The Joy of Business Experimentation

There’s a particular type of joy that comes from running companies that you fully control, and this year, I got a taste of what that felt like.

The joy comes from the following things:

1. You get to pick who you work with. If you are wise, you will pick only those who are competent, who have excellent character, and who you enjoy associating with.
2. More importantly, you can cut out from your life people who you do not want to associate with. This reads like an unalloyed good, but it really isn’t: there are tradeoffs. About which, more in a bit.
3. Given the above two things, you can go into the world together and prove that certain ideas you’ve noticed actually works. And since this is business that we’re talking about, you can do this in a way that makes everyone wealthy.

In exchange for these properties, you make the following tradeoffs:

• You give up on opportunities — potentially very lucrative opportunities — that involve people you do not want to associate with.
• You maintain control of some kind of holding structure that enables such work — which in turn means that you don’t ever put yourself in a situation where you give up control. (Think about what you’re giving up here).
• You accept that this is the main thing you do for decades. (Think, also, what you’re giving up here).

The implications of these tradeoffs are pretty far reaching. For starters, there are few cooperative structures that allow for such a life. Since you do not share in the spoils with uninvited external parties, it’s almost guaranteed that you would need to do some plotting to set things up.

But what rewards you do reap if you get there.

Of the three properties, the one that I find the most interesting is the third one, on experimenting with business. Over the past year, I’ve had the privilege of testing a few interesting business ideas against reality, alongside a team that I like and respect. I hope to share the spoils of such experimentation with my team when they emerge — which they should, some as early as next year. But even as is, I think there’s something pretty remarkable about a commercial enterprise built around harvesting the fruits of business curiosity.

I don’t want to make it seem like this is something I’ve figured out on my own. There’s a wonderful interview between John Collison and Charlie Munger that was recorded a few months before Munger’s passing late this year. At some point Collison asks about Munger’s decades-long working relationship with Buffett. He replies:

Charlie: [01:04:21] You’re very lucky to have a good life partner. Yes, I’m sure you’re also very skillful and talented, but it’s a blessing to do it with a good partner than to be all alone doing it. And of course it’s better. Of course it’s a blessing. Warren and I have not just succeeded in making money or something.

We have had a lot of fun, actual fun. We enjoy doing what we’ve done, mostly. We’re associated with a perfectly marvelous group of human beings. It’s almost unfair. The people with Warren and I associate with all day long are such high-grade people. Of course it is a pleasure to associate with high-grade people all day long. Talented people, too.

John: [01:05:02] When you’re saying it’s fun for you and Warren together, just the relationship is fun outside of the results. What does that look like? Is it staying up late watching funny YouTube videos? Is it…

Charlie: [01:05:09] No, no, no. We get fun doing, doing and understanding. We both like learning something new, preferably something useful that’s new. And we both like accomplishing a certain amount and the fact it’s difficult and you’re still able to do it, of course it’s a pleasure. (emphasis mine)

There’s also this revealing snippet from an interview with Paul Graham, who founded early Internet startup Viaweb with his friend Robert Morris, and then later did Y Combinator with the same people he enjoyed working with.

Jessica Livingston: I want to ask you about when you retired in 2014. I want you to tell the story about that. Because Y Combinator was on a high. So why did you leave?

Paul Graham: Well, because I hadn’t actually meant to be an investor. I was writing essays, and software. And then we thought “ok we’ll start a VC thing as well.” And this thing that we started which was meant to be a part time job, ended up becaming more than a full-time job. It was gradually taking over my whole life. And I could’ve kept doing this until I died. I mean, YC is still going after all these years right? So at some point I’m either going to do this and nothing else for the rest of my life. Or if there’s anything else I want to do, I have to leave at some point.

But it was Robert [Morris], really. Robert never volunteers advice. Robert would come out to [YC] interviews in California. So Robert was there visiting for interviews, and it was always fun when he would come, it wasn’t just for interviews, [because] we got to hang out with Robert. So we were walking down to the centre of Palo Alto and at one point he stopped and said “you know, you should make sure YC isn’t the last cool thing you do.” And I couldn’t even understand what he meant. It took me months to realise. But I sent him an email and I said “when you said that, you meant I’m wasting my time, didn’t you?”

And he said “yeah, basically.” He said, “you’ve already proved your point, it works, why are you still doing it?”

Which is not the normal model of people working on companies. When it works, that’s when they keep doing it! But Robert has a different view of the world. And so I thought to myself “hmm, maybe he’s right.”

And then my mother got sick. I used to have to fly up to visit her every weekend. And so on one of these flights, I was thinking, “alright”, I remember, looking out the window of the plane thinking “ok, I’m going to recruit someone to run YC.”

And so Graham retired. I realise — listening to both clips back-to-back now — that what drove him was really the same thing that drove Buffett and Munger over the course of their lives: pg saw an interesting, unnoticed quirk in the world, and he wanted to prove that it could work. And it did, and everyone he roped into the project became wealthy.

It’s not hard to look at these people, chart the arc of their lives, and think to yourself “this is what I want for me and mine too.”

Which is exactly what I tasted, for the first time, this year.

Cedric Chin
25 December 2023