Damien Hirst and the Unbelievable Wreck of the Art Market

At dinner this evening one of my partners told the story of last year's Damien Hirst mockumentary, Treasures from the Wreck of the Unbelievable. It sounded like a great bit of entertainment and I just put it on my Netflix list. I looked at bits from the Venice exhibition when it was trashed by critics and was blown away by the elaborateness of it all.

I like Hirst for how he makes me think about art, which means I appreciate some of the criticism, too. I think Felix Salmon really nailed the Hirst phenomenon in his piece in the New Yorker in December: The False Narrative of Damien Hirst’s Rise and Fall.

I'm a cynic when it comes to the art "market", which for me is a toxic cocktail of conspicuous consumption and opaque, frequently fraudulent behavior. And so I love that Hirst unabashedly creates high quality work and sells it at ultra-luxury prices, even if I don't like the aesthetics of much of it. He's the ultimate direct-to-consumer brand in the segment and he's retained a punk rock attitude to building authentic product. More power to him.

Redirect your inner critic to move forward

One thing a lot of high-achieving founders (and VCs) don't like to speak about is their inner critic. Everyone has feelings of inadequacy, of "I'm not good enough for this." Of course, lots of times those feelings are more specific - like a fear of public speaking, social anxiety, fear of failure, a need to fit in, etc.

I sincerely believe everything has a purpose - and so does your inner critic. Each particular message from your inner critic has a particular purpose. So, for example, if you were embarrassed as a kid in school, you created that inner message of not wanting to be embarrassed to protect you in the future. That kind of behaviour could have been very useful in the cruel peer culture of school life, but now is simply a conditioned response that may be holding you back from taking the risks you want to take.

Once you're aware of your inner critic's specific message and how it may have been created, integration requires acknowledgement, acceptance and sometimes redirection: 

- Why is the inner critic showing up today?
- What purpose is it trying to solve by holding you back / how is it trying to protect you?

Then you can give it a new job: since the old purpose is no longer appropriate, what could your inner critic be saying to be helpful today? I like to actually make this a little ritual: release the inner critic from its previous purpose and then affirm its new purpose.

Identifying, understanding, and redirecting your inner critic is an incredibly powerful method to move forward to become more of who we really are. 

Music Saturday: Just Dropped In (Mickey Newbury)

Just Dropped In (To See What Condition My Condition Was In) was a big hit for Kenny Rogers and The First Edition in 1968, but the song was written by Mickey Newbury and I've always preferred his rendition (from the Winter Winds album). The man had a phenomenal range and feel. Incidentally it was Jimi Hendrix' favourite song and you may remember it from the Dude's dream sequence in The Big Lebowski. 

Yes, this is about the tough parts of an acid trip. The Newbury version retains more of the warnings that were intended, whereas latter versions become more of a drug anthem. 

Do you know your meme?

I'm a child of the internet post crash. In 2000 I was 22, sitting in the Greenwich offices of Paul Tudor Jones, working for a Tiger cub focused on cyclical industrials. We didn't own a single tech stock. We felt pretty smug watching the NASDAQ crash.

I graduated from business school in 2002 and started a post-graduate degree about marketing in recession. The twin towers had just come down, I hated all my job offers and kind of fell into helping start my first company, myblog.de. We were fans of LiveJournal and Metafilter and Neopets and, of course, Ev Williams who went on to do Odeo which became Twitter. The guy who started LiveJournal, Brad Fitzpatrick, eventually brought you OAuth. Which became "Sign up with Facebook", which started to make the internet suck. But that is Brad's fault as much as it is Ev's fault that Trump is President.  

We sold Last.fm, my first angel investment, to CBS in 2007. I had joined Atlas Venture as an analyst just a few months prior. That was my first venture gig. Back then, if you wanted to figure out something about internet culture, you read Encyclopedia Dramatica. Unless you hung out on 4chan all day, it was hard to get all the references. 

In 2008, KnowYourMeme got started, and for the last decade it has been the place to go to understand internet culture. The Verge has a nice feature of Brad Kim, who has worked on KnowYourMeme from the start. Go and check it out if you care about how we got to and where we go from here. 

Let my people go surfing

There aren't a lot of business books that I recommend. But "Let My People Go Surfing" by Patagonia founder Yvon Chouinard is one of the few ones that endure. 

The first half of the book is Yvon's personal account of his life and the development of Patagonia. It's a great story. Made greater because (I assume) it's true. It's not marketing bullshit. It's the story of someone who pursued his interests and his passions without regard for social acceptance or financial success. It's great to reset the baseline of what a successful life looks like. No fear, no greed. Do something you like and make something people want.

The second half of the book sets out Patagonia's philosophy. And this is where it gets valuable for every single company we invest in. Patagonia's mission statement is to "build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis."

The central idea is that product matters - build the best product. But product isn't just important by itself. It should be cared for because it is something made by a human for another human. You don't want to make shoddy products that you're not proud of. You don't want to make wasteful products that hurt the planet. You don't want to make something that's bought just because it's fashionable - you want it to have real utility, value. 

In everything Patagonia makes, they strive to make the best of its kind. The highest utility. The most durable. The least harmful to the environment.

This same care extends to its staff. So hiring selects for passion. Flexible work schedules permit the pursuit of those passions. Health and child care are priorities (and with the same attitude - how do we provide the very best child care). Self-management (teal) abounds.

And finally, though it's a "rag trade" company with horrible environmental externalities, Patagonia strives to use its profits to find solutions to the environmental crisis. It is a purpose-driven company not just in the utility of its products, which bring customers closer to nature, but in the proceeds from this value, which are used to preserve that nature.

As you can tell, I'm a fan boy. Business doesn't have to be solely focused on growth and consumption. In fact, the best products are often made by companies focused on anything but.

The three last miles of DTC

IAB had a great feature on direct-to-consumer brands a few weeks ago. Deck (PDF) here

I really liked this slide - partially because I'm a language and metaphor kinda guy:

1. To the head: great product utility/performance is more than a hygiene factor - it's the core of your product. Charge less than the value you provide (balance producer and consumer rents). Figure out what your customer needs (data!) and then seek to over-deliver on performance.

2. To the heart: have purpose. Be authentic. Tell your story: remember where you started and why. It helps to leverage data once again to figure out what resonates the most.

3. To the home: (over-) invest in phenomenal fulfillment and customer support. This is all about maximizing convenience as part of the product experience.

To some extent, these three last miles are versions of "selection, convenience, price." Which leads to the question of where this wonderful and chaotic proliferation of DTC brands will end up. I can imagine four scenarios that will co-exist:

- consolidation by the large FMCG companies in the categories with high frequency/critical mass 

- a healthy and long-term independent long tail of specialty brands that leverage data and fulfill very specific needs of a distinct but small target audience

- Amazon private labels that continues to eat at the bottom value-end of the scale and will push DTC out of the market in some categories

- digital FMCG platforms that build large, independent platforms in related verticals (too early to tell whether this will play out)

Capitalism and meaning

Slavoj Žižek, whose name I learned to spell because I liked his ideas on ideology, has a rather cryptic piece in the Spectator (UK) on whether Trump isn't a cause of the opioid crisis so much as a symptom. Which is a rather boring thing to waste your time writing (or reading, for that matter) about. But the interesting stuff that happened to me today was at a board meeting and it's all confidential and so here's the passage that stuck out for me:

"Capitalism is the first socio-economic order which de-totalizes meaning: it is not global at the level of meaning. There is, after all, no global capitalist world view, no capitalist civilisation proper: the fundamental lesson of globalisation is precisely that capitalism can accommodate itself to all civilisations, from Christian to Hindu or Buddhist, from West to East. Capitalism’s global dimension can only be formulated at the level of truth-without-meaning, as the Real of the global market mechanism."

See, this is the problem with Žižek - he thinks he understands capitalism. But like many academics (and doesn't the Moldbugian Cathedral ring true here), he has never understood the ethical triumph that is capitalism. 

[Trigger warning: smacks of Rand]

Capitalism is, in direct contrast to what Žižek the Marxist believes, the first socio-economic order that elevates meaning and celebrates equality in humanity. It is, in fact, global at this level of meaning. The global capitalist worldview is of the non-violent exchange of value using an agreed upon currency - money. That, for the best of my efforts in bringing value, I receive such currency that I am then free (free!) to spend to acquire the value of others' labors. 

It is precisely this abstraction from culture, from the historical rivers of blood and slavery, that makes meaning - it is the only way to live in freedom. In return, it asks the best of each of us and expects us to demand the best in return. And this is where the problems begin.

Contrary to popular belief, it is not the decay of late-stage capitalism that has caused the misery we see around us. It is the lack of ethics and morals to demand better of the goods and services provided by and to us. Who stood against the sweatshop owners, the Taylorist timetracking slavedrivers, the polluters of our planet? And I don't mean the cheap standing they do at universities everywhere, but the actual refusal to consume the goods tainted by greed and violence. Even if it means a loss of comfort or convenience. 

Capitalism has brought us unprecedented prosperity. It has brought opportunity to the darkest places on earth. It is beginning to allow us to live as Gods. But in the end, capitalism only says "you are free to choose." Or as I like to put it: you are a God - now act like one.

Escape velocity

Last year Joi Ito, who was a co-investor in my first ever seed investment Last.fm, published an important essay called Resisting Reduction. You can read it here: https://pubpub.ito.com/pub/resisting-reduction

I agree with many things in it, not least taking an evolutionary and integral view of progress, and that the one currency view of the world is wrong. But there’s a key concept that I have a different take on: that of escape velocity. 

I deeply believe in escape velocity as a human motivator. Whether it is making planetary resources work for a population of 10 billion. Or making algorithms smarter than humans. Or making us a multi-planetary species. 

These are all escape velocity goals. Without them, we have always been heading for the end of the runway as a species. Technology has always been the lever of escape velocity - we have never managed to “change” human nature. God knows we have killed millions trying. 

Escape velocity goals are good segments to think about starting a business in. They’re generally worthwhile ideas to pursue.  

Weapons of hyperscale

Yesterday I wrote about the compromise of German government networks, an attack that seems to be the worst assumable accident for anyone thinking about cybersecurity and nation states. There's no such thing as secrets anymore. Unwittingly, Julian has won. 

Anne Currie, a self-avowed "greybeard" programmer wrote a related article in The Reg yesterday: Ethics? Yeah, that's great, but do they scale?

Her point is simple but powerful: off-the-shelf tooling for continuous integration/deployment and infrastructure-as-a-service have boosted "time to scale" by multiple orders of magnitude. This is, of course, great for companies that make stuff that we want. They'll improve it more quickly and get it to us instantly. But "we're getting close to the point where almost anyone could potentially affect the behaviour of a significant proportion of humanity." Great quote (I suggest removing "almost" and "potentially").

I think she's right. These tools are open for anyone. Before the last election I used to joke that if you give me a sufficiently large online advertising budget, I could swing any European election. I think that's still true. 

I'm not sure how often you interacted with companies today whose primary objective is to change your behaviour so that you stay longer, click more, consume more. I'd bet ten times or more since you got up this morning.

If you value freedom, that's a problem.

P.S. Case in point: the DDOS attack on Github. Look ma, no botnet!

German cybersecurity is dead

German news media ran a story yesterday about a hack by "Advanced Persistent Threat 28", purportedly of Russian origin, who penetrated the data networks of Germany's federal government and its security institutions. That is to say the German equivalents of the entire executive branch, including chancellor, cabinet, and executive branch agencies like CIA, FBI, ICE, federal and state police services, military intelligence and security command. Yes, let that sink in.

Counter-intelligence noticed the breach in December. At that point the systems had been compromised for the better part of a year. A year.

Notwithstanding the fact that all journalism related to this attack is abysmal - in particular the "let's blame a sovereign nation for what amounts to a cyber act of war" based on what: an IP address? a common methodology? - the fact that a breach at federal level can remain undetected for a year speaks to how woefully unprepared Germany is in cybersecurity.

At this point, one should assume that there is no such thing as German state or economic secrets. Everything has been compromised. For a nation that used to pride itself on security and the strength of its intellectual property, this is a very sad day indeed.