AWS, DoorDash, Multi-Disciplinary Thinking, and Patrick Collison
"It takes muscle to do hard things, and muscle gets built by doing hard things"
Howdy! Welcome to issue #5. As always, I’m keen to share what I’ve been reading, learning, and compressing.
Here’s the format of today’s email:
Part 1: Behind the Curtain - Amazon, DoorDash, and Teachable
Part 2: Peter Kaufman on the Multi-Disciplinary Approach to Thinking
Part 3: Under the Spotlight: Patrick Collison
Part 4: Bonus Quirky Content - Something to Read, Watch, and Listen.
Behind the Curtain
A new section that I’m aiming to do every few weeks. What’s Behind the Curtain about? Looking into business stories and anecdotes to analyse their successes and failures.
Amazon and AWS
(Assuming you read the above tweet) Amazon’s site stability was critical. Every second of downtime was lost sales, so large amounts of money was spent to keep the site up. Sun Microsystem servers were the most reliable (and most expensive) so all internet companies used them back then.
Amazon's CTO Rick Dalzell pivoted the engineering team to replace Sun Microsystem servers with HP/Linux. Linux kernel having only been released 6 years prior, a risky approach at the time. Once they started the transition to Linux, there was no going back. If it worked, infrastructure costs would go down by 80%+. If it failed, the website would fall over and the company would die.
When Amazon finally completed the transition, CAPEX was massively reduced overnight, along with infinitely scalable infrastructure.
There was also seasonality in Amazon’s server usage. If they have excess server capacity outside usual busy periods (e.g Christmas), why not rent it out to other companies?
Thus, AWS was born. Today, AWS contributes ~12% of Amazon’s revenue (see graphic below), AWS makes up ~71% of Amazon’s overall operating profits! Never let a good crisis go to waste!
It takes muscle to do hard things, and muscle gets built by doing hard things. The best companies look at every challenge as an opportunity and engrave that mindset into their culture.
In 1900, a business had to build its own generator to open a shop. Why should a business in 2000 have to build its own datacenter?
DoorDash Focused on the Suburbs
Delivering in cities is hard. Customers expect to pay less, drivers expect to be paid more, traffic sucks, and parking is hard. Suburbs have better fundamentals and even more people. While their competitors struggled in cities, DoorDash shifted their focus to the suburbs and found instant product-market fit. Once profitable in the suburbs, they could then move to cities and compete there.
Selection and Quality > Price and Speed
In food delivery, you compete on four things – price, speed, selection, and quality. DoorDash couldn't beat Uber on price or speed. But DoorDash analysis showed there was a limited marginal benefit to customer conversion or retention rates under 42 minute deliveries. As long as deliveries were sub 42 min, customers didn't really care how long they took. DoorDash focused on having the best selection (all the restaurants you want to order from) and the best quality (making sure your food arrived on time, with everything, in the state you expected). That focus paid off. People trusted DoorDarsh more, talked about them more, and stuck with them.
Obsess over the Merchant AND Dasher AND the Customer
DoorDash is a service business. It's run by and powered by people. Their competitors focused on customers first; restaurants and drivers second. They often ignored merchant & driver needs. DoorDash weighed all sides equally. By treating merchants & dashers the right way, they became allies, not adversaries. Restaurants in particular felt they could trust DoorDash more vs. the competition. From the host at the front desk, to the store manager, to the business owner, they all chose to send business our way.
The image basically sums itself up!
Peter Kaufman on the Multi-Disciplinary Approach to Thinking
You might know Peter Kaufman as the author of the book Poor Charlie’s Almanack. Apparently, he doesn’t usually allow his talks to be on the record. So super lucky to be able to access this! And I reckon it’s a banger.
Pro tip: The audio is the key bit here. So I’d recommend downloading it as an MP3 (plenty of websites can do that) and transfer it to your phone to listen to. A full transcript is also available. [Link]
All you have to do, if you want everything in life from everybody else, is first pay attention, listen to them, show them respect, give them meaning, satisfaction, and fulfillment. Convey to them that they matter to you. And show you love them.
But you have to go first. And what are you going to get back? Mirrored reciprocation. The world is so damn simple. It’s not complicated at all!
The last few minutes of the speech pack a punch
The secret to leadership is to see through the eyes of all six important counterparty groups and make sure that everything you do is structured in such a way to be win-win with them.
The communities you operate in.
And if you can truly see through the eyes of all six of these counterparty groups and understand their needs, their aspirations, their insecurities, their time horizons. How many blind spots do you have now? Zero. How many mistakes are you going to make? You’re going to make zero. […] There’s this great African proverb. It’s the definition of win-win. ‘If you want to go quickly, go alone, if you want to go far, go together.’ Live your life to go far together. Don’t live it to go quickly alone. Most people grow up wanting to go quickly alone. It doesn’t work. You wind up like Ebenezer Scrooge in A Christmas Carol. You get to the end of your life. Yeah you’re rich, you’re powerful, you’re famous, and you want a do over because you realize at the end of your life, ‘I didn’t live my life right.’ I don’t have what really matters. What really matters is to have people pay attention to you, listen to you, and respect you, show you that you matter, and to love you. And to have it be genuine, not bought.
And I think this is the perfect quote to wrap it all up:
There’s another proverb, it’s a Turkish Proverb. ‘No road is long with good company.’ The essence of life is to surround yourself, as continuously as you can, with good company. Like I have today. You’re marvelous company. But how did I get that? I had to earn it, didn’t I? I’m not just some guy you picked off the street. I earned the privilege of coming here and the privilege of being with you. It gives me what? It gives me meaning in my life. It makes me feel I matter. To have people listening to me. This is my strategy for getting those five thing. You can develop your own strategy and I hope it involves going positive and going first.
Under the Spotlight: Patrick Collison
Each week I provide a little spotlight on an investor or operator I admire.
Patrick Collison is this weeks focus, in a nutshell:
Born in rural Ireland to entrepreneur parents. His father running a 24-bedroom hotel, his mother operating a corporate training company from the family’s home.
Took his first communion money and bought a computer. Created his own operating system while coding over a dial-up line.
Founded Stripe (at 21) alongside his brother John. Which is payment infrastructure for the internet, essentially making it easier for anyone to accept digital payments. John’s goal for Stripe? Grow the GDP of the internet.
Running Your Company by Patrick Collison
I like Patrick’s thoughts on doing hard things:
When I look back at life to the things that I am most glad I did, I wasn’t exactly happy while doing them. Often I was stressed out or I had to work very hard. But those are the things that brought the most fulfillment.
Yet also being totally aware of the other side of hard situations:
If something is making you unhappy, if it doesn’t seem promising, or it’s just not working, your time has relatively high opportunity costs. You don’t get to start that many startups in your life, knowing when to call it quits is valuable… sometimes you should quit.
Patrick is obsessed with moving fast. He even has a section of his site dedicated to people accomplishing ambitious things quickly. [Link]
We are constantly self-flagellating over how freaking slow we are. We are paranoid about degenerating into an immobile stupor. To whatever extent that we do get things done or appear fast, is because we are very paranoid.
Patrick Collison on The Tim Ferriss Show [Apple Link]
Honestly, not my favourite Tim Ferriss episode (I think Tim talks and interrupts too much in this one). So I highly recommend skimming the transcript for this one.
Small companies don’t realize how much of an upper hand they have here where if they can create a product that is so much better than the status quo that they start to get organic traction, once you attach a real sales and marketing engine to that, it’s going to be really freaking hard for a big company to effectively compete because, again, this organizational transformation into being good at software is just so profoundly hard.
Patrick on decision making is an interesting one. Basically, don’t stress so much on decisions in the first place. But always be mentally flexible and prepared to change decisions over time.
You don’t necessarily need to be that good at decision making if you get really good at remaking the decision when and as necessary […] I have been flying for more than 10 years, and when you’re flying a landing, you’re always off track. And if there was a big discussion of, “How do you make sure that you get established on precisely the right glide slope when you start,” I don’t think that would really be that productive. I think it would be pretty frustrating. Instead, it’s all about the constant feedback and course and error correction. And I think that’s, as a general matter, a better model for life and that even a lot of the decisions that look pretty trapdoor may not necessarily be.
Bonus Quirky Content
Something to read: The Gervais Principle, Or The Office According to “The Office” [Link]
The Gervais Principle is this:
Sociopaths, in their own best interests, knowingly promote over-performing losers into middle-management, groom under-performing losers into sociopaths, and leave the average bare-minimum-effort losers to fend for themselves.
Thanks go to Mostly Borrowed Ideas [@borrowed_ideas] for sharing this one on Twitter. It’s so great I’m honestly not even quite sure which quotes to pull. It’s all so damn good and deserves a full read. I’m guessing this will be super niche to The Office viewers, but if you’ve seen it I think you’ll love it.
Something to watch: Your Theme [6 mins]
Instead of resolutions, try setting an overall theme of how you’d like to approach this year (or even season). This theme becomes like a guiding principle for your work and/or personal life for that period. Examples of themes? Adventure, discipline, growth, routine, joy, and health. It’s completely up to you!
My theme for this year? Consistency. Consistency in this newsletter. Consistency in bettering myself. And consistency is improving my golf game!
This episode is pretty highly hyped. And deservedly so. One of my favourite interviews in recent memory.
The key to writing, to being a good writer, is to treat yourself like a baby, very extremely nurturing and loving, and then switch over to Lou Gossett in Officer and a Gentleman and just be a harsh prick, a ball-busting son of a bitch, about, “That is just not good enough. That’s got to come out,” or “It’s got to be redone or thrown away.”
So flipping back and forth between those two brain quadrants is the key to writing. When you’re writing, you want to treat your brain like a toddler. It’s just all nurturing and loving and supportiveness. And then when you look at it the next day, you want to be just a hard-ass. And you switch back and forth.
From my personal experience, I’ll feel great about my writing, yet only realise it’s a total dog’s breakfast the following day. So the goal is to be easy on yourself getting words on the page. Because writing is hard. Cut yourself some slack but get it done. But then you should edit like a stubborn asshole and show your previous writing no mercy.
I’d love to know, what have you been reading this week?
But until next week, have a good one!
- Salami Carrot
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