In September 2013, my startup, Parse.ly, had just raised Series A capital, and had just begun growing its team rapidly, from a small group of fewer than 10 to over 40 employees now. In the past several years, I have run Parse.ly’s fully remote engineering, product & design team.
Back in 2013, we had achieved initial product/market fit, initial revenue, and had already established a kernel of a product and engineering culture. I knew the company would change, but I wasn’t sure exactly how. Meanwhile, I had just recently read “Reasons & Persons”, a book on ethics and identity by the philosopher Derek Parfit. Though his ideas focused primarily on individuals, they influenced the way I thought about my business, my team, and its evolution over time.
What follows are my speaker notes from a talk I gave to my team to discuss the issues of Ethics and Identity central to Parse.ly’s culture:
Origin of this talk
- Parse.ly turned 4 years old in May 2013
- I reflected after our Series A round
- I read a book about ethics/identity, Reasons & Persons
- Realized some interesting concepts apply to firms, too
Parse.ly, different takes
- “An analytics platform for large media companies?”
- “A startup founded originally in 2009 at Dreamit Ventures?”
- “A team of employees?”
- “A specific configuration of tech and code?”
What is Parse.ly, really?
- our history?
- our appearance to customers / press?
- our employees (or founders)?
- our technology / product?
- our shareholders? (huh?)
Ship of Theseus
What is the Ship of Theseus?
- They took away the old planks as they decayed
- … putting in new and stronger timber in their place
- One side held that the ship remained the same,
- … and the other contended that it was not the same.
What is Parse.ly’s goal, really?
We “aim to”:
- create a profitable business
- make innovative technology
- do work that we love
- change an industry
- generate value for shareholders / employees
- all of the above?
First detour: Spolsky
- When I was still in high school, Joel Spolsky wrote the only interesting stuff about “startups” I could find.
- In 2000, he wrote about his theory of work in an essay called “Converting Capital Into Software That Works” (2000).
Here’s what he said:
Imagine that the goal of your software company is not to solve some specific problem, but to be able to convert money to code through programmers.
That’s a little bit strange, but bear with me.
A software company has to think of recruiting the right people as its number one problem. If you are successful, this can solve any other problem.
Hire smart people, and they will produce good stuff that you can sell and make money off. Then everything else follows.
Spolsky had other ideas
- great programmers work best in small groups
- every professional programmer needs a private office
- process is about ensuring quality, not cracking a whip
- managers are janitors, not kings
Here’s the important part:
No existing company works this way; he had to invent one.
This resonated with me
- It’s no surprise that in 2006, when I was graduating from NYU, I almost took a job at Fog Creek Software.
- But, in a twist of fate, I then ended up at Morgan Stanley.
- By 2009, I was convinced if I wanted to love my work, I was going to need to invent a new company.
- Luckily, my co-founder felt the same way. “The rest is history.”
Hitting the High Notes
In “Hitting the High Notes” (2005), Spolsky elaborated on his idea of a company, turning it into a simple formula:
- Best working conditions
- Best people
- Best software
Put another way
- You tap into the ingenuity of your staff.
- You don’t bottleneck ingenuity to the founders.
- What’s more, people actually enjoy their work — because they have control.
So, what about ethics?
Parfit seeks to understand what makes us act (reason) and who we really are (persons).
To do so, he introduces some interesting concepts that can be cross-applied to business.
- The first theory Parfit analyzes is the “self-interest theory”, or “S”.
- He suggests: if we operate under a theory where we aim to pursue our self interests, we may end up not pursuing our own interests.
- In this way, “S may be self-defeating”.
In following S, I defeat my S-given aims. Lots of illustrations:
- Prisoner’s Dilemma
- Tragedy of Commons
- It may be better if we follow some other theory.
- He suggests maximize outcomes for everyone in “some group”.
- Calls this consequentialism.
Note: “some group” qualifier is important.
Let’s evaluate a business operating theory in this way: shareholder value maximization.
I might call it “SVM”, and I might say, “in following SVM, I defeat my SVM-given aims.”
- SVM may be self-defeating.
- When I follow this theory, the outcome is that my shareholder value is not maximized.
- There might be some other theory that, when followed, actually achieves SVM-given aims better.
How about profits?
- By ruthlessly seeking profit, can we fail?
- Can a firm engage in self-defeating behavior?
- The answer is obviously yes.
- Following the theory “seek profits” is not enough.
- We need to weigh actual consequences.
- Example: “Achieving outsize profits may mean ignoring net income for awhile.”
- Or: “Seeking profits in area X may distract us from threat Y.
- Consider: Blackberry vs iPhone, Netflix vs Blockbuster.
- Long view of Amazon is this taken to a dramatic conclusion.
Some other theories
There are other operating theories out there:
- Maximize customer satisfaction
- Maximize technological innovation
- Maximize employee happiness
- Maximize value in “reverse order”: employees, founders, other shareholders
- It may just so happen that companies that follow these theories actually maximize shareholder value, too.
(Or not. How do we know?)
Conventional wisdom in marketing:
- model a funnel
- acquire lots of prospects
- spam the hell out of them
- convert them into happy customers
Marketing “meat-grinder”. Let’s call this “Lead-Driven Marketing”, or LDM.
If the goal of a marketing campaign is to acquire qualified leads, a lead-driven marketing theory seems obvious.
- Now wonder, “in following LDM, might I defeat my LDM-given aims?”
- In other words, may I end up with less qualified leads than if I follow some other theory?
- Mailchimp CEO thinks so: he “turns the funnel upside down.”
- He starts with happy customers, focuses on word of mouth from them.
Test-Driven Development is a fad in software circles. Conventional wisdom for TDD:
- Write every piece of code first as a failing test case.
- If a piece of code is hard to test, it’s poorly designed.
- Rework code to make it more testable.
- A piece of code is only “done” when it passes tests.
The goal of TDD is to build well-designed, robust software — more efficiently.
- Now wonder, “in following TDD, might I defeat my TDD-given aims?”
- May I end up with poor designs / brittle code — and/or get there less efficiently?
- Is there some other theory I could follow to better achieve these aims?
- For example: we’re all adults here, rely on engineer judgement?
Now for Identity
There are three thought experiments Parfit uses to help us with Identity problems:
- Split brains
Suppose that you enter a cubicle in which, when you press a button, a scanner records the states of all the cells in your brain and body, destroying both while doing so.
This information is then transmitted at the speed of light to some other planet, where a replicator produces a perfect organic copy of you.
Suppose further that a different teletransportation machine transmits the copy, but the original stays alive for 10 minutes after transportation, and can communicate with the Replica.
Since the brain of your Replica is exactly like yours, it will seem to remember living your life up to the moment when you pressed the button, its character will be just like yours, and it will be in every other way psychologically continuous with you.
Existence and Empty Questions
He says: “People exist in the same way that nations or clubs exist.”
Empty questions are those we are tempted by as philosophers, ones we cannot answer, but concerning which there is nothing left to learn:
- Is it the same company it was in 2009?
- If we dramatically expand our market, will we be the same company?
- If we lose a key employee, will we be the same company?
Like Ship of Theseus, these may all be “empty questions”.
Parfit’s take on identity is something called Relation-R.
- Relation-R is our connectedness to our past memories and experiences.
- If a body/brain “survives” a surgery, but lacks Relation-R, a “death” has occured.
- This also explains why shared experiences create shared identities.
- “Quasi-remembering” is making someone else share an experience, without identity requirement.
(Think: long-term married couples. Relation-R to a similar set of memories/experiences, some quasi-remembered.)
- Yes, that means in Parfit’s view, when you are replicated, you “survive”.
- When you are cloned, you also “survive” as two persons.
- This is with “branching”: the experiences of each begin to diverge.
- To combat critics, he says: “a double success cannot be a failure.”
- Concludes that numerical identity is irrelevant. Only Relation-R matters.
So, firm identity
- If a firm “forgets” history, is it no longer the same?
- I think so.
- Relation-R might be major aspect of firm identity.
- Firms can do something to make sure that employees “quasi-remember”.
- Example: “Googleyness”.
Our retreats, for example, help solidify the idea behind Parse.ly, and our culture.
- On founding: we put great people together and get out of their way.
- On ethics: careful thought and reflection — not operating theories — shall guide us.
- On identity: as we evolve, we remain the same, through our connectedness to past experiences.
So, who are we?
Returning to the original question: what is Parse.ly, really?
- a work environment that puts smart people in control (founding principle)
- a group whose outcome we care about: shareholders, employees, customers (ethics)
- a set of shared experiences, some remembered and some quasi-remembered through culture (identity)
What is Parse.ly to you?
For me, personally, it’s also:
- an outlet for creative autonomy (D. Pinker)
- a platform for shipping software (S. Berkun)
- a modern-day studio of great hackers (P. Graham)
Ultimately, we have a mission: build a measurement layer for the entire web.
Thanks for being awesome
… and let’s discuss!