The Weaponization of Diversity

This is an unusually extra lengthy essay, because the issue is so complex, sensitive, and nuanced that it deserves an appropriate level of patience and attention. It includes my deeply honest, personal, and some would say risky perspective on the topic of diversity in high-performance careers, including tech entrepreneurship; and my concern, as a latino who grew up low-income, that the decision by some to “weaponize” diversity is backfiring and causing harm to under-represented minority (URM) groups. 

I grew up in a very “colorful” part of Northside Houston, with neighbors and schoolmates who were usually a mix of latino (immigrants and 2nd generation), black, asian and white; and a general socioeconomic range hovering between welfare, blue collar, and sort-of-middle class. My parents (Mexican immigrants) started a produce business selling avocados and tomatoes, which eventually grew but then unfortunately imploded. By the time I was sending off college applications, my two sisters and I were supported by our single mother who sold perfumes at an indoor flea market. After public K-12, I ended up attending the University of Texas and Harvard Law School, graduating in both cases with various honors. Today, with three healthy kids, happily married over a decade and a successful legal practice/leadership position at an elite boutique law firm, my cozy “1%” life definitely does not suck.

But this isn’t your classic self-congratulatory American Dream story. There’s a key twist, and that twist has given me a unique perspective on issues of socioeconomic inequality and diversity. My mother, despite ending up in a struggling, unstable situation, was actually a computer science graduate of the top technology university in Mexico; the Tecnologico de Monterrey. Basically the MIT of Mexico. And her family background includes a nationally celebrated Mexican artist and a biological (but estranged) father considered one of the top Medical doctors and Medical School professors in his field.

How did my mom go from a top-tier student with a strong family background to selling perfumes at a flea market as a single mother hovering preciously close to Medicaid-level poverty? This isn’t my autobiography, so I’ll cut that part of the story short and summarize: very debilitating mental illness. Many people fail to appreciate how success is just as much about emotional stability and health as it is about intellectual and analytical capacity; and the formula for producing the former is often far more complex and nuanced than what’s necessary for the latter.

I mentioned these details about my mother because they are historical elements that keep me, if I’m honest, from painting for you a perfect “the system is totally fine because I made it” story; the kind of story that is too-often used to ignore real problems in society. My mother’s emphasis on academics and her love of computers – which she made every effort to expose me to, within her limited means – were key strategic assets in my childhood that differentiated me from my peer group, and undoubtedly propelled me forward. The truth is the vast majority of people who give you these “rags to riches” stories can, if they’re sincere enough, come up with their own kinds of privilege (including familial privilege) that they depended on growing up. If anything, simply being born “gifted” (to use a very broad but frequently used term) is itself an unearned privilege reserved for a lucky few who often like to conveniently overlook their luck.

Yes, we were poor latinos living in a low-income area and a broken home, speaking a blend of spanish and english and having our fair share of tamales, frijoles, barbacoa, etc. etc… but as it related to school, my home culture was different. I studied. Hard. With a level of discipline that got me labeled as “acting white” (by other latinos) more than enough times. There was even a special term for it: “coconut.” Brown on the outside, white on the inside. I had friends growing up who studied as hard as I did, but none of them were latino.

Very very few of my childhood latino friends have ended up as successful doctors, lawyers, engineers, executives, or entrepreneurs, including some who had more money and far more stable families than we did. Many of them didn’t even go to college. Whenever I hear someone bring up statistics about the under-representation of latinos among the top economic strata in the U.S., I think about my childhood experiences and how differently I saw the world from my friends, because of the expectations I had at home; my “coconut” expectations.

I think about how often I heard, and sometimes still hear, underachieving peers lash out at the world for its supposed racism and prejudice against latinos; and yet, with a name like Jose, there was no hiding my own ethnicity. If the world I was living in had deep, systemic discrimination against latinos, surely I was an easy target. Certainly I’ve encountered some bona fide racists, but rarely were they in positions of influence to alter my trajectory. And of course there are stereotypes that I’ve had to overcome. But, again, given the progressiveness and merit-driven nature of the people and institutions of influence I’ve encountered (and thank God for that), the stereotypes eventually gave way to what I could actually deliver.

I’ve learned to not be so offended by weak stereotypes, because given my experiences growing up, I understand full well why they exist. Stereotyping is at some level a normal, even if often unfortunate, function of human behavior. We had plenty of stereotype jokes in our household growing up, particularly about white people. Stereotypes alone do not really make you a racist. They make you human. It’s how strongly you hold onto a stereotype, and your willingness to give individuals the benefit of the doubt, that determines whether or not you deserve the label. By all means push back hard against true racists. But first, don’t jump to unproductive (for you) and incorrect conclusions about how many people out there really are racists; or convince yourself that your particular minority group’s stereotypes are so much harder to overcome than those of the many other ethnic and religious minorities that have faced prejudice throughout history.

But let’s jump back to the unfortunate above-mentioned fact: very few of my latino friends ended up successful. Why? Racism? Systemic discrimination? I’m sorry, but you won’t convince me of that. I will acknowledge that stereotypes are out there, and they do impact latinos at the margins, but my own experiences, observations, and reflections make it impossible for me to accept that the dramatic under-representation of American latinos in high-performance industries today is the result of them being discriminated against for being latinos. The gap is simply too large, reflected across numerous top-tier industries, and many of these industries are simply too competitive and lucrative for key players to ignore truly untapped talent being kept on the sidelines.

If you want to argue for strong, systemic discrimination against latinos, you’ll have to explain the very big gaps in outcomes between, say, Cubans and Mexicans. A reflective and honest latino can explain that gap very quickly. Cuba had a “brain drain” thanks to Castro. Mexico did not. Every major country has different strata with their own subcultures and attitudes, including about education, work, family building, and many other life factors. Mexicans certainly share a common culture, but a Mexican banker or professor has a very different attitude toward education than a Mexican laborer or restaurant owner. History and geography have caused Cuban immigration to the United States to select more for Cubans with values that help them succeed at higher levels of performance in an education and capitalism driven society, while Mexicans with similar values have disproportionately chosen to stay home, with their much more blue collar counterparts (with far less emphasis on academics) leaving to America.

You see this issue pop up between black Americans of recent African descent – like Nigerians and Ghanaians – relative to African-Americans with lengthy American histories, including with slavery and Jim Crow. Nigerian and Ghanaian Americans, and their children, are far more economically successful on average than other black Americans, including by some measures more successful than average white Americans. But just as between Cubans and Mexicans, any “racists” would have a hard time distinguishing them from appearances. Clearly this systemic discrimination narrative is more complex than some make it out to be. Immigration patterns have generated a “brain drain” from various African countries that selects for members of those populations with values that generate more positive outcomes.

Of course, this isn’t to pretend that the selection process of differential migration alone explains the full outcomes of different groups. Confucianism goes a long way in explaining why certain “Asian” cultures are obsessive about academic achievement for their children. China broadly cares a whole lot more about school performance than Mexico does (or anyone else for that matter). Talmudic history similarly explains the strong outcomes of Jews. Explaining Mormons is a little more complicated. But the general message is centuries of distinct history produce distinct cultures with distinct values that generate distinct kinds of performance in distinct environments. How many elite Chinese-American baseball players are you aware of? Culture matters. A lot.

So why is there such a disproportionately small number of American latinos in high-achievement careers? To give a full answer, it would take a day’s worth of conversations, and hours of writing. On a socioeconomic level, latinos in America obviously face barriers like higher amounts of poverty, poor schools, cramped housing, and all the challenges of being in the lower economic brackets typically reserved for recent immigrants. Regardless of what minority group you are talking about, these factors push down long-term performance.

Yet the data unavoidably shows that, even when controlling for socioeconomic barriers, certain groups still dramatically outperform others in school and long-term economic outcomes. It also shows that even in affluent environments, wide achievement gaps between groups persist, and are linked to parental educational engagement, expectations, and perceptions about how educational achievement impacts market success. There are even empirical studies demonstrating that among under-represented minority students, there is a negative correlation between high academic achievement and popularity among their same-ethnicity peers.

Do not interpret this as suggesting that economic inequality is not a serious problem in America. Without a doubt, it is. But the point here is that given the number of under-represented minorities “of color” who aren’t poor, and even attend decent schools, if poverty and weak schools were the main issues we would see much better representation of URMs in high-performance industries than we currently do. The fact that, on average, even middle and upper middle class URMs continue to reflect an educational performance gap, but that the gap narrows and even disappears for specific sub-cultures of URMs, necessitates acknowledging that something deeper is at play.

To ignore the reality of cultural values is to cowardly stick your head in the sand, and therefore never fully address the main source of the problem. American Latino culture (generally) heavily promotes short-term economic gain over the kind of long-term success requiring what’s often called “delayed gratification.” If you find a decent job right outside of high school (and even during high school) that can afford you a relatively nice car and possibly a modest home, your “network” as an American latino is far more likely to celebrate your achievement. If you grind out your high school years acing AP classes (having taken advanced classes in middle school), forgoing short-term economic opportunities in hopes of getting a BA and even a masters degree, you’re more likely to be called a coconut.

American Latino culture (specifically the culture of the strata of latinos who come to America, which is very different from Latin American culture generally), for all of the above-covered reasons having to do with history and immigration selection, disproportionately prioritizes blue collar and middle-class success over the long-term delayed training required to reach the upper tiers of high-performance professions. Where are the millions of Mexican parents who demand academic excellence from their kids? Largely in Mexico, where they are successful and have no reason to leave.

High-performance professions, like law, engineering, and medicine, are heavily oriented toward the kinds of skills that depend on long-term, compounding training and achievement. Unlike, say, marketing or sales, where someone with a natural gift could possibly not do that well in K-12 and still quickly absorb necessary skills for high-performance post-school, it is very hard to make up, in a matter of a few months or even years, for extremely weak math and science training if you want to be an engineer or doctor.

Heaven knows many universities try (and bless them for it), but they simply cannot waive a magic wand and erase a poor public education and home environment (culture) that failed to instill academic rigor over the course of over a decade, including during a child’s most formative years. They have made great strides in helping students with weak backgrounds “catch up” for middle class oriented careers, but the gap for top-tier achievement is simply too high. Think of what it takes to be a world class violinist. How many of them started training only when they got to university, or even high school? Virtually none. How a child spends their time heavily influences the performance level they are able to attain as an adult, especially in careers dependent on compounding skillsets with high-performance requirements.

Thus, these career tracks by their nature – a nature that has absolutely nothing to do with racial discrimination, mind you – heavily disfavor anyone who doesn’t show up to college with a relatively solid academic background. That means, disproportionately, American latinos (and also other subcultures, like rural whites in Appalachia). To really address this problem requires a lengthy, candid discussion about childhood, parenting, family structure, and cultural identity. Calling “the system” and its performance standards racist gets you nowhere.

Yes, certain groups do better than others in the system, but that’s generally because they better prepare children to meet the logical requirements of the system, with a home environment that emphasizes high educational expectations from an early age. Rather than pretending that reasonable and necessary meritocratic standards, which an enormously diverse set of ethnic groups and nationalities are able to succeed within, are “racist” and oppressive – a logic that has more to do with defeatist Marxist ideology than racial supremacy – we should be addressing the background sociocultural and educational reasons (originating in early childhood and education policy) why certain groups struggle disproportionately with the standards.

To be clear, one can reasonably acknowledge that the historical origin of the educational values of certain URMs is directly tied to oppression and lack of opportunity. This is certainly the case with laborers and low-income migrants from Latin America, where social mobility is generally worse than it is in the United States. Latin American laborers have, because of colonialism and its legacy, historically been denied access to viable education and thus, over generations, a distrust and skepticism of the real payout of long-term academic effort (and starting very early in that effort) became engrained in their values. Contrast that with China, where for centuries the entire basis for virtually all social mobility rested literally on a standardized exam administered to everyone. History matters.

But with all of that being said, even if oppression is the historical cause of cultural values that now generate underperformance, that doesn’t at all mean that today URMs are (on average) underperforming because they are academically or professionally oppressed. History can’t be changed, but culture can evolve, if we’re willing to be honest about it.

Acknowledging the cultural underpinnings behind educational performance gaps, and how they directly align with under-representation in top-tier industries, is not about blaming under-represented minority groups for their challenges. No one chooses the culture of their childhood, or the history of that culture, any more than they choose their parents or skin color. But acknowledging the issue, no matter how much certain misguided commentators demand silence, is essential for ultimately resolving it. In fact, the combative tendency to immediately shout down anyone as “racist” or offensive for sincerely raising these issues is precisely why discussion remains stuck in a phase of stale and exhausted, but easier-to-discuss ideas; like “trying harder” to find qualified candidates.

Now speaking even more narrowly for the audience that frequents this blog: why are there so few successful latino tech entrepreneurs? I’ve already explained part of the answer. As much as we celebrate people like Mark Zuckerberg and Bill Gates dropping out of Harvard to start tech companies, it’s worth emphasizing that first they still got into Harvard, and second they surely must’ve learned the skills necessary to start tech companies somewhere before getting to Harvard. Tech entrepreneurship is dependent on a compounding skillset that, again, filters out people whose childhoods failed to help them develop that skillset. Zuck and Bill didn’t learn to code during their freshman years.

But let’s put aside the compounding/technical skill issue for a moment, because there’s a more nuanced issue at play here, and it relates to the point I made when discussing my mother’s poor outcome despite her clear academic intelligence: success depends on technical skill but also, particularly in certain environments, on emotional/psychological resilience.

There’s a frequently cited John Adams line that I am going to paraphrase and somewhat modernize: people become farmers, so that their children can become merchants, so that their children can become professionals, so that their children can become artists and entrepreneurs.

What is this line telling us? That there is often a generational progression to career trajectories, and that progression is tied to economic stability, which itself is tied to psychological resilience and willingness to take risk. I can tell you, having worked with and observed hundreds of entrepreneurial ventures, your average tech entrepreneur is not coming from a low-income or even blue collar/middle class background. Zuck and Bill certainly did not.

It often takes a childhood environment that infuses a person with confidence about their family/network’s overall economic stability to enable that person to confidently take the enormous personal risk of becoming an entrepreneur; instead of going into a nicely salaried career. Wealthy kids are far more likely to grow up to become entrepreneurs, because they know that going “bust” doesn’t mean actually going homeless, but instead there’s an enormous set of resources there to serve as a parachute.  Kids with similar technical or “intellectual” ability, but with families living on the precipice of poverty, or at least with very few excess resources to manage a blowup, do not have that luxury.

This is not to say that tech entrepreneurs with wealthy backgrounds are not big risk takers. Most of their equally wealthy friends probably still went into consulting and other salaried jobs. But it is to at least acknowledge that having an affluent background dramatically subsidizes personal risk tolerance.

I do not regret for a second becoming a VC lawyer instead of becoming an entrepreneur. Neither of my parents had any substantial savings. In fact, I support my mother in her retirement, and most of the rest of my family struggles on a daily basis to even stay in the middle class (loosely defined). Unlike Zuck or Bill, failure in my case would’ve, quite literally, risked homelessness. I have met entrepreneurs who really did risk homelessness/poverty in starting their entrepreneurial ventures, but they are a far smaller minority than is suggested from the heroic “risk absolutely everything” stories one often hears in the media.

So I went into a career that made sense for my low-income family background/history. No regrets. I can guarantee you countless high-achieving latinos (and other minorities) make this exact decision on a daily basis. Startup? Sorry, I’ve got parents and other extended family to help out. I’ll take that high-salaried job I busted my tail and sacrificed for. Maybe my kids will have a better parachute.

Many high-achieving under-represented minorities simply do not have the luxury of parents, aunts, uncles, and cousins all with stable incomes and savings to provide them a parachute for an entrepreneurial adventure. Now, their kids might (see the John Adams line), but that’s why changing the long-term economic success of any broad group simply cannot be wished into existence. The most challenging forms of success take an entire childhood of compounding learning, and going even further, the very highest risk paths often take generational building of wealth and resilience.

We like to think of entrepreneurship, including tech entrepreneurship, as a very democratizing, equalizing playing field where anyone with the right motivation and persistence can succeed; but my honest experience is that today, in fact, it’s the opposite. High-achieving entrepreneurship takes a spectacularly rare and complex combination of analytical and technical skills, communication skills, social skills, and creative judgment about current and changing market conditions, on top of incredible psychological resilience. Rather than an easily accessible field for anyone who wants to play, modern hyper-competitive tech entrepreneurship represents the apex of human abilities, creativity, and endurance. We should not be surprised that, for most people, the necessary (but not sufficient) conditions for reaching that apex start well before adulthood; and include a childhood environment that supports high achievement.

Tying this all together: first, the compounding technical skill “filter” disproportionately impacts latinos (and similar groups) because cultural, not just socioeconomic, factors lead fewer of them to develop the compounding skills in childhood that make tech entrepreneurship (or many other high-performance careers) feasible. Second, for the disproportionately small number of them who still end up getting there, they are far less likely than other groups to come from the kinds of stable economic backgrounds that make high-risk paths like entrepreneurship attractive. Among under-represented minorities like American latinos, the “best and brightest” are, much more so than other groups (but certainly not always), drawn toward stable high-income professions and away from high-risk paths like startup employment and entrepreneurship. Now, let’s ask ourselves a hard question. How much of this unfortunate reality can actually be materially impacted by recruiters and investors in any short-term sense?

It takes time for the descendants of low-income immigrants to build the kind of economic stability and resilience that encourages very high-risk, very high-reward paths. Anyone expecting to actually impact long-term collective outcomes needs to face, head on and without unproductive outrage or finger-pointing, the fact that helping people meet the requirements of high-performance takes time. It also takes honesty about the cultural/behavioral values that build up children to face those requirements as adults. The requirements themselves, no matter how much we might wish otherwise, are not going to budge.

I want to see more “people of color” in tech entrepreneurship and other high-performance careers just like all other good, honest, progressive people. But I’m afraid that a segment of the community – either well-intentioned or not – has chosen to weaponize the issue of diversity in a way that is not only hostile and disingenuous, but counterproductive to its own cause.

There are historical, cultural, and socioeconomic reasons – all of which have been exhaustively studied – that explain why a disproportionately small number of people in certain ethnic/minority groups are able to achieve the high levels of performance and economic success attained by other groups. The number of high-performing candidates “of color,” in the sense we are discussing, is in fact smaller. Throwing the label “racist” around indiscriminately, and trying to guilt decision makers – like recruiters and investors – into hiring or investing in more of these candidates than realistically exist (today) can backfire. Dramatically. I’ve seen it happen.

I’ve seen very well-intentioned “diversity” accelerators created with much fan-fare and PR. But because they didn’t actually dig into the deep, complex reasons for the low representation of certain groups in their industry, and instead wanted quick and easy results, what actually ended up happening is that they promoted companies that underperformed and underachieved. The end-result? They very loudly and publicly reinforced the very stereotypes they were trying to break. Even more sadly, already successful/wealthy people, usually white, still get their PR and photo ops from these initiatives, while minorities are, once again, left holding an empty bag. On the most important issues, good intentions are not enough. Instead of stereotypes truly holding us back, we are foolishly incentivizing their amplification.

In the case of many mission-driven “diversity” venture funds, they’ll often amplify the idea that venture capital is racist or systemically discriminatory, but a quick glance at their portfolio makes it clear that they are sourcing and funding various kinds of businesses that do not generate true venture capital returns (but fulfill their mission). That they are choosing to fund other lower-margin, lower-scale kinds of businesses is great, and yet their claims that venture capitalists seeking high-scale, high-margin venture level returns are “racist” are still disingenuous.

The more exposed any position is to the harsh, unforgiving reality of the market, the harder it is to compensate for underperformance. This is why large organizations, like the government (including the military) have historically been the best environments for “affirmative action” type initiatives that acknowledged some preferential treatment of under-represented minorities, but are able to contain and address any performance issues with the “slack” of the large organization. Very high-performance, high-stakes positions, like startup entrepreneurship (and also complex law, by the way) unfortunately don’t have this luxury. If there are nuanced, complex reasons for why a disproportionately small number of latinos meet the requirements of medical schools, I doubt anyone wants to suggest we guilt and shame the schools into graduating more of them anyway.

Tech startups operate in the most performance-driven, cut-throat, “figure it out or die” segment of the economy. Unlike large organizations with many layers of staff and substantial buffer resources for training, bringing on anyone who underperforms risks catastrophic failure for a startup team. The reasons they underperform may be totally unfair: disadvantaged background, low-income, poor education, etc., but, again, customers don’t care. Can an NFL team afford to take into account “fairness” in whom they put on the field? No, and neither can startups. Once we clear out true discrimination, any attempts at increasing representation must involve actually improving the performance of the underrepresented groups.

The world of startups is one of the most culturally progressive environments I have ever encountered in my life. But it is also, by necessity, fiercely (even if imperfectly) meritocratic. This fact makes it quite “colorful” in terms of the full diversity of ethnicities and nationalities one encounters – hardly all white American-born men, but it also means wide performance differentials between groups are going to be unavoidably visible in outcomes.

The great “myth” of the tech sector, or really of the entire high end of the modern economy, isn’t a myth of meritocracy. Competitive markets make it very expensive to hire under-performers, or to discriminate against available talent. We have, perhaps more than any time in history, meritocracy. The myth is that meritocracy (alone) means equal opportunity. To the contrary, hyper-meritocracy puts an enormous premium on having a strong (socioeconomic and cultural) background that prepared you with compounding training, because you need to show up on Day 1 ready to perform. Meritocracy massively privileges having a good childhood, including a home culture that enables, from very early on, high achievement. Appealing to racism and prejudice among the decision-makers in elite institutions (including employers) isn’t necessary at all for explaining the wide disparities we see in our increasingly meritocratic market economy. The problems aren’t post-college, but pre-high school; going as deep as early-childhood development and parenting.

The fact is that, in the United States, equal opportunity largely stops at who your parents are. Relative to other developed countries, America is particularly egregious in how little it does, especially in early childhood, to prevent young kids’ educational trajectories from becoming extremely dependent on the private initiative (and resources) of their parents. Meritocracy ensures people are measured by the skillset they bring to the market, but without additional public policies it does nothing for the kids who aren’t born into families that, from a very young age, help them develop their skills so that they benefit from the kind of long-term compounding that produces very high-performing adults. Some of those kids start to take control of their educations around high school when they begin thinking about financial independence as adolescents, but by then high achievers have had a 5-10 year head start. The nature of compounding is that gaps widen over time; they rarely close.

Promoting diversity in tech entrepreneurship and startups is an extremely noble and good goal. I support it. Wholeheartedly. But for the love of God, let’s please be honest, decent, and smart about it. If we’re honest, we’ll first acknowledge all of the nuances and complexities – some of them clearly uncomfortable – about the background sources of the problem. We’ll also acknowledge that extremely competitive industries – like venture capital – are heavily incentivized to look for and exploit “undervalued” talent. Literally hundreds of funds, many of them led by people hardly from the kinds of backwater places simmering with racism, are all competing to the death to find successes. If they still are not substantially moving the needle on finding numerous tech ventures led by teams of underrepresented color capable of generating venture returns, maybe racism isn’t the real problem.

Second, if we’re decent about it, we will not play this unfair game of simply looking at a team or portfolio, finding that there’s no one “of color” on it, and throwing a racist label at someone. We will stop weaponizing diversity. Many recruiters in certain high-performance industries know how much extra effort it can take to find truly high-performing “diverse” candidates. It is not because they do not exist. It is because they, for all of the discussed reasons, are in shorter supply; and because they are in shorter supply, they get taken up by employers with the best brands and compensation packages. When a particular A-level firm – whether it’s a law firm or a venture capital firm – loudly promotes their “diverse” roster, it does not mean every company with less “diverse” rosters is full of racists. It means that in a market increasingly looking for these scarcer candidates, those with the most “pull” (better brand, better pay, lower risk) are able to win, and those with less pull lose. In many cases “inclusiveness” has absolutely nothing to do with it.

This last fact is a real problem with arguing simplistically that “more diverse teams outperform.” Of course if you hire meritocratically from the broadest pool of talent (including all ethnicities and international talent), you are going to get more high performers. If we count the full spectrum of ethnicities and nationalities, together with gender diversity, in “diversity” (broad diversity), the argument that diversity improves performance is almost certainly accurate. It’s the story of American immigration and outperformance. Even Silicon Valley is extremely “diverse” in this sense. Bigger talent pool, more meritocracy. But people who use that data to then justify weaponized diversity initiatives for specific under-represented groups (narrow diversity, just URMs) are engaging in a sleight-of-hand with the term “diverse.” There is no data suggesting that early-stage founding teams comprised of those specific groups outperform.

If we expand the discussion to later-stage teams hiring employees (not entrepreneurs or senior executives), the causation between “diversity” (in the narrow sense of URMs only) and performance can easily run in the opposite direction. The highest performing companies raise from the most prestigious funds, pay the best, and are able to absorb the high-achieving under-represented minorities in the talent pool. Because high-performing URMs are, for the discussed reasons, in more limited supply, lower performing companies have fewer to recruit; thus top companies are more “diverse”, and lower-tier companies are less so.

All of these attempts at using misapplied data to force overly-aggressive hiring of under-represented minorities are at best unhelpful, and at worst disingenuous; and they distract us from addressing the real problems behind under-representation. I cannot stress this enough: our unwillingness to openly talk about the uncomfortable reality, and instead continue with the same “we just need to try harder at ending racism” stories, is exactly why we are making so little progress.

Relatedly, the weaponization (and in some cases monetization) of diversity heavily incentivizes tokenism. As long as I can secure enough people who, from outer appearances, check the “diverse” box, I can move on and totally avoid actually addressing the systemic issues that demonstrably disadvantage certain people over others. For example, many latinos at elite universities are the children of doctors, lawyers, and executives, from stable homes and private prep schools. Are these really the “diverse” candidates we want to pour substantial resources into helping? Does a Jose who summers in the Hamptons and got a BMW for his 16th birthday bring “color” to your workplace in the way diversity initiatives intend? Maybe. But if that’s what we really want, let’s be honest and open about it. Filling your workplace or portfolio with people from objectively affluent and privileged backgrounds, who nevertheless have the right names or skin tones, feels different to some of us than really putting in effort to level the playing field for people facing real structural barriers.

Finally, if we’re smart about diversity in high-performance areas, we’ll acknowledge how important patience is. Instead of pretending that a few well-intentioned initiatives are going to suddenly erase decades and even generations of differences with compounding effects, we’ll start going after long-term policies that will really change the landscape. Policies like:

-equalized public school funding and school choice
-funding for schools to engage with low-income homes and communities on educational culture
-public daycare and pre-K
-criminal justice reform
-public funding for healthcare, including mental healthcare
-social and economic support initiatives

Evidence is mounting that the charter schools most successful at breaking cycles of poverty, and closing the early achievement gap of URMs (which widens over time when left unaddressed), are those that go well beyond educational instruction; directly engaging with parents and households to instill a culture of high educational expectations. Achieving results requires intervention into household environments, and that requires letting go of our misguided and self-defeating fears of discussing family cultural differences.

Recklessly and indiscriminately warmongering over diversity is the business world’s equivalent of breaking windows and looting. The anger and frustration over the slow pace of results are understandable and worthy of empathy. And yet angrily pointing fingers at people who are sincerely trying to improve an issue that they really did not cause, and in truth are very limited in their ability to quickly fix, is counterproductive. If we push them to promote candidates who truly are not ready, the resulting underperformance will not only ruin the confidence of people who otherwise might’ve had very positive outcomes in a more appropriate environment, but it will also harden stereotypes that we should instead be, strategically, weakening.

For too long we’ve allowed discussions of diversity in tech and other high-performing professions to be hijacked and unjustifiably dominated by those who want us endlessly distracted by searching for racism and systemic discrimination as the supreme, seemingly supernatural explanation for all our challenges; and who at times see a profitable opportunity in that distraction. Their often vitriolic refusals to even engage in respectful substantive discussion about other explanations, and other solutions – including long-term policy solutions – are, unfortunately, a significant reason why our community is stalling in its progress.

I’m thankful every day that the decision-makers I encountered throughout my life didn’t just see “a latino.” They didn’t see a stereotype to be quickly discarded, nor a token to be pushed in directions driven by a political agenda. They saw Jose Ancer – a specific kid with some challenges but also some abilities – and gave me a shot at showing what I could really deliver within the background and life I was actually living. We should want nothing less for every single child that enters the school system, and adult that enters the market. How many individual people are we failing to objectively help, because we are paralyzed by grand theories chasing rushed collective goals that have never been feasible on any short timeline?

Results over misdirected rage. Equal opportunity over unrealistic expectations of quickly equal outcomes. But getting there requires all of us to talk honestly, empathetically, and carefully about the real issues, without demonizing those who sincerely feel like we are spinning our wheels. That’s the only way we will finally get past the anger and frustration that understandably result from misguided quick fixes that ignore the complexity and depth of the challenges.

I want to see, on top of the public policies that directly address the social and economic challenges of poverty in America, an environment in which every young latino can throw him or herself into whatever subject they want, and make long-term sacrifices to succeed, without facing labels like “coconut” or other counterproductive messaging from other latinos that children from other ethnic backgrounds simply never have to face. We absolutely know how to work hard, but as it relates to high academic and business achievement, we too often celebrate working on the wrong things, and wait too long to correct course.

Without a doubt, let’s ensure we’re rooting out whatever racism and non-meritocratic discrimination that exists in our high-performance industries. I’m sure some does, though we too often exaggerate (dramatically) its explanatory power for disparities in outcomes. Importantly, we also shouldn’t deny the personal responsibility necessary in our own communities to evolve our identities so that no child is ever forced to choose between high achievement and culture. In doing so, we must not forget to support socioeconomic and educational public policies that can legitimately level the playing field for everyone.

The evidence is nevertheless quite clear that no amount of public policy or reconciliation over historical injustices will ever replace the profound, long-lasting impact of private household cultural values, including about education and long-term training, on the performance level children are able to reach as adults. Sometimes the very hardest problems are the ones that no one else can fully solve for us. Yet at the same time, there can be hope in realizing that many of the long-term solutions are much more in our control, and we don’t have to wait for outsider heroes to be our saviors.

It’s time for the most honest among us to demand that the level of diversity discourse be elevated and civilized; above the yells and sand-pounding of those who continue pretending that the key to increasing true high achievement in our community lies in another inclusiveness seminar, another infantilizing apology from a colleague, or another lecture from self-appointed “experts” on our universal, never-ending victimization. The truth is that it lies far closer to our communities, our families, and our homes.

On a closing note, I was careful to keep this discussion personal, and about my own experiences as a latino. I don’t pretend to speak in any way for other minority groups; and certainly not for the black community, which has faced a very different and legitimately harsher historical reality in America. I cannot pretend to know what it is like to be a black American, or to fully understand the incredibly justifiable outrage sparked by George Floyd’s murder. This essay was not at all about police brutality, for which there is seemingly limitless evidence, or well-documented racism and discrimination in segments of society outside of tech entrepreneurship and other high-performance career paths. It by no means is an argument that we live in a perfect, fully meritocratic world; but rather a personal observation and reflection on whether we are completely missing the mark on the real reasons – or at a minimum, the most impactful reasons – why certain groups, like American latinos, remain so under-represented in the very high-performance, high-risk world of tech entrepreneurship.

I do hope, however, that some of my thoughts might be helpful for other people of color to assess and chart their own paths on the issue of diversity, and what changes they hope to effect in the market. I hope we will no longer allow legitimate voices and perspectives to be silenced in favor of the same mono-narrative that wastes precious time and fails at delivering durable results. Anger and frustration can be fuel for enormously productive action, but only if we channel them in ways that truly hit the source of a problem; even if that source is more complex and uncomfortable, and less responsive to simplistic outrage and politicization, than we want to admit.

Legal Office Hours for Remote Startups

TL;DR: I’ve become particularly interested in, and connected to, the distributed/remote startup ecosystem; and decided to throw in a few hours of my time each week to support new teams growing specifically under that model via free virtual office hours. Info on that is near the end of the post.

Over the past several years, I’ve become fascinating with the idea of a startup ecosystem largely detached from geographic constraints, with companies recruiting talent based on fit and merit, regardless of where they live. For years I lived in the Hill Country outside of Austin, barely ever working from the firm’s downtown office because I just didn’t see a need to; and my clients didn’t care. Highly regarded Startup Lawyers don’t really need to spend much time in coffee shops or conventional offices. All they really need is a solid internet connection. Sidenote: I think Elon Musk’s StarLink (high-speed broadband anywhere) could be a game changer.

As my family – particularly my wife, who grew up in SoCal – realized that my growing client base didn’t care at all about my physical location, their willingness to continue putting up with Austin’s mosquitoes and deadly snakes (big problem outside of urban core), humidity, horrible traffic, decidedly limited outdoor beauty (save for a lake) and seemingly endless scorching summers (Mid-May through mid-October really sucks) reached a breaking point. Austin is an amazing and thriving city for many reasons, but it is not for anyone who likes needs the outdoors. No city is for everyone.

Because my wife and I had already decided to homeschool our three young kids, we had almost total freedom to pick a destination; and ultimately we landed on living near the mountains about an hour outside of Denver. Amazing weather and mountain views, literally limitless outdoor recreation, and a short flight or road trip to almost anywhere we needed to go. And yes, still rock solid broadband so I can close deals and work with clients just as easily as I did before. Little did we know that with both “homeschooling” and “remote” work, we’d started riding waves that would suddenly turn into a massive tsunami because of a pandemic.

I bring up this background to highlight how escaping the “tyranny of geography,” and the growing comfort with distributed startup teams, is not just an intellectual curiosity to me; it’s a core part of my life. When we’d announced that we were leaving Austin, there was no shortage of people who thought I was absolutely nuts and lighting a match to my legal career. They didn’t know I’d already been living in “the Texas countryside,” with a thriving ECVC client base and firm, for years. If my clients – all scattered across the U.S. and world – didn’t care that I was living on acreage in the Texas hill country, I knew they wouldn’t care about my living in the mountains of Colorado.

As our own adventures with remote/distributed work have continued, I’ve watched the broader ecosystem of “remote” startups mature as well. The number of companies using a distributed team, with few if any people in the Bay Area, has grown exponentially over the past 5 years or so; and we’re also increasingly seeing institutional investors who are happy to “venture” outside of their local markets in search of high-potential businesses that aren’t on the classic Silicon-Valley style VC circuit. Suddenly the distributed startup ecosystem has moved from a fringe quirk to a desirable asset with distinct competitive advantages.

But there’s one distinct disadvantage of “remote” startups that I keep seeing come up over and over again: they don’t connect as easily with serious lawyers. Most ECVC (emerging companies and venture capital) lawyers are still heavily tied down to local geographies, particularly the Bay Area. Strong teams in non-traditional markets often end up either using nearby lawyers who are totally lacking in the appropriate expertise/specialization, or they just wait until their investors happily “recommend” their favorite $1,000/hr Bay Area lawyer whose firm represents Uber and Apple. People who read SHL regularly know that I’ve discussed ad nauseam the deep problems (conflicts of interest) with using your investors’ pet lawyers; and also how the Bay Area market often promotes norms/practices (“unicorn or bust”) that are a poor fit for “normal” startups.

As I’ve been living through this pandemic and watching the growing zeitgeist around distributed startups, it occurred to me that I’m in a place where I could contribute some of my time to supporting the ecosystem. So I’ve decided to allocate a few hours of my time each week to free virtual “office hours” specifically for distributed teams outside of the Bay Area. We can spend, via a phone call or Zoom, up to an hour talking about any legal/strategic issue on the team’s mind: formation, founder relationships, fundraising and structuring, governance, hiring, etc. No expectation of billing or future engagement. I really just want to get more visibility into how this growing ecosystem is evolving, and how existing market players can help it thrive.

My personal thesis is that America’s size and unique geo/climate diversity is an enormously under-utilized asset in tech. Why should entrepreneurs and employees be forced to live in a handful of narrow, crowded, and increasingly over-priced concrete jungles when there are an endless number of beautiful, affordable, perfectly livable places that need high-potential residents but just don’t have the “tech” base to employ people locally? Because of some nonsense about the importance of “body language” and regular in-person meetings? Please. I think this pandemic is not just helping everyone realize the superficiality in some of their assumptions about remote work, but about a lot of virtual interactions: education, healthcare, and even connecting with the investor community.

A secondary thesis of mine is that the more geographically diversified a startup team’s network becomes, the less exposed they are to local startup power politics. Every geographically constrained ecosystem has organizations that have consolidated a level of influence/control such that it can feel like you need to kiss a brass ring in order to access resources you need. That dynamic is the opposite of what a real ecosystem should be; a decentralized resource where no single player can play gatekeeper and extract more value than their own value-add really merits. Promoting a more distributed startup ecosystem reduces the influence of overly self-interested power players, and enhances the kind of transparent meritocracy that helps teams access the right people with minimal wasted time.

Startup ecosystems are ultimately about relationships and people; not about artificial city or state borders. It’s time we talked more about the American ecosystem, and freed entrepreneurs and talented employees to work and live wherever is best for their companies and families. In the process, we’ll spread economic opportunity further across the country, and reduce many of the ills that have resulted from cramming people into too few of cities with not enough space and resources to make “living” affordable and accessible.

Info on participating in virtual legal office hours for remote/distributed teams:

My bio: here.

E-mail: [email protected]

Criteria (please explain in intro e-mail how you meet the below):

  • HQ is not in the Bay Area
  • You already have, or expect to have, a distributed team. Not a 1 or 2 people that you “let” work remotely, but a full orientation around enabling remote work such that no one outside of whatever you might call “HQ” is disadvantaged in opportunities, because the whole team is included in events/meetings.
  • The market you are going after has a credible shot at producing an at least $50 million (enterprise value) business.

This isn’t any kind of formal program with a hardened schedule, because my own availability varies day to day with deal/client work and firm admin, and I’ll scale my time allocation up or down as the number of teams fluctuates. Looking forward to getting to know new teams that reach out.

Burnout, Depression, and Suicide

Background Reading: Founder Burnout and Long-Distance Thinking 

This is going to be another personal post; less about how to close a financing or avoid legal issues, and more about the bigger fundamental issue of life outside of work. Because if you think what happens outside of work doesn’t heavily influence what you achieve at work, you’re clueless. Please move onto another SHL post if you want Startup/VC law advice.  This post is prompted by the very unfortunate passing of Anthony Bourdain, whom I admired as a voice of authenticity in a world that sterilizes and bullshits far too much.

Depression and suicide are two things with which my bloodline is far too familiar. Since I was a young kid – watching family members lock themselves in rooms for days and weeks in the dark, and openly discuss swerving their car into oncoming traffic, sometimes while I was in it – it’s been at the top of my mind.

Despite my many faults – my wife of 10 years is always happy to provide a list – one thing I know I’m good at is being observant. I watch people very closely, and pick up on patterns and subtleties that others miss.  As the old saying goes: the wise learn from the mistakes of others, the smart learn from their own mistakes, and fools never learn.

Another thing I’m particularly fond of is what I call asking the “meta question,” meaning trying to separate symptoms from the disease, and talk about the root cause of something. Because far too often people get caught up with trying to band-aid the symptoms of something, without digging deeper and probing into fundamentals.

What’s absolutely crystal clear is that suicide and depression are way up in America. It is clearly a paradox, given that on many objective metrics, life has never been better: life expectancy, technological advancement, overall wealth, homicide/major crime rates, gender equality, etc.

The standard reaction to this rise in depression/suicide is to focus on mental health. If we just had more infrastructure for affordable therapists and anti-depressants, all would be better. But that obviously misses the bigger historical point. Life was, on many levelsway harder even just 50 years ago, and we didn’t have an army of public therapists then; yet depression and suicide were less prevalent. Clearly there is a meta issue here worth discussing.

To share my thoughts and observations on the topic, I’m going to first list out a few concepts that I’ve picked up over the years from reading, education, having good conversations over coffee, etc.:

Maslow’s Hierarchy of Needs – This is the idea that as peoples’ more physiological needs are met (shelter, food, etc.) and become less of a top-of-mind concern, their psychology shifts to prioritize “higher” needs, like love, belonging, art/beauty, etc.  People who grow up in more stable, loving environments (or societies) tend to be more open, creative, and communal, but that can also result in being more sensitive and emotionally vulnerable.

Specialization v. Generalism – Economic development inevitably leads to human specialization. People in rural communities are often decent at a lot of things, and more self-reliant, because they have to be. They’re also poorer. People in advanced markets tend to have much narrower, specialized skillsets, which they then sell in the market to earn surplus income to buy everything else.

Grit – The idea that exposure to hardship/struggle can build mental resilience, in the same way that exposing muscle to pressure makes it stronger, as long as it doesn’t go so far that things start to break. Moderate stress is good. Too little or too much is bad.

Dopamine v. Serotonin  – D and S are neurotransmitters. Without getting too bogged down in details that I certainly will botch, D is largely the “desire/drive” brain chemical. Heavily involved in addiction. Serotonin is heavily involved in calmness, satisfaction, a feeling of fulfillment. D and S have a tension with each other. If D overruns things, S decreases, which leads to depression.

Higher Pleasures v. Lower Pleasures – In the way that complex carbs are longer-lasting while simple carbs are often tastier but shorter-lasting, lower pleasures tend to be activities in life that are thrilling, fun, and even memorable, but don’t have much of an on-going positive effect. Lower pleasures drive dopamine. Higher pleasures, on the other hand, tend to be less thrilling, and in specific moments may actually be difficult/painful, but they have significantly longer-lasting positive impacts. Lower pleasures tend to cost you mostly money. Higher pleasures tend to cost you mostly time, but increase serotonin.

Traditional Culture v. Market Culture – Culture is largely the set of narratives and values that swirl in our brain to tell us how we should live, our role in the world, and the underlying purpose/meaning behind it. Many moderns dramatically under-appreciate the complexity and nuance in how culture plays into life satisfaction and progress.

Without culture, humans are just advanced monkeys. Traditional culture is the accumulation of centuries of slow-changing values and life-structures interacting with history, human psychology, social dynamics, etc. Market culture is the result of marketing/advertising messaging, often informed by PhDs in psychology and neuroscience, nudging people to engage in activities that ultimately maximize economic growth for someone.

Bottom-up Organic v. Top-Down Theoretical – There are two ways that cultural values, systems, and ideas in general emerge. A bottom-up “organic” approach starts from the ground, interacting with all the nuances and variables of reality, and iterates “upward” over time to arrive at an equilibrium.  A top-down structure starts with logic or theoretical principles, focusing on a kind of abstract consistency, and then imposes itself “downward” on reality. Organic emergence is messy, iterative, and often slow. Top-down is “cleaner” and more consistent, and usually faster. But also more prone to extreme errors. Traditionalists (at least those who aren’t dogmatic) tend to favor organic emergence of ideas. Intellectuals tend to favor the top-down.

Individualism v. Communalism – The free market pushes individualism as a primary value, because it maximizes economic growth. The more differences we can parse out among people, slowly nudging them to like different things, pursue different paths, the more things we can sell to them. It may feel like “discovering yourself,” but there’s a lot of outside nudging involved. Communalism, on the other hand, emphasizes similarities and long-standing histories between people. It’s driven by more traditional value structures, which focus less on peoples’ economic outputs, and more on their deep relationships to one another. It also is more constraining on individual freedom/choice.

Age-Mixing – Somewhere along the way, society got the idea that it’s better for everyone if people of the same age spend all of their time with each other. I suspect industrial-age schooling, and the efficiencies of standardizing education, are partially at play. Yet the evidence is clear that age-mixing produces significantly better outcomes on a psychological level. When you age-mix, older people (including older children) learn responsibility and empathy, and how to teach the younger. They also feel more “needed,” which gives life a sense of meaningful purpose apart from their market value.

And the younger benefit from the longer-term perspective of people who’ve “been there” and know how life progresses, instead of just being focused on immediate wants/needs. When people fail to age mix in their lives, they tend to be more hierarchical, competitive, myopic, and neurotic.

Ok, that’s a lot, and it took a while. But hopefully at least some of the concepts were enlightening. Now, using those concepts, here are my own personal observations/thoughts from my own life, my family’s history, and observation of others regarding the “meta” question of why society is so much more depressed and suicidal:

Affluence has taken away a lot of the hardship and struggle that once was a defining feature and motivator of people’s lives. Obviously, this is not necessarily a bad thing. I know so many people today whose life largely boils down to specialized work and leisure. They do one narrow thing that someone pays them for, and they buy everything else, so that they have “free time” to do things they enjoy; which usually involve seeking entertainment in the market. Specialization obviously makes people wealthier. But is there a point beyond which it makes people less happy?

Now you can order any meal you want on Uber Eats, and it’ll be delivered right to your door. That’s fantastic. It’s efficient. But what if the act of cooking, and even the act of picking out ingredients has some deeper psychological benefit that we missed? Now we can Lyft or drive to wherever we want, but what if the act of walking does something for us that we missed (and I don’t just mean burn calories)?

Market economics (and culture) says to specialize. Only do what has the highest market value, and you can just buy everything else. But traditional culture says hyper-specialization makes you fragile. You may become wealthier, but you also become less self-reliant and therefore more dependent on the market. And the idea that everyone should just do one narrowly defined thing, and then seek “entertainment” the rest of the time, is a speck in humanity’s evolutionary history.

Is the person who works their own garden and cooks on the weekends  just wasting their time on inefficient activities? Should the person who works on their car in their garage just stop wasting time and send it to a mechanic? Maybe. Or maybe there’s something more there than top-down market theory can grasp.

Social revolutions told people to throw away traditional, organic culture and “be themselves.” Modern “top-down” market culture then filled the void. The idea that you are born with some inner core “you” that you must discover over time, free from the influences of everything external, has a very romantic sound to it. It’s also totally false, or at best extremely incomplete. “You” are heavily a by-product of your environment. You don’t “free” yourself from culture; you simply adopt one over another.

So as age-mixing gave way to age-sorting, and people stopped taking advice from grandparents, family, traditions, etc., the market was there to fill the void. But the values of the market are top-down and profit-driven.  When a grandparent tries to teach their grandchild about life, one can assume that in most circumstances the child’s long-term well-being is an end-goal. When a market actor teaches a child something, there can be any number of other incentives; often tied in the end to economics.

Remember that organic, bottom-up progression involves slow evolution; strongly path-dependent on the past, which is assumed to carry a kind of underlying wisdom/understanding that is perhaps difficult to articulate, but is nevertheless there. On the other hand, top-down progression is about intellectual consistency with some defining value structure, like freedom, or fairness.

Older generations had their views on family, life roles, responsibility, money, work, and they were the product of slow evolution over time, integrating feedback from history’s experiments and mistakes. They had their problems, for sure, but evidently large-scale depression and suicide was not one of them. Then social revolutions came in and demanded corrections, many of which made sense at a theoretical level, and were amplified by market incentives. But top-down theory breaks down when it hits messy, multi-variate reality.

Without getting too bogged down in specifics, there is a meta issue here: a theoretical framework that hyper-emphasizes individuality and freedom may be more productive economically, and intellectually “purer” but it breaks-down, or at least reveals fundamental flaws, when it hits the reality of human psychology; which evolved on older, more organically evolved values.

Modern market culture pushes us to pursue things that lead to greater economic activity (dopamine), while neglecting those that may actually make us happier (serotonin), but can’t be monetized.

There’s a better job for you in another state. Go, pursue “your” dreams. You can visit your parents, childhood friends, and cousins on holidays.

If you have kids now, you’ll get “tied down.” You can always have them later (maybe…). Build your career. Travel the world.

Why are you wasting time cooking for yourself? Bill a few extra hours, and have the food delivered.

Your parents’ and grandparents’ views on life are out-dated. “Be yourself” and “follow your own path” with your peers, who largely feel the same.

Apologies to my millennial friends with romantic notions about how the “experience” of travel “expands your mind” and is “life changing.” I love traveling too. But that doesn’t mean I don’t recognize really good marketing when I see it.

There’s a big difference between what makes you wealthier, free-er, or more “empowered” (abstract concepts that, conveniently, have a way of increasing GDP) and what actually makes you – advanced monkey with a brain evolved over millennia – happier and more resilient.

The market’s individualism (liberating, but cold and detached) and traditional communalism (constraining, but warm and connected) are competing goods that need to be balanced. We are sucking at that balancing. 

It is much harder to balance competing goods than to simply let one take over our lives, even if the former is far better for us in the long run. When virtually all of the messaging/reinforcement in our environments supports only one side (because that’s the side that literally pays for messaging/reinforcement, including advertising and our educational infrastructure), that’s where so many of us end up.

Individuality, freedom, and financial wealth (all quintessential American, market values) – “following your own path” “pursuing your dreams” “not getting bogged down” “crushing it” – are real, valuable things. They’ve all played a key role in my life, for sure.

But the happiest, most resilient people I’ve known (men and women) have never “bought” fully into the market ideology (and it is ideology) that they are the be-all end-all of life. They understand that what’s old may be flawed and constraining, but if it’s old, that means it’s lasted. And things last for a reason; even if that reason isn’t easy to explain or fit within a theoretical framework. Freedom, empowerment, etc. are surely valuable. But so are durability and longevity; in other words, life paths and values that have been proven to “work” in the long-run.

As another old saying goes, winning is not the same as winning an argument; not even close.  The human brain is not designed in logic.  There’s no reason to expect an optimal human life to be either.

So if someone asks me for my thoughts on depression and suicide: sure, more therapists, discussion, and anti-depressants; certainly for the specific people who need emergency help now. But the meta-answer is to ask deeper questions about humanity, and to start questioning the life values that have been sold (and I do mean sold) to us; no matter how much we think they are supreme. Because we’ve clearly broken something, and it’s worthwhile to look back and examine a time when it wasn’t broken. 

Founder Burnout and Long-Distance Thinking

TL;DR: “Life ain’t a track meet; it’s a marathon.” – Ice Cube

Related Reading: Burnout, Depression, and Suicide

I’m prone to deep thinking about life. It’s why I quit the honors program in a great business school within weeks of entering college, and switched to Philosophy (adding Economics later). Best career decision of my life. No offense to the business school grads out there.

I’ve always had this feeling that people devote far too much brainpower toward things that ultimately amount to nonsense, and yet things that are infinitely consequential – like what you want to do in life, where and how you want to live, whom and when to marry, whether and when to have kids – people seem to either follow a script, or just let their surrounding culture/peers push them in the direction of the current zeitgeist. And the truth is, the zeitgeist doesn’t give a shit about you. Slow down, and think it through. You get one shot.

And instead of asking your friends, ask people who’ve gone the distance. It’s well documented culturally / sociologically that spending all of your time with people your own age leads to all kind of mental dysfunctions and myopic thinking. The only way to get real perspective is to listen to other perspectives, and that means age / generational diversity.

A lot of the advice out there on founder burnout amounts to a kind of checklist on health and wellness. Let’s go ahead and get that checklist out of the way:

  • Sleep – Don’t delude yourself into thinking that pulling all-nighters and not hitting your 7/8 hour a day quota will make you more productive. It won’t. The data is clear.
  • Exercise – Same. Go for a run. Lift some weights. It’s not time wasted. Again, it makes you more productive.
  • Eat well – Eat shit, and you’ll feel like shit. Read up on carbohydrates, insulin, inflammation, and energy. You’ll learn some things.
  • Delegate – Build systems, and then hand those systems over to other people. If you can’t figure out a way to scale your skills, you will fail at life and at work.

But in my opinion, and from what I’ve observed among certain entrepreneurs, there’s a deeper, longer-term issue at play regarding founder burnout (and life burnout in general) than just getting overworked and not taking care of your body. The best way I can explain it is using some old school philosophy concepts: higher and lower pleasures.

Speaking very generally, lower pleasures require constant replenishment, because the feeling they generate just doesn’t last. They’re the “simple carbs” of life. Sex, drugs, and rock n’ roll are the typical go-to’s when someone wants to explain lower pleasures, but lots of cleaner forms of activities in life fit this category. Once they’re over, all you’re left with is a memory, and a desire for another one.

In contrast, higher pleasures have a kind of lasting effect. They have staying power and can bring satisfaction to life even when you’re not at the moment “doing” anything about them. Long-term friendships, love, family, and a sense of meaningful (not just financial) achievement are all classic examples of higher pleasures. They can be entertaining (or the opposite) and take up your time, but that time is a kind of investment toward building something that carries you forward in life, and is still there when you’re in your 40s, 50s, 60s, and later. David Brooks wrote a good op-ed called The Moral Bucket List that is worth reading.

The deeper kind of life burnout that goes beyond health/wellness results from years, or even decades, of failing to build durable “higher” pleasures into your life. You can ensure that you’ve slept enough, exercised, eat well, and have built a great management team, and yet at 40, 45, 50, find yourself sipping martinis on Christmas Eve, alone, or with someone who means absolutely nothing to you. That end-result really burns, because there’s no checklist for resolving it. Fail to build/invest into things in life that last and will help you really go the distance, and it can eat you alive in the long run.

When asked by young law students about how to vet law firms for employment, I’ve always said to look at the older partners, and watch/listen very closely. Look for divorces, kids in therapy, anger management issues, drug addiction, alcoholism. In the legal profession, and in all areas full of high performance personalities – including entrepreneurs – they’re everywhere. People who treated life like it’s a track meet – narrow your vision and run as fast as you can – when it’s really a much longer, much more intricate marathon.  Rock stars in their earlier years, but they failed to go the distance.

So my personal advice to ambitious entrepreneurs about preventing burnout long-term is, yes, sleep, exercise, eat well, and delegate, but also build a real life, not just a company. Emphasis on the word build; as in, activities that contribute to relationships and things that will be there tomorrow, and next year, and a decade later, when you’re a different person, with different priorities. Look ahead, and plan for the distance.  Most of the people around you telling you to just “keep hustling” care more about your stock than they do about you personally, or are themselves ignoring how long the marathon is.

Look for mentors who’ve built their own companies, but while maintaining a sense of balance (even if loosely defined).  Even if zen-like balance isn’t really achievable, the simple act of trying hard to achieve it will ensure you land somewhere sustainable. Like a speed limit, you know you’ll break it, but it’ll still help pace you.  

Think things through, and spend some of your time really building a life, apart from your company. The building may take longer than just narrowing your goals and running as fast as you can, but the end-result will be something much more durable. 

Why I left a big law firm, but not BigLaw.

While I’ve devoted the majority of this blog to providing free resources on startup law and finance to startup entrepreneurs, I occasionally take the time to write about the economics of law firms and why entrepreneurs would be wise to understand it at a high-level.  This post will start out with a historical summary of positions I’ve taken on the subject, with links to applicable posts, and then branch into my decision to move my own practice and clients to a new type of firm – not BigLaw, but not quite traditional BoutiqueLaw.

  • The Economic Deflation of Startup Law – Early stage startup law, much to the benefit of entrepreneurs and top-tier lawyers, has become increasingly automated and commoditized. The end result is a form of “freemium” law practice, where (i) entrepreneurs can obtain quality representation for very little money, and (ii) quality lawyers can, thanks to automation, engage entrepreneurs early on without having to discount fees, defer, or any of the other old-school ways of obscuring the cost of legal services. Low-quality or narrowly focused “cottage” lawyers will struggle because their bread-and-butter work will have little to no margin, while higher-tier lawyers will thrive on their pipeline of later-stage, funded clients, which cross-subsidize early-stage work.
  • In Startup Law, Big Can Be Beautiful – Breadth and scalability are absolutely essential to the proper representation of a startup, and large firms have historically been where to get that.
  • Integrated Startup Law – Specialists Matter – Technology startups do not need and should not want unscalable, narrow “small business” legal representation. By their nature, they will need a broad set of legal specialties – Tax, Labor, IP, Regulatory, etc. – along the course of their business cycle, and failing to choose a firm at the beginning that can efficiently coordinate all those specialists will become a big problem. The analogy to healthcare is important. Also see – The Cost of “Staging” Your Startup Lawyers.
  • The Ad-Hoc Law Firm – The ability of networks of small law firms to coordinate efficiently will allow for (i) the replication of BigLaw’s breadth and experience, without its overhead and inflexibility, and (ii) the scalability that boutique firms alone can’t provide.

Nutshell Summary: BigLaw offers experience and breadth, but is largely over-priced and inflexible. Boutiques are cheaper, but often narrow and incapable of truly scaling, and their work is being commoditized.

BigLaw Beginning

So in my own career, I started out at a big firm with a group of fantastic lawyers whom any startup would be well-served by, but I increasingly butted heads against the firm’s (separating the lawyers from the institution is important) policies, including (i) IT policies with respect to new technology that needed to be adopted, (ii) billing policies around how to charge startup clients, and (iii) personnel that simply didn’t want to do things differently and weren’t incentivized to care anyway.

Your Boutique Can’t Scale

I watched the market, and had some overtures from boutiques in the area, but every time I came away underwhelmed:

  • Lower Pay, Lower Lawyers – Often the boutiques had very low rates, but their lawyers made a lot less income.  True innovation is about doing more for less while earning more – it should be win-win economically on both the client and the lawyer’s end. That’s why the most disruptive startups aren’t in it to make less money, they’re in it to make more money, but on a model that makes the end-price lower by cutting out fat, not muscle. If your firm is built on paying lawyers less – guess what? You’re just going to attract lower-quality, less ambitious lawyers. Surprise, surprise. Anyone can lower their price tag.
  • Where are the partners? – A lot of BoutiqueLaw firms will advertise that their attorneys offer “partner-level” service.  The reality is that most boutiques are run by senior “associates” (never made partner) from large firms who started their own firms and donned the partner label.  Early-stage clients might not care about this because their interactions are usually with associates anyway, but a lack of true partner experience within a firm can mean (i) your late-stage company is effectively funding on-the-job training, and (ii) that training can lead to mistakes.  A scalable firm needs true partners with the credentials and experience to actually provide partner-level service, otherwise top clients will have to go elsewhere.
  • Where are the specialists? – No one had a good answer for how to efficiently provide full service legal representation to clients. Asking them to engage a dozen firms on a piece-meal basis and manage a dozen different bills is not the right answer.
  • Where’s the technology? – If you think a lot of law firms haven’t joined the 20th century with respect to technology, check out some boutique law firms.  A lower rate is often used as an excuse for being inefficient and taking longer to do something.  Smart clients realize that their legal bill is a two-part equation: rate * time spent.  And if their lawyer is taking forever to do basic stuff, the lower rate is a mirage.  Startup law is for technologists, not cottage industry practitioners.

So why did I move my practice to a smaller firm (Miller Egan)?  Addressing the above issues in order:

  • The compensation structure is designed to attract top talent lawyers, not people who are looking for semi-retirement.
  • The firm is built and run by partners who were partners at the country’s leading law firms, but got fed up with the bureaucracy and inflexibility.  This means the firm can truly provide the “partner-level” counseling that is traditionally found only in BigLaw and that large, late-stage clients will require.
  • The firm has a well-developed network and process for coordinating specialist counsel for clients when needed, so clients can get the full service representation they’d receive at a big firm, but under a far more efficient model.
  • Technology? I’m CTO. #Howyalikedemapples

The above post should be read as a clear message to both traditional BigLaw and traditional BoutiqueLaw. Big can be important, and boutique can be cheap, but small, flexible, and scalable may eventually eat your lunch.  And let me tell you, that lunch is delicious.