A guide to learning, earning, and minimizing regret
There’s an episode in Star Trek: The Next Generation where Captain Jean-Luc Picard never makes it past Lieutenant junior grade— a low level astrophysics engineer. He was “thorough, dedicated . . . steady, reliable, punctual.” He had lofty goals, but never was willing to do what was necessary to attain them.
This is what can happen to you if you never take risks.
Today we’re going to talk about career risk for great software engineers, designers, and builders. Nothing ventured, nothing gained.
If you know how to code, if you know how to design, if you know how to make products that people use, you’re someone who can go anywhere in the world and work in any sector and find some way to create value. I think we are in the very early innings of this really crazy one-time shift. Software eating the world? It’s just getting started, really.
I wish someone came along to me earlier and said, “Garry, because you can make any kind of software, you should really think about increasing the amount of risk you can take because the only risk for you is not taking risk at all.” It’s counterintuitive and fundamentally true.
If you want more risk, here are three ways to get it.
1. Intrapreneurship: It’s the most incremental way to get more risk in your career. Every business has three phases: the commandos, the army, and the police. Commandos, like startup founders or early employees, parachute in and establish a beachhead. Then the army comes in and secures it. And finally the police hold it down after the fact. If you’re at a big company, you’re probably police, but there are parts of that organization that probably have either new things to work on, new products or new frontiers. And those things might actually be the future of the business overall. You can always move from a police stage to an army stage. And if you’re lucky, there are parts of a company that you already work at that are tackling brand new problems. Maybe you can even go full commando.
2. Working at a startup. There are lots of ways to find startups to work at, but my favorite kind is to look into your own life and see what you find interesting. If you find a job that you actually really like, it’s like finding five extra days to every week. Software is becoming an absolutely key part of everything in the world. Almost anything that you could be interested in could be a startup that might need your skills. Do you like music? Find the best music startups making something that’s interesting or valuable. Camping, food, double entry accounting. There’s a startup for every interest, no matter how obscure or niche. Go out there, Google, find some things that are really interesting to you. And the good thing is, if you’re really into it, you’re probably one of the best people to evaluate whether that startup will work or not. If you are genuinely interested, a cold e-mail will work wonders.
3. Starting a startup. Now this is the hardest form of ratcheting up the risk cycle. And it’s not for everyone. This is like trying to run a marathon on your first try. Some people are naturals, but it helps to have been training for a while before you start your attempt. And this is the hardest type of risk that you could possibly take. You’ve got to start from scratch. You’re hiring the initial set of people to work on it. You’re raising money, you’re building a first version. None of these things are easy. When you do it right, you’ll find that taking more risk will result in a lot more reward. And I guess you could argue that’s how it should be.
All right, well, now that you’ve got choices, how do you decide? Well, here’s my framework. Every place you could possibly work gives you two different axes to think about: Learning and earning.
Learning is very important. There are a bunch of kinds of things that are absolutely worth learning when taking on a position with more risk. For instance:
- Learning to build something from scratch. That was my experience working for Palantir.
- Shipping to lots of users. Or you might find a place that allows you to ship software to a lot of people. There’s nothing like seeing that software work for tens, if not hundreds of millions of people. That’s powerful.
- Making hard product decisions. There are some roles that are specifically geared towards this. These companies actually put those decisions in your hands. That’s really priceless.
- Getting users from scratch. Other places might require you to go out and get users for them from scratch. You might have to communicate with the outside world, press, social media, the users themselves. You’ll learn a ton.
- Building and managing a team. Now sooner or later, managing and scaling a team or organization is going to be valuable because the first part is always building something other people want. The second part is actually building the team that can take advantage of that product need and bring a solution to the masses. Once you catch lightning in a bottle, it takes a team to hold onto it.
Earning: How to understand your equity options
Next is earning, and this is purely monetary. I really recommend creating a spreadsheet, really with two columns. One is salary. The other is equity. Salary is pretty self-explanatory. The more salary, the less risk. Equity is actually quite a bit more complicated. But here are the three things that you need to get from every offer (and this allows you to compare offers, apples to apples).
First, you care about your percentage ownership. Now this might be the percentage ownership of a company from an option grant at the company you’re at right now, compared to a stock option grant that might come from an offer from a startup. Percentage ownership you can always calculate. If you have the number of shares that they’re going to give you, you can divide it by the number of shares that are outstanding.
Next, you need the valuation of that company at that round. It’s usually whatever the last fundraising round was.
And then finally, what’s the vesting schedule on it? Standard is one-year cliff with a four-year overall vest. If it’s four years, then that gives you really simple math to play with. Say, you have a 2% offer from a company worth $20 million. Well, that is $400,000 total. With a four-year vest, that’s $100,000 a year. Say you have another offer for 0.2% of the company from a company that’s worth $200 million. Well, that’s also $400,000 total. And with a four-year vest, that’s also $100,000 a year. Finally, say you have a third offer for 0.05% from a company worth $2 billion, which is actually $1 million total or $250,000 over a four-year vest. You can already see that these offers are not the same.
This is where risk tolerance really comes into play. There’s no one right answer. There are just the specifics and you’ll need to think through what each might mean for you. The first company might be so early that it’s maybe too likely to fail. And the second company, once it reaches Series B, may actually have a form of product-market fit. Strangely, for some companies, this is actually the best time to join. There’s still a 10x or 100x left in the company. Some people in the Valley actually make a career just jumping from fast-growing companies at this stage to the next. Now the third company is kind of interesting and on its face, it might actually look like a much bigger offer. You might also find that that company has raised more than a billion dollars, meaning that company actually has a preference stack of more than a billion. Unless the company exits for that much or more, you’re getting nothing. And these are things that you have to think through.
Learning versus Earning
For me, earlier in my career, I wish I spent a lot more time learning. Learning mode gives you the skills and network you need for that next phase. Earning mode is about how you get paid. And there’s not really one way to do it either. The best opportunities broadly let you do both. They let you learn and they let you earn.
How do you actually make the choice? This is where I like Bezos’ regret minimization framework. And this is actually what he used to decide whether or not to leave his very cushy, perfect job at D.E. Shaw to start Amazon.
This is what Jeff Bezos says about regret minimization:
“I went to my boss and said to him, you know, I’m going to go do this crazy thing. And I’m going to start this company selling books online. So it really was a decision that I had to make for myself and the framework I found, which made the decision incredibly easy was what I called, which only a nerd would call, a regret minimization framework.
So I wanted to project myself forward to age 80. And so, okay, now I’m looking back on my life. I want to have minimized the number of regrets I have. And, you know, I knew that when I was 80, I was not going to regret having tried this. I was not going to regret having wanted, trying to participate in this thing called the internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. And I knew that that would haunt me every day.
So when I thought about it that way, it was an incredibly easy decision. And I think that’s a very good — if you can project yourself out to age 80 and sort of think, what will I think at that time? It gets you away from some of the daily pieces of confusion. I left this Wall Street firm in the middle of the year. When you do that, you walk away from your annual bonus and that’s the kind of thing, then the short term can confuse you. But if you think about the long term, then you can really make good life decisions that you won’t regret later.”
Regret minimization? I use that technique all the time. How am I going to feel when I’m 80? Will I regret not taking the chance? Or will I regret more my opportunity costs?
This is a very personal decision and I can’t make that choice for you. You’ve got to make it for yourself.
If you can make any kind of software, if you’re a builder, if you’re a designer, if you’re an engineer, if you’re a product manager, who can make anything, the world is still your oyster.
So again, as far as I’m concerned, I’ve learned over and over that the only true risk that you can take, if you’re in that position, is not taking any risk at all.
Thanks for reading! To watch my full episodes that go into detail about these ideas — and more — head over to my YouTube channel.