Update on The Very Big Downgrade
When people successfully sell their company, they typically acquire stuff. Instead I gave up my house, apartment and car and gave most of my material possessions (furniture, clothes, books, etc.) to charity in December 2012. It was my Very Big Downgrade. Two years in, it’s time to take stock of what happened, especially since it has not gone entirely as expected.
When I decided on my Very Big Downgrade, I felt my possessions were anchoring me, keeping me away from the important relationships in my life. I was spending so much money and time maintaining my place in Bedford, I started thinking I had to use it thereby committing the gross fallacy of focusing on sunk costs rather than NPV (net present value). We should spend time somewhere because we want to and it maximizes our happiness, not because we feel we have to spend time there to justify the spending we incur by owning that possession!
Having successfully freed up a lot of time, I embarked on a mission to reconnect with my friends. I naively thought that if I spent a few weeks on their couches or their guest bedrooms, we would be able to reconnect the way we connected while we were in college spending hours sharing stories, dreams and remaking the world. If you spend a few days sleeping on friends’ couches, they do have a tendency to open up and you rekindle that level of intimate conversation that started the friendship in the first place. However, I soon realized that Benjamin Franklin was right: “Guests, like fish, begin to smell after three days.” This is especially true if your friends have a day job and are married with kids, while you are single, with no explicit time commitment other than to manage inbound investment opportunities while looking for “the new new thing.”
It did not take very long to realize that I was rapidly overstaying my welcome everywhere. As my dreams of couch surfing the world for weeks on end while reconnecting with my friends rapidly crashed and burned, I chanced upon a more effective solution of achieving both goals.
I laid out fun personal objectives and iterated through them until I found things that resonated. I rekindled my love affair with skiing. I tried various skiing destinations until I found Mica, which turned out to be skiing heaven. After I got my fill of hedonistic activities, which for me really meant catching up on movies, video games, books and skiing, I analyzed the causes of my couch surfing fiasco. The root cause of the debacle was clearly the disconnect between my friends’ obligations and my lack of a formal time commitment. To solve that, I needed to see them on vacation outside of their day to day environment. I also posited that it made more sense to organize said trip outside of traditional vacation dates to avoid conflicting with family obligations.
My mission to reconnect with my loved ones was accomplished.
But there is always room for improvement! For example, I learned that organizing vacations outside of traditional holidays clearly has benefits in terms of lower costs and easier travel, but really makes it hard for people with school-age kids to attend for more than a long weekend, especially if there are no direct flights. Also, Anguilla was hard to get to and there was no wind for kiteboarding, which leads me to the next chapter in my Very Big Downgrade.
I started spending a fair amount of time in Cabarete, Dominican Republic, where there is always wind. With the beach and pool, my dogs and I were in Heaven!
My new underlying cost structure in the Dominican Republic was less than a tenth of what it had been in New York. I expected hedonic adaptation to help me rapidly adjust to my new standard of living and was not disappointed, as my mean level of happiness did not change. My fundamental fear in leaving New York most of 2013 was that I was going to become socially detached from my friends. That fear was rapidly put to rest. I always had a least one friend come visit and often 5-10 at a time. I would have never expected that being a 3 hour flight away would lead to more social activities. To my surprise, people preferred a weekend in the Caribbean to an hour long drive to Westchester. .
I also feared becoming disconnected from the Internet ecosystem. Being in Cabarete you are clearly not as embedded as if I lived in San Francisco and lived and breathed tech, but I found that attending the Founders Forum, NOAH and LeWeb, interacting with the 50 companies reaching out to us for investments every week, and reading Techmeme, Techcrunch, etc. were a reasonable, if imperfect, substitute. Moreover, having removed India, Russia, China, South Africa, Brazil, Argentina and more as my OLX travel destinations, I actually spent more time in the Bay Area than ever before.
I also realized I missed lots of little things in a reasonably visceral way: the BAM (and plays in general), IMAX movie theaters, video games, New York’s fantastic restaurants. Given that there are no movie theaters around Cabarete, you can imagine how devoid of artistic venues the place is. As such I bought Xbox One, a PS4 and a projector. As for movies, my friends were bemused when I watched a movie every day in Paris and Bucharest in June and July 🙂
I also really missed racing with my McLaren, but it’s an indulgence I can do without. I scratch that itch by going kart racing at Grand Prix New York.
The only fundamental thing that I felt was missing were the dialoging dinners that I loved to organize in New York creating a general intellectual dearth, only partially compensated by reading and writing more. I also realized that every time I went to a high energy city like New York or San Francisco, my mind would be abuzz with ideas, clearly showing the limits of living outside such centers. As such it was obvious I would have to return on a more permanent basis sooner rather than later.
As luck would have it, I found “the new new thing.” I have been building and investing in marketplaces for the last 16 years and have been putting a lot of time thinking about the evolution of marketplaces and how to build vertical marketplaces. There was a clear trend towards end-to-end service augmented marketplaces where the marketplace looks as though it is the provider of the service. We surveyed the space looking for investment opportunities and white space to build new companies.
After we identified a number of such opportunities in the US, I thought long and hard about whether I should become CEO of one of them. At this point it only really makes sense if the company is going to be massive. At the same time, I like being an entrepreneur more than being an investor so I decided to try a hybrid role where I play the role of executive chairman. I help pick the strategy, hire the team, fund raise and play a semi-operational role in product and marketing, with the idea that that role would decrease as the company and team scaled up. I would consider also jumping on board full time at a later date, as Kevin Ryan did at Gilt, should it made sense for all parties. I ended up creating two new companies in 2013 and another two in 2014. With Jose, my angel investing partner, coming on board full time, we will probably keep creating one to two a year for the next few years.
Given the complexity of finding and retaining tech talent in the US, I went back to my old strategy of using offshore talent. I started looking for Argentine programmers, but Cristina Kirchner’s continued attempts to destroy her country economically made it untenable. I identified an opportunity to build a tech team in Bucharest and Kiev and started spending time there. We now have around 25 people between both cities. Simultaneously, Jose and I became more visible as angel investors. On top of that Güimar Vaca Sittic, an amazing young analyst, joined our team, and his proactive outreach significantly increased our deal flow.
By the end of the year, I found myself working harder than at any point during the OLX years, stretched a bit thin by the travel to Ukraine, Bucharest, New York, San Francisco, all the conferences, the operational work in the companies I co-founded and the work with the investment team. This brings me back to the Very Big Downgrade and why it was only half successful.
After vowing (and failing) to decrease the amount of travel during the OLX years, I found myself yet again on the road on a permanent basis with my trusty green carry on suitcase, which can hold most of my possessions. I am actually on the eve of a 7 week trip that will take me from NY to San Francisco, London, Oslo, Paris, Geneva, Brussels, Madrid, Milan, Bucharest, Kiev and then back again to New York, San Francisco, Boston and New York again!
One of the keys to productivity is batch processing work: only do one task at a time avoiding absolutely all distractions. That’s why I have all notifications (including vibrations) turned off on my phone and PC -> Skype logins, Whatsapp messages, incoming calls, etc. Traveling as much as I do only spending a limited amount of time at each place is a gross violation of that policy as I end up spending too much time in transit and too little time in any given place.
The best way to do that is clearly to have a home base and try to spend more time there and to stay there in at least 3 week increments (as opposed to a few days everywhere). Given my love of New York and the fact that more of my companies and friends are there than anywhere else, it should be New York. However, picking a home base is not sufficient, I still need to decrease the reasons for travel. The easiest way to do that is to limit the number of conferences I attend and to move my programmers out of Bucharest & Kiev. I started working on limiting conference attendance. I now only go if I am a keynote speaker and try to avoid going to the same conference several years in a row.
With regards to my tech teams, there is another benefit of moving them closer to me: avoiding early morning calls. I am NOT a morning person and there are few things that decrease my happiness as much as having to get up early for calls with Bucharest and Kiev which are 7 hours ahead. Unfortunately, the US immigration process is a mess. It’s not only inordinately expensive to bring people to the US, it’s also extraordinarily time consuming with an uncertain outcome.
That’s where Cabarete comes back in the picture. As you may recall, I had vowed to try to bring my friends to an easier to reach destination. I organized both the New Year 2013 holidays and my birthday in August 2014 there and it worked wonderfully I realized that having a fixed spot at a convenient location actually worked better than having rotating venues for each gathering.
It dawned on me that there might be a solution to my aspirations for more stability and less travel: get a place in New York for professional and intellectual stimulation, get a place in Cabarete as a gathering ground for my friends and move as much of my tech teams as possible to Silicon Cabarete 🙂
The tech lead for one of my companies already moved to Cabarete from Ukraine, happy to avoid the civil war. This way I get the best of all worlds and can spend extended periods of time at each place: say 3 weeks in a row in NY, 3 weeks in a row in Cabarete, 3 weeks in a row in Europe.
In a way my life has been a constant midlife crisis. Now that I have turned 40, I am having a reverse midlife crisis, a desire for more stability. I suppose in my own way I am heeding my friend’s advice from the birthday video they prepared for me. Worry not I am not getting a house in Larchmont, a wife and two kids. After all, it’s me we are talking about. I am just getting two places to live 🙂 It’s only “relative stability” as I am hoping to lead a distributed life between two locations and other travel commitments in 3 week increments, but it will be a great improvement over the last 10 years. And so the Very Big Downgrade will end at some point in 2015 or 2016 when I get more permanent digs. It’s been enlightening and fun, but it’s time for a change!
It will be exciting to see what the next chapter brings, but we’ll cross that bridge when we get there. In the meantime, I have to pack!