4 Kinds of people (the hacker matrix)

To win in a game, in a tournament, in life, what kind of person must you be?

I saw four kinds of people this weekend at a hackathon, this one organized by the groovy AT&T Developer Program, and sponsored by the good folks at Stackmob, Tiggzi (cloud-based mobile app builder), and Amazon AWS.  I know, I just couldn't resist the free food and the vibrant energy of the crowd that gathers at these events.

And while most of us dug into our screens to play with APIs, slap together mock-ups, and code away, I saw many other kinds of people at the event.  Let me summarize in picture:

Four Kinds of People at a Hackathon

The two axes by which I categorize people are Skill and Drive.  Note that you could use other axes, but I choose these two.

• Lo-skill, lo-effort - You are a bystander. You came to enjoy the scene and be inspired. This is okay.  But, you walk away with an empty handed. 

• Lo-skill, hi-effort - You are a hustler.  It is an uphill battle.  Don't give up.  (I fall into this category.)  Dreamers have to recruit additional talent (recruit = beg for help from developers).

• Hi-skill, lo-effort - You are qualified.  Yet, without blood & sweat, you will not be in a winning team.  Have you been part of a team of smart people that never quite achieved something of significance?

• Hi-skill, hi-effort - Winners!  As in, these people won the day and made out like bandits with real prizes!  They had the talent; they put in the hours.

No mind-blowing insight here.  But, perhaps a sobering reminder to those not in the top-right quadrant, and want to be.  So, ask yourselves these questions today:

1. Do I have the right skills?  Enough skills?  If not, what can I do to gain those skills? 
2. Do I have sufficient drive or am I putting in enough effort?  If not, why not?  Am I in the wrong profession?  What can I do to figure out my passion?  

Note that I used the term "Hacker," rather than winner.  I read a great article about what is a hacker?  I aspire to be more like a hacker, in my case as an example to push myself and to gain new skills that I find exhilarating and fun.

We must all find our own paths to happiness and success.  In that walk, are you a bystander?  A dreamer?  Or will you take risks and put in the effort to realize your dreams? 


Whatever the case maybe, smile and enjoy the journey!

Smiling faces of friends remind me not to take myself too seriously

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News from the event - a team of two dashing fellows presented Voicegram, a service that allows users to send voice greetings to friends and family. It's a very nice idea to keep in touch with friends.  Check them out on Twitter to stay tuned.

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How did Zuckerberg value Instagram?

I wondered how Facebook came up with $1B figure for Instagram.  For example, do you value Instagram based on its revenues? Or how do you get $1B from number of users Instagram had?

A few weeks before Facebook announced its acquisition of Instagram, I wrote a blog about what problem instagram solves, and concluded that there is huge value in delivering abstract stuff like beauty. Specifically, I wrote:

"Increasingly, products with the highest value offering will be those that allow people to experience beauty, meaning, transformation, values which are not forefront when more mundane problems persist. But, as people increasingly cover the 'basic needs', demand for such abstract items will rise."

This made me wonder about the valuation logic in Silicon Valley. How does a brilliant entrepreneur and hacker like Mark Zuckerberg (or Twitter's Jack Dorsey) think about valuing assets that they acquire?

I thought back to some common methods for valuing stuff in the business world.

1. Discounted cash flows (DCF) - discounts future cash streams
2. Comparables - uses similar deals as benchmark
3. Options - applies some fancy math to financial instruments ... and assumes normal distribution
4. Customer lifetime value (CLV) - tries to value the customers
5. Gut

1. DCF - From what I understand, the Wall Street-types love using something called discounted cash flows method to value an asset. Asset is anything that will make you money today or later. In short, discounted cash flows values an asset by all the money that asset might bring you today and in the future, and then "discounts" the value of all that money to adjust for inflation. (Inflation - you know, a 12 oz Coke used to be 50 cents, but is now a $1 at a vending machine.)

So, if you use discounted cash flows, Instagram value is $0. Why? Because they weren't really generating cash flows.

2. Comparables - this isn't a bad way to get a baseline. But, what other deal was like Instagram? Has Instagram been sold and traded before? Nope.

3. Options - this usually applies to trade of commodities and financial assets (remember the movie Trading Places?). No help here.

4. CLV - okay, this one is a bit more promising. (This model works well when subscription is involved - like Netflix or newspapers.) I tried to imagine Zuckerberg doing the math in his head. Let's say Instagram had about 40M users at the time of acquisition. $1,000M / 40M users = $25 / user. (For comparison, here's a Quora answer on the lifetime value of a Netflix customer.)

But, then think about the fact that once acquired, Instagram has access to Facebook's user base (let's round up and say it's 1 billion).  Let's do the math again. $1B / 1B users = $1 per user. A $1 per person! Do you think you could squeeze out $1 over the lifetime of a Facebook-Instagram user if you were Zuck? Do cats meow?  

Image from techi.com - 4/10/12 post

5. Gut - okay, there's not much science here.  Clearly, none of the above methods are going to give you a true answer.  I'm beginning to learn that there is a healthy amount of going by the gut in Silicon Valley.  Give it a try.  Next time you have to make a decision, try the back of the napkin, but also listen to your gut!


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