DROdio http://danielodio.com A Sanctuary for Founders and Entrepreneurs en-us Fri, 09 Oct 2015 19:05:15 +0000 http://sett.com Sett RSS Generator Elon Musk goes Back to the Future http://danielodio.com/elon-musk-goes-back-to-the-future Elon Musk did a fireside chat (why is the fire always missing from these fireside chats?) with Steve Jurvitson of DFJ at Stanford this morning to celebrate an event called FutureFest. In the movie Back to the Future, Marty McFly went 30 years into the future to October ]]>

Elon Musk did a fireside chat (why is the fire always missing from these fireside chats?) with Steve Jurvitson of DFJ at Stanford this morning to celebrate an event called FutureFest. In the movie Back to the Future, Marty McFly went 30 years into the future to October 2015. Now that we're 30 years into that future, how does it compare to how people thought it would look? Steve also grilled Elon on what he thought the world would look like 30 years from now (except he made it 20 years to account for the increasing speed of change).

Since there was a long queue of Stanford students waiting outside to hear Elon who weren't able to get in due to space restrictions, I captured the talk on my phone. The audio's pretty poor, but if you wear headphones you can make their conversation out reasonably well.

Here's the video. And below that are some of the things Elon covered, which include:

- How we could re-imagine self governance on Mars, including ways to improve democracy (moving from a representative democracy to a direct democracy where everyone participates now that technolgoy enables that to happen; was impossible 200 years ago when everyone had to send letters to each other to communicate across vast distances.)

- Why AI is a big deal, including how it's accelerating, as evidenced by Elon's timeframe for self-driving cars being technologically possible moving from 10 years into the future two years ago, to five years out last year, to three years out now.

- How Elon thinks about 'the headline' when imagining change, and then dials back to a set of prioritized actions he has to achieve to get there.

And lots more. As someone who's been betting on Elon for many years and knows about content like the WaitButWhy Tesla and SpaceX posts, the majority of what he talked about was known to me, but it was interesting to hear more detail on how Elon's approaching the success of Tesla and SpaceX (for example, he and the SpaceX team are spending 30 minutes per week thinking about how to transport a high volume of people to Mars).

The most interesting thing to me about predicting the future is how it always seems to look like the present with a futuristic element. It's like we have a really, really hard time getting the present out of our heads enough to really envision the future. For example, here's a painting from the early 1900s World Fair where an artist envisioned a self-cleaning robot. It looks nothing like a Roomba, because the artist couldn't conceptualize anything other than his or her present, but just doing futuristic things. Predicting the future is a tricky business; I'll be super interested to see how the things Elon said today come to pass.

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Wed, 07 Oct 2015 21:53:20 +0000 http://danielodio.com/elon-musk-goes-back-to-the-future
Need vs. Want http://danielodio.com/need-vs-want Just a quick post to share a decision making pro-tip that I shared with a few people this week. Anytime I need to consider a number of criteria to make a decision on something, I try to suss out what my needs are vs. my wants. (This is a framework my wife and I have been]]>

Just a quick post to share a decision making pro-tip that I shared with a few people this week.

Anytime I need to consider a number of criteria to make a decision on something, I try to suss out what my needs are vs. my wants. (This is a framework my wife and I have been using in our personal & professional decision making for years.)

It sounds so obvious, right? But specifically writing it out brings clarity to a decision, especially when multiple people are involved.

  • Needs = Must have this. Deal breaker if not.
  • Wants = Desired but not required.

For example, when I need hire someone, I make sure to list the skills and characteristics for the two. Is the ability to code in a certain language a need or a want? How about certain type of cultural fit?

Additionally, I try to make the 'needs' section as short as possible and bump those items into 'wants', because I find that many 'needs' are actually 'wants' in disguise. An easy way to tell the difference when recruiting, for example: If a certain skill (say, the ability to code in Python) is listed as a "need," then I would create a filter that disqualifies anyone who can't code in Python, which means I don't even consider them for the role. But if I wasn't comfortable automatically disqualifying anyone who couldn't code Python, then I'd realize that's actually a 'want' even though I thought it was a 'need' before I really thought through it. So make yourself really take a hard look at whether a perceived need really is a true need.

Another example of why this is so powerful: When my wife and I were house hunting, we made a list of needs vs. wants. We found a house that met everything on our "needs" list (i.e., less than 10 minutes from the office; has a separate casita, at least 2 BR, rent below a certain price). It was a hot market so we signed the rental agreement for it sight-unseen and felt comfortable doing so because even though we didn't know if it had all of our "wants," we did know it met our needs -- which it did; the house worked out great for us. Carefully defining one's needs vs. wants helps you make faster decisions because you don't mix the two up. If we hadn't specified the difference, it's very likely we would have had a "want" that we thought was a need which would have kept us from moving as quickly on the property.


Pic above is of our ShareThis board member, Blair, talking with our VP of Engineering, Isaac recently about reporting best-practices. Just seemed like the most appropriate pic for this post!

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Mon, 10 Aug 2015 22:55:58 +0000 http://danielodio.com/need-vs-want
Behind The Scenes of the 2015 Buring Man Temple of Promise http://danielodio.com/behind-the-scenes-of-the-2015-buring-man-temple-of-promise Jazz Tigan, an insanely talented artist, is the lead designer of the 2015 Burning Man Temple of Promise. Burning Man is a festival in the desert that's often misunderstood by those who have never been. It's not just a party, rather, it's a place to experience yourself]]>

Jazz Tigan, an insanely talented artist, is the lead designer of the 2015 Burning Man Temple of Promise.

Burning Man is a festival in the desert that's often misunderstood by those who have never been. It's not just a party, rather, it's a place to experience yourself as you truly want to be. A place without judgement. A place with incredible art and creativity. It's a place to refresh your soul and to re-evaluate your life's priorities.

The Temple sits at the center of it all. If the Man at Burning Man is the body of the event, the Temple is its soul. So when it turned out that the guy who dreamt up this year's Temple design was someone I went to school with, I had to go check out the build site, which is located in Alamedia, CA (just across the bridge from San Francisco) until mid August, when they'll ship everything out to Black Rock Desert to finish the Temple on-site.

Jazz has a special, secret project that he's looking to fund in addition to the main Temple build. He needs $5k to successfully finish this secret project. Think of it as the icing on the cake. If you're interested in donating any amount to make it happen, message Jazz on Facebook and let him know. Sue and I just donated to support it. Also, if you'd like to volunteer to help build the Temple between now & mid August, just let Jazz know. They're on-site in Alameda every day for the next 2 weeks.

The Temple is a place for quiet reflection. It's a place to look inside yourself and take stock of your life, and your loved ones, as well as forgive those who have hurt you. If you've never been to Burning Man, here's the best video I've ever seen that describes what the Temple means to Burning Man:

And here's a video I took at the build site in Alameda:

I asked Jazz how he got the idea for the Temple, and he told me about how it came to him; literally in 10 seconds he had the initial concept worked out in his head. He said it "was like reaching into the void and pulling it out.":

Can't wait to see this masterpiece on the Playa at Burning Man!

Here are more pictures from the build site (you can get high-res versions here), including my favorite one: Jazz and my daughter Devina grooving to the great tracks a DJ was laying down while the build was happening:

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Sun, 02 Aug 2015 20:56:56 +0000 http://danielodio.com/behind-the-scenes-of-the-2015-buring-man-temple-of-promise
Life In the Fast Lane: My Experiment with Intermittent Fasting for Health and Fitness http://danielodio.com/life-in-the-fast-lane-my-experiment-with-intermittent-fasting-for-health-and-fitness I'm turning 40 this December, and that's caused me to deeply re-evaluate my health. In high school I had wrestled at the 152 lb weight level and was a gymnast. In my 20s, I ran two 50 mile ultra-marathons and a half dozen marathons. I had a 33 inch waist and weighed 185]]> I'm turning 40 this December, and that's caused me to deeply re-evaluate my health. In high school I had wrestled at the 152 lb weight level and was a gymnast. In my 20s, I ran two 50 mile ultra-marathons and a half dozen marathons. I had a 33 inch waist and weighed 185 lbs. I could eat whatever I wanted and stay in good shape. But after a decade of doing startups, I found myself in my late 30s in much worse shape. My metabolism hit a wall when I turned 30, and although I didn't eat terribly, I also found it hard to figure out exactly how to get back to where I was in my 20s. My waist was 38 inches and I weighed 245 lbs; 93 lbs over my wrestling weight. My triglycerides were 33% above where they should've been. I'd imagine this happens to many of us as we get older, and I felt helpless as I watched all of this unfold, almost like it was happening according to some script that I wasn't in control of. Most of all, I was really disappointed in myself for not staying on top of my health, but I couldn't find the right balance of eating and exercising to change the path I was on. It felt like I was on a slow motion slippery slope as I got older and more out of shape.

When my daughter was born in 2013, I made myself a promise: I would be in as good of shape when I turned 40 as I was when I turned 30. I didn't want to have a hard time keeping up with her as she grew up. I started doing CrossFit twice a week that year. I signed up and completed a few triathlons. But my weight still wouldn't budge from 245 lbs, and my triglycerides, although lower, were still 15% above the max recommended range. CrossFit was making me much stronger, but that was only part of the puzzle. I had to figure out the rest, and I hadn't quite cracked it.

In December of last year, I realized I was running short on time: I'd really have to hump it to get back in shape within the next year, before my 40th birthday in December 2015. By this time I had upped my CrossFit schedule to 3x per week and I started rowing for 15 minutes before CrossFit started in the mornings. But that still wasn't enough: By April I knew I was going to have to take some much more drastic measures to reach my goal.

This blog is a story of those drastic measures, and how they're going. It's a deep-dive into the rabbit hole that we call 'health' as I see it. It's a journey that I invite you to take with me as we all get older, together. I am only starting to unlock some of the things that affect my body and I would love your thoughts and opinions as well in the comments below.

Let me also caveat this entire blog by saying that some of what I write about below is contrary to the things we've been told to believe, and I fully recognize that. I'm not a medical expert and I'm not telling you to throw away what you believe to be true. But just walk into all of this with an open mind, as I'm trying to do, and more importantly, be willing to try some of these things yourself if you also want to experiment a bit to try to find a better path than you've found so far.

The Mind, or: My brain as my own worst enemy

I've often wondered if I have an eating disorder. I think I might. I've never had it properly diagnosed, but here's why I think so: When I look at food, it talks to me. I don't mean that it's literally speaking to me, but the feeling is that it's like a magnet and I feel this irresistable sense of attraction to it. It doesn't matter what kind of food it is, and it doesn't matter how hungry I am -- if there's food and it's out on a table, I want to eat it. I thought this was normal, and everyone felt this way, until five years into dating my now wife, I told her one day "isn't it crazy how food talks to you?" and she responded with "I don't know what you're talking about." And then I said to her (incredulously) "wait, are you saying that when you look at this delicious food, and then you look at something that's not food, like this glass, the feeling you get from those two things is exactly the same?" And she said, "that's exactly what I'm saying." That was a mind blowing moment for me. I had absolutely no idea that food didn't talk to other people. I have the hardest time not grazing on food that's accessible to me. I've talked to others about this since and I've come to the conclusion that people have this sense of irresistible attraction to food at varying levels. Some people say, for example, "yes I feel that a bit, but it doesn't cause me to pick food up and put it in my mouth." If you feel this a little, but you can control it, then just imagine that feeling but multiplied by 100x whenever you pass by any type of food. That's what it's like for me. And the worst part of having this feeling is that I get mad at myself when I eat the food, and yet I can't help myself from doing it. It's a really destructive thing, and I've literally never been able to control it.

Until I tried intermittent fasting. For the very first time in my life, I feel like I'm in control of my body.

I recently saw this BBC documentary that got me started with Intermittent Fasting. If you're interested in the topic, it's a really great place to start. I credit this documentary with helping me find an approach that puts me in control of my body for the first time.

I'm going deep on intermittent fasting in this first health blog installment because although it's just one of several things I'm doing to get in shape by December, it's the most effective and meaningful change I've made. In addition to fasting, I'm also rowing on an indoor rower 6x per week, and I'm going to CrossFit 3x per week. But here's the simple truth: Controlling the food you put into your mouth pays much greater dividends than trying to control how you burn the calories later.

It's not even close -- in our society today, with restaurant dinners that easily surpass 1,000 calories and scientifically engineered foods that trigger our primal savory + sweet cravings, it's hella easy to ingest way more calories than your body needs. If you only try one thing from this blog, my suggestion is that you try intermittent fasting.

First off, some vocab:

IF: Intermittent Fasting. IF means you fast for some period of time on a regular basis (and the time periods vary as you'll learn below.) Here's a guide to five types of intermittent fasting.

ADF: Alternate Day Fasting. Also called a "4:3 fast" because you are fasting every other day (i.e., on 3 out of every 4 days per week). This is one specific type of IF.

I'm two weeks into an eight week, 5:2 intermittent fasting experiment (where I fast for two non consecutive days each week), and although it's been the most meaningful thing I've done to date to lose weight, I'm not even doing it for the weight loss. That's just the great side benefit. I started doing it because of the amazing body of science that's starting to show how ridiculously good fasting is for one's overall health.

Although below I provide a summary of the benefits I've found in researching intermittent fasting (and some associated quotes), watching that BBC documentary above is the easiest way to get up to speed on the benefits of intermittent fasting.

"There is nothing else you can do to your body that is as powerful as fasting." - BBC Documentary

"Fasting alone is more powerful in preventing and reversing some diseases than drugs," said Satchidananda Panda, an associate professor of regulatory biology at the Salk Institute for Biological Studies in San Diego, California

" Data show that IF, when done properly, might help extend life, regulate blood glucose, control blood lipids, manage body weight, gain (or maintain) lean mass, and more."

Research on mice as far back as 1945 showed that calorie restriction in mice promotes up to 40% longer lifespans in rodents.

" Mattson thinks that intermittent fasting acts in part as a form of mild stress that continually revs up cellular defenses against molecular damage. For instance, occasional fasting increases the levels of “chaperone proteins,” which prevent the incorrect assembly of other molecules in the cell. Additionally, fasting mice have higher levels of brain-derived neurotrophic factor (BDNF), a protein that prevents stressed neurons from dying. Low levels of BDNF have been linked to everything from depression to Alzheimer's, although it is still unclear whether these findings reflect cause and effect. Fasting also ramps up autophagy, a kind of garbage-disposal system in cells that gets rid of damaged molecules, including ones that have been previously tied to Alzheimer's, Parkinson's and other neurological diseases."

"Restricting caloric intake to 60–70% of normal adult weight maintenance requirement prolongs lifespan 30–50% and confers near perfect health across a broad range of species. Every other day [ADF] feeding produces similar effects in rodents, and profound beneficial physiologic changes have been demonstrated in the absence of weight loss in ob/ob mice. Since May 2003 we have experimented with alternate day calorie restriction, one day consuming 20–50% of estimated daily caloric requirement and the next day ad lib eating, and have observed health benefits starting in as little as two weeks, in insulin resistance, asthma, seasonal allergies, infectious diseases of viral, bacterial and fungal origin (viral URI, recurrent bacterial tonsillitis, chronic sinusitis, periodontal disease), autoimmune disorder (rheumatoid arthritis), osteoarthritis, symptoms due to CNS inflammatory lesions (Tourette’s, Meniere’s) cardiac arrhythmias (PVCs, atrial fibrillation), menopause related hot flashes. We hypothesize that other many conditions would be delayed, prevented or improved, including Alzheimer’s, Parkinson’s, multiple sclerosis, brain injury due to thrombotic stroke atherosclerosis, NIDDM, congestive heart failure."

"The limited human evidence suggests higher HDL-cholesterol concentrations and lower triacylglycerol concentrations but no effect on blood pressure. In terms of cancer risk, there is no human evidence to date, yet animal studies found decreases in lymphoma incidence, longer survival after tumor inoculation, and lower rates of proliferation of several cell types. The findings in animals suggest that ADF may effectively modulate several risk factors, thereby preventing chronic disease, and that ADF may modulate disease risk to an extent similar to that of CR"

"A large body of evidence for the physiologic benefits and life-extending properties of CR now exists. Restricting daily energy intake by 15–40% has been shown in both animals and humans to improve glucose tolerance and insulin action, which indicates an enhancement in insulin sensitivity (7, 8); to reduce blood pressure and the heart rate, which is consistent with benefits for cardiovascular health (9-11); and to reduce oxidative damage to lipids, protein, and DNA, which implies a protective effect against oxidative stress (12-15). Many other effects of CR have been documented, including increased average and maximal life span (12), reduced incidence of spontaneous and induced cancers (13), resistance of neurons to degeneration (14), lower rates of kidney disease (15), and prolongation of reproductive function (16)."

Here are more specific benefits of intermittent fasting I've culled from my research:

The following are reduced:

  • Lowering triglyceride levels and improving other biomarkers of disease
  • Reducing oxidative stress: Fasting decreases the accumulation of oxidative radicals in the cell, and thereby prevents oxidative damage to cellular proteins, lipids, and nucleic acids associated with aging and disease
  • Alternate-day fasting may reduce body weight, LDL, and triglyceride levels to the same degree regardless of maintenance of low fat or high fat diet on the feeding day
  • Blood lipids (including decreased triglycerides and LDL cholesterol)
  • Blood pressure (perhaps through changes in sympathetic/parasympathetic activity)
  • Markers of inflammation (including CRP<, IL-6, TNF, BDNF, and more)
  • Oxidative stress (using markers of protein, lipid, and DNA damage)
  • Risk of cancer

The following are increased:

  • Cellular turnover and repair (called autophagocytosis)
  • Fat burning (increase in fatty acid oxidation later in the fast)
  • Growth hormone release later in the fast (hormonally mediated)
  • Metabolic rate later in the fast (stimulated by epinephrine and norepinephrine release)

The following are improved:

  • Fasting episodes trigger the process of autophagy [15] which breaks down and recycles dysfunctional proteins and organelles, and perhaps also the process of apoptosis which does the same with cells.
  • Intermittent fasting boosts production of a protein called brain-derived neurotrophic factor (BDNF), which activates brain stem cells to convert into new neurons, and triggers numerous other chemicals that promote neural health.
  • It also protects your brain cells from changes associated with Alzheimer’s and Parkinson’s disease. Research by Dr. Mark Mattson, a senior investigator for the National Institute on Aging, suggests that alternate-day fasting (restricting your meal on fasting days to about 600 calories), can boost BDNF by anywhere from 50 to 400 percent, depending on the brain region
  • Intermittent fasting helps reset your body to use fat as its primary fuel, and mounting evidence confirms that when your body becomes adapted to burning fat instead of sugar as its primary fuel, you dramatically reduce your risk of chronic disease
  • There's also plenty of research showing that fasting has a beneficial impact on longevity in animals. There are a number of mechanisms contributing to this effect. Normalizing insulin sensitivity is a major one, but fasting also inhibits the mTOR pathway, which plays an important part in driving the aging process.
  • Normalizing ghrelin levels, also known as "the hunger hormone"
  • Promoting human growth hormone (HGH) production: Research has shown fasting can raise HGH by as much as 1,300 percent in women, and 2,000 percent in men,2 which plays an important part in health, fitness, and slowing the aging process. HGH is also a fat-burning hormone, which helps explain why fasting is so effective for weight loss
  • Normalizing your insulin and leptin sensitivity, and boosting mitochondrial energy efficiency
  • Chronic fasting extends longevity, in part, by reprogramming metabolic and stress resistance pathways
  • Appetite control (perhaps through changes in PPY and ghrelin)
  • Blood sugar control (by lowering blood glucose and increasing insulin sensitivity)
  • Cardiovascular function (by offering protection against ischemic injury to the heart)
  • Neurogenesis and neuronal plasticity (by offering protection against neurotoxins)

I don't know if all of the benefits above are true. As I said, I'm not a doctor, and everywhere I researched, I kept seeing cautions that most of the real research done so far has been done on animals vs. humans. But I was intrigued enough to give it a try, so I went to my doctor 2 weeks ago and got a baseline of tests done: IGF-1, Hemoglobin, full metabolic panel. I'm going to try a 5:2 fast for eight weeks, and then get another set of blood tests done for a true before & after comparison. I'll also leave updates in the comments below on how things are progressing for me.

This 5:2 schedule allows for one small (600 calorie for men, 500 for women) meal on fasting days, which I've been doing in the first few weeks, but I'm going to try skipping that meal on my next fast day because by the evening of a fast day, I find that I'm not super hungry, as I mention in the video above.

The other thing I really like about 5:2 intermittent fasting so far is knowing that I can easily dial it back to 6:1 once I reach my target health goals, or I can ramp it up to 4:3 if I don't feel like I'm progressing enough. This is really what's helped me feel in control of my body for the first time: On fast days, I just say 'no' to all food. I don't have to fight individual cravings.

As this article mentions, we all practice intermittent fasting on a "12/12" basis already. We eat at regular intervals, typically between 8am-8pm, and then we don't eat between 8pm and 8am the next day (largely because we spend much of that time sleeping). The crazy thing about intermittent fasting is that it's not necessarily about restricting the overall calories you eat, but just about when you eat them. There's a lot of science that shows that you can eat the same number of overall calories in a week, but by fasting for several days per week, you still gain many of the benefits listed above. In reality, it's also likely you'll consume fewer total calories in a week if you restrict meals on 2 days, and in fact in the first two weeks of doing it I've dropped from 245 lbs to 230 lbs (the picture at top was of the scale the morning I wrote this blog!) which is a bit surprising. I'll be curious to see how that trend continues.

Exercising During Intermittent Fasting:

As this article mentions, "if you’re fairly sedentary during the fast, you may need the full 20-24 hours without food to realize the benefits. However, if you’re very active, or you exercise purposefully during the fasted state, you may be able to enjoy the same benefits after only 16-20 hours without food." I'm following a pretty robust exercise schedule, so I'll report on specifically how it is exercising during fasting. So far, it's been great -- here's a post I recently posted on Facebook:

That's quite a bit to take in to start! More to come, including more comments below. I'd love to hear what you think, and how it goes for you if you decide to give it a try.

Want to go deeper?

  • Experiments with Intermittent Fasting: A great blog by Dr. John Berardi on his very in-depth experiments with different approaches to intermittent fasting and the results he saw.
  • ScientificAmerican: How Intermittent Fasting Might Help You Live a Longer and Healthier Life
  • New York Times: 4 days, 11 pounds
  • The BBC documentary reporter, Dr. Michael Mosley, has gone on to create a website called "The 5:2 Fast Diet" and wrote a book about it, which you can find on Amazon. I haven't read the book so I can't vouch for it per-se, but it has 4.5 stars w/ 1600+ reviews, so I imagine it's a pretty good place to start if you want to dig in deeper. I'm also not a huge fan of calling fasting a "diet" because to me it's more about creating a healthier lifestyle with a very specific set of health benefits, but I suppose that putting the word "diet" in the title helps sell more copies.


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Sun, 26 Jul 2015 07:43:53 +0000 http://danielodio.com/life-in-the-fast-lane-my-experiment-with-intermittent-fasting-for-health-and-fitness
One Year In: Lending Money to Complete Strangers via an API... And Why You Should Try It http://danielodio.com/one-year-in-lending-money-to-complete-strangers-via-an-api-and-why-you-should-try-it About a year ago, I wrote a blog called "Show Me the Money: Six Strategies to Put Your Cash to Work," where I talked about two new(ish) investment strategies my wife and I were using. I wrote a followup blog about the first strategy, Electronically Traded Funds (ETFs),]]>

About a year ago, I wrote a blog called "Show Me the Money: Six Strategies to Put Your Cash to Work," where I talked about two new(ish) investment strategies my wife and I were using. I wrote a followup blog about the first strategy, Electronically Traded Funds (ETFs), where I compared Betterment vs. Wealthfront. Now here is a followup on the second newish strategy that you're probably not yet trying out, but absolutely should be: Peer to Peer lending... or put another way: Lending money to complete strangers as an investment strategy.

I'm going to write this blog as a step-by-step how-to guide on trying P2P lending. Don't think you have enough money to become an investor? Wrong. Just set aside $25 to invest in each of the 2 biggest platforms. Seriously, who can't part with $50 to try something that will change your perspective on lending?

First, more on what P2P lending is:

  • Historically, banks have been the institutions that take deposits from investors, and then loan money out to borrowers. Banks have shouldered the risk, and the FDIC has ensured investors against that risk. This is a very safe place to park your cash. But it also provides an absolutely dismal return. The national average yield on a savings or money market account is 0.47%. Want a higher return? Put your money in a 5 year CD and you'll make 2.25%.
  • On the other side of the spectrum, borrowers pay interest through the nose. The current average credit card interest rate in the US is 15.91%.
  • That's quite a spread! Banks are paying out a couple of percentage points to investors, yet they are charging borrowers (especially those using credit cards) very high rates, and garnering headlines like this one in the Wall Street Journal: "U.S. Bank Profits Near Record Levels."
  • But technology -- and specifically the sharing economy -- is giving investors an opportunity to connect directly with borrowers, disintermediating the banks entirely. What if you had a little cash to lend out, and you could use a platform to find borrowers that fit the criteria you were comfortable with? This is what Peer to Peer lending is all about: Putting your dollars to work so others can borrow money. You make a higher rate than you would with a bank, and the borrower pays less than they would otherwise pay. In this scatterplot from LendingClub, you can see the median return for investors is 7.4%:

OK, what's the catch?

Just like anything in life, there's are risks to P2P lending. It's important that you really understand what they are. I'm going to walk through each risk that I consider significant, and how to protect yourself against that risk.

  • The biggest risk is that your money is not FDIC insured. When you put money in a bank the first $250,000 of your deposits are protected by the US government. That's not the case when you put your money to work in the P2P economy. This means that if our economy tanks, the people you're lending to are more likely to default on their loans, which means more of the loans you hold will be charged off as uncollectible. To mitigate this risk, I recommend 2 things: Primarily, only put as much money into P2P platforms as you're willing to risk losing. That might just be $50. Or it might be $5k. Or $50k. Etc. Just treat this as a grand experiment where you might lose it all. But don't let yourself be so scared of this risk that you put $0 into P2P lending. The opportunity to leverage technology to disintermediate the entire banking industry is just too compelling to not give it a shot! I'd encourage you to put at least $50 into this so you can at least experience what it's like to put your dollars to work in the sharing economy. Secondarily, you can mitigate this risk by spreading your dollars out across many hundreds of loans. This diversifies your risk and makes it less likely that any one borrower defaulting will completely torpedo your portfolio.
  • Your return is completely dependent on your risk tolerance. As you'll see below, if you only invest in "Grade A1" loans, your expected return will only be 3% ± 1.53%. That means it might be as low as 1.47% or as high as 4.53%. But at that point, you might as well put your money into a 5 year CD where it can return a safe 2.25%. So you have to be a bit more risk tolerant to really leverage the value provided by these lending platforms.
  • These lending companies are startups, and startups have a bad habit of failing. LendingClub recently IPO'd, so it's a bit bigger than the second largest company in the space, Prosper. If one of these companies failed, it's hard to say what would happen to the underlying notes -- I'd assume they'd still be valid debt obligations, and likely picked up by some other company. But I'm sure it'd be messy. So that's a risk.
  • The notes aren't liquid. A huge thank-you to Paul in the comments below for pointing this risk out -- it's a very important one: When you offer your money up to borrowers, it gets put to work for 36 to 60 month terms. That means you can't get your money back until the note matures. This is a problem if you'll need access to your invested funds for some unforeseen emergency or personal circumstance. For this reason, my wife and I think of P2P lending as "Hotel California" -- the money goes in, but it doesn't come out. What I mean is that we only invest money in P2P lending that we know we won't need immediate access to right away. There are some ways you can caveat this risk. There is a secondary market on LendingClub, so my guess is that if you really, really, really needed to get your money out, you could offer to sell your active notes to another investor at a discount. However, in my experience, the pricing on that secondary market will demand a steep discount on the face value of the note, meaning if you have $25 invested with Sally in our example above, and you need that $25 back, you might only be able to get $20 for that $25 note (I'm assuming a 20% discount on the note's face value but I don't really know what the secondary market will offer since I only tested it a bit -- I'd love to hear feedback in the comments on what the discounts tend to be for notes in various stages of maturity / status.) There's another caveat to this risk, too, but this one works in your favor: The entire idea behind getting a 10%+ return is that you won't ever need to touch the principal, because it's working for you. For example, let's say you invest $500,000 in LendingClub notes (that would be pretty aggressive! I'd love to hear from if someone who has put that much in). This would mean that while it's hard to get your $500,000 out in a personal emergency since it's deployed capital, what isn't hard is that you'd be making $50k annually in interest income (10% of the $500k). The median US household income was $52,250 in 2013, meaning you'd be earning as much for doing nothing each year as an average US household earns for working really hard. Of course, the super hard work is in amassing $500k that you can invest into a P2P lending platform in the first place! But you get the idea: Hard to get principal out, but potentially great investment income cash flow.
  • Those are really all the risks I can think of. If you come up with some others, let me know in the comments below and I'll add them to the list.

Starting small: The ideal minimum investment size

OK so let's say you're like me and my wife -- you want to start small and see what it's like to put your dollars to work on a P2P platform. What's the minimum you should put to work? Like I said above, you can literally get started with $25 on each platform. So if you're debating between doing nothing vs. trying it, then literally just fund each account with $25, and fund two individual notes (the minimum investment size is $25 per note you fund). That's not the ideal minimum, however, and here's why: You want to diversify your risk across many borrowers, so if one defaults, it doesn't torpedo your returns. If you only invest $25 to fund one borrower, and that borrower defaults, then your return will be shot. There's a great article by LendingRobot that shows once you invest in at least 146 notes at $25 each (a total of $3,650), you have a statistically minuscule chance of earning a negative return. LendingMemo takes it a step further and breaks the diversification recommendations down by your risk tolerance -- they suggest funding a minimum of 200 to 300 loans (depending on the note's risk scoring grade level) at $25 each so you can get an expected positive return. 200 notes x $25 invested in each = $5,000. And there's another reason to start at a $5k investment level, as I'll describe below. So, to reiterate: Start with $50 just to experience it. But if you're really going to make this a part of our investment portfolio, invest at least $5k.

A side note about what "investing $25 in a note" really means: Let's say a borrower -- we'll call her Sally -- wants to borrow $10,000 to consolidate her credit card debt. She goes to LendingClub and applies for a loan. LendingClub will take that $10,000 loan and break it up into smaller chunks, and then offer each chunk to individual investors. So for example, Sally's $10,000 loan might be funded by 400 investors at $25 each. This diversifies the risk for everyone. If Sally defaults, those investors each only lose $25 -- a small part of their overall portfolio.

My wife and I use P2P lending for an aggressive part of our portfolio. Although we could choose to fund "A1" grade loans, we want to achieve a return of at least 10% annually, so we tend to fund D,E & F grade notes. In fact, as you can see in this screenshot below, LendingClub has over-allocated us on A,B & C grade notes, and can't fill our demand for the lower grade notes. This is typical because most investors who are putting money to work in P2P platforms want that higher return and are willing to accept the higher risk that comes with it.

But even in this under-allocated state, we are achieving a net annualized return of 11.89% -- and that's after accounting for defaults & charge offs! Here's what I mean: By investing in lower grade notes, we are expecting that a higher percentage of those borrowers will default on their loans, and subsequently, have their loans charged off. But that's why the interest rate on these notes is higher -- to account for the expected charge offs. LendingClub has issued over $9 billion in loans since it started. You can see from this chart that the charge off rate on all loans is 3.6%. When you diversify your portfolio by spreading $25 investments over thousands of notes, you're able to control for the variables that would otherwise be really scary, like "what if someone defaults?!" At these large scales, it all becomes a math equation: How much risk are you willing to shoulder in exchange for what level of projected return net of that risk, and then set your investing criteria accordingly.

And just like a bank or a credit card, if a borrow goes late, the lending platform will try to collect on the loan. For example, below an actual default from our portfolio. This borrower got a $12,925 loan from LendingClub. We pitched in $25 to fund that note. They stopped paying, and for 3 months, LendingClub tried to collect. They eventually charged the loan off, which negatively affected the borrower's credit score. We lost our $25 -- but not without a fight! And LendingClub did all the actual "fighting". (You can see a larger version of the screenshot here.)

Another reason to invest at least $5,000 is that once you do, LendingClub will turn on a feature they call "Automated Investing." If you invest less than $5,000, you have to slog through each available individual note, deciding which to fund. When you put $5k into their platform, they'll handle all the investment decisions for you based on the criteria you set, so it literally becomes a "set it and forget it" experience.

OK that's it for the "P2P Investing 101" part -- I encourage you to give it a try. Start with just $50 to experience it. Give it a solid try with $5k. Or get adventurous if you have the cash: Putting $120k to work on the platform will earn you $1,000/mo in interest income at a 10% return. (Important tax note: This income is taxed at an ordinary income rate, not a long-term capital gains rate, which reduces your net return... talk to your tax advisor, because I am certainly certainly not one!)

But wait, there's more -- here's the best part if you want to go deeper:

For the past year, my wife and I have been using LendingClub's "automated investing" function and happily earning an 11.89% return. But it was driving me crazy that we were under allocated in the notes we most wanted to get into. So I did some digging. It appears that we're not the only ones that have this idea. Hedge funds and other institutional investors have been using an API access layer to snap up notes the second they hit the market -- indeed, faster than even LendingClub's automated investing can pick them up. I wanted in on the API action! So I turned to a service called LendingRobot which hooks into both LendingClub and Prosper through the API interface. I've just recently begun experimenting with it, but the interface looks awesome. For example, I created two "rules" which define how we want to invest our cash in LendingClub. For example, one of our roles is to only invest in notes with a 14%+ expected return, and to borrowers not in FL, AZ, CA or NV (here's why). LendingRobot projects we'll make a 15% ± 7.44% return with these filters.

The second rule is for borrowers who have a mortgage (no renters, no outright homeowners) with zero inquiries on their credit reports in the past 6 months (here's why) with a 12%+ expected return. LendingRobot projects we'll make a 13% ± 6.56% return with these filters.

The downside of using LendingRobot is that they charge a 0.45% fee for providing this lightning fast API access and filtering capabilities, which has the net effect of reducing our overall return by that amount. It's too early to say whether the value created LendingRobot will offset that additional fee, but I'm willing to give it a try. For now, I've kept "Automated Investing" turned on in LendingClub while at the same time letting LendingRobot have access to the cash in our LC account. I figure if their API really is faster, they'll get access to that cash first, and if it's not, they won't. I'll report back after a few months to let you know how the LendingRobot returns are comparing against the straight LendingClub returns -- and I'd LOVE to hear any feedback from anyone who has experience using LendingRobot or any of the other automated investing P2P services springing up out there.

I hope you give P2P lending a shot-- and welcome to the sharing economy! Please leave a comment below describing your experience if you do try it.

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Wed, 01 Jul 2015 05:59:22 +0000 http://danielodio.com/one-year-in-lending-money-to-complete-strangers-via-an-api-and-why-you-should-try-it
The Forest vs. The Trees: A Story About Focus http://danielodio.com/the-forest-vs-the-trees-a-story-about-focus I'm going to share a story about the forest vs. the trees. But it's not the story you're expecting to hear. My last blog post was about Doing Less, Better, which is my theme for 2015. A big part of doing less, better is achieving focus. But that very word is often misund]]>

I'm going to share a story about the forest vs. the trees. But it's not the story you're expecting to hear.

My last blog post was about Doing Less, Better, which is my theme for 2015.

A big part of doing less, better is achieving focus. But that very word is often misunderstood. Focus means the elimination of distractions, not the mitigation of distractions. Let's dig into that more deeply:

The first hard thing in a startup is knowing what to focus on initially. When you first start, you don't have strong product/market fit in anything, so like any good LeanStartup you might start with a hypothesis and work through the build --> measure --> learn cycle as quickly and effectively as you can. The key is to find some early area of traction & demand that you can build off of.

Having a solid initial hypothesis is important, but I would argue that even more important is being close to customers and listening to them intently. You're probably not listening to your customers closely enough, even if you think you are. They will tell you where your hypothesis is wrong. They won't be able to tell you what they do want -- they won't know what they don't know -- but they will absolutely be able to react to what you put in front of them.

So far, so good. But here's what usually happens in startups: You start doing several experiements because you desperately want to find that traction. So instead of just iterating on one thing to make it better, you move on, saying "well that didn't work," except you don't really move on. You keep it around, kind of. Maybe you have a customer or two using it. Or you're generating some revenue from it. Or you've invested so much code, time and cost into it that you can't just bear to completely shut it down. This is where things get dangerous. It's absurdly hard to force yourself to either a) keep iterating on it until it gets better or b) to shut it down completely. In fact, in my experience, this is what separates the massively successful startups from the rest of them. Less successful startups do a lot of mitigation. More successful startups do a lot of elimination.

I've been trying to find a way to explain this simply, and in the shower the other morning, it hit me: Trees.

Let's say you're CEO of a startup that's not yet profitable. Just envision that each initiative in your business is represented by a small, young sapling.

Now here's the kicker: You only have a certain amount of water. That water is your funding. Water is precious and expensive to get. You have to make a choice: Do you concentrate your water on just one of the saplings, or do you water them all equally?

It sounds so obvious, right? You want to grow a tall, strong tree. But it's so very hard to let those other trees die. That's where startups make a false choice: They mitigate by watering the other trees, just enough so they don't die. But not enough for them to grow, either.

And a startup is just like a tree in another way, too: When the tree gets big enough, its root system will be able to capture its own water from the ground. And when a startup matures enough, it too can start to feed itself. It can become profitable. But this only happens when you focus your water on just one tree. If you try to water them all, none of them will reach the stage where their roots can really take hold.

And this is how, ironically, by cutting water off to all your trees but one, your tree will grow big, strong and tall. It will drop acorns around it and spawn other trees. It will create a forest.

But by spreading your water out to many trees, all of them will die, and you will be left with an empty field.

Focus means being ruthless about watering only one tree, so that you can successfully build your forest.

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Thu, 28 May 2015 14:32:26 +0000 http://danielodio.com/the-forest-vs-the-trees-a-story-about-focus
Do Less, Better http://danielodio.com/do-less-better There's a great article in the NYTimes about Slack, a new startup that the Valley is buzzing about. Slack is a business messaging & collaboration app, and it's really, really good. The reporter in the article questions whether this year-old company is really worth $]]>

There's a great article in the NYTimes about Slack, a new startup that the Valley is buzzing about. Slack is a business messaging & collaboration app, and it's really, really good. The reporter in the article questions whether this year-old company is really worth $2.8 billion.

Slack is not good because it has a ton of features. In fact, it's missing the things that I would expect it to have.

It's good -- and worth its valuation-- because it does less, better.

The things Slack chooses to do, it does insanely well.

Take just one small example: When I use Slack on my phone, and then pick up on my desktop, Slack knows where I left, and takes me there on the desktop, providing for a seamless, magical user experience that's a pleasure to use.

I wrote a blog post about the value of going deep instead of wide a few years ago. When you do less, better, you're able to create magical experiences, because of the level of attention you can put into everything you choose to spend time on.

And that's the thing -- none of us can manufacture time. The danger in a startup -- a trap so, so many startups fall into -- is to try to do more. More features. More revenue streams. More diversification. And not just startups -- this is a problem for companies of all sizes; it's just masked at larger companies because they have legacy revenue streams that mute the blow of a lack of focus (for a while, at least). But like my buddy Isaac says, "everything is a distraction. So choose your distractions carefully."

Slack is so focused on making the little moments magical that even it's app release notes are funny, and a pleasure to read:

The amazing thing about Slack is that it's a company that's simply building a B2B messaging tool! That's about as far from being a new category as I can imagine. AOL has offered IM for nearly 20 years. Others have tried this, including Yammer, Chatter, Campfire, and countless others. It's about as crowded a category as I can imagine.

And Slack is winning by doing less, not more. Slack doesn't offer any sort of video conferencing. There's no to-do list. No screen sharing. Just a collaboration tool that really works. That is a sign of really strong product/market fit -- when something works so well that users are willing to overlook what's missing. It's how the iPhone got away with not offering multitasking or copy & paste when it debuted.

I'd imagine that the Slack team will slowly, carefully, deliberately, build the functionality of Slack over time, and I'd also imagine that it will continue to be good. Since we can't manufacture time, when you do less, better, you're able to focus the time you have on doing things well, and building on their success over time.

And back to the NYTimes article, having insane product/market fit means Stewart, the CEO, can respond to the reporter's questions with statements like this:

Q. So do you think Slack is worth $3 billion?

A. It is, because people say it is. I’m not trying to be trite, and I know why you’re asking, but if you go down to the fundamental level, we all have an agreement about what things are worth — until we don’t.

I've been bolding do less, better because it's my personal theme for 2015. Time and again, the most successful companies -- especially startups -- have shown that the best way to maximize success is to do less, but to do it magically well. AirBnB focuses on enabling people to rent their rooms. Dropbox focuses on helping people share files. Even Google, which Page famously has had to re-focus in recent years because it tries to do so much, started life with extreme focus:

"Despite Google’s increasing reach, Page and Brin refused to change the core focus on search. Brin, in a later interview, said that “with 100 services, they assumed they would be 100 times as successful. But they learned that not all services are created equal.Finding information is much more important to most people than horoscopes, stock quotes, or a whole range of other things.” As a result, Google retained its now-famous user interface consisting of little more than a search box and an early version of the iconic logo."

Here's where I see startups go off the rails: They think that "focus" equals the mitigation of distractions. But that's not focus. Focus is the elimination of distractions. They might sound similar, but they couldn't be more different.

Focus means saying "we're not doing to do [pick-any-topic] anymore. We're not going to talk about it, we're not going to think about it, we're not going to put any work into it. It's dead to us. If I hear anyone talk about it, even once, then we've failed in our focus."

Mitigation, meanwhile, surfaces with sentences like "we're going to put it into maintenance mode." Or "it's too important for us to stop." Or "we need the revenue." Or "it's too early for us to say 'no'." Or my favorite, "let's do both." Whenever you hear the words "and" or "both" in conversations around focus... then it's not focus. "Both" is the exact same thing as "neither" -- or at least "neither as well as you could have if you'd only done one." Saying no to things to achieve focus requires hard decisions. And that's the hard thing about hard things.

It's hard, and scary, to focus on doing less. It's hard to say "no" when you don't know what the "yes" is. But you can't just keep doing too many things that aren't working, hoping that you'll find the right thing. The only way you'll find the right thing is by creating the time and mental space to pursue it. Iteration is very good. The LeanStartup "Build --> Measure --> Learn" loop is great. But learning is the key part that startups leave out when they try to mitigate distractions instead of eliminating them. Use data to learn, and use that learning to say 'no' so you can get to the 'yes' that you haven't found yet.

So, start by saying "no" and eliminating-- not mitigating-- distractions. Make yourself give something up every time you give yourself something new. Focus on doing less, better.


The picture I took above is of a road on the way to Yosemite. When I see it, I see focus.

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Sat, 18 Apr 2015 00:36:45 +0000 http://danielodio.com/do-less-better
Marketing Your Startup by Giving Out Stock Options http://danielodio.com/marketing-your-startup-by-giving-out-stock-options This new startup, Jet.com, is looking to be the Costco of the web, and to undercut Amazon's prices by an average of 10%. They won't focus on speedy 2 day "prime" delivery. Instead, by being a member and paying a $49 annual fee (like you do with Amazon or with Costco), yo]]>

This new startup, Jet.com, is looking to be the Costco of the web, and to undercut Amazon's prices by an average of 10%. They won't focus on speedy 2 day "prime" delivery. Instead, by being a member and paying a $49 annual fee (like you do with Amazon or with Costco), you'll get access to discounts, but the products will take longer to ship to you. This is a great model for non-time-sensitive things, like re-ordering diapers.

But the best part of it is how they're building a pre-launch interest list: When you sign up, they give you a unique sharing code. For example, mine is https://jet.com/#/ji/cj2tx and I'm currently member 124,837 of 124,877 on their interest list. The more people sign up based on your code, the more rewards you unlock. That's not all that new or innovative -- but the part that's great is that they're offering lifetime memberships and even stock options to their top sharers. Which is a great marketing move, although the reality is that getting 100k options doesn't mean much unless you know how many total shares are issued, and what the strike price is. But it's marketing genius!

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Fri, 09 Jan 2015 01:29:03 +0000 http://danielodio.com/marketing-your-startup-by-giving-out-stock-options
High Fives and Arash's Story http://danielodio.com/high-fives-and-arashs-story At a recent DFJ venture capital conference, I heard the story of Arash Bayatmakou.

He fell from a 3rd story balcony a few years ago and landed on his neck, paralyzing him from the chest down.

Incredibly, he's determined to walk again. We exchanged emails after the conference and he signed off with this:

A high five, coming from a guy who's facing incredible challenges every day just to get back to doing the things we take for granted. I loved it, and decided that from now on, I'm going to sign my emails with a high five as well, as a tribute to him and his positive attitude.

If you want to follow Arash's recovery, you can subscribe to his blog here. And below is a video where he tells his story.

High five, Arash!

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Mon, 24 Nov 2014 04:54:46 +0000 http://danielodio.com/high-fives-and-arashs-story
How Are You Spending Your 700,800 Hours? http://danielodio.com/what-are-you-doing-with-your-700800-hours

"Time is what we want most, but what we use worst." - William Penn

Time is our most precious asset, and none of us know how much of it we have left.

It's ironic, then, how easily we let it slip away. An hour for a meeting, an hour in traffic.

Next time you get asked to spend an hour doing something, just hold it up to this filter before you decide:

  • Each year, we are each allotted 8,760 hours. Most of us spend 30% of that sleeping, so in reality you have 6,132 hours per year to work with.
  • Of those, you'll likely spend at least 2,000 of them working, leaving just over 4,000 for everything else -- your family, your kids, yourself.
  • Even a long lived life is only 700,800 hours, and you'll only be awake for 500,000 of them. If you limit that to productive adult years, it's more like 350,000 hours that count.

Treat those hours preciously, and do great things with them, because you can never get them back.

The background picture is a watch my amazing wife gave me years... make that about 35,000 hours... ago. Feels like an antique in this age of iWatches!

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Thu, 20 Nov 2014 01:11:32 +0000 http://danielodio.com/what-are-you-doing-with-your-700800-hours