I recently came across a twitter thread by Erik Torenberg, which was one of the most insightful thread I have ever read. Here are the key takeaways —
I’m increasingly interested in the idea of “personal moats” in the context of careers. Moats should be: Hard to learn and hard to do (but perhaps easier for you)
- Skills that are rare and valuable
- Legible
- Compounding over time
- Unique to your own talents & interests
The Q to ask when evaluating career decisions: “What are the things that if you do, today, make it easier for you to have the career opportunities and resources you desire, tomorrow, in a way that compounds and is defensible?”
Things that look like moats but likely aren’t or may fade:
- Anything that depends on information asymmetry Litmus test: If there is a Quora post with step by step instructions on how to do something, or if a lot of people have done it, then it’s likely not a durable personal moat. If there’s a playbook for it, then how defensible is it?
Understanding how to build a moat is hard (and takes a long time), so people affiliate w/ brands as short hand: Harvard, Goldman Sachs, etc. As information symmetry increases, however, the value of brand decreases. In a world w perfect information symmetry, your Harvard degree is only worth the intrinsic value of the skills/networks/etc. developed there. As information symmetry increases, however, the value of brand decreases. In a world w perfect information symmetry, your Harvard degree is only worth the intrinsic value of the skills/networks/etc. developed there.
When it comes to network, most people make the mistake of focusing on brand awareness, instead of expertise. They focus too much on the “legible” side of things, rather than knowledge / skills. In other words, focusing on knowledge / skills enables you to most quickly gain the other loops — capital, network, and legibility. but it doesn’t work the other way around.
- The cleanest & most direct way to build career capital in tech is to start a successful company.
Step 1 — Start company Step 2 — Do whatever you want.
If you don’t, you want to have some specific skill, knowledge base, or asset that gives you a moat.
- Assets are more non-obvious, and hard to build, but if you do them they can be good moats.
Steps to building a moat if you’re not going to start a company:
a) “Get in the game” b) Build an asset that builds some social capital c) Convert social capital to financial capital (e.g invest)
@rrhoover couldn’t have started Product Hunt when at Playhaven, he had to start his blog experiment to build enough critical relationships.
Once you’re “in the game”, you can compound a skill, knowledge base, or build an asset.
@Nivo0o0 worked at PH/Angel List, and then started a fund. AL and PH were how he got in the game, the price of entry. He didn’t own it, but he could raise a fund off his social capital.
@HarryStebbings owns 20 min VC. That’s an asset. A valuable asset.
He leveraged that asset to partner with someone and raise a fund.
“Get in the game” so you can build an asset.
Build an asset to get deal flow.
Leverage it to make investments.
Example, in action:
Join Product Hunt in any role (“get in the game”)
- Start dinner series for people looking to do their next thing (“build asset”)
- Share deals with VCs until they give you allocation + build track record to start a fund (“leverage asset”) CONCLUSION —
Personal moats, in rank order:
A/ Building a successful company
B/ Building rare & valuable skillset / domain (e.g. Laura Deming http://ldeming.com )
C/ Building an asset