100 years of financial history

Reference 

1. Paradigm shifts by Ray Dalio

Causes of Burnout

Target Audience

Software Engineers and Tech Lead Managers

Goal of this post

Any engineer reading this should develop an understanding of some of reasons for burnout. If they are themselves feeling burnt or on the edge, they should be able to RCA(root cause analyze) their situation independently and pin point some of the reasons.

Demystifying burnout

People often think that high workload causes burnout. But that is a fallacy. Someone who is excited about a technology, passionate about the mission of the company, finds meaning in their work, can see career progress may thrive under heavy workload and may even be super motivated to take on more.

Take ownership 

Always remember, as an engineer, you own your career. Managing your burnout is your responsibility. You can seek the help of your manager in the process, but it is always better to be on the driving seat yourself. The goal of this post is to outline the top reasons for burnout so that you can debug it yourself.

• Feeling like you have no control - this feeling is often exacerbated in highly dynamic, changing work environments with lot of ambiguity and lot of conflicting stakeholders
• Not getting acknowledged - again complex work environments and structures amplify this
• Having poor relationships with co-workers
• Being treated unfairly by your boss
• Having different values than your employer - this will lead to shrinkage in the meaning that you derive from the work. You will be less connected to the mission and will question "why" we are doing things. You will lose trust and will not see the same bigger picture as your leadership. This acts as a vicious cycle and you will be less and less motivated to go to work everyday leading to burnout. 
• If your organization is structured to hire and feed off of insecure overachievers or people perpetually suffering from imposters syndrome, you need to understand that dynamic ASAP. 

elite professional organizations deliberately set out to identify and recruit “insecure overachievers” — some leading professional organizations explicitly use this terminology, though not in public. Insecure overachievers are exceptionally capable and fiercely ambitious, yet driven by a profound sense of their own inadequacy. This typically stems from childhood, and may result from various factors, such as experience of financial or physical deprivation, or a belief that their parents’ love was contingent upon their behaving and performing well.

If you are an engineer reading this post who has experienced burnout, I would love to hear your story in comments. 

Burnout detector tests

1. Mind Tools : Burn out self test
2. Psychology today : Burn out test for non-services fields
3. Psychology today : Burn out test for services fields

References

1. If you are so successful, why are you working 70 hours per week

Coronavirus will expedite Amazonification of the world

Coronavirus is expediting the Amazonification of industries worldwide. Here are the first order effects of shift of usage to Amazon

• People are staying home instead of visiting malls and ordering essentials on Amazon. This is expedited by the large scale closure of malls and retail complexes. 
• People are ordering groceries on Whole Foods for home delivery inspite of higher prices compared to their local grocery store. For a lot of families, the grocery budget is moving to Amazon. Given the large scale closure of restaurants worldwide, this will only increase. 
• People staying home are watching videos on Amazon Prime Video for entertainment purposes. Given Prime membership benefit is already providing so much value, netflix and disney could be a discretionary expense and Prime video could be a necessary essential
• Businesses going through the sudden demand and revenue shocks will need to rethink their expenses and specially fixed cost expenses. Technology and IT will be a big fixed cost expense waiting to be cut at this point. This will expedite the move to Cloud (AWS is rightly positioned for this) as it provides the value proposition of making this a variable cost - pay as much as you use. If there is no demand, dont pay. This will put Amazon into a strong position with respect to the shift to Cloud. 
• Audible has made 100s of kids audiobook free. This will expedite adoption and usage of Alexa. Parents at home juggling kids, job and a pandemic will find this great value. 
• Amazon Care, the healthcare arm of Amazon will work with Bill Gates to delivery Coronavirus tests to homes in the Seattle area. If it works, this could be scaled globally in collaboration with Governments and could put Amazon in prime position to enter healthcare. 

Data points supporting the above trends

• Amazon hiring 100k new workers to meet demand 
• Amazon pantry temporarily closes as online shopping surge amid coronavirus outbreak
• Amazon AWS launches 20 million initiative to fight the coronavirus

All the above viewpoints and facts show that how Amazon has grown in value during these unprecedented times the world is facing through the pandemic. There is the other side of the equation, which shows that malls, commercial real estate could be in dire shape and there could be a lot of bankruptcies.

At the time of this writing, US already has more than 100k coronavirus cases and given the exponential spread, it doesnt look like stopping. In fact, things will get a lot worse, before it gets any better. 

Cheesecake factory, Subway and other major retailers have told their landlords that they cannot pay rent. The restaurant industry has already gone through unprecedented layoffs. Given that the US response to the crisis has been delayed, the closures will last as cases will continue multiplying. This will have cascading effects onto the landlords, malls, commercial real estate players who have these retaurants as renters. There will be cascading bankruptices which will spread through the economy. Malls will find it hard to find replacements during these tough times. Even if the economy were to open up today, people who are seeing widespread deaths in their communities arent going to rush to restaurants/malls anytime soon. 

This will complete the other side of the puzzle and will expedite Amazonification of the world.

Update July 24, 2020 

Putting my Money where my mouth is :

The Intelligent Investor - Book Review

Introduction

• Obvious growth in physical prospects of a business do not necessarily translate to profits for investors
• It was easy to forecast that the value of airtraffic would grow spectacularly over the years. But despite the expansion in revenues at a pace far greater than the computer industry, a combination of technological problems and overexpansion in capacity led to disastrous profit figures. 
• Same happened for Uber in 2015. Even though the rides volume grew massively till 2020, any investment in late 2015 saw negligible gains at the time of IPO. 
• Experts do not have a dependable way of selecting the most promising companies in the most promising industries
• The pendulum in stock markets swings from irrational exuberance to unjustifiable pessimism

Investment vs Speculation

• Investors judge the market price by establishing standards of value
• Speculators base their standards of value based on the market price
• The intelligent investor has no interest in being temporarily right. To reach your long term financial goals, you need to be reliably and sustainably right.

The Investor and Inflation

• As recently as 1973-82, the US went through one of the most painful bursts of inflation. As measured by CPI, prices more than doubled during that period rising at the rate of nearly 9% annually. In 1979, inflation raged at 13.3% paralyzing the economy in what is known as stagflation, and many leading commentators began questioning whether America could lead in the global marketplace.
• In times of deflation, it is better to be a lender than a borrower, which means that investors should keep atleast a small portion of their investment in bonds, as a form of insurance against deflating prices. 
• The stock market lost money money in 8 of the 14 years in which inflation exceeded 6% and the average returns of these years was a measly 2.6%. 
• While mild inflation allows companies to pass on the increased costs of the raw materials to customers, high inflation wreaks havoc forcing customers to slash their purchases and depressing activity through the economy. 
• Asset classes for inflation protection - REITs and TIPs. 
• Commentary for 2020 recession : At the time of this writing, REITs may be risky. As we get more clarity into how shallow/deep this recession is going to be, there is a fair chance that commercial REITs may suffer heavy losses as the lockdown extends as the virus will now spread to new hotspots into the heartland of America. 

A century of stock market history

Coronavirus diaries

This post contains real life stories from people from across the world about how they have been impacted by coronavirus. This may feel depressing to read and some of the accounts are troubling and horrific. Please read at your own discretion. However, all these are real accounts from real people.

May 17

• People going missing from west bengal, india hospitals

March 28

• A tale of two states

March 26

• A choir group had 60 people show up for practice. Now 45 are sick, 27 tested positive and 1 dead.
• Recovery story of a 29 year old 
• Facebook obituary of a person who got coronavirus on a cruise ship

March 24

• Man who lost both his grandparents from coronavirus in 24 hours
• A physician who is self isolating from her kids, watches them from the window
• A urge from a mother who lost her 21 year daughter to take this virus seriously

March 21

• 42 year male on horrific account of how he felt through the coronavirus sickness

March 20

• Story of a nurse talking to his children from 20 feet

March 18

• We are 7 to 10 days ahead of you America - a post from western washington

March 13

• Story of a mom who is with her baby with asthma in the ICU
• A doctor's plea from San Francisco
• Seattle area hospital suspends elective surgeries and is down to 4 days of gloves supply

March 9

• A doctor's report from Italy when the hospitals in Lombardy were beginning to get overwhelmed
• This is a post for my family and friends outside Italy 

March 8

• Seattle woman who survived coronavirus shares her story

Online courses for engineers interested in management

1. Writing skills for engineering leaders - coursera
2. Self awareness and the effective leader - coursera
3. Personal Leadership development planning and leading high performance teams - coursera
4. 
   

Coronavirus - Events

March 30

• US stock future falter, Oil trades at 18 year low - goes below 20$ 
• Trump extends Coronavirus guidelines till April 30, targets to keep US death toll below 100k
• Bend it like the bay area. 30 days after publication of Coronavirus in the bay area and 2 weeks after lockdown, bay area curve looks like flattening. Things could change anytime, cautiously positive
• 

March 27

• President Trump signs 2 trillion coronavirus stimulus bill
• US cases top 100k
• California bans evictions
• India declares relief package worth 22.5 billion dollars

March 26

• India declares country wide lockdown - worlds largest coronavirus lockdown
• Spain becomes Italy, spanish doctors are forced to choose who to let die

March 25

• Wells Fargo, Citi, JPMorgan, and US Bank have agreed to a 90 day grace period for mortgage payments for those impacted by Covid-19 in california
• Bay area public schools extend temporary school closures to May 4
• Spain's death toll surpasses China after biggest one day jump

March 23

• Central banks to purchase unlimited amounts of treasuries
• This was the fastest 30% selloff ever exceeding the pace of the great depression
• Coronavirus cases top 20000 in New York with 12000 cases in NYC
• Italy coronavirus deaths slow for second day in a row

March 21

• FDA grants emergency use coronavirus test that can grant results in 45 minutes

March 20

• Italy death toll rises by 546 in a day and stands at highest in the world

March 19

• California wide shelter in place order - https://www.facebook.com/GavinNewsom/posts/10158296906323117 
• Coronavirus : The Hammer and Dance

March 18

• ECB to launch 750 billion bond buying program
• Another day of trading halt - investors sell everything
• President Trump signs coronavirus relief plan to expand paid leave

March 17

• European Union leaders agree to close borders for 30 days
• Beijing kicks out US journalists

March 16

• Dow suffers worst single day fall since 1987 Black Monday
• Amazon to hire 100k more delivery workers and give raises to current staff amid coronavirus demand
• Order of the health officer for the county of santa clara
• Bay Area officials issue stay at home order

March 15(Sunday)

• Stocks and Bond yields slide after Fed cuts interest rates to 0
• UK also added to US travel suspension list

March 13

• US declares national emergency as coronavirus reaches 44 states
• S&P500 rises 9.29% on Friday
• Dairy of a crazy week in markets
• US Coronavirus cases reach 2000 and growing

March 12

• CNN Global Coronavirus townhall - all the news go mainstream
• Stocks plunge 10% in worst fall of the Dow since 1987

March 11

• India suspends all tourist visas
• US suspends all travel from Europe

March 10

• Act today of people will die note shared 
• Italian healthcare swamped

March 9

March 8

• Recession note shared on siliconvalleystories
• Flatten the Curve note shared on silicon valley stories

March 7

• Murphy's law of retirement shared

March 5

• The black swan of 2020
• California orders insurers to waive out of pocket costs for coronavirus testing

March 1

• Coronavirus in the bay area

Coronavirus is far worse than you think

If you are not worried yet or dont think that you are old enough that Coronavirus will affect you, you are being irresponsible 

Two facts

1. China didnt build a hospital in 10 days for nothing
2. Italy didnt quarantine the whole nation and stop the country for simple reasons

These are unprecedented events in history

Here is some news about how things are playing out elsewhere

1. War like situation in Italy - they have to chose who to let live and who to die
2. A doctor's take from Italy about how hospitals are being transformed

Facts

1. A very detailed analysis of the outbreak and exponential growth across countries
2. CNN townhall - this is all on mainstream media now

For young people who think that they are less likely to get it and be fine even if they do, upto 20% of young people who get coronavirus could still die

Hope

1. Flatten the curve
2. This is how COVID-19 is growing and this is what exponential growth looks like

Healthcare crisis - Global Recession 2020

This time it is different.
2000 - we had the tech bubble burst
2008 - we had the housing crisis which led to financial crisis
2020 - we will have the healthcare crisis which will lead to a financial crisis

Here are the factors playing into the recession

1. Healthcare crisis due to Coronavirus will impact ~10% of the world population
2. Supply side pressure due to reduced workforce, factory shutdowns due to coronavirus
3. Business and pleasure travel will reduce by 80% due to coronavirus scare
4. Demand side pressure 
5. Coronavirus will become a global epidemic
6. The world is already slow to react and has lost valuable time to prevent this crisis
7. Supply and demand side shocks will take at least two quarters and will lead to quarter over quarter contraction
8. Oil prices will drop precipitously due to supply and demand shock
9. Situation may be exacerbated by health crisis -> job loss -> insurance loss -> financial loss -> depression -> health loss. This could be a vicious loop. 

Trends

1. This will lead to new work from home trends and companies that support it
2. Several startups which have been fueled by cheap capital in the past decade will have a existential crisis and will need to expedite path to profitability
3. Steep valuation cuts in travel stocks - it is bad, it will get much worse before it gets better

References

1. Coronavirus - the blackswan of 2020

Coronavirus - Flatten the curve

Is America headed down Italy's path ? Italy healthcare system is crashing !! 

This is an example of what the situation in Italy looks like. 
This is what we can do

Context

I published a post 1 week back(on March 1) claiming that California Coronavirus cases will go from 0->100 in a week(by March 8). I also published another post comparing this Coronavirus situation to a "Black Swan Event". Needless to say that it has happened. I am very sad that some of the predictions came true because this involves some ones wife/husband/son/daughter that fell sick. I am super sad and more worried about the one that did not.

Recap :

1. 100 cases in california - True (currently 105)
2. Clusters of infected areas evolve - True (King County in Seattle, Santa Clara in bay area, NYC are all clusters)
3. Some town in the west coast gets quarantined - False

What is the goal of this post? 

I can make further predictions from hereon

1. Santa Clara county in Bay area alone will have 100 cases by next week given it has 25 now
2. UK will cross 500 cases by next week given it has 200 cases at the time of this writing
3. NYC will have 400 cases by next week
4. Washington will have 500 cases by next week
5. California will have 400 cases by next week

I hope you all understood what exponential growth looks like. 

This post is not about further predictions that went right. It is about the prediction that did not go right - some town in the west coast gets quarantined. Why did I get it wrong and what should be our way at preventing this catastrophe. But before we get there, lets see how this week went and some disclaimers.

What is explicitly not the goal of this post?

The goal is not to create panic. I strongly believe that when it comes to public health, honesty is better than hope. 

Disclaimers

Like I wrote in my last post, these are not my employers views. I am no expert in biology or rather in anything. I think nobody knows what is going on right now. I know a thing or two about startups and have seen some hockey stick curves in the past. That said, there are lot of false news on the internet. Use your judgement. Don't use this post or anything on my blog for any material decision in your life before doing your due diligence. 

How did the week go and what did I learn ? 

On March 1, I claimed in my blog that Coronavirus is growing exponentially with a CFR(Case Fatality of 3.4%)  and I urged people to take this seriously and WFH,not take trains, avoid public gatherings, etc to protect themselves, their families and their community. This blog has been widely shared after that and lot of the readers have taken some of this to heart. I am overwhelmed by your response. This post is for those people. This is for those who fought back when some one said "this is just a flu", "only the old or people with underlying conditions are dying".

Learnings and worries

1. At the time of that writing, I was not completely aware how ill-prepared the CDC was and that they were testing 100 people per day. UWash has come up with new testing kits in the mean time which are testing samples at ~7% on average. But we are still far from full testing capacity across the US. This is the biggest point of concern.  In last 10 days Italy diagnosed 95% of total cases they now report; South Korea 85%. 2 weeks ago, Italy had just 9 cases. 7 weeks ago, China reported 50 cases. The point: once the epidemics are discovered, they’ve been underway. I fear we will find a lot more cases in the US in the coming week, hoping that we raise our game in testing. I just hope that the US learns and can turn this graph around. 
2. Past recessions have looked like Financial Loss -> Job Loss -> Depression -> Health Loss. This time, it may be different. It may look like Health Loss due to coronavirus -> Depression -> Job Loss -> Healthcare loss -> Financial Loss. Basically, things may happen in the reverse order. Given American's have no sick leaves and a lot of them are underinsured or dependent on their job for insurance, they are the most vulnerable. 
3. If you had a hard time understanding what exponential growth looks like from my post, here is a much more explicit breakdown. The calculations may be off by days or weeks, but hope you get the point about why this discussion is so important for public health.
4. India is right in the early phases of the spread and it is home to more than a billion people. I am very worried at this stage about how things will pan out in the next 2 weeks. I hope to be wrong, but if India also reaches 100 cases by next week, things could get really bad. 

Recommendations

1. As you may have heard Italy is about to quarantine 10 million people in Lombardy. At this point our goal should be to reduce the total number of cases at the peak of the epidemic. Besides quarantine, there are several measures : reduce public transport, cancel public events, stop non-essential travel, stop gyms, move schools to online classes being some. Here are the CDC guidelines on preventing community spread. 
2. Our healthcare system is going through a denial of service (DOS) attack. This is what delaying/reducing it may look like from the economist
3. 
4. This is the first epidemic that the world is facing in the time of social media. Some social/medical/mental health implications beyond the disease from Ground Zero in China .

A chart from how the situation in italy looks like

Some other readings 

1. Why soap works well against viruses ?

Hope

1. The fact that some of the companies have declared WFH, lot of the companies have cancelled conferences are a positive step towards reducing that R0 and reducing that spread. We need to aggressively quarantine cities and reduce that R0 and reduce the load on the healthcare system to mitigate the disease. I dont want to introduce complacency in this post, this is as bad as it gets.
2. I hope some of the secondary predictions I make here in the post are actually wrong and the government can mitigate using some of the strategies mentioned here. 

Murphy's law of retirement

As a bull market proceeds, people's portfolios swell. These investors, seeing the size of their portfolios, then decide to retire at or near the top of a bull. After a long bull market future expected returns are lower and the potential for reversion to mean is high. People retire, then subject themselves to terrible sequence of returns risk at the worst time, early retirement. The sequence of returns early in retirement is crucial to a financially successful retirement. People who retire when valuations are high are most exposed to this risk.

Why am I posting this ?

The past bull market of the last 10 years has really fuelled he FIRE(Financial Independence and Retire Early) movement. I think it is time to remind all the FIRE aspirees about the Murphy's law of retirement. 

Psychology of Investing through a recession

Psychology plays a big role into how investors see through a bear market. Even the most staunch buy and hold investors can get wiped out during the harshest recessions. These are investors who have help regular 10-20% market downs and bought the dip into a bull market.

Asset allocation and the ability to stick to it is off course very important. Often times investors coin asset allocations during bull markets and heavily "overestimate" the amount of real risk they can tolerate. Overestimation is a harsh word here. Bull markets are characterized by good times, growing earnings, growing incomes, new cars, new houses, etc. Hence, recency bias can trick an investors brain and the investor tend to forget what bad times look like. The probability of bad things happening tend to be low. Also generally investors see peak asset prices towards the end of a bull market, fuelling higher confidence, retirement dreams, etc.  Once a recession emerges, several risk factors become more probable. Often times they are correlated and become more likely to happen. An investor generally keeps 6 months expenditure as emergency funds. Let me underline some risk factors that can blow up the emergency funds during a recession

• job loss
• health insurance loss
• stock market decline and scare of contagion into bond/real estate prices
• mental and physical health issues
• immigration uncertainties
• lack of diversification of assets
• emergency fund being too small
• regret of not having sold and FIREd
• house price underwater
• over-investment in company stock
• high amount of leverage in rentals
• head-fake or bull-trap

All these things piled together leads to "flight to safety" mentality which leads investors to sell at lower prices. When all these dark clouds appear together, even the biggest "buy and hold" investors can fold. Also this has played out time and again from 1942, 1972, 2008, 2020

I have compile a list of real life readings for investors from previous recessions/bear markets

1. Devil take the hindmost : a history of financial speculation
2. A tale of health crisis, layoffs, 2 recessions and how a couple FIREd in their 40s
3. FATFire Facebook thread on recession stories
4. Have courage : we have been here before - describes the bleak outlook of capital markets in the midst of world war II 
5. Making sense of a stock market that doesn't make sense

Guggenheim

1. Market whiplash perspective during 2020 recession
2. Note published after the S&P500 experienced worst weekly loss after 2008

Sabre Capital

1. Bear Market Notes

Boggleheads threads from past recessions

1. [Oct 9, 2008] Sheepdog's "To sell or not to sell" is a must read for all new investors or new retirees. It talks about how Sheepdog made the decision at the depths of the financial crisis. This is the point in 2008 when the market was 40% off the peak. Point to note was that the market fell 20% from here further to reach the bottom. Also the market rose 10% from the day after he sold
2. [Dec 29, 2008] Maximum tolerable loss thread on boggleheads
3. [Sep 7, 2008] Plan B - achieve your required minimum wealth in loss. This thread is important because the recession comes after a prolonged bull market. Hence, investors often feel that they are close to their retirement goals, life goals, etc. The should tie their portfolio and asset allocation to those goals. If an investors current asset allocation, guarantees them to not need to work full time, they may consider taking some chips off the table by the time the market still allows them to. Otherwise, the bear market may wipe out that dream leading to regret and despair. 
4. [Sep 16, 2007] Mortgage your retirement - long 3x ETFs threads that surface at the peak of the bull market
5. [Mar 3, 2009] REIT disappearance thread on boggleheads
6. [28 Jan, 2009] Real estate expert stay away from malls

Coronavirus - The Black Swan of 2020

What is a black swan ?

Here is the investopedia definition : A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

The concept was highly popularized by Nassim Taleb's book. 

On March 1st, I published a blog post predicting the massive outbreak in california and particularly the west coast. Washington has evolved as the epicenter of USA. That article looks very prescient now.

I stated in the article

The disease has a R0 of ~2.5, that means that 10 affected people will spread it to 25 people. R0 is a measure of how infectious a disease is and is heavily used for planning strategies to mitigate the spread(R0 calculation is an ongoing task here and it lies between 2 and 3.5). This is what makes it an exponential rate of increase

Paul Graham, VC investor and the co-founder of startup accelerator firm Y-combinator also tweeted yesterday

This is similar to catch a lightening in a bottle and indeed very hard to explain outside the startup world. Very few people understand the power of compounding.

This is what also explains why the government response has been bungled, our testing kits have lacked in numbers. In-spite of a headstart from china and other countries, our preparation and response has been tepid. This is what makes it a black swan.

Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

Before talking further, customary disclaimer and warning. I want to emphasize I dont know how good/bad it will get from here and how sharp/shallow the coming downturn will look like. This is not investment advice. Use your own judgement. The world is uncertain and I am just talking about some possibilities. I might be wrong.

Now that we have a blackswan event, how is the investment community(Venture Capital and Hedge Funds) reacting

Venture Capital

1. Sequoia capital, the legendary silicon valley VC firm published the blog post - coronavirus the black swan of 2020. This is eerily reminiscent of 2008 presentation that sequoia capital did before the depths of the housing and financial crisis, RIP Good times. Does that ring a bell ? Yes, this time it is different. 
2. Some of the key points from Sequoia's black swan presentation
• It will take considerable time — perhaps several quarters — before we can be confident that the virus has been contained. It will take even longer for the global economy to recover its footing. Some of you may experience softening demand; some of you may face supply challenges.

• Monetary policy will prove a blunt tool in front of a healthcare crisis
• Squeeze coming in capital spending, marketing, sales, headcount as we are already seeing in some industries like travel


• A distinctive feature of enduring companies is the way their leaders react to moments like these. Your employees are all aware of COVID-19 and are wondering how you will react and what it means for them. False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action.
• Already, there is a thread on the private social network blind titled  - Anybody think differently about their employer after seeing the response to COVID-19

• It will take considerable time — perhaps several quarters — before we can be confident that the virus has been contained. It will take even longer for the global economy to recover its footing. Some of you may experience softening demand; some of you may face supply challenges.

• Monetary policy will prove a blunt tool in front of a healthcare crisis
• Squeeze coming in capital spending, marketing, sales, headcount as we are already seeing in some industries like travel


• A distinctive feature of enduring companies is the way their leaders react to moments like these. Your employees are all aware of COVID-19 and are wondering how you will react and what it means for them. False optimism can easily lead you astray and prevent you from making contingency plans or taking bold action.
• Already, there is a thread on the private social network blind titled  - Anybody think differently about their employer after seeing the response to COVID-19

Hedge Funds

Like with any downturn, some firms will be more impacted than others. The legendary hedge fund investor, Ray Dalio published the blog post : My thoughts on coronavirus. Ray Dalio has a net worth of ~$18.7 billion and is the founder and chairman of Bridgewater Associates with approximately $160 billion AUM. Here are his thoughts on the market impact section - 

The world is now leveraged long with a lot of cash still on the sidelines—i.e., most investors are long equities and other risky assets and the amount of leveraging that has taken place to support these positions has been large because low interest rates relative to expected returns on equities and the need to leverage up low returns to make them larger have led to this. The actions taken to curtail business activities will certainly cut revenues until the virus and business activity reverse which will lead to a rebound in revenue. That should (but won’t certainly) lead to V- or U-shaped financials for most companies.  However, during the drop, the market impact on leveraged companies in the most severely affected economies will probably be significant. We will show you what that looks like shortly. My guess is that the markets will probably not distinguish well between those which can and cannot withstand well the temporary shock and will focus more on their temporary hit to revenues than they should and underweight the credit impact—e.g., a company with plenty of cash and a big temporary economic hit will probably be exaggeratedly hit relative to one that is less economically hit but has a lot of short-term debt. 

Additionally, it seems to me that this is one of those once in 100 years catastrophic events that annihilates those who provide insurance against it and those who don’t take insurance to protect themselves against it because they treat it as the exposed bet that they can take because it virtually never happens.  These folks come in all sorts of forms, such as insurance companies who insured against the consequences that we are about to experience, those who sold deep-out-of-the-money options planning to earn the premiums and cover their exposures through dynamic hedging if and when the prices get near in the money, etc. The markets are being, and will continue to be, affected by these sorts of market players getting squeezed and forced to make market moves because of cash-flow issues rather than because of thoughtful fundamental analysis.  We are seeing this in very unusual and fundamentally unwarranted market action. Also, what’s interesting is how attractive some companies with good cash yields have become, especially as many market players have been shaken out. 

Ray Dalio doesnt say that this is a black swan but uses the words

it seems to me that this is one of those once in 100 years catastrophic events

Bill Gates 

Bill Gates is the founder of Microsoft and the second richest person in the world at the time of this writing. Rather than debate whether to allow WFH policies or not, he is spending his time helping the world become a better place. I highly recommend watching his TED talk from 4 years back where he states how the world is ill-prepared to fight the next outbreak.


If it is not clear why all the above is a problem, it is going to create huge pressure on the healthcare system, the health of the population, lost productivity, supply side pressure due to factory shutdowns, lost demand because of cancelled travel, vacations, business trips etc.

Conclusion

The goal of this blog is not to give investment/life advice, but to educate the community in terms of what is going on. Hope you are able to learn from some of the stalwarts of the VC and hedge fund industry and take the best of decisions in terms of health and investments for yourself and your family. 

References

1. Bill Gates ted talk : the next outbreak? We are not ready. shared 4 years ago.
2. Ray Dalio's thoughts on coronavirus shared on March 3
3. Sequoia capitals memo : coronavirus - the black swan of 2020
4. The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility" (Incerto)
5. Healthcare crisis : recession 2020

Best books for Investing and Financial Independence - FIRE

The FIRE(Financial Independence and Retire Early) movement has really picked up in the last decade.

Here are the best books to prepare for FIRE

1. The richest man in Babylon
2. The simple path to wealth
3. The Intelligent Investor
4. The Little Book on Common Sense Investing
5. Rich Dad Poor Dad
6. A random walk down wall street
7. One up on wall street
8. Devil take the hindmost - a history of financial speculation 

Engineering Manager's Blog reading list

1. Excellent resources github link from charlax
2. Rand in response's blog on engineering management
3. Kate Huston's management blog
4. Kate Matsudaira management blog
5. Yishan Wong's blog - ex CEO of reddit
6. staffeng - by CTO of Calm
7. Irrational Exhuberance - by CTO of Calm
8. theengineeringmanager.com

Questions to ask to make sure you built a great Product roadmap

This is a very broad question. It depends on couple of dimensions : who your customers are and who your competitors are. Now depending on whether you are a product team, infra team or a services team, your customers and competitors will vary. The rest of the blog analyzes this from the perspective of a Product Engineering Manager

Product EM

Customers : Users
Competitors : Other industry products

Questions to ask

1. What is the mission and 2 year vision of the team?
2. Where does this put us in terms of competitor landscape in 2 years?
3. What are the latest trends in the product landscape that can disrupt the product? Examples : ride-sharing disrupted taxis, stories disrupted feed, mobile disrupted traditional camera, e-commerce disrupted brick and mortar. 
4. What is the strategy of the team that supports that mission/vision
5. How many customers(measured in MAU, DAU,WAU) and what is their level of engagement(impressions, clicks, sales, communication, usage, retention) needed for the north star
6. Reverse engineer into half over half goals
7. Ideate and prioritize(cost, confidence, impact) top engineering projects that can hit those goals
8. Roadmap should have a balance of short term, medium term and long term projects. There should be a mix of exploration and exploitation. The balance 50-50, 20-80, 70-30 may change half over half to compensate for new learnings and data as you go. 

How do you continue to develop yourself as a manager ?

1. Continuously seek 360 degree feedback, accept it and work towards improving it - you own both the perception and the reality of the feedback as a leader
2. Provide mentorship to others (EMs, ICs, PMs)- put yourself in a position of being able to learn recurrently from other's experiences 
3. Delegate and auto-pilot your current team and take on more organizational responsibilities
4. Interviews and hiring - learn from experience of TLs and EMs from other companies
5. Read profusely
6. Prolific writer
7. Reflection and introspection
8. Re-read and re-write previous blogs
9. Networking with ex-colleagues, ex-team mates
10. Invest in weak connections
11. Follow the earnings call of big tech companies, understand their product strategy and direction
12. Follow the VCs, understand the startup ecosystem, S curves, network effects and the next bets
13. Pursue financial independence aggressively to decouple money and career

What else do you think that I should be doing to develop myself? Please let me know in comments.

How to maintain engineering morale

There are two aspects to this. Morale at the team level and a group sense. Morale at the individual level. We will dissect both there. 

1. Strong sense of purpose, mission, vision and direction
2. Encourage, acknowledge and act on feedback on an ongoing basis
• Get feedback about small things like team lunch timings, offsite planning and big things like roadmapping process alike and act. This will give the team a sense of transparency and a feeling of being heard.
3. Recognize achievements
• Top down awards
• Bottom up nominations
4. Offer career development opportunities/interesting projects/mentorship opportunities
5. Flexibility and work life balance
6. Openly discuss the frustrations, blockers and proactively work towards smoothening/ unblocking execution. Keep checking about new things that may come up. 
7. Create an element of fun that the team can enjoy together

How do you know you are a good Manager?

When I started as a manager for the first time, my work life balance was pretty bad. I was everywhere, firefighting, involved in several projects, PMing, hiring, reverse engineering timelines, fighting outages. I was the bottleneck for the team.

Key thing for managers is to "Never have a bottleneck in the team and to definitely not be the bottleneck". It might seem counter-intuitive but a manager is doing well if they can manage themselves out of their job. Here are 10 questions to ask yourself :

• Can you take a week off without disrupting things?  
• Can problems be handled without you being in the room all the time ?
• Can the team deliver consistently ? 
• Do people feel that you are accessible, open, transparent. Can they share feedback openly ?
• Can you provide good/constructive feedback to your team?
• Can you delegate well ? 
• Can you take on work outside your immediate scope ?

References

1. How to tell if you are a good manager

Decision Making in Poker, Investing and Management

Poker, Investing and Management - these things have one thing in common. The player, the investor and the manager all have to make decisions when faced with imperfect information and uncertain outcomes. In an ever changing and fast moving world of business, quality decision making has become ever important. It is often counter intuitive to think that a decision can only be judged based on the outcome. Well thought out decisions may fail and bad decisions may succeed. It is hard to tell the difference between luck and skill in a small number of iterations. It is about the process of coming to decision that makes it a good/bad decision. Hence managers are not necessarily evaluated on "what" they achieved but on "how" they achieved it.

References

1. Howard Mark's memo to Oaktree clients "You Bet"
2. Thinking in bets
3. Book summary : Thinking in bets

Howard Marks letters to OakTree Clients

1. Nobody knows part II - March 2020
2. You bet - January 2020
3. This time it is different - June 12, 2019
4. On the other hand - July 2019
5. On the couch - January 2016 
6. Which way now - March 31, 2020

What does a healthy team look like

The best way to think about this to understand what a not healthy team looks like. Engineering Management is about balancing people and projects.

Scenario 1

All the people are very happy and all the projects fail. Then the team doesnt serve business goals

Scenario 2

All the projects succeed, but all the people burn out and leave. Then you didnt retain and grow top talent and you cant delivery any further. Hiring takes time and has onboarding cost, so your team is not sustainable.

Both the above scenarios are undesirable outcomes that should be avoided.

Healthy team is about balancing people and projects and to sustainably and consistently deliver against changing business/product/platform needs. 

How to build happy teams

This post is not necessarily for managers. If you want to increasing the bonding between the engineers on the team, how well they gell together, here are some ideas. Happy teams where individuals enjoy good interpersonal relations often lead to good psychological safety which improves team productivity, brainstorming about ideas, challenging decisions and leads to better outcomes. Here are few simple things that teams can do :

1. Weekly team lunch
2. Weekly game nights
3. Bi-weekly happy hour
4. Quarterly team dinner
5. Bi-annual offsites that improve team dynamics. My favorite is escape room

Management Style

What are the key words that describe management style

1. Visionary - set technical/product/project direction and strategy. Connected to the mission and vision of the team - gives a sense of purpose
2. Authoritative - mobilize the team towards a vision
3. Coaching - use a coaching habit to grow the people
4. Democratic - collective and inclusive decision making
5. Transformational - careers, projects, companies

You may not be using only one style and may be switching between the various styles depending on the execution phase where you belong.  

For example chronologically through the half, you have a visionary style during setting up the team charter/roadmapping, authoritative style during roadmapping/goal setting, coaching style during execution, democratic style during conflict resolution, transformational style during changing direction. 

At the same instant of time, you may use different styles based on the level of the engineer you are working with. You need to vary between assertive(directive) vs assistive(supportive) style. For junior engineers, you need to be more assertive so that they get a clear set of instructions to execute on. Otherwise, they may feel too much thrash. For senior engineers, you need to be more supportive so that they get the freedom to chose their path to the goal. 

What people on the team will feel : PETTIFOG

1. Personalization
2. Empathy
3. Trust
4. Transparency
5. Integrity
6. Fairness
7. Openness
8. Growth

Extra : Agency

References

1. Mastering new leadership styles

Product Manager's book reading list for an EM

This is a preliminary reading list. I expect PMs to be more thoroughly read. This article is geared towards an EM to better understand what your PM is reading and how he/she is thinking. Please leave your recommendations in comments. Will keep adding to this list.

Interviews

1. Decode and Conquer: Answers to Product Management Interviews
2. Cracking the PM Interview: How to Land a Product Manager Job in Technology

Writing

1. On Writing Well: The Classic Guide to Writing Nonfiction

Presentation

1. Presentation Zen: Simple Ideas on Presentation Design and Delivery (Voices That Matter)

Product strategy 

1. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change)
2. Hard thing about hard things : Building a business when there are no easy answers
3. Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs

Building Businesses

1. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
2. Zero to One: Notes on Startups, or How to Build the Future
3. Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers

Design and User Experience

1. The Design of Everyday Things: Revised and Expanded Edition

Leadership

1. Thinking fast and slow

Coronavirus in the bay area

Context : At the time of writing March 1(Sunday) , there were 3 cases in Bay Area and 5-7 in Washington.

Prediction by March 8(next Sunday), we will have

1. 100 cases in california
2. Clusters of infected areas evolve 
3. Some town in the west coast gets quarantined

Outcome(Edited on March 7, Saturday)

This is what we can do to flatten the curve

Disclaimer : I am no bio expert. These are learnings I accumulated from reading blogs. Please use your own judgement. Not everything you read on the internet is true. I am just posting the summary of my learnings here and some predictions drawn from that. 

Why am I posting this ?

Lots of friends are asking me whether to work from home and whether they should get supplies stocked up or not. I see a bunch of people clueless about the situation and lot of panic. Also people are not sure whether they should use bart/caltrain/public transport. Wanted to share some of the research that I did over the weekend.

Summary of my learnings and some numbers

Disease -> Spread -> Metrics -> Virality -> Infrastructure hotspots

1. Coronavirus may have spread in the seattle area for weeks as gene sequencing results suggest
2. The virus has a 14 day incubation period
3. The test in the hospital takes 2-3 days 
4. This results in a delay in detection of around ~15 days
5. Thus there are way more people around affected than we know
6. Detection of peak will be delayed after the actual peak
7. As we see from italy, the government will have no way other than quarantine a whole city by the time they detect a cluster where the virus is spreading
8. The disease has a CFR(Case Fatality Rate) of ~2.3%, that means that 23 out of 1000 people affected will die
9. The disease has a R0 of ~2.5, that means that 10 affected people will spread it to 25 people. R0 is a measure of how infectious a disease is and is heavily used for planning strategies to mitigate the spread(R0 calculation is an ongoing task here and it lies between 2 and 3.5). This is what makes it an exponential rate of increase
10. A very good read to learn more about R0 and CFR and to put things into perspective, and how different diseases(measles, flu, rabies) compare against each other on these two dimensions
11. Inspite of the low CFR, this disease is a strain on the medical infrastructure due to clustering around particular locations. 
12. California has 1.8 hospital beds per 1000 people
13. As you can see, that given the CFR, if the disease spreads, we will only be able to care for the critically ill patients only. This is also something that has been observed in the past in other countries. Non-critical patients have been asked to stay home
14. Couple of factors that could test USA: lack of paid sick leave and some people not having healthcare. The high population density in the bay area may expedite things too
15. This will effectively create a Denial of Service(DOS) attack on our healthcare system
16. This could very well put the world into a global recession where rate cuts may not really help
17. Summer is still 1 month away. 

What steps can we take as individuals to prevent/protect themselves

1. Please watch the government video : https://www.youtube.com/watch?v=nnz95Ssgt3k

References

1. Cryptic transmission of novel coronavirus revealed by genomic epidemology by Trevor Bedford
2. Why am I concerned about the coronavirus : applying a viral growth data metric to a viral crisis by Ed Baker - ex Uber and ex Facebook.
3. How to decide when to take precautionary action on coronavirus - an analytical model by Adam Gries
4. Coronavirus dashboard
5. Bill Gates blog post on how to respond to coronavirus now and to epidemics in the future
6. The virus is coming - In public health honesty is worth a lot more than hope - The Economist
7. Harvard FAQ

Update 

1. At Mar 2, 2.30pm PST 16 people are affected across the state of california - 6 people die in Washington
2. Mar 2, 5.20pm PST - 100 cases of coronavirus in the US
3. Mar 3, 10.30am PST, 24 people are affected in california
4. Mar 3, 11.45am, Seattle times has taken down their paywall https://www.seattletimes.com/seattle-news/health/coronavirus-kirkland-seattle-updates-tuesday/
5. Mar 3, 11.45 am New cases in washington looks like doubling every 6 days
6. Mar 3, 2.20pm - 45 cases in california
7. 
8. March 4, 11.28am 58 cases in california, 1 person sadly dies
9. 
10. Mar 5, 10.45pm update : Coronavirus - Black Swan of 2020
11. Leaked presentation in hospitals show that they are prepared for millions of hospitalizations
12. 
13. March 7, 3.09pm, 104 cases in California. The predictions came out true. 
14. 
15. If you have read till here, this twitter thread breaks down what exponential growth looks like. 
16. Please stay healthy and stay safe for yourself, your family and your community. 

1. Must watch video from NYC ER doctor - author of superbugs, race to stop an epidemic