Say you want to improve at your job. Given finite time and resources, you can either focus on getting better at what you’re good at or getting okay at what you’re bad at.

Traditional performance management focuses on the latter. It identifies gaps in performance and asks an employee to please fix them or else.

In the last decade or so, performance management focusing on the former has gained popularity. They call it “strengths-based feedback” or “strengths coaching.”

To choose a style of performance management is to prioritize. Traditional prioritizes weaknesses. Strengths prioritizes strengths. In this post, I explore whether people, startups, and cryptonetworks should choose to focus on strengths or weaknesses.

Strengths coaching

The thesis behind strengths coaching is that overall performance improves more when you focus on boosting natural strengths rather than working on natural weaknesses. Assuming performance is at least at par, does overall performance benefit from investments in improving weaknesses or in improving strengths?

According to the Harvard Business Review, we don’t yet know.

Still, it stands to reason that at least in some conditions, leaning into strengths should lead to better outcomes.

Allow me a personal anecdote from my competitive tennis playing days. I’m not tall or exceptionally athletic, but I managed to play at the national level in junior tennis and played on an NCAA championship (D3, but still) winning college team. I didn’t win matches because of patching my natural weaknesses (strength, touch), I won because I leaned into my natural strengths (mental toughness, shot selection, endurance, and some mind games). I never won beautifully but I won a lot.

Zoom IPO

In tech, the big winner of the moment has been Zoom. Trying to compete with Google, Cisco, and a sea of startups for video conferencing dominance seemed like a death wish to many. But despite the odds, Zoom became a market leader that enjoyed a $10B IPO.

How did they win? They leaned into their strength of a more reliable technology stack and designed their entire strategy and operations around that strength.

You can see their single-minded focus in their recently filed S1. Words like “frictionless,” “just works,” “reliable,” and “easy to use” appear in every paragraph, reinforcing a clear strategy of leaning into their strengths enabled by a differentiated technical approach:

Our approach to video has been substantially different from that taken by others who have attempted to add video to an aging, pre-existing conference call or chat tool. We developed a proprietary multimedia router optimized for the cloud that separates content processing from the transporting and mixing of streams. Our globally distributed cloud architecture delivers a differentiated user experience.

This durable technical advantage combined with a clear strategic emphasis on what the technical advantage affords (“just works” more than their competitors) led them to massive success.

As Sam Altman recently tweeted: “generally the highest ROI comes from getting even better in areas where you’re already strong, not improving in areas where you’re weak.

Et tu, Crypto?

Just as people and companies have achieved better overall results from prioritizing strengths over weaknesses, protocols and projects in crypto will do the same.

There are now dozens of viable smart contract protocols competing to bootstrap their networks. Competition begets criticism. Criticisms tend to focus on the relative weaknesses of these networks. The most common examples:

  • The classic: Bitcoin doesn’t scale.
  • The new classic: Ethereum doesn’t scale.
  • The high-ground: _____ isn’t decentralized.

But real-world usage of these protocols occurs because of their strengths, not the degree to which they’ve addressed their weaknesses.

Bitcoin is far and ahead the leader for “digital gold” because it’s strengths (e.g. security, distribution of power, strength of social contract) are so expensive to replicate that there are no viable competitors. Even if Bitcoin scaled even worse than it does today, people would use Bitcoin for “digital gold.”

Ethereum is the next best thing to Bitcoin on said properties and has smart contracts, which affords it an ecosystem of developers building on top of it. (One could construct arguments that on certain properties like cost of attack other networks might be more expensive, but for the broad strokes concepts here, allow me this generalization.) So it’s no surprise that “decentralized finance” which requires strong security lives on Ethereum. Even if Ethereum scaled worse than it does today, DeFi would live on Ethereum.

By and large, competitors to Ethereum elect to trade security and decentralization for performance. So we see gambling and games growing on EOS and Tron. Even if EOS and Tron were literally databases, I suspect people would still use them to gamble.

Protocols that cannot match their strengths to a valuable use case are in no-mans land. No matter how adequate their weaknesses are, a lack of relative strength yields no reasons to use the protocol.

Many challenger teams are enumerating the valuable use-cases that blockchains afford and cross-referencing them with the strengths of their blockchain. There’s no consensus yet on how many categories of valuable use-cases there are. If there are tons and tons of use-cases each with their own requirements. The vision of e.g. Cosmos’ “application specific chain” where you roll your own custom blockchain for your given application seems likely (I don’t know if it will be Cosmos or something else that allows developers to spin up their own blockchains). If there are only a few categories, then it’s a race to be the strongest of the pack on the properties that matter for the target category.

This line of thinking (focus on strengths, not weaknesses) also generates interesting questions for the more established protocols. Given finite resources, should Ethereum devs focus on scaling or continuously improving security + distribution of power and tailoring it to the needs of those with high value, low velocity use cases? It depends on whether their current strengths are durable. While Bitcoin’s current strengths are durable, for Ethereum, I’m less sure, so pursuing ETH2.0 and competing on scalability might be the best option.

The questions to ask: what valuable use case relies on my natural strengths? How durable is my advantage? The answers can be scary.

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Member updates

May 23, 2019

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May 9, 2019

Are bitcoin reorgs bad? (plus on-chain cashflow)

May 2, 2019

Understanding Chamath Palihapitiya's optimism about cryptocurrrencies (plus Tether stuff)