Grant Oliphant

Supported by Greenhaven Road Capital, finding value off the beaten path.

Grant Oliphant (President of Heinz Endowment) spoke with Aaron Watson. The podcast was good.

If you’ve never heard of Oliphant that’s good. This is the beauty of podcasts. There are all kinds of wonderful, intelligent, ground-breaking people experimenting, running companies, and leading others out there in the world. Podcasting helps tell their stories. Patrick O’Shaugnessy’s podcast is excellent at this too.

Okay, the notes.

1/ Organizational leaders go deep (talk to customers) and go wide (steal what works). Oliphant  says, “We work really hard to go deep and to go wide.” To rephrase with more descriptive verbs, Oliphant hires people with expertise and borrows best practices.

There’s an adage in non-profit work, Oliphant says, “nothing about me without me.” It’s “probably the most important rule.” In Pittsburgh, Oliphant’s endowment teams have had 150+ “listening meetings” in the community. Organizations only succeed by solving problems.

Organizations only succeed by solving problems.

Oliphant doesn’t have customers but he does serve people in the same way. Failed start-ups consistently failed to talk to their customers. Those founders should imitate Oliphant or have read more Paul Graham, who wrote:

“If you can’t understand users, however, you should either learn how or find a co-founder who can. That is the single most important issue for technology startups, and the rock that sinks more of them than anything else.”

To serve people you have to solve a problem. To solve a problem you have to listen to what people want. To listen you have to go out and talk.  Andy Grove wrote:

“They (middle management) usually know more about upcoming change than the senior management because they spend so much time ‘outdoors’ where the winds of the real world blow in their faces…I feel much safer back here in California than he does in ‘enemy territory.’ But is my perspective the right one? Or is his?”

Collecting information about what people want is going deep. Borrowing best practices is going wide. Oliphant says, “we look all over the world for the best ideas.”

Ben Thompson’s post The Audacity of Copying Well summarizes this. It’s also the subject of episode #102 of James Allworth, Thompson’s podcasting co-host, said he admires Instagram for swallowing their pride and copying Snapchat. Samsung too, who copied Apple.

Gary Vaynerchuk suggests this strategy for individuals, “better your strengths and punt your weaknesses” Vaynerchuk says. This means adopting, borrowing, or stealing best practices. Oliphant copies in this sense too, learning from others so he can focus on his strength, helping the people of Pittsburgh.

2/ Failure. (?) Failure can be difficult to determine because, “if you’re running a company – you can, despite the bottom line – continue to convince yourself you’ve got a future for a very long time.” Oliphant explained that one early education initiative in Pittsburgh was a “smashing success” for the kids involved. But they shut it down because it couldn’t scale.

As I listened I was again brought back to what I learned about start-ups that failed. Some simply ran out of money, but not all. Other founders shuttered operations because they meandered along.

When does an initiative fail? A company? A relationship? When do you know? Do you ever?

3/ Predictions. “Human decision making turns out to be maddening imprecise and beautiful at the same time.” This is why you need to talk to people. It’s why you need to be there on stoops, porches, and sidewalks. It’s why foundations have listening meetings. It’s hard to model what people will do.

Peter Lynch made the case against macroeconomic and political predictions. Lynch said that if you spend 14 minutes figuring out how those currents fit in your plans you’ve spent 12 minutes too long. That’s not to say we can’t do better at predicting things. Phillip Tetlock wrote a book to help us to that and we applied that framework to ask Is Bill Simmons A Superforecaster?.

The most helpful advice for someone in Oliphant’s shoes comes from Howard Marks’s  Expert Opinion. In that letter, Marks wrote that we should pursue information that is helpful and knowable. It sounds like that’s what Oliphant has done. Find out the important things you can (at listening meetings) and let everything else go.

4/ Talent stacking.  “One of the things we’re learning is that intersectionality is really important in this world….we need people who can think about the dynamics of outcomes and why the world is the way it is and what we can do about it to change it.”

Scott Adams wrote that he’s not the best at drawing, making people laugh, or someone with a deep knowledge of business. However, he’s probably in the top 1% of people who are good at each of those three things. Daymond John said this too, only about music and clothing. Dave McClure started his VC fund because he had engineering and marketing experience and “there weren’t that may people doing investing that had both disciplines.”

Talent stacking fits in a world that’s complicated. Our world!

Adams, John, and McClure succeed because their skills match what the real world wants. It’s like a puzzle piece.

Thanks for reading. If you want book recommendations, I send those out via email here




Bill Gates and Warren Buffett

Supported by Greenhaven Road Capital, finding value off the beaten path.

Our source:

Let’s start with a story. When I was ten we moved to a new town. It was a typical move; new house, new friends, new school, new patterns, new memories. Another newness was that the town was bike friendly. I could ride to the city baseball diamonds, friends’ houses, and the public library, and oh what a library it was. It was stacked. There were comics and elven fantasies I didn’t even know existed, much less had read. I was thrilled.

Years later I went off to college which had an even larger library, and, get this, you could request things from other libraries! I’d like to report that I searched out the great tomes and read them cover to cover and back again, but I did not. Instead, I used it to borrow rather than buy textbooks.

I mention this because Bill Gates marveled at the same thing. “It’s an incredible time to be a learner,” he told Charlie Rose, “I remember when I was young and it was very good, but I always felt like ‘I gotta get into this more, I want to understand it better.’ Today, the videos and courses that are online with the very best professors is phenomenal.” Tyler Cowen calls these kinds of people infovores and wrote about this.

Consider the magnitude of this. What do you want to learn? It’s out there, go get it. When we moved, I saw my access grow. When I went to college it grew again. With the internet 2.0, user generated content, YouTube, Coursera, and so on and so on you can learn anything. The question becomes, will you?

Success is going from ‘what to do’ to ‘how to do it’ to ‘did it.’ This is simple, but not easy. What follows are 9 suggestions for ‘what to do’ from Buffett and Gates. The rest is up to you.

  1. Be curious
  2. Be optimistic
  3. Have focus
  4. Be a multidisciplinary thinker
  5. Learn things that are knowable (and valuable)
  6. Hustle
  7. Match your temperament to your work
  8. Create situations for big wins but small losses
  9. Marry well

Good luck.

Start with curiosity.  Buffett said that what surprised him about meeting Gates was the curiosity they shared. It wasn’t for the same domains, but it was the same intensity. Curiosity is a superpower.

Brian Grazer is curious, and he writes that it’s been a boon to his career. Grazer explains that curiosity is best when it’s done with an open mind and when you act on it. Listen, understand, and act when possible is Grazer’s model. Yvon Chouinard, for example, was curious. What if we made colored, tough, clothes for climbers like ourselves? Kara Swisher says that curiosity is going where a conversation takes you, not guiding it where you want it to go.

You also need to be an optimist. In a talk, Sanjay Bakshi said that he likes to find entrepreneurs that are optimistic, but not delusional. Successful people climb to the top of the mountain for the view, but don’t jump off thinking they can fly.

When Daymond John started FUBU he said he had this kind of optimism. He believed he could compete with Adidas, but wasn’t delusional that it would be immediate. “I worked at Red Lobster for six years while running FUBU,” John said.

Daniel Kahneman put it this way, “Optimism is the engine of capitalism. When you look at big successes, it’s because someone tried something they shouldn’t have.”

Another attribute is the ability to focus. “Both of us got to where we are because of focus,” said Buffett. That means a deep understanding of the most important things. It’s why Bill Belichick wins Super Bowls. It’s how  Milton Hershey created a chocolate empire. It’s how Phil Knight created Nike. In Shoe Dog Knight wrote, “While auditing these companies, digging into their guts, taking them apart and putting them back together, I was also learning how they survived, or didn’t.” Like a watchmaker, Knight saw the gears that made companies tick.

It helps too to be a multidisciplinary thinker. Gates never was until he met Buffett. “One of the first questions he asked me,” said Gates, “was, ‘Microsoft is a small company. IBM is a big company. Why can you do better? Why can’t they beat you at the software game that you’re playing?’”

Multidisciplinary thinking is efficient and fun! Tren Griffin wrote, “looking for models that can reveal and explain mistakes so one can accumulate worldly wisdom is actually lots of fun. It is like a puzzle to be solved.” It also doesn’t take that much work. At the 2017 Daily Journal meeting Charlie Munger suggested spending 10% of your time learning the big ideas from different domains. Robert Hagstrom wrote a book – Investing: The Last Liberal Art – if you want to dip your toe in the pool.

Sanjay Bakshi employs multidisciplinary thinking with the “part-of-the-reason” prompt. When faced with a  problem, Bakshi will say, ‘part of the reason is this, and part of the reason is that, and so on.’   Why does this tend to work? Because problems have multiple reasons.  Neil deGrasse Tyson noted that “the universe does not divide itself neatly into textbooks.”

When asked about his most valuable skill Christian Rudder effectively said multidisciplinary thinking:

“The skills that have been most important to me in what I’ve done has been a kind of world real experience, a sense of how people work. I haven’t spent my entire life in an academic department. I’ve done a lot of different things. I think that is extremely helpful in analyzing data. Any data analysis in a social setting your goal is to understand human behavior.”

This exposure isn’t normal. We have to seek it out.  “Nobody had ever asked me that question,” Gates said.

While we think about thinking, we also should learn things that are knowable. In his Expert Opinion memo, Howard Marks encouraged us to pursue information that is important and knowable. There are some things that are not. Take macroeconomics, says Gates. “Things like macroeconomics involve emotional sentiment, (and) we’re a long way from (predicting) that.” Peter Lynch didn’t even think you should try. Fourteen minutes spent on considering politics, global events, or macroeconomic forces, said Lynch, was twelve minutes too long. Shane Parrish suggests finding things that change slowly.

As you do these things you also have to persist. “Guys like Bill don’t quit,” said Buffett, “He moves onto something like polio. He mentions fifty cases in the world. There were more than fifty in the ward where I want when I was a teenager.”

This was an amazing moment of the talk. Worldwide Polio in 2017 has similar numbers to Omaha Nebraska in 1940. Wow. That’s thanks to persistence.

Gates said that in the early days of Microsoft he never left. There was no such thing as a weekend or vacation. Gates even says that his mother had to negotiate with him for nights when he would come over for dinner.

This work isn’t always easy either. Brent Beshore compared it to a knife fight. Pete Carroll said there’s no rest:

“When you’re a competitor you don’t rest. You’re either competing or you’re not. We’re in a relentless pursuit of finding the competitive edge in everything we’re doing, and that’s a mentality. You’re either competing or you’re not. You’re either working at doing better or you’re going in the wrong direction. You’ve got to be on. You can’t be too comfortable, you have to keep pushing.”

One supervisor reported about John Boyd:

“His production comes from about 10% inspiration and 90% a grueling pace that his cohorts find difficult if not impossible to keep up with. He is extremely intolerant of inefficiency and those who attempt to impede his program.”

What do Boyd, Carroll, Beshore, Gates and Munger have in common? They work hard and they love hard work.

It’s easier to work like this when you have the right temperament. Moderator Charlie Rose asked Gates and Buffett what they would do if they had to start over again. Both said they would do the same thing. Buffett – of course – put it in a memorable way:

“I wasn’t going to be a pro football player. It was a question of zeroing out all the other incomes. I was actually wired in a way where this was something I was going to be good at.”

He continued and said that for investing, “temperament is more important than IQ.”

Find a job where you tap dance to work, says Buffett. Or:

“Look for the job that you would take if you didn’t need a job. Don’t sleepwalk through life and don’t say it’s all going to be great, ‘I’ll do this and I’ll do that. I’m just marking time till I’m older.’ That’s like saving up sex for your old age. That’s not a good idea.”

If you can work this way then the next step is to arrange asymmetrical returns. Gates said, “I didn’t view (working with computers) as risky. I viewed it as this kind of fun hobby…My passion and hobby was in an area I could start a company right at the beginning of a revolution. It coincided in a nice way.”

It was a win a lot or lose very little situation. If everything worked out (and it did) Gates was the founder of Microsoft. If everything didn’t, Gates could get another job working with computers and even the time he sunk into a company was just a “fun hobby.”

Part of the way to arrange this situation is to keep a low overhead. Gates said, “if Microsoft had failed, I didn’t have kids and I could go back to school and finish my degree and go get a job somewhere.” Once he started to hire people he continued to keep expenses down:

“I always made sure we had enough money in the bank to pay everybody for at least a year if nobody paid us at all. I was hiring people who had kids and families and here I was at 19 or 20 years old telling people I would be paying their salaries. I was very conservative on a financial point of view.”

Burton Malkiel told this story about when frugalistas Jack Bogle and Warren Buffett met:

“When Jack Bogle first met Warren Buffett they were at a hotel together and Jack recognized Warren, went up and introduced himself, and he said to Warren, ‘you know the thing I really like about you is you have rumpled suits just the same as I do’ and Jack and Warren have become very good friends.”

Why? In Buffett’s own words, “I have every possession I want. I have friends with a lot more possessions but in some cases I think the possessions possess them rather than the other way around.”

A low overhead provides more runway. More runway means more time for a big payout. On a smaller scale, many podcasters do this. Podcasts may not have moats but they don’t need to. May podcasters do it as a hobby, just like Gates. If it brings professional, educational, or financial rewards then great. If not, it was still a good time.

As you do these things there will be people in your life, so try to marry well.

Gates did. “Melinda is an amazing partner,” he said, “She thinks about the people issues better than I do. She knows when I get over excited about the science we can make sure we’re being realistic about it. And it makes it fun.” Tom Brokaw, Brian Koppelman, and Charley Ellis mention the value of a good marriage.

It’s not only marital ones, there are legal ones too. Buffett has benefited from partnering with Charlie Munger. “Charlie Munger changed my views. He defined them in a huge way, in terms of looking for the quality companies. Looking for the ability to make an investment that would work out well for 5 or 10 or 20 years.” Buffett continued:

“You will move in the direction of the people you associate with and it’s important to associate with people that are better than yourself…you want to associate with people who are the kind of person you’d like to be….The friends you have will form you as you go through life.”

Of course there’s one more thing. You need to be a learner “I read at one-fifth the pace Bill does but I still spend five to six hours a day reading,” said Buffett, “You can learn so much. I particularly love biographies.”

Thanks for reading. If you want to see what I read, subscribe here:


Supported by Greenhaven Road Capital, finding value off the beaten path.

In his podcast with Patrick O’Shaugnessy, Brent Beshore explained how he’s amended his view on incentives and rationality. Beshore’s shifted to a more local approach. The view from ten thousand feet is that doing drugs is bad. The view from the street is different. The same incentives are in play, but the weight has shifted.

Incentives are unique and variability and that means one-size-fits-all solutions are difficult (or impossible). In the 1990’s the government thought CEO pay was too high because companies were laying off their workers. The solution was to cap pay as a deductible expense at $1M/year. Yet companies wanted to pay more, hence the stock option.

This will incentivize results! We did it!


Well, the 1990’s bull market ripped upward and we’re stuck with correlation and regression models trying to piece things together. In effect, how much of a tailwind did that market provide?

Jack Schwager warns us about tailwinds. Kara Swisher said this about people at Google who move to Yahoo!?. Ben Horowitz looks for tailwinds on resumes. Warren Buffett compared it to ducks on a pond. Did ducks rise because of the tide, or because they flapped their wings?

Finding good incentives isn’t easy, but this is a solvable problem. In Think Like a Freak Stephen Dubner suggested avenues for ideas. Let’s look at them.

1/ Figure out what people really care about.

Baby I don’t need dollar bills to have fun tonight
(I love cheap thrills)
Baby I don’t need dollar bills to have fun tonight
(I love cheap thrills)
But I don’t need no money
As long as I can feel the beat
I don’t need no money
As long as I keep dancing

In his short biography of Napoleon Bonaparte, Paul Johnson writes that Napoleon figured out incentives. He gave the men what they wanted:

“The armies identifies their interests and their future with Bonaparte, and the lower the rank, the more complete this identification became.”

Napoleon let his men send home the spoils of war. They could fight longer campaigns because things were ‘taken care of’ at home. He also promoted on merit, fraternized with his troops, and arranged rides rather than marches when he could. Napoleon gave the men the things they wanted.

And it’s not always money. Tony Hsieh wrote:

“I thought about how easily we are all brainwashed by our society and culture to stop thinking and just assume by default that more money equals more success and more happiness, when ultimately happiness is really just about enjoying life.”

There’s always a better answer than money. Money is only the medium. Good leaders will find the things people care about. Sometimes even on the cheap.

2/ Choose things valuable to them but cheap for you to provide. The book Getting to Yes is almost entirely about this idea. There is something you can give to the other ‘side’ that they value but you do not. Rather than quote a passage, let’s look at a nursery rhyme.

Jack Sprat could eat no fat
His wife could eat no lean,
And so betwixt them both
They licked the platter clean.

Figure out what people care about (#1) and present the cheaper options.

What do people want? Recognition, time, freedom, food, options, appreciation, thanks, quiet, shelter, love, less friction, more babysitting, time off, overtime, free time, time to think, twenty-percent time. Talk to people and you’ll find out their secrets.

Basecamp is a successful technology start-up that epitomizes this. Jason Fried and David Heinemeier Hansson offer the following; summer hours, paid vacations (trips and time), and sabbaticals. Why can they offer these things? Because time away from work doesn’t mean less work gets done. It’s not a linear equation. Fried said on the Product Hunt podcast:

“A lot of things we spend our time on is wasted…when we have our 32 hour workweeks, just about the same amount of work gets done as it does in 40.”

What’s something people want? More time off.

What’s something cheap for Basecamp to provide? More time off.

Why is it cheap? Because the same amount of work gets done.

3/ Pay attention to how people act, they will give you clues. Let’s stay on campus. The story goes like this.


Old State University has expanded. New buildings for STEM and Underwater Basket Weaving (minor only) were built adjacent to campus. The buildings are modern marvels – LEED certified – but one thing is missing. There are no sidewalks. “We’ll come back next year and build those,” architect Felicia Jones told reporters, “after students have worn paths through the grass.”

This happened at Ohio State.

Sidewalks are a simple, concrete (see what I did there?) incentive. Walk here and avoid dirt, debris, and wet socks.

Yvon Chouinard noticed that women brought their babies to work or took time off because they couldn’t find babysitters. In response, Chouinard created a childcare program on the Patagonia campus. If you hired someone great, he writes do what you can to keep them.

More examples abound at our signals post. All you have to do is pay attention.

4/ Make incentives cooperative rather than adversarial. Choose an incentive that gets everyone rowing in the same direction.

In the early days of Nike, Phil Knight got his bankers and box suppliers behind him because they could succeed with him. Milton Hershey did this with the dairy farmers. Andy Weissman warns start-up founders what to expect. If a venture capitalist needs to return money to their investors, they need a lot of money. If that’s not what you want, said Weissman, don’t take money.

5/ People will not always “do the right thing.” No matter how carefully crafted, incentive systems won’t shake out perfectly. Not all college paths are paved and despite the salary cap, CEO compensation went up.

Any system (like incentive systems) is complex. “In complex systems, malfunctions may not be detected for long periods, if ever,” wrote John Gall.

Michael Mauboussin put it this way, “Complex adaptive systems effectively obscure cause and effect.”

Ben Horowitz wrote, “There’s no recipe for really complicated, dynamic, situations.”

Intended design is not actual use.

6/ Some people will game the system.

Let’s bring everything together. This is a true story.

My daughters earn an allowance from doing chores. Their compensation goes into a jar and they can spend the money on anything they want (#1 find something they value). Their favorite things are stuffed animals and tchotchkes.

They earn $1/day for things like feeding the dog, taking out the recycling, and picking up their rooms. I’d much rather pay them for doing these things than do them myself (#2 choose things valuable to them but cheap for you to provide).

My six-year-old daughter does her chores almost every day, but especially on days she can use her iPad. My eight-year-old daughter only does her chores on days when they are a prerequisite for using her iPad (#3 pay attention to how people act, they will give you clues).

It would be nice if I instilled a reason behind the chores. They love their dog but the connection between the dog needs to eat food so the dog can stay alive has not yet been made. They are motivated by money and screen time (#4 make incentives cooperative rather than adversarial). Also, as anyone who has been a kid knows, chores aren’t always correctly done (#5 people will not always “do the right thing”).

I offer one conciliation – a performance bonus. If they earn a mathematics flashcard PR I will do two of their chores. My younger daughter loves this. If she sets a record she will go through her list of chores and carefully delegate the most difficult ones. She makes steady progress so the system looks like this. I clean her room and put away dishes on Monday. On Tuesday – if she beats her record – she will “clean” her room and “put away dishes” and choose new chores for me. Of course, the things she chooses are easier because I just did them (#6 some people will game the system)!

Thanks for reading.

Kara Swisher

Supported by Greenhaven Road Capital, finding value off the beaten path.

Kara Swisher must be on the podcast tour because she ended up in my feed more than two times – and it was great.

Someone on Twitter asked, “Who is someone you don’t agree with but appreciate?” I couldn’t think of an answer then, but Swisher comes to mind now. Each point she makes, makes me think. 🤔  Plus, she’s a great interviewer. Along with Russ Roberts on EconTalk and Patrick O’Shaugnessy on Invest Like the Best, I start every interview of hers.

Her podcast with Ezra Klein was my favorite of the bunch, so let’s take our notes from there. Ready?

1/ School! School? Klein asks about journalism school and Swisher isn’t a fan. There are better ways to learn she says. One great way she’s seen eroded is mentorships. “One thing I think is missing,” from good work environments, Swisher says, “is the mentorship. I had amazing mentorship at the Washington Post and every moment of my life there I had great mentors and that is lost.”

At the end of each episode of his podcast, Barry Ritholtz asks guests about their mentors and the guests always light up. In his February 2017 book email, Patrick O’Shaughnessy said he’s noticed the same thing.

Here’s my theory. Multidisciplinary lifelong thinking should be achieved through multiple ways. Books are great but insufficient. We need to learn from mentors, enroll in XMBA programs, travel, and take classes. That can seem like a lot but you get a whole life to do it.

2/ Build relationships. Swisher says she talks to a lot of people. As I listened I wondered, who doesn’t Kara Swisher talk to? There’s a reason for this; she’s curious, and it helps.

“I try to reach out and ask them questions because most reporters don’t develop relationships with people. I’m not talking friendships because most of these people are not my friends…I think people appreciate having a relationship because what a lot of people do is call when something happens and then, ‘tell me everything.’”

How do you start? Just cold call says, Swisher. “I cold call people all the time. I just write them and say ‘Hi I’m Kara Swisher I would love to have lunch with you.’ I want to meet someone in person.”

Tony Hsieh wrote, “The major turning points (at Zappos)…were the results of relationships that we had started building 2-3 years earlier.” Pete Carroll keeps his office door open to grow relationships like crystals in a chemistry set.

I’ve started to think about relationships like the wind. On your journey through life, the right relationships can push you along – though you may not even notice – like a tailwind. Some relationships will blow across your bow, others head on. Relationships will swirl and settle too.

3/ Curiosity.  Klein asks, what makes a good interview? “Not sucking up to someone. Having a real conversation. Asking the questions you want to know,” says Swisher.

Brian Grazer wrote a book about being curious and has three principles:

  1. It’s ‘curiosity’, not ‘finding answers.’ Grazer never tries to find ideas for productions, he enters conversations with an open mind, ready for serendipity. Swisher says about interviews, “You should go where the conversation takes you.”
  2. Pay attention to the answers. Listen like Eric Maddox. Don’t just nod your head and don’think about what you’re going to say next.
  3. Be willing to act.

Try to bake in curiosity. In a world of #lifehacks and #productivity, this can seem like dead time but maybe it’s not. Maybe curiosity can lead to ideas that are different and right. It can lead to moments where you think, that’s interesting. 

4/ Chesterton fences.  What does Kara Swisher like about Donald Trump? (Yes, there is an answer.)

“One thing I like about Trump, though most things he says are idiotic and cruel, he does point out, ‘WHAT?!’ I do like his ability to say ‘what?’…Let’s not do it the way it’s been done for hundreds of years.”

Swisher likes Trumps ability to call out Chesterton fences. This ability to ask, ‘Why are we doing things this way?’ can be valuable.

Gregg Popovich changed how he coached the San Antonio Spurs when he questioned the fence known as ‘pre-game shootarounds.’ Jocko Willink applied this to leadership. Dave Oliver saw it on Nuclear submarines.  It was key to Lyft’s switch.

When Trump suggests moving the press room out of the White House, Swisher says, “What’s wrong with thinking about it?”

We need to change because the world changes. That means that some things have to go – but we don’t like to lose things.

Especialy things we own (the endowment effect).

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5/ Pattern recognition. Swisher reminded me a lot of Tom Brokaw. Both had a lot of right place/right time luck in their careers. Thanks to fortunate situations, Swisher became an expert pattern recognizer.

“I was paying a lot of attention to his (Donald Trumps) Twitter account.. he’s an evil genius, but I was more interested in the reporters who were more interested in not reporting. I had seen things destroyed, like newspapers or photography or retail overnight. It took a minute for Craigslist to occur. The (San Francisco) Chronicle had a classified business of 70 million dollars for years and years, it was a big money maker. Craigslist came in and did these free classifieds and it became a 7 million dollar business. It wasn’t ever going back to 70. Craigslist could make due on that amount of money but the Chronicle couldn’t.”

Swisher has seen how industries change, anyone can. All you have to do is pay attention.

Learn the history says  Jim Chanos, Bill Belichick, and Warren Buffett, who at the 2016 Berkshire meeting said:

“Pattern recognition gets very important in evaluating humans and businesses and pattern recognition isn’t 100%, but there are certain things in businesses we’ve seen over and over.”

6/ Frictions. Here’s a #lifehack. Make the things you want to do easier. This includes; being able to see the thing, getting better at the thing, have intrinsic or extrinsic motivation to do the thing.

Another #lifehack. Make the things you do NOT want to do more difficult. Hide it, put up blockades, and be disincentivized to engage with it. If licorice shows up at my house, I will put it in three zip top bags. These small frictions create large enough obstacles.

Keep this idea of frictions in mind as we think about social media.

Swisher and Klein wonder how much of social media is a good thing. “(with) the tendency to text so quickly people can now text you every thought,” says Swisher, “These tools give you an ability to say everything on your mind and that’s not necessarily a good thing.” Just because something is easier doesn’t make it better.

Fast food is easier, not better. Online trading, says Tadas Viskanta and Jason Osborne is easier, but not always better. Consumerism, writes Tony Hsieh is easier but not always better.

On her Recode podcast with Tim Ferriss, Swisher said that she saw the movie Arrival and liked it, but didn’t share that. She wanted to keep that to herself.

Any action – tweeting, running, cooking, loving, talking, listening – can be tweaked to be easier or harder. It just depends on how important it is to you.

“Action expresses priorities.” – Ghandi

7/ Rapid fire. There was a lot of good stuff in Swisher’s interviews, let’s be quick.

Circle of competence. “We didn’t cover Theranos at all because we didn’t have a health care reporter and one of the things I like to do is not cover things we don’t know about.”

You’ll never be ready for it. When asked why she jumped to TV Swisher says; “I thought it was interesting…I didn’t know anything about it, why not?” Each interview with Swisher exudes this attitude.

Sometimes don’t be there.  “It was good he (Walt Mossberg) was here (Washington D.C.) because he wasn’t part of the cabal of Silicon Valley.” Warren Buffett is in Omaha, not New York. Josh Kopelman is in Philadelphia, not Silicon Valley. When Theo Epstein started out in baseball his office was between the head scout and head analyst. Both colored his view. Epstein was never pulled into an echo chamber.

Career advice. To summarize Swisher:

  1. Do every job offered – especially ones other people don’t like – and crush it.
  2. Get your foot in the door. Swisher started in the business section. At the time it was the “backwater.”
  3. Become indispensable.


Thanks for reading. If you think I missed something you can email me. I got the Tony Hsieh quotes from his book Delivering Happiness, if you want to see all the books I read, sign up here:

One addition. It’s easy to see Chesterton fences to tear down; pre-game shootarounds, diesel submarine procedures, etc. It’s harder to see ones you maybe should have kept. One example comes from Paul Johnson’s book about Napoleon where he writes, “In fact, the Holy Roman Empire filled a role. It was a driver for stressing the cultural unity of Germany while making it difficult to bring about its political and military unity.” Napoleon, naturally, destroyed it.

Also, we are trying an experiment this week, an Amazon Giveaway of Organizational Alpha: How to Add Value in Institutional Asset Management.

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Amazon Observations

Supported by Greenhaven Road Capital, finding value off the beaten path.

This post isn’t the typical notes posts, feel free to skip. It’s three observations of Amazon.

  1. Ordering non-perishables is easy, cheap-enough, and relieves a pair of small burdens.
  2. The local and big box hardware stores will be killed by Amazon’s selection and YouTube’s ‘How-to’ videos.
  3. Amazon music will head off Spotify and Apple Music at the pass.

Example 1: My wife wanted cashew butter and our local store doesn’t stock it. The next closest store only occasionally stocks it. Rather than roll the dice, she ordered it on Amazon. It landed not in our shopping cart but something called the Prime Pantry Box.

The box ships for $5.99 so we filled it up. Among our bounty was a single box of cereal, a twelve pack of fancy water, and the cashew butter. The prices were slightly more than those at the local stores.

Six dollars for the box isn’t a great deal but it was a better shopping experience. For one, I didn’t have to go to the store. Second, there was no mental strain. Unlike physical strain, which I can see by how much I sweat on the treadmill, mental strain goes unseen. Though I can’t see it, I still believe in it after reading Thinking Fast and Slow and Misbehaving.

I also know that frictions matter. Mindless Eating is full of supportive case studies. While Amazon still offers Oreos, I didn’t impulsively buy them like I may have in the store. 

I paid more but also got more. 

Example 2: I go out of my way to shop at the local hardware store. I pay cash, saving them the 2% in credit card fees. I pay more than the comparable item at big box stores. I wait for things to be stocked and delay projects. 

I – to use Clayton Christensen’s concept – ‘hired’ the store for 3 jobs:

  1. Have the right supplies (inventory).
  2. Be there when I need something  (availability).
  3. Answer my questions (expertise).

In January our garage door motor crapped out. It was a repair in my circle of competence. I called the hardware only to find out it would be a week until the 1/2 horsepower unit was in stock. “I’ll wait,” I said. When the unit arrived I noticed it wasn’t exactly what I wanted but was close enough. The install went smooth and a few small hiccups were answered by YouTube videos.

Looking back, the Internet offers a better option for the job I’m hiring for. 

  1. Amazon has a far larger inventory at cheaper prices and more precision (I would have bought a different motor than the one I ended up with).
  2. With Prime shipping, the Amazon motor would have actually arrived sooner, but the hardware store still trumps Amazon for those “in a pinch” moments.
  3. The hardware store has two employees who know considerably more than me but none with more knowledge than YouTube. 

Christensen writes that once customers are satisfied with the performance of one area they will switch to another. Laptops demonstrate this as the distinguishing features have progressed; storage, weight, disc drives, processing, and display.  Amazon has passed the local store on price and selection while YouTube has passed expertise. They are neck and neck with availability. It may be time to switch.

Example 3: Music. Amazon Prime members get a nice bundle of service for the $99 annual fee. There’s streaming shows – Ben Carlson likes Sneaky Pete – two-day shipping, cloud storage for photos, and streaming music.

The streaming selections are good, but not great. Fortunately for Amazon, that’s all it needs to be. Christensen wrote in The Innovator’s Solution:

“The companies that are positioned at a spot in a value chain where performance is not yet good enough will capture the profit. That is the circumstance where differentiable products, scale-based cost advantages, and high entry barriers can be created.”

Let’s rephrase in general:

The companies that are positioned at a spot in the value chain where performance is good enough will NOT capture the profit. That is the circumstance where moats will not be created.

Rephrased for Amazon streaming:

If Amazon is positioned at a spot in the value chain for streaming services and provides a service that is good enough (read: selection you use) they will create a moat thanks to scale.

Spotify is screwed. Amazon can offer streaming music at cost as part of the Prime bundle. Facebook is using this same technique via Instagram to cut Snapchat off at the pass. Techcrunch reported that when Instagram released stories, Snapchat growth slowed 82%.

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In Exponent episode #102 Ben Thompson and James Allworth talk about this. They agree on copying that companies should copy the strengths of others and focus on their ow. strengths. Nokia failed to play to their strengths, says Thompson “and they went to the grave.” Samsung did, and they’re still around.

I’ve started to think more deeply about Amazon since reading The Everything Store by Brad Stone. If you want to see more of what I read sign up here: 

Also, we are trying an experiment this week, an Amazon Giveaway of Organizational Alpha: How to Add Value in Institutional Asset Management.

NO PURCHASE NECESSARY. Ends the earlier of Feb 20, 2017 11:59 PM PST, or when all prizes are claimed. See Official Rules

Brent Beshore

Supported by Greenhaven Road Capital, finding value off the beaten path.

Brent Beshore was on the Invest Like the Best podcast with Patrick O’Shaughnessy and it was great. There was a lot of advice for business operators. Here are five things:

  1. Build a moat, not as easy as it sounds.
  2. Experiment, then do more of what works and less of what doesn’t.
  3. But don’t expect it to be easy.
  4. Find incentives then align incentives.
  5. The bias to act.


1/ Build a moat.  Brent and Patrick agree that people probably don’t design moats as much as they stumble into them. Tren Griffin reminds us that some build a moat (Bill Gates) and that some find a moat (Warren Buffett). In general, the moat menu looks like this:

  1. Network effects (Facebook, WeChat).
  2. Supply-side economies of scale (Coca-Cola, Tesla batteries, Amazon).
  3. Brand (Harry’s Razors, Amazon).
  4. Intellectual property.
  5. Government regulation.

Beshore adds one – or creates a hybrid -; geographic isolation. Beshore looks for companies with a niche and “not much natural competition.”

Organizations and organisms do better when they have a niche. Seth Klarman said his niche is catalyst moments. Chris Sacca explained that Uber survived because the niche was deemed too small. Yvon Chouinard found the niche of rugged, stylish, functional apparel.

Beshore says that not every company he looks at is worth an investment. In fact, most are not. “Last year I looked at 2500 business and after a while, you get pretty good with the reflexes around what are the things you are trying to ping…it’s painting a story in my head.” Arnold Schwarzenegger said much the same:

“It is always the more you practice something the more confidence you get and the better you are going to perform when you go to those auditions. So, reps, reps, reps and keep practicing…we have a saying in German…the more you practice something the more you master something.”

Mistakes happen when you don’t have the reps, when you think there is a moat and there isn’t. Beshore says that he sees investors buy businesses only to get in trouble. “They haven’t seen enough pitches to even understand what they’re trying to look at,” Beshore explains.

Lesson: Moats are hard to construct from scratch but it’s an idea to keep in the back of your mind. You can learn what they look like through repetition.

2/ Experiment. “The biggest secret,” Beshore says, “is there is no secret.” Experiment and then, “do more of what works and less of what doesn’t.”

When Beshore said this it reminded me of what Ben Horowitz wrote about doing hard things. Horowitz explained that there are no silver bullet solutions, only lead ones. Solving problems takes work (time * effort) and panaceas don’t exist. I sort-of knew this but Horowitz crystalized it for me.

Then, Beshore crystalized something else, there’s a lot people don’t know. Sure, doctors are mostly right. Accountants do good work. Bloggers, well, let’s not get into bloggers. Steve Jobs explained it this way:

“Everything around you that you call life was made up by people that were no smarter than you. You can change it. You can influence it. You can build your own things that other people can use.”

I couldn’t unlearn this idea. OF COURSE, WE SHOULD EXPERIMENT!  Andy Katz-Mayfield doesn’t know what he’s doing with Harry’s. The Instagram founders created a check-in app. How quaint is that looking back?  Jim Koch, Yvon Chouinard, and Phil Knight didn’t know what they were doing. They experimented and did more of what worked, and less of what didn’t.

Hopefully, that inspires you. Now, let’s get real.

3/ Knife fights in the mud. Beshore compares running a company to getting out of bed, knife fighting through the day, and then getting back in bed. It’s hard. Beshore loves his job, loves the struggle, but notes “some days you have to trudge through the mud.”

I sense a glory around start-ups, entrepreneurship, gigs, freelancers and so on. They’re not just jobs, but cool jobs. They’re dream jobs. Mostly.

Jon Acuff and Austin Kleon are quick to point out that they too trudge through the mud. Just because you don’t have a boss doesn’t mean you don’t have to do things you don’t like. Elizabeth Gilbert said this:

“I have this theory that everything that’s interesting is mostly boring. Life is filled with all these interesting things and we chase the high and the buzz of the excitement of the thing, but 90% of the thing is boring….The trouble people get into, is that they go into creative careers because they want an interesting life and then they’re amazed to find out at how much tedium and boring is in there, but if you can stick through the boring part, there is stupendous reward.”

The key is to find a job where you – not your parents – like the balance between excitement and boredom. A job with enough knife fights and enough peace. Beshore said, “There are a lot of ways to make money in this world but you ultimately get one life.”

4/ Aligned incentives. Money is a commodity (another lightbulb moment) says, Beshore. If the dollar doesn’t differentiate, what does? For founders who take investment dollars the answer better be the people. To put it another way, your incentives better line up.

Andy Weissman is a venture capitalist who cautioned entrepreneurs:

“If you take money from a venture capitalist, the way the economics of the VC world work, are an investor like me needs to make 10 or 100 x on our money, which means we need these companies to be really large businesses for us to return money to our investors. If they’re not, those returns make less sense to us. The time to take venture money is when you think your incentives are completely aligned with that. You have to believe it’s a big business. You are comfortable taking big risks, including existential risks around managing that business.”

When Phil Knight was short on cash – which was always in the early Nike history – he had to borrow from a shoebox supplier to pay payroll. The supplier lent the money because if Nike went out business, who would he make shoes for?

When workers went on strike against Milton Hershey the local dairy farmers came to his aid. If there was no milk chocolate being made, who would buy their milk?

When Coca-Cola expanded overseas they aligned the incentives. “As one Coke executive pointed out, ‘in Germany it is a German business; in France, it is a French business; in Italy, it is an Italian business.’ Local industries to produce glass, carton, crown and bottling equipment started in each new country.”

It helps when everyone in the same boat rows the same direction. If you take on an investor like Beshore or Weissman, make sure they want to row the same way as you.

5/ Bias to action. “There is a constant pull to do deals,” Beshore says, “it is seductive, to say the least.” It’s “progress anxiety.”

We call this the “don’t just do something, sit there” condition thanks to how Barry Ritholtz talks about it on his podcast. This bias to action is powerful because we want to show that X leads to Y. However, there are times when no action is better.

Beshore looked at 2,500 companies and invested in two. That’s fighting the bias. Phil Jackson fought the action bias when working out difficulties with players or in the games he coached. Cal Newport suggests we take this approach to social media. Nassim Taleb points out, “It is much easier to sell ‘look what I did for you’ than ‘look what I avoided for you.’”

Brian Grazer writes, “Bob Iger, the CEO of Disney, is a close friend who once gave me a piece of advice that has stuck with me. In the right circumstances, he said, ‘Doing nothing can be a very powerful action unto itself.'”

To run a company means to make the right decision. The bias toward action is a crosswind off the bow. Incentives and people are those on the oars. Moats are the direction you want to go, only like the island in Lost, the destination moves. All this isn’t easy because of the weather, waves, and lack of orange juice.

Thanks for reading. If you made it this far you’ll probably like some longer, hidden stuff I write. That’s shared on this email list:

Also, we are trying an experiment this week, an Amazon Giveaway of Organizational Alpha: How to Add Value in Institutional Asset Management.

NO PURCHASE NECESSARY. Ends the earlier of Feb 20, 2017 11:59 PM PST, or when all prizes are claimed. See Official Rules

Tony Hsieh

Supported by Greenhaven Road Capital, finding value off the beaten path.

Courtesy of some nudging on Twitter, I re-read Delivering Happiness by Tony Hsieh (pronounced “Shay”), the CEO of Zappos. It was great.

What struck me on the re-read was how much I missed! Or, how much I now understood. Shane Parrish wrote why:


That’s how I felt about this entire book. My first read had been BBM (before Buffett & Munger) and I missed all the parallels to them. It was before I wrote a short book on failed start-ups. It was before so much.

Reading the book also confirmed my hypothesis that podcasts make for excellent book previews and summaries. The big ideas from the book were in the How I Built This episode with Hsieh. The Russ Roberts interview with Sam Quinones was a preview of Dreamland. Podcasts are great.

Ready for my notes?

1/ Experiments. Hsieh writes, “I tried to expose myself to as many interesting things in high school as possible.” That meant classes in Morse code and Japanese. His first start-up, Link Exchange, was an experiment too. “It was more like, we were bored, let’s see what happens,” Hsieh tells Guy Roz in How I Built This. The early version of Zappos was also an experiment. If visitors ordered from someone would go and buy the shows from a brick and mortar store.

Experimentation is important. “The big secret,” about business success, says Brent Beshore, “is there is no secret.” His advice is to experiment, and “do more of what works and less of what doesn’t.”

What you want to get to are that’s interesting moments. Hsieh almost passed on Zappos until he heard from founder Nick Swinmurn that catalog sales were 5% of the industry – and growing. Hsieh went from thinking ‘people won’t buy shoes without trying them on’ to thinking ‘oh, wow, people are already buying shoes without trying them on.’ The experiment of started with some knowledge of how the world works.

People buy shoes without ever trying them on? That’s interesting. 


2/ Snooze buttons. In college, Hsieh often slept through his first class. When it was time to rise for the second one he reasoned that he could skip one class he could skip two – and so on.

Hsieh graduated – thanks to some clever solutions he shares in the book – and got a job at Oracle. Soon after Hsieh and his roommate discovered, “we didn’t want to work at Oracle.” Onto the start-up!

That start-up became Link Exchange and Yahoo offered twenty million dollars for the company. ‘Okay’ thought Hsieh, if I had that much money what would I do with it? He wanted a new computer and TV. Maybe upgrade his home too. As Hsieh made the list he realized he already could do everything on his list – expect one. Run a company he loved.

“ I was already helping run a company I was excited about. It seemed kind of silly to sell a company I was excited about in order to start another company to be excited about.”

Peter Thiel recalled Mark Zuckerberg saying the same thing about his offer from Yahoo.

Hsieh concluded this by getting to the end state. What do you want from our lives? He writes:

“I thought about how easily we are all brainwashed by our society and culture to stop thinking and just assume by default that more money equals more success and more happiness, when ultimately happiness is really just about enjoying life.”

With this conclusion, Hsieh turned down the Yahoo offer. Later Hsieh woke up and realized something went wrong. “I was the co-founder of Link Exchange and yet the company was no longer a place I wanted to be at.” The culture and company had grown into something Hsieh didn’t like. The endstate he wanted had changed.

Hsieh’s path shows us a clear signal; do I want to wake up and do this? In high school, the answer was yes because he got to choose the classes. In college, it was no. At Oracle, it was no. At the start-up, it was yes, then no.

Mohnish Pabrai said the same thing about an alarm clock as a signal. I loved this advice.

To a point.

Austin Kleon pointed out that every job is still a job. Elizabeth Gilbert echoed that sentiment too. Brent Beshore said he has a great job but “some days you have to trudge through the mud.”

The key is to find balance. How many days do you push the snooze button and how many days do you jump out of bed?

3/ Having your cake and eating it too. 

Guy Raz: “Customer service wasn’t baked into the model from the beginning?”

Tony Hsieh: “In the beginning, we always wanted to offer good service but it wasn’t until we decided that’s what we wanted our brand to be about that it was the most important thing. It led us to do many things that would not have made any sense if that wasn’t our north star.”

In episode #102 of, Ben Thompson and James Allworth talk about this idea as it relates to technology. “You have to understand what your advantages are,” Thompson says. For Samsung, the advantages are manufacturing and distribution. For Facebook, the advantage is 500 million users. For Harry’s, the advantage is brand.

These advantages go by another name; moats. “There is no sustainable business model,” Thompson says, “built on features alone.” Companies need an advantage and that advantage will preclude other things. Amazon’s advantage is low prices on a wide selection. My local hardware store’s advantage is advice and convenience.

Companies need to realize this because it means doubling down on your strengths and punting your weaknesses. It means copying.

Throughout the Exponent episode, Allworth praises Instagram for swallowing their pride and copying Snapchat. Thompson points out that Nokia did something innovative – rather than copy  – “and they went to the grave.”

The advantage for Zappos is their customer service (brand). What that means though is that they can’t be anything else.

4/ Lessons from the poker table.  This was my favorite quote from the book:

“Understanding the mathematics behind hold’em and playing against players who didn’t was like owning a coin that would land on heads one-third of the time and tails the other two-thirds of the time and always being allowed to bet on tails.”

This part of the book was so good I took pictures of the pages and saved them to Evernote.

5/ Watch that basket! “Well, if you think we should put more money into Zappos, then we really should be spending more time with them in order to protect our investment.” – Alfred Lin

To catch you up. Hsieh leaves Oracle, starts Link Exchange, sells it to Microsoft, starts a venture capital fund, invests in Zappos and others, sees the other investments fail, and sees the funding landscape dry up. The moment of truth arrives when it’s time to double down on Zappos or let it whither. Hsieh doubles down.

Warren Buffett has used different metaphors – flashlights rather than lanterns – but the idea is to pay attention to the important things.

Putting your eggs in one basket can be great, but you have to watch that basket.

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