Small Bets

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

I had a problem. Too many of my subscriptions went unread. Too much podcast advice went unheeded.

I had another problem, I need repetition to learn things. The first time it took me over an hour to change a headlight. Now it takes fifteen minutes.

I have a solution (not for the headlight). If you want a short email, each weekday, focused on one theme for the week you can sign up.

There will be no links. There will be no breaking news. There will be no interviews, analysis, or something else, someone else is already doing really well.

There will be stories. Some will be apocryphal, second hand, and every now-and-again they will be untrue. That’s okay. We aren’t aiming for statistical significance, we’re aiming for ideas to try.

Rory Sutherland is fond of saying that a change in perspective is worth forty IQ points. That’s what this is. It’s a fast hit, a thinking vitamin, a dash mushroom. It’s asymmetrical, minuscule investments for gigantic payouts. There will be weeks when this email is unhelpful, maybe even unwelcome. But there will be once when it leads to a brilliant idea. Sign up.

The theme for week one is small bets. Here are two snapshots.

Happy (belated) Father’s Day to the dads. Father is a biological term but that’s not really what we celebrate. It’s not the number of kids you have but the kind and kindness you show.

How we measure things matters. In academia it’s p-value. A value of p=.05 means that there’s less than a one in twenty chance the observed effect is due to chance. For studies published in journals read by professors that’s good. But not for real life. Instead, we’re looking for anything that works.

That’s what Sam Walton did we he started Walmart. As Charlie Munger notes, Walton invented almost nothing we might think of when we think of Walmart. Instead, he copied the best from everyone else then stacked, piled, or implemented it himself. Walton once bragged that no one had been in more Kmart stores than he had. One time he was walking down the aisle of Costco taking notes on his ubiquitous notepad when the store manager asked him to leave. That was Sam Walton.

Not all the ideas were good but none were fatal. One time Walton borrowed $1,800 for an ice cream machine and popcorn maker. They grabbed attention and got people into the story. But he wrote: “Every crazy thing we tried hadn’t turned out as well as the ice cream machine, of course, but we hadn’t made any mistakes we couldn’t correct quickly, none so big they threatened the business.”

These emails will not be statistically significant in the academic sense. These will be stories. There will be survival bias. There will be irrelevant, apocryphal, and wrong things. That’s okay too because a change in POV is worth 40IQ.

Marc Cohodes is a short seller. Cohodes is candid. He’s active on Twitter (@AlderLaneEggs) and even creates websites for whistleblowers to report fraud at companies he suspects. He’ll swear in interviews. He’s a reckless guy.

Except he’s not. To short a stock, Cohodes borrows a share at one price with a promise to repay at a later date. In theory, his downside is infinite while his upside is capped – at zero. Though brash, he’s cautious and Cohodes said that he uses the lifeguarding motto he was taught as a way to think about how he invests. Lifeguards are taught to Reach, Throw, Row, Go.

Though it makes for good television, running into the surf, diving into a pool, or swimming through the water is the path of last resort.

Caution saves lives. The Red Cross has even adapted the rhyme to instruct most people; Reach or Throw, don’t Go. The point is to nibble new ideas, not gulp them down.

Charlie Munger is an investor, but not a short seller like Cohodes. Munger has worked with Warren Buffett for four decades. Buffett said that Munger has the best brains in the business. Reflecting on his early investing career, Munger told a group of University of Michigan students, “I was not a courageous, adventuresome admirable man. I was a cautious little squirrel.”

There are many ways to take big swings but those are often the moments that expose us most. Sam Walton took calculated risks by getting cheap rents and copying best practices. His weird ideas were small things, like introducing Walmart shoppers to flip flops or buying an ice cream cart to use for promotions.

It’s not big swings that change our course but new ideas. As they say, a change in POV is worth 40IQ.

Tyler Willis

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

Jerry Neumann again chatted with Patrick O’Shaughnessy on Invest Like the Best. Neuman is kind and curious and we’ve looked at some of his ideas already:

He also turned us on to Rob Fitzpatrick, author of The Mom Test. Recently Neumann invested in Unsupervised and he said, “One founder is one of the few people in the commercial world who understands this (machine learning) technique and the other founder has worked at startups before and is an awesome outside facing person.”

There are two parts to any business; doing then telling. If neither is done well, startups won’t succeed. Josh Wolfe told O’Shaughnessy, “There are amazing credible people. And there are amazing salesman. And sometimes those two people are one. When they are you have an amazing entrepreneur. But often times they’re not.” So you get two. You get someone like Tyler Willis, that “outside facing” person.

“I was not a good traditional student,” Willis said. We hear this a lot and it’s helpful to think of school as one type of education. Another type is to do. Tom Goodwin said, “Leaving school and starting out, or leaving school and traveling the world and writing, or leaving school and creating a documentary are actually pretty remarkable ways to learn.”

However, Willis said, “If you’re going to drop out you need to work harder than you would have in school.” That’s kind of what he did and does. “So I tried to do things. I became a fairly voracious reader. I read a lot of nonfiction to understand different people’s opinions about different things. I read history, biographies, a lot of varied topics.”

But Willis also gives a reason to stay in school. “If you don’t know which way to go, the default should be to stay in school.” Defaults, base rates, and distributions are all mathematical fences to corral our psychological guesses. Michael Mauboussin is fond of citing Daniel Kahneman’s work, and no wonder. Kahneman observed – academically – our self-aggrandizement.

Base rates are for other people. Right?

Ramit Sethi said that for the second edition (10th anniversary) of his book, I Will Teach You to be Rich, he was coaching a group of readers through the content. He asked them, What would you do with $10,000? They’d be canny of course. Ramit said they were full of baloney. “According to these answers, we have a bunch of Mother Theresa’s in the group. They will pay down debt, give to charity, do this and that.”

These were people who had enrolled to be coached through a book on better financial decisions. But it’s not just them. It’s all of us. Even Kahneman fell for it, thinking he could write Thinking Fast and Slow in less time than the base rate might suggest.

Willis is familiar with the work of Ramit who champions good designs. Dan Lockton has done lots of good work on designs too and noted that designs only do so much. Lockton said, “When people feel they are being influenced in a way that doesn’t match their understanding of the situation they will rebel.”


In 2014 Willis spoke about growth. First, “You have to create a product of value before you can grow your product.” Then, “The number one thing is that speed beats everything else. The faster that you iterate, the more you win…You could be one standard deviation better than the next guy but if he has 20% more cycles he’s going to beat you.”

Jerry Murrell messed up a lot of businesses before starting Five Guys. Anson Dorrance told his soccer players that goals only happen every seven shots or so. Scott Adams compares life to a slot machine that costs little and has “rare and uncertain payoffs.”

Mauboussin titled one of his books, The Success Equation. The formula is some luck mixed with some skill. Mauboussin’s goal was to look back to peek forward at expected values. His advice might be, ‘do more skill dependent things.’ But for some people it’s even simpler, ‘do more.’ Think of marketing as an MVP process too said, Willis.


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Martin Lindstrom

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

Martin Lindstrom was doing research for LEGO. He was a good choice because he loved LEGOs. As a kid, Lindstrom built a LEGO Land in his backyard. It was so popular that one day two – kind – IP lawyers showed up and asked him to call it something else.

LEGO saw 2003 as a time of change. Call of Duty was released and The Matrix trilogy finished. It seemed like kids wanted easier toys (everyone knows kids have short attention spans, right?) with more technology. LEGO adapted, making sets with bigger blocks, fewer steps, and less intricacy. Things only got worse.

Year-over-year Christmas sales fell 30%. LEGO headed out into homes around Europe to find out what kids really want. At one home the LEGO team asked a kid about his favorite possession and he pointed to a pair of ratty shoes. Those? Yep. Why?! Well, the kid said, those are my first skateboard shoes. That moment showed LEGO that kids only had short attention spans for boring things. The company shifted directions and found success.

It wasn’t that kids wanted easier LEGO toys, they wanted less boring ones.

Lindstrom calls these moments “Small Data” and said “these seemingly insignificant observations, is all about causation. The reason why.”

Lindstrom is a consultant, spending most of his time in planes, hotels, and client’s offices. He’s the author of Small Data, Brandwashed, and Buyology. We’ll look at his suggestions for creativity, how to focus on the customer and how we think fast and slow.

Phone and serendipity. There’s a joke that veterinarians are just like doctors only their patients can’t tell them what’s wrong. Lindstrom is like a consumer vet. How does he do this kind of work? Recently he got rid of his smartphone, “I don’t have a smartphone because it makes me detach from the world and stops my creativity.”

The problem isn’t the phone so much as what it replaces, boredom. “I’ve learned that creativity happens when you’re completely bored and that inspiration for creativity is when you start to see the world. Yet we hide behind the screen, a comfortable distance from the real world.”

This summer our family is reading The Lion, the Witch, and the Wardrobe. The story begins when four children are whisked to a countryside house to avoid the bombs of World War II. The children are nervous but excited, especially to explore the nearby woods. “There might be eagles. There might be stags. There’ll be hawks,” Peter exclaims to the others.

But the first day it rains. “Of course it would be raining,” groans Edmund. “Do stop grumbling, Ed.” said Susan. “There’s a wireless and lots of books.” “Not for me,” said Peter, “I’m going to explore the house.” On a rainy day, in the English countryside, within a large home, four children discover that a wardrobe is not just a wardrobe.

Fast forward to today’s English countryside and any home and with a smartphone, and the entertainment is quite different. The radio for Peter, Susan, Edmond, and Lucy had an effective library of one, whatever was being broadcast. Now the effective library is more like 11,000+. In his technology strategy analysis, Ben Thompson often brings up the moment when Netflix signed up to stream Starz to create an effective library of 11,000. A few months early the iPhone was released. Then, Facebook published its mobile site.

From the world of Narnia in 1950 to the world of the smartphone in 2008, effective libraries crawled along until they suddenly jumped. When I was a kid it was easy to be bored. I watched ESPN SportsCenter every summer day but only for an hour. Then it repeated itself and I was bored. Try doing that on YouTube when YouTube’s incentive is the opposite.

Yet we need to be bored.

Ed Sheeran told Howard Stern, “The worst thing in the world is being in the studio and you’re, like, mid-flow, bang bang bang, and you get a text and you go into your phone and that’s an hour of your time gone.”

To stop the flow no-nos Sheeran’s apps had to go. He deleted a bunch. “If you don’t have any distractions – I was literally writing four or five songs a day ‘cause there was nothing else to do.”

Lindstrom’s research revealed that too, “Even if you have a smartphone on a desk that’s not yours, it will affect your performance negatively.” Kenneth Jeffrey Marshall said, “I don’t own a smartphone. I don’t own a television. I don’t have a Bloomberg terminal. All of that seems to have led to better decisions. There’s less noise, and little loss of signal.”

With Starz on Netflix, phones in pockets, and infinite feeds we consume and assume rather than observe and wonder.

Brian Grazer, curiouser raconteur wrote about curiosity as a prerequisite to serendipity. You don’t need a smartphone, an internet connection, or an encyclopedia. You just have to notice things and ask questions about them. It’s like when Neo sees a glitch in the Matrix or when you pause and say that’s interesting.

This is hard for us to do because serendipity and curiosity aren’t linear. There’s no cause and effect and as people, we love to see cause and effect. Lindstrom notes that “Clue gathering is never linear.”

David Epstein told Patrick O’Shaughnessy this when they talked. During his research, Epstein reads ten journal articles a day, sometimes veering in odd directions. That’s okay.

Rabbit holes and wardrobes both lead to interesting places, often more than smartphones.

Outsider POV on the customer. Businesses succeed when they serve customers and earn sustainable profits. But, “Business are struggling right now because they don’t understand the customer.”

Why is that? “There’s a huge difference between selling to you and listening to you.” Lindstrom put his phone away and started to listen more. In his books, he writes about being in different homes around the world and watching what people do, what people hang on their walls, what people store in their refrigerators and where.

I have a neighbor who doesn’t recycle. At all. This amazes me. At our previous house, we sorted and transported our recycling. At our current house, we have a single stream bin and a combination of lasers, pressurized air, and algorithms sort it. For us, it’s easier. For my neighbor, it’s not.

That’s the kind of point-of-view a business needs to understand. Priors are important because humans compare in relative, not absolute terms.

David Halpern’s work in the United Kingdom is probably the best application of the behavioral economics work done by Kahneman, Tversky, and Thaler. Halpern reflected, “We’re not very good at estimating the absolute value or price of something but we’re pretty good at estimating relative to something else.”

Like me, Halpern is willing to pursue easy environmentalism. While was in charge of Britains ‘Nudge Unit’ Halpern noticed that if more people insulated their attics they’d use less energy and save more money in the future. Using a direct mailing, Halpern and his team notified people of the potential savings.

Rather than absolute terms (all live on the planet will die unless…) they used relative terms (you could save money…). But almost no one took them up on the offer.

Here we should hear and heed Lindstrom. Go sit with your customer. That’s what they did. Halpern’s Nudge team went out and talked to people. Everyone wanted to save money but that only happened in the future. There was a price to pay to get there. It was costly, not in money per se but in something else. It’s a cost every adult has borne at one point. Cleaning out an attic is a pain in the ass.

There are decisions to make about what to keep and what to pitch. How many photo albums are enough? Will I ever go skiing again? Why did I buy this in the first place? Could I sell this and if so for how much?

With this understanding, the Nudge team started sharing coupons and connections to movers who would at least bring everything down. That made it easier. Rather than a physical and psychological effort, people had half that. Halpern found out when he talked to his customers, in this case, fellow citizens.

Lindstrom has also worked with IKEA and showed up one day to meet with the CEO only to find he wasn’t in his office. That’s odd. Lindstrom checked with his secretary who explained that he was in the store.

When Lindstrom finally tracked down founder, Ingvar Kamprad, he was working at the cash register! Lindstrom said, “If you want to study animals, don’t go to the zoo, go to the Amazon.” If you want to understand customers, don’t use spreadsheets, go to the cash register.

We looked at the Pixar fairy tale and how unlikely it was…

…but part of the reason the company made great movies was the field trips. Ed Catmull wrote, “Many on the crew of Finding Nemo also became scuba certified.” For Monster’s University, the crew visited MIT, Harvard, Princeton, UC Berkeley, and Stanford.

When John Lasseter and Catmull got to Disney they insisted the animators go to New Orleans for The Princess and the Frog. “Attending the Krewe of Bacchus parade on the Sunday before Mardi Gras gave them a vivid frame of reference when they animated a sequence based on that festival.” Catmull explained, “The authenticity it fosters in the film always comes through, even if moviegoers know nothing about the reality the film is depicting.”

The Pixar teams had to go there because they couldn’t listen to scuba divers, professors, and parade queens. That introduces Kulturbrille, culture glasses, that tint whatever you see.

Lindstrom said, “Familiarity, in fact, is at best counterproductive, and at worst, paralyzing.” Mark Ritson said that the early days for a consultant are the most important because, “The minute you start getting paid to work for a company, product, or service, it is impossible to see that product the way the customer sees it.”

Lowes Foods in North Carolina asked Lindstrom for help and in turn, Lindstrom asked everyone there for something. Rather than do his own research, Lindstrom took the store employees with him. “Why not issue a report? There’s no emotion to a report. But if you see a person cry, or emotionally affected, you will realize it has more impact than 10,000 people in a report. We infused empathy into the minds of the employees.”

Then, when they were working, the employees understood the why.

Customers hire businesses for all kinds of jobs to be done. Sometimes they know, sometimes they don’t. It can be clear, or opaque. Whatever the conditions, listening to your customers is crucial.

Buyology. Lindstrom’s book, Buyology, is an academic-like approach to how people unconsciously react. “Emotion is a sort of autopilot we’ve inherited through millions of years of evolution,” Lindstrom writes.

The book has many sections on smoking, in part, because Lindstrom’s mom was a smoker. “I noticed that when there were no ashtrays around my mom smoked less. Not because it was inconvenient but because it didn’t remind her to smoke.”

Using this insight he put people in an fMRI machine and wondered if Mark Ritson’s brand codes.

Screen Shot 2019-06-03 at 9.32.00 AM

This is the DNA of a brand. There’s a story, maybe true but definitely helpful that the classic Coca-Cola bottle had to be designed such that even if it was smashed it someone could recognize it.

Cigarettes companies cannot advertise on television and this constraint turned one of their weaknesses into a strength. Without one medium, the cigarette companies got really good using the others. Smokers in an fMRI had similar brain activity when they saw cigarettes or a camel, mountains, or rugged cowboys.

However, when asked, people said it wasn’t subconscious associations. Lindstrom said, “Feeling the emotion is a process distinct from having the emotion in the first place.”  And we post-rationalize. Jonathan Haidt said, “The conscious mind thinks it’s the Oval Office when in reality it’s the press office.”

Lindstrom saw this strongest in Coke and Pepsi test. If fed with a straw, participant’s brains and surveys reported liking Pepsi more. If asked, participants said they liked Coke. Like Dominos pizza, Pepsi had negative brand equity when compared to Coke.

Lindstrom wants people to ask questions and listen to the answers. That means putting down your phone and heading out to your customers.

This takes work. Lindstrom is on the road almost all of the year, but it’s an important job. Ron Shaich asked customers why they wanted their bread sliced. Eric Maddox asked why one person hung around another. Brian Koppelman asked why poker players (and then billionaires) talked a certain way. These are glitches in the matrix or ‘that’s interesting’ moments.

Sometimes we know why we do things, sometimes we don’t but that’s just a reason to ask more questions.


Thanks for reading.

Nell Scovell

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

Just the funny parts by Nell Scovell is the story of 30+ years of television writing. We highlight people from all walks of life because of the potency of out of sample tests. If something proves true, relevant, or helpful in more than one domain it’s more likely to help in ours.

When running his models, Cliff Asness told Barry Ritholtz that out of sample tests are “very calming because it made you think there’s a much smaller chance that you’re just lucky.” So, what did Nell Scovell do so well?

Partner well. “My career has let me put words in the mouths of iconic performers like Bette Midler, Bob Newhart, Craig T. Nelson, and Miss Piggy. Those performers make everything funnier. It’s like having Serena Williams as your doubles partner.”

When Brian Koppelman wrote Billions, he knew the actors could add something to the writing. One step back and Koppelman’s writing partner, David Levein, is his doubles partner on the page.

Good partnerships are built, said Marc Andreessen, when “It has to be more important that the other one gets to make the decision than for you to prove yourself right.”

See it to believe it. It was Monty Python and other TV comedy where Scovell noticed that men and women are both funny. Ramit Sethi included case studies in his latest book for this reason too. When Paul Rudd told Marc Maron that he didn’t realize acting was something to do, Maron said that hears that a lot. It’s not just a job but that a job can be done by someone like me.

Heads I win, tails I don’t lose. I “TRYING SOMETHING NEW SHOULD BE THE EASIEST thing in the world. If you succeed, great. And if you fail, you have the perfect excuse: “Hey, I’ve never done this before.””

Chris Cole wondered why more people don’t take these kinds of risks. The cost is so small compared to the possible payout. Ask the girl, call the boy, talk to your boss.

Career. Scovell had a lot of bombed jokes and bad jobs. So what. Move on. “This approach also applies to an overall career where it’s better to focus on the next opportunity rather than ruminate on missed chances and setbacks.”

Jerry Murrell started and failed at a number of businesses. He had setbacks and no experience in restaurants – and why restaurants are terrible businesses – but he started one anyway. “I really didn’t know what I was doing,” Murrell said, “I’m just lucky that I got in the hamburger business.” It was that opportunity that became Five Guys.

Culture stems from the top and flows down. In television that’s the showrunner. These people can frame how things are going to work – and where. In New Jersey, the writers were, “Operating outside Hollywood’s sphere (which) gave Monk a different feel. No one was reading the trades and the small staff buckled down and stayed focused.”

For Ken Burns, that means New Hampshire. For George Lucas, it was the Bay Area. Organizations can get a mental distance and remove cultural influences by abstraction. Here’s Bill Simmons on how the Celtics dealt with Greg Oden’s medical history.

Serendipity, according to Scovell is a “felicitous accident.” On one shoot she was getting a lot of pushback from the director of photography about how to compose different shots. During a rain break, she slipped under an overhang where a cameraman was watching the gear. They struck up a conversation, got to know one another, and as the shooting progressed he backed up her ideas.

It’s about being open to opportunities.

In 1979 Bill Walsh was the head coach and GM of the San Francisco 49ers. He visited UCLA to see if hurdler James Owens could be a football wide receiver. When Walsh got there he needed someone to throw the football to Owens. There was a quarterback there too, so Walsh asked him to throw a few balls. That quarterback’s name was Joe Montana.

Diversity. Scovell compares the Hollywood glass ceiling to the antifragile metal from the Terminator. That’s too bad because as one mentor told her, “A fairer sampling of humanity will always produce better comedy.”

Businesses call this “cognitive diversity” and as Michael Mauboussin said, “People that can surface different kinds of view is key for quality decision making.” How do you get diversity? Batches. Rory Sutherland notes that when choosing one thing we aim for the average thing. Families own one minivan. Vacations are the average for how much we can spend and choose to do. But do batch work and the decisions change. Hire one person each month for a year and it’ll be the average applicant. Hire twelve people once a year and there’ll be diversity.


Thanks for reading.

Ramit Sethi

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

Ramit Sethi is a great interview. He’s on the podcast circuit because he’s updated I Will Teach You to be Rich. I like Ramit, in part because he’s a nice guy.

Years ago I sent him an out-of-the-blue email about working for him. His response was prompt, kind, and thoughtful. It was like a stranger holding open a door for you, but also noticing the map in your hands and offering directions and a dinner suggestion.

These notes and quotes are from Ramit’s podcasts with Tim Ferriss and The Mad FiEntist.

Good designs. Ramit believes in automated finances. Just like email filters, but for money he tells Ferriss. But Ramit’s taken this approach beyond money. “I wake up in the morning and double click on my calendar and everything is perfectly organized.”

Designs influence behavior. Dan Lockton talked about how metaphors influence our thoughts (Startups are like a…). There’s an architecture of happiness. ‘Choice architecture’ is one tenet of nudging because designs matter.

In his podcast with Howard Marks, Ferriss credited the design around him (physically and contractually) for his investing success. “I’ve done reasonably well in private technology startups because I lived in the middle of it in San Francisco, it was the only thing I paid attention to, and it protected me from my lesser behaviors because I wasn’t allowed to sell.”

Habits are behaviors we’ve already designed for, choices are opportunities we haven’t yet.

Base rates and optimistic future selves. Ramit is coaching a group of people through his book and asked what they might do if gifted ten thousand dollars. “According to these answers, we have a bunch of Mother Theresa’s in the group. They will pay down debt, give to charity, do this and that.”

Much like as Daniel Kahneman thought he could write a book in less time than everyone else, these people thought they could spend money more wisely than their previous selves. But we’re all overly optimistic about ourselves.

This is part-of-the-reason Michael Mauboussin hammers base rates again and again. Base rates help even when someone doesn’t think they will. Bent Flyvbjerg studies megaprojects like dams, bridges, airports and the like and said:

“You hear this when you talk to project planners like I do in my research. You will hear them say you cannot compare projects, it’s impossible, each project is unique. Our statistician laughs when he hears this because he says the curves of cost overruns and benefit shortfalls are so similar that it’s ridiculous to talk about the projects as being unique.”

Adam Carolla colorfully put it this way:


See it to believe it. Ramit includes examples in the second edition of his book. People who retired early(ish). People with a lot of money. People with enough. He told Ferriss that seeing someone like you, doing something new, makes the doing seem possible.

Doris Kearns Goodwin saw it in this book. For Sig Mejdal it was this book. Nell Scovell saw it in this show. This works for college or entrepreneurship too said, Malcolm Gladwell:

Context matters. The middle of the Ferriss interview has a lot about relationships and Tim shares how he and his partner conduct a weekly check-in. “We started off with, ‘shit you need to fix’, then it was ‘growth opportunities’, now its ‘what I’d like to see more of’. The phrasing turns out to be really important.”

For investors, this means figuring out what kind of (bull or bear) market they’ve invested in. For baseball managers, this means figuring out what kind of ballpark a hitter played in. For marketers, this means figuring out what works and why.

Rory Sutherland’s Alchemy is full of examples of context mattering a great deal. One friend enjoyed a trip to the Caribbean so much he loaded up on banana flavored rum to share with his friends back home. But he got home and realized banana flavored rum goes best with sand and sun.

Important things, measurable things, and their differences. Ramit praises the Financial Independence, Retire Early group. Most people don’t save enough, but they have. That’s good. However, “I think a lot of FIRE people decide what’s not important to me. They are on top of that. I think the challenge I would make is, ‘You nailed what’s not important to you, now let’s talk about what is important to you.’”

This is hard. This is latent needs.

Rory Sutherland wrote to “Interpret laterally rather than literally.” The literal interpretation of FIRE is to ‘retire early’. The lateral interpretation is, ‘And then do what?’

In the same way that marketers find the latent needs of their customers, individuals who retire need to provide for their latent needs. Jobs provide meaning, friendships, income, hobbies, connections, and more. “Sometimes the most valuable things in life live outside a spreadsheet.”

Brynjolfsson and McAfee have made the role of ‘job’ more important in their research because of this. Universal Basic Income is like FIRE, a literal interpretation of work but not an accurate one.


Thanks for reading.


Howard Stern

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

Howard Stern Comes Again is a collection of (mostly recent) interviews from the Howard Stern Show.

The last time I heard Stern was in 1998. My summer job was sealing asphalt and one guy loved Stern. He was a hard worker so I didn’t mind pairing up with him but I just didn’t get Stern. It was too early. This book of interviews is smart, funny, and insightful. Stern is contrite and kind. This might be the ultimate book where your mileage will vary but here’s a taste of a few lessons I learned.

The hedonic treadmill is real. Most every guest is rich. Stern is rich too. But money isn’t everything. The celebrities, the actors, the guitarists, the lead singers, and the comedians are also parents, brothers, wives, and friends. They still have problems in their lives, challenges with their health, and obstacles every day.

In what Stern calls my best interview ever, he asks Conan O’Brien about turning down a deal from Fox for twenty-million dollars. Conan replies, “I never made a decision in my career based on money. Not once.” For him, the value was in the body of work. Conan valued his portfolio more than another portico.

Each year there’s a new number. According to Nature, it’s $95,000. But the real number is something else. ‘Enough’ is only enough when it meets expectations. Like pouring water into a graduated cylinder, at a certain level, it’s all you need. Only we change. We adapt to the hedonic treadmill, up and down. The way to get off, as Conan noted, is to want something else.

Work, work, work, work. Stern writes in the introduction, “Nothing is casual. Everything requires work, research and thought.” Throughout the book, the interviewees comment on Stern’s preparedness. Stern may seem like someone who just rolls out of bed and does his show, but that’s how good he is. Prepare enough and anything looks easy.

Stern asks Madonna why celebrities aren’t friends with each other. “Because everybody is busy working,” she tells him.

Before commenting on how hard their jobs are, most interviewees point out they aren’t complaining. It’s easy to think that someone making millions of dollars a year should be breaking their back and busting their hump. They did, they do. Chris Rock said, “Malcolm Gladwell (and 10,000 hours) in the closest I come to religion.”

When Steve Martin ventured away from the warm safety of television writing to be a standup comedian he was scared. Instead of being a writer, magician, and comedian he would just be one. He hit the road because “The lonely road with nobody watching was the place to dig up my boldest – or dumbest – ideas and put them on stage.” Stern too writes that he was glad he got his reps in while he was small.

Years later Gladwell points out that his point wasn’t to set a benchmark but a stage. To get “10,000 hours” requires a lot of support.

Time is zero-sum. Both Bill Murray and Ed Sheeran say they’ve simplified their mobile/social usage. Murray said, “I only got a phone to text with my sons…I’m not a very organized guy Howard. I’m really not. I can’t take on any more.”

Ed Sheehan commented, “The worst thing in the world is being in the studio and you’re, like, midflow, bang bang bang, and you get a text and you go into your phone and that’s an hour of your time gone.” Sheeran deleted social apps, then, “If you don’t have any distractions – I was literally writing four or five songs a day ‘cause there was nothing else to do.”

A constant distraction decreases creativity and serendipity. This idea also fits well with Cal Newport’s career capital theory and the example of Brian Koppelman’s Career.

Fit. Jerry Seinfeld said, “I am not arrogant and stupid enough to think I did that. I know that I got caught in a perfect storm. Me and Larry fit together perfectly. And then the cast.”

“What I do is too hot for television,” wrote Stern, “I mean ‘hot’ in the way that Marshall McLuhan used the word. You got to be ‘cool’ on TV. You can’t heat things up too much. People get uncomfortable. When you see a guy growling and gritting his teeth and baring his fangs, it looks ugly. When you eliminate the video and just go with the audio, it becomes wonderful. It becomes refreshingly honest.”

Different forms have different norms. The best work is done when there’s a good fit. Michael Lewis noticed this about podcasting:

This doesn’t only apply to media. Good businesses have the right culture. Good marketing matches a business’s spirit. Good distribution depends on the product and the customer.

School of life. A lot of the guests had difficult periods of life. Stephen Colbert’s father and brothers died in a plane crash and after that school punishments become hollow. But, “Oh, I read every day. I read almost a book a day. But I just read whatever I wanted to.”

He didn’t care for school but books, books were grand. When I talk to young people I notice that often they dismiss both school and learning. Like train cars hitched to each other, if one’s bad then another is too.

That’s not the case.

Life is full of learning, and best when it is. Tom Cruise never went to film school but said, “Film school was every day I was making a movie.” Michael Lombardi got his Ph.D in football from Al Davis, Bill Walsh, and Bill Belichick. That’s a better education than any school could provide. Sanjay Bakshi said the Berkshire Hathaway letters are free, though he paid for the postage for the early ones while at the LSE and it was the best investment of his life.


Thanks for reading.

Dan Lockton

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

These are notes from three YouTube talks by designer Dan Lockton. I found Lockton’s work thanks to Stevyn Colgan’s mention of him in the park benches section of Why Did the Policeman Cross the Road?

2014, Nudgestock. Dan Lockton wants people to know that “everything that is designed has some effect on people’s behavior.” Even things that appear chaotic (cities) have a (/n emergent) structure.

Sometimes you can’t always get what you want.  “When people feel they are being influenced in a way that doesn’t match their understanding of the situation they will rebel.” Design only does so much.

Nudging isn’t shoving, it’s small prompts for small changes. Design nudging, only in the physical rather than psychological. Misuse comes when “The people designing these things don’t understand how people actually think or act.” Bad design is from an IYI.

Good design comes from talking to people. If you want to know how the lion hunts, don’t go to the zoo. Good designers leave the lab. Good designs ‘pave the cowpaths.’

2016, London College of Communications. Behavioral economics has caught the attention of organizations and governments but it’s not a panacea. BE is a model of the world, and like all models, it’s imperfect but useful.

Lockton uses the garden cities analogy as a warning about design. “This is sort of the modernist’s dream, ‘If we plan everything perfectly and design everything there won’t be any problems anymore.’” But no complex system, including people, is predictable. Also, omnipotence excludes interestingness.

In another talk, Greg Lindsay outlined four components for serendipity:

  1. Are you ready? “You know the classical line, the true sound of scientific discovery is not Eureka but ‘that’s interesting’.”
  2. Can you talk at work? “Google started a beekeeping club so that engineers who are interested in beekeeping might meet each other and actually have discussions about unrelated subjects.”
  3. Do you meet people in the city? When it comes to serendipity, “cities are the stars.”
  4. What about your network? “It takes unknown knows and makes them known knowns.”

Lockton ends this talk with a nice example about BBQ. Many cities are concerned about fire and ban flames. But that’s not the only solution. This is the heart of what designers and businesses do, what job is your customer hiring for? Cities aren’t anti-BBQ. Cities are anti-fire. Lockton shares solutions where cities provide water or dirt to extinguish the flames.

That’s good design. Create something that solves the collective problem while allowing individual liberty.

2018, ILA, Rio. “Think of metaphors as a designed thing, deliberately created by people to try to enable other people to understand something in a different way.” In his previous talks, Lockton talked about how physical spaces influence behavior. In this one, he’s talking about mental spaces, like metaphors.

Metaphors are just another model, inaccurate but helpful. Though unique, people share overlapping parts, “and that overlap is the cultural understanding of a concept.” Metaphors often exist at opportunities, neé gaps.

Lockton looked at how people thought about energy usage. People may think of powerlines or thermostats or batteries but are those the best metaphors? How might someone know which metaphors were better?

“One of the big parts of the (energy use) project was visiting people in their homes and trying to understand how did they understand energy. You’re told to use less energy but then actually spending time with people to understand how they understand and make decisions about energy in their everyday life.”

Telling people their kilowatt usage doesn’t change behavior because it’s too abstract.

When gas costs peaked in 2012 ($3.62/gal) people connected mpg to ppg and sold gas guzzlers as fast as possible. Home energy is different and to understand their understanding Lockton got people to draw it.

Metaphors are pliable and can frame things in positive or negative ways.
The government is like X…
The city is like Y…
Life is like a box of chocolates, you never know what you’re going to get.

I learned how varied this could after two minutes on Twitter. Search for “Startups are like” to learn they’re like… hockey, sausages, long call options, an inverted TARDIS, embryos, moody families, Schrödinger’s cat, cults, fingerprints, babies, pirates, boats, ant farms, love affairs, garage bands….

There were many more. A lot had to do with boats and water.


Whether physical or mental, design can only influence behavior so much. But that can still be a large ROI. People change based on their understanding of the world, not yours. And just because it doesn’t seem like there’s a good reason for something means we haven’t found it yet. Thanks for reading.

age quod agis

‘Do what you are doing’ bracelet