Supported by Greenhaven Road Capital, finding value off the beaten path.
The last one of these was way back in September 2016, so this post will be an update and quick primer for anyone interested.
I (too) record a podcast. It comes out on Thursday mornings. It includes ideas that are either too small for the blog, audio versions of the posts, or ‘thinking out loud’.
The most recent episode is from June 1st. Each episode opens with a quote and then dives into some number of points.
The opening quote is from Startup and Jerry Kaplans 1987 (!!) meeting at Apple to see the precursor to Newton which was the precursor to the iPhone/iPad. It took over twenty years to build something they thought would take only a few.
1/ I quoted from Chris Cole’s Star Wars convexity. Convexity isn’t an idea that comes naturally to me, or most, writes Cole. This short pdf explains it in terms that I can better understand.
2/ Checklists are fun! An idea that’s bubbled up repeatedly is the value of checklists and part-of-the-reason may be our enjoyment crossing things off lists and completing them. For example, here’s what Tracy Kidder wrote about his time with Paul Farmer:
“On the wall beside his desk, Farmer has taped up three sheets of yellow legal paper, on every line a task to be completed, and beside each of those a hand-drawn box, in Creole a bwat. I’ve noticed that if he completes a chore that he forgot to put on the list, he writes down the chore, makes a bwat beside it, then puts a check in the box. This seems to give him an inordinate amount of pleasure, and I must admit that I feel some myself, completely unjustified, when he says, ‘We’re getting a lot done.'”
3/ Base rates on motorcycles. I first heard about the idea of base rates from Michael Mauboussin, and much like convexity, I didn’t understand it. Tynan wrote a blog post titled Analyzing Risk where he explained the inside and outside view.
“In some cases, they’re (risks) fairly universal. My risk of dying in an airplane crash is the same, per mile, as anyone else’s….But some statistics can be very accurate for a population yet way off for an individual. When I began riding a motorcycle I looked carefully at what actually caused motorcycle accidents. Alcohol was a factor in 50% of crashes, and since I don’t drink I can eliminate that.”
Mauboussin instructs to start with the base rate/outside view. Then, figure out the inside view. This is the ‘well sure it happened to them but it won’t happen to me’ phase. After that consider how much you can move the needle. It helps to understand the two-jar model and how much of results are luck and how much are skill. Then adjust the expected outcome.
4/ The stories we tell ourselves. Scott Alexander wrote about aliens in Budapest. The whole post is interesting but in the podcast, we just touched on our story-telling nature.
Again, thanks for reading,