Paul Wilmott

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

Paul Wilmott joined Barry Ritholtz on Masters in Business.

Models. All models are wrong but some are useful is the expression but Wilmott adds a twist. “Are they useful in how they control risk? Are they useful in helping you do more business? They may conflict with what the man on the street might want.”

Complexity can be marketing, as Geoffrey Miller writes about inSpent. Complexity can also be wrong. There are limits to our models and maps. The perfect map is the 1:1 map. The map as large as the world. While accurate it’s unwieldy. Map/model makers need to embrace the tradeoff from useful to descriptive.

Maybe we’re also looking at the wrong models, to begin with. “You really have to understand human nature,” said Wilmott, “before you start doing the mathematics.”

Rory Sutherland said that human psychology is the original code. Rather than design a product to be bigger, faster, larger, longer, shorter, lighter, etc – Sutherland wants people to ask, how is this perceived.

A transportation model is ‘shorter = better’. With this guidance, engineers will aim to make trips as short as possible. However, Sutherland points out, we run up against the Right Wall of physics and earn diminishing returns. What if he asks, we switch models? Rather than faster being better let’s use the model of enjoyable being better. This is harder to measure but may be more effective and efficient.

The Wilmott Business Model.  “My business model has always been, do something which is fun and then accidentally turn things into businesses. It’s not a greed thing, it’s an enthusiasm thing.”

Scott Galloway gave great advice on how to do it.

“The secret is to find something you’re good at, as the rewards and recognition that stem from being great at something will make you passionate about whatever “it” is.”

Charlie Munger too.

“One trick related to passion is that you are not likely to be passionate about something you do not understand.”

“The more you know about some topic, the more passionate you will get.”

Enjoyment follows skill which feels back into enjoyment.

PassionSkill (1)

Small, interesting, bets.  “Going back to the late eighties, I was doing some research with colleagues at the university and we thought, why don’t we give some courses and teach people in the city? They were phenomenally successful so we set up a business. We turned that into a book, and self-published it.”

Life advances incrementally. The direction may be clear but the path is not. Strike off and see where it leads. It could, like Wilmott, go somewhere great.

Dan Egan said, “Everyone hates draw downs except perma-bears and behavioral scientists because this is the point where I finally get to test whether stuff works.”

Judd Apatow told Joe Rogan, “With any scene, I’m always like ‘well that’s where the joke’s supposed to be, here’s my favorite, let’s get eight more and we’ll move on.”

How to read books.  “I’m now very impatient with books. Up until the age of thirty if I started a book I had to finish it. This was the greatest thing to happen to me – other than the birth of my children- to realize that I could just stop reading a book.”

Bill Gates said he’s choosy about starting because he’ll want to read the whole thing if he starts. I’ve given reading advice in three times; one, two, three.

Thanks for reading.

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