Committing to some verb; exercising, writing, or working often involves some metric and the metric matters. Bosses sometimes pay for getting work done, and sometimes pay for being there – and getting some work done. We’re our own bosses too and operate with the metric of our choice.
Some numbers, like dollars to retire or distance to run work well – sometimes. Other times there’s something even better.
Time is a great metric, especially for things where the process is more important than the outcome. And twenty minutes is the best anyone can work on anything for twenty minutes.
I’m trying to become a better swimmer and that means going slow to practice good form so time is a better metric than distance. I can also set a timer on my watch so that my only focus is on swimming, keeping myself totally focused.
Twenty-minutes is also a swallowable pill for less desirable work. Twenty-minutes of housework can turn into a workout with the right mindset. Whenever there’s transcription, research, or proofreading to do I set a timer for twenty-minutes, repeating it once or twice if I get into a groove.
What twenty minutes really is is an easy design hack. It shifts your perception of a situation. Any arbitrary rule can do this.
Here’s now Neil Gaiman explained his “biggest (writing) rule” to Tim Ferriss. He’ll head down to his writing cabin and “and I’m absolutely allowed not to do anything. I’m allowed to sit at my desk, I’m allowed to stare out at the world, I’m allowed to do anything I like, as long as it isn’t anything.”
No crosswords, no phones, no books. “All I’m allowed to do is absolutely nothing, or write.” Like a parent who offers their children the option of carrots or broccoli rather than fruit or vegetables, Gaiman has redesigned his environment.
Within that, he avoids wordcounts. Gaiman writes by hand using different colored fountain pens. Each color shows him how much he wrote each day.
In sitting alone in his gazebo in the woods with just his pens and notebooks, Gaiman has created an environment to write (“the most important thing about the gazebo is it’s out of wireless range”).
All metrics are like this, arbitrary. Does it matter if the goal is 100 or 98? Did you know the marathon, the fabled Greek-inspired feat of feet has changed distances over time?
The things we measure influence our behavior and we can change those measurements to change our behavior. Not just in the number but in the form.
In a recent post we noted that doing good work takes three things; the skills for the work, the motivation to do it, and the right conditions for it.
Timing ourselves is a way to frame the conditions. Do this unpleasant task for just this long. Sure.
That said, I wrote this using a word metric, not a time one. Each morning I wake up, write 400 words, and only then am I done. If it was twenty minutes I’d get distracted, fall back asleep, get more coffee, or anything else. For this task, at this time, the best metric for me is words. My morning design may be different than Gaiman’s, but it’s still designed.
We still need dollars and dates and distances for the working, creating, and running we do. But we can also use time. Most important is picking the metric that gets results. It’s not the measurement that matters, but the verb we’ve committed to.
Anytime we want to do something in life we need three things; enough motivation, the right skills, and helpful conditions. This trio of ingredients is actually why college is still a good choice for many young people. Having advisors, friends, and grades to keep you motivated, having a deliberate and directional progression of skills and the resources of college like libraries, study groups, and tools makes college a one-stop shop for learning.
College is like a European riverboat cruise. The XMBA is like backpacking and couch-surfing.
We talk about college alternatives because the availability of ‘the right skills’ has changed. Online lectures, blog posts, and podcast interviews with the best experts in the world makes getting the best content easier than ever. Not only that but experts who aren’t professors, like Rory Sutherland, share their expertise too.
But just because the skills are available doesn’t mean a DIY education is best for everyone. Co-Founder of an AI firm and former angel Investor Tyler Willis said, “If you don’t know which way to go, the default should be to stay in school.” He added, “If you’re going to drop out you need to work harder than you would have in school.”
Though less explicit, motivations and conditions matter quite a bit.
This education example exposed itself in the excellent Endurance by Scott Kelly who didn’t care about learning in high school or his first year in college. Then one day he picks up The Right Stuff, reads the entire thing, and wants to become an astronaut. Kelly could work hard when he wanted to. He became an EMT in high school and favored the shifts that ran through the more dangerous parts of town.
The best way to get to NASA was the U.S. Merchant Marine Academy and as a legacy student thought he had a chance. He was rejected. Why? His terrible grades.
He applied to SUNY Maritime and got in. There he wrote, “The military discipline came pretty easily for me. I think I had been craving that kind of structure, and it was almost a relief to be told what to do and how to do it.”
The Right Stuff motivated Scott Kelly.
The school structured the day for Kelly.
The classroom offered the skills and Kelly seized them. Though it wasn’t easy. He reflected on his first math class assignment, “It was late at night by the time I was done, and I tried not to reflect on the fact that everyone else in my class had probably ripped through the homework in fifteen minutes. I tried to focus on the fact that I had set myself a goal—to read this chapter, to do the problems—and I had done that. I turned out the light feeling like I might finally be able to turn things around.”
I used to teach at a small college in Ohio. I still talk to high school students. In three years I’ll have a high schooler. I’m not sure what my advice about college will be but I always tell people that school is not your only education.
College is a normal bell curve, not-college is that but with fat tails. The good is better, the bad is worse.
In either direction, students can shift the curve to the right if they have enough motivation, the right skills, and helpful conditions.
A friend admitted his admiration a while ago. ‘I’d be lucky to read one book a month and you seem to read one in a day.’ That’s an exaggeration in absolute but not relative terms. I read a lot more but he’s a lot busier.
Luckily for both of us, it’s easier to read more, or watch YouTube videos or listen to more podcasts. The problem isn’t finding good stuff to consume, but prioritizing it. After reading more than a book a week, listening to untold hours, and having an eclectic mix of YouTube view history, here are some things I’ve found that work.
Get a foothold. Often it takes a snippet of knowledge to get started on a topic. Before I started watching the Nudgestock videos I watched a lot of Rory Sutherland. Watching Rory I understood the kind of things he was interested in and had some framing for what was to come. Each episode built my pyramid of knowledge. However…
Be okay not knowing. The a16z podcast is the most advanced show in my regular queue and I know nothing about “Damage-free Genome Editing — Next in CRISPR” or “What’s in the Water at the George Church Lab?” That’s okay. I listen if it’s interesting. If it’s not it means I don’t have a foothold. Listening to something familiar is like swimming in a lake and a paddleboat goes by. Anyone can heft themselves in, operate the controls, and tool around.
Listening to something new is like watching a cruise ship motor past. You can’t get on, up to speed, or understand it without a lot of studies. That’s fine, watch it pass. Part of lifelong learning is realizing that unlike school, none of this on the test, there is no test. You can always learn it later, or not at all.
Skip relentlessly. There’s no such thing as a bad book, just a bad book for you. I struggled for years to read Taleb before he clicked, whereas Tyler Cowen I could read every day. For podcasts, I’ll start every episode in my feed but skip until something sticks. You have no commitment to finish each book, episode, or video. Remember what Scott Malpass told Ted Seides, “At the end of the day we don’t really care much about what other people are doing. We’ve got our own risk tolerance, our own mission. We are going to do what we need to do for Norte Dame.”
That’s what your learning is too, what you need to do for you.
Designing. Good design is ‘paving the cowpaths’. Your goal to consume more shouldn’t be to absorb an entire curriculum but to make it a daily habit. Like finances or health, the small regular steps compound better. How can you design your day to make listening, reading, or watching easier?
On YouTube, their recommendation engine is very good at suggesting new things. This cuts both ways. If you browse highlights, vloggers, or viral videos that’s what you’ll see. A new profile for ‘learning’ might do the job.
On Podcasts, go for a walk. This is my favorite thing to do. There’s something about being outside that makes this all the more enjoyable.
On Reading, choose your medium. The Kindle is great for battery life, portability (underrated by most), and focus. Also great is an old iPad where internet browsing is too slow to be comfortable. Or physical books if you’re one of those sorts. Find the design that fits you best.
Taking notes. A frequent question I get is, ‘How do I take notes?’ Much like good design, it’s what fits you. Lately, I’ve used, but not committed to, the Apple Notes app. Here’s a sample of the Epstein note:
Note taking is great too because it makes the information stick. If you’re hiring podcasts, books, and videos for education then it’s not just consumption that performs this job, but production too.
In that note, Epstein references kind and wicked environments and they’re good descriptors for learning in school and learning in life. School is kind where the things you practice will be on the test. Life is wicked where pop quizzes rule the day. You’re preparing for the latter, which means there’s no curriculum to study. Follow your curiosity to whatever weird podcasts, books, and videos you can.
How does someone make good decisions? There’s a lot of smart people talking about it and we’ve written about a number of them here. Michael Mauboussin, Nassim Taleb, Rory Sutherland, Gerd Gigerenzer, and Richard Thaler all come up on this blog. Part of what makes decision making difficult is the destination.
Diet is an easy example. The destination is a healthy body. The decision is to replace unhealthy foods with healthier ones.
Diet is easy (kinda) because it’s a kind rather than wicked environment. As David Epstein spoke about, some sports like golf and chess are very stable. Other parts of life are much more complex. Epstein’s point was that we shouldn’t learn lessons that work in one area but are void in another.
Diet is kinda kind because it’s a lot of chemistry with some social and some psychology mixed in. This is why diets tend to work with design interventions. Penn Jillette ate just a potato and fasted and that worked. Coaching solved the design issue while chemistry took care of the weight.
Let’s look at something different. Let’s look at something common in harder decisions, ambiguity.
Scott Kelly successfully spent a year in space and wrote about it in the book, Endurance. Kelly and his twin brother Mark had a rough life growing up. Part of the reason was that his family was middle class trying to live an upper-class lifestyle. Part of the reasons was his father was a drunk. One night dad went out to the bars with no food or money at home. Kelly wrote:
“The physical feeling of hunger is horrible, but much worse is the bottomlessness of not knowing when it will end.”
Later when Kelly was on the ISS there were some launch accidents. Their supply ships blew up on the launch pad or malfunctioned and burned up in the atmosphere. The ISS has a safety gap in supplies and redundancies in machineries but there was still the doubt about when the next capsule would make it up.
When there’s ambiguity for loss – how many people would really want to live in space for more than a year? – we tend to shy away from it. When there’s ambiguity for gain we can place Small Bets.
Rory Sutherland notes that we like brands because it’s insurance that something isn’t shit. Buying brands limits ambiguity. We buy brands because risks are calculated in the pre-frontal cortex whereas ambiguity is in the limbic systems, “said a simpler way, with ambiguity emotions play a much more significant role in the process than they do with risky decisions or deductive decisions.”
The lesson then is to make small, non-lethal bets, even if it costs a lot, in areas that are important to us. Buy the damn Samsung TV but take risks on anything that can compound over time like financial, habitual, or relational. Bill Gurley said about missing Google:
“I think it came down to the price at the time was remarkably high and the team was remarkably self confident in a way that would cause you to question whether they could pull it off but they did. I go back and the learning is that if you have remarkably asymmetric returns you have to ask yourself, ‘how high could up be and what could go right?’ because it’s not a 50/50 thing. If you thought there was a 20% chance you should still do it because the upside is so high.”
Humans don’t like ambiguity. It shields us from some mistakes, but it also conceals some gems.
Ben Horowitz and Marc Andreessen were interviewed by Stewart Butterfield about their ten years at a16z. We’ll frame three rhetorical questions from the interview.
How to start? Copy
a16z started by copying Michael Ovitz’s model at CAA. Horowitz said, “We probably saved five years by copying his model.”
Recapped in, Who is Michael Ovitz, the idea was to have a team of domain experts serving clients. This was a different model for entertainment and it worked for Ovitz. It was also different for venture capital and it worked there too. But it won’t work for you unless your industry is new.
Andreessen explained that once a company starts, “Then it’s a compounding advantage where you get more and more different from the status quo…why would William Morris copy you (Ovitz)?” The couldn’t because they’d need to take salary cuts. The William Morris executives had too many stakeholders, neé bills, in their lives.
This question gets asked a lot, What’s stopping Company X from doing this? Why can’t Microsoft in the 90’s, Google in the 00’s, Facebook in the 10’s just come in and do this?
The best answer is to say that they can’t. This is what Max Levchin did with Affirm. And it’s not unique to startups. Competitors need to think about where their opponent’s weaknesses lie and head for those. That was the CAA and a16z agency model. Take some salary money and create services.
What’s going to happen next? No one knows.
Andreessen lived through this with the Netscape browser and has seen the internet, mobile, and social trends. He said, “People don’t think these things are obvious in the beginning. They are only obvious after the fact.”
When he pitched media companies for investments in Netscape they balked. Those business “knew that normal people wouldn’t use the internet if it didn’t have Time magazine on it because Time would obviously be the killer app for the internet.”
But killer apps require a convergence of this, that, and something else. Andreessen said that “basically everything happens,” but like a solar eclipse, things like markets, technologies, and governments have to line up – or not oppose – first. One example is the book, The One Device.
If no one knows what’s going to happen and anyone can make something happen, even if it’s small, that’s great news. Andreessen is optimistic and recommends the book, How History Gets Things Wrong. The future is flexible! What’s going to happen next is up to you.
How to make mistakes? Probabilistically.
Horowitz likes the way Bezos puts it, “We rate people on the inputs, not the outputs.”
Andreessen elaborated, “We have a very specific philosophy on that (mistake making) and the book I recommend is Thinking in Bets where she (Annie Duke) talks about what is the nature of a mistake in a probabilistic domain.”
Instead of looking at outcomes, look at processes. Sports can provide handy visual examples. We praise Bill Belichick a lot but Chuck Klosterman made this point to Bill Simmons:
In his podcast with Russ Roberts, David Epstein said the same thing, “We have to be really conscious of the fact that a good outcome means we used a good process and vice versa.” Both of Michael Mauboussin’s books, More Than You Know and The Success Equation address this kind of making.
At a16z they use an idea maze. Andreessen explained, “is like a hundred step process to work your way through all the different permutations of the idea before you figure out the real thing.” It’s a way to think of alternative histories, counterfactuals, and possible outcomes. It’s a way to think probabilistically.
One idea maze solution is money. But that’s an idea maze problem too. Stewart said, “Having a whole bunch of money takes away a critical forcing function.”
Constraints like this can help. David Lynch wrote that more money means less thinking. Interviewer extraordinaire Terri Gross said that daily interviews make her a better interviewer.
David Epstein is on the podcast tour, talking about his new book Range, “why generalists triumph in a specialized world.” His advice isn’t to specialize or generalize but to have both, at the individual and community levels. He told Patrick O’Shaughnessy, “In areas where the next steps were clear, specialists were better. In areas where the next steps were less clear, people who worked across a large ranger were most effective.”
If you read Jack of all trades as a negative this book is for you. If it’s a positive expression then you’re rowing in the same direction as Epstein. Either way, seeing things from Epstein’s perspective is helpful. It’s what academics tend not to do. On Longform Epstein said, “The researchers (I cite) never come to the same place, they always go to their own conference where everybody believes their stuff.”
Michael Pollan saw this in his writings on homes, gardens, food, farms, – and most recently, hallucinogenics. “Doing it for the first time gives you a kind of wonder, of first sight, that you’ll never get again.” Even breaks from projects, relationships, or the simple crossword puzzle reveal solutions.
To make his perspective reflective Epstein does a lot of research. He tries to read ten journal articles a day early on, wandering into rabbit holes as needed. One tip he shared on Longform was to not dig into the method section unless the overall ideas look interesting.
Epstein also likes to talk to people. “I’m a reporter and I know if I talk to someone I’m going to find out things I’m not going to find out any other way.” In each of his interviews, he’s curious, which as Epstein notes, is a kind of ranginess itself. And he’s always been that way.
First, “I wanted to be an astronaut.” Then Epstein went to school at Columbia, started running track, and took a summer class because it would be easier to run track during that time.
That class was geology. Epstein loved it so much he went to graduate school for it. There he took a night class in journalism. That was fun too. With an eclectic mix, his job prospects were mixed. But he found one, the night shift, operating a phone for news tips and running out to report on stories as necessary. The experience was “a great boot camp.” It was his XMBA
Epstein followed other serendipitous moments to Sports Illustrated. His career was punctuated by that went well assignments and a focus on the truth rather than the conventional. Traditional answers are easy to tell ourselves and to tell others but traditional doesn’t necessarily mean true. Sometimes we have to find new, odd, and different solutions. Sometimes we have to show some range.
Rory Sutherland makes this point in his book, Alchemy. Terry O’Reilly’s does too, writing, “The difficult thing about counterintuitive solutions is that they are often difficult to swallow and hard to present, and are usually shunned by almost everyone initially.”
Epstein saw this too, telling Russ Roberts, “As one researcher told me, ‘The difference between cancer research and Jeopardy is that in Jeopardy we know all the answers.”
It comes up in so many domains of life that it’s hard to ignore. Part of life is making the trains run on time and part of life is laying new track. Part of life is efficient execution and part of life is non-fatal exploration.
One way to explore better is, the next time you make an analogy, “Instead of picking the first analogy that comes to mind because it has some surface similarities, create a reference class of analogies and think of what happens on the broad scale instead of the particular details.”
Exploration came up often in Epstein’s conversations. After his lunch with Russ Roberts, “I ended up with half a dozen new things on my reading list, which for someone who doesn’t know what they’re going to do next, it’s tremendously important to get suggestions to read things I wouldn’t have otherwise read.”
Epstein is also in a culture – writing – that allows this. You told O’Shaughnessy,
“Give people the liberty to start exploring.” Culture influences people. The Apple and Steve Jobs culture, said Ken Segall, was “a table, white board, and an honest exchange of ideas.”
So explore more. In his interviews Epstein mentions many different sources, here’s a few.
About To Youyou, the Nobel Prize winner with ‘No’ credentials. BBC.
About Wicked and Kind environments with the psychologist, Robin Hogarth. YouTube
About the book The Master and his Emissary, right brain and left brain, Iain McGilchrist. YouTube
About Dark Horse projects of self exploration with Todd Rose YouTube.
Lots of life is a balance. Greed and benevolence. Extreme ownership and decentralized command. Firm and soft. Act and adapt. When abstracted and visualized we make maps. As Adam Savage wrote, “Drawing is your brain transferring your ideas, your knowledge, your intentions, from the electrical storm cloud at its center, through synapses and never endings, through the pencil in your hand, through your fingers, until it is captured in the permanence of the page, in physical space.
The things we draw, the maps we make aren’t real – but they are helpful.
In POV40IQ emails this week we looked at situations where actions rule and ones where adaptation rules. One more example is Disney.
Marty Sklar is the only Disney employee to attend the opening of all eleven theme parks across the world. Disney theme park service is best in class. It’s so good they teach the Disney way as a class. Ramit likes it.
Sklar knows a lot of these things. Some he taught. Some he writes about, like in the book, Mickey’s Ten Commandments, a book focused on how Disney makes their theme parks so Disney like.
One way to do that is to have a patron’s point-of-view.
“In the earliest days of Disneyland, when everything was new for the guests and the Imagineers, Walt Disney decreed that every designer was to go to the park at lease every other week and stand in the lines (we call them queues) to understand what our guests were experiencing.”
That’s a case of Disney acting to see how they could improve people’s experience at the parks. Lots of good businesses do this. The IKEA founder, for example, still occasionally worked the cash registers when he was CEO.
Disney’s effort shows. The parks include some of the most innovative designs in the world. Understanding psychology, much like Rory Sutherland, Disney knows that entertaining waits aren’t waits at all.
Dumbo gives people a place to rest (in the air conditioning!). The Jungle Cruise queue is full of humor. So is the Haunted Mansion. Taking the customer’s perspective, Disney Imagineers acted. But sometimes the Imagineers adapt.
After 2008 Disney stumbled. In 2009 Disney reported to investors that attendance dropped 1% but park and resort operating profits fell by half.
How did Disney keep attendance levels up? They adapted. They offered free dining plans. People liked it, and they got used to it. Now it’s a program that brings people back year after year.
In one post we compared Howard Marks to Russian nesting dolls. There we noted the three levels we ‘live in’. Our heads, our buildings, and our environment. At each of these, we act or adapt depending on the circumstances.
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.
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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.
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.
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“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.
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.
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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.
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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.
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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.
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.
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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.
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