Author: MIKE

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Florida Publix, February 2024

I used to return these shopping cart to the store. Not anymore.

One of our dog walking neighbors is Jewish and she turned us on to the idea of the Mitzvah. As she explained, it’s the act of doing (unrecognized?) good deeds daily. So on our dog walk we pick up trash around the neighborhood and at Publix we return some of the shopping carts.

It’s only some of the carts because this cart is exactly where it should be. It’s not in a coral or back at the store but it’s next to a handicap parking spot.

Sometimes people with handicap parking needs also have walking assistance needs. Hence the cart. The cart isn’t randomly there, it was purposely placed there by someone who “gets it”.

The same day as this picture, Seth Stephens-Davidowitz was on the Michael Shermer Shoe podcast.

He mentioned a viral tweet that got over a million impressions but only led to five book sales.

So much for “going viral”.

A few days later was Valentine’s Day.

–

Be curious.

Wonder about oddities, like stray carts.

Be curious.

Think beyond the metrics, like tweet impressions.

Be curious.

Listen to your partner, what do they really want?

Be curious.

Even governors use JTBD

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From Arnold Schwarzenegger’s Be Useful.

It was November 10, 2005. I’d been governor of California for two years, and I’d just had my ass handed to me in a special election that I had called against many people’s advice, in order to present four policy ideas to the voters that I couldn’t make headway on by working with the legislature.

The issues?

Teacher tenure. State spending limits. Union dues and political contributions. Even redistricting reform failed to connect with them.

…

Simply put, I’d filled the bucket with a bunch of shit that most Californians weren’t interested in wading through at the time. It was my fault, and I wasn’t going to do that to the people ever again.

Arnold was speaking in terms of supply rather than demand. Customers won’t wade through anything – unless they really want it. Unless they understand and value it.

And you know what the key was to selling that infrastructure package to the people? Having learned my lesson from 2005, I rarely ever used technical words like “infrastructure” by themselves. Instead I talked about needing to fix our old roads and build new ones so parents wouldn’t be stuck in traffic for so long and miss their kids’ soccer practices so often.

People don’t care about the roads, they care about their time on those roads. That was the job to be done.

Clear Thinking (book review)

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Comparison is the thief of joy, this is how Shane Parish closes his book, Clear Thinking.

But it’s how he should have started it.

Maybe that’s another book, but we have to want the right things first. What’s important?

My gripe is that this book was not a daily devotional. It could’ve started with wanting the big things , enforce that each day, and given specific tactics, ideas, and questions. 

We want actions, but what are we acting towards?

Comparison is the thief of joy. We have to be careful about our wants. It is easy to want the wrong things. Many celebrities have noted that the downside of fame – the things we don’t see! – do not balance the upside.

And this is where the book could have started. Making sure we use clear thinking on the important things. 

It’s a good book, even though it isn’t a daily devotional. It’s broken down into two big ideas.

First, do we have the right mindset. Does someone have the right person on their shoulder, whispering in their ear? Do they have the right feelings in their heart? Do they have the norms, customs, culture, habits, in their life that leave them to the things they want?

The ways we act. The things we say. How we compose emails. How quickly we respond to text messages: and with what emojis. That’s how our norms. It’s the slope of our line (y=mx+b). There’s only so much we can do, but we need to have something helpful there.

Second, the systems we can design around our mindset. We aren’t always going to be humble, or getting after it, or on top of our game. In those situations, we rely on the systems we design around us.

The four enemies we face are emotion, ego, social pressure, and inertia. These are the enemies that rise up and whisper to our mindset. They are louder than the normal voices in our head. They steal our heart, they infiltrate our culture.

What may look like discipline often involves a carefully created environment to encourage certain behaviors. – Shane Parrish

The good news is, these enemies are not that strong. For example, Shane writes that it is easier to go to the gym seven days a week than three. Objectively this doesn’t make sense, but it uses the principle of a inertia to our advantage.

A tactic to avoid the social enemy is to have personal rules. I don’t drink on Thursday nights. I always sleep on it before signing a deal.

The influence of monger, the stoics, and the many others of Shane‘s parish run through this book. So much of it is about avoiding mistakes. It’s about avoiding these enemies, not through choice, but having good design and the right mindset.

The book also includes a section on decisions in action. It offers incredibly helpful specific questions for decision-makers to ask. I won’t spoil them here. 

Two Rules of Thirds

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Rule #1

The game was developed by the same Firaxis Games team that developed the expansions on Civilization V, and most of the new mechanics introduced in these were present in Civilization VI at its launch.[10] This follows from Sid Meier’s “33/33/33” rule of sequel design: 33% of the game should retain established systems, 33% should feature improved systems over the previous version, and the remaining 33% should feature new material

Wikipedia: Civilization VI

Rule #2

When training for something, you should be disappointed in your results a third of the time, content with them a third of the time, and pleased with them a third of the time.

Unknown

What both of these ideas get at is change. Grow or die.

How much change? Well that depends, but the rule of thirds feels like a good proxy. It’s not going to be exactly one-third, but it’s the right approach. Sometimes we should be disappointed in a result and sometimes we need to change a major thing. But sometimes we’ll be pleased and sometimes we need to keep what works.

You’re not selling tires

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From the Chuck Akre episode of the ILTB podcast. A reminder that categories are an abstraction which may conceal competition, customer criteria, and the job to be done.

Patrick: [00:10:15] I’m a quant, but I recognize the art in each of those three legs of the stool and I’d love to spend a few minutes on each. So I came across a really interesting story in preparing for our conversation about a company called Bandag and I’d love to hear that as an example of trying to identify the essence of an underlying business’ value creation, and why it’s ROE can be above nine or 10 for a long period of time.

Chuck: [00:10:36] So this was actually in the days when I was at a firm called Johnston Lemon in Washington, DC. It was a brokerage firm and I was a principal in the firm and we had some interns around and I took an inbox that was full of things I’d tear out of magazines and papers and put in a box and gave them to this intern and said, “Look through there and see if you find anything interesting.”

A week later he came back and he said, “Well, here’s a really interesting company called Bandag.” Why is it interesting? Well, it had very high returns on capital and had done well for a long period of time. And I said, “Great, what business is it?” And he said, “It’s the tire business.” And I looked at the returns and the capital and said, “Well, it’s clearly not in the tire business.”

“What do you mean?”

I said, “Well, take a look at the returns and then take a look at the returns of all the other tire businesses you find and see how they relate to each other.” And Bandag’s was three or four times what they were. I said, “Obviously, it’s not in the tire business. It’s in another business. Our goal is to figure out what business it’s in.”

So we went out to see them and a fellow by the name of Marty [Carver] was running the business. It had been founded by his father, it was in Muskatine, Iowa, and I got to the meeting and Marty had his feet up on the desk and was eating an apple during our interview. So you got a different feel right off the bat, and their business was retreating truck and bus tires. It’s something I really knew nothing about before then.

And we had been through the oil embargo in the United States in the early ’70s, where prices of gasoline went through the roof and one of the principal components of tire molding and recapping is, of course, petroleum based. So it had caused all of their dealers to have a huge increase in the cost of doing business and when prices began to come back down, Bandag took those savings and distributed them to dealers on the basis that they had to use the money in the business.

They couldn’t go buy new Cadillac’s, but they could build a new store. So their principal competition were the major tire companies, all of whom had company-owned stores. All the Bandag stores were franchised. So they were dealing with independent dealers who, as they say, got there at six in the morning and closed at nine at night, as opposed to the employee-dealers, who got there at nine in the morning and left at six at night.

And these people were motivated by their own profits and whatnot, so Bandag, very wisely shared the wealth, as it were, with their dealers, instead of passing it all onto their shareholders, at that time. And it created a huge dealer loyalty and the dealers were able to… They did very sophisticated things about identifying the cost of fuel to a trucking operation if they had a Bandag tread on their tire as opposed to some other kind of tread. And truck tires and bus tires are built and designed to be retreaded two or three times. Most people don’t know that. Automobile tires are not. Bus and truck tires are constructed that way.

At any rate, so they had built this huge loyalty network of independent dealers who continued to use the Bandag name and product in their business, instead of national tire companies and as a result of that, the company had much higher returns on capital than other tire companies

The Lesson from Jaws

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The Lesson from Jaws 

On June 20 1975 Jaws was released in theaters. The iconic movie broke ground in a lot of ways. Most notably, it was the first summer blockbuster. After 1975, summers in America would never be the same. 

And it almost never happened. 

Jaws was a difficult movie to film, mostly thanks to the shark animatronic. 

Some people know that Speilberg named the shark ‘Bruce’ after his lawyer – but that’s not what he called it on set. There it was known as “the great white turd”. 

It didn’t work. 

And when it did work it looked terrible. 

It was a blessing in disguise.  

Sitting in the editing bay with so little usable footage, Speilberg had to rely on mystery, ambiguity, and John Wiliams’s stunning soundtrack. Viewers were left to imagine the shark and in their imagination is where the danger lies. 

Obstacles arise. Problems grow. Things are not the way we imagine. 

That’s okay. It’s just another problem we can solve. 

Porsche Jobs

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In the late 1990s, Porsche was a great brand. The 911 and Boxster were cool cars. They were movie stars, appearing in Risky Business, Top Gun, and Scarface. 

One Porsche ad read, “it’s either an expensive sportscar or a very reasonable racecar.” Another said, “one ride and you’ll understand why most rocket scientists are German.” 

But Porsche faced a common business dilemma: Sell the same thing to new people or sell new things to the same people. Porsche needed a new thing. Porsche needed an SUV. 

The company built fast cars for sixty years. They knew what they were doing. So they didn’t let the “rocket scientists” design it. 

Instead Porsche went on a road show. They spoke with 911 and Boxster owners. What do you like? Not like? Where do you need more room? Less?

They collected data, built prototypes, and took the prototypes back to those people to collect more data. Drive this, sit here, load that.

Porsche didn’t ask what do you want? Customers are too busy living to answer! Instead Porsche presented tradeoffs like more and larger cupholders. They ‘ruined’ the design but the Cayenne sold well, surpassing the 911 in sales in just five years.

No matter how good a business, how wise and leader, how innovative a product – it always comes back to the customer. If they want more cup holders, give it to them

Interesting Listening Jobs

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One aspect of Jobs Theory is when producers focus on one aspect but consumers prefer another.

Often this is in terms of measurable features: size, speed, cost and so on. But consumers think about their tradeoffs in a different language. Here’s an example from November 2023.

Bill Simmons: “To me audiobooks don’t seem that much different than podcasts. My wife likes audiobooks more than podcasts but it’s not like ‘I’m an audiobook person and not a podcast person.’”

Malcolm Gladwell: “There’s been a real blurring of that line – but these distinctions don’t matter to listeners who just want to hear something interesting. It’s only insiders who obsess over the differences between podcasts and audiobooks. It’s just interesting stuff to listen to.”

How to make baseball fans

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You don’t teach them the history of baseball, give them the baseball encyclopedia, quiz them about Abner Doubleday, and if they do well on the test, let them go to a game. What you do is get them enrolled in the journey of being a baseball fan because five minutes of it was fun, and they want it again. The next thing you know, they’re learning statistics because they want to. They’re learning facts because they want to, not because there’s going to be a test.

Seth Godin

How do you make someone anything?

There’s directional, measurable, logical. We will design this using our expertise. We are accountable.

But there’s also “it was fun and I want to do more”. That’s Alchemy.

But it’s not a choice between the two.

The rules of the system dictate the choice. Incentives. Norms. The business model.

Change the system to change the choice.

Reverse Financial Advice (MUSU)

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Financial advice is tricky because it’s a bunch of priority influenced trade-offs. There are many ways to succeed financially, it’s just a question of how: What are the priorities and trade-offs?

Our previous personal finance MUSU was based on the Michael Douglas movie, The Game. In that thriller, Douglas is sent on an adrenaline adventure. We never know if what he lives through is real, or just the game.

That start up could imitate market crashes, pandemics, and stressful situation. Individual investors would never know if what they live through is real, or just the game.

Today is another personal finance idea.

A lot of advice starts with the idea of goals. What is your goal retirement age? What is your goal retirement income? What are your contribution goals for the kids’ education?

Share your goals, work backward in time, make assumptions, and then generate a plan.

But as humans, this is difficult to articulate. As we saw with opportunity, cost neglect, if it’s not an obvious choice in front of us, we don’t generate it. I want to retire at 65 and live on 80% of my current expenditures and pay for two college educations. Blah. Generic options like multiple-choice tests in school.

Thinking different – please read this book – is hard. So it’s logical to conclude that non-differentiated thinking means that it might not be what a person really wants.

The pitch: show us your portfolio, and we will tell you your goals.

For example, someone comes in with a limited portfolio in a bunch of individual stocks. The goals of this person is to rely on luck. Or, someone comes in with $X,000. This is the portfolio of someone who wants to work for twenty more years.

A lot of clients would come in and go oh hell no. That’s good! That reaction creates boundaries to what they truly do/don’t want out of their financial plan.

Additionally, this presentation could be presented using base rates: People with X at age Y work for Z more years – just like you will unless something changes.

This is a hard sell because finance is, like Rory Sutherland writes, a “name brand”. People buy financial advice for the same reason they buy name brand products, as downside protection. I don’t need it to be good, our subconscious reasons, I just need it to not be shit. Brands are undifferentiated on purpose!

The “white suv meme” circulates on the internet and we laugh. But new leads to unexpected factory recalls, disappointed customers, and other monkey wrenches. New/Unproven is not what the customer wants, though it’s better on some dimension. That goes for cars as much as it goes for financial advice. Even if, a little game or a backwards approach might lead to some good ideas.