Tag: be different

Intentional living – winning or otherwise

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Good advice is tricky. The This Time is Different series is built around asking: Are these the correct lessons?

Part of the uncertainty is the truth and fit between the big idea and the story. In Start with No, the big idea is our ego, the story is sales, and the fit is: good salespeople have the right ego. Do people have egos? Are people in sales? Does the right ego for sales still matter? Yes – so the book is good advice. 

In Wanting: The Power of Mimetic Desire in Everyday Life, the big idea is network structure, the story is about mimetics the fit is: we are mimetic due to our network structure. That checks out too (though doubt the effect size). 

Winning by Tim Grover follows this pattern. The big idea is intentionality told through the story of winning a competition. Winning like Jordan or Kobe requires intentional actions. That checks out too. In Early Retirement Extreme, the big idea is intentionality but the story is financial philosophy. The same big idea but a different story. 

Grover focuses on intentionality in two ways: wants leading to actions and outsider status.

For Grover, wanting to win has to lead to acting to win. “If you don’t get on the same level,” Michael Jordan told one teammate, “It’s going to be hell for you.” Jordan was one of the first players to switch from carb-heavy meals to eating steak before games. Before Jordan, few players trained during and before the season. For Kobe, the actions were learning Slovenian to trash talk Luca Donic. In 2008, preparing for the Olympic Games, Kobe was going to the gym when the rest of the team came back from a party at five in the morning. 

Intentional living requires wants which require actions.

Grover’s second point is how it feels to be an outsider. Howard Marks popularized the idea that outperformance means being different and being right. Easy to say, hard to do. 

Investors, like Marks, can be different and right with good stakeholders. If limited partners don’t ‘get it’ the business plan can’t work. So investors look for LPs who will ‘stick with it’. It’s easier to be an outsider when surrounded by a collection of insiders. 

Grover’s clients are in the entertainment business and the ‘get it’ is social. Why succeed unconventionally when you can fail conventionally? 

To succeed as an outsider someone must have a plan and stick with it rather than stick your finger in the wind. “No,” Grover writes, “is a complete sentence.” Build up the don’t give a fuck muscle too. Some think it’s weird? Who cares! Successful outsiders will design easier paths. Kobe Bryant had the most ingenious form and LARPed as the Black Mamba. Winning wasn’t a great book. I hoped for more insider stories. But the big idea was a good reminder. 

By what conventions?

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This episode dropped among a list of NFT episodes, but first the quote.

“In education there is a lot of incentive to fail with the pack rather than to take a risk away from the pack. For example, folks would teach the Prussian Lecture method. We all knew it was bad, we all did it together, and education failed but no one stood out. There were brave people who built flipped classrooms, but a lot of students didn’t like it and they would get bad teaching evaluations and sometimes lose tenure. If in football you play by the book, which isn’t really the book, it’s what everybody has historically done, and you fail then you are failing the same game the way everybody else fails. In a way you are failing in a more honorable space than somebody who does something differently and takes that chance.” – Eric Eager, The Science of Change, November 2021

Failing conventionally is an idea we’ve looked at before. But there are two additional points.
1. Conventions (‘the book’) change.
2. It’s the relative difference to these moving conventions that matter.

In football, for instance, going for it on fourth down is being normalized. If in next year’s season the convention is go for it on fourth and one in the opponent’s territory then the conventions have changed and coaches who go for in in their own territory will have less relative difference from the conventions.

What does any of this have to do with NFTs? NFTs are weird. They’re basically agreements. We all live under a collection of agreements: constitutions, laws, proposals, deals, partnerships, user agreements, contracts and so on. Some of these agreements are more explicit than others. The laws of physics notes Neil Degrasse Tyson are true whether you believe them or not. Contracts more solid agreements depending on the enforcement system. Relationships are toward the softer end of agreements and NFTs are digital agreements.

Like Eager’s flipped classroom and fourth down comments NFTs are novel conventions. And we should expect more weirdness.

Conventions used to be dictated by the physical space. We acted mostly like the people around us acted. Now, we hang out on the internet. The conventions are still dictated by the people around us but now it’s in the digital space. And as we are in the digital space more we will come up with new agreements there.

![Generative art](https://upload.wikimedia.org/wikipedia/commons/b/be/VeKings.png =200×200)

Digital art is an early development for these digital agreements because it’s easy. An NFT is basically a link to a file with an agreement attached. The file is stored in this server which is how website work, AND it is owned by so-and-so.

Our lives are full of agreements and conventions. If the things we do are online more the agreements and conventions in our lives will change. NFTs may be one such example.

–
Art NFT are a bit overhyped because the price is wrong. The floor on one ape was $200,000 but really the price was 50ETH. But there’s no way whoever buys this ape will pay for it when 200K=50ETH. Rather, part of the NFT craze is that a bunch of people have ETH at prices well below the fall 2021 levels.

How to complete next year’s NCAA Men’s Basketball bracket

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A quarantine activity in my sister-in-law’s family is buying stocks. Stonks. Gamestonks? Each week, each kid, gets five dollars. They invest in whatever they want.

The best returns, to date, are from my niece. She’s 8. Her name begins with ‘T’ so her stock choices begin with ‘T’. She owns Tesla.

My three nieces and nephews aren’t competing but they do demonstrate that in small groups the best way to outperform others is ‘be chalky.’ Picking favorites is called chalky because in the days of horse racing, tracks wrote the lines on chalkboards with chalk. Even then, people liked betting favorites, so those odds were updated more often and had fresher chalk marks. Hence, ‘betting chalk’.

The same structure works for winning in any small group. To outperform, bet chalk. **However in a large group, choose variance.** Be different, and be right. We know that something will happen. We just don’t know which something.

One way to think through this approach is to consider the sum of the NCAAM final four team’s ranks. This question was posed on Wharton Moneyball and we have an answer: 11. On average, two number one seeds make it to the final four each year. Only in 1993 did all one seeds make it to the FF.

Yeah, but Covid!

That’s what I thought too. When Cade Massey proposed that it might be a more variable season I thought, base rates be dammed it’s going over. But that’s probably wrong (Narrator: It was not).

What I missed what something Daniel Kahneman wrote about in TFaS: substitution.

Rather than answer the question: Will the sum of the ranks of the final four teams be larger than average this year? I substituted the question: Will there be more variance this year?

What I missed was the idea behind hurdle technologies. In food preservation there’s not just one way that keeps food safe to eat, but a bunch. Food might be too acidic and be cooled and be sealed. It’s the combination of things, a series of obstacles, which limits bacteria.

That same idea applies in a bracket. Oral Roberts (#15) beat Ohio State (#2) and Florida (#7) but had to face Arkansas (#3) too, who won.

Ultimately the final four seeds totaled 15 (1,1,2,11). My direction was right. My reasoning was wrong.

The Restricted Actions Section

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Shane Parrish on Capital Allocators:

“Even during the pandemic, there are tons of public health guidelines out there where people are telling you what to think, how to think. You need to filter that and digest it. You can’t just rely on it. They came out and said that masks don’t matter and then said masks do matter—well there was no downside to wearing a mask. You might look like an idiot in the short-term but there’s no downside to it.”

Shane Parrish

One theme in Shane’s great conversation with Ted Seides was how much the cost of looking dumb restricts possible actions. About his podcast Shane said he’s just an idiot with a microphone.

But restricted compared to what? An idiot how?

Restrictions differ by scale and is much like the old political joke: I’m a libertarian at the national level but to my dog I’m a Marxist.

This idea surfaced in Bill Brewster’s podcast with Dan McMurtrie.

“I was somewhat bold enough to call out a transaction that some people have been burned on. But when I started to get inbounds from real mutual funds and managers and as I listened to why people weren’t buying I was like ‘Oh, I’m gonna fucking win on this because I don’t have the constraints.”

Dan is super good in the interview and together they address the four levels of constraints.

  • Macro culture (society). For instance, it’s taboo to talk about sex, or at least the dating market.
  • Micro culture (office). In another Seides podcast, he spoke with Ben Reiter about culture.
  • Position (job). Certain institutions have mandates about size, moral, or industry situations. ESG is a literal example.
  • Psychology (self). In the podcast Dan and Bill joke about investors who say “See’s Candy is my fav WEB investment”. That’s a psychology restriction.

So what? Why do constraints matter? Because they limit what a person can do. Dan again:

“I never want to compete against Stan Druckenmiller in timing the market. I never want to compete against David Einhorn in valuing a company. I never want to compete against Dan Loeb in writing an aggressive letter to a board. Where I might compete is where the environmental factors means that fighter is not able to perform at their best.”

It’s not more options that are better, but different options. Having good ideas (‘Go’) that also look good (‘Show’) is twice as difficult as just having a good idea. Or, can you look a bit like an idiot?

Escaping College and Commodity Competition

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When one product is similar to another there is competition. Businesses which compete on price lead to low-cost-high-volume winners. Thankfully, being dissimilar isn’t difficult. Many brands (Advil, Coca-Cola, Harvard) differentiate commodities by framing the context.

Differentiation avoids the market mechanism. But that doesn’t mean things will be easy. Being the low-cost provider or being different both take extreme amounts of work. That said, jobs-to-be-done thinking may lead to a slightly easier slog

The JTBD idea is updated on Twitter, but Michael Horn’s TAG brought up an easy idea for escaping competition. Instead of asking who are your customers, ask what do customers want?

Typically businesses count things. This is easy data. Plus, the more math the less career risk: a bit of math in itself.

Through their book, Choosing College, Horn and Bob Moesta encourage people to think about new categories. To count less and consider more. Get past demographics (high school graduate) and to demands (level-up).

What is the demographic profile of someone who eats at Panera Bread? That’s a hard question. However, what’s the JTBD of someone who eats at Panera Bread? That’s easier. Ron Shaich explained that Panera is “the kind of space where you want to sit and do an interview, a place for a bible study group, for a team meeting.” 

People hire Panera for group space and bagel spreads. That’s the JTBD. That’s the differentiation.

Being different is easier—though not easy—because it offers many directions. If a business competes on price, that’s it. If a business finds a new JTBD they might have that market all to themselves, temporarily.

Argue Zell

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One trait of great business leaders (seems to be) a willingness to hear dissenting opinions. It takes a seed of humility that will sprout a culture where ‘arguing well’ can survive.

Michigan Dean, Scott DeRue told Sam Zell: “I’ve met a number of your employees and one of the things that’s universal when they talk about what it’s like to work with, and for, Sam is that it’s not always easy. You will challenge them but they know that you believe in them.” To which Zell replied:

“You don’t kill the messenger. As I say to my people all the time, take me on. I’m not afraid to defend my position and neither should you.”

Sam Zell

This has been important, Zell explained, because he’s been “business agnostic.” Investments in twenty different industries (“it could have been forty”) means that Zell has to think on the fly. As such, “No one is quicker to admit they’re wrong than I am.”

Yet, as people this is hard. It’s difficult to separate I was dumb from That was dumb. In th wrong culture it’s impossible

As Zell put it, “I’m not afraid to defend my position and neither should you.” I think it was Kara Swisher who said that when she hears someone say, ‘I like to be challenged’ they really don’t. To her it’s a red flag. Partly because, good arguments are difficult to do well. Yet in the right place, it’s possible and as Zell proves, profitable, to argue well.

Other quotes from Zell:

  • On Risk, “If my watch has one moving part then it has a very small probability of not working. If my watch has fifty moving parts then there would be another forty-nine potential reasons it didn’t work.“
  • Risk, again. “I only want to be right seventy percent of the time. The real key is how wrong are you on the thirty percent.”
  • Leaving money on the table, “I think that a great deal of my financial success is directly related to the fact that we’ve been long-term players.”
  • Being different, “Look at everyone the Forbes 400 who didn’t inheret money. Everybody went left when conventional wisdom said to go right.” & “There are very few examples of high margin businesses that are done by everybody.”
  • Skill and luck, “I think ninety percent of success is accidental. Accidental in terms of the opportunity arising, not accidental in terms of people’s understanding and willingness to take it up.”
  • Action, “My advice to everyone is to become a profesional opportunist.”

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