Archives for November 2016

November 25, 2016 - Comments Off on Commonplace #0040

Commonplace #0040

The people who stand before kings may look like they did it all by themselves. But in fact they are invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies that allow them to learn and work hard and make sense of the world in ways others cannot.

First mover advantage is exacerbated by the fact that technology companies enjoy compounded growth. Building organizations takes time. Incorporating, fundraising, recruiting, and shipping and marketing a product can easily add up to many months of work. If you’re second to market, your competitor will have been scaling their user acquisition machine while you’re still scrambling to ship your product. They’ll acquire resources at an exponential rate that allow them to reach even more customers before you do, and you’ll be stuck trying to explain to users how your product is different from theirs. Most of the time, that means the death of your company.

I need thy presence every passing hour.

Each of us human beings, for example, is the product of an enormously long
sequence of accidents, any of which could have turned out differently.

The self is a relation that relates itself to itself.

Self-forgiveness is a misconception. The only people who can forgive us are those we have sinned against, those we have harmed.

Kierkegaard observed that you don’t change God when you pray, you change yourself.

Make the most of your regrets; never smother your sorrow, but tend and cherish it till it comes to have a separate and integral interest. To regret deeply is to live afresh.

This idea of fundamental laws plus accidents, and the non-linear second order effects they produce, became the science of complexity and chaos theory.

We own our business, and it is ours to lose.

The rule for decision making in life and business goes like this: The fewest blind spots wins.

“If one would give me six lines written by the hand of the most honest man, I would find something in them to have him hanged.” — Cardinal Richelieu in 1641

How we perceive the world and how we act in it are products of how and what we remember. We’re all just a bundle of habits shaped by our memories. And to the extent that we control our lives, we do so by gradually altering those habits, which is to say the networks of our memory… Our ability to find humor in the world, to make connections between previously unconnected notions, to create new ideas, to share in a common culture: All these essentially human acts depend on memory. Now more than ever, as the role of memory in our culture erodes at a faster pace than ever before, we need to cultivate our ability to remember. Our memories make us who we are.

In the late 1800s, “Buffalo Bill” Cody created a show called Buffalo Bill’s Wild West Show, which toured the United States, putting on exhibitions of gun fighting, horsemanship, and other cowboy skills. One of the show’s most popular acts was a woman named Phoebe Moses, nicknamed Annie Oakley. Annie was reputed to have been able to shoot the head off of a running quail by age twelve, and in Buffalo Bill’s show, she put on a demonstration of marksmanship that included shooting flames off candles, and corks out of bottles. For her grand finale, Annie would announce that she would shoot the end off a lit cigarette held in a man’s mouth, and ask for a brave volunteer from the audience. Since no one was ever courageous enough to come forward, Annie hid her husband, Frank, in the audience. He would “volunteer,” and they would complete the trick together. In 1980, when the Wild West Show was touring Europe, a young crown prince (and later, kaiser), Wilhelm, was in the audience. When the grand finale came, much to Annie’s surprise, the macho crown prince stood up and volunteered. The future German kaiser strode into the ring, placed the cigarette in his mouth, and stood ready. Annie, who had been up late the night before in the local beer garden, was unnerved by this unexpected development. She lined the cigarette up in her sights, squeezed…and hit it right on the target.

Many people have speculated that if at that moment, there had been a slight tremor in Annie’s hand, then World War I might never have happened. If World War I had not happened, 8.5 million soldiers and 13 million civilian lives would have been saved. Furthermore, if Annie’s hand had trembled and World War I had not happened, Hitler would not have risen from the ashes of a defeated Germany, and Lenin would not have overthrown a demoralized Russian government. The entire course of twentieth-century history might have been changed by the merest quiver of a hand at a critical moment. Yet, at the time, there was no way anyone could have known the momentous nature of the event.

Managers can grow and retain top talent by helping their employees articulate long-term vision for their careers.

Investing is about owning a partial stake in a real business. You must understand whether the actual businesses in which you own stock earns a return on capital to be a successful investor. The more different types of businesses you understand in this way, the more skill you will acquire in understanding another new business.

The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.

We have to have a business with some inherent characteristics that give it a durable competitive advantage.

The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.

Risk comes from not knowing what you are doing.

If there are no barriers to entry, you won’t be very profitable.

If customers have all the power, and if rivalry is based on price, you won’t be very profitable. Producing the highest-quality products at the lowest cost or consolidating their industry is trying to improve on best practices. That’s not a strategy.

All human activities can be described by five high-level components: data, prediction, judgment, action, and outcomes. For example, a visit to the doctor in response to pain leads to: 1) x-rays, blood tests, monitoring (data), 2) diagnosis of the problem, such as “if we administer treatment A, then we predict outcome X, but if we administer treatment B, then we predict outcome Y” (prediction), 3) weighing options: “given your age, lifestyle, and family status, I think you might be best with treatment A; let’s discuss how you feel about the risks and side effects” (judgment); 4) administering treatment A (action), and 5) full recovery with minor side effects (outcome).

Being able to cross-pollinate the flow of ­information is amazing

Entrepreneurs and risk takers succeed or fail not so much on their ability to talk, explain, and rationalize as their ability to get things done.

People who are good “doers” and people who are good “talkers” are often selected for different traits. Be careful not to mix them up.

I write to dream; to connect with other human beings; to record; to clarify; to visit the dead. I have a kind of primitive need to leave a mark on the world. Also, I have a need for money.
I’m almost always anxious when I’m writing. There are those great moments when you forget where you are, when you get your hands on the keys, and you don’t feel anything because you’re somewhere else. But that very rarely happens. Mostly I’m pounding my hands on the corpse’s chest.

I write entirely to find out what I’m thinking.

November 8, 2016 - Comments Off on Commonplace #0039

Commonplace #0039

A good plan violently executed now is better than a perfect plan next week.

Always remember you are braver than you believe, stronger than you seem, and smarter than you think.

Having users make the rules confers several advantages. First, they are closest to the facts on the ground and best positioned to codify experience into usable rules. Because they will make decisions based on the rules, they can strike the right balance between guidance and discretion, avoiding rules that are overly vague or restrictive. User can also phrase the rules in language that resonates for them, rather than relying on business jargon. By actively participating in the process, users are more likely to buy into the final rules and therefore apply them in practice. Firsthand knowledge also makes it easier to explain the rules, and their underlying rationale, to colleagues who did not participate in the process.

Giving is an act of worship.

be greedy when others are fearful and fearful when others are greedy. One of the best times to invest is when uncertainty is the greatest and fear is the highest. I want fear. I want to buy things when people are afraid of it, not when they think it’s a gift being handed down to them.

To make money, you must find something that nobody else knows, or do something that others won’t do because they have rigid mind-sets.

Successful investing is the search for the mistakes of other people that may create a mispriced asset. In other words, one person’s mistake about the value of an asset is what can create an opportunity for another investor to outperform the market. This search is best done by people who are curious and hard working. Great investors hustle, have a huge scuttlebutt network and read constantly.

Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a 10% chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs.” “In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.

If something is already consensus then money will have already flooded in and the profit opportunity is gone. And so by definition in venture capital, if you are doing it right, you are continuously investing in things that are non-consensus at the time of investment.  And let me translate ‘non-consensus’: in sort of practical terms, it translates to crazy. You are investing in things that look like they are just nuts.” “The entire art of venture capital in our view is the big breakthrough for ideas. The nature of the big idea is that they are not that predictable.” “Most of the big breakthrough technologies/companies seem crazy at first: PCs, the internet, Bitcoin, Airbnb, Uber, 140 characters. It has to be a radical product. It has to be something where, when people look at it, at first they say, ‘I don’t get it, I don’t understand it. I think it’s too weird, I think it’s too unusual.

Don't settle for the little dream. Go for the big one.

What we call following our gut, is really us being subconsciously guided by every piece of information we’ve ever consumed, shaping our instincts and ideas and forming us.

The power which has always started the greatest religious and political avalanches in history has been, from time immemorial, none but the magic power of the word, and that alone. Particularly the broad masses of the people can be moved only by the power of speech… Only a storm of hot passion can turn the destinies of peoples, and he alone can arouse passion who hears it within himself.

In the morning and during the day it seems that the power of the human will rebel with its strongest energy against any attempt to impose upon it the will or opinion of another. On the other hand, in the evening it easily succumbs to the domination of a stronger will.

The person who says he knows what he thinks but cannot express it usually does not know what he thinks.

Don’t start a company unless it’s an obsession and something you love. If you have an exit strategy, it’s not an obsession.

All else being equal, the fastest company in any market will win.