Hard, Boring, Long

The world is complex, random, and ambiguous. I like it where there is a process I can repeat with things I know that work, and will stay the same. I am not afraid of hard. What gets me down is wasted time. Fake work and indecision. 

When I have faith that I can just chip away at something, the disempowering anxiety that comes with “not knowing what to do” calms down. 

One of my passions is language learning. I can still only really speak English, but I am following the process of Fluent Forever (Gabriel Wyner) to train my ear and mouth muscles on lots of different languages. Not an easy task. What I like is that in 10 years, 20 years, 30 years, it is unlikely that there aren’t going to be people who speak those languages. The effort will have been worth it. 

There are certain difficult things you can put the effort in on, where the unknowns are limited. One of the best competitive advantages is choosing things that are hard (in very simple effort terms), boring, or take a lot of time. Language learning is a great example. Breaking out of our mother tongue is incredibly challenging... yet lots of people do it. 

There are advantages that even if you do in the open, and tell people how to do what you are doing, it will take time and application for others to catch up. “People tend to overestimate what they can achieve in a year, and underestimate what they can achieve in a decade”. 

Long-term plans you have to chip away at can be significantly more sustainable than quick wins that burn bright and fade out.

Adding Time

Chipping Away

The thing I work hardest on is accepting noise. Accepting wildness and randomness. Finding comfort in ambiguity and discomfort. Returning to an internal source of joy which I can build on. Coming to peace terms with constraints. 

Not building up hope that something is going to happen, and then it doesn’t happen. But also not expecting the world to be horrible, painful, and cruel. 

It comes down to the practical reality of what each day looks like. How am I going to wake up? The longer periods build on each other. The idea around 10,000 hours of purposeful practice. Hours that are meaningful and consciously lived. 

What is it I am learning? What am I building? What is my (evolving) path? Not as a tool for separating myself from others and creating a hierarchy where I am better, or good enough. 

Just a practice for grappling with stuff I find fascinating. Doing something that grabs my attention and develops my skills and knowledge. 

Reflecting on why I react in the way I do. Noticing when I am in situations that scream of the past, or where the past screams. 

Competitive Advantages are often not what you are good at. They are the container in which you are operating. One of the most effective containers is difficulty. If hard doesn’t scare you. An easy path is easy for everybody... it has no container. 

If you want to find creative problems that are really going to engage you, the challenge lies in chipping away at things that are hard.

Then you Build

Wealth building is not wealth extraction. It is not a negative competition. Yes, you are engaged with people in a way where you push each other, and challenge each other, but there is no need for schadenfreude and benefitting only if others do badly. 

We can gradually let go of that and have the genuine intention to solve rather than perpetuate problems while drawing rent from them. There is the temptation to have easy containers where the only competitive advantages are fake. 

Real mastery and resilience can cope with, and thrive under, openness and transparency. A really good business idea can be judged through the filter of how it would work in a world with full transparency, zero transaction costs, and perfect replicability. 

If someone knows what you are doing, they could do it too. Real competitive advantage comes from embodied knowledge. You can tell someone what you do and how you do it... and they still won’t be able to, or won’t want to, because it isn’t what makes them tick. You have a relationship with them, and that is something they will keep coming back for. 

The way you see the world can change, and adjust. We can go deep into different areas. Make different choices. 

My goal has always been to develop a resilient world view. One where there is nothing that everything relies on. Where changing one thing doesn’t bring everything else down. Where you hold each part lovingly, but you are not so attached to it that it defines the whole reality. 

Then you build. Choose. Go.

Building doesn't have to leave a hole

What Makes Money

Income and money operate at a very explicit level. Pay for what you see. Fully acknowledging what makes money and what doesn’t, and not using force to get your way, allows you to go deeper and wider. 

You can shift to embodied learning. To things we can’t explain. To the tacit knowledge that is held by people on the very front lines with zero distance from decision making. Knowledge built through immediate and repeated feedback cycles and real wrestling with real problems. Understanding that is impossible to pass up the chain. 

Research and development can take a lot of time and become a part of you. Where the payback is hidden. 

Competitive advantages I like are ones you can do in the open. In “The Art of Learning”, Josh Waitzkin talks about his jiu-jitsu teacher publishing his training videos. This surprised people, because he was freely giving away his secrets. His answer lay in his confidence that if you were concentrating on what he was doing, he would be a step ahead, because he had gone deeper. 

If you have to safely guard a secret, it’s not really a competitive advantage. It is a fragile wall. 

With an enduring advantage, you can tell people what to do, but the time, commitment, and effort will scare them off. Particularly if that mastery doesn't make money. They will head towards the six easy steps to financial freedom in six months. Not the life of hard graft that will set up the next generation.

Time - Commitment - Effort

Understanding your Constraints

A competitive advantage is not the thing you are good at. It is the barrier that stops other people from being good at it. A competitive advantage is not the value. It is the container. It is a given that you need skills and knowledge, but you get paid for the box. 

You get paid because of the limits of supply. You do not get paid for things that are plentiful. The barrier is what makes it hard to do. It may be some intrinsic ability that only a few people have. They won the lottery of birth. Whether genetic, geographic, or familial. It does not matter if I want to run as fast as Wayde van Niekerk. It does not matter how hard I train in that attempt. It will not happen. 

It is not true that you can do anything you put your mind to (unless you just want to do it in your mind). We are born with constraints. You need to understand those limits, and how the world works. Then push them. Shift them. Break them. Or find your meaning within them. Not everyone can be Roger Federer, Simone Biles, or Caster Semenya. Not everyone can be you.

World Class Athlete

I See You

Fundamental Investing is the “Sawubona” of investment philosophies. “I see you” is the aim. What you see is not all there is. A business is not just about an idea. It is about what gets done over a significant helping of time. Meritocracy is caveated by the ideas of competitive advantage and barriers to entry. Any idea, whatever its quality, requires Capital to protect it from the waves of chaos, and to feed its growth. Any idea, whatever its quality, exists in an ecosystem of stakeholders (regulators, suppliers, customers, competitors, employees, investors) that force its existence into constant existential evaluation. Resources are limited. We don’t get to do everything. There are tradeoffs. Fundamental Investing is about seeing the potential through the noise of the conspicuous. It is about looking at support structures. It is about doing due diligence on how something exists, not just that it exists.

compound eye of an antartic krill

 

Golden Calf

The reason some industries struggle to transform is because they need to maintain the illusion of excellence through artificial barriers to entry. I, like everyone, obviously only have limited exposure to my own bubble. But, in my bubble, the reason I was surrounded by white men is because the bubble was built by white men. Investing is really not complicated. If you can’t take someone and teach them how to be a good investor, the fault lies with you, not them. If you can’t take someone and teach them to be a good investor, it is because you are protecting your privilege. You are protecting your club. You are worried you might train them and then they will leave. You are worried that your selection criteria will be shown up to be unnecessary. I do believe there are things not everyone can do. Like sprinting. Not everyone can run a sub 10 second 100 metres. Investing is not one of those things. There are no gods. Just false gods. If you are in a business that is not transformed, it is the people in charges fault. Fullstop.

False Idols

Five Forces

Significant wealth is created across generations and among communities. Where there is time. Significant wealth exists beyond the world of hand-to-mouth where you consume all the excess you create. Where there is space to breathe. Significant wealth is leaky. Where there are people growing around you. When analysing a business, you don’t look at it in isolation. The “Porter Five Forces Framework” is one way of looking at where a business stands. It always comes back to supply and demand. How much is there? How much is wanted? The five forces are the bargaining power of (1) suppliers and (2) buyers, the threat of (3) new entrants and (4) new substitutes (a better solution), and (5) the industry rivalry (the competition). For anyone to do well, everyone needs to do well. That is why the idea of “self-made” is rubbish. Win-win problem solving is relationship building. Wealth creation rather than wealth extraction. It comes from listening to signals of what needs doing. Gaining the skills and knowledge to do it.  And getting it done. It comes from connection.

Elite Team

If you want to be part of an Elite Team, you first have to accept the idea that there are people that aren’t good enough. You have to accept the possibility that you aren’t good enough. That there is someone who deserves your spot more than you. If you push the idea of Meritocracy to its extreme, and believe in surrounding yourself with the best, you need to be consistent. You need to listen to that voice in your head that asks if you are good enough. The impostor syndrome that makes you feel inadequate. That means you have never reached the goal. Elite Teams aren’t about the individuals. They are about the Team. They require sharp knives. Personally, I don’t want to be part of an Elite Team. I don’t care if you think I am enough. I don’t find the question of whether you are enough interesting. What interests me is your incentives. Your passions. The way you create meaning. What interests me is the way you connect to others. What you do every day. That is enough.

Are you the best?

Fifteen Years

I am not afraid of hard. Hard is an incredibly sustainable competitive advantage. The first step of financial security is finding an income. To do that you need monetizable skills and knowledge. If someone promises you this in just 6 months, I’d take it with a pinch of salt. More realistic is probably 5 years to develop the skills and knowledge, five years to build a buffer and some Capital, and another 5 years for that Capital to just start learning to walk. If you have 6 months, I’ll have a beer and a moan with you. If you have 15 years, then we’re talking. What I am afraid of, is gambling. Hard, with the odds stacked against you. Hard, where you can have put the 15 years effort in and still be nowhere. That is why I prefer micro-ambition. Learning a little each day. More endurance. More resilience. More creativity. Developing a practice that you can have confidence in. Breaking hard down into little chunks. Then connecting each day to the next. Making a life out of those connections.

Lightbulb Moment

Relative comparison can become destructive. We celebrate outliers because they expand our boundaries of knowledge and experience. Edison didn’t believe he had failed numerous times, “The light bulb was an invention with 1,000 steps.” Each of those steps were connected. They all shone in the resulting light. With individuals, we raise our heroes and not all those who also tried but failed. As we cumulatively take more steps, the heroes get compounded praise. But we already have light bulbs. We don’t always have to think outside the box. To have a “Unique Selling Point”. At some point, we need to start appreciating the strong foundations we have, if we are willing to see and embrace them. Think inside the box. Remember why the light was necessary in the first place. Remember the path it was lighting.

In the Light

A real competitive advantage doesn’t need to be hidden. In a world with full transparency, you have to assume that anything that can be copied, will be. Real competitive advantages are embodied. The “information” can be completely open-source, but it is the embedded habits and compounded understanding that can only be accessed through attitude and commitment. Not just showing up today. Not just stepping up today. Today doesn’t matter without tomorrow. Tomorrow doesn’t matter without the next day. You can burn everything to the ground today. If you want to build something worthwhile, it is the long term that matters. It is the relationship between your days that matters. It is time that matters. You can shout that from the rooftops and no one will be able to steal it from you. Build Endurance. Build Resilience. Then do stuff that matters. Every day.

Real competitive advantages aren't afraid of the light

Monopoly on Poverty

Money is the story we tell ourselves to try release potential. The ideological conflict of the last century between Capitalism and Communism was as much about the flow of information as it was about inherent moral goals. Capitalism filters decisions out. Communism centralised decisions. When the world is changing rapidly, money allows decisions about allocating resources to change rapidly as supply and demand changes.

Supply and Demand fails to carry information rapidly, i.e. the market fails, when barriers prevent the free flow of information. At one end, it is why Competition Commissions break up Monopolies. These laws are called 'Anti-Trust' because the price no longer accurately reflects the overall cumulative decisions of everybody. Monopolies have barriers that have gone beyond rewarding them for creativity, and instead allow them to extract wealth. Barriers that don't support a win-win cooperative economy.

The same concept should apply at the other end. When certain groups of people have a monopoly on poverty. Poverty prevents full participation in the economy. It has barriers that prevent people from leaving. It prevents competition from those who don't have the resources to survive. It prevents competition from those who don't have a buffer to experiment. 

Two of the factors that make the US economy as innovative as it is, are its lenient attitude toward Bankruptcy and the wealth it has already created. If you know failure won't destroy you, and you know you can have periods without income because you are building something with a long term perspective, it is far easier to be creative. First rule, survive. Then you can create.

An Unconditional Basic Income is the missing horn of Anti-Trust law. No individual can have sufficient knowledge to understand what we all do together. We all do better when we are all decision makers. When we are all empowered.

Money is blood that connects us. A language we all share even with people with very different aims and belief. If we stop its flow to all the parts of the body, they fall off, and we all suffer. 

Missing Horn

A World of Abundance

Economics is the study of scarcity. In a world of abundance, all the rules of 'supply and demand' fall away. There is a limit to how much people want of something even if it is free. One of the reasons De Beers was able to create a mythology and mystique around diamonds, was to control the supply. They were able to convince us that a rare rock symbolised a rare relationship. When Rhodes died in 1902, De Beers controlled 90% of the production of diamonds.

Put a Ring On It

'Gift Economics' and 'Sharing Economics' are completely different. There isn't an exchange. There isn't a limit. When something is given, nothing is expected. The best example is parenting. A friend of mine spoke of learning just how much his parents had given him, by being a parent himself. He said he had heard someone (who didn't have kids) say that parenting was hedonistic because people wanted unconditional love. Unconditional love from kids isn't even close to guaranteed. Parents have to pour themselves into their kids. How the little person responds is only partly influenced by their effort. It isn't a cash for service purchase.

Burning Man is a famous ongoing experiment with the sharing economy

I am excited by what happens in a world of abundance. Silicon Valley is famous for providing employees with incredible working environments. Unlimited food, places to relax, places to exercise, and all the other tools to succeed. They do this because the employees are not seen as an expense. By releasing obstacles, they believe the employees will be able to allow their creativity to explode. I think that is true for everyone. Not just high flyers.

Rules change. Google changed the rules for business by providing the 'product' for free. We are essentially Google's product because search provides a far better connection to what we want than broadcast advertising. Amazon changed the rules for running a retail business, by constantly pushing profit margins as low as they will go and reinvesting in building a better client experience.

I can imagine an Artificial Intelligence machine that realises that by providing personalised coaching and covering the 'basics' like food, accommodation, security and transport... it can release our potential. An Artificial Intelligence that doesn't wait for Governments around the world to decide that a Universal Basic Income is a good idea. It just does it.

A world of abundance levels the playing field. It turns the play away from competition. Competition has been an engine to motivate us. We are going to need to start thinking more deeply about alternatives. What comes after enough?

Standing Back

One of the lessons I learnt from last year's #FeesMustFall campaign was when to stand back. It was clear from the start that while students appreciated support, they did not want Politicians to give voice to their concerns. A problem with politics is similar to the problems of businesses that aren't really good at what they do. Ugly business can descend into a defence of 'why we are better' through attack. I have seen 100 page vitriolic attacks on competitors. Departments of 'Competitor Analysis' where the task is to finding talking points to bring the competitor down. Each new product release is similar to each new issue that raises its head in the public debate. Instead of trying to solve the problem, it becomes an opportunity to distinguish themselves. In business, to create a competitive advantage. In politics, to increase the partisan divide.

Students said no. They said they would take care of it. They didn't want to provide soapboxes or to divide themselves. They were from all sides of the political spectrum and didn't want reasons to build walls. They wanted to be heard. They didn't need representation.

No walls of soap boxes thank you.

I also had a chat with someone who is a leader of a very conservative community. He had expressed the start of doubts about the way the Church was dealing with homosexuality. He also expressed that he himself did not know many same sex couples. This is not surprising given how conservative the world he provides care to is. The simple act of expressing doubt raised the heat in the room for him in both directions. The uber-conservative elements doubting his ability to lead if he was even raising questions. The liberal friends he had outside his circles angry that it wasn't obvious to him that people should be treated with kindness.

The likelihood of productive conversation between the people on either side of emotional issues is slim to voetsek. Change happens amongst the doubters and wobblers. For me as my blood started to boil in the infamous comments section, I briefly broke my rule of responding to what I consider trolling. I tried to engage.

But trolling isn't trolling if a person actually believes what they say. Take the king of Trolls, the Donald. We don't know what the Donald believes. He doesn't aim for ideological consistency. He figures out what people want to hear and says it. If that isn't working, he says things that people find offensive but some people believe. Once he becomes the champion of people's deep dark secret prejudices, they will stop hearing they stuff he says which they disagree with. We ignore our hero's faults. We ignore our enemy's strengths.

The King of Trolls

When people are talking about their genuine beliefs, the only people who are likely to really understand them are people the believe to be on their side. People listen to people who are mostly on their side.

The thing with that Church leader is that he is mostly on my side. He is also mostly on their side. Me attempting to change the view on the other side is almost completely pointless. There needs to be common ground first. It's not my fight. Not in the sense that I should let it be. But if what I want is progress rather than just the righteous high ground, the best thing I can do is step back where there is more heat than light. To continue the conversation where it is productive.

You can't change anyone's mind until you are on their side. Until you change together. If you aren't in that position, it is best to stand back.

Hide & Don't Speak

Usain Bolt doesn't need to hide how he does what he does. That is a real competitive advantage. Josh Waitzkin, of the Art of Learning Project, talks of his Brazilian Jiu Jitsu teacher posting videos of himself training on the web. This went against traditional secretive practices of competitors trying to hide what they do until the competition to gain an edge. His view was that he should be good enough to beat someone even if they knew what he was going to do. A real competitive advantage is one that is not fragile. It is not a secret. It is not a thought that will dawn on someone standing in the shower belting out Bohemian Rhapsody.

Source: Wikipedia

It concerns people that The Wright Brothers are credited with inventing and building the first successful airplane, but it was William Boeing who really made the cash. The protection of intellectual property, and how much we value an idea, is a cornerstone of what we value as the capitalist system. It irks people that others copy. We want to credit the person whose idea it was.

I am not completely convinced of the overall value of unlimited protection of intellectual property when it is easy to copy. Often the founders don't even know what the technology will be used for - it is the users and the copiers who create a lot of the value.

Twitter is a great example, here Evan Williams describes the original idea:

'With Twitter, it wasn't clear what it was. They called it a social network, they called it microblogging, but it was hard to define, because it didn't replace anything. There was this path of discovery with something like that, where over time you figure out what it is. Twitter actually changed from what we thought it was in the beginning, which we described as status updates and a social utility. It is that, in part, but the insight we eventually came to was Twitter was really more of an information network than it is a social network'

I wonder how different the world would be if we were less afraid. What would happen if companies didn't work in separate offices? What would happen if we were more project based and less scared of telling people what we were working on? If teachers worked with marketing professionals and actors in developing awesome presentations/lessons. If stock pickers published their analysis of a business warts and all and debated them with competitors, clients and the executives. If statisticians were standing next to journalists at the water cooler and able to say, 'Ja, that draft I just saw on your desk is interesting but the number you are quoting is just wrong. Here is a better way of looking at it.'

While being protective of intellectual property does have some value in that it gives the person whose idea it is an opportunity to cash in, perhaps there is more value to be gained in working out loud. Perhaps there is value in completely re-thinking our desire to spend most of our time only with people solving a particular subset of problems. Maybe the solutions to our problems lie in being more open with people with an altogether different approach?