Counting and being Counted

The easiest problems to tackle are the ones that focus on things that you can count. If you can count something, it is easier to control. STEM subjects (Science, Technology, Engineering, and Mathematics), all revolve around things that you can count. Science also provides a framework for experimentation and research. There is a process of trial and error. Physics, chemistry, biology, biology, technology, and computer engineering (for example), tend to make it easier to find jobs because it is easier to specify problems. 

In product development, you have a “Product Specification” which identifies what the problem is and maps out the intended solution. If it is easy to put something into words and numbers, it is easier to communicate. It is easier to get funding for problems where you can explain how you can make a profit. When it is clear the act of solving the problem can finance itself. As soon as something is qualitative, it is much harder to explain what the benefits are. Because it is not necessarily tangible. It may be something we feel, and we may feel differently about what is valuable. 

Not every good idea is a good business idea. 

If an idea is a good idea, but it very difficult (and not desirable) to create barriers around it to monetize, then it becomes a passion project. It can still be something that gives your life meaning and gives others meaning. But in order to make it happen, the problem requires resources. You need to find funding. 

It might be government funding. It might be grants. There might be someone willing to give you money, but that's a whole different world. That's a world where you learn to do fundraising. To convince people that art/service/change is good. That ceases to be about some key numbers. It becomes storytelling. You need to be able to convey information in a way that grabs someone. 

You need a decision-maker who is willing to give you money. 

Part of acceptance is why you are doing what you are doing. Coming down to the nitty gritty of what drives you. What are your incentives? What's the bigger plan? What's driving your daily practice? What are you going towards? 

Quite often we don't choose that, because we are just on a set path that is given to us by others. That path comes through comparison and relativity. You start looking at friends and family and building towards what is expected. Maybe it's a bigger house. Maybe it is expenses related to children’s education. It might even be that your chosen job has a natural progression. The better you are at your job, you get promotions and raises. We don't necessarily find something that works for us and build mastery around it. We want to see conspicuous evidence of progress. 

We need to unpack what we mean by progress. 

In its historical context. Is it a cultural thing? Is it controlling nature? Is it controlling our environment? Is it something we have to rethink? Given challenges like climate change and sustainability. Do we need to come up with different measures that aren't so focused on the numbers and social mobility? 

The world is getting progressively (but bumpily) less racist, sexist, homophobic, and classist. We are breaking down barriers, but we still have hierarchy. The concept of people being better and lifting groups of people. The directionality of that is interesting because living a simple life can be a choice. There is a story of Alexander the Great out empire building and he comes across a sage sitting on a rock. The one doing external work. The other doing internal work. The Gini Coefficient measures inequality. A Gini of Zero (0) in a two-person world would mean Alexander and the Yogi had the same. One (1) would mean Alexander had it all. If we shared everything, there would be no incentive to get more because it would immediately be watered down (particularly if it was among the 7.8 billion people on the planet). 

We want to have a sense of reward for what we do. Conspicuous reward. Well done, here’s a gold star. Here’s some money. That’s how we do incentivization. You do something. You get measured against other people. You do something more. Understanding what we do, starts with understanding what incentivizes us. If we are going to plot *how* we do what we do, we need to understand *why* we do what we do.

Alexander the "Great"

What is Greatness?

Building Value

We understand things better if we are directly involved. We all have to live somewhere, and so houses are the default big asset we think of people deciding to buy/own. We know our home. A roof over your head is a very easy problem to communicate. 

If someone offers to buy your house, and suggests a price that is less than what you think it is worth... it is easy to say no. Especially if you didn’t even want to sell. A reluctant yes may squeak out if you have no option but to sell, and no one else but that cheeky person to sell to. 

With investments, when the price falls, there is panic! All a price is, is a quote. The last agreed number for which a share changed hands. The lack of real-time knowledge of price (noise) for houses brings some calm. 

The best tool for long-term investing is the ability to choose what to pay attention to. To place your attention consciously in alignment with little actions that add up. 

Fundamental investing is when you get your money a job. Your money becomes a mini version of you (with more flexibility) that can earn on your behalf. “The actions that add up” is the real work the money is doing. 

Why is it making money? What problem is being solved? What is the ask? What is the offer? What is the container? Or the hardest problem of the lot in making money... “How do you get paid?”. Fundamental questions about building value.

Brick Making

Deep Bench

You need support in your planning. It is all well and good to have specific goals, but we go through waves and moods, and we are not consistent. We forget why we made decisions. In specific moments, we want other things. This means we all need to know what kind of support we need. 

When you are going through difficulties, what is the kind of person you need to speak to? I am lucky that I have developed a lot of good friendships. I know that in certain situations, there are specific friends I need. Certain "cards" I need to play. Sometimes support, sometimes challenge, sometimes advice, sometimes silence. I know that to develop those friendships, I need to be available when the kind of support I am capable of is what they need. We have different strengths and weaknesses, and the deeper your bench of friendships is, the more support you will be able to provide to each other. The more space you can hold. 

The idea of holding space is that you are not there to provide a solution. You are there to listen. Having someone to hold space is not saying that you are not competent and capable. It simply reinforces the self-awareness that you know who you need to walk with in the situations you are going to face. Building that capacity is important. 

As our story changes, we need mirrors to incorporate new information. We need to realise which behaviours no longer work. Which never worked (on reflection). Which behaviours might work. We need to unlearn, relearn, and change with change.

Know Who You Need

Real Value

Find value in the abundant that is neither contained nor containable. Find value in things that are difficult to monetise. When you want to be paid, provide solutions that are easy to monetise. 

To put a price on something, you need shape and form. To see value, you need to look beyond superficial structure. To see what others don't. To price, you need to simplify into a clear ask and offer. To see value, you need to relax into complexity that may exist beyond words and pictures. 

To make money, you need to listen to the signals of the market, be adjustable, and move with the problems as they arise and are solved. As the situation changes, the useful containers change. Real value is more consistent and dependable than the temporary containers we use. 

We create space for real value by getting spending under control. Carefully choosing the containers we are prepared to pay for. Building internal spending discipline is fundamental to being able to handle the waves of money anxiety. That anxiety comes from placing our value in external containers that are not of our choosing or creation.

Artist: Alex Rennie

The Signal

Until you are the decision maker, there are lots of people who will be in positions to choose the options that are available to you. Good ideas are not sufficient without financing and a container. Someone must have the money. Someone must own the money vehicle. Until that person is you, you will have to convince people. Skills and knowledge will need to be conspicuous. A clear offer. Although there are other paths, one of the tools for conspicuous skill is formal education. Arguably, you are not paying for the education/information (that is largely free now), you are paying for (1) exclusivity (for them to reject other candidates), (2) network (for them to accept other candidates who will become colleagues/friends), and (3) the signal to the person with money who gets to impact your fate. You are buying privilege. Beyond the knowledge, exam and study technique become essential. Establishing a habit of breaking down barriers. The process of absorbing information in a limited time, and then performing in an artificially constructed signal factory. 

"The Signal"

William Powell Firth  (1858)

 

Embodied Knowledge

Doing well in exams is not just about knowing the information in a I-can-google-it way. The first time I wrote open-book exams (when you can take the answers in with you!) was when I did a diploma in financial planning. The exams were spread over four days, and while I had prepared, I was not as bullet-proof as I liked to be because I assumed I could look up answers. I got through day one with very little “margin for safety” and a heightened sense of respect. Having the books is not sufficient. Knowing you can look, knowing where to look, and knowing, are three very different levels of knowledge. Beyond exams, making money is often about taking complexity and being able to articulate a very clear, instantly recognisable, ask and offer. Delivering a punchy two-mark answer in the 30 seconds allocated. Not spending 5 minutes finding the answer. That is embodied knowledge. That demonstrates having engaged with the body of work, so deeply that you know the path to the stuff that matters. Real competitive advantages are open-books. Those with mastery have engaged so deeply they don’t need to hide. The answers are simple, and available, but require you to do the work.  

The Gutenberg Bible

One of the first books to be printed with a printing press

Kool-Aid Man

I like being a believer, so I have always been susceptible to “Drinking the Kool-Aid”. I try balance that with healthy scepticism and good old fashioned South African distrust for authority. After giving a convincing answer in a client meeting once, I was shot down with, “That makes sense, but you have a silver tongue”. How do you respond to that? I also almost didn’t get a job once because a reference (attempting to be on my side) said I was very convincing. They didn’t want to hire a hard salesman. Everyone has to eat, so when an offer sounds too good… it is worth adding some doubt. The balance to hard sales is expectation management. Being completely transparent with the downsides and what can go wrong. Transparency requires the admission that we are all making it up as we go along. Making mistakes and making a living. Chipping away at problems and trying to get paid. Building cushions so we are okay even when we are not okay. Building containers so the people we care about are looked after even if they are not the best. Committing and believing.

Capital and Containers

Making money is not just based on skills and knowledge. It also requires capital and containers. Capital provides endurance and resilience. The ability to survive through waves of feast and famine, with a degree of stability. The ability to invest, unlearn, relearn, and adapt as the skills and knowledge that are required and rewarded change. The ability to absorb and accommodate shocks from expected and unexpected risks. Containers give shape and form to what we do. They are the wider context in which we operate. The laws. The agreements. The relationships. The barriers. The incentives. Containers are where the rubber hits the road, and we get paid for our potential. They hold the space for an ask to meet an offer. They allow potential to manifest. Without capital and containers, merit does not get seen.

Giving Shape and Form

 

Decision Makers

Ideally, we would have a very transparent relationship with asking and offering. Money is made by solving problems for decision makers with money. The challenge is making sure everyone is a decision maker. That is a foundation stone for the idea of Universal Basic Income. Information gets lost in central decision making. The more layers there are between where the knowledge lies, and where the power lies, the poorer the decision will be. Central decision makers also rely on concealing information. The true nature of problems. The resources allocated to those problems. This makes it harder for people to develop the skills and knowledge necessary to find solutions. It is hard to ask. It is hard to offer. It is hard to know with clarity what you need to do to help, even if you want to. Part of this is due to trust and communication skills. Being prepared to clumsily iterate through the questions and answers needed to nail what needs doing. Trusting that being open will not bring down the barriers to entry that maintain the illusion of your superiority. Trusting that other people will make different decisions, while respecting yours.

Nailing the Problem

Talking to Each Other

Money is a smarter form of barter. It is a communication tool that allows us to match asks with offers, without needing to swap needs. Money is not a physical thing that does work. It is a placeholder. A story that sits on top of reality to help us make sense of things. To smooth. To spark. To support. It is up to us to look through the story to see what is fundamentally happening. To make things that matter happen. Money should be durable. If you sell something for money, it must still be usable when you find the thing you want. It should be portable. Easier than carrying a belligerent goat to market. It should be uniform and stable in value, so that we trust it. Money itself is not an investment. It is a place holder or a buffer for doing things of value. A blunt tool to count things that cannot be counted, by finding two people who think the number makes sense. The fuzzy value is less than the ask, and more than the offer. If we had smart money, it would be able to understand people and their asks and offers. Like smart cars being able to talk to each other to avoid traffic jams and keep people moving efficiently without dying because they are distracted. Smart money would keep us all moving with strength, flexibility, and control.

Money is a Co-ordination Tool

Getting Paid

Money is made by solving problems for decision-makers with money. Desire to solve those problems is not enough. You need the skills and knowledge to be able to deliver. To do that, you need training/studying. You also need the decision-maker to choose you specifically. There will normally be others who can solve the problem too. How many others is the key factor in how much you get paid. It is not about you. It is about the supply of problem solvers, and demand for problem-solving. Beyond merit (skills and knowledge), the two other key factors are capital and containers. Capital buys you time to build skills and knowledge. Ideally, you can build while earning, but often there is a trade-off. Time to learn. Time to earn. The container is the barriers to entry that make it worth your while. The container is the “rubber hits the road” way to get paid. You can spend years developing merit, but if there is no container to fit that into a countable “product” where an ask meets an offer, there will be no reward.

Where the rubber hits the road

Winking in the Dark

There is not enough work. Much of the work there is does not pay enough to have some left over to build capital. It is not simply a case of willingness to work. You must find a job that matches your skills and knowledge. Then it depends how many other people could do the job, and whether the employer/client specifically wants you. Ideally this would all be neatly mapped out like GPS. Insert destination, and a road map is provided. The challenge is we all need to eat. In a pure play meritocracy with 7.8 Billion people, there is for all but the Djokofednadals, always someone better. We operate behind smoke and mirrors to protect our containers. A friend told me about a reality show called “dating on the spectrum”, and how young adults with autism deal with the unpredictability of dating. A world where you hope someone stops “looking for someone better”. In some ways their yesses are yesses and noes are noes, and they deal with it. Imagine a world with full transparency where we were comfortable being open with our asks and offers. It would be pretty uncomfortable, but we would do less winking in the dark.

Winking in the Dark

Rules of the Game

Money is made by being able to clearly identify, articulate, and solve problems for decision makers with money. Solving problems requires skills and knowledge, and that is what we traditionally think of as meritocracy. That is not the whole story. Two key factors besides problem solving, are capital and containers. Capital is fungible. It can be allocated (by a decision maker) to any problem, and is not defined by skills and knowledge. Instead, it acts as a buffer and an engine. A buffer to reduce noise and increase the timeframe for planning (ends hand-to-mouth survival decision making). An engine to fund good ideas that are not good business ideas, and to generate more capital. A container is how you get paid. Once the ideas stop bouncing around, how does money move into your account? When? How much? A container is the reason you solve the problem, and not someone else. A container is the rules of the game. The world as it is now. The barriers to entry. The barriers to exit. Making money is not just about ideas, or skills and knowledge. Problems get solved with capital in containers.

Song Dynasty Football

Don't Be Jam

“What do you want to be when you grow up?”. How you make money has got nothing to do with who you are! Making money has very tight constraints. You need a container. You need to be able to charge. You need a way to get paid. To turn an idea into money, you need to be able to describe very clearly what you are selling. What is the problem that you are offering to solve? What is the alternative reality you are going to deliver?

In a way that I say, “I can make Jam. Do you want Jam?” And you go, “I know what Jam is. I want Jam. You have got Jam. Yes, please can I have that.” I hand you a container. You hand me money. That is how it works. It is all about Jam, and having a container to put your Jam in. A way to sell it. And the vital point is… you do not want to be Jam.

When asked, “What do you want to be when you grow up?”, no one ever said, “I want to be Jam.” That is just the problem you want to solve. And the next week, you might not be selling Jam. You might be selling books, dry cleaning services, a haircut, or coffee. It is just a problem. You are not the problem. The problem is the problem.

Listening to Signals

In an ideal world the market would scream signals at us unambiguously. If we were brave, we would all focus on being able to clearly and transparently articulate our problems. A good business idea is where there is agreement on a product at a price that is attractive to both the buyer and the seller. The cost is less than the price, so the seller is happy. The value is more than the price, so the buyer is happy. The signal to, and from, the market is profit. Super profits will mean more supply of that product (with limited barriers to entry). Insufficient profit will mean less supply (with limited barriers to exit). The problem is, we define ourselves by a product (job or business), aren’t willing to openly express our problems (privacy), or listen to the market signals (enter or exit). Supply adjustment takes time and investment. We want an answer for life. By implication, that stops us listening. If there was a clear path to skills and knowledge development, with a reasonably certain pay off, perhaps people would be brave enough to adapt, adjust, and accommodate.

East German Ampelmännchen

$5 Brick

A price is just a quote until someone actually pays it. It’s just an offer. Imagine someone walking up to the door of your house and offering you $1,000 for it. That’s just an ask. It is only when an Ask meets an Offer that the exchange price means something. It means the “thing” is worth more than the money to one person, and less than the money to the other. It still doesn’t tell you what the thing is actually worth. Price is not value. It is just a tool we use to release value by moving things around. The “Market Capitalisation” of a business listed on a stock exchange is the number of shares multiplied by the most recent exchange price. It is not the value of the company. Say your house could be counted up in little shares, and someone offered you $100 for a brick you knew was worth $5 (and you still kept the house). You wouldn’t multiply that out and get all excited about the value of the whole house. The shares of companies move wildly at times. The future is complicated, uncertain, and ambiguous. It is better to think of price as a question than an answer. Value unravels its true self over time, on one of many possible paths.

Your Own Believer

There are a limited number of jobs. There are a limited number of employers. Many of the jobs that people currently do are being mechanised and automated. This means that however you go about planning your career, you have to think about what it would look like as a business. Employers are a middle man between you and clients. The key to every business is identifying the needs of decision makers with money. Solving decision makers’ problems. You can divide work into the categories of cost centres and profit centres. Cost centres are things that don’t finance themselves. They can be very valuable, and even foundational to profit centres, but they don’t make money. They need money. Quality Content is a cost centre. Advertising is a profit centre. Without advertising, print media started dying. Cost centres need believers. Not all good ideas are good business ideas. Good business ideas make money. Fortunately, that doesn’t have to trap us in profit centres. Gradually we can reinvest money in profit centres, and turn ourselves into decision makers with money. We can be our own believers.

Newseum

Know Their Jam

Money is made in boxes. That is the problem with “out the box” thinking. Most of our problems are not unique. If the solution is too creative, people might not even recognise it. They may not even know they have the problem. If someone wants Strawberry Jam, and walks into your shop and sees Strawberry Jam on the shelf, there may be no words exchanged. They pick the Jam up. Pay for it. Leave. No pitch. No elaborate story. Just a clear ask meeting a clear offer. The trick? You have to know what people want. Know their Jam. Then you have to learn how to make Jam. It’s not a secret. But you have to learn. No one is born knowing how to make Jam. We don’t all have to be Elon Musk. Not all problems are rocket science. Some problems are as simple as paying attention, developing the skills and knowledge, and putting it in a box. Sometimes it isn’t about creativity. It is about time and application.

Traffic Jam

Staying Rooted

If we were all farmers, delegation would be easier. The person giving the task, and the person accepting the task would understand each other clearly. Developed over the thousands of years since we learned to tame the land, our words would probably mean the same thing. The tasks would be well understood, even if seasons and the weather had the final say. We are not all farmers. Our words don’t mean the same thing. We often end up having to delegate tasks in areas we do not understand, so we can focus on our own slice (which we understand better than others, maybe). Due Diligence is the process of taking reasonable steps of oversight. Kicking the tires to check for defects or poor quality. Trust but verify. It’s worth collecting good questions. Knowing what to ask. What to look for. My preference is for as little abstraction as possible. I want to know what the Jam is. The product. How it is made. Who makes it. The process. Too many layers, and I’ll pass. We may not be farmers, but staying rooted still matters.

Not Farmers

Beyond You

Financial Yoga recognises that not all ideas are good business ideas. You can’t always define yourself in the way you truly want to if you insist on packaging “that” (you) as a business idea. Most people have to be their initial source. They have to personally take on the role of Productive Asset, and figure out a way to generate an income. There are lots of things that are of incredible value that are awful business ideas. Start by accepting that. You have to articulate an Ask/Offer. Not everything can be expressed in words. You have to have something you can count. Not everything can be counted. There has to be some control over supply and demand. Some things of incredible value are abundant. The random cards you have been dealt (talents, wiring, community, world view) can be tweaked with a lot of effort. With daily practice. Gradually you can release the obstacles that define you. You can free yourself from the constraints of what makes you a good business. You can start to look at what makes a good business (beyond you). You can use good businesses to power good ideas. Expanding your possibilities.