Meaningful Creation

You can meet conspicuously successful people, who have got a lot to say about their ideas, with not much space for conversation and exploration. They hold court. That is not impressive because their (and all of our) ideas are limited. Everyone we engage with presents an opportunity to learn, unless what you are really doing is promoting your own ideas. Evangelising. Civilising. Imposing. 

David Attenborough asks us to take more seriously the power of the wild and biodiversity. Rather than scaling up our ideas and creating vast mono-cultures. The goal is not knowing the solution. It is about trying different things and having capacity to adapt, adjust, and accommodate a dynamic environment that is chaotic, nuanced, and deeply complex. An environment we know we do not have capacity to understand. If we let go of the attempt to scale control, while still engaging with an active feedback loop, the goal shifts to building a practice. 

Risk tolerance is not simply a trade-off. Return is not a reward for taking extra risk. Snap that idea. Risk tolerance is the capacity to listen, unlearn, learn, and create. It is meaningful creation you are rewarded for.

Holding Court

Hairy Bottomed Spaniard

Not all good ideas are good business ideas. Not all good ideas can be quantified, contained, and controlled. Good business ideas exist within a container, supported by capital. Great business ideas are self-financing and scalable. They pay for themselves. Generating the profit to reinvest and grow. A lot of the very best ideas can not pay for themselves, and are so amazing because of their intimacy. Zero scalability. Tossing quantification, barriers, and control off like the unwanted clothing of a hairy bottomed Spanish Grandpa running naked into the Mediterranean after ten too many Sangrias. Good business ideas will always be necessary to build engines. Good business ideas require attention to the loud voices of supply and demand. They require us to separate our identity and worth from problems, so that we can solve them and move on. There will always be new coal (problems) to feed these engines. We can then attach engines to great ideas. Powering our ability to create value in spaces that cannot be priced.

Sangria

Win-Win at Scale

Before Amazon, Netflix, Google, and other big disruptors entered the world lived Sam Walton. The founder of Walmart realised that you aren’t trying to maximise profit on every item you sell. You aren’t trying to maximise price. You have to look at the big picture and give your customer a good deal.  By charging lower margins on the stuff he sold his clients, and really understanding both their needs and how to get them a good deal, he combined Win-Win economics with scale. When people speak of “Meritocracy” for companies, and principles of excellence they are still looking after themselves, their container, and their spot in that container. They will look for people to join them that improve the merit of their container, but not at their expense. Very few people are that self-less, and the goal isn’t that noble. Stepping aside for someone who is smarter and more effective than you is hardly philanthropy. You would only do that if you are an owner. Similarly, part of the challenge with transformation is hiring people that companies fear will leave. Loyalty trumps merit. People hire people like them who like them. Then knit their lives together. The only way things will transform is with bigger containers we trust, and feel a sense of ownership in. Win-win at scale.

Sam Walton

Reality Check

There are four broad categories of investors in Asset Management Funds. Institutional, High-Net-Worth-Individuals (HNWI), Retail, and those who get left out because the economics are hard. Institutional investors are Pension Funds, Fund-of-Funds, Company Assets, Insurance Companies, Endowments (e.g. Universities), Charities and Governments. Investment Committees make the decision to invest on behalf of others. They pool the assets to reduce the costs. HNWI are rich people. They make their own decisions, or get an adviser. Retail Investors are non-professional but still have enough to invest that the expenses don’t completely swallow the growth. Not having money is expensive. Scale makes things cheaper. One of the hardest problems to crack is making investing accessible. Two companies I follow with interest working on this problem are Franc (www.franc.app) which aims to make investing affordable and social, and Meerkat (www.meerkat.co.za) which focuses on those who are in a hole of debt. Charting a path off debt reliance and providing cover for the clear and present emergencies that can make long term capital building a pleasant unicorn frolicking in another reality.

Finding a Match

The jobs that are safest from the threat of Artificial Intelligence replacement are those that don’t scale. Where “Same As” doesn’t work. Money is made, at scale, when you find a solution to a problem, a huge market with the same challenge, and a container that allows you to get paid. The money made by Walmart, Tesco, Sainsbury’s and crew as they rolled out the cookie cutter. Everyone needs to eat. Mostly the same stuff. 1-1 work doesn’t scale. You have to be there. It also means you are often charging by the hour. Charging for time immediately makes you directly comparable to everything else that charges by the hour. In the same way as any two things with a price can be compared. Time and Money judge all. Comparison and options forces down price. This isn’t a scalable business. Which ironically means it may be a great Basic Source. The need for someone to see you (specifically), and your needs (specifically), is incredibly resilient. The Economics are difficult. Difficult is a container. If you can build something that sneaks under the radar, and drip that source into building an Engine… the difficulty may shade the wind for your match.

Descaling our Lives

Money is a communication tool. Like words and numbers, it helps us organise ourselves and share our skills, knowledge, and resources. Slightly smarter than barter, but still mostly unaware. We don’t trust each other enough for full transparency. We all need to eat, so even if we know there is a better solution somewhere else, we still want to sell our skills. Secrecy and politics protect our interests. Competing interests. Money-making boils down to matching an ask to an offer. How many people want the same thing? How many people can offer it? A key ingredient is scale. If you can find something lots of people want, where only you have the solution. That is clearly difficult in a world where information flows freely, secrecy is harder, and the winner takes it all. The best competitive advantages don’t have to hide. They are “in the box thinking” which, like exercise and diet, everyone knows about but doesn’t necessarily do. A real competitive advantage is not having to scale. Breaking free from supply, demand, and secrecy. Changing the rules. That requires building Capital to do the money stuff, so we can do something else. Descaling our lives and leaning into the other communication tools.

That, is a Bat

In Dutch and German, an Employee is “werknemer” and “arbeitnehmer”. A work taker. One of my pet peeves is when managers tell employees to “think like an owner”. It is like Nagel’s paper “What is it like to be a bat?”. You either are a bat, or you aren’t. You either are an owner, or you aren’t. If you are a work taker, you are paid for the work you are doing. If you are an owner, you have a share in the problem being solved. A rule of thumb for if something is a good business idea is “does it scale?”. Taking work doesn’t scale. Ownership does. We have limited time, energy, knowledge and skills. Capital has no such limits. Work gets a salary. A salary is a price. In a healthy economy prices come down and Capital grows. The way you become an owner, without needing permission, is by squeezing a gap between what you earn for taking work and what you spend. Then get your money a job. That, is thinking like an owner. That, is being an owner.

Does it Scale?

Not all good ideas are good business ideas. Not all good business ideas are good ideas. One rule of thumb to separate good ideas from good business ideas is the question, “Does it Scale?”. Advice givers are stuck with this dilemma. High quality advice is clearly a very good idea. The world is complicated, ambiguous, and random. We are all hopelessly incompetent and ignorant in our own special way. The world, and knowledge of the world, is simply too infinite for us to be adequately equipped to make all our decisions on our own. High quality advice isn’t scalable. We all experience reality as a controlled hallucination. What we see is based on what we have seen. To see what others see, you have to develop a relationship. You have to share their hallucination. It’s intimate. It is time and energy consuming. If you need to monetise this, the only way you can make the economics work is by pushing the price up. That’s not a good business idea, its just better story telling. Another approach is for things that scale to finance things that don’t.

Personal Gold

If you live hand-to-mouth, and receive a salary, then your work is solving a funding problem. The work you do, as a transaction, pays for the life you live. “The lifestyle to which you have become accustomed”. I believe it is possible to move beyond this. To solve the expenses funding problem. Then the set of “how do we pay for this” questions expands. To how do we solve this. To how do we experience this. It is a coordination issue. How do we become aware of people’s needs, wants, dreams, skills, knowledge, and capacity? Markets are the easy answer, but as they become bigger they lose some of the fuzzy wisdom of intimacy while they gain in the brute strength of scale. Solving our individual base funding problems gives us a buffer of time and space to look more curiously. To look at the problems that don’t scale. That aren’t good business. Personal gold beyond scale.

Moche Gold Necklace

At Scale

'Big Solutions' take a lot of people agreeing and a strong vision of where the destination is. Bringing empowered people along with you is difficult at scale. Like herding cats, getting a bunch of strong-willed individuals to 'get on board' requires top-down control, and (strength to unsustainably overcome un-)willing followers. Complete individuality doesn't scale either. We have to cooperate given we don't live on desert islands by ourselves. There is a middle ground. Voluntary Association can scale. Pushing ourselves outside our comfort zone in who we mix with, but not so much that we break. Accepting our foibles and dark-sides as people, but not at the expense of rejecting the better angels of our nature. Micro-ambitious 'solutions' may just be questions, but the spreading of questions may be more powerful than the spreading of answers.

Accepting the dark side?

Basic Income Platform

We could crowdsource a Community Wealth Fund (CWF) to pay a Universal Basic Income (UBI). Given that it is Universal and doesn't distinguish between deserving and undeserving recipients, finding those to receive is not difficult. The harder challenge is getting buy-in for those willing to contribute. Each contributor could (1) fund their own UBI, and (2) nominate one recipient they know personally. A fully funded UBI of $3000 a year could then be allocated to recipients via a lottery system once the capital has been raised. Limiting the size of the CWF to 150 payments would mean 75 recipients. This would be small enough for everybody to get to know everybody. Those who contribute know the others who contribute. This would prevent the sense of disconnection that comes with scale. The peer-to-peer relationships provide the human glue to hold it together.

Playing Live

One massive change brought about by communication technology is the ability of decisions, and control, to scale. Senior executives earn way higher than front line workers now, partly because the workers are paid their cog value, and partly because a decision, made once, can be replicated. A musician who can record something once, but keep 'Intellectual Property' over it can make far more than someone who only plays live. Labourers play live. In a world that is perfectly transparent, and where it is easy to replicate whatever anyone does, the only control those at the top have is property rights. Those have become easier to enforce (for now). In the past, there had to be delegation of control, and reward, because of distance. Communication technology changed that (for now). In a world where everything you can do can be copied and repeated immediately, the power will shift back to playing live. The real value people add isn't in doing things a second time. It is in relationships and creativity. It is in being present. You can't replicate that.

Three Challenges

I am working on an idea of building a community of 150 people. I want to simplify what seems like a bottomless pit of issues to something that feels manageable. Here are three challenges I am chewing on.

1) Scalability

The traditional tool to solve big problems has been Government. I have grown a little cynical at our ability to gain consensus for big groups. We don't come at the problem with a recognition that we are searching for common ground. Instead, voting tends to be about picking the candidate who represents our view, and mandating them to fight for our interests. As soon as groups become very big, this becomes incredibly difficult. That is why I like the idea of focusing on a small, holey group. However the idea takes shape, it still needs to be easy to copy, and likely to be copied, for it to be of 'big' value. The benefit of Big Government is its scale. It might be slow to move, but when it does, it can have a big impact. For better or worse. A bottom up idea can better control for unintended consequences, but needs to be catchy and easy to spread.

Holey

2) Common Ground

Most communities grow around a feeling of having deep common ground with people. There are lots of examples of functional communities that are incredibly powerful. My concern is the lack of understanding, conflict between, and inequality of opportunities between communities. If what I want to build is, by definition, a community that is built on the idea of challenging a lack of common ground, then that becomes incredibly difficult to build around. Poking our bubbles is uncomfortable, and something that requires deep wells of discipline. There may be some people who push deep into stressful territory to build strength, but most people take the path of least resistance. For ideas to spread, they can't just be the right thing to do. They also have to be a nice thing to do. The preferred thing to do. Easy common ground feels good.

Deep Well

3) Selection

Who gets help when so many need help? I find the Universal part of the idea of Universal Basic Income very appealing. It is a bit of a misnomer in the sense that the target is not people with money already. It is universal because 'means testing' (1) costs/wastes money, and (2) adds a stigma with recipients having to prove they need help in order to get help. If I manage to figure out how to fund 150 UBIs, the vast majority would not getting anything. It could be funded in part through Capital and in part through voluntary contributions. For the idea to be scalable, how that money is raised has to represent willingness of people to be a part of the idea. Otherwise it is just a vanity project. For something to truly be universal, it needs to be very simple and be something we recognise, and buy into. Selecting those in need may be easy, but selecting those who will help can't give false hope.

Getting Bigger

Getting bigger makes things more efficient. Getting bigger makes co-ordination and understanding a lot more difficult. As we have scaled production of very specific things, we have got incredibly efficient. Foxconn in Taiwan employs over 1.2million people and is probably involved in the manufacture of a large chunk of the electronics you own. Walmart flipped the way retailers sold food. Sam Walton focussed on smaller towns, and cut down profit margins believing that giving clients a good deal would deliver the scale that would make up the difference. He was right and the Walmart story is a powerful one. Things do change as you grow and systems become more complex. Walton was a hands on manager who learnt to fly so he could wander around America getting to know his customers and what they needed. Seth Godin makes a powerful case that 'small is the new big'.

One of the issues of getting bigger is the 'Postrel Problem' - we are not good at articulating much of our understanding. Often we know how to do something but not why we know how. We have tacit knowledge. If we try to articulate, we often get it wrong. We don't feel it is good enough to say, 'I don't actually know, but it seems to work'. Instead we throw out untested thoughts, normally very confidently, about our theories or rational. Although the definition can be different, I think it is useful to think of an 'interesting thought' as one that can be proved wrong. If that is not possible, the thought can be beautiful, but not interesting. That doesn't mean they aren't useful. We may still have to discover the way to frame the question in an interesting way. Our Elephants are actually very intelligent but they pick things up through patterns and repetition, making trial and error leaps of judgement. Our Riders are very rational but also rather self-conscious, insecure and unwilling to admit doubt. The Rider wants to believe they are in control, and so will attempt to explain things. The bigger an organisation gets, the bigger the gap from the understanding and the more insecure riders involved in the communication links.

One of the quandaries that come with growth as well is our ability to understand the 'big picture'. As soon as things get big, we need to specialise. The lack of broader understanding means that while we are doing well in our area, a coordination problem can exist. Globalisation has allowed us to grow the number of people we are exposed to. Communication and travel has allowed us to live further and further away. One of the challenges this poses is how to let people know the things they would have known through body language and presence when words escape. Sometimes it is hard to ask. When you live in a communal area, the uncle will see Mom and Dad need a break, and without words exchanged take the tyrannical, uber-Lord, tantrumming, titan, two year old for a few hours. When you live in a neighbourhood where people know each other, the teenager who has a few hours spare may (I did say may) help someone who is washing their car.

Perhaps Artificial Intelligence and electronics can help. We may know the questions that are tougher to ask, and ask them. If you sat down and said and were asked what chores you would be willing to do for a few friends and family (without them asking) and then we they logged on, they saw a willing source of support, perhaps they would jump at the offer. More broadly, a computer could co-ordinate known skills with willing users. The broader question is with all the gains scale has given us, how do we counter the loss of non-verbal communication and coordinate tacit knowledge?