Also… hacking culture, internet trends, and what is your business worth?
AngelList founder Naval Ravikant (also an early angel investor in Twitter, if you’ve ever heard of that) posted a controversial “tweet storm” (a successive list of tweets on a given subject), and one of the posts I found striking was the following:
Never mind the comment about avoiding business magazines and classes; I have no idea whether his view withstands the myriad exceptions that immediately come to mind, and Twitter is not exactly the forum of choice for such nuance. The part I want to focus on is the premise: there is no skill called business.
He’s right. What makes someone good at business? What is business? In my opinion, a successful business is a contributor of value to society. This contribution is by an individual or a group, and the contribution is validated by the culture. The contribution’s value is judged both on its ability to entice buyers or participants and to sustain itself. It does this by creating a premium on the original materials, time spent in labor, or both. This premium is essentially profit.
Ben Graham once said “the market is a voting machine.” This is true of all markets. In a capitalistic, free market, individuals vote on the usefulness of a contribution to society by purchasing goods or services. In short, the skill of business is the skill of contributing value to society in a sustainable way.
Cracking Cultural Codes: How do we know what society values?
My last newsletter discussed the underlying purpose of IG being to examine the “fabric of reality” and learning to recognize patterns across disciplines. We want to “memorialize durable ideas” - truths that last - so we can use them. Apropos of this, I found a blog post by Tyler Cowen on the subject called Deconstructing Cultural Codes. Cowen is an economist, and has the following to say:
I’ve long been convinced that “matters of culture” are central for understanding economic growth, but I’m also painfully aware these theories tend to lack rigor and even trying to define culture can waste people’s time for hours, with no satisfactory resolution.
He knows that “culture” is an underlying factor in economics, but it is nearly impossible to define. How does he tackle this issue? He calls it “cracking cultural codes.”
As many styles of art. As many kinds of music. As many complex novels, and complex classic books, and of course as many economic models as well. Religions, and religious books. Anthropological understandings.
What is he getting at? He knows economics to be the study of human behavior as it relates to incentives and exchange of scarce resources (i.e.: atoms and bytes that are traded as particles of reality in the aforementioned system of value contribution). The better he understands the underlying realities, the better he understands economics. The same is true for us. We are economists even if we don’t know it. Even if we resist the idea.
Internet Trends Takeaways: Part 2
In Internet Trends Takeaways, Part 1, I talk about some of the most interesting ideas highlighted by Mary Meeker about the global society and its interaction with the internet. It examines businesses, consumers, individual behavior, macroeconomics, and governments.
Part 2 gets deeper into what the internet is giving us and what it is taking away. Without saying much, below is an image that shows us what it is both giving and taking. It is giving us the ability to customize information received and more of it. It is taking from us the ability to digest, think, and relate to ideas from across the aisle.
Speed Matters
A 2015 blog post by James Somers hits on another important business topic. If you’re always doing things that don’t matter, when will you create things that society values? The title of the post is Speed Matters: Why working quickly is more important than it seems. The premise is that if you work quickly on things that you wish to excel at, it will be to your benefit. However, if you work quickly in things at which you do not wish to excel, or that don’t provide any form of measurable or discernible growth, it will cost you something.
Costly Areas
First off, Somers mentions the anecdotal response to his quick email replies. He suggests that it provides the person on the other end with “dopaminergic” validation, and incents them to constantly come to him for quick feedback. He suggests that this is why the best employees in an organization get so bogged down.
High Payoff Areas
Somers goes on to mention that his own inertia is often based on his perception of effort in an activity. He suggests that if he learns to do that activity quickly, he will perceive less effort involved, which will reduce inertia and increase his frequency of practice, thus giving him more time and repetition to excel.
Conclusion
I’ve personally observed this to be true. I used to be very regimented and detailed in my schedule, but I felt like I never got anything done. Sure, I managed to get important projects completed at work, but I never built anything. I always felt like I was digging holes and filling them back in. Now, the only area where I apply rigor and discipline is on costly areas. I only answer emails and agree to phone calls during certain hours (sorry – not telling you when those are). I block out huge blocks of free time to work on important things that drive value at my company. Guess what? I now get way more done in less time.
In my business, I’ve managed to increase in every important area (deal flow, productivity on portfolio company work, networking with key people) while starting a blog and spending lots of quality time with my wife and kids. Not that I have it all together (I really do not), but I agree that speed matters, but not all speed is good.
How do I know what my business is worth?
I am often asked by entrepreneurs, “how should my company be valued?” In this write-up, I do not give you a fish, nor do I teach you how to fish. I teach you how to decide whether to go fishing, hunting, or stay home and do some gardening.
Check out my blog post here.
Philosophy: Aristotle’s High Minded Man
Just read and stewed on Aristotle’s High Minded Man for a bit the other day while on a flight. Lots of great nuggets. This work is widely regarded as a foundation piece for what later became stoicism. There are great truths in here about our ability to overcome difficult circumstances and cope with complex social situations. My favorite is this part:
It is the mark of the high-minded man to ask for nothing or little, but to be eager to serve, and to be dignified towards those in power and fortune, and unassuming towards the middle class.
That said, I believe the overall position is limited. Aristotle lays forth a sophisticated coping system rather than a man of true “high-mindedness.” The message is one can attain a height so great that life’s experiences, good and bad, are beneath him.
The basic premise is that nothing should ever bother a truly high minded man because, “nothing is of great consequence to him.” He is so concerned with honor, that even honor itself is beneath him, but “he accepts it because [those who bestow honor] have nothing better to give him.”
To this I say:
Who am I to poo-poo Aristotle? No one. I’m not qualified. But I did cringe my way through his essay. None of what he wrote in this piece is real. He made it all up. The high minded man is a nice idea, but anyone, including people of great achievement, who have been through real suffering would never attest to being “above it all.”
To me, it is self evident that we can live lives of deep feeling and emotion, sometimes pain and mourning, sometimes pleasure and rejoicing. Furthermore, you can fully experience despair and hope - 100% of both at the same time. We are not inherently good, nor are we capable of achieving high mindedness through enlightenment. At the same time, we are infinitely valuable and capable of achieving a potential far greater than we could even imagine.
Many of my friends are into stoic philosophy. I respect it, but I don’t buy it. I most likely do not fully understand it, but insofar as I do, it seems like mere coping. Pretend you are high-minded enough to be above feeling all your suffering. At least the worldview is consistent enough to take away your pleasure if it takes away your suffering, but it lacks an under-girding of reality. Sure, composure is good. But it’s just the outside, and it’s no more real than the inside. I want to change from the inside, that way I never have to worry about whether I have my composure on any given day. Whatever I have will flow from within.
Good Reads
Here are some great articles I read this week:
Why is Airport Food So Expensive? (Sourced via The Knife Fight)
Ever wonder why it’s so crowded at the airport? It’s not because it’s $12 bagel day. It’s because the airport takes a cut of sales, labor is more expensive and higher turnover, and materials are more costly to bring in.
Around the World in Perfect Weather: A 52 Week Dream Trip (Sourced via Abnormal Returns)
My wife can attest to my whining all winter long that it’s too cold in [everywhere that is not 70 degrees or more]. One day, I’ll fulfill her wildest dreams by dragging her on my dream trip.
Swastikas on the Strand (Sourced via Farnam Street)
What if the Germans had successfully invaded Great Britain in WWII? Catherine Gallagher, an English Literature professor at Berkely, writes a thought provoking piece in Aeon about the usefulness of thought experiments in Great Britain. It caused me to wonder what use we might gain from thought experiments in our firm to learn from past events.
Dune
Know what to Outsource
Previous Versions of IG & Articles
Thanks
Let me know what topics or subjects you would like to cover, and always feel free to provide feedback or debate. If you like this, please pass along or post it to social media.