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A Few Things: Commodities & Energy with Andurand and Currie, Discipline is Destiny, Dror Poleg on Maximizing Human Capital, The Secrets to Amazon's Success, Intelligence Trap, The Art of Living
September 27 2022
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
You can check out last week’s edition here: Carlo Rovelli's Big Idea, Rubenstein's How To Invest, MS on Moonshots, Daniel Yergin on Energy, Private Equity Case Study, Changing Mind, Onboarding to Web3
“You don’t get to choose how you’re going to die. Or when. You can only decide how you’re going to live. Now.”
- Joan Baez
“In the realm of ideas, everything depends on enthusiasm...In the real world, all rests on perseverance.”
- Johann Wolfgang von Goethe
“It’s a paradox to say that one ought to hold cash, but I think one must. What you want, I say, is flexibility in the face of uncertainty and risk and possible protracted adversity…. What you want is the flexibility to avail yourself of the gifts of a bear market, not just the pain. And the gift of a bear market is value…. What happens in a bear market is that everything goes down. And with cash—which, to be sure, you’re losing some of to the scourge of inflation; but with cash you get a chance to be tactical and to keep your courage up. You can watch things take shape in a way that will be advantageous to the person who can avail himself or herself of the gift of value.”
- Jim Grant
A. A Few Things Worth Checking Out:
1. I’m trying to understand how concerned I should be about inflation and how much of an investment opportunity Commodities are. Two conversations that helped are:
2. And a great set of tweets on the Global Energy Crisis
3. If you hadn’t heard, Nord Stream 1 (the subsea pipeline linking the North Sea gas fields, and then Norway with the rest of the continent and the UK) and Nord Stream 2 (connecting Russia to Germany through the Baltic Sea) are among the most strategic assets right now for Europe.
They have now both sprung very large leaks.
4. Ryan Holiday on his Daily Stoic Podcast discussed: Discipline Is Destiny. Powerful and moving episode. He focused on Queen Elizabeth as an example. This was a life changing one and covers all the main idea from his book.
5. My wise friend Dror Poleg was on the Scott Galloway podcast discussing “The Future of Cities & Maximizing Human Capital” (action starts 17:30).
He’s the author of “Rethinking Real Estate” which while published in 2019 predicted many of the things we see today.
The big ideas on this podcast: a) If your job can move Boulder or Bangalore, then it will - tech is the great leveller and destroyer of the middle. Need to embrace inequality b) people will live in the big cities as much for the jobs as the culture and entertainment c) we should ban companies like TikTok d) life advice: learn to productise yourself, spend time thinking about how can use technology to scale what you do.
6. Was late reading this book about Amazon. Most people refer to the Bezos memos or the Brad Stone books, but this make book takes a different angle.
The authors who were both at Amazon for decades do a great job sharing what really happens behind the scenes at Amazon.
The tools I liked were:
The six-page memo. The company in 2004 banned PowerPoint, which until then had been the default for its managers. The reasoning was that six-page narrative memos were much better at conveying the nuances of a business than bullet-pointed slides, and that preparing the memos was valuable for forcing teams to refine their ideas. Amazon executives spend the first part of the meetings reading the memos, so everyone is focused on the matter and discussions pick up from there.
Bar raisers" for hiring. Specially trained Amazon employees participate in the hiring process as "bar raisers," providing a dispassionate view on whether the desired candidate is right for the company and wielding a (rarely exercised) veto over the final decision. The idea is to counterbalance many managers' tendency to want to hire quickly so not to fall behind, and to ensure the process is thorough and structured properly.
Vesting responsibility and control in a single project leader. Bezos has been obsessed as the company has grown with minimising the coordination and communication required of teams for them to move forward with a project, and ensuring that someone is totally focused on its success. One part of the approach was to have "two-pizza" teams — groups of 10 or fewer employees (the number that could be fed by two pizzas) with responsibility for specific product initiatives. That evolved over time into what it calls a "separable, single-threaded team" which has relative autonomy and works only on the specific feature.
7. Great set of tools on the Internet I didn’t know existed.
B. The Intelligence Trap
Why do smart people do stupid things?
We assume that smarter people are less prone to error. But greater education and expertise can often amplify our mistakes while rendering us blind to our biases. This is the ‘intelligence trap’.
Drawing on the latest behavioural science and historical examples from Socrates to Benjamin Franklin, David Robson demonstrates how to apply our intelligence more wisely.
This book combines and builds on a lot of book like Superforecasting, Thinking Fast and Slow, Predictably Irrational.
David Robson is an award-winning science writer, specialising in the extremes of the human brain, body and behaviour.
There is a lot to summarise in this dense book, I dog-eared a lot of pages, maybe the best way to do is by discussing the taxonomy of Wisdom and Stupidity.
Sometimes just knowing the names of things helps put a finger on what you might be doing wrong and what right looks like.
This Taxonomy of Stupidity helped to know what to avoid:
Bias blind spot: Our tendency to see others’ flaws, while being oblivious to the prejudices and errors in our own reasoning.
Earned dogmatism: Our self-perceptions of expertise mean we have gained the right to be closed-minded and to ignore other points of view.
Entrenchment: The process by which an expert’s ideas become rigid and fixed.
Functional stupidity: A general reluctance to self-reflect, question our assumptions, and reason about the consequences of our actions. Although this may increase productivity in the short term (making it ‘functional’), it reduces creativity and critical thinking in the long term.
Meta-forgetfulness: A form of intellectual arrogance. We fail to keep track of how much we know and how much we have forgotten; we assume that our current knowledge is the same as our peak knowledge. This is common among university graduates; years down the line, they believe that they understand the issues as well as they did when they took their final exams.
Motivated reasoning: The unconscious tendency to apply our brainpower only when the conclusions will suit our predetermined goal.
Peter principle: We are promoted based on our aptitude at our current job – not on our potential to fill the next role. This means that managers inevitably ‘rise to their level of incompetence’.
Solomon’s paradox: Named after the ancient Israelite king, Solomon’s paradox describes our inability to reason wisely about our own lives, even if we demonstrate good judgement when faced with other people’s problems.
The too-much-talent effect: The unexpected failure of teams once their proportion of ‘star’ players reaches a certain threshold. See, for instance, the England football team in the Euro 2016 tournament.”
TheTaxonomy of Wisdom can help to guide you in the right direction:
Actively open-minded thinking: The deliberate pursuit of alternative viewpoints and evidence that may question our opinions.
Desirable difficulties: A powerful concept in education: we actually learn better if our initial understanding is made harder, not easier. See also Growth mindset.
Emotional compass: A combination of interoception (sensitivity to bodily signals), emotion differentiation (the capacity to label your feelings in precise detail) and emotion regulation that together help us to avoid cognitive and affective biases.
Foreign language effect: The surprising tendency to become more rational when speaking a second language.
Growth mindset: The belief that talents can be developed and trained.
Pre-mortem: Deliberately considering the worst-case scenario, and all the factors that may have contributed towards it, before making a decision.
Socrates effect: A form of perspective taking, in which we imagine explaining our problem to a young child. The strategy appears to reduce ‘hot’ cognition and reduce biases and motivated reasoning.
You can get a great overview of the book in this talk he gave:
C. The Art of Living
I probably feel a negative emotion on a daily basis. You know the usual envy, anger, jealousy, fear, sadness…
One of the things I have found helpful is Stoic philosophy. It often gets a bad rap. It’s not about being cold, lonely, emotionless, though some claim it as such.
My entry to this world has been the work of William Irvine, author of many books, and specifically: A Guide To the Good Life.
I got a chance to go deeper when I tried his course on Sam Harris’ Waking Up App.
If you don’t subscribe, his podcast with Sam Harris is a good start.
Here are some ideas I picked up that I’ve been applying:
Whenever you are doing something you aren’t enjoying or maybe it’s just tedious, for example it might be driving your kids to another activity…..Imagine you are doing this for the last time! It’s amazing that knowing it might be the last time makes you treasure it and be in moment far more.
Most of us are very lucky, we live in stable democracies, eat 3 meals a day and have the use of all our limbs and senses. It’s good remind yourself that you are actually living someone else's dream life or imagine your future self, say twenty years from now. Will you look back to the present moment and say “those were the good old days”. Enjoy them today. That’s called: Prospective Retrospection.
Negative visualisation, or what some of us know it as “a pre-mortem” is imagining all the things that can go wrong in your life. By doing this we prepare for the bad things, and make ourselves psychologically immune. It’s like lifting weights for the mind.
"Whatever age you are today, your future self would love to be it.
Most people do not consider 65 to be a young age... but when you're 75, you'd love to rewind to 65 and regain those years. Few people would describe 35 as your youth, but in your mid-50s your mid-30s will seem like the "young you."
Today is a great opportunity, no matter your age. Looking back in a few years, today will seem like the time when you were young and full of potential or the moment when you could have started early or the turning point when you made a choice that benefited your future.
The moment in front of you right now is a good one. Make the most of it."
- James Clear