2: Trade-offs in pursuit of excellence, fractals, willingness to do, time-shifting cost, bell curves, and pottery
Seeking wisdom is a great recipe for increasing effectiveness. Its cost is a relentless awareness of one’s own foolishness.
This is a branch of the writing from the Phronesis Fund and the second entry on the pursuit of practical wisdom. Details here.
Wisdom is competence with regard to the complex realities of life. — Gerhard von Rad
Trade-offs in pursuit of excellence
We regularly observe and often celebrate excellence.
We spend too little time understanding and accepting the costs to get there.
For example:
Seeking wisdom is a great recipe for increasing effectiveness. Its cost is a relentless awareness of one’s own foolishness.
Surrounding yourself with great people is a great recipe to improve quickly. Its cost is a constant feeling of inadequacy.
Sitting quietly alone in a room is a great recipe for producing better thinking. Its cost is enduring substantial time and space alone with one’s thoughts.
Investing is a great recipe for building wealth. Its cost is regular awareness of having missed out on a profitable deal or trend.
An intimate understanding of incentives allows one to glimpse the future. Its cost is impatience in how quickly it arrives, and disappointment when it doesn’t meet expectations.
Excellence requires hard work. But it is also a mental battle against impatience, frustration, and dissatisfaction.
Thanks to Julie Zhuo’s thread for inspiration on the above.
Fractals
Many things — including self-improvement — have a fractal-like nature.
Fractal (noun): a curve or geometric figure, each part of which has the same statistical character as the whole. — Oxford Languages
It is easy for me to observe that I have grown in wisdom within the past ten years.
Same within the past five years, to a lesser degree.
Same within past year, to a lesser degree.
How about the last month? Week? Day? Hour? Growth is there, but it’s much harder to see.
This pattern is relentless. Plot the S&P 500 and zoom way in and way out. Plot internet down-time. Plot emotions.
Fractals aren’t maps but understanding fractal-like properties within systems that exhibit them are an immensely useful way to gain enhanced perspective on the system as a whole.
Willingness to do
Quality is the best business plan. — Pixar slogan, from John Lasseter
I recently spent time with a Disney executive who has worked at the company across 40 years in multiple countries and on multiple Disney parks. Given my fascination with the company I had many questions. He had many answers, the most interesting of which was a frequent return to Disney's "willingness to do" vs. its competitors.
Disney owns an enormous amount of the world's most valuable intellectual property. The many Disney and Pixar franchises. The Marvel Comic Universe. Star Wars. National Geographic. These have immense value. But the point he continued to stress was not the value of the IP, but the fact that very few companies have the willingness to deliver excellence to the degree that Disney can and will. That organizational willingness, capability, and momentum is what matters the most — and why copying and theft of Disney IP, though rampant, is not a structural risk to the company.
Time-shifting cost
I was fortunate to see the world's first 3D printed community a couple weeks ago and witness families moving into the homes.
These homes have received an enormous amount of press (see recent New York Times coverage and the excellent Apple TV documentary).
One of the more interesting conversations I had at the site was with one of the home builders. As I understood the technology and its promise, she expressed frustration at the frequent desire of journalists to know the unit cost of each home.
That's not a bad question, but her experience (which resonates with mine) is that there is a simple desire for a single number and a common lack of willingness to understand the broader systemic context of the project.
Creating technology to 3D print one home was an enormous undertaking. It required a company to invest in developing an enormous 3D printer and substantial chemical engineering to create a substance that is both viscous enough to be extruded from a 3D printer, solid enough to maintain its form once extruded, fast-drying enough to enable new layers to be extruded on top of it with reasonable speed, and strong enough to create a safe, durable, permanent structure.
The net result: printing the first home costs a lot. But that was never the point. Learning how to print a home has set the stage for faster construction (each home takes about 24 hours to print), enables local sourcing for much of the build materials (which is why the company recently received NASA funding to explore building structures on the moon), and has primed the relentless march of technology that will drive down costs. In the long run this means minimal physical labor, minimal materials transportation, and ultimately minimal cost to build millions of homes with unprecedented speed.
As with any innovation, the enormous benefits come in the out-years. Journalists often want to see:
Cost to Date / Homes to Date = Average Cost per Home
We should instead be evaluating:
Cost Next 10 Years / Homes Next 10 Years = Average Cost per Home
That is all that will matter.
Bell curves
The problem with many of today's financial risk models is that they are like airbags that go off at stop signs but not in an actual crash.
What sits behind this is a fundamental misunderstanding of how financial markets actually behave. The common assumption behind most of the math we use in economics is that risks are normally distributed (that is, follow a normally distributed bell curve). The problem is that none of us have this lived experience. If financial market risk did take this shape, the odds of the 1987 stock market crash were about 10^-148 — that is, basically impossible in the lifetime of the universe. But it happened. And it happened again in 2001. And 2008. And 2020. Our lived experience doesn't match the models, but the models let people use the math they know to feel they have some sense of control and prescience.
We should not be so naïve.
Thank to Brinton Johns and Brad Slingerland for their excellent essay on Complexity Investing.
Go make some pots
A primary inspiration for this newsletter (including its frequency) came from a short story that strongly resonated with my lived experience. I often tell myself that success is iterative — so iterate.
Alex Danco relayed this story:
A pottery teacher has two students. On Monday he tells the first student: “Your job this week is to try to create one perfect pot. Spend as much time as you need. Make it perfect.” Then he tells the second student: “Your job this week is to make as many pots as possible. I don’t care if they’re nice. Crank ‘em out.” Then on Friday, he comes back. What does he find?
Not only has the second student produced hundreds more pots than the first student (who’s labored over his one shot at glory); every single one of her pots is better. The way you learn how to make a perfect pot is by making a lot of pots. Period. — Alex Danco (great set of writing tips here.)