To be one of the best in the world at something, you have to work hard.
While this seems obvious, there are many people who don’t believe it’s true. Many people believe you can become great just working 9 to 5. It’s not clear where this controversy comes from.
It could be a result of the fact that we can’t all agree on how many hours of work really constitute “hard.” Malcolm Gladwell theorizes that it takes 10,000 hours of deliberate practice to become a master at something. But it is not just the hours … it is the obsession that matters.
You cannot be great at something unless you are obsessed with it. You need to be thinking about it all the time. That obsession may consume you and it might not be healthy for you … but that is the difference between the great and the merely good.
Hard work is a prerequisite to changing the world.
People who changed the world were workaholics. Look at Martin Luther King Jr., or Mahatma Gandhi, or Alexander Hamilton. They all put in many hours more than a standard 40-hour week.
The difference though is that their work is an extension of who and what they are.
They worked hard because it did not feel like work. At least not always.
Actually getting 40 hours of work done in a week is rare.
There are very few people who can do world-changing work in a 40-hour week. I’ve never seen one.
Warren Buffet once famously stated that compound interest is the eighth wonder of the world. Power laws rule much around us, but more so in the technology and business worlds. One fantastic deal, such as Facebook buying Instagram, can shift the bedrock of business everywhere. Despite the common belief that 80% of company acquisitions are failures, the remaining 20% can shape a new path for in that company – the expected value is still enormous and is definitely a worthwhile path if executed properly.
Many people mistake averages for value. Venture capital is exactly the opposite of this: missing the seed round of AirBNB if you had the chance to invest means you would be financially worse off than had you invested in 50 Theranoses. The difference is that in the first case you would make 1000x your investment or at worst 0, so the opportunity cost is immense.
Power Laws also exist in company acquisitions.
The Power Law of Company Acquisitions is why companies continue to make acquisitions. In the few cases it does work, like Google’s purchase of YouTube, the gains can continue to reap dividends decades later. Fundamentally, most of the best acquisitions are contrarian in nature; otherwise, they would have been bought by another company already. And sometimes, like the YouTube acquisition, there are only a few companies that could have acquired it successfully – the key is to stay within your circle of competence.
Exorbitant Salaries don’t make for Exorbitant Lifestyles
Here is an interesting paradox: the world is experiencing the largest bull market in history, but fewer than one out of five Americans feel like they’re living the American Dream. Many of these people have incomes ranging well above six figures, in the vicinity of $200-400k, and still worry about making ends meet.
In 2018, the Department of Housing found that a salary of $117,000 is considered low income in San Francisco. Effectively, making six figures puts one into poverty in SF (if you are taking care of a family). Sadly, this is not a trend isolated to the Bay Area. There is a financial disparity amongst people who are in the top 2% of earners in the U.S. who live in expensive areas, and not because they can’t afford a yacht.
All-together, these families are earning a tremendous salary by any standard (often more than $300k per year), attending the most prestigious graduate schools and coming from upper-middle-class backgrounds. The scariest part is that these are not people you’d expect to be struggling. In fact, if you took and average U.S. family of four and told them that a family who made $300k/yr – the top 2% of income in the U.S. – was struggling, they would laugh hysterically. They would never believe you because the median US salary is $62k. It would be called fake news.
Unfortunately, this story is playing out across the country. Of course, it is not happening everywhere nor is it happening to everyone. It is primarily happening to secular people that have kids and live in ultra-expensive places like New York City, DC suburbs, Bay Area, etc. The inflation rate in those cities for core goods (housing, healthcare, and education) have been growing at a rate of more than 10% a year for the last 10 years. How do these elites manage to keep afloat? The short answer is that they’re not able to and the consequences could have a drastic impact on the future of our nation’s democracy.
Sisyphus’ Hedonic Treadmill
The Elite With No Savings (TEWNS)
A necessary piece of the puzzle requires imagining what these people look like; how fanciful are their lives that they feel like they are working class on $300k a year? People have a tough time believing this because on the surface, The Elite With No Savings (or TEWNS) are doing well. To paint the picture, these are families with two college educated parents, perhaps they met at an Ivy League school, with young kids. They live in expensive cities, far from their parents, while paying off a mortgage. Daycare and expensive schools are a must for these families, eating into their bottom-line and leaving almost nothing for savings.
For the top 2%, life should be different; they played the game well by delaying gratification and they went to a top school while knocking their academic careers out of the park. They passed the Marshmallow Test. Still, many are financially underwater after learning that there’s more to life than just academics.
I plan on writing a lot more about why the Thiel interview question (what is an important truth that most people think is crazy) and why it is so brilliant. In the meantime, here is a tweetstorm with my quick thoughts:
Greenland is very strategic territory and becoming more strategic by the day (due to global warming). It is one of most important locations for a military presence. And it would be extremely undesirable (to the U.S.) if a rival country had a significant military presence on Greenland.
But Greenland needs a lot of development. Its 56,000 inhabitants need better resources. While the average Greenlander has an income of $35,000 (more than half of what an average American makes), it takes a lot of resources to live in a place that has such extreme weather.
So here is a modest proposal: Greenland sells itself to the United States.
Yes, the first reaction might be that I’m a jingoistic crazy. But this could be good for every Greenlander.
Imagine selling Greenland to the U.S. for $120 billion (assuming the Danish allow the Greenlanders to make that self-determination). That means that each Greenlander will be worth $2 million — including every adult and child. They could even set up a trust for kids (so the kids, not their parents, have access to the money.
Almost every company spends over 95% of its time doing what every other company does. And it spends less than 5% of its time on things that are unique to the company.
That makes no sense.
Ideally it should be flipped. Your company should spend the vast majority of its time focusing on things that are unique to your company.
Crazy thought experiment: Imagine a new type of company that decided to only do what it was really good at and essentially outsourced everything else.
Recruiting as a service?
Pretty much every company spends lots of time recruiting. Recruiting is a massive time suck. Yes, some companies do it better than others … but there are a set of best practices that all the good companies eventually master.
What if your company could completely outsource its recruiting (including interviewing) to another service? I know this seems completely crazy … but imagine if that could happen. Imagine the time savings.
There is a caricature of certain successful people as being stupid. I never understood this but it is something that has prevailed in our culture.
It is an odd insult often thrown by the less successful at the more successful. If these successful people were really so stupid, why did they accomplish so much?
We have a tradition of calling our President ‘stupid.’
It goes back a long way. Many of Franklin Delano Roosevelt’s enemies (including many in his own party) called him stupid and a lightweight. Of course, we do not think of FDR today as a lightweight … but that was a criticism of him for many years.
In my lifetime, almost every Republican President has been caricatured as being stupid. Gerald Ford was the clumsy bumbler portrayed. Anyone of that era remembers Chevy Chase’s hilarious skits on Saturday Night Live.
But Ford wasn’t a clumsy bumbler. He was actually the opposite — Ford was a world-class athlete. He was voted the most valuable player on the University of Michigan Football team.
Then came Reagan. How could an actor be smart? The zeitgeist was that Reagan was stupid and he was being taken advantage of by other members of his party. It was so assumed that he was a dummy that there is a classic SNL Phil Hartman skit that is a parody of the parody. The skit was so hilarious because no one could actually believe Reagan could take control of anything.
The problem is that you cannot use first principles to determine everything. You don’t have the time to do that. You need to rely on proxies who you believed have figured things out and believe in them (until you eventually figure out that the proxies are wrong, frauds, etc.).
For instance, I have never actually done the full proof that the world is round. I don’t actually know, with 100% certainty, the shape of the earth. I use proxies to help me determine that. It might not be round. There might be a conspiracy. Or we might be living inside a simulation. I’m not 100% sure. But I rely on proxies and make an assumption that the world is round (at least for my purposes).
I don’t know (with certainty) that the moon landing in 1969 was real. Some people believe it was faked. But I use proxies who I respect and therefore adopt the belief that the moon landing was real. I believe this even though I have not taken the 100+ hours to prove it myself.
Therefore, I believe the world is round and also believe the moon landing was real. Am I 100% certain? No. But I live life believing it and know that I will likely never take the time to prove either to myself.
Let’s say you are investing money in something, what is the rate you want to be scammed?
You could, of course, say that rate should be zero. That you will tolerate no loss due to scams, unethical practices, etc. But that puts an extreme due diligence burden on you before you make an investment. You can’t be 100% on BOTH precision and recall. If you have fewer false positives, you will inevitably have fewer false negatives.
Being skeptical of everything will allow you to avoid investing with Madoff, but it will also have you miss that angel investment in Facebook and Airbnb. Many ideas seem very crazy (until they aren’t).
This is also true in life.
You can distrust every taxi driver and every construction contractor … but that might lead do you distrusting most people which could lead to a lot of unhappiness.
Or … or … or … you can accept that you will have some rate that you will be scammed.
You should have a rate you want to be scammed.
A good rate is likely 1-3% of your interactions. This can be on taxi cab drivers, investments, hires, etc. If your scam rate is under 1%, you are likely not taking enough chances. If your scam rate starts approaching 10%, you might lose all your money.
If you never get into a car, you will never die in an auto accident. But you will also have a lot of trouble living life. So you need to have some guide-rails (wear a seat belt, don’t get in a car with a drunk (or sleepy) driver, etc.). The same is true for investing or doing anything else in life.
Much of marketing is social proof. You use products because you see other people that you admire using products. This is especially true in B2B marketing.
Social proof, when it works well, is a feedback loop. Actions create evidence which create relevance and then create consequences.
This is true in products you buy personally and products you buy for your business. It is true for homes, schools, medical procedures, and even political candidates. Social proof is the number one thing that convinces you to choose any product that is out there.
If you are a marketer, you need to acknowledge the power of social proof and use it to your advantage.
Social proof is a very good short-cut for people who are doing due diligence of a product. They want to understand who else is using a product and what they think of it.
In marketing, social proof is king, queen, and emperor.