How Organizations Get Rich - This month’s best read is from a speech given by Jared Diamond in 1999 titled How to Get Rich but it’s not about how individuals get rich. It’s about how businesses or countries can get rich by implementing two ideas.
Jared looked through history which is really just a large amount of experiments of what works and what doesn’t work over time to find out why some groups of people got rich and why some didn’t. Jared found some examples which include a German beer company, a Japanese food company, and the countries that make up Europe, China and Tasmania to demonstrate how it happens.
The two ideas are:
The appropriate use of fragmentation
Unity within groups and not being isolated
“We can extract from human history a couple of principles. First, the principle that really isolated groups are at a disadvantage, because most groups get most of their ideas and innovations from the outside. Second, I also derive the principle of intermediate fragmentation: you don’t want excessive unity and you don’t want excessive fragmentation; instead, you want your human society or business to be broken up into a number of groups which compete with each other but which also maintain relatively free communication with each other. And those I see as the overall principles of how to organize a business and get rich.”
Three Big Things: The Most Important Forces Shaping The World - I’ve recommended Morgan Housel’s articles many times and this time is no different. He wrote another great article; this one being on the big things that will shape the world over the next several decades.
These 3 forces are: demographic shifts, wealth inequality, and access to information.
Big shifts have always had major effects on the world and as Morgan Housel writes, “An irony of studying history is that we often know exactly how a story ends, but have no idea where it began.”
What are the 3 major shifts that affected the 1900's? They were World War 1, the Great Depression and World War 2 with Morgan adding extra emphasis in this article on World War 2 since it is most likely that that war had the biggest effect on how the rest of the century turned out.
Morgan goes into more depth on his reasons why and he also goes into more depth on how and why demographic shifts, wealth inequality, and access to information will all have the biggest force on the rest of this century.
Markets Are Eating the World - In this article Taylor Pearson discusses the evolution of markets and how improvements in technology have had such a big impact on the changes in markets. One big technological change to markets was the invention of money which had a huge effect on markets because it allows a wider range of people to trade with each other. Another big change we are all familiar with is the internet which probably had the biggest effect on the markets that we interact with today.
The internet opened up a much wider range of sellers/buyers and a much wider range of goods to be traded. Before the internet there was no eBay which allows people to buy and sell rare collectibles such as baseball cards from people 1000’s of miles away.
EBay led to the invention of PayPal which allows buyers to get the items they buy a lot quicker because before PayPal the most common way of making payments to sellers was by personal check or certified check. It took days before the check arrived at the seller’s mailbox and if you sent a personal check it took even more days because the seller then would wait for the personal check to clear their bank.
PayPal’s great idea of creating a way to make payments online led others later on to follow suit and create others ways to pay online such as Zelle, Venmo (now owned by PayPal), and eventually Bitcoin and cryptocurrency which uses a blockchain to process payments.
Taylor also discusses in this article how blockchain can have a huge impact on corporations and markets in the future but one of my favorite parts was his discussion on the impact that the invention of the mechanical clock had on markets and people’s worklife.
The Future of Electric Cars v.s. ICE Cars - Vitaliy Katsenelson is the CEO of Investment Management Associates based out of Colorado. He has done a lot of great writing on his investing blog which can be found at www.contrarianedge.com. I’ve read a lot of his articles in addition to all of his emails that he sends out periodically.
His most recent post is the most interesting and best one that I’ve read so far.
Vitaliy has written a little bit about Tesla and the electric car in the past since he put down a deposit for the Tesla 3 but in this article he really goes into depth on where he sees the EV industry and the oil industry progressing to, how an electric vehicle actually works compared to an ICE car, the future of self-driving cars, his thoughts on Elon Musk, the future of Tesla and a lot more.
I highly recommend reading it. Since it is such a long article (45 pages), Vitaliy lets you subscribe by email so you can read 1 chapter a day or he also sends you an email with the full pdf if you want to read the full paper at once. I started out reading one chapter a day but it was so interesting that after a couple of chapters I just printed the whole report, sat down and finished the rest.
Leverage Points: Places to Intervene in a System - A system is a set of things working together as parts of a mechanism or an interconnecting network. Whether you recognize it or not there are systems all around us. Even in places that you may not even realize at first glance.
Some places that we encounter that have systems which may not be so obvious at first are local government services such as sanitation, the ATM machine that spurts out your cash, the water that runs through your faucets, the daily operations of the company we work for, the distribution of produce to your local supermarket and how some of the macroeconomic decisions are made that affect your mortgage rate.
In this interesting article written by Donella Meadows who is known for her two influential books The Limits to Growth and Thinking in Systems: A Primer, Donella focuses on leverage points in systems. Leverage is a way of getting more with less so when Donella is discussing leverage points she is looking for ways to intervene in a system that give a larger output but have a smaller input.
The Psychology of Prediction - The future is uncertain and making predictions are hard yet we all need to make some predictions in order to better prepare for it. If you think predictions are easy then you are in denial. Predictions involve a lot of known and unknown information, bias, and moving variables that can result in your prediction to change from one outcome to another over the course of a couple hours or days depending on the time frame and on the new information that becomes available.
In this month’s Best Reads of the Month, Morgan Housel describes 12 of the common flaws, errors, and misadventures that happen inside people’s heads when they make predictions.
Here are some parts that I found insightful:
“It is hard to think of the history of the twentieth century, including its large social movements, without bringing in the role of Hitler, Stalin, and Mao Zedong. But there was a moment in time, just before an egg was fertilized, when there was a fifty-fifty chance that the embryo that became Hitler could have been a female. Compounding the three events, there was a probability of one-eighth of a twentieth century without any of the three great villains and it is impossible to argue that history would have been roughly the same in their absence. The fertilization of these three eggs had momentous consequences, and it makes a joke of the idea that long-term developments are predictable.”
“Credibility is not impartial: Your willingness to believe a prediction is influenced by how much you need that prediction to be true. If you tell me you’ve found a way to double your money in a week, I’m not going to believe you by default. But if my family was starving and I owed someone money next month that I don’t have, I would listen. And I would probably believe whatever crazy prediction you have, because I’d desperately want and need it to be right.”
“Predicting the behavior of other people relies on understanding their motivations, incentives, social norms and how all those things change. That can be difficult if you are not a member of that group and have a different set of life experiences.”
The Most Important Internet Trends - The picture above is just one of many fascinating trends from a presentation that Mary Meeker gives every year based on her deep research and analysis of what is going on throughout the internet. Mary Meeker is the general partner at the venture capital firm Bond Capital.
In 2008, adults in the USA spent 2.7 hours per day on the internet but ten years later they now spend 6.3 hours per day. Internet usage in this statistic pertains to all devices such as mobile, desktop/laptop, and all others.
This statistic shows how much the internet has affected all of us since 6 hours a day is about 25% of all of our days. This is a lot when you consider that another 7–8 hours a day are used for sleeping.
In her presentation, Mary Meek also shows the enormous influence technology companies have on the world now that 7 of the world’s 10 most valuable companies are tech companies which include Microsoft, Amazon, Apple, Alphabet, Facebook, Alibaba, and Tencent. Also discussed are trends on internet advertising, interactive gaming, customer acquisition costs, e-commerce and more.
Rani Molla does a good job summarizing some interesting ideas from Mary’s presentation on Vox and then links to the presentation on the most important internet trends of the year at the end.
A Great Collection of Book Summaries and Ideas - I usually recommend an article or a blog post each month for my Best Reads of the Month but this month I am going to do something different. I am recommending a whole website because there are so many great ideas and articles from this site that I have been reading these past couple of weeks.
The website is actually based on an idea that I had for my own website. The creator, Blas Moros, has read an enormous amount of books and does a fabulous job taking some of the best ideas from each book and creating summaries. There are loads of great summaries on his website from some of my favorite books such as Sapiens by Yuval Noah Harari, The Laws of Human Nature by Robert Greene, Meditations by Marcus Aurelius, Thinking Fast and Slow by Daniel Kahneman, and Seeking Wisdom: From Darwin to Munger by Peter Bevelin.
Since we tend to forget a lot of what we read over the years, this website makes for a great tool to help remind us of the important ideas from some of our favorite books. It also makes for a great website if you are unsure if you should start reading a book. You could read the synopsis and the reader reviews but reading blas’ summaries makes for a great compliment.
A Collection of Wisdom from Warren Buffett - Warren Buffett is an iconic name in the investment business. Many investors from just starting out to the most experienced have looked to him for advice on not just investing, but life advice as well. He is full of useful wisdom that can help anyone live a better all-around life.
Every single year Warren holds his company’s annual shareholder meeting in his hometown of Omaha, Nebraska where 40,000–50,000 people travel from all over the world to attend. This last Saturday, May 5th, was the company’s most recent annual meeting so I decided to add a couple of documents filled with wisdom from Warren Buffett for April’s Best Reads of the Month.
The first document, which can be found as a downloadable link in the "LR Downloads" section, is one that I just came across today, May 7th, and just started reading. It is filled with loads of questions and answers with Warren Buffett throughout his life on various topics such as investment valuation, oil, charity, career, education and so much more. I want to give a huge thank you to Nick Webb who is listed on the last page for going through all the hard work to compile 566 pages of wisdom all in one place and a huge thank you to Whitney Tilson who Nick gives credit to for compiling a majority of the content in Nick’s pdf through note taking.
Warren has had a huge influence on my life and so many others, so if you aren’t familiar with him then there is a lot to learn in these documents. In addition to the compilation of frequently asked questions to Warren, I’ve posted a video to the most recent Berkshire Hathaway annual meeting where Warren and his longtime investment partner, Charlie Munger, fielded questions from the audience; Warren Buffett’s most recent letter to shareholders; a link to a website filled with all of Warren’s letter to shareholders and a compilation of content put together by CNBC with loads of advice from interviews they had with Warren over many decades.
Hope you enjoy!
Warren Buffett FAQ: https://www.mikegorlon.com/fileshare
Most Recent Shareholder Meeting (Video): https://www.youtube.com/watch?v=VCwIAnjAqiM
Most Recent Shareholder Meeting (Notes): https://www.investopedia.com/5-takeaways-from-the-berkshire-hathaway-annual-meeting-4686363
2018 Letter to Shareholders (Published Feb 2019): http://www.berkshirehathaway.com/letters/2018ltr.pdf
Link to all of Warren’s Letters to Sharholders: http://www.berkshirehathaway.com/letters/letters.html
Compilation of Content from CNBC: https://buffett.cnbc.com/warren-buffett-archive/
What the Hell is Going On - The world is changing. That is for sure. And it’s changing at the most rapid pace that our species has ever experienced. The article for this Month’s Best Read of the Month goes to one written by David Perell who I am not familiar with but has does some really good writing on his website www.perell.com. Large disruptions and changes in any subject really grab my attention and in this article David Perell does a fabulous job of covering three big subjects that we are all familiar with that have been turned upside down over the past 70 years.
Those subjects are commerce, education and politics. These areas have been turned upside down due to the way information is disseminated today compared to how it was 70 years ago or even 30 years ago. There used to be a huge asymmetry in the way information was disseminated but today that no longer exists.
In the 1950’s and 1960’s, the sellers — whom were mostly giant companies who got bigger and bigger — had the majority of the information and consumers had very little. That changed with the invention of the internet. Consumers in commerce are much more informed today. Just look at this picture below showing the rapid increase in the amount of information that there is in the world.
It’s amazing! The amount of information generated in 2001 exceeded all of the cumulative information that was generated in all of our existence prior. And then even more remarkable is that the information generated in 2002 doubled what was generated in 2001.
And this has led to more informed consumers who have been able take advantage by making smarter decisions when purchasing goods and services. It has also led to students no longer needing to be so dependent on universities. Once upon a time they would have to go to the university library or meet a knowledgeable person to speak with to gain access to information to learn. Now so much of that learning is done on the internet. And it has had a huge change in the way we all live. Especially for politics as well.
“The Broadcast era was shaped by high barriers to entry, which centralized the entire media industry. At the peak of the Broadcast Era in the 1960s, fewer than 25 companies monopolized the information cables of radio, television, books, magazines, and music.
There were four television networks, five book publishing houses, five record companies, and seven motion picture studios that controlled most of what America consumed. Powerful and authoritative, these media conglomerates shaped the hearts and minds of millions of Americans. They shaped narratives and controlled ideologies. Information flowed in one direction, from producer to consumer…..
Narrative control is no longer monopolized. The arbiters of truth have fragmented. Millions of people, historically constrained by the reach and spread of their ideas, can theoretically reach anybody in the world with an internet connection. The truth has always existed, but until recently, we haven’t had the means to uncover and distribute it.”
“Today’s elite no longer have the cultural shield that once made it harder for outsiders to take a crack at them… Probably the single biggest change in American life has been a dramatic decline in the cost and inconvenience of getting information… An informed populace, however, can also be a cynical populace, and a cynical populace is willing to tolerate or maybe even support cynical leaders. The world might be better off with more of that naive moonshot optimism of the 1960s.” — Tyler Cowen
AR Will Spark the Next Big Tech Platform – Call It Mirrorworld - This is a very interesting article from WIRED that makes a prediction of what the next big tech revolution will look like. The author, Kevin Kelly, of the article was WIRED’s founding executive editor and he gives an interesting take on where he sees the tech future progressing. It involves an intersection of the digitized world that we know today as the internet, and the real world. He refers to it as the mirrorworld.
The mirrorworld is a representation of the real world in a digital form. Right now, we have a digitalized world and a real world that run parallel to each other but in the mirrorworld, the digital world and the real-world will meet. It will be driven by augmented reality. Picture being able to put on an augmented reality headset and being able to work from home as you roam around your office in digital form while you see your other coworkers who are also roaming around the office in digital form even though they are still at home just like you.
Or picture putting on an AR headset and being able to travel the world from your home. You put the headset on, go on Google Earth and unlike Google Maps where all the buildings and the streets are 2 dimensional, everything is now 3 dimensional. Kevin also sees a situation where instead of just being able to search text like we do on Google search in the digitized world, we will be able to search physical objects or physical space. Think of running a Google search for benches by typing in “find me all the places where a park bench faces sunrise along a river.”
Right now, there is lot of talent, money, time, and effort already being invested into building this world as you are reading this post. And that is rightfully so because Kevin sees the winner of this next tech revolution as becoming one of the wealthiest and most powerful people and companies in history.
“It is already under construction. Deep in the research labs of tech companies around the world, scientists and engineers are racing to construct virtual places that overlay actual places. Crucially, these emerging digital landscapes will feel real; they’ll exhibit what landscape architects call placeness. The Street View images in Google Maps are just facades, flat images hinged together. But in the mirrorworld, a virtual building will have volume, a virtual chair will exhibit chairness, and a virtual street will have layers of textures, gaps, and intrusions that all convey a sense of “street.”
"Augmented reality is the technology underpinning the mirrorworld; it is the awkward newborn that will grow into a giant. ‘Mirrorworlds immerse you without removing you from the space. You are still present, but on a different plane of reality. Think Frodo when he puts on the One Ring. Rather than cutting you off from the world, they form a new connection to it,’ writes Keiichi Matsuda, former creative director for Leap Motion, a company that develops hand-gesture technology for AR."
“’Augmented reality is going to change everything,’ Apple CEO Tim Cook said during an earnings call in late 2017. ‘I think it’s profound, and I think Apple is in a really unique position to lead in this area.’"
"New technologies bestow new superpowers. We gained super speed with jet planes, super healing powers with antibiotics, super hearing with the radio. The mirrorworld promises super vision. We’ll have a type of x-ray vision able to see into objects via their virtual ghosts, exploding them into constituent parts, able to untangle their circuits visually. Just as past generations gained textual literacy in school, learning how to master the written word, from alphabets to indexes, the next generation will master visual literacy. A properly educated person will be able to create a 3D image inside of a 3D landscape nearly as fast as one can type today. They will know how to search all videos ever made for the visual idea they have in their head, without needing words. The complexities of color and the rules of perspective will be commonly understood, like the rules of grammar. It will be the Photonic Era."
Sam Altman on How to be Successful - Sam is an entrepreneur, investor, programmer, and blogger who is most famous for being the president of Y Combinator and for co-founding a location-based social networking mobile app called Loopt. He started as a part-time partner at Y Combinator until 2014 when he was named president.
Y Combinator is a seed accelerator which in other words is a program that provides connections, mentoring, and capital in exchange for ownership (equity) to young companies. Y Combinator has been very successful and just to touch upon some of their past investments, here are a couple of very well-known companies that they have seeded: Airbnb, Dropbox, Zenefits, and Stripe. In addition, Sam himself has personally invested in Airbnb, Reddit, Pinterest, and Stripe.
Sam has a website where he blogs on his thoughts every once in a while, and today I came across a post he wrote about success. We all have our own idea of success but most of us think about it linearly as opposed to exponential. The big difference between exponential success and linear success are the huge differences in returns due to compounding.
In this blog post, Sam discusses 13 ways to put yourself in a much better position to achieve outlier success which I listed below followed by some quotes that I enjoyed.
1. Compound yourself
2. Have almost too much self-belief
3. Learn to think independently
4. Get good at “sales”
5. Make it easy to take risks
7. Work hard
8. Be bold
9. Be willful
10. Be hard to compete with
11. Build a network
12. You get rich by owning things
13. Be internally driven
“Most people get bogged down in linear opportunities. Be willing to let small opportunities go to focus on potential step changes.”
“I think the biggest competitive advantage in business — either for a company or for an individual’s career — is long-term thinking with a broad view of how different systems in the world are going to come together. One of the notable aspects of compound growth is that the furthest out years are the most important. In a world where almost no one takes a truly long-term view, the market richly rewards those who do.”
“Self-Belief is immensely powerful. The most successful people I know believe in themselves almost to the point of delusion.”
“Self-belief must be balanced with self-awareness. I used to hate criticism of any sort and actively avoided it. Now I try to always listen to it with the assumption that it’s true, and then decide if I want to act on it or not. Truth-seeking is hard and often painful, but it is what separates self-belief from self-delusion.”
“’I will fail many times, and I will be really right once’ is the entrepreneurs’ way. You have to give yourself a lot of chances to get lucky.”
“Don’t save up for too long, though. At [Y Combinator], we’ve often noticed a problem with founders that have spent a lot of time working at Google or Facebook. When people get used to a comfortable life, a predictable job, and a reputation of succeeding at whatever they do, it gets very hard to leave that behind (and people have an incredible ability to always match their lifestyle to next year’s salary). Even if they do leave, the temptation to return is great. It’s easy — and human nature — to prioritize short-term gain and convenience over long-term fulfillment.”
Part 1 - On Writing Better: Getting Started: http://jasonzweig.com/on-writing-better-part-1/
Part 2 - On Writing Better: Sharpening Your Tools: http://jasonzweig.com/on-writing-better-part-2/
Part 3 - On Writing Better: Becoming A Writer: http://jasonzweig.com/on-writing-better-part-3/
Writing is hard. I’ve thought about why it’s so hard and why our minds have this habit of going into writer’s block mode so often and I’ve concluded that it is because our minds just aren’t wired to write. After all, we evolved from a single-celled species like so many other animals, yet we are the only animal that uses writing as a form of communication. And also, humans have been around for 200,000 years yet we only have found recorded written language going back to 3200 BC. That makes up only 3% of our existence and language also evolves over time which means that the writing that was used during the BC period or even 100 years ago is much different than it is today.
Writing just isn’t hardwired into our brains like eating, reproducing, and breathing are. These 3 actions come naturally to us and all 3 of these actions feel good unless they are being way overdone, but writing doesn’t come naturally to us. It is a skill that must be learned and practiced to be good at. It takes time and a lot of hard work.
When I subscribed to the Wall St. Journal a couple years ago there was a column written by Jason Zweig that I used to always read. I enjoyed his thoughts on the markets as well as his writings in the updated version of the popular investment book The Intelligent Investor by Benjamin Graham. Back when I used to read his columns, I didn’t think much about him as a great writer. It wasn’t until I started doing some writing myself that I realized how great he really is. He’s been writing for a long time and currently does about 50 columns a year for the Wall Street Journal in addition to all of the books he’s written such as his most popular one called Your Money and Your Brain or his most recent one called The Devil’s Financial Dictionary.
I happen to come across some interesting blog posts from Jason Zweig on his website this month. In these posts, Jason discusses his methods and ideas on how to become a better writer and since becoming a good writer is such a complex topic, he spread his advice out into 3 different blog posts so for this month’s Best Reads of the Month I’m sharing 3 different links.
But before you start reading them, here are 3 really good ideas I highlighted from his 3 blog posts:
“I also know why I write: to learn. For me, writing is like peeling the onion of my own ignorance. The clearer and simpler I try to make my thoughts as I set them down, the more I realize how little I know and how much more I need to read, how much longer I need to study, how many more people I need to talk with, before I can finally write without feeling like a complete impostor or intellectual fraud. In my columns, that often means coming back to the same topic again and again until I finally figure it out.”
“Good writing is full of wonder; it marvels at the glory and stupidity and frustration and pain and beauty of being alive. You can’t write anything if you don’t feel something. You have to want to tell people what you feel, what you care about, what you believe, what you know; if you don’t have something you’re on fire to tell us about, you shouldn’t be writing.”
“Instead of trying to sound distinctive, just sound like you. Your style is yourself; how you write is who you are. Appealing to someone who’s never read you before is exactly like going out on a first date: The worst thing you can possibly do is to pretend to be someone other than yourself. Don’t try to be serious if you’re funny, funny if you’re serious, a mathematician if you’re a poet, or a poet if you’re a mathematician. Don’t show off a vocabulary you don’t have; don’t hide a sophistication that you do have. My dad used to say, “If you try to make an impression, that’s the impression you’ll make.” Straining to sound unique can end up making you sound just like every other wannabe — and nothing like yourself.”