Month: October 2022

In a conversation recently, a friend underscored the importance of becoming the “go to” person on whatever topic you are focused on at work. She referred to this as one of the most important habits you can build in your career.

As she talked about this, she shared something insightful – becoming the “go to” person isn’t all that much work. That’s because very few bother to do the pre-work. As she wisely observed, few show up to meetings with the pre-read done. Fewer still take the time to really absorb all the data available.

I found myself nodding fervently.

This is doubly true in life as well. Everyone has opinions – most of these are curated either from cherry picked data or “anecdata”/anecdotal data. That’s understandable. If it is hard to do the homework at a job where you’re paid to do just that, consider how many will actually dig deep enough to absorb source data* or look at a meta study (an analysis of multiple studies on the same topic) to then synthesize their point of view.

Just as it does in our career, I think the benefits to doing this in our life are incredibly rich. It helps us reason and gives us a depth of understanding that forms the foundation of thoughtfulness and equanimity.

So, become the “go to” person at work. Then, for subjects you care about, make the effort to look at the source data yourself to form opinions in your personal life. It takes work – but, on the bright side, it takes less work than you think.

*It is why aggregation/visualization of publicly available datasets created by initiatives like Our World in Data are so powerful. They make it so much easier to understand the data and to do the homework by democratizing access to information. We need more of these kinds of initiatives!

“In kindergarten, a child’s education is as much in the classroom as it is in the playground.” | A wise teacher

In truth, the world and all of this life is our classroom. And learning is equal parts perspective changing and fun.

All we need to do is show up willing to learn.

I was out at a restaurant today that had hung up a short story on the wall. It was about a man who got on stage and told the audience a joke. The audience laughed loudly.

He then repeated the joke.

A few people laughed this time.

He repeated the same joke for the third time.

No one laughed.

To this, he said – “You can’t laugh at the same joke over and over again. Why do you then keep crying and complaining about the same problems?”

Why indeed?

I was out in the evening recently and found myself gazing into the sky and appreciating the stars.

The stars are always there of course. I just don’t appreciate them enough.

Just like so many other wonderful things in this life.

My favorite source of stories in the past 3 years has been Morgan Housel’s blog posts on the Collaborative Fund’s blog. I’ve shared so many of these on this blog (thank you, Morgan). Today’s post on expectations was very well done. The story below definitely hit home.

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Dr. Dan Goodman once performed surgery on a middle-aged woman whose cataract had left her blind since childhood. The cataract was removed, leaving the woman with near-perfect vision. A miraculous success.

The patient returned for a checkup a few weeks later. The book Crashing Through writes:

Her reaction startled Goodman. She had been happy and content as a blind person. Now sighted, she became anxious and depressed. She told him that she had spent her adult life on welfare and had never worked, married, or ventured far from home – a small existence to which she had become comfortably accustomed. Now, however, government officials told her that she no longer qualified for disability, and they expected her to get a job. Society wanted her to function normally. It was, she told Goldman, too much to handle.

Every goal you dream about has a downside that’s easy to overlook.

I found this chart about electric vehicle adoption in China intriguing.

In early 2020, both China and the US were at about 5% penetration as a % of in-year sales. In early 2021, we got to 10%.

However, at some point in mid 2021, China’s penetration began taking off. In the last few months we’ve seen averages above 20% with a high greater than 25%. It definitely feels like it has hit a tipping point while the US has stagnated.

It got me wondering about that tipping point. Is the 15%-20% range the tipping point? Or was it better electric car charging infrastructure? High gas prices?

There isn’t enough data on this. But, looking at Norway’s new car sales, it is fascinating to see adoption take off around the 20% mark.

Tipping points are fascinating.

If we’re in the business of attempting to bring about transformational change, paying attention to and optimizing for them is often the difference between success and failure.

Our ability to drive a change in our behavior is directly proportional to our ability to check in with ourselves at a regular cadence.

Regular check ins enable us to hit reset and course correct. They also give us the opportunity to recommit (as many times as necessary) to the why behind our commitment when the wheels inevitably fall off.

Get the check in schedule right first, and the behavior change we’re seeking will follow.

The better your understanding of a domain, the better your ability to make high quality decisions with lesser data.

Bloomberg’s Matt Levine writes an excellent newsletter – Money Stuff – where he breaks down various kinds of financial news. One of my favorite recent breakdowns was about the Patagonia Founder’s move to donate Patagonia’s profits to climate change.

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If you own a business and it is a big successful business and makes a lot of money, you will end up getting a lot of money. If you do not want a lot of money (because you find it embarrassing to be rich, etc.), or if you want to give money to good causes rather than spending it on yachts, you can get your check — a dividend or profit share or whatever — from the company each quarter, and then hand the money over to charity. But there are some problems:

1. Getting $100 million a year from your company and donating $100 million a year to charity is not necessarily all that tax-efficient. For instance, charitable donations can be deducted from your taxable income, but there are limits to how much they can reduce that income. If you get $100 million and donate $100 million then you have nothing left over, but you might still owe $10 million of taxes. If the money is coming from your company and going to charity, it might not be ideal for it to make an intermediate stop on your personal tax return. There are frictions. 
   
2. If you die, your heirs will get the company, which means they will start getting those checks, and maybe they will start spending the money on yachts instead of charity. You might want to prevent this and keep the money running from the company to charity forever.
   
3. This is sort of a stupid metaphysical point, but if you own 100% of a company that pays you $100 million per year, then you are technically a “billionaire.” This is true even if you get the $100 million each year and give it away immediately, leaving you with no cash at all. The company is an asset, and traditional valuation techniques will tell you that a company that makes a profit of $100 million a year is worth, you know, $2 billion or $3 billion, something like that. [1]  Bankers will occasionally show up at your office pitching a deal to sell your company for billions of dollars, because that’s what it’s worth. So even if you give away all the money, you continue to own an asset worth billions of dollars, making you a billionaire. We have talked about this before, in the context of people who would like to be billionaires — there are some bragging rights — and who incorporate and sell stakes in their businesses in order to formalize that status. But if you’re a person who finds it embarrassing to be rich, owning a multibillion-dollar asset is embarrassing.

Here is a straightforward solution:

A half century after founding the outdoor apparel maker Patagonia, Yvon Chouinard, the eccentric rock climber who became a reluctant billionaire with his unconventional spin on capitalism, has given the company away.

Rather than selling the company or taking it public, Mr. Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits — some $100 million a year — are used to combat climate change and protect undeveloped land around the globe. …

Patagonia will continue to operate as a private, for-profit corporation based in Ventura, Calif., selling more than $1 billion worth of jackets, hats and ski pants each year. But the Chouinards, who controlled Patagonia until last month, no longer own the company.

But they still control it, more or less:

In August, the family irrevocably transferred all the company’s voting stock, equivalent to 2 percent of the overall shares, into a newly established entity known as the Patagonia Purpose Trust.

The trust, which will be overseen by members of the family and their closest advisers, is intended to ensure that Patagonia makes good on its commitment to run a socially responsible business and give away its profits. … The Chouinards then donated the other 98 percent of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. …

“I don’t respect the stock market at all,” he said. “Once you’re public, you’ve lost control over the company, and you have to maximize profits for the shareholder, and then you become one of these irresponsible companies.”

Instead of the control being in the hands of the family, it is in the hands of a trust controlled by the family. For now those are close to the same thing — Yvon Chouinard just tells the company what to do — but in expectation, 100 years from now, those things will probably produce different outcomes. The way you pick your successors at a Purpose Trust is probably different from how you pick your heirs.

And instead of the profits going to the family, which then donates them to a nonprofit, they go directly to the nonprofit. Which is tax-efficient and, again, removes the possibility of future heirs redirecting the profits to their own yachts. Also it allows Chouinard to say that he “no longer owns the company” and have a New York Times headline saying “Billionaire No More,” which seems to have been an important goal:

“I was in Forbes magazine listed as a billionaire, which really, really pissed me off,” he said. “I don’t have $1 billion in the bank. I don’t drive Lexuses.”

Right, he didn’t have $1 billion in the bank; he had stock in a corporation worth $3 billion. Now he technically does not. 

This strikes me mostly as a fairly simple bit of financial planning to achieve an unusual but understandable set of goals. (Stop owning a company without letting anyone else own it, turn a for-profit company into a vehicle for philanthropy without some of the restrictions of becoming a nonprofit company, avoid flowing corporate-to-charity money through personal income.) 

Also, though, it is an interesting form of corporate governance. The ordinary rule is that a company is owned by its shareholders, and the shareholders have a claim on its profits, and the shareholders have ultimate authority to hire and fire the company’s board and managers. In public companies with dispersed anonymous shareholders, the board and managers mostly run the company without too much shareholder interference, and they assume that the shareholders just want them to maximize profits. In companies with controlling shareholders, the controlling shareholders tend to have real authority over the managers, and can tell them what they want to maximize, which may or may not be profits. (In public companies with lots of environmental, social and governance-minded investors, the ESG investors can also lobby the managers to maximize something other than profits.) The shareholders’ residual claim on the company’s profits and their ability to tell the managers what to do are related, but they don’t absolutely have to go together. The shareholders could come to the managers and say “as shareholders, we control the company, and we instruct you to stop giving us the profits and start giving them to charity instead.” That’s more or less what happened here.

When we’re feeling anxious about something, it is tempting to try to deal with how we’re feeling by thinking it through/solving it in our head.

But, if certain thought patterns are either responsible or contributing to the anxiety, attempting to think it through can backfire.

Action, on the other hand, has a propensity to inspire constructive thought. So, action – even if it just the act of writing and organizing our thoughts – ends up being a more reliable antidote to anxiety.