What to Do When You Don’t Know What You Want

I drafted this post on Friday night at 7pm. I’m sitting in a cafe in San Francisco right now at around 6:30am on Saturday editing it.

I was going to go to the Giants’ game Friday, but after walking around for a few hours with some friends, I sort of got that itch to work.

Whenever I take time off, I always get that itch. The farther I get into entrepreneurship, the more transparent and bigger opportunity costs become.

I see more opportunity today than I ever have in the past and that only seems to be accelerating. Both because it’s more transparent to me personally and because there’s just more opportunity out there.

Social, economic, and technological barriers to entry are lower than ever and falling in almost every market.

While this is exciting, I don’t really know where it’s going. Both in general and for me personally.

I’ve talked a handful of people since reading/watching Start with Why by Simon Sinek.

Everyone loves Sinek’s general concept – define a central, motivating WHY for yourself, your organization or your project and let that be an effective guiding heuristic that moves the organization or yourself towards it’s ultimate goal.

But what if you don’t know exactly where you’re going? I’ve talked to a lot of people that agree with the concept but don’t necessarily know their WHY.

They like the work and they’re looking for a higher purpose for it, but aren’t clear what that purpose is.

I feel the same.

I love the work, but I don’t know exactly where it’s going. I don’t have a clearly defined end game – it’s always evolving.

It’s becoming more clear, but  only as a result of experience and actually having something to look back on.

I was talking to Ian a week or so ago about this. We both like the work, but it’s not entirely clear where it’s going.

What I do know is that things are changing faster than ever. There’s not a shortage of opportunity.

Building a Platform to Optimize for Optionality

The best solution I’ve come up with for this is to optimize for optionality.

And the best way to optimize for optionality is to build a platform.

A Platform is something that gives you more, better options – it creates optionality.

I like to think of it as a bank account of different currencies – both legible and illegible ones.

Platforms are valuable because platforms create optionality. And optionality lets you get what you want once you figure out what it is that you do want.

Things that Grow a Platform

A Track Record of Creating Results People Pay For – See Hustle - Ability to manage distributed teams, Sales, Copywriting, doctors that actually help people. Any skill set people will pay you for gives you options.

Networks – Being able to connect people synergistically and creating win-wins. Both loose ties and strong ties.

Trust and Attention/Distribution Channels – Blogs, Podcasts, Speaking Gigs – anything that shows you have the trust and attention of another person. Probably getting more valuable.

Cash – See everything Mark Cuban has ever written.

Assets that are Growing/Appreciating – Businesses, Rental Properties, and most significantly – Yourself .

Things that Destroy Platform

Personal Debt – Debt destroys freedom and dramatically reduces your options

Poisonous Relationships – Hanging around with people that suck is draining and

Lack of Integrity – See Trust and Attention.

Things Commonly Mistaken as Platform

Illiquid Assets – There’s nothing about a 30 year mortgage or 3% equity in a failing company that creates more options.

Good ideas that you don’t have the resources to convert into tangible outcomes - This is one I’ve learned the hard way. The world isn’t short on good ideas or opportunity – it’s short on hustle. 

So I’m trying to do things that grow platforms – meet people, create results, save money, invest in assets

Caveats

1. Platform is agnostic. Building a platform doesn’t ensure it will ever get used for anything beneficial. There isn’t anything about platform that necessarily guarantees happiness, it just guarantees options.

I knew a handful of very rich peole growing up that had very large platforms – lots of cash, lots of influence, lots of relationships, lots of options.

And for the most part, they were fairly miserable people in my opinion. So while platforms create optionality – They certainly don’t ensure you’ll use it well.

2.  When you do know what you want – decrease optionality. You don’t necessarily always want options. I believe the distinction is whether or not you have clearly defined outcomes.

If you know the outcome you want, it makes sense to eliminate or at least drastically decrease optionality. If you want to lose weight, it’s a lot easier to just eat the same food everyday. If you want to write a book, don’t do a lot of lunch meetings.

P.S. I struggled to come up with more Things that Grow/Destroy Platforms and not even sure the ones I outlined are correct or properly categorized. Feedback appreciated.

What if the Answer is Sack the Fuck Up?

I quoted in What if The Answer is Just Keep Going? that distinguished between things being difficult vs. being hard:

“I’d argue that it’s extremely difficult to start a million dollar company (in post tax profit).

Most people never get there.

The main reason? Resourcefulness and grit – to some extent. But largely it is time.

Rarely is it talent. Market forces are more important than talent.

Hard work is more important than talent. A rich uncle bankrolling you is more important than talent.

The most important factor in money is time.

The main reason most people never build a million dollar company is time.

They quit before they reach it, or they never get started.

Difficult doesn’t mean hard. Lots of things are hard.

Difficult means doing your own business day in and day out, for 10+ years.”

I feel like I preach a lot about doing the work. And that’s because I think it’s important to do the work and, to be honest, a lot of times I need to reaffirm that through writing about it.

There’s a lot to be said for actually taking action and doing the work. Because most people don’t. Most people aren’t willing to do the work “day in and day out, for 10+ years”

To quote famed philosopher Ronnie Coleman – “Everyone wants to be a bodybuilder but no one wants to lift no heavy ass weights.”

But there’s still a lot of people that are willing to do the work – to lift the heavy ass weights. There’s a lot of people that work extremely hard but have relatively poor trajectories.

The person that always comes to my mind  is the late-20′s investment banker or corporate lawyer. It’s comes to mind in large part because that was the trajectory I was on at one point in my life.

If you’ve ever met one of those guys, there’s no question those guys work hard. And there’s no question they’re smart. However, I think most of those guys in my generation aren’t going to get the outcomes they want out of life.

Emotional Courage

So what separates that guy from someone getting the outcomes they want out of life?

Emotional Courage.

What’s rarer than smarts or hard work is the emotional courage to do the right work and not do the wrong work.

And I don’t talk about that much because I’m not as good at it as I am at just working hard.

I think a lot of times this gets called working smarter not harder.

But that’s a misnomer.

I’m smart. Most people I hang out with are smart. It’s got nothing to do with smarts or intellectual ability. It’s got everything to do with emotional courage.

Emotional Courage is a fancy, less sexist, more politically correct way of saying “sack the fuck up.”

It’s been interesting meeting a lot of guys in the VC-backed start up world recently that have had 10 million or 100 million dollar exits.

I always walk away with same thought – this dude isn’t any smarter than me and he’s not working any harder.

What gives?

The natural tendency is to say they got lucky. They picked a bigger problem with more competition and happened to come out on top.

It’s natural to assume that, but I suspect that the same phenomenon is true here as is true for the ten sitting at the bar.

No one ever walks up and talks to the ten. Everyone psyches themselves out saying “Oh, I’m sure she gets hit on all the time.”

Since every dude in the bar is sitting around assuming that, no one is talking to her and she’s probably more receptive than the 7 every dude has talked to instead because it’s less scary and you don’t have to sack up as much.

A lot of hard work over a long period of time and being reasonably smart are what it takes to get in the arena – it’s a baseline.

And it’s a baseline most people don’t cross. Most people are still sitting in the stands.

When I look at myself, I don’t doubt my intelligence or my ability to do the work. I’m smart. I have a track record of doing the work.

Where my track record needs work is having the emotional courage to do the right work.

All the largest up-levelings I’ve made in life were a result of sacking the fuck up.

I had this epiphany as it relates to sales when I met a guy in Houston to sell him a couple of licenses to Valet Up.

When you’re talking about doing sales online vs. on the phone vs. in person, the effectiveness increase you get isn’t double.

It’s an order of magnitude- 10x.

It’s 10x more effective to close deals on the phone as over email and another 10x in person. (That is, it’s AT LEAST 100x more effective than email).

The guys I know that are closing 6 and 7-figure deals aren’t sending emails, they’re sacking up and getting on the phone and 747s.

I believe emotional courage, just like hard work is a muscle – you can train yourself to move towards the fear. You can become the type of person that habitually sacks the fuck up.

Whenever I feel like I’m working really hard and getting nowhere – the answer is never to work harder, it’s to work on tasks that require more emotional courage.

When I took over a software project, Valet Up, it didn’t seem to be going anywhere. I was living in Saigon, Vietnam and I tried working harder, working longer hours.

I put up more landing pages and did more webinars.

And it still wasn’t going anywhere.

As it turns out, the solution wasn’t to work harder. It was a one way plane ticket to San Diego, a phone line and sacking the fuck up.

It was not being a pussy.

If you’re working hard and you’re not getting the results you want, I think there’s only two reasons for that.

One is certainly time. It’s to just keep going. It’s being willing to “do the work, day in and day out for 10+ years.”

But the other is doing the right work and saying no to the wrong work. It’s sacking the fuck up.

What if The Answer is Just Keep Going?

You can be good enough to write good songs or make a good film or whatever. There’s no such thing as not having enough talent to get to that level. I mean, persistence is talent, really. Just sticking with it. Talent is not stopping.” - Kirby Ferguson 

I’ve been sitting in a cafe for going on 4 hours trying to write a blog post.

I’ve read back over my notes from 3 different books that I like to use as prompts to start writing.

I’ve written well over 1000 words – all complete dog shit.

I read back over them and there’s not a coherent thought in there.

There’s lot of nuggets. Thoughts that if fleshed out could become really interesting at some point. But, there all missing something right now.

I can’t tie it together into a framework or mental model that’s useful enough to publish.

Some of them are ideas I think are interesting and true but I don’t really feel qualified to talk about.

Whenever I get that feeling, I always think of Steven Pressfield writing the War of Art and the Resistance telling him to quit – that he was a fiction writer and not qualified.

“When I began this book, Resistance almost beat me. This is the form it took. It told me (the voice in my head) that I was a writer of fiction, not nonfiction, and that I shouldn’t be exposing these concepts of Resistance literally and overtly; rather, I should incorporate them metaphorically into a novel.

That’s a pretty damn subtle and convincing argument. The rationalization Resistance presented me with was that I should write, say, a war piece in which the principles of Resistance were expressed as the fear a warrior feels.

Resistance also told me I shouldn’t seek to instruct, or put myself forward as a purveyor of wisdom; that this was vain, egotistical, possibly even corrupt, and that it would work harm to me in the end. That scared me. It made a lot of sense.”

Re-reading that is always inspiring to me. It’s a book which has profoundly changed my vision of the way the universe works and my life.

And Pressfield almost didn’t write it. I’m sure there’s millions of equally beautiful and profound works of art that never came to life because people gave in to the Resistance.

Any activity which induces the Resistance is valuable in itself – Writing, cold calling, approaching that cute blonde girl sitting across the cafe.

These are valuable because they force you to feel the Resistance, sit with it, and keep going.

A few months ago, I wrote a long, rambly email with the subject line “mini-blogging identity crisis” to a couple of people whose opinions I respect saying that I wasn’t really sure where I was going with this blog (I’m still not) and I felt like it was all preachy BS that I was unqualified to write.

One of them sent me a back an email that said – “Yea. me too. Just keep going.”

What I take away from Pressfield is exactly that same thing.

You just keep going and shipping and hacking and feeling insecure.

I smiled when a couple of weeks I got a similar email to the one I’d sent out about my “mini-blogging identity crisis” from a friend saying basically the same thing -

“Writing is really hard and makes me feel insecure.”

Yea. Get in line. Then keep going.

There’s a tendency for all of us to notice that insecurity in ourselves and feel alone and isolated because on the surface, it’s not clear that everyone else trying to do something profound and meaningful with their lives is going through the same thing

Everyone has all the same seemingly unsolvable problems racing through their heads.

Everyone goes through periods of feeling lonely and unloved.

Everyone feels like they’re working really hard and not getting anywhere.

Everyone’s energy and willpower fails at some point and they quit that day and go home and watch a movie.

Everyone goes through self-loathing

Everyone wonders whether they’re on the right path to achieve their goals or if they’re just deceiving themselves.

That’s because doing something meaningful is difficult. It takes a long time.

A friend of mine running two different companies right now wrote me an email in response to Why Starting a Million Dollar Company is Easy that distinguished between things that are difficult and things that are hard:

“I’d argue that it’s extremely difficult to start a million dollar company (in post tax profit).

Most people never get there.

The main reason? Resourcefulness and grit – to some extent. But largely it is time.

Rarely is it talent. Market forces are more important than talent.

Hard work is more important than talent. A rich uncle bankrolling you is more important than talent.

The most important factor in money is time.

The main reason most people never build a million dollar company is time.

They quit before they reach it, or they never get started.

Difficult doesn’t mean hard. Lots of things are hard.

Difficult means doing your own business day in and day out, for 10+ years.”

I don’t believe that you can have everything you want, but I do believe you can have far more than you imagine is possible.

It’s just going to take you a really long time and a lot of hard work and dedication and sacrifice. It’s difficult.

The software developer and biohacker I’m working with on Valet Up spent 10 years of his life in the movie industry trying to become a director. After the money dried up in 2008 for independent films, he switched to software development and in fairly short order has built a successful business.

I asked him about it and he said – “Realize that you’re probably going to spend most of your life working on all the wrong shit. And that’s ok. The important thing is to learn how to just keep going.”

I suspect the movie business is a good industry to learn how to just keep going.

I think it’s probably true that I’m working on all the wrong stuff, but the only way to figure it out is just to keep going and become the type of person that just keeps going.

That’s far better than just standing still.

Sometimes when I get that sense of churning and going nowhere, I imagine myself cutting a path through the Jungle like in that real life Jungle book movie where they’re looking for the monkey temple.

They know the temple is out there but aren’t sure exactly where it is. On the way, one dude gets eaten by a lion. One guy gets sucked into a pit of quicksand. But they keep moving forward hacking away at the seemingly impenetrable jungle with by now blunted machetes.

My natural tendency in this case is always to step back and see if I can find the temple with satellite photos and fly in a logging machine.

While that’s a valuable exercise and there’s no reason to hack you way through the jungle when the satellite or logging machine is just waiting, a lot of the time you can’t get satellite imagery or logging machines.

The guy with the satellite and logging machine had to hack through the jungle to find his first couple of temples too.

So what you have is a machete and you just keep hacking.

And maybe you hack down half the jungle and never find the monkey temple. Maybe it’s the wrong jungle.

But I don’t think that’s necessarily a bad thing.

Because now you’re the guy that’s strong enough to hack down half of a jungle with a blunted machete.

Wear the Weight

Everybody wants to be a builder but nobody wants to lift no heavy ass weights.

-Ronnie Coleman

There’s a concept in weight lifting called wearing the weight.

If you have a particular amount of weight you’re trying to lift that’s out of your current reach heavy, you practice putting that weight on the bar and then un-racking it and stepping back.

You don’t actually do the rep since you know the weight is too heavy for how strong you are at that moment, but you just get mentally adjusted to feeling that weight on their backs.

Feeling what it’s like to take 315 out of the squat rack prepares you to actually squat it.

Just standing there feeling the heaviness of it and knowing that you will get to the point where you can actually perform the rep and lift that weight.

The same is true in any area where you’re trying to grow.

When I woke up and opened my laptop this morning a bunch of things were going through my head.

We had a bad trade show this week for the Portable Bar Company. I’d gotten some sad news from a friend. One of our first customers from Valet Up emailed me with an issue that I didn’t know about. We got a manual penalty on one of our other sites from Google so the rankings tanked.

And I kind of thought about all this and just sat there for a minute and I realized I could lift that weight. I’d worn it before and now I could lift it. And I think that’s a skill.

That’s the hard work to have all that sit on you and just handle it.

Six months ago, it would have felt really uncomfortable for me to have all that going on. At a certain point in the future, these problems will seem even smaller thank they do now.

I think it’s a fallacy that you should wait to do something until you feel ready. You never feel ready. You’ve got to start wearing the weight.

There’s a story I heard Tony Robbins tell about Bruce Springsteen. He asked Bruce if he still got nervous before he went on stage.

Bruce replied -

“Yea, every show.”

“Before I step on the stage my hands start to sweat and shake a little. My heart rate beats faster and louder and I can hear it in my head. Then I feel that hollow, empty feeling in my gut and that’s when I know I’m ready.”

Robbins had been reminded of the story when a younger singer called him complaining of panic attacks. She was explaining her symptoms -

“Before I step on the stage my hands start to sweat and shake a little. My heart rate beats faster and louder in my chest. Then I feel that hollow, empty feeling in my gut and that’s when I know I’m having a panic attack.”

It’s not a symptom of a panic attack. It’s a symptom of wearing the weight.

It’s what CEOs and professional athletes get paid millions of dollars to do. Most people won’t wear that weight because it’s hard work.

That’s why most people are on the couch watching the game, not walking onto the field.

EP: Why Starting a Million Dollar Company is Easy

A lot of people pass up on opportunities to do something where the outcome of what they get is uncertain but the outcome of who they become is far more certain.

I was re-reading a post on Forever Jobless called EV: Millionaire’s Math. EV stands for estimated value – the return you can expect from any given decision based on probabilities. It’s a much more accessible explanation of Bayesianism in business. By pursuing seemingly risky opportunities that actually have a positive estimated value systematically, you can come out way ahead in the long run.

I’ll steal an example and change the numbers a bit.

Imagine you’re purchasing an asset that can lead to two possible outcomes:

  1. Lose $2k 75% of the time
  2. Make $10k 25% of the time

Because humans are notoriously loss averse, the majority people avoid these kinds of deals – there’s a 75% chance of losing two grand.

However, the estimated value on this is actually a +$1k.

.75 x -$2k = Lose 1.5k
.25 x $10k = Make $2.5k

By systematically pursuing these types of deals, you can start to make a lot of money.

It’s the strategy both entrepreneurs and professional poker players use. (and I suspect one of the reasons why there are so many former  poker players that are entrepreneurs.)

It’s counter intuitive to make these kinds of decisions unless you’ve trained yourself to do so. Which is why sitting down and running the numbers on them can be so valuable.

EP: Expected Person

While it’s certainly valuable to run the math on decisions, not all decisions can be quantified so easily.

So another way is to look at them based on who you’ll become – how would the person you want to be make this decision.

Instead of looking at what you will get, ask what you will become. Because it’s becoming that matters.

One thing I always thing after hanging out with financially successful business owners or entrepreneurs and hearing how they built their businesses or had multi-million dollar exits is

It isn’t very hard to start a million dollar or 10 million dollar company or a hundred million dollar company.

I’ve met a lot of people that are doing it and I always walk away with the same thought about how they build their business – “I could do that.”

I watched a profile on Elon Musk a few weeks ago. Musk is most famous now for his work with TESLA and SpaceX, but his first two ventures were a local listing directory and Paypal.

What is often overlooked is who Musk became as a result of those experiences and the impact that’s had on the success of Tesla and SpaceX.

If most people sat down and calculated the expected value of starting a commercial space flight company like SpaceX or an electric car company like Tesla, the probabilities of success would be estimated so astronomically low as to make the calculation worthless.

Yet Musk has simultaneously made both successful.

That’s because of who he is, and who he has become. He’s able to operate from a different paradigm which gives him dramatically more leverage than most people have.

If Musk lost everything tomorrow, it would be fairly trivial for him to go start a successful million or ten million dollar company. I don’t think it’s that hard to do impossible things. It’s very hard (and a lot of hard work) to become the type of person that does impossible things.

So when it comes to achieving desired outcomes, I’ve stopped asking “how do I get that?” and started asking:

How do I become the type of person that already has that?

A lot of people ask me if I’m working on side projects other than Valet Up and the Portable Bar Company which are the two primary companies I work on.

The answer is no, not really.

Though to be honest, I think I could make a significantly larger amount of money in the next 1-2 years by quitting my job and going into consulting. Maybe it’s hubris, but I feel confident I could double my salary on a 6-12 month time frame.

So why don’t I?

Because I think the long term trajcetory is higher. I think the work I’m doing now is harder and the person I’ll become as a result of it is more significant.

The strongest steel is forged in the hottest fires.

When I ask myself in 1 year from now would I have rather made X by building and selling a product over the phone or would I have rather made 2x working on consulting projects that aren’t as I challenging, I say always choose the first scenario.

I’m more interested in becoming the type of person that can build a million dollar business than. I think the trajectory for that type of person is more in line with what I want out of my life.

I am at least aware that this could all be me rationalizing  as a way to avoid conflict and change, but whenever I sit down to examine that feeling, I still think I’m right.

The value is in training at altitude, in the becoming, not the doing.

Be the Dumbest Guy in the Room

I wrote a post a little over a year ago about my feeling after a business conference called the Dumbest Guy in the Room. Walking out of the conference, I felt like everyone in the room was at a higher level than me.

When I look around at some of the rooms I’m in right now, I often am the “dumbest” guy in the room. Increasingly, I think that’s a sign that it’s the right room to be in.

The dumbest guy in the room has the most upside. He’ got the most opportunity to grow – to become.

His EP is highest.

I think it’s  true that most of the time when you start something new then, you’ll fail to get whatever outcome you set out to achieve. If you can accept that on the front end and ask yourself not if you’ll get the outcome you want, but whether you’ll become the person you want to be, the decision becomes clearer.

I think the same is true of organizations and businesses. When businesses or organizations make decisions, the question should more often be not what will we get, but what kind of organization will we become?

Will making this decision or pursuing this project bring us closer to being the type of organization we want to be regardless of the outcome?

If the answer is yes then it’s probably worth pursuing.

I don’t think it’s a coincidence that almost all people that are hyper successful in any area have stories of failing catastrophically first.

Abraham Lincoln spent 10 years wallowing around in local Illinois politics before in the next 10 years he “came out of nowhere” to win the Republican nomination, the 1860 presidential election and lead a young nation through the biggest challenge in it’s history.

He didn’t get much trudging around in local Illinois politics for a decade, but he molded himself into a superior leader and politician.

He became something profound.

I get irritated when I see gurus in any area promoting courses about how they’ll save you all the pain they went through and make everything easier for you.

Should you learn from other people’s mistakes – absolutely.

But what many of those gurus discount is what they became as a result of those failures. They don’t consider (or don’t advertise) that perhaps it wasn’t the actions they took that produced the result, but the person they became.

I’ve been reading a bunch of sales training books and watching sales training seminars lately. Every single one of them has the same spiel on cold calling -

“I did it for 5 years and it was really hard and it sucked and here’s my 7 step system on how to avoid it”

What they want you to focus on is the “7 step sytem how to avoid it.”

What do they all actually have in common? THEY DID IT FOR 5 YEARS.

I’ve made a fair number of cold calls over the past few months and you know what I got?

Not much.

But what did I become?

I feel far more comfortable now picking up the phone and calling people. I feel far more relaxed and comfortable selling on the phone. When I first started, I got uncomfortable on the phone after 4 or 5 minutes. In the past week I’ve had 3 two-hour phone calls.

The value is in the becoming, not the doing.

Who Does Your Business Serve?

Corporations are pretty good about conforming to psychology when it comes to products: the intuitive feel of a smart phone, the way a sports car handles or a cheeseburger comforts are just a few of many bits of evidence of how seriously corporations take human psychology when it comes to humans as consumers. Corporations seem less able to engage the human when it comes to our roles as producers, though. As previously mentioned, the design of work is something rarely considered much less done intentionally. We too often brute force learning and work within our social systems with carrots and sticks (or, in an attempt to stay positive, using carrots as sticks).   Generally speaking, corporations are less sensitive to human psychology when it comes to the design of work than in the design of products.

Ron Davison – The Fourth Economy: Inventing Western Civilization (pp. 377-378)

Corporations are historically very good at serving consumers and customers and very poor at serving their own employees.

I was talking with someone who worked at Apple and they reflected on this. They had always wanted to work at Apple because of how amazing Apple’s products were, but once they got there, it wasn’t quite so magical.

Slowly, that’s changing though.

Because technology can make a single person so much more impactful, the value of having the highest quality team is increasing.

The clearest example of this phenomenon is with developers. Everyone I meet is complaining about a shortage of high quality developers. They all realize that the impact of one super good developer could be 10x that of a mediocre one.

But, exceptional developers don’t just want 10x cash. they want work the fulfills them and helps them move towards personal mastery and their own goals. They want to be paid in more illegible currencies like freedom of time and location.

That means, increasingly, being able to attract super high quality people makes corporations better able to serve end customers.

Companies like Basecamp, formerly 37 signals, show how powerful a good team combined with modern technology can be. The possibility for companies to generate millions of dollars of revenues per employee is a very recent once.

As technology improves, I think corporations that flourish will spend more time asking “how can I better serve my team?” instead of  just “how can I better serve my  customers?”

Because if the bottleneck to serving your customers is really putting together a great team then it’s sort of the same questions isn’t it.

The Foxhole Strategist

Growing up, I played a lot of computer strategy games. In almost every strategy game, there is always something called the fog of war.

When you start playing the game, you can only see a very small section of the whole map and as you keep playing and explore more of the map, you better understand what the whole territory looks like and can make better strategic decisions.

As a result of playing out the game and trying different tactics in different areas, the fog of war disappears.

The Fog of War in true military terms is a bit more nuanced, but basically covers the same concept -

War is an area of uncertainty; three quarters of the things on which all action in War is based are lying in a fog of uncertainty to a greater or lesser extent. The first thing needed here is a fine, piercing mind to feel out the truth with the measure of its judgement.

von Clausewitz

In any military action, you have to make a lot of decisions based on limited access to information. So whichever side is able to get better information, gains a significant advantage.

The paradigm shift that seems to have happened in military strategy is the shift from trying to move all the information about the reality of the situation up the chain and instead bringing the top of the chain into the action.

The Vietnam War is an obvious example of these two styles.

The top-down, command and control force with massively outsized resources (the U.S.) failed to overcome a militarily weaker force (the Vietnamese) that was capable of adapting faster because the top of their command chain better understood the foggy parts of the system they were operating in.

While the leaders of U.S. strategy, Robert McNamara, was attempting to dissect the war from thousands of miles away using spreadsheets and field reports, his Vietnamese counter part, Vo Nguyen Jiap, was routinely on the front lines of the conflict.

Jiap’s major breakthrough in the Vietnamese hierarchy was as the on-the-ground officer at Dien Bien Phu – the battle that effectively threw the French out of Indochina.

Jiap spent years operating in fighting zones and as a result was much more capable of understanding all the forces at play at the front before making strategic decisions. He was wading into the fog. He was, quite literally, in the foxholes.

He could see the complex interactions of the system and visualize what the implications of big decisions would be on the ground level. McNamara, sitting thousands of miles away, couldn’t ever comprehend the subtleties of that reality from spreadsheets and military reports.

The significance of morale, local support and an unwillingness to give up are much less tangible and quantifiable factors than things like how many troops are deployed or bombs are dropped.

However, they proved to be far greater leverage points and exert far more influence on the outcome of the war.

By becoming a part of the complex, foggy system, and living side by side many of his soldiers in the conflict, Nguyen Giap proved far more effective in deploying resources than McNamara was. He was a foxhole strategist.

The Foxhole Strategist

The same concept of a foxhole strategist is applicable to any complex system – including businesses and entrepreneurship.  The processes that really lead to successful outcomes are usually hidden to outside observers. They aren’t apparent until you get inside of them and get your hands dirty.

Much of the lean movement operates based on the same principles as Nguyen Giap did. Lean companies are forced by their more limited resources to work with the messy details of the system and come to understand the system they’re operating in instead of just throwing money at it.

When he went to visit the front lines, Nguyen Giap was doing what we might call customer (troop?) development.

As Giap discovered, the biggest leverage points in any system are not found by observing a system from the outside if you haven’t “gotten out of the building.”

One of the major impacts of modern technology is that markets are growing more complex and dynamic. There are more and more actors and interactions between them while at the same time, the rate of change is increasing within markets.

Markets are both growing larger and more complex while changing faster and faster.

That means it’s more and more important to spend time in the foxhole before making strategic decisions.

Because, it’s only after you’ve spent some time in the foxhole that you’ll have the understanding to put together a grand strategy.

5 Mental Models That Create Dramatically More Leverage

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.

-Archimedes

I met up with Ron Davison last weekend and to talk about his book The Fourth Economy. One of the central concepts in the book is systems thinking.

I’d never explicitly studied or read much about systems outside of a chapter in his book, but I sat down and read Donnela Meadows’ Thinking in Systems this week realized that it was actually a concept I’d been dancing around for a long time without ever having a good name for.

Once people understand the basis concept, that systems exist everywhere and it’s the working of the systems that lead to outcomes, it’s both fairly intuitive and revolutionary. It’s in making changes to the system that you change your outcomes.

Someone born in rural Guatemala is going to have dramatically different life outcomes than if they had been born to a wealthy family in New York City. This has very little to do with them inherently and everything to do with the systems that shape them.

One of the concepts central to systems thinking is the idea of levers and leverage points.

In any given system at any given time, certain activities at certain times provide more leverage than at others.

So I started thinking about different mental models of leverage points that I’ve found both in my own experience and through reading.

Here are a few:

Understand Growth before Optimization (AKA Work in the System before you Work the System)

The best way to succeed in business is to be in business

You have to be, or have been, immeshed in a system to understand it before you’re able to work on it and actively shape it.

The highest leverage point for a business is highly dependent on what stage of it’s life that business is in. Applying the wrong techniques at the wrong times doesn’t yield much leverage.

People like to give blanket recommendations in all areas of life like “measure everything.” But that’s only true for certain parts of certain systems at certain stages. There’s a hard cost and an opportunity cost to measuring something. When you have 5 customers in a business, you don’t need to measure anything. You need to call them every week.

This became obvious to me at a trade show we went to a couple of weeks ago. The system we were trying to understand was how to sell portable bars to event rental companies. By immeshing ourself in the system at the trade show, I would say we learned more about that system in the first hour of the trade show than in the previous year of sitting around split testing headlines.

Charles Darwin spent 5 years sailing around on the HMS Beagle collecting specimens and making observations about ecosystems around the world. He wouldn’t have been able to create the paradigm shift he did in Biology had he not totally submerged himself in the system he was trying to understand first.

Think in Longer Time Horizons 

It is important not to confuse ‘goals’ and ‘desires’. Goals are the things that you really want to achieve, while desires are things you want that can prevent you from reaching your goals.

- Ray Dalio

One of the (many) ways humans are maladapted for modern society is that it’s unnatural for us to project the implications of our decisions far out into the future. The power of habit formation means that seemingly one-off decisions really lay the groundwork for a pattern of behavior. The compound interest of those decisions have huge implications over the course of a lifetime.

Thinking in 5, 10, or 20 year time frames is one of the better heuristics I’ve found for making important decisions and in differentiating between things I want that are desires vs goals. The decisions you make today aren’t anomalies, they’re laying the groundwork for the life you’ll be leading 20 years from now.

While I’m always (categorically) wrong about what I actually will want 5 years from now, framing the decision on that time frame forces me to consider the true implications.

Societies that survived thousands of years frequently focused on seemingly absurdly long time horizons. Some Native American societies that lasted for thousands of years framed decisions in terms of how it would affect them 7 generations into the future.

One of the striking things reading about George Washington was that he was making decisions and shaping his character in his twenties with the belief that this would set him up for achieving his desired outcomes in his 50′s and beyond. That worked out pretty well.

Focus on Fundamentals

One of the other ways humans are maladapted to modern society is that we’re always looking for novelty and shortcuts and the world and economy we live in is more than happy to sell them to us.

However, there are relatively few fundamental principles and mental models that govern even the most complex systems.

Charlie Munger, one of the wealthiest men in the world, emphasizes that he makes almost all his decisions using a few basic models from physics, psychology and economics.

I love the subtitle to Chet Holmes Book – the Ultimate Sales Machine: Turbocharge your Business with Relentless Focus on 12 Key Strategies.

The entire field of sales and marketing, which has been arguably the biggest driver of economic growth in the last 100 years, can be distilled down into 12 strategies in a 200 page book.

The difficult thing with this leverage point for most people is that the conclusion isn’t very appealing to our novelty seeking brains. It’s the same conclusion Gladwell reaches with his 10,000 hours hypothesis in Outliers.

The leverage in this case is in sitting down and doing the work. A lot of it.

Start with Why

Simon Sinek’s TED talk and book, Start with Why, has a powerful effect on most people because I think everyone realizes that what he’s saying, that changing the purpose of a system creates far more leverage than changing the parts or actions, is correct.

Altering the purpose of a system, can create dramatically different results.

The objective of one of our companies is to sell valet equipment.

I’m not particularly passionate about valet equipment.

I am passionate about supplying business owners with products that lets them run and grow their businesses in ways that improve their lives and the lives of their team and customers.

While the desired outcome (selling more valet equipment) is the same, reframing the purpose dramatically affects how the system (our company) works to achieve that outcome.

I’ve been a long time fan of David Allen’s Getting Things Done. While it’s still a great organization system, it misses out on some of the more holistic, systems thinking aspects of being productive.

That was something I didn’t realize until I discovered Agile Results and realized that before figuring out what to do or how to do it, you have to figure out why you want to do it in the first place or you’ll lack the motivation to get anything done.

Focus on Paradigm Shifts (AKA Table Selection)

I love reading about the daily rituals of people I admire and trying to understand how they live their lives.

One of the things that is striking about many of them to me is that considering what they accomplished, they just don’t seem to have worked that much. There’s lawyers working away on 100+ hour work weeks that will never make a fraction of the impact someone like Darwin did on the world

Yet, for the majority of his life, Darwin only worked 3 hours/day.

His impact was so profound and lasting because he was focusing his effort on shifting the paradigm of his field, doing the deep work so his lever for creating impact was enormously long.

Mark Cuban has said that the difference between most 10 million dollar companies and 1 billion dollar companies is simply market cap. The systems required to successfully grow and run each one are more or less the same. It’s just a question of which table you’re sitting at.

There is an element of Working in the System first here though. The problem with choosing the right table is that’s very rarely clear how good of a table it is until you’ve sat down and played a few hands.

 

Existential Terror is Just Another Word for Happiness

The most effective heuristic I’ve found for deciding what to work on is Steven Pressfield’s concept of The Resistance.

If I had to describe the Resistance in my own words, I would say it’s a state of mild existential terror and discomfort.

And I think that’s how you should feel everyday.

I fundamentally accept the premise that humans are at their best when reaching or striving for something greater. I think this is something that artists, philosophers and makers throughout history have always believed.

It’s present in Aristotle’s conception of eudamonia. The idea that man should always be taking action to better himself

It’s the central premise of Viktor Frankl’s logotherapy in Man’s Search for Meaning.

Creación_de_Adám

Ah, but a man’s reach should exceed his grasp,
Or what’s a heaven for?

Robert Browning (1855)

Whenever I read that quote by Robert Browning, I think of the image on the ceiling of the Sistine chapel of the Creation of Adam with the image of Adam stretching out his arm and quite not reaching God.

Even the the idealized version of man in Micahelangelo’s conception of him, Adam,  can’t quite reach heaven.

The reason I personally so fundamentally accept this premise though is more than anything personal experience.

In retrospect, it’s always the periods saturated with mild existential terror that were the most rewarding.

You always hear athletes lamenting the end of their playing days or entrepreneurs lamenting the early years of their businesses. It was the times when things seemed the most difficult in the moment that they remember most fondly.

I still vividly remember that feeling of butterflies when you’re sitting in the locker room before a big game. It was terrifying.

I get the same feeling right before making cold calls now. I frequently get it before hitting publish on this blog.

I love the image Pressfield paints in The War of Art.

He describes that moment of waking up and going through his morning routine – eating breakfast, talking with his wife – before he sits down to write. For anyone looking on, everything seems normal and placed. But on the inside, he’s a warrior preparing for battle. He’s just going through the motions when inside he’s really terrified of that moment when he actually has to sit down and do the work.

Use Deliverables to Set Yourself Up for Existential Terror and Discomfort

The problem is that it isn’t natural for people to go out and stretch for when they aren’t forced into it.

I try to structure my life in such a way that I regularly experience a mild level of existential terror and discomfort.

I set up all these systems to fore myself into trying to make sure I experience it everyday.

Creating deadlines and deliverables like call 50 prospects today or publish once a week is the most effective way I’ve found to do this.

It’s easy to deceive yourself into thinking you’re doing the handwork, but setting deliverables and deadlines forces you to actually execute.

Sebastian Marshall posted a heuristic, I’ve found to be particularly valuable -

“Once you get to 85% complete, start obsessively focusing on the project that’s 85% complete. The mind will play all sorts of tricks on you if you let it, trying to seduce me into doing something unrelated or new. Never give in to that. Get hungry and focused when you get to 85% complete; get it done.”

I don’t think that feeling of mild existential terror ever goes away, nor should it.

It doesn’t get any easier and it wouldn’t be much fun of it did.

The only answer is to get it done, to just keep going.

Why Cash is Worth Less Than You Think

Consider the framework that everything you have and everything you want in life is in simply a currency. It’s something that you can exchange for another good or service.

If we start from this framework that everything is a currency then we can map these currencies across a continuum of legibility.

It might look something like this:

Legibility Continuum of Currencies
More legible currencies are typically things like cash and physical objects. It’s very easy to quantify how much cash you have.

More illegible currencies are things like meaning, attention, willpower, time, and relationships.

What’s interesting is that we all naturally have illegible currencies (time, attention, willpower) which we then trade for legible currencies (like cash) only to trade them back for illegible currencies (like relationships or freedom of time).

Let’s use an example of a knowledge worker to illustrate.  He starts with his knowledge, time and energy (illegible currencies), he then exchanges those for money, health benefits (legible currencies) and then trades that for another illegible currency like freedom of time (to go on vacation).

However, he pays an exchange rate on each of these transactions. And the conversion fee for converting an illegible currency like into a legible currency like cash is absurdly high. So high in fact, that I think it’s fair to claim cash is in a bubble.

Cash is in a Bubble

You can model this simply to show how expensive converting things into cash can be. For example if someone wanted to optimize for freedom of location and they can choose between a mid-level professional job at say $60k/year and a lifestyle design job as outlined above at $24k/year.

The profession could has optimistically 4 weeks of vacation/year (most of my friends have more like 2). They also pay a lot for that vacation because everyone else is over-invested in cash and under-invested in travel. Everyone has to fly home on the 23rd of December and back on the 2nd so flights are expensive. If you have freedom of location in your work, you can travel at off-peak season when flights and lodging are cheaper.

On the other hand, the lifestyle design job can work from home for 8 hours/day for a month, travel at off-peak times, etc.

So if you’re maximizing for freedom to travel. Making $24k/year can make a lot more sense than making $60k/year because you’re accepting payment in illegible currencies.

This is over simplified, but I think you get the idea.

Recognizing this is the whole genesis lifestyle design movement. By skipping the conversion of time and attention into cash and trading it directly for desired outcomes, you can get much better exchange rates. A freelancer working remotely might not be able to charge as high of a rate (in legible, cash terms) as an agency in the geographic location of the client but he can still earn more if he views his freedom not to work a set schedule or in a set location as a currency.

Meaning or Purpose as Currency

Successful non-profits manage volunteers better than most businesses manage employees because they trade in an illegible currency – meaning or purpose.

They understand that volunteers want a clear mission statement. They’re looking for a way to find meaning in their work.

Instead of fundraising a bunch of money to pay qualified people, most successful non-profits simply find qualified people and pay them in fulfillment. Many of the non-profit volunteers work in jobs where the legible currencies – cash, benefits etc. are all good, but they volunteer after hours anyway. Successful non-profits Start with Why.

They get better ROI by giving volunteers meaning or purposes.

When volunteers are asked why they said that they want to be challenged and engaged to they feel like they’re giving their best efforts and can see the difference their making. They want “Flow” work on challenging problems, not just tasks. That’s a more valuable currency

Meaning is the currency that successful non-profits are able to leverage and avoid the expensive conversion into cash.

I was talking to Mark Manson a few months ago and he said something profound – “Meaning is the new luxury.” Unlike what we traditionally think of as luxury goods though, you can trade for it directly without converting it into cash.

It’s valuable to think of it as a currency, because that’s how individuals businesses in the modern economy can leverage it.

You can pay people in lots of currencies as well and lots of smart businesses do this, though not as explicitly as they should.

The compensation in currencies for an entrepreneurial, lifestyle design job or consulting gig could be stated explicitly as:

  • $X/month
  • Expanded freedom of location
  • Expanded freedom of time
  • Expanded freedom to choose the projects you want to work on (and thus gain meaning)
  • Training at Altitude – (Improving you personal longterm trajectory by working on bigger problems)
  • Work with like-minded people (meaningful relationships)

They’re willing to take less money in return for expanded freedom, the opportunity to work on bigger businesses that improve their longterm trajectory.

So, if you’re hiring, realize that more qualified people are willing to accept less legible currencies and work more if they’re able to connect their work with their desired outcomes without having to go through the expensive conversion into a legible currency like cash.

If you pay people well enough and offer good enough benefits that they don’t have to be worried about not being able to afford basic necessities rent or making ends meet, which if they’re living in a place like Vietnam, which they should, is not a whole lot.

Once you get to that point though in terms of cash payment, you can get better ROI on your hire not by offering more money, but by structuring and framing the position in such a way that it’s an opportunity for them to find meaning and purpose, to gain freedom, and to train at altitude.

Both parties able to come out better off by avoiding the extremely expensive conversion to a legible currency like cash.

Time as Currency

Perhaps the most obvious example of under valued currency is time. The vast majority of people under-value their time and over value cash.

KFC ran a promotion a few years ago where they gave away free chicken buckets. I remember the pictures of people that waited in lines for hours to get $5 of free chicken.

If you make that legible and convert that time into cash, it’s stupid. If those people had a minimum wage position of at least $10 hour and they wait for 3 hours then you could argue they paid $25 for chicken ($30 of time -$5/chicken).

Money is a useful baseline to use to measure illegible currencies, because it’s so tangible. So you can correlate an illegible currency (like time) with a limited resource (like cash) to figure out how much it’s worth to you without ever having to actually go through the exchange.

Willpower as Currency

Willpower is a limited resource that everyone needs to achieve desired outcomes. So it makes sense to pay to preserve it – often by paying not to do something. I use a program called Self-Control to block myself of sites I use to procrastinate when I would rather be working.

It’s free, which makes no economic sense. With the amount of distractions available to me right now, something that lets me easily preservce my willpower is extraordinarily valuable. If I gain 1 hour of quality work a day through conserving willpower and I  value an hour of your work at say $50, then it would be a no brainer to pay $10/day to use.

I’ve started paying for grocery delivery, partly for the convenience, but also for the willpower it saves. I don’t have to walk past all the shelf displays strategically positioned to make you likely to buy stuff I don’t want or need. I pay $10 for delivery, but you trade that for say an hour of time and a good chunk of willpower. That’s a no brainer.

Relationships as Currency

It’s interesting how most successful people are incredibly generous in their time and building relationships.

I had an hour long chat with a guy who had a start-up that got acquired recently in a related industry. I know the guy is extremely busy, but he was more than happy to carry on a conversation for an hour and give me a lot of good advice and feedback. Let’s say his time was worth $100/hour.

Thought it’s not immediately legible to him that talking to me for an hour is worth $100, it’s probably worth far more. It’s correlative, but people that are extremely successful in my experience and incredibly generous with their time, especially considering how much their time is worth. They’ve realized that there’s ROI on that even though it’s extremely illegible how that comes back.

This is why it makes sense to me to model  behavior based on people that have achieved my desired outcomes. There’s hidden economics there that aren’t legible, but I’m certain exist.

Of course, there’s synergy and it can be hard to reduce exchanges to individual currencies. For example, time and attention aren’t that valuable without energy. So I’m willing to spend time and attention to get energy. Going to the gym takes time, but I feel it gives me more attention and energy so it’s a good trade.

Illegible Investments Always Have Better ROI

Illegible investments in almost any field always have better ROI. Because the majority of the market can’t understand it, the ROI is much better. No one understood online adverting or marketing 10 years ago so the ROI was outstanding. As more businesses come to understand it, the ROI decreases.

Figure out your desired outcomes and see how you can utilize less legible currencies to get them by avoiding the extremely expensive conversion into cash. If we view everything as a currency, cash is in a massive bubble because it’s so legible.

So if you can deal primarily in illegible currencies, which in the end, is actually what most people want, you can see a lot higher returns.