I read an article by Bob Parsons, the founder of GoDaddy, when I was 18 where he emphasized that “whatever you measure gets managed.” At the time, I’d never thought about it. In the time since, it’s rung true for me and almost everyone I’ve ever worked with. If you measure something and stick it in front of your face every day, it will always improve. I keep a Key Performance dashboard for exactly that reason.
But, those aren’t the full picture. Metrics or KPIs (Key Performance Indicators) are not what you are actually optimizing for. They are proxies of whatever you are optimizing for. What I’m measuring right now in regards to this site is:
email subscribers, unique visitors, and the Visitor to Subscriber Conversion Rate percentage.
What I’m actually optimizing, and what I care about, is trust.
Tracking KPIs is a good practice and those KPIs are good proxies, but they’re still proxies.
You know those articles on mainstream business sites that have a slideshow used to increase page views? They’re full of clickbait articles. The math on these sites is pretty simple—more page views = more advertiser dollars. If we can get twice as many page views, we can make twice as much money. It’s measurable and people can be held accountable for it, so it’s optimized for. Let’s take a different tact from Charlie Munger’s dictum for problem solving: Invert, always invert.
Why Trust Is Important In Business:
In an age where everything seems to be increasing and getting bigger, what’s not increasing? Trust isn’t increasing. We don’t have any more personal bandwidth today than someone did one hundred years ago. Frequently cited as 150, Dunbar’s number, the number of people with whom we can maintain a meaningful relationship is a direct function of the size of the neocortex.
Michael Ellsberg, author of The Education of Millionaires, explains what he calls the Tim Ferriss effect: the best way to market a book (something I’ve been thinking about a lot lately) is to focus on single author blogs. Compared to a 3 minute spot on CNN, a thousand word piece in the New York Times and a guest post on Ferriss’s blog, the last of those three sold more books than the other two combined.
Why? It certainly didn’t get more eyeballs. It did get a lot more trust. If you buy and email a cold list of prospects, a 2% response is normal. A 5-7% response rate is worth writing a book about. I was fortunate enough to have over 10% of my email list volunteer to read an entire book manuscript. Not because I’m special, but because I’ve established some level of trust and rapport with people who consistently read this site.
A Primer on Illegible Currencies
The issue though is that you can’t measure trust and attention. There’s no trust-o-meter for how much someone or a group of people trusts you.
Maligned by many, The 4 Hour Work Week so strongly impacted me and many others I’ve spoken with wasn’t all the clever outsourcing or automation tricks—it was that Ferriss provided an alternative path to ambition by redefining currency. At the time, I was fighting with the choice to either “be ambitious” and go to law school or go bum around the world for cheap. I didn’t see a way to both satisfy my ambition and do other things that were important to me, like travel and work on projects I believed were important.
Ferriss opened up the idea of mobility and time as currency.
An executive making tons of money with no mobility or free time is poorer than someone making less money with more mobility and time.
If you make a million dollars a year, but you have to spend eighty hours a week locked in your office, how much is that worth? Would you rather be making $40,000 a year but able to work when you wanted from wherever you wanted? That was just as ambitious as the latter, but imminently more appealing to me at the time. Yet, I don’t believe Ferriss went nearly far enough.
Mobility and time are only two illegible currencies that are part of a broader spectrum of illegible currencies.
A currency is a medium of exchange, something we have that can be traded for something else we want. You do a friend a favor, he gives you $5 and you trade $5 for a sandwich. The $5 is a legible store of value. You can hold it in your hand or look at in your bank statement. The issue Ferriss made explicit about illegible currencies is using mobility and time as examples was that we have a tendency to overvalue highly legible currencies and undervalue highly illegible ones.
Time is less legible yet more limited than money. Barring technology making it possible to live forever, you have a limited amount of time, yet we frequently spend it much more carelessly than you spend money. All time is not created equal.
You probably have a few hours a day where you’re tremendously creative and productive and a lot of time where you’re output and creativity is fairly mediocre. How you choose to invest those hours, your best creative energy will have a tremendous impact on what you’re able to achieve.
JP Morgan operated in ten minute bursts of tremendous insight and creativity where he would negotiate deals worth tens of millions of dollars. Those bursts of insight were an illegible currency for him. He might have some intuitive sense of how often they came or how to make them come, but he couldn’t trot to the store and see how many were in stock.
The reason Schwarzenegger was able to win the gubernatorial election in California was because he owned his time. All the other candidates had to finish up other projects before they started campaigning. Schwarzenegger didn’t keep a schedule, so he jumped right in. He was holding an illegible currency (his time) and spent it at the moment when he had a disproportionate amount of leverage to win his title as governor. He had a war chest of illegible currency in the form of his time and his relationships and when he saw an opportunity to convert it into something valuable, he took it.
Trust and attention are other illegible currencies. If you lose someone’s trust, it makes it a lot harder to get that person to do what you want. If you gain someone’s trust, the opposite is true. They’ll often do something you ask without understanding the rationale simply because the trust you. If someone I deeply trust asks me to do something, I rarely ask why. This has very real world, hard currency implications.
Writers, bloggers, and podcasters with huge audiences get six-figure book deals where equally talented individuals get nothing – publishers recognize the value of trust and attention to selling products as much as anyone else.
Being able to move for a job or project—having location freedom as a currency, can be a competitive advantage. If you can move across the world for a project tomorrow and your competition can’t, that’s an advantage.
The human tendency to overvalue legible currencies is compounded by the fact that the most valuable assets are often illegible.
There is no metric to measure the depth of a relationship, or trust and attention from your customers, and yet who wouldn’t rather have ten deep, meaningful relationships as opposed to 1000 shallow ones, or a thousand true fans as opposed to a hundred thousand flakey ones?
While we recognize the value of illegible currencies when clearly presented with the dichotomy, we don’t make day-to-day decisions based on them. While I recognize upon reflection that protecting my time to work on important projects or spend time with important people to me is valuable, my actual behavior rarely seems to reflect that. Study after study shows that in the most connected age of all time, we’re lonelier than ever.
As the value of illegible assets: time, trust, and relationships among others is rising, the visibility of legible currencies is increasing. It’s easier than ever to compare yourself not just to people across the street but people across the world. Yet, once I understood the basic premise of currency legibility, I began to see it as a market opportunity. Billions of dollars are made trading traditional, legible currencies: if you believe the dollar is going up and the Euro is going down, you can make money off of that knowledge. Currency arbitrage works just as well with illegible currencies.
Four Ways to Leverage Currency Illegibility
The catch is this: Because we don’t instinctually optimize for illegible currencies, you have to build systems to optimize for them. If you can though, just as Arnold, Tim and others found out, the rewards are real. Here’s a few things I’ve tried to help myself optimize for illegibility currencies:
Protect Your Willpower
The Willpower as a muscle mode indicates that willpower, just like a muscle is worn down with use and must be recharged. Productivity tactics like Eat that Frog encourage you to do your most important work in the morning. I also use Freedom to block myself off the internet when writing and off social media sites when doing other work.
Optimize for Depth of Relationships, Not Numbers
Listening to the audiobook version of The 80/20 Principle by Richard Koch, I smiled as he seemingly belabored the point of how valuable deep relationships were. It’s a point the bears belaboring as few others do. Whenever I went to a business conference, I used to try and meet as many people as humanly possible. I felt this huge pressure to maximize the value of the conference and ended up walking away with 50 business cards that never came to anything.
I’m happy now to meet and actually get to know one person per day.
If I establish the groundwork for one deep meaningful relationship at a business conference, that’s a huge win that’s paid off for me before and I suspect will again. I keep a to-do list for deepening meaningful relationships – call family, go out to dinner with a friend, organize brunch for friends in town and make sure I check one off every week.
Use KPIs, But Always Keep What’s Important in Mind
I love using KPIs. But I ask myself, is this what matters? Or is it just a proxy?
Pay (and Get Paid) in Illegible Currencies
Good news coming off of tax day a couple of weeks ago- you don’t have to pay taxes (or Paypal fees) on illegible currencies. The intuitive understanding of this is why I suspect so many entrepreneurs are so generous with their time.
Last Updated on July 30, 2019 by Taylor Pearson