I have come to believe that every decision we make in our live is essentially a bet. We are betting that the set of beliefs or assumptions behind our decisions are right.
Here’s an example: let’s say time is finite (i.e. we have 24 hours a day) and we have to allocate it between developing our internal (e.g. knowledge, skills, intelligence), and our external (branding, credentials). By devoting more time in accumulating knowledge and skills over maintaining this blog, I am betting that real substance will prevail over branding. I am betting that the world will eventually get tired of the excessive amount of self-promotion and noise in the web, and that it’s worthwhile to focus my energy into learning and creating quality products while I am still at a young age. It’s like putting in the effort and time to polish one’s lens to see better, and by “seeing better”, I am referring to the capacity to produce better insights than other people who are exposed to the same set of facts and observations.
This is my premise, and I could very much be wrong. But I am making many of my day-to-day decisions based on this belief, so this “bet” will play a big part in how my life will eventually turn out. Our beliefs behind our bets determine our lives.
If this is the case, how do we increase our odds?
I tend to agree with Peter Thiel that people don’t seem to believe in anything anymore. If you ask the average college students from a top university what they want to do after they graduate, at least 60% (more so if they are an econ or business major) will tell you that they want to work for an investment bank or a consulting firm. When asked why, 90% of them will tell you it’s because (1) they open up new opportunities, (2) the industry is “competitive and challenging”, (3) they like working with smart people. It’s scary how these are repeated like some sort of a set doctrine. If you sit down and think about it, none of the above reasons are exclusive to the ibanking and consulting industries. In particular, doing something purely because it’s “competitive” means that you fighting over something just because a lot of people are also chasing after it.
The inherent assumption behind this is that if the crowd is fighting for it, it must be good. With more people jumping into this assumption without truly thinking, the size of the crowd increases in accelerating speed. Isn’t this a bubble in itself?
I believe that competition and value are not synonyms. There are a lot of industries that are competitive, but (excuse my political incorrectness), I do think that not every industry is equally valuable to humanity, or at least, not every industry is pushing humanity to the next frontier. Most industries are like the “back-end” of a company, making sure the world maintains its operation. They are important, but not necessarily as valuable. I believe that competition is an outcome, not a value proposition. There could be correlation between the two, but it shouldn’t be assumed. It’s dangerous to see competition as a value proposition, because you are then easily manipulated. It’s like if you throw out two bones (one quality one, one bad one) to a kennel of dogs, and then have the dogs fight over them. If the majority of the dogs are running towards the bad bone, does that make the bone any better? It’s irrational to think that it does.
One may argue that the process of fighting over the bad bone makes us stronger, but that’s about the only benefit competition has, and you are not even sure the “muscles” you built up over the course of the competition will be the ones that are applicable in the future. In the long term, being able to pick the “right bone” despite what the crowd tells you is more valuable than the muscles you gained by the competition.
After all, life’s short, and we only have that much time to do what matters to our hearts.
To believe in something, one has to develop introspection. We are all shaped by a certain degree of social engineering and pressure to conform. The easy default is to absorb what the society tells you like a sponge, and figure out the highest utility you can get as a function of your capacity and the state of the society. This usually works if you are comfortable with being the best among the mediocre. You may be considered “successful” at a specific point of time, but it will not be sustainable. If you analyze the most influential players in different industries, you will find out that they have a common factor: they usually have a liberal arts sort of mindset and develop a few specific beliefs of their own that’s relatively abstract and intellectual.
Ray Dalio has been named “the most influential hedge fund manager” for the past few years. What distinguishes him from other hedge-fund managers is his intellectual ambition. He is very keen to be seen as not just a billionaire trader, but like his rival George Soros, he aspires to the role of worldly philosopher. He spends little time in staring at his computer screen or doing discounted cash flows, and focuses on figuring out how economic and financial events fit together in a coherent framework.
His beliefs are captured in “Principles,” a hundred-page text that is a required reading for Bridgewater’s new hires. It’s not your usual company introduction. It is partly a self-help book and partly a management manual. In other words, it’s Dalio’s personal “Bible”, a platform for him to express his beliefs and insights. It’s a documentation of the assumptions behind his bets.
There are many other examples of betting on beliefs. Steve Jobs is not just a CEO of a successful tech company. He is influential because he embodies a certain sets of philosophies: it’s okay to be different; “I know what you want more than you (customer) do”, and so on. These are the premise behind his bets, triggered down to the day-to-day operations of Apple. For instance, Apple barely does any customer research or surveys, and focuses just on what they believe are quality products. This is drastically different from how most companies are run, especially those that are selling consumer products. This is his “bet”.
Forming beliefs is the first step of making the bet, but successfully doing so doesn’t necessarily lead to a positive outcome. But not doing so and just following the path most traveled by, you are making the assumption that the crowd always develop the most intelligent beliefs. Whether this is true is too long of a discussion to be included here. But if you look at the short span of human history, it seems that we will be better off thinking for ourselves.
Happy independent thinking, and, in the words of the game officials from the Hunger Games, “may the odds be ever in your favor”.