Tag: strategy

Categories
Financial Planning Investing

The Mistake of Balance

We are culturally conditioned to hedge. We are taught the virtues of a balanced portfolio, a balanced diet, and a balanced life. We spread our chips across the table—a little bit of energy here, a little bit of time there—hoping that if we just cover enough bases, the aggregate sum of our efforts will amount to a meaningful existence. We find comfort in the average because it protects us from the zero.

But nature, and certainly the mechanics of outsized success, rarely operates on a bell curve. It operates on a Power Law.

Sam Altman, reflecting on the errors of intuition in investing, noted that his second biggest mistake was failing to internalize this mathematical reality. He said:

“The power law means that your single best investment will be worth more to you in return than the rest of your investments put together. Your second best will be better than three through infinity put together. This is like a deeply true thing that most investors find, and this is so counterintuitive that it means almost everyone invests the wrong way.”

The math is brutal in its clarity. It suggests that the drop-off from our primary point of leverage to everything else is not a gentle slope; it is a cliff.

When we apply this to capital, it makes sense. One Google or one Stripe returns the fund. But this is a “deeply true thing” that transcends venture capital. It applies to our attention, our relationships, and our creative output.

Consider the “investments” of your daily energy. Most of us spend our days in the “three through infinity” zone. We answer emails, we manage low-leverage maintenance tasks, we entertain lukewarm acquaintanceships. We busy ourselves with the long tail of distribution because the long tail is where safety lives. It feels productive to check fifty small boxes.

However, if Altman’s observation holds true for life as it does for equity, then that single, terrifyingly important project—the one you are likely procrastinating on because it feels too big—is worth more than the rest of your to-do list combined.

The “counterintuitive” pain point Altman mentions is that to align with the Power Law, you have to be willing to look irresponsible to the outside observer. You have to neglect the “three through infinity.” You have to let small fires burn so that you can pour all your fuel onto the one flame that actually matters.

We invest the wrong way because we are afraid of the volatility of focus. We dilute our potential because we are terrified that if we bet on the “single best,” and it fails, we are left with nothing. But the inverse is the quiet tragedy of the modern age: we succeed at a thousand things that don’t matter, missing the one thing that would have outweighed them all.

Categories
Living

Life’s a Honeymoon Bridge: A Hand Dealt Just for You

Amor Towles, the literary maestro behind “A Gentleman in Moscow,” throws a curious phrase our way in the epilogue of “Rules of Civility” – life’s a game of honeymoon bridge. Intriguing, right? Forget four partners and fancy bidding wars. Honeymoon bridge is a stripped-down affair, two souls huddled, playing with a deck stacked with the unknown.

In our twenties, when there is still so much time ahead of us, time that seems ample for a hundred indecisions, for a hundred visions and revisions—we draw a card, and we must decide right then and there whether to keep that card and discard the next, or discard the first card and keep the second. And before we know it, the deck has been played out and the decisions we have just made will shape our lives for decades to come.

Amor Towles, Rules of Civility

Makes you think, doesn’t it? Because life, let’s face it, is rarely a team sport. We navigate its twists and turns with a partner by our side sometimes, sure, but ultimately, the hand we’re dealt is ours alone. We hold the cards, good and bad, diamonds of joy, clubs of disappointment, hearts overflowing with love, and spades that sting with loss.

The beauty, and the burden, of honeymoon bridge is this: you don’t get to see all the cards at once. They’re dealt face down, one by one. A job offer, a heartbreak, a random act of kindness — each a surprise revelation. You play based on what you hold, strategize on the fly, hoping the next card complements your hand, not cripples it.

Think about it. That first crush, a nervous flutter as you lay down a tentative “hello.” The late-night study session, hearts pounding in sync with the clock ticking down to exam day. The thrill of landing your dream job, a high five with fate itself. These are the early bids, the initial gambles in this grand game of life.

But here’s the twist: unlike bridge, where the entire deck is eventually revealed, life keeps some cards hidden. You might yearn for a specific suit, a heart to mend a broken one, a diamond to replace a financial worry. But the dealer, that mischievous force we call destiny, has its own agenda.

So, what do you do? Do you fold, overwhelmed by the uncertainty? No, my friend. In honeymoon bridge, you play with what you’ve got. You learn to finesse the hand you’re dealt. A bad grade? Maybe it’s a wake-up call to explore a different path. A lost love? A chance to rediscover yourself and redefine what matters.

The key, as Towles suggests, is in that word “honeymoon.” It speaks of a time of joy, of new beginnings, of a willingness to embrace the unknown. It’s about approaching life with the wide-eyed wonder of a first kiss, a constant sense of discovery even when the cards seem stacked against you.

Sure, there will be moments of frustration. You’ll throw your hands up, wondering why you keep getting dealt rotten luck. But remember, even the worst hand can be salvaged by a clever play. A setback at work might lead to an unexpected opportunity. A health scare could ignite a newfound appreciation for life.

Life’s a game of honeymoon bridge, after all, not a high-stakes poker game. There’s no all-or-nothing final showdown. It’s a continuous flow, a constant dance with the cards you’re given. And the most skilled players, the ones who truly master the game, are the ones who learn to adapt, to find the hidden value in every card, even the seemingly useless ones.

Because sometimes, the joker you least expect becomes the winning play. A random encounter blossoms into a lifelong friendship. A layoff pushes you towards a hidden passion. These unexpected turns, these wild cards, are what make the game truly exhilarating.

So, the next time life throws you a curveball, a card you didn’t see coming, take a deep breath. Remember, it’s honeymoon bridge, not a battle royale. Embrace the challenge, assess your hand, and make the best play you can. With a little bit of strategy, a whole lot of heart, and a dash of that honeymoon spirit, you might just surprise yourself with the hand you build.

Life’s a game, after all, and the best players are the ones who keep playing, no matter what cards they’re dealt. It’s the journey not the reward.

Categories
Living Work

The Silver Bullet Mindset

In my strategy consulting practice, I’ve come across a pattern that I find interesting. It’s what I’ve come to call “silver bullet thinking” – our desire to find the one right answer for any particular problem.

I think this need for one right answer is something we’re born with – which is then further developed in each of us through the years of education we go through. And, finally, when we go to work in a company, especially a larger company, the decision processes further refine this kind of thinking.

But sometimes the search for the silver bullet leads to the wrong outcome – a premature focus on a particular strategy which then gets organizationally committed, funded, and elevated in importance. In my experience, the larger the company, the more likely this kind of silver bullet thinking will dominate.

Yet, when I’ve worked with smaller, more innovative companies, they are less wed to their silver bullet – and more open to a process of on-going evaluation of the strategy based on the feedback from the market. Ideally, they’re able to pursue a couple of different strategies and test the market response to each in the process.

It seems to take a different, more entrepreneurial mindset for this to happen – and might one of the reasons that executives with big company experience find it so challenging to work in small company settings. Learning to be situational – considering when to stay loose and pursue multiple initial strategies vs. binding the whole organization to a single strategy – the silver bullet – may be one of the key leadership skills required of successful innovators.