Alex, also known as “The Science of Hitting Investing” on Gurufocus and TSOH_Investing on Twitter, is an investor at an RIA and a prolific investing writer. I’ve really enjoyed his articles, so I was really excited to talk to him. And the conversation didn’t disappoint. During the interview, we talk about structuring a process to maximize your chance of finding good investment candidates, trying to reconstruct management dashboards as a way to understand investments, and the different parts of the value investing spectrum. Time Stamps0:01:00 – Introduction to Alex (@TSOH_Investing on Twitter https://twitter.com/TSOH_Investing; https://www.gurufocus.com/news.php?author=The+Science+of+Hitting&u=110170 on GuruFocus) 0:05:05 – The 3 Modalities of long-only value investing: (1) buy companies that are better than everyone thinks they are, (2) buy companies that are less bad than everyone thinks they are, and (3) greater fool theory. 0:06:45 – Alex on the path to value investing as a philosophy (passive-active split) 0:10:35 – Howard Marks on “Winning the Loser’s Game” (not making mistakes) 0:11:30 – Pros and cons of quality vs cheapness in investing (spillover research, ulcers, frictional costs, etc.) 0:15:30 – Alex’s thoughts on quality companies / compounders vs cheap names 0:17:00 – “When to Average Down” by John Hempton 0:21:20 – Risks of screening 0:23:00 – David Kilcullen “rich information” and sunk costs 0:25:30 – My experience with finding Tailored Brands through screening 0:27:00 – Thoughts on fixing my screening process (setting myself up for failure) 0:28:31 – How Alex runs his portfolio (low turnover, high quality, relatively concentrated) 0:37:54 – How to conduct a search to maximize the chances of finding a compounder 0:42:15 – Cumulative knowledge: an advantage of studying high-quality businesses 0:46:31 – Thinking about how to allocate research time with Costco as a case study 0:49:50 – Red flags (compensation, management ownership, shareholder letters, etc.) 1:00:00 – Trying to construct a management key performance indicator (KPI) dashboard 1:02:05 – An issue with financial modeling—everything is based on sales, and sales are hard to predict 1:03:45 – Pat Dorsey: don’t model using percentages (Visa example) 1:05:10 – TSOH investment style in a nutshell: “the return to a historic margin rate is in doubt, and I’m stepping in and saying it’s a short-term problem.” 1:07:00 – Disney analysis: CPI vs Magic Kingdom pricing vs airline pricing 1:09:17 – My observation on “the game:” cigar butts have secure sales but insecure cash flows; compounders have secure margins but insecure sales 1:11:00 – Bruce Greenwald said that long term, things become commodities (everything is a toaster in the long term), but some have disagreed ( https://sloanreview.mit.edu/article/the-myth-of-commoditization/ ) 1:24:00 – Thoughts on software 1:28:24 – Thoughts on optimizing industry study time: listen to smart people, observe what you know 1:33:27 – Thoughts on micro-caps and special situations 1:35:20 – Observations on short-form podcasting 1:40:31 – The importance of exploring the investing the world alongside great people 1:41:55 – Closing thoughts Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium) 

Strategy Chain

037 - @TSOH_Investing - Process, Cumulative Knowledge, and Quality Businesses

This episode is an amazing case study on founder-market fit. As Mr. T says, “I pity the fool” who competes with Max and Patrick at relationship building—they clearly live and breathe the opportunity to form genuine connections with people. Beyond founder-market fit, Max and Patrick also make a connection to the 8th wonder of the world, which value investing disciples know is compounding. They don’t do any paid marketing, but they can almost predict the amount of inbound referrals they’ll get on any given month, and it’s all because of their focus on white-glove customer service for everyone they meet. Max and Patrick's Links On the web: https://www.maxandpatrick.com/ https://americaonerealestate.com/ Instagram: https://www.instagram.com/max_americaone/?hl=en  https://www.instagram.com/patrick_americaone/?hl=en Youtube: https://www.youtube.com/channel/UC9m_VZEMttpIiXjE6RZEpRA/featured Time Stamps0:03:15 – A frustrating experience exposed a market opportunity 0:15:15 – Thoughts on the luxury customer experience 0:19:50 – Surprising lessons from operating the business: it’s not reinventing the wheel, it’s getting the job done 0:24:20 – A critical outside observation: where does business come from (organic referral, marketing, salesmen, etc.) 0:27:08 – Most important first step: screening for genuine, long-term relationships by emphasizing the personal relationship before entering into a business relationship 0:31:30 – White glove service: using technology and one-on-one attention to help buyers understand the product (3d photorealistic renderings, one-on-one tours through other projects at various levels of completion, everything catered toward fostering a relationship) 0:34:55 – Referral sources (referrals from people they’ve never even met) 0:39:08 – Highlight reel moments: representing the transaction rather than the buyer or seller 0:41:00 – Training and growing a team, consistently reflecting on process and habits 0:46:45 – Helpful resources in the course of running their business: it’s the simplest things that help you be effective (their phones are their CRM). 0:50:15 – The right kind of lazy: the pursuit of having to work less 0:51:52 – Get out and talk to people (even in the tech industry) 0:54:10 – Compounding relationships (the most predictable business is the “unpredictable” business) 1:01:15 – It’s not what they do, it’s who they are: genuine desire to serve 1:08:45 Where to find them: On the Web: https://www.maxandpatrick.com/ https://americaonerealestate.com/ Instagram: https://www.instagram.com/max_americaone/?hl=en  https://www.instagram.com/patrick_americaone/?hl=en Youtube: https://www.youtube.com/channel/UC9m_VZEMttpIiXjE6RZEpRA/featured Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

036 - Max De Melo and Patrick Niederdrenk - Founder-Market-Fit and Relationship Compounding

Errors snowball, and compounding is like the Marine Corps—no better friend, and no worse enemy. In this episode, we’ll talk about how Jocko Willink, Mike Krzyzewski, and Bill Ackman use a tactical “reset” to get back on track. Let’s start with the opposite. Time’s running out, everything is on the line, mistakes are being made, and it looks like the window of opportunity is closing. The position is going from bad to worse, and a vicious cycle is forming: bad position, bad decision, worse position, worse decision. And on, and on. Balls are getting dropped, emotions are running hot, and stress is widespread. Chaos reigns. Corners are being cut since time is in short supply. Confusion, haste, sloppiness, complexity, errors, anxiety, weariness. It’s a nightmare situation. This description could apply to a crunch period at work, the fourth quarter of a basketball game, or just about any part of life where results matter. We all know the phrase: “when the going gets tough, the tough get going.” But sometimes even the toughest know it’s time to take a beat. In this episode, we’ll talk about how Jocko Willink, Mike Krzyzewski, and Bill Ackman use a tactical “reset” to get back on track. Jocko Willink: “Detachment” First, let’s talk about resetting through the frame of “detachment.” Let’s start with the toughest of the tough. If you know Jocko Willink, you know he’s no wimp. Jocko is a huge proponent of what he calls “detaching.” In the show notes, there’s a link to a podcast episode where Jocko dives into this idea and the experience that drove it home for him.  https://fhww.files.wordpress.com/2018/08/107-jocko-willink.pdf  In a nutshell, during a complicated, stressful training mission on an offshore oil rig, Jocko realized that by taking a few steps away from his team’s position, he could re-assess the situation with fresh eyes. When you “detach,” priorities become clear. You can stop spinning your wheels and get back to ticking off your priorities. If you listen to his podcast—and I highly recommend it—you’ll hear from tons of people who had to reset mid-battle, right in the thick of the fog of war. Coach K: “We Will Win” It’s February 12, 2019, and 22,000 Louisville fans have packed the KFC Yum! Center to see their Cardinals beat the Duke Blue Devils. At 9 minutes, 54 seconds remaining in the game, a Louisville player hits a 3-point shot that puts Lousiville ahead 59-36. At that point, Coach K had never seen a Duke team recover from such a dramatic deficit. Before we discuss what Krzyzewski said during his own timeout, let’s take a timeout of our own. I’ve included a bunch of links in the show notes. The first is the full video highlight reel for the comeback. The second is an incredible article by the NCAA (written in conjunction with ESPN’s data) laying out the highlights of how the game progressed along with a chart showing the statistical probability of victory in a time series graph. At its trough, the win probability was 0.1%, meaning that Duke had a 1 in 1,000 chance of victory. It’s times like these that coaches like Coach K and programs like Duke don’t show up in the numbers. https://youtu.be/OydPe7ZtdRY https://www.ncaa.com/news/basketball-men/article/2019-02-13/improbable-duke-comeback-vs-louisville-explained-coach-k-and So what happens? Coach K calls a timeout and makes a tactical shift (more on that in a moment), but more importantly, he communicates the message that he believes Duke will earn the win. In the article, he mentions that he wasn’t necessarily being 100% truthful. Tactically, Coach K shifts to an aggressive, attacking form of defense that doesn’t concede any ground to the opposing team as they try to maneuver the ball from under their own basket into their opponents’ half. The results are unbelievable. Louisville implodes under the pressure, giving up 9 turnovers in the final minutes of the game, and Duke wins by 2. I didn’t see the stats to prove it, but I’m relatively sure that most of the points Duke scored in the comeback were transition opportunities directly resulting from opponents’ turnovers. If you can visualize a steal where two defenders strip the ball from a lone ballhandler steps from his own basket, you know that this is asymmetry at its finest. Oh—and regarding frustration, the tables have completely turned. Two points to Duke, and the Louisville transition starts right back over again. Right back into the jaws of the full-court press. This is coaching at its purest. (A) don’t panic; we can win (B) let’s re-take the aggressive, proactive stance in this game by rapidly forcing a situation that favors us drastically—a suffocating, flustering, frustrating, exhausting, and in-your-face defense that plays to all of our strengths. Coach K knows how to reset. Bill Ackman: “Back to Basics” We can also frame the tactical “reset” as “back to basics.” Bill Ackman lays out his basic investment criteria in an interview (and I’ve linked it in the show notes). Before we move on—because I know I’d be wondering if I were listening—this is what he says he wants. Businesses that are: Simple Predictable Free Cash Flow Generative Dominant And that have: High Barriers to Entry Limited Exposure to Extrinsic Risk Strong Balance Sheets (and as a result no need to access capital markets) Excellent Management & Good Governance https://www.youtube.com/watch?v=sU83fZF6HcU&feature=youtu.be&t=669  Now, if you follow the financial media, you might be wondering why he needs to go “back to basics” at all! What am I talking about? Bill Ackman has been in the media recently after a windfall profit from what’s been called the “best trade of all time” since he spent $27 million to make $2.6 billion dollars with extremely limited exposure (but I should mention that the total exposure was probably about $700 million on a worst-case basis). So still a 5-bagger. And he did it by buying credit default swaps or CDS on three credit default swap indices (both high yield and investment grade) as a hedge on the credit markets. Again—for those interested, I’ve linked to the letter where he both describes the position and gives a brief primer on the mechanics behind how CDS works. It’s really awesome reading if you’re into this stuff. https://assets.pershingsquareholdings.com/2020/03/26222617/Pershing-Square-Capital-Management-L.P.-Releases-Letter-to-Investors-March-26-2020.pdf And I’ve also linked to an excellent interview he did with Shane Parrish of Farnam Street (although his podcast—which is excellent—is called The Knowledge Project). He talks with Shane about the rationale behind the hedge as well as his thoughts on bouncing back from failure. It’s an excellent listen. https://fs.blog/knowledge-project/bill-ackman/ Now if you’re not familiar with Ackman, I know you must be asking yourself: “What on Earth does all this have to do with resetting? Seems like Ackman is doing just fine.” And I hear you—in his interview with Shane, he also acknowledges that much of what I’m about to describe is firmly under the umbrella of “first world problems.” But if we re-wind the tape, Bill Ackman had been having an incredibly difficult run from 2015 until about 2019. Let’s go back in time. During its 2015 peak, Pershing Square was running $20 billion in AUM.  Ackman was in the middle of a battle over Herbalife, which he believed was a pyramid scheme. Between 2012 and 2018, Ackman held short positions (first outright short positions in Herbalife stock, and later put options). Ackman ran a very public campaign to out what he considered to be unethical practices (and make money if the share price dropped). Carl Icahn, another billionaire, had built an enormous position on the other side of the trade, aiming to catalyze what he called “the mother of all short squeezes.” This squeeze would basically make the short side submit and unwind the position, causing a big run-up in the share price. With this long and ultimately unfruitful campaign in the background, he began to have serious problems with an investment in Valeant, a pharmaceutical company. Over the life of Pershing’s investment, Valeant dropped from $190/share to $11/share during a very public activist stake (and I have a really interesting article from the New York Times linked that includes a timeline, for those interested). And for a Murphy’s Law moment, Pershing was sued by Allergan shareholders, who claimed that Pershing bought Allergan shares with insider knowledge of a looming takeover bid from Valeant. All told—per the Wall Street Journal—Valeant cost Pershing $4 billion (there’s a link in the show notes to that too). https://www.nytimes.com/2017/03/19/business/valeant-ackman-timeline.html https://www.wsj.com/articles/william-ackmans-pershing-square-sold-stake-in-valeant-1489439314?mod=article_inline What a nightmare. Now let’s skip ahead So the mid-teens were a rough few years for Ackman and Pershing. But now let’s skip ahead to 2019. Let’s start with a headline from Yahoo! Finance on January 5, 2020. Hedge fund manager Bill Ackman delivers 58.1% for investors in 2019. The article, linked below, was written by Julia La Roche, and I certainly couldn’t sum things up any better: “Like Buffett, the mission at Pershing Square is to have a permanent capital structure. Ackman said the firm took a step in that direction, launching a publicly-traded fund in 2014 with the long-term plan to have a majority of capital in that vehicle. After posting a return of 40.4% in 2014, the hedge fund experienced negative performance for each consecutive year—until 2019. At the April conference, Ackman attributed the string of poor performance to a couple of bad investments. Those mistakes led to significant investor redemptions, or what Ackman characterized as a “rough patch.” Pershing Square Holdings, the public vehicle, is now 80% of the firm’s capital, Ackman said at the time.” The link to the article is in the show notes. https://finance.yahoo.com/news/bill-ackman-pershing-square-2019-performance-130053673.html So what happened? In the interview with Shane, Bill mentions that recover is a “slow, plodding, one-step-at-a-time process.” I think there are lots of reasons for the comeback. I’m sure I’ll leave some out, but I think these ones are critical: He revamped the investor base I believe it’s impossible to be a good long-term investor without committed, locked-in, and relatively under-updated capital He swore off public contests, especially on the short side These drain his time, energy, and attention—his most valuable resources In the interview with Shane, Bill mentions that he’s focused on avoiding catastrophically low “return on invested brain damage” He swore off bets with 100% downside (even if they have the potential to be a 4-bagger) This one speaks to me I just made a mistake with just such a company It was an enormous waste of time, energy and resources And it was pretty embarrassing to do it in public! And last but not least, he returned to his basic criteria, which he literally has engraved into tombstones (also known as deal toys) that sit on every employee’s desk For good measure, I’m including one additional fun article on Ackman that the Wall Street Journal ran. The byline: With performance bad and investors fleeing, Mr. Ackman ‘went activist’ on Pershing Square. https://www.wsj.com/articles/after-suffering-bruising-losses-ackman-pursues-quiet-recovery-11553176760?adobe_mc=MCMID%3D69363972300789071000526555740666532794%7CMCORGID%3DCB68E4BA55144CAA0A4C98A5%2540AdobeOrg%7CTS%3D1597609842 Bottom Line Compounding is the 8th wonder of the world, and we need to do everything in our power to make sure we aren’t on the wrong side of it. Well-oiled machines shouldn’t constantly require downtime, but in critical moments, it can be an extremely high-yield decision to pause and reset. Errors snowball, and compounding is like the Marine Corps—no better friend, and no worse enemy. So that does it for this episode. I hope it shows some threads to pull. If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on social media @strategychain. So until next time—thank you. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

035 - Easy Series #10 - Reset: the shared tactic of Jocko Willink, Coach K, and Bill Ackman

 In this episode I had the good fortune to talk to Dr. Ivan Pastine. I really enjoyed his refreshingly positive outlook. In our conversation, we talk about common real-life game theory scenarios, avoiding man with a hammer syndrome, the concept of “imperfect but useful,” incentives, trust, marketing, networking, and the importance of showing up. I think his book, Game Theory: A Graphic Guide, is the best introduction to game theory out there. I really enjoyed this conversation, and I think you will too. 0:01:52 – The time Ivan punched a Thai officer while in the Navy 0:04:55 – How he moved from the Navy into economics 0:07:21 – Game theory “games” that happen all the time 0:07:47 – Competition Demystified by Bruce Greenwald 0:08:47 – One of Ivan’s books—Introducing Game Theory: A Graphic Guide 0:12:50 – The economic starting point: how the individual acts in service of his goals 0:16:06 – Avoiding man with a hammer syndrome: what’s the important bit / imperfect, but useful. 0:27:45 – Behavioral economics & the ultimatum game (spite) 0:43:50 – Trust, the marshmallow game, and how games change when players expect to play each other again 0:49:35 –James Heckman, Kindergarten lessons about conflict, and a connection to “Touchy Feely” with Nicky Hinrichsen and Chris Coleman (Episode 029) 0:54:39 – Hawk and Dove Game—attitudes toward conflict 1:04:02 – The pinnacle of game theory: understanding the incentives (a la Charlie Munger) 1:11:55 – Shaping incentives for better outcomes (social norms) 1:21:32 – Trust as it relates to dealing with a person vs an institution 1:26:38 – Communication—lessons from teaching and writing 1:32:18 – The importance of having a good editor & the qualities of a good editor 1:35:07 – Thoughts on marketing, celebrity, and the media 1:47:40 – Connection to Mike Malinconico (Episode 021) 1:49:20 – Networking strategies and tactics 1:54:45 – People are surprisingly generous 1:57:30 – Important beliefs: showing up is really important Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

034 - Ivan Pastine - Game Theory, Incentives, and Showing Up

This series is all about making things easier for ourselves. I’m going to make the non-controversial case that collaborating with others is a great way to do this. Then I’ll talk about some tactics that can help us perform better. First, let’s take a page out of Charlie Munger’s book and approach the problem backwards. Let’s look at the opposite of working together—isolation. This is particularly relevant during COVID-19. A quick google search for solitary confinement will show the effects of being alone. Yes—this is a very specific population, and some of the more vivid examples might not be relevant for most of us. But there are some important takeaways. https://www.psychologytoday.com/us/blog/brain-chemistry/201902/the-effects-solitary-confinement-the-brain In Psychology Today, Elena Blanco Suarez, a biochemistry PhD, reported that “solitary confinement as a punishment is closer to a form of torture, with serious consequences for neurological health.” The brain literally changes, with the zones that contribute to learning, memory, and spatial awareness shrinking and those that contribute to fear and anxiety growing. I’ve even seen a TED talk by Johann Hari (link https://www.ted.com/talks/johann_hari_everything_you_think_you_know_about_addiction_is_wrong/transcript?language=en  in the show notes) about how the famous rats on heroin model doesn’t result in overdose when the rats have other rat friends, food, and fun things to do. As the saying goes, no man is an island! From an economic viewpoint, isolation also hurts us. If Dan can sew and cook better than Tim, Dan can still benefit from trading with Tim because Dan is likely to be “better-er,” so to speak, at one of the two activities. So the opportunity cost drives a collaboration benefit. This isn’t groundbreaking—the overwhelming majority of people benefit from trade. Virtually no one produces even her own food and shelter. Doing this would require massive downgrades in both. We’re a society of middle-men, and I don’t say that pejoratively—we’re benefitting from comparative advantage, and it’s completely natural and logical. Everyone has a boss, even if it’s ultimately the consumer of our products, even if we live off investment earnings, we’re ultimately beholden to the people who buy our investments’ products and services. We’re all in this together. So now let’s talk about how we can be together better. Co-Founders Paul Graham of Y Combinator notes that startups that work tend to have multiple co-founders. There are tons of reasons why. As Calvin Hawkes mentioned in our interview, a big role of the co-founding team is to be emotionally strong when the other co-founder is struggling. As you increase the number of engines on an airplane, you reduce the likelihood that they all fail. On top of that, there’s a wide spectrum of skills required to nail product development and marketing of products and services, and any one person is unlikely to have an expertise in all the skills. And there’s virtually no chance that there wouldn’t be comparative advantage stemming from opportunity cost (remember—there’s a cost associated with doing what you’re not “better-er” at). Corporate Boards Another feature of the startup ecosystem is the board of directors. Mature companies also feature corporate boards, but I’d argue that their impact is relatively muted when compared to the green-ness you’d see in startups and the siloed nature of the co-founders’ experience. The C-Suite exists to manage the day-to-day operations of the company, and the board of directors exists to manage and counsel the company’s managers on behalf of the company’s owners (shareholders). The best corporate board members provide incisive, experienced, and nuanced takes on complex, critical issues. For up-and-coming companies, board members offer a fresh perspective from a different background that is grounded in years of experience. To me, this sounds a lot like mentorship, and I think many startup co-founders would agree. Why Should You Care? There’s a possibility that I’m living in a bubble, but I think most people are lucky to have even one lifelong mentor. This is a far cry from accepted best practices in the startup ecosystem, and I think it’s a screaming opportunity for us to improve our internal processes by leaps and bounds. Each of us is the CEO of our own life. Those in the know recommend building a co-founding team and a strong board of directors. We should follow suit—here’s how: Think about the advisors you need (based on weaknesses and blind spots) Populate your advisory board Real contacts (consider teachers, coaches, parents, bosses, friends, and family members) Your favorite in-thinkers (dead or alive) Your favorite cross-functional thinkers (dead or alive) Invite them (in real life or virtually) Build your process Choose a reporting period (weekly, monthly, quarterly) Choose a reporting template (more frequent = shorter report, aim for 1 page) Divide the page into Past Performance KPIs, MD&A, Future Objectives, and Open Questions Iterate Periodically write the report Distribute it to real-life contacts & record the feedback Imagine what your non-contacts would say to you & record the feedback The questions of the week: Who do you want on your team? What processes can you build to improve your results? So that does it for this episode. I hope it shows some threads to pull. If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on social media @strategychain. So until next time—thank you. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

033 - Easy Series #9 - Together vs Alone

Einstein famously described compounding as the 8th wonder of the world. It’s the secret superpower that drives network effects, population growth, and the spread of viruses—clearly it’s a force to be reckoned with. In a recent conversation, Max De Melo and Patrick Niederdrenk of America One Luxury Real Estate illustrated another hidden example of compounding: reputation. They mentioned that they could essentially predict inbound referral business despite having absolutely no idea where it would come from on a one-off basis. For any Ozark fans out there, it instantly reminded me of the scene where Marty Byrde talks about casinos. On any individual pull on the slot machine, he couldn’t predict the outcome. But on the aggregate, casino results become probability math—super predictable. With a nod to “German Efficiency,” Max and Patrick mentioned that they basically don’t conduct outbound marketing. Their business is completely referral driven. And they’ve been growing. Fast. This means that Max and Patrick have found viral growth, another way to describe compounding. One good experience leads the customer to recommend America One. Rinse, lather, repeat. For a strange coincidence, I’ve also recently received a ton of inbound opportunities from people I’ve known for years and years. There’s a reason Warren Buffett and Charlie Munger put such a special emphasis on reputation—it’s a natural compounding engine. And for a final callback to Charlie Munger’s beloved idea of inversion, I think it’s important to examine what happens when you give a customer or a boss—or anyone for that matter—a terrible experience. You create an agent for negative compounding. In the episode with Dylan Lipari, he mentioned a terrible experience with a store owner. Dylan’s a nice guy, and he didn’t talk about it explicitly in the episode, but I bet he’d love to tell you where *not* to get your shoes repaired in LA if you talked to him in confidence. When you give someone a terrible experience, you create a motivated saboteur. Someone who will write bad reviews, give bad referrals, and basically become an unpaid intern for your competition. I like to call to mind the episode of How I Met Your Mother where Barney’s love life goes to shambles as a former romantic partner spread the news about his misdeeds. The bottom line: reputation is everything. Do all in your power to guard, enhance, and leverage your own reputation. Don’t do anything that would endanger it—it’s your most powerful asset. The questions of the week: What scripted response would you like someone to give if they had to talk about you? How can you turn those words from a hypothetical wish fantasy into a real-life review? What can you do to enhance your reputation? What low-cost actions could turn someone you know into an evangelist for you? How can you share what you know or who you know with someone else? So that does it for this episode. I hope it shows  some threads to pull. If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on social media @strategychain. So until next time—thank you. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

032 - Easy Series #8 - Compounding

I’m working hard on developing an important skill: the ability to deconstruct a failure before it happens. I’m trying to move from postmortem to premortem. A postmortem is an after-action review where mistakes and successes are deconstructed. A premortem is the same analysis shifted forward in time and focused on the variables that cause mistakes. Charlie Munger says that the best type of learning is “vicarious,” meaning that you learn from the example of others. You see your friend burn his hand on the stove, and you decide not to touch it for yourself to see if it’s hot. This type of learning is great, and I think it can prevent a lot of unnecessary suffering. But I think a lot of learning comes from experience. Howard Marks likes to say that “experience is what you get when you don’t get what you want.” Another phrase I like is “he who suffers remembers.” In that light—postmortem learning definitely isn’t preferable, but once mistakes become available for you to deconstruct, they can be a great resource. On Twitter, Ian Cassel recently mentioned that a well-constructed active investment strategy needs to be molded and shaped to you as an individual. It’s similar to what people say about Jiu Jitsu having a certain sense of justice—you’ll often find yourself in the positions you need to work on most. Rubbing your face in real-life mistakes through postmortem analysis is a fantastic way to address key flaws and drive inflection points in your learning. I’m just finished a postmortem of a miserable experience I had investing in Tailored Brands (which, as of July 8th, looks to be on the verge of bankruptcy after a missed bond interest payment). You’ll be able to see that analysis online at www.strategychainpodcast.com/postmortems. The analysis centers on analytical fundamentals, execution methodology, and psychology & behavior. I summarize the experience, look at what went right, and discuss in detail what I did wrong. The question of the week is short: how can I shift the distribution away from postmortem and toward premortem? So that does it for this episode. I hope it unearths some threads to pull. If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on Twitter @strategychain. So until next time—thank you. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

031 - Easy Series #7 - Premortem vs Postmortem

I’m a huge fan of Howard Marks. He often references the concept of “winning the loser’s game” by avoiding errors rather than looking for huge wins. In tennis, professionals win with unreturnable shots and amateurs win by keeping the ball in play. Charlie Munger uses a similar framework: inversion. He focuses on not going where he will die. In physical training, Christian Thibaudeau promotes a similar idea for “natural” lifters (as opposed to those using performance-enhancing drugs). Cortisol—the stress/readiness hormone is the enemy of the natural lifter because it can promote a variety of counterproductive sequences in the body. So the goal is to structure a program that sidesteps the problems from high stress levels in order to perform at peak levels. I believe that the body and the mind are one. Physical realities can change our mental state, and our thinking can change our physiology. To perform at our best, we need to use all our tools. Similar to what Thibaudeau says about sidestepping cortisol for physical performance, I think we can use a similar strategy to make life easy so that we can perform our best. We can do that by embracing simple joys and avoiding suffering. But I want to take a quick moment to explain what I’m NOT saying. There’s a reason Navy SEALs essentially torture their incoming pipeline of prospects. The ability to endure hardship is critical. I’m not saying that we should all sit on the couch chasing fleeting pleasure at the expense of critical day-to-day tasks and long-term strategic pursuits. I’m saying that there are cheap, untapped resources all around us that can help us recover so that we can operate at the highest levels. I’m talking about simple joys, the natural ways that we can soothe and rejuvenate ourselves—recharging for our next push forward. The problem is that many physical pleasures can be traps—pathways to pile on physical debt by trading misery tomorrow for euphoria today. This includes everything addictive—drugs, alcohol, sugar, technology, and the list goes on. Things that are expensive, things that downgrade your decision-making, and things that otherwise erode your future goals. These aren’t what I’m talking about. We should mostly avoid things in this category. If you can handle moderation, I think the phrase “everything in moderation—including moderation” makes sense. But there’s also a huge list of simple, cheap, sustainable physical pleasures that don’t hurt us in the future. Sunlight, exposure to the blue sky, the mild post-workout euphoria, a cold or warm shower (depending on the season), a nap, a full night’s sleep, a moment of mental rest from meditation, a simple stretch, a short walk, a moment of laughter from stand-up comedy. These are all examples of nearly costless ways to fight stress and its depleting, destructive, gradual erosion. So the question of the week is simple: what can I do for 5 minutes to enjoy a simple, natural pleasure and unplug from the world of worry and stress? So that does it for this episode. I hope it unearths some threads to pull. If you’re interested in show notes or supporting the podcast, check out strategychainpodcast.com. If you want to get in touch with me, you can find me on social media @strategychain. So until next time—thank you. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

030 - Easy Series #6 - Simple Joy vs Suffering

Today, I had the pleasure of talking to Nicky Hinrichsen and Chris Coleman, who went to Stanford Business School and started a venture-backed company called Carlypso in 2013. Working on building the “Amazon for used cars,” the two founders went through Y Combinator in 2014, raised $10 million in venture capital by 2015, and successfully sold the business to Carvana in 2017. Like true entrepreneurs, Chris and Nicky are now working on their next venture called WithClutch. The co-founders discovered that auto loan rates are all over the map, and they built a refinance calculator that allows car owners to reduce their monthly payments and save thousands in just minutes. Time Stamps 0:06:28 – Nicky & Chris’ meeting 0:11:57 – Two stages of a startup: (1) finding value (2) scaling 0:15:37 – Nicky & Chris’ experience at Y Combinator 0:22:42 – What it was like to build the technology as semi-technical co-founders 0:27:17 – Evaluating technical talent outside of your comfort zone 0:39:56 – Things that don’t scale: chasing a stolen car down the highway 0:45:47 – Developing the hustler mentality and structuring processes that worked for them psychologically 0:50:11 – Lessons on hiring, firing, and job inertia 0:57:30 – The Co-Founder relationship: what Nicky and Chris got right 1:03:48 – Nicky’s confrontation with a copycat 1:06:28 – Creating a culture of candor 1:08:26 – “Touchy Feely” at Stanford GSB 1:11:06 – Things they’d whisper in their own ears: some lessons are best hard-learned, it’s important to take time off, it’s good to form an informal advisory board, be easier on yourself when you miss high bars 1:13:30 – Books: ( www.strategychainpodcast.com/support ) Never Split the Difference by Chris Voss (and an example), High Output Management by Andy Grove 1:18:00 – Where to connect with Nicky and Chris: LinkedIn https://www.linkedin.com/in/nicholas-hinrichsen-7b33874a/ ; https://www.linkedin.com/in/christopher-coleman-a316696/ Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

029 - Nicky Hinrichsen & Chris Coleman - Vehicle pursuits, things that don't scale, & "touchy-feely" startup lessons

Today’s episode explores how we can take the “easy” road by broadening our view. Let’s start with the problem We see the world through a flawed lens. There are a million terms for this idea: “target fixation,” “missing the forest for the trees,” “anchoring,” “framing.” The list goes on. The point is—we get so used to “the rules of the game” that we miss it when the game changes. David Kilcullen explores this idea in fascinating detail in The Dragons and the Snakes. If you’re into geopolitics, check out Episode 023 with David. The TL;DR version of the book is that success can breed failure. Since the West dominated the traditional battlefield, its enemies found new ways to fight. China embraced a much wider view of war, including economic, legal, and technological avenues to fight the West. David called this tactic conceptual envelopment. Similarly, the Russians have sidestepped traditional battlefield confrontations by “surfing the edge,” as David would say, of confrontation. The Russians blur the lines and exploit the slow reaction times of Western powers. The takeaway: don’t get mired in the old way of fighting. In my recent episode with Brian DeChesare, a similar concept comes up at the very end. He mentions that very driven people tend to confine themselves to options (a, b, c) when there are many more that exist. We get sucked into optimizing for the wrong thing, and we grind away for trivial gains while leaving the critical variables unexamined. Hollywood gives an awesome false frame example in the Dark Knight. Batman’s butler, Alfred, tells the story of his search for a jewel thief in Burma. Alfred and his team search the villages and black markets for the stolen jewels—all to no avail. Until they find a child playing with a huge ruby. They realized that the “thief” wasn’t a thief at all. He was throwing the stones away because he just wanted to cause chaos. Once they realized that the problem was different, they could pivot and make real progress. Their false assumption caused a lot of wasted effort. For a more real-life example, there’s a funny Harvard Business Review article by Peter Bregman where a “sibling fighting problem” is reframed as a “morning crankiness problem.” The link is in the show notes https://hbr.org/2015/12/are-you-solving-the-wrong-problem. It turned out that the solution was orange juice rather than a lecture on the golden rule. If we find ourselves grinding away without making progress, it can be a good time to try to rethink our assumptions. But this is way easier said than done. So what’s the solution? If it’s possible that our assumptions are wrong, we need to take a moment to consider what we might think is goofy. If convention isn’t working, it’s time to start breaking the rules—if only as a thought experiment. So here are some questions to ask and threads to pull: First, reconsider the obvious What is obvious? What clear facts are present? List them out and toggle them on and off to see if breakthrough ideas present themselves. Ask yourself how you know these obvious facts are true. Second, role play—how would a completely different person approach the issue There’s a link in the show notes to a site called 16 Personalities https://www.16personalities.com/personality-types It uses the Meyers Briggs classifications to construct some character archetypes Put yourself in the shoes of a different type, and imagine how that person might approach the problem You could also imagine an advisory council of people (and this could be past or present) who you admire Third, use arbitrary restriction What tools are available? Imagine throwing them out and starting from scratch What else is possible? How could you solve the problem if you had no resources whatsoever. Fourth, consider your untapped resources What allies haven’t you called on? What hidden assets haven’t you considered? What inventory or skills or contacts or tests are going underutilized? Think of the way AirBnb has unlocked the ability to rent out vacant real estate. Fifth, use physical cues What’s your physical status right now? How can you change your environment to stimulate different, novel thoughts? Take a freezing shower Go for a walk To change your perspective—literally change your vantage point Toggle the stimulus from your five senses to break free of the thinking ruts you’re in Finally, imagine the problem didn’t exist Is it possible that you don’t need to solve the problem? Is it possible that the problem can be sidestepped instead of tackled head-on? Is the problem taking its power from another controllable factor? How can that factor be addressed? Hopefully these questions help explore new avenues and wider perspectives on the challenges at hand. Until next week—thanks for listening. Support Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

028 - Easy Series #5 - Broad vs Narrow

Brian DeChesare is the founder of Breaking Into Wall Street and Mergers and Inquisitions. Mergers & Inquisitions is a website dedicated to careers in the finance industry, with over 600 expertly crafted articles, over 500,000 monthly visitors, and over 100,000 email subscribers. The site features interviews with industry insiders in investment banking, private equity, venture capital, hedge funds, sales & trading, and other fields, as well as career tips, news commentary, case studies, and modeling tutorials. Breaking Into Wall Street is M&I’s sister site. It offers online training products like PDF guides and video courses as well as coaching services designed to help people break into investment banking, private equity, and hedge funds. Early in my career, I was both an avid reader and a customer of Brian’s. Although Brian has been a successful entrepreneur—earning a case study mention in the 4-Hour Workweek, as an example—I’m more impressed by Brian’s ability to “step off the line,” as Jocko Willink would say, to strategically re-orient himself. During our conversation, we discuss two points where Brian strategically pivots in order to achieve his true long-term objectives. We also cover Brian’s experience with angel investing, his biggest business inflection points, and how he structures his life to accentuate his strong suits. Links from the Show Mergers and Inquisitions www.mergersandinquisitions.com Breaking Into Wall Street www.breakingintowallstreet.com Brian’s Reading List www.strategychainpodcast.com/support Time Stamps 0:03:40 – Brian’s “slap in the face” moment 0:07:35 – Connection to Episode 003 with Michael Pollack 0:09:41 – Catch-up since Brian’s latest life story post 0:12:19 – Eliminating policy-borne headaches (refunds, support, payment plans) 0:22:31 – The difficulty of transitioning from a one-man show to a team 0:28:02 – Misinterpretations of the 4-Hour Workweek 0:31:52 – How to leverage obsessive-compulsive traits (spurts, Toggl time tracking, and adapting over time) 0:44:26 – High-yield activities and attribution difficulties (Wicked Reports) 0:50:31 – Issues with partnerships within a niche industry 0:55:46 – Business inflection points (pitching content, product development, marketing) 1:11:30 – The psychological lift from making the first sale 1:17:13 – Developing products by offering services 1:22:03 – The magic decision that improved profitability AND unit sales: pricing 1:30:32 – Brian’s angel investing experience 1:48:19 – What Brian would say to a younger version of himself: think of other options 1:50:40 – Brian’s future plans 1:55:15 – Book recommendations (Dan Kennedy’s work, Jason Fried & David Heinemeier Hansson: It Doesn't Have to be Crazy at Work, Rework, Remote, Henry IV Parts 1&2, Henry V, A Song of Ice and Fire, The Witcher Series, Brandon Sanderson’s The Wheel of Time, Robert Jackson Bennett [City of Miracles, City of Blades, City of Stairs]) 2:06:08 – Closing thoughts: you can only connect the dots in retrospect, find the unconsidered options. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

027 - Brian DeChesare - Inflection Points & Iterative Reflection

What if we didn’t have to worry anymore? In this episode for anxiety-ridden overthinkers, I’m going to distinguish between worry (non-productive, anxious, hand-wringing) and work (productive, effective steps toward good decision-making). Then I’ll offer up some tactics to reallocate your resources into the work bucket. Let’s take a step back No matter what our goals are, we have a few things in common. We want to create a high chance of winning and a low chance of losing. And we want a big reward for winning and a small penalty for losing. Here’s the rub We get into trouble because we often mistake activity for production. The future is foggy and uncertain. I like Howard Marks’ description: the future is a spectrum of possible future outcomes. Humans hate uncertainty. It’s painful because it’s scary. And it’s scary because we don’t know what’s going to happen. It’s the grown-up version of being scared of the dark. We’ll do almost anything to get rid of the nagging doubt and anxiety about the future. We are driven to confirm there isn’t a monster under the bed. After we lay our baseline of fear, we stack on another dangerous brick: unfounded hope, otherwise known as simple psychological denial. In other words, as the saying goes “as we wish, so we shall believe.” We want to find a light switch. We want to find a flashlight. We want to know for sure that monsters aren’t there. We’re scared and we want to deal with it. Maybe I can relax once I check “x,” once I look at “y,” once I confirm “z.” So we cake hope on top of fear, and we end up with what Charlie Munger calls a Lollapalooza effect—a nasty combination of powerful psychological factors. If you’re like me, you might begin to create a feedback loop. Fear, unfounded hope, checking behavior, lack of material results. Rinse, lather repeat. Two absurd extremes Let’s illustrate the spectrum with a ridiculous example. On one end, there’s driving down the road with a blindfold on. That’s zero analysis. Action without forethought. On the other end, there’s learning Japanese to consider the historical context of other cultures and their attitudes toward motor vehicles. That’s over-analysis. Forethought without action. Let’s get back to reality Recently, I’ve been looking through Distressed Debt Analysis by Stephen Moyer. For many of you, that might not sound like a super-thrilling read. But there’s an EXTREMELY helpful concept in the book. Moyer addresses the critical challenge of investment analysis: when do you know enough to make an educated decision in the face of an uncertain future? On page 258, Moyer says: Realistically, however, the investor cannot “know” with metaphysical certitude that the firm will be able to access the capital markets in the future, and, mathematically, it is difficult to meaningfully or rigorously “quantify” the risk of refinancing. The investor can make an investment judgment based on an experienced assessment of the environment. However, that investment judgment will be erroneously derived, if the investor fails to uncover that another bond indenture of the firm prohibits the refinancing of the subordinated debt with other than junior securities, for which there may be no market, or that the working capital facility has a lien on all assets, not just the typical accounts receivable and inventory. Those factors were not in the “terms” of the bet. It would be like making a bet on a horse in a given race and then finding out that at the last moment the jockey was being changed or that three very strong horses had been added to the field. To properly calculate the odds, you need all the facts. That is the role of “due diligence.” So that’s the key idea. If there are material, discoverable unknowns affecting your decision-making, it makes sense to invest your time to find out the facts. On the other hand, if there aren’t material, discoverable unknowns affecting your decision-making, it’s time to calculate your best move. Importantly, this guideline applies throughout the decision-making process. At any given moment, your best course of action is determined by the facts. If you’ve already “decided,” and you are presented with information material to your decision-making—you should change course. It’s no use staring at a broken window and crying about what a wonderful window it used to be. Move on. The art is to construct a process that drives efficient discovery of the material facts, balancing a fact’s impact with its cost of discovery. This idea was one of Calvin Hawkes’ closing thoughts during Episode 013. If you haven’t heard it, I highly recommend that series of episodes. Calvin is super interesting and super smart. Now let’s bring this full circle Above, I’ve described the strategy for structuring a decision-making process. It’s all about material, discoverable facts. Finding those facts is what I call “work.” On the other hand, there are immaterial, impossible-to-find facts. The facts are there, but the cost to acquire the fact is too high or the impact of the fact is too low. And that’s where worry lives. Worry is the nightmare union of wasted time and energy. It’s a wheel-spinning, cortisol-dumping, mental sludge factory. Returning again to Charlie Munger, this is a great time to invert. Worry is where we can’t afford to live, and it warrants some deep thought. Everyone is different, and everyone has different circumstances. So—as always—there isn’t a one-size-fits-all solution. Here are some questions to help expose wasteful allocations of mental your energy. What are your fears? Which of your fears are uncertainty-driven? Which of the many possible futures scare you? What facts would help you narrow the distribution of probable futures? Objectively, are you likely to find those facts? Objectively, what is the cost—in time, in cash, in opportunity, in anxiety—required to find those facts? Imagine the worst-case scenario. Is that an acceptable outcome to you given your current levels of uncertainty? If you make a decision, are you likely to spin your wheels in search of answers you won’t find? What could make you comfortable with the uncertainty? Are you prone to checking behaviors that don’t deliver material new information? How can you change your decision-making structure or daily habits to side-step these checking behaviors? Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

026 - Easy Series #4 - Work vs Worry

Jacob Wolinsky worked in investing and financial journalism before founding ValueWalk, a site that curates information about investing, hedge funds, asset management, and the broader world of finance. We explore Jacob’s journey as an investor and an entrepreneur. This episode was a real treat for me because our guest was (and continues to be) instrumental to my growth as a value investor. Jacob gave us a ton of awesome reading material, and I can’t wait to dive into it. Links from the Show ValueWalk www.valuewalk.com ValueWalk Premium www.valuewalkpremium.com Hidden Value Stocks www.hiddenvaluestocks.com Jacob’s Reading List www.strategychainpodcast.com/support Time Stamps 0:06:34 – Jacob’s first experience as an investor: right for the wrong reason! 0:08:38 – A revelation: Benjamin Graham’s book The Intelligent Investor 0:14:49 – Greater Fool Theory: Beanie Babies and Trading Tulips 0:18:12 – Cigar Butts: Classic value investing 0:21:40 – The role of psychology in investing 0:24:15 – Jacob’s professional path into investing 0:32:01 – How Jacob got started writing for GuruFocus 0:40:40 – Circle of competence & the danger of overstepping like Long-Term Capital Management 0:44:22 – Patience: David Einhorn’s Fooling Some of the People All of the Time and Christine Richard’s Confidence Game (About Bill Ackman) 0:46:36 – Joel Greenblatt: positions took 2-3 years before they worked (on average) 0:47:43 – The advantages of being a small investor 0:50:04 – Taking the jump: focusing on ValueWalk full time 1:17:49 – HiddenValueStocks.com background 1:22:11 – Thoughts on conducting valuation after having run a real business 1:31:35 – Investing is extremely dependent on the individual’s personality 1:35:03 – Jacob’s favorite investing books: John Neff’s books (particularly John Neff on Investing), David Dreman’s books (particularly Contrarian Investing Strategies), Christopher Browne’s The Little Book of Value Investing, James Montier’s The Little Book of Behavioral Investing, The Millionaire Next Door by Thomas Stanley and William Danko, John Bogle’s books, Bruce Greenwald’s Value Investing from Graham to Buffett and Beyond, John Train’s Money Masters of Our Time, Joel Greenblatt’s You Can Be a Stock Market Genius, Ben Graham and David Dodd’s The Intelligent Investor, Andrew Tobias’ The Only Investment Guide You’ll Ever Need, William J. Bernstein’s The Four Pillars of Investing. Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

025 - Jacob Wolinsky - The ValueWalk Story

 Mohnish Pabrai - Paul Tudor Jones - Ian Spalter - Elad Gil - Eric Ries - Gabriel Weinberg - Sun Tzu - David Kilcullen - Charlie Munger - Mike Malinconico They all say to be brief. We should listen. Brevity is “easy” because time is expensive. Brevity isn’t easy for you, but it’s easy for your counterparts: customers, investors, students, athletes, colleagues, bosses, partners. Everyone. We need to get to the point if we want people to listen. Here are some examples: In Investing Mohnish Pabrai suggests limiting investment theses to one paragraph. Paul Tudor Jones suggests studying journalism to learn clarity, brevity, and the art of positioning the critical matters first such that readers can stop at any point and take away the most important ideas. See the show notes for a link to his thoughts. https://www.youtube.com/watch?v=_e0U-MKV90w In Business Brevity is the core of user experience design. Designers obsess over every line and punctuation mark so users get what they want—fast. When was the last time Amazon made you suffer through a tedious experience? Twitter is what’s happening in 140 characters. Instagram is 1,000 words in an instant. For a great example, see the show notes for a link to Ian Spalter’s episode on Abstract: The Art of Design. https://www.netflix.com/title/80057883 In Entrepreneurship When pitching Venture Capitalists—or anyone really—it’s crucial to get to the point. Explain the market opportunity, the product, the distribution strategy, and the team. Then be ready for a game of 20 questions. Elad Gil mentioned that his favorite pitch meeting was scheduled for 45 minutes but lasted for 10. The founder explained himself, fielded key questions, thanked Elad for the meeting, left, and responded with the answer a few days later. Brief, rapid-iteration testing is a hallmark of both The Lean Startup and Traction. In Combat Brevity is critical in combat. Time is the critical resource. Manage it well. Sun Tzu says that no effective campaign can be drawn out. Long, draining campaigns are the enemy of good strategy. In his latest book, The Dragons and the Snakes and in Episode 023, David Kilcullen discusses how Russia uses ultra-quick, ultra-targeted campaigns masterfully. The US did the same thing during the Gulf War. Interestingly, Charlie Munger also praises extreme decisiveness in the face of fleeting opportunity. In Grappling Mike Malinconico boils years of training into 90 seconds of dense technique in his Behind the Dirt series and in FloWrestling’s technique library. High-level jiu jitsu players talk about following the tightest path between two points. In the striking arts, the jab and the teep are essential building blocks—and they highlight the connection between small time investments and limited risk. In Athletics Master coaches work on jarringly brief cues to instantly communicate technical corrections. My Resolution It’s not the New Year, but I resolve to chase brevity. So for the question of the week: where can we trim the fat in our communication? Support Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium) 

024 - Easy Series #3 - Brevity

David Kilcullen is a soldier, strategist, diplomat, and author. He’s a scholar of guerrilla warfare, terrorism, urbanization, and the future of conflict. His newest book explores how the Western world's adversaries are adapting. This was a fascinating conversation covering topics like second-order effects, evolution and adaptation in competitive environments, and yield. We discuss world politics and the strategies and tactics of Russia, China, and North Korea. Links from the Show David’s talk at the Australian Centre for Society and Armed Conflict https://www.youtube.com/watch?v=JDummafZbXs David’s talks at Google https://www.youtube.com/watch?v=tVUI9U4WQ6E https://www.youtube.com/watch?v=DoS9_Mr_K2E David on Hidden Forces (podcast) https://hiddenforces.io/podcasts/david-kilcullen-national-emergency/ David on the Federalist Radio Hour (podcast) https://thefederalist.com/2020/04/06/federalist-radio-hour-how-bad-actors-plague-the-international-stage-and-attack-the-west/ David on Departures with Robert Amsterdam (podcast) https://robertamsterdam.com/new-episode-of-departures-podcast-featuring-david-kilcullen/  Time Stamps 0:02:00 – Introduction 0:04:32 – Other talks by David you might enjoy (Google, Australian Centre for Society and Armed Conflict, Hidden Forces, The Federalist Radio Hour, and Departures with Robert Amsterdam) 0:07:35 – Nadia Schadlow & her book War and the Art of Governance (link above) 0:10:17 – Basis for the book’s name: CIA Director James Woolsey’s 1993 confirmation hearing testimony 0:14:16 – What exactly are “the dragons and the snakes?” 0:15:58 – The Gulf War: the blueprint for how not to fight the US 0:16:56 – Bookend #1: H.R. McMaster and the Battle of 73 Easting (precision, system-of-systems battlefield dominance) 0:19:12 – Second-order effects: the Gulf War forces an evolutionary response (Iran, China, and even US allies!) 0:22:13 – Bookend #2 “Dora Farms” (tactical excellence in the service of a blinkered strategy) 0:28:36 – Multi-disciplinary approach: using evolutionary biology as a basis for exploring strategy 0:32:10 – By becoming so dominant in 1991, we forced our adversaries to adapt or evolve 0:32:40 – Russia case study: Liminal Warfare & surfing the ambiguity threshold 0:40:55 – Adaptations to the modern media environment: impossible to keep things secret, but possible to sow confusion and exploit the intelligence OODA Loop 0:43:49 – Russian goal wasn’t to elect Trump but to create debate and disruption 0:48:15 – Russian strategy is like a Hollywood heist movie 0:49:50 – Connection to investing: super-high yield 0:51:44 – China case study: broadening the definition of war 1:07:17 – Reference Prisoners of Geography 1:08:32 – A huge theme in the book: the potential for misunderstanding 1:16:24 – North Korea case study 1:20:33 – Attempt to contain nuclear ambitions fall apart as we focus on Iraq and Afghanistan and in the aftermath of the “axis of evil” speech 1:34:50 – The three approaches the US can take going forward Strategy Chain Links Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

023 - David Kilcullen - The West's Adversaries Have Evolved

Strategy Chain examines high-performing individuals, teams, and companies to find strategic themes with broad uses. Some favorite rabbit-holes include investing, grappling, business, combat, entrepreneurship, and athletics. Strategy Chain is all about high-stakes games that rely on strategy.

hubhopper

Strategy Chain

hubhopper