mundell

Reminders for myself that I don't mind sharing

The macro cannot succeed without the micro, but the macro pulls a majority of the weight. Think of the Pareto Distribution. 80% of the outcomes are due to 20% of causes. The macro is that 20%. The micro makes up the other 80% which creates the other 20% of outcomes.

Self-improvement, growth hacking, most dieting, and minutia of hobbies get people absorbed into them. But they don't really have an effect. The same concept applies to making money. Cutting out a $5 coffee every day will save you $1825 per year but it will never make you rich. Increasing your income from $3,000 per month to $6,000 per month will impact your life noticeably.

The simplest solution is often the right one. All growth hacking tips can be dismissed by simply making a better product, one that people want. Getting fit doesn't require specific secrets and routines, it just requires you to do strenuous physical activity every day, preferably one you enjoy. Tips for “game” (talking to women/men) are irrelevant when you simply act like yourself.

People are ignoring the big movers in favor of small movers, probably because they're afraid to get started with the big movers. Big movers will not pay off immediately, at least most of the time. Delayed gratification is a hard thing for most to overcome. A lot of people struggle with overthinking, thinking they will never be ready to undertake something. This leads to a feedback loop of constantly searching for the final thing, “If only I knew this, then I would do xyz!”.

This isn't to say the little details aren't important. They are, they just don't have as big of an impact on you as you think they should. The macro is inherently made up of the micro, and vice versa. Getting fit requires taking action every day, micro level things. But over the course of a year, the macro is what you will look at. You don't track your progress daily, you track it monthly, quarterly, or yearly.

What it comes down to are the things that you focus on. Are you going to spend most of your energy on things that don't matter? The trouble is, people don't know how to discern between what matters and what doesn't. When in doubt, choose the simplest solution.

There is a difference between knowing the name of something and knowing something. The movie Good Will Hunting illustrates it well. In a scene, the psychologist (Robin Williams) talks to Will (Matt Damon) about how even though he is book smart and can hold vast quantities of information, none of it matters because he won't know what that information is like until he experiences it for himself.

The map is not the territory. A topographic map may show elevation change and differing terrains but you will never know what that area is truly like until you go there. You won't be aware of the effect it has on you until you're experiencing it. Just like how what an art book says about a painting or an artist is not representative of how that art or artist makes you feel. That is what's important to recognize.

Far too many people are getting caught up in logic or emotion instead of considering them together. Stalin said “One death is a tragedy, millions is a statistic”. A family suffering from that one death will feel pain strongly yet we feel the death of millions with weak emotion. People can look at statistics and see the number of deaths from any possible cause but they cannot grasp the emotional aspect of it, until they experience it or something like it themselves. This phenomenon clouds judgement. The extremes of emotion and logic do not offer helpful solutions. The solution is found in the divide between yin and yang.

What Stalin's quote can help us understand about modern society is the lack of minutia we experience. Everything is focused on scale, growing bigger and better than ever before. While growth is not necessarily bad, maybe it shouldn't be pursued at all costs. The single, caring bakery is left to die in favor of a large multinational that offers low prices and extreme efficiency. What people don't realize is those small-town bakeries are where memories are forged. Bonds between the customers and the owner and worker are built around a common interest. Change is more noticeable on a smaller scale.

Humans lived a specific lifestyle for thousands of years and it has suddenly changed within the last 100 to 120 years. There has certainly been a disconnection from the old way of living. It's why new diseases have been popping up, stemming from the modern way of life. Billions of people can be accessed almost instantaneously, something we weren't able to do even twenty years ago.

The finer things in life seem to be found in the little details. Humans went from opening physical mail once per day to checking emails and social media notifications multiple times per hour. The internet has certainly been a good thing but it doesn't mean everything done before should be heavily discounted. There is tremendous value in old things. They have withstood the test of time.

People should strive to produce more than they consume. But to get the attention of thousands or millions of people requires either an extraordinary feat or consistent efforts. People struggle with either of these options. Some people don't have what it takes to produce extraordinary works, to dedicate copious amounts of a time to creating a work of art the world has never seen before. David Blaine is a modern example of this. He's dedicated his life to magic and extraordinary feats so when he attempts something people watch. The other side is unable to produce consistently unless they have eyes on them already. They rely on social validation for production. These people are not seen so there are few examples. Rest assured they are out there. They make up the mass of users on the internet.

These people will start a new blog, start making YouTube videos, start a business, etc. and continue with it for a while. But if they don't gain traction by the time their honeymoon phase of the new venture wears off, they stop working on it. This leads them to pursuing another venture and the cycle eventually repeats itself. What they don't realize is that great things start slowly. People shout into the void until fellow travelers eventually stop to chat. To achieve success you need to make yourself happy by shouting into the void. Don't be bothered if no one stops for a long while. It's just a single-player game. Do not produce because you seek external validation, produce because you love to produce.

Mentioned earlier is the notion that appealing to masses gets you attention. This is still true. Some people act the jester to appeal the king. The king will reward the jester if he is entertained, but can the jester go on like this? The jester was initially chosen for his unique talents, but he is still an animal. He can be conditioned by rewarding stimuli. If the king likes a certain dance, he will dance that dance more often. Eventually he will lose himself to the ideals the king has for him.

What you need to realize is people are attracted via appeals to emotion. It's why people watch WWE although it's fake. We can't help but follow a strong story that impacts our emotions. So the more emotionally active we can make someone, the more they will think about us. To obtain success requires being front of mind in your customers. To be front of mind you must produce constantly, often targeting customer emotions. The old saying “There's no such thing as bad publicity” is true. Any publicity gets attention of yourself onto the consumer. Would you rather have them know you exist and they have strong feelings towards you, one way or the other, or have them not know you exist at all?

Average actions provide average returns. It may sound obvious but people don't consider the second-order effects of their actions. If you want to achieve great things, take great actions. Outliers are found in the extremes, take the bell curve for example. 100% of points are found under the curve. 68% of the points fall into one standard deviation. 95% of the points fall within two standard deviations. 99.7% of points fall within three standard deviations from the mean.

If you are doing what everyone else is, is it any wonder why you are getting average results? Markets mostly operate in the opposite way. Finding an edge, a competitive advantage, requires doing something different, something extreme. Some businesses do it via information, some do it via their technology and other innovations. Individuals can do the same thing, by not reading or watching or listening to what everyone else is. I'm convinced the “hustle porn” is only motivating and attractive to individuals because they are seeing someone do something extreme. If everyone was working hard, the bar would be raised even higher.

So focus on the extremes. People are attracted to interesting people, not average people. But something intriguing about that is how you can garner a large following by appealing to the masses, often what celebrities do. But that is a sort-of meta game that few people do, hence it is an outlier, hence why it works.

Remove yourself from the competition, it is the easiest way to win. Far too many people discount their inherently abilities and chase something else. Nobody can be you as well as you can. Companies that succeed have monopolies on the areas they operate in. But they are not traditional monopolies, those that merely price gouge consumers and control supply. They take over a corner of the market that few people are targeting (outliers) and they take it to the extreme. It's no wonder why they succeed. Then they retain a consumer-driven monopoly. The consumers can leave but they don't (Amazon is a great example). The rest of the bunch is stuck competing away for scraps.

Unfortunately it's in our human nature to function within groups, to do what others are doing. But that was essential for survival. Nowadays it is a leftover trait from a time long past. Those who step outside the group and do their own thing will find success quicker than those who remain in the group. The best part is you'll find yourself happier outside it, doing your own thing. You're free to do as you please, following what interests you. Taking the road less traveled is certainly more dangerous, but there is no reward without risk.

The notion of normal exists until it doesn't. Everyone is lost within their own realities, thinking they have to follow a certain path or must wait until a certain time to do certain things. None of that is real. It is all made up within the mind to make you feel comfortable. The reality is anyone can purchase a plane ticket or quit their job at any moment if they so choose. One's habits can change immediately if they are determined enough to change them.

The same rules apply for a society. If a majority of members within a society simply stop believing in certain rules, that rule becomes nonexistent. It all sounds well and simple but the truth is human nature gets in the way. People follow incentives. It's why people follow the laws, otherwise they will face negative consequences, which is against their self-interest. So what should we be afraid of? We should be afraid of those who have no regard for themselves and wholly submit to what they believe in. Those people are the ones who generate critical mass.

Critical mass is essential for understanding how decisions are made and how systems operate. Most people tag along with what the majority says. But they will not tag along until a certain number of people already believe in it. So who do you need to convince? You need to focus on the critical mass, the small group of people who will believe in it before anyone else. Examples of this are common. A group making a decision will be torn on what to decide until a certain number of group members drift towards one of the options. In a group of ten they say only three people are required to drag the other seven along.

The issue with this is those who grasp the concept can manipulate it. The options put forward may not be the best possible options (refer to things we don't know is greater than things we do know). Those who understand it can also find a group size big enough to act as a critical mass. In a group of ten people, if three of them are friends and will easily agree on the option put forward by them, it will be easy to drag the other members of the group along, to have them do the group of three's bidding.

By throwing incentives into that mixture it is easy to see how things can be manipulated. A critical mass can be persuaded using money, power, connections, etc to agree with the option the creator of it wants. This scales to decision-making at all levels.

How we've come to behave today can change rapidly if the critical mass is changed. But the critical mass for a nation is an innumerable amount of people. So how can one make changes? Start with a small group of people and slowly add concentric circles.

Cults are the extreme example of this. A small group of people can be made to do seemingly insane things just because the people around them also do it. If the cult grows, eventually that will become the norm within the population. The problem with this is there are few outside looking in who can do anything to evaluate if what they're doing is right. They hold no power within the system and so have to change it from the outside.

It's why one must disconnect themselves from the popular points of view. One cannot accurately evaluate the system they reside in, precisely because they reside in it. They will be inherently biased. It's why people can spot the flaws of others easily but cannot see the flaws within themselves.

One must not get lost in the system they've created or surrounded themselves with. Scientists and mathematicians often produce their most notable work when they are young and still new to their industry. This is because they haven't acclimated to their surroundings and are trying new things out.

Humans enjoy comfort rather than disruption. But disruption is what creates great things. Naval Ravikant has said “Your real resume is just a catalogue of your suffering” which seems to be true. At the end of your life you will look at the things which made you suffer in the short-term but you were grateful for in the long-term.

So the reason why great mathematicians and scientists produce their best work while they're young is because they don't want to ruin their reputations. Once they have become notable for something after throwing countless darts on the board they get comfortable with their position in the hierarchy. They get complacent and don't strive to achieve greatness. From their position of status they make it harder for beginners to overcome what they themselves have achieved. Why? Because if someone comes up with a better theory or workaround then the “great one” loses status and is no longer the cool kid.

But what way is there to prevent the system from being overtaken by those that don't want to lose power? The concepts to take from are survival of the fittest and equal opportunity. Those that are willing to work hard enough and smart enough to overtake those above them deserve a fair shot at it. They should not be cut down at the knees. But too many people who agree with that statement focus on the symptoms and not the root problem.

Which is exactly what it is all about. This is the chief problem with us as humans. We are too easily distracted from the root cause, we get lost in the systems we invent. Peter Thiel has previously said something along the lines of “So many people are focused on getting through a small doorway when there is a wide-open gate right around the corner”. Many peoples' favorite movies are those with a massive twist at the end. But consider what those movies have in common with systems we live and work in. Everyone watching is lost in the plot, trying to put together who the culprit might be, when it all it took to discover was to look at the character right in front of them.

It's why we must build from the fundamentals upwards. A house with a poor foundation can only reach so high before it comes tumbling down. Maybe we should consider how the foundation is built before jumping to the next level.

Building a society or a system is as simple as building a house but there is a pesky little thing called human nature getting in the way.

Systems are not set up correctly, at least most of the time. Humans are biased. People in charge of systems will set them up in a way that benefits them, while also helping others. But nobody sets up a system detrimental to themselves. Unfortunately it's just human nature. People are left behind, unable to fulfill their potentials.

The endogenous personality is someone who is inner motivated, highly intelligent, and highly creative. These people are indifferent to social norms, that's what makes them special. They are able to think outside of the box, creating innovative new things that benefit society.

The exogenous is the opposite. They are oriented towards the social environment and chase status. These people align their behaviors with group norms.

Where the problem arises is exogenous people by nature function in groups, while the endogenous person functions as an individual. Systems are created by groups, for groups. Bureaucracy runs these systems, notably academia. They are filled with exogenous personalities, with a few endogenous personalities sprinkled in.

Bureaucracy HR filled with exogenous personalities select for other exogenous personalities because those people are most similar to themselves. The bureaucracy does not want to be replaced by a potentially better system so it self-perpetuates by hiring more people who work well in bureaucracies. A school selects for students with the best grades. But the best grades don't necessarily mean the most intelligent students. They are the best at completing assignments and taking tests, but is that what really matters? But, real change comes from outside bureaucracies, from endogenous individuals who are the people the bureaucracy doesn't want to select.

When selecting members of your friend group do you choose those similar to yourself, with similar personalities, or those who are completely different? It's human nature to select those similar to yourself. But where we've gone wrong is ignoring the potential benefits those different from us can offer. The endogenous personality is powerful because it doesn't conform to social ideals. It looks at problems from a completely different prospective. The greatest inventors and scientists throughout history have been endogenous personalities. They are those making large changes to the society that selects against them.

A game or a simulation will never be an accurate representation of reality because of its creators. Its creators are biased, even if they try to be unbiased. So ultimately the best way to win the game is to play it the way the creators of the game think is the best way. But the method they've chosen as a winner has never been played against the outside world.

Google Search functions the same way. To be at the top of Google search results you need to figure out what Google selects for and do those things. But nobody considers that what parameters Google selects for aren't actually the most helpful and yield the best search results. Notice how when you search for help guides the top five results say roughly the same thing and provide little to no substance while the most informative guides are hidden many pages down.

But we must not lose hope, those nuggets of gold get found because of their quality. Word of mouth is more powerful than an easily manipulated search algorithm.

Paying attention is important. Unfortunately there is a lot of junk out there. We need to discern signal from noise. Noise is stuff that looks important but actually isn't. Signal may or may not look important but it is important. Social media and the news have surrounded us with constant noise. Little of what is said on a day-to-day basis actually matters. One's judgement as it relates to what they pay attention to can make the difference between a gold and fool's gold.

What is important to listen to and read are the things that don't change. This is the Lindy Effect. Focus on information that has remained relevant for thousands of years. Learn skills that have been relevant for thousands of years. Sales is a great example of a skill that will never go away. You're selling yourself whether you're in a job interview or trying to please a cute girl.

In this sense you're better off learning the fundamentals of the areas you operate in, rather than whatever the latest info is. The only exception to this may be tech since it's so new and things get outdated rapidly.

An easy way to test signal vs. noise is to watch the stock market. Each day the market will go up and down slightly, with variations in volatility. If you pay attention to it every day you will become emotional seeing the prices go up and down and you get focused in on the prices. But day-to-day prices don't mean anything. Look at it from a faraway point of view. What trends are effecting the market on a quarterly or yearly basis? What might be happening now or in the near future that will impact overall stock prices? Information like that is a signal, it has a concrete impact on prices.

To bring it back to books, don't read whatever is on the NYT bestseller. 99% of books on there are noise. They will be irrelevant in a year or two since what they talk about is only applicable to this time period. That is noise. What the ancients wrote 2000 years ago on human behavior is still relevant. That is signal.

Think back on your life. What are the greatest or worse memories you've had? Are they the day-to-day of regular life or some tragic event? The day-to-day represents noise, the outlier event represents signal. Chances are an outlier event has impacted you more than the noise.

Stay aware of what you're doing, what you're watching, and how you're living. Pay attention to signal instead of noise. Look at what truly matters.

Traditions outlive randomness. Time is ultimately the greatest factor in what stays relevant and what dies out. This is known as the “Lindy Effect” as coined by Nassim Nicholas Taleb. What the effect refers to is ideas or things that survive the test of time are therefore projected to survive even longer in the future. If they have already survived so much why would they die out now?

What these things are outliving is randomness. An earthquake, a tornado, a new regime, a new religion. If the way people operate remains the same throughout these factors, it is bound to remain the same long into the future. It's why many people, including myself, recommend reading old books that have stood the test of time. Books written nowadays are irrelevant within a few years. They are rehashing old information. You should read the primary source, books from hundreds, if not thousands of years ago.

Tradition is listening to your grandma's wisdom instead of a random journalist. Tradition is rooted in experience and longevity. If something worked for your great great grandfather, why wouldn't it work for you?

But that isn't to say that traditions don't subtly change. Communication could be regarded as a tradition. People throughout history have communicated with each other. There were carrier pigeons, horse delivery, postal services, and now email has taken over. I'm sure email will last long into the future until something else replaces its role as deliverer of messages.

So what we want to do is subject ourselves and our ideas to a lot of randomness. It doesn't necessarily have to be something extreme but it needs to be something you didn't initially think of. If you build a phone that can within stand a 5 foot drop, can it also withstand a completely unrelated event? What you, extensions of you, and your ideas need to be subjected to cannot be accounted for when developing yourself and your beliefs.

That ties in well with what I've already said about risk-taking. You never really know what you're up against or going into until you're actually doing it. Read all you want about travelling to China, but you'll never know what it's actually like until you go there.

Feels like this was all over the place but I hope you get the gist. Final point: Tradition exists for a reason. It works.

Imagine a world 100 years from now. I'm betting it will look something similar to Brave New World. Not in the literal sense but some aspects might look similar to our reality by then. The book is about a dystopian future where people are genetically predetermined in artificial wombs to be stuck in their social class for life. There is also mention of a drug called Soma, who's goal it is to keep the population happy and sedated.

I'm not some conspiracy person but I think there are important connections to be made to Brave New World. Soma as mentioned in the book is not actually some made-up drug. It's actually one of the oldest, known in the Rig Vedas (ancient Indian book, rumored 1500 BCE) also as Soma. In the Rig Vedas the drug is made up of a combination of poppy and cannabis, with some other small plants. I'm not very familiar with cannabis but a quick search says cannabis gives an increase in relaxation and increase in appetite. Cannabis legalization is a big political issue right now, could it be a different form of Soma?

But that isn't the main point. The main point is to think about the future and what innate human traits will last. Technology is going to replace thousands of jobs in the future. Computers can beat humans at chess and other man-made games. Most accounting-type roles will be replaced by automation. Manufacturing will continue to be replaced. Ultimately technology gives creators more leverage to obtain capital. Why would a founder want to deal with employees when he can control an army of robots instead?

So, I believe there will be a universal basic income and Soma-like drug to sedate the masses, otherwise there would be mass anxiety and loss of purpose. But it can be avoided if we focus on our innate traits. Specifically creativity and judgement.

Creativity cannot be replaced by robots. A robot may be able to throw paint on the wall or create something based off a Van Gogh but it will never create something truly original. I believe in a better future where everyone is able to pursue their creative interests, so that work feels like play instead of work. Creativity also includes teaching students or sales roles. Human touch cannot be replaced by robot touch.

The second factor is judgement. This comes back to technology and leverage. The future may be more about judgement in the sense of capital/resource deployment rather than the amount of time you work. If I am managing a million dollars worth of capital and I get can a 10% higher return than the next best guy, I will win and be paid out more. That is a benefit of good judgement. Judgement will be about interpreting data the computer spits out at you. Programs create reports, make dashboards, and output results but they cannot discern what is valuable from what is not. It is the humans job to take inputs and turn it into outputs. Robots are making it easier to obtain the inputs. They are also making the difference between inputs and outputs greater.

It used to be 1 hour of work (input) = 1 hour of pay. Now it is 1 hour of work (input) = 500 hours of pay, thanks to technology. Creativity is discovering new inputs. Judgement is taking inputs and finding the best output for them.

Enter your email to subscribe to updates.