During their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed Christensen’s How To Measure Your Life. Here’s an excerpt from the episode:
Jake: [laughs] That’s right. So, the first thing is, how this came up was– I’ll give you guys a little hack that I do. How you read an article or maybe a blog post, or even sometimes a book where you’re like, “God, that was really good. And I know I should probably read that again at some point.” Then, you put it on the shelf and you forget about it, and then maybe like 10 years later, you come back and you see it and like, “Oh, I probably should have been reading that two or three times in the interim.”
Well, what I started doing was, I’ll make an actual like calendar appointment for myself with a– it’ll just say like, “Read this.” I have this particular article set to pop up every six months, I think, because it’s a five-minute article to read. It just is a really nice way of re-grounding what’s important in life. Without further ado on that, it’s a Harvard Business Review from 2010 article by Clayton Christensen, who’s popularized a lot of work on disruption, which maybe we’ll get into more disruption stuff talk later when we talk about some of these things that are happening.
What’s really nice about this is that he wrote this towards the end of his life actually. I don’t know if he knew it at the time, but he probably kind of knew. He asked himself– He’s talking to all of his students, because he taught at Harvard for a long time. He asked them three questions. Number one is, how can you be sure that you end up happy in your career? Number two was, how can you be sure that the relationships with your spouse and family are enduring sources of happiness for you? And number three was, how can you be sure that you stay out of jail? Everyone thinks he was joking about that. Skilling was a classmate of his at HBS, so it’s a very real thing. There were multiple guys that he went to school with that he said were good guys in school that ended up in jail. So, you can somehow find yourself there even if you’ve never had that intention.
He’s talking about how the most powerful motivator for people isn’t money. It’s the opportunity to learn, to grow in responsibilities, contribute to others, and be recognized for your achievements. He said when he thinks about that, you have to look for that in your own career, but then also your ability to give that to others, by being a manager is actually a huge opportunity for you to do great good in the world.
Here’s a great story that he has. He was in the Rhodes program at Oxford. He spent one hour per night thinking about, and praying actually, to figure out why was he put on earth. He spent hour after hour every day thinking about that, basically meditating on that. And what he said was that, that was the single most useful thing that he ever learned, and that it kept paying him back multiple times over the rest of his life, as opposed to if he could have taken that one hour and learned some, he says, like some new econometric technique, he would have used that maybe two times the rest of his life. But every hour that he spent every night paid for the rest of his life.
He says how you allocate your time, energy, and talent will shape your life strategy. I find that to be a really interesting idea, that we all have strategies that our life can unfold from just like a business.
He says if you have a high need for achievement, it’s most likely going to be directed into your career because the feedback loop is the closest there. You get the promotion, you get the pay raise, you get recognized, you get to feel like you’re making a big difference. But that tends to then people under-invest in their family, because it’s a longer time horizon on those things. By the time that kid’s 20 years old, you realize you did a good job or not, but all along the way, it’s hard to get that same feedback as opposed to in your career where it’s a closer feedback loop.
He says that all families have cultures just like companies. Eventually, the power tools of coercion and threat and punishment that can work in a hierarchy in a business will not work on a teenager. So, you have to work on your culture the whole time while they’re young so that everyone’s on the same page. How do they respond to problems? That’s sort of what a culture is.
Maybe the most interesting thing is, he talks about how marginal cost thinking will lead you down paths that end up getting you in trouble often. You have this idea, the marginal cost of this action, there’s extenuating circumstances, I’m only going to do it this one time. That then becomes this slippery slope that then turns into– that’s how you end up in jail. He gives a story about how– he played basketball while he was at Oxford, and you may not know this, but he was like 6′ 8″ and he was like their starting center. They went undefeated. They’re in the British equivalent of the NCAA tournament, and they get to the championship game. It’s on a Sunday and he’s taken an oath to basically– he won’t play ball on Sundays because it’s for religious reasons.
He goes to tell the coach like, “Hey, I have a problem. I can’t play in the championship game.” The coach is like, “Surely you can bend the rule for just this one time, right?” All of his teammates are like, “We need you. You’re our starting center. This is the championship game.” He doesn’t play. What he says is that he’s found that it’s much easier to hold your principles if you commit to 100% than to allowing 98%. While at the time felt very painful and felt like the wrong decision, I bet that that paid for itself lots and lots of times throughout his life later when he could fall back on those principles.
After he was diagnosed with cancer, which ended up killing him eventually, he said that– he’s written all these books and pioneered a lot of research on disruption. He said he doesn’t care about any of that. It meant nothing to him when he was on death’s door. What he realized was it was the impact of working with people, the changes that he made in people’s lives was the only thing that he cared about.
I guess the important thing for us is to think about, especially like trying market times, when we’re probably going to be lamenting through here for the next 45 minutes, there’s bigger games here than just that. Maybe if it’s a rough patch, don’t over-invest in that with your energy and your mental capabilities. Maybe spend a little bit more time with your family now and look at this as a gift to open up the time to do it. If the market’s giving you nothing but confusing sliders in the dirt, maybe take the bat off your shoulder and go take your kid for a walk instead and come back later and maybe you’ll get some pitches more to your liking. Trying to draw that back into investing a little bit, but I thought, wow, that’s a good message for me to just go read every six months or so. Take five minutes, refresh the brain a little bit, put that back into the RAM, and then go back to life.
Tobias: Practically, what do you do having read that?
Jake: That’s none of your business.
Jake: For me, it’s just more of a mindset shift of– You know what? Don’t stress so much about some of these things. It’s going to come around. This too shall pass. Go enjoy a little bit more time with your family right now, and not feel like that that’s the only one game that matters necessarily.
Tobias: I like that. I did the same thing except I watched the movie A Good Year because my wife loves it. I’ve watched it so many times, but only because she– I’ve basically got it memorized because she wants to watch it. Every now and again, I put that on because it’s the escape fantasy, the guy goes to the French vineyard, decides that he’s not going to be a trader in the city anymore. Be nice to inherit a French vineyard and not have to do that. But if you don’t have that, the equivalent, I guess, is spending a little bit more time with a family, remembering this stuff outside.
Jake: Yeah, get outside, get in nature, get refreshed, and you’ll probably have a fresh take on what the world looks like when you get back. Either it changed or you changed– [crosstalk]
Tobias: I also like the systematization. Everything you do, you should be doing it infinitely. It’s repeatable and you should do it over and over again. If it’s an exercise that you do infinitely and it leads to ruin and it doesn’t work, because you never know if the next one could be the time that leads to ruin. So, you need to find things that infinitely put you in a better position.
Jake: Yeah, that’s right. I think our very smart friend, Dan, Bill, would call that variance strain, right?
Tobias: What’s that?
Bill: When you have hiccups, you want to reduce the size of the hiccup as much as humanly possible. You want to avoid big drawdowns in any facet of life. The less that you can go down, the greater the probability that you increase at a fairly steady state over time.
Jake: Even it means truncating some of your upside.
Jake: Narrowing the range of outcomes little bit can make a big difference.
Bill: Fuck, man. I should have called him in March. He has such good ideas on positions. He’s just smarter than me That’s the problem. There was some stuff that I probably should have had, option size positions that– but I don’t know, it goes back to what you’re talking about. Don’t sacrifice on your principles. I don’t know how to have option size positions, but also try to have a high enough hurdle that not everything gets through, so at some point, you’re just an index fund if you do it that way. I digress.
One-Percenters That Pay Off
Tobias: We can weight more heavily to the ones that have more conviction and you just have a few one-percenters.
Bill: Yeah, I just don’t know that that’s right for my personality. I don’t disagree with that at all. I just think I might get a little bit too loose if I was okay with that too often.
Tobias: I like one-percenters that pay off in like a quarter, so you’re either right or wrong in a quarter and then you just move on. Not currently, but in the past that’s what I’ve done. You’re going to make the decision in the short term. Because it’s more random, in the short term, it’s random. But if you’ve got a view and you want to express it and you just want to see short-term 1%.
Bill: Yeah. Well, the two I complain about, Restoration Hardware and Eldorado Resorts. I held Eldorado Resorts for like two days at 9 and I’m pretty sure it’s at 50 now, so that hurts. But I didn’t think that have the liquidity, so I probably shouldn’t have bought it in the first place. If you can’t sleep with it for two nights, you probably shouldn’t own it. That’s probably rule number one, but whatever.
Jake: Is this dating advice now?
Bill: That’s right. Rent it, don’t won it.
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