No. 462 — March 6, 2022
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First-principles thinking is a competitive advantage because almost no one does it.
— The Building Blocks of True Knowledge
“Make no little plans; they have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone will be a living thing, asserting itself with ever-growing insistency. Remember that our sons and grandsons are going to do things that would stagger us.”— Daniel Burnham
Linear games are won by working harder than others. And the harder other people work, the higher the bar. You need to work harder and harder, just to stay in the same relative position.
Asymmetry is different. Even people who understand asymmetry consistently underestimate its power.
Positive asymmetry happens when you have a lot of upside and little downside. Negative asymmetry is when you have little upside and high downside. Finding hidden or overlooked asymmetry is the key to an unstoppable advantage. And there is a lot of it hiding in plain sight.
Consider trust. A lot of people are slow to trust. Their default level of trust is about 40% and you earn more.
Very few people understand that a low trust approach reduces positive asymmetry.
Most of the time people deserve to be trusted by default. Perhaps 3% of the time they take advantage of you and make you look foolish. In an effort to avoid what happens 3% of the time, people forgo asymmetric upside.
Not only does a low trust approach eliminate the upside, but you spend your time looking over your shoulder worrying about how someone might take advantage of you. That’s no way to live.
High trust people want to be around other high trust people.
I’m pretty trusting by default. And while some people have taken advantage of me, I still prefer my approach because there is no ceiling on what’s possible. The three largest business deals of my life have all been high-trust deals.
A low trust approach might put a floor on how often you get taken advantage of, but it puts a ceiling on what’s possible.
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Explore Your Curiosity
★ “The older we get, the more we need our friends—and the harder it is to keep them.”
— It’s Your Friends Who Break Your Heart
★ “Poor countries dream of finding oil like poor people fantasise about winning the lottery. But the dream often turns into a nightmare as new oil exporters realise that their treasure brings more trouble than help.”
— How Norway used its oil reserves to create one of the largest sovereign wealth funds in the world.
P.S. The kids enjoyed this.