What I Am Reading
The Psychology of Money: Timeless lessons on wealth, greed, and happiness
Doing well with money isn’t necessarily about what you know. It’s about how you behave. And behavior is hard to teach, even to really smart people. Money―investing, personal finance, and business decisions―is typically taught as a math-based field, where data and formulas tell us exactly what to do. But in the real world people don’t make financial decisions on a spreadsheet. They make them at the dinner table, or in a meeting room, where personal history, your own unique view of the world, ego, pride, marketing, and odd incentives are scrambled together. In The Psychology of Money, award-winning author Morgan Housel shares 19 short stories exploring the strange ways people think about money and teaches you how to make better sense of one of life’s most important topics.
The Science of Wisdom
As it turns out, wisdom doesn’t vary only between people who read about hypothetical scenarios in a laboratory. Even the same person typically shows substantial variability over time. Several years back, researchers asked a group of Berliners to report their most challenging personal issue. Participants also reported how they reasoned about each challenge, including meta-cognitive strategies similar to those described above. When inspecting the results, scholars observed a peculiar pattern: for most characteristics, there was more variability within the same person over time than there was between people. In short, wisdom was highly variable from one situation to the next. The variability also followed systematic rules. It heightened when participants focused on close others and work colleagues, compared with cases when participants focused solely on themselves.
These studies reveal a certain irony: in those situations where we might care the most about behaving wisely, we’re least likely to do so. Is there a way to use evidence-based insights to counter this tendency?
Like the knight’s sword, the firefighter’s hose, and the lumberjack’s ax, venture capitalists courageously wield the memo.
For VCs, learning from mistakes is easy. In fact, we make so many that we’re experts on what not to do. What’s hard is to learn from success. How did we spot those baby unicorns in the wild? Did we just get lucky? Because we really want to find more of them.
To glean patterns from those particularly beneficial early-stage decisions (and sometimes just to nourish our fragile egos), we find it helpful to publish and scrutinize the Investment Recommendation Memoranda that we circulated years ago. One pattern that consistently emerges is that Bessemer’s best investment decisions centered on people. In retrospect, the early products themselves are barely recognizable today. Rather, passionate, analytical and relentless founders zigged and zagged their way to that elusive “product-market fit”, and these memos provide a glimpse of those winning entrepreneurs before they were famous. They are the prequels of our heroes, as inspirational to us as The Hobbit, Solo, Batman Begins, and Better Call Saul. Because, really, who doesn’t love a good memo?
Making more friends in adulthood is going to take some deliberate effort on your part. It’s an exciting challenge in theory, but one of the first obstacles you’ll encounter is having enough confidence. Especially if you are shy by nature, putting yourself out there can seem scary, triggering fears of rejection. These fears might lead you to engage in two types of avoidance that will inhibit your ability to make friends. First, you might practise ‘overt avoidance’, by not putting yourself in situations where it’s possible to meet new people. Instead of going to your friend’s movie night, with the chance to meet others, you end up staying at home. Second, you might find yourself engaging in ‘covert avoidance’, which means that you show up but don’t engage with people when you arrive. You go to the movie night, but while everyone else is analysing the film after it’s over, you stay silent in the corner, petting someone’s pet corgi and scrolling through Instagram.
What I am Watching:
Why cryptocurrency is loved by oppressive rulers
Freedom. Democracy. Equality. That’s the promise of cryptocurrency. Blockchain technology was built to decentralize governments and the power of financial institutions, so why is it so appealing to authoritarian rulers? Quartz reporter Preeti Varathan looks at how President of Venezuela, Nicolás Maduro is creating its own crypto (the Petro) to maintain Venezuela's grip on power. Meanwhile, Venezuelans are mining bitcoins in an attempt to circumvent intense inflation. And Maduro is not the only leader or government with their eye on a crypto workaround.
What I am Listening To:
Chetan Puttagunta and Jeremiah Lowin – Open Source Crash Course
My guests this week are Jeremiah Lowin and Chetan Puttagunta. Jeremiah is the founder of Prefect.io, an open-source software company where my family and I are investors, and Chetan is a partner at Benchmark Capital. Both are past guests and good friends. I asked them on to help the audience understand the open source software business model. I’ve been fascinated with this model in which companies give a huge chunk of their work and value away for free to a community of developers, and then make money by building additional tools, functionality, and services on top of their free and open platform. While this may strike you as a wonky discussion on a niche software topic, I think it is valuable for everyone because the ideas can be applied to more than just code. I view much of my own activity as open-sourcing investment research and knowledge. It is also important because much of the world’s technology is built on top of open source projects. I hope you learn something new about this emerging category.
Is There An Antidote To Stress?
We’re up against a chronic epidemic: stress. In fact, it’s estimated that 80% or more of doctors’ visits are due to illnesses related to stress. This can come in many different forms. Socioeconomic stress is a real burden for many people, as is the stress of taking care of several generations within a family, or meeting the demands of our jobs. Stress can also come in the form of bad food and poor or inadequate sleep, which send negative signals to the brain that produce stress hormones. That doesn’t mean we’re stuck with stress though. Today on The Doctor’s Farmacy, I’m joined by my good friend Dr. Rangan Chatterjee to look at the many sides of stress and all the actions we can take to stop it in its tracks.
Dr. Chatterjee is regarded as one of the most influential doctors in the UK and wants to change how medicine will be practiced for years to come. He hosts the biggest health podcast in Europe, Feel Better, Live More, which Apple has announced as one of the most downloaded new podcasts of the past year. His first book, How to Make Disease Disappear, is an international bestseller all over the world and has sold over 250,000 copies worldwide in just 18 months. His most recent book, the #1 bestseller, The Stress Solution, tackles what the WHO calls the health epidemic of our time—stress.
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