Exploring the power of questioning and the Socratic Method in fostering creativity and critical thinking, challenging assumptions in investing and startups, and unlocking innovation in ambitious teams like Tesla and SpaceX.

Welcome to the 537 new members of the curiosity tribe who have joined us since Friday. Join the 27,544 others who are receiving high-signal, curiosity-inducing content every single week. Oh, and share this on Twitter to help grow the tribe!Today’s newsletter is brought to you by Morning Brew!Morning Brew is on my must-read list every single day. There's a reason over 3 million people start their day with Morning Brew — it’s a free daily email that delivers the latest news from Wall Street to Silicon Valley in an easy-to-digest format. Join millions of others and subscribe today!Today at a GlanceCognitive biases are systemic errors in thinking that negatively impact decision-making quality and outcomes.Combatting cognitive biases relies first and foremost on establishing a level of awareness of the biases, but each has its own specific combat strategies as well.Overview, examples, and combat tactics for common biases, including Loss Aversion, Endowment Effect, Ben Franklin Effect, Availability Bias, Survivorship Bias, Ikea Effect, Hindsight Bias, Plan Continuation Bias, Gambler’s Fallacy, and Curse of Knowledge.The Cognitive Bias Handbook - Part IICognitive biases are systemic errors in thinking that negatively impact decision-making quality and outcomes. I recently shared a Twitter thread covering the basics of 20 cognitive biases - but it was admittedly surface-level (280 characters only allows for so much depth and nuance on a topic!).Last week, I went deeper, with Part I of The Cognitive Bias Handbook, covering 10 common cognitive biases, including examples and ways to combat each. Today, I will cover the remaining 10. As a reminder, this two-part newsletter series was split as follows:Part I (last week) covered Fundamental Attribution Error, Bandwagon Effect, Egocentric Bias, Naïve Realism, Baader-Meinhof Phenomenon, Pygmalion Effect, Confirmation Bias, Backfire Effect, Anchoring, and Dunning-Kruger Effect.Part II (today) covers Loss Aversion, Endowment Effect, Ben Franklin Effect, Availability Bias, Survivorship Bias, Ikea Effect, Hindsight Bias, Plan Continuation Bias, Gambler’s Fallacy, and Curse of Knowledge.This handbook is designed to be a resource you can save and come back to whenever you need a refresher. Given the volume and importance of the information, I am considering working with an illustrator to convert it into a physical/digital book that you can reference as well. Stay tuned!Without further ado, let’s dive into Part II…Loss AversionWhat is it?The pain of losing something is more powerful than the pleasure of winning it.Loss aversion was first identified by famed behavioral scientists Amos Tversky and Daniel Kahneman, who found that humans had a tendency to prefer avoiding losses over acquiring equivalent gains. Accordingly, people were typically willing to take actions to avoid losses that they wouldn’t have taken to seek gains.Economists had previously assumed humans were rational actors - that $100 in losses would drive the same amount of pain as $100 in gains would create pleasure. Wrong. Humans are enigmatic creatures!ExamplesInvestors - professional and amateur alike - exhibit loss aversion. The pain and fear of realizing a loss often leads investors to hold onto losing positions much longer than they should.Gamblers who are in the red for a given night often risk much more to try to get back into the black (above breakeven) than they should.How do you combat it?Loss aversion is hardwired into our primate brains, but as always, awareness is the first step to fighting back against its influence.Avoid emotional connection to your possessions - whether they are investments, material items, or money. Attempt to distance your emotions from the decision-making process where possible.Ask questions:Am I being objective and rational in this decision?Am I letting my emotions influence my decision?Am I too connected emotionally to make a rational decision?If you are too connected to a given decision, you may need to outsource it to an objective third-party.The Endowment EffectWhat is it?A close relative of loss aversion, the endowment effect (sometimes called “divestiture aversion”) says that once we have something, we don't want to give it up.Specifically, we demand more to give up an object than we would be willing to pay to acquire it. In slightly more scientific terms, willingness to pay (“WTP”) to acquire an object is typically lower than willingness to accept (“WTA”) to give up an object.ExamplesIn a classic experiment performed by Richard Thaler, two groups of people were placed in a room and given either (a) a fancy pen or (b) a coffee mug. They were then asked if they would be willing to trade their item for the alternate item. Both groups expressed an unwillingness to trade their endowed item for the alternate item, even though they had similar objective values.In another study of NCAA Final Four ticket-holders, it was found that their WTA was ~10x+ higher than their WTP for the same tickets. Insane!How do you combat it?The path to fighting back against the endowment effect is, unsurprisingly, very similar to that of loss aversion.Force a level of hyper-awareness of the irrational gap between your WTA and your WTP on a possession. Use your imagination to distance yourself from the possession and think objectively about its value and utility.It’s never perfect, but it’s a start.The Ben Franklin EffectWhat is it?"He that has once done you a kindness will be more ready to do you another, than he whom you yourself have obliged." - Benjamin FranklinPut simply, doing one favor for a person makes you more likely to do another favor for that person than if you had received a favor from them.Humans love to reinforce our own self-perceptions. If we perform a favor for another person, we have become a “favor-giver” in our minds. We become more likely to reinforce this self-perception by performing another favor.The Ben Franklin Effect says that this reinforcing effect is more powerful than the desire to return a favor when one has been done for you.ExamplesThe best example of The Ben Franklin Effect is of how Ben Franklin’s eponymous effect was born.Early in his career, Benjamin Franklin once sought to convert a political adversary into a fan. He did so by requesting a favor from the adversary (he asked for a book from his personal library). Flattered by the request, the adversary quickly obliged and loaned Franklin the book.After he returned the book (with a nice thank you note!), Franklin noted that the adversary became a neutral supporter in all future interactions.By drawing out a favor from the hater, he turned him into a fan (or at least a neutral bystander).How do you combat it?With the Ben Franklin Effect, rather than focusing on how to combat it, it is perhaps more impactful to think about the best ways to use it to your advantage in your own life.As a brand or an individual, developing an awareness of this cognitive bias should allow you to think creatively about leveraging its power for converting haters into fans.Availability ...

Welcome to the 840 new members of the curiosity tribe who have joined us since Friday. Join the 26,411 others who are receiving high-signal, curiosity-inducing content every single week! Oh, and share this on Twitter to help grow the tribe!Today’s newsletter is brought to you by MicroAcquire!MicroAcquire is revolutionizing the startup acquisition process. As the #1 startup acquisition marketplace in the world, MicroAcquire provides a platform covering everything you need in order to buy and sell startups. The company recently raised a $6.3 million seed round from a long list of technology entrepreneurs and investors (including this humble newsletter writer!) and is poised for rapid growth.If you are interested in buying or selling a startup, check out MicroAcquire today!Today at a GlanceCognitive biases are systemic errors in thinking that negatively impact decision-making quality and outcomes.Combatting cognitive biases relies first and foremost on establishing a level of awareness of the biases.Overview, examples, and combat tactics for common biases, including Dunning-Kruger Effect, Fundamental Attribution Error, Bandwagon Effect, Egocentric Bias, Naïve Realism, Baader-Meinhof Phenomenon, Pygmalion Effect, Confirmation Bias, Backfire Effect, and Anchoring.The Cognitive Bias Handbook - Part ICognitive biases are systemic errors in thinking that negatively impact decision-making quality and outcomes. I recently shared a Twitter thread covering the basics of 20 cognitive biases - but it was admittedly surface-level (280 characters only allows for so much depth and nuance on a topic!).So here we are. It’s time to dive deeper on cognitive biases, including examples and specific ways to combat each one. To avoid a monstrous newsletter piece that no one has the time to read (or listen to), I will be splitting the coverage of the 20 cognitive biases across 2 newsletters over the coming weeks (with each covering 10 common biases).This two-part newsletter series will be split as follows:Part I: Fundamental Attribution Error, Bandwagon Effect, Egocentric Bias, Naïve Realism, Baader-Meinhof Phenomenon, Pygmalion Effect, Confirmation Bias, Backfire Effect, Anchoring, and Dunning-Kruger Effect.Part II: Ben Franklin Effect, Loss Aversion, Endowment Effect, Availability Bias, Survivorship Bias, Ikea Effect, Hindsight Bias, Plan Continuation Bias, Gambler’s Fallacy, and Curse of Knowledge.This handbook is designed to be a resource you can save and come back to whenever you need a refresher. Without further ado, let’s dive into Part I…Dunning-Kruger EffectWhat is it?The Dunning-Kruger Effect says that people with a low objective ability at a task are prone to overestimate their ability at that task.Humans are notoriously incapable of objective evaluation of themselves, including of their competency levels.(Note: see below for a deep-dive thread I wrote on Dunning-Kruger!)Examples“Everyone is a genius in a bull market.”This is a common phrase heard in the investment world during bull markets. When everyone is making money, everyone starts to fancy themselves expert investors. They fail to separate their objective skill at the task from the outcomes.If you start hearing more and more people bragging about their stock market prowess, the market is entering the danger zone.How do you combat it?Several tactical strategies for combatting the Dunning-Kruger Effect:Identify your circle of competence: Know what you know, and what you don’t.Get comfortable with “I don’t know”: Most people are afraid of this phrase. Get comfortable with it.Challenge yourself: Consistently challenge your belief on your own competency ratings. Do you actually know something as well as you think you do? What would an unbiased third-party say?It will feel uncomfortable - you’ll be challenging your most basic instincts. If you persist, you’ll be less prone to falling victim to the Dunning-Kruger Effect.Fundamental Attribution ErrorWhat is it?Fundamental Attribution Error (or “FAE” for short) is the human tendency to hold others accountable (while giving ourselves a break).It says that humans will tend to:Attribute the actions of others to their character (and not to their situation or context).Attribute our own actions to situation and context (and not to our character).Why do we do this? Well, as with many of the biases we will cover, it likely developed as a heuristic (a problem-solving or decision-making shortcut), in this case for simplifying the process and judgement around new human relationships.From an evolutionary perspective, quickly attributing negative actions to character (rather than situation or context) may have kept you alive, as you’d be more likely to avoid that individual.But in a modern context, being prone to FAE can create real problems.ExamplesThe workplace is a common FAE breeding ground.It is easy to form perspectives on the character of colleagues and bosses based on small pieces of information. If a colleague arrives late for work, they are lazy, right? This is clearly a flawed line of thinking, as there are numerous factors that could have contributed to your colleague’s lateness.The reality is that, in these instances, you are using limited information to create an overall picture of an individual. This is the equivalent of seeing one square of a map and believing you know the map in its entirety.How do you combat it?The first step to combatting FAE (and all cognitive biases, for that matter!) is awareness. Keep it in mind as you build a body of experiences with new colleagues or acquaintances.Beyond awareness, combatting FAE comes down to forcing yourself to slow down and evaluate the potential circumstances or situational factors that may be influencing an individual’s actions or behaviors. You won’t always have the time to do so (heuristics can be helpful!), but with more lasting relationships (friends, partners, colleagues, etc.), it is worth the extra effort.You’ll build deeper, more trusting relationships (and naturally become a more compassionate person).Bandwagon EffectWhat is it?Humans evolved as a social species. Our communities and collective behavior allowed us to thrive.But our nature has a downside…It creates a strong tendency to speak, act, or believe things simply because a lot of other people do. The Bandwagon Effect says that we prefer actions that many others are taking, irrespective of the logic or soundness of those actions.Our social nature subconsciously pushes us towards fitting in, leading to mindless actions and dangerous groupthink.ExamplesThe classic example of Bandwagon Effect is from a popular old TV show, Candid Camera, in which unknowing participants were caught on hidden cameras doing funny things.In one episode, people entered an elevator to find several people (actors) standing facing the back wall. Rather than question the behavior, many of the elevator entrants simply mimicked the behavior, despite its absurdity.The Bandwagon Effect is all around us - in investing (FOMO and meme stocks, anyone?!), politics (sigh…), business (companies blindly following the strategies of competitors), and more.Once you learn it, you’ll start seeing it all around you.How do you combat it?There are two effective ways to combat the Bandwagon Effect:Ground yo...

Welcome to the 750+ new members of the curiosity tribe who have joined us since Friday. Join the 24,766 others who are receiving high-signal, curiosity-inducing content every single week!Today’s newsletter is brought to you by AppSumo!AppSumo was founded with one goal in mind: to give entrepreneurs the tools they need to grow their businesses, at a fraction of their regular cost. To do this, AppSumo partners with the hottest tech companies and gets you insane deals on their products and services. You’ll save money and discover exciting, up-and-coming technologies. I’m a customer, you should be too. Check it out below to take advantage!Today at a GlanceInversion is a simple, powerful mental model for solving complex problems.When problems become challenging to solve forwards, they may be more readily solved backwards.Inversion has a wide variety of applications, ranging from investing to business to leadership to relationships.Invert, Always InvertThe world is an exceptionally complicated and competitive arena. On any given day, you wake up, encounter a wide array of challenging, multivariate problems, make decisions with highly-imperfect information, and then plan to do it all over again the next day.To outperform in this complicated and competitive arena, you need serious problem-solving skills. Fortunately, contrary to what many of you have been told, these skills can be learned.Today, I’d like to cover inversion - a simple, powerful mental model for thinking clearly and solving complex problems.The History of InversionWhen solving problems, the human mind is wired to think in linear, logical, forward terms. This is (probably, I’m not a scientist!) due to the types of problems our ancestors faced - avoiding getting eaten by large animals, hunting other large animals, searching for the next meal, etc. These problems were inherently ephemeral and discrete - they had clear lines of action/reaction and obvious allies and enemies. But as humanity entered the Agricultural Age, followed by the Industrial Age, followed by now the Digital Age, our problems seemed to change. They got much more complex. As Notorious B.I.G. famously said, “Mo technology, mo problems” (or something like that?). As the problems get increasingly complex, the forward, logical process evolved in our ancestors often fails. Enter our simple, powerful mental model: inversion.Let’s start with the basics. What is inversion?Inversion is a mental model and thinking tool used by some of the world’s greatest thinkers and problem solvers. Simply put, it says that when problems become challenging to solve forwards, they may be more readily solved backwards.Inversion as a general thinking tool has been around for millennia. Stoic philosophers would perform an exercise they called “premeditatio malorum” - roughly translating to “the pre-meditation of evils” - in which they would imagine the worst case scenario ahead of time. They believed that this exercise would force them to engage in behavior and make plans to avoid this outcome.The more formal mental model was popularized by German mathematician Carl Jacobi in the mid-1800s. Jacobi was famous for his work in advancing the field of elliptic functions. Wikipedia tells me elliptic functions are “a special kind of meromorphic functions, that satisfy two periodicity conditions” - which provided approximately zero clarity, so I’ll just stick to my lane.When faced with difficult problems (which happened frequently!), Jacobi had a strategy: “Man muss immer umkehren.”The loose translation: “Invert, always invert.”Jacobi frequently used this strategy if he were to be stumped on a challenging math problem. Rather than continuing to look at it the same way (forwards), he would restate it in inverse form (backwards). This new, creative perspective often allowed him to solve the problem more easily.Fast forward 100+ years and inversion went mainstream when Charlie Munger made one classic, quintessentially pithy remark:“All I want to know is where I’m going to die, so I’ll never go there.”Munger realized that forward, logical thinking can only take you so far. To solve certain problems, you have to think differently.Inversion is just that: a method for thinking about a problem differently. It requires you to look at things from a different angle to embrace a new perspective. Just as the captain surveys the battlefield for a new vector of attack, you too have to uncover a novel approach.Perhaps more importantly, inversion trains your mind to think dynamically. Athletes have long known that training in a single plane leads to stasis. The same principle applies to the mind. Inversion trains it from multiple angles.But let’s get practical. How and where can you apply it in your life?Inversion in InvestingWarren Buffett famously stated that there were only two rules of investing:"Rule #1: Never lose money. Rule #2: Never forget Rule #1."Buffett (and his business partner Charlie Munger) have often evangelized the benefits of simply avoiding stupidity vs. seeking brilliance. This is a classic example of inversion in action.When it comes to investing, the first point to internalize is that achieving long-term outperformance is extremely challenging (some would argue impossible!).(Note: If anyone tells you otherwise, you should run in the other direction!)Applying inversion, rather than solving for how to achieve outperformance, try solving for how to achieve underperformance. This sounds crazy, but bear with me…What type of behaviors, thought patterns, and decisions would effectively guarantee you underperform the market? Said differently, how do you guarantee you break Buffett's Rule #1 and lose money?By answering these questions, you are eliminating a lot of actions that may have crept into your investing process and scuttled your performance goals. Through this process of elimination, you may find a cleaner, shorter list of behaviors and actions that will help you to craft a strategy for outperformance.Inversion in Startups & BusinessFor most startups and businesses, defining and executing against a strategy to drive durable, long-term growth is the primary priority. Grow or die.But in a high-stakes, competitive market, deciding on the "right" strategy can often be incredibly difficult. There are simply too many options, too many variables, and too many decisions to make along the way.Inversion can help. Here’s how:Conduct a pre-mortem analysis - your own version of the "premeditatio malorum" of the Stoic philosophers - of the different strategies and levers. For a given strategy, ask a few questions:If this were to fail, why did it fail?How might we have avoided this failure?What are the consequences of this failure?If you perform this exercise across the various considered strategies for your startup or business, the answer of which strategy to pursue will likely come into clear view. The pre-mortem analysis can be a very helpful exercise for cutting through the noise and making quick, effective decisions.Inversion in LeadershipThere are countless books on how to be an effective leader. But when you're dropped into a new context and asked to lead, these books can only take you so far. Leadership is not a one-size-fits-all endeavor. Every new situation requires a new approach to leadership. So how do you lead?J...

Welcome to the 500+ new members of the curiosity tribe who have joined us since Friday. Join the 23,529 others who are receiving high-signal, curiosity-inducing content every single week!Today’s newsletter is brought to you by AppSumo!Are you an entrepreneur? Do you like great deals? Great news: Sumo Day 2021 is finally here - an event for entrepreneurs hosted by my friends over at AppSumo. Think of Sumo Day as Amazon Prime Day, but for entrepreneurs. AppSumo is bringing entrepreneurs insane products, discounts, and giveaways for just 72 hours! Sign up to take advantage of the deals and get the updates straight to your inbox!Principles of Effective StorytellingStorytelling is a superpower. But it is - for one reason or another - an underrated one. It is rarely talked about alongside other key traits of highly-successful people. Instead, we glamorize traits like intelligence, creativity, and focus, calling these the “keys to success,” often completely ignoring the role that storytelling may play in the trajectories of great women and men.This misses the mark. Storytelling, I would contend, is one of the most important “weapons” to have in your arsenal. It is a key to unlocking growth in your writing, startups, marketing, business, career, or life. Moreover, it is not genetically endowed - anyone can become a great storyteller!So let’s begin our storytelling journey today…Here are 10+ principles of effective storytelling (that you can start using today):Clarity of PurposeThe best storytellers always define a clear purpose prior to crafting their story.What is the story trying to achieve? What does success look like with this story? Do you have a burning desire to tell this story? If so, why?If your answers to these questions are loose or dynamic, you’re going to have a difficult time capturing your audience from the start. The audience feeds off of your commitment and clarity. If you are lacking either, they will feel it. Guaranteed.Commit to answering these key questions before doing anything else.Define the AudienceEvery great story begins with a well-defined audience. The story you tell has to be catered to the audience to whom you will deliver it. Who is the audience? What do they consciously (or subconsciously!) want from the story?Be deliberate with this exercise. It will determine how you approach structure, emotion, novelty, and many of the other storytelling principles we will cover later in this piece.Be ruthlessly honest with yourself. The audience may look different than you expect.Establish Structure“People have forgotten how to tell a story. Stories don’t have a middle or an end any more. They usually have a beginning that never stops beginning.” – Steven SpielbergStories need structure! Imagine your story as a house - the structure is the foundation of that house. A flimsy foundation makes for a flimsy house - a sturdy foundation makes for a sturdy house. Moreover, a sturdy foundation allows the architect to get more creative with what goes on top of it, knowing that the ground will hold.There are structural archetypes you can use or leverage. Clear narrative arcs (like the “hero’s journey” often used by Pixar) work well.If you are struggling to establish structure, try using “the story spine” framework, first created by playwright Kenn Adams. It goes like this:Once upon a time there was [blank]. Every day, [blank]. One day [blank]. Because of that, [blank]. Until finally [bank].It has helped me more times than I can count. Fill it in and watch your story take shape.Weave in the EmotionEmotion is what makes great stories stick.Think about your favorite stories. How did they make you feel? It’s a safe bet that they elicited a strong emotional response - positive or negative.Take it one step further. Watch your favorite movie. Using emojis in a note document, map out your emotions (and the strength of each) that you are feeling at various points throughout during the movie. Your note doc may look something like this:😂😁😫😤😍☹️😆Learn from this. The best stories elicit deep, varied emotional responses. When you are approaching your own storytelling, make sure to weave emotion into the foundational fabric of what you create.Infuse NoveltyEvery great story is infused with novelty.Novelty comes in many different forms: Fresh, new perspectives. Surprising insights. Shock-and-awe moments. Unexpected twists.Novelty is what makes your audience say: “Oh, wow!” It is what catches them off-guard, what distances them from their linear ways of thinking. It immediately signals that this isn’t like anything they have seen, read, or experienced before.Are you meeting this burden? If you’re falling short, dig deeper.Create ContrastsStorytelling expert Nancy Duarte coined the simple “what is vs. what could be” framework for creating contrasts in your stories. This framework forces you to create contrasts to craft a captivating narrative.First, describe the reality (“what is”). Next, describe the potential future (“what could be”). The audience will want to lean in - to understand why the world is not the way it could be. They will become invested in that potential future (because it is so different from the reality you portrayed).You have them - now you can take them along on that journey with you!Suspend RealityDisney is the greatest storytelling empire of all time. They have the best IP in the world, but more importantly, they do more with that IP than anyone can imagine.Walt Disney was famous for his focus on suspending reality for his audiences - allowing them to experience his new reality while still being in their reality.“There’s always room for a story that can transport people to another place.” – J.K. RowlingTake a lesson from the best. Suspend reality.(Note: This thread from my friend Trung Phan dives deep on some of Disney’s insane commitments to storytelling at their theme parks)Keep It Simple“Make it simple, but significant.” - Don DraperA good story may be complex, but a great story is always simple.One way to test your story: Try to elevator pitch the story to an uninformed party. Are they able to understand it? Could they repeat it back to you or share it with a friend in a similarly simple manner? If not, you still have work to do.When in doubt, simplify!Foster CommunityShared community is an insanely powerful force.The best stories (and the best storytellers) foster community - they elicit a sense of shared purpose, shared membership in a group, or shared experience. Stories that build communities last forever.Note: As many of you will undoubtedly point out, this one is a double-edged sword. Some of the most terrible dictators and leaders in history used storytelling to foster a community aligned with their aims. It cuts both ways - it can be a force for good or a force for evil.Make It ShareableStories are meant to be shared.The story “K-factor” - a viral marketing metric for growth - should be high. The K-factor is defined as the number of “invites” sent by each customer (or audience member) multiplied by the conversion of these invites.So what you really want to see is an audience that is naturally evangelizing your story with their...

Welcome to the 100+ new members of the curiosity tribe who have joined us since Friday. Join the 22,300+ others who are receiving high-signal, curiosity-inducing content every single week!Today’s newsletter is brought to you by AppSumo!Sumo Day 2021 is almost here - an event for entrepreneurs hosted by my friends over at AppSumo. Think of Sumo Day as Amazon Prime Day, but for entrepreneurs. Starting July 13th, AppSumo is bringing you insane products, discounts, and giveaways for just 72 hours! So sign up to get the updates straight to your inbox!Hedgehogs & FoxesWhat can hedgehogs and foxes teach us about startups, entrepreneurship, investing, and growth? A lot.For today’s newsletter, let me take you down the rabbit (er, fox) hole on a mental model on vision, focus, and the journey from good to great.Let's start at the beginning...In the 8th century BC, a Greek poet named Archilochus penned a line that has stood the test of time."The fox knows many things; the hedgehog knows one big thing."In the thousands of years since it was written, the meaning of Archilochus’ words has been debated by many of the greatest philosophers, historians, writers and thinkers.In a literal sense, the fox has an array of tricks at his disposal, but is defeated by the hedgehog's singular (and spiky) defense. In a figurative sense, Archilochus is highlighting the difference between those with singular vision and those with more scattered inspirations.The dichotomy of the hedgehog and the fox entered the more mainstream lexicon in 1953, when philosopher Isaiah Berlin published an essay entitled, The Hedgehog and the Fox, which would go on to be one of his most popular and well-regarded works.Berlin's essay sought to divide history's great writers and thinkers into two groups:Hedgehogs: who view the world through the lens of a single, all-encompassing ideaFoxes: who draw upon myriad experiences and cannot view the world through the lens of a single idea“For there exists a great chasm between those, on one side, who relate everything to a single central vision, one system, less or more coherent or articulate, in terms of which they understand, think and feel – a single, universal, organizing principle in terms of which alone all that they are and say has significance – and, on the other side, those who pursue many ends, often unrelated and even contradictory, connected, if at all, only in some de facto way, for some psychological or physiological cause, related to no moral or aesthetic principle.” - Isaiah Berlin, The Hedgehog and the Fox, 1953In The Hedgehog and the Fox, Berlin largely focused on categorizing writers and thinkers into these two groups. But he also - perhaps unintentionally - sparked the concept to leap into a new domain.Leadership and business.Enter stage left, Jim Collins...In 2001, renowned author Jim Collins released Good to Great, a book exploring why certain companies are able to achieve greatness after long periods of mediocrity (and why others don’t).In it, Collins referenced The Hedgehog and the Fox in building out what he referred to as The Hedgehog Concept. Collins asserted that the leaders of the good-to-great companies were all hedgehogs - people with a singular, all-encompassing vision.These leaders were uniquely capable of taking the complexity of their businesses and markets and simplifying it into a unifying idea.The Hedgehog Concept is a simple framework for identifying that unifying idea or vision.It is found at the center of:What you are passionate aboutWhat drives your economic engineWhat you can be the best atThis last point is nuanced and worth a brief aside...What can you be the best at?Most people and companies have a very tough time with this question. It's not about a process to become the best. It's not about a strategy, plan, or roadmap. It's a simple, self-reflective exercise in identifying what game you should be playing.Here's one way to go about it:Map a list of skills or attributes on a page. Where do you spike? Where do you lag? Mark the map with pluses (+) and minuses (-) accordingly. Reflect on your map.Questions to ask:What game am I playing?Am I uniquely positioned to "win" that game?What game should I be playing?The key point here is that succeeding on the journey from good to great requires you (or your company) to play a game that you can be great at! Far too many people and companies spend years languishing in the valley of mediocrity simply because they were playing the wrong game.Ok, after that brief aside (which probably deserves its own piece in the future), back to hedgehogs and foxes...We have established a mental model: Foxes have multiple motivations, while hedgehogs have a singular focus.So where might you apply this mental model in practice?InvestingWhether you are investing in startups or mature public companies, understanding management and their motivations is of paramount importance.This is often easier said than done.Try asking a simple, clarifying question: Is the leader a hedgehog or a fox?It can be a tricky question to answer. It hits a very common investor blindspot. Investors tend to fall in love with foxes. They are dynamic, social, and multi-talented. Hedgehogs may not be any of these things, but with their singular focus, they are always in the fight.The best investors - the ones with the longest track records of success, not the “flash in the pan” hotshots - go to great lengths to understand management motivations and identify the hedgehogs. The investors I admire most, some of whom I have the privilege to call friends and mentors, share this in common.In addition to the legends you all know (Buffett, Munger, etc.), Ho Nam (of the Uber-successful Altos Ventures) has written a great piece on this and Gavin Baker and Dennis Hong talk and write about this often.So the mental model clearly applies to investing, but what else?Personal DevelopmentFor investing, you are evaluating others, but you can also use this mental model to evaluate yourself.Are you a hedgehog or a fox? Are you working toward a singular, unifying vision? Or are you pulled apart by a variety of motivations?Importantly, a point that I have yet to address is that the characterization (hedgehog or fox) actually lies on a spectrum. It is not an absolute. You can be (and probably are!) a blend of the two.In his highly-regarded book On Grand Strategy, Yale professor John Lewis Gaddis points out that Abraham Lincoln likely embodied features of both the hedgehog and the fox.He had a unifying vision, but used certain fox-like means and characteristics to achieve his goals.Be ruthlessly honest and reflect on where you lie on the spectrum. Most of us (myself included!) will find that we are more fox than hedgehog.If that is the case, try using Jim Collins' Hedgehog Concept to identify your unifying vision, something we can all benefit fro...

Welcome to the 500+ new members of the curiosity tribe who have joined us since Friday. Join the 20,500+ others who are receiving high-signal, curiosity-inducing content every single week!Today’s newsletter is brought to you by Fundrise!Fundrise is the future of real estate investing - a platform that allows anyone to invest in a low-cost, diversified portfolio of institutional-quality real estate. With low minimums and no accreditation requirements, Fundrise is democratizing access to a historically exclusive asset class.Join 150,000+ other investors and start investing in real estate today!Mental RazorsRazors are rules that simplify decisions.20+ powerful razors (to help you cut through life’s noise):The ELI5 RazorComplexity and jargon are often used to mask a lack of true understanding.If you can’t explain it to a 5-year-old, you don’t really understand it. If someone uses a lot of complexity and jargon to explain something to you, they probably don’t understand it.Munger’s Rule of Opinions“I never allow myself to have an opinion on anything that I don’t know the other side’s argument better than they do.” - Charlie MungerOpinions aren’t free. You have to work to earn the right to have them.The Taleb “Look the Part” RazorIf forced to choose between two options of seemingly equal merit, choose the one that doesn’t look the part. The one who doesn’t look the part has had to overcome much more to achieve its status than the one who fit in perfectly.The Bezos Regret Minimization FrameworkThe goal is to minimize the number of regrets in life.When faced with a difficult decision:Project yourself into the futureLook back on the decisionAsk "Will I regret not doing this?"Take actionThe Boaster’s RazorTruly successful people rarely feel the need to boast about their success.If someone regularly boasts about their income, wealth, or success, it’s fair to assume the reality is a fraction of what they claim.The Steve Jobs Quality Razor“When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.” - Steve JobsWhen building, take pride in carrying the quality all the way through. Would you be proud for your work to be seen from every angle and perspective? If not, keep working.Buffett’s Rule of Holes“The most important thing to do if you find yourself in a hole is to stop digging." - Warren BuffettWhen things aren’t working, change course and try something different. When you find yourself at the bottom of a hole, stop digging and climb out of it.The Paul Graham Crazy Idea RazorIf someone proposes a crazy idea, ask:Are they a domain expert?Do I know them to be reasonable?If yes on (1) and (2), you should take the idea seriously, as it may be an asymmetric bet on the future.The Circle of CompetenceBe ruthless in identifying your circle of competence (and its boundaries). When faced with a big decision, ask yourself whether you are qualified to handle it given your circle. If yes, proceed. If no, outsource it to someone who is.The Duck TestIf it looks like a duck, swims like a duck, and quacks like a duck, it’s probably a duck. You can determine a lot about a person by regularly observing their habitual characteristics.Buffett’s Juicy Pitch“You don't have to swing at everything - you can wait for your pitch." - Warren BuffettLife doesn’t reward you for the number of swings you take. Slow down and focus on identifying the juiciest pitch. When it comes, swing hard and don’t miss it.Occam’s RazorThe simplest explanation is often the best one. Simple assumptions > complex assumptions. Simple is beautiful.The Buffett Reputation Razor“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” - Warren BuffettRemember that quote and act accordingly. Your character is your fate.Hanlon’s RazorNever attribute to malice that which can be adequately explained by stupidity.In assessing someone's actions, we should not assume negative intent if there is a viable alternative explanation, such as different beliefs, incompetence, or ignorance.Machiavelli’s RazorA simple modification of Hanlon’s Razor:Never attribute to malice that which can be adequately explained by self-interest.In assessing someone's actions, we should not assume negative intent if there is a viable alternative explanation that they are acting on rooted self-interest.Newton’s Flaming Laser SwordIf something cannot be settled by experiment or observation, it is not worth debating. This will save you from wasting a lot of time on pointless arguments.Hitchens’ RazorWhat can be asserted without evidence can also be dismissed without evidence. The burden of proof regarding a claim lies with the one who makes the claim. If unmet, no argument is required to dismiss it.Sagan’s Standard“Extraordinary claims require extraordinary evidence.” - Carl SaganThe more crazy and outrageous the claim, the more crazy and outrageous the body of evidence must be in order to prove it.The Naval Reading Razor“Read what you love until you love to read.” - NavalWhen deciding what to read, just read whatever grabs you. Avoid the trap of only reading “impressive” or “smart” books that bore you to death. Never establish vanity metrics (e.g. # of books) as goals.The Eisenhower Decision MatrixWhen faced with a task, ask: “Is this urgent? Is this important?”An "urgent" task is one that requires immediate attention. An "important" task is one that promotes or furthers your long-term goals.Place it on a 2x2 matrix and act accordingly.The Steve Jobs Settling Razor“The only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.” - Steve JobsIt’s Monday morning. Did you wake up with energy or with dread? Your answer will tell you if you’re settling.The Career RazorWhen deciding on a new job, choose the one that will challenge you the most (intellectually, physically, or emotionally). Challenge and discomfort forces growth.P.S. Check out The Bloomboard for challenging new roles!Those are 20+ powerful razors to help you cut through life’s noise. What are your favorites? What razors am I missing?Love this post? Share it with your family and friends and help grow the tribe! The Bloomboard - Featured OpportunitiesPallet - Swiss Army KnifeCommonsto...

Welcome to the 500+ new members of the curiosity tribe who have joined us since Friday. Join the 19,000+ others who are receiving high-signal, curiosity-inducing content every single week!Today’s newsletter is brought to you by Fundrise!Fundrise is the future of real estate investing - a platform that allows anyone to invest in a low-cost, diversified portfolio of institutional-quality real estate. With low minimums and no accreditation requirements, Fundrise is democratizing access to a historically exclusive asset class.You can join 150,000+ other investors and start investing in real estate today!Powerful ParadoxesFrom a young age, we are taught to view the world as black and white. But many of life’s most important truths appear contradictory on the surface.15 powerful paradoxes (on growth, business, careers, and life):Sprezzatura (“Studied Carelessness”)You have to put in more effort to make something appear effortless. Effortless, elegant performances are often the result of a large volume of effortful, gritty practice. Simple is not simple.Slow Down to Speed UpWant to speed up? Try slowing down. Slowing down gives you the time to be deliberate with your actions. You can focus, gather energy, and deploy your resources more efficiently. It allows you to focus on leverage and ROI. Move slow to move fast.Learn More to Know LessThe wisdom paradox - the more you learn, the more you are exposed to the immense unknown. This should be empowering, not frightening.“The more I learn, the more I realize how much I don't know.” - Albert EinsteinEmbrace lifelong learning.Shrink to GrowGrowth is never linear. In order to grow, sometimes you need to shrink. Shedding deadweight may feel like a step back, but it is a necessity for long-term growth. This principle applies to your career, startup, or life. One step back for two steps forward.Fail More to Succeed MoreWe fear failure, so most of us play it safe to avoid it. But our greatest moments of growth often stem directly from our greatest failures. Don’t fear failure, just learn to fail smart and fast. Fail more - you’ll learn, adapt, and grow.Take On Less, Accomplish MoreSuccess doesn’t come from taking on everything that comes your way. It comes from focus - deep, disciplined focus on the tasks that really matter. Say yes to what matters, say no to what doesn’t. Protect your time. It is a gift to be cherished.Memento MoriA favorite of Stoic philosophy, it is a reminder of the certainty and inescapability of death. It is not intended to be morbid or dark; rather, to clarify, illuminate, and inspire. You must know your death in order to truly live your life.Talk Less to Be Heard MoreFriday Night Lights (the movie) has a famous scene where a notoriously quiet player gives a riveting speech that turns around a game. He rarely spoke up, so when he did, it hit. Hard. If you want to be heard, talk less. You’ll find more power in your words.The Only Constant is ChangeEntropy is reality. The world is in a continuous state of change. It’s the one thing you can always count on - the only constant. Embrace it - be dynamic, be adaptable.“When you are finished changing, you are finished.” - Benjamin FranklinStop Looking to Find MoreHave you ever noticed that when you are looking for something, you rarely find it? Stop looking. What you’re looking for may just find you.More Choices, Less SatisfactionWe assume a positive linear relationship between choice and satisfaction. But is this wrong? “Choice paralysis” is a very real phenomenon. The relationship between choice and satisfaction is much more nuanced than you’ve been led to believe.Argue Less to Persuade MoreHave you ever noticed that the most argumentative people rarely persuade anyone of anything? The most persuasive people don’t argue more - they observe, listen, and ask questions. Persuasion is an art that requires a paintbrush, not a sledgehammer.Face Your FearsIf something scares you, you should probably go do it. Fears, when avoided, become limiters on our growth and life. Make a habit of getting closer to your fears. Then take the leap (metaphorically!) - you may just find growth on the other side.Get Vulnerable to Become StrongThe stigma of vulnerability has been broken. It’s ok to admit we aren’t ok. Strength comes from opening up to our vulnerabilities - embracing them, owning them, and growing through them. Want to get strong? Get vulnerable first.Nothing is Certain“The only certainty is that nothing is certain.” - Pliny the ElderUncertainty and randomness are features, not bugs. Embrace them.“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” - Mark TwainThose are 15 powerful paradoxes on growth and life. What are your favorites? What paradoxes am I missing?If you’ve been following along, you know that I write a lot about growth. It’s what I’m passionate about. I want to help you grow in your career. Check out my job board, where I curate amazing roles in finance and tech every week!Some amazing new roles up this week, including at Avicado, Atreides Management, Beyond Protocol, Commonstock, and more!If you’re a growing company in finance or technology, use the “Post a Job” button to have your roles posted and featured today.Join the 19,000+ others who are receiving high-signal, curiosity-inducing content every single week! Until next time, stay curious, friends!(P.S. a note from Fundrise: here's all the legal jargon we know you love reading) This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sahilbloom.substack.com

Welcome to all of the new subscribers who have joined this growing tribe since Monday. If you’re not a subscriber, join the 18,500+ others and subscribe today!The Mechanics of a Meme Stock Rally“Meme stocks” like AMC and GameStop have captured the attention of the financial world. But few understand what is actually driving these furious price rallies. Let’s dive into the mechanics of a meme stock rally…First off, what is a meme stock? There is no single definition, but meme stocks can be understood as stocks that experience rapid upward price movements as a result of collective social media evangelism. The price movements are typically not related to business fundamentals.AMC and GameStop are the two most salient examples of meme stocks from recent memory. Both experienced furious, Reddit-fueled rallies that left the financial establishment scratching their heads. Heroes emerged, like fearless leader Roaring Kitty (who is not, in fact, a cat!). But how did it happen? Emotion (FOMO!) and the power of crowds played a role, but I’ll leave those to the sociologists and psychologists to analyze. There are two underlying financial dynamics at play: a short squeeze and a gamma squeeze.Let’s cover the mechanics of each…The Short SqueezeFirst, a short squeeze. The "short" in "short squeeze" refers to the concept of short selling. The basics are covered in my thread below. TL;DR - short selling is a way of betting against a stock - i.e. betting that its price will decline. "Short interest" is a measure of how heavily an asset is shorted by the market. It is the total number of shares that have been sold short (borrowed and sold), but have not yet been covered (bought and returned). It is usually measured as a % of the # of shares outstanding.A "short squeeze" occurs when a heavily-shorted asset experiences a rapid upward price movement. When this happens, short sellers may be forced to close their short positions (i.e. buy the stock and return it to the broker), further accelerating the upward price movement.In the case of the recent meme stocks, as AMC or GameStop stock rose, short sellers were forced to close their shorts all at once. This created a surge of buying (to return the borrowed shares) and drove the price up further. It created an accelerating upward price movement.The Gamma SqueezeSo that’s a short squeeze, but what about a gamma squeeze? It’s a bit more complicated, but let's attempt to simplify it here...A gamma squeeze is all about options contracts and their indirect impact on the underlying stock. For a primer on options, see my thread below.When you buy a call option on AMC, someone has to sell you that option contract. You pay them a bit of money (the premium) and they make a commitment to deliver you the underlying stock at a future date for the strike price of the option. It's a pretty simple transaction.But in the background, the seller (often called a "market maker") has to think about their risk exposure. If AMC rises above your strike price, they will have to buy the stock at the market price and sell it to you for the strike price, incurring a (potentially large!) loss.To hedge this risk, when the market maker sells you the option, she also goes into the market and buys a bit of the underlying stock. The amount of stock she buys is based on the "Delta" - a ratio of how much the option price moves relative to a $1 move in the stock."Gamma" is the rate of change of the "Delta" of the option. As Delta and Gamma rise, the market maker gets more and more nervous! She has to buy more stock to hedge the risk of the option being exercised in the money (i.e. with the underlying price above the strike price).So here we have the (simplified!) makings of the gamma squeeze. As call option purchasing volumes on AMC suddenly surged, market makers had to purchase a lot of AMC stock to hedge. This set in motion a self-fulfilling prophecy...Market makers rushed to purchase AMC stock to hedge exposure. This drove the price of AMC up! As the price of AMC went up, the Delta and Gamma of AMC call options rose. This meant market makers had to buy more stock, further driving up the AMC price! Reflexivity.So to summarize: With AMC and GameStop (and other meme stocks!), we had both (1) a short squeeze - short-sellers frantically buying the stock to close/cover their shorts and (2) a gamma squeeze - call option market makers frantically buying the stock to hedge their exposure.The result? Check the charts…I hope this piece was helpful and makes you feel more well-informed on what is happening under the surface with meme stocks!Enjoy this and want to share it with family and friends? You can find the original thread below. Subscribe now and follow me on Twitter so you never miss a beat.Until next time, stay curious, friends! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sahilbloom.substack.com

Steve Jobs delivered the commencement speech at Stanford University on June 12, 2005. 16 years later, its wisdom remains.Lessons from Steve Jobs (on careers, startups, and life):Develop Independent ViewsTo carve your own path - in your career or life - you have to develop your own views. Steve Jobs originally went to college because it was what he was supposed to do after graduating high school. He dropped out when he couldn’t see the value in it.“I had no idea what I wanted to do with my life and no idea how college was going to help me figure it out. So I decided to drop out...it was one of the best decisions I ever made."Don't chart your course based on someone else's map for your life. Develop independent views.Let Curiosity Guide YouThere are no how-to books on life (or no good ones, at least). You have to develop your own guidebook that empowers you to navigate the endless, mysterious expanse. Curiosity can be that guide (if you embrace it).Steve Jobs experienced this when he began dropping in on random classes that sparked his interest."Much of what I stumbled into by following my curiosity and intuition turned out to be priceless later on."Curiosity is a mysterious and powerful force. Let curiosity guide you. Have Faith in the DotsIn following his curiosity, Steve Jobs dropped in on a calligraphy course for a semester."It was beautiful, historical, artistically subtle in a way that science can’t capture."But it had no practical relevance to his life...or so he thought."10 years later, when we were designing the first Macintosh computer, it all came back to me...It was the first computer with beautiful typography."You are just a series of "dots" - moments, decisions, successes, and failures. Your life is the line that connects them."You can’t connect the dots looking forward; you can only connect them looking backward. So you have to trust that the dots will somehow connect in your future...This approach has never let me down, and it has made all the difference in my life."Have faith in the dots.Go Back to the Starting LineAfter being fired from Apple, Steve Jobs felt the weight of tremendous public failure. He had been fired from the company he founded, after all. But through self-reflection, he came to see that this very public failure had freed him in a way.“The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life.”Don’t let the burden of external forces drain your life. Go back to the starting line.Never SettleIn your career, if you have the luxury of choice, never settle for less than love. Low tolerance for uncertainty often leads to this settling - we fear the uncertainty and settle to escape it. Resist this urge...“The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle.”Tolerate uncertainty for a bit longer. Never settle.Memento MoriOne year before his speech, Steve Jobs had survived a scare with pancreatic cancer. It was a very real reminder of his mortality and the inescapability of death. But rather than darkness, this experience brought light."Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart."Remember that you must die. Memento Mori.Stay Hungry, Stay FoolishFight back against “fitting in” - fight back against normalcy.“Your time is limited, so don’t waste it living someone else’s life...Have the courage to follow your heart and intuition. They somehow already know what you truly want to become.”The world wants you to be normal and play by the rules. You have to fight - consistently and diligently - to maintain your uniqueness. Steve Jobs recognized this as well as anyone in the world. So it was that he closed with his most famous line:“Stay Hungry. Stay Foolish.”These were the powerful mental models and lessons from Steve Jobs, delivered during his commencement speech at Stanford University on June 12, 2005. The full text and video of the speech can be found here.If you are still looking to find that love in your career that Steve Jobs referenced, I want to help. Check out my job board for curated roles at high-growth companies in finance and technology that believe in open access recruiting.There are some amazing new roles on the board this week from companies like Commonstock, Beyond Protocol, and Mercury - check it out today!And if you are a growing company in finance or technology looking to access a unique pool of talent and have your roles promoted to my audience on Twitter or through the newsletter, post a job on the board or message me for additional information.Enjoy this and want to share it with family and friends? You can find the original thread below. Subscribe now and follow me on Twitter so you never miss a beat.Until next time, stay curious, friends! This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit sahilbloom.substack.com