Monday, August 11, 2008

Success Secrets: Top 10 Reasons for Thinking Long-Term

What if this were true: no goal is worth achieving unless it takes at least 100 of something to get there. If it were true, how would that affect the way we think about what goals we set for ourselves? How would it structure our daily lives? What if we only looked at goals that take at least 100? 100 customers, 100 days, 100 wins, 100 attempts, 100 months, 100 miles, 100X improvement, etc

I was thinking about the definition of a long term goal, and why long-term goals seem to be so much more inspiring, and so much more worthwhile. Here are my Top 10 Reasons for Thinking Long Term.

1. If 100 iterations are necessary, it makes us pick something worth doing. If I wanted to pick something that would really get me somewhere after 100 days or 100 weeks, I am going to pick something pretty important.

2. Longer time frames allow small changes to add up. Small changes on the way to a goal are often not inspiring or even invisible. But thinking in longer time scales allows more space between evaluations, allowing the invisible successes to become visible by building up. Your sales statistics, IRA balance, or body weight may not change in a dramatic way in a week. But in 100 days, or 100 weeks, you are more likely to see those results.

3. The learning curve. As you “get used” to a particular endeavor, your efficiency at it improves. If you’ve been using a particular tool for 6 months, you are going to be a lot more fluent than if you use it for 6 minutes. We underestimate the results we can get because we don’t allow ourselves to adapt to the situation over time.

4. Success is an iterative pursuit. You get better as you see the results of the last iteration. I think this is an underestimated benefit of long-term thinking. As you begin to pursue a project, each activity along the way become open to improvement. Let’s say your goal is to win a footrace in 100 days. You begin to see the components of that event as separate categories to improvement. The start, the finish, your stride, your pace. Then you begin to see inputs to each area that will improve that component. You work backward: your warm-ups, your sleep, your attitude, your nutrition, etc. Each area comes under scrutiny, and gets improved iteratively, as previous attempts are evaluated. None of these iterations can happen quickly. They come to the surface gradually, over time. Only through a longer-term point of view can these benefits be realized.

5. Commitment over time reduces competition. People get bored (but not you). People give up (but not you). People try something easier (but not you). People don’t show up month after month (but you do). Before you know it…there’s no one competing…but you.

6. Statistics, to have meaning, need a lot of events. As a trader, my work improved as I understood that any given event has very little meaning. You need a lot of events just to track your progress. Reality is “lumpy”. You have good days, you have bad days. But things smooth out if you have enough events. The trajectory becomes clear. The progress emerges from the ‘noise”. But only if you have enough events, attempts, results, etc to be able to see the arc of your progress clearly.

7. Reputation takes time to build. How many trials has your attorney won? How many years has your money manager beaten the S&P? Reputation is, in part, a function of time. And it’s not merely “results” which accrete over time. Your single-minded intensity will attract like-minded people with ideas, will attract mentors, will attract professionals and even competitors who can help you. But only if you have become a “known” quantity. At the far end of the scale, an investor like Warren Buffett, a music producer like Quicy Jones, a filmmaker like Steve Spielberg…these people spent decades achieving their mythical status. Their lives are quests. There is no goal. There is no end. This type of stature is built with decades of commitment.

8. Acquiring knowledge takes time. There is so much knowledge being generated in every field, that any significant goal is going to require significant expenditure of time to acquire that knowledge. These days, you may not even know here “square one” is until a few months of pursuing a long-term goal. Furthermore, it may take a lot of time to merely identify high-quality sources of knowledge.

9. Luck has a better chance to work over time. You’ve been thinking about a problem for a year. You wander into a bookstore, you leaf through your favorite magazine and…bam!! Out of nowhere, a solution is staring you in the face. I have had very significant breakthroughs by wandering into one more seminar, on one more topic, going over ground I thought was already covered. But it wasn’t. The new fragments added to the older data, and I was able to make progress.

10. You can relax. It’s not just about today. You have the dual reward of being proud of your discipline while on your way to the higher reward of the actual achievement of your goal

11. (I exceeded my goal of “Top 10”). Rewards tend to compound. And longer-term pursuits allow ever-higher waves of compounding. Success at a given level allows you to re-set your sights on higher goals. Success locally begets success nationally, with exponential results. Notoriety attracts higher levels of notoriety. Skills compound at accelerating rates. Your ability to focus on key drivers improves. Here’s an example: my trading results from July 1, 2008 to August 11, 2008 are almost equal to my trading results from Jan 1 2008 to July 1 2008. That’s right: I made nearly six months of profits in the seventh month of the year. How? Commitment, attention to each component of my plan, better-directed research, doing more of what works, and luck. But if I had given up in month 6, I would have given up 43% of my year-to-date profit.

If you select shorter term goals, as opposed to longer term goals, you are giving up an entire “probability funnel” of successes that come at the 3rd try, the 10th week, the 30th book, the 80th business conference. These are unknowns, but not as “unknown” as we might think. We know that if we stick to a long-term goal, we will definitely acquire more knowledge about it, meet more people in the field, find more helpers, etc. than if we switch goals, or give up too easily. Don’t believe me? Check out Michael Jordan’s lifetime record…in baseball.

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Wednesday, August 06, 2008

Success Videos: Marc Andreessen at Startup School

As I was writing my last post about Marc Andreessen's take on Charlie Munger, I came across a great video of Andreessen speaking at Startup School . I strongly recommend watching the entire video, but here are a few important points outlined by this successful and seasoned entrepreneur:

1. If you are concentrating on anything besides your core competency before you really have a core competency, you are kidding yourself. The core competency is the best ticket to all the other entrepreneurial functions (hiring great people, getting backers, etc).

2. That core must be first and foremost generated by you and your inner group. It's much easier to hire an echelon of employees to administrate your breakthrough than to have them help create your breakthrough.

3. "A" people hire "a" people and "b" people hire "c" people. Corollary: the level of a work group (engineers, vice presidents, etc) defaults to the level of the lowest-quality member of that category. To avoid this error: attempt to raise the average performance level with each new hire. Without constant and ruthless attention, employee quality will drop.

4. Luck is a timing phenomenon. Good ideas abound and repeat (Friendster, Facebook). Timing is the difference between success and failure and is often random. Don't confuse a function of randomness (i.e. timing) with genius. The implication , as Ben Stein says, is , you must develop your capabilities and then hang in there: "stay at the table" till you win.

5. Finally, pay attention to commitments. In the context of his talk, he was referring to financial commitments. In this respect he reflects the teachings of banking wizards Sandy Weill and Jamie Dimon both of whom support the concept of a "fortress balance sheet"...a strong preponderance of assets over liabilities.

As I listened to Andreessen I was also struck by his skill at conceptualizing. Beyond being a brilliant engineer, he takes a conceptual view of his Brian Tracy might say "What am I trying to do, and how am I trying to do it?". His respect for the random nature of reality, as well as his quick humor are hallmarks of his ability to think beyond the task-focus of the moment...and yet he reminds us over and over, if you don't hit that core task with all you've got, you're just kidding yourself.

Success Secrets: Marc Andreessen on Charlie Munger

I have devoted an entire category on this blog to the thought of billionaire Charlie Munger. Munger's goals, int his many speeches and writings, often concerns the psychological behavior of humans, which, when understood, leads to success in business and other areas of life. His thought is truly deep, and so far above the "basics" of achievement skills, it might fall into a separate category, perhaps "Meta-Success".

It is truly gratifying to see Marc Andreessen's post: The Psychology of Entrepreneurial Misjudgment, Part1: biases 1-6 on his blog recently. Andreesson generously gives the reader his "take" on Munger's classic "The Psychology of Human Misjudgment". Andreesson, founder of Mosaic, Netscape, Ning, etc has been extraordinarily successful, and, from this post, it is easy to see why: he is able to abstract individual experiences into larger conceptual frameworks. This post is an extraordinary read, and I hope he will go on to discuss all 25 of Munger's principles. I have created a digest of the principles here.

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