Strategy Chain

Brian DeChesare is the founder of Breaking Into Wall Street and Mergers and Inquisitions.

Mergers & Inquisitions is a website dedicated to careers in the finance industry, with over 600 expertly crafted articles, over 500,000 monthly visitors, and over 100,000 email subscribers. The site features interviews with industry insiders in investment banking, private equity, venture capital, hedge funds, sales & trading, and other fields, as well as career tips, news commentary, case studies, and modeling tutorials.

Breaking Into Wall Street is M&I's sister site. It offers online training products like PDF guides and video courses as well as coaching services designed to help people break into investment banking, private equity, and hedge funds. Early in my career, I was both an avid reader and a customer of Brian's.

Although Brian has been a successful entrepreneur—earning a case study mention in the 4-Hour Workweek, as an example—I'm more impressed by Brian's ability to "step off the line," as Jocko Willink would say, to strategically re-orient himself.

During our conversation, we discuss two points where Brian strategically pivots in order to achieve his true long-term objectives. We also cover Brian's experience with angel investing, his biggest business inflection points, and how he structures his life to accentuate his strong suits.

Links from the Show

Mergers and Inquisitions www.mergersandinquisitions.com

Breaking Into Wall Street www.breakingintowallstreet.com

Brian's Reading List www.strategychainpodcast.com/support

Time Stamps

0:03:40 – Brian's "slap in the face" moment

0:07:35 – Connection to Episode 003 with Michael Pollack

0:09:41 – Catch-up since Brian's latest life story post 0:12:19 – Eliminating policy-borne headaches (refunds, support, payment plans) 0:22:31 – The difficulty of transitioning from a one-man show to a team 0:28:02 – Misinterpretations of the 4-Hour Workweek

0:31:52 – How to leverage obsessive-compulsive traits (spurts, Toggl time tracking, and adapting over time)

0:44:26 – High-yield activities and attribution difficulties (Wicked Reports) 0:50:31 – Issues with partnerships within a niche industry 0:55:46 – Business inflection points (pitching content, product development, marketing) 1:11:30 – The psychological lift from making the first sale 1:17:13 – Developing products by offering services

1:22:03 – The magic decision that improved profitability AND unit sales: pricing 1:30:32 – Brian's angel investing experience

1:48:19 – What Brian would say to a younger version of himself: think of other options 1:50:40 – Brian's future plans

1:55:15 – Book recommendations (Dan Kennedy's work, Jason Fried & David Heinemeier Hansson: It Doesn't Have to be Crazy at Work, Rework, Remote, Henry IV Parts 1&2, Henry V, A Song of Ice and Fire, The Witcher Series, Brandon Sanderson's The Wheel of Time, Robert Jackson Bennett [City of Miracles, City of Blades, City of Stairs]) 2:06:08 – Closing thoughts: you can only connect the dots in retrospect, find the unconsidered options.

Strategy Chain Links

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What if we didn't have to worry anymore?

In this episode for anxiety-ridden overthinkers, I'm going to distinguish between worry (non-productive, anxious, hand-wringing) and work (productive, effective steps toward good decision-making). Then I'll offer up some tactics to reallocate your resources into the work bucket.

Let's take a step back

No matter what our goals are, we have a few things in common. We want to create a high chance of winning and a low chance of losing. And we want a big reward for winning and a small penalty for losing.

Here's the rub

We get into trouble because we often mistake activity for production.

The future is foggy and uncertain. I like Howard Marks' description: the future is a spectrum of possible future outcomes. Humans hate uncertainty. It's painful because it's scary. And it's scary because we don't know what's going to happen. It's the grown-up version of being scared of the dark. We'll do almost anything to get rid of the nagging doubt and anxiety about the future. We are driven to confirm there isn't a monster under the bed.

After we lay our baseline of fear, we stack on another dangerous brick: unfounded hope, otherwise known as simple psychological denial. In other words, as the saying goes "as we wish, so we shall believe." We want to find a light switch. We want to find a flashlight. We want to know for sure that monsters aren't there. We're scared and we want to deal with it. Maybe I can relax once I check "x," once I look at "y," once I confirm "z."

So we cake hope on top of fear, and we end up with what Charlie Munger calls a Lollapalooza effect—a nasty combination of powerful psychological factors. If you're like me, you might begin to create a feedback loop. Fear, unfounded hope, checking behavior, lack of material results. Rinse, lather repeat.

Two absurd extremes

Let's illustrate the spectrum with a ridiculous example.

On one end, there's driving down the road with a blindfold on. That's zero analysis. Action without forethought.

On the other end, there's learning Japanese to consider the historical context of other cultures and their attitudes toward motor vehicles. That's over-analysis. Forethought without action.

Let's get back to reality

Recently, I've been looking through Distressed Debt Analysis by Stephen Moyer. For many of you, that might not sound like a super-thrilling read. But there's an EXTREMELY helpful concept in the book. Moyer addresses the critical challenge of investment analysis: when do you know enough to make an educated decision in the face of an uncertain future?

On page 258, Moyer says:

Realistically, however, the investor cannot "know" with metaphysical certitude that the firm will be able to access the capital markets in the future, and, mathematically, it is difficult to meaningfully or rigorously "quantify" the risk of refinancing. The investor can make an investment judgment based on an experienced assessment of the environment. However, that investment judgment will be erroneously derived, if the investor fails to uncover that another bond indenture of the firm prohibits the refinancing of the subordinated debt with other than junior securities, for which there may be no market, or that the working capital facility has a lien on all assets, not just the typical accounts receivable and inventory. Those factors were not in the "terms" of the bet. It would be like making a bet on a horse in a given race and then finding out that at the last moment the jockey was being changed or that three very strong horses had been added to the field. To properly calculate the odds, you need all the facts. That is the role of "due diligence."

So that's the key idea. If there are material, discoverable unknowns affecting your decision-making, it makes sense to invest your time to find out the facts. On the other hand, if there aren't material, discoverable unknowns affecting your decision-making, it's time to calculate your best move.

Importantly, this guideline applies throughout the decision-making process. At any given moment, your best course of action is determined by the facts. If you've already "decided," and you are presented with information material to your decision-making—you should change course. It's no use staring at a broken window and crying about what a wonderful window it used to be. Move on.

The art is to construct a process that drives efficient discovery of the material facts, balancing a fact's impact with its cost of discovery.

This idea was one of Calvin Hawkes' closing thoughts during Episode 013. If you haven't heard it, I highly recommend that series of episodes. Calvin is super interesting and super smart.

Now let's bring this full circle

Above, I've described the strategy for structuring a decision-making process. It's all about material, discoverable facts. Finding those facts is what I call "work."

On the other hand, there are immaterial, impossible-to-find facts. The facts are there, but the cost to acquire the fact is too high or the impact of the fact is too low. And that's where worry lives. Worry is the nightmare union of wasted time and energy. It's a wheel-spinning, cortisol-dumping, mental sludge factory.

Returning again to Charlie Munger, this is a great time to invert. Worry is where we can't afford to live, and it warrants some deep thought. Everyone is different, and everyone has different circumstances. So—as always—there isn't a one-size-fits-all solution.

Here are some questions to help expose wasteful allocations of mental your energy.

• What are your fears?
• Which of your fears are uncertainty-driven?
• Which of the many possible futures scare you?
• What facts would help you narrow the distribution of probable futures?
• Objectively, are you likely to find those facts?
• Objectively, what is the cost—in time, in cash, in opportunity, in anxiety—required to find those facts?
• Imagine the worst-case scenario. Is that an acceptable outcome to you given your current levels of uncertainty?
• If you make a decision, are you likely to spin your wheels in search of answers you won't find?
• What could make you comfortable with the uncertainty?
• Are you prone to checking behaviors that don't deliver material new information?
• How can you change your decision-making structure or daily habits to side-step these checking behaviors?

Strategy Chain Links

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Jacob Wolinsky worked in investing and financial journalism before founding ValueWalk, a site that curates information about investing, hedge funds, asset management, and the broader world of finance. We explore Jacob's journey as an investor and an entrepreneur. This episode was a real treat for me because our guest was (and continues to be) instrumental to my growth as a value investor. Jacob gave us a ton of awesome reading material, and I can't wait to dive into it.

Links from the Show

ValueWalk www.valuewalk.com

ValueWalk Premium www.valuewalkpremium.com

Hidden Value Stocks www.hiddenvaluestocks.com

Jacob's Reading List www.strategychainpodcast.com/support

Time Stamps

0:06:34 – Jacob's first experience as an investor: right for the wrong reason!

0:08:38 – A revelation: Benjamin Graham's book The Intelligent Investor

0:14:49 – Greater Fool Theory: Beanie Babies and Trading Tulips

0:18:12 – Cigar Butts: Classic value investing

0:21:40 – The role of psychology in investing

0:24:15 – Jacob's professional path into investing

0:32:01 – How Jacob got started writing for GuruFocus

0:40:40 – Circle of competence & the danger of overstepping like Long-Term Capital Management

0:44:22 – Patience: David Einhorn's Fooling Some of the People All of the Time and Christine Richard's Confidence Game (About Bill Ackman)

0:46:36 – Joel Greenblatt: positions took 2-3 years before they worked (on average)

0:47:43 – The advantages of being a small investor

0:50:04 – Taking the jump: focusing on ValueWalk full time

1:17:49 – HiddenValueStocks.com background

1:22:11 – Thoughts on conducting valuation after having run a real business

1:31:35 – Investing is extremely dependent on the individual's personality

1:35:03 – Jacob's favorite investing books: John Neff's books (particularly John Neff on Investing), David Dreman's books (particularly Contrarian Investing Strategies), Christopher Browne's The Little Book of Value Investing, James Montier's The Little Book of Behavioral Investing, The Millionaire Next Door by Thomas Stanley and William Danko, John Bogle's books, Bruce Greenwald's Value Investing from Graham to Buffett and Beyond, John Train's Money Masters of Our Time, Joel Greenblatt's You Can Be a Stock Market Genius, Ben Graham and David Dodd's The Intelligent Investor, Andrew Tobias' The Only Investment Guide You'll Ever Need, William J. Bernstein's The Four Pillars of Investing.

Strategy Chain Links

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

Mohnish Pabrai - Paul Tudor Jones - Ian Spalter - Elad Gil - Eric Ries - Gabriel Weinberg - Sun Tzu - David Kilcullen - Charlie Munger - Mike Malinconico

They all say to be brief. We should listen.

Brevity is "easy" because time is expensive. Brevity isn't easy for you, but it's easy for your counterparts: customers, investors, students, athletes, colleagues, bosses, partners. Everyone. We need to get to the point if we want people to listen.

Here are some examples:

In Investing

Mohnish Pabrai suggests limiting investment theses to one paragraph. Paul Tudor Jones suggests studying journalism to learn clarity, brevity, and the art of positioning the critical matters first such that readers can stop at any point and take away the most important ideas. See the show notes for a link to his thoughts. https://www.youtube.com/watch?v=_e0U-MKV90w

In Business

Brevity is the core of user experience design. Designers obsess over every line and punctuation mark so users get what they want—fast. When was the last time Amazon made you suffer through a tedious experience? Twitter is what's happening in 140 characters. Instagram is 1,000 words in an instant. For a great example, see the show notes for a link to Ian Spalter's episode on Abstract: The Art of Design. https://www.netflix.com/title/80057883

In Entrepreneurship

When pitching Venture Capitalists—or anyone really—it's crucial to get to the point. Explain the market opportunity, the product, the distribution strategy, and the team. Then be ready for a game of 20 questions. Elad Gil mentioned that his favorite pitch meeting was scheduled for 45 minutes but lasted for 10. The founder explained himself, fielded key questions, thanked Elad for the meeting, left, and responded with the answer a few days later. Brief, rapid-iteration testing is a hallmark of both The Lean Startup and Traction.

In Combat

Brevity is critical in combat. Time is the critical resource. Manage it well. Sun Tzu says that no effective campaign can be drawn out. Long, draining campaigns are the enemy of good strategy. In his latest book, The Dragons and the Snakes and in Episode 023, David Kilcullen discusses how Russia uses ultra-quick, ultra-targeted campaigns masterfully. The US did the same thing during the Gulf War. Interestingly, Charlie Munger also praises extreme decisiveness in the face of fleeting opportunity.

In Grappling

Mike Malinconico boils years of training into 90 seconds of dense technique in his Behind the Dirt series and in FloWrestling's technique library. High-level jiu jitsu players talk about following the tightest path between two points. In the striking arts, the jab and the teep are essential building blocks—and they highlight the connection between small time investments and limited risk.

In Athletics

Master coaches work on jarringly brief cues to instantly communicate technical corrections.

My Resolution

It's not the New Year, but I resolve to chase brevity. So for the question of the week: where can we trim the fat in our communication?

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

David Kilcullen is a soldier, strategist, diplomat, and author. He's a scholar of guerrilla warfare, terrorism, urbanization, and the future of conflict. His newest book explores how the Western world's adversaries are adapting.

This was a fascinating conversation covering topics like second-order effects, evolution and adaptation in competitive environments, and yield. We discuss world politics and the strategies and tactics of Russia, China, and North Korea.

Links from the Show

David's talk at the Australian Centre for Society and Armed Conflict https://www.youtube.com/watch?v=JDummafZbXs

David's talks at Google

https://www.youtube.com/watch?v=tVUI9U4WQ6E

https://www.youtube.com/watch?v=DoS9_Mr_K2E

David on Hidden Forces (podcast)

https://hiddenforces.io/podcasts/david-kilcullen-national-emergency/

David on the Federalist Radio Hour (podcast)

https://thefederalist.com/2020/04/06/federalist-radio-hour-how-bad-actors-plague-the-international-stage-and-attack-the-west/

David on Departures with Robert Amsterdam (podcast)

https://robertamsterdam.com/new-episode-of-departures-podcast-featuring-david-kilcullen/

 Time Stamps

0:02:00 – Introduction

0:04:32 – Other talks by David you might enjoy (Google, Australian Centre for Society and Armed Conflict, Hidden Forces, The Federalist Radio Hour, and Departures with Robert Amsterdam) 0:07:35 – Nadia Schadlow & her book War and the Art of Governance (link above) 0:10:17 – Basis for the book's name: CIA Director James Woolsey's 1993 confirmation hearing testimony 0:14:16 – What exactly are "the dragons and the snakes?" 0:15:58 – The Gulf War: the blueprint for how not to fight the US

0:16:56 – Bookend #1: H.R. McMaster and the Battle of 73 Easting (precision, system-of-systems battlefield dominance)

0:19:12 – Second-order effects: the Gulf War forces an evolutionary response (Iran, China, and even US allies!) 0:22:13 – Bookend #2 "Dora Farms" (tactical excellence in the service of a blinkered strategy) 0:28:36 – Multi-disciplinary approach: using evolutionary biology as a basis for exploring strategy 0:32:10 – By becoming so dominant in 1991, we forced our adversaries to adapt or evolve 0:32:40 – Russia case study: Liminal Warfare & surfing the ambiguity threshold

0:40:55 – Adaptations to the modern media environment: impossible to keep things secret, but possible to sow confusion and exploit the intelligence OODA Loop 0:43:49 – Russian goal wasn't to elect Trump but to create debate and disruption 0:48:15 – Russian strategy is like a Hollywood heist movie

0:49:50 – Connection to investing: super-high yield 0:51:44 – China case study: broadening the definition of war 1:07:17 – Reference Prisoners of Geography

1:08:32 – A huge theme in the book: the potential for misunderstanding 1:16:24 – North Korea case study 1:20:33 – Attempt to contain nuclear ambitions fall apart as we focus on Iraq and Afghanistan and in the aftermath of the "axis of evil" speech 1:34:50 – The three approaches the US can take going forward

Strategy Chain Links

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

Today we're going to focus on the concept of yield—both high-yielding activities and their opposite, wheel spinning. The world's top performers always focus on getting the most bang for their buck. From business to combat and everything in-between, this is a pretty steady rule.

Investing Topics and Links

The Superinvestors of Graham-and-Doddsville https://www8.gsb.columbia.edu/articles/columbia-business/superinvestors

Joel Greenblatt's The Little Book That Beats the Market and You Can Be a Stock Market Genius, Tobias Carlisle's The Acquirer's Multiple, Ben Graham's Security Analysis

Business Topics and Links

Jocko Willink's phrase "prioritize and execute," Richard Koch's The 80/20 Principle, Peter Drucker's The Effective Executive, Gabriel Weinberg's Traction, Eric Ries' The Lean Startup, Kim and Mauborgne's Blue Ocean Strategy, Ries and Trout's The 22 Immutable Laws of Marketing, Peter Thiel's Zero to One

Entrepreneurship Topics and Links

Elaine Pofeldt's The Million-Dollar One-Person Business, Chris Guillebeau's Side Hustle and The $100 Startup

Joshua Kennon's essay on synthetic equity https://web.archive.org/web/20150109034520/https://www.joshuakennon.com/creating-and-using-synthetic-equity-to-make-money/ 

Calvin Hawkes' Soul Ceramics

Combat

David Kilcullen's The Snakes and the Dragons: How the Rest Learned to Fight the West

Grappling

Helio Gracie

Athletics

Pine City's basketball team https://www.wsj.com/articles/the-basketball-team-that-never-takes-a-bad-shot-1485788165

Pulaski Academy's football team https://www.washingtonpost.com/news/sports/wp/2015/08/13/the-highly-successful-high-school-coach-who-never-punts-has-another-radical-idea/

Money Ball

FiveThirtyEight's 3-Pointer study https://fivethirtyeight.com/features/nearly-every-team-is-playing-like-the-rockets-and-thats-hurting-the-rockets/

LeBron James https://www.espn.com/nba/story/_/id/23384071/lebron-james-plays-rests-keep-cleveland-cavaliers-hopes-alive

Support Links

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

Today's guest is Mike Malinconico, FloWrestling's technique wizard. We had a really broad conversation covering topics like: the challenges of the learning process, the role of money in wrestling, how to grow the sport, and how to break wrestling into branches from a home base.

0:05:43 – The beginnings of "Behind the Dirt" technique series

0:08:51 – What Mike had to do to find technique "back in the day"

0:10:21 – Wrestling's education problem—it's hard to be a casual fan

0:14:42 – How struggling in school led to becoming a great student and teacher of technique

0:17:35 – Lessons translated from sales: brevity and engagement

0:27:33 – Thoughts on Tim Ferriss' learning framework (deconstruction, selection, sequencing, stakes)

0:32:39 – J'Den Cox as an example of hyper focus on his best positions

0:34:12 – The difference between a technique and a system

0:36:21 – Staples vs. Esoterica

0:38:51 – The drill Mike starts every practice with: "chasing tail"

0:47:47 – What makes a good college program

0:51:20 – The impact of funding on wrestling programs: it's all about who's in the room

0:55:27 – How the RTC system works (non-profits outside of the universities)

1:02:15 – The opportunity for growth in metropolitan hubs

1:06:34 – Can the US re-create the culture of wrestling in Russia and Iran?

1:07:58 – An Madison Square Garden mystery event which may or may not be happening Nov. 1, 2020

1:09:12 – Beat the Streets and what wrestling can be

1:12:06 – WWE, UFC, and how we can leverage their hype tactics to grow wrestling

1:19:11 – Me on my soapbox: what needs to change for us to grow wrestling

1:26:02 – Another huge opportunity: growing women's wrestling

1:36:47 – How to select a technical system or style to develop

1:54:36 – Surprising lessons from being around elite athletes and coaches

1:58:51 – Recommended books: Zen and the Art of Motorcycle Maintenance

2:02:08 – Skills to develop: storytelling and video editing

2:14:56 – How Mike became comfortable with promoting himself

2:20:52 – Important beliefs: everyone should wrestle

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

Jocko Willink, Marcelo Garcia, Kurt Osiander, Joel Greenblatt, Seth Godin, Tim Ferriss, and Sun Tzu are all using the same strategic approach to drive their tactical decision-making. It's a mental model called "catalysts and derivative decisions." Let's get into it.

Warren Buffett says compounding is the 8th wonder of the world. He's usually talking about the power of reinvestment. That's either operating cash flow funding reinvestment in a business and creating more future cash flow—or interest from reinvested interest.

But compounding exists outside of business and investing. Its mechanics define and drive viral growth, causing positives like agriculture and negatives like COVID-19. It's something worth understanding.

Either way, when we hear people talking about compounding or virality, they're usually talking about "growth." But compounding has another critical application: cascading effects—actions that influence later actions.

High performers use compounding to create advantages by focusing on catalysts and ignoring "derivative decisions."

In turned-based, position-based, and time-sensitive strategic applications, it's critical to get ahead and stay ahead. It's like the saying "an ounce of prevention is worth a pound of cure." Business, sports, combat—and much of life—falls into this bucket.

Let's explore how titans from different verticals leverage this concept.

Jocko Willink is a retired Navy SEAL Commander with 20 years of service experience. Since retiring, he's focused on building an expansive business empire. Before leaving the Navy, he had already owned real estate properties and an MMA gym. Since then, he has created a blockbuster podcast on leadership, 10 books, a strategy consulting firm, and an All-American manufacturing company whose products run the gamut: jeans, boots, nutrition products, jiu-jitsu gis, and standard apparel. And he's only been at it for a decade.

If you've listened to the podcast, you'll recognize a few omnipresent themes: "default aggressive" and "be first."

Both of these obey the law of "catalysts." In true combat and in combat sports, this concept is critical. Being first creates a cascade of better opportunities. Two examples jump to mind: ambush situations and the first minutes of an MMA fight.

First—let's talk about an example of being on the wrong end of the rule. If you're being ambushed, you're on what Sun Tzu calls "death ground." Think of a sinking ship or a burning building. The situation is bad, and it gets worse every second. Without even knowing it, you've found yourself several unfavorable steps into a decision tree. But things can and will deteriorate if you delay. Combat veterans call the position where the ambush is triggered the "X." The idea: get off the X! Things have developed against you, but you can still stop your position from becoming even worse.

On the other hand, we have the beginning of the fight. "Be first" means take the fight where you want it to go. If you're a stronger striker, begin to dismantle the opponent with movement and traps. If you're a stronger grappler, initiate with takedown pressure. Relentlessly force the opponent into worse positions. Even if you're globally outmatched by the opponent, you can at the very least maneuver to a position you're familiar with rather than a place of total confusion.

Marcelo Garcia uses the same approach when teaching. His lessons often begin with resetting—breaking the opponent's initial controlling grips and funneling the fight to a place where you can dominate. Watch his matches—this is something he does relentlessly.

A Marcelo Garcia highlight reel is like a technique DVD focused on a single technical pathway to submission. Why? Because he doesn't accept what Tom DeBlass calls "the mutual agreement," that the guard passer will (a) allow a guard to be established and then (b) try to dismantle it. Marcelo Garcia aggressively seeks advantage and aggressively breaks any tie that doesn't favor him.

As a counterexample, check out this video [ https://www.youtube.com/watch?v=4l9tP2gRuOo ]of Kurt Osiander explaining how to get out of bottom side control. For the non-BJJ crowd, bottom side control is extremely hard to escape—there are many variations that require different responses. As the bottom player, you're constantly defending a diverse combination of attacks. For an extremely technical positional breakdown: "bro, you fucked up a long time ago!" Don't let them get you there.

But this theme extends well beyond combat and sports applications.

Joel Greenblatt is a legendary investor. Howard Marks—a legend in his own right—describes investment returns in the high teens as being very special. Anything above that level should be viewed as the territory of the very best of the experienced professional investing world. Joel Greenblatt returned 50% per annum for a decade, well over 50x returns.

He's written a deeply technical book about investing opportunity and deeply simple book about beating the market using a simple rule. The first book is called You Can Be a Stock Market Genius. Don't let the goofy title fool you. It's one of the best books on public markets investing, period.

Joel attributes his success to his methodology—a hyper focus on "special situations" like spinoffs, rights offerings, restructurings, stub stocks, and much more. What's so "special" about these situations? They are corners of the market where sophisticated players act like idiots for structural reasons. Reasons related to their investing mandates. I love the metaphor he uses for this choice on page 55:

So, there I was, at perhaps the finest restaurant in the world, certainly in New York, looking over the menu. Over walks a gentleman in full chef's garb to help with our order. Somehow, his outfit didn't tip me off that this was actually Andre Soltner, proprietor and head chef. Pointing to one of the appetizers on the menu, I asked innocently, "Is this one any good?" "No, it stinks!" came Soltner's reply. Even thought he was just kidding around, I did get the point. Pretty much everything on the menu was going to be good. Selecting Lutece was the important culinary decision, my particular menu choices were just fine tuning. … It's great to look for investments in places other are not, but it's not enough. You also have to look in the right places. If you preselect investment areas that put you ahead of the game even before you start (the "Luteces" of the investment world), the most important work is already done. You'll still have plenty of decisions to make, but if you're picking and choosing your spots from an already outstanding menu, your choices are less likely to result in indigestion.

Continuing along with the "culinary metaphors" to explain the catalysts versus derivative decisions theme, we have some thoughts from Seth Godin in his post "Tires, Coffee, and People." [ https://seths.blog/2015/09/tires-coffee-and-people/ ]

The most important part of a cup of coffee is the beans. The grinder, the machine, the barista pale in comparison to the quality of what you start with.

And finally, Tim Ferriss is a huge proponent of the concept. Tim calls these high-leverage actions "lead dominos" and describes them as things that "make everything else easier or irrelevant."

So where does this leave us? I really enjoy the concept of "threads to pull." Why? Circumstances vary widely, so the execution of certain strategies can become a no go. Specific application is crucial. So while it's impossible to make blanket statements that will work for any situation, we can always ask ourselves good questions.

·         How can I "be first?"

·         When am I reactive? How can I transition to proactive?

·         What's at the very beginning of my critical decision tree?

·         Where can I find structural causes of market dislocations?

·         How can I improve the quality of my fundamental building blocks?

·         What rules can I use so that my decision-making doesn't matter?

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I'm excited to announce a mini-series double header. They will be called "The Easy Series" and "The Hard Series." These will be punchy episodes focused on giving you themes to ponder, threads to pull, and stories to remember.    

Arthur Schopenhauer said:  

Talent hits a target no one else can hit; genius hits a target no one else can see.

This quote gets at the core of strategy.

There are two paths: the easy way and the hard way. And there's a time and place for both! Each is based on avoiding prisoner's dilemma and exploiting non-crowded (and therefore high-yield) channels.

The Easy Way is only "easy" because it's the hidden target. It's represented by the target no one can see. To paraphrase Howard Marks, all it takes to be a great investor is superior insight. Sure—but how do we get that superior insight? We need to be able to perceive the truth—to find what's retrospectively obvious.

We'll call it "easy" because it uses the brain instead of using pain. The difficulty is understanding the principles and seeing where to apply them. Luckily, we can largely steal these principles from the smartest people ever to walk the Earth. Then it's generally a process of turning over rocks to see what we find underneath.

When you think of "The Easy Way," think "we copy them," as in—the greatest to play the game. ("Easy" might be a bit of a misnomer, but let's go with it.)

On the other hand, "The Hard Way" is the target no one else can hit. It's totally obvious what we have to do. These are the things that everyone knows yet no one does. It's generally as simple as "this is so painful that no one else will be able to do it."

We'll call it "hard" because it uses pain—not the brain. These things are generally slogs. Uncomfortable processes with long time horizons. Frustrating, painful, and tedious. What's the upside? Most people can't stand to do them. So yes—competitors could copy us—but they probably can't stand actually doing it. The hard way is where the rubber meets the road.

When you think of "The Hard Way," think "they can't copy us." Why? Because it's too painful.

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)

Entrepreneurs, investors, and designers alike will enjoy this conversation. It focuses on the missing link between the vague idea for a company and the ultimate cash flows it produces—namely, the execution of a design that makes customers want to pay.

You might be surprised at some of their ideas about branding tactics. Have you ever considered the impact of typeface design in a company's messaging? Today's guests make a compelling case for re-thinking the media we use to reach our customers and prospects.

Ryan Bugden is an old friend, and together with Michelle Ando, we had a fantastic discussion on their design education, their work, their approach to branding, and the way that design bridges the commercial and the artistic. Ryan and Michelle are both RISD-educated graphic designers based in Brooklyn. Both at one point made their way to Red Antler—a legendary branding design studio known for its work with clients like Casper, Allbirds, FourSquare, Square, Betterment, Zillow, Google, American Express, HBO, TripAdvisor, and General Electric, just to name a few.

Michelle is still with Red Antler, and Ryan has moved on, working at Pentagram under Paula Scher before leaving to focus on his own work. Keep listening for their thoughts on design, branding, the creative process, learning, and much more.

Ryan Bugden: Instagram @ryanbugden https://www.instagram.com/ryanbugden/ | Website https://www.ryanbugden.com

Michelle Ando: Website https://michelle-ando.com

0:05:05 – What it was like developing as artists

0:07:53 – Design bridges the artistic and commercial worlds

0:09:41 – Why Ryan and Michelle dislike being called "creatives"

0:10:59 – Viewing different verticals as learnable disciplines: Mastery by Robert Greene

0:14:47 – How they became interested in typeface design

0:20:39 – What typefaces can do for a brand

0:27:36 – Ryan and Michelle's work with Getaway ( https://www.getaway.bar/ )

0:34:16 – Design as the connection between the "numbers" and the "reality" of business

0:38:30 – Branding and the "spectrum of consistency" 

0:40:28 – Nike: "consistently inconsistent in a beautiful way"

0:41:58 – Shick Toikka's "Nike Unlaced" typeface ( https://www.schick-toikka.com/custom-fonts/nike-unlaced )

0:43:52 – Discussion of building a heritage brand and brand equity

0:48:55 – Watching the development of Allbirds's branding at Red Antler

0:50:17 – Emily Heyward's top 3 questions about brand identity

0:51:45 – Ryan and Michelle's process & design approach

1:13:47 – Growth & recovery: connection to Katina Mountanos, Dupi Singh, and Daydreamers

1:16:07 – The connection between play and recovery

1:19:55 – Managing emotions in the creative process

1:25:32 – Their approach to marketing and cold outreach

1:33:33 – Truthfully, much in design (as in investing) is a leap of faith

1:39:29 – Observations on what clients and end customers really want

1:42:21 – Genuineness—the brand needs to be congruent with the company

1:44:25 – The spectrum of "brand importance" (from B2B to Fashion)

1:47:48 – Influential books: Roland Barthes, Walter Benjamin, Susan Sontag, Alan Watts

1:54:16 – Documentaries: Adam Curtis (HyperNormalisation) https://www.youtube.com/watch?v=AUiqaFIONPQ

1:57:36 – Skills: coding in Python, animation

2:04:31 – Beliefs: "brand systems can be chaotic" and "work smart; not hard"

2:08:33 – Learning strategies: make learning purpose-driven

2:17:11 – Whisper to themselves: (paraphrasing) "a career in the arts is possible," "don't overtrust others or undertrust yourself," and "make the process your own."

Rate and review the podcast at https://podcasts.apple.com/us/podcast/strategy-chain/id1492935567 Find Amazon affiliate links at http://strategychainpodcast.com/support Send me questions at http://strategychainpodcast.com/contact Sign up for the email list at http://strategychainpodcast.com/ Social Media @strategychain (Facebook, Twitter, Instagram, Medium)