Category: Farnam Street

Ask Farnam Street #1

Welcome to the first incarnation of Ask Farnam Streetwhere we'll be taking and answering questions on anything you're curious about that we feel we can answer competently and honestly. This first batch of questions comes straight from our Members.

If you'd like to submit a question for our next Q&A, please send it to us at [email protected] with the title “Ask Farnam Street.” We will choose a group of the most thoughtful questions and answer them right here on the site. 

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How do we cultivate a good balance between thinking for ourselves and building our own systems to suit our unique personalities, and learning from what other people have already discovered about the world and the systems they’ve built and shared?

This is a pretty common question in a lot of fields. Almost anyone who goes deep on trying to study the success and advice of others eventually wonders if they’ll just become a clone of someone else. But the truth of the matter is that most do eventually “find their way” – where everything you’ve learned coalesces into a system of your own. Purely aping someone else doesn't work very well and is harder than it sounds anyway.

Here’s an exercise for anyone who likes music: Pick a musical artist you like and find out who influenced them. Then listen to those influences. Does your favorite really sound like those influences? Like, really? Almost never.

You might hear an “echo” of Robert Johnson in the Rolling Stones, but the differences between the two are night and day – the difference between country blues and rock ‘n roll!

Yet if you were to ask Keith Richards, he’d tell you the Stones started out basically doing a poor imitation of old American blues artists. But what they really did was take the soul of that music (and, I might add, early rock and rollers like Elvis and Chuck Berry), added their own spice and reality, and created something entirely new. That’s how creativity works. You don’t just create new things out of the clear blue sky – you have to start with something. Making new connections and associations is creativity.

Even Sam Walton used to say that he basically stole all of the ideas that became Wal-Mart. But what other company was really anything like Wal-Mart? It was completely unique. And why should anyone else have been like Wal-Mart – they were missing the key ingredient…Walton himself!

In these stories lies your answer. Cultivating that balance will happen naturally if you simply break down what you learn to its essence and take what is useful from it. You don’t need to outright copy anyone else, and contrary to popular belief, success isn’t simple imitation. It’s learning the principles behind what made others successful, the underlying reality being demonstrated by that success, and incorporating that reality into your worldview.

Farnam Street is about pursuing an understanding of “the way the world works.” As long as you use those systems you learn from others as a way of getting at the underlying reality – going beyond pure imitation — you will have the opportunity to “make them your own.”

Two quotes sum this up:

Take what is useful, discard what is not, add what is specifically your own.
Bruce Lee

Any truth, I maintain, is my own property.
Seneca

When Charlie [Munger] talks about knowledge across a wide range of disciplines, what are those disciplines, and which does he appear to favor?

Charlie address this a little bit in a speech called “A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business”.

He's talking about the basic disciplines that would make up a really good broad undergraduate curriculum: Math/Statistics, Physics, Chemistry, Biology, Engineering, Complex Systems, Psychology, Business/Economics, Law, with the more fundamental ones being generally most reliable. (1+1 always seems to come out to 2.)

Charlie seems to have made use of models across all disciplines. He probably uses psychology and biology more than most, which is a great lesson. And clearly he and Buffett have made wise use of probabilistic thinking.

But remember, in his own words, “80 or 90 models carry most of the freight” – in other words, you’re looking for the Big Ideas. Something like compound interest from mathematics or incentives from psychology explain a large fraction of what you see around you. And you always have the ability to generate new models that you think are explanatory, accurate, and memorable — that's part of the fun.

An accurate and fluent understanding of the big models of the world should be your “first principles” — the large trunk and branches on which all of the “leaves” of your knowledge will hang. Without a big solid trunk with big solid branches, what kind of tree do you expect to have?

From there, it’s about synthesizing across the disciplines — understanding where they overlap, conflict, and combine. What do the models in biology and business have in common? What does the concept of entropy have to do with practical life? Well, a great deal. But you have to reach a bit to figure it all out. And as we talk a lot about here, you eventually find that everything seems to be connected to everything else.

Remember, all models are abstractions of reality. George Box put it that “All models are false. Some are useful.”

Reality itself is simply one continuous, flowing entity, but we as humans have to work with our natural apparatus to understand it. Dividing things into little sub-disciplines is one of the ways we go about doing that. Just remember that your end-goal is to understand reality as best as possible; unfiltered and unadulterated. Any way you decide to organize your search for reality must take into account the way humans learn, but always remember that you're abstracting reality.

How do you choose what next to read? Do you randomly pick a book off the shelf or do you let what you just read pull you towards something that it referenced so you can go deeper into a topic? Do you just wake up in the morning and say I feel like learning about.. this! and go for it? 

It’s a combination of a lot of things, but basically the underlying principle is always to follow what interests you, right now. We discuss this a few times in our course on reading.

The thing about curiosity, in the words of Nassim Taleb, is that it’s “Antifragile, like an addiction, and is magnified by attempts to satisfy it.” When you go down the curious path on a particular topic, you have to keep letting it pull you down. Don't just stop because you feel like you should — if you want to keep going, keep going! Learn! Go deep! Trust us on this one: Ride the wave when it's taking you. It may be a while before you get back up there.

When you decide to get off the path is really going to be an individual judgment, based on how curious you are, how competent you feel you are, and what you plan to do with that information. If you’re going to be a doctor, you have to go “all the way down the path” on the current and most up-to-date understanding of how the human body works, in great detail. Lives depend on it.

But if you’re a lawyer, you might be (rightfully) content to simply try to understand at a high-level how all the main bodily systems work and interact, without being able to do a detailed dissection of the heart. The doctor and the lawyer need not pursue their understanding of human anatomy in anywhere near the same level of detail, but they should both know the Big Ideas. Make sense?

So, long story short, what we're reading at any given time is simply what currently grabs our curiosity; and there are innumerable ways to get it grabbed. Sometimes we will see a book on the shelf and pull it down, but more frequently it’s connected to something else we’ve read recently and decided to pursue further. Recently we recommended a biography of Will Rogers in Brain Food. Why that one, and why now? Because someone I respect recommended studying his life, and when the book came in, the time “felt right” almost right then and there. (Which is actually unusual — most of our books sit for a while before we read them.)

Did we know much about memory before starting the four-part series? No. But we had studied human personality and social psychology quite a bit, and memory is a logical extension of that. In this case, the book we discussed came straight from the bibliography of another one.

Once your anti-library is sufficiently stocked, finding the next book to read will always be the last of your worries. We always have many “on deck” and recommend you do too.

For the mailbag, this isn't really a question maybe more of a post request, but I'd love to see a follow up or update on how your media consumption habits have evolved/changed. The post from Shane a few years back is a personal favorite, and something I've found myself revisiting often: 

I'm going to go in a slightly different direction than the question you asked, but hang with me.

We've been thinking a lot on this recently, with increasing concern that we're filling our heads with junk. This, we believe, is not only a poor use of our time and causes more mistakes than are necessary but it also reduces our capacity to find the relevant variables in any given situation.

If you think of your mind as a library, three things should concern you.

  1. The information you store in there — its accuracy and relevance;
  2. Your ability to find/retrieve that information on demand; and
  3. Finally your ability to put that information to use when you need it – that is, you want to apply it.

There is no point having a repository of knowledge in your mind if you can't find and apply its contents (see multiplicative systems).

Let's talk about the first part today, which is the information you put into your mind.

We feel this is massively misunderstood, resulting in people failing to filter things from entering the “library of the mind.”

If your library is full of crap and falsehoods, you're going to struggle and spend a lot of time correcting mistakes. You won't be very productive and you'll generally muddle through things.

Our minds are like any tool, and needs to be optimized in building this library. Clickbait media is not the stuff we want to put into our mind library. However, this crap is like cocaine — it causes our brains to light up and feel good. The more of it we consume, the more of it we want. It's a vicious flywheel, like eating sugar.

Our brain isn't stupid. It doesn't want this crap, so while it's giving you a mild dopamine rush, it's also working very hard to make sure this junk doesn't make it into your library. This is one reason that people re-read an article and don't remember having read it. Their brains determined it was trash and subsequently got rid of it rather than storing it.  Sounds good right?

Well, sort of. As hard as our brains work to ensure this crap doesn't make it into our library, if we keep feeding it junk, we will overwhelm that natural filter. Over days and weeks this isn't a big problem, but over years and decades it becomes a huge one.

Junk in the library messes with accuracy, relevance, and gets in the way of effective and efficient use our of brains – it causes issues with retrieving and applying. (Which is most often done by our subconscious. Ever had a great idea in the shower, as you were falling asleep, or while driving? Exactly.)

And while we probably agree that the quality of what enters our head matters, it's easier said than done.

Consider the CEO with 6 layers of management below him. Something that happens “on the ground floor” of the business, say an interaction between a salesperson and a customer, usually goes through six filters. There is almost no way that information is as accurate as it should be for a good decision after all that filtering.

Now, the CEO might recognize this, but then they have to do something psychologically hard, which is basically say to their direct reports, “I'm not sure I got the right information from you.” They have to go out of their way to seek out more detailed, relevant, independent information from the people close to the problem. (A good assistant will do this for you, but in a political organization they will also be hung out to dry by all parties, CEO included.)

So not only do we need to filter, but we need to be aware of what filters our information has already been through.

Let's hit on one more related thought.

In our search for wisdom and high quality information to put into our library, we often turn to knowledge nuggets called sound-bytes. These deceptive fellows, also called surface knowledge, make us sound clever and feel good about ourselves. They are also easy to add to our “mind library.”

The problem is surface knowledge is blown away easily, like topsoil. However, we reason, most other people are operating on the same level of surface knowledge! So, in a twisted bout of game theory, we are rarely if ever called out on our bullshit.

The result is that this surface, illusory, knowledge is later retrieved and applied when we're making decisions (again, often driven by the subconscious) in a variety of contexts, with terrible results. As the saying goes, “Garbage-in equals garbage-out.”

If you're looking for a quick heuristic you can use for information you're putting into your library, try the two-pronged approach of:

A. Time
B. Detail.

Time meaning – how relevant is this historically? How long will it be accurate — what will it look like in ten minutes, ten months, ten years? If it's going to change that soon, you can probably filter it out right here.

One way to determine if the information will stand the test of time is by gauging its accuracy by examining the details. Details are so important that Elon Musk uses them to tell if people are lying during interviews. You want to learn from people with a deepaccurate fluency in their area of expertise: One of the ways you can assess that is through the details they provide. Surface skimming articles are sometimes meant to be readable by the lay public, but more frequently it indicates simply that the author only has surface knowledge! 

So be careful. We'd guess that 99.9% of click-bait articles fail both these filters. They're neither detailed nor lasting in importance.

The good thing is that you can raise your standards over time. One major reason to read documents by people like Richard Feynman or Charlie Munger is that it gets you used to what really clear thought looks like. If you're reading shallow, quickly irrelevant media all the time, when will you read Feynman?

For now let's leave it at that – we'll have more to say on this in the future. It's important.

So many people always ask what's the best book for word-for-word wisdom, or spend hours working out the most efficient means of doing something, which is all great, but in the spirit of a Munger-like avoiding of mistakes, I'd like to hear you and Shane answer what you've done in the sphere of learning about the world that's been the biggest waste of time: the least bang for your mental-investment buck?

Interesting question. It’s hard to answer because everything seems to have some value or another – often it’s in the “what not to do” or “what doesn’t work” sphere, but that is still a useful sphere, so it’s not really a waste.

One thing that does come to mind is speed reading. That is a waste of time and totally counter-productive when you get down to it. If anything, we’ve tried to slow down our reading so we can savor and recall more of what we read. Speed reading is a snare and a delusion, and not worth the time.

Woody Allen had it right: “I took a course on speed reading…and was able to read War and Peace in 20 minutes. It’s about Russia.”

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If you'd like to submit a question for our next Q&A, please send it to us at [email protected] with the title “Ask Farnam Street.” We will choose a group of the most thoughtful questions and answer them right here on the site. Enjoy!

Farnam Street’s 2015 Annual Letter to Readers

To the readers of Farnam Street:

Most public companies issue an annual letter. These letters offer an opportunity for the people entrusted to run the company to communicate with the people who own the company.

I decided this would be a good year to start a similar tradition at Farnam Street. It’s not that I haven’t written annual letters before. As a board member and advisor, I’ve written a few in the past. However, I’ve never written you an annual letter before. There is no good reason for that. To a large extent, I consider you to be the owners of Farnam Street.

Investors, or owners, traditionally exchange money for shares in a company. I think your investment in Farnam Street is just as important. You trust me with something far more valuable than money: your time.

For all of us, time is finite. That means we need to think about opportunity costs. Reading Farnam Street means you’re not doing something else. My job is to make sure your investment is getting an above average return.

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2015 was a record year in almost every reader-related metric for Farnam Street.

The number of Farnam Street readers increased dramatically. The time people spent reading a page (a good proxy for how interested people are in the content) increased. The bounce rate (a fancy phrase for the percentage of people who look at one page and then leave the site) decreased dramatically. In short we had more people who read longer and looked at more pages.

We offered three public Re:Think Workshops (Leadership, Innovation, and Decision Making). This took a lot of effort from an amazing team. The quality of people who attend these events continues to blow my mind. One former Harvard Business School professor summed it up nicely by saying you won’t find a better crowd of people at a public event anywhere. The feedback for all of the events was positive with the exception of one person (over 100 positives and 1 negative – we’ll take it). I felt we were at risk of spreading ourselves too thin, so we've decided to pare down to two in 2016 (Decision Making in February, which is already sold out, and Innovation in the fall). We’ve opted to put Re:Think Leadership on hold for now. Additionally, we have 13 people coming to Re:Think Decision Making who have attended Re:Think workshops in the past (including 6 who are attending Re:Think Decision Making for the second time) — I can’t think of a better metric to help gauge success.

The Knowledge Project, a successful podcast, launched. The first few episodes have been downloaded over 100,000 times. The audio quality sucked at first — which is entirely my fault — so we’ve spent a lot of time and money getting that to a decent place. I can tell you firsthand, the quality of conversation doesn’t matter if people can’t hear it. We’re much better now but there is still a lot of room for improvement.

Our first ever online product: How to be Insanely More Productive launched. I remember being on a train coming back from Toronto when I first put this online. I figured this was a good place to start as I’m often asked to talk about productivity. I guessed about 50 people would sign up and I’d get some good feedback on how to deliver an online course that delivered tangible results in people’s lives. I was blown away by the participation levels and extremely positive feedback. I still get emails almost weekly from people saying how it helped them gain control of their lives and spend more time with their family. However, similar to the first episode of The Knowledge Project, this webinar offered first-rate content in third-tier packaging. I had another webinar planned for September on How to Read a Book, but I delayed the launch until I could find the right people to help re-package and re-formulate the material into something much better.

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Membership program and the economics of running an online media company.

Perceptive readers will note the change of perspective from “I” to “we” in recent posts and newsletters.

Farnam Street had reached the point where I couldn't do the things I wanted to do long-term and still keep the day-to-day going. Despite having a team of people working hard to bring you events like Re:Think Decision Making, it's largely been a one-person endeavor until now.

I had to decide between pursuing my goals short-handed, which limits what can be accomplished, and growing with like-minded people who share my vision for Farnam Street. I chose the latter. And the first such hire started in November.

In late summer I started courting Jeff Annello to work with me at Farnam Street full-time. Not only does Jeff exemplify the Farnam Street ethos but he's a paragon of quality thinking. We've worked together in the past and had been waiting for another opportunity to do so.

Many people don't realize that Farnam Street takes hundreds of hours and thousands of dollars a month to sustain — and that was before bringing Jeff on board.

For years, generous readers like you have supported Farnam Street with donations. Without exception, I've reinvested all of that money back into Farnam Street.

I wish all help came as cheap. Jeff and his new fiancé, as you can imagine, don't fully subscribe to this long-hours, no-salary package.

This was the impetus that led me to Re:Think the donation model. While I haven't done away with donations, you can still contribute that way if you wish, I've opted to focus on a membership program.

Online media properties, as you probably know, are going through a bit of a rough patch as they look for ways to create and capture value. The problem, from a reader's perspective, is that most of these organizations want to capture more value than they create — they focus on the wrong side of the equation. This leads to a short-term engagement between creator and audience, as the latter realizes they've been had.

Farnam Street takes the opposite approach: Add so much value that people want to support it. Our goal is to be so good that having a membership becomes a no-brainer, while at the same time, using some of the proceeds from paid membership to improve the free areas of the site.

The vast majority of content will always be free, and you can expect the free content to increase in quantity and quality as we head into 2016. If you find value in Farnam Street, we hope you'll consider contributing either through an individual or corporate membership.

One thing I want to make clear is that, although I've done a good bit of the work to date by myself, Farnam Street is a team. There is no way we would have gotten where we are without the wonderful support of a few key people who wish to remain behind the scenes. These people play more of a role than you can imagine and we all owe them our thanks.

I also want to thank our lead sponsor for 2015, Greenhaven Road Capital and our two lead sponsors for 2016: Slack and Siebels Asset Management Research. It’s not too early to start thinking about 2017. If you’d like to inquire about sponsoring the blog please get in touch with me.

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We will continue to work hard every day to offer readers and members more value in 2016. That’s not an empty statement. Allow me to explain. Here is what you can expect and hold us accountable for in 2016:

The quality of all content will be much higher. We will do better at adding context, presenting ideas in compelling ways, adding tools to your mental tool box, making things practical, and exposing you to mental models that will help you be better at what you do. We’ll further our exploration of what it means to live a meaningful life and deepen our understanding of ourselves and the world.

The Re:Think workshops will offer a better experience. While everyone has described their experiences so far as off the charts, I see so much room for improvement that it’s hard to fathom how we’re exceeding expectations. Everything from onboarding and hotel options to the overall experience while at the event will be improved. We have an amazing team in place for the events. They consistently sell out.

The audio quality on the podcast will be much improved. I’ve already taken care of this to a large extent. Where possible, I'll do more in-person interviews as these offer more meaningful and deeper conversations.

The experience of existing readers will not be compromised to add new readers. For a large part of the year there was an annoying little pop-up that appeared on the screen asking for your email address. This was a mistake. While it helped us grow at about 2500 readers a month, it’s annoying to some and degrades the reading experience for all. You deserve better. I fumbled here and hopefully recovered. I was aware of how annoying it was and failed to act. The allure of 100,000 readers is a strong pull — especially when my mother reminds me that her “small town” (my words, not hers) has more people than I have readers. Anyway, the pop-up is off now.

The site will function better. We will be seeking to engage a web designer in 2016 or 2017 to redesign the site to improve navigation, organization, and the overall reading experience. This is more about finding the right person or team to work with us and less about the year in which it happens.

Products will exceed your expectations. We have two new things slated to roll out in 2016 — a mini-course in January on How to Read A Book and a project I’ll reveal when the time is right. To help ensure we’re delivering at the quality and caliber you deserve, we’ve invested in hiring the right people to help design, develop, and deliver these courses. I hope you'll offer your honest feedback.

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We have no idea what tomorrow will bring so we try to prepare for an uncertain future. I show up to the office every day looking for opportunities to move forward in the best way I can. That’s usually putting one foot in front of the other and trying to make incremental progress without regressing.

Thank you for your time and trust,
Shane

An Extraordinary Birthday Present (Plus a Free Re:Think Innovation Ticket)

So I turn 36 this weekend.

Ask anyone that knows me and they'll tell you I'm difficult — or even impossible — to buy presents for. Which isn't true. I love wine, books, and memberships. But most of all, I love it when people do something nice for someone they'll never meet. 

In the past, we've given to the Ottawa food bank and purchased over $10,000 in books for schools that need them. Together we've done some amazing things.

Now I want to do something I've never done on my birthday.

In lieu of gifts, my birthday wish this year is to raise $1,000 supporting something near and dear to my heart: Education.

Why? Because the best way out of poverty is literacy.

I want to give back to the most in need, most impoverished schools. And I want your help.

What if it were your kids going to these schools? 

I'll sweeten the pot.

Here's how to get it:

  • Spread the word however you can (Twitter, Facebook, Megaphone, …). Send people to this post or the Donorschoose.org page.
  • Leave a comment below telling me how you spread the word  (Measurement of any type gets huge bonus points. Comment must be put up no later than 11:59pm EST on Sunday, July 12th, 2015.)
  • Lastly, answer one question at the very top of your comment: “What does literacy mean to you?” Put “#LiteracyMeans” at the very top, followed by your answer. This is an IQ test in following directions, as I’ll skip entries without #LiteracyMeans at the top.

I'll pick the winner on Monday July 13th. You must be over 18, void where prohibited, no aliens, etc.

The best reason of all is that you'll feel awesome. Even if it's $1 it would mean the world to me.

Again, here is where you can donate $36, $1, $1,000, or whatever you can.

(This unusual birthday present isn't my idea, I stole it from Tim Ferriss. When people have better ideas, don't fight it. Just adopt them.)