#241: Bird by Bird by Anne Lamott, If I was Zuck, Berkshire Part 5, Doing Small Things...
“All I know is that if I sit there long enough, something will happen.” - Anne Lamott
Hello! This week’s premium newsletter was Part 5 of the Berkshire Hathaway series. I used the momentum from writing Part 4 to finally enter the era of Berkshire Hathaway that I could relate with. Naturally, I wasn’t disappointed with the new set of learnings revolving around the exceptional people who did ordinary things at Berkshire.
The business segment is a thought piece with a bit of role-playing. I was thinking through whether the stock market’s opinion mattered if I controlled an all-powerful company. Sure, it’s part of one’s fiduciary duty…but is there a scenario where I don’t have to care if I’m an all-powerful CEO?
The culture segment starts with a book note on Anne Lamott’s Bird by Bird, a wonderful book on writing. Then there is a beautiful poem by Bill Holm and some thoughts on doing “small things.”
Finally, there is the usual thought on gratitude and confessions. Naturally, both are about writing.
As always, feel free to pick and choose from the categories below and I hope one of the things I wrote is of some value to you.
Business & Investing
Culture & Systems
Introspection & Habits
Business & Investing
Conformity Doesn’t Matter If I'm Zuckerberg
You need conformity in the markets for your thesis to work. It’s predicated on it. You need everyone to eventually see some version of the future for the appreciation of the company’s value. But value is often mistaken as stock price in the short term. The value of a business is really the cash it generates on its capital.
“The real money in investment will have to be made- as most of it has been in the past- not out of buying and selling but of owning and holding securities, receiving interest and dividends and increases in value." - Ben Graham
If that’s the case, then do you not believe that an investment should increase their cash flows over time? The subsequent belief would be that the prudent management will reinvest that cash flow at higher rates of capital, buyback shares or pay it out as a dividend.
If I held a private business, I would be looking for a fat dividend off a business with a high ROIC. I wouldn’t be obsessed with trying to sell it to an unsuspecting buyer.
Then whatever yield you see in your investment will be what you earn. In the public markets, that may result in the share price rising until a yield the market is willing to accept for the business in question. The long-term investor will continue to earn returns on the initial capital employed. Isn’t that the point?
For example, what’s the point of investing in cash-gushing businesses like Facebook or Google if I don’t believe management has the ability to reinvest all that cash at incrementally higher rates of return? Everything is about the ability to continuously increase cash flow and if they can’t achieve that, then what’s the point?
Let alone, if I don’t believe management will ever return value to shareholders then what is the point? Is it not a game of musical chairs amongst investors who all believe management can do XYZ and will return capital….until they all no longer believe it because it hasn’t happened?
Let me assume I’m Mark Zuckerberg. Here I am in control of Facebook, a cash gushing machine. Now, why the fuck would I care about “shareholders” who are expecting some yield out of my business? I don’t owe them anything.
I owed the initial investors (i.e. Peter Thiel and the crew) that got their starting capital out with the IPO. Now I have my cash machine and I control it. Why in God’s name would I be obsessed with the shareholders?
My business doesn’t stop gushing cash because investors lose faith in my business. My customers don’t care how I treat the investment funds who have their money in the business. My employees are paid a salary from the businesses’ operations—sure they have stock options and RSU but we all know they aren’t going to make bank with that now.
Sure, there is something called doing the right thing. But it’s to the people who work for me and people who I serve. They are not the shareholders. That only matters when the shareholders are my employees and customers. I care for their success and want them to do well. But this third party of investors who tack on for the ride and complain all day about how I’m not building a company that fits their idea of growth? Why should I care about them?
They are off playing their own game of speculation and herd conformity talking to each other about the future of my business. I’m here running it and even I don’t know how everything is going to plan out yet these rich assholes who make money off the hard work of others are screaming out a future? What fools.
I'll care about my suppliers, customers, builders, users, and employees. The people I pay to make my dreams come true. Like a philanthropist, I give them money for them to give meaning to their lives and I, in turn, get to feel like a God who give people a way to live. They can all go on creating a life for themselves while helping me achieve my dreams.
The users are people I like to delight. They are a part of my dream. My customers pay me so would like to delight them as well. I would feel responsible for the trust they give me with their hard-earned currency.
Now, the angels and venture investors who gave me a start. They believed I could make something amazing. For them, I IPO'd and gave them an opportunity to realize the value. Everyone else? Sure, come along. But what does your trust mean for me?
To preserve my standing in the world as a billionaire? What do I care what you people think? I own all your data, I own your way of living. What do I care what you think of my financial ranking when I believe you can’t live without me? When I know how much money my company brings in and how I can change your world with a few key strokes. What do I care for the whims of the market?
Now, that was a rather trite bit of role play. But it’s possible no? Maybe it’s naive for me to think so. Yet, in a world reliant on the conformity of opinions, what does any of that matter when an entity is unequivocally controlled by one person?
If this absolute ruler doesn’t care about generating higher returns on invested capital or returning any value to shareholders along for the ride, does any of the conforming opinion matter in the long term?
Last Week’s Premium Newsletter
Berkshire Hathaway: Ordinary Things by Exceptional People via 1992-1996 Letters
"Ben Graham taught me 45 years ago that in investing it is not necessary to do extraordinary things to get extraordinary results.” - Warren Buffett
Culture & Systems
Book: Bird by Bird by Anne Lamott
Thoughts & Rating: 9/10
Bird by Bird is a wonderful book for writers. That includes aspiring writers and—I imagine—professionals. I could be valuable for others in creative professions as well. I say this because the arrogant little shit I was during my early corporate days probably would’ve scoffed at Lamott’s raw honesty.
This book is great because it gave me what I needed. Every page was a dose of self-confirmation bias as I screamed “Yes, that’s it! That makes sense! Oh thank God she said that!”
Bird by Bird felt like a warm blanket at the end of a rainy marathon. It was similar to when I first read Phil Fisher’s Common Stocks and Uncommon Profits and I knew fundamental equity investing was something I would dedicate a chunk of my life to.
The book didn’t make me want to be a writer. It made me feel okay for wanting to be a writer. It became another friend I needed to say, “Oh no, you aren’t crazy. It’s all normal.”
In hindsight, a core lesson from writing that is the same with investing, powerlifting (i.e. the shit I like to do), and anything else people might find worth doing is to start small.
Take it one-inch picture frame at a time. Focus on the small things. Don’t focus on getting published or anything big. No grandiose vision or goal. Just focus on sitting down at your desk at the same time every day and get to work. Afterward, go for a walk. Fill up on the world around you.
Book Notes:
Read Notes Here
A Poem
August in Waterton, Alberta - Bill Holm
Above me, wind does its best
to blow leaves off
the aspen tree a month too soon.
No use wind. All you succeed
in doing is making music, the noise
of failure growing beautiful.
Food(s) for Thought
“What we think of as endpoints to a goal are really just forks in a road that is endlessly forking.” - Neil Strauss
“Excellence is the next five minutes or nothing at all.” - Tom Peters
Think small. What can I do today? What can I make today that is awesome?
Obsessing over the big goal can seem daunting and crippling. So focus on doing the small thing. Do something cool by the end of the day. Something I can look back on and be happy or proud about.
As the saying goes: You make plans. God laughs.
I must be a real standup comedian to God.
Best to do the small things now.
Introspection & Habits
An Ode to Gratitude.
It seems silly that most jobs require employees to think fast, learn quickly, and juggle lots of things. Almost all job descriptions have it, to the point that it’s meaningless. It’s like an investment fund saying they are long-term oriented. Please. That’s only because they can’t say “We are super short-term oriented and obsess over daily stock prices.”
The professions that really need to be fast, juggle crap, and learn quickly with minimal mistakes are people in the military, ER or some other profession where lives are literally at stake.
Thankfully, I’m a slow learner. I have to make a ton of mistakes and I don’t like making important decisions on the spot. I like to take my time, journal it out, stare at the window, sip my coffee, and a few months later, decide.
Lucky for me, I found some things where what some would call stupidly stubborn seems to pay off. Writing appears to be one of those things where it’s a type of endurance sport of sitting my ass on a chair for a long time.
Sometimes, my head is blank but there is nothing to it. I have to sit down, try to type, stare at the blank screen, and eventually, something will come about. It appears so inefficient it’s lovely. I could say the same for powerlifting.
I once spent an entire year training and my bench press increased by 5lbs. That’s 780 hours in a year (15hrs/wk x 52). The next year, it increased by 20lbs. It’s nice to know some things are meant for people like me who just like to pound things out slowly and steadily.
Confessions of a Work-In-Progress
When I’m writing long essays or parts of a book, I imagine I’m playing the piano. I love the click-clacking sound of my mechanical keyboard and how fast the keys respond to my fingers. I try to maintain a strong wrist as I type and stare at the keys as I type. I understand this is bad typing practice but why have auto-spellcheck, right?
When I type fast, everything feels like a blur. I start imagining I’m in a concert hall playing on the ebony and ivory keyboards of a Steinway. I try to be graceful with my typing while clicking fast. I imagine I’m playing an orchestral piece as the typing goes click, clack, click, clack.
I imagine the spotlight and imagine this is my performance and I relish in the feeling of typing nonstop. This might be why I prefer to write long essays or find writing a book fun as well. It lets me go on and on as I type my bull shit hoping to unearth something great near the end. I end up deleting most of the material but that means another typing rampage.
What joy!