Grit Is Overrated

One of the things I’ve been thinking a lot about lately is the context-dependency of advice.  Over the course of my life, I’ve received a lot of (well-meaning) advice that has been somewhere between wholly unhelpful and totally wrong, and it’s not so much that the givers of advice were unqualified (often quite the opposite) or that their advice didn’t make sense (within a certain paradigm).  But when you have a different starting point (or ending goal) than the person who is giving you advice, there may be a few things lost in translation.

I tend to be a natural contrarian insofar as seeing everyone going in one direction usually primes me to think about what they could be missing, and the concept of “grit” is one such issue.  It’s not a new thing, really just a distillation of a larger trend that has been ongoing for some time – the semi-Puritanical glorification of hard work, perseverance, commitment, whatever you wanna call it.  And it’s one that, on some level, I think is wholly misguided.

This is a conclusion I’ve come to after about 15 years of pursuing a “Batman-has-no-limits” approach to life – I competed in the National Spelling Bee five times in elementary and middle school, I graduated concurrently from community college and high school, I started working full-time in a white collar job at eighteen while also being a full-time student and maintaining a >3.9 GPA and finishing an MBA before I turned 21.  Clearly, by any objective standard, my life has not been characterized by a lack of grit – yet grit was wholly insufficient for the challenges I faced next.  What I’ve come to believe is that advancing the cult of “better faster harder stronger” as the always-and-everywhere solution to problems is not only suboptimal, but in many cases dangerous.

Maximum Effort… in what direction?

deadpool-2-boyfriend-pic

Deadpool recommends: MAXIMUM EFFORT!  (And now you know where I get my email handle from.)

Let me explain: I think “put some effort in a productive direction” is great advice to give to a fourteen year old who spends the entirety of his life playing Call of Duty and paging through Playboy.  But as I thought David Denby explained pretty well in “The Limits of Grit,” that’s a rather unhelpful directive to a vast swath of the target audience of Grit (the book).  As I told my wildly ambitious and accomplished intern Matt when he emailed me with a crazy plan to improve his mental and physical stamina (that reminded me of something I might have done myself a few years ago), “the telos [of what you’re talking about doing] is misery, divorce, and a mid-life crisis fueled by utter self-hatred.”  

Since this a blog post rather than a whitepaper, I’m not gonna bother finding/citing sources, but we all know the drill: Americans are workaholics who worship at the shrine of busyness, putting in way too many hours at (and away from) the office and not taking enough vacation.  And so on.  So if you’re a reasonably successful white-collar professional, chances are that your problem (or your kids’ problem, if you’ve had any involvement in their lives) is not a lack of effort or persistence.  The solution to your problems, by corollary, is not “try harder!”  In fact, I think oftentimes, quitting is the harder rather than easier option – opting out of a culture of workaholism and optics-over-results, or choosing fewer resume-padding extracurriculars in lieu of the chance to do some real learning.

Let’s take one of the most-cited examples of grit – the Navy SEALs.  Popular culture (assisted by a few war stories) plays up Hell Week and the raw toughness of SEALs.  They are the real-life version of Rambo, of Jack Bauer, of Captain America and Iron Man – they beat you by being bigger, badder, and just generally imposing their force of will.  They punch you until you stop punching back.

Or so the story goes – reality is, I think, a little different.  I am not saying that SEALs aren’t tough (of course they are; they’re ridiculously tough).  But SEALs don’t win (most of the time) by being grittier than you.  One of the coolest experiences I’ve had since launching my fund was getting to sit down with Mike Zapata, who was actually a Navy SEAL (eventually joining “SEAL Team Six,” no less), and is now a value investor.  What I took away from chatting with Mike was completely different than the pop-culture view of the SEALs.  In fact, here’s what Mike had to say in an interview with the Manual of Ideas a while back:

“From a military side, from the special operations side: My first commander, Tim Szymanski of Seal Team 2, the first team that I was at, discussed ‘stacking the odds in our favor.’ He looked at it from a combat perspective which is (i) operationally, (ii) tactically, from our preparation, and (iii) technically, whether that is night-vision or air-assets.  People think that special forces operations are dangerous and high risk — we didn’t see it that way.  We saw it as incredibly low risk because we stacked the odds in our favor.  We used all these advantages to our benefit and I would much rather have been in our position — conducting our operations — because we de-risked a lot of it.”

On Systems, Sand, and Senses

When I was in high school, I was pretty fond of this thought experiment I came up with about sand: you can work really hard moving a giant pile of sand on a beach from point A to point B with your bare hands.  This is what the really gritty person would do – you’re hot and dehydrated and your hands are bleeding?  Nobody cares, TOUGH IT OUT MAN.

The person who is a little less pain-tolerant (more on that in a second) would look at the problem and say, well, I could spend my life doing this, orrrrrrrrrr I could go rent a Cat dozer and bam, I have the afternoon to play in the surf.  (The really smart person might ask, hey, why are we moving this sand to begin with?)

If you invert the issue a little bit, it’s important, I think, to think about why pain exists in the first place (assuming that “grit” can be dimensionalized, in one way, as the ability/willingness to push through pain and discomfort.)  We’ve all had those moments where we wish we couldn’t feel pain – but being able to feel pain obviously has more benefits than drawbacks (otherwise we’d end up in all sorts of horrible situations without realizing it.)  Pain is a signal saying “hey, something is no bueno, check it out.”  The ability to stretch yourself and expand your limits is good – but again, the sort of people who tend to be value investors (or executives or successful whatevers) tend not to be the sort of people who encounter a challenge and promptly give up.  If anything, they’re the sort of people who don’t give up easily enough on things that aren’t working because they think if we just tried a little harder...

“Be gritty” or, in other words, “try harder” is thus patently unhelpful advice, empirically, for a number of thorny problems on a personal or societal level: nutrition and fitness, productivity, making good decisions, etc.  On the other hand, to go back to the SEAL example, success appears to be about systems or structuring problems in a way that they are solvable with less effort (rather than trying to brute-force them with maximum effort).  Indeed, the pop psychology / self-help books I’ve gotten the most mileage out of tend to be those with action-oriented systems with tangible rationale for their effectiveness- Charles Duhigg’s The Power of Habit or Shawn Achor’s The Happiness Advantage, Stephen Covey’s The 7 Habits of Highly Effective People (disclosure, long FC), or Cal Newport’s Deep Work.

Three quick personal anecdotes here.  The first, on the productivity front – for much of 2016, I was spending 12+ hours five days a week (and often half or more of a sixth) sitting at my computer trying to “work” (i.e. do research).  So, 60-80 hours of attempted work, on average.  I would estimate that my actual honest to god productivity was probably, I dunno, 20 hours?  I can’t account for the rest of the hours but I can tell you that other than working out and the occasional lunch/dinner with a friend, I spent a lot of the year not attending to my personal hobbies.  My vegetable garden withered and died [ 🙁 ], my guitar was gathering dust, my bookcase piled up with unread Amazon orders, etcetcetc.  And yet the more I tried to willpower my way into productivity, the less and less I got done, until I was at the point where there were whole days (even weeks) where I would sit in front of my computer trying my very hardest to no avail.

Over the past ~six weeks or so, I’d say my productivity (measured by the tangible, documented research produced that is available for my future reference) has doubled or tripled (with the exception of a week off between dealing with audit/compliance stuff and getting over a minor cold).  Over that time period, I’ve read as many books as I read in the second half of 2016, I’ve made more progress on learning to actually play guitar than I have at any point in the past decade, and I’m spending far less time “working” but getting nothing done.

What changed?  It wasn’t trying harder – it was actively deciding to try less hard (constrain working hours, prioritize other things) and let various process improvements (standardizing research format, etc) do some of the heavy lifting.  Abandoning the mentality of “I can just push through this” has made me way more productive.  More effort did not = more productivity.

The second, on sleep – as I’ve mentioned elsewhere, half the reason I launched Askeladden is an intractable circadian rhythm issue which makes mornings challenging.  The (well-meaning) advice I got from family and friends was along the lines of “go to sleep earlier!  drink less caffeine!  learn to love mornings!” and of course, you can’t just effort your way through the way your brain processes artificial light exposure.  I tried for the better part of a year to do that and it plain didn’t work.  Setting my own schedule, I accomplish 10x what I ever could have accomplished working on a normal schedule.

The third, on capital raising – a while back I had a lunch with a (really nice) guy here in Dallas who runs just south of $1B in AUM.  He more or less suggested that I abandon the content marketing approach to capital raising and instead do the whole networking-with-local-potential-fund-investors thing.  Setting aside the fact that I don’t know any local potential fund investors (I didn’t see that category in the phonebook), I am absolutely terrible at introducing myself to people.  It’s not that I’m uncomfortable speaking to people – I was an ace high school debater and would be totally fine speaking to a stadium; I’m also typically a pretty good conversationalist if I have a warm intro and a few points of mutual interest – I can talk your ear off!  But for some reason, I really struggle with establishing credibility / a platform / whatever in interpersonal interactions with strangers.  I have worked on this!  I read Dale Carnegie and everything!  I have gone from being the awkward kid in the corner at cocktail mixers, never introducing himself to anyone, to being the kid who spends 20 minutes working up the courage to introduce himself to one poor unsuspecting soul, and then promptly clinging to them for the rest of the event with such leech-like tenacity that one hotel checkout and two Uber rides later, bemused TSA agents have to separate us using the jaws of life.

I’m being a bit self-effacing, of course, but the point is that no matter how much I work on this, I’m never gonna be my friend who can walk into a roomful of strangers and 30 minutes later have 100 new BFFs.  It’s just not me – and rather than bash my head against the wall (be gritty, don’t give up) I’ve found an alternative way to build my business that leverages my strengths (writing) instead of forcing me to overcome the obstacles of my weaknesses.

Implications For Growth and Self-Improvement

That third point is a nice segue to my conclusion.  I recently read an interesting book – “Different” by Youngme Moon – about consumer brands that break the mold.  Without rehashing the entire book (it’s short and you can/should read it yourself), one of the key takeaways is that brands all attempting to improve on their weaknesses eventually leads to a homogenized, undifferentiated product.  i.e. if you have a sporty car and try to make it more comfortable and safe, and if you have a safe car and try to make it more comfortable and sporty, and if you have a comfortable car and try to make it more safe and sporty, eventually you end up with three cars that look pretty much the same and now nobody’s happy.  (I immediately thought of parallels to Malcolm Gladwell’s “perfect spaghetti sauce” story – there is no perfect spaghetti sauce, the average focus group result is despised by all.  there are only multiple perfect spaghetti sauces…)

Anyway, the read-across to growth and self-improvement (the holy grail of the people and things that interest me) is that maybe improving on your weaknesses isn’t all that it’s cut out to be.  Again, you have to remember that what I’m saying here is context-dependent – in the absolute it is totally a good idea to try and get better at things you are not good at, but with the starting point of being someone focused on self-improvement perhaps there is a point at which there is diminishing returns.

Indeed, one of the things that is somewhat impolite to say but totally true is that skill/talent/natural ability are real things; nobody sensible or reasonable would recommend that Cole Beasley become a value investor or that I become a slot receiver.   (I don’t know, I’ve never met Beasley, maybe he’d make a great investor.  But just for the point of my argument.)

The point is that every action has an opportunity cost – time spent improving XYZ weakness is also time that could have been spent improving ABC strength – and you have to ask yourself if the payoff from delta(XYZ) is really bigger than the foregone payoff from delta(ABC).  In the case of consumer brands, Moon pretty compellingly makes the case in Different that the answer is often “no.”

In the case of self-improvement, I think the answer is sometimes (but not always) the same.  If there is a specific weakness that is explicitly hindering your ability to get where you want to go, then working on it is probably a good thing.  But inverting the problem, a much easier and more profitable way of approaching things (whether as a businessperson or investor or whatever) is to solve problems that you are naturally good at solving, rather than to try to make yourself good at solving problems that you are naturally bad at solving…

Perhaps this is a bit of an unsatisfying conclusion, or a bit rambly.  That’s why this is a blog post and not a whitepaper – the action items and synthesis of key concepts are very clear in my head (insofar as my tactical rather than brute-force approach to life).  But I think, again with the caveat of the starting point being the sort of value-investor-people who read think-y books and blogs, that grit and effort and the cult of “more better faster stronger harder” are way overrated.  They are prerequisites to success but everyone reading Grit (and similar books) has enough of them anyway.  The path to different/better results isn’t “try harder.”  It’s “do something different and shape the problem to your strengths.”

In fact, “weaknesses and strengths” is a bit of a bad paradigm anyway – again with the context-dependency – it’s much better to think of yourself v. the world in terms of traits that are adaptive or not under certain circumstances.  The analogy is a bit hokey, but there’s that classic saying about not judging an elephant by its ability to climb a tree.  That doesn’t make it a bad elephant.  It just makes it an elephant.

Traits that are highly adaptive in certain contexts (empathy/depth of feeling, in the context of interpersonal relationships and being an ethical person) are highly un-adaptive in other contexts (dealing with market volatility, for example).  The solution isn’t to feel less… but rather to set up systems or approaches where you are less exposed to that (configuring your trading interface to not show daily PNL, not tracking or checking relative or absolute performance on a frequent basis, etc).

That’s my best (maximum?) effort on this topic for now.  I’ll come back to it later.  Summary: if you’re having really hard time moving sand by hand, find a bulldozer.

 

 

 

 

 

Regulations, Toothpaste, and Askeladden’s Q4 2016 Letter

After retaining new legal counsel at the management company level, I decided it was in our best interests to rely on Rule 506(c) of Regulation D rather than 506(b).  The operational/compliance impact is that the toothpaste is out of the tube – now I can’t go back, and will need to request documentation to verify accredited status from prospective fund investors who I do not have a pre-existing relationship with as of today.  (To my knowledge, this requirement does not apply to separately managed accounts.)

The practical impact is that I can share investor letters and other information about Askeladden more broadly – hence, the new website.  While it should still very much be viewed as “under construction” and there are some parts that may take me a while (like resources for those interested in learning about value investing, lists of books and interviews I’ve found helpful, etc).  However, I have uploaded our recent letters and current pitchbook to the letters page, and will continue to keep that page updated as we have new ones.

The Q4 2016 letter can be read here.

Welcome To The Blog

I know I’m about, I dunno, two decades too late on blogging – we’re onto what, TweetSnapwhatevering now?  That said, given that I post content in a variety of places, and that I’ve had a number of requests for a mailing list, I decided to centralize/automate some of that.  This site will serve as a repository of the content I post – in some cases, if I’m not allowed to re-post, I’ll just put up a link to wherever you can go read it.