Touch Some Grass

The What Is Never As Important As The Why

This is a weekly newsletter about the art and science of building and investing in tech companies. To receive Investing 101 in your inbox each week, subscribe here:

---

I enjoy a good biography as much as the next person, maybe more so. I love reading the stories of Benjamin Franklin, Katharine Graham, Warren Buffett, and others who have lived pretty extraordinary lives, and accomplished significant things. Anytime I enter a bookstore, I head for the biographies section first

My wife refers to this affectionately as a "boring hobby." I'm not sure what she means by that; the woman contains multitudes.

But as I've read about many of the best investors in history (in part thanks to great resources from folks like Frederik Gieschen and Conor Mac), I've noticed two important takeaways: (1) they seem to be thinking about investing all the time, and (2) they're NOT talking about investing all the time.

What do they talk about a LOT? Psychology.

So much of success in life, business, and investing, is mastering yourself. Your bias', your habits, your fears, and your aspirations.

I continue to return to this idea: I'm shocked by how little thought investors put into their own intellectual exercise and processes.

Kyle Harrison @kwharrison13

What’s shocking is how much evidence there is that the best investors are information input/output engines, but very few investors spend much time thinking about their information systems, or tuning their decision making processes

Conor Mac @InvestmentTalkk

Two sources, 15 years apart, and roughly similar conclusions as to sources of alpha. • Parse/collect information better • Process information better • Have behavioural advantage https://t.co/JKXw2PVPT1

But even deeper than just "do you sell the stock when you get scared?" I think there is a deeper psychological case study to explore with investors that doesn't get enough attention.

There is this idea of stated preference vs. revealed preference. If you ask people in a group setting "what do you listen to in the car?" a lot of wannabe intellectuals might say, "Oh, NPR almost all of the time." But if you hid in their backseat, you'd hear Katy Perry blaring over the speakers as soon as the car started.

This isn't just true of investors. Everyone has a hidden psychology that you can't unpack without trying. But the better you understand your own psychology, the more effective you can be at just about everything. And the better you get at reading other people's psychology, the more effectively you can understand them, work with them, or (if you're a bummer) take advantage of them.

This weekend has me reflecting on my own psychology. Now, granted. The musings I've had recently aren't going to make me a better investor. But it's an exercise in self-exploration. You become more capable of unpacking yourself as you grow more comfortable you are asking questions like, "why do I lose my temper when I do? Why did I get as excited as that? Why did I feel obligated to argue that point? Why did that comment bother me so much?"

For me, the greatest exercise in self-exploration has been my family. I got married when I was 22 years old; had my first kid at 24. My entire adult life has been lived with other people directly invested in my decisions. That has forced me to think more clearly about what I want, and why.

So. Where do we go from here? The breakdown of the greatest investors mental checklists? The secret psychological trick of the most successful founders? The 8 pitfalls to avoid as a VC? Not today, maybe some day.

But todays thoughts are brief, and will be left at this. Take time to get to know yourself, because everything will be a derivative of that relationship. Go touch some grass my friends. Get to know yourself a little bit. God speed.

---

Thanks for reading! Subscribe here to receive Investing 101 in your inbox each week: