Source: the good coach
I recently stumbled upon this clip from the Daily Journal AGM 2017, where Charlie Munger said something really interesting:
You know, the ideas that I have had in my life are quite few. But the lesson I can give you is, a few is all you need, & don’t be disappointed.
When you find the few, of course, you have to act aggressively, that’s the Munger system.Charlie Munger
As I was ruminating on blogging about my experience of this idea, Warren Buffet did a timely reminder in the recent Berkshire 2022 Shareholders Letter:
The lesson for investors: The weeds wither away in significance as the flowers bloom.
Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.Warren Buffet
The idea that you only need to get it right a few times in order to lead a rich life is so powerful! Through it, Munger & Buffet also underline the importance of power laws in almost everything worthwhile. That a few decisions & outcomes will drive most of our respective lives.
About a decade back, this idea was an intriguing concept for me, but only at an academic level. Since then, I have experienced, & therefore internalized it, across multiple aspects of my life. Even though I would consider myself a perpetual hustler who has worked in 8 companies, tried multiple functions across diverse industries, lived in many cities across US & Asia, and invested in 20+ startups, I can boil down where I am in life today to a handful of decisions that acted as step-functions:
- Where I ended up studying for undergrad, as that’s where I met my (future) wife.
- Pursuing & marrying her several years later.
- A cold email to a VC firm that eventually became my entry point into tech.
- Deciding to move from India to Silicon Valley with no job in hand, no existing networks, with just faith that I will figure it out.
- Casually meeting the husband of one of my wife’s friends back then, who eventually led me to join Alibaba.
That’s it! If I take any of these decisions out of the equation, my life would look very different.
At a more specific level, I see this dynamic play out in my angel portfolio too. I have been investing as an operator-angel since 2014, & now with enough data from my own experience, can confirm that 1-2 companies will end up driving a majority of my returns. The countless hours I have spent turning over stones, meeting hundreds of founders & working in the trenches with portcos, translate to just a couple of needle-moving outcomes over a decade. But yes, they are expected to move the needle by a lot (major step-functions, as I like to call them).
Same with content – sometimes I feel like I have written the most thoughtful post or a super-smart tweet, & no one reads it. And then, I write some crazy anecdote from my past lives & it goes viral.
Translating this “only need to get a few right” idea from purely academic to a lived & internalized one becomes important as it helps to frame risk-taking in the right way, particularly dealing with failure.
It has taught me many lessons:
- Outcomes in creative & high-risk-high-reward pursuits are random.
- Multiple failures don’t matter (& should be expected), as long as the few successes are outlandishly large.
- Given success is sporadic, need enough shots at the goal to get odds in your favor. Take more chances with asymmetric upsides.
- Given success is intermittent, plan for & evaluate things over a long-enough timeline. Patience is key!
- When you get it right, let it compound. Milk every success to the fullest.
- While specific outcomes are uncontrollable, a few decisions will always be make-or-break points in life – where you study, who you marry, which city you decide to settle down in, whether you have kids or how many, what house you buy & when etc. When faced with these questions, appreciate their importance, take your time & try to make the best possible decision in your capacity.
- Finally, rather than getting fixated on episodic successes & failures, zoom out to look at the bigger picture & visualize your life as a curve. The goal is to have it trending up & to the right over a long timeline.
So, keep playing the game, be patient & wait until you get your “few” right!
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