The Bunches Principle: why things go right or wrong all at once

What’s common between Nvidia’s recent massive stock jump, Zoom’s unprecedented user growth during the pandemic, SVB’s blow-up in a week & network effects of Calendly?

It’s a phenomenon I call the Bunches Principle, & it poses both risks & opportunities. Here’s how you can be on its right side.

Probably the biggest news of last week was the major pop in Nvidia stock. After an AI-fueled earnings update that massively surpassed market expectations, its stock price rose by 24% in a single day (May 25), taking its market cap close to $1Tn.

While this was happening, I went back to check how the stock has moved since the company IPO’d in 1999 (see chart below). Interestingly, the stock remained flat for almost a decade starting 2006, before growing ~9x between 2016 and 2018, then dropped again in late 2018 before 10x’ing again in the next 3 years. More recently, Nvidia’s stock has been up 235% since its two-year low in Oct’22, beating out the performance of any other S&P 500 company since then.

Nvidia’s stock performance reflects a phenomenon that I see frequently play out in the world at-large, and especially in complex-dynamic systems like financial markets, technology innovation, growth of young companies etc. I call it the Bunches Principle – it states that both good & bad things tend to happen in bunches.

Some examples of the Bunches Principle at play:

1/ Driven by the pandemic lockdown, Zoom’s daily meeting participants rose from 10Mn on Dec 31, 2019 to 200Mn on Mar 31, 2020 and 300Mn on Apr 21, 2020. That’s 20x growth in 3 months flat! This translated to steep revenue growth as shown below:

2/ SVB was a top 20 bank in the US by assets, a category leader in servicing the venture space, and had crossed $40Bn market cap in Nov’21. Even with a downturn in public markets, it had a ~$17Bn market cap on Feb 28, 2023. From there, it went bust in a week and was put under FDIC receivership on Mar 10 (see collapse timeline below).

3/ I see a frequent pattern in enterprise software/ SaaS startups wherein it can take several years for a product to grow from 0 to $1Mn+ ARR (especially when run bootstrapped or with minimal capital infusion), but then, $1Mn ➡ $100Mn ARR happens in a fraction of that time (see chart below). Case in point is Calendly’s timeline – the company was largely bootstrapped in its initial phase, raising only a small $550k seed round in 2014. Tope Awotona (who is a solo founder, to top it all – I mean this company is riddled with narrative violations at all levels!) ran it super-frugally for the next 7 years, getting the company to ~$100Mn ARR in 2021 and only then raising the 2nd round of…wait for it…$350Mn at a cool $3Bn valuation.

4/ I often say that while we think we are living in the age of innovation, our rate of shipping new groundbreaking technology is perhaps 10% of what the US achieved during World War 2. In 10 war-torn years between 1935-1945, here is a sampling of all the things that were invented in the country – Flu Vaccines, Penicillin, Jet Engines, Blood Plasma Transfusion, Electronic Computers, Radar, Atomic Bomb, Jeep, Superglue, Synthetic Rubber, Radar, Microwave Oven and many other spinoff products. It wouldn’t be an exaggeration to say that the foundation of modern life as we know it, was built in WW2.

What creates the Bunches Principle?

Within any complex-dynamic system, there are many interconnected & intertwined constituent elements, each of which is continuously evolving. As this system tries to achieve its stated goal or purpose, its constituent elements are both interacting with each other (“internalities”) as well as with external forces (“externalities”). On a shorter timeline, changes in these internalities & externalities are hard to observe, and often, can appear random or chaotic.

However, in some systems and at a specific point in time, these internalities and externalities combine in a unique way, sometimes called the perfect storm in everyday language, to create a tipping point. Beyond this point, the system makes explosive progress that can be either positive (towards the goal) or negative (away from the goal).

So, in the above examples:

Rapid acceleration of Generative AI via the launch of ChatGPT has created a positive tipping point in demand for Nvidia’s chips & data center products.
The pandemic literally drove the entire knowledge worker population on the planet to adopt video meetings, creating a positive tipping point for a consumerized, self-serve video conferencing product like Zoom (& then eventually for Teams & Meet as well).
Drastic interest rate increase by the Fed in less than a year (from 0.25-0.50% in Mar’22 to 4.75-5.00% in Feb’23) created a negative tipping point for SVB given it held a significant portion of its assets in long term treasuries that had to be marked-to-market to significantly lower levels, thus severely impacting its asset values & in turn, causing a bank run on it.
Calendly is a calendar scheduling product with in-built network effects given meetings are multi-sided. While these types of products have a cold-start problem and take a lot of initial heavy-lifting, once adoption reaches critical mass, a positive tipping point gets created for network effects to take over in a massive way. Same dynamic can also be seen in products like Slack.

What are the implications of the Bunches Principle for me?

Whenever we are operating in a complex-dynamic system, eg. the stock market, venture investing, building a new business, working in a pre-PMF startup, or even careers in general, we should be prepared to encounter the Bunches Principle & take decisions accordingly.

Some of these considerations could be:

1/ While holding a stock, as long as your conviction in the initial thesis holds & the business continues to make solid progress in the right direction, it might be worth holding on even if the stock stays flat, as a positive tipping point could be around the corner. See this pic via a tweet from Ian Cassel that I found worth bookmarking.

2/ In my experience, careers move in step functions, in what I call a “sow-reap” format. You sow for a few years, getting yourself to a tipping point where you reap significant rewards in bunches, post which another phase of sowing begins.

Therefore, it’s important to be patient enough during career journeys, in order to be on the right side of the Bunches Principle & catch those tipping points. Founders & venture investors, in particular, will appreciate this point given their careers involve putting in years of upfront work, with the belief that a giant payout awaits in the end.

3/ Watch out for small systemic risks that could be silently accumulating in important aspects of your life, potentially leading to a negative tipping point down the road. This could be neglecting health on a daily basis, various kinds of small debt piling up, not saving enough on a regular basis, over-exposure to one asset class, taking an important relationship for granted & not giving it enough care on a regular basis, having small but frequent burnout episodes at work etc.

4/ As you operate in various macro environments & external contexts, be aware of any negative tipping points that could be lurking within them. Things like the pandemic displacing life as we knew it, remote work destroying commercial real estate, geopolitical conflicts & their ripple effects coming to your door, regime changes leading to social unrest in your communities etc.

While it’s almost impossible to predict these, designing your life in an anti-fragile way with a margin of safety baked in, can go a long way in countering whatever the world throws at you. PS: for more thoughts on this, check out my post: Building an anti-fragile career (& life!).

In the ever-changing landscape of life and business, understanding and embracing the Bunches Principle empowers us to adapt, seize opportunities, and mitigate risks. So, as you venture forth, be aware of the bunches that surround you, for within them lie the seeds of both transformation and caution.

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The Success Flywheel

Do you know what’s common between Shaq’s investment in Google, Ryan Reynold’s success as a marketer, the business dominance of Ivy Leagues & Peter Thiel’s investment in Facebook? A phenomenon I call the Success Flywheel.

In this post, I unpack this concept, including ways you can kickstart your own Flywheel.

Let me share a story that has 2 of my most favorite things in life – NBA and tech investing. Did you know that Lakers legend Shaquille O’Neal invested in Google’s Series A round in 1999 at a $100Mn valuation? Which, as we all know now, has turned out to be the biggest venture outcome of the last 25 years. So, how did an active basketball player get access to the deal of the century alongside Sequoia?

Shaq revealed the story behind his Google investment during his appearance at TheEllenShow a few years back. Apparently, he was hanging out at the Four Seasons in LA & started playing with a bunch of kids at the next table. In his own words – “I felt like I was babysitting this guy’s kids while he was in a meeting”. As it turned out, this stranger (Shaq didn’t disclose who he was) eventually let him into the Google deal.

Now, knowing Shaq’s storytelling skills, am sure this story is a bit jazzed up. And given he was already an NBA star in 1999 (he would go on to win his first ring in 2000), obviously this stranger must have recognized him. But even discounting for these possibilities, it’s clear that some amount of serendipity was definitely involved – meeting an important investor in a famous watering hill located in a powerful city led to him accessing a once-in-a-lifetime deal.

As you digest this, let’s cut to a similar story of another star, this time in Hollywood. Ryan Reynolds is now considered one of the savviest marketers & investors around. Look at his track record:

Became the brand personality for Mint Mobile, reportedly taking a 25% stake in the company. Mint recently got sold to T-Mobile for $1.35Bn!
In 2018, started promoting Aviation Gin and also took a stake in the company. The company was purchased two years later by Diageo for $600Mn.
In late 2020, co-bought a struggling fifth-division Welsh soccer team for 2Mn pounds. Used his marketing chops, including creating a Hulu documentary, to turn around the club’s attendance & revenues. It is now a thriving organization.

So, how does an active movie actor get access to deals that would be the envy of major private equity funds? And not just one-off – he keeps getting invited to the best deals one after another.

This is what I call the Success Flywheel at play. While the above are outlier examples related to top celebrities, I have seen the Success Flywheel working countless times both in my own career as well as those around me:

Repeat founders with prior success get access to the most venture dollars from the best investors. The other side of this coin – VCs with successful track records keep getting preferential access to the best founders.
The best recruiters (consulting, banking, investing, big tech) visit only the top campuses in each country for placements. So, these students get preferential access to the best jobs. And the flywheel doesn’t stop there – once you have any of these top logos on your resume, they act as preferential filters for subsequent jobs.
Early success brings folks to major economic centers like the Bay Area, NYC, London, Bangalore & Shanghai, either to study or work. Just by participating in the natural flow of information & people in these hubs, they get exposed to the best opportunities.

Morgan Housel of Collaborative Fund has a similar observation in his awesome post “Tails, You Win“:

The Success Flywheel is like a law of nature because it stems from fundamental human behavior. Across countries, cultures, sectors or even historical eras, at a fundamental level, humans are wired to maximize risk-adjusted returns while doing deals. Very crudely, there are 2 ways to do this – increase the numerator (return) and/ or decrease the denominator (risk).

Equally importantly, time is finite so people are looking to get to the most optimal risk-adjusted option, as efficiently as possible. This gives rise to the concept of “access” – how does one get in the flow of these people looking to do the best deals? ‘Cos they will quickly choose from people in their natural flow.

Having a prior event of success helps in getting repeated access to this flow as it creates a strong credentialing signal that plays really well to a crude heuristic that the human brain often uses – “if the person has been successful before, they are more likely to succeed again”. This signal drives 3 kinds of access: (1) Inbound (“I should talk to X”), (2) Referrals (“you should talk to X”) and (3) Serendipity (“have you met X?”).

1/ Inbound

The more socially-visible & externally-validated the prior event of success is, the more broad-based inbound access it drives to various kinds of flows. People looking to do deals proactively reach out even without any significant outbound effort (trying to sell yourself). Hence, visibly successful founders, investors, leaders, celebrities & experts keep getting access to opportunities.

This is also why conventionally successful professionals in any field still continue to productize & distribute themselves, building their personal brand & constantly growing their reach via networking, blogging, tweeting or starting podcasts. Putting oneself out there drives familiarity, which is key to inbound flow.

2/ Referrals

Everyone in these flows is typically in a consciously-cooperative mode, trying to optimize risk-adjusted returns for each other via referring opportunities, in the hope of future reciprocation. So, if a person has a prior event of success & on top of it, is also well-networked, it turbocharges referral-based access.

There is also a mini-flywheel at play here where a success event attracts people to your network, which drives referrals & more preferential access, thereby leading to more potential success & so on.

3/ Serendipity

Finally, even if you are not proactively looking for certain kind of opportunities (am sure Shaq wasn’t sourcing venture deals full-time), just being in the right flows puts you in the vicinity of serendipity that can take you in directions you never imagined. Shaq being at the LA Four Seasons at exactly the right time was the result of his outlier success as a basketball player, not his proactive networking skills.

The halo effect of success in one field generally transfers to other adjoining fields as well, which can drive massive serendipitous upsides. For eg. Peter Thiel’s track record as a co-founder of Paypal put him in the flows of Mark Zuckerberg in 2004, helping him become the first investor in Facebook. Or Jeff Bezos was able to invest in Google while it was still in the garage, courtesy of his success with Amazon.

Now the million dollar question – how does one leverage the Success Flywheel?

It starts by putting in the work to get your first event of success. The sooner the better so a sense of urgency goes a long way! And the good news is – unless one is born to privilege, most people start from scratch and build towards their initial success.

An event of success could be anything from cracking a top university, getting a coveted internship in a hot field, hustling into a brand-name job, hitting milestones with your business, creating a new product with buzz, publishing a paper, joining a board, building a social media following or just about any accomplishment in your context. Big or small matters less, it’s about getting a win on the score board to get the flywheel going.

While you are putting in the work towards your goal, also build a distribution network in parallel. This includes deep relationships & loose networks, both in the physical (IRL networking) & digital world (social media).

Once you get to that event of success, leverage your distribution network to amplify its impact. Make sure your success is visible, validated & shared in the ecosystem.

As Inbounds start, connect with people authentically, leave a good impression & look to solve problems for others.
To jumpstart Referrals, start using the tools & resources that typically come with success, to disproportionately give back to the network.
To leverage Serendipity, follow the golden rule of “showing-up” everywhere – meetings, events, calls, webinars, conferences, mixers, even birthday parties. PS: if you find networking at events a huge pain like me but still want to get better, check out my post “Networking at Events for Introverts“.

TLDR: the way to get a Success Flywheel going in your life is to first put in the work with a sense of urgency, and create an event of success, big or small. Once you get this event, make sure you “distribute” it well and ensure its compounding by continuous learning & effort.

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The 3Cs of career leverage

As I started experiencing both time & mental bandwidth constraints, especially post becoming a parent, I started thinking through the golden question – “How do I get more leverage in my career?”.

Sharing 3 main forms of leverage that I have identified during my journey in tech as an investor, operator & founder.

The way I design my career completely changed when my first son was born in 2017. From the day I graduated from IIT, I implemented what I call a Brute Force strategy to climb the career ladder. The idea was to basically outwork everyone – worked deep into the weekend during my investment banking days, did every possible hustle during the venture capital gig, and was on a plane 15-20 days a month for 5 years at Alibaba, literally doing a round trip of the world (SF – Hangzhou – SEA – India – back to SF via EU).

Everything changed once a parallel day (& night) job landed on my plate – that of being a parent. Relative to Asia, raising kids in the US is especially hard given there are no support systems to fall back on, especially for a 1st gen immigrant like me.

The easy choice, of course, would be to step off the gas a bit, realign professional goals & essentially, accept the trade-off of more personal time & lower professional outcomes. And many at this life stage end up choosing this option.

But then, I have never been the guy who loves the easy way out. I set out to answer the golden question – “How do I get more leverage in my career?”. Essentially, figuring out ways to significantly improve the ratio of output (value created) to input (time & mental bandwidth invested).

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.
Archimedes

As I churned on this topic in my head for a year or so, Naval Ravikant posted his now legendary “How to get rich (without getting lucky)” tweetstorm in 2018, where he wrote about leverage as one of the key ideas.

Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
Naval Ravikant

Having worked in tech as an investor, operator & founder, I had the opportunity to observe various forms of leverage at play from close quarters. Some examples that hit home hard for me over the years included:

When WhatsApp got acquired by Facebook for $19Bn in Feb 2014, it had only 55 employees and yet, had built a product with 450Mn MAUs.
Masayoshi Son of Softbank invested $20Mn in Alibaba in Jan 2000. When Alibaba went public in 2014, Softbank’s stake was valued at ~$90Bn, a 4,500x return. Similarly, Peter Thiel’s 2004 angel investment of $500k in Facebook turned into a ~$1Bn cash return when the company went public in 2012.
I discovered legendary VC Fred Wilson’s “AVC” blog during my first year in venture capital. It blew my mind that Fred had been consistently blogging on startups & investing since 2003 when at the time most Indian VCs didn’t have a Twitter account. Cut to today, Fred still continues to write on the same AVC domain!

These examples highlight 3 main forms of career leverage I have come to identify in my journey. I call them the 3Cs – Code, Capital & Content.

1/ Code

Code is the strongest form of leverage that has come into existence in the last 50 years. It started from the days when one had to have access to a University with a Punch Card machine, just to run simple programs. Then, Apple and Microsoft together brought computers to regular homes, but coding languages were still complex & needed expertise. As personal computers got more powerful, the open-source ecosystem of programming languages started thriving, creating much broader access to software programming across the world (from s/w products in Silicon Valley to IT services in India). Now, with the rise of generative AI, it wouldn’t be a stretch to say that almost every knowledge worker can code & create products without deep expertise in specific languages.

Code provides game-changing leverage. Over the last 20 years, anyone with a decent laptop and an Internet connection could build a SaaS business, become a freelance developer, or get hired by a large tech company at extremely attractive salaries irrespective of location, background, or past credentials. As opposed to hourly jobs in the industrial age, coding just for more hours doesn’t necessarily translate into better outcomes. Quality of problem-solving matters much more than the quantity of hours, which is what gave rise to the 10x engineer phenomenon.

As someone who had neither the skillset nor the mindset to code, this extremely powerful form of leverage has always been out of my reach. That’s why I am particularly excited about how AI will make coding so much more accessible. At the minimum, it will both increase the global base of developers, as well as significantly enhance the productivity of the best ones (the 10x engineer now becomes a 100x?).

Given coding hasn’t been available to me as a leverage point in my career, I have had to double down on the other 2Cs, as I will explain below.

2/ Capital

Using capital to own assets is the oldest form of leverage that continues to stay powerful. The Vanderbilts made their fortune owning railroads, Carnegie in Steel, the Waltons & Jeff Bezos in retail, Buffet & Munger in owning full businesses as well as investing in stocks, Jobs & Gates in tech, Templeton, Soros & Jim Simons in public market investing, Stephen Schwarzman & Henry Kravis in Private Equity investing, and Don Valentine & John Doerr in Venture Capital investing.

Capital can be used to buy ownership in Real assets as well as businesses. The former benefits from scarcity (land is finite on this planet) & gives double-dip benefits of monthly cash flow + equity appreciation. But personally, I find the latter more interesting, purely because great businesses become long-term compounding machines, providing the prospect of exponential returns that Real assets can’t match.

As an example, Microsoft’s market cap has grown from ~$270Bn to $2Tn+ in 20 years. For any part owner via stock, everyone from Bill Gates to Steve Ballmer & now Satya Nadella has been putting in the work to give shareholders ~17% annualized returns.

Of course, the most powerful route would be to use your “sweat equity” & start a business, but that’s typically not an optimal option for most people.

Given my significant experience in banking & venture investing, I have gotten the most exposure to Capital as a form of leverage & ways to harness it across asset classes. In addition to developing expertise by working across institutions, investing in both public & private markets has also become my personal passion over the years. In a very organic way, I have always turned to the lens of markets & investing to decode life & human behavior.

As a result, I have doubled down on leveraging Capital to acquire ownership in businesses as a core form of leverage. I have been investing in tech startups for more than a decade, & plan to keep doing it for the rest of my life. My simple pursuit is to identify the best founders out there, & I believe this is where my professional Alpha is!

Compared to Code, Capital-based leverage is relatively hard to acquire. Accumulating own capital takes time & being able to manage other people’s money has a really high bar of trust, reputation & accountability.

The good news is – you can start young & with small amounts of capital. Compounding is your friend and as long as you are determined to save & deploy on a continuous basis for decades, every small step adds up. And sooner or later, my favorite model of “you only need to get a few right” kicks in, wherein a smart decision every few years will create a step function in your portfolio.

The first $100,000 is a bi**h, but you gotta do it. I don’t care what you have to do – if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.
Charlie Munger

3/ Content

This is the newest form of leverage, & one of the most exciting ones. Pre-Internet, there were many gatekeepers in the way of getting ideas heard. Most regular people had almost no access to traditional media. One needed relationships with publishers & power brokers to put anything out in the market. Participating in a high-quality exchange of ideas happened within tight cliques – scientific, university, neighborhood, racial, socio-economic, etc. Essentially, the common man was blocked by “access”.

The Internet changed everything. Anyone could build a website to publish their ideas. With search engines, this content became discoverable by anyone across the world. As social media got created, distribution became turbo-charged with authors able to create holistic personal brands & interact with very specific audiences for their work. Now, powerful phones & software have transformed authors into “creators”, arming them with light-weight studios to create various forms of media, from vlogs & podcasts to tweets & reels.

I started writing online in 2011, mainly via blogging & tweeting. Over the years, my conviction in Content as a powerful form of leverage has only increased with time. As anyone who has taken a new product to market knows, it’s just not enough to have a great product. Communicating with your audience in a way that makes the product resonate in their minds matters the most. Case in point: Apple’s legendary 1984 Super Bowl commercial introducing the Mac (& in the process, convincing the audience that IBM is obsolete!). Even a product genius like Jobs spent an inordinate amount of time thinking about marketing (check out this snippet from Jobs on how he simplified Apple’s marketing message).

To me, the ability to influence human minds with your ideas is a superpower like no other. Writing & putting content out there helps me engage with people I would have never met otherwise. It helps me attract people with similar values, with whom I can solve problems. It helps me have a conversation with them even when one of us is asleep, or in a different time zone, or even when the encounter happens many years after the actual writing.

Early-stage investing is a long-tail game, with thousands of new startups getting created across the globe & tens of founders in the pipeline at any point in time. I realized very early that real-time meetings are unscalable, especially at my life stage, & that demand-gen is key.

Content is arguably the most scalable form of human interaction, with its engagement & subsequent impact reverberating for years & sometimes, generations (in the case of the best books). In fact, this post itself is a perfect example, wherein I have shared links to an Apple commercial from 1984, a Steve Jobs speech on marketing from 1997, and a Wall Street Journal article from 2000.

My belief is that Content in many ways provides more potent leverage than Capital – money can’t buy the best ideas, but the best ideas can attract money. And this friends, is why I write!

To summarize, employing various forms of leverage is key to creating large professional outcomes. As you design your career, think about proactively layering in one or more of Code, Capital & Content into it & equally importantly, commit to doing it over many decades.

The Familiarity Conundrum

Earlier this year, my younger son got admitted to the same preschool that the older one attended in SF. As parents, we were elated! Our older one loved this school, we know the Principal and teachers really well, and it significantly reduces uncertainty for us given this school goes up to Middle. A win-win in every respect!

Except, we were caught completely off-guard by how the first few weeks turned out. That the kid was having “adjustment issues” would be an understatement. Everything from sleep schedules & toilet training to eating & social behavior went majorly South. While this is normally expected when kids change schools, what surprised me was how much this derailed us as parents. We were maniacally struggling to manage the kid in this transition while trying to cope with all the mood swings & changes this was bringing to our daily routine.

Of course, things started improving after a couple of months & as we speak, the kid seems all settled in the new environment🤞🏽. But I couldn’t stop introspecting on why we got caught so off-balance in this episode, even when we knew the school intimately & had gone through this exact experience before with our older one?

This was a manifestation of what I call the Familiarity Conundrum. When we deal with things we are intimately familiar with, there is a double-edged sword at play. While familiarity arms us with high-fidelity, experiential data that can be incredibly useful in making a smart decision, it also creates overconfidence-driven blind spots in our ability to deal with the familiar.

In highly familiar situations, our brain tends to short-circuit the decision-making process, perhaps gathering comfort from past anecdotal experience regarding similar situations. The result is a quick decision based on 1st order thinking. We went through this in the above school episode – our brains used a quick, 1st order heuristic – “because this school was so great for our older son, it will be equally good for our younger one too”. We failed to ask even a basic set of questions regarding this decision eg. are the teachers the same this year, is our younger son starting at the same age as the older one, should we expect any changes to the school routines post-Covid etc. These are basic diligence questions that we would have definitely tried to answer had this been an unfamiliar school for us.

This Familiarity Conundrum often leads to sub-optimal decisions in other aspects of life as well. Some examples that I have personally experienced or witnessed:

When hiring someone we are highly familiar with eg. an ex-colleague or classmate, our brain tends to unfairly magnify our last, dated view of their strengths, not pushing us enough to evaluate them independently, especially with respect to fit with the current opportunity.
When a trusted person introduces us to a deal, say an investment opportunity, our brain wrongly transfers trust with the referrer onto the referred deal, without a rigorous evaluation of the deal on a stand-alone basis as well as the referrer’s true competence in the specific area being evaluated.
When operating in an area where we have prior work experience, we tend to under-diligence the opportunity & overestimate our likelihood of success. In areas of perceived expertise, our brain doesn’t push hard enough on 2nd & 3rd order thinking like figuring out ways in which this context is different from our prior experience, trying to see around corners for lurking risks etc.

So what can we do to effectively deal with this Conundrum? Based on what I have learned from my experience as well as studying great rationalists like Charlie Munger, here are a few ideas:

1/ First step is spotting it at the right time – training your mind to spot times when familiarity could be creating blind spots for you, is itself a major part of keeping biases at bay. Personally, I tend to keep a matrix of such mental models both layered in my head as well as often as part of a diligence checklist. For decisions that cross the bar of impact and/or irreversibility, I like to run them through this matrix to check for potential blind spots.

2/ Don’t deviate from the “checklist” – Dr. Atul Gawande argued for the importance of checklists as a tool to make surgeries safer in his popular book “The Checklist Manifesto – how to get things right“. Professionals as diverse as surgeons, pilots & public market investors leverage checklists to handle uncertainty & make better decisions under stress.

The key is not deviating from your operating process even when the context is highly familiar and your brain is pushing you to use crude heuristics to arrive at a quick decision. Like a pilot who will diligently run through the aviation checklist even on the best-weather days, one needs to strive to do the same, each time, every time while taking high-impact decisions.

3/ Always have an independent feedback mechanism – even in areas where you believe you have deep knowledge and/or extensive on-ground experience, it’s always good to get feedback from independent players who are likely to see the opportunity in an unbiased way.

During my early days as an angel investor, I had a tendency to predominantly rely on my own judgment of a startup & often made decisions without taking the time to gather feedback from other sources. Having learned from several missteps, I have now incorporated gathering feedback from several sources including market experts, customers, founder references & other investors, as a core part of my investing process.

In this context, I find the idea of having a “feedback buddy” incredibly useful. For important projects eg. buying a house, a product launch, a big investment, it’s good to have someone who is unrelated to the project be a sounding board to bounce off ideas, poke holes in current thinking & simply provide common-sense feedback.

The bottom line is this – as opposed to explicitly unfamiliar terrain where our natural survival mode gets alerted, familiar contexts are significantly more likely to get our brains in “lazy thinking” mode, creating blind spots that will catch us off-guard. Proactively spotting this dynamic, having the discipline to stick to a rigorous process at all times & consciously incorporating an independent feedback mechanism within it, goes a long way in offsetting this Familiarity Conundrum.