This morning I found a Kindle Voyage under the Christmas tree and immediately loaded up Tren Griffin’s Charlie Munger: The Complete Investor. I’ve been eagerly waiting to read it since hearing Griffin on a stellar episode of the a16z podcast. The fifth or so of the book I have read so far has been excellent and I look forward to finishing it; Griffin elucidates the seemingly simple wisdom that guides Munger’s, and tangentially Warren Buffett’s, wild investing successes.

I didn’t make it past the introduction before finding an idea that spoke to me:

“in Buffett’s view, if you cannot write it down, you have not thought it through.”

In that vein, I’m taking some of the reflections and musings that come naturally with this time of year and writing them here to ensure that I’ve really thought them through.

2015: The Year of the Framework

In 2015 my growth began to come from getting better at thinking rather than from improving on discrete skills.

By the midway point of this year I felt settled into my new position at work enough to catch my breath, lift my head up and look around. Work became less about getting out from under a list of tasks and more about identifying high value opportunity spaces to tackle.

While my managers gave me a long leash from the very beginning, the work of an entry-level individual contributor is in many ways similar to that of a student: there is a predetermined correct outcome and it is your job to execute towards it. Being smart, reliable, and thorough in this work is a good way to prove yourself, but you don’t begin to contribute more meaningful value until you make the shift to identifying overlooked problem spaces and applying creative solutions to them.

My biggest learning as I made this shift is that just being clever and hardworking doesn’t cut it when a problem space isn’t clearly defined. No one knew the answers anymore and there was no book of steps to follow. With the guidance of my more experienced team members, I began to develop strategic frameworks that could be broadly applied to a wide array of challenges. These frameworks are mental models for problem solving, a checklist of thought processes and guidelines to eliminate bias and guide decision making.

For example, when considering a potential change to a product, three solutions presented themselves. One would likely generate the most revenue but could frustrate users, the second would likely generate the most user satisfaction and goodwill but have very limited long term revenue prospects, and the third would please users while generating moderate revenue. Without considering the details of the product in question, my team and I were able to agree on a framework that would make the decision simple:

We don’t believe in investing resources in products that won’t make our users happy
We have a lot of opportunities to make products that make users happy and make money so we shouldn’t accept a product that only does one of the two unless it’s orders of magnitude above the alternatives

With these points in mind, the solution was clear. Option three was the only viable choice. And this framework isn’t specific to the product we were working on. We had already designed a lot of products that fit this framework, but now we’re intentional about calling out our model. Now that we’ve constructed this model, we can shortcut to the correct solution on all future products.

Frameworks have changed the way I identify opportunities, develop solutions, and share results. Now more important than the what of the solution is the why. My favorite thing about using a frameworks approach to work is that each time I finish a project I get to update my mental models. Whether my proposed solution works or doesn’t, and whether my next project is related or isn’t, I can take lessons from how I thought about the solution to improve my ability to succeed in the future. The more I consciously run through mental frameworks, the better results I’ve seen from my decision making at work and in my personal life.

Opportunity Cost

Sound investing in an option rich environment boils down to opportunity cost.

Over the course of the year I had the opportunity to work on many projects in many spaces of our company and have done my best to catalogue my approach to each. I’m still relatively green, but I’m excited about the potential that my new adherence to mental models brings. Of all of the concepts that I’ve catalogued for myself, my favorite is opportunity cost.

The value of investing (time or money) in any project has to be measured against alternative uses of the same resources.

While opportunity cost is a widely taught microeconomic concept, I consistently see it being overlooked in day to day decision making. In many businesses, opportunities to invest time and resources are limited by a reliance on money. Young and struggling companies are happy to find a product that generates more cash than it costs to make; if they don’t, they don’t make payroll and the ride is over. Eventually, successful companies become lucky enough to have choices in what they invest in, knowing that many choices will be ROI positive. My own company is fortunate enough to operate on a scale that ensures that almost any individual product we make will return more than it cost to produce. The key, then, to making good decisions is to understand that ROI can no longer be calculated in terms of money made/money spent. A minor success should be considered a failure if it is pursued to the exclusion of a major success.

Teams that pat themselves on the back for making $5 million dollars with new product X when they could have made $7 million dollars with new product Y are really just taking credit for the scale of their audience, built over many years through the hard work of the entire company. This same team would balk at adding that same $2 million to their budget. The most challenging concept for people to grasp, it seems, is that foregoing $2 million is financially equivalent to spending $2 million.

As my team trusts me more and more to identify my own problems to tackle, I aim to keep opportunity cost at the forefront of my mind. Is the problem I’m solving right now the most important problem I could solve? If not, I am not efficiently spending my time.

2016: Focus, Discipline, and Consideration

The same principle of efficiency applies to my personal growth. Time spent on personal development is now judged against other areas of growth I could focus on. That is one of the reasons I am most interested in finishing Griffin’s book. Reading about the frameworks developed by brilliant men and women over many years seems to be the most efficient way to advance my own mental models.

With that in mind, these are the areas of growth I aim to invest the most attention in for the coming year.

Focus

Be intentional about what projects I work on at work and how I spend time at home
Identify clear steps to success/completion for each of those projects
Eliminate distractions and focus on achieving those deliverables until the project is complete

Discipline

Be disciplined and restrained with my words
Be mindful of how my bearing comes across to others
Avoid communicating overconfidence

Consideration

When coming up with solutions, survey the entire field of options
Stress test solutions against best available alternatives

I’m looking forward to another year of growth, new mental models, and being more intentional about how I invest my time. I appreciate you spending a little of yours to read my thoughts.

Merry Christmas and Happy New Year,

Brendan