Mental Models

Seeing vs. Making Reality

The most challenging part about being an experienced investor is uncovering your biases about how an industry or a company should work. In other words, the challenge is to be able to see reality objectively and for what it is and not what you want it to be. I refer to “experienced” investors in particular because experience makes you more susceptible to projecting your previous biases and mental models around how things should be, instead of objectively evaluating how things actually are. (Side note: This is true of life in general. Experience is both a boon and a curse – it allows you to learn from the past, but it also takes away the freshness and novelty of a beginner’s mind.)

For example, building financial models based on how you think the company should work might be the part that trips investors. You project financial models based on what industry benchmarks are, where you think the company can be more efficient, and what your thoughts around growth are. But in the midst of all of this, you may fail to see reality for what it is. You may fail to understand the actual reasons behind a company’s performance and that the growth trajectory may not be the one that you hold in your head. As such, you will end up making poor investment decisions and being intellectually dishonest.
Great investors are able to see reality for what it is. They are able to think and invest in an objective manner.

On the other hand, being an entrepreneur means making the reality you want. It requires a balance of dreaming and being realistic at the same time. Entrepreneurs hold dreams of the reality they want, and then go out there and make that reality come true. So, how do they make this “reality come true”? Ironically enough, creating your own reality requires embracing reality. (Now I’m sure I’ve confused you, so let me explain.)

I’m not saying that successful entrepreneurs are realistic. In fact, some of the greatest entrepreneurs probably think in the most “unrealistic” way (i.e. Steve Jobs). But I do think that they are very objective about what it takes to accomplish their seemingly unrealistic dreams. In other words, they dream unrealistically, but accomplish realistically. 

To sum it up, I think the difference between an investor vs. an entrepreneur’s frame of mind may be that one (investor) sees reality whereas the other (entrepreneur) makes reality.

This brings me to the point that the common thread between great investors and entrepreneurs is objectivity. And I believe this translates to all areas of life. One of the keys to greatness lies in training yourself to do everything in an objective manner. Again, it does not mean not killing your craziest dreams and fantasies – it means being realistic about what it takes to achieve those dreams and then going out there and doing it!

Mental Models

On Thinking

My previous post ended by asking you to pick up the book A Brave New World because “It will make you think.” However, it seems like the act of thinking itself may be dying.

“How do you get time to think?” A good friend of mine asked me this question a few nights ago after I rattled off some of my thoughts on the use of technology, social media and short attention spans. His question made me revisit Aldous Huxley’s genius 1930’s creation where Huxley predicted the future. He wrote about reading and thinking becoming alien concepts in the future. That future is now the present.

Constantly disturbed by our smartphones, we have eroded our abilities to focus deeply and pay attention. Hard problems take time and patience to solve and we cannot be reflective analytic problem solvers in this culture of distraction. We are so attached to our screens that we fail to observe the world around us. A flourishing society that can come together and solve the most important problems of the world is reliant on deep work, empathy and human connections. These are slowly degrading and we must make an effort to revive it.

I’m not saying that I am the deepest thinker or have great self-control when it comes to the use of technology. However, I am making a conscious effort to improve on these fronts. In that respect, here are some small actions that help me think more and focus better:

  1. Create habits and routines so you don’t have to exert too much mental power into planning your day and your mind can be free to wander
  2. Work in chunks and blocks of time and do not multi-task
  3. Do not check your phone while working. Better still, keep it away from you
  4. Reduce time on social media
  5. Actively carve out time to think. Go on walks
  6. Meditate (still working on this one)
  7. Be observant

The hope is that we can be clear thinkers in this world full of noise.

Recommended book: Deep Work: Rules for Focused Success in a Distracted World by Cal Newport

Recommended blog post: Mental Models and Thinking Better by Shane Parrish

If you have any suggestions to share or want to talk about this, I would love to hear your thoughts / critiques – so please drop me a note.


Mental Models

Soma in a Brave New World

When one of your favorite authors mentions a book that influenced his / her thinking, you have to pick it up to understand the root source behind the books that impacted you. A Brave New World by Aldous Huxley is one of the books that influenced Yuval Noah Harrari, bestselling author of Sapiens and Homo Deus.

Even though I finished reading this 1930’s dystopian novel about a month ago and have been mulling over in my thoughts about the book, I haven’t quite been sure of how to express them in writing. But here is an attempt at it.

One particular word from the book stuck with me; it’s called Soma.

The book describes a New World into the future where almost everyone is happy. There are no blood relationships, only sex. People just work the amount they have to based on the “status” they were assigned at the time of birth. Babies are conditioned in test-tubes at the time of birth and that defines their lives. There is no concept of the American Dream. Everyone lives a happy and content life. And if for some reason, something upsets you, there is an easy fix and that is Soma. Soma is a happy drug. It’s a pill that you just pop in and you become satisfied again.

“Now – such is progress – no leisure from pleasure, not a moment to sit down and think.” And if ever by some unlucky chance your happy state of mind is distracted, “there is always soma, delicious soma, half a gramme for a half-holiday, a gramme for a weekend, two grammes for a trip to the gorgeous East…”

The concept of Soma really disturbed me, and I immediately started thinking about analogies to Soma in today’s world. Does alcohol serve the purpose of Soma for many of us? Is juul the new Soma? And, what’s the next quick-fix drug we are going to use because we can’t confront our unhappy / confused state of mind? Have a lot of us also forgotten how to think because we are constantly distracted by social media, the next great vacation to plan and long hours at work?

I tried to argue with myself that Soma could also be the simple pleasures of life such as enjoying a good meal with a loved one, exercising, reading, or even some good wine and beer with old friends. Aren’t those happiness pills too? If so, there may be nothing wrong with Soma.

But then I realized that Aldous Huxley is referring to Soma as a drug that intentionally blocks our ability to think clearly and gives us a false sense of happiness when we are under the influence of that drug. The point being that a lot of us are afraid to confront our discontented state of mind and so we look towards Soma to make us feel “happy” and forget our worries. But it’s unlikely that you will find true happiness unless you are willing to confront your struggles. It’s not about finding quick and easy solutions. It’s about facing those challenges and coming out stronger. It’s about enjoying the roller-coaster ride (ups and downs) of life.

Are we presently living in this Brave New World that Aldous Huxley conceived of more than 80 years ago? Pick up the book. It will make you think.

Recommended Book: A Brave New World by Aldous Huxley

Mental Models

Ikigai: Purpose in Action

I visited Japan after graduation and like Tim Urban (one of my favorite bloggers), I too failed to figure it out. Even though I stayed with a local friend in Japan for a few days and traveled alone, which forced me to interact with the local people, I found it very difficult to even begin to understand the Japanese culture. Nonetheless, I fell in love with the place (despite only being able to eat white rice on a vegetarian diet) and I came back and started reading some of their very thought-provoking philosophies. I’ll begin with Ikigai.

Ikigai is a concept to improve work and life. It’s about finding happiness in everyday life, such that the sum of small joys adds up to a more meaningful life. It is essentially the convergence of four primary elements:

  1. What you love (your passion)
  2. What the world needs (your mission)
  3. What you are good at (your vocation)
  4. What you can get paid for (your profession)


Of course not everyone has figured out what these four elements even mean for us (I’m still on the journey), but it’s a great lens and framework to use. It’s about “Purpose in Action.” Find your purpose. Take action.

If you have discovered your Ikigai or are still exploring like me, I would love to hear your stories – drop me a note! Till then, enjoy these pictures of my friends and me at a teenage photo studio in Tokyo!


Recommended article:

More to come on Ikigai once I’ve read the book: Ikigai: The Japanese Secret to a Long and Happy Life by Hector Garcia

Mental Models

Jeff Bezos on Long-Term Thinking

Jeff Bezos is currently the richest man on Earth. In hindsight, it’s easy to think that Amazon was bound to be a success with the boom in technology and internet. However, the Amazon story is quite remarkable and Bezos went through his fair share of struggles before this giant empire got established. After the initial madness and motto of “Get Big Fast”, Bezos decided to deploy a “Get the House in Order” philosophy and never shied away from thinking longer-term. He knew that great businesses fail because they are reluctant to embrace promising new markets that might undermine their traditional businesses and that do not appear to satisfy their short-term growth requirements. So, Bezos always kept an eye on the future and thus the Kindle and Amazon Web Services (the fastest growing and the most profitable segment) were born.

One of my most favorite Jeff theories is “the regret minimization framework”, which he came up with when he was switching from his lucrative job at D.E. Shaw to potentially starting Amazon.

“When you are in the thick of things, you can get confused by small stuff. I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way, it was incredibly easy to make the decision.” – Jeff Bezos

Bezos’ point is that when you start thinking about the longer-term consequences, the small everyday confusions begin to disappear.

Even in the worst of times, Bezos did not give up this attitude. During the dot-com bubble burst, Amazon stock dropped from $57 to $33, shedding almost half its value. Bezos scrawled “I am not my stock price” on the whiteboard in his office and instructed everyone to ignore the mounting pessimism. “You don’t feel thirty percent smarter when the stock goes up by thirty percent so when the stock goes down you shouldn’t feel thirty percent dumber,” he said at an all-hands meeting. He quoted Ben Graham, “In the short term, the stock market is a voting machine. In the long run, it’s a weighing machine that measures a company’s true value. If Amazon stayed focused on the customer, the company would be fine.”

I’ll end with some of Jeff Bezos’ main tenets:

  1. Customer obsession
  2. Be patient
  3. Invent your way out of boxes
  4. Invent your way into the future
  5. Operational excellence so you can find defects at the root and fix them

Recommended book: The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone

Recommended Podcast: The Investors Podcast: Learning from Jeff Bezos