Partial Reality & Strong Opinions
Inspired by the humility of a Billionaire
You say that your skills got you to the top, but does that imply that others in your school or college were not equally skilled or even more skilled?
You say that your insights led you to pick multi-bagger* stocks and outperform the index. Can you repeat this process with enough confidence in your next stock picks?
You think that you are smarter than those around you and hence may judge others as less or wrong. What if others think the same about you? And they do.
We have very strong feelings about our superior abilities and that’s good. It makes us take on endeavors that are challenging, it makes us push higher, it makes us endure difficult times, and it makes us fight one more day even if we may be on the last few ounces of energy left.
But it also has a downside to it, especially when you overdo it.
And that is where overconfidence enters the arena and could lead you in a spot of bother, only because you thought too much about your skills and abilities, while the results could have been due to serendipity, coincidence, or a massive stroke of luck.
As Sahil Bloom puts it “humans are notoriously incapable of objective evaluation of their competency levels.”
A few examples -
If a CEO lies, manipulates, or deceives, it’s only a matter of time before the cooked-up stories catch up with the CEO (eg. Enron, NMC, or Wirecard fraud)
If you claim to be the next Warren Buffet, as Chamath Palihapitiya (Founder of Social Capital) did, odds are really high that you will be eating your words very soon and come across as incompetent and arrogant in the domain of long-term wealth generation.
Another outlet for overconfidence is opining on every topic, only because you tasted success in a specific field.
As the image shows, you may have Unconcious Competence in the domain of your expertise i.e. your intuition produces the right choices, and is backed by the right analysis and relevant experience. That is why SKY (Suryakumar Yadav from Mumbai Indians IPL Franchise) can bat so well or Elon Musk can create billion-dollar companies with unparalleled frequency.
But that doesn’t qualify the person to comment or opine strongly on other topics, as he may only be demonstrating unconscious incompetence in it, but clothed in smooth talk and eloquent language.
As Pulak Prasad expresses in his book - when someone says, “This is a great management team,” what they are actually saying is, “These guys talk so well!”
Talk is cheap, but that’s what many indulge in. It’s easy and doesn’t cost much. At least in the short term.
Let me give you examples -
Ever met a doctor who gives you permission to eat anything, only if you take your pills on time?
Ever met a banker who speaks about property investments with conviction?
Ever met an entrepreneur who holds very strong views on how a country should be run by politicians?
You see where I am going. It’s easy to tell someone how to run their business. But what that person is missing is that he has no perspective or deep insight into what exactly is needed.
Add to that the partial or complete ignorance of what’s the reality on the ground, the pressures, the incentives, the culture, the promises, the threats, the lack of supply, or the history. There is a lot that doesn’t get factored into when opining or suggesting with high conviction.
In the examples above, the professional has formed a view or created an opinion, or made a suggestion on a very limited view of reality. And that's what I see often, almost everywhere.
Partial Reality & Strong Opinions
But it need not be that way.
I met a very influential businessman in Dubai recently. For confidentiality reasons, I won’t name him, but if ranked in terms of wealth or the revenues of his businesses, he would rank in the top 10 in the whole UAE. He refuses to give any interviews, appear on talk shows, or host fancy events to tom-tom his success.
And I asked him, why?
He said that there is a lot that has gone into his success, besides the work he put in. It was the relationships he built, the support of family, lots of luck and gods will. He was so clear in his expression and didn’t see it any other way. Hence he didn’t want to come across as taking the entire credit for building an empire on his own.
That kind of humility is rare. Very rare. And that can only be understood by someone who sees the contribution of others in their success.
Add to this the complexity of the process itself, and the odds of things going wrong.
If you look into any process, it takes a certain kind of effort for yielding desired outcomes. A pizza made by you and me could be done in 10 mins. The process may look as follows - Take the frozen pizza from the fridge, put it in the microwave oven for a few minutes, and wait for the bell. Voila - an edible pizza is ready.
‘Edible Pizza’ - nothing more !!!
But a professional Italian chef could take time to prep the dough. He would only use the best quality cheese and tomatoes sourced from farmers’ market in the early morning hours. He may put the ingredients in an oven with heat from the fire and not some electric rods. And he would wait, much longer than the few mins of a microwave oven.
This pizza will taste 100x more delicious than the one you and I heated in our microwave oven. The whole experience will be beautiful. Your senses will derive pleasure from this pizza, and your gut will be happy too.
If you just look at any process from this lens, you will realize the layers of work, the quality of ingredients, and the insights that go into making a process churn desirable outcomes.
If you watch the movie ‘Jiro Dreams of Sushi’ on Netflix, you will witness the act of making sushi by the best in the world. It is a painstaking effort and was daunting for me to witness the masters at their game. Dining at Jiro will cost you USD 410 minimum i.e. JPY 55,000 for the Omakase Tasting Menu, the only dish they serve.
Yes, they serve only 1 thing. Take it or leave it. That too, if you do get a reservation. Many don’t.
Then comes luck. I have written about it before and you can read it here. The crux of the piece was summed up in one paragraph -
Prudence leaves me enough buffer for bad luck. Patience allows me enough time for the decisions to work out. Knowledge allows me to make wise decisions. This is my trinity of mental frameworks to help me deal with “bad luck”, while I keep my arms open to embrace “good luck” when it arrives.
When you mix all these ingredients, you may just realize that your overconfidence is pure hubris and just maybe, you might get down from your high horse and choose to be kind and humble in your demeanor.
If you’ve been lucky, being nice is the best way to express your gratitude towards goddess Fortuna. And it doesn’t cost anything.
Actually, it does cost something. A bite out of your ego or self-importance ;)
Ouch !!!
I shall leave Morgan Housel to sum up this piece in his own words - “Be nicer and less flashy. No one is impressed with your possessions as much as you are. You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration. And you’re more likely to gain those things through kindness and humility than horsepower and chrome.”
Wishing you all a fantastic weekend ahead.
Sending you loads of love and luck🧿
Manish
Great piece as always!