Saturday, January 21, 2017

Tool for Titans #43 :The problem with plans.

Scott Belsky is an entrepreneur, author and investor.

a) The problem with plans.

Right off the bat, Scott talks about the limitations levied when you plan your life too well.

Scott's idea is that if he plans for everything, his life will not exceed his expectations because he loses one source of creativity as he gets jammed less often. We can't really falsify this statement but productivity systems like GTD aim to assist in planning your life so well that your mind becomes more creative as you free up the time to be really imaginative.

Just who is right ?

b) Kill your darlings

It's easier to agree with this second point.

Businesses have to kill their darlings in order to grow and thrive. Sometimes, a business is fixated with an unprofitable product and this limits their ability to scale given limited resources. This is why consultants always try to trim the menu for failing restaurants to bring it back into profitability.

c) There is no pattern behind successful innovation

Great innovation comes from surprise. Entrepreneurs who adopt patterns or somebody else's playbook can create a derivative product but will not create something which changes the world.

I've always harboured grave doubts about books on turning innovation into a process. It might be better to read a technology textbook instead.

Friday, January 20, 2017

Tools for Titans #42 : Inspiration is for amateurs.

Justin Boreta is the founding member of Glitch Mob.

I have no fricking idea who this guy is. If you are a fan of his music, please share with me his better songs. Initially, I had half a mind to skip this section because it is not coherent enough to be in this book and the editor should be shot for allowing this to be included.

The only statement I will discuss today is the statement that "Inspiration is for amateurs - the rest of us just show up and get to work." The editing is so bad, I wasn't even sure whether he agreed with this statement or he didn't agree with it.

The flaw in this statement is that getting inspired was positioned to be mutually exclusive against showing up to get the work done. You often need a certain measure of both to engage in your creative pursuits.

For example, this Tools for Titan's series is quite grindy because I need to be disciplined enough to do one segment every day. But sometimes, feedback from the fans as well as the Adsense numbers give me the inspiration and motivation to carry on.

Keep it hanging... Tools for Titans on this blog will be over and done with over the next 4-5 days.

Then we will move to something more hardcore for intermediate investors.

Thursday, January 19, 2017

Tools for Titans #41 : What are their incentives ?

Mike Shinoda is one of the two vocalists of Linkin Park.

There is only one major learning from this section of the book.

When we engage with someone, the first question we should always ask ourselves is what are the incentives of the other party.

For example, how do we know that insurance agents may not have our best interests in mind ?


Insurance agents  make a commission based on how many or what kinds of products we buy from them. They are not paid a commission when we meet our financial goals or do well in the financial markets.

Insurance agents will sell you products which would give them the highest possible commissions. You see a lot of ILPs being unloaded to the hapless customer but very few term life insurance schemes. Confront them with this fact and you will find a response which demonstrates just how prepared and polished they are for questions like that which you pose.

Same goes for some of these so-called life coaches.

If life coaches are paid per session, and do not negotiate the conditions for an exit, then the incentive would be to extend the business relationship for as long as possible. Does the life coach ever benefit from resolving your personal issues permanently ?

Don't get me started on litigators....

Wednesday, January 18, 2017

Tools for Titans #40 : Reject the norms of your time.

This segment is about Neil Strauss. He is the author of the pick-up book The Game. If I were to read The Game in my 20s, Neil might have turned out to be my favourite author. Unfortunately, I learnt of his works through mutual friends who experimented with "negging" women with low self-esteem at pickup bars.

( I don't neg women with low self-esteem. My wife, however, is very good at negging men with an abnormally high self-esteem. )

I was actually rather turned off my some of the antics used in The Game. I will not say that it does not work, a lot of single men who "neg" women with a low self esteem end up getting a good time. The question is whether they can build a lasting bond.

This write-up on Neil Strauss, however, turned out to be very useful and shows him to be more than just a beta-male pick-up artist.

a) Reject the norms of your time

A billionaire claims that the reason why they are rich is because they reject the norms of their time. This is probably true.

But you can also reject norms by committing sexual assault. Consequently, you can find a lot of 'iconoclasts' in prison.

b) Three ways of editing your works 

This is actually a good tip to improve fiction writing. First, edit the work to please yourself. Second, edit your work to please your fans. Finally, edit your work to please your critics.

I really like this piece of advice as I may still have a book waiting for publication in a few years or so.

c) Defeat writer's block by lowballing targets

Neil's writing advice should to not be ignored as he is a perpetual best-seller.

His advice against writer's block is simply create two crappy pages of work every day. If George R R Martin followed Neil's advice, Winds of Winter would have been out years ago.

This blog is my way of writing 2 crappy pages a day. I've been churning out pages every day thanks to Tools for Titans.

Tuesday, January 17, 2017

Tools for Titans #39 : Gut Investing.

At least according to Tim Ferriss, Kevin Rose is the best stock picker in the start-up world. Compared to the other sections of the book, this section ranks as one of the more important ones for the investing public.

When it comes to start-up investing, most value investors who need to look at accounting statements would be quickly rendered impotent because may startups are hardly profitable businesses. A similar phenomenon occurs when dealing with cypto-currencies so most investors rely on technical indicators to time their purchases.

In such an absence of information, Kevin Rose invests using his gut - he invests by assessing the business idea emotionally.

Kevin looks at the feature of each start-up product and determines how much emotional impact it would have for the customer. He also considers the possibility of a future feature when making such an assessment. In the Twitter example as demonstrated in the book, the main points of consideration were quick public sharing, following and syndication of content. All three features which were deemed to appeal emotionally to the customer.

Within the Twitter example lies the weakness of investing based on your gut. Twitter is not exactly doing particularly well in the market right now so there are limits to investing this way according to emotion. But I'm pretty sure Kevin got a nice sexy exit when Twitter IPOed a while ago.

Tim also credits Kevin Rose with making a prediction on augmented reality much earlier than the breakout success of Pokemon Go.

Unless a person is actually an accredited investor, I do not advise investing by gut feeling. Start-up founders spend inordinate amounts of time honing an elevator pitch which would make anything emotionally attractive. Furthermore, businesses exists to make money, so some attention should at least be given to future profitability. There are plenty of solid cash generating businesses which are boring and will not excite customers in any way.

One final point is that I don't even consider Kevin Rose's approach as being unique in any particular way. Peter Lynch has always advocated an investment idea based on his wife's shopping habits in his book One Up on Wallstreet. I am pretty sure that his wife's fancy is not the sole basis of the considerations he makes when investing in a stock counter.

I think Tim Ferriss is just fixated with one aspect of decision making by Kevin Rose.

I'm sure a deeper discussion would yield a methodology with more moving parts.


Monday, January 16, 2017

Personal finances when transitioning from single-hood to being married.

Ok, today's article is to simply tie up a loose end from the talk. We failed to address the question directly from a question in the audience who asked us how our personal finance changed when we transitioned from single-hood to marriage.

Theoretical answer

I will first share a theoretical answer because it is more likely to be experienced by a reader. In the presentation I shared a table which showed that households becoming more economically efficient as the number of family members increase.

If you transition from a 4 person household to a 2 person household of a married couple, you are likely going to experience a 33% increase  in expenses. However, if you are already living alone as a single person, you may experience a reduction of 20% as you find more efficient ways to spend your money as a couple.

Personal answer

I was borderline financially independent when I got married, getting around $2k+ dividends a month but spending about $1200-$1500 as a single man. Me and my wife stayed with my parents for quite a number of years and we both worked then.

The only major change was that every month, I channelled an extra $1500 into a joint account to build a dividends portfolio for my family.

The first major change to my personal finances was the time we bought a weekend car for $28,000 which meant that I had to pay road taxes every year.

When my daughter was born, it was financially a non-event as accumulated dividends paid for almost everything and everything else was settled by the matching I made to the Child Development Account.

It was good to farm 100% of my earned income into the stock market and pay for everything from dividends payouts.

The only stressful event was getting my first mortgage because I was already transitioning out of a job by then and now I have property taxes and conservancy fees. My CPF can still last me about 3-4 years, but setting aside the dividends equivalent to the mortgage value is stressful even although I am currently investing that amount too to push my dividends up even further.


Sunday, January 15, 2017

Tools for Titans #38 : The value of "I Don't Understand"

Luis Von Ahn is a computer science professor and the CEO of Duolingo, one of the more efficient ways to pick up a new language.

His section has two key ideas :

a) The value of "I don't understand"

Luis had a Phd advisor who kept insisting that he did not understand what Luis was trying to say when he was developing the CAPTCHA system. Eventually, it was revealed that his advisor was simply employing a tactic to get Luis to think deeper about the problem he was facing with.

Blogger Scott Young is an advocate for a learning approach known as the Feynman Technique which basically forces you to explain concepts that you learn in plain English. If you find that your ideas are expressed in jargon, it is possible that you really do not understand the material yourself.

The kay to mastery to is to be be able to explain something to an untrained lay-person. This is something which I should aspire to on this blog although we're still quite far from that ideal.

b) Build startups outside Silicon Valley

The second idea is that Luis prefers to build startups outside Silicon Valley. By sticking to areas like Pittsburgh, the companies which Luis run tend to have a lower turnover rate as he wants to be the only game in town.

Generally if you go for a strategy like this, you will also face a lower concentration of tech professionals so I am not too sure whether it will always work in practice. It might have the benefit of attracting folks who are into lifestyle design as one of the negative issues faced by places like Silicon Valley is that the cost of real estate escalates faster than average income growth.

Which is why a Singapore rentier should always subtly support government initiatives in Ayer Rajah Crescent because while the direct beneficiaries are engineering and technology professionals, the real beneficiaries are the owners of real estate.