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Episode 161  |  16:30 min

#161: Go All in with Great Opportunities (They Are Rarer than You Think)

Episode 161  |  16:30 min  |  01.11.2021

#161: Go All in with Great Opportunities (They Are Rarer than You Think)

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This is a podcast episode titled, #161: Go All in with Great Opportunities (They Are Rarer than You Think). The summary for this episode is: Great opportunities are much rarer than you think. When they do come your way, go all-in. That's the takeaway DC shares on this episode of Seeking Wisdom and it's just one secret behind Charlie Munger's success. Tune in for more wisdom plus lessons from Jeff Bezos and Bill Ackman. And, is this the episode DC finally gets on Twitch? You'll have to listen to find out. Like this episode? Be sure to leave a ⭐️ ⭐️ ⭐️ ⭐️ ⭐️ ⭐️ review and share the pod with your friends. You can connect with DC and his co-host, Adam Schoenfeld, on Twitter @dcancel @schoeny @HYPERGROWTH_Pod For more learnings from DC, check out his weekly newsletter, The One Thing. You can subscribe here: https://www.drift.com/insider/learn/newsletters/dc/
Great opportunities are much rarer than you think. When they do come your way, go all-in. That's the takeaway DC shares on this episode of Seeking Wisdom and it's just one secret behind Charlie Munger's success. Tune in for more wisdom plus lessons from Jeff Bezos and Bill Ackman. And, is this the episode DC finally gets on Twitch? You'll have to listen to find out. Like this episode? Be sure to leave a ⭐️ ⭐️ ⭐️ ⭐️ ⭐️ ⭐️ review and share the pod with your friends. You can connect with DC and his co-host, Adam Schoenfeld, on Twitter @dcancel @schoeny @HYPERGROWTH_Pod For more learnings from DC, check out his weekly newsletter, The One Thing. You can subscribe here: https://www.drift.com/insider/learn/newsletters/dc/

DC: Boom. We're back, Seeking Wisdom. What's going on, Young Adam?

Adam: What's up, DC. Good to be back. We're excited. We're going to talk more about what you wish you knew when you were younger. That's what we're here to do. You write down these tweets and we have to talk about them. That's the rules.

DC: I wish I was younger. That's what I wish I knew when I was younger. Stay young.

Adam: Well, in the absence of making you younger, we're going to impart this wisdom on me, first of all, because I'm much younger, and others listening.

DC: That's savagery. Savage.

Adam: Had to get that one in there for you.

DC: Sadly much younger, much, much, baby. So anyway, we're back, people, Seeking Wisdom. The universe's only six star podcast, six star. If you're listening to this also know that we are now putting these on YouTube, LinkedIn, Twitter, Facebook, maybe I'll even go to Twitch soon and run my own discord server. Let's go-

Adam: TickTock.

DC: ...it's time.

Adam: It's everywhere.

DC: TickTock. Let's do it everywhere humanly possible. The universe has only six star podcasts and we're back with a young Jedi in training, Adam Schoenfeld. All right, let's talk, let's do this.

Adam: I'm excited about this one today, because you said in this piece of wisdom, great opportunities are much rarer than you think. Go all in. When you find the few in your lifetime.

DC: That is me paraphrasing a story that Charlie Munger once talked about, where his uncle had said that to him. I believe it was his uncle. Might've been as great uncle, but I think it was his uncle, who gave that advice to him early in his life. And he credits that as being one of the most important pieces of advice that he ever got. Which is, this idea that opportunities are very rare. I think as kids we're taught, for some reason, we get this notion in our head or we're taught that we can do anything in the world, which is not true, which is a whole nother podcast. Then two, that there's going to be this boundless opportunities that are going to come our way, which is also not true. It's actually super rare. And you're only going to have a handful of these in your life. And now that I can look back, because I am much older than Adam, as he said, I can look back at my history and say," Wow, the true opportunities, which you never know when they're there or they're hard to know when you're there." So we can talk more about that. But true opportunities are very, very rare and I don't have regrets. I don't really think about the past, but if I were to say the biggest mistakes that I probably have made, is not to double, triple, quadruple down on those opportunities when they were in front of me. And instead I treated them like everything else and treated them with this idea that many of these were going to come down the road.

Adam: So can you talk about how you were mis calibrated on this in the past? Because-

DC: Sure.

Adam: ...you're saying it's much rarer than you think it implies that we think there are more and that maybe you thought there were more. So how were you mis calibrated versus how you see it now and how did you come to that realization?

DC: Well, now that I can look back, I can see some of these opportunities that were actually, even on the surface, when they were in front of me, they were super unusual. They didn't feel like anything else in the past. And I hadn't had those experiences before and the magnitude and, in some of the cases and I'm talking mostly in the professional sense here, but we have these in the personal sense as well. But for me in the professional sense, they were an order of magnitude greater than anything that I had seen before. They moved at a different speed. They had their own velocity, they had their own energy, their own momentum. When I saw these opportunities or I was involved in these opportunities, but for some reason, looked at them and thought," Well, another one's going to come down the road soon, or I'm going to have another one of these..." Even though, at the time I knew that I had not felt anything like this before. And I think for me, it was probably, like many of us, it was the logical part or the rational part, convincing myself that this was normal, that this was something that I'd seen before or that this thing, this momentum, this energy that I felt, was something that I should discount. Something that I shouldn't pay attention to because I couldn't explain it. I couldn't put my arms around it. I couldn't say, in concrete terms, this is this amazing opportunity. And then said, because I couldn't explain it, in a logical rational sense, I dismissed it. And I looked at it basically for what it was at the time, discounting, the energy and the momentum behind these things.

Adam: You talked about momentum a few times, which is pretty interesting. I know that part of the trap is to try to explain it logically, which I always want to do. But is there some laws of nature that you think are behind that or powerful forces at work that you felt or saw when you look back on those things or any patterns that stand out?

DC: You know, I've wanted to come up with... Again, because we both like to think in terms of systems and frameworks, I've wanted to come up with a framework for how to identify these things. But aside from a feeling which is not satisfactory to either of us, I don't know how to create a framework around it. I'd say, you know it, when you see it. And you know when you experience it, that it's different. It's trying to create a framework around how you fell in love with your wife. How do you rationalize that? How do you create a framework around that? How do you explain that to someone else and say," When these three things happen, you'll know that you should marry this person and have kids and fall in love with this person." It's a really impossible thing to talk about. And even how we met, when you were running your own company Syfrock and we talked about a possibility of an acquisition. I remember you saying one of the things that was attractive about that was this momentum that you felt that drift had in the market. Again, how do you explain that? Was that number of tweets or retweet, or likes or that kind of stuff like?

Adam: Right, there was no KPI for that.

DC: There was no KPI for it. I don't know how to explain it. And it's unsatisfactory for systems thinkers, but I will say this system that I've relied on, is to be more in tune with when something feels wildly different in a positive sense. It feels unusual. And the more history that you have, the easier it gets to spot, Wow, that's really unusual. That feels very different than the rest."

Adam: Well, because in retrospect, that's the only way you then know," Oh, I had that feeling." And you can then see the results play out over time and see that," Oh, that was a big thing."

DC: Yeah. This reminds me also of, speaking of Charlie Munger, his business partner, Warren Buffet. And Warren Buffet was talking about a similar concept. And the way that he talked about it was, and he was giving a speech to a bunch of people in business school and saying, I'm sure you've heard this, where he was saying that," Think about that these opportunities are rare." It's hard to identify the person who is going to stand out. But if you were to look at all your classmates and say," You can only bet on one person, how do you decide who to bet on and whatever income or whatever they produced over the next 25 years was going to be your only portfolio of one? How would you choose?" And he said," It wouldn't be the rational, logical systematic way of doing it." It wouldn't be, who's the smartest, who's the best looking? Who's the best speaker? It wouldn't be any of those things that we would think of, or who did the best in class or whatever, but it would be this intrinsic quality. That some reason this person stood out. And I think he said," This person had a twinkle in their eye. This person had something really different about them." And that was the person that you would probably place your bet on. If you could only bet on one person. It's very similar to this in terms of looking for opportunities. Often I meet in myself, when I've done Angela investing in the past, it's hard to explain who you invest in. In the people who have been very successful versus the other. But they had a different energy around them. That when you pattern match and you talk to enough people, when you met this person, for whatever reason, doesn't mean it's going to work out. But this person had something different around them. And it wasn't just charisma. It wasn't just their speaking ability, but there was something different around them from an energy standpoint. And the more experiences that you have with people, the easier it is to find someone who just is intrinsically different, about this person.

Adam: I love that because I think we can all identify that thing in people that we choose to have relationships with or who we bet on. And it really brings it down to earth a little bit. How do you think about the other side of this? I don't know if you're known for being the most patient person in DC. But there's the other half of this, of knowing when you see the big opportunity knowing to double down, triple down and go hard on it. But then there's also the patience component or waiting for the'Fat Pitch' as Monger says, that piece?

DC: Obviously, you know that I struggle with that. And so I definitely struggle with being patient and just waiting it out. I think the approach that I've taken, and this is just an approach, is to rely on play the numbers game and say, you have to kiss a lot of frogs. You're going to have to kiss a lot of frogs. You're going to have to do a lot of experiments. You're going to have to iterate a lot and have lots and lots of failures. And I think this is something that probably Bezos would say and has said around, that they have to have a culture of, at Amazon, a culture of lots and lots and lots of experiments and most of them will fail. And some of them will fail epically and there will be a handful of winners. Which will disproportionately pay for all the experiments. And so I think about it at that, in our terms as well, at Drift, of just we have to have this culture of continuously trying and experimenting. Almost all those things will fail, but they will help us get closer to something that will win or educate us on the way to getting closer to something that we can use down the road.

Adam: Hmm. So how do you balance avoiding failure or avoiding swinging at the wrong bet. Thinking something's a big opportunity when it's not, versus just designing a process that accounts for failures or is that even the right thing to balance?

DC: I think we should do a better job of it, but we do try to design a process around trying lots of different things. I'd say, I don't think we can avoid failure. And so we will fail on these things. Often some people would say you need to celebrate failure more, I don't know how to do that personally. And so if someone can help me figure out how to... It doesn't feel good ever. When someone says that or I hear people speak about that, I really cannot connect with that because I don't know how to celebrate failure. Even culturally or personally. And so it's never going to feel good, but I think we just have to... The thing that I always talk about, which is we have to just be comfortable being in this uncomfortable position because it's not going to feel good, no matter how much you talk about creating a culture of celebrating failures. So I don't think we avoid them. I think we try to lean into them. I think we can always do a better job at how we lean into them. I do think the thing that is important is to not get stuck in the failure mode for too long or not wanting to'Cut Bait' in other words, on the failure. And we're dealing with things that are largely digital, in terms of failure, in terms of experiments in our case. Just get rid them as quickly as possible, just shatter them and deal with and take your hard medicine quickly.

Adam: Yeah. It goes back to what we talked about before with the reversability factor or the one- way door versus two way door.

DC: Exactly.

Adam: As long as we're in a two- way door, then the cost can be very little as long as we're designed for that.

DC: I know, and I love that framework and I think it's important for all of us to keep repeating that. And we do. But we are emotional creatures. It doesn't feel good, no one likes confrontation, no one wants to tell the person or people or team that have been working on something that we're going to get rid of that thing. And we're going to put their energy on something else, it doesn't feel good. Does it feel good to tell people, users, or customers of something that you can't use that thing anymore? So these things are again, my mantra is" Simple, not easy.' Everything is simple conceptually, but is very, very hard to actually pull off. And so those are mantras for a reason for me. Because I have to convince myself, I have to repeat them to myself so that I can actually do them and remember those things, when the time comes and it actually sucks to do it.

Adam: We all know that feeling. All right. Who else do you like for role models in this, or who else have you learned from on this principle about great opportunities being rare and going all in? And we talked about Monger, talked about Bezos a little bit. Who else do you like to learn from on this one or a role model companies or people?

DC: You know, there's a number of people who I role model on this. But one that... And all three of the ones that you mentioned now, are ones that I talk about a lot and ones that are role models, but I'm always searching for new ones. And one that I've been really spending a lot of time consuming and understanding their approach is Bill Ackerman at Pershing Square, which is a hedge fund that he runs. It's a very different hedge fund in that they do... Search for YouTube videos you can listen to a lot of talks that he does and a lot of briefings that he does with the press. But they have eight to 10 holdings. They hold them for a very long time, very different than most PE firms. And so they're trying to hold these things for a long time. It's a more modernized version of a buffet, a Berkshire strategy, but they have 10 holdings. And so I like the way that he thinks about it and he evaluates his bets and how much energy they put into a bet. And he has very clear framework for how they decide on what companies to even spend time on and to do due diligence on, because they're only going to have 10 bets. They only have 50 people in a company that's managing billions of dollars from a portfolio standpoint. And so Bill Ackerman is someone who I'm spending a lot of time on, and then he's current. So that's good. You can hear current stuff from him, but I've mentioned that I'm really spending a lot of time on Andrew Carnegie right now. And trying to learn some lessons there, which is a whole different podcast.

Adam: All right. I want to do that one. I want to know what you're learning from that, but I guess I have to go read that 2001st book or whatever it is.

DC: Yes.

Adam: All right. Is there anything else you want to share on this one? How great opportunities are rarer then you think?

DC: No, I think this is an important lesson for all of us to really beat into our heads. The important thing is not only to realize how rare opportunities are, but to actually seize them when you feel that you have this opportunity. Again, an opportunity is not a guarantee, it doesn't mean that it's going to be successful. Those few opportunities may fail, but you have to seize those big opportunities when you see them. And one opportunity that you have is to leave a six star only review for us, anywhere that you're listening to the Seeking Wisdom podcast, leave a six star review. Leave some comments for us because we get our feedback. I read every single comment on there, whether you leave it on YouTube, Apple podcast, Stitcher, I don't know if you can leave comments on Spotify, but wherever you can leave a comment, leave it. Believe me, I read those and subscribe to the One Thing newsletter, which I'm putting out every week now. And you can do that on LinkedIn or on our website and a little shout out there for the Schoenfeld right there.

Adam: Awesome. Boom.

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