Archive for September, 2020

Clarity of Mind

Wednesday, September 16th, 2020

There are 11 traits I observe with my best clients and others that separate superior entrepreneurs from the field and attract superior investors and talent. Here is a rare and highly important trait: maximum clarity of mind and the ability to maintain that “in the moment” when taking risks in complex and ambiguous situations.

Why is it so important? The fragility or antifragility of the business in an investor’s mind is directly linked to the entrepreneur’s behaviour under pressure. Their performance with allocating capital, hiring talent, innovation and implementing strategy smartly.

You’d pay a premium where an individual has that in abundance, equally you might hesitate or not invest where an entrepreneur struggles or is susceptible to wild swings.

It is a learnable skill. Although those that start with superior talent and judgement are unquestionably at an advantage. Experience is an important contributor, which explains investors preferences for seasoned entrepreneurs.

It is diluted when we are overwhelmed (priority), lose focus (second-guessing ourselves manifest as procrastination), ill-disciplined (routine and exceptional activities), disorganised (poor time use) and lack resilience (bounce back).

How do I see it? Take any superior risk taker in any sector globally, and examine how they have maintained maximum clarity of mind. Therein lies a pathway to profit. Superior investors such as Warren Buffett use “pattern recognition” to spot it in executives and entrepreneurs they routinely evaluate.

You may not be in front of Buffett but here is a simple question: how could your ideal investors see that you demonstrably possess that trait? What stories can you tell that powerfully articulate that? Who could credibly support your assertion and influence the investor?

Feedback

Wednesday, September 16th, 2020

Most unsolicited feedback given to entrepreneurs, executives and investors is for the benefit of the individual offering it, not you. Ignore unless you see a pattern of comments from various sources.

Covid, Models & Wisdom

Tuesday, September 15th, 2020

A friend tells me of his college-age daughter’s Covid experience at the University of Wisconsin, where 20% of her dorm (1800 kids) this week have the virus. Thankfully, very few have needed hospitalisation.

What she and millions of others, cannot be sure about is the “second order” effects on their health and the future rate of morbidity. The very same issue applies to the impact on health insurers, health systems and policymakers. The “tail risk” is, and will be huge. Epidemiological models lie in tatters.

There is hope too. More statistical information resides in the extremes rather than the “bulk” data. We can with tools such as extreme value theory (EVT) move with prudence in policy making. Most of all we need we need to understand model error before we use models. We go from reality to models, and not from models to reality.