The Top Fifth

On My Mind | 2024.03.15

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On My Mind

To-do lists are powerful.

A company with sufficiently complex operations might break its operations team into two categories — 1) strategy teams and 2) execution teams. The first group focuses on determining the most profitable long-term initiatives, and the second focuses on the most profitable way to execute towards those initiatives in the immediate term.

Companies tend to bifurcate teams this way because it is hard for a single person to be both strategic and execution-focused at the same time. If someone tries to do both, on average, you get both below-average strategy and below-average execution

As individuals, we don’t have the luxury of choosing one or the other — we have to be both strategic thinkers and exceptional executors. A life spent only strategizing means you won’t get anywhere. A life constantly focused on action can result in you looking like a man so busy swinging his axe to chop down tree after tree after tree that he hasn’t noticed the chainsaw sitting on the ground next to him.

Thus, we have to break ourselves into multiple people. At times, we have to stop and view our future self as a third person and say, “What is the most profitable things for them to do?” While this is true in a more esoteric “what do I want to do with my life” sense, more to the point we’re exploring here, it also applies to storyboarding what needs to get done in your day / week / month / year.

Once determined, you need your current self to execute. But how do you bridge that conversion from strategic person to executing machine?

Similar to how companies write memos, debate them, re-write them, and then create action plans, you need to write things down. That bureaucracy within a company — which can obviously be taken to such an extreme that it becomes unprofitable — serves a purpose: it improves decision making for those focused on strategy through debate and reduces confusion around what to prioritize for those executing.

To-do lists are memos for individuals.

As life becomes increasingly complex, its improbable that you can, in the moment, remember everything that needs to be done and their relative priority. However, if you have debated priority with yourself in the past and written it down, it’s improbable that you will miss the most important things.

Quote of the Week

As I always say, the iron rule of life is that only 20% of people can be in the top fifth. That’s just the way it is.

— Charlie Munger

Poll of the Week

Have you been the victim of a cybersecurity / hacking incident?

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Last Week

Question: On an average day, how many hours are you in front of a screen?

Results: 44% spend 5 - 10 hours. 33% spend 10+ hours. I personally fall into the ~10 hour range as well.

Earlier This Week

Question: Are you familiar with John Galbraith?

Results: 72% were not familiar — I fall into the same camp. Prior to reading The Great Crash 1929, I would not have recognized his name.

Things to Read

Writing & Economics | From Writing, Typing & Economics by History Investor, 2024

John Kenneth Galbraith, an economist and Harvard professor, lived a life marked by a unique blend of intellectual curiosity and social engagement, which made him one of the more celebrated public intellectuals of his time…

Galbraith's career was characterized by his ability to bridge the gap between academia and the public sphere. He was a prolific writer, producing numerous books and articles that tackled complex economic issues in a manner accessible to the general public.

This accessibility was rooted, in part, in his approach to writing. Despite the complex topics he researched, he wrote simply. Despite the simplicity, his words carried a unique, sarcastically factual personality. Above all, his words conveyed with clarity…

In 1978 he wrote Writing, Typing & Economics (link to digitized PDF) in The Atlantic to distill his key writing principles into four pages. While Galbraith was thinking about writers, his advice on communication leaves takeaways for our business lives as well.

Takeaways for Investors:

1. Don’t overcomplicate things. If you can’t simply state why you are making an investment, you might want to think about it more.

2. Sometimes the obvious conclusions are enough and additional work merely creates the feeling of better decision making.

3. Find facts and interpret them yourself — be careful to not outsource thinking to others.

Takeaways for Builders:

1. Inspired or not, make progress every day. Progress compounds over time — inspiration doesn’t.

2. Simple clarity reduces friction, so don’t over complicate things for your customers.

3. Stick to the facts of how you add value and the message will be more easily heard.

Cybersecurity | From The Untold Story of NotPetya by Andy Greenberg, 2018

Within half an hour, Maersk employees were running down hallways, yelling to their colleagues to turn off computers or disconnect them from Maersk’s network before the malicious software could infect them, as it dawned on them that every minute could mean dozens or hundreds more corrupted PCs. Tech workers ran into conference rooms and unplugged machines in the middle of meetings. Soon staffers were hurdling over locked key-card gates, which had been paralyzed by the still-mysterious malware, to spread the warning to other sections of the building…

“To date, it was simply the fastest-propagating piece of malware we’ve ever seen,” says Craig Williams, director of outreach at Cisco’s Talos division, one of the first security companies to reverse engineer and analyze Not­Petya. “By the second you saw it, your data center was already gone”…

The malware’s goal was purely destructive. It irreversibly encrypted computers’ master boot records, the deep-seated part of a machine that tells it where to find its own operating system. Any ransom payment that victims tried to make was futile. No key even existed to reorder the scrambled noise of their computer’s contents.

In the realm of cyber warfare, few events have been as destructive as those caused by NotPetya in 2017. Original launched by Russia in Ukraine, the attack quickly spread beyond its intended target, causing widespread chaos and disruption to businesses, governments, and individuals across the globe.

The NotPetya attack was intended to frustrate Ukraine's financial, energy, and government institutions. However, due to the interconnected nature of global digital infrastructure, the malware rapidly spread to other countries, infecting systems in Europe, the United States, and Asia. The attack's impact was particularly severe for multinational corporations, such as Maersk, FedEx, and Merck, which suffered significant financial losses and operational disruptions.

Andy Greenberg provides a detailed account of the attack, its origins, and its far-reaching consequences.

Hidden Wealth | From Ludwig: The Invisible Billionaire by Andy Greenberg, 2000

Ludwig doesn’t drink much, he doesn’t smoke at all, he doesn’t entertain lavishly. His only bad habit is work – and that he can’t stop…

He was born in June, 1897, in South Haven, Michigan, a small lakeside community… Young Daniel was fascinated by boats and ships. At the age of nine he found a sunken 26-foot diesel boat that had been abandoned as not worth the salvage costs. He bought it from the owner for $25, which he amassed by working...

He raised the boat and spent an entire winter repairing it. The following summer he earned some $50 by chartering the boat. This was his first experience in the shipping business, and he enjoyed every minute of it — particularly the knowl­edge that he had come out with a profit.

Daniel Ludwig, born in Michigan in 1897, was a American businessman who built a vast business empire from humble beginnings. When he died in 1992, he had become one of the wealthiest individuals of his time.

Throughout his life, Ludwig was known for his ambitious projects. His ventures were often characterized by their scale and audacity. Ludwig's business philosophy revolved around the concept of vertical integration, which allowed him to control all aspects of his business, from production to distribution.

Ludwig's life was not without controversy. His business practices were often criticized for their aggressive nature, and he was accused of exploiting natural resources and labor in the countries where he operated.

The 1982 recession was one of the worst recessionary periods pre-2007. What drove this recession is something readers today can appreciate today, inflation. Shortly after Volcker’s appointment to the chairman of the Fed in 1979, Volcker pursued a tight monetary policy and flipped the business cycle. Unemployment peaked at 11% in 1982 and was the worst post-WW2 recession the country had seen to this point. This context makes the 1982 semiconductor cycle make sense. But while 1983 had better economic strength to come, the real threat to come was Japan.

Quietly in this period, Japan surpassed the United States in global market share in memory during 1982, and this trend would only accelerate. The real driver here was manufacturing yields, as American semiconductor companies were shocked to learn from HP that Japanese companies consistently had better quality and yield that American chip companies. Not only were they beating them to the punch in process, but in quality. That’s hard to compete then.

Similar to last week’s article from O’Laughlin, he presents an in-depth review of a complex historical market — this time concerning the global 1980s semiconductor industry.

During this period, the semiconductor industry experienced rapid growth and change, marked by significant technological advancements and a shift in the balance of power between nations. The Japanese semiconductor industry, through aggressive investment in research and development, managed to dominate the market and even surpass the United States in terms of technological prowess.

The Japanese government played a crucial role in this success, providing subsidies and incentives to the semiconductor industry, as well as implementing policies that protected domestic producers from foreign competition.


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Have a great weekend,


Twitter / X: @HistoryEJ

Disclosure: Nothing in this article constitutes investment advice. More detailed disclosure here.

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