Over Simplified #2

Learning from reality & an inferiority complex

May 11, 2022

Hello again! Welcome to second edition of over simplified. Even though its just week 2 I’m already seeing the benefits of using a simple structure to writing. Eliminating the decision making of what-when-if to write helps go through the motions early on and build habit via discipline.

Being in the middle of the Bengaluru Solana hacker house & having an upset stomach - I can assure you I wouldn’t have published this if I hadn’t committed to it last week. Sorry about sending this one out so late in the day though.

The last week has seen a fair bit of market turmoil across all assets. Twitter and social media generally becomes a firehose of information. My 2c are that unless you’re financially affected by it (sorry) it is best to ignore, understand and move on. Fundamentals of business and technology don’t change in a week. Increase or decrease in liquidity just accelerates discovery of good/bad businesses. I’m personally continuing to focus on taking the right bets & trying to have a sufficiently long time horizon (5-10 yrs) [None of this is financial advice]

Quick reminder that there’s a specific format I’m trying out with this newsletter. Would love your feedback on it - what do you like, what should I drop? Here’s the first edition incase you missed it.

With that, let’s dive in…

Idea

An idea that inspired me

You will never convince someone they are fully wrong, only reality can.
via skin in the game

I’ve recently started my 2nd attempt at reading skin in the game and came across this idea in the first few pages. The author references this in the context of financial regulators, he says that post the 2008 banking crisis two things happened:

regulators increased scrutiny and paperwork on financial institutions
the hedge fund model of investing became more popular

He says that regulators had not experienced the full consequences of the crash and thus came up with measures that did not require bankers to take on more personal liability. On the flipside, hedge fund managers have a majority of their net worth locked into the fund - so they are captains who go down with the ship. A slightly darker way the author explains this is, “all the bad pilots are at the bottom of the ocean”.

The point he is trying to make is that, there are two types of people

Those who get feedback from people (e.g. your boss, peers, friends)
Those who get feedback from reality ( e.g. market price)

He argues that only things that take feedback from reality will truly survive over time, because reality only cares about survival. Not about how something “looks” or what someone will “feel”.

Applying this to our everyday life - even after knowing this intelectually - is not as easy as you’d think. We have evolved to take cognitive shortcuts, fallback to old habits, rely on groupthink and social validation.

Here’s a few early thoughts on how i’m implementing this in my life:

Taking more risk
Rely on first party information as much as possible.
Whenever I feel like critising something, I ask myself - how would I do this better
Evaluate based on actions/outcomes over words
Understand incentives of the person you are talking to
Know that people’s approval/validation is designed to give a dopamine hit. Don’t make big decisions when in this state.

I hope over time these will become my default. I’ll share more updates on how this goes.

Book notes

An insight from a book(s) i’m reading this week

Today I’m going to talk about a book called, “The Courage to be Disliked”

I’d strongly recommend you read this book. I’m about 20% through it and it is the most amazing book I’ve read in a while. It has pushed me to introspect like never before.

The book makes a bold claim that all suffering is caused by interpersonal relationships. (suffering != pain)

Before we get to that, let’s look at two contradicting ideologies the book presents,

Cause & Effect : “Because this —> that”. This implies that our future is largely a consequence of our past.
Goal seeking : “Because i want this —> that”. This implies that our future is determined in the present moment based on a “goal” we have. These goals are often subconscious. I had tweeted about this a few weeks ago.

Aditya Shetty@aditay7s

came across a powerful idea: we all are "goal-seeking" creatures at every level. each time you feel stuck, upset, angry etc... ask the q, "what goal is this helping me achieve"

3:15 AM · Apr 22, 2022

1 Repost · 7 Likes

Without going into which ideology is “correct” (lol) , I personally prefer the second one because I find it more practically empowering.

With that context in mind, the next idea that stood out for me was that of an inferiority complex. The authors argue that we are all born with an inferiority complex, it is basically a desire to improve - this is why we learn from our environment, but what we do with this inferiority complex decides our experience in life. If we use it to improve ourselves and focus on things we can control - we are happy, but the more we focus on what we’re lacking compared to others the more miserable we are.

They posit that once you take this view to life then you’re not competing with other people. They argue that the more we stray from this view the more we indulge in feelings of “competition” which has winners and losers & then “revenge” for cases where we’ve lost.

A lot of this is not too different from the advice that goes around, what makes it special for me is the idea that the inferiority complex is a feature not a bug. A resource not a limitation. A survival instinct meant to help us grow not paralyse us.