How to Walk Away from the Best Deals
Or, how to decide when to press harder and when to walk away
Welcome to Issue 81
👋 Hi, I’m Abhishek. Welcome to Sunday Wisdom, a weekly newsletter packed with timeless insights on better thinking and decision making that you can use at work and home. I appreciate you being here. If you are getting value from this, you can buy me coffee or share this newsletter with a friend.
The best deals are the ones you can walk away from. This is taken to the extreme when you face a once-in-a-lifetime opportunity that is slipping off your hands. How do you decide whether to press harder, or to give up? Mountaineer Ed Viesturs may have something to teach us.
Viesturs has climbed Mt. Everest and stood on top of the world’s highest peak seven times. Seven times! What’s more interesting is that he didn’t make it in his first try, and neither in his second try.
He reached as close as 100 metres to the summit, but decided to turn around when the weather condition worsened. Let that sink in for a moment.
It’s obvious that climbing the Everest isn’t a cakewalk. You have to spend thousands of dollars, do months of training, take time away from work, friends, and family only to walk away when you have already climbed 8.7km and are only 100 metres away from your goal! Just imagine what you have to go through to give up on your dream.
The natural urge is to push ahead, and that’s what costs lives. Climbing the Everest was Viesturs’ dream, and that’s why he kept coming back again and again. But at the same time, he was willing to walk away when he needed to. You cannot accomplish your dream if you are dead.
What most people don’t understand is that climbing a mountain is a round trip. Getting off the mountain is more important than getting to the top.
Viesturs is also credited with being the only American to have climbed the world’s 14 highest mountain peaks, and the fifth person to do so without using supplemental oxygen. But it took him 21 attempts—seven of which resulted in him giving up. This was possible only because he had Circuit Breakers installed in his decision-making process, and was willing to walk away when things went south.
It’s impossible to make the right call when you are in the thick of things, swayed by powerful emotions. It’s extremely hard to let go off your once-in-a-lifetime opportunities when you are only inches away, but that’s exactly when you make bad decisions.
So, a good strategy is to avoid making runtime decisions, and install Circuit Breakers well ahead in time when you can do you best thinking.
Installing circuit breakers means deciding in advance to not take a course of action when you hit a specific and quantifiable circumstance. For example, abandoning the expedition when your oxygen level falls below a certain amount, or a certain pace isn’t met, or a certain geographical location isn’t reached in a certain amount of time.
If the team hits one of them, there’s no arguing or debating on the mountain when everyone is tired. They’ve already decided; they’ve already planned for this in advance. It’s time to turn around.
Not only negatives, circuit breakers should go off when we hit a metric that denotes a lack of positive. For example, you should shut down a business if there are no paying customers for a certain duration, or a certain revenue figure isn’t met, or the cash flow falls below a certain limit.
Efficient circuit breakers take the stress out of the decision-making process when things become stressful. Spend time designing them. Tweak and update when needed, but never start an expedition without installing one. Out of 30+ expeditions, Ed Viesturs has never been injured, and he’s never had to see a teammate die on any peak thanks to proper circuit breakers that were installed.
I’ve Quit My Job
This is the second time I’ve done it. I had quit my job exactly 5 years back in 2016. But unlike last time, this time I had planned ahead. Last time I was stupid enough to quit my job despite not having any savings.
On top of that, last time I had convinced a friend of mine to quit his job as well, since I wanted to start a business with him. In retrospect, this wasn’t the best decision since the business didn’t do well, and after one year we had to shut it down. Luckily, both of us got new jobs that paid well. It turned out okay, but it was foolish. This is something I’ll never recommend.
In this video I discuss how I planned my finances this time, and what all I’m gonna do with the free time I’ll get. If you plan to quit your job for any reason, this video would help. It’s time to watch and learn.
Noteworthy Ideas
Following are a bunch of ideas on various topics from my personal library of notes that I’ve collected over the years. I briefly talk about my note-taking process in this video.
Grow Slowly
Humans, fishes, birds, and rats that grow slowly live longer. The same applies to businesses and personal wealth as well.
Warren Buffett once said: “Charlie and I always knew that we would become incredibly wealthy. We were not in a hurry to get wealthy; we knew it would happen. Rick was just as smart as us, but he was in a hurry.”
Rick Guerin was a third partner who started investing with Warren Buffett and Charlie Munger, but was forced to sell his Berkshire Hathaway stock for less than $40 a share during the 1974 recession.
Relentless focus on growth at all costs always backfires. There is a graveyard of companies whose early success pushed them to grow as fast as they could, right past the point where growth killed them.
Sure, you’ve “acquired” 50,000 users, but do they like your product or are they here only for the discount? Cool, you got to $50 million in revenue, but do the unit economics work? Will they ever work?
Growth is not a strategy, it’s a tactic. When undisciplined growth becomes a strategy the business loses its way. What creates a strong base is slow growth. Likes fishes, trees, and rats, a business needs a strong base to live long.
Effective Strategies Are Boring
Prevention is better than cure, but prevention is boring as hell. For example, if you don’t smoke, you won’t get cancer. And if you don’t get cancer, you’re not going to die from it. That’s a simple truth that we overlook because it’s intellectually not very stimulating and exciting.
Persuading somebody to quit smoking is a psychological exercise. It has nothing to do with molecules and genes and cells, and so researchers don’t find them cool, despite the fact that stopping people from smoking will vastly impact anything any cancer researcher can hope to do in a lifetime.
Similarly, the solution to 99% of financial problems is “save more money and be more patient.” Nothing is more capable of moving the needle, but it’s so boring, it almost makes you sound like your grandma.
In both cancer research and investing advice, things that are boring but effective are discounted relative to things that are exciting but (knowingly) less effective.
Just because avoiding war is boring compared to winning one, you wouldn’t want to look for opportunities to get into one.
Important Things Recur
If you find an event that is true in more than one field, you’ve probably uncovered something particularly important. The more fields it shows up in, the more likely it is to be a fundamental and recurring driver of how the world works.
For example, you are bound to learn more about money and investing by reading things that have nothing to do with investing, such as sociology, psychology, history, etc.
Restricting your learning to a narrow lens means you’re less likely to uncover the biggest and most important parts of the field. Diversify your learning.
👋 That’s All!
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As always, please give me feedback. Did any of the ideas resonate with you? Do you disagree with anything? What do you want more or less of? Any other suggestions? Please let me know in the comments.