Just Being Different Doesn’t Make You a Contrarian
Or, why sometimes you have to take positions the market disagrees with
👋 Hey there! My name is Abhishek. Welcome to a new edition of The Sunday Wisdom! This is the best way to learn new things with the least amount of effort.
It’s a collection of weekly explorations and inquiries into many curiosities, such as business, human nature, society, and life’s big questions. My primary goal is to give you some new perspective to think about things.
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Q: What does it take to be a contrarian?
It’s a well-known fact that in investing and startups, you get an edge if you can think against the crowd. When you take a position the market disagrees with, or when you build upon an idea that everyone says is ridiculous, it pays off tremendously (if it pays off at all). Being a contrarian has its benefits. The question is, how do you become one?
Peter Thiel, the billionaire investor, has a famous question of his own: What important truth do very few people agree with you on?
According to him, a good answer takes the following form: most people believe in X, but the truth is the opposite of X.
When we are betting against others, we are convinced that we know better than others. We think we are contrarians, and “most people” are the consensus we are outsmarting. But who are these “most people”?
It’s not you and me for sure. No matter what we do, we can always think of a large group who disagrees with our views. Is that enough to make us contrarians?
Human beings may like to see themselves as better than the average, but they have a pathological need to be perceived as different, both to ourselves and others.
In a study, when people were asked about generosity, they claimed to perform a greater number of generous acts than others. But when asked about selfishness, they claimed to perform a greater number of selfish acts as well.
If being contrarian was as simple as differing from most people in opinion, every second person you meet would be a contrarian. For example, if you prefer to set up your startup in a hill station while most people don’t, it doesn’t necessarily make you a contrarian.
You see, lots of people disagreeing with you isn’t enough because sometimes even minority ideas can become popular. Among the thousands of startups that are popping up every day, a lot of them may decide to set up office is some offbeat place. Similarly, there are countless others who invest in the very rare stocks you invest in, and harbour outlandish ideas that are similar to yours. Just being different isn’t enough, especially when there are so many like you.
Therefore, instead of contrarians, we get multiple groups of people who think they are different from the consensus. People who take immense pride in their faux-contrarian views. For example, crypto believers believe they are contrarians since they don’t believe in the traditional banking system. Similarly, Silicon Valley startups believe they are contrarians because they are against how traditional small businesses are run.
But such people talk among themselves. They form groups and share ideas. More than often it leads to groupthink. What begins as a genuine attempt at independent thinking often leads to the opposite. Being a contrarian is much harder and rarer than that.
By definition, not everyone can be a contrarian. Contrarianism, in its truest form, is painful and lonely. It hurts, and everyone thinks you’re nuts. It doesn’t happen when you buy a stock that has fallen by 25%. It happens when your clients threaten to sue you for being negligent, arrogant and stupid; when investors threaten to pull their money; when your friends don’t call you; and when your partner wishes you’d abandon this meaningless obsession.
Michael Burry was the first investor to recognise and profit from the impending subprime mortgage crisis of 2008. He saw something that no one else saw or believed in. He literally had to go against everybody—the market, his investors, and the big guns—to stay true to his prediction. When the dust settled after the crash, his payoff was huge. But it didn’t come without a price. It left him so much mentally exhausted that he subsequently liquidated his company to focus on his personal investment portfolio.
Being a contrarian isn’t easy, but the good news is that true contrarianism isn’t a necessity to win in investing or business. Plenty can be achieved by agreeing to the consensus—especially if you find your edge by being more patient than others and not going out of business too soon.
My YouTube Video
Stumbling on Happiness by Daniel Gilbert is one of my favourite books. I often recommend this as the first book to read if you are getting started in psychology. This books changes everything we know about human behaviour. We aren’t rational beings who behave emotionally sometimes. Instead, we are emotional beings who behave rationally sometimes.
In this video, I give you the key lessons from this excellent book. This isn’t a summary of the book. My goal is only to make you curious enough to read the whole book.
What I’m Learning
I.
If you are a CTO or a technical manager, you are familiar with how hard it is to measure productivity in your team. My best friends are developers, and I’ve worked with countless developers over the years, so can closely relate to the problem. This piece sheds some light into the problem, and proposes some solutions.
‘Hours worked’ is a false metric to measure job performance. Working hours are seen as non-negotiable in all workplaces, and being “Available” is seen as proof that someone is working. As time goes on, the workplace becomes a place where everyone is working but nothing is getting done. This is counterproductive.
All work isn’t positive work. Developers who work while exhausted, distracted, or sick tend to do ‘negative work’—work so poorly done that it must be undone or compensated for later, thus increasing rather than decreasing the amount of work remaining.
Measuring individual productivity in terms of bugs fixed, tasks completed, or features shipped is equally futile. If the goal is to fix more bugs, developers can write intentionally buggy software and then write a plethora of fixes. If the goal is to ship features, they can write them quickly and naively, resulting in barely functioning software. If the goal is to finish tasks, the each developer would jockey for the easiest tasks, leading to internal politics.
Creativity doesn’t happen all the time. Individual productivity tends to vary greatly over the short term, thereby stifling efforts to track it with any specificity.
But it can be safely assumed that a team that produces useful software on a regular basis is productive. Since teammates tend to be well aware of each other’s contributions (whether measurable or not), any serious failings in individual productivity can be discovered by means of good organisational habits—such as one-on-one interviews.
‘Velocity’ is an aggregate measure of tasks completed by a team over time, usually taking into account developers’ own estimates of the relative complexity of each task. It answers questions like, “How much work can this team do in the next two weeks?”
Understanding the velocity of a team can be foundational as you prioritise feature development, set expectations with clients, and plan the future of your products.
Yet, many organisations thrive without any hard-and-fast measures, where developers are liberated to do their best work, whenever and wherever they’re most productive.
For some, it can be frustrating to manage work that can’t be reduced to a number. But with work as nuanced and abstract as software development, the further we entrench ourselves in details, the more we defeat our own purposes. Useful software is the only goal. As long as this is met, it’s okay if one or two individuals aren’t giving their best. Forcibly measuring anything else would only give us either a false positive or a false negative.
— Can Developer Productivity be Measured?
II.
If you want to get better at writing, you know well that it’s a continuous process. There’s always some room for development. But it essentially boils down the following practices.
Trusting your own interests. Work from your own interest; never from what you think you should be writing. Let what you want to write about be tested by time, not by people.
Taking notes regularly. This sharpens both your powers of observation and your ability to express. By taking notes, you observe more; and by observing more, you have more to note down. This starts a positive feedback loop.
Revising notes. Develop the ability to read notes (as if you’ve never read them before) to see how well they communicate. Constant revision—whether or not you’re going to “do” anything with what you’ve written—also teaches you to write better in the first place, when you first write something down.
— Advice for Writers on Editing, Revising, and Taking Notes
III.
Like all geeks and nerds, I’m a huge fan of Derek Sivers. He has a unique ability to distil ideas down to the bare essential by stripping down all the non-essential things.
In this short animation, which was part of a podcast, Sivers lays down the idea that we often put too much effort and take unnecessary stress over minutiae. In his case, something as minuscule as improving his cycling speed by mere 2 minutes after putting so much of effort.
The art of living with less stress, on the other hand, is to go out and feel the wind, smell the air, and see the sky while cycling or running—without caring about the output. Every act doesn’t have to be an act of optimisation—be it in business or in life.
— The Art of Living with Less Stress
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I’ll see you next Sunday,
Abhishek 👋