The Interesting Times: How to Prioritize

Hey there,

I posted a summary of one of my favorite books of the last few years, Eric Beinhocker’s Origin of Wealth. The book gets at the hear of what’s going on in financial markets today. It questions traditional assumptions and ask what really is driving markets? And how could a different view of how markets work change how we invest, save, and build businesses?

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The Best of What I've Been Consuming

The practical application of "Rocks, Pebbles, Sand"

A Smart Bear: Longform

There’s a (probably apocryphal) story about a philosophy professor who starts a class by taking a mayonnaise jar and filling it up with golf ball-sized rocks. He then asks the class if the jar is full. They all nod and agree that it is.

He then takes a box of pebbles and pours them in, gently shaking the jar so they roll into the open spaces between the rocks. He asks them again if it is full. They laugh a little and now say that, "Yea, it’s really full."

Then he picks up a box of sand and pours it into the jar, gently shaking the jar so that the sand falls into the cracks between the pebbles.

The story illustrates a seeming truism that we often fail to acknowledge: This jar signifies your life. The rocks are the truly important things, the pebbles are the other things that matter, and the sand is the little details.

What the story is meant to teach is that most people put the sand in first though, filling their schedules up with meetings and managerial work. That leaves no room for the rocks and the pebbles – the high-leverage, creative work.

This is a useful metaphor for prioritizing projects and scheduling your and your team’s time but it’s non-trivial to figure out exactly how to implement that.

This post looks at how specifically a software company delineates between rocks, pebbles, and sand and how it splits a team’s time between them.

The section on the importance of picking big enough impact projects stood out most to me:

The most common problem is executing Rocks that aren’t impactful enough. The Rock claims to "make a difference," but not *enough* difference, and after a few years, it feels like "we’re not moving fast enough" or "why isn’t revenue higher" even though the work from engineering is high-quality and stories are duly delivered every sprint.

Hofstadter’s Law applies not only to the time-estimate, but to the impact-estimate, and thus to the height of the bar that need to set: It must be higher than you think, even when you take Hofstadter’s Law into account. Over-shooting is is the antidote to Hofstadter’s Law.

Even if your ideas aren’t good enough, you will be tempted to select the most impactful idea on the list and just do it. This is a mistake.

…

Your biggest problem is a lack of a truly great idea, and you must solve *that* rather than embarking on a long, misguided journey. The team can do Pebbles and Sand in the meantime, thus staying productive, while also helping ideate and validate better ideas.

The post outlines a rough prioritization of a team’s time as:

Time-critical items, regardless of size. *(Examples: security patches, bugs actively impacting customers, critical work for a launch or other event with an externally-imposed, immovable date)*
One or more stories from the current Rock.
One or more stories from the current Pebble.
Sand.

The Best Strategies For Dealing With Inflation? Factors And Trend-Following

Alpha Architect

A review of a paper on which investment strategies do well in inflationary periods.

Around the end of last year, a lot of people were telling me they were hedging inflation through stocks and real estate. This may work in the future but the data from this paper suggests it has not worked in the past so you need a pretty good explanation for why that is going to change.

Equities struggled primarily because costs tend to outpace price increases.

Equities performed poorly during inflationary regimes. The expectation is that the rate on debt for stocks should theoretically offer some relief and prices of products can be adjusted upward. The reality is much different as the risk in costs tends to outpace the risk in product prices.

Real Estate also did a fair bit worse than I think most people would expect, though better than many other assets.

Real estate comes in a far second to commodities but did hold it’s value at a slight negative -2% real return, although it was not significant.

The winner of the bunch was commodities (and particularly commodity trend following).

Commodities posted a perfect track record and performing quite well during rising returning an average of 14% over the 8 regimes with each regime being positive.

I previously did a review of the same paper here.

Hardcore History 27-30 – Ghosts of the Ostfront Series ($)

Dan Carlin

I am a longtime fan of Dan Carlin’s Hardcore History podcast. I went back and listened to one of his earlier series on the fighting at the Eastern Front in World War II between the Soviet and German armies. It contains his characteristic flare and he goes out of his way to try and give some sense for what it was actually like on the front lines.

I think it’s basically accurate to say that the Soviets (backed by the American equipment supplied via the Lend-Lease Program) basically won the war and defeated the Germans. They were able to do so only by employing the most brutal of tactics including shooting their own troops if they tried to retreat rather than face certain death at the front.

Estimates vary but Soviet casualties in the war were likely in the realm of 20 million people. More Soviets and Germans died at a single battle (Stalingrad) than British and American soldiers died in the entire war.

A reminder of how good recent history has been and the capacity for destruction that remains embedded in our modern world.

Here are a few more things you might find interesting:

Newsletter Past Editions: Read past editions of The interesting Times Newsletter.

Interesting Essays: Read my best, free essays on topics like bitcoin, investing, decision making and marketing.

Consulting & Advising: Are you looking for help with making decisions around scaling your company from $500k to $5 million? I’ve been working with authors, entrepreneurs, and startups for half a decade to help them get more out of their businesses.

Internet Business Toolkit: An exhaustive list of all the online tools I use to be more productive.

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