Charlie Munger once quipped, “Competency is a relative concept. And what a lot of us needed to get ahead — including the one speaking — was to compete against idiots. And luckily there’s a large supply.”
It reminds me of the old joke about two men that were hiking through the woods.
As they broke the tree line and reached a clearing, they noticed a bear snacking on wild berries. Unfortunately for the men, the bear noticed them as well, and started in their direction.
As the bear closed in, the first man bent down, tightening his sneakers.
The second man looked at him and said, “What the hell do you think you’re doing? You can’t outrun a bear!”
The first man gazed toward his friend and said, “I don’t need to outrun the bear; I just need to outrun you!”
Competence, a relative concept:
Both men knew how to run, they had the skill, the competence. But what matters is your competence relative to others. Where competence meets competition.
And Munger offered some advice on that subject as well.
He said, “If you’re five-foot-two, you don’t have much of a future in the National Basketball League. And if you’re 95 years of age, you probably shouldn’t try and act the romantic lead in Hollywood.
“If you weigh 350 pounds, you probably shouldn’t try and dance the lead part in the Bolshoi Ballet.”
It’s not that you can’t do these things, and it’s not that you can’t grow your competence over time, but you should look to build competence in areas of natural inclination.
And in the off chance that you’re being chased by a bear, low level competition doesn’t hurt either.
Competition Neglect:
We have the tendency to ignore competition when it’s truly significant and exaggerate competition when it’s trivial.
Are you a good driver?
Are you a better than average driver?
90% of drivers believe they are better than average. Statistically, that’s not going to work.
In “Thinking, Fast and Slow,” Daniel Kahneman wrote, “the first question is easy and the answer comes quickly: most drivers say yes. The second question is much harder and for most respondents almost impossible to answer seriously and correctly, because it requires an assessment of the average quality of drivers.”
Most people will answer without even thinking about what it means to be “average.” Why answer that difficult question when you can answer an easier one.
The below average effect and the above average effect show us that while ignoring competition, people extrapolate their perceived efforts into a judgment of their skills compared to others. If they find something difficult, they’ll say they are below average. This is why your kids tell you they “suck” at math and then bring home a B+ on the test. It’s hard, they think the average person perceives the subject as easy, therefore they must be below average.
Likewise, if they find something easy, like jumping on a trampoline, they’ll default into the above average self-grading without ever thinking or noticing DONG Dong and the trampoline world championships.
This holds true for driving, school, sports, and business.
Again, from Kahneman, “Entrepreneurs naturally focus on what they know best—their plans and actions and the most immediate threats and opportunities, such as the availability of funding. They know less about their competitors and therefore find it natural to imagine a future in which the competition plays little part.”
“Colin Camerer and Dan Lovallo, who coined the concept of competition neglect, illustrated it with a quote from the then chairman of Disney Studios. Asked why so many expensive big-budget movies are released on the same days (such as Memorial Day and Independence Day), he replied: Hubris. If you only think about your own business, you think, ‘I’ve got a good story department, I’ve got a good marketing department, we’re going to go out and do this.’ And you don’t think that everybody else is thinking the same way. In a given weekend in a year you’ll have five movies open, and there’s certainly not enough people to go around.”
Competition is not part of the decision. The difficult question has been replaced by an easier one.
They should be asking themselves: Based on the competitive landscape, how many people will come and see our movie if we open on Memorial Day vs. the following weekend?
Instead, they ask themselves the easier question: Do we think the film is good?
And because of competition neglect we get more than the market can profitably sustain.
Can you imagine starting a cola company without thinking about Coke and Pepsi?
This is why you have 17 options for project management software. They are all terrific. I’m sure all of them are worthy entrants into the market. But they all entered the fray thinking the same thing. People need project management software, our team has great talent to solve the problem. But they didn’t pick their head up and look at all of the companies trying to solve the same issue.
This is also the reason that your sharp new salesperson hasn’t been able to get any deals lined up with those enterprise accounts. You selected based on your view from the inside. Internal competition and training. They killed it in training, had no problem with the role plays, let’s go. But your clients are selecting from the larger competitive landscape.
All of the drivers on the road, not just the one in your head. All of the movies in the theater, not just the one you worked on. And all of the salespeople and services, not just your new rainmaker.
Leapfrog the competition and extend your lead:
When I started in Technology Services (we called it Staffing back then), I was intimidated by my new coworkers. They knew the operation, they knew the players, and they knew where the bathroom was. When you are just getting started, that’s enough.
But over the course of a few weeks, I came to understand something at a very deep level.
I was competing against idiots. A large supply of them.
Okay, idiot might be a bit harsh. They were a combonation of lazy, inexperienced, or uninterested.
And some were total idiots.
Soon enough, their leads had faded. I’d learned just enough to be dangerous. And now I was focused on what I called “leapfrogging.” I looked around at the other account executives and took note of who had been there longer, who was in line ahead of me for the next promotion.
And I started taking them down one at a time.
I’d later read David Ogilvy’s advice to aspiring account executives and nodded my head the whole way through. It is almost exactly what I’d done to move myself past the others in my cohort.
“Set yourself to becoming the best-informed person in the agency on the account to which you are assigned. If, for example, it is a gasoline account, read books on oil geology and the production of petroleum products. Read the trade journals in the field. Spend Saturday mornings in service stations, talking to motorists. Visit your client’s refineries and research laboratories. At the end of your first year, you will know more about the oil business than your boss, and be ready to succeed him.”
What I did was similar. I studied our internal training documents and practiced them daily. I’d even hold rehearsals in my bathroom mirror, playing both prospect and account executive, holding eye contacts with myself the whole way through.
Yes, I was that desperate.
And as my manager let me lose on my own client list, I took it one step further. Instead of just learning all the details for the account I was assigned (Safeco Insurance), I looked for accounts that I was already familiar with. Starbucks and Amazon emerged. I was leaning into my natural inclination.
Next, I appraised the competition.
Amazon was HOT, and it was going to be pretty hard to outrun that bear at this early stage in my career.
Because of all the large technology companies in the Seattle market, it seemed to me that Starbucks was being neglected, so it’s no surprise that it became my largest customer for over a decade. I was able to “know more about the business than my boss,” and more importantly, I knew more than my competition.
I was building my competence, I was leveraging my inclination, and I was avoiding competition neglect.
And once I got the ball rolling, I would not be caught.
Escaping Competition:
David Senra was on the Art of Investing podcast discussing what he has built with Founders podcast. Senra said, “I’m so far ahead, the game is already over. No one will ever catch me. I work on it seven days a week. There’s no way you’re ever going to catch me. And it’s because of this compounding nature.”
Jimmy Donaldson, aka MrBeast, said something similar.
“No one’s ever gonna do what I do better than me. It’s not even humanly possible. I reinvest every penny I make. I work every hour I’m awake. I devote every atom in my brain to solving this. I hire the best people on the planet. I’ve been doing this for 14 years. And I think in decades, not years.
“All I do is wake up every day and obsess over how to make the best videos possible. It’s all I care about. It’s the only thing that’s ever really made me happy.”
Both Senra and Donaldson are probably right, but the game they are talking about is unique. It’s niche.
Podcast book reports on the autobiographies of business founders? Yeah, Senra probably has an insurmountable lead in that space, but he started after listening to Jocko Willink do his version of military book reports on Jocko Podcast.
Donaldson is being specific as well, “No one’s ever gonna do what I do better than me.” He is not laying claim to all of the internet, or even all of YouTube, but what he does specifically. Elaborate, in your face challenges and giveaways on YouTube.
So, if you want to spin up a channel with “survive 100 days in a circle” I think he is probably right, but you’ve got other options.
What they have all done is compounded their interests over time. And because they selected something that makes them happy, something the fits their natural inclinations, they got ahead and will never be caught.
Miss Excel has millions of views and she just talks about…. Excel.
Like, the spreadsheets.
And she might say the same thing as Senra and Donaldson, “I’m so far ahead, the game is already over.”
How to build competence and escape competition:
A big part of building an insurmountable lead is finding the right game. The game you have a natural inclination towards, where you can “think in decades.” In other words, begin with the end in mind. What would you like to spend two or three decades working on, where you’d enjoy the work involved in building an insurmountable lead?
Within that game, can you see a path to leapfrogging your competition? Is there a niche you can carve out?
And perhaps more important, is there a niche that is unrecognized or undesirable to others?
Naval Ravikant says, “I’m always ‘working.’ It looks like work to others, but it feels like play to me. And that’s how I know no one can compete with me on it. Because I’m just playing, for sixteen hours a day. If others want to compete with me, they’re going to work, and they’re going to lose because they’re not going to do it for sixteen hours a day, seven days a week.”
Sounds like Senra and Donaldson to me.
The blog here at Win With Flynn is play. I know I’ll overtake a lot of blogs that are doing “work.” The ones that are constantly manipulating SEO and spinning up content on the latest trends.
But admittedly, to my own detriment, I’ve been very broad. I haven’t followed a well-defined niche like Miss Excel.
Will I take my own advice?
I’m not sure.
Munger has said, “the ordinary way to succeed is to narrowly specialize,” although that is not what he and Warren did. They preferred to be more general but admitted, “I don’t think we could recommend it to other people.”
Eyes wide open.
I realize being a generalist might make it hard for me to outrun the internet bear. I realize that others may consider me their “idiot.” They may find me easy to leapfrog.
But sometimes all you’re looking for is a stroll in the woods. And sometimes those bears will just walk right on past.
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