Jake Taylor - Improve Your Decisions
Album art photo taken by Mike Ando.
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[The Business Brew theme]
Bill: Ladies and gentlemen, welcome to The Business Brew. I am your host, Bill Brewster. This episode features Jake Taylor, a repeat guest to the pod, my co-host on Value: After Hours, all around good dude. Jake has developed a product called Journalytic, J-O-U-R-N-A-L-Y-T-I-C. Journalytic is a free software that you can use to improve your investment process. You can monitor a bunch of things about how you go through researching an idea, you can have checklists, you can have a bunch of stuff, you will hear about it in the podcast. This podcast is more or less an infomercial for Journalytic. Why'd I do it? I did it because I believe in Jake. I think Journalytic is a great product. It's free. You can try it out. If you hate it, don't use it. If you love it, keep using it. Either way, send Jake feedback. He's looking for it. I'm looking to help him. I hope you all enjoy this. He's a guy that's worth supporting. So, that's the episode in a nutshell.
Another potential product is offered by the sponsor of this episode, stratosphere.io, stratosphere.io is a web-based terminal that has financial data, KPIs, links to filings, hedge fund letters, et cetera, stratosphere.io provides clean data for segment data KPIs, which are triple checked for accuracy. I use it, I like it, I encourage you to check it out. Should you want to sign up for some of the more premium features, please use the promo code, BREW, B-R-E-W for a 15% off discount. I am like Santa Claus bringing you all this free stuff this weekend and you're welcome. I'm doing it because I appreciate your time, I appreciate you listening to the show. Please know that this is for entertainment purposes only. Anything we say should be checked against your own due diligence. You know the drill. I don't actually think we need many disclaimers in this particular episode. So, do your own due diligence. Enjoy the show and happy holidays to everybody. With that out of the way, enjoy the show.
All right, ladies and gentlemen, we are joined again by Jake Taylor, big announcement, but first you're going to get to hear us talk about why this is just audio only. Yeah, anyway, the last couple of episodes have been audio because I wasn't in the house. I was off location. I mean the retention numbers, it's very similar. It turns out I think people care about the quality of the discussion and not whether or not they can see us talk.
Jake: I think that's correct. And they're certainly not missing much. I wanted to know whether I should do my hair or not. [laughs]
Bill: Well, what time is it where you are? Is it 06:00 AM?
Jake: 06:00 AM. Yeah.
Bill: Yeah, man. You were ready to go. As soon as I said, let's do it at 09:00 AM, I was like, "Ah, Jake's in California. That's not exactly thoughtful of me." And then, you were like, "No, I'll be up.", So, no worries.
Jake: Yeah, it's a little harder to wake up in the wintertime when it's still dark, but usually I'm up pretty early.
Bill: Yeah. Well, that's part of why you're a productive member of society, I think.
Jake: I mean, it's a joke, but when the rest of the family is asleep is my golden time, where the really good work gets done, good thoughts happen. It's not so noisy and distracting around here. So, there is something to be said about that.
Bill: You know what I've been dealing with lately is, I came to the conclusion. It was an upsetting conclusion that my wife is correct.
Jake: I hate when that happens. [laughs]
Bill: Yeah, I know. And it happens all the time, which is unfortunate for me, but she kept being like, "You're not--" I think what she was trying to tell me and probably did tell me, but I refused to listen was that I'm not present enough when I'm around and I was like, "No, I am here." I don't know, I've taken the podcast off when I've been around the family. I've been fishing with the kids more, I've been more present. It's been really nice. I don't know. I actually think my productivity has gone up quite a bit, because I think I'm disconnecting better each way. Does that make sense?
Jake: Yeah, that's something I-- This work from home has revealed a little bit of some problems for me in a way that I didn't anticipate, which was that even when the kids are at school and it's just my wife and I both working from home, it sounds like, "Oh, you're going to have all this chance to interact with each other, because you're both home." But it turns out, I feel we're having a lot of low-quality interactions and lot less high-quality interactions. The quantity is higher, but they're like throw away, like you're getting coffee in the kitchen and so am I, and you just complain about some little thing or I do. And then, we go back to our respective little offices. But that's not really the stuff that a good marriage is built on necessarily. I don't know. It feels it's not as much as I was hoping it would be potentially when it came to that.
Bill: Yeah. I think what may happen is the mental association when you're seeing somebody and you're getting those low-quality interactions. I don't know it solidifies that maybe it's not a low-quality interaction relationship, but I do think that it chips away at how your mind frames the relationship.
Jake: Yeah. I mean just like anything that you know the diminishing returns being around me that much, it's going to start to not be that great. But if I was at work all day and then I come home and you only have to deal with me for a few hours, that might be somewhat pleasant. [laughs] So, I don't know.
Bill: Yeah, I'm certain being around me all the time is not that fun, because I have to be around myself [Jake laughs] all the time and it's a torture.
Jake: Just a grind.
[laughter]
Bill: Yeah, it really is. Well, man, I am super happy for you and I could not be happier to do this episode. I hope that people try the product once we talk about it. But it's exciting to see you come out with Journalytic publicly and you want to talk about what Journalytic is. People asked me once, they said, "How much time do you think Jake put into this?" I said, "I think it's probably a decade of thinking constantly about this." So, I think you're the right guy for the right product and I'm happy to feature you. So, you want to go with it?
Jake: I appreciate that, Bill. How long have we been talking about it behind the scenes? It's been-
Bill: A long time.
Jake: -at least a few years, right?
Bill: Yeah. I would say, before even the product existed, we talked about you wanting a product like this-
Jake: Yeah. Right.
Bill: -and then you built it.
Jake: Yeah. That's really the impetus of the whole thing was that, if this existed already out there and was easy to use, I would have gladly just bought that product from whoever had built it and gone on my merry way, probably.
Bill: Yeah. So, what is the product for people that don’t know?
Jake: Yeah. It's a journaling, notetaking, decision recording, and hopefully debiasing based on the structure of it, software that lets you basically get all your thoughts in there, get them organized, record decisions, and really capture a bunch of data about your investment process that is currently going, most likely unrecorded that could have huge impacts on closing feedback loops, so that you learn about yourself and so that you discover where you are making systematic errors and hopefully maybe be able to take some correction.
Bill: Then it provides you-- So, one of the things that I really liked about when we're talking about it is, how am I feeling about this investment? And then, you can look at a stock chart and you can see every time you input, how am I feeling about this? You can take a step back and say, "Okay, well, do I feel good when the stock goes up and do I feel bad when it goes down? How much of that's reality?" I would think some of that's correlated, because usually stocks don't go up and down when things, they usually move with news. But it helps put data to feelings.
Jake: Right. One of the issues is that there can often be a lot of recency bias in. if you feel bad about it, let's say, the price went down and now we're looking at the next 10-Q or whatever the next update that comes in, we have this layer of negativity, what psychology research will call affect about the new incoming data and that's going to bias us towards finding the negative thing and finding why is this glass half empty now? It may be justified a lot of the times, but it also might not be. That's when real opportunity is that when Klarman talks about investing being the marriage of a calculator and what was the other part of it? It was a contrarian streak and a calculator.
So, the calculator part is actually processing the data correctly and not having that bias in the way based on what the price has been doing or what social media has been saying. All the million echo chambers that we all live in that will bias us towards possibly not seeing reality clearly.
Bill: Yeah. I guess, how has it helped you as you built it out? For those that haven't checked it out, first of all, it's free. So, there's no excuse not to. Second of all, there're a lot of checklists in it. It's very customizable. If you want to do your own checklist, you can check out. Okay, one of the things I thought was really interesting that you said is, when you think that when your justification for making an investment is that the stock is cheap, you have found that the data maybe says, it wasn't as cheap as you thought it was, right? And being able to have that feedback is super valuable.
Jake: Yeah. The software is free to use. However, it's not completely free. What I mean by that is, there are a few prerequisites that are important probably for a user to keep in mind. Number one is that, you have to have a growth mindset coming into it. If you don't think that you can get better, then there's no point in working on all this stuff. But if you do believe that you have the ability to get better, then I think that this could be really helpful. Number two is that you have to have a willingness to work a little bit. It takes work to record a lot of this stuff and capture it in the software. And so, if you're generally lazy, then I would say, "Maybe this will help you get to recording more." But if you're so lazy that you don't want to record anything, then it's hard to really help.
Then the last thing is that, I think it requires of someone who has some self-honesty and wants to be introspective about their process and get better. If you don't have those three things, then it's probably not for you. That's okay. It doesn't have to be for everybody. But for the person who does like measuring things about themselves and does want to get better and believes they can get better, then I think the suite of tools that we've put together are super valuable for that. So, I probably should have prefaced at the very beginning of the interview, so if someone fell into the other camp, they can just tune off now. [laughs]
Bill: Yeah. I feel bad, if you listened to Jake's pitch right there and said, "Yeah, I'm really a person that doesn't want to get any better."
Jake: [laughs]
Bill: It's going to be tough to be a good investor, if that's where you fall, but whatever, beyond [crosstalk] right?
Jake: Yeah, be honest. So, what you were referring to was the idea that, when you record a decision in Journalytic, you can attach to it a reason code. This can be broad level. Whatever you want it to be, you can put in customized. We have some presets. But what's interesting is, once you've built up an inventory of decisions that you've been making and I've been recording in here for a good 18 months and even going back further and backdating some decisions, but even then, I'm a little suspect of those because you can't be exactly sure what you were thinking at that time.
Bill: Yeah.
Jake: Now, perspectively, when I go and I look at that time period where I've been diligent about recording them, there're some patterns that are starting to emerge in my decision-making based on the reason code and then how did that basket of reason codes go on to perform. So, it is about tying those feedback loops of what works and what doesn't for you. It's still probably early in the data set to draw too many conclusions, but I know that the path that I'm on is leading me to a place where I'm going to have a very nice data set that I can look back on and figure out when I go wrong, is there a consistent reason that keeps leading me to going wrong?
Bill: Yeah. I know you have thought, but have you thought about ways of getting case studies in, so that people can get more reps on the data?
Jake: Yeah, I've daydreamed about like imagine if Buffett had been filling out diligently a Journalytic account for 50 years, and then picture that as a data set that you could go read about and look at and just like the treasure trove that that would be. The idea that there would be somebody eventually who never probably going to be as good as Buffett. But even if they were pretty good and they used it for a long time, they could show what they've worked on and how they've grown.
Other than putting in just like dummy decisions, I actually don't think it's that helpful for-- It's okay to see the mechanics for someone of how it works, but to actually get those deep insights, we're going so far into your thought processes that I almost think you can't just create those out of thin air and then end up with the ingredients that would show some kind of true insight. I think it almost has to emerge as a natural process.
Bill: Yeah. I think the other thing, it may be difficult. If you're a listener and you haven't checked it out, it may be difficult to say, "Okay, well, I don't make that many investment decisions a year." One way that I think that you can increase the reps and you're not juking the stats is like, "I've been researching Dish lately and it is not an equity that I'm going to buy right now," but that is a decision. So, the decisions to not purchase things are decisions.
Jake: Yeah. So, looking at one of the categories in there is a past decision. So, looking at all of the reason codes that you could use about passing, you'll start to have feedback on what is the filtration system look like. Where are you systematically screening out winners and losers as well, which might be self-reinforcing to tell you like, "Oh, this is something I believe. Maybe for me, for instance, too much leverage is a potential line item"? I don't actually know the answer to that one yet. It's possible that I have had a bias against too much leverage that has hurt me in the long run, but we'll find out eventually together probably.
So, being able to see how your filters are impacting your decision-making. But also, like you said, if you record a decision that you're passing for now while you're researching more, that can actually have information in it, as well as to what is the opportunity cost of spending more and more time to research. What's possible is that there's some small subset of companies where you just get it right away and those turn into really good investments. It would tell you almost like, "Oh, man, the time that I spent on all of this other research that didn't really take me anywhere." A lot of times I just talked myself into some kind of bullshit stuff. That's good to know about yourself, I think.
It almost forces you into realizing like, "Oh, my God, sometimes, there's no brainers and sometimes there aren't." Occasionally, if I work hard enough, I'll find some unique insight. But often, if it doesn't come soon enough, then that means that I'm forcing it too much, which is something I think can happen. But you don't really know any answers to these things until you have data about them. We're all just guessing at it. We remember one or two big ones, but we don't really have the full base rate of decisions to see what the scoring would look like.
Bill: Yeah. You can either cash tag the equity or you can hashtag who you got the information from. So, I'm just going to use Dish because I've been working through it with that currently. I had put out the Craig Moffett episode and somebody from Twitter pinged me and said, "I think you're blind, potentially blind to what Dish is doing." I said, "Okay, that may make sense." And then I started to go through and I put in Journalytic, where did I get this idea from? Why am I interested in it, stuff like that and we'll see, was I blind for a good reason? Was I not blind or whatever it is? I do think that person was correct to highlight that I should do the research. I think if I were to buy it today it would be because it's cheap. One of the reasons that I said that I'm not buying it is, I'd like to see the business transformation work a little bit longer and it's got a little too much leverage for me. So, I've coded all that stuff and we'll see.
Jake: So, what's really great is, you can record that decision and then have it say like pass for now. And then, you could record a self-contract where you set the parameters of what you would like to see right now while you're thinking clearly about it, while it's all loaded in RAM in your head. And then, set a trigger for that, so that eventually, ideally, someday, I'm going to have this programmed where you can set price alerts. That's obvious. There's a lot of places you can do that. You could set even maybe valuation alerts. So, that's oftentimes, if the company you're interested in, you like the business, but it's too expensive for your tastes, you have an inventory item that if it ever got down to a certain valuation, I'd be interested in it. So, setting evaluation and having that trigger for you and send you an alert.
But what I'd really like to do is, someday having it be even a little smarter than that and have some AI be able to look at it and look at what you said the trigger was and see if it can back into what that might be based on the words that it might see in an 8-K, for instance. Let's say, for me, personally, I'm not a big fan of management repricing their options, okay? That should not actually be that difficult for a computer to parse in an 8-K when it comes out or in the proxy. And having it then alert me when that happens and I could say, "Oh, shit, this is like a deal breaker for me and now I know about it right away and I preprogrammed already in a contract with myself that I was just going to punch out if this happened, because that meant to me there are cockroaches in the kitchen and who knows how many there are."
Bill: Yeah, that's interesting. With Dish, my perception of what is going to happen or should happen is there are three things. One, they need to probably merge Dish and DirecTV. Two, they need to divest the prepaid business, and three, they need to acquire some customers in a postpaid wireless product on consumer. I guess, the fourth is, let's see what they do in enterprise. So, it would be interesting to say, this is my self-contract of when I'd like to revisit this idea, say, Dish and DirecTV merge. And then have Journalytic ping me and say, "Hey, you said this to yourself. What are you thinking now?" It just forces you to stay on top of things.
Jake: Right. You could set a reminder in there now and check back on this in six months. We actually built an inactivity alert. So, for me, you don't want to go too long without looking at something you own again. But it's really easy for a quarter or two to go by sometimes without checking back in on things. If you don't do a journal entry about an item, you could set it either 30 or 90 days, it will ping you and say, "Hey, you've been inactive on this name for 90 days. Should you make a journal entry and do a little digging again?"
Bill: It's a powerful tool for individuals, but I would think it's even more powerful for institutions because you get more reps, right? Just by definition, you have more people, you get more reps, you get more data.
Jake: Yeah, we're not there yet. That's something we're working on like how do we turn this from a single player game into a multiplayer game. When we do that, I think it's going to be very powerful. Actually, a lot of the data that is interesting at a single individual investor level gets even more interesting at a multiple user level and how people interact and all of that stuff. It's just a whole another degree of freedom of measurement that is super interesting.
One of the things you've said a couple of times is about getting reps. One of the problems with the whole investing game is that to truly score yourself and figure out luck versus skill. If you were to do it based on price only, which is basically returns, which is what everyone only uses, if you look at only returns, it's probably a good decade before we could say with a whole lot of really any certainty, but probably not even that much certainty, do you have luck or do you have skill?
One way to bring that timeline in is to make probabilistic predictions about business fundamentals and then score those and get a much higher data set as to the accuracy of your ability to understand the truth of any business. So, you could be making a revenue, a margin, a multiple, a dividend yield, a share count prediction for every single one price entry that you would have over a period of time. We could really start to ramp up the data set of what you could look at as to the predictions. And so, why probabilistic? Well, that is going to over time tell you how accurately calibrated are you. Are you overconfident? If you're overconfident, then you are thinking that things are going to happen a lot more often, and then you end up being wrong when you thought you were going to be right.
Let's say, you said it was a 90% chance that this company was going to grow revenue of 10%. Well, that means nine out of ten times of that type of data, it should happen. If it doesn't and let's say it comes in at like 50, well, that's really good to know about yourself that you tend to be over optimistic about how much companies are going to grow. In any one of those, you can do it for any KPI or whatever measurement that you want that you feel makes sense for that business. But I think we could all probably do more of focusing on the business, and the fundamentals there, and making projections about those data points and less just following what the price is saying and getting our one per year data entry on what did the price do this year.
Bill: Yeah. You can break down returns into multiple expansion, did you predict that or did you not predict that?
Jake: Yeah, how am I going to win?
Bill: Get a little more honest with yourself.
Jake: Yeah, exactly right. At the end of the day, that was all I wanted out of a tool was like, hold the mirror up, don't let me retell history that I thought something was going to happen a certain way. And then, when it didn't, my mind went back and patched it over, so that it protected my ego at the end of the day, that's what our brains are trying to do there. We want to think that we can make sense of the world and it's very threatening to imagine that we can't make sense of it. Our brains are just trying to help us out and do what they think is best. But if you want to get at the fundamental truth of anything, then you have to record things in high fidelity and not let your memory rewrite history.
Bill: I think something that is going to be important to people, because we touched on multiplayer games and whatnot, and I mentioned institutions, data security, can you see what people are putting into the platform and how are you thinking about other people's work product?
Jake: I wish I could because it would be infinitely fascinating. [laughs] But the answer is no. The data are encrypted at the browser level on your computer locally, transmitted. And then, on our servers, what you're at Google's servers? Cloud, it's encrypted at REST, it's called. So, it's basically, no one can get into it. It's as good as the security as we can possibly do. We can't see anything. We do have a tool that it's fun to see. It lets you watch what a user is doing, but it redacts all of the data and fuzzies it out. You see where people are clicking around, where are they getting stuck, what are they working on, but you can't actually see any of the real data that would be market sensitive at all.
Bill: Yeah. The checklist, I'm very excited to bring that into my-- I have done checklists in the past. I'm very excited to see how I interact with to your point holding the mirror up and going through a full-blown checklist, even if it says, "This doesn't apply here." Just making myself go through it. And then, I like it in software form, because you really can't lie to yourself, right? It's not paper where you can be like, "Ah, I wrote that or whatever." It's like that.
Jake: My original checklist that I did before Journalytic was a 40-page word doc that was just different line items and it would have stories like here's where someone else messed up. It was always about trying to avoid mistakes and bring blind spots to awareness. The problem is, when it was just written out like that, I would just blow through it. I wasn't really thinking deeply about each thing. You don't actually think through something unless you have to write it down also. There has to be some activity taken that really closes that loop somewhat. So, with their checklist, we have 45 different categories of checklists already built in with more than 300 items. They're all over the place. We have famous investors checklists who we have just scoured the internet and found all the people you might want to see. And then, all the way from accounting red flags to--
We built the software. It's mostly aimed towards public equities. That's probably my own biases and scratching my own itch more than anything. But we do have custom assets that you can create, whether it's a real estate property, or private equity, or venture capital, whatever you want. There're some checklists about those asset classes as well in there. So, we wanted it to be a little bit more flexible. If you were running a family office or whatever and you have money with a manager, you could create a custom asset for a particular manager, an LP that you're a part of. We didn't want to have it not work for you in that instance, because all these same decision-making, all that criteria, everything is pretty comparable, whether you're deciding to invest in individual security, or a manager, or a piece of property, or a start-up, or whatever it is. All that hygiene that you're trying to get better at is still all totally applicable.
Bill: It's very neat. I really believe you're the right person for this product. So, how did you get, I would say, I almost obsessed with process and where does that come from?
Jake: That's a good question. I'm the right person only if Michael Mauboussin is already busy only if [laughs] Phil Tetlock or Annie Duke or Daniel Kahneman, if they're already busy working on other things, then maybe I might be okay. [laughs]
Bill: Yah. Okay. So, you say that, but all good ideas are-- I don't know that there's any new good ideas, right? They're all somewhat borrowed. What I think you've done with this product is go through those kinds of thinkers and say, "Okay, how can I automate, for lack of a better term, or put into software forum what I've learned from these people?"
Jake: I don't know where the focus on process has come from. It might be poetic justice or actually, a beautiful nudge from the universe in that value sucking for a long time will make you check all of your assumptions. Whatever your investment process is, if it doesn't work for a long period of time, that will make you get back to like, "Let's strip this thing down to the studs and figure out, do I still know what the hell I'm doing? Am I totally off base?" Perhaps, that forcing function of value being facing quite a headwind for several years and relatively early in my career, that will push me to probably be more introspective.
If everything was just working right out of the gates, it's easy to just imagine you're smart and it's like, "Well, yeah, of course it was going to work. I'm smart. So, [laughs] I'm good at this." But if it's not working, you really are like, "Okay, well shit, what do I actually have control over here?" The answer that I came to realize was that process was the only thing that I really had control over. Can I just get better about making better decisions every single day? Maybe obviously, Munger's mentality of going to bed a little smarter than you woke up is kind of baked into that mindset. And so, how could I force myself to do that?
I found that having forcing functions is really important. I've made a joke on Twitter at one point that learning about the investment process, for me, my version was naturally curious is one level of pushing you to understand and then teaching a class, which I did for a number of years was a great forcing function to really learn deeply. And then, writing a book was another level down of forcing me to really think through something and get to all the base, first principle assumptions that are involved in that exercise.
Making software for something is that next level down, because it just requires so much turning this Rubik's cube over and over until you fully understand all the outline of how it fits into the rest of what you're trying to accomplish. So, I don't know, that's a long answer with not much of a real answer in it, but that's been my journey at least for the last decade.
Bill: Well, for people that don't know, I don't know who listens to me that doesn't listen to Value: After Hours, but whoever you are, I appreciate the support.
Jake: Love you too. [laughs]
Bill: Yeah, that's right. But you are the guy that comes on the show and you do the veggie segments is what we call them, eat your veggies. It's been a lot about process. I think that on that particular show, we all have our own character roles that we play. But your character role is very very aligned with how you are day in and day out. I'm just super excited for this product. I don't know how you're going to make money. Have you figured that out? [Jake laughs] If you're giving all this away for free, it's a cost center for you and I don't know where the revenue is coming from, but I have a feeling that will work itself out over time.
Jake: Yeah, it's a good question. I honestly don't know the answer yet, which is always a little scary, but I have an amazing team around me with this project. That was another thing that starting this out. Other things that I've done before, whether it was managing money, or writing a book, or whatever, I've tended to keep it very closely held and owned most of the equity and pretty much guarded that closely. I decided before even I had, before I imagined Journalytic being a business, I said, "My next project, I'm going to just open up to the universe of like, who wants to work together? Who wants to raise their hand? When they say yes and I like them and they like me, then we're just going to make some shit happen." And so, I had that mentality coming into this project and it's like the people that's attracted to work with us--
I have two other co-founders who are amazing and I've got three awesome employees that are just grinding nonstop and really passionate about it. So, we'll figure it out as the short answer, but yeah, it's definitely a challenge to imagine what's the right feature set. Part of it is figuring out exactly who's using the product and what else can we build for them. They would be so in love with that they would never imagine wanting to use another service for it. They'd be so happy to write that check or credit card payment every month or whatever to keep the service going and feeling like they were ripping me off at that point. And that's what I'm aiming for.
Bill: Yeah. Well, you're always talking about Peter Kaufman's win-win-win concept and I know that that's where this is going eventually. Our mutual friend, Chaz, he raves about what Journalytic has done for him. I think part of why I want to do this podcast with you too is, we've talked about this. You're not somebody that said like, "I have found the ultimate product and this is the end state of the product." You're actively soliciting feedback. That's part of why it's free. So, I hope that some of the listeners that adopt it, because in case you haven't heard three times, it's free, they can now reach out to you and give you some feedback on what they'd like to see.
Jake: Yeah. All feedback is welcome, good and bad. It helps make the product better. Chaz has been really awesome and great to get to know. One of the things that he really impresses upon us is that actually some of the feeling stuff-- A lot of it actually comes down to biometrics like, "Are you getting enough sleep?" You and I have talked about this a lot trying to improve sleep quality and what are you eating, stress. All of these different allostatic loads, they call it on your system, what are they doing to bias your decision making?
Eventually, we are going to have your Apple watch or your Oura Ring or your Fitbit, whatever your devices of choice, port in your biometric data to then have that as part of the feed of assigning you a decision readiness score. You're coming in, you're thinking about buying something, let's check and make sure that you're in a great headspace, both biometrically and through some other ways, so that we know that you're not making a decision when you're stressed out, when you're hungry, when you're tired. Because we know that there's a million examples in psychology of how that can lead you astray and lead to suboptimal decision making.
The fact that we're not all already checking our watch first before we hit the limit order in there or whatever we're doing, that makes no sense to me. I think it's just patently absurd that we don't keep more awareness about our internal body state when we are making decisions. So, I think we have a lot to explore there still, but I think it's going to be really powerful when we do get it built.
Bill: Yeah, it'll be interesting. I suspect that if you had my biometrics in March of 2020, they would not be a resting state.
Jake: [laughs] There was a touch of stress happening.
Bill: Yeah. You know what? Maybe the stress actually sharpened the spear, right?
Jake: it could be.
Bill: I think I made some really good decisions then, and I think I made some bad ones after. It would have been nice to have some of the biometric data behind some of those.
Jake: That is going to be very interesting to see the most laconical example of this is George Soros and his back pain. He felt back pain for a number of days. That was his clue. That was his body telling him something he was missing. He would liquidate his portfolio because of that. It's a great story. I don't know how true it is and I don't know if actually that was good. I'd love to see the data of actually, how did things go on prospectively from liquidation, those securities? Did they do well or not? What I'm saying is that I'm not sure which way the arrow goes when it comes to-- If you had a pit in your stomach when you were hitting the buy, that might be the buy of a lifetime, right?
Bill: Yeah.
Jake: We don't really know unless we start recording some of this stuff. I think it's going to be really powerful to see are there signals in that noise of our, what's called interoception, which is like, your body's internal signals being sent up to your brain to tell you how it's feeling? Is my stomach kind of hurt or it's all of this neurological feedback that comes into the brain that we then process as emotion, actually. So, it'd be very interesting to see, is there a signal in that noise that-- We all experience it, but we don't really keep track of it enough to know is it telling us something important or not?
There's so much happening subconsciously that's below our level of recognition that I'd love to know more about what's happening under the covers of our brains than just purely executive conscious thought.
Bill: Yeah, it will be interesting to see how that develops. I think it's also somewhat interesting to think about how-- One of the checklist items that I'm thinking about in my head is like, "Am I embarrassed to pitch this?" Because I think you're almost saying, "This is so contrarian."
Jake: [laughs] So, that would be an affirmative. Then, if you're like, "Oh, God, I would never want to talk about this publicly," that means you might be onto something?
Bill: Yeah. I think some of the better investments that I've made would fit in that. I also think it's interesting to think about like what would I have been embarrassed back in the day and what would I be embarrassed of today and how has that changed? Again, just how rational is it and how smart is that thought? I don't know, man. I'm super excited. I think you're going to get a lot of data and I think you're going to get a lot of people that use it that really like it. Some people won't. There's only so much you can do. You give people the tools.
Jake: True. One thing I'm really excited about too is to see of some of the metalevel data that starts to emerge. Probably, if we get a big enough user base going and you have-- [crosstalk]
Bill: When?
Jake: Yeah.
Bill: It's free.
Jake: When we have a big enough user base. Imagine that you've done a lot of work you think on an idea and then, you go to hit by and it says, "Well, just so you know, you are in the 10th percentile of number of journal entries about this name or you've spent one-tenth of the time of the average Journalytic user as far as that name is concerned." How do I fit into the--? When I sit down at the poker table and where's the patsy? Little bit of patsy detection might be very interesting to know as you go into it.
Bill: It'd be nice toggle that on and off too, right?
Jake: Yeah.
Bill: Because sometimes you may not want to know that.
Jake: True. Yes.
Bill: Yeah, that would be interesting to know. Dude, you have spent no time on this idea and you think-- You are in the bottom 10 percentile of people that have spent time and your confidence interval is quite a bit higher than everybody else and you may say, I don't care, but at least then you're not flying blind.
Jake: Right. Record why you're overriding, why you think that this is-- Why the algorithm, which is what all that really is? Why you think it's wrong? That could be fine. You could say like, "I know something that no one else knows about this and I know this is the most important thing" like I know the horse has a broken leg and no one else knows that. [chuckles]
Bill: Yeah, that's right. Or, I only think this one thing matters and then you can look back and say, "Oh, boy." Bud was something that I pitched a while back. I remember, it might have been blind arts. So, there's a couple of sharp accounts on Twitter that have had followed it in the past and said, "You should really look at really compared to Heineken like do the work." I thought I had. I don't know, maybe I had and the outcome was bad, but I think there was a lot more FX risk than I really appreciated.
You know what was interesting about that one is, I ran past some yellow and maybe even red flags. And I think some of it was because of the amount of time that I had spent on it. I almost didn't want to lose that time. I still do believe in a lot of the reasons that I bought it. But one of the things that I had a conversation with a buddy and he said, "The problem with their craft beer strategy is, when they buy a brewery, it's almost like when you buy a new car and you drive it off the lot. It's worth a lot less." As soon as Budweiser or AB InBev owns a craft brewery, it's no longer craft and it's lost a lot of its luster. I had seen that to be true with Goose Island. I had seen that to be true with a couple of other ones that they had acquired like Elysium, for example. I don't think that IPA is what it was. I just ran past it. So, that's interesting.
Jake: What you're highlighting is that the investment world and because it's so connected to the real world, which is messy, it's a very wicked learning environment is what psychologist researchers would call it, which means that feedback is ambiguous, it's slow, it's inconsistent, and it's really hard to learn in a wicked feedback and wicked learning environment like that. What you can do, hopefully, is by recording more of this stuff, you can make it more of a kind environment and at least start to see the patterns that emerge from things that consistently happen. But to expect our brains to untangle all of these different permutations and variables in real time and then remember what you were thinking about it five years ago when you were looking at it, that's a really tall order and it's just not how memory was.
There was no reason to have a perfect memory on the savannah for millions of years like that. Our memory is only good enough for what it needed at that time and nature of horrors overbuilding in that way. We all want to save glucose at the end of the day. That's what's happening in our brain. So, in order to overcome some of that stuff, the technology of just writing some shit down is hugely valuable and I think underrated even still, even though we've been doing it for thousands of years.
Bill: Yeah. How has decision recording changed, I guess, the outcome of your process a little bit? Have you said to yourself, "I'm on the right path and I'm going to stick to my path, or have you morphed?" Everybody morphs as an investor a little bit, but I'd just be curious what you've learned about yourself.
Jake: Yeah, I'm trying not to-- 2021, well, really 2020 crazy year like 1 in 100-year type of pandemic, shut the economy down. 2021, maybe one of the all-time insane bubbles happening, I think history will probably show. And then, 2022, a lot of crash. So, at the end of the day, any decision that was recorded at any one of those three years is going to have such a tide that's happened against it over a short period of time that everything has to be taken with a grain of salt right now, as far as like, drawing too many conclusions from any of my baskets of decisions. I'd almost want to put a pin in that for a few years and come back to it and see what the answer is.
In general, I think the forcing function of having to write down what my reasoning is exactly and knowing that I'm going to have to go read it later, even that alone is enough to make me work a little bit harder to clarify the thought, to synthesize a little bit more, and not-- It's really easy to just be like, "Yeah, I think I got enough information. I'm good enough. Let's just go forward." It's super easy to get to that point. You know what other thing is? I can feel when I start to want to say yes to an investment.
Bill: Yeah, so can I. Yeah.
Jake: [laughs] Now, I can feel myself starting to tip towards like, "I'm going to go look for reasons for why this is a yes," which I think is maybe not the-- That's not very good scientific method. You should be looking for disconfirming evidence to your thesis, but it's hard not to do that.
Bill: It's also hard to know when wanting to say yes is your mind processing the first 20% of information that gets you 80% of the way there and is the right thing to do versus that next 30% or 40% that gives you the overconfidence that then you make the wrong bet. It's so complicated. The game is so complicated that I understand the merit in reducing the amount of decisions that you make, because the more decisions you make, the harder-- It seems to me the math gets further and further against your side than on your side.
Jake: Yeah. There's this weird like, what's the logical extrapolation of that then? Should you have a super concentrated portfolio, if you're only making a few decisions?
Bill: My answer for me now is no. In my head, what I've told myself is like, "Fifteen equal weighted positions probably be the smartest portfolio I could put together."
Jake: Yeah.
Bill: I don't know if 15 is the right. That's not the right number for everybody, obviously. But for me, I think I can get roughly close to where I need to be there. I'm not trying to actually be a hedge fund hall of famer. I'm trying to get to the end of this game.
Jake: Yeah, just survive and do okay.
Bill: Yeah.
Jake: I agree. Portfolio management is something we haven't really talked about yet. We've been talking more individual security selection, but I think there's actually quite a bit of work in the decision space that's ignored on portfolio management. That gets swept under the rug a lot. We haven't built them yet, but I've got some ideas about what I'd like to see for myself as far as compare my portfolio performance to all of my names equally weighted. Let's look to see if disposition sizing add any alpha there. Am I adding or subtracting? I think I might actually be subtracting. My gut tells me. But I want to see the actual data of it. And over a long enough period of time that should always caveat with that.
Then, also actually, our mutual friend, Drew Dixon has some pretty good white papers on this. He's written up about looking at his portfolio. He'll actively trade around his names up and down throughout a year. He'll run a couple of different kind of assessments of that to see like, "Okay, was the name that we picked, was that a good name? And then, how we sized it. Is that right? And then, how we traded around that over short time periods? Did we add anything there?" I think that if you're more of like a hedge fund, they typically operate a little bit more like that, little bit more active decisions within trading. So, having all of those automatically figured out for you would be kind of slick to just know like, "Where am I adding value in this whole process chain?"
Bill: I think what's interesting about watching, I always say my perception of Buffett, because my perception changes over time. The more I learn, the more I realize I didn't know.
Jake: [laughs] The more I can guess. Yeah. [laughs]
Bill: Yeah, that's right. I'm like, "Oh, that guy really is a genius." Alex Morris has talked about this with me. You watch what his Coke investment did and how he never trimmed and he's almost allowed incoming cash to reduce the position size of Coke. But he's not a big trimmer. I have this big Microsoft position as a percentage of the portfolio, because I inherited it. I know I don't know more than the market on it. I know the market knows more than I know on it. Does it make sense to sell it or do you just keep something like that and say it probably doesn't make much sense to buy more until I get up to speed or just you collect the dividends and go elsewhere with it? They're very complicated, I guess, decisions that come up over time when you hit a winner. In this case, it wasn't even my winner, which makes it even harder. But I do think I generally understand what I own.
Jake: That's a tough one, because it'd be really easy to-- You look at that cost basis and you're like--
Bill: It's like above 30.
Jake: Yeah.
Bill: Everything's taxable.
Jake: Everything's taxable, which makes the math even harder to swallow.
Bill: On the other hand, capital gains aren't exactly that high relative to history.
Jake: That's a good point. Yeah, you should probably think historically when it comes to that kind of stuff. [laughs]
Bill: Yeah. If you think we have a lot of-
Jake: Trillion-dollar deficits? Yeah.
Bill: -liabilities on the [unintelligible [00:48:24] that maybe need to be paid back, you could see a scenario where capital gains could go up substantially.
Jake: Well, imagine living in California where you see the wealth leaving, the liabilities staying, the asset base not necessarily growing the way that you might want and just recognizing that like, "Ah, that Bill is increasing for me, probably, as we move along."
Bill: Yeah. You guys need another 10 years to get another hype cycle going.
Jake: Yes.
Bill: California is very good at capturing that every once in a while.
Jake: The bad news for you is that it's probably going to end up being a federal problem, if it does become a problem. [laughs]
Bill: Yeh, that's right.
Jake: I think we're all going to be on the hook for everybody's problems here.
Bill: Yeah, it is probably going to be a federal problem. You have read Zeihan. right? Or, Zeihan, Zeihan, Zeihan?
Jake: I did. I read, what is it, The End of the World Is Just the Beginning?
Bill: Dude, It's not exciting stuff.
Jake: If you're in the United States, it doesn't seem quite so bad based on his findings. I'm not-- [crosstalk]
Bill: Very hard to argue it's bullish equity.
Jake: True.
Bill: For those that don't know, basically, every developed economy according to him is facing demographic cliffs. We have a shortage of working age population that can take care of those people. Those people tend to be living longer. Basically, it tells me, get long pharma and inflation because if his theory of the case is correct, the idea that wages aren't going to be sticky going forward, pretty hard to buy. I don't know if I said that correctly, but wages should be sticky. It should be a good time to be a worker.
Jake: Yeah, I think so.
Bill: I don't know how much they're going to confiscate through taxes.
Jake: Yeah, I don't know either. There're multivariate problems that are really hard to untangle. That's why we're just macro tourists. But [chuckles] it certainly seems very important. I'd love to know the answers. And if I knew the answer, it would dramatically impact, probably, how I manage money. I just don't see how I can figure out the answer well enough to get comfortable with it.
Bill: Yeah, I think I'm sorry to any boomers that are listening, but this is my honest opinion. I don't think that boomers are going to sacrifice a lot in retirement. I think they're going to spend a lot. I think as a generation, they're not the most sacrificial generation. So, I got to figure out how to get smart exposure to housing, like elderly housing. Watching what my grandma has gone through, man, it is-
Jake: It's expensive to get-- [crosstalk]
Bill: -really expensive. Yeah. There's going to have to be a way to give boomers a shared experience, like a community [Jake laughs] that's not a nursing home, but you can [crosstalk] spread the cost out.
Jake: [laughs]
Bill: Yeah, that's right.
Jake: There's your shared experience. [laughs]
Bill: Yeah. That's right. There's some like that and people don't want to die. So, whatever drugs can keep them alive are going to have a structural-- None of this is a unique thought.
Jake: Well, I was going to say, it definitely makes it harder to imagine that inflation doesn't stick around for quite a bit longer than maybe what you might anticipate just because of the reverse of globalization playing out, like reshoring going to probably be more expensive, energy breaking up into multiple kind of energy supply chains. I don't know, it just seems that there's a lot of trends that had happened for most of our lifetimes to go back to-- By the way, I listened to the Bob Robotti podcast that you did.
Bill: He's the man.
Jake: I was like, "Oh, God, I got to come in after Bob, after he drops 60 years' worth of investing wisdom, and I show up like this jabroni.
Bill: [laughs] Well, I don't think so, man. I've said it now three times. You are the guy for this product. I know it. And Bob knows it too. The thing that you have going for you, in my opinion of Journalytic, is anyone that knows you has to behind you on this, because it's the right product. And I think you can help the investment community a lot. So, anyway, continue with your pejorative comments.
Jake: I appreciate that, by the way. I do think it would feel really good if-- Munger's got this sense of, I think that he feels good that he has actually caused a lot of rationality in the world through talking about his 25 behavioral or psychological biases that trip up people to-- all the ways that he's tried to make the world a more rational place. I think he's very proud of that. The idea that if I could even just have a tiny version of that with a product like this, that would feel very good for me as well in leaving the world a little better than you found it since.
Bill: Yeah, you will. I'm a little upset you didn't do it in 2017, because right now, it sounds like your money losing SaaS, which would have been worth at least a Billion.
Jake: Ah, I know. That window I've missed--
Bill: [laughs]
Jake: Well, but in fairness, yeah, you get 50 times revenue, but we're zero revenue, so that's 50 times zero is still zero.
Bill: Ah, we could make up a different metric. We could value you on eyeballs. You got a wealthy base of users. There's a lot we can do here.
Jake: [laughs] Yeah. There's a lot to spin the story up.
Bill: Yeah. We just got to get it to scale. We'll figure out the capital market-- [crosstalk]
Jake: When's the next SPAC boom? That's what I need to know these.
Bill: These things can happen faster than you think. We'll see.
Jake: [laughs] It'd be pretty amazing if we got another one of those off the ground anytime soon.
Bill: Yeah. The SPAC thing has been interesting because the first thing that introduced me to SPACs was somebody SPACed, I think it was Blue Bird bus company, the people that make the buses. I was reading through that. I was like, "Oh, my God, the founder shares are so cheap." And then, knowing Kyle, who does SPACs and talking to Mike about it, I've realized watching Liberty not do one and they lost the risk capital, I've realized it's a lot more nuanced, but boy, for a little while that just became fucking pixie dust and grift. It's disgusting.
Jake: Yeah. It's not worked out well for the people who are holding some of those bags. That's rough.
Bill: Yeah, well, I am holding one of the bags, but not a lot of bags.
Jake: Basically, just a one bagger. [laughs]
Bill: Yeah, it is.
Jake: Is that what they've been talking about this whole time, a ten bagger?
Bill: Yeah, that's right.
Jake: Obviously, you've been holding ten bags on the way down? [laughs]
Bill: Oh, God. I get so frustrated at, I don't even want to say it out loud, but it's true. Chamath, it's awesome that he growth hacked social media for his bank account. But you see what that's done to the world. All the retail grift during the SPAC boom, it's just so upsetting on so many levels-
Jake: Is it kind of a trail of destruction, right?
Bill: -and he's accumulated so much during it. It's like, "Man, that's, I don't know, a fucked-up result."
Jake: Yeah. I think we have to take some solace in that. I think the universe eventually evens things out. If you go around just taking, taking, taking, eventually there's some comeuppance. I don't know how it happens, but whether you get to the end and personally, no one shows up for your funeral or what. It could be something that far away, but eventually, grifters and takers, I'd like to believe that the universe evens some of that stuff out.
Bill: When I listen to him, I do like him. I like his story. But that's part of why he can raise so much capital. It's not like a unique thought. People that are likable are usually the people that can take a lot. I don't know. It's frustrating to me.
Jake: Yeah.
Bill: It wasn't just him. He was the guy on social media, cheerleading GameStop and clearly soliciting retail money. It was disgusting.
Jake: What do you think that like where's our regulatory apparatus and all of that stuff? Is this like, "Okay, I'm sorry, it's a big boy world and it's kind of dog eat dog or should we do more to be protecting people"?
Bill: I don't know the answer to that. I go really back and forth on it and especially, what I live through and the consequences of it.
Jake: It's much more visceral for you.
Bill: Yeah. I think like, ah, man, I don't know. Four people having access to-- It bothers me that rich people had access to private equity funds. And in a time when rates went down on a personal basis, rich people probably benefited more than those that didn't have money. On the other hand, pension funds did allocate to these things. So, it's not as if the working class completely got cut out. But man, when you start to see people talking about, "Boy, options trading is great because it democratizes access to products that rich people have." Rich people didn't get rich trading options. Shut the fuck up.
Jake: Yeah. That's true. [laughs]
Bill: That stuff really bothers me. And then, when you have a company that's basically a casino that doesn't even invest in customer service and they're allowed to go public, and then the people that funded them are heralded as some visionaries, fuck that. You just turned the market into gambling and it didn't have any customer service. I don't respect that.
Jake: Yeah. I agree. That Keynes quote about, "If the allocation of capital and society is done in a gambling way, it's likely not to be done well." That's, I think, a very true statement.
Bill: Yeah. And then, if those people complain about regulation or whatever coming in, it's like, "You're the reason we need regulation."
Jake: Yeah. You're the wolf at the door that we're trying to keep from getting into the hen house.
Bill: I don't mind. Jake's doing something. I don't think he needs to be that regulated. You, on the other hand, need to be watched.
Jake: [laughs]
Bill: So, I don't know, it's very complicated questions.
Jake: Yeah.
Bill: Where do you stand on it now? All the crypto stuff? It was nuts.
Jake: Yeah, I go back and forth as well. It's that like, "Are you your brother's keeper?" It's the same question that we've been trying to answer for thousands of years. A younger version of myself that saw the world a lot more black and white would have been like, "Hey, man, this is just how it is, and live and let die and let's just have complete freedom on all this stuff."
I don't think I'm all the way over to Munger's patriarchy, where Munger knows best and therefore he's going to set the rules and society will then probably be run better because of he knows how to counteract some of their more base instincts. I'm not sure I'm fully onboard with that either. So, I'm stuck in the middle now where I don't have a very good answer either way. I just know both arguments to me seem overly simplistic and these are just super, super hard questions to figure out the right answers to.
Bill: I think it's hard to argue that the SEC didn't miss some things. I guess from what I've watched, it seems they've waited to see what breaks before prosecuting. It seems I don’t know-- [crosstalk]
Jake: I think that's always been the case though.
Bill: Yeah.
Jake: I think if I remember right, at Enron, Skilling and Lay weren't prosecuted for a couple of years after the bankruptcy. I think it probably just takes time to build a case, I assume and the barn door is fully open and the horse is miles away before-- They're probably more like they don't prevent fires there. The house burned down, everyone was lost inside, and then they come in and-- [laughs] "All right, what went wrong here?"
Bill: Yeah. So, then you get into the regulations, end up fighting the last war, and it's like, "Okay, well, what are we doing here?"
Jake: Yeah, true.
Bill: Because finance generally is pretty good at finding the next war to fight.
Jake: Well, that was one of the takeaways of reading Edward Chancellor's new book, The Price of Time.
Bill: Yeah.
Jake: He said that basically, you could almost substitute in the word financial innovation for figuring out how to get around today's current set of regulations. [laughs] That's all that it ever is. He's going back hundreds of years to make this claim.
Bill: Yeah. Well, it's most basic form, right? In general, in finance, you're giving money out today to get more back in the future and then it's where are you in the capital stack. And everything else is just a marketing package, I think, I don’t know.
Jake: Yeah. ASOP. One in the hand, two in the bush.
Bill: Yeah. And then, Buffett goes into, "So, how many birds are you getting? When are you getting them?" It's so simple how he talks. Dish is so prominent on my mind right now, because what I think is true is I think they're doing very interesting things with Spectrum. So, they've designed, it's called O-RAN, which is open radio access network, which basically means, in the past the networks, the hardware and the software were made by the same manufacturer and it was slower to update. And they've open sourced a lot of the hardware, buying and a lot of the software. I think one of their providers is Rakuten. I listened to a podcast on The Verge that the guy was saying that, "In Japan," I believe he said, "It's 40% cheaper to operate the O-RAN network that they have that's working." It's like, "Okay, here you have a technology that I think is superior, and I think is cheaper, and you have an equity that is theoretically priced really cheaply."
On the other hand, they've got to divest a shrinking business that's probably over levered. They've got to divest another business that's not great. And then, you've got to sign up clients to switch to Dish Mobile or Boost Infinite is what it's called. I get thinking about, "Okay, how many birds are in the bush today?"
Jake: That's a lot of path to tendency to the bush too.
Bill: That's right. The younger me would have been like, "Well, it's cheap, I should buy this." And now, I'm far from where I need to be, but I've begun to appreciate how much path dependency impacts what those birds are worth.
Jake: Do you think you could back into what you think the probability of each one of those individual components is and then do some summation of a probabilistic outcome?
Bill: I don't think I've done enough, yet.
Jake: It's almost like runner-runner. I need three cards in a row to-- [laughs]
Bill: Yeah. But there are very smart people that are involved in that equity. There are some insiders buying. Then it gets into, "Okay, well, do they have a view that's an inside view and the outside view is smarter?" So, the answer is no. It's in my too hard pile.
Jake: Yeah.
Bill: That's one of the decision codes, right?
Jake: Yeah, definitely. That's an interesting one, because what it might reveal is that, yes, the things that are too hard, like stay the hell away from them, then that could totally be the answer that it tells you. It might also tell you that, "Boy, there was a lot of gold in that too hard pile that you threw away." If maybe a little bit more effort you put in might have revealed some of those nuggets, then it might be worth it to stick with it for a little bit longer. But you don't really know the answer to those two things until you have the data set.
Bill: Well, I'm going to keep doing calls on this thing, because I'm fascinated whether or not I have a blind spot that actually impacts my cable investment, that would be a real problem.
Jake: That'd be material? [laughs]
Bill: Yeah.
Jake: That'd be materially adverse.
Bill: Correct. I actually want to have some analyst that's bullish Dish on in order to counteract the Moffett episode. But I don't know, we'll see, man. These are all the things like I can go through my feelings and I can say, "Okay, how are my feelings changing as I'm doing more research and how does my feeling change after I do a call with somebody that's bullish?" Or, "How does my feeling change after a call with somebody that's bearish? How much am I influenced by what I'm hearing versus what I think to be true?" That's where I really think the power in this is.
Jake: One of the ideas that we've had recently that I think is super fascinating, I never really thought about it before, but imagine if you recorded a feeling after that call that you have and you're like, "God, I'm kind of bold up about this right now." You record a positive feeling. Now, imagine that we serve it back up to you in a week or two weeks, and you just read through it again and reassess your feelings.
Bill: Yes.
Jake: My hunch is that there's probably a decay. There's a half-life to your excitement.
Bill: 100%.
Jake: Knowing what that is and knowing like, "Oh, my God, I'm so biased when I hear a good story." If I come back to it with clear eyes and without being all worked up, I have a somewhat different assessment of it. And tracking the feelings of how it changes over time on the same piece of information, I think, is actually super interesting.
Bill: Yeah. I think, for me, one of the things that I know about-- Well, I think I would be a reasonably good salesperson. And am a reasonably good salesperson? But one of the downsides of being reasonably good salespeople or a person is they tend to be easily sold.
Jake: Yeah. [laughs] You can get excited about some shit, right?
Bill: Yeah, that's right. So, I completely agree with you. To measure that half-life and be like, "Okay, I am not allowed to make any decision on anything for two weeks after I talk to somebody."
Jake: Yeah. But there's got to be a cooling off period here before I would ever make a decision.
Bill: Yes.
Jake: How long is that half-life? It probably varies for different people.
Bill: Yeah, it definitely does. Are you going to expand it into other segments of life, I wonder?
Jake: [sighs] It would tickle me pink to, if there was some equivalent of Journalytic that was being used for business cap allocation decisions. I think all of the same stuff applies. I think all of the same things that trip up decision makers happen in the business context. And maybe even more, because frankly the investment community is actually more open to change when it comes to that stuff and trying to improve. The business is a lot more making gut decisions and then having a bunch of people go find the numbers that support your gut that you already made. You see it all the time, if you're studying cap allocation of corporate America.
So, I think it would be so cool, if I could make a little dent in that universe someday, but I want to help investors first and I think they're the ones who are more open to these types of tools and improvement processes. But eventually, someday, I think that would be so fun and so cool.
Bill: Yeah. How I've seen this working for you and my vision may not be your vision.
Jake: What are the "I thinks" saying? [laughs]
Bill: I think you deservedly so could make a very good living in some sort of consulting role with helping people stick to process and decision making. I guess, the word that keeps coming to my head is the purity of your process. I think people could spend a shit ton on you and get a shit ton more back. I think Journalytic is a good free way to help people and then, I think you're worth a whole lot more than free.
Jake: Yeah, that's it. I think you're right that that could be true. Just trading time for money would be really tough for me at this stage of life.
Bill: Yeah, that I understand. But I'll tell you what, you're not going to make it podcasting.
Jake: What?
Bill: If your podcasting monetization is anything like mine, [Jake laughs] this business could use of a little bit of work.
Jake: Yeah, no doubt. It's little slow on the revenue side. [laughs]
Bill: Yeah. I have enjoyed it though. The benefits have been immense, I think.
Jake: Immense and non-monetary. [laughs]
Bill: That's right. That's exactly right. Yeah, I love when people talk about how many ads are on Value: After Hours. We don't see any of that and I don't think Toby is showering himself in gold.
Jake: Oh, no.
Bill: So, Google's just taking it.
Jake: 100%. Well, I don't know. Have you guys been getting paid? I don't think I have so. [laughs]
Bill: I have not. No. [Jake laughs] I do appreciate the sponsors of this show, but it covers cost.
Jake: Yeah. Not your time though, right?
Bill: No. Hell no.
Jake: Apparently, our time is not worth very much, if we just basically give it away. [laughs]
Bill: Yeah. Well, look, there're some benefits to scale, I suppose. Cost per thousand listens or whatever is the metrics. But I don't know, it's interesting.
Jake: You know what it is? It's the ultimate serendipity generator for life. It just creates all of these random, cool optionality events that you couldn't really make them happen otherwise. That alone, just the novelty of it is worth all of the investment of the time and the heartache and the bullshit that you deal with, I think.
Bill: No, I 100% agree. Look, I think it rightly or wrongly, and I have dabbled with Spotify stock in the past, but it rightly or wrongly got me out of that because I look at how hard it is to actually scale a podcast according to Raptor whatever. I think both Value: After Hours and this are in the top 1% of podcasts.
Jake: [laughs]
Bill: If that's the case-- [crosstalk]
Jake: But this is what winning looks like?
[laughter]
Bill: Yeah, that's right. Obviously, it's a power wall, right?
Jake: Yeah. Super long tail.
Bill: I mean Patrick's podcast is massive. We study Billionaires is massive, but monetizing the long tail is tough. It's hard for me to understand why people would do podcasts that are not just marketing their business. If you're just marketing your business, I don't know that you really care about monetization that much, because by definition is almost a tangential goal. It's not your primary focus.
Jake: No. Is that the content that people are really dying to hear also?
Bill: Well, I think people like our content in general, but I don't know that they would like it if I had to flood it with ads to get myself paid. So, that's the rub.
Jake: Yeah.
Bill: So, we'll see. I don’t know.
Jake: The world has gone towards wanting free stuff too all the time. It's actually a really difficult bar to get over now to get someone to pay for something.
Bill: Yeah.
Jake: That might be changing-- [crosstalk]
Bill: Well, maybe we should stop doing things for free.
Jake: I think some of that a little bit is a-- That's a zero rates environment creates that as well. There's so much money chasing so many ideas and funding so many things that then don't require the marketplace to validate them necessarily with the transaction of revenue that you end up with a flood of business ideas. It's an interesting thought experiment to imagine that low rates overclock the natural biological evolutionary system of capitalism, so that you're exploring more of the potential paths that businesses could take, because you have so many of them that are starting up-- A lot of them are no good. How many different scooter companies do we need?
You also maybe you find some technology or some path that you wouldn't have otherwise or it would have taken five more years to naturally find it under a normal rates environment. I don't know the answer to that. I think there's a lot of pain involved as well in that overclocking the system. You end up with a lot of destruction of capital. But you can make the argument that, if you overclock it, you actually are overclocking the environment as well. One of the things we've talked about on the show is this idea of pace layers like, where some parts of the world are moving faster than others. The commerce layer versus the governance layer versus the environmental layer.
If you're overclocking the commerce layer because of low rates, you're potentially putting more friction on the environmental layer. If you were super ESG, you'd almost say like, "Well, shit, put rates at 6% then, because this is--" Only the projects that should probably get funded and have some chance of being sustainable. There's going to be more of those than otherwise. We won't be building a bunch of shit that-- We won't have scooters floating in the San Francisco Bay, because people are like, "Well this company sucks and it went bankrupt and now, they just are throwing them off the wharf into the Bay." [laughs]
Bill: It's frustrating. Now that I live somewhere that I'm outdoors a lot, I've taken a much bigger interest in the environment than I did when I was in Chicago.
Jake: Interesting. Yeah.
Bill: Yeah, I think a little bit. Man, the amount of consumption and plastic pisses me off. Part of the interest rate or part of the inflation problem is, I just want to be like, if we could all just back off consumption a little bit and not just all need to spend more and just slow down a bit, we wouldn't be in some of the problems that we're in. It's just not human nature. It's always just going to be a pie in the sky theory, but it is frustrating.
Jake: You know what's messed up about that is that instead of the answer of us who were all born on third base as far as human experience goes, we don't want to back off. We want to make the other 2 Billion people on the planet not come near where our level of living is instead. I find that to be gross, actually, in a cosmic sense.
Bill: Well, you and I have talked about this on Value: After Hours and our views on oil. I get some hate mail over this. People don't like my views that-- Foundationally, coal and oil are-- If I was in an emerging market, I would not care at all about solar and wind. I'd be like, "I need to get energy to my people."
Jake: Yeah.
Bill: That's how it works, right?
Jake: It's the truth. That's what you see in China. If you look at CO2 emissions globally, China is this huge outlier that's just cranking them out. We're going to go tell a Billion people like, "Sorry, you can't have the stuff that we have in the west, because we're so profligate in our usage of it for the last hundred years. We built all this infrastructure and now we get to live these amazing lives and easy lives relative to the typical human throughout history that we're going to say, "No, you can't do that now." There's little bit of like, "Where do you get off thinking that you get to tell other people that type of thing?"
Bill: Yeah, and I think too. We've outsourced so much manufacturing to over there that-- To complain about that, I think it's almost like off balance sheet environmental liability-
Jake: 100%.
Bill: -that we've just pushed, right?
Jake: Oh, yeah.
Bill: So, nobody wants to spend what they need to spend to buy shoes that are made here or iPhones in a factory that people aren't jumping out of a window. But as long as I don't have to see it, then I can complain about them. I don’t know, it's bothersome. I'm guilty of it too. I'm not trying to say that I'm not, but it's just frustrating. There's some hypocrisy.
Jake: For sure. I try to recognize my own hypocrisy in this as well. [laughs]
Bill: Yes, I'm an honest hypocrite.
Jake: Yeah. [laughs] I'm sure we've talked before on the show about like, what does the amount of energy that you actually use? What would it look like if a human had to be the one that was providing all of this and not an old dinosaur that decayed and then, we tapped it? The answer is, in a developed world where we live, it's 600 people that would be required to-- That many hands in the process to create your world that you live in. The global average is, I think, more around 50 hands. So, we're already like 10X or more what everyone else is doing on average. It's like, "Boy, pot calling the kettle black here in some ways."
Bill: You know the fucked up thing about it in a way is, it seems to me that the more that people consume, I do not believe-- Well, there is most definitely a correlation between whether or not you can comfortably live and eat in happiness. But I'm convinced that once you get over, at least, a certain level, your happiness goes down. I know there have been studies on it that show like a minimum level of, what is it, 75? It probably 85 grand or whatever.
Jake: There is inflation, let's call it 90 grand now or something.
Bill: 90. Yeah. But still, the more you consume, the more the stuff owns you. It's a bizarre thing.
Jake: I have a friend who I'm not going to name him, because I'm not sure he would want this attributed to him. But his theory of the case is that above that $90,000 threshold, most of the underlying motivation that job to be done of what the consumption is, is a guy trying to get laid and whatever it is or vice versa or a woman.
Bill: I would say it slightly differently. I think it's covering up insecurity.
Jake: But that conspicuous deception is-
Bill: At least, for me, it was.
Jake: -covering up insecurity more than trying to procreate.
Bill: Yes. Once people are married, right? I've also seen a lot of spending trying to cover up pain from childhood. But fundamentally, I don't think it comes from a strong place. I think it comes from a place of weakness.
Jake: Yeah, I think that's right.
Bill: Maybe wrong. I don't know, but-- [crosstalk]
Jake: It sounds right. [laughs] So, let's go.
Bill: Yeah. So, it is right. Boom.
Jake: [laughs]
Bill: The wisdom. Well, anyway, man, I wanted to have you on the show. I wanted to plug Journalytic. We got into some life. And I don't know, man, I love you. It's been fun to have a show together for three years and it's been really fun to watch you develop this product. In case people didn't hear it, it's free. So, they should check it out and provide feedback. I'm excited for you.
Jake: Well, I really appreciate it. As you know, I also love you. Our ability to bond every week for the last four seasons and coming into a fifth one here, I think, has been just such a treat. I think about how lucky it was that it all came together when it did for us. Yeah, life should always be full of those happy accidents, if you can get them and lean into them.
Bill: Yeah. We lasted longer than five episodes.
Jake: I can't believe it.
Bill: Before long, we'll do five on this show ourselves.
Jake: Jesus. [laughs]
Bill: [laughs]
Jake: These are fun though too, because it's a more leisurely pace than what we're doing. Because we're aiming for an hour with Value: After Hours. We know we have a certain amount of times-- [crosstalk]
Bill: Toby is on it, man. 60 minutes hits and he's off.
Jake: He's like he's catching a flight every week. He's got somewhere to go.
Bill: I get it. I get why, but sometimes, it's like. "Dude, just let us go."
Jake: I know. We were just getting into some good shit and he'd cut us off. [laughs]
Bill: Yeah, that's right. We get into the real meat and he's like, "And we'll see you next week."
Jake: The problem is that we never pick it back up and continue the thread. We always just start over. [laughs]
Bill: That's right. Yeah. I was actually thinking about listening to some old shows and doing a segment on, "This is what we said two years ago" and whatever. It would be nice, if some listeners would do that for me though. I don't really have the time to do that. You know, TrueCar stats or whatever.
Jake: I would love to have them go back and look-- Especially, probably the most likely place where there were going to be errors is when the world was most uncertain. "Listen to all the shows in the spring of 2020 and then tell us all of the stupid things that we said." I'd really like to know what was the dumbest thing I said in 2020?
Bill: I don't know, man. I think that were pretty good then. I think I probably said some stupid stuff a year later.
Jake: That was when we got stupid. [laughs]
Bill: Yeah. But I think at that time, we are pretty good.
Jake: Is this is around buying a Bored Ape? [laughs]
Bill: I still am interested in that.
Jake: Oh.
Bill: I still think I'll own one eventually. As I said, I think I'm going to either pay a very little bit or a lot. And it's still waiting.
Jake: I want to own one now for the same reason that someone has Zimbabwe trillion-dollar Bills that they have. It's the same kind of memorial. That's what I want it for.
Bill: Yeah, exactly. I still think there's going to be really interesting stuff that comes out of crypto. I do not think that there was no there-there. I just think it was 90s in tech.
Jake: Mm-hmm.
Bill: But I'm sure I said dumb things. After a year of a raging bull market, I'm certain that got into my head.
Jake: Well, nothing dulls the senses like easy money, according to Buffett. [chuckles]
Bill: Yes. Euphoria is nice. Nice to live through the hangover, it sucks.
Jake: And it feels the best right before the end. [laughs]
Bill: That's right. Yes. Like being very drunk.
Jake: Yeah, that's right.
Bill: So, we'll see how long this hangover lasts. If it's anything like drinking, I think we've got a little bit longer to go.
Jake: Oof, that was a rager.
Bill: We were pretty drunk. That was-- [crosstalk]
Jake: We were getting after it. [laughs]
Bill: Yes, indeed. Collectively. All right, man. Well, enjoy your vacation and we'll see you when you come back.
Jake: Sounds good. Thanks, brother.
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