What We’re Reading

A few good articles the Collab team came across this week …

Statistics

How most people think about probability:

People understand that if they roll a die 100 times, they will get some 1’s. But when they see a probability for one event, they tend to think: Is this going to happen or not? They then effectively round to 0 or to 100 percent.

Meritocracy

This is great:

I think a very smart CEO of any company, big or small, has a policy where they listen to every suggestion and idea — best idea wins. That’s how it should be. Best idea wins. And you never know where it’s gonna come from.

That’s the way to create goodwill and keep your colleagues happy and involved and engaged.

Diligence

How Todd Combs of Berkshire Hathaway spends his day:

I read about 12 hours a day. Our offices are like a library. So I read annual reports, conference call transcripts, trade magazines, etc. Most things are routine, mundane and obvious, but every once in a while you find something interesting worth digging into. Warren and I will usually catch up once or twice a day on stuff that’s going on – deals, stocks, stuff with our companies. Sometimes our managers reach out or a banker calls with an idea, but that’s about it.

Moats

The modern version:

Technology has changed the nature of competition. While businesses were once considered only as valuable as the dividends they paid out, the “impenetrable” moats that let companies spit off excess cash are dwindling. A moat today is simply a temporary buffer that helps a company get ahead of the next innovation cycle.

Incentives

The same thing happened during prohibition:

After randomly sampling about 17,000 middle and high school students across the state of Colorado, researchers found that the rate of marijuana use among teenagers stayed relatively the same since it was legalized.

“Four out of five Colorado high school students have not used marijuana in the last 30 days,” the study says, “a rate that remains relatively unchanged since 2013.” And Colorado teenagers are just as likely to have smoked weed in the last month as those nationwide, which is currently 21.7 percent of all teens. In 2013, that number was closer to 20 percent for Colorado teens.

Distribution

Where income gains have gone during various expansions:

Screen Shot 2017-12-29 at 7.55.21 AM.png

Have a nice weekend.


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