“I don’t know why people keep using one-year earnings,” economist Robert Shiller once said. “That is the time it takes the Earth to go around the sun. I don’t see any other significance.”
I thought about this line when I recently heard an investor say they were expected to come up with two good investment ideas per year.
I get why those quotas exist. Employers and investors can’t maintain accountability with an infinite leash.
But good investment ideas don’t care that you need to discover one of them by the next solar rotation. They’ll come when they’re ready, on their terms, not yours.
Good ideas are sporadic. They can’t be scheduled. That’s true whether we’re talking about good investing ideas or good marketing ideas or good product ideas. Remembering that you care about your deadline but the rest of the world doesn’t even know about it is an important part of setting expectations.
You can say there are always good opportunities out there, so not finding one within a set period of time reflects your process and effort. That’s reasonable. But once someone has a target deadline, the deadline can become the center of attention in a way that anchors how good your ideas are likely to be. If you have to find a gem in the next six months, every month that goes by makes the ugly rocks appear a little sparklier.
Michael Lewis published his first book, Liar’s Poker, in 1989. It was a huge hit. But his next book didn’t come for another decade. He later said about his hiatuses and why he fills his time between good ideas with side projects:
I just thought writers can get themselves in this mindset where they feel they have to write another book … the publisher’s right on you afterwards and they’re ready to get you going again, and I just always feel that the book is going to be better if I start all over again, start completely fresh as if I’ve never written a book before and give myself at least the option of not writing books.
The best books happen when you wait patiently for the best ideas to come, which isn’t something you or your publisher can schedule.
That’s not the case when it comes to executing around good ideas. There, it’s almost the opposite. The urgency of World War II gave rise to everything from penicillin to radar to nuclear power. But all of those ideas had been largely discovered, at least on paper, before the war. The frantic push was working out the bugs and mass producing them virtually overnight. Stress and tension can increase the stakes enough to make something happen when the answer is largely known.
But when the answer isn’t known?
When you have no idea what you’re looking for?
Or what’s in front of you isn’t exciting?
Then there is perhaps no greater fuel of good ideas than the ability to wait for those ideas to come together.
That’s why having options and controlling your time are so valuable.
And why the ability to think at work is so vital.
And why time horizon works.
A few years ago a high school student asked Michael Lewis where he gets his ideas.
“I’m always on the lookout for good ideas,” he said. “I write when the story is so good that I feel an obligation to tell it.”
And not a moment sooner.