Lucius Annaeus Seneca was born 4 BCE in Córdoba, Spain and died in 65 CE in Rome. He was a philosopher, writer and orator, among other things. He was at times in his life a wealthy man who was for many years an advisor to the Emperor Nero.
1. “The time will come when diligent research over long periods will bring to light things which now lie hidden. A single lifetime, even though entirely devoted to the sky, would not be enough for the investigation of so vast a subject… And so this knowledge will be unfolded only through long successive ages. There will come a time when our descendants will be amazed that we did not know things that are so plain to them… Many discoveries are reserved for ages still to come, when memory of us will have been effaced.”
What Seneca said then is still true today. Innovation will surely continue to amaze people. Forever. There’s no invention stagnation happening now nor will it happen in the future. The idea advanced by some that the pace of innovation is slowing down is deeply misguided. Innovation that is distributed is harder for some people to see, but it is far more substantial when considered in the aggregate. Seneca is saying that there is no fixed supply of innovation. Seneca also wrote: “For many men, the acquisition of wealth does not end their troubles, it only changes them.” and “Wealth is the slave of a wise man. The master of a fool.” He is saying that the best approach is to view wealth as one would any form of optionality. Nassim Taleb’s view on Seneca is as follows:
“Seneca was about being long options. He wanted to keep the upside and not be hurt by the downside. That’s it. It’s just how to set up his method. Seneca was the wealthiest man in the world. He had 500 desks, on which he wrote his letters talking about how good it was to be poor. And people found inconsistency. But they didn’t realize what Seneca said. He was not against wealth. And he proved effectively that a philosopher can have wealth and be a philosopher. What he was about is dependence on wealth. He wanted the upside of wealth without its downside. And what he would do is–he had been in a shipwreck before. He would fake like he was a shipwreck and travel like he was a shipwreck once in a while. And then he would go back to his villas and feel rich. He would write off every night before going to bed his entire wealth. As a mental exercise. And then wakes up rich. So, he kept the upside. In fact, what he had, my summary of what Stoics were about is a people who really had, like Buddhists, an attitude. One was to have the last word with fate. And my definition is a Stoic Sage is someone who transforms fear into prudence, pain into transformation, mistakes into initiation, and desire into undertaking. Very different than the Buddhist idea of someone who is completely separated from worldly sentiments and possessions and thrills. Very different. Someone who wanted the upside without the downside. And Seneca proved it. He understood the hedonic treadmill that Daniel Kahneman rediscovered 2,000 years later. He understood it very well. And he understood wealth, debt from others or from fortune. And he wanted to write off debt from fortune and he wanted to remove his dependence on fate, on randomness. He wanted to have the last word–with randomness. And he did.” – EconTalk
2. “We let go the present, which we have in our power, and look forward to that which depends upon chance, and so relinquish a certainty for an uncertainty.”
It is in the domain of uncertainty that the greatest financial returns can be obtained by a venture capitalist or any investor for that matter. I have cited Richard Zeckhauser’s work several times on 25IQ on this point: “the wisest investors have earned extraordinary returns by investing in the unknown and the unknowable (UU)” writes Zeckhauser. Embracing uncertainty is essential. Nassim Taleb writes “I want to live happily in a world I don’t understand. You get pseudo-order when you seek order; you only get a measure of order and control when you embrace randomness.” There are greater financial returns where the crowd does not follow since contrarian bets with odds substantially in your favor can be found in just such a place.
3. “Delay not; swift the flight of fortune’s greatest favors.”
The successful pursuit of an idea is sometimes time dependent. For example, if Bill Gates had not left Harvard and started Microsoft with Paul Allen and had instead waited to graduate, the opportunity would most probably have been lost. It is not possible to re-run history and prove that point, but the idea of carpe diem seems hard to dispute. Many ideas and businesses are time stamped with an expiration date. Do you need to be first especially in every case? No. Google’s success proves that. But you do need to “be.” Talking ain’t doing. “Real artists ship,” famously said Steve Jobs.
4. “Courage leads to heaven; fear leads to death.”
“There are more things to alarm us than to harm us, and we suffer more often in apprehension than reality.”
Again and again you hear venture capitalists talk about their desire for missionary founders. Missionary founders are far more likely to be courageous and to persevere when things inevitably get hard. Leaders in other spheres of life think the same way. Sheryl Sandberg has said: “Your life’s course will not be determined by doing the things that you are certain you can do. Those are the easy things. It will be determined by whether you try the things that are hard.” and “Ask yourself: What would I do if I weren’t afraid? And then go do it.”
In venture capital courage matters. Being carried back from battle on your shield is neither shameful nor the end of the world. No one “bats a thousand.” People get too hung up on frequency of success, when it is magnitude of success that they should focus on.
Nassim Taleb writes about Seneca:
“Recall that epic heroes were judged by their actions, not by the results. No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word…..There is nothing wrong and undignified with emotions—we are cut to have them. What is wrong is not following the heroic or, at least, the dignified path. That is what stoicism truly means. It is the attempt by man to get even with probability…..stoicism has rather little to do with the stiff-upper-lip notion that we believe it means…..The stoic is a person who combines the qualities of wisdom, upright dealing, and courage. The stoic will thus be immune from life’s gyrations as he will be superior to the wounds from some of life’s dirty tricks.”
5. “There is no genius without a touch of madness.”
“It is pleasant at times to play the madman.”
Marc Andreessen has said that he “is looking for the big breakthrough. Ideas that are unpredictable and seem crazy at first. (Black Swans)” and “You are investing in things that look like they are just nuts.” Michael Moritz has a similar view: “What they don’t say is that at the very beginning there was great uncertainty and a great lack of clarity…. We just love … people who perhaps to others look unbackable.” The reason why venture capitalists like a touch of madness is that this is where optionality can be found. If the idea was not somewhat nuts, big companies would be pursuing it. A good dose of nuttiness scares away the people who would rather “fail conventionally than succeed unconventionally.”
6. “The less money, the less trouble.”
What Seneca is saying here is quite clear, but for many people it is still puzzling. Bill Gurley likes to say: “more startups die of indigestion than starvation.” When you don’t have “enough” money you are forced to get innovative and to solve problems with a better culture rather than money. Of course, you don’t want to run out of money either since as Seneca also said: “Economy is too late when you are at the bottom of your purse.” When it comes to how much money to have on hand at a startup there is a level like Goldilocks that is “just right.” My post on Rolef Botha addresses this issue.
7. “It is quality rather than quantity that matters.”
“Love of bustle is not industry.”
Focus matters for an entrepreneur. What Bill Gurley calls “death from indigestion” also applies to startups that try to do too much. Fred Wilson has said: “You need more than a lean methodology, you need a lean culture….To me, lean is a state of mind that a founder and his/her team needs to have across all aspects of the business. The specific product and engineering approaches that are at the core of the lean startup movement are paramount for sure. But if you can apply lean to hiring, sales, marketing, customer service, finance, and everything else, you will be rewarded with a fast, nimble company.”
8. “Fidelity that is bought with money may be overcome with money.”
Keith Rabois has pointed out: “Many entrepreneurs are raising more money than they need and it can cause derivative consequences down the road that are not healthy.” Solving hard problems with just money does not scale. (Clinkle. Color. Fab. ) If a business is going to overcome mercenary behavior by employees it must offer employees much more than just a paycheck.
9. “Associate with those who will make a better man of you.”
Mark Zuckerberg has said: “I will only hire someone to work directly for me if I would work for that person. And it’s a pretty good test.” Keith Rabois puts it this way: “First principle: The team you build is the company you build.” Nothing is quite as much fun than learning from other smart and hard-working people when building something important. This point is the inverse of what George Bernard Shaw once said: “I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it.” In contrast, wrestling with people who will make you a better person is wise.
10. “To err is human, but to persist (in the mistake) is diabolical.”
It is important to make mostly new mistakes in life. Charlie Munger has famously said: “Forgetting mistakes is a terrible error if you’re trying to improve cognition. Reality doesn’t remind you. Why not celebrate stupidities?” One of the best ways to learn from mistakes is to conduct a post mortem on a significant mistake. And, of course, to learn vicariously from the mistakes of other people. I am writing a post now on Charlie Munger’s views on mistakes that will appear in September when my book on him is out. Munger says: “Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn’t remind you. Why not celebrate stupidities in both categories?” and “It’s important to review your past stupidities so you are less likely to repeat them, but I’m not gnashing my teeth over it or suffering or enduring it.” and “It’s a good habit to trumpet your failures and be quiet about your successes.”
11. “Our plans miscarry because they have no aim. When a man does not know what harbor he is making for, no wind is the right wind.”
A startup executing a pivot may be wise or not. But executing a pivot is not the first choice of an entrepreneur and certainly not if they are mostly clueless about where they want to go. I wrote in my post about Eric Ries: “A decision to pivot shouldn’t be taken lightly. Some founders pivot their way right into bankruptcy. Failing is not a good thing. Instead, having the ability to fail and then possibly still recover is a good thing.”
12. “Leisure without books is death, and burial of a man alive.”
“Welcome those whom you yourself can improve. The process is mutual; for men learn while they teach.”
People who teach others get more than they give if they are doing it right. Teaching others and writing helps you think things fully through. If you can’t teach it, you don’t know it. Yes, Charlie Munger is right that: “The best thing a human being can do is to help another human being know more.” But teaching and writing are also selfish activities in many respects. As for the benefits of reading, Charlie Munger points out:
“We read a lot. I don’t know anyone who’s wise who doesn’t read a lot. But that’s not enough: You have to have a temperament to grab ideas and do sensible things. Most people don’t grab the right ideas or don’t know what to do with them.” & “In my whole life, I have known no wise people (over a broad subject matter area) who didn’t read all the time – none, zero. You’d be amazed at how much Warren reads – at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
Notes:
- A Dozen Things I’ve Learned about Value Investing from Jean Marie Eveillard
- A Dozen Things I’ve Learned from Jim Goetz about Business, Startups and Venture Capital
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Tags: Charlie Munger, Lucius Annaeus Seneca, Michael Moritz, Nassim Taleb, Richard Zeckhauser, venture capitalist