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Jeff Bezos says that if Amazon has a good quarter it’s because of work they did 3, 4, 5 years ago—not because they did a good job that quarter. Today’s league-leading Golden State Warriors acquired Draymond Green, Andrew Bogut, and Klay Thompson almost 4 years ago, nearly 4 years ago exactly, and almost 5 years ago. In this league, the long view picks at the lock of mediocrity.
While some organizations (like ours) have this as part of their ethos, for others it is the ethos. Check out the 10,000 Year Clock. It is no mere thought experiment, but an actual clock being designed to be placed inside a mountain in West Texas, wound, and left to tick and chime for ten thousand years. Why?
Because to design something that lasts that long makes us all consider what the world will look like betweennow and then. In return, we might be inspired to do something about it.
More practically, to take the long view has an unintuitive advantage built in—fewer competitors.
Here’s Warren Buffett in the late 80s on this topic: “In any sort of a contest—financial, mental, or
physical—it’s an enormous advantage to have opponents who have been taught that it’s useless to even try.”
Ask who wants to trade for an in-his-prime Kevin Garnett and 30 hands will go up. Ask who planned for it three or four years in advance and Danny Ainge is nearly alone. Same for Daryl Morey in Houston trading for James Harden. San Antonio’s Peter Holt said after signing LaMarcus Aldridge this summer, “R.C. came to us with this plan three years ago, four years ago—seriously. And we’ve worked at it ever since.”
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A contrarian mindset
This one is tricky, and getting more so in a league as healthy and popular as the NBA that is covered by beat writers, columnists, bloggers, commentators, and fans minute-to-minute. If you want to have real success you have to very often be willing to do something different from the herd.
A few examples might help. Step away from basketball and imagine for a moment this is investment management, and your job is to take your client’s money and make it grow. It’s January 1, 2015 and the S&P 500 is $171.60, exactly the same price it has been since January 1, 1985. No fluctuation up or down. Flat every single day. And your job for every day of the past 30 years is to make money for your clients by investing. What would you do?
In the NBA, that’s wins. The same 82 games are up for grabs every year for every team. Just like in
1985 (or before). To get more wins, you’re going to have to take them from someone else. Wins are a zerogrowth industry (how many of you regularly choose to invest in those?), and the only way up is to steal share from your competitors. You will have to do something different. You will have to be contrarian.
Howard Marks describes this as a necessary condition of great performance: you have to be nonconsensus and right. Both. That means you have to find some way to have a differentiated viewpoint from the masses. And it needs to be right. Anything less won’t work.
But this is difficult, emotionally and intellectually. Seth Klarman talks about the comfort of
consensus. It’s much more comfortable to have people generally agreeing with you. By definition, those opportunities in a constrained environment winnow away with each person that agrees with you, though. It reminds me of when we first moved to Palo Alto. Within about a week of living there a voice kept telling me, “This is great. Great weather, 30 minutes to the ocean, 3 hours to ski, a vibrant city 30 miles away, and one of the world’s best research universities within walking distance. People should really move here.”