Reward
I have a lot of fun designing financial back-testing projects in Excel. To me, it's art.
Huge, robust projects that take your inputs and spit out useful information about financial markets. At Spectra Markets, we publish these projects, use them to support our trade ideas, and share them with clients. This is a big part of my job. We build things in Excel that answer interesting questions that are useful to everyone who reads our stuff.
I also have a lot of fun writing. And figuring out how to market something. Or figuring out how to teach someone something in a way that will stick.
Again, this is all art.
What all of these things have in common is that they excite the most thoughtful parts of me. They’re curiosity-driven.
One question leaders, managers, parents, or anyone working with people have to ask is: the carrot or the stick? Can a reward be used to get done what needs done, or does the threat of punishment fit this situation better? How much reward, or how much punishment?
The carrot and the stick are useful, but they can only get you so far. Sure you can pay someone to do a job. And sure you can pay someone more if they do a better job. And sure you can threaten somebody into doing something. And sure you can punish them when they don't.
But absolutely under no circumstances will you get someone to do their best work when you simply threaten or pay them. In order to do their best work, people have to feel like they're taking responsibility for a problem in a deeply personal way.
The litmus test is whether they stare off into space and daydream about it. (An alternative test is if they ask other smart people to talk through it with them.) If they don’t, the problem isn’t how big the carrot or the stick is: the problem is that they just don’t care.
When someone truly cares about something, they don't just want to get it done to get the reward or avoid the punishment. They want to get it done because the reward will be having done it. The reward will be that they built something they wanted to build, or learned a dance they wanted to learn.
Sometimes you’ll meet natural daydreamers — people who have a constitutional tendency to take personal responsibility for interesting problems. The biggest reason for this isn’t necessarily ambition or conscientiousness or people-pleasing; rather, it’s that they’re curious people. Curiosity is the biggest contributor to daydreaming, and to pretty much anything that is a long-term productive endeavor. (Including relationships.)
If there’s one personality trait besides integrity that you want in a business partner or a high-productivity employee, it’s that they’re curious. This is the highest-signal trait that someone is likely to want to find right answers to things and explore problems seriously. These are the people you want, for instance, when you’re starting a small company. When you’re trying to build something, you need people who are motivated by more than money. You need people who love doing great work.
You cannot start and grow a company just by finding “good employees.”
Leadership
But for those whose personalities aren’t already wired or trained to be curious, this becomes a leadership problem.
As a manager or leader one of the best things you can do is learn how to delegate. Which means two things: to trust people with responsibility even if you feel you could do it better, and to understand the macro goals of a project and divide those goals up effectively. In other words, you delegate because it helps you, them, and the project.
But there's another thing that an excellent leader has to do: to make people daydream about a better way to do things.
It's not just about inspiring, or encouraging, or giving people ownership. Although those are important. It's about issuing a call that someone wants to respond to.
If you can't issue that call, you can't lead. You can only manage.
It’s no surprise that every movie depiction of Spartan soldiers has them screaming battlecries until they have hernias. That’s not just a cinematic trope. If the Spartans didn’t behave this way, they’d never have risen to military prominence and we’d have never heard of them. To the Spartans, being a soldier wasn’t just an occupation. It was a journey towards being a hero — a cause worth suffering and dying for. Something that young men and boys daydreamed about, until they finally had the privilege of dying in battle, under great leaders.
Modern people no longer see any such glory in death — we just see it as death, which is inconvenient. Most of us no longer daydream about being soldiers, because we really don’t care about that anymore. We’re too rational to see glory in it.
And we don't have any leaders who could take us there anyway. We haven’t had a Winston Churchill since Winston Churchill.
Invention
My boss and the president of Spectra Markets, Brent Donnelly, is a pretty accomplished Excel jockey in his own right. Most of what I've learned, I've learned from him. But I have also had to roam around the desert of Excel project-building myself, and pray to Google, for answers to some of my questions. For answers to how to make Excel do a thing, so we could get the information we needed for our clients.
Or even for a definition for my problem. Often when you can’t solve a problem, it’s because you have defined it wrong. You have defined it in a way that there isn’t a solution for.
For instance, the problem with designing a bicycle with square wheels isn’t that you can’t get the tire right. The problem is “why the hell am I not making the wheels round.”
Good thinking is not just about knowledge, the same way good work is not just about hours or sweat. 90% of problem solving is asking the right questions.
There have been times when Brent has told me to look into a hypothesis in the foreign exchange market or the stock market, but then told me "but I really don't know how you'll do this." Usually he knows how we’ll approach a problem, mechanically or mathematically. But sometimes he doesn’t. That’s why we need each other — one of us can think of a better wheel.
If someone tells you to do something, but doesn't know how, you might think "great, now I have to figure out how to do this damn thing, and then put in the work to actually do it."
But in retrospect, these are always the projects I have the most fun with. Because they allow me to think about the problem. The solution is always more rewarding because it's something I have to invent.
Obviously I didn't invent Excel formulas. But if you don't know how to do a thing and then you create a way to do the thing by combining simpler tools, that's the same as inventing it. Right? And that makes you a smarter and more resourceful person.
Beauty
Another part of what makes the work so fun for me is that I give myself the task to make it beautiful. That’s the same task Steve Jobs gave the designers of the Mac computer. If he hadn’t done that, people under 20 probably never would have heard of Apple. Beauty was the thing that Apple did right.
And beautiful doesn't just mean physically attractive or easy on the eyes. It means someone's approach to something was beautiful. It means thoughtful and intuitive. It means intent and craftsmanship. In that sense, the original iPod was beautiful. You knew all of its functions just by looking at it. It just worked.
That’s the same way I feel about my Excel projects. They’re an absolute joy to work in, because they’re beautiful and intuitive. Because I make them that way. Because building something beautiful is in and of itself worth doing. And the bonus is that they're incredibly useful, and allow us to give our readers and clients what they want and need: insights that are pleasant to read and look at.
Magic
There’s an old Buddhist principle that says, when you’re washing the dishes, wash the dishes. I’m paraphrasing.
You’re focusing on the task at hand, because the task at hand is in and of itself a worthwhile and beautiful thing. You’re not worried about next week, you’re not worried about comparing yourself to someone else. And you’re certainly not worried about getting paid.
There is only one dimension to your work: you either do it correctly, or you don't do it correctly.
But there’s an additional dimension to creative work. People assign a different criterion to the job of a creator — a person whose job is about art and experience.
As a creator, you can either be honest or dishonest. You can either do it for love, or you can do it for money. People equate doing it for money with being dishonest. Which is a valid point. If you're no longer making art out of love and curiosity, you're simply doing it as an output job. You're flipping burgers.
People get existentially offended by that, because that's not what art is supposed to be. Art is not supposed to be a way to get paid. It's supposed to be a way to clarify life. It's supposed to be a way to make the world a better and richer place.
When someone sells out, it feels like a betrayal of what people want, and in some sense need, to believe in. Magic. That being a creator is more like a heroic act in communing with the gods than it is about putting out a consumer product. That it’s about people, not money.
This is also the reason why programmers who simply "program as a job" are often terrible, low-productivity messes who spend more time fixing and creating bugs than on creating anything that actually solves problems. Because they get paid by the hour, and when you pay someone by the hour you remove their incentive to do anything creative. When you pay someone by the hour, you make them fall out of love with the work.
The best programmers can be hired for money, sure, but they don't care about your incentive structures. They code because they love to. The money is simply a side effect of doing what they already wanted to do.
And people can tell. Because the product, in the end, always speaks for itself and for everyone who built it. If no one ever daydreamed about it, the customer will know.
Drink some water.
JDR
“If you need to close your customer, you’ve done something wrong.” - Meir Ezra
Did not know you are Brent's prodigy. I have been following him, on epsilon theory and substakc, for some time.
I've been thinking about similar things and the funny thing is that this line of thought started when I got triggered by something I read in one of Brent's books: 'Trading is not who you are. It's what you do.' I disagree with this statement. I think trading is one of those things which you either are, at heart, or you are not. But it got me thinking about how people end up doing the things they do as their professions. What qualities drive them there? For instance, I am convinced that had Michael Jordan played any other sport since childhood, he would still have been great at it because of all the stories I've come across about his competitive nature. Somehow he simply loved basketball more than any other sport, so he became arguably the greatest basketball player ever. My thinking is that he was a great athlete first and a great basketball player second. And it's the same way I feel about traders. I feel like great traders are risk takers at heart, in the same way great athletes are competitive people at heart. Then they become great at a particular form of risk-taking from poker to sports betting to trading. I think that such people are incapable of turning it off, which is why I disagree with the above statement. At the same time, I agree with the sentiment of organizing one's trading like a 9-5. I heard a story somewhere on youtube about how Eminem clocks out of the studio at 5 like it is a job and he is arguably one of the best rappers alive. But I think it is similar to how artists try to come back to a piece of art with fresh eyes. So I think anyone who is a great anything cannot have much of a life outside their profession or trade, they can only have stuff they do when they are off the court. The profession/trade is who they are.