How I Optimize
My personal mission is to spend my time working on interesting projects alongside people who I like and respect. How did I get there?
Luck found me
I’ve been successful and I’ve been lucky. The two are inseparable. Out of the wreckage of the 2007-2009 recession I helped build a business. The timing worked in our favor. Some incredibly talented people joined our team. We made many good decisions and plenty of bad ones too. We put in extraordinary effort and worked hard for years.
A public company bought the business in 2015. That was fortunate. All of a sudden I became known as a “successful entrepreneur who had an exit.” I stayed on for a few years, rolling up my sleeves at first and later spending most of my time coaching others on the team. Over time the industry felt mature. I was learning less and less.
Eventually, I decided it was time to go. It was time to search for a new adventure.
Doubling down on success
I set out in search of more success. I would find a new business. Of course, this time I would apply the many things I’d learned during my career. I would be more deliberate about culture, business model, capital, recruiting, budgeting and more.
I also decided not to start from scratch – to avoid a startup. The journey to product-market fit is long and treacherous, and the failure rate is high. Most importantly, there wasn’t anything I was so passionate about that I just had to build it.
Better, I thought, would be to find a business that’s already serving customers and generating revenue. I would buy some or all of the business, stepping in to lead and coach the team towards growth and success.
I had to create constraints for my search: financial constraints, geographic constraints, industry constraints, and more.
I looked at over 100 businesses for sale in the first quarter of 2019. I ruled out most of them pretty quickly. I considered a handful of them in more detail. I made zero offers. Something was missing.
What was I missing?
Almost all the businesses I looked at had a founder who was trying to exit (turn their investment into cash and step away). That founder had years, often decades, of expertise with their product/service/customers. That expertise was what had driven them to build their business and it was about to walk out the door.
I wasn’t going to be able to replace that. I didn’t want to try. I wanted to get into a business where the founder was excited to venture deeper in rather than get out.
I wanted to find a partnership where we could complement one another. I would build systems and technology to make operations and administration into sources of strength, and the founder would recapture their time to focus once again on product/service/customers.
This opportunity would be hard to find. The founders I’m envisioning have not hired a broker or banker to sell their business. Instead, they’re heads-down operating like I once was. My process relied on my network. I asked everyone I talked to for introductions to founders and began to have more and more conversations.
It was working. I met with dozens of entrepreneurs, some of whom I knew from years past. We had great conversations about our businesses, past and present. We shared experiences and learned from one another. In a few cases, we worked together on short-term projects, testing if something deeper might fit.
Did I choose it or was it chosen for me?
By the end of the summer, a nagging thought kept entering my mind. The path I was walking was tried and true. From the looks of it, many were walking a similar path.
We were searching for success. That was implicitly tied to money. Success in business is rewarded with money. So doesn’t it stand to reason that more money means more success?
In a moment of clarity, I recognized something. I absolutely enjoy success. When I’m succeeding at something hard I feel like I’m on top of the world. I’m happy! But, if I had twice the money would I be twice as happy?
I realized my entire process since I left my prior business was built on an assumption. The assumption is that the following is true:
more money = more success = more happiness
And once I realized that, I didn’t buy it anymore.
more money <> more success <> more happiness
I was optimizing for economics, and I hadn’t even considered why. It felt like the world chose that as a default and I’d just accepted it. I decided to be more considerate about what I wanted to optimize for. What was my real goal?
I decided on happiness.
Happiness when? Experiencing self vs Remembering self
Daniel Kahneman (along with Amos Tvserky) pioneered research about unconscious human biases that became the field of behavioral economics. They noticed that humans behaved in irrational ways, and started piecing together the many ways that we behaved in predictably irrational ways.
Kahneman wrote about The Two Selves. That is, the experiencing self and the remembering self. It turns out that they’re different. See appendix for more details.
This seemed relevant to my new quest for happiness. Did I want to optimize for happiness for my experiencing self, or for my remembering self?
Checking both boxes
With all the hubris of a 30-something year old, I decided to try and optimize for both. I also decided to take a liberty with Kahneman’s definition. The experiencing self is actually approximately 3-second intervals, but for my own convenience I’ve zoomed that out to a day.
So, my goal became optimizing for happiness while neglecting neither my experience of it nor my memory of it. I started thinking about how I might be able to accomplish this.
One of the first things I realized was that what I was working on mattered greatly. Before you judge that I’m another high-minded millennial in search of purpose or value for society, that’s not what I mean. It’s actually much more selfish. I just realized that whatever I worked on must be interesting to me. This spans a wide range (duh, for anyone who reads my newsletter), and is ever-shifting.
The other aspect that I know matters to me is who I’m working with. It’s important that I enjoy the company, that we can have fun together, and that we can speak the same ‘language’. We must like one another. It’s also important to me that whatever their strengths are, I have to have great professional respect for them in those areas so that I’m not continually second-guessing them.
My personal mission
So now I’m once again clear-minded in my pursuit. I know what I’m looking for and it’s not a particular industry or valuation or business model. I’m looking to spend my time in a way that gets me ever-closer to my goal of happiness.
My personal mission is to spend my time working on interesting projects alongside people who I like and respect.
I believe that if I do that as much as possible, I will have a great shot at happiness for both my experiencing self and my remembering self.
I also believe that if I’m successful at this, economic rewards will follow. It might not be the absolute most money I can make, but it’ll be plenty to support my family and our lifestyle.
If you’re working on an interesting project, let me know :).
Detail on Remembering vs Experiencing Self
Kahneman showed the distinction with an experiment. He would bring subjects into a room and put them through two conditions (in random order).
1. Dunk your hand into a bucket of ice water for 60 seconds, then pull your hand out.
2. Dunk your hand into a bucket of ice water for 60 seconds, then leave it in the water for another 30 seconds while the temperature is raised by one degree Celcius, then pull your hand out.
If you ever put your hand in ice water, you’ll immediately recognize that it’s painful. Objectively, condition two is most painful. It has all of the same pain as condition one, and then some.
The researchers asked each subject which condition they’d like to repeat. That’s where things became interesting. Subjects overwhelmingly chose condition two, the more painful choice. Why?
The peak-end rule.The peak–end rule is a psychological heuristic in which people judge an experience largely based on how they felt at its peak (i.e., its most intense point) and at its end, rather than based on the total sum or average of every moment of the experience.
The end of condition two was a slight relief of the pain. During the last 30 seconds, the temperature of the ice water rose a small bit. That was enough to bias their memory of the experience, and that was enough to make them choose to repeat the more painful one.
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This is really great food for thought as I wrap up the year and prepare for next year. Thank you!