By Jesse Koltes,

Any year that passes in which you don’t destroy one of your best loved ideas is a wasted year.


— Charlie Munger

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I ordered 55 books for myself in 2016, and downloaded 18 audiobooks. I didn’t read every word in every book—not by a long shot. I read some books three times.

I approach a new book like a new dish at a restaurant. I’m curious and cautious at first, but if its delicious, I consume the whole thing with gusto. If the dish is bad after a few bites, it’s probably not going to get better, and I allow myself skip around and look for good parts. I don’t understand the masochists who insist on finishing full plates of bad food.

In the spirit of Charlie’s quote, I thought I’d review the most important ideas I picked up from my reading and thinking this year. To generate the list, I asked myself which ideas spent the most time at the front of my mind, hoping that time roughly correlates with importance.

Some ideas are new, some are old, but hopefully there’s more here than the normal value investing fare. Enjoy!


2016 marked the first full calendar year that I worked for myself. I am my own boss, and my own employee (I am happy to report labor relations are very good).

Left to my own devices, I made inversion my project manager. For any given project, I ask myself what the stupidest way to go about something would be, and then proceed to chart the opposite path. I am embarrassed to admit how often I find myself slandering something I certainly would have done but for having taken the time to slander it first. It’s a wonderful mental trick.

The most common outcome of project management by inversion is that I assign myself a lot of reading. What could be dumber than failing to read the five best books on something of great importance to you? This usually only takes a week or two tops if I’m efficient, and I always end up enormously ahead of where I started. All it takes is a library card, some sitzfleisch, and enough chutzpah to believe you can learn.

Invert, always invert – Carl Jacobi

I’m amazed how many people devote a career to something without having devoted a week to studying their craft. I also wonder how many expensive consulting projects could be avoided if a company assigned a smart person  to read five books and then summarize them first. Probably a lot.

Sales versus Marketing

I hated sales for most of my professional life. Even as a kid, I had the impression that sales were undignified, and somehow beneath me. I don’t like saying that, but I definitely believed it.

I didn’t become fully conscious of my own bias until I read Jim Koch’s book Quench Your Own Thirst. Koch is a recovering management consultant turned entrepreneur (like me), and reading his story was like looking in a mirror, albeit a far less successful one (Koch founded Samuel Adams).

Before I read Koch’s book, I thought that marketing was the thinking mans way of generating revenue, and that sales were merely a low level function. After all the top business schools don’t teach any courses on sales, but they teach dozens on marketing. Fortunately, Koch set me straight:

“The difference between marketing and sales is the difference between masturbation and sex. One you can do all by yourself in a dark room and fool yourself into thinking you’re accomplishing something. The other requires real human skills and all the fury and muck and mire of real human-to-human contact.” – Jim Koch

Koch destroyed the anti-sales mental roadblock that had been preventing me from studying the sales seriously. That was no easy task. The anti-sales ignorance was very strong within me just a few years ago, and that ignorance, along with a lollapalooza of other compounding errors, is why my first entrepreneurial venture hardly lasted two years before failing.

Racking the Shotgun

When I began my study of sales, I searched for the five best books on the subject. Of the many I’ve read, 80/20 Sales and Marketing is far and away the best.

Perry’s “racking the shotgun” parable is the most powerful idea I have ever read about the act of actually being involved in sales

“In a noisy club in Las Vegas, a professional gambler pulled a sawed-off shotgun out of his jacket, racked it, and looked around to see who recognized the ratcheting sound and turned their heads. He said to his protégé, “John, the people who turned their heads are not marks. Do not play poker with them. Gamble with everybody else.”

The basic wisdom is that sales is an elimination game. If you send one signal to an audience that most people ignore, but qualified leads respond to, you have massively simplified the sales process. I think there is a broader point for all kinds of selection scenarios, including investing: its all about finding the right fishing holes.

Fractal 80/20

 “Most people think they understand 80/20. Not one person in 1,000 people actually does.” – Perry Marshall

A year ago I would have told you I understood 80/20. I even thought I understood it better than most business people and mused that it would be funny to name a pet (or a kid) Vilfredo, after the Italian economist who first identified the unequal relationship between inputs and outputs.

80/20 Sales and Marketing showed me about a dozen ways 80/20 worked that I had not understood. The most important new idea is that 80/20 relationships are fractal. This means that if 80% of the results come from 20% of the work, its also true that 80% of the 80% of results comes from 20% of the 20% of the work, and so on, ad infinitum.

In other words, the most important things are exponentially more important than non-fractal 80/20 would suggest. If 80/20 is fractal, 64% of the results (80%2) comes from 4% (20%2) of the inputs, and 51% of the results (80%3) come from less than 1%  (20%3) of the inputs.

The takeaway is that your best customer, opportunity, investment, etc is probably not two or three times more important than the median, but potentially 50-100 times more important.

Ask versus Guess

 The basic idea here is that some people are from “ask” cultures, and other people are from “guess” cultures (here is a link to the article).

An “ask” person is taught that it is perfectly polite to make nearly any request one may feel like asking, because it is assumed that if someone does not want to comply with the request, they will politely respond “no”. Because asking and answering are both permissible and even encouraged, neither party is offended by any outcome.

A “guess” person or culture is not comfortable asking direct questions. Bold requests are considered rude and forward. Instead of directly asking  for things, the appropriate course is to put out gentle feelers, insinuate your desires, and only ask questions you are relatively certain you will receive positive responses to. If a “guess” person plays it perfectly, they may even

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