By: Eric Markowitz
@EricMarkowitz
In 1941, the Swiss engineer George de Mestral set out for a walk with his dog in the Jura mountains. On his return home, he noticed dozens of little burrs had attached themselves to his wool coat. The engineer was intrigued. He looked under a microscope and observed how the tiny hooks of the plant would affix to the small loops of his pant’s fabric.
An idea clicked. Over the ensuing years, de Mestral worked on a synthetic dry adhesive that he struggled to commercialize. He combined “velour”—the French word for velvet—with “crochet” material, the French word for hook.
Finally, a decade later, his idea emerged into the world: In 1952, Velcro was born.
Something I have been considering lately is the nature of good ideas. Where do insights come from? How do you create an environment for creativity to flourish? Is there a repeatable process to stimulate them?
Idea generation, in the investment business, has always been something of a dark art. Some managers prefer stringent quantitative screens to generate ideas. Others keep a narrow band of expertise and choose only to invest in particular niches. Then there are the generalists, who simply hunt in open territory for the best ideas. Each specialization requires specific frameworks to be successful, but the point is this: idea generation has always been—and will always be—part art, and part science.
There is no formula for guaranteeing the generation of “good” ideas. But I do believe there is at least one framework that can unleash a consistent flow of creativity.
And that framework boils down to one simple idea.
Creative ideas flourish when there is permission to wander
Recently, Jeff Bezos sat down with the podcaster Lex Fridman. Lex asks: “If you were to study your own brain, introspect, how do you think? What’s your thinking process like?”
Bezos considers the question and responds:
“I honestly don’t know how it works. If I did, I would try to explain it. I know it involves lots of wandering, so when I sit down to work on a problem, I know I don’t know where I’m going… real invention, real lateral thinking requires wandering. And you have to give yourself permission to wander.”
There are a couple of ways to interpret Bezos’ answer.
The first is to think about wandering in the figurative sense: To be cross-disciplinary, and to meander among fields. This insight is important because some of the world’s best ideas were produced by individuals who pursued non-traditional, non-linear paths (and whose insights could be profoundly heretical.)
In 1455, Johannes Gutenberg introduced the mechanized printing press. The invention was arguably the “best idea” of the last 1,000 years, and paved the road to the Renaissance and a revolution of human knowledge. So how did Gutenberg come up with this idea? It may be tempting to believe Gutenberg’s invention was the result of his deep expertise of printing techniques. But the truth is far more complex.
In reality, Gutenberg was already in his mid-40s and working as a craftsman who toiled as a goldsmith, metalworker, and gem cutter before he ever began tinkering with a printing press concept. His only other entrepreneurial endeavor—a failed attempt to produce metal frames for mirrors—soon went bankrupt. “The little that is known about Gutenberg,” reads one biography, “often comes from the many court cases in which he clashed with his business partners.”
Despite his series failures (or perhaps motivated by them) Gutenberg began experimenting with different use cases for a range of alloys, which drew on his background as a metalworker. It was this cross-pollination of experiences—as well as a deep urgency to settle his debts—that led Gutenberg to develop a movable metal type, ideal for printing.
The story is instructive because it makes clear that good ideas require expertise, but the best ideas require a multidisciplinary understanding of the world. In other words, great ideas require wandering. In fact, the irony of expertise is that deep knowledge on a singular subject can be self-limiting. This is the basis of the Dunning-Kruger Effect: “The more you learn in a specific skill, the more you realize you don’t know.”
Of course, if you have a broken toilet, I’m not suggesting you seek out a philosophy professor: some jobs do indeed require expertise. But investing, in particular, is the study and application of how the world is evolving. If you become too fixated on a singular worldview—or become too insular in your thinking—then you are destined to fail. Put another way, I’ve never met a successful investor who simply reads earnings calls, reads the Wall Street Journal, and analyzes financial documents. The best investors I know are deeply voracious readers who “wander” in all sorts of fields—from art to science to engineering.
Not surprisingly, perhaps Charlie Munger said it best: “If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.”
Ambulation for ideation
There is a second interpretation of “wandering” to stimulate creativity, and one that is far more literal: Walking.
Countless philosophers have effused about the mental benefits of walking, ranging from the ancient Stoics (“We should take wandering outdoor walks, so that the mind might be nourished and refreshed by the open air and deep breathing.” – Seneca) to more modern European philosophers (“All truly great thoughts are conceived by walking.” Nietszche) to the techno-libertarian walking ideology of Steve Jobs.
Perhaps my personal favorite quote on the subject comes from Thoreau, who once said: “Every walk is a sort of crusade.” (Thoreau himself was obsessed with walking, and even wrote a book on the subject.)
The idea-enhancing benefits of walking are not entirely understood from a neurological perspective, but one Stanford study found that walking can boost creative thinking and idea generation by an average of 60 percent. I have personally found that going for a simple walk around my neighborhood often leads to better ideas and the ability to see a problem in a new light. After all, the word “idea” literally comes from the ancient Greek word idein, which means “to see.”
We are all, in a sense, striving to have our own “velcro” moments. And while there is no formula to generate great ideas, there are habits to form to enhance our ability to “think laterally.” If you’re stuck, go for a walk. Or read a book outside of your field. Spend time wandering, both figuratively and literally.
You may be surprised with what you find.
Disclosures:
This has been prepared for information purposes only. This information is confidential and for the use of the intended recipients only. It may not be reproduced, redistributed, or copied in whole or in part for any purpose without the prior written consent of Nightview Capital.
The opinions expressed herein are those of Arne Alsin and Nightview Capital and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward looking statements cannot be guaranteed. This is not an offer to sell, or a solicitation of an offer to purchase any fund managed by Nightview Capital. This is not a recommendation to buy, sell, or hold any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will be profitable, or that the investment recommendations or decisions Nightview Capital makes in the future will be profitable or equal the performance of the securities discussed herein. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Nightview Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Recommendations made in the last 12 months are available upon request.
Nightview Capital Management, LLC (Nightview Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Nightview Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request. WRC-20-09
Articles
How to Generate Good Ideas
Subscribe to our weekly Insights.
All things technology, innovation, and long-term investing.
By: Eric Markowitz
@EricMarkowitz
In 1941, the Swiss engineer George de Mestral set out for a walk with his dog in the Jura mountains. On his return home, he noticed dozens of little burrs had attached themselves to his wool coat. The engineer was intrigued. He looked under a microscope and observed how the tiny hooks of the plant would affix to the small loops of his pant’s fabric.
An idea clicked. Over the ensuing years, de Mestral worked on a synthetic dry adhesive that he struggled to commercialize. He combined “velour”—the French word for velvet—with “crochet” material, the French word for hook.
Finally, a decade later, his idea emerged into the world: In 1952, Velcro was born.
Something I have been considering lately is the nature of good ideas. Where do insights come from? How do you create an environment for creativity to flourish? Is there a repeatable process to stimulate them?
Idea generation, in the investment business, has always been something of a dark art. Some managers prefer stringent quantitative screens to generate ideas. Others keep a narrow band of expertise and choose only to invest in particular niches. Then there are the generalists, who simply hunt in open territory for the best ideas. Each specialization requires specific frameworks to be successful, but the point is this: idea generation has always been—and will always be—part art, and part science.
There is no formula for guaranteeing the generation of “good” ideas. But I do believe there is at least one framework that can unleash a consistent flow of creativity.
And that framework boils down to one simple idea.
Creative ideas flourish when there is permission to wander
Recently, Jeff Bezos sat down with the podcaster Lex Fridman. Lex asks: “If you were to study your own brain, introspect, how do you think? What’s your thinking process like?”
Bezos considers the question and responds:
“I honestly don’t know how it works. If I did, I would try to explain it. I know it involves lots of wandering, so when I sit down to work on a problem, I know I don’t know where I’m going… real invention, real lateral thinking requires wandering. And you have to give yourself permission to wander.”
There are a couple of ways to interpret Bezos’ answer.
The first is to think about wandering in the figurative sense: To be cross-disciplinary, and to meander among fields. This insight is important because some of the world’s best ideas were produced by individuals who pursued non-traditional, non-linear paths (and whose insights could be profoundly heretical.)
In 1455, Johannes Gutenberg introduced the mechanized printing press. The invention was arguably the “best idea” of the last 1,000 years, and paved the road to the Renaissance and a revolution of human knowledge. So how did Gutenberg come up with this idea? It may be tempting to believe Gutenberg’s invention was the result of his deep expertise of printing techniques. But the truth is far more complex.
In reality, Gutenberg was already in his mid-40s and working as a craftsman who toiled as a goldsmith, metalworker, and gem cutter before he ever began tinkering with a printing press concept. His only other entrepreneurial endeavor—a failed attempt to produce metal frames for mirrors—soon went bankrupt. “The little that is known about Gutenberg,” reads one biography, “often comes from the many court cases in which he clashed with his business partners.”
Despite his series failures (or perhaps motivated by them) Gutenberg began experimenting with different use cases for a range of alloys, which drew on his background as a metalworker. It was this cross-pollination of experiences—as well as a deep urgency to settle his debts—that led Gutenberg to develop a movable metal type, ideal for printing.
The story is instructive because it makes clear that good ideas require expertise, but the best ideas require a multidisciplinary understanding of the world. In other words, great ideas require wandering. In fact, the irony of expertise is that deep knowledge on a singular subject can be self-limiting. This is the basis of the Dunning-Kruger Effect: “The more you learn in a specific skill, the more you realize you don’t know.”
Of course, if you have a broken toilet, I’m not suggesting you seek out a philosophy professor: some jobs do indeed require expertise. But investing, in particular, is the study and application of how the world is evolving. If you become too fixated on a singular worldview—or become too insular in your thinking—then you are destined to fail. Put another way, I’ve never met a successful investor who simply reads earnings calls, reads the Wall Street Journal, and analyzes financial documents. The best investors I know are deeply voracious readers who “wander” in all sorts of fields—from art to science to engineering.
Not surprisingly, perhaps Charlie Munger said it best: “If you skillfully follow the multidisciplinary path, you will never wish to come back. It would be like cutting off your hands.”
Ambulation for ideation
There is a second interpretation of “wandering” to stimulate creativity, and one that is far more literal: Walking.
Countless philosophers have effused about the mental benefits of walking, ranging from the ancient Stoics (“We should take wandering outdoor walks, so that the mind might be nourished and refreshed by the open air and deep breathing.” – Seneca) to more modern European philosophers (“All truly great thoughts are conceived by walking.” Nietszche) to the techno-libertarian walking ideology of Steve Jobs.
Perhaps my personal favorite quote on the subject comes from Thoreau, who once said: “Every walk is a sort of crusade.” (Thoreau himself was obsessed with walking, and even wrote a book on the subject.)
The idea-enhancing benefits of walking are not entirely understood from a neurological perspective, but one Stanford study found that walking can boost creative thinking and idea generation by an average of 60 percent. I have personally found that going for a simple walk around my neighborhood often leads to better ideas and the ability to see a problem in a new light. After all, the word “idea” literally comes from the ancient Greek word idein, which means “to see.”
We are all, in a sense, striving to have our own “velcro” moments. And while there is no formula to generate great ideas, there are habits to form to enhance our ability to “think laterally.” If you’re stuck, go for a walk. Or read a book outside of your field. Spend time wandering, both figuratively and literally.
You may be surprised with what you find.
Disclosures:
This has been prepared for information purposes only. This information is confidential and for the use of the intended recipients only. It may not be reproduced, redistributed, or copied in whole or in part for any purpose without the prior written consent of Nightview Capital.
The opinions expressed herein are those of Arne Alsin and Nightview Capital and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward looking statements cannot be guaranteed. This is not an offer to sell, or a solicitation of an offer to purchase any fund managed by Nightview Capital. This is not a recommendation to buy, sell, or hold any particular security. There is no assurance that any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. It should not be assumed that any of the securities transactions, holdings or sectors discussed were or will be profitable, or that the investment recommendations or decisions Nightview Capital makes in the future will be profitable or equal the performance of the securities discussed herein. There is no assurance that any securities, sectors or industries discussed herein will be included in or excluded from an account’s portfolio. Nightview Capital reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Recommendations made in the last 12 months are available upon request.
Nightview Capital Management, LLC (Nightview Capital) is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about Nightview Capital including our investment strategies and objectives can be found in our ADV Part 2, which is available upon request. WRC-20-09
What Investigative Journalism Taught Me About Investing
Fact-checking is essential. Detective work is table stakes. Skepticism ensures survival. My favorite journalism credo is this: “If your mother says she loves you, check it out.”
How AI could fuel hyperscaler profits for a decade (or more)
A combination of open software tools, a renaissance in chip design, and overall data center optimization will lower the cost structure of hyperscalers, improving profitability over time.