I wasted 20 years of my life chasing utopian energy.
Utopian energy is an imagined form of energy that’s abundant, reliable, inexpensive, and also clean, renewable, and life-sustaining. But utopian energy is as much a fantasy as a utopian society. Seeking the fount of perfect energy allows us to pretend there aren’t real-world tradeoffs between, say, banning fossil fuels and helping people in impoverished nations or between using solar and wind power and conserving natural habitats.
For years, I chased utopian energy. I promoted solar, wind, and energy efficiency because I felt like I was protecting the environment. But I was wrong! Feeling like you’re doing the right thing doesn’t mean you are. I just couldn’t admit it. My sense of identity was tied to my false beliefs about energy—myths that blinded me to what really does—and doesn’t—help the planet.
I’ve loved the outdoors since I was a teenager. I led mountaineering expeditions in Alaska, spent months backpacking in the Rockies, and climbed in national parks. My wilderness experiences led to my desire to protect these beautiful areas. I saw that a lot of people who tried to solve environmental issues worked in academia, nonprofits, or government, but they often failed to understand what it actually took to get things done in the real world. I didn’t want to be one of those people. I wanted to make a real difference.
I believe that to fix something, you need to understand it and that hands-on experience is the only way you can gain understanding. So I started building my knowledge and skills from the ground up.
I went to work in construction to build energy-efficient homes, and I started a company that built composting systems for cities and businesses. I became executive director of an organization that championed green building policies and became CEO of a consulting firm that commercialized clean energy technologies and ran energy-efficiency programs. I then founded a software startup to help promote green home upgrades, and I led business development for a company making wireless power technology.
I learned how to see things not just the way environmentalists do, but also the way utilities, governments, builders, engineers, lenders, and manufacturers see them.
But by 2008, I started to see cracks in my beliefs. The Obama administration had earmarked billions of dollars in federal funding to create jobs in the energy sector, and my company won multi-year contracts valued at over $60 million. Creating jobs and making buildings more energy-efficient were worthy goals. But the project was an utter failure. It didn’t get anywhere close to achieving the goals that the government had set. But what was really shocking to me was how the government refused to admit the project had failed. All of its public communications about the project boasted about its effectiveness.
I started to realize that I had accepted as true certain claims about energy and our environment. Now I began to see those claims were false. For example:
I used to think solar and wind power were the best ways to reduce CO2 emissions. But the biggest reduction in CO2 emissionsduring the past 15 years (over 60%) has come from switching from coal to natural gas.
I used to think that the world was transitioning to solar, wind, and batteries. This, too, was false. Trillionsof dollars were spent on wind and solar projects over the last 20 years, yet the world’s dependence on fossil fuels declined only 3 percentage points, from 87% to 84%.
I used to believe nuclear energy was dangerous and nuclear waste was a big problem. In fact, nuclear is the safestand most reliable way to generate low-emission electricity, and it provides the best chance of reducing CO2 emissions.
It’s now clear I was chasing utopian energy. I was using green energy myths as moral camouflage, and I was able to believe those myths as long as I remained ignorant about the real costs and benefits of different energy sources.
I’ve dedicated most of my life to protecting the environment. But I was wrong about the best ways to do it. I thought I was acting morally and protecting the well-being of people and the planet. In fact, I was harming both.
If we’re serious about tackling climate change, protecting the environment, and helping people climb out of energy poverty around the world, we need to stop chasing utopian energy. Instead, it’s time to be honest about all the costs and benefits of every energy source—wind, solar, natural gas, coal, oil, and nuclear.
Here are eight principles that can help us evaluate energy options that will give us the best chance to bring about successful energy reform that protects both people and the planet.
1. Security: Does an energy source enable a country to maintain its autonomy? Controlling access to critical minerals and natural resources to make affordable, reliable energy is a precondition for liberty and self-determination. Relying on energy imports or minerals from other countries puts a nation at risk.
2. Reliability: Can people and businesses reliably access energy when they need it? A reliable energy system provides power 24/7/365.
3. Affordability: Is the energy source easily affordable for households and businesses? The cost of energy affects the cost of everything else. If energy is not affordable, businesses can’t make the products we want, and people will freeze to death in their own homes.
4. Versatility: How many different kinds of machines can the energy source power? We need energy to power machines that mine, drill, pave, fly, cut, pump, filter, transport, compact, excavate, grade, and lift.
5. Scalability:How many people can use the energy source across how many places? Wind, solar, and water resources are often located far away from where people live and work, making it difficult and expensive to transport the energy to where it is needed.
6. Emissions:What are the energy source’s effects on air pollution, GHG emissions, and water quality? Sources of emissions include mining, transportation, and electricity production.
7. Land use:What are the energy source’s effects on wildlife, habitat, farmland, viewsheds, and coastlines? For example, a typical 1,000-megawatt US nuclear power plant needs little more than 1 square mile to operate. Solar farms need 75 times more land to produce the same amount of energy. Wind farms need 360 times more.
8. Lifespan:How long will a source produce energy? Nuclear plants can operate for over 80 years and run for 100 years if they are well-maintained. By contrast, solar panels and wind turbines last only about 20 years.
I’m still on a mission to protect the beautiful landscapes I fell in love with when I was a young man. And I’m still committed to raising worldwide living standards, reducing pollution, and lowering greenhouse gas emissions. But my firsthand experience has exposed the futility of chasing utopian energy sources. I’ve learned the mainstream narrative about what we should do to protect the environment will never accomplish those goals.
Now, my mission includes sharing what I have learned to promote energy sources that can be truly productive and lead to a path of actual, effective change.
Many people believe an untrue story about fossil fuels: that fossil fuels are destroying the planet and that solar, wind, and electric vehicles are the only things that can save it. Investors and banks view energy companies as “sin” peddlers on a par with companies selling alcohol, tobacco, and pornography. They’re convinced fossil fuels are being phased out and perceive energy companies as riskier investments than alternative energy sources. As a result, asset managers are shifting away from traditional energy companies, and major banks are charging them higher rates for capital while aligning their lending portfolios with net-zero emission goals.
I, too, once believed that untrue story. In fact, my belief that fossil fuels are villains and solar and wind are heroes for many years guided my career.
I championed renewable energy for over two decades, first as executive director of a green building trade association, then as CEO of a consulting firm specializing in clean energy, and more recently as founder of a clean-tech startup. I used to believe the worst harm to the environment came from fossil fuels—and from greedy companies exploiting the land, polluting the air, and destroying ecosystems to get them.
I was wrong.
After many years, I finally recognized the crucial role that fossil fuels play in promoting human prosperity and protecting our environment. Fossil fuels are the lifeblood of modern civilization, and their use has improved our quality of life more than anything else in history. Thanks to fossil fuels, we’ve made huge advances in food production, healthcare, housing, sanitation, water quality, transportation, safety, communication, and economic opportunity.
But most people don’t recognize the benefits bestowed by fossil fuels because the opposition has conquered their mental space. As a result, the storytelling dominance of the opposition now limits the kinds of movements energy companies can make. The myths shape public policy and block new infrastructure development, and they provide the lens through which people interpret—or misinterpret—everything energy companies say and do. No matter how much a company lowers emissions or how many ESG strategies it implements, if it doesn’t control the overarching narrative, people will simply see it as a villain trying to look good—like a crooked politician seeking photo ops with children.
Energy companies need to recapture the narrative high ground and re-educate consumers about how much fossil fuels have contributed to human prosperity. If they don’t, U.S. companies are going to shrink and eventually be pushed out of the market by foreign competitors.
Re-educating the public involves more than PR and ESG checklists. It requires reframing the entire story about fossil fuel energy and crafting compelling counter-narratives, as happened when North Face refused to make a branded jacket for a fossil fuel company in 2020.
Industry representatives responded by placing the following billboard near North Face’s headquarters.
In addition, Chris Wright, the CEO of Liberty Oilfield Services, made a video, Thank You, North Face, highlighting the many North Face products that depend on oil and gas.
Wright’s video enabled him to tell a different story about North Face that exposed its move as hollow virtue signaling. The fact is, North Face can’t make its high-performance products without fossil fuels, and the same is true of multiple other products in multiple other industries.
Here’s another example of a fossil fuel exec who is changing the narrative. Toby Rice, the CEO of EQT Corp., America’s largest producer of natural gas, created Unleashing U.S. LNG, a presentation that recasts natural gas as a hero instead of a villain. He argues that displacing coal with natural gas is the fastest way of reducing CO2 emissions. By 2030, his plan would reduce emissions equivalent to:
Electrifying 100% of U.S. passenger vehicles;
Powering every U.S. home with rooftop solar and battery backup packs, and;
Doubling U.S. wind capacity by adding 54,000 industrial-scale windmills.
These two examples illustrate how the industry can challenge the opposition and reframe the narrative around energy to cast fossil fuels as heroes instead of villains.
When it comes to ideological warfare, whoever tells the best story wins. Energy companies need to stop fighting a defensive battle and go on the offensive. Recapture the narrative high ground and craft compelling counter-narratives to highlight the essential contribution of fossil fuels to human well-being. Remind the American public that energy companies play vital roles in improving our world beyond simply reducing CO2 emissions or producing high-performance outdoor products. Fossil fuel companies also help provide energy security, pull people out of poverty, create economic opportunity, improve water quality and sanitation, prevent deforestation, and promote habitat preservation.
When energy companies tell better stories and present a bold vision of a better future, they can free people’s minds from the false beliefs about fossil fuels that threaten our collective prosperity.
Utopian energy fantasies are turning California (CA) into a dystopian nightmare. CA’s energy policies amount to a bold suicide plan worthy of a collective Darwin award.
Traditional Darwin Awards honor people who improve the human gene pool by unintentionally removing themselves from it—like the guy who fatally attempted DIY bungee jumping from a bridge shorter than his bungee cord.
I propose another category of Darwin Awards for entire groups of people (teams, companies, countries…) whose foolish behavior curtails their existence. Examples include Enron, Venezuela, and the former Soviet Union.
Venezuela, for instance, enacted policies that killed its economy. It went from being one of the world’s richest oil economies to being an economic and political wasteland with 77% of its population living in extreme poverty.
CA has adopted a bold energy suicide plan that will earn it a place alongside Venezuela. If CA stays on its current energy trajectory, many businesses will close or move out of state in the next 20 years. People will flee, and the real estate market will crash.
CA residents who can’t leave will face higher taxes, power rationing, and limited access to clean water. Weekly blackouts will likely force households and businesses to pay two electric bills: one to the utility, and another to black-market syndicates that operate diesel-fired generators.
Supporters of CA’s plan complain that it’s unfair to honor CA with a Darwin Award for an imagined future that hasn’t yet (and might not) come to pass. But Californians don’t have to wait 20 years to feel the pain. They’re feeling it now.
CA has the highest poverty rate in America, and rising energy cost is a growing part of the problem. From 2010 to 2020, CA’s electricity rates rose almost seven times faster than the US average. Over 3.3 million CA households have past-due utility bills that together total $1.2 billion.
CA’s decision to shift energy production to solar and wind has made energy prices soar and increased the fragility of its electrical grid. The unreliability of solar and wind power was among the three primary factors causing CA’s blackouts in 2020.
Things are going to get worse. CA leaders decided to prematurely shut down Diablo Canyon–the state’s last remaining nuclear power plant—even though nuclear power is the safest, most powerful, and most reliable way to generate low-emissions electricity.
Diablo Canyon accounts for nearly 10% of CA’s electricity production. Its 2025 shutdown will leave a gaping hole in CA’s baseload power. Policymakers hope to fill the hole with a mix of solar, wind, and batteries. But that hope is unrealistic for five reasons.
Solar and wind are unreliable. The sun doesn’t always shine, and the wind doesn’t always blow.
Batteries cost too much. CA has only 3% of the battery storage it needs to replace 280 gigawatt-hours/day of natural gas during the summer. CA’s policies depend on a technological miracle to produce cheaper batteries.
Using batteries to back up solar farms doubles the number of solar panels required. You need one set of panels to supply power to the grid while the sun is up, and another to charge batteries for when the sun goes down.
CA can’t build transmission lines fast enough to meet its mandate of 100% renewable power by 2045. Current grid capacity needs to almost triple in size, but Californians fiercely oppose constructing power lines, which makes building them practically impossible.
The cost of converting the grid to run on solar, wind, and batteries is $500B to $1T. Households will face a hard choice between paying thousands of dollars a month for electricity or suffering energy poverty.
On top of all that, CA’s electric grid wasn’t designed to charge millions of electric vehicles.
But the state will require nearly 1 million new cars and passenger trucks sold in CA each year to be zero-emission by 2035.
More than 50 CA cities and counties have adopted building codes to restrict natural gas. Banning natural gas and attempting to electrify everything concentrates energy risks on the grid–a grid that wasn’t designed to shoulder the additional load now carried by natural gas during the winter.
CA currently imports about 28% of its electricity from other states. On hot days, the neighboring states will need the energy themselves, so CA will be forced to cut power to homes and businesses.
Expensive energy also means expensive water. Nearly 20% of CA’s electricity use goes to pump and treat water. Farmers in the San Joaquin Valley won’t be able to afford to irrigate their crops. CA will go from being the breadbasket of the world to importing most of its food.
CA’s energy policy is supposed to be a model for the world. It is. It’s a model of what not to do. CA’s energy policies all but guarantee high energy prices, power blackouts, and a crashing economy. These policies are why CA truly deserves a Darwin Award. Every day spent chasing energy fantasies causes unnecessary suffering.
What CA Needs To Do:
Renew licenses for Diablo Canyon nuclear power plant
End subsidies and incentives for solar and wind
Build new efficient natural gas power plants (and hydro and geothermal where possible)
Have you ever searched frantically for your keys only to discover you were holding them in your hand?
The same thing happens in investing: we fail to see opportunities that are right in front of us. Sometimes investors miss lucrative opportunities because they harbor false beliefs about a particular field or sector.
That’s happening right now in the energy sector. Many investors misunderstand the direction of the industry, and their confusion is creating a rare opportunity for others to invest in a large, undervalued market that’s positioned for growth.
Venture capitalists (VCs) love a product that
solves a painful problem
in a huge global market
that is ripe for technological disruption
and has high growth potential and undervalued companies.
The energy sector satisfies all of these conditions.
Energy companies need to solve a painful problem. Energy producers need to lower greenhouse gas emissions while keeping energy affordable. Governments, companies, and financial institutions are committing trillions of dollars to reduce climate risk, and corporations face stricter government regulations and pressure from investors to curb emissions.
In addition, the need for energy continues to rise. Energy is an enabling technology; it empowers people to get the other things they want–in fact, almost every other thing they want. Try going a day without your phone, hot water, lights, refrigerator, or car. Modern civilization grinds to a halt without access to affordable and reliable energy.
Energy is the largest market in the world. Nearly $2 trillion is spent on energy every year[1]—more than enterprise software,[2] fintech,[3] and consumer electronics[4] combined.
The energy sector is ripe for technological disruption. Over 60% of energy is wasted because of inefficiency in the current system.[5] Energy companies are desperate for new technology that drives down emissions and helps find, generate, move, and use energy efficiently, which is the key to making it more affordable.
The energy sector has high growth potential and undervalued companies. Global demand for energy is increasing now, and it will continue to increase in the future. Energy consumption more than doubled between 1971 and 2020,[6] and it’s projected to grow 50% by 2050.[7] Energy fuels all the benefits of modern life: healthcare, education, transportation, communication, and economic growth. Developed countries don’t want to give up those benefits, and developing countries want more of them. In addition, new technologies such as artificial intelligence and robotics require even more energy. As a result, the demand for energy will continue to increase in the future.
Finally, companies in the energy sector are some of the most undervalued. Fear of missing out is currently driving investors toward trending categories like the metaverse, artificial intelligence, and crypto. As a result, sectors like energy tech are undervalued.
Many investors assume solar, wind, and batteries are the most promising ways of achieving low-emission energy and implementing the preferred environmental, social, and governance framework (ESG). ESG is a legitimate concern: we want cleaner air and water, lower greenhouse gas emissions, and increased quality of life for people around the world.
However, solar and wind are not the best ways to implement ESG. They’re unreliable; they raise electricity rates and over-consume minerals and land.[8] In general, solar and wind don’t have the power density to fuel modern life. Even after $2.7 trillion has been invested in solar and wind over the last decade, they still produce only 3% of global energy.[9] So when solar and wind fail (and they will), people will be forced to turn to more cost-effective and reliable sources of power.
Contrary to what many energy investors think, the biggest winner in the energy sector in the next 10 years will be natural gas–especially technologies that enable the efficient production, transport, and use of natural gas.
Natural gas provides the most cost-effective near-term solution for affordable, reliable, low-emission energy. Shifts from coal to natural gas have produced the biggest emissions reductions over the past 15 years. Natural gas produces only 10% of the air pollutants and 50% of the CO2 that coal does.[10] Natural gas also has many uses beyond providing power; fertilizers, computers, medical equipment, steel, plastic, mobile phones, cars, and most consumer products are currently made from natural gas and oil. In fact, even solar and wind require natural gas as a backup because they don’t operate most of the time.
Energy Capital Ventures (ECV) is one of the few VCs that sees the potential of natural gas. Instead of chasing popular trends, ECV correctly sees the path to achieving low-emission energy will come through investments in scaleable energy technology such as advanced leak detection and methane capture, process automation and controls, renewable natural gas, and synthetic microbes that absorb greenhouse emissions.
Energy tech is similar to fintech 15 years ago. Just as fintech took off, energy tech will soon soar just as high. It’s rare to be positioned so well to capitalize on future growth. The keys are in your hand. Don’t miss out!
Europe has an energy crisis. Factories are halting operations in the face of soaring energy prices; families are paying 50% more for heating (or opting to freeze in their homes), and Europe as a whole continues to destabilize its political position by making itself more dependent on Russia for natural gas.
Europe shows what happens when you adopt policies based on false ideas—myths about energy that all but guarantee high prices, power blackouts, and a crashing economy. Here are 6 of them:
MYTH 1: The world is transitioning to solar, wind, and batteries.
Fact: Solar and wind power are unreliable, raise electricity rates, and over-consume minerals and land. Even after investing $2.7 trillion in them over the last decade, solar and wind still produce 3% of global energy.
MYTH 2: Solar and wind power are the best ways to lower greenhouse gas emissions.
Fact: The biggest emissions reductions over the last 15 years have been due to shifts from coal to natural gas. Natural gas produces only 10% of the air pollutants and 50% of the CO2 that coal does.
Proponents of solar and wind power can talk about the potential of these technologies as much as they want, but the reality is—per Myth 1—the world is far, far away from being able to manufacture, deploy, and maintain this tech efficiently.
MYTH 3: Solar farms reduce household utility bills.
Fact: Households pay more for electricity where governments mandate solar power: households in the United States (US) pay 11% more in the 29 states with solar mandates; households in California pay 80% more than the US avg; and households in Germany saw their energy bills increase by 34% between 2010-2020 because Germany spent hundreds of billions of euros on building massive wind and solar farms.
MYTH 4: Nuclear power is dangerous.
Fact: Nuclear is the safest, most powerful and reliable way to generate low-emission electricity. Only about 200 people have died as a result of radiation from nuclear accidents in over 60 years. This number includes the accidents at Chernobyl, Three Mile Island, and Fukushima.
Even if you count the cancer diagnoses among people exposed to radiation, the harm from nuclear plant accidents remains minuscule in contrast with the millions who die every year from the effects of coal pollution.
MYTH 5: Nuclear waste is a big problem.
Fact: Nuclear is the only energy source that prevents waste from going into the environment. All the nuclear fuel ever generated in the US is safely contained and can fit on a single football field stacked less than 10 yards high.
In fact, used nuclear fuel is not strictly waste because some advanced reactor designs in development could run on used nuclear fuel in the future. More than 90% of its potential energy still remains in the fuel, even after five years of operating in a reactor.
MYTH 6: Electric vehicles (EV) reduce CO2 emissions.
Fact: EVs don’t eliminate emissions; they just shift emissions from the tailpipe to the power plant. If the power source is dirty, so is the EV. More than 50% of new EV sales are expected in China where most power plants are fueled by coal, the dirtiest power source.
Energy Myths Are a Global Threat
Myths like these continue driving bad investments and bad policies. They hurt the poorest among us by weaponizing good intentions.
We all want to feel like we’re making the world a better place. But feeling like we’re doing the right thing doesn’t mean we are. I championed energy efficiency, solar, and wind power for over two decades—first as executive director of a green building non-profit, then as CEO of a consulting firm specializing in clean energy, and more recently as founder of a cleantech startup.
All of this made me feel like I was fighting the good fight to promote people’s wellbeing and protect the environment. But I was wrong. My agenda was harming both. I just couldn’t admit it. My sense of identity was tied to false beliefs about energy, and my ignorance and ideology blinded me to what actually does help the planet.
I see other people making the same mistakes today. Europe isn’t the only place basing policies on these energy myths. California, New York, and New England are doing it too. If the US wants to avoid what’s happening in Europe, we need to see Europe’s example for what it is: a canary in a coal mine. We need to break free of the pernicious influence of these myths. We need to stop taxing the poor with the high cost of false moral comfort, and build an energy system that maximizes human flourishing and minimizes environmental harm.
Here’s how to start:
End subsidies and incentives for solar and wind.
Retire the dirtiest coal power plants.
Build new efficient natural gas power plants (and hydro and geothermal where possible).
Reform regulations and build nuclear power plants.
Invest in energy research and development.
If Europe takes these steps, it may avoid a new dark age.
Liberty is a tech company disguised as an oilfield services firm. Technology innovations are helping the company increase production, lower costs, and enhance environmental, social, and governance (ESG) performance.
Liberty annual earnings are projected to grow nearly 80% over the next 3 years. Its stock price (US~$10) on 12/9/21 is ~15% undervalued.
Liberty has provided a 24% average cash return on capital invested over 9 years.
Liberty Oilfield Services (NYSE: LBRT) is undervalued and positioned for growth. Liberty offers fracking services to energy companies across North America. A method of extracting oil and natural gas, fracking involves drilling into the ground and applying fluids under high pressure to release the oil and gas contained in underground rock formations. But don’t be fooled by simplistic job descriptions. Liberty is actually a tech company disguised as an oilfield services firm.
Liberty’s outspoken CEO, Chris Wright, unapologetically highlights the critical role oil and gas play in pulling people out of poverty, reducing environmental harm, and fueling the benefits of modern life.
Wright first grabbed my attention when he made this video highlighting the hypocrisy of North Face, which makes high-quality outdoor recreation gear. North Face refused to make a co-branded jacket with one of Liberty’s competitors, an oil and gas company. Chris exposed this silly act of virtue-signaling by buying ad space on billboards near North Face’s headquarters to point out that their products are made with the help of the oil and gas industry.
Chris does not come from a traditional industry background. He’s a self-described “energy nerd” who studied mechanical and electrical engineering at MIT and UC Berkeley and worked on nuclear fusion. His first company, Pinnacle Technologies, helped launch commercial shale gas production in the late 1990s. Chris started Liberty in 2011, and in the past ten years, the company has grown to a $1.7 billion market capitalization and ~2,500 employees. Liberty, which had its IPO in 2017, is headquartered in Denver, Colorado.
Liberty’s technology advantage
Liberty’s technology portfolio includes ~500 patents and strategic acquisitions to raise productivity and lower costs, and it has helped customers reduce the cost to produce a barrel of oil by more than 65% over the last eight years, according to Liberty’s 2020 annual report. The company’s quest for increasing productivity delivers lower emissions and boosts environmental, social, and governance (ESG) performance.
Liberty’s data-rich ESG report is not the typical “we are less bad” report full of greenwashing, buzzwords, and empty promises. It looks instead at a bigger picture of our world and describes the positive impact Liberty and the industry make on energy access, healthcare, education, transportation, communication, and economic growth.
Here’s a sample of some of the technology innovations helping Liberty increase production, lower costs, and enhance ESG performance.
Liberty introduced “FracSense,” a diagnostic service to help customers acquire more accurate well data to optimize hydraulic fracture completions and well spacing.
Liberty set a record for a 24-hour period of continuous pumping using real-time data tracking, predictive analytics, and supply chain and logistics integration.
Liberty developed “Quiet Fleet” technology to reduce noise emissions during hydraulic fracturing operations by a factor of 3 compared to a conventional fracturing fleet.
Liberty acquired PropX, a provider of delivery equipment, logistics, and software solutions to drive efficiency and reduce noise and emissions.
Liberty acquired Schlumberger’s onshore hydraulic fracturing business in the United States and Canada including proprietary controls, novel software, and fleet automation.
Liberty is in the process of launching electric frac pumps with 40% more horsepower and 25% lower emissions than conventional technologies.
Outlook Liberty’s annual earnings are projected to grow nearly 80% over the next three years. And its current stock price (US~$10) is currently ~15% undervalued (on 12/9/21), according to stock market analysts.
Natural gas will be the biggest winner in the energy sector over the next decade. The demand for energy continues to outpace supply, as evidenced by the current energy crisis in Europe and China. Underinvestment in global oil and natural gas production has led to higher energy prices and shortages. Increasing demand, policies aimed at reducing climate risk, and current market incentives will likely make the supply shortage last through this decade because it’s clear we’re going to need a lot more energy than we’re generating now. Energy runs on a predictable cycle like other commodities, and we are at the beginning of a new cycle.
The world is moving to natural gas because it’s reliable, affordable, and emits fewer greenhouse gases than the alternatives. Contrary to what many investors think, the biggest greenhouse gas reductions over the past 15 years are not related to increased solar and wind power but to shifts away from coal and toward natural gas. (I explain more about this in another article.) Natural gas produces about half the carbon dioxide and just one-tenth of the air pollutants that coal does.
All of these conditions mean Liberty is well positioned for growth.
Risk analysis
ESG mandates and investor pressure are the greatest threats to the oil and natural gas industry. Many investors and politicians don’t understand the energy system and are confused by the myriad messages they’re hearing about renewable energy and climate risk. Concerns about climate risk have led to corporate and government incentives that channel money away from oil and gas production. These incentives may impact the cost of capital, which will put American oil and gas companies at a disadvantage. S&P Global Ratings estimates funding costs were about 75 basis points higher on average for the most carbon-intensive borrowers from the North American energy sector.
In addition, the U.S. oil and gas industry will likely face more regulation. In fact, the Environmental Protection Agency (EPA) announced new rules in November 2021 that strengthen regulations on new oil and gas wells. If a carbon tax is imposed in the future, it will negatively impact the value of U.S. oil and gas companies. President Biden’s orders to halt oil and natural gas leases on public lands and waters can also hurt U.S. industry. These efforts to curb planet-warming carbon emissions are counterproductive and may lead the U.S. to import energy from countries with less strict environmental regulations—something that will increase greenhouse gas emissions.
Although the regulatory efforts will be counterproductive, they can still negatively affect the U.S. oil and gas industry. In addition, geopolitics can have a huge impact on the supply and price of energy. Economic sanctions on energy-rich countries like Iran, Russia, and Venezuela can quickly move the global energy market up or down.
Liberty is not immune to macroeconomic forces like higher transportation costs, driver scarcity, and labor shortages caused by Covid-19.West Texas Intermediate (WTI) oil prices dropped as low as $18 per barrel in the spring of 2020, and supply chain disruptions, materials shortages, labor scarcity, and rising costs all eat away at margins.
Despite these risks to oil and gas companies, the truth is that solar and wind provide less than 3% of global energy after two decades and $2 trillion invested, including heavy subsidies. The world currently runs on 84% hydrocarbons. People are going to continue to need hydrocarbons to meet their energy needs for many decades, and unless Americans are going to give up air conditioning, heating, driving, computers, and flying in airplanes, we are going to continue to use oil and gas.
And as we are now exiting the historic Covid downturn, oil is near ~$70 per barrel and the supply chain and labor shortages will fade as the global economy bounces back.
Financial health
Liberty reported a third-quarter 2021 loss per share of 22 cents. The underperformance is due largely to expenses related to acquiring and integrating the onshore hydraulic fracturing business it purchased from Schlumberger in January.
Liberty had approximately $35 million in cash and cash equivalents as of September 30, 2021. Its long-term debt of $122 million represented a debt-to-capitalization of 9.2%. Further, the company’s liquidity—cash balance, plus revolving credit facility—amounted to $268 million.
Zoom out, and Liberty has provided a 24% average cash return on capital invested over 9 years
Investment recommendation
I’ve invested my own money in Liberty because I have high conviction in its future growth prospects. I’m a long-term investor and plan to hold my investments for at least three to five years.
Your ultimate goal as an investor is to buy assets for less than they are really worth, and Liberty currently provides that opportunity. The volatility of the energy market allows investors to reap large returns, but make sure you have the right constitution to weather large swings in stock price before you jump into this pool.
Be patient and wait for the right price. If you decide to invest, consider reducing the risk by buying your desired position in four tranches. Look to buy your first investment-sized tranche below $11/share. Liberty is a growth stock and does not pay a dividend.
Current stock price near historic lows
Key Takeaways
Liberty’s annual earnings are projected to grow nearly 80% over the next 3 years. Its current stock price (US~$10) is currently ~15% undervalued.
Liberty is a tech company disguised as an oilfield services firm. Technology innovations are helping the company increase production, lower costs, and enhance ESG performance.
Liberty has a strong founder/CEO with a proven track record.
Natural gas will be the biggest winner in the energy sector over the next decade. The world is moving to natural gas because it’s reliable, affordable, and emits fewer greenhouse gases than the alternatives.
Liberty is not immune to macroeconomic forces like higher transportation costs, driver scarcity, and labor shortages caused by Covid-19.
ESG concerns and investor pressure may impact the cost of capital, which would put American oil and gas companies at a disadvantage.
Liberty has provided a 24% average cash return on capital invested over 9 years.
My analysis is presented for general informational purposes and does not constitute investment advice. Do your own research. Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own due diligence before making investment decisions.
Natural gas and nuclear power will be the big winners in the energy sector over the next 20 years. They have a competitive advantage over solar, wind, hydro, geothermal, coal, and oil. That advantage, combined with market factors, sets up rare investment opportunities to hold high-quality energy companies and buy natural gas and uranium futures.
People in different parts of the world—from Sacramento to Frankfurt to Beijing—are currently experiencing higher energy prices and shortages. Three main factors are at work here:
Increased demand,
Policies aimed at reducing climate risk,
Current market incentives.
Global demand for energy is increasing. Energy fuels all the benefits of modern life: healthcare, education, transportation, communication, and economic growth. Developed countries don’t want to give up those benefits, and developing countries want more of them. As a result, the demand for energy will continue to increase over the next 20 years.
But supply isn’t currently increasing to meet that demand. Concerns about climate risk have led to corporate and government incentives that channel money away from oil and gas production toward solar and wind power, and environmental activists in Europe and the U.S. have successfully slowed the development of nuclear power. Investors lost money betting on the energy sector over the last decade, so the stock market has been rewarding energy companies for strengthening their balance sheets and returning cash to shareholders instead of investing in new long-term projects.
But things are poised to change. Energy runs on a predictable cycle like other commodities. As demand for energy increases, the price of energy also increases because supply is limited. Higher prices attract producers to invest in new production. New production kicks into overdrive because companies start competing to produce more. This competition leads in turn to oversupply: prices crash, and producers stop investing. Supply then gets tight; prices start rising again, and the boom-bust cycle continues.
We are at the beginning of a new cycle. The supply shortage we’re currently experiencing will likely last the remainder of this decade. Investors will find rare opportunities to capitalize on growth.
Global demand for energy is increasing
Energy is the lifeblood of modern civilization, the driving factor behind human progress and human flourishing. Our food, water, housing, transportation, communication, healthcare, and economic development all depend on harnessing energy.
Energy isn’t limited to generating electricity. It is needed for transportation, heating, and producing most of the materials and products we rely on: plastics, fertilizer, computers, medical equipment, mobile phones, cars, and airplanes–all currently made from oil and natural gas.
The world is hungry for energy. Global energy consumption more than doubled between 1971 and 2020,[1] and it’s projected to increase nearly 50% by 2050.[2] It’s clear that we’re going to need a lot more energy than we’re generating now. Some people believe that when we learn to harness new sources of energy, we will stop using our current sources. But that has never been true. Historically, whenever we learned to harness a new energy source, we did not stop using the sources we previously relied on (Figure 1).
Figure 1: Harnessing new energy sources did not replace energy sources we used before.
Future demand for energy isn’t going to be evenly distributed around the globe. Over 3 billion people—40% of the Earth’s population—currently live in energy poverty.[3] Most of the increased future demand for energy is going to come from providing these people with the energy they need and deserve. This is especially true in Asia where standards of living are rapidly increasing.
Navigating climate risk
Climate risk is a real problem because warming temperatures likely increase the severity of floods, droughts, heatwaves, hurricanes, and fires. But it’s important to keep things in perspective.
There are better and worse ways of managing climate risk. Many investors falsely believe we are transitioning to a world that runs on solar energy, wind power, and batteries. But solar and wind power are unreliable: the sun doesn’t always shine, the wind doesn’t always blow, and batteries are too expensive to store enough energy to power the electrical grid.[4] Efforts to shift to solar and wind power inevitably lead to energy shortfalls and increased energy prices for consumers. Solar and wind are useful for certain niche applications, but they don’t scale well and end up distracting us from more effective ways of reducing climate risk. I wrote more about the problems with solar power in another article: “Solar’s Dirty Secrets.”
Pushing to phase out fossil fuels and nuclear energy without a realistic plan to replace them has resulted in rising energy prices, power blackouts, and fuel shortages in Europe, the United States, and parts of Asia. And it has made people more vulnerable to climate risk by curtailing their access to energy.[5]
Wealthier countries are in general more resilient and better able to adapt to climate risk. The global population grew from 2 billion people in 1900 to 7.7 billion today.[6] Yet deaths due to natural disasters have plummeted over 95% during the last 100 years as the world has gotten wealthier (Figure 2).[7] One way of mitigating the human impact of climate risk is to reduce energy poverty and invest in forms of energy that continue fueling economic growth.
Figure 2: Fewer people have died from natural disasters as the world has grown more wealthy.
Market incentives contribute to supply shortages
The energy sector is currently underinvested because many investors lost money betting on it over the past decade. In the early 2000s, a breakthrough in new horizontal drilling technology led to an oil and gas boom, and investors began pouring money into new exploration. Production started to rise in 2008, and the next seven years marked the fastest increase in oil and gas production in U.S. history. But this boom led to global oversupply, causing prices to crash and investors to lose money and stop investing (Figure 3).
Demand eventually ate up the surplus supply, and energy prices are once again increasing. But investors remain gun-shy: they’re reluctant to pour money back into new exploration and production, and the stock market continues to reward energy companies for paying dividends rather than investing in exploration or innovation. As a result, long-term projects are getting pushed into the future.
Figure 3: Underinvestment in supply contributes to current energy shortages.
The supply squeeze is going to last longer than many investors think. Solar and wind aren’t going to meet our energy needs, and the current lack of investment in the energy sector will contribute to energy shortages and higher prices.
The investment case for natural gas and nuclear energy
All energy sources have tradeoffs. Natural gas and nuclear power are no different. Nevertheless, they rise to the top of the best energy options when you consider the alternatives and their tradeoffs.
Burning coal and oil generates pollution and greenhouse gases.
Solar and wind power are unreliable; they increase energy prices for consumers and don’t scale well.
Hydroelectric dams and geothermal plants can’t be built in all the places people need energy because not all places have suitable water and geothermal sources.
Biofuels require an enormous amount of land, water, and chemicals and cause air pollution.
Nuclear and natural gas are reliable, affordable, and produce low emissions. They’re not perfect. But their shortcomings are more manageable than the alternatives, and their advantages can’t be beat.
The biggest advantage is that nuclear and natural gas are both extremely reliable sources of power (Figure 4). Nuclear is, in fact, the most reliable of all energy sources.
Figure 4: The capacity factor of a power plant tracks the time it produces maximum power throughout the year.
In addition, both nuclear and natural gas reduce greenhouse gas emissions. Nuclear power plants don’t emit any greenhouse gases or air pollution while operating. And natural gas produces about 50% of the carbon dioxide and just 10% the air pollutants that coal does.
Contrary to what many investors think, the biggest greenhouse gas reductions over the past 15 years haven’t come from increased solar and wind power, but from shifts away from coal and toward natural gas.[8]
Moreover, nuclear and natural gas have the highest power densities of all energy sources, so they require less land to operate than other energy sources. Consequently, both help preserve natural ecosystems.
Natural gas is flexible and helps grid operators ramp power plants up and down quickly to accommodate changes in demand, and it provides an essential backup for intermittent power sources like solar and wind.
In addition, natural gas continues to be essential for heating, cooking, and producing fertilizer, steel, fuel, motor oils, plastics, detergents, cosmetics, and many other products.
The biggest concern with natural gas is that it emits methane, a greenhouse gas. But it’s possible to capture the methane before it escapes and thus decrease the amount released into the atmosphere.
Nuclear is the safest, the most powerful, and the most reliable way to generate electricity. Once the reactors are built, they are relatively cheap to operate. Countries that rely heavily on nuclear power have below-average retail electricity prices.[9] And nuclear plants can operate for 80-100 years if they’re well maintained.[10]
The biggest problem facing nuclear power is lack of will. The public’s misperception about nuclear’s safety is based on irrational fear. People think nuclear power plants are dangerous for the same reason they think airplanes are more dangerous than cars: they’re swayed by emotion rather than the evidence.[11] Just as airplanes are far safer than cars, nuclear is far safer than other energy sources.[12][13] This fear has nevertheless resulted in the E.U. and U.S. having very strict regulatory and financing hurdles that make the process of building nuclear plants slow and expensive.[14] But it doesn’t have to be.
Japan built a nuclear reactor in just over 3 years.[15] France built over 50 nuclear reactors in 15 years and currently gets 70% of its electricity from nuclear power.[16] And China plans to build 150 nuclear power reactors in the next 15 years at about one-third the cost of recent projects in the U.S. and France.[17]
The future of energy
Many investors feel confused by the myriad divergent messages they’re hearing about renewable energy and climate risk. Their uncertainty is why energy stocks are trading at historic lows. But one thing is certain: people are going to continue needing energy. When we weigh the costs and benefits of different energy sources, nuclear and natural gas are the inevitable winners in the energy sector. Their advantages are enormous, and their shortcomings can be managed. In fact, managing the shortcomings creates part of the investment opportunity: developing better, cheaper methods to produce energy.
It’s difficult to find investment opportunities with tremendous financial upside that also advance human flourishing and protect nature. And it’s rare to be positioned so well to capitalize on future growth. Don’t miss out!
[13] Environmental Progress, “Nuclear energy accidents, although rare, have led to fatalities in operators, first responders, and civilians,” Environmentalprogress.com, https://environmentalprogress.org/nuclear-deaths
False beliefs about renewable energy are harming the environment. I say this as someone who championed renewable energy for over two decades—first as executive director of a green building non-profit, then as CEO of a consulting firm specializing in clean energy, and most recently as founder of a cleantech startup. I thought my efforts were helping to protect the environment. But I was wrong.
Like many people, I believed the worst harm to the environment came from fossil fuels—and greedy companies exploiting the land, polluting the air, and destroying ecosystems to get them. It took me many years to realize that this viewpoint is distorted and to admit that many of my beliefs about renewable energy were false. And now I’m ready to talk about what we really need to do to save the environment.
The Truth about Energy
The truth is this: every source of energy has costs and benefits that have to be carefully weighed. Wind and solar are no different. Most people are familiar with the benefits of wind and solar: reduced air pollution, reduced greenhouse gas emissions, and reduced reliance on fossil fuels. But not as many recognize the costs of wind and solar or understand how those costs hurt both the environment and people—especially people with lower incomes.
Looking at Life Cycles
To fully evaluate how solar and wind energy hurt people and the environment, we must consider the lifecycle of renewable energy systems. Every artifact has a lifecycle that includes manufacture, installation, operation, maintenance, and disposal. Every stage in that lifecycle requires energy and materials, so we need to tally up the energy and materials used at every stage of the cycle to fully understand the environmental impact of an object.
Think of a car. To understand its full impact on the environment, we must consider more than simply how many miles it gets per gallon of gas. Gas consumption measures only the cost of operating the car, but it doesn’t measure all the energy and materials that go into manufacturing, transporting, maintaining, and ultimately disposing of the car. Tally up the costs at each stage of the car’s lifecycle to get a more complete picture of its environmental impact.
The same is true of solar panels. To fully understand the environmental impact of solar panels, we need to consider more than simply how much energy and emissions the panels produce during operation. We also need to tally up the expenditure of energy and materials that go into manufacturing, transporting, installing, maintaining, and ultimately disposing of the panels. Once we tally up those costs, we see that solar power leaves a larger ecological footprint than advocates like to admit.
The Environmental Costs of Manufacturing and Installing Solar
Solar advocates often gloss over the solar-panel manufacturing process. They just say, “We turn sand, glass, and metal into solar panels.” This oversimplification masks the real environmental costs of the manufacturing process.
Solar panels are manufactured using minerals, toxic chemicals, and fossil fuels. In fact, solar panels require 10 times the minerals to deliver the same quantity of energy as a natural gas plant.[1] Quartz, copper, silver, zinc, aluminum, and other rare earth minerals are mined with heavy diesel-powered machinery. In fact, 38% of the world’s industrial energy and 11% of total energy currently go into mining operations.[2]
Once the materials are mined, the quartz and other materials get melted down in electric-arc furnaces at temperatures over 3,450°F (1,900°C) to make silicon—the key ingredient in solar cells. The furnaces take an enormous amount of energy to operate, and that energy typically comes from fossil fuels.[3] Nearly 80% of solar cells are manufactured in China, for instance, where weak environmental regulations prevail and lower production costs are fueled by coal.[4]
There are also environmental costs to installing the panels. Solar panels are primarily installed in two ways: in solar farms and on rooftops. Most U.S. solar farms are sited in the southwestern U.S. where sunshine is abundant. The now-canceled Mormon Mesa project, for instance, was proposed for a site about 70 miles northeast of Las Vegas. It was slated to cover 14 square miles (the equivalent of 7,000 football fields) with upwards of a million solar panels, each 10-20 feet tall. It would have involved bulldozing plants and wildlife habitat on a massive scale to replace them with concrete and steel. Environmentalists and local community groups opposed the project because it threatened views of the landscape and endangered species like the desert tortoise, and the proposed project was eventually withdrawn.[5]
Placing massive solar farms far from populated areas presents additional challenges as their remote locations require new power lines to carry energy to people who use it. Environmentalists and local community groups often fiercely oppose the construction of ugly power lines, which also have to get approval from multiple regulatory agencies. Those factors make it almost impossible to build new transmission lines in the U.S.[6] If approval is granted, installing those lines takes a further toll on the environment.
In addition, the farther the electricity has to travel, the more energy is lost as heat in the transmission process. The cost-effective limit for electricity transmission is roughly 1,200 miles (1,930 kilometers.) So you can’t power New York or Chicago from solar energy farms in Arizona.
Limitations to Rooftop Solar
Rooftop solar installations could sidestep some of the problems of solar farms, but they have problems of their own.
First, many buildings are not suitable for rooftop solar panels. Rooftop installations are typically exposed to less direct sunlight due to local weather patterns, shade from surrounding trees, the orientation of a building (which are often not angled toward the sun), or the pitch of the roof.
Second, the average cost to buy and install rooftop solar panels on a home as of July 2021 is $20,474.[7] This makes rooftop installations cost-prohibitive—especially for lower-income families.
Finally, even if we installed solar panels on all suitable buildings in the U.S. we could generate only 39% of the electricity the country needs according to the National Renewable Energy Laboratory.[8]
Solar panels also have a shorter lifespan[9] than other power sources (about half as long as natural gas[10] and nuclear plants[11]), and they’re difficult and expensive to recycle because they’re made with toxic chemicals. When solar panels reach the end of their usable life, their fate will most likely be the same as most of our toxic electronic waste: They will be dumped in poorer nations. It is estimated that global solar panel waste will reach around 78 million metric tons by 2050[12]–the equivalent of throwing away nearly 60 million Honda Civic cars.[13]
The Human Costs of Solar
Solar harms more than the environment; it hurts people—especially the economically disadvantaged, who face a hard choice between paying high energy costs or suffering energy poverty.
Consider a family of four in California’s Central Valley. They currently pay one of the highest rates for electricity in the U.S.—80% more than the national average.[14] They may be forced to choose between paying for daycare or turning off their air conditioner in 100-degree heat. Families like this are not rare. The California Public Utilities Commission says 3.3 million residential customers have past-due utility bills. Taken together they owe $1.2 billion.[15]
Adding more renewable energy to the grid is not only expensive; it’s dangerous! The North American Electric Reliability Corporation (NERC), a nonprofit organization that monitors the reliability, resilience, and security of the grid, says that the number-one risk to the electrical grid in America is adding more unreliable renewables.[16]
The reliability of a power source is measured by capacity factor. The capacity factor of a power plant tracks the time it’s producing maximum power throughout the year. When we compare the capacity factors of power plants, we see that solar is the least reliable energy source: natural gas is twice as reliable as solar, and nuclear energy is three times more reliable.
Recent events in Texas and California highlight the risk of adding more unreliable power sources to the grid. The blackouts were caused by several interconnected factors. The Texas power blackout in February 2021 left 4.5 million homes and businesses without power (some for several days) and killed hundreds of people.[17] The immediate trigger of the Texas blackout was an extreme winter storm, but that storm had such a massive effect because of factors rooted in poorly designed economic incentives. Texas wind and solar projects collected $22 billion in Federal and State subsidies.[18] These subsidies distorted the price of power and hence compromised the reliability of the Texas grid. The electricity market is complex. And multiple factors converged to cause the blackout including a failure of government oversight and regulation. But if investments had flowed to natural gas and nuclear power plants instead of unreliable solar and wind, the blackout would likely have lasted minutes instead of days.
Unreliable solar and wind power were also among the three primary factors causing California’s rolling blackouts in August 2020, according to the State of California’s final report on the power outages.[19]
A year later, in July 2021, Governor Gavin Newsom declared a state of emergency and authorized the use of diesel generators to overcome energy shortfalls. And in August 2021, the state announced the emergency construction of five new gas-fueled generators to avoid future blackouts.[20]
Events in California and Texas highlight another unappreciated cost of solar and wind: Compensating for their unreliability requires the use of more reliable sources of power, namely fossil fuels. A study conducted across 26 countries over two decades by the National Bureau of Economic Research (NBER) concluded for every 1 megawatt of solar or wind power installed there need to be 1.12 megawatts of fossil fuels (usually natural gas) as backup capacity because solar and wind are unreliable.[21] Moreover, using backup diesel generators and ramping power plants up and down to meet energy shortfalls are two of the worst ways to use fossil fuels; they’re inefficient and cause unnecessary pollution.
A final point: solar and wind have low power densities. According to a facts guide on nuclear energy from the U.S. Department of Energy, a typical 1,000-megawatt nuclear facility in the United States needs a little more than 1 square mile to operate. Solar farms, by contrast, need 75 times more land and wind farms need 360 times more land, to produce the same amount of electricity.[22]
Even if we could overcome all the practical constraints on storing, transmitting, and distributing solar power, supplying a country the size of the U.S. would require over 22,000 square miles of solar panels[23]—approximately the size of New Jersey, Maryland, and Massachusetts combined.[24] And the unreliability of solar power means that even with that many solar panels, we would continue to need most of our existing power plants.
The Costs of Energy Poverty Worldwide
The less-measured costs of promoting renewable energy extend far beyond California and even the United States. Energy is the foundation of civilization. Access to it enables healthcare, education, and economic opportunity. It liberates men from dangerous jobs, women from domestic drudgery, children from forced labor, and animals from backbreaking work.
Energy poverty, by contrast, leads to malnutrition, preventable disease, lack of access to safe drinking water, and contributes to 10 million premature deaths per year.[25] Over 3 billion people—40% of the Earth’s population—live in energy poverty. Nearly one billion people don’t have access to electricity and use wood or animal dung for cooking and heating their homes.[26] Another billion only get enough electricity to power a light bulb for a few hours a day.[27] Women in energy poverty spend more than two hours a day gathering water[28] for drinking and wood for cooking.[29] And over 3.8 million people die every year[30] from breathing wood smoke while cooking—something which could be prevented by using stoves fueled with propane or butane.
You might think that wealthy nations with a commitment to human rights would take steps to alleviate energy poverty. But exactly the opposite is happening: Wealthy nations are pulling up the ladder behind them and subjecting the developing world to energy poverty.
In 2019, the European Investment Bank announced it would stop financing fossil fuel power plants in poor nations by 2021.[31] And the World Bank (the largest financier of developing nations) is developing a similar policy.[32] The hypocrisy is mind-boggling: wealthy nations get 80% of their energy from fossil fuels and reap the benefits of unprecedented prosperity due to the low-cost, reliable energy they provide.[33]
Weighing the Costs and Benefits
Evaluating the environmental impact of solar panels simply in terms of the CO2 emissions of operating solar panels is like evaluating the environmental impact of a car simply in terms of how many miles it can travel on a gallon of gas. It’s an overly simplistic view that fails to account for all the environmental costs of mining, manufacturing, installing, operating, and disposing of the solar panels.
Once we tally up all of solar’s lifecycle costs, it’s no longer obvious that solar is better for the environment than other sources of energy, including highly efficient natural gas. In fact, solar energy might be worse for the environment after we factor in its unreliability. California’s recent energy crisis illustrates that new solar installations need to be coupled with more reliable sources of power–like natural gas plants–to compensate for their unreliability.
That unreliability is not something that better technology can erase. It’s simply due to the very nature of solar power: the sun doesn’t shine 24 hours a day, so it’s impossible for solar panels to produce electricity 24 hours a day.
Some people theorize that we will eventually be able to store surplus solar energy in batteries, but the reality is batteries cost about 200 times more than the cost of natural gas to solve energy storage at scale.[34] In addition, batteries don’t have enough storage capacity to meet our energy needs. Currently, America has 1 gigawatt of large-scale battery storage that can deliver power for up to four hours without a recharge. A gigawatt is enough energy to power 750,000 homes, which is a small fraction of the amount of energy storage we would need for a grid powered mostly by renewables. It is, for instance, less than 1% of the 120 gigawatts of energy storage that would be needed for a grid powered 80% by renewables.[35]
Manufacturing batteries also takes a serious toll on the environment, as they require lots of mining, hydrocarbons, and electricity. According to analysis completed by the Manhattan Institute, it requires the energy equivalent of about 100 barrels of oil to make batteries that can store a single barrel of oil-equivalent energy. And between 50 to 100 pounds of various materials are mined, moved, and processed for one pound of battery produced. Enormous quantities of lithium, copper, nickel, graphite, rare earth elements, and cobalt would need to be mined in China, Russia, Congo, Chile, and Argentina where weak environmental regulations and poor labor conditions prevail.[36]
The high cost and poor performance of batteries explain why there’s no market for long-duration (eight or more hours) battery storage. Existing battery technology is unlikely to overcome the limits of physics and chemistry in the next decade to come anywhere close to the levels of efficiency we need to store energy at scale.
So adding solar power to the grid will not eliminate the need for natural gas. And when you really examine the harm that solar installations do to the environment, solar begins to look worse for the environment on balance than efficient natural gas plants.
When we add the human costs to the tally, the case for solar looks even worse. Forcing low-income people to pay 80% more for electricity in places like California is ethically dubious and increases wealth inequality. And these are just the costs in developed countries. When we consider the human costs of energy poverty worldwide, using solar to decrease CO2 emissions subjects poor people to unnecessary suffering without substantially reducing climate risk.
Real Benefits of Solar
If you have read this far, you might believe I think solar energy is bad. Nothing could be further from the truth. I think solar is a great technology, but it just doesn’t scale well. When it’s limited to its original applications, it can be a game-changer for many people. Think of African villages that get a lot of sun but are too remote to justify the cost for building new power lines. Equipping a school, community center, or individual homes with solar panels could be a game-changer and lift many people out of energy poverty.
These are the applications for solar that we should be looking into. But it is wrongheaded to see solar as a replacement for more reliable sources of energy in industrialized, power-hungry nations. That’s an illusion.
But that illusion does make people in developed countries feel good about themselves because it makes them feel less guilty about a lifestyle based on excessive energy consumption. They want to drive nice cars, live in big homes, vacation in exotic destinations, and enjoy all the conveniences of modern life–without worrying that they are hurting poor people and or the planet.
I’m not pointing fingers. I put myself in this category. It took me years to see that my reasons for pushing solar and wind power were false. I liked seeing myself as a hero defending the environment against ruthless pillagers, and because I wanted other people to see me this way. My false ideas about fossil fuels and renewables were as bound up with my sense of identity and self-worth as they were with my lifestyle.
But I now understand that I was using those ideas as moral camouflage, and I was able to maintain them only by remaining ignorant about the real costs and benefits of different energy sources. That ignorance prevented me from making a real difference.
I’ve dedicated most of my life to protecting the environment. But for years, I was going about it in the wrong way. I thought I was acting morally and protecting the well-being of people and the planet. But in fact, I was harming both, and I see people making the same mistakes today. Governments, companies, and building owners around the world invested $2.7 trillion on renewable energy between 2010-2019, and they plan on investing an additional $1 trillion by 2030.[37] We can make better investment decisions to maximize human flourishing and minimize environmental harm.
What We Need To Do
My message probably stands in contrast to most of what you’ve been told about renewable energy. But I’m convinced that the stakes are too high for me to sit back and not to challenge the false beliefs that continue to fuel poor investments and bad policy decisions. It’s time to stop virtue signaling and take off our moral camouflage so we can meet the problems of climate change and energy poverty head-on.
If we’re serious about tackling climate change, protecting the environment, and helping impoverished people around the world, we need to stop chasing fantasies about solar and wind energy. We need to start weighing all the costs and benefits of all energy sources—wind, solar, natural gas, coal, hydro, geothermal, and nuclear.
Here are five steps we can begin to take towards making things better for both people and the planet:
End subsidies and incentives for solar and wind power;
Invest in research and development to advance new energy technologies;
Build new efficient natural gas power plants (and hydro and geothermal where possible);
Reform regulations and build nuclear power plants;
Retire the worst coal power plants (5% of power plants create 73% of carbon emissions from electricity generation)[38].
Every day we spend chasing fantasies causes unnecessary harm and suffering. Let’s pursue energy solutions that benefit people and also save the environment.
[2] J.J.S. Guilbaud, “Hybrid Renewable Power Systems for the Mining Industry: System Costs, Reliability Costs, and Portfolio Cost Risks” University College London, 2016, https://discovery.ucl.ac.uk/id/eprint/1528681/
[8] Pieter Gagnon, Robert Margolis, Jennifer Melius, Caleb Phillips, and Ryan Elmore, “Rooftop Solar Photovoltaic Technical Potential in the United States: A Detailed Assessment” National Renewable Energy Laboratory, January 2016, https://www.nrel.gov/docs/fy16osti/65298.pdf
On April 1, 2016, I was excited and full of optimism. After months of negotiation, we were about to sign a purchase agreement to sell our company. Although I had mentally braced myself for the buyer saying the deal was off in an attempt at an April fool’s joke, we closed the deal that day. Three years later, the real trick was revealed.
Dr. Bob Knight, the founder of our company, had recruited me to become CEO in January 2009. Bob, an engineer in his mid-sixties, was ready to retire. Our company focused on commercializing new technology in the utility and energy industry, and we worked on a broad range of projects including ways to commercialize fuel-cell vehicles, emission control technology at power plants, and new approaches to make buildings more energy efficient.
Our company’s growth had been fueled by the 2008 economic downturn. In response to the devastating impacts of the recession, the Obama administration earmarked billions of dollars in federal stimulus funding to support “shovel-ready” jobs related to energy projects, including the retrofit and weatherization of buildings. When I realized most of the money would flow to state and local governments, we developed a strategy to help governments quickly implement energy retrofit programs that would make homes and buildings more energy efficient and create jobs. Our strategy worked. We won multiyear contracts valued over $60M, and our company grew overnight from fifteen to fifty employees.
I learned a lot from this experience. But years of battling onerous regulatory requirements and red tape prevented us from implementing our best ideas and made me feel like a fighter going up against a much larger opponent with one arm tied behind my back. I was ready to move on to my next chapter.
I had an idea for a startup. In fact, we had already begun work on the new idea, and as a condition of selling the company, I negotiated a small team to go with me to pursue it. My new company was called UtilityScore. We built software that estimated electricity, natural gas, and water bills based on property information, local utility rates, and climate data. We contracted with Zillow and other real estate websites to give buyers a good picture of the total cost of ownership of a particular property before they made a purchase. Every home was assigned a score related to the cost of utilities so homebuyers could compare homes in their area.
Because utility costs are 20%-40% of housing expenses in most of the U.S., we expected that homebuyers would be eager to have such information. Contractors could also use our data to show potential customers how much they could save by installing solar or upgrading their air conditioner or heater.
Life was good and about to get better. I had money in the bank from the sale of the business and a great team I looked forward to working with every day. And in early June, we were accepted into the summer 2016 batch of Y Combinator (YC.) Getting the stamp of approval from the most famous startup accelerator in the world gave us a boost of confidence.
YC has helped some of the most successful high-growth startups including Stripe, Airbnb, Cruise Automation, DoorDash, Coinbase, Instacart, Dropbox, Twitch, and Reddit. And as soon as we got into YC, several angel investors decided to invest. YC Demo Day is the main event of the program, providing an opportunity to pitch several hundred investors. The amount of money raised by companies varies, but many of the companies raise a $1M to $2M seed round in the weeks following Demo Day.
Clouds roll in
We raised a total of $0 dollars after Demo Day. Not a typo! I think we were the only company not to raise any money in that batch. I felt demoralized and embarrassed. I had entertained no illusions that we were going to be a top company in the batch, but I had certainly expected to raise at least a few hundred thousand dollars to buy us time to continue our mission. Telling my team and existing angel investors that we didn’t raise any money was difficult and sent a terrible signal.
Shortly after Demo Day, things went from bad to worse. Around 5 a.m. on October 6, 2016, I was pulling out of my garage to go to the gym when the front left tire of the car broke off the axle, making it impossible to drive or even return it to the garage. Determined to get in my morning workout, I went back upstairs, asked my girlfriend to call AAA, and changed into my running shoes.
Early morning light was just beginning to bathe the streets of San Francisco’s SOMA district when I started running down 7th street. My lungs were full of the cool air as my body put up its normal fight against running so early in the morning.
As I approached the intersection at 7th St and Brannon, I saw a car slowing down for the stop light. The pedestrian walk light was illuminated, so I proceeded to run into the intersection as I watched the car approach. By the time I realized the driver did not see me and had no intention of stopping for the red light, it was too late. The car struck my right side. I flew into the air, smashed down on the hood of her car, and violently bounced off onto the hard pavement — shattering my left knee on impact. Doctors had to drill nine screws and support hardware into my bone to hold my knee together.
And that’s when things really started to get dark. Intense pain shot through my knee for weeks. I lay on my couch, relying on my girlfriend and other people for everything. I could not even bathe myself. My head was so foggy from painkillers that I could barely focus on work.
But the clock was ticking, and I felt like a dark cloud was constantly looming above me. I got sick to my stomach watching my bank account shrink month after month. So I started going to the gym on crutches to strengthen my body and build back the muscle and range of motion in my left leg. Motivated to get back to work with my team as quickly as possible, I hobbled into the office, putting my leg up on a pillow on my desk.
But Zillow, our biggest customer, continued to drag their feet and kept finding new reasons to delay implementation. We made multiple attempts to test new approaches and pivot, leveraging the assets we built. But we were not getting traction.
Persistent or Irresponsible?
One of the hardest parts of entrepreneurship is knowing when to quit. Every successful entrepreneur tells stories of persevering against all odds when everything looked hopeless — making their eventual success seem even sweeter. “Don’t quit” had been seared into my brain. But it’s hard to know whether you are wisely pushing through adversity or just flushing money down the toilet and banging your head against the wall for no good reason.
After three years of hard work and experimentation, we were out of ideas and money. We were speeding toward a cliff, and I needed to make a decision. I tried to sell the company’s assets, but multiple deals fell through. I had to shut down the company.
The mental whiplash of making and losing millions of dollars in a short period of time shook me to my core. Questions swirled through my head. Why did we fail? What could we have done differently? What important signal did we miss? I became obsessed with uncovering and understanding my mistakes. My search for answers sent me deep down a rabbit hole to learn what I did wrong. I was determined to prevent it from happening again.
What I learned completely transformed how I think about building companies, making decisions, and solving problems. Much of what I learned is not intuitive and pushes against the way most of us naturally think.
Learning hard lessons
One of my most important lessons was learning to question my beliefs. You can end up making poor choices if you don’t frequently strip bare your beliefs, which requires rigorous questioning and inspection of assumptions. This process is even harder than it sounds, which is why most of us don’t do it. When was the last time you actively tried to disprove your beliefs like a scientist trying to poke holes in a hypothesis through testing?
Your beliefs shape your perspective and influence your judgment, which affects your decisions. Your decisions shape who you are and the reality you live in. The stakes are high because your decisions will play a large part in determining if you succeed or fail.
I played a very expensive trick on myself by pursuing solutions to a made-up problem. I should have tested my assumptions — my beliefs — without committing three years and millions of dollars to them. UtilityScore did not create enough value to justify the cost. My desire to help reduce energy use in homes contributed to my blindness and clouded my judgment. Be extra careful when you feel virtuous about your mission. It’s easier to fool yourself when your identity is tangled up in the mission and you are gaining a sense of purpose from your efforts.
Judgment is knowing the long-term consequences of your choices and making the right decisions to capitalize on them. Good judgment is a superpower, which is normally gained through trial and error. But it’s also a skill you can cultivate by learning to apply principles, processes, and tools. Good judgment leads to better decisions.
What you decide to work on is far more important than how hard you work. Tactics don’t matter if you have the wrong strategy, and your direction matters more than your speed. You can be an amazing engineer, marketer, or salesperson, but if you decide to build, promote, or sell the wrong product for the wrong market, you’re going to fail.
Decisions are not one-size-fits-all. Math-based decisions are straightforward and usually involve running cost-benefit analyses. These decisions are typically not controversial and easy to make. Judgement-based decisions call for taking action under uncertain conditions, often due to missing information.
Some decisions are difficult or even impossible to reverse. Jeff Bezos, founder/CEO of Amazon, calls these decisions one-way doors. Make these decisions carefully and methodically, ideally after performing a detailed scenario analysis in consultation with key stakeholders. Decisions that can be easily reversed are called two-way doors, and these lighter-weight decisions should be made quickly by high-judgement individuals or small groups.
Just DO IT
Following a process helps you improve the quality of your decisions as it can help you structure your thinking. To help me remember the steps of my decision-making process, I created the acronym DO IT: Define Observe Imagine Test. With a little practice, applying this process becomes automatic.
Step 1. Define. Recognize the type of decision you are facing. Write down the problem or opportunity, describing it with clear and precise language. We frequently do not recognize the complexity of the problem we are trying to solve until we invest the time to define it. Clarify the importance. What’s the magnitude? Is it reversible? How much time do you have to make the decision? Do other people need to be involved? Who are they?
Step 2. Observe. Look at the motivations and incentives of everyone involved, including yourself. Write down all the assumptions. Inspect each assumption by asking “why?” Continue to drill down into the assumption until you hit bedrock.
Step 3. Imagine. Engage in mental time travel and create multiple scenarios of the future. For each scenario, ask yourself what would have to be true for this to be a good choice? Scenario analysis requires writing down and applying evaluation criteria to help you grapple with tradeoffs and evaluate your choices.
Step 4. Test. Try to disprove each scenario. Get feedback from customers, partners, or other appropriate stakeholders.
Don’t make the mistake of needing to learn everything the hard way. We have unprecedented opportunities to access knowledge and training that can teach you how to question your beliefs, improve your judgment, and make better decisions. Learn as much as you can from other people’s experiences to minimize wasting time, losing money, or regretting your choices.
If you want to build your judgment faster and learn to apply principles, processes, and tools to make better decisions, get my free e-book on judgment and decision making. The e-book pulls together hard-earned wisdom and shares the best of what I’ve learned, including the how-to’s, frameworks, and mental models to save yourself the pain of learning the hard way.
Beyond the practical content, you can use these ideas as a sharpening stone to become a more independent thinker. Learn how to test your beliefs and insulate yourself from outside forces that want to control or manipulate you. Overcome the fears and desires that cloud your judgment. Tackle stressful decisions with confidence. Most importantly, learn how to think more clearly and make better decisions in order to build the life you want.
Most of the time we believe what we hear. And too often we hear—and then believe—things that are not true. But imagine how hard it would be to question every fact and underlying assumption you hear or read throughout the day.
Your brain acts like a sponge soaking up conversations with family and friends, daily news reports on TV and radio, information in emails and social media posts. It would impossible to every day test and probe every sentence from every source for complete accuracy. Even getting through one hour—much less a day—would be almost impossible. I’m exhausted just thinking about it.
To efficiently navigate life, we learn to trust people and institutions. Your life runs on trust for many things we take for granted. You trust when you flip on the light switch that electricity will be available to power your light bulb. You trust that pipes coming in and out of your home will provide water to flush the toilet. You trust that the ambulance will show up if you dial 911. You trust that the money you deposited in your bank account today will still be there tomorrow.
Trust undergirds our financial system and our justice system and our transportation system and provides the glue to hold our social fabric together. Without trust we would live in a world of paralyzing fear and violence. However, it’s important to recognize when it’s time to switch off your trust autopilot and begin questioning assumptions. If you don’t, you can make painful mistakes and walk blindly into bad decisions.
I spent twenty years of my professional career working on the wrong problem. Blinded by a utopian vision of renewable energy, I didn’t apply critical thinking to test my beliefs. Renewable energy technology has a role to play in providing the power in some situations, but currently it represents 2% of global energy. The laws of physics prevent renewable energy from becoming an efficient and preferred source of energy to power society.
I was not alone in making this mistake. One of our worst decisions in the 20th century was to underfund and overregulate nuclear energy. We let activists, rather than scientists, lead the national conversation on nuclear energy. Unfortunately, we were told many things that were not true—and we believed them.
In the book How Innovation Works, author Matt Ridley shares evidence for nuclear energy being the safest form of energy we produce: “Per unit of power coal kills 2,000 times as many people as nuclear; bioenergy fifty times; gas forty times; hydro fifteen times; solar five times (people falling off roofs installing panels) and wind kills twice as many as nuclear. And these numbers include the accidents at Chernobyl and Fukushima.”
New nuclear technology in the form of many relatively small reactors has no risk of explosion or meltdown, produces very little radioactive waste, and cannot be used to make nuclear weapons. But our fears of nuclear accidents and nuclear waste have kept us from pursuing this energy solution. Instead of having energy that’s too cheap to meter fueling massive new growth and innovation, for the past fifty years we have been dealing with economic stagnation and unnecessary environmental impacts related to pollution, habitat destruction, and climate change.
Dig down to bedrock
How much of your perceived reality is grounded in truth? What would happen if you took a crowbar and pried under every assumption you have about the world. What would be left? What are your foundational beliefs? I know what I see, hear, smell, taste, and feel. But I have to recognize the limits of my perception. Peering through a microscope or out the window of an airplane enables me to see different perspectives and helps me understand that there are truths I rarely recognize.
Limited perception helps you focus and survive. Imagine if you were not shielded from unlimited awareness. You would likely be so overwhelmed by sensation and experience that you would not be able to function. But perception does not equal reality. Therefore, it’s important to probe and question your beliefs often.
My beliefs today have changed from yesterday. And my beliefs yesterday were different from what I believed last week, last month, last year. If your beliefs are not changing, you may not be learning. Some of my best ideas and beliefs have been wrecked on the sharp rocks of reality. I have learned that it’s useful to question what I believe and to keep a loose grip on my opinions because my perspective changes with new experience and knowledge.
When I dig deep down to bedrock and question my understanding of the world, I see patterns of creative destruction—cycles of growth trying to maintain a balance between chaos and order. But my crowbar could not dislodge the following assumptions.
Dependence. You and I are both dependent. To survive you need oxygen to breathe. Water to drink. Food to eat. All life on earth depends on other organisms for survival. You alone are not self-sustaining.
Struggle. Life requires struggle. I’ve not yet met a human who does not struggle—no matter how much money or power they have achieved. Scratch beneath the surface of anyone’s life, and you will find struggle and pain.
Violence. You cannot escape violence. Life requires it. We are made of it. From the cells in your body fighting viruses to our need to kill plants and animals to acquire the nutrients we need to survive. Life is based on cycles of violence and rebirth. Every living creature on the planet participates in violence. You may choose to wear a veil of ignorance and pretend you are nonviolent. But there is no escape. Even heroes such as Gandhi and Martin Luther King Jr. who promoted the principle of nonviolence were violent. Existing in the world requires killing other life to survive.
Pain. Nothing sharpens your mind more than pain. Don’t believe me? Put your hand on a hot stove and your mind will snap into focus instantly. All other thoughts and desires will instantly vacate your head.
Growth. Growth requires violence and pain. Muscles can’t grow without breaking down and rebuilding. New ideas can’t progress if you don’t allow old ideas to die.
Reproduction. From a biological perspective, your purpose is to survive long enough to reproduce. And pass on what you learned to the next generation.
Death. You cannot escape death. As we push the limits of technology, we will extend life and maybe be able to upload our consciousness. But our bodies are going die.
If you don’t routinely strip bare your beliefs, you can end up making poor choices. Dig down to uncover your foundational beliefs. Consider how your beliefs shape your perspective and influence your decisions.
Your emotions influence your decisions. Learning to read and regulate your emotions will help you make better choices and build better relationships.
When I was nineteen, I spent four months traveling in India to learn meditation. Given the opportunity to experiment with dozens of different meditation techniques, I learned how to witness my thoughts and emotions and not react to them. Surprisingly, this is one of the most practical and useful skills I’ve learned, and I use it every day in my interactions with people.
Our emotions evolved to help us survive and reproduce. Fear, anger, sadness, joy, and disgust are names we give to describe different states of our nervous system. Fear is experienced as contraction in your belly or chest. Joy brings a feeling of expansion. Your reactions to these types of physical sensations influence your decisions and behaviors.
Babies express raw unregulated emotion. Discomfort due to hunger or pain causes them to cry. Babies have not yet been taught how to regulate their emotions. Imagine the reaction you would get at work if you started crying because you were hungry. Although I don’t cry when I’m hungry, I do have similar strong emotional reactions to situations that would be just as ridiculous if expressed.
As we mature, we are taught what is an acceptable display of emotion and behavior by the people around us. Breaking these social norms brings consequences. In ancient times, if you were kicked out of the tribe due to your behavior, you would likely not survive. This primal fear persists today, and strongly influences our behavior at work and in our personal lives.
Emotions are powerful but they are short lived unless you continue to feed them. If you are willing to sit in the emotion fully, instead of struggling to ignore or repress it, you will find the emotion is very short and lasts only moments—not minutes. It amazes me how if I’m cut off while driving, I can go from a calm state to full-on rage in less than a second. And then return to a calm state a few minutes later. My brain interpreted the car cutting me off as a threat and reacted. In that moment of rage, I felt capable of physical violence toward the driver who cut me off. Most likely the person did not wish me harm. They probably did not even see my car. If you pay attention to the physical sensations in your body, it’s hard to stay angry for more than a few moments unless you continue to feed the anger with additional mental chatter.
Emotional intelligence is the ability to separate your emotion from your behavior. The better you get at reading, regulating, and expressing your emotions, the better your relationships will be.
People with high emotional intelligence perform better at work. It’s not surprising that surveys of employers showed that 71% of them valued emotional intelligence over IQ in an employee. For managers and leaders this is an essential skill.
Emotional intelligence allows you to stay calm in times of stress, conflict, and challenge. This helps you resolve conflict effectively and quickly. By practicing active listening and taking an interest in understanding other people’s perspectives, you gain empathy, which creates the opportunity to cooperate. All of this allows you to form and develop better relationships with others.
Your ability to manage stress and build better relationships also increases your physical and mental health, preventing the onset and progression of heart problems, anxiety, and depression.
Emotional intelligence can be learned. But just like any skill, it requires consistent practice. You don’t get a healthy body by going to the gym once a week. And you don’t learn a new language by just attending a few classes. Building your emotional intelligence requires consistent practice over a long time-frame. But you can do it in small steps.
Here are a few useful ways to improve your emotional intelligence.
Practice meditation at least 10 minutes every day. Meditation is an effective tool to build self-awareness. I use the Waking Up app by Sam Harris because the instructions Sam provides are useful and the app tracks the time. A common misconception about meditation is that you are detached and not feeling your emotions. The opposite is true. You are not distancing yourself from your emotions. You willingly feel emotions and physical sensations more intensely to fully experience them in your body. But you experience them without judgment. Meditation is practicing being fully aware without reacting. For example, you can’t close your ears and stop sound from entering. But you can listen to sound without it triggering an emotional reaction. Imagine if you are trying to concentrate at work and someone is speaking loudly near you and its distracting. You’ve a choice in how you respond. You may feel anger or frustration but it will not likely serve you to act out of anger in your response.
Ask for feedback. Ask people with diverse perspectives to give you feedback frequently. Be vulnerable and open to receiving what you hear. Monitor your emotions so that you are not defensive. Feedback gives you an opportunity to gain empathy by seeing different points of view, and it shines a bright light on your blind spots. Feedback also helps you correct mistakes quickly and improve your performance.
Be curious about your emotions. Practice curiosity by becoming interested in the patterns of energy in your body in different situations. Approach this exercise as an experiment. Notice when you’re angry or frustrated. Are there certain people or situations that trigger these responses? Look for patterns.
Your emotions are a natural part of being human, but you can learn to regulate them in order to be happier, healthier, and more productive.
Feedback helps you better see the reality of world around you. It allows you to correct mistakes and learn faster. Feedback gives you an opportunity to gain empathy by seeing different perspectives, and it shines a bright light on your blind spots, improving your decision-making ability. Better relationships and improved performance are the result. Helpful feedback returns both positive and negative information about your actions. Without it, we are driving blind.
I remember the first time I received feedback at work. As a new manager who wanted to be liked, I was blindsided when some of my direct reports said I did not seem interested in helping them advance their careers. This feedback was hard to hear, and my first reaction was to be defensive. In my mind, I was a good manager. But after I took time to really consider their complaints, I concluded they were right. Receiving these comments provided me an opportunity to change my behavior, and I chose to invest more time supporting their professional development.
Feedback is a rare and valuable resource
Direct, honest feedback is hard to find because very few people are willing to tell you the truth. Most people want to avoid conflict, and they don’t want to jeopardize their relationship with you. Feedback from family, friends, or work colleagues is often influenced by conflict of interest. For example, you may want to tell your boss that you don’t need to be micromanaged, but you don’t want to upset her as that could negatively affect your evaluation and future compensation. In that situation, it will be hard for you to provide the most honest feedback to your boss.
Or maybe you’re considering getting feedback from your parents about your idea to change careers. But you borrowed money from them in the past to buy a house, and your new career would mean making less money. Your parent’s feedback on your career change idea will likely be influenced by the money you owe them.
Few people are trained to give and receive feedback. Receiving feedback requires humility and a desire to learn. And it requires you to practice active listening, monitoring your emotions so you do not become defensive. When you give feedback, make the recipient feel you have their best interest in mind and deliver direct and constructive comments. For best results, give feedback immediately or soon after the action you want to comment on.
To strengthen a relationship, build into it a frequent reciprocal feedback loop. Don’t be afraid to be vulnerable — vulnerability builds trust. Allow yourself to be vulnerable by proactively owning your mistakes. Invite and welcome feedback to demonstrate your receptivity to it.
Get feedback from people with diverse perspectives and experience. Don’t live in an echo chamber. When I talk about “diversity,” I’m not referring solely to race, gender, or sexual orientation because these can be poor proxies for true cognitive diversity. Seek out people who have truly different skills, experiences, and worldviews. They will expose your blind spots. Challenge yourself to accept feedback from someone you dislike. I admit this is hard to do, but we can learn from everyone, including people we don’t like.
Ways to cultivate feedback
Ask. If you don’t ask, you will rarely receive. Ask for feedback frequently and from people with diverse perspectives. Provide context, set expectations, give permission to be critical, and ask for specific examples. Phrasing is important. For example, don’t ask, “What do you think about my idea?” Instead ask, “What is wrong with this idea?”
Show humility. Proactively share your mistakes or weaknesses. Don’t be defensive and welcome feedback even if you disagree.
Listen actively. Repeat back key points before responding to ensure you are absorbing the feedback correctly. This provides an opportunity for the giver to correct your interpretation.
Embrace responsibility. Take responsibility for your actions or role in the situation.
Act. Feedback has little ultimate value if you don’t take action on what you learn. Act on the feedback and demonstrate that you are taking it seriously and trying to improve.
Feedback accelerates learning. Embrace feedback to help correct mistakes quickly and improve your performance and relationships. When you take feedback to heart, you will make better decisions.
Nothing is more important or more valuable than thinking and communicating clearly. Thinking before acting helps you minimize expensive and painful mistakes. Clear thinking allows you to prioritize effectively, produce more, and make better decisions. Good communication starts with good ideas. So, your ability to deconstruct ideas and think critically enables you to communicate effectively. Expressing your ideas effectively empowers you to influence people and have an impact on their thoughts and actions.
The best way I’ve found to improve my thinking is learning how to write. Writing helps you formulate and organize your ideas into a clear and persuasive form before you act on them. You can write down more facts, ideas, and stray thoughts than you can remember at any one time. Putting your ideas in writing allows you to organize and edit them. Writing also exposes gaps in your knowledge while allowing you to see the interactive effects of ideas.
Writing instead of meeting
Replacing work meetings with long-form memos is one way you can practice writing to help you think and communicate more clearly while also saving time. Most meetings are an inefficient waste of time and resources. When I walk into a meeting, the first thing that comes to mind is how much it costs to have all these people sitting in one room instead of getting work done. Communication based on long-form writing forces an exchange based on complete thoughts and ideas whereas meetings encourage participants to react in the moment and shoot from the hip.
Communicating through comprehensive written memos also frees you from the constraint of aligning schedules and allows people who could not be in the room to understand the issues, assumptions, and decisions. I’m not suggesting you do away with meetings altogether because there can be value in getting people together to discuss ideas. However, meetings should be a last resort and not the first option.
Writing to gain leverage
Writing also gives you leverage and the ability to scale your ideas. Sharing your written ideas offers opportunities to find peers, collaborators, and business opportunities. Paul Graham, cofounder of Y Combinator, wrote online essays to share his ideas and lessons about how to build a start-up. This strategy attracted start-up founders from around the world and has contributed to Y Combinator’s massive impact and success.
Writing to learn
Writing also helps you learn faster as it forces you to internalize learning at a deeper level. My mind is terrible at retaining what I read. I bet I only retain 10% to 15% of a book’s content. However, when I write an essay that synthesizes ideas I have been reading, the act of writing helps me internalize knowledge and remember it.
Useful tips to improve your writing
I’m always looking for ways to improve my writing. Here are some tips I’ve found useful.
Write like you talk. This is one of the most helpful tips I have learned. Spoken language is easier to understand, so read your writing out loud and fix anything that does not sound like a conversation.
Use simple, clear language. Imagine you are writing to an eight-year-old, and don’t allow your sentences to become flabby and swollen. Write tighter, stronger, and more precise. Avoid complex sentences, fancy words, jargon, acronyms, and filler phrases. Don’t use unfamiliar words to sound smart or important.
Choose your words with care. Each sentence should include one thought—and only one. Don’t make one sentence do too much work. After each sentence ask yourself, “what does the reader want to know next?”
Shorter is better. Remove every element not doing useful work. Use the fewest words possible. Imagine someone paying you $1,000 for each word you remove. Rewrite to remove ragged edges and extra parts. Sharpen, tighten, cut.
Simple style results from hard work and hard thinking. A muddled writing style reflects a muddled thinker. If what you write is ornate, pompous, or fuzzy, readers will perceive you as ornate, pompous, or fuzzy.
Use writing as a tool to help you think and communicate more clearly. Invest time to improve your writing to achieve your potential.
I don’t believe in silver bullets. But if you forced me to distill the most important career advice I’ve learned, I would tell you to commit one hour every day to learning and skill development.
Following this daily ritual has changed my life. It feels like I have installed a major software upgrade on my brain. The knowledge I have gained has not only upgraded my skills but has also transformed my values and beliefs.
High-performing athletes, musicians, writers, and artists have something important in common: daily, deliberate practice. What work skill do you practice daily that would be equivalent to an athlete running laps or a musician practicing scales?
Many people want to get ahead. Few push themselves mentally. Skill development requires consistent practice, feedback, and pushing through discomfort. You’ll need to learn dozens of useful skills to contribute value and reinvent yourself again and again over your career. Learning skills builds your self-confidence by closing the gap between who you are and who you think you should be.
To excel in your field, you need to solve complex problems and produce quality work. One way to reach that level is to adopt a craftsman mindset. Master rare and valuable skills to find fulfillment in your career and earn financial independence. You’ll become a magnet for opportunities and gain the freedom to choose exciting, attractive work.
Don’t wait until you need a new skill to start learning it. To seize opportunities, you need to master skills years before you need them. If you procrastinate or become complacent, you’ll not only miss opportunities but actually be in danger of getting left behind. And it’s getting harder and harder to catch up when that happens.
You can’t expect to rely on raw talent when new opportunities arise. Continuous learning and development are mandatory because the accelerating pace of innovation is allowing machines to take over repetitive tasks while requiring knowledge workers to master new technology and increasingly intelligent machines.
If that sounds like a nightmare scenario to you, don’t panic and don’t underestimate how much you can achieve in just six months of focused learning. Today, it’s all about the quality of your ideas and how to leverage the internet.
Two are better than one
Being good at two complementary skills is better than being excellent at one. Every time you add a new skill, your market value increases. Think strategically about the investment needed to develop useful skills.
It’s harder to be a top performer when you’re competing against a global talent pool, as we all are today. If you can build a rare combination of two complementary skills, you are more likely to stand out from the competition and advance quicker. You will be able to perform in the top 20% in two skills quicker and with less effort than you can get into the top 5% for one skill.
Imagine the advantage of a skilled computer programmer who also has excellent communication skills. A top salesperson with deep technical knowledge. Or a doctor in California who’s also fluent in Spanish. The rarer your skill combination, the more valuable you become.
Your unique skill combination should meet at the intersection of what you’re interested in, what you’re good at, and what the market values.
If you’re not sure what that combination looks like, use curiosity as your guide to explore your interests. Make a list of 15 things you’re curious about. Be specific. Then identify where your curiosities intersect.
For example, maybe you’re interested in artificial intelligence and writing. Explore the advantages and disadvantages of using artificial intelligence to help authors write books, journalists publish articles, or knowledge workers create content (reports, articles, website copy, emails, customer communications.)
Keep exploring and feed your curiosities a little at a time until you find something you’re deeply interested in. Search for a topic that interests you so much that you look forward to investing time on the weekends to learn more about it. You’ll be unstoppable if you can find something you enjoy that looks like less-than-pleasant work to other people.
Master meta-skills
It’s essential to learn specialty skills such as computer programming, digital marketing, project management, accounting, law, operations, and sales. But those skills won’t help you stand out from the herd.
To gain an unfair advantage and accelerate your career, master the following meta-skills.
Learn faster. To solve challenging problems quickly, create a learning process to cut through information overwhelm, evaluate opposing viewpoints, develop hypotheses, test ideas quickly, and get feedback. The faster you learn, the more you earn.
Think critically. Learn strategies and mental models to help you deconstruct ideas, test your beliefs, and insulate yourself from forces that want to influence, control, or manipulate you. Overcome the fears and desires that cloud your judgment. See essential connections between concepts and second-order effects. Apply these methods to minimize expensive mistakes, prioritize effectively, and make better decisions.
Communicate effectively. Learn to write and speak well to communicate your ideas clearly and persuasively. Use compelling stories and leverage powerful psychological principles to influence people. Writing helps you formulate, organize, and edit your ideas into a clear and persuasive form before you talk with decision-makers. Aim for clear writing because clear writing becomes clear thinking. Writing also gives you leverage, showcases your domain knowledge, and attracts opportunities. Speaking well allows your ideas to have more significant influence, attracts opportunities, and helps you build stronger relationships.
Choose wisely. Judgment is recognizing the long-term consequences of your choices and making the right decisions to capitalize on them. Good judgment is a superpower, which is typically gained through trial and error. But it’s also a skill you can cultivate by learning to apply principles, processes, and tools to strip bare your beliefs and rigorously question and inspect assumptions. Force your brain to think about a decision from different perspectives to compare scenarios, improve your clarity of thinking, and evaluate options. Tackle stressful choices with confidence and make better decisions.
Negotiate effectively. You need to negotiate when you work with other people with different views so you can reach an agreement. Learn negotiation skills to turn conflict into collaboration and help you navigate relationships with work colleagues, customers, and supervisors. A productive negotiation is more like a dance than a tug of war. Skilled negotiators steer the discussion toward solving a puzzle through collaboration. Like a professional chess player who can see multiple moves ahead on the chessboard, skilled negotiators think through scenarios and use negotiation and persuasion tactics to guide the conversation toward a mutually beneficial outcome.
Learn skills in less time
You have a choice to make. You can be intentional, create a plan, and build good habits to maximize learning in less time. Or you can hope you will learn a skill when you have extra time, feel motivated, or are forced to learn to keep your job. Hope is not a strategy. Don’t put your financial security at risk by neglecting to plan for your continuing education.
Be intentional. Don’t rely solely on inspiration and willpower to make yourself better. Instead, create 30-day skill development plans, which will ensure you learn more in less time. Focus on one rare and valuable skill at a time and start with the in-demand skill that most interests you. There’s no need to commit to a long-term plan. At the end of 30 days, you can assess whether you want to dig deeper and carve out more dedicated time to further develop that skill or whether it’s time to tackle a different one.
Create a skill-building project. The best way to learn is to make something. It’s easy to fool yourself into thinking you know more than you do. To make knowledge stick, apply what you’re learning to a project. You don’t learn skills and retain knowledge by passively reading, listening, or watching content. Projects help you synthesize and express the ideas you are learning while forcing you to push through discomfort and confront real-world challenges.
For example, if I read a book, I remember only a handful of the ideas (maybe 10% to 15% if I’m lucky.) But if I write an article on the ideas presented in the book, I’m forced to think deeply and internalize what I’m learning. As a result, I retain more knowledge at a deeper level.
Projects also provide proof of skill, showcase what you’ve learned, and help you build your portfolio. Portfolios are not just for artists and designers. Build a personal website and portfolio to show how you think and problem solve. Portfolios are more potent than resumes and can help you earn a promotion or land a better job.
Commit to a small project, such as one from the list below. Choose one that is not too ambitious and make sure you can accomplish it in the 30-day timeframe.
Write an essay, article, or blog post.
Create a five-minute explainer video.
Write a summary highlighting what you have learned from a particular book.
Create a case study on a person, business, or historical event related to your work.
Build a financial model.
Learn to code a simple computer game.
Evaluate a job opportunity using decision tools (e.g., decision scorecard, mental models).
Prepare a strategy for a specific negotiation.
Commit one hour every day. Carve out one hour a day (including weekends) to learning and skills development. Use this time to read, write, and work on your skill-building projects. The most powerful way to accelerate your career is to create a daily learning habit. Shift your mindset until you view daily learning as equivalent to drinking your morning coffee or brushing your teeth, and you will earn financial freedom. Make the time. Your future self will thank you!
I recommend scheduling a one-hour block at the same time every day to minimize scheduling conflicts and ensure you prioritize the time. You can also break the time into two 30-minute blocks. To maximize productivity, avoid context switching and distraction during the time block. Don’t check your phone, email, social media, or get up to grab a coffee or anything else during the time block.
Create a weekly plan. At the beginning of each week, invest 10 minutes to map out weekly milestones (e.g., finish reading book X, create an outline for an article) to prioritize your time and stay on track. Update daily time blocks in your calendar with a short note (e.g., read book, work on first draft of article) so you know what to focus on each day.
Use clever shortcuts to cut through information overwhelm. You don’t have to wade through mountains of data and invest countless hours into researching a topic. Instead, try this smart shortcut: Identify the top two to three reputable experts with opposing views and focus on their material. You’ll quickly learn the essential ideas, terminology, and areas of disagreement, and you will be exposed to relevant, cutting-edge research.
Look for material written by experts who collaborate despite holding different views. For example, Nobel laureate Daniel Kahneman and psychologist Gary Klein use adversarial collaboration in this study to debate the power and perils of intuition in business decision-making.
Other methods to quickly identify experts:
Learn the history of the topic or field (notable contributors will be easy to spot).
Use Google Scholar to find the most cited studies and publications.
Look for a systematic review on the topic, written by a scholar conducting a meta-analysis of the research.
Check Amazon for the most-reviewed books on the subject.
Search Apple podcasts to look for in-demand experts interviewed on multiple shows.
Let’s say you’re interested in learning influence and persuasion tactics to become a more effective communicator. When you search for the topic on Amazon, you discover that Dr. Robert Cialdini’s book Influence: The Psychology of Persuasion pops up as the first title with 7,467 reviews and 4.5 stars. Then glance at Google Scholar, and you’ll find thousands of citations for Dr. Cialdini’s work. Now you can be fairly confident about studying Cialdini.
You don’t necessarily need to read five or more books on a topic. You just need to read the best ones.
Before you read a book by an expert, read one of the author’s blog posts or listen to a long-form podcast interview with them and assess whether it will be a worthwhile time investment to read their book. (By the way, you definitely should read Dr. Robert Cialdini’s books Influence and Pre-Suasion. You won’t be disappointed.)
Eat a healthy information diet
Learn as much as you can from other people’s knowledge and experiences, but be very selective. The information you consume is just as important as the food you eat. Exposing yourself to low-quality information by scrolling through social media is equivalent to eating lots of sugar and processed food. It sticks in your brain and hampers your thinking.
There’s a reason billions of dollars are spent on advertising every year. Also, there’s an opportunity cost to every minute you waste reading social media or lower-quality information.
Read and listen to long-form quality content (books, podcast interviews, research papers.) Follow your curiosity and expose yourself to new ideas and different ways of thinking. Take a multidisciplinary approach (learn basic concepts from psychology, microeconomics, biology, chemistry, art, physics.) Often you can apply and combine insights from other fields to innovate. Look for patterns, connect the dots between ideas, and think hard about using them in your specific area.
Focus most of your time on reading books or research papers instead of articles, blog posts, and social media. Only the best ideas make it into a book or are published in scientific papers due to the level of effort required. Most authors spend years thinking about and researching the ideas that go into their book. Older books are usually better than newer books because they have survived the test of time. For example, to help me learn to write copy, I read Scientific Advertising by Claude C. Hopkins, published in 1923, and the Boron Letters by Gary C. Halbert, published in 2013.
Teach to learn
To learn an idea or concept faster, teach it to other people. Simplify and explain everything you’re learning through casual conversations with family, friends, and work colleagues. When you verbally explain new knowledge to other people, you can’t rely on memorizing information; you need to understand concepts from the ground up.
Start today
Follow your curiosity, identify the in-demand skills that align with your interests, make a plan, and begin. Don’t wait to sign up for a training or course. You don’t need money to start building rare and valuable skills. The only requirements are shifting your mindset and creating a daily learning habit. You can do it!
The only thing more valuable than your attention is the energy you deplete to direct it.
Thinking, stress, and making decisions burn a lot of energy. According to Stanford University researchers, professional chess competitors can burn up to “6,000 calories a day sitting in their chair while playing in a tournament, three times what an average person consumes in a day.”[1]
Your brain uses energy to process thousands of important conscious and unconscious choices throughout your day. From the second you wake up, visual images flood your eyes and sound waves crash into your ears. Information travels through your brain at over 260 mph, igniting more than 100,000 chemical reactions per second across 86 billion cells.[2]
To double your productivity, you must design habits, workflow, and systems to promote the efficient use of energy. Energy is upstream of time. Time management is important, but it’s not the root of the problem.
There are three main levers you can pull to increase your market value:
Increase productivity
Build rare and valuable skills
Invest in relationships and broaden your professional network.
Boosting productivity delivers the quickest return on investment out of these three levers.
What if you could double your productivity? What impact would that make on your career advancement and compensation?
How much is your attention worth?
You have a finite amount of energy and time each day. Paying attention to one thing requires ignoring something else. Every word you read, email you write, and conversation you have eats more of your daily energy budget.
According to research published by RescueTime, the average American office worker:
Spends less than three hours per day doing productive work;
Checks email or instant messages every six minutes; and
Spends 21% of working hours ingesting entertainment, news, and social media.[3]
By my calculations, the cost of that kind of distraction equals at least $124 / day or $32,240 per year for the average U.S. worker.[4]
Don’t multitask and context switch
Context switching can kill up to 80% of your productivity.[5] In other words, multitasking can affect your productivity as much as drinking alcohol throughout the workday. If you’re like most people, you’re constantly jumping between tasks, email, instant messages, and meetings. According to research from Carnegie Mellon University, knowledge workers “average about three minutes on a task and two minutes using any electronic tool or paper document before switching.”[6]
Context switching makes you dumber. Heavy multitasking:
Knocks your IQ score down by as much as 15 points, three times more than smoking cannabis;
Increases errors by as much as 50 percent; and
Costs the global economy as much as $450 billion annually.[7]
Build habits to increase productivity
Your brain is not stupid. It turns recurring behaviors into habits, allowing it to free up brainpower for more important tasks. Habits automate decisions to conserve energy, reduce stress, and provide the structure to function efficiently in everyday life. According to researchers from Duke University, up to 40% of our behaviors on any given day are powered by habits and routines.[8]
Good habits help you become the person you want to be. Bad habits get in your way.
Kill bad habits first
Ending bad habits can deliver more productivity gains than creating good habits.
What are some unproductive behaviors you could abandon to improve your productivity?
Perhaps you could:
Stop checking social media or news during the workday.
Stop trying to multitask.
Stop ad hoc inefficient communication.
Add friction to help you avoid bad habits. For example, remove temptation by deleting social media apps from your phone and schedule time to check social media using your computer. The extra effort and inconvenience of logging in using a mobile web browser can be a deterrent.
Conversely, reduce friction to encourage good habits. Take the first step in that direction by eliminating inefficient work habits. What decision can you make once to eliminate hundreds of future decisions? For example, could you allow people to book unblocked time on your calendar using a scheduling tool (e.g., Calendly, Google Calendar) instead of emailing back and forth to decide on a meeting time? Imagine the hundreds of scheduling decisions and emails you could eliminate.
Focus on value
Instead of focusing on hours worked, focus your attention on the value created per hour. Not all work has the same value. Laser focus on completing high-value tasks in less time. What you decide to work on is more important than how hard you work. Embrace this mindset and you’ll start to see every moment of distraction as a thief robbing you of potential income, energy, and time.
Don’t get jerked like a puppet. Prioritize your most important work and design your workday to avoid context switching.Create quarterly plans to identify strategic priorities and plan your week in advance to focus on important milestones. Don’t allow yourself to get sucked into spending hours responding to email and instant messages or working on lower-priority tasks.
Assign every hour a task
To design your workday, break your daily schedule up into specific blocks of time that are aligned with your energy level, work responsibilities, and goals. Scheduling tasks for specific time periods helps you focus on one task at a time and guard against distraction. When you fill your calendar with priority work tasks, it’s harder for people to steal your time.
For example, I schedule a recurring two-hour time block every morning when I have the most energy to focus on important work that requires deep concentration. And I schedule a recurring one-hour block after lunch to complete less cognitively demanding administrative tasks. Schedule all eight-plus work hours in your day, but don’t break the time into smaller than 20-minute increments.
Use time blocking and the following habits to supercharge your productivity. You will feel like you’re driving a Ferrari on a racetrack instead of a minivan stuck in traffic.
Commit to focus exclusively on the scheduled task during each time block.
Schedule times to check email and instant messages (e.g., 9 a.m., noon, 4 p.m.).
Add a block for reactive tasks so you can deal with last-minute and more urgent requests.
Set a timer for each time block to help you focus and manage your time.
Update time blocks at the beginning of each day and allow for flexibility.
Build in buffer time and schedule breaks in addition to lunch.
Schedule your ending time. Know when you will stop work for the day.
I approach each time block like a sprinter running a race and put my full energy and focus into the scheduled task for that limited period of time. No going to the bathroom, checking email, or getting up to grab a cup of coffee.
Start with 20-minute time increments to train your focus. Add time gradually as your focus improves until you can sustain longer periods of intense concentration. Due to the overhead of context switching, it takes most people the first five to ten minutes to clear their heads and get into a flow state. Work gradually toward a goal of 60- to 90-minute blocks of focused time. My sweet spot is 60-minute blocks before I need a mental break.
Minimize email and instant messaging
Don’t allow email or instant messages to drive your workday. Opening your inbox is like pulling the handle on a Las Vegas slot machine. Hitting the jackpot is highly unlikely, but you are guaranteed to waste a lot of time. When you open your email or instant messenger, you no longer control what grabs your attention. Therefore, you want to limit your exposure.
But scheduling time to check email and instant messages is not enough. You want to reduce the number of messages you receive in the first place.
Create clear processes to minimize messages and improve communication with your team and customers. Inventory your email inbox and instant messages over the last 30 days. Examine the purpose of each message and identify recurring decisions. Look for ways to construct a process for each decision to prevent future messages. A little investment up front can create a workflow that avoids lots of back-and-forth chatter and distraction.
For each recurring decision, create a shared document (e.g., Google sheet) or add it to a task board (e.g., Trello, Asana, Flow) and establish a review schedule. Creating a predictable workflow allows everyone involved in the decision to see information, update statuses, schedule responsibilities, and add notes to identify issues or ask questions. You can use this method to review content and provide input on any type of collaborative project.
Another strategy to reduce messages is to set office hours at a designated time to make yourself available to talk with people. Sometimes a short conversation can save dozens of back-and-forth messages.
Don’t use your email inbox to manage tasks and obligations. Put them into a task manager or to-do list to reduce the time you spend in your inbox.
To dig deeper into all the ways you can kick your email habit, read Cal Newport’s book A World Without Email.
Have fewer—and more productive—meetings
Most meetings are an inefficient waste of time and resources. When I walk into a meeting (or join a Zoom call), the first thing that comes to mind is how much it costs to have all these people in one room. Long-form memos can replace many types of meetings. Getting multiple people together for a meeting should be reserved for times when discussion is needed on important decisions.
Don’t call a meeting to provide updates—use memos to communicate those. When a meeting is necessary, distribute long-form memos in advance to help the meeting be more productive and worthwhile. Communication based on long-form writing forces team members to exchange ideas based on complete thoughts and contemplation, whereas meetings encourage participants to react in the moment and shoot from the hip.
Communicating through comprehensive written memos also frees you from aligning schedules and allows people who could not be in the room to understand issues, assumptions, and decisions. I’m not suggesting you do away with meetings altogether because there can be value in getting people together to discuss ideas. However, meetings should be a last resort and not a first option.
Exchanging ideas in written memos before meetings can also allow your times together to be shorter and more effective. For example, Amazon does not allow PowerPoint presentations in meetings. Instead, the company requires a meeting memo—a short written document with background on the agenda items, assumptions, scenarios, and decisions to be made. The meeting memo loads information into people’s brains quickly and allows them to absorb information better because they are reading.
Offload information to your second brain
Storing information in your head burns energy and limits your capacity to process new information and remember things. So stop trying to remember everything. Instead, capture and preserve knowledge, notes, and ideas in a digital format.
Outsourcing your memory improves your thinking, reduces stress, and helps keep you organized. I completed a personal knowledge management training called Building A Second Brain that transformed how I capture, organize, and share information. Here’s the overview of the methodology taught in the course.
Boost energy and accelerate learning every day
Your habits compound to help or hurt you. Physical and mental fitness are tied together. You can get exponential return on learning, exercising, eating healthy, sleeping, and meditating by investing a small amount of time every day.
But beware: bad habits also compound. Drinking, smoking, eating junk food, and failing to exercise can have cascading negative effects on your health and productivity.
Not all habits are created equal.Focus on significant actions that move the needle. For example, you could habitually track multiple metrics related to your car, such as tire pressure, miles traveled since last oil change, or when to check and replace your air filter. These metrics might be very important to make sure your car is achieving optimal performance. But when you’re driving the car, the most important metric to track is how much gas is in the car’s tank. You need to make a habit of watching the fuel gauge to know how far you can drive without running out of gas.
In the same way, you need to focus on habits that fuel your body and brain. Cultivating the following habits has had the biggest impact on my energy, learning, and productivity.
Sleep. Maintain a consistent sleep schedule during the work week, waking up and going to sleep at the same time each day. Benefits: Improved health, attention, response time, creativity, and decision-making ability. Sleeping for fewer than seven hours a night impacts your brain function and immune system.
Morning routine. I do the same things in the same order every morning. Benefits: Fewer decisions, which saves time, conserves energy, and reinforces good habits.
Meditate. I meditate first thing every morning. If you’re new to meditation, start with five minutes and add time gradually. Over the course of one year I increased my time to 40 minutes. Benefits: Less emotional reactivity, reduced stress, improved focus.
Read. I dedicate a minimum of 30 minutes to reading books—not social media, news, or articles. Benefits: Injects my brain with new ideas and accelerates learning.
Write. Writing helps integrate the knowledge learned from reading. I invest at least 30 minutes writing every day on topics I want to learn more about. Benefits: Improves clarity of thought, internalizes learning, allows me to share and communicate ideas with others.
Exercise. I exercise for a minimum of 30 minutes every day. I run outside, go to the gym, or walk. Benefits: Increases energy, reduces stress, prevents weight gain, makes me stronger, and makes me feel better.
Track habits manually
Tracking measures progress and builds a positive feedback loop reinforcing your actions.
I used to always look for ways to automate tracking and reduce friction. But I discovered a counterintuitive insight through trial and error. Adding friction by manually updating the most important metrics as I complete them throughout my day works better than automated tracking.
I’ve tried using different tracking apps and metrics but have been surprised to find that tracking minutes in a simple Google sheet has yielded the best results. Opening the sheet several times a day to manually update metrics for each habit and seeing my progress creates a dopamine hit and positively reinforces my goals.
I track a limited number of important daily habits that yield the biggest impact on my learning, energy, and performance. You can see a sample of my tracking here.
Tune your day
Experiment with productivity methods and customize them for your situation. Productivity is not one size fits all. Tune your habits, workflow, and systems in the same way a musician tunes their instrument to hit the right pitch. Strike the right balance between flexibility and structure to conserve your energy and maximize your creativity and focus.
I don’t want to give you the impression that any of this is easy. Growth requires effort. But you don’t need to incorporate all these ideas at once. Start small and build momentum. Your effort will pay off. Work toward doubling your productivity to earn more money and gain time to pursue your interests and spend more time with friends and family.
Goals provide a desired destination and help you clarify why you want to be more productive in the first place. Habits, workflow, and systems provide the method of transport to get there.
[2] “Exploring the human brain,” Anythink, December 2015, https://www.anythinklibraries.org/blog/exploring-human-brain#:~:text=With%20information%20traveling%20at%20260,complex%20entity%20known%20to%20man/.
[3]Work life balance study 2019, Jory MacKay, RescueTime, January 2019, https://rescuetime.wpengine.com/work-life-balance-study-2019/.
[4] Assumptions: Salary per year = $50,000; $50,000 / 1,800 hours = $27.78 / hour; $27.78 / hour X 4.5 hours distracted = $124 / day
[7] “The high cost of multitasking,” Infographic, Fuze News, January 2014, https://www.fuze.com/blog/infographic-the-high-cost-of-multitasking/.
[8] “Habits—A repeat performance,” David T. Neal, Wendy Wood, and Jeffrey M. Quinn, Current Directions in Psychological Science, 2006, https://web.archive.org/web/20110526144503/http:/dornsife.usc.edu/wendywood/research/documents/Neal.Wood.Quinn.2006.pdf/.
Deep in his autobiography, Benjamin Franklin reveals a secret to his success. His accomplishments steal the spotlight, so I almost missed this buried treasure.
Before I share Franklin’s secret, you need to understand some background to help you understand the outsized impact this strategy had on his career.
Imagine being born in 1706, living in a small house with sixteen siblings, and enduring the cold and dark winters of Boston, Massachusetts, without electricity or indoor plumbing. Imagine being forced to quit school at age 12 because it cost too much money and being sent to work as an apprentice in a print shop.
It’s hard to imagine how much success you could expect in those circumstances. But Benjamin Franklin overcame all those disadvantages to:
Become one of the founders of the United States;
Help draft and then sign the Declaration of Independence, U.S. Constitution, and treaties with France and Great Britain;
Build a successful printing business and be selected as the official printer for Pennsylvania and New Jersey paper currency;
Purchase and operate the Pennsylvania Gazette newspaper;
Make improvements to the mail system as the country’s first postmaster general;
Invent bifocals and the Franklin stove and conduct experiments that helped lead to the development of electricity; and
Help launch multiple community-based organizations, including a university, a militia, and the nation’s first hospital, subscription library, and fire department.
And those are just the highlights. Benjamin Franklin’s accomplishments are so numerous it takes multiple pages to list them all.
Franklin was self-taught and well-known for having an insatiable appetite for reading books and writing.
But you may be surprised to learn that, at age 21, Franklin started a secret club for mutual development that lasted for 38 years. Junto, also known as the Leather Apron Club, included 12 members who met every Friday to share knowledge; discuss morals, philosophy, politics, and science; and help each other in their business affairs.
The group included printers, surveyors, self-taught mathematicians, cabinetmakers, shoemakers, clerks, and a bartender. Franklin credits the relationships he built with Junto members as key to his development and success.
Social capital: More valuable than money
The people you know and the value of those relationships determine your social capital. Social capital provides a competitive advantage by giving you access to opportunities, advice, support, and feedback that money can’t buy.
Humans learned a long time ago that a group of people will be smarter and stronger than any one individual. Lacking the lion’s strength, the rhino’s protective thick skin, or the cheetah’s speed, we discovered that banding together helped us to fight off predators and hunt animals faster or stronger than us.
In some ways, things have not changed. Your ancestors hunted in groups to survive, and you need to work with other people to earn money to support yourself and your family. Cooperation continues to be the winning strategy.
But cooperation doesn’t work without trust, which provides the glue to bind us together. Without it, we would live in a world of paralyzing fear and violence. Trust is social currency that enables us to help each other without exchanging money. The strong social norm of reciprocity says if I help you now, you may help me later. And because you can’t be the best at everything, it’s practical and more efficient to work collaboratively with other people. Although not formally tracked on a ledger, the exchange is often more valuable than using money.
High-trust relationships go beyond fundamental reciprocity and cause people to want to help each other. But this level of cooperation requires both parties to trust each other enough to shed their armor and be vulnerable.
Peter Thiel, the co-founder of PayPal, Palantir, and Founders Fund, is one of the most successful entrepreneurs and venture capitalists of our time. He says his tight-knit network plays a critical role in his learning and decision-making. He described the process on a 2017 podcast:
One thing I try to do every day is to have a conversation with some of the smartest people I know and continue to develop my thinking. I’m trying to learn new things. I find that I learn them from other people, and it’s often people with whom I’ve had conversations for a long time. So, it’s not an approach where you talk to a new smart person every day. It’s one where you have sustained conversations with a group of friends or people you’ve been working with for a long time, and you come back to thinking about some of these questions, and that’s how I find I continue to learn every day and expand my thinking about the world.[1]
Networks deliver opportunity
Why do people compete to get into Harvard, Stanford, MIT, Yale, and other Ivy League schools? Gaining knowledge and skills represents only a small part of the value.
Anyone in the world with a computer and internet connection has access to free education from MIT. MIT makes almost all course materials publicly available for free.
A few years ago, Scott Young challenged himself to learn the entire MIT undergraduate four-year computer science curriculum in 12 months. Studying the free material offered online, he successfully passed the final exams and completed the required programming projects without paying a dollar in tuition. Although he did not earn an MIT degree, Scott’s experiment highlights one way you can acquire knowledge and skills while saving three years and a lot of money.
The total price to attend MIT for the 2019–2020 academic year was $73,160, including tuition, housing, food, and personal expenses. Why would people pay approximately $300,000 for a four-year degree if the course materials are available for free?
Access to instruction and interaction with faculty has value, but students pay the premium for the credential and network. They believe the relationships they will build and opportunities they will find through the alumni network are worth the investment.
Shaped by your peers
Your relationships have an impact beyond your career. You soak up the aspirations, values, beliefs, and attitudes of the people around you. Peer pressure, social status, and norms are powerful motivational forces that can help or hurt you. So be selective.
Decades of scientific research show how social networks influence our behavior, our habits, and even our appearance. Recent studies conclude:
A person’s chances of becoming obese increased by 57% if he or she had a friend who became obese.[2]
People stop smoking because the people around them stopped. For employees working in small firms, smoking cessation by a coworker decreased a person’s chances of smoking by 34%.[3]
Don’t underestimate the power of the people around you to shape your behavior. Surround yourself with people who push you to be better. Build long-term relationships with intelligent people who challenge your thinking and give constructive feedback. Direct, honest feedback is hard to find because very few people are willing to tell you the truth. Most people want to avoid conflict, and they don’t want to jeopardize their relationship with you.
How to build social capital
You don’t need to be born into a wealthy family or attend an Ivy League school to build social capital. The internet unlocks access to intelligent, creative, and curious people while also providing you a platform to showcase your ideas.
But a shift in mindset may be required to create the optimal network. Instead of focusing on how people can help you, focus on how you can help them. A paradox is at work here. The more you seek to help other people, the more you will benefit. Act with generosity, and people want to help you. Learn faster by teaching others. Find purpose by contributing to something bigger than yourself.
Notice the precise language Benjamin Franklin used when he described the Junto as a “club for mutual development.” Not “self-development.”
The idea of always putting yourself first is counterproductive and will prevent you from attracting the best people. But as you help others and build stronger relationships, you benefit from their specific knowledge, feedback, and connections.
Here’s how you do it.
Build skills. To build mutually beneficial relationships, you need to have something to offer. Let curiosity be your guide and invest time building rare and valuable skills in a topic you’re interested in. This will also give you opportunities to connect with people who share your interest. With focus, you can gain useful knowledge and acquire skills in as little as three months.
Be useful. The more useful you can be to other people, the more they will want to help you. You need to earn trust and provide value.Nobody owes you anything, and it’s unlikely there’s a line of people banging down your door to be your mentor. Successful people are busy. Instead of thinking about how someone can help you, ask yourself, how can I help this person?
Give first. Offer value without expecting anything in return. Building social capital requires taking a risk. Be as generous as you can by consistently providing value to other people. Stick with it, and you’ll be rewarded over time.
Write online. Become a magnet andshare your ideas and knowledge through articles, essays, blogs, or social media. Writing online gives you leverage and exposes your thoughts to a broader network of people. And it’s a lot more effective than going to conferences or meetups.
Go deep. Develop deeper relationships with a small group (6 to 12 people) instead of amassing a large number of weaker connections. Loose connections provide value, but it’s better to focus on building your tight inner circle first. Remember, high-trust relationships go beyond fundamental reciprocity and inspire people to want to help you.
Focus a couple of steps ahead. Identify people you admire one or two steps ahead of you. Their support is often more helpful than an industry leader because they more recently solved problems similar to ones you’re facing. The people at the top are less accessible and usually far removed from your current challenges. And they often suffer from survivorship bias, meaning they may hold false conclusions about what led to their success.
Make a list. Be intentional.Identify and make a list of at least 25 people you can learn from and want to know. Before you start contacting people on your list, do your homework and invest time to understand how you might help them. Be prepared to consistently reach out over time and look for new ways to be helpful and provide value.
Get compounding returns. Invest two hours per week in building and maintaining relationships. Invest one hour in cultivating existing relationships. Grab lunch, go on a walk, get coffee or engage in any activity that allows you to engage in good conversation. Dedicate another hour to developing and helping new desired contacts.
Don’t go alone
Follow Benjamin Franklin and Peter Thiel’s advice and build a tight-knit network of people you trust. Without help and support, your journey will take longer and be a lot more difficult. The pursuit of excellence in any field requires collaboration. Give first, be helpful, and watch your social capital grow.
[1] “Investing Wisdom from Marc Andreessen, Peter Thiel, Reid Hoffman, Chris Sacca, and Others,” The Tim Ferriss Show, Episode #270, October 5, 2017, https://tim.blog/2017/10/05/investing-wisdom/ .
The Navy’s Tomahawk cruise missile soars at 550 miles per hour and can hit a target up to 1,500 miles away. The smart missile’s onboard guidance system uses satellites and global positioning system (GPS) calculations to make course corrections to ensure accuracy within 15 feet of a target. Imagine a missile 20 feet long, almost 2 feet wide, and weighing more than 3,500 pounds flying through the air toward its target. Two coordinates are required to make course corrections—the missile’s location at the moment and the target destination. Course corrections are impossible if either coordinate is missing.
You launched years ago following a trajectory shaped by your birthplace, parents, and education. Do you have a clear target now? Where are you in relation to your desired destination? If you don’t know the answers to both questions, you can’t make needed course corrections. And you will probably not end up where you want to go.
What do you hope to achieve in your life, and what kind of person do you want to be? Unfortunately, most people don’t invest enough time contemplating these questions, even though you are always moving toward something. Be aware of where you are headed and what you are aiming at.
Career decisions are bets on your future
Your career choices are the most crucial coordinates under your control as you move toward your goals. Your direction matters more than your speed, so what you decide to work on is far more important than how hard you work. You can be a fantastic engineer, marketer, or salesperson, but if you work on the wrong problem, take the wrong role, or work at the wrong company, you’re not going to get where you want to go.
Job and career choices impact a lot more than your finances—they have an outsized impact on your happiness and quality of life. The jobs you choose impact where you live, how much free time you have, the quality of your relationships with friends and family, your health, what type of house you buy, and who you marry.
You are likely going to spend 80,000 hours working during your life, so think hard about where you want to wind up in your career and create a plan of action to start moving in the right direction. Crafting a career path that provides fulfillment, financial independence, and supports your desired lifestyle requires thoughtful planning at the outset and course corrections along the way.
Think long term. Imagine the future and work backward. What does success look like? What are you aiming at? Clearly defining a target ensures that the next job you choose leads you in the right direction. I’ve included a planning exercise and questions below to help you think through and clarify your goals.
You don’t want to have regrets. For most people, their biggest regrets stem from the things they chose not to pursue. The people, places, or ideas left unexplored. Don’t fall into the trap of choosing a career simply to please your parents or your friends. Don’t get a job only so you can make a lot of money to buy a fancy house and car and expect to feel fulfilled.
Imagine your funeral. Who will attend? What will they say about you? How do you want to be remembered? The jobs you choose determine how much time you spend with family and friends and how much energy you will have to pursue your interests or mission. Don’t waste time and energy working in a job that’s not guiding you toward your desired destination.
Identify where you find purpose
For some people, work provides a sense of purpose and allows them to be useful by contributing value to something bigger than themselves. Others are more likely to find purpose and value outside of their workplace.
Understanding where you are most likely to find meaning in your life will help you make wise job choices. For example, if you know that raising kids will be your primary path to purpose, you should select a job that will maximize quality time spent with your children.
People crave meaning and purpose. We create meaning through our beliefs, thoughts, and actions. And we use stories to extract meaning from our experiences and to understand who we are.
You find meaning by voluntarily shouldering responsibility. This is not intuitive, especially because our culture tells us to seek pleasure, accumulate material wealth, and shed responsibility to live “the good life.”
Viktor Frankl, a Holocaust survivor and professor of neurology and psychiatry, founded logotherapy, a type of psychotherapy based on the premise that an individual’s primary motivational force is to find meaning in life. In his book Man’s Search for Meaning, Frankl describes three paths to a meaningful life. Notice how taking responsibility underlies each of his recommended paths:
Through meaningful work;
Through nurturing and caring for another person (e.g., raising children); and
Through overcoming adversity and suffering.
What path are you on? Will it lead to a meaningful life? Do you want to change direction?
Are you seeking a job, career, or mission?
Get clear on what you’re seeking. Most of us need a job—a way to earn money to support ourselves and our family. A job pays the bills. You don’t need to love it, and it does not need to be your primary source of life fulfillment.
A career is a job you’re good at and one you are willing to make sacrifices for because it provides fulfillment.
A mission is your calling and the highest possible pursuit. No one can give it or take it from you. Your mission may be the same as your career, but it doesn’t have to be. Sometimes you get a job to provide you with the time and energy to pursue your mission outside of work.
And don’t confuse your hobby with your job or your mission. Hobbies are activities you are interested in—something you do for your pleasure without a specific goal.
You may be surprised to learn that earning more money or following your passion is not the main factor in finding a job that’s enjoyable and meaningful. According to two decades of research into the predictors of a satisfying life and career—drawing on over 60 studies compiled by 80000hours.org—to have a fulfilling career, you should do something you are good at that allows you to contribute value to something bigger than yourself.
The research shows the following predictors of job satisfaction.
You’re good at what you’re doing.
You’re engaged, challenged, and have some degree of control over your tasks.
You contribute value and help others.
You work with people you like in a supportive work environment.
You get paid fairly.
Your work hours and commute match your desired lifestyle.
Ask important questions
The specific questions you ask yourself matter. For example, rather than asking, “What’s my passion?” ask, “How can I be useful?”
Your answers will help you identify potential job paths aligned with your interests, abilities, and desired lifestyle. The questions below will get you started; based on your answers, keep asking questions specific to your situation that will help you determine your desired direction.
How can I be useful?
What problems am I most interested in working on?
What am I unusually good at?
What am I most interested in learning?
What are my constraints?
How much money do I want to earn?
Where do I want to live?
What fulfills me?
How do I want to spend my time?
You become what you do
Be extra careful when accepting a job offer. A job shapes how you act and becomes part of your identity. Don’t underestimate the power of your co-workers to influence your behavior. Humans are herd animals, and the social norms of your group shape your behavior. Therefore, make sure the job you choose and the people you work with support who you want to become.
Your identity changes through various stages of life. At different times in my life, I wanted to be a National Geographic photographer, pro rock climber, mountaineering guide, karate teacher, organic farmer, solar contractor, fireman, detective, stockbroker, inventor, entrepreneur, and many other things. The jobs I wanted to pursue were fueled by my interests and who I wanted to become.
Envision your future
To ensure you are aiming at the right target, engage in mental time travel.Invest the time to clarify where you want to go and to imagine the future you want to avoid. Research shows that anticipating the ways things might go wrong helps you get things right. For example, in a work setting, teams can produce 30% more reasons why something might fail when they imagine the project did fail and then work backward to identify obstacles.[1] This process then helps them avoid those obstacles—and failure.
Spend time defining the life you want to avoid at all costs. Fearing this pessimistic vision and associated potential threats will help motivate you to make better decisions. You know your weaknesses and bad habits better than anyone, so you can imagine what would happen if you allow your worst impulses to guide your actions. Imagine falling prey to indecision, vices, a lack of self-discipline, and bad decision-making. Describe this future state in as much detail as possible, considering all aspects of your life, such as work, health, relationships, and finances. Force yourself to write for at least 20 minutes to clarify the future you want to avoid.
After picturing the life you don’t want, envision the future you do want to build. Close your eyes and spend a few minutes daydreaming about your ideal future. Consider all aspects of your life, including career, relationships, health, family, home, location, finances, and lifestyle. Spend some time imagining what your typical day looks like in your imagined ideal life.
Concentrate on the end state, not the process of getting there. This exercise does not require you to identify a specific job. If you know your dream job, that’s great, but if you don’t, simply describe the type of work environment, team, and tasks you enjoy.
For example, do you like working in an office, or do you prefer working from home or in the field? Do you want to travel for work? How many hours per week do you want to work? Do you enjoy working independently or do you want to manage a team? How many years into the future are you looking?
Be ambitious and don’t hold back on your vision. After a few minutes, start writing, but keep daydreaming. Write about your imagined, ideal future, and describe it in great detail. Even if you feel blocked, force yourself to let your imagination go and keep writing for at least 20 minutes.
ABZ planning
After you envision your future and reflect on important questions, start sketching out your best hypotheses. Making career decisions involves much uncertainty, and it’s easy to feel stuck or not know where to start. Make some best-guess hypotheses and begin generating ideas. But be sure to make decisions and weigh tradeoffs focused on your long-term goals.
Your strategy will depend on your career stage. Early on, when you’re very uncertain, you should focus on career exploration and experiment. Don’t focus too narrowly on a single option.
Go and gather information and test out lots of options. Speak with three or more people who work in a job area and read industry publications and books about the field. Look up the base rates for compensation in each job.
But realize that research and interviews can only get you so far. Try out different jobs. Take options that help you gain new skills and build valuable connections that can be useful in various fields. Consider taking on project work, internships, or jobs with trial periods or shorter commitments. Don’t be afraid to quit if the job is not what you thought it would be or if you realize it will not be useful in supporting your career path.
Later, when you have more responsibilities (e.g., mortgage, kids), you will need to use a different strategy because of your financial obligations and time restrictions. At this stage, you will need to make job decisions more methodically. Invest more time in research, create detailed scenario analysis, and talk through tradeoffs with your family.
After you get clear on your strategy, you are ready to make plans. Plans help you think through what you want and lay out the necessary steps to move forward.
Your plan should change as you learn more. You will need to adapt to changing job markets and personal circumstances. Reid Hoffman, the founder of LinkedIn and author of The Start-Up of You, recommends using the ABZ planning framework.
Plan A. Define your job hypothesis. What problem do you want to work on? Why do you think it’s an excellent opportunity? What role do you want to play? Why will you be good at it? What skills, credentials, and connections will you need to be successful? Where do you want to be in three to five years? Question your beliefs by rigorously challenging and inspecting your assumptions. Write down your answers to these questions and conduct a premortem and backcast to work backward from a point in the future to help identify required steps and obstacles.
Premortem. Imagine worst-case outcomes, and work backward from that gloomy future to identify potential reasons for failure in the job. Imagine a point in the future the day after you failed. Work backward to identify all the reasons you failed due to decisions you made, as well as potential reasons out of your control.
Backcast. Imagine best-case outcomes, and work backward from the positive future to identify reasons for success in the job. Imagine a point in the future the day after you succeeded and work backward to identify all the reasons you succeeded due to your decisions, as well as potential causes out of your control.
Plan B. Assume Plan A is not working, and you need to make a course correction. Plan B explores nearby options but is not a radical departure from Plan A. You don’t have a crystal ball, so you can’t blindly follow your plan like a blueprint. Plans are not static. You will learn and need to make course corrections. For example, let’s imagine you are pursuing a job in corporate law. What happens if you find corporate law unfulfilling or it’s not what you thought it was? What’s an alternative path based on your interests you can pursue that leverages your law degree? Maybe you pursue criminal law, estate planning law, or intellectual property law. Map out your desired alternate option and repeat the planning exercise you completed for Plan A.
Plan Z. What do you do in the scenario when your plans aren’t working and you need to change something? Imagine you’ve invested time learning and making course corrections to your Plan Bs, but now you have lost confidence you are on the right path. Don’t continue doing something that’s no longer beneficial simply because you’ve already invested a lot of time or money in it. These are sunk costs. It’s time to execute your temporary fallback plan. Make sure you still have enough money in the bank to navigate a radical job change. Don’t wait until you run out of money and you feel trapped. Ideally, your Plan Z becomes your new Plan A.
Get feedback on your plans
Ask two to three trusted friends who know you well to provide feedback on your ABZ plans. Also seek feedback from a coach or from two to three people in the field you want to enter. Be vulnerable and monitor your emotions so that you are not defensive. Listen more and speak less.
Feedback is a rare and valuable resource. Direct, honest feedback is hard to find because very few people are willing to tell you the truth. Most people want to avoid conflict, and they don’t want to jeopardize their relationship with you. A conflict of interest often influences feedback from family, friends, or work colleagues. This is why it’s also helpful to get feedback from a coach and other people in your desired field. Your challenge will be to recognize the bias of the people providing you feedback and then to synthesize their input to make the right decision.
Next steps
Using these techniques and strategies can help you determine whether your job and career are carrying you toward your life goals or whether you need to make some course corrections on the fly. When your target and current location are clearer, you are ready to zero in on getting your desired job.
[1] Deborah Mitchell, J. Edward Russo, Nancy Pennington, “Back to the future: Temporal perspectives in the explanation of events,” Journal of Behavior Decision-making 2, no. 1 (January 1989): 25-38.
We’re living through a remarkable moment: the beginning of The Information Age, a transformation reshaping society and how we work. As we shed the Industrial Age, like a snake slithering out of old skin, we discover that we need a new toolbox of skills and work habits.
In ages past, our ancestors’ primary skills changed from hunting and gathering to planting seeds and harvesting crops and eventually to operating machines in factories. In our world today, information technology is rapidly changing what skills are needed in the job market. To understand which rare and valuable skills you should work to acquire, determine which skills will be most valued and will cultivate the kind of creativity needed in today’s job market.
Artificial intelligence (AI) and automation are accelerating and will replace most jobs that are repetitive or don’t require creativity. No profession will escape. Any uncomplicated job that requires no creativity is at risk. In addition to affecting taxi and truck drivers, accountants, and cashiers, automation is now rippling through knowledge work, impacting industries such as healthcare, law, education, and financial services.
In a very short period of time, we have seen personal computers, the internet, cable TV, mobile phones, and cloud computing go from science projects to mainstream, essential infrastructure. The largest tech companies in the world, including Amazon, Google, Facebook, Apple, and Alibaba, did not even exist when I was born. And I’m not that old!
Historically, we do a poor job of imagining the jobs of the future because we are blind to the new industries, technologies, and services that will be created. Benjamin Franklin famously did not see much utility in his electricity experiments. In the early days of the internet, few people believed it would be useful in everyday life. Many voices are warning that robots and software will be taking jobs from humans. I’m not convinced that will be our main problem because I’m not convinced that we can confidently predict where our biggest problems will arise.
But I am convinced that to keep pace with innovation, you will need to reinvent yourself again and again. Standing still is moving backward. Ongoing investment in learning new skills becomes mandatory or you risk your skills being obsolete every three to five years.
Just as gunpowder separated military power from physical strength, information technology separates worker productivity from hours worked. One person with specific knowledge coupled with machines can replace hundreds of workers. And knowledge and information can be shared at the speed of light, which dissolves geographic boundaries and enables a global workforce.
An opportunity not to be wasted
Find the intersection of what you’re good at, what you’re interested in, and what the market will pay you for. You are facing a wide-open frontier bursting with opportunities if you have the courage to stake your claim. The Information Age will be the age of upward mobility. Your social status and geographic location at birth no longer predetermine your chances to succeed in the new economy. You have the opportunity to transform your life and earn your freedom.
You can pull three main levers to gain a competitive advantage and increase your market value:
Increase productivity
Build rare and valuable skills
Invest in relationships and broaden your professional network
If you invest wisely in these three areas, you can measure success not just by how many zeros you add to your net worth, but also by how much you pursue your interests, spend quality time with friends and family, and realize your potential.
Don’t get left behind
You’re no longer competing with job seekers in commuting distance of a particular office. More companies are adopting remote work due to improvements in video conferencing, messaging, and software tools. Therefore, employers can access a global talent pool.
Most professions are already dominated by the Pareto principle (80/20 rule), which means 20% of workers are responsible for 80% of the results and reap a disproportionate financial return. Global competition will amplify this effect.
If you’re not in the top 20% in your field, financial freedom will be hard to find. As competition intensifies, we are increasingly moving to a “winner-take-all” economy. Earning capacity is moving away from getting paid by the hour and toward performance professions like professional sports, music, and entertainment. Being “average” will not make the cut in the Information Age.
Don’t get stuck. If you get distracted and procrastinate, you will likely fall further and further behind. And the accelerating pace of change will make it harder and harder to catch up.
The best way to develop ideas for new services or products is to consider your own problems. What do you find tedious, annoying, or inconvenient? How could you solve that problem or minimize the irritation?
Solving your own problem will ensure the problem actually exists. It’s much harder to create a solution for a problem you don’t have. If you don’t experience the pain yourself, you will have to depend on customer feedback to determine if you have solved the problem.
Even worse: You may find a great solution to a problem that doesn’t actually exist or that doesn’t cause a lot of pain. Many new businesses fail because they start with a made-up idea.
I’ve made this mistake myself. I started a software company that calculated estimates for electricity, natural gas, and water bills based on property data, local utility rates, and climate data. Because utility costs are 20%-40% of housing expenses in most of the U.S., we expected that homebuyers would be eager to have such information. We contracted with Zillow and other real estate websites to give buyers a good picture of the total cost of ownership before they made a purchase. Contractors could also use our data to show potential customers how much they could save by installing solar or upgrading their air conditioner or heater.
Unfortunately, this service did not create enough value to justify the cost. I was too far away from the problem to accurately assess the value of our solution. And my desire to help reduce energy use in homes contributed to my blindness. You can avoid this type of mistake by identifying a painful problem that frustrates you personally. It’s likely you are not the only person dealing with that problem, so focus on solving your problem or looking for ways to ease your frustrations.
Is there a missing element that could fix your problem? Often, the best solutions fill gaps between existing products or services rather than creating a completely new way of doing things. Seek out ideas that are unsexy but make weekly tasks easier.
And make sure your idea passes the dog food test: Will the dog eat the dog food? In this case, you are the dog. How much would you be willing to pay for a product to solve the problem? If you would not be inclined to pay to solve this problem, then why would anyone else?
Cultivating ideas to solve your own problem at least ensures you are creating something you want. And if you want it, it’s likely some other people will too.
Create constraints
If I gave you a blank piece of paper and told you to start writing, you might have a hard time knowing where to start. But if I gave you a blank piece of paper and asked you to list your favorite foods, you likely would have no trouble. When thinking about new business ideas, don’t get paralyzed or overwhelmed by the abundance of choices. Instead, create constraints to help you narrow your focus.
Zoom in. Focus on problems you can solve with minimal outside help and support. Your goals and the constraints you set will determine what types of ideas you pursue. I’m currently in the process of creating a new online business, and I imposed the following constraints on my ideas:
No investors
No employees
Must be able to work from anywhere in the world with only a computer and internet connection.
My constraints limit the type of ideas I can pursue.
Consider your own constraints. Do you want to create a lifestyle business that optimizes freedom, flexibility, and time for your family and interests? Do you want to build a company that requires investors and employees? Maybe you should constrain ideas to a specific industry or product type.
Here’s an idea I decided not to pursue. I listen to a lot of podcasts and audiobooks. Often, I hear an idea I want to capture, but I’m doing the dishes or driving and can’t stop and take out my phone and record a note. Even though I’m experiencing this problem myself, solving it would not align with my constraints. A solution to this problem would likely require building a new software application, raising money from investors, and hiring a development team. But please let me know if you build a frictionless, hands-free solution for taking audio notes from Audible and podcasts that integrates into Notion (my preferred note taking app.) I’ll happily pay you a $10/month subscription fee.
Practice noticing problems
Notice friction throughout your day. Look for it. The friction will often lead you to good ideas hiding in plain sight. Think about the last time you purchased a car. If you’re like me, after you narrow down your choices to a specific make and model, you start seeing the model everywhere as you drive around town. You spot the car because you are now tuned to look for it. When you pay attention, you will notice a lot of friction as you go about your day.
Identify what you don’t want
Often it’s easier to identify what you don’t want than what you do. Imagine you and I are going to dinner, and I ask you what you want to eat. Your brain thinks through all the potential options of food you like, and you find it hard to narrow down your choices. However, if I ask what type of food you don’t like, it’s likely you would give me a quick answer.
So, make a list of things you don’t want to do. Maybe you don’t want to travel for work, talk on the phone, or manage people. Then screen out new business ideas that would require you to invest a lot of time in these activities.
Find your niche
Don’t chase the latest hot trends. Avoid competition. What are you good at? What have you done that gives you a unique perspective? Where can you build a personal monopoly because of your specific knowledge? Start with the smallest niche possible and expand out only after you gain traction. Even the biggest successful companies started by focusing on a niche. Amazon started with books. Facebook targeted students at Harvard. Airbnb rented out blow-up mattresses for conference attendees who could not find hotel rooms. Try to find the smallest viable audience that shares your painful problem.
Build your idea muscle
Become an idea machine. After you have identified a problem, then start generating creative ideas for solutions. Build your creativity muscle. Muscles get weak and flabby unless you put them to work. Exercise your creativity muscle to generate more and better ideas. Creativity requires practice.
Create an idea habit. Invest 10 minutes a day generating new ideas. Hat tip to James Altucher for sharing his daily practice of writing down 10 new ideas every day. Yes, I said 10. Make your brain sweat. Let your imagination run wild and write down all of your ideas. Don’t worry if most of the ideas are terrible, and don’t limit yourself to business-related ideas. This daily practice will help strengthen your idea muscle. You may be surprised to discover how creative you become when you stop limiting yourself to only good ideas.
Describe your idea in 50 characters or fewer
Complex ideas are a sign of muddled thinking or a made-up problem. Ideas need to be clear to spread. Use clear and concise language to describe your idea. Entrepreneurs who think and communicate clearly have a big advantage because your idea must be clearly defined in order to sell, recruit, and raise money. Creating a 50-character limit forces you to distill your idea down to its simplest form.
Examples
Product Hunt: the best new products in tech
Stripe: online payments
Dropbox: access your files anywhere
Surround yourself with optimistic people
New ideas are fragile. And good ideas usually don’t sound good in the beginning. Ideas need to be nurtured, so don’t keep them secret. It’s rare for anyone to steal your idea. And 99% of the work is in the execution, not the idea.
Surround yourself with smart, creative people and share your ideas freely. Explain your projects to help you refine them and get feedback to improve them. Don’t waste your time hanging around people who make you feel stupid for sharing bad or silly ideas.
Combining ideas creates innovation.
In biology, male and female genes combine to form the embryo. The re-combination principle also applies to ideas and technology. Every new idea is a combination of other ideas, and new technology is a combination of other technologies. Apple did not invent silicon chips, the touchscreen, batteries, GPS, or any of the dozens of other technologies that combine to create the iPhone. It just combined existing technologies in a new and novel way.
Mix and match ideas and experiment with new combinations. Be playful with this exercise. Some of the combinations may not make sense. But you may be surprised when you create a combination you had not previously envisioned.
Size matters
If you can’t identify the immediate next step to test your idea, then it may be too big or too far out of your circle of competence. Try to break the idea down into smaller pieces.
Sell before you build
Talk to potential customers about your idea. Don’t build a minimum viable product (MVP) or invest significant time in an idea without trying to sell the value to your target customer. Start by crafting your message. The exact language you choose to describe your product and the value of your offer will help you and your customer understand what you are selling. Test your idea by trying to sell it to a customer before you write a line of code or build anything.
Be creative. Create a landing page with your offer and try to sell the product. You don’t need to fulfill the order. Put customers who click the call-to-action button on a waiting list. Call customers or meet them in-person and speak with them one on one. Beware—they will lie to you unless you are presenting a specific offer and price. If they bite, get a letter of intent to purchase your product when it’s ready.
Test lots of ideas
Experiment a lot. Don’t be attached to the outcome. Most of your ideas will fail, so you need to develop the correct mindset to learn fast and move on. Edison tested 6,000 plant materials to find the right type of bamboo for the filament of a light bulb. Mozart was a prolific composer and wrote over 600 compositions across multiple genres, but only a select few of those compositions are known by most people today.
Let ideas evolve slowly
Let ideas simmer. Don’t rush to create a company. If you get good feedback from customers on an idea, consider turning it into a project, but keep expectations low. Iterate on your idea and build momentum. Work on the project as long as possible before turning it into a company. The moment you create a company, expectations change and financial commitment increases.
Now it’s your turn
Notice friction throughout your day. If you approach this task in the right mindset, it can be addictive and fun. Flex your idea muscle to generate lots of creative solutions. Combine ideas and identify ways to test them quickly with minimal time investment. Start with language to sell the value and gauge interest. Enjoy the creative process and, most importantly, have fun.
Questions guide your attention toward a destination. Imagine you could look at a map depicting every important decision you’ve made. You would see that at every fork in the road you had faced a question. Your answer to that question determined your next step, which determined your path forward.
Questions are tools for self-reflection that can shift your mindset and reframe your thinking. Just as Michelangelo carved his masterpiece David from a single block of stone, cutting away pieces of marble to reveal an awe-inspiring image, use questions to chip away your assumptions and motivations to reveal your fears and desires.
Make a list of important questions, but don’t try to answer them right away. Let them stew in the back of your mind as you gather new experiences and additional information. Every time you learn something new, take note of that new knowledge and test to see whether it applies to any of your questions.
Here are some questions I added into in my note tacking app. Whenever I learn something that applies to a question, I add a quick note so I don’t forget it.
What piques your curiosity?
What have you learned that surprised you?
How much money do you want to earn?
Who do you want to spend more time with?
Where do you want to live?
What behavior can you stop doing that would improve your life?
What do you want to accomplish in the next three years?
What deeply held belief do you hold that may be wrong?
How do you want to spend your time?
What scares you?
What fulfills you?
The question effect
Can asking a question really be that powerful in shaping your life? Let’s explore this one: “How much money do you want to earn?” Have you thought deeply about this question? Do you want $100K, $500K, $1M, $10M, or $50M? Before you say, “the more the better,” invest the time to think through the benefits and tradeoffs of your choice.
There’s not a right or wrong answer, but your response will impact where you live, how much free time you have, the quality of your relationships with friends and family, your health, what type of house you buy, and who you marry. Your answer maps to your aspirations, abilities, values, and interests. And your answer will likely change and evolve over time.
There are many perks and benefits to earning lots of money. But earning more money also comes with tradeoffs. Before you set your sights on earning $50M, recognize that your primary relationship will be your career. You will need to work many nights and weekends, and 12- to 14-hour work days will be standard. You will shoulder immense responsibility and stress.
You won’t likely have the time to watch your kids play sports, perform in a play, or teach them how to ride a bike. You won’t have free time to pursue hobbies or spend much quality time with your partner. Envy and expectations may strain relationships with friends and family. It may be harder to make new friends because in the back of your mind you will be wondering whether someone wants to be your friend just because of your money.
Your family may face security threats. Criminals target wealthy people for robbery, kidnapping, extortion. Criminals buy airline flight manifests and target wealthy people when they travel, which explains why many of them will use a different name when traveling out of the U.S.
Earning more money may bring increased status but only marginal utility after you have acquired enough to be comfortable and take care of your family. The entertainment you consume, trips you take, health care you receive, food you eat, or technology you use will not be significantly better at $50M compared to $1M.
Your answer to the question of how much money you want ripples throughout your life. Important life decisions start with good questions. Make a list of important questions. Let them burn slowly in the back of your mind, and beware of your initial answers.
Use questions as a tool to guide your decisions and ensure you are heading toward your desired destination.
