Humans are naturally driven to follow the crowds. We believe in doing what everyone else is doing because it gives us a feeling of acceptance — we are similar to everyone else. Humans naturally do not want to take big risks, because doing so could cause them to lose that acceptance. Therefore, we are unable to reach our full potential because we are always chasing what other people are doing. Although following the crowds can be good in some situations — it has been a critical part of our evolution — it becomes dangerous when we start to compromise our own values that we have internalized, just so that we can be like everyone else. We seek the admiration of our peers, but compromising our values to do so is not worth it.
The problem is that the masses are never right, especially in areas such as startups and finance. If all of the articles saying that the oil sector is a great investment opportunity were indeed accurate, everyone would be rich. This information would be publicly available, and so there is nothing stopping anyone from following the advice of the article which says that oil is a great investment opportunity, and then earning money. Everyone in entrepreneurship and finance is looking to develop an unfair advantage over everyone else, and often this lies in the ability to be one’s self. If you act based on your values in investing, you may lose out on a few opportunities, but ultimately you will prevail. Acting on your values means that you don’t care about what the crowd is doing, but rather what you think is right. This is especially important in starting a company — if you pay too much attention to what everyone else is doing, then it will be very difficult for your company to stay relevant.
Naval is famous for saying that you can “escape competition through authenticity”. If everyone is following a certain path, then the only ways that you can really get ahead are to either be better than everyone else, or to pursue a different path. For example, let’s say that you were going to attend Wharton Business School to study business management. Most people that pursue this path are likely expecting to get a job in business development, consulting, or operations in the future, and so they optimize their lives around that specific goal. Unless you are better than everyone else — which is often an illusion — then it is very difficult for you to set yourself apart from them. You all attended Wharton, and you all have the same experience. When we are competing, we often end up pursuing paths driven by status — to get a diploma, to be seen as great by our network — which end up making us just like everyone else. Pursuing status is an inefficient use of our time for a few reasons. The most notable, however, is that we end up competing for what other people want and what other people think we should want, rather than what we actually want.
If you want to get ahead, then you need to play a different game. There is one element of playing a different game which is often overlooked, yet is very important to understand: being authentic. No-one can compete with you being yourself. If you are authentic and act like yourself in all situations, then nobody will be able to get ahead — they are not you. Who could be the next Elon Musk? Who could be the next Jeff Bezos? There will be nobody who is similar to these people, because they prioritized authenticity — they cared more about being themselves than being just like everyone else. Entrepreneurs are inherently authentic, because in order to succeed, they have to go against societal norms and pursue a non-traditional path. If an entrepreneur isn’t unique, then they will struggle to hire or raise capital, because people want to work for and invest in visionaries and people who act authentic, rather than those who give in to popular opinion so that they are accepted.
Warren Buffett also has a few great thoughts on authenticity. One of the most important characteristics that Buffett has is that he is principled, and works on his own “inner scorecard”. He is not willing to compromise his values in order to advance his personal wealth, or achieve a certain goal. Buffet famously stated “Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover?”. If we consider this in more depth, we realize that doing whatever you can to seek validation from others is often to the detriment of our values, and ultimately makes us feel less authentic. To use another example, it shouldn’t matter if everyone thinks you are an excellent entrepreneur. It should matter that you think you are an excellent entrepreneur. Often times founders look for validation and end up coming up short, because at the earliest stages of a company, you have to be willing to risk social disapproval and go with your instincts in order to succeed.
The aim of life — if such a thing were to exist — should not be to accumulate a significant amount of capital, but rather to live a fulfilling life. After all, we only have one chance to live our life, and so we should optimize for being ourselves. We should spend our time working hard on the things we love doing, and that means that we need to stop working on everything that other people think we should work on. College is a great example here. If I were to not want to pursue college but let my parents convince me to do so, even though I knew it was not the right path, then I would have compromised one of the values on my inner scorecard — integrity. Although in the moment it may seem great because my parents are now proud and have stopped trying to convince me to go to college, how would I feel within a few years? It is very likely that I would regret pursuing college because someone else told me to, when I knew at the time that it was not the path that would allow me to thrive.
How does one go about cultivating their inner scorecard? There is no specific guide to doing this. Rather, your inner scorecard consists of all of the values that you want to practice in your life. If you don’t believe in the ability of college to accelerate your career, then you should not allow others to push you into going to college. If you don’t believe in selling off investments in favor of higher-earning ones — Buffet has famously held onto his investments for the long-term, even if better investment opportunities were available — then you should not allow others to push you into doing this. Everyone else may sell off their less profitable investments in favor of a short-term return, but those that don’t are acting on their beliefs, and are likely to be right in the long-term.
Being yourself is a competitive advantage. Buffett cared more about wealth — being happy, having a good life, et cetera — than money. In the investing case, working from your inner scorecard has allowed you to act more ethically, even if it has caused you to realize a lesser return. The thing to consider is that there is more to life than money — our values define us. If we act with integrity in all situations — even those where money is on the table — we will be able to stand out from the crowd because most people would pursue wealth over practicing their internal values. Money, fame, public acceptance, et cetera are only one component of life — the most important part is how satisfied we feel with our life, our work, and our impact on others.
The one value that I try to cultivate every day is being myself. For example, rather than learning a certain skill because other people in my network have that skill, I instead look to my inner scorecard and consider whether I will derive any value from learning that skill. The rise of social media has caused a lot of us to adopt inauthentic identities — we want to be like a venture capitalist or founder who has received a lot of publicity. Consider this: how did they get there? Most successful people got to where they are today by being themselves, and never compromising their values when it could indeed allow them to become more successful. Most of my work consists of the things which I am really good at, because I am passionate about those areas. I don’t try to do things that I know I am not good at, but rather double down on my defining characteristics.
Consider what makes you unique, and invest more time and energy into exploring that area in more depth. I am good at writing, conducting research, thinking independently, and have a passion for Income Share Agreements. I am not competing to be the best person in venture capital or entrepreneurship — two areas that are not relevant to my goals. I am competing to be the best person in the ISA market, where I have a unique advantage — my passion and prior research. It may be difficult for you to be the best banker or investor in the world, but there will be at least one area where you can become the best in the world, if you are always authentic and act based on your principles. Interestingly, if you be yourself, other people who also value authenticity will naturally gravitate toward you. Being yourself is difficult, and so many people in society value those who take the time to cultivate the value.
No-one can compete with you being you. The masses are never right. Don’t compromise your values to seek validation in the short-term — work from your inner scorecard and work over the long-term.