A House of Sticks Won’t Save You from the Big Bad Wolf

Picture this: a gym class, eighth grade. A line of students standing against the wall, waiting their turn to be measured. I was there, too, and when my turn came, the tape measure stopped just shy of 5 feet. That day, I earned a nickname that would stick with me for years: “Four foot eleven and a half.”

I was a late bloomer, a fact I came to terms with early on. I knew I would eventually realize my dreams, but it would take longer than I, or anyone else, wanted. This realization has been a constant companion, a prophecy that's unfolding just as I had expected.

Now, let's shift gears for a moment. Imagine a cold water fish.

Researchers at the University of Las Palmas de Gran Canaria, Spain, have been studying the effects of temperature on growth rates across a variety of species. Their findings are fascinating: when an organism is raised in colder than natural temperatures, its growth rate lags behind the average. Warm temperatures, on the other hand, have the opposite effect.

Consider the humble goldfish. If you raise one in warmer than natural water, it will grow at an astonishing pace. But its sibling, raised in colder water, will grow more slowly. Yet, when both reach maturity and are placed in water matching their natural habitat, they revert to the mean, and become indistinguishable.

There's one key difference, though: the fast-growing fish, raised in warm water, has a life expectancy reduced by up to 16%. The slow-growing fish, raised in cold water, lives up to 30% longer.

Why does this happen?

Warm temperatures speed up metabolism, leading to higher calorie consumption. It's a simple equation: more input equals more output. But the issue of life expectancy is more complex. As an organism grows, it uses its energy and resources for various activities - cellular replication, repair, and maintenance. If the rate of replication is so high that it demands resources that would have been applied to repair and maintenance, the organism grows with an abundance of tissue damage.

A slower-growing organism, however, has a more balanced distribution of resources. This ensures a strong and healthy foundation, reducing mutant cells, inflammation, and tissue damage. While these conditions may not cause trouble at a young age, as an organism ages and becomes more prone to disease, their vulnerabilities are exposed.

This principle isn't limited to goldfish. It applies to most mammals, reptiles, fish - and yes, humans.

This lesson, I believe, is universal.

Fast-growing trees produce soft, airy wood. Slow-growing trees yield hard, dense timber. As German forester Peter Wohlleben puts it in The Hidden Life of Trees, "A tree that grows quickly, rots quickly, and therefore never has a chance to grow old."

I see this principle at work among my friends, many of whom are entrepreneurs.

One friend, a software company owner, is always on the cutting edge of every emerging industry. He pivots with remarkable agility, captures market share, and is often recognized as a pioneer. Yet, his business hasn’t grown in the ten years that I have known him. He has had some phenomenal years, followed by some remarkably insolvent ones. Ten years later, there has been no actual growth, just a relentless pursuit of shiny objects.

Another friend built a seemingly mundane, blue-collar service business. For twenty years, he stayed focused on exceptional customer service and slow organic growth into new geographies. He eventually sold to a strategic competitor for a life-changing sum.

He was the cold water fish.

I appreciate concepts like this because I believe there are certain natural laws that govern us.

Investors seeking the quick win or the easy trade are the ones who get wiped out.

Entrepreneurs who fixate on shortcuts always face their day of reckoning.

Even my kids understand that a quick house made of sticks won’t save you from the big bad wolf.

So take your time. Be patient, and trust your process. Be the cold water fish.

Now on to the portfolio…

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Nothing I write or say is investment advice. You are the only one responsible for your investment decisions.

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Have there been any major events this week that changed my current investment thesis?

Yup.

For anyone not familiar, Jeff Bezos, Richard Branson, Bill Gates, Marc Andreesson and Ben Horowitz are making a billion-dollar play into the mining industry.

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