Author: Collaborative Fund

Rare Skills

Three rare and powerful skills:

1. Understanding why people believe things in a way that makes you respect their delusions.

A rare and useful skill is understanding that people you find to be deluded likely suffer from the same shortcomings you do.

Historian Will Durant wrote in his book The Lessons of History that we should learn enough from history to respect each other’s delusions. He explained:

Our knowledge of any past event is always incomplete, probably inaccurate, beclouded by ambivalent evidence and biased historians, and perhaps distorted by our own patriotic or religious partisanship. Most history is guessing, and the rest is prejudice.

I think this boils down to three points:

  • Everyone is heavily influenced by what they’ve experienced firsthand, because what you’ve experienced is more persuasive than something you read about.

  • Even our understanding of firsthand experience is sketchy, because we oversimplify what happened and self-justify our involvement.

  • Those who didn’t experience an event firsthand have an even weaker grasp on reality because they can cherry pick the oversimplified, self-justified arguments and data from people with firsthand experience.

So everyone has delusions about how the world works. You, me, everyone.

We are all prisoners to our past, products of our generation, and influenced by who we’ve met and what we’ve experienced, most of which has been out of our control. Some are worse than others, and some are more aware of their blindspots. But everyone has a firmly held belief that an equally smart and informed person disagrees (Read more...)

Reality Catches Up

An asset you don’t deserve can quickly become a liability.

Maybe your portfolio surged during a bubble, your company hit a monster valuation, or you negotiated a salary that exceeds your ability. It feels great at the time. But reality eventually catches up, and demands repayment in equal proportion to your delusions – plus interest.

These debts are easy to ignore because they are often repaid in the form of self-doubt and crushed morale. But they are very real, and when you understand their power you become careful what you wish for.

Companies should want the valuation they deserve, and not a penny more.

Workers should want a salary that matches their skill, and nothing more.

Families should want a lifestyle they can sustain, and nothing higher.

None of those are about settling or giving up. It’s about avoiding a certain kind of psychological debt that comes due when reality catches up.

WeWork is currently worth $3.5 billion, which is a monster success for a 12-year-old company – it’s probably in the top 0.0001% of business successes. But of course no one feels that way. The company was worth $47 billion a few years ago, and it was trying to go public at a $100 billion valuation, which no one could justify but felt fun because those were the times we were living in. So by comparison today’s valuation feels like a corporate bellyflop – embarrassment, employees whose stock options expired worthless, and morale shattered as it laid off thousands (Read more...)

Breaking Points

Two weeks ago, Mitt Romney wrote an opinion piece in The Atlantic titled, “America Is in Denial”. The piece highlights numerous potentially “cataclysmic events” facing the nation, namely droughts out west, inflation, rising debt levels, profligate government spending, melting ice caps, illegal immigration, and the events of January 6th. Interestingly though, Romney argues that the most significant threat is actually not the events themselves, but rather Americans’ refusal to address them.

The question is why?

Romney believes it is due to our “powerful impulse to believe what we hope to be the case — We don’t need to cut back on watering, because the drought is just part of a cycle that will reverse. With economic growth, the debt will take care of itself. January 6th was a false-flag operation.”

You may or may not agree with Romney’s causes for concern, but for the moment let’s assume that at least a few have merit. If so, why do people so rarely act before a crisis occurs? Why do we instead choose to bury our heads in the sand and hope for the best?

The answer is actually quite simple — no one knows when something will break. It could be imminent or many years away. No. One. Knows. As a result, people tend to push the throttle until it does.

History is full of examples. It’s why governments don’t reform until it’s too late, real estate developers believe there is always room for one more building….theirs (Read more...)

Breaking Down A Tesla

Tesla has single-handedly transformed the landscape of the automobile industry worldwide in less than two decades. Before it, almost no car companies were seriously invested in developing all-electric vehicles (EVs).

Now, automakers around the world are racing to catch up to Tesla, completely overhauling their R&D to prioritize EVs.

And we think Tesla and the cars it makes are good.

Yes, it’s had its fair share of controversy and drama over the years, from accusations of sexual harrasment at the company to CEO Elon Musk’s infamously mercurial behavior on Twitter (and his efforts both to outright buy it and then get out of buying it). Tesla was also recently de-listed from the S&P 500 Environmental, Social and Governance (ESG) index, which struck many people as odd for a company whose raison d’être is to eliminate fossil fuel emissions.

Setting aside all that recent news to look at Tesla’s cars themselves, the Models S, 3, X, and Y are truly groundbreaking in the EV space because they were the first cars to do everything that a gas-powered car can do without asking drivers to sacrifice style and luxury. And people have been lining up in droves to buy them. So, despite the controversies, the company seems to be doing an admirable job of hewing to its mission to “accelerate the world’s transition to sustainable energy.”

We’ve recently gotten really interested in the materials that make up our world, and so we started to wonder: what are Tesla’s cars actually (Read more...)

Tails, You Win

Steamboat Willie put Walt Disney on the map as an animator. Business success was another story. Disney’s first studio went bankrupt. Later cartoons were monstrously expensive to produce, and financed at onerous terms. By the mid-1930s Disney had produced more than 400 cartoons – most of them short, most of them liked, and most of them losing money. Disney and his studio were nearly broke.

Snow White and the Seven Dwarfs changed everything. The $8 million it earned in the first six months of 1938 was an order of magnitude higher than anything the studio earned previously. It transformed Disney Studios. All company debts were paid off. Key employees got retention bonuses. The company purchased a new state-of-the-art studio in Burbank, where it remains today. By 1938 Walt had produced several hundred hours of film. But in business terms, the 83 minutes of Snow White was pretty much all that mattered.

Long tails drive everything. They dominate business, investing, sports, politics, products, careers, everything. Rule of thumb: Anything that is huge, profitable, famous, or influential is the result of a tail event. Another rule of thumb: Most of our attention goes to things that are huge, profitable, famous, or influential. And when most of what you pay attention to is the result of a tail, you underestimate how rare and powerful they really are.

Venture capital is a tail-driven business. You’ve likely heard that. Make 100 investments, and almost all of your return will come from five of them; most (Read more...)

Little Ways The World Works

If you find something that is true in more than one field, you’ve probably uncovered something particularly important. The more fields it shows up in, the more likely it is to be a fundamental and recurring driver of how the world works.

Take two topics that seemingly have nothing to do with each other: goldfish and tech companies.

Take two groups of identical baby fish. Put one in abnormally cold water; the other in abnormally warm water. The fish living in cold water will grow slower than normal, while those in warm water will grow faster than normal.

Put both groups back in regular temperature water and they’ll eventually converge to become normal, full-sized adults.

Then the magic happens.

Fish with slowed-down growth in their early days go on to live 30% longer than average. Those with artificial super-charged growth early on die 15% earlier than average.

That’s what biologists from University of Glasgow found.

The cause isn’t complicated. Super-charged growth can cause permanent tissue damage and “may only be achieved by diversion of resources away from maintenance and repair of damaged biomolecules.” Slowed-down growth does the opposite, “allowing an increased allocation to maintenance and repair.”

“You might well expect a machine built in haste to fail quicker than one put together carefully and methodically, and our study suggests that this may be true for bodies too,” one of the researchers wrote.

The same thing has been found in humans. And in birds. And in rats.

And (Read more...)

SOS: A New Fund and a Call to Action

Collab SOS: A New Fund and a Call to Action

As a complement to Shared Future, a dedicated fund providing rapid, catalytic capital to entrepreneurs working on climate solutions, we are thrilled to share a new $200 million fund called Collab SOS — which invests in Series A and Series B companies fueling a more sustainable economy across materials, ingredients, energy, and supply chains. Our criteria for investing is simple:

Is your product or service better for the planet, without asking consumers to sacrifice?

The back half of that statement is our bullseye.

Tesla doesn’t ask us to settle on speed or aesthetics.

Impossible Foods doesn’t ask us to compromise on taste.

Stella McCartney doesn’t ask us to sacrifice on style.

And these pioneers are not alone.

Allbirds is using recycled plastic bottles to manufacture their laces. Everlane has used over 34,000 lbs of regenerated nylon waste to develop its swimwear collection.

Flexport launched a dashboard to help supply chain and logistics teams quickly assess and manage sustainability programs—such as enrolling in carbon offset programs and analyzing shipment emissions.

Large companies have committed to bold environmental goals including Etsy powering its marketplace with 100% renewable electricity and Lyft committing to using 100% electric vehicles by 2030.

Dandelion is helping consumers free their homes from using fossil fuels and Span electrifies everything inside.

The Climate Pledge Arena in Seattle is on its way to becoming the first net zero certified arena in the world. This includes the construction materials, the (Read more...)


Fifty-four years ago this month, in a push for publicity, The Sunday Times offered £5,000 to whoever could sail solo nonstop around the world the fastest. It was technically a race, but that was an afterthought, as no one had ever completed the feat.

There were no qualification requirements and few rules. Nine men joined the race, one of whom had never sailed. Just one man finished, 312 days and 27,000 miles later.

But it was two participants who never completed the race that generated the most news. One ended up dead, the other found himself happier than ever. Both outcomes came from decisions made at sea, but neither had anything to do with sailing.

The two men, Donald Crowhurst and Bernard Moitessier, are astounding examples of how the quality of your life is shaped by who you want to impress. Their stories are extreme, but what they dealt with was just a magnified version of what ordinary people face all the time, and likely one you’re facing right now.

Donald Crowhurst was a tinkerer who came up with his own boat modifications. Convinced his innovations could propel him to win the Sunday Times race, he faced just one obstacle: he was broke, and stood no chance of financing the race himself.

Crowhurst struck a deal with an English businessman who agreed to cover the cost of the race under two conditions: They would orchestrate a media frenzy, portraying Crowhurst as a sailing savant. And if Crowhurst didn’t finish, he (Read more...)

Wealth vs. Getting Wealthier

Will Smith writes in his biography that:

  • Becoming famous is amazing.

  • Being famous is a mixed bag.

  • Losing fame is miserable.

The amount of fame almost doesn’t matter. It’s the trajectory that people cling to.

Same with money. I think for a lot of people the process of becoming wealthier feels better than having wealth.

If it’s wealth we were after, most of us would feel great, because most of us are unfathomably wealthier than we were a generation or two ago. Or ten years ago. Or five years ago. Or two years ago!

What feels great is being on an upward path. That’s when dopamine takes over. That’s when you can extrapolate it and assume it goes on forever, and compare yourself to where you were before, and feel like nothing can stop you.

When that path declines – even if it happens when you have a level of wealth you couldn’t fathom a few years ago – the whole sensation shatters.

U.S. household net worth is $80 trillion higher today than it was ten years ago, which is astounding. But it’s about $700 billion lower than it was three months ago, which is honestly nothing. Yet one of those figures creates ten times the headlines, ten times the attention, ten times the emotions, ten times the introspection. It has nothing to do with the level of wealth and everything to do with the trajectory.

The problem is that an occasional downward path is inevitable in investing. Outside of (Read more...)

The Playbook

Maverick is back and given the Top Gun sequel has raked in more than $800 million to date, it is already the biggest blockbuster of Tom Cruise’s career. A lot has changed since the original nearly four decades ago, but the secret to its success lies in what hasn’t changed — its “playbook.”

When one of the movie’s producers recently described how his team approached the script, he highlighted a conversation he had with Cruise shortly before the project started. The message was clear. Cruise said,

“This is a competition film. It’s about family, emotion, and the characters. We have to stay true to the original.”

While the Top Gun sequel employed modern technology and implemented a plot to fit the times, Cruise knew that its ultimate success (or lack thereof) would boil down to how well it followed the playbook that made the original so successful. The producers executed on that vision.

Top Gun’s playbook is simple — appeal to the nostalgia of those who saw the movie in the theaters in the mid-80’s. Remind them of the time they bought their first aviators after seeing Maverick wear them on the runway at Miramar, echoed the line “you can be my wingman anytime”, and rolled down their car windows, cranked up the volume, and driven a little faster when Kenny Loggins’ “Danger Zone” came on the radio.

The journalist Rich Eisen said it better on his show a couple weeks ago after seeing the movie,

“I cannot tell you (Read more...)