Q: Why do simple or obvious solutions often get overlooked?
A: Leaders are embarrassed by how stupid the solution seems.
Peter Thiel said, “…as an investor, you often want to find things that are so stupid that other investors are embarrassed to invest in them.”
He sites FAANG (Facebook, Apple, Amazon, Netflix, & Google) as an example. They’re the largest and most obvious stocks. But if you bought them when the “FAANG” term was coined and just held, you’d have 8x-ed your money in six years; easily outperforming most VC firms. But it seemed too simple—too stupid.
Smart people like overcomplicating things so they feel like they’re working hard. But the world rewards you for outcomes, not effort.
This doesn’t just apply to investing.
I once wasted 20 minutes standing in a US Customs line because that was where everyone else went. But there was a booth one station over that had nearly no-line. I assumed everyone else knew something I didn’t. Surely the line would have self-balanced if that station was open to everyone, right? No. We all stayed in an unnecessarily long line because everyone was afraid of looking stupid by going to the wrong booth.
Actionable Question: What solution am I overlooking because it seems too stupid?
-Andrew Nemeth
H/T to David Perrell for bringing this concept to my attention.