How To Process Information Like A Contrarian

Courtesy of Arthur Schopenhauer:

Talent can hit a target nobody else can hit. Genius can hit a target that nobody else can see.

Wikimedia Commons

Lux Capital's mantra is "the best way to predict the future is to invent it". In investment decisions, Josh and company seek to find and back scientists and inventors that envision — and seek to create — a future that nobody else can see.

Again, these scenarios may be low probability, but the sum of Josh's information framework may give him a higher probability of success on low probability bets than the average, consensus-seeking individual.

Josh describes this sum as a "mosaic of finding different sources, putting them together, seeing trends and patterns". To best inform Lux's investment decisions, it's a continual process of learning — reading, distilling information, speaking to experts, reforming hypothesis, rereading, redistilling information, respeaking to experts.

Particularly when seeking contrarian views, and from contrarian sources, it's vital to weigh and reweigh the contrarian and expert viewpoints in the decision algorithm, so to speak, in order to create the highest low probability decision.

What's The Goal Of Processing Information Like A Contrarian?

Josh believes in randomness and optionality. Josh says,

If you're humbled to the idea that luck matters so much, then it opens you up to the possibility that there's randomness and optionality, and you should try to maximize that as cheaply as possible.

It raises the question — how do you maximize randomness and optionality, and create your own luck?

I recently wrote about saying yes more often and creating serendipity. Processing information like a contrarian, and using Josh's Fitzgerald, Twain, and Schopenhauer framework is another way of saying yes — of opening yourself up to the opportunity to maximize randomness and optionality.

There may be nothing worth reading on page C22. You don't know until you turn there. You may miss the target that nobody else can see. You won't know until you shoot at it.

It's important to acknowledge that the goal of Josh, and other venture capitalists, is to make investment decisions — decisions that are inherently contrarian and bets against the status quo. It serves them well to process information like a contrarian.

Additionally, VC firms have a portfolio of companies. Their risk is inherently mitigated, allowing them to make low probability, high upside bets. The average person doesn't have that luxury in their decisions and investments.

And being a contrarian is not easy — in fact, it compels us to resist some of our greatest psychological urges. When faced with uncertainty and an abundance of information, social proof — in which we view a behavior as correct in a given situation to the degree that we see others performing it — is a great heuristic to guide our decision making. Challenging and betting against the consensus is to resist the biological and psychological shortcuts that allow us to understand the world.

However, if we wish to disrupt, to innovate, to create change, or to reside on the cutting edge of what is currently possible, it's required that we learn and act like a contrarian. With Josh's Fitzgerald, Twain, and Schopenhauer framework, we've got an incredible model to help us do so.

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