Courage Gap in Investing

Shaan Puri and Sam Parr discuss the gap between understanding investment opportunities conceptually and having the courage to fully act on them, particularly in the context of Bitcoin and risk-taking in general.

Key Points:

• Bitcoin as "Digital Manhattan":

  • Michael Saylor's argument is that Bitcoin is like digital Manhattan real estate
  • There are only 21 million blocks (like scarce land)
  • The strategy is to acquire as much as possible at any price
  • "You don't look for the third best thing, you buy Manhattan"
  • Focus on scarce, rare assets and hold for the long term

• The Courage Gap:

  • Understanding an investment thesis conceptually is easier than acting on it fully
  • "Having the courage to believe that your opinion is right" is the hard part
  • Sam admits: "I buy into this concept conceptually but I'm not truly acting on it... not in a 100% type of way"

• Risk Management vs. Going All-In:

  • Shaan's approach: "Avoid ruin" is a key principle
  • "Do not risk what you have for what you don't need"
  • Kelly criteria: don't risk ruin, stay in the game
  • "You don't need to borrow every dollar even when you have conviction"

• Levels of Risk-Taking:

  • The most successful people (like Elon Musk) often take extreme risks
  • "There are levels to intelligence, levels to crazy, levels to risk-taking"
  • What most consider "level 10" risk is often only "level 7" compared to true outliers

• Outlier Thinking:

  • Extreme outliers think very differently from normal people
  • Examples: Collison brothers of Stripe have frameworks that are "way different"
  • The gap between average thinking and outlier thinking is enormous
  • "We underestimate how different the outliers are in terms of personality"

• Optimism vs. Cynicism in Investing:

  • "In our business, the cynics get to be right and the optimists get to be rich"
  • Different investment approaches work in different contexts
  • Value investing (Buffett) predicts the future will repeat the past
  • VC/tech investing predicts the opposite - that the future will be different
  • Both approaches can be valid in their respective domains