Greenfield and Brownfield investments are ways in which a company can expand into other countries. They are 2 different types of foreign direct investment.
Greenfield investment is when the company builds necessary resources from scratch in the new country. This could include building new plants, distribution centres etc. Greenfield option makes more sense if the business operations are unique and custom made for the company. It is more risky as it is the more expensive option of the two. If the operations are near one-of-a-kind, it would be cheaper to build it from scratch and operate it like existing parts of the business. A good example of this is the Gigafactory tesla is building in Germany.
Brownfield investment is when the company relies on acquiring existing companies and facilities. This makes sense when business operations are rather existing. In some cases, facilities are leased instead of purchasing. This could be an interim solution before companies can take the leap to build their own facilities in a new market.
This way of thinking can be applied to personal projects as well. Would it be easier to update your personal website by making tweaks or to rewrite it from scratch.
The Casey Neistat work ethic is breaking down what ever you want to be better at into a chunk that can be performed every day. And then doing it every day. No excuses. No ifs. No what ifs. Just do it. Every single day.
He famously started daily vlogging to put an impetus on himself to film something everyday.
The secret sauce is keeping the daily task at the boundaries of your current ability. That provides enough motivation to work on it and get better but at the same time not too easy or boring.
This won’t be easy. DoingÂ somethingÂ hardÂ deliberatelyÂ requiresÂ discipline.Â
One of the key ideas for investing well, over a long period of time is to handle as much of thinking using structured methods. Leaving things open and to be decided by chance is an easy way for it to get affected by emotions, biases and the chatter in your head. A downside to using systems to invest is it is very easy to fool yourself that you have found a silver bullet.
“To a man with only a hammer, every problem looks like a nail” – Charlie Munger.
Systematic thought processes can be achieved in many ways. A well-known approach is having a toolbox of mental models. Another popular way is to use algorithms.
An algorithm is a well-defined set of instructions that can be executed to achieve a solution. Algorithms help make the thinking process more deterministic. These algorithms can be based on different heuristics. Screening is a common practice to filter out companies that satisfy different conditions. Usually conditions on various financial ratios. Filters in itself is an algorithm.
Checklists are probably the most simplest version of an algorithm. They are a very “analog”, pen-and-paper way of putting a system in place.
In the context of investing, systems like checklists and algorithms work better when they are not defined down to the last decimal point. There needs to be a variable part to the system that can change depending on the context and company in question. This is where investing turns into something of an art. Knowing when to use what thought process to value a company.
In some cases, the system in place won’t have a variable part in it. And the complete process can be boiled down to a well-defined algorithm. Once the system reaches that state of maturity, computers can take over and do a much better job then us. Algorithmic trading and investing allows to push the boundaries from 2 perspectives. Trades can happen in a whole new time domain. Instead of timing in terms of time of day, trades can be orchestrated with a resolution of milliseconds. Secondly, the limit of quantitative analysis can be pushed considerably if we let computers take care of the complete process.
Walt Disney used this method to come up with new ideas and subsequently break them down and refine them to end up with something viable.
The process is split into 3 parts:
- The Dreamer: There are no bad ideas here. It can be wild or logical. With as less thought on limitations. Raw ideas that are bold, absurd or downright ridiculous.
- The Realist: In this stage the ideas are re-examined. The practical aspects are given more importance. This stage is about answering “How?” it can be done.
- The Critic: Play the devil’s advocate a bit. Try to shoot down your ideas. A key part of working on the most important and awesome ideas is to kill the not so good ones early on.
Walt also incorporated a physical aspect to this method. Each of this stage would be done in different rooms. This is a really powerful move. It engages and cue’s your brain to get into a particular mindset each time you enter the room.
Social media apps these days have features built into them to keep us mindlessly scrolling through its infinite feed. One easy way to unhabit is to install a “focus” app that limits the time you spend on these apps. But what if we try to introduce a negative stimuli instead of outright limiting the time we spend on these apps. For example, if we have to pay for each scroll we do after a certain daily limit, or if it reduces your daily spend limit on your card. Over sometime, we might get conditioned to use these apps less. But that still creates this whole void of dopamine that was otherwise met. So maybe this only solves half the problem.
To unlearn a habit, we must also provide our brains with interesting and perhaps overwhelming avenues to direct our attention towards.
Our brain is designed to focus on one task. However, by multitasking we are training it to be distracted by multiple stimuli. Each time we switch tasks we lose our focus. The brain takes some sometime before it can readjust to the new task. On an average it takes 23 minutes before the brain can refocus. This is a major barrier to reaching a state of flow while performing a task.
One way to combat this is to batch tasks so that your brain can work on one aspect long enough to generate new ideas, figure out solutions etc. It gives a chance for your brain to think and work deeply in a given area. Elon Musk is said to batch his tasks in a day.
One prerequisite to be in a state of flow while working is to have good clarity on the goal and get immediate feedback. Being in such a state feels like you are on auto-pilot, you lose your perception of time and a feeling of calmness fill in you. Depending on the nature of the task, context and urgency you can convert parts of your workflow into chunks of flow-inducing work. Checklists provide an easy way to put you into such a state even for tasks that are repetitive. Checking of an item from the list kicks off a short dopamine loop in your that propels you to keep at it.
Another key aspect of being in a state of flow is that the tasks should be bordering on your existing capabilities making the task at hand challenging. Not too easy. Not too hard. Hence, tasks that fulfill the following characteristics would be ideal:
- Repeatable on a high level but are nuanced each time
- Recur over time
- Hands-on nature
- Require attention down to the details
Today’s productivity apps like Todoist, Things all try to delight you with the satisfaction that they get when you check things off a list. In a small way, that too is immediate feedback for you.
Doing something hard deliberately requires discipline. This is especially true when you are starting out to do something. And it feels like shouting out into the void and seeing no progress. One way to think about discipline is the training period for your brain to create a dopamine feedback loop. The need for standing out and the pursuit of perfection is an enemy during this period. But after passing that period, it won’t feel like you need to put in a lot of discipline to continue. Moreover, it becomes effortless with time. The next phase involves progressing and making it harder, although it may not feel that way. And that’s when the Goldilocks Rule kicks in. This rule states that humans experience peak motivation when working on tasks that are right on the edge of their current capability. Understanding the “why?” behind that task also factors into this a bit. The incentives have to be aligned in some way for a habit to manifest.
Just. Do. It.