Friday, June 08, 2012

Start With Why

Just saw a great video on TED. The speaker was Simon Sinek and he was sharing how leaders inspire by appealing to peoples' hearts and emotions. The way they do that is to "Start with Why". The leaders share with the people why they do the things they do. When people see and believe their causes, the inspiration follows.

He asked a question: "If you ask someone what his company does, he would have no trouble answering that, but few people would be able to answer WHY the company is doing what it is doing". The reason that a great company is able to keep growing sales and profits while their competition "cui" (ie falter) in the wind is because the company has a belief and that belief is what defines them and inspires people to believe in what they believe in.

He used Apple as an example as it is easy to understand. There are a dozen or more computer makers in the world but they all cui while Apple rules the globe. Why? Apple has a mission. The firm believes its mission is to create technological products that are easy to use, fun to use and help us connect better with technology and also with other human beings. The firm believes its mission is to think different and bring the best of technology to enrich peoples' lives. Apple happens to just make computers and mobile phones. And we buy their products by the truckloads. It is not WHAT you do (or make), but WHY you do it.

Take Colgate as another example. A stock which I have talked about and own. (Yes pls read the disclaimers carefully :). Colgate does not just sell toothpaste and dental stuff. The firm believes it is their fundamental mission to help everyone have better dental health. They started campaigns to teach school children to brush their teeth when they were young. Those Singaporean readers old enough would know this! They continue to innovate and create better toothpaste (try Colgate Total for its new sensation) and toothbrushes (those that massage your gum while you brush). Colgate's competition is how to give ever better dental care, not P&G. That is why it keeps growing market share. It is the firm's belief that defines it and help grow sales.

He gave an interesting quote on employing staff: "If you hire people just because they can do a job, they’ll work for your money. But if you hire people who believe what you believe, they’ll work for you with blood and sweat and tears."

So when people believe what you stand for, not just will they buy your product, they will want to work for you. And you don't need to pay them! They will also help you spread your belief. Bcos that's what they believe in as well. Humans have an innate capability to empathize and that is why we follow those who believe in their cause.

Whether they're individuals or organizations, we follow those who lead, not because we have to, but because we want to. We follow those who lead, not for them, but for ourselves. And it's those who start with "why" that have the ability to inspire those around them or find others who inspire them. Quote from Simon Sinek.

So here is what I believe.

I believe that I can help everyone identify bargains. Not in the bargains in real life during the Great Singapore Sale, whereby it's almost effortless and everyone knows that three for $10 is a good buy. And obviously, nobody needs my help there.

I believe I can help everyone make good investments and avoid bad ones. I live in the financial world and see fortunes made and lost. Sometimes unduly lost. I brushed up my expertise in identifying bargain investments such as stocks, bonds and properties and I want to help everyone understand when we should be buying; ie when things are cheap like some global stocks now. Not when the market is hot and your grandma opens a brokerage account so that she can buy Creative in 1999. Hence I also believe that I should help people avoid expensive stuff. Like Sky Habitat at $1700 psf. Or Facebook at 50x PE.

The way to achieve my goals are already spelled out nicely in value investing and what the masters have been saying. I believe that it is the purpose of this blog to apply the principles in value investing to help identify bargain investments. It will take some effort for the un-initiated to be familiarized with some concepts such as margin of safety and valuation. But I believe that is not at all difficult if you are willing to put your mind to it.

I believe that the world will be a much better place if more people understand value. We will not see Sky Habitat at $1700 psf, or COE at $90,000 bcos people understand that it simply doesn't pay. Let alone makes sense.

Well, that is my belief.

5 comments:

Singapore Man Of Leisure said...

Good morning 8%!

I believe in free market economy and thus it's perfectly OK for sellers to offer and price Sky Habitat at $1700 and Facebook at 50xPE.

If I have something to sell, I would price it to what the market will bear ;)

Similarly, we the consumers have every right to walk away.

People are funny. I see some people will bargain like hell and do comparison shopping for small ticket items; but for big ticket items like car, property, or equities, they don't mind paying full retail!?

LOL!

8percentpa said...

Hi Sg Man of Leisure,

Your argument works for most consumer products and services, but not investments.

This is bcos the value of aninvestment is not subjective, it is very objective. A luxury watch can sell for 10k bcos to someone who likes it, it is worth 10k. He will have no qualms paying 10k or 20k for it for that matter.

But Facebook is worth $20 and you try to sell at $40, that is akin to cheating, which is why there are now lawsuits being filed against Morgan Stanley. Cheating might be too harsh, but the idea is not far.

If MS tried to sell for $22 or $25, maybe we can argue, value of Facebook will grow over time, so charging a bit more is ok. But at $40, and when it crash 40% in the first week... That's when lawyers phones ring.

Property is both an investment and an aspiration, which makes it special. But I believe the investment side should lend more weight to the argument.

In some consumer products, the situation can also be similar. Take those super kids training courses. The seller says it is worth 3k, but your kid goes through it, nothing much happens, how do you judge whether he did improve? Did the seller just make a quick buck?

Think about magnetic beds, or slimming pills or hair growth gel.
When the result is unmeasurable, then how does the buyer know he didnt get taken for a ride?

There are cases whereby sellers have an obligation to make sure that its product is worth its price. Investments - all the more so.

Of course, you can always argue, in the end, its caveat emptor, buyers beware. Well that's beyond this debate though.

But I would want to think that in a civil society, sellers take care as well to sell products that do has value that is not too far from its price>. Maybe that's just a dream.

Well that's my take, hope to discuss.

Anonymous said...

Hi,
Like your posts espy on education! Pls post more! Just curious, what is your background ?

Anonymous said...

Hello! This poѕt couldn't be written any better! Reading this post reminds me of my previous room mate! He always kept talking about this. I will forward this write-up to him. Pretty sure he will have a good read. Thank you for sharing!
My web site seo birmingham

8percentpa said...

Hi Anon @ 822, I am an analyst. My kids will be going into Sg schools soon. Hence the interest in the education topic. It's such a crazy system right?