Sunday Briefing: On principles, checklists, streaming wars, and forecasting in a complex world

Sunday Briefing: On principles, checklists, streaming wars, and forecasting in a complex world

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Welcome to the Sunday Briefing newsletter where I share some of the interesting lessons in life, business, and investing that I’ve come across during the week.

Latest on Junto

I published two articles during the week.

116 Principles for Business, Life, and Learning. While mental models guide comprehension, principles guide behavior.

Checklists: Getting Important Decisions Right. How to use the timeless tool of a checklist to reduce the rate of error in important decisions.

I’m currently working on a member write-up of Topicus.com—the new European entity created from the spin off of Constellation Software’s Total Specific Solutions (TSS) operating group.

What I’ve been reading

The Flaws of “Subscription Fatigue”, “SVOD Fatigue”, and the “Streaming Wars”. A nice read from Matthew Ball to add to my recent Disney write-up.

The question of SVOD fatigue isn’t about “how many SVODs will the average household have”. It’s really about “how many different roles are there to be played in video”. And the answer here is mostly path dependent – it depends on the innovation, risk taking, and discovery that happens in the marketplace, as well as timing. No one knew “live streaming video games” was an opportunity until Twitch, for example. And while Twitch likely steals time away from the video ecosystem, the viability of the Twitch subscription doesn’t mean that the number of viable OTT services has reduced.

The Fallacy of Forecasting in a Complex World.

…the frequency of occurrence does not equal level of risk. In other words, just because an event has never happened does not mean it has a low probability of happening. Consider the case of a snake bite. I have never been bitten by a rattlesnake; therefore my frequency of occurrence is zero. But a frequency of zero when it comes to snake bites tells you nothing about the risk of being bitten. If I stick my hand under a rock with a rattlesnake, my risk of being bitten is very high, regardless of the frequency of occurrence.

Company of the week

The company of the week is Heico Corp—The aircraft or engine component (generic PMA) manufacturer that has compounded revenues at 10% and net income at 18% per year for the past 10 years. At the current price, my take is that Heico isn’t a screaming buy, nor is it as wildly overvalued as many consider it to be.

Download the full model here and make your own assumptions.

Heico valuation sheet

Quote of the week

Seneca on discipline.

“The day a man becomes superior to pleasure, he will also be superior to pain.”

A thought

In the same way compounding interest increases wealth, good decisions produce exponentially better results the more of them we make. So learning to make them well is a very healthy investment.

Have a great coming week,
Oliver Sung

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