On Scarcity & Abundance

2024.12.08

LXXVII

A scarcity mindset forces you to be reactive and unfocused.

An abundance mindset enables you to proactively focus on what you’ve consciously decided matters.

Too Many Questions!

We had some users this week enter a lot of questions into the BirdDog system. Based on how the questions were worded and what they asked, it resulted in a bit of a noisy experience for the users & redundant information. 

So, we went through all of their questions and merged and reworked a bunch of them. Then, the users agreed to try the new questions, and we made the swap.

That being said, we made a mistake. The user had to tell us that they had a problem with what they were getting out of the product. Given the number of users we have, the fact that the users with the problem are a great opportunity for us, and the fact that I had a call scheduled with them, I could’ve proactively identified the problem and come to the call with a solution rather than having them explain the problem to me in the call and sending the solution after.

Interestingly enough, I think being proactive vs reactive is actually related to the concept of abundance vs scarcity. An abundance mindset leads to a stronger sense of commitment and more proactivity going into a situation like that.

So, this was a good reminder to maintain an abundance mindset.

Scarcity vs Abundance

When you have a scarcity mindset, you accept anything that comes your way, typically out of fear that this might be the last such thing you get. 

When you have an abundance mindset, you are cautious about accepting opportunities, because you know there will be more to come. Is this the thing you want to invest so much time and effort into?  

Speaking of investing, Warren Buffet has an abundance mindset–sit on cash and wait until the right time to buy things that are a really good fit. Cliché, I know, so to remind you that I’m not like the other finance bros, I’ll point out that this was also true of the Nomad Investors*.

In contrast, the stereotypical “WallStreetBets” trader (read: degenerate, their words, not mine) has a scarcity mindset–you need to get in on this trade now or you’ll be broke forever. Interestingly enough, even more respected firms that advertise to retail investors seem to pander to this mindset, too(think: the Motley Fool, ad below). 

The mindset you’re in makes all the difference & is strongly related to the notion of reactivity vs proactivity. If you are in a scarcity mindset, you are reacting & likely overreacting to everything that happens. With an abundance mindset, you have the time to focus and determine what you should focus on, rather than what seems to demand your attention.

*You likely haven’t heard of them, but their cumulative returns of >900% over a period that included 2008 right in the middle of it speaks for itself. I read these letters during a biz econ class and can assure you I learned more doing so than I would have with the third rehashing of supply and demand graphs.

Reactivity & Scarcity

With a reactive and scarce mindset, every opportunity that comes to you is life or death and the next big break.

In terms of trading, this might be hearing about some shit coin* and investing in it because someone on the internet said it will make you rich. Now, this can sometimes work out, as has occasionally been the case with doge coin, or it can utterly fail, as was the case with the Hawk Tuah coin.**

From a sales angle, I had a demo call with a guy who had just started an IT Support business, had no paying customers, asserted that people would use his service simply because he was cheap, expressed discomfort around BirdDog’s price, and still wanted to do a free trial. 

Jack caught me here, because I almost let him do a free trial, anyways. That doesn’t make any sense, though, because in all regards, the guy is not a good fit for us, and trials cost us time and money. If we would have done a free trial, it would have been out of a scarcity mindset, thinking any opportunity is a good opportunity, even if the expected value is near zero.

Any opportunity is not a good opportunity. A good opportunity is a good opportunity. 

*Colloquial for crypto currency that likely doesn’t have a real use case outside of speculation.

**There are totally viable trading strategies based on riding media attention and hype, but most people who purchase these things are gambling.

Proactivity & Abundance

With a proactive and abundant mindset, opportunities are evaluated based on their actual merits, not based on the simple fact that they exist. 

A concern one might have about the abundance mindset is that it leads to laziness, the “I’ll figure it out when I figure it out” attitude. However, it really is what enables the high level of attention that leads to abnormally good results. 

In the Nomad Letters, the investors talk about how they made some purchases in Zimbabwe in 2005. They honed in on what they believed to be an incredible opportunity and focused on it very heavily. Concurrently, nearly every other market besides the one in Zimbabwe was doing great and was undoubtedly rife with distractions and stimuli to react to. Still, they invested inordinate amount of time into what was a good opportunity by their standards.

Not only did they do an insane amount of research, but they also flew out to Zimbabwe to evaluate potential businesses. After that, when they knew they wanted to buy in, they had to deal with an artificially inflated Zimbabwe currency that would erode their buying power if they exchanged USD for it. That wasn’t enough to stop them, though–they found that they could buy stock in South Africa in companies dually listed in Zimbabwe, re-registered the stock in Zimbabwe, and then sell the stock to get significantly more Zimbabwe currency than they would if they did a pure play currency exchange.*

And, when they closed their fund, their Zimbabwe investments had each returned 3x-8x in USD.

With an abundance mindset, as you increase your certainty about an opportunity, you increase your investment in that opportunity, too. And, because of this, you can overcome unique challenges, like artificially inflated currencies or misuse of your product due to having provided poor instructions. 

In contrast, if there are challenges when you are in a scarcity and reactive mindset, it doesn’t matter, because by the time you’ve ran into a barrier, it’s okay, some other immediate opportunity has presented itself. And, if you haven’t seriously evaluated the one in front of and just took it because it was there, then you’ll surely move on to the next thing without evaluating it, either.

The updates we made to the BirdDog user’s question this week were reactive. However, this firm with these users represents a quite good opportunity for us, and the incident is a good reminder about what we should be focusing on. That doesn’t mean neglecting other users–rather, that means saying no upfront more, and treating the sales process as a filter rather than a voracious funnel trying to convert literally everyone who is remotely interested.

The best opportunities have a way of knowing if you’re serious about achieving joint success or desperately grabbing at everything in front of you.

*This tedious process is explained in slightly more depth at the end of page 215 of their collected letters.

Your time is the most valuable thing you have. You get to decide how to spend it. 

Counterintuitively, when I was giving an insane amount of demos (~100 in just over 2 weeks) I was very much in a scarcity mindset. That’s really why it’s a mindset, because it seriously can be detached from reality. 

You can have one demo a year and be in an abundance mindset. 

Live Deeply,