Indicators

Recognizing the truth.

By Matthew Laffer
December 13, 2023

The world is not what it appears to be at first glance. Indicators – especially *inverse* indicators – are a way to understand and navigate the world by seeing truths that are normally concealed from us.

When most people are racing toward a cliff, the person running in the opposite direction appears to have lost their mind. And it’s the people racing toward a cliff who often so casually say, “When in Rome.” How quickly people forget the Romans used to feed the Christians to the lions.

Mark Twain said it best, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

What important truth do very few people agree with you on?

I think about this question a lot. It has informed my playbook. In business and in life.

I love making concentrated, contrarian investments. The places where people give less importance are where you’ll find the greatest opportunity. It’s much less considered, which means there’s so much more to reveal.

And there are significant differences between being a theoretical contrarian and really engaging with it. To truly engage requires strong interaction and a deep personal involvement. You have to do your own homework. There’s no outsourcing strong interaction to so-called “experts”.

Step by step walk the thousand-mile road. It is said, the man who has faced death at the point of a sword has an elevated understanding.

Concentrated, contrarian players are not for the faint of heart.

Here are a few of my favorite inverse indicators that have informed my path of truth.

Inverse Indicators.

1. The unnecessary, over-complication of anything is an inverse indicator. You can always recognize truth by its simplicity.

This inverse indicator emerges frequently when speaking with founders, particularly when discussing their business model or when troubleshooting a problem.

Overcomplicating the business is a blind spot for many leaders. “We’re so unique that we can’t be compared to anything” cultivates complexity growth, unchecked.

When troubleshooting, simplify the problem. Strip away the ambiguity and start by focusing on one crystal-clear objective that you can control.

Simplicity has a massive asymmetrical upside.

I also see this inverse indicator illustrated in presentations and in the world of finance. Most charts don’t require more than two or three lines. I still make my own charts with a No. 2 pencil. I find it’s easier to see the truth when we participate in revealing it.

Mark Twain also said, “There are three kinds of lies: lies, damned lies, and statistics.” Charts and statistics can be manipulated in nearly infinite ways. Caveat emptor.

2. Business magazine covers have been a reliable inverse indicator for decades. If you’re looking for ideas to short the market, look no further than this inverse indicator.

Here are some doozies…

3. Does size really matter? Yes! Small classes and intimate workshops have been some of my most delightful and meaningful inverse indicators.

I’ve learned more about leadership from two lines of Yeats than from top leadership conferences around the world.

FOMO makes it difficult to separate popularity from truth.

“I have spread my dreams under your feet; Tread softly because you tread on my dreams.” -W.B. Yeats

Having top-secret security clearance at some of the most innovative companies creates unique opportunities for me to observe and to learn.

The paradox of having top-secret clearance is that it’s a completely unnecessary gateway to the truth. There are no new revelations here.

These tried-and-true indicators for sizing up leadership and culture are intuitive and timeless. Unfortunately, the traditional methods for measuring leaders and company culture leave a great deal to be desired.

Indicators.

1. The ultimate indicator of a leader is that they do what they say they will. Period. Period. Period.

2. A leader’s mood is an indicator of what is being infused into the employee experience. Emotional leadership is a potent driver of company culture and success. Managing financial results and not one’s inner life is a big miss for many.

3. Evaluating a company’s culture from the outside can be more challenging, but it is possible. I get asked about this frequently when people are interviewing with a new company. Here are the culture indicators that I use when I’m on the outside looking in.

a.) Is there L&D for everyone or the execs only?

b.) How do people leave the company, and do they ever return?

c.) Are vendors presented with win-win or win-lose situations?

If a, b, or c, then beware. 😬 If a, b, and c, then run. 🏃

It’s prudent to have more than one indicator when seeking confirmatory evidence. This is especially true since most indicators will eventually bite the dust. We must have an open mind and adapt to change.

One final thought on more soulful matters. The physical world provides a limited view of reality, so you’ll want to have *inner* indicators for knowing truth.

Matthew Laffer is a 3x entrepreneur and the Founder and CEO at Goalspriing.