Why seek out fads?
Fads are temporary–they fade away or get pushed out by the next one. If I asked you to name 5 fads right now you’d rattle them off in 30 seconds, but the fads you’d tell me have come and gone–they’re in the past. The real challenge is in identifying current fads–the fads that we don’t know are fads yet. And I’m not talking about fads in fashion, I’m talking about fads in financial advice.
This is difficult and important work. It’s difficult because a fad isn’t a fad until it’s gone. Fads are literally a thing of the past. That’s why a fad never feels like a fad–just “the thing to do.” It’s important work because, A) Financial advice needs upheaval, revolution; something, and B) What’s popular now is usually a good thing to ignore if you want to be the best tomorrow.
Ignore everything (and everybody).
When is ignoring what’s popular a good idea? Almost all of the time. Finding examples of this isn’t very hard. Who can argue that every industry undergoes fads, and that the ability to detect them before everybody else would be beneficial? It’s the only way to beat the status quo.
I got hooked on this idea after being introduced to the essays of Paul Graham.
Graham founded Viaweb, the first SaaS (Software as a Service company) company which sold to Yahoo! for almost $50 million. He also founded Y-Combinator, an extremely successful startup investor and accelerator (the average valuation of a Y-Combinator backed company is $45.2 million). He’s also well-known for his essays, which are largely responsible for his personal website’s approximate 17 million pageviews a year. He’s a smart guy. Here’s how he finishes up an essay on the dangers of fashionable thinking:
In any competitive field, you can win big by seeing things that others daren’t. And in every field there are probably heresies few dare utter. Within the US car industry there is a lot of hand-wringing now about declining market share. Yet the cause is so obvious that any observant outsider could explain it in a second: they make bad cars. And they have for so long that by now the US car brands are antibrands– something you’d buy a car despite, not because of. Cadillac stopped being the Cadillac of cars in about 1970. And yet I suspect no one dares say this.  Otherwise these companies would have tried to fix the problem.
Training yourself to think unthinkable thoughts has advantages beyond the thoughts themselves. It’s like stretching. When you stretch before running, you put your body into positions much more extreme than any it will assume during the run. If you can think things so outside the box that they’d make people’s hair stand on end, you’ll have no trouble with the small trips outside the box that people call innovative.
And that’s why we need to look for the fads in the industry now, so that we can make the business of financial advice ready for the people who need it–ready for tomorrow.
What are the fads that we need to ditch in order to move this industry forward? We’re working on the software aspect of this industry, but what about the rest?