(2021-09-21) Chin Are You Playing To Play Or Playing To Win

Cedric Chin: Are You Playing to Play, or Playing to Win? My friend Lesley has this thing where she says “make sure you’re playing the real game, not some more complicated game you’ve made up for yourself.” (Game Playing)

We can’t beat them with Judo, because they have way more people to train with, way more opportunity, so we have to beat them with … physicality, technical strategy, gripping, newaza, conditioning, toughness … in the mindset, that we’re going to win, and this is how we’re going to win, and you have to get your students to believe in the system.

In the world of gaming, a scrub is someone who isn’t playing to win. (computer game)

The scrub mentality is to be so shackled by self-imposed handicaps as to never have any hope of being truly good at a game. (game rule)

A scrub would disagree with this though. They'd say they are trying very hard. The problem is they are only trying hard within a construct of fictitious rules that prevent them from ever truly competing.

Scrubs are likely to label a wide variety of moves and tactics as "cheap."

Is there scrub behaviour in business? Almost certainly: one trivial example is the stance that I alluded to in Changing My Mind on Capital — the idea that bootstrapping without ever selling equity to external investors is somehow a better way of doing business

When is scrub-like behaviour truly scrub-like? And when is it ethics?

Long-term readers of Commonplace would know my admiration for John Malone, the onetime CEO of cable company TCI.

Malone was, essentially, a hacker: he stared deeply at the thicket of accounting rules, tax laws, and possible business moves, and found a strategy that exploited the structural realities he found in front of him. He was the first person to deploy this playbook rigorously, and TCI was amongst the first companies to start using EBITDA as a financial metric.

In my eyes, Malone is an almost perfect example of a non-scrub

Malone’s insight was that he could load TCI up with debt (at a disciplined five-to-one earnings ratio), and then use the interest payments and cable equipment depreciation as a tax shield for TCI’s utility-like, monopoly cash flows. He then used that debt to expand aggressively

What I’ve never written about, though, is the flip side of Malone’s reign as TCI’s chief — that is, that Malone treated his customers as an afterthought. This was a side-effect of the ‘monopoly’ in ‘monopoly cash flows’

Ironically, this most technically savvy of cable CEOs was typically the last to implement new technology, preferring the role of technological “settler” to that of “pioneer.”

Over the course of Malone’s two decades of leadership, TCI earned a reputation for poor customer service and ‘unjustified’ price hikes. It let its systems rot. As a result, it was hated to varying intensities by customers, local government officials, and politicians alike. Malone didn’t care.

The difficulty of business — and the difficulty of thinking about scrub behaviour in business — is that the rules are often only what you can discover to be true.

One reason that scrub behaviour is so compelling to us is that we admire those who decide to play a harder game, and who manage to win anyway.

This, I think, is what mastery looks like.

The uncharitable implication is that a maestro is simply a scrub who wins.

Are there examples in business? Certainly.

A friend of mine was telling me about Martine Rothblatt’s United Therapeutics.

Rothblatt explained the genesis of her company:

So there are a good zillion articles published on every type of medical research

but in law school, we learn a very useful skill. And this skill goes by the name of Shepardizing, after this type of index they have in law school called Shepard’s

the Shepardizing process is after you get all of those references to then look up all of the references in those other articles. And ultimately, you get to a point of diminishing returns where three, four, five levels down, the references are all circling back

So I applied that Shepardizing process to these medical articles

I read about a molecule that a researcher at Glaxo Wellcome had written in which they described testing this molecule

Rothblatt then went to Glaxo Wellcome to ask about the molecule, but was told that they weren’t going to develop it:

He said, “But it’s possible you could buy it from us. If you had a real pharmaceutical company with real pharmaceutical expertise, I could then introduce you to the business development people at Glaxo Wellcome.” Which is what she did.

To hear Rothblatt tell it, UT has paid back more than a billion dollars in royalties to Glaxo Wellcome in the years since they first brought the drug to market.

Much later, UT acquired the technology to refurbish human lungs for transplantation. But Rothblatt wasn’t happy about the carbon costs of flying damaged organs to their facility and then back out to the hospitals

So, of course, they started developing electric helicopters.

I am absolutely convinced that in this decade, the 2020s, we will be delivering manufactured organs by electric helicopter.

Will they succeed? I don’t know. But I certainly want them to. And my friend, who owns shares in UT more out of awe than anything else, says that it’s ridiculous that a biotech company would want to go beyond doing good to doing right by the environment

What should we conclude from this discussion?

Nobody wants to be called a scrub. But when all is said and done, there are aesthetic and moral reasons to want to play a more difficult game.

But you only get to be called a maestro if you play the harder game and you win. For everyone else, it’s probably a better idea to avoid being a scrub. Winning is hard enough as it is.