The Competitive Advantage
My time in college has convinced me that if I could only choose one attribute from wealth, prestige, influence, or knowledge, hands down I would choose knowledge.
Information access is the greatest competitive advantage you can have.
Table of Contents:
Know The Rules. Win The Game.
Life is a series of games, many of which are zero-sum or with success heavily weighted towards a select few. College admissions, being the top-performing venture capital fund, job recruiting, writing a great novel, etc. wherever there is competition, the success of a few individuals will be significantly greater than the rest.
This is the power-law distribution. A select number will receive admissions into all the elite colleges, a venture capital fund will return a percentage far greater than the others combined, a job hunter will receive offers from all the top firms, the best selling novel will have significantly more sales than all the other books that came out in the same year.
Success in these games can be attributed to innocuous things like hard work and talent or the more contentious advantages of wealth and privilege, but an often overlooked competitive advantage is knowledge.
In life games, knowledge is king. If you know the criteria required to win, you can work backward to achieve victory. Take job recruiting, for example. If you know how the company selects interview candidates, the types of questions they’ll ask during the interview, and the skills they’re looking for, you simply have to put in the work to prepare. It’s like asking your professor what will be tested on the exam before taking it.
The Black Swan
There’s a problem though. You can’t always ask your professor what will be on the test. Knowledge isn’t always distributed equally or easy to obtain.
Knowledge falls into four categories:
- The known knowns — the things that you know you know
- The known unknowns — the things that you know you don’t know
- The unknown knowns — the things that you don’t know you know
- The unknown unknowns — the things that you don’t know you don’t know
The known knowns require no explanation, but the other three categories I will dive into a bit more.
The known unknowns are the things that you know you need to know but you don’t know. For example, you know that having the interview questions in advance of an interview would be helpful but you don’t know what they are yet. These can usually be easily overcome with a cursory online search.
The unknown knowns are the things you didn’t think you needed to know but you know. Taking the scenario from before, this would be if you didn’t know you needed to prepare for a particular interview question but you did so anyway and were pleasantly surprised when it came up.
These unknown unknowns are what you need to worry about. They’re called black swans since they’re completely unforeseen and will keep you from obtaining a competitive advantage. The interview equivalent would be not knowing you needed to know the interview questions beforehand and so you never looked into it. This example sounds a bit preposterous since it’s a bit obvious that you should research interview questions to prepare but take a story that an upperclassman at Swarthmore (let’s call him Robert) shared with me.
Robert had just been at the first week of his investment banking internship when his manager pulled him into the office and asked Robert why he hadn’t scheduled a meeting with him to check-in. Robert’s manager told him that all the other interns in his analyst class had done so and that it was standard practice to schedule a coffee chat with your manager to establish expectations in the first week. All the Wharton finance kids knew this and so they all scheduled coffee chats, meanwhile because Robert goes to Swarthmore (a liberal arts school without the same finance culture) he didn’t know that was something he was even supposed to do. This is the black swan— the unknown unknowns.
Those from lower socioeconomic backgrounds struggle the most with unknown unknowns. In a parallel scenario from above, albeit a bit more insidious, you might say that students at a socioeconomically disadvantaged public high school have less awareness about the college application process compared to students that go to an elite private high school. Taking the SATs, knowing which extracurriculars to participate in, and writing great essays, are all a series of games that must be played in the tournament of college admissions. Students who aren’t aware of these things are put at a major disadvantage.🔥 Enjoying reading this? If you'd like to receive exclusive early access to new posts, along with reading recommendations and other insights, consider providing your email below. I don't spam and will be releasing writings on how to be a better leader in the coming months.
Revealing Black Swans
But what about the internet? Shouldn’t people easily be able to find whatever they need to know?
I want to clarify that although the internet has increased information availability, in a sense it has decreased information access by making it harder than ever to determine what information is reliable and helpful.
That’s why online gurus can charge thousands of dollars for courses on college essay help, interview preparation, growing your online business, learning how to be productive, etc. Most of the knowledge they teach is already out there for free, but because it’s close to impossible to organize that information in a structured way, they attract large swathes of consumers. There is true value in these courses because the good ones can compress years of knowledge and months of research into mere hours of reading/video content.
That’s great for those with the money to pay for the knowledge but still doesn’t address the main concern when it comes to information access.
How does one know what to research to reveal black swans without knowing what they’re even supposed to research in the first place? And perhaps more importantly, how do you do it for free?
Unfortunately, there aren’t any real shortcuts. Without prior connections or money to hire coaches/guides, you need to put in the work to create your customized knowledge base. You must leverage the power of online social networks to surround yourself with the ideas of the most brilliant thinkers in the world.
One of the value propositions of elite university educations is the learning by osmosis that occurs when you’re surrounded by highly intelligent people for four years. You can simulate this environment by following and reading the ideas and writings of the foremost entrepreneurs, innovators, and writers alive today.
The following general best practices allow you to do this. While they aren’t particularly profound, they’re effective and most people don’t do it because it’s difficult:
- Leverage social media to create connections and find mentors. Talk to people who are doing what you want to be doing and ask good questions. Because you might not have the domain expertise to ask precise questions to reveal black swans, you need to ask questions that prompt an individual to reveal unexpected insights. Questions like “What did you wish you knew before doing X?” or “What is something unexpected about X?” are good. These questions are the most efficient way to find black swans.
- Instead of relying on low-quality posts from a simple Google Search, use forums like Reddit and Quora. They often contain gold nuggets of wisdom written by people with extensive domain experience.
- Look up the people you admire and see who they follow and what they’re reading. Chances are, there’s a reason they follow those people and read those articles and books.
- Try to embed yourself in communities where you can learn by osmosis. Join a Slack/Discord group with people in fields that you’re interested in. Merely absorbing the content they share and write about will expose you to a wealth of knowledge that will eliminate gaps in your understanding.
The reality is that information access is an extremely difficult obstacle to overcome. That’s what makes it a competitive advantage and also why it’ll never go away. The first step to developing this competitive advantage is being aware of your lack of it. Then, you can take steps to develop your competitive edge.
Thank you to Kishore Srinivas for reading drafts of this and providing valuable feedback.
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