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[VIC - 167] Opportunity cost

July 5 · Issue #167 · View online
Jeremy Hurst
The idea of opportunity cost is one I spend a lot of time thinking about in almost every area of my life…

Business & Money
Every investment decision is one that should involve a consideration of opportunity cost. Is this the absolute best use of capital available to me right now?
Not is this better than that, but is this the best in an absolute sense?
I had a friend email me last week asking whether I thought company A was more attractive than company B. My response was, “is this the entire universe of investment opportunities available to you right now?”
And the “right now” portion is equally, or perhaps more important, than the “investment opportunities” portion.
Lucky for us, there are no shot clocks in the public markets.
Human Progress
Money is one thing, but time occupies more of my attention these days, given it’s nonrenewable. So every allocation of time has to be weighed against other uses of time.
I find this topic vexing because the universe of options for how to spend time is vast, almost infinite in fact.
I think about my work for instance. Why build a software company when there are fundamental challenges like racial inequality and social justice to be solved?
To capture one aspect of how I think about this, I’ll share a story included in a letter written by Ernst Stuhlinger (the Associate Director for Science at the Marshall Space Flight Center at the time he penned it). He wrote the letter in response to one he received from Sister Mary Jucunda, a nun who worked among the starving children of Kabwe, Zambia, in Africa, who questioned the value of space exploration.
About 400 years ago, there lived a count in a small town in Germany. He was one of the benign counts, and he gave a large part of his income to the poor in his town. This was much appreciated, because poverty was abundant during medieval times, and there were epidemics of the plague which ravaged the country frequently. One day, the count met a strange man. He had a workbench and little laboratory in his house, and he labored hard during the daytime so that he could afford a few hours every evening to work in his laboratory. He ground small lenses from pieces of glass; he mounted the lenses in tubes, and he used these gadgets to look at very small objects. The count was particularly fascinated by the tiny creatures that could be observed with the strong magnification, and which he had never seen before. He invited the man to move with his laboratory to the castle, to become a member of the count’s household, and to devote henceforth all his time to the development and perfection of his optical gadgets as a special employee of the count.
The townspeople, however, became angry when they realized that the count was wasting his money, as they thought, on a stunt without purpose. “We are suffering from this plague,” they said, “while he is paying that man for a useless hobby!” But the count remained firm. “I give you as much as I can afford,” he said, “but I will also support this man and his work, because I know that someday something will come out of it!”
Indeed, something very good came out of this work, and also out of similar work done by others at other places: the microscope. It is well known that the microscope has contributed more than any other invention to the progress of medicine, and that the elimination of the plague and many other contagious diseases from most parts of the world is largely a result of studies which the microscope made possible.
The count, by retaining some of his spending money for research and discovery, contributed far more to the relief of human suffering than he could have contributed by giving all he could possibly spare to his plague-ridden community.
So, while I am not inventing the microscope, I think about my work in similar terms. It’s my belief that the internet is the greatest tool on earth for unlocking human potential. We’re trying to make it easier to use for people who are trying to pursue their passions. If we are successful, it will mean that hundreds, thousands, or perhaps millions of other people can more efficiently access the tools they need to make far more progress toward solving fundamental challenges than I could ever do on my own.
Similar to time, but somewhat different is attention.
Recently, someone I know behaved in a way that could be interpreted as rude or inconsiderate. A friend of mine called me to say, “Aren’t you pissed about such and such? That was so rude!”
I responded that I wasn’t.
Perhaps it was rude, or perhaps the behavior could be attributed to some factor that I’m unaware of. Who knows?
But I have a choice of how to direct my attention and my emotional energy. I felt better served simply moving past it and directing my attention and energy elsewhere.
My Latest Discovery
Not really a recent discovery, by damn this city is gorgeous!
It's A Wrap!
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