Time Does Not Scale

I get asked a lot, “How do you work?” and “How do you find time to write?”

People wonder when I have time to do research. Do I do research at all? Or do I have someone else do it for me?

I’ll share some thoughts about this here. I hope this will help other investment, and non-investment, professionals.

There are so many ways to answer this. I’ll start by saying that I write about two hours every day. This translates into 500–700 hours a year.

I write probably 800 words per hour, so that is 40,000 to 60,000 words a year – roughly a small book. The more you write, the better you get, especially if you write daily. I’ve been writing since 2004. Thus I can spew out more words than a person who is not a regular writer. Though quantity doesn’t mean quality, to quote the not-so-great Joseph Stalin: “Quantity has a quality of its own.”

I normally get up very early, make coffee, put on my headphones, and write. My wife and kids are asleep, it’s dark outside, and I enter my own world. I get two hours of uninterrupted, focused thinking. And that is what writing is – focused thinking. This is how I access the deep, dark corners of my subconscious mind. It’s a necessity, because this is the only way I can string thoughts together.

Writing probably overcompensates for my inability to sit still.

I love research! The only reason I can write about stocks I own or have analyzed is because I read their annual reports, listen to their earnings calls, build financial models, and debate them with others. The ease with which I write about stocks comes from understanding their businesses, which comes from doing primary research.

I am not the only one doing research at IMA – we have internal and external teams. I have a global network of investment friends (though the professional/personal boundaries were washed away years ago) with whom I share our research, with whom I can debate stocks I am analyzing, and who will share ideas with me. IMA does not have the large research department of a mutual fund company, but neither does it have the constraints of one.

I am driven by learning, creating, discovering.

When people ask me at social functions what I do for a living and I don’t want to talk about the stock market, I tell them I’m a writer. But I don’t really think of myself as a writer, just a person who thinks through writing.

I think of myself as a student of life – a moniker I borrowed from Rabbi Noah Weinberg. We are more than our professions. We are parents, spouses, children, friends; we are our hobbies and our interests. I love investing; I would do it 80 hours a week if my family did not remind me of their existence. But I’d like to be more than just that. Being a student of life is not just a moniker, it is a mentality; it is a slightly different – more open-minded – approach to life.

This is why I write about topics outside of investing.

My explorations into classical music are an example of that. I cannot play an instrument, but I receive incredible enjoyment from listening to classical music. Without it my life would be far emptier. So I started writing about it, which in turn helped me to learn more about it.

And then I am also the CEO of IMA – an investment firm with employees and a lot of clients. My first and most important professional responsibility is to do research. Clients come to IMA, turn over the bulk of their net worth, and basically say, “Vitaliy, don’t screw it up, please.”

How do I make sure that being CEO of IMA doesn’t interfere with research?

It took me plenty of trial and error to get to the place where I am today, but here is what I do to stay focused on analyzing and managing stock investments.

I outsource and delegate. I hired an assistant. I looked through all the tasks I had to do. The ones where I added little value and did not enjoy, I offloaded to my wonderful assistant Barbara. Try to schedule a call with me and you’ll be interacting with her. Not because I am so important – I am not – but because even scheduling a call takes time – five minutes, three emails. If you do four of those a week, that’s 20 minutes. I add very little value doing that task. These things add up.

Which brings me to this: I hire my weaknesses. Which is easy for me, because I have plenty.

I am horrible with emails; I forget to reply, or reply weeks later. Barbara has zero emails in her inbox; I have an embarrassing number.

When we hired an analyst, I looked for someone who would have the same passion for value investing and have the same values, but a complementary skill set, with strengths that offset my weaknesses.

I went to lunch with a guy who ran a Fortune 500 company, and I asked him what he looked for in the people he hired. He said, look for the two C’s: competency and character. Hire people that will own a task. This is what I do. Someone gave me another piece of advice that I also took to heart: Hire slowly, but fire fast.

I am protective of my time. Try to reach out to me through IMA’s website and you’ll get an autoresponder telling you that if you are a prospective client and would like to talk to me, first you need to read our brochure. I won’t talk to a prospect who has not read the brochure. Most of the questions that prospective clients have for me over the phone have already been answered more eloquently in the brochure.

IMA doesn’t do traditional marketing or selling. Clients refer their friends to us or people read my articles and my books, and they reach out to us. Then we figure out whether we are a good fit for each other. That’s it. IMA is not a traditional investment firm; nobody here does seminars, cold calls, or country club social selling.

Therefore, I spend no time on direct selling. None! This frees up a lot of time.

I say no, a lot. Most of the conferences I attend, I am there to learn, not to speak. When I am asked to speak at a conference I usually decline, unless I have an ulterior motive – like a getaway with my wife. In a few cases, when I say yes, once or twice a year, I decline to do a traditional, monological presentation and only do a Q&A. Presentations require a lot of preparation and occupy a lot of mental real estate weeks before a conference. And to be honest, I don’t enjoy doing them, so I stopped doing them.

I don’t do “let’s meet for coffee.” I used to feel bad about being selfish with my time, but then I realized that my most important responsibility is to my immediate family and close friends. The time I spend on a “let’s meet for coffee” meeting is time taken away from a game of chess with my kids or a walk in the park with a friend. Once I started to look at things from this perspective, any guilt I had from saying “no” dissipated.

I also say no to internal projects that are a time suck. Our director of marketing wanted me to do a podcast. I like being an occasional guest on someone else’s podcast – this requires very little time and I enjoy it. But doing a weekly podcast requires a time commitment and doing something I don’t enjoy. So I found an elegant solution. I have a professional narrator read my articles, and voila, we have a podcast. It requires absolutely zero time from me.

It is produced by the IMA team.

I hope you see a pattern. My personal formula for happiness is: Take the things I enjoy and from which I receive creative satisfaction, and divide by the things that I don’t enjoy (usually very detail-oriented, mundane things that have few creative calories). The goal is to maximize the numerator and minimize the denominator. Because I focus on doing things I love, I can be more focused and have greater stamina.

I avoid time-draining hobbies – I don’t play golf or follow sports. There is nothing wrong with either, they are just not my thing. I watch probably two football games a year. This is not advice for others, but it frees up a lot of time for me to research, write, read, and spend time with family.

I time block. I am a morning person; I am more productive and creative in the first half of the day. I look at research as the most important thing I do. Research consumes energy and requires creativity; thus, I am very protective of my mornings. From 8 a.m. to 2 p.m. I focus on research and don’t do non-research phone calls. Talking to clients or prospects takes less energy, and thus I can do it later in the day (from 2–3 p.m.).

I don’t schedule any appointments or phone calls on Wednesday; that’s an open day, when I have no obligations to anyone. I can be as productive or unproductive as I feel like. I can go to the park, go skiing, go see a movie, or go to Starbucks to read. It is my time.

I scale my time through writing.

I modeled IMA after Starbucks – a company I have tremendous respect for. Starbucks provides premium, consistent, high-quality products and great customer service. That’s a good description of IMA’s own North Star.

IMA is not just in the investment business; it is in the service business as well. There is an interesting paradox: Customer service means time – my time. Well, almost – operational issues are elegantly resolved by our very capable team in operations. But as IMA keeps growing and thus has more clients, those clients will naturally want me to address their concerns about the economy, their portfolios, and so on. Our website and brochure state that our portfolio managers are one phone call away. We promise that we’ll answer clients’ inquiries within one business day. This is not an empty promise. We always do.

I came up with a solution regarding portfolio questions. Every quarter I write an in-depth letter addressing client portfolios. These letters run 20 pages. Through the magic of technology these letters are custom tailored for each client, because all clients’ portfolios don’t look the same.

In the letter there is a Q&A section where I answer questions sent to us by clients. The goal of these letters is to answer accessibly, honestly, and clearly any possible questions clients may have about their portfolios and the economic world around us. As a result, last year I probably spent 30 hours at the most talking to clients on the phone. Clients can always call me, but they don’t often have the need – I have answered their questions in my letters. My writing is scalable; my time on the phone is not.

As Freddie Mercury said, time waits for no one. I am a bit paranoid about time. I try very hard to spend it only on the things that matter to me the most. I have structured my life to do more things I love and fewer things I don’t like. I identified my edge: thinking through writing and focused research. Time does not scale; writing does. I delegate and outsource. I work with people I love. That’s it!