Moontower #106


Actions say more than words. The reason is proof of work. Actions usually take far more energy. Sometimes the concepts overlap. Giving a speech at a wedding is words but requires preparation. Thinking, remembering, writing, memorizing, moderating your champagne intake until it’s over. Lots of energy. It’s a meaningful set of actions that manifests as words. They are rightly cherished as actions. In signaling theory, actions are more trustworthy because they are less easily faked. They have opportunity costs if not direct costs too.

Love is work. Relationships take deliberate energy. Everything truly valuable requires effort and maintenance to stave off decay. The directional arrow of entropy is towards undoing as surely as gravity is a vector.

Amazon’s latest letter to shareholders is Bezos’s final one as CEO. The entire thing is worth reading, as they usually are, but the lesson of entropy applied to our uniqueness is poignant. Not because it makes the case that your expression is important even though that’s true. Not because it reminds you that there’s a cost to your snowflakism even though that’s true. The reason I find it so halting comes from the questions it never explicitly asks. The questions you can ask yourself after reading it:

What are your most distinguishing actions, what are they costing you, and why is it worth it?

You can find the passage below and the entire letter here.

Differentiation is Survival and the Universe Wants You to be Typical

This is my last annual shareholder letter as the CEO of Amazon, and I have one last thing of utmost importance I feel compelled to teach. I hope all Amazonians take it to heart.

Here is a passage from Richard Dawkins’ (extraordinary) book The Blind Watchmaker. It’s about a basic fact of biology.

“Staving off death is a thing that you have to work at. Left to itself – and that is what it is when it dies – the body tends to revert to a state of equilibrium with its environment. If you measure some quantity such as the temperature, the acidity, the water content or the electrical potential in a living body, you will typically find that it is markedly different from the corresponding measure in the surroundings. Our bodies, for instance, are usually hotter than our surroundings, and in cold climates they have to work hard to maintain the differential. When we die the work stops, the temperature differential starts to disappear, and we end up the same temperature as our surroundings. Not all animals work so hard to avoid coming into equilibrium with their surrounding temperature, but all animals do some comparable work. For instance, in a dry country, animals and plants work to maintain the fluid content of their cells, work against a natural tendency for water to flow from them into the dry outside world. If they fail they die. More generally, if living things didn’t work actively to prevent it, they would eventually merge into their surroundings, and cease to exist as autonomous beings. That is what happens when they die.”

While the passage is not intended as a metaphor, it’s nevertheless a fantastic one, and very relevant to Amazon. I would argue that it’s relevant to all companies and all institutions and to each of our individual lives too. In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness? To keep alive the thing or things that make you special?

I know a happily married couple who have a running joke in their relationship. Not infrequently, the husband looks at the wife with faux distress and says to her, “Can’t you just be normal?” They both smile and laugh, and of course the deep truth is that her distinctiveness is something he loves about her. But, at the same time, it’s also true that things would often be easier – take less energy – if we were a little more normal.

This phenomenon happens at all scale levels. Democracies are not normal. Tyranny is the historical norm. If we stopped doing all of the continuous hard work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny.

We all know that distinctiveness – originality – is valuable. We are all taught to “be yourself.” What I’m really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen.

You have to pay a price for your distinctiveness, and it’s worth it. The fairy tale version of “be yourself ” is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don’t expect it to be easy or free. You’ll have to put energy into it continuously.

The world will always try to make Amazon more typical – to bring us into equilibrium with our environment. It will take continuous effort, but we can and must be better than that.

The Money Angle

I suspect we are entering a golden age of shorting. This is not a well-researched opinion. Just a feeling of attrition amongst all but the savviest short sellers.

That said, shorting is no stroll in the park. So I wrote a post about it.


  1. Common Objections To Shorting

    It’s common for shorting detractors to mock the strategy as negative EV for 2 reasons. I’m just going to annihilate them now so we can get to a more productive discussion…

  2. The Real Reasons Why Shorting Is Difficult

    The asymmetry of arbitrage and return math

  3. Using Options

    How to think about synthetic shorts, outright puts, and vertical spreads

  4. The Benefit Of Structuring Options Trades Even If You Don’t Actually Use Them To Implement

    I call it the “Write Down Your Thoughts” effect.

Continue reading…Shorting In The Time Of ShitCos

Last Call

  • Last summer, I re-learned why capital punishment is a bad idea. This week Paul Graham published The Real Reason To End The Death Penalty. (Link)
  • I will make special trips just to get a fountain Diet Coke. Many people swear that McDonald’s has the best fountain diet Coke. It turns out there’s good reasons for this. (Link)
  • The faux IKEA employee TikTok that went viral is worth 2 minutes (Link)

From my actual life 

I’ll wrap this week with ego/alter-ego recommendations.
  • Wholesome rec

    The family is very much in a Mark Rober rabbit hole lately. The boys like skipping rocks so they lost their minds when they discovered this video:

    Rock Skip Robot – The Science Of Perfect Rock Skipping (YouTube)

    This 9-minute video is amazing. The science of rock skipping is neat (the height thing really suprised me, I thought the same thing Rober did about that before he tested it). Plus this episode includes a great general recipe when Rober “pulls back the curtain on the engineering design process”. We wrote it down and posted it on the fridge.

  • Less wholesome recs

    If you observe the 4/20 holiday, you might appreciate some on-brand Moontower Music and video mixes. Not all of it is safe for work. (Link)

    We are binging Schitt’s Creek these days. We are on season 3. The characters are immediately some of my all-time favorites (David, Stevie, Moira, Jocelyn). And since season 2, Alexis who was the weakest at first is surging in a way that makes me wonder if actress Annie Murphy dialed her in all of a sudden, or if she was holding her back intentionally at first.

    I don’t have the requisite knowledge to properly describe comedy, but this show has several types of, I don’t know, comedic set-pieces that it keeps coming back to. Like intentionally confusing conversations that emerge from certain words or idioms. When I’m done with the show I’ll chase down a taxonomy, I’d love to understand the templates they are playing with.

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