I want to share more takeaways from The First 20 Hours: How to Learn Anything . . . Fast!. The major premise of the book, which I posted about yesterday, is that learning and skill acquisition are different. By combining the two, you accelerate your acquisition of a new skill. I found author Josh Kauffman’s thinking around the specifics of each area and how they work together interesting.

Skill acquisition

Kauffman defines rapid skill acquisition as the process of breaking down a skill into its smallest parts, pinpointing the important ones, and practicing those key subskills first. He believes “temporary obsession” aids skill acquisition and that “rapid skill acquisition principles” are a way to cultivate temporary obsession. Here’s a checklist of his acquisition principles:

• Choose a lovable project – Pick a skill you’re excited about. Your excitement will fuel you when you’re frustrated.
• Focus your energy on one skill at a time – Acquiring new skills requires concentrated time and focused attention. If you spread yourself too thin, your skill acquisition will likely be extremely slow.
• Determine your performance level – Rapid skill acquisition is about sufficiency, not perfection. Define what sufficiency means to you.
• Deconstruct skills into subskills – Identify what subskills make up this skill.
• Obtain critical tools – Get the tools necessary for you to practice the skill.
• Eliminate barriers to practice – Remove the soft barriers that will make it more difficult to practice the skill.
• Make dedicated time for practice – Schedule time to practice consistently. Commit to practicing regularly until you’ve completed at least twenty hours of practice.
• Create fast feedback loops – Figure out ways to learn how you’re performing when you’re practicing. The faster the feedback, the faster you can make the right adjustments. The faster you adjust, the faster you acquire the skill.
• Practice by the clock in short bursts – Set a timer for twenty or thirty minutes for your practice session.
• Emphasize quantity over speed – Do as many reps as you can without worrying about perfection. The more reps, the better your rep quality will become.

Learning

Learning about a skill is the acquisition of knowledge related to that skill. Kauffman doesn’t believe jumping straight into practicing a new skill is the most efficient approach. Doing some advance research and planning can reduce the amount of time and energy you’ll have to expend and the frustration you feel. He believes “learning principles” help you get the most out of your practice sessions. Here’s a checklist of his learning principles:

• Research the skill and related topics – Look for patterns—the same ideas and tools being mentioned repeatedly as you research. These will likely reduce your trial and error.
• Jump in over your head – You want to learn at an uncomfortable pace. Confusion is part of being uncomfortable and can pinpoint areas you should focus on more.
• Identify mental models and mental hooks – Look for ways to help you make sense of what you’re seeing. These mental models will help you understand the present and what the future could hold if you take specific actions. These will come in handy during practice.
• Imagine the opposite of what you want – Determining your goal’s natural opposite can highlight what to avoid. This is called inversion and is a technique Charlie Munger embraced heavily.
• Talk to practitioners to set expectations – Unrealistic expectations can be discouraging. Talking to others with more experience can illuminate blind spots so you’ll know what to expect.
• Eliminate distractions – Distractions can ruin focused practice, slowing or stopping skill acquisition. Figure out what could distract you during practice and eliminate it beforehand.
• Use spaced repetition and reinforcement for memorization – Review important information regularly. New or difficult information should be reviewed more often; familiar or simple information less.
• Create scaffolds and checklists – Create checklists to systematize your practice process and make it more consistent. Create a pre-practice sequence (i.e., a scaffold) to ensure that you approach the skill the same way each time you start practicing. A basketball player’s pre–free throw routine is a good example of a scaffold.
• Make and test predictions – Come up with your predictions based on your research and test them as you practice. Adjust accordingly.
• Honor your biology – If your mind and body aren’t good, your practice won’t be good. Put yourself in the best physical and mental state to get the most out of your practice.

Every principle won’t apply to every situation, but going through each checklist can prevent omissions that could hamper you from achieving your goal.

Acquiring a skill is the result of practicing it. How you practice impacts how fast you acquire the skill. Learning makes your practice more efficient and accelerates acquisition, but it doesn’t replace it. There is no replacement for practice. You must do the work. But how you go about it matters.

The insight and principles in Kauffman’s book aren’t earth-shattering, but his combination and articulation of them could provide clarity and an action plan to people who struggle to acquire new skills.

During one of my learning survey conversations, a founder friend mentioned he’d read The First 20 Hours: How to Learn Anything . . . Fast! by Josh Kauffman. He described the book as an approach to learning any skill quickly. It sounded interesting, so I ordered it. I just finished reading it.

The book highlighted that skill acquisition and learning are different. Acquiring a skill requires practicing the skill until you become proficient at it. Learning, though, is about understanding the skill. Learning about a skill doesn’t mean you’ll acquire the skill—it means you’ll know more about it. The book uses the example of learning about a foreign language. You can understand all the nuances and history of the language without being able to speak the language. Speaking it results from practicing by speaking it with others.

Kauffman goes on to say that to acquire a skill, learning about it isn’t necessary, but it is helpful because it’s important to acquire the skill rapidly. Learning about the skill helps you focus on the most important subskills, understand the key concepts related to the skill, avoid practice pitfalls, etc., all of which make your practice more efficient. And you’ll acquire the skill sooner if you improve more rapidly.

Kauffman’s distinction is helpful. I now think about learning as the prework I do that will make practicing a new skill more efficient.

I finished reading The Davis Dynasty: Fifty Years of Successful Investing on Wall Street this week. The book chronicles three generations of the Davis family and how an initial $50,000 investment in stocks by the patriarch has turned into more than $2 billion for the family and an investment firm that manages over $25 billion in total assets.

This book caught my eye because I enjoy learning about “investor entrepreneurs” —investors by profession who don’t want to work for someone else, so they choose to become entrepreneurs by starting companies that invest capital

In the 1940s, the Davis family patriarch had a unique insight about insurance companies. He realized that (1) the companies had hidden investment portfolios that would compound for long periods until claims were paid out, but they were disguised as unprofitable companies because of accounting rules, and (2) the market for life insurance was exploding because of World War II. He quit his job in 1947 and became a full-time investor specializing in the stocks of insurance companies. His timing proved ideal: his portfolio ballooned from $50,000 to roughly $10 million by 1959.

One key takeaway from this book is the patriarch’s insistence on writing and distributing a weekly bulletin about the insurance industry. In the early 1990s, his grandson began helping him write this newsletter. He asked why they should bother when the lack of feedback suggested that no one was reading it. The patriarch’s response? “It’s not for the readers. It’s for us. We write it for ourselves. Putting ideas on paper forces you to think things through.”

The patriarch used the weekly bulletin as a tool for reflection and learning. Distributing it to others added accountability to the process.

When I read this, I thought about a few successful founder friends with a similar habit—which I remembered because it’s rare. They’ve built companies worth hundreds of millions of dollars or more. Each sends a weekly email update to their investors and/or team. They’ve kept up with this habit for years, since their earliest days. I asked one of them why he keeps doing it. He does it for himself, he said, not the recipients. It forces him to reflect on the past seven days and plan for the next seven.

I’m a proponent of founders sending update emails. It’s a habit with superpower potential. Everyone can do it, and because few people do, it gives those who take the time for it an edge.

Last week I shared my takeaways from reading Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion, a book about Home Depot’s founding. One thing I learned is that Home Depot’s founders rethought their market, which changed their growth strategy.

They initially went after the do-it-yourself market, which was consumer focused. Then they realized they were serving the home-improvement market. This change in how they thought about and defined their market was important because home improvement included contractors too. Home improvement was a much bigger and more fragmented market than do-it-yourself. This decision played a role in Home Depot’s annual revenue increasing from $20 billion in 1996 to $135 billion in 2023.

Today it was announced that Home Depot is acquiring SRS Distribution Inc., a “distributor of building products . . . serving the professional roofing contractor’s business.” The deal is for about $18.25 billion. The stated logic behind the deal is that it will help Home Depot grow its business with contractors.

The Home Depot’s founders haven’t run the company for over twenty years. But their insight about what their market is and what customers they serve is still driving the growth strategy today, even if it’s growth through acquisition rather than organic growth.

Markets matter a lot more than some entrepreneurs realize. I’d say it’s one of the most important factors that impact business success and growth potential. Building a big business in a small market is hard because there aren’t enough people willing to buy your product or solution. Home Depot’s realization about its market roughly thirty years ago has allowed it to build a massive business, and it still provides growth opportunities, as shown by today’s announcement.

I’m enjoying reading Built from Scratch: How a Couple of Regular Guys Grew The Home Depot from Nothing to $30 Billion, a book about Home Depot’s founding. It was published in 1999, and initially I was worried because it missed the last 25 years of the company’s history, but I realized I was looking at it the wrong way. Because the book covers a shorter period, it goes into more detail about things I care about most—mainly the actions taken in the early days and the wisdom gained from them. If the book covered 25 more years, it would have to be twice as long or less detailed.

I’m a fan of founders thinking about the market for their products or solutions. It’s hard to build a big business in a small market—there just aren’t enough people willing to pay for what you’re selling. Given the importance of markets, I’m always curious about how founders who achieved outsize success thought about their market in the early days and how that shaped their strategy.

This book detailed how the Home Depot founders thought about their market and how their thought process and strategy evolved. Again, this book was published in 1999, so the data reflect that period. Here’s what they realized:

• In 1996, the do-it-yourself industry was thought to be $135 billion in annual sales. Home Depot had sales of $20 billion that year, so 15% of the market. That left 85% of the market for it to go after—$135 billion is a big market, and 15% leaves a lot of room for growth.
• The founders realized their market wasn’t the do-it-yourself market; it was the home improvement market. The home improvement market included consumers (do-it-yourselfers) and businesses doing home improvements (i.e., contractors). This expanded market included anything needed to maintain and improve homes and was more fragmented, which equaled more opportunity.
• The home improvement market in 1996 was $365 billion, not $135 billion, meaning Home Depot had only 5% of the market.
• Selling to smaller contractors was a huge opportunity. The company retooled its stores and operations to cater to smaller contractors in addition to consumers.

Home Depot redefined “the pond in which we fish,” as they put it in the book. The realization that its market was much bigger than consumers doing weekend projects led to an adjustment of their growth strategy.

Over 25 years have passed since this strategy was implemented. I was curious how it played out, so I checked Home Depot’s SEC filings and found its 2023 10K (annual report). The company reported annual revenue for 2023 of $152 billion.

Markets matter a lot. Founders should understand their market and formulate their growth plan accordingly. Home Depot found a large and growing market that helped propel the company to levels of success the founders never dreamed of.

I’m reading Built from Scratch: How a Couple of Regular Guys Grew the Home Depot from Nothing to $30 Billion. It’s about the founding of Home Depot and its growth until 1999, the year the book was published.

One thing that stood out to me was how Bernie Marcus and Arthur Blank identified another cofounder, Pat Farrah. Farrah was a merchandising and marketing genius who started a home improvement superstore called Homeco in California in 1978. Farrah’s store was packed with customers because of his innovative approaches to marketing and merchandising. Marcus and Blank heard about Homeco and went to visit. They were blown away by what Farrah had created and how he’d built the business. It was exactly what Marcus had envisioned for the yet-to-be-named start-up, but Farrah had beaten them to the launch.

Farrah’s skills helped get Homeco’s stores full of customers and sales growing straight out of the gate. But his weaknesses ended up sinking his company. Farrah didn’t understand accounting, processes, or controls. Homeco was doing brisk business. Stores were packed and money was coming in. But Farrah didn’t know whether Homeco was making money. Vendors were sending products but weren’t being paid. It turned out that Homeco was losing money rapidly. Farrah had no idea until Blank brought some things to his attention. Homeco closed a few months after Blank warned Farrah about the issues, and Farrah filed for personal and business bankruptcy.

Farrah had failed as an entrepreneur, but Blank and Marcus looked past that. They recognized that his talents in merchandising were unlike anything they’d seen in anyone else. They wanted those skills at Home Depot, so just two days after Homeco folded, they mounted a full-court press to convince Farrah to help them launch Home Depot. They reasoned that Homeco had failed because Farrah had skills gaps that made the business vulnerable. They also noticed that where Farrah’s skills were weak, Marcus’s and Blank’s were strong. And vice versa. Marcus and Blank figured the three of them could be a complementary unit with exceptional skills in all the key areas needed for Home Depot to survive. Failure or not, Farrah had to be part of the team. Farrah eventually agreed to join as a cofounder, and the first Home Depot store opened in June 1979.

I like the approach Blank and Marcus took to identifying a cofounder: find an entrepreneur who has failed but has skills that complement those of the founding team, filling the gaps. The failed entrepreneur likely has learned a lot from his (or her) failure, has free time, and wants another shot to prove he (or she) can succeed as an entrepreneur.

A failed founder joining the right cofounders at another company can be a win-win for everyone. It worked out pretty well for the Home Depot founders.

This month I challenged myself to start writing about my reading. My goal was to write down—after I finished reading a book—the main concepts and new insights I formed. I’ve completed three books and started a fourth since that post. Here’s what I’ve learned so far:

• Waiting until I’ve finished a book to begin writing posts isn’t optimal. The books are usually in the range of 200–400 pages, and I read them in multiple sessions. Waiting until the end to write a post increases the likelihood that I’ll miss something valuable. That didn’t feel like the right rhythm. It felt more organic for me to reflect more frequently on a smaller amount of content. I naturally ended up doing this with the books on Ken Langone (here and here) and Bernie Marcus (here and here). I wrote more than one post on each book. Every 100 or so pages felt like a good reflection rhythm. I think I’ll replicate and refine this rhythm going forward.
• Some books I read are a historical recount of a period or business event. With this type of book, which is an author’s interpretation of what happened and why, I’m looking to understand what happened and whether similar things are occurring today. I read a book about the dot-com bubble and shared a post about a similarity I noticed between that period and today. Biographies and historical books are different. What I seek from each type of book is different. My expectations for my posts should reflect these differences.
• Now, I’m reading the autobiography of a well-known, seasoned entrepreneur. So far, no concepts have caught my attention, and it hasn’t sparked me to form any new insights. Hopefully, this will change by the time I finish the book. I failed to consider that some books I read may not provide much value to me and hadn’t thought about how I’d handle posts in this situation. I’ve decided that I want my posts to be positive and bring value to others. If I don’t get value from a book, I won’t write a post about it.
• I need to take notes and highlight important concepts as I read. Reviewing these is a key step in the process of reflecting and writing.

I’m enjoying the challenge so far. Looking forward to continuing next week and iterating as I learn more.

Today I finished reading Kick Up Some Dust: Lessons on Thinking Big, Giving Back, and Doing It Yourself by Bernie Marcus, cofounder and longtime CEO of Home Depot. The book is about Marcus’s life. It describes his upbringing, career in corporate America, transition to entrepreneur, and transition to philanthropist. Marcus is almost 95 and has accomplished (and failed at) many things over the years. I was eager to hear about his experiences and the lessons he learned from them.

Marcus shares what he calls “core lessons in business and life.” He makes it clear that lessons are easy to grasp but hard to put into action. Here are the lessons:

• Confidence – You won’t get anywhere if you don’t believe that you can “do it yourself.” You must be confident that you have the skills and abilities to accomplish any task or solve any problem. If you don’t have the skills, you can learn most of them without going to school.
• Teamwork – On the other hand, you don’t have to do hard things by yourself. Some people will help if you give them the opportunity.
• Full-time – You must be committed and determined to make whatever you’re pursuing work. Marcus says “[t]here is no such thing as part-time passion.”
• Risk taking – If you find a problem or need that isn’t being met, you must take big risks to meet the need or solve the problem. Consider taking the biggest risks when you’re young; there’s less downside.
• Failure – “Failure is the price you pay on your way to success.” Marcus describes his ninety-plus-year journey through life as "stumbling" fueled by optimism.
• Storytelling – Marcus considers this the most important lesson. You must be able to articulate what you’re doing and why it adds value in a compelling story that’s easy to understand.

I’m glad I found this book. I learned a lot about Marcus that I wasn’t aware of. He’s a driven person who’s had a significant impact as both an entrepreneur and a philanthropist.

After reading the book by Home Depot cofounder Ken Langone, I decided to go deeper on the other cofounders. Bernie Marcus was the CEO for many years, and I discovered that within the last few years, he wrote Kick Up Some Dust: Lessons on Thinking Big, Giving Back, and Doing It Yourself. Bernie is almost 95 years old, so I was curious about the wisdom he’d accumulated after almost a century. I ordered his book.

I’m not finished with the book yet, but so far as I can tell, Bernie has a strong personality and entrepreneurial fire inside him.

Bernie shared his thoughts on failure, and they got me thinking:

"I think how you respond to failure comes down to whether your fear is stronger than your passion. People driven by passion see setbacks as unpleasant, but inevitable challenges. What they know that quitters do not is that failure can be eaten in small pieces."

I never enjoyed failing when I was younger, but my mindset shifted when I started being entrepreneurial. I was passionate about what I was doing and driven to see it succeed. This meant I was trying a bunch of things and a lot of it didn’t work. But I noticed a pattern. Going through the things that didn’t work led me to the things that did work. Instead of looking at things via a success-or-failure construct, I began looking at them as either a success or a lesson that got me closer to success. Failures became expected. Many were still painful, but I focused on what I could learn from each failure instead of the pain.

Failure is part of life. As they say in baseball, nobody bats a thousand. Even the best players strike out at the plate. But a single strikeout doesn’t stop them from winning the World Series as long as they don’t give up and keep playing the game to the best of their ability.

I recently finished reading Bull! A History of the Boom and Bust, 1982–2004 by Maggie Mahar. The book was published in 2004, not too long after the dot-com bubble burst. I’ve seen the book recommended a few times and noticed that the cover includes an endorsement by Warren Buffett, so I ordered it. Also, the book’s narrow focus on the period when interest rates started what ended up being a forty-year decline through 2004 was intriguing to me.

I enjoyed reading the book. Given the focus on a very specific period, it provides lots of details about the economic environment, who the main figures were who had an impact on the stock market, and the key decisions they made. Mahar does a good job of describing her perspective on the impact those decisions had on inflating and bursting the internet bubble.

One thing that caught my attention was her explanation of the role the inclusion of high-flying technology companies in stock market indexes (e.g., the S&P 500 and NASDAQ Composite) played in valuations reaching levels that were hard to justify. She believes that this, combined with the rise of the 401k and index funds, contributed to a significant amount of capital being allocated to these highfliers even though valuations were hard to justify. The valuations of companies kept rising because capital kept flowing into the index funds until the stock market bubble burst around 2000.

This caught my attention because last month, I listened to an interview of David Einhorn, founder of Greenlight Capital. Einhorn shared his opinion of the impact that passive investing is having on the valuations of certain companies in today’s stock market. Essentially, he believes that valuations of companies continue to rise because they’re part of one or more stock market indexes (e.g., the S&P 500 and NASDAQ Composite). Passive index funds track indexes, which leads to the funds buying more shares in these companies, regardless of the valuation, as more investors allocate capital to the passive index funds. For this section of Einhorn’s interview, listen here.

I found this interesting because there’s a twenty-year gap between this book’s publication date and Einhorn’s interview.