Redemption of a Marijuana Addict

Not long ago, I wrote a piece on my addiction to marijuana.  It wasn’t that I couldn’t stop when I wanted to – because I had several times before – it was that I didn’t want to.

I spent the last 4 years of my life managing portfolios for high net-worth individuals at one of the world’s most recognized banks.  I’m no stranger to long hours and high pressure environments – that’s my comfort zone.  This was different though and it took me a while to figure out why.  In a nutshell, the industry is marketed as advice but it’s structured entirely as sales.  Your only performance criteria is bringing in new money, but if you were honest about that with your clients, you wouldn’t have any clients.  Trying to do right by my clients while appeasing management was a daily battle and one which I was losing because I wouldn’t compromise my commitment to my clients.  This was my own personal hell – being completely invested in something that required me to compromise my integrity and my character to achieve success.

By most people’s standards, I don’t really stress out about things.  I’m usually Mr. Cool Calm and Collected but I think part of that is how I manage myself.  The gym is a great outlet – so was smoking a ton of weed.  I never smoked before or at work because of my professional standards, but I smoked just about every night before bed.  I did take a few breaks, including a 6 month break to prove to myself that I could stop when I wanted to – but had decided that I’d rather smoke weed.  It made life more enjoyable.. or maybe more tolerable.

In the last stage of my career at the bank, I moved to join a senior team to insulate me from management and remove my sales targets.  To ensure that I could respond with my best effort, I took another hiatus from weed.  Management wasn’t having any of it and fired me in the first week of January.  The first thing I did after leaving the office was sign up at the local dispensary and  I spent most of the next month stoned.  The following month, I broke my arm.  Rather than take the opiates they prescribed to me, I spent the next couple months stoned *all* of the time.  At my peak, I was smoking an ounce per week.

I smoked so much that it seemed like I had disassociated from everyone else’s reality and only existed within my own.  With a logical mind, a knack for research, and a priority of having the most accurate view of my world – I was able to understand why I had failed so spectacularly.  Global banks are massive corporate entities which operate in heavily regulated environments.  They’re structured for the purpose of stability – maintaining the status quo.  At the very core of my being, it’s in my nature to challenge the status quo.  That was a very important insight that helped me understand that if I was going to achieve the levels of success that I wanted for myself – my maximum utility – I needed to seek out a different environment.

I moved back home and started looking into tech, venture capital, and cannabis.  Tech looked like it would take some time to find the right opportunity but there were opportunities.  Venture capital gave me some very interesting advice.  They said that all the qualities that made me a pain in the ass for the big banks were the same qualities that made me a great leader and an effective CEO for a much smaller company – then they said go be a CEO.  When I looked into cannabis, I went to my favourite dispensary and spoke with the owners about making some introductions.  They said they’d be happy to but then we started getting into their expansion plans.

Last year, they were awarded top dispensary in the city and top dispensary in the country.  It wasn’t hard to understand why, they had the finest herb, a brilliantly designed shop, and a caliber of staff which made the experience far more like a casual wine tasting than buying a drink at a bar.  Their reputation had plenty of people approaching them offering to invest to help them expand and this was all foreign territory for them.  I offered to help in any way I could and they appreciated it.  A couple weeks later, I built a business plan for their expansion.  A week after that, they asked me to lead their capital raise.  A week after that, I introduced them to the top cannabis VC in town and a week after that, we were competing for a slot at the Arcview Investor Forum (think sharktank for week).

When we first discussed the game plan, we were going to start the raise towards the end of the summer.  It was going to give us time to clean up the books, do a legal restructure, roll out some strategic marketing, and refine our vision for what came next.  Unfortunately for us, our deadline for qualifying for the Arcview forum was 45 days.  I told them no problem – long hours and high pressure was my jam and I’d be happy to lead the charge.  They accepted and we were off to the races.

For the few weeks leading up to this, I had a few moments where I told myself that it was time to take another break but smoking weed was way too effective at alleviating my boredom and far too useful in helping me sleep.  When I took this project on however, it was no longer about me.  I had committed myself to something that deserved my best effort, to people who deserved my best effort, and to something which I was legitimately passionate about doing.  I told the founders that they were going to get the best out of me if I was sober and so I was making a commitment that I wouldn’t blaze until we raise.  The founders were a mix of amused, confused, and happy that I was so committed.

Just about every day started at 6am and ended at midnight.  Weekends were irrelevant.  Any time I spent not working on this project was time I spent maintaining the level of balance necessary to get the most out of the hours I was putting in.  My commutes were filled with calls.  My meals out were with key contacts.  My meals in were spent watching material relevant to this project.  I was consumed – and couldn’t be happier.

I’ve never been this engaged.  I’ve never been this excited to be a part of something either.  This is the first time in my life that I’ve been able to apply my mind like this and I feel like I’m in my element.  This is my jam.  The harder I work, the more I want to work at it.  The more we push forward, the more obstacles and barriers seem to dissolve in front of us.  The best part?  The core values behind the business have very little to do with cannabis – it has everything to do with social freedoms.  To borrow a line from Starbucks, ‘we’re in the business of social freedom, we just happen to sell cannabis’.  That’s something I can get behind all day long and I seem to have a bottomless pit of energy and passion for it.

The craziest part? I kinda forgot about weed and I think there’s a super important lesson there.  If I look throughout my life at the times when I was smoking most, there’s a pattern.  They were also the times where I was the least satisfied with my life.  It’s easy to say that I was using it to unwind, or de-stress, but I can’t help but think that those are euphemisms for an escape.  When I was stoned, I was no longer concerned with my daily struggles.  It put my mind elsewhere – sometimes nowhere.  Now that I get to spend my waking hours pouring everything I have and everything I know into a totally worthy cause, being stoned isn’t nearly as appealing.

Before we made our submission, I had some of the city’s top VCs and CEOs review the pitch materials before our submission.  The response was unanimous and tremendously positive.  One of the top investors at Arcview was local and was beyond impressed.  The ‘chief mentor’ at Arcview said that this was so well done that he expected Arcview investors to reach out to us directly in such a high volume that we’d complete the raise before we even reached the forum.  We were pumped.

Last week, we submitted our pitch package to the Arcview Group and while we scored the highest score of any submission that round – we scored just below their cut-off for the investor forum next month.  This was a remarkably frustrating experience.  Those who were supposed to qualify us were supposed to read through our executive summary and team bio, go through our pitch deck, and then watch the pitch video for which we were available for a live Q&A after.  The video was played through GoToMeeting – meaning that it was too choppy to watch.  The questions being asked in the live Q&A made it evident that they hadn’t even looked at the rest of our materials.  It was remarkably frustrating.

That night, I had a friend and his wife over for dinner.  He brought a joint.  I said no at first, but then I rationalized it.  I poured myself into this process and put forward something that I was incredibly proud of.  While it didn’t receive the result I wanted, I still qualified it as a success.  The joint was part stress-relief and part reward for an effort I was genuinely proud of – and I’m happy that I did.

I went from a state of frustration to a state of relaxation.  Without the preoccupation of the day’s failure, I was able to be more present and enjoy the company of my friends.  Colours were brighter, the food was better, and the music was especially good – I felt elevated.

I had been such a heavy user of cannabis for so long that I had burnt out my cannabinoid receptors to the point where no matter how much weed I smoked, it simply brought be back to a baseline of haziness.  I had abused the drug rather than used it.  I can’t stress enough, how important of a lesson that was for me.  For me, this wasn’t a lesson in yes you should or no you shouldn’t, it was a lesson in balance.  I doubt this journey is over, but these last few months have been a remarkable learning experience… and I’m just getting started.

 

The Wonderful Flaw in Capitalism

So sleep hasn’t come easily to me since I was young, but perhaps it’s both a blessing and a curse.  As I lay awake at night wishing I could fall asleep, my mind continues to problem solve.  A few months ago, I was doing my best to understand the difference between the idea of democracy, and the application of it in American politics – and effectively understand where things went sideways when 20% of the American public was able to elect someone which most of the world despised.  More recently, I’ve been focused on capitalism and more importantly, how it’s led to an unsustainable concentration of wealth.  At about 2am a couple nights ago, I woke up Siri to take a note.  That note reads:

“The fly in capitalism is the assumption that resources are scarce” 

I had said flaw, but close enough, Siri.  What I first tried to do was understand what capitalism is at its core.  My best definition was the exchange of resources for the creation of value.  Whether you’re producing a good, a service, or something in between, capitalism was there to reward you with resources to help you sustain yourself and with the goal of motivating you to create more value in the future.  Theoretically, in capitalism, those who create the most value should be rewarded with the most resources.  I don’t think that’s the case today.

As  the application of capitalism evolved, it became a heavily complex system and as with all systems, they can be taken advantage of.  For example, some businesses specifically target customers who don’t fully understand the transaction and end up paying for services they don’t need or products they can’t use – selling ice to an Eskimo.  While some examples are blatant, I suspect most are shades of grey.  Those shades of grey allow those with a greater understanding of the system to manipulate that transaction of value for resources – ultimately leaving them paying less or receiving more.  In this environment, the most significant factor in deciding who receives the most resources isn’t the ability to create value, but rather the ability to understand and play the game.

When I look across the board of the wealthiest people in the world, I don’t see a direct correlation between the wealth they’ve accumulated and the value they’ve created.  There are some, like Bill Gates, Jeff Bezos, or Larry Paige who I think should be among the wealthiest individuals in the world, but for each of them, there are dozens of wealthy individuals who have made their fortunes by extracting resources rather than creating value – casino’s come to mind.

So when I understood that, I thought that we just needed to find a way to get back to the fundamentals of capitalism.  We just needed to find a better way to ensure that there was a fair and equitable approach to the exchange of value for resources.  But wait… if resources weren’t scarce, would capitalism still motivate us to create value?

I know this is all super high level so let’s make this more tangible.  The sun currently projects more energy onto our planet than we’re capable of using – and we’re getting increasingly better at harnessing it.  99.9% of the resources ever used on this planet are still on this planet because as it turns out, matter can’t be destroyed.  That means that resources aren’t scarce, we’re just temporarily inefficient at turning used resources into usable resources.  That’s a technological issue that we’re getting increasingly better at solving – one which I expect to be largely solved within our lifetime.

So let’s be optimistic and think 100 years out.  There are solar panels everywhere.  Roads, roofs, cars, skyscrapers, and huge chunks of desserts are covered in enough solar panels to passive provide our planet with sufficient energy to both sustain and grow.  Waste conversion technologies have advanced to the point where a landfill can be broken down into synthesized raw materials.  Additive manufacturing is able to take synthesized raw materials and efficiently build just about anything that our minds can imagine.  If that ecosystem sounds familiar, it’s because that’s pretty much how our planet worked before humans came along and started trying to reinvent the wheel.  Mind you the earth did it at a much slower pace, but the fundamentals are the same.

Waste is a concept only known to humans.  In every other aspect of the known universe, it’s simply another state in which energy or matter can exist.  Once we can wrap our heads around that, it’s easier to understand that there is no scarcity in resources, simply an temporary inefficiency in turning used resources into usable resources.  That is something that I’m confident technology can solve, and it has me looking rather optimistically towards the future.

In a future where resources aren’t scarce, what would motivate someone to create value for others?  This is where the crusty capitalists might say that people are inherently lazy and it’s only through the motivation of scarcity that they’re willing to provide any level of value to others.  It’s too easy to find counter-examples for that to be entirely true, but I don’t deny that the fear of not being able to sustain yourself can motivate people to do all kinds of things.  What I also think though, is that love is a far more powerful motivator.  In this case, it would be love for what one does.  More often than not, the best computer programmers, the best musicians, the best entrepreneurs, and the best parents are those who absolutely love what they do.  Between their hardware, firmware and software, they’re totally in line with their life’s work.  They’re in their element.  They love what they do, and as a result, their drive, passion, and work ethic to create value for others far surpasses what they might have done out of fear.

That is the future I see and the future that I’m confident we’re headed towards.  We’re a few years out, and there will be plenty of stumbling blocks between now and then, but this is a logical eventuality which is simultaneously an enlightened perspective on how technology drives progress, and how progress drives ideology.  The future is bright and oh so cool.

The Real Cannabis Conversation

As is often the case, I think the the most interesting conversation on the topic is the one we’re not having right now.   I find that as people argue, they become more interested in defending their perspective than understanding another’s and I think that’s a key issue here.  While there are plenty of conversations around how to legalize or how to criminalize, I think the real question is why we should legalize or why we should criminalize.  When we take a proper look at the why behind whether or not we as a people should have legal access to this drug, we have a great opportunity for self-reflection.

I think the first thing we should do define is the term ‘drug’.  When heroin is found in the streets, it’s discussed as a highly illegal and highly dangerous drug.  When morphine is found in a hospital, its discussed as a pain killer and part of the medical process.  Both are obtained from the Opium poppy.  When you remove all the bias, drugs are simply something you put in your body for a desired effect.  That means they’re a tool and tools are remarkably indifferent to how we use them.

So why do we takes drugs then? I think we do it to adjust our state of mind.  Even drugs with no psychotropic effects are still targeting state of mind in a less direct manner.  Consider using an over-the-counter pain killer for a sprained ankle.  The ankle is an injury of the body, but the pain that’s being addressed is a state of mind.  If the mind was unaware of the body’s pain, the painkillers would be unnecessary.  Even if you’re taking drugs to address an illness with no obvious symptoms, you’re taking the drugs to address the concern of a future illness – still looking to resolve a state of mind.  So what if the issue isn’t a physical illness?  What if it’s mental?  What if it’s social?

There’s  a fantastic Sherlock quote… something along the lines of “I’m not an addict, I’m a user.  I look to alleviate boredom and occasionally stimulate my thought process.”  It’s interesting because if you say that it’s something you use to limit boredom, it’s relatable but if someone says they’re using it as a coping mechanism, it’s a bigger issue.  What if it’s a mechanism used to cope with boredom?  What I’m trying to demonstrate is that we’re really just scratching the surface of what drugs are and why we use them.  All we know is that we put them in our bodies to get us closer to the state of mind that we want to be in.  There’s a tremendous amount of research to do there, and I think the answers we arrive at will speak volumes on the human condition.

So let’s bring this back to cannabis.  Why do I take it?  Primarily for sleep, to escape my thoughts, and to alleviate boredom.  I recognize that the closer my life gets to where I want it to be, the less I want to escape from my reality and the less weed I look to consume.  That’s my personal experiment at the moment, if I’m where I want to be mentally, then will I still look to change my state of mind?

A great question to ask when discussing marijuana is addiction.  Most people would suggest that marijuana isn’t addictive because it lacks certain chemical properties that create a physiological dependency like some other drugs.  While that may be true to an extent, I’d suggest that marijuana can be addictive simply because of it’s effects.  I’ve had weeks where sobriety was the enemy and it was hard not to think I was staring addiction in the face.  That said, if you dropped me off in a location with no access to marijuana, I’d have a few sleepless nights and then carry on.  It’s easy to think of hard drugs when you think addiction but in reality, many addictions exist purely in the mind.  I think that with sufficient research, one may find that a chemical dependency and addiction are two different things, one is one of the body while the other is of the mind.  If that’s the case, marijuana addiction is possible and likely very real.  We owe it to ourselves to be honest about this and bring this element into the conversation

It’s not often that a drug makes the journey from being an illegal psychotropic to a widely prescribed medicine.  If I were to take this all at face value, cannabis is a miracle plant capable of treating all kinds of illnesses.  While I think that’s a possibility, I’m more interested in seeing the research than jumping on the hype train.  I also think that the medical properties of the plant would be discussed less if legalized recreational access was available.  In the current market, most users have acquired a medical license from a lax medical professional to achieve access for recreational use.  I can’t help but think that if wine were illegal, people would also seek medical licenses with claims that wine extends your lifespan, protects against cancers, improves mental health, and benefits the heart.  They may even be right, but it doesn’t change the fact that they were just looking to unwind with some friends at the end of the week.

So what are the actual medical properties of marijuana?  The real answer is we don’t know.  There’s anecdotal evidence of it successfully treating just about everything from cancer to seizures but the reality is we’ve just started the research.  From what I’ve seen, I suspect there are very real medical properties in the plant but I that we need to understand what they are to a much deeper level before we embrace them to this degree.  For example, I can confirm that it’s the most successful sleep aid I’ve ever used but I must also concede that I never wake up refreshed the way I feel when I sleep without it.  From an introspective standpoint, I think what it does very well is it helps you shift into a more copacetic mindset and it’s that mindset which helps you better deal with things like pain, stress, and anxiety.  Beyond that, I’m looking to learn and making no assumptions.

So what about recreational use?  We’re most of the way there and the momentum doesn’t seem to be letting up.  Every once in a while, some old white guy will say something like ‘I don’t see how making these substances legal will improve anyone’s quality of life.’  I understand that mindset, but I also understand why it’s flawed.  The error is in the assumption that marijuana affects all people equally.  Some of us are easier to get along with when we’re stoned while others are simply far more productive individuals.  There are some people who shouldn’t be using cannabis and that’s OK too.  The solution isn’t restricting access to everyone, the solution is to provide access to everyone and letting us collectively explore the pros and cons.  We’ll make some mistakes and lose some good people along the way, but such is the nature of progress.

Someone might say that it poses too much of a risk but to them I would say that fear makes for poor decision making.  Too often the government treats the general population like a parent treats their children but in reality, the general population is representative of a collective intelligence which is often under utilized.  Look at what happened when we legalized alcohol.  Alcohol abuse has ruined lives while alcohol poisoning has take them.  That doesn’t make alcohol bad, it makes alcohol important.  It makes it important to understand why we drink, and what the real impact is.  Marijuana will be no different.  It’s just another substance, which if anything, is a reflection of ourselves.

I can’t help but think that the majority of those who are opposed to the legalization of marijuana either have a political angle, don’t understand the matter, or are simply afraid.  The solution to each is education.  We all need to know more about what this plant is and what it does, but we’re not going to learn what we want to know by leaving it in the labs because there’s more to it than that.  Marijuana should be legal for the reason that every other drug should be legal.  We shouldn’t be cautious around drugs because they’re bad or illegal, we should indifferent around drugs because we understand that the ethical and practical impact has everything to do with that specific drug and that specific person.  The level of research necessary to truly understand those dynamics requires a decentralized approach to research and fortunately for us, there are plenty of volunteers.

So at the end of the day, who do I think should be smoking cannabis?  Anyone who wants to, on the condition that they understand what they’re doing and why.  We know it’s a plant that gets you stoned and we know it has medical properties.  We need to know a lot more than that.  Part of that process is giving us the chance to explore – and that means legalization.  When it’s all said and done, we’ve tried it their way.. with the whole war on drugs thing… now it’s time to embrace freedom.  The freedom for people to choose how to live their lives.  The freedom for people to choose what medicine they use.  The freedom to choose how to deal with boredom and the freedom to experience the negative realities of poor decision making.  It’s all part of the same evolutionary process… this is how we grow.

 

My Thoughts on Privilege

 

A few years ago, a girl I was dating told me to check my privilege.  It was tremendously frustrating for me as I couldn’t understand what she was actually trying to say.  She went on to say that as a good-looking white male, I had all kinds of advantages afforded to me which weren’t available to others.  I reflected on that statement and it still didn’t resonate.  From my perspective, my path had not been easy and both my opportunities and successes were well-earned.  I figured a good place to start would be with a definition we could both agree on.  So we looked it up:

 

Privilege: A special right, advantage, or immunity granted or available to a particular person or group.

 

That sounded rather general to me.  By that definition, if white privilege existed, then so did black privilege – and every other kind of privilege for that matter.  Tall people are privileged to reach things off high shelves while short people are privileged to not bump their heads on low ceilings.  If privilege is simply referring to the advantages held by some and not others, aren’t we just talking about people in general?  Maybe.

It would be easy for me to say that white privilege doesn’t exist because privilege doesn’t exist.  I would go on to give an example:  Would you rather be a black man being pulled over by the police in Alabama, or would you rather be a white guy getting pulled over by freedom fighters in West Africa?  Then I’d remind us that while we all share a common blueprint, we all vary in our own ways and those variations provide inherent advantages and disadvantages depending on the circumstance.  If circumstance is the variable that determines if we experience an advantage or disadvantage, then does privilege really exist?  Like I said, it would be easy for me to say that white privilege doesn’t exist because privilege doesn’t exist – but I would be wrong.

 

Everything that I just said is valid to an extent but I think that there’s another layer to what’s going on here that better represents what we’re looking at.  I think if we explore this a little further, we’ll find some clarity

A granted privilege seems to be simply be an advantage given from one person to another.  What I find curious here is that the word granted offers the possibility of earning your advantage.  Consider a student who has good grades in high school and then is ‘granted’ admittance to a top-tier university – we’ll call her Priya. Now consider someone who had average grades, who also made it into that university after their parents made a significant donation – we’ll call him Bryce.  I think most people would blow the whistle and call a privilege foul here on the latter, but what if the Priya was at a top private school with unlimited tutoring funded by her parents?  What if Bryce’s parents grew up in poverty, worked hard, and were simply making a donation to their alma mater?

This is a rather interesting topic for me because in the context of a social conversation, privilege is what I would consider to be a poorly defined topic.  It’s like we know that there’s something wrong but we’re not exactly sure how to articulate it.  As in many other cases in society, we think we’re dealing in issues of fairness but in reality we’re dealing with issues of efficiency.

Let’s revisit the earlier example in a different context.  Let’s say for the sake of simplicity, Priya is unprivileged and Bryce is very privileged.  Both are admitted to a top-tier university and both approach their degree as an independent effort.  Now they’ve both graduated and while Priya continued to work hard and earned good grades, Bryce worked harder and earned better grades.  Now imagine that in 40 years, we’re reflecting on their life’s work and there’s a clear winner – Bryce.

If this were a real world example, what we commonly define as privilege could’ve led to the discrepancy in university grades and the career but that’s the point.  What if it wasn’t?  It’s certainly possible that Bryce did better because he had more resources at his disposal, but what if his circumstances we’re simply better aligned with his own personal strengths?  What if Bryce simply wasn’t motivated in high-school, but once he had the autonomy and challenge that came with a top-tier university, he was motivated to perform?  And what if his personality and degree were directly in line with his career path?  And what if Priya who worked hard and got good grades her entire life had the genetic blueprint for a world class chef, but became an accountant as a result of her academic focus?

In reality, what we’re really upset at is a series of systems which are inefficient at allocating resources and creating value.  The system we have currently is a ‘fair’ entry system predicated on prior academic performance and extra-curricular activities but it’s also the same system that would see Priya become an accountant and see Bryce not gain admission.  It’s largely a level playing field, but perhaps it’s time to prioitize making sure people are suited up for the right sport and playing to their full potential.

With the progress we’ve made in understanding our genealogy and psychology, along with advances in our ability to collect and analyze data… I smell a revolution in how we determine fit.  Imagine everyone being given the freedom to explore their options, while also being given the information to understand what they’re likely to be best at.  Now imagine everyone having access to the same information and how much more efficient we’d all be… at everything.  The goal isn’t to make privilege against the rules, the goal is to have a system in place that makes the use of privilege seem foolish and counter-productive.

If I were to offer up my best definition of privilege, it would be an applied, circumstantial advantage.  When circumstantial advantages are used to further the collective interests (efficient), people seem not to mind.  When circumstantial advantages are used to further self-interests (inefficient), there’s an issue.  Our issue isn’t with having different strengths and weaknesses from one another.  Our issues aren’t even with those who apply their strengths when competing.  Our issue is those who take the short-sighted approach of putting their own interests ahead of collective progress.  Our issue is with those who use their resources to create inefficiencies in the larger system at play.

The Future of Real Estate – Part 2 (The Solution)

In my last post, I detailed the problem with real estate – it’s too expensive.

People have been trained to want to buy real estate without understanding what makes a good real estate investment.  The system in place allows us to amplify those bad decisions by spending 5x more than we were able to save, effectively spending the next 20 years paying it back.  Because it fit into our monthly budget, we were never overly concerned with the cost.  The market has now figured that out and in many major cities, is testing our upper threshold of what we’re willing to pay.  When you test that upper limit of what people are willing to do, they start thinking outside the box.

The best recent example, which I had mentioned in the last post is how high oil prices gave rise to an environment in which Tesla could be successful.  So the fun question that we get to answer here is what high real estate prices are creating. Prices have reached a point where all kinds of businesses are coming out of the wood work with ‘alternative housing’ ideas.  Most of it is in its early stages now, but we have some very cool options in the pipeline.

3D printed homes.  If you don’t know what I’m talking about, do a quick search.  Additive manufacturing is most likely the future of manufacturing, and I can’t see why it won’t also be the future of building homes.  If I were to guess, I’d say that the future of construction is automated and the further we progress in that direction, it’ll look like a giant 3D printer.  While they’re not ready for the market yet, I’d be surprised if we didn’t see some market ready options within 10 years.

Shipping container homes.  Shipping containers are relatively inexpensive, structurally sound, and made from recycled materials.  They also apparently double as pretty cool homes.  The genius in this approach is that we’ve figured out we can build a modern, livable home out of just about anything.

Mobile homes.  Not trailer park mobile homes, just homes that are mobile.  One of the more interesting designs that I’ve seen was of micro suites which could easily be moved from building to building.  For individuals who like to move around, their suite would just move with them from city to city.  For others mobile homes are about getting off the grid.  One of the coolest ideas in the pipeline are self-sustaining, modern, smart, mobile homes.  Everything from solar panels to water filtration would be built into the home itself, allowing for you to put your home down on any piece of land you’d like.

Modular homes.  While 3D printed homes certainly don’t qualify, almost every other new style of alternative housing falls under the category of modular (including container and mobile homes).  Modular homes are such a broad category because it’s really referencing the production process rather than the final product.  With modular homes, each section of your home is manufactured centrally, then shipped out to your location to be installed.  That’s a big deal.

Right now, an average home is built like a Rolls Royce: with hand tools and a 6 month wait-time.  What we need is an effective assembly line for homes and that’s what modular housing is looking to tackle.  By building in modules, fabrication can be done centrally and then shipped out to the buyer for installation.  That central, and streamlined fabrication process means that a home can be built in a couple weeks and with far fewer resources.  We’re quite possibly looking at a genuine disruption in how homes are constructed, especially when the build time and cost are a fraction of our current options.

What about the land though?  Real estate is always a two part conversation because land is pretty useless without a house to put on it and a house is pretty useless without land it put it on.  It’s very possible that as houses become less and less expensive to build, people are just going to charge more for land, effectively providing the same end price.  Again, this is what happens when we understand the price of something but not its value.  That’s ok though, because I see a solution on the horizon for the cost of land as well.

Land is not unlimited, but we are not even close to using up what we have.  What’s really limited is land near urban centers.  Urban centers tend to have the most desirable jobs so people move to the city.  There’s more people who want to live there than land available so demand exceeds supply and the price goes up.  The solution thus far has been densification – finding ways to put more people in the same area and large residential towers are the result.  The problem with densification is that the city’s infrastructure rarely keeps up and we simply end up with congestion.  Yes you get to live in the city, but good luck getting around and doing things.

There’s more than one way to solve this problem though.  Rather than trying to accommodate more people in the city, why not motivate them to leave the city?

The first way you do that is by making the commute more tolerable and I think driverless cars are going to help that in a big way.  For most people, driverless cars are likely to cut down on commuting times significantly.  Second, commuting takes on an entirely different meaning when you’re not driving.  What we think of as a 2 hour commute today, could very easily become an hour in your mobile office a decade from now.  Some will still prefer to be within walking distance of their job.  For others, a cool modular home, on a quiet lake just outside of town for a fraction of the price will be the more attractive option.

The other way to get people to leave the city is by providing job opportunities outside the city.  It was the industrial revolution which created this population shift, but it was really the evolution of technology.  Farming techniques had evolved to the point where fewer farmers were needed, just as factories were being introduced and manufacturing jobs in the cities were booming.  If I were to guess, it will be technology which brings people back out to the country – and I’m thinking it’s going to be telecommuting.  Telecommuting is basically working from home, but with the power of the internet and the way the job market has evolved, it’s becoming more and more feasible.  Perhaps one of the biggest transitions will be when coding becomes a primary trade.

When I think of successes like Uber and AirBnB, I see a trend of decentralization.  It’s taking a look at the resources we already have access to and simply using them more efficiently.  My biggest issue with real estate is that it represents a remarkable inefficiency.  We have more than enough land to share, but we’re willing to commit decades of our income to securing a small piece.  Every dollar that we spend on a house is a dollar we don’t spend on all the other things our economy produces, yet we’re encouraged to spend 5x more than what we’re able to save.  And without understanding these dynamics, we haven’t been motivated to challenge the status quo – until now.

The Future of Real Estate – Part 1 (The Problem)

 

Real Estate has long since been a frustration for me. Growing up, I heard the same thing that everyone else did… You should own your home because if you lose everything, at least you’ll have your home.  Paying a mortgage is better than paying rent because it’s pretty much like paying yourself instead of paying someone else.  Real estate is a safe investment because everyone needs a place to live.

As I developed my investment skillset, my perspective on real estate began to shift.  Not only did I lack any emotional attachment to owning my own home, Now I also had a much clearer understanding for how real estate behaved as an asset within its markets.  What I’ve also realized is the unfortunate reality that while your average real estate professional is aware of these dynamics, they don’t entirely understand them, and will only mention them when it helps to close a sale.  If a market is overpriced, you’re more likely to hear your realtor tell you that you’ll make your money back eventually, than to wait for prices to come down.

While we’re going to dive into what the real issues around real estate are and how I think they could be solved, I think it’s important to mention that my perspective on real estate has been shaped by growing up in a city which became one of the world’s hottest real estate markets.  While I have the funds necessary to own my own home, I do not.  It’s frustrating because I’d like to, but my understanding of the dynamics at work prevent me from making that decision.  While I’m confident in my patience, paying rent is still far from ideal.

There are several issues with real estate, and I think they all start to come undone quite nicely when we start asking why real estate is so expensive.  Consider this, if we didn’t have the option to borrow hundreds of thousands of dollars that would take us decades to pay off, how much would a home cost?  What if we could only spend what we had saved up?

The problem with a mortgage is that it inflates purchasing power.  If you saved 100K, you can now go spend 500k on a house.  Saved 200k, go spend a million.  The lenders know how hard it was for you to save that first 20% as well, which is why they’ll give you between 20 and 30 years to pay it off the last 80%.  Yes you’ll have a place to live, you’ll spend most of your working life paying it off.  Am I the only one who thinks this sounds like financial slavery? If we all simply said no, I won’t take on a debt which will take 20+ years to pay off, we’ve set the terms on what we’re willing to pay.  They can only sell at the price at which we’re willing to pay.  Unfortunately we haven’t figured that out yet and we’re too used to the upper threshold of what we can afford to pay.

So what is a home worth?  Not price but value.  Price is what you pay, value is what you get.  Well traditionally, there’s 2 parts.  First you buy the land, then you build a house on it.  We often find land to be expensive, but why?  If I were to buy a business that produced widgets, it would have value because I could take those widgets to market and sell them.  If I bought a farm, it would have value because I could take the crops to market and sell them.  If I owned a plot of land, which did nothing, would it have value? Well it would be worth whatever someone was willing to pay me for it right?  If the land carries no inherent value, why would someone pay me for it?

In effect, what we’re really paying for when we buy land is a reduced travel time between home and work.  With a limited supply of land within the city center and a seemingly unlimited demand of people who want to live there, the markets set the current price.

The second piece of this puzzle is the cost of building an actual house.  Right now, an average house takes about 6 months to because it’s treated like an individual project, and done primarily with manual labour and hand tools.  Sounds like the timeline and process for a Rolls Royce.

So this is where I leave you hanging.  We’re keen on city centers now, but will that always be the case?  And what happens when we can start building houses like we currently build cars?  Well that’s not going to happen… is it?  The real question is why it hasn’t happened already.  Here’s my final thought:  When oil prices were low, nobody cared about electric cars.  When oil prices were high, electric vehicles became a more realistic alternative.  When oil prices peaked, Tesla walked into a market waiting with open arms.  High oil prices delivered Tesla.

What will high real estate prices deliver?

 

Fuck the Rules.

Think about the last time you were driving.  How fast were you going?  Was it at or below the posted speed limit?  If you were like me, you were going with the flow of traffic which is usually about 20% over.  Despite a blatant disregard for the law, millions of commuters get to and from work every day without any intervention from law enforcement.  Why?

Natural order supersedes civil law.  People are driven to pursue efficiency and it’s usually achieved through a group effort.  Collectively, we decided that the speed limit was too low and that we could safely operate our vehicles beyond that range.  Since we’ve done it collectively, and have demonstrated its success, law enforcement has conceded this victory and have effectively decided to focus their efforts elsewhere.  I find it curious that the laws have not changed to reflect this, especially considering that cars have become far more agile and much safer since current speed limits were introduced.  Perhaps they’ve assumed that if they increased the limit to what we actually drove, people would simply drive 20% above that and it would be chaos.  Maybe.  Maybe we find that natural balance between speed and risk on our own.

Another perspective, well known by the tinfoil hats, suggests that this is done on purpose as it gives a government direct control over its population anytime it’s deemed to be necessary.  If a cop wanted to pull you over, he could start with the fact that you were probably speeding.  If you were driving the limit while everyone else was speeding, well now he’ll pull you over for acting suspicious.  A well-known lawyer wrote a book about the idea that the average American professional broke several federal laws each day.  This wasn’t because of a lack of morals, ethics, or competency, but because the rules, laws, and regulations were so numerous, broad or vague, that it was nearly impossible to do your job without breaking some set of rules.

While I think government and law enforcement largely recognize the system and understand how to exploit it, I don’t think it was purpose-built nor do I think most governments work with the goal of exploiting their people. If you think about why rules are put in place, it’s usually to retain power or to promote efficiency.  When a king decided that only his bloodline would rule, this helped to protect his power.  When slave owners decided that slaves didn’t have rights, this was to protect their power.  When men decided that women shouldn’t be allowed to vote, it was to protect their power.  While it still does happen, I suspect that it’s becoming increasingly difficult to introduce laws for the purpose of retaining power.  If I’m not mistaken, those types of laws rely on a lack of access to information and the internet seems to have undermined that quite nicely.

What about speeding though?  That law doesn’t do much in the way of consolidating power in any direction does it?  Of course not… I don’t think.  That’s a law designed to promote efficiency.  The idea is that we want to maintain a healthy flow of traffic, with as few accidents and injuries as possible.  Not difficult to understand and most would agree that it’ a sensible solution – so why does almost everyone break that limit?  Well as it happens, we’re capable of finding that equilibrium on our own.  Once upon a time, when cars were heavier and couldn’t stop as fast, back when they weren’t loaded up with airbags, back when there weren’t seatbelts, those speed limits may have represented that equilibrium – but we’ve since evolved.

We actually have our own criteria for setting a speed limit.  We want to get from point A to point B in the least amount of time possible, without causing an accident, and without being pulled over by law enforcement.  As it turns out, we’ve identified that this new equilibrium is usually about 20% over the posted limit, and it’s why so many of us get frustrated when we’re being obstructed with someone who is only going the limit or just below.

So rules are good as long as they’re promoting efficiency then right?  No murdering is a good rule because it decreases our population’s mortality rate, time spent thinking about being murdered, and resources spent not getting murdered.  Net result is more people with more time to think about things besides being murdered – makes sense.  Consider this though, if murder wasn’t against the law, would you?  For those that have, was the law an effective deterrent?  For those who it did deter, would they have done it had they known they wouldn’t get caught?  What I’m getting at is that the law isn’t driving our sense of right and wrong, that’s something you find on the inside.

So we have these internal drivers that help us pursue efficiency and internal drivers that help us understand right from wrong.  I think they overlap and when I’ve refined this idea, it’ll certainly be its own blog post.  Until then, follow me on the assumption that our concept of right and wrong is based on our understanding of efficiency.  It’s why speeding doesn’t feel unethical unless you’re creating a dangerous situation for others.

So back to murder.  It’s a concept which is almost universally understood to be unethical or immoral. Why is that?  Well there’s an emotional perspective, an intellectual perspective, and a societal perspective that most of you will already be familiar with, but here’s my perspective from the side of efficiency.  I don’t think murder is inherently right or wrong.  If you were given a chance to assassinate Hitler prior to the holocaust, would you?  Someone who did would likely be considered a hero.  Someone who refused may even be considered to be immoral by the masses.  But what if you were only given an opportunity to kill him prior to him doing any harm?  What if you were given an opportunity to murder Hitler as an infant? Quite the ethical conundrum.

From the perspective of efficiency though, I don’t think it’s that simple.  The most efficient approach would likely be some level of early stage intervention.  I know I’m probably one of the few to suggest this, but imagine if Hitler’s passion, intelligence, and charisma were better channeled?  Not only would we have avoided a second world war, Hitler was probably capable of making a very positive contribution given the right circumstances.  All that said, in a universe of infinite possibilities, there are bound to be scenarios where murder is the most efficient option.  Where I’m sitting on this currently, is that while murder can be ethical or the most efficient course of action, it rarely ever is.  How many of us have the wisdom necessary to know which lives are worth keeping and which aren’t. How many of us would you think are entirely incapable of making a positive impact on the world when surrounded by the right people?  I think the answer is barely any and I think those are probably the biggest reasons why this exists as a social rule, regardless of law.

Finally, the fun part.  I was trying to come up with a law that was already in place, which embodied efficiency.  I couldn’t.  Then the lightbulb went off.  I suspect efficiency is like an exponential curve, meaning that you can always become more efficient, but in most cases you can never become completely efficient.  Effectively, there’s *always* room for improvement.  The purpose of a rule, is to dictate behaviour.  That rule may dictate how to behave in a highly efficient manner today, but what happens when our behaviour evolves beyond that construct?

The more rules we take away, the more we’re allowed to be ourselves.  The more we’re allowed to be ourselves, the better we can understand our maximum utility and the value of others.  The better we understand each other and ourselves, the better we are at working together towards a common goal.  The better we work together towards a common goal, the more efficient we all become.

Best laws ever ‘put’ in place? Allowing people to govern themselves.  Allowing slaves to be people.  Allowing women to be equal.  When you remove laws and regulations, allowing us to be what we should be, amazing things happen.