Practicing Wisdom Issue #1

1. What I Learned This Week

The Illusion of Control, the Power of Float, and the Quiet Tyranny of Being the Default

What if leverage doesn’t come from power, brilliance, or hard work—but from structure? This week’s readings pushed me to reflect not on what people build, but how the invisible frameworks beneath them turn good ideas into compounding machines—or into chaos.

Start with the concept of negative working capital, which looks like financial wizardry but is actually a form of temporal jiu-jitsu. A retail chain rolling out stores with a 20% ROI suddenly doubles that return not by selling more, but by restructuring time—paying suppliers after the goods are sold, holding minimal inventory, and collecting cash upfront. It's not margin magic; it's time arbitrage. The float becomes a form of capital—temporary, invisible, and immensely powerful.

Warren Buffett’s insurance float, Amazon’s supplier cycle, even SaaS annual billing: all rely on the same trick. They borrow from the future without calling it debt. Once you see it, you can’t unsee it. The balance sheet starts whispering secrets about who’s funding whom.

This theme of structure shaping outcomes keeps surfacing.

In Apollo’s Web, we see private equity’s transformation of the insurance industry not as a hostile takeover but a structural arbitrage. Apollo doesn’t compete in traditional insurance; it reconfigures the whole asset-liability engine. By matching annuity inflows with illiquid, high-yield assets, it effectively turns retirement savings into a financing mechanism for alternative assets. Again: not a new product. A new architecture.

And in Tower of Basel, Marc Rubinstein’s recounting of the Basel Accords shows that regulation—intended to constrain excess—can itself become a gameable system. What began as a crude 30-page capital requirement in 1988 morphed into an 80,000-page labyrinth. Complexity, far from increasing safety, offered banks the tools to hide risk in plain sight. Once again, structure dictated behavior—and sometimes undermined intent.

Which brings us to Very Bad Advice. Housel’s satirical inversion offers a kind of checklist of structural failure modes for the self: compare yourself constantly, chase engagement over insight, optimize for applause. Each line reflects a misaligned incentive system we inherit unless we consciously rewrite it.

In Dror Poleg’s piece on intangible asset bubbles he argues, persuasively, that in a world where code and hype matter more than factories and land, valuation is less about analysis and more about collective belief. In other words: it’s not what you build, but when the crowd believes it’s valuable. You can have the best codebase in the world—but if the default belief system doesn’t price it that way, you’re a genius without funding.

That brings us to Benn Stancil’s cold (and hilarious) take on Google’s failure to make its AI models the default choice. His observation? The best tech doesn’t win. The best consumer defaults do. Google owns the browser, the OS, and the search box—but OpenAI owns mindshare, the default AI bookmark. And in consumer tech, the default is destiny.

We can wrap up on this theme with Charlie Songhurt’s conversation on investing in around 500 startups. He observed that successful founders often survive by avoiding predictable failure. Greatness, he suggests, might just be what happens when you don’t die long enough. The survivors aren’t always the smartest or boldest—they’re the ones who master entropy: organizational, psychological, and financial.

So maybe that’s the week’s thesis: Success is often less about brilliance, and more about structure, sequence, and staying power. And to guide us on finding where not to go we can steal a quote from Carl Gustav Jacobi - “Invert, always invert.”

Sources Referenced

“The Miracle of Negative Working Capital” — CFO Secrets

“Very Bad Advice” — Morgan Housel, Collaborative Fund

“Apollo’s Web” — Marc Rubinstein, Net Interest

“Tower of Basel” — Marc Rubinstein, Net Interest

“A Cold Play” — Benn Stancil, Substack

“Charlie Songhurst: Invest Like the Best” — Interview with Patrick O’Shaughnessy

“Are We in a Bubble?” — Dror Poleg

2. Key Distillations

• “Float is another word for borrowed time.”

• “The best model rarely wins. The best default does.”

• “Bubbles can’t be diagnosed in real time—only postmortem.”

• “Most startup failure isn’t dramatic—it’s just organizational entropy.”

• “Negative working capital is compound interest in disguise.”

3. One Contrarian Viewpoint

Cash is strategy.

Traditional wisdom says capital allocation is a CFO's job, but the lesson of negative working capital is that operational design is financial strategy. Distribution terms, supply chain timing, and customer prepayments can matter more than product innovation or growth rates. Capital efficiency is not a metric—it's a competitive weapon.

4. One Investable Idea

Default UX is a billion-dollar moat.

The AI race won't be won by raw model performance. As Benn Stancil notes, OpenAI’s dominance stems not from its algorithmic edge, but from the fact that “ChatGPT” is now a verb. The startup that builds the most frictionless, trustworthy default experience—especially in trust-sensitive fields like health, finance, and education—has the edge. To steal an old aphorism - no one gets fired for buying IBM.

5. From the Archives: A Recall Highlight

“Brand is just memory plus trust.”
Still relevant in the AI arms race. Performance changes. Memory and trust compound.