In this edition of Life-Changing Concepts:

Inverse Thinking

In 1907, the nightmare of every banker came true in the US.

Bank runs.

After several trusts went bankrupt, people lost confidence in the financial system.

So everybody ran to the banks to withdraw their money.

It wasn’t one bank or city.

Imagine thousands of people waiting in front of all bank branches across the country.

So banks couldn’t keep up with withdrawal requests and started ceasing operations.

And what happens when banks can’t give you your money?

Yes, panic.

The stock market went down 50%, the interest rate reached 100%.

It was one of the worst crises in US history.

The whole financial system came to the verge of collapse.

But then…

A superhero came to the rescue as in Marvel movies.

A 70-year-old banker, J.P Morgan.

He pledged his own money to the banks of Wall Street to ease the liquidity pressure.

And he led some other wealthy people to do the same.

His efforts kept the New York Stock Exchange open and resolved the crisis.

The panic stopped.

And the financial system of the US survived thanks to one person.

Now imagine how the government felt.

While they were desperate, an individual managed to save the country from a disaster.

Newspapers made fun of the situation.
​

​

​This trauma made the government stop and think:

“How can we avoid this disaster from happening again?”

The Power of Inverse Thinking

For years, governments had implemented policies to strengthen the US financial system and economy.

But those policies didn’t prevent the near-collapse of 1907.

Only when they thought inversely to avoid another disaster, they came up with the best idea.

They founded the Federal Reserve System (FED) to act as a lender of last resort.

And to regulate the trusts and banks.

The FED provided the financial infrastructure that made the US survive other crises.

And become the financial center of the world.

Yes, it’s not perfect.

But complex problems —like economic policies, business decisions, or what to do with our lives— don’t have perfect solutions.

So it’s easier to find the right path by avoiding the negative.

And that’s what inverse thinking is.

You think about the negative outcomes, and make decisions to avoid them.
​

​
Inverse thinking is a simple yet invaluable tool.

Now let’s see how to use it in business and life with inverted questions:

1. Inversion in Business

Back in the 90s, Yahoo was the search engine leader.

But when users searched on Yahoo, they had to go through many irrelevant results to get to what they were looking for.

Larry Page and Sergey Brin wondered how they can avoid showing irrelevant results.

Framing the problem this way made them realize a pattern.

Like academic papers, low-quality pages didn’t have many other websites referencing them.

On the internet, references were links.

So they created the PageRank algorithm that ranked sites based on backlinks.

This increased the chance of users finding what they were looking for in the first few results.

And Google beat Yahoo in the search game.

Besides solving specific problems, you can use other inverted questions to get closer to the right path in business:

• How can we increase customer churn?
• How can we make our website less user-friendly?
• How can we create a hostile working environment?
• How can we create a new product that no one wants?
• How can we make our products harder to find and buy?

Now, these questions sound strange.

But they are so easy to answer.

Think about your answers, and avoid them at all costs.

2. Inversion in Personal Life

Yesterday I talked with a friend.

He told me he rejected a promotion as he knew the role was not for him.

Despite all his colleagues wanting that position.

I admired his courage to say no.

And to resist mimetic desires.

He thought that role would make his life miserable.

So he avoided it.

Many people try to find the best career path or the best business to start.

That’s hard.

Because the options are too broad.

But it’s easy to know what you don’t want.

So use inverted questions to design your life.

Some examples:

• What can I do today to waste my time?
• What purchases can I make to ruin my finances?
• What habits can I build to become unhealthy in 5-10 years?
• What decisions can I make (or not make) to have regrets in the future?
• What can I work on this week to feel busy but get no concrete results?

Let’s finish with a quote from Charlie Munger — who is one of the biggest advocates of inverse thinking.

“All I want to know is where I'm going to die, so I'll never go there.”
​

One recommendation:

The Daily Upside: I stopped watching the news a long time ago. And I'm also trying to spend less time on social media.

You know what's one downside of this? Missing relevant business news.

So I use some daily newsletters that summarize what's going on in the business world. The Daily Upside is one of them.

But what I like the most is they don't only tell. They add their insights to explain why that piece of information matters. It's a huge newsletter with almost 1 million subscribers.

Check it out here or join in one click (free).
​

One quote:

When you are ready, join Frontera Premium to get lessons from the great founders and thinkers to 10x your outcomes in business (and life). Exclusive for entrepreneurs.

​

You can reply to this mail with your thoughts and feedback. I'd be happy to hear from you — I read and reply to all messages.
​
Have a great day.

Ozan
Founder - Frontera
​