"How to Make Fewer but Correct Decisions"

This article is Lu Canwei's 89th original piece.

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Today, Lao Hua shared a formula that left a deep impression on me, which he calls the wealth-generating formula:

Start with the end in mind.

Throughout our lives, we face various decisions, from choosing what major to pursue, what school to attend, what industry to enter, what city to live in, to what fields to invest in, down to whether I should drink coffee today or what clothes to wear when going out (perhaps boys don’t have such worries).

All our decisions stem from our own experiences and relevant background knowledge. For example, I don’t often drink coffee in the afternoon because it affects my sleep at night. These decisions are short-term and have little impact; drinking coffee in the afternoon only affects my sleep that night.

However, many times, our decisions can have a longer impact cycle. For instance, if we choose a career path and go in the wrong direction, no matter how much we invest, it’s hard to see results. In this fast-paced era, we pursue quick decisions for maximum efficiency, but in long-term impactful decisions, this is not necessarily a good choice.

Take live-streaming sales as an example. Everyone knows that live-streaming sales are very popular now. Is there still an opportunity to get into live-streaming sales? If there is, how should I go about it?

Many people’s first instinct might be to sell products in categories they are familiar with.

If you approach it this way, it’s likely that it won’t succeed, regardless of how hard you try. You might invest time and energy, but end up with nothing to show for it.

You might say, “What if I get lucky? Isn’t it all about luck these days? How would I know if I don’t try? I believe I’m more knowledgeable in this field than others.” But where does that confidence come from, thinking you’ll hit the jackpot, like Liang Jingru?

If you really have such good luck, why not do something that’s closest to making money, like buying a lottery ticket?

What we need to do is position ourselves as ordinary people, without extraordinary luck. Most of what I can think of, others can think of too, which puts us at the first level. So, let’s consider, if others can think of it too, how can I find points that others haven’t thought of to enter the second level?

Learn from experts.

Using the previous example, since I’m just an ordinary person, I should seek external support, which means consulting experts. Some may be at the second level, while others may be at the third level. You might ask why not go directly to someone at the fourth or fifth level?

People who are far more capable than you often don’t have time for you.

You might say, “How do I know if what the expert says is right? If one might be wrong, I can consult ten or even a hundred. Once I understand, I might not reach a score of 60, but I can at least get a 45.”

Just like many investment firms, they invest in many companies within the same sector. Even if most fail, as long as one succeeds, the funds invested in the failed companies can generally be recouped.

You are the same; even if 9 out of 10 people you consult are unreliable, if the 10th person can provide value, it can completely cover the costs of learning from the previous 9.

Do the math.

Teacher Bobo shared their experience in selecting products for live-streaming sales. They didn’t start with categories they were good at but first found a category on an e-commerce platform with a trading scale of around 20 billion. By observing transaction data in short videos, they discovered that the trading scale in this area was quite small, only a few hundred million.

If you focus on categories you’re good at, the market scale is likely a bloody red ocean, where everyone competes fiercely. Of course, there are many latecomers who eventually rise to the top, like Meituan and Didi. But everyone is a top student; having good grades isn’t your barrier.

At this point, entering a blue ocean market, even if my ability is only 30 points, I can sell far more in this category than in others. As long as I spend a little time learning—after all, top students learn much better than those who struggle—I can quickly crush the competition in this field. This is also why we see larger companies continually entering different fields, like ByteDance.

Another example is Teacher Tiao Xing Ma sharing a strategy in online education, which has a similar underlying thought process to Teacher Bobo. The formula for online education:

They looked at the user scale for online education in first-tier cities, which is about 100 million, and second-tier cities are similar. If they want to achieve tenfold growth, they either need to increase the current user scale, such as from 1 million to 10 million, or improve the conversion rate, such as from 5% to 50%.

However, even we can see that achieving 10 million users in the currently saturated first-tier market is very difficult. So, should we build a gold medal team to achieve a 50% conversion rate? But looking at industry data, having more than 10% of companies is already considered very excellent.

So, does that mean this endeavor is doomed?

The user scale in the fourth, fifth, sixth, seventh, and eighth-tier cities combined is 1.1 billion. Now, the question becomes how to make rural aunties understand the importance of their children learning English…

Similarly, Brother Goji told me that my articles are a bit dry and hard for the average person to understand. After looking at Boyang’s data, I found that his readership is generally higher than mine. Regardless of how much better his writing is compared to mine (my articles have issues like logical inconsistencies and typos), if I can write in a way that a 12-year-old can understand, then my audience won’t just be limited to the internet crowd but can include a larger audience, as elementary school students are also a significant group.

Finally, you might say, “I understand the reasoning, but…”

Six words: Make fewer decisions, think more.

Recommendations:

You should take responsibility for your own life.

You may need to plan for your own obsolescence.

How does the economic machine operate?

How important are right and wrong?

What’s so difficult about this?

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