💡 Weekly Thought Exercise: Charlie Munger Wants You to Align Your Incentives

This week's thought exercise is inspired by a Wall Street Scandal.

The culprit: Ivar Kreuger.

The crime: Ponzi scheme.

A Ponzi scheme happens when a con artist tricks people into investing, then pays off the original investors with cash from the new investors on a repeated cycle until it inevitably crashes and burns.

Ivar's ponzi scheme worked incredibly well (he was assumed to be one of the richest people in the world in the 1920s) because he correctly aligned incentives.

This was his clever plan: He incentivized auditors and bankers to overlook obvious red flags because of how much money they were making investing with him.

(BTW he learned about incentives from Rockefeller 👀)

If incentives can inspire people to pretend everything looks fine and dandy on financial statements (putting them at risk of jail time, ruining their career, and demolishing their reputation)...

That means they're a crucial motivator you need to pay attention to.

Unlike Ivar, we're...obviously...going to use incentives for good.

This week we're going to look at your business goals and work backward to figure out your true incentives.

Why?

Business is inevitably challenging. And if you don't have a solid foundation of why you're doing this you'll...

• Burn out

• Lose motivation in what you're doing

• Fall prey to Shiny Object Syndrome

When you know your incentives you create an infinite amount of energy to work hard, continuously put yourself out there, and keep pushing forward in the face of challenge and rejection.

So, let's get into it.

• This reflection will take about 10-30 minutes.

• You don't need to add any context - just copy and paste the prompt

• Let me know how you like the prompt in the poll below

Here's the prompt to copy and paste into Claude.ai (you don't need to add any context):

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