Fund manager Joon Yun argues that aiming for 10x returns, not modest gains, changes how you think and build teams. He shows how incremental targets crowd trades, bloat healthcare costs through me-too drugs, and waste clinical trial resources.
Chapters
Now, aiming high, thinking big, all these things are things you've heard about. But I'm going to tell you about how difficult this really is and what it's going to take to aim high. And for the sake of it, I'm just going to say aiming high, I'm going to define it as aiming at least 10x. So as it turns out, the majority of us aim too low. Now, when I talk to my friends who are in their 40s now, they're looking for about a 20% return on the rest of their life. What I mean by that is, they can kind of see what, where, how their life's gonna head. They're gonna, they know who they're gonna be married to. They know how they're gonna retire, where they're gonna be. That's aiming too low. That's aiming for 20%. Aiming for 10x means you have no idea where your life's gonna end up, even at age 40. Mm-hm. Now, the majority of us, Are pretty good at aiming high when we're young. The older we get, the lower we set our horizons. Now, what is this all about? In fact, I think it's pretty easy to pick out somebody who's aiming too low. You can tell by the kinds of questions they ask. So in the investment business, you want to aim for high returns, right? Whether you're a venture capitalist or a public company investor, you want high returns. As it turns out, most people are aiming for low returns. They're typically— They're not investing. Looking for about a 20% return. And the way you pick them up is by listening to their questions. If they say, I like that stock, but I want to look for a 10% dip in the stock price to buy it, they're letting you know that the expected return is only 20%. That 10% matters. That's half your gain. Whereas, if you're aiming for 10x returns on your investment, you don't care about a 10% difference in entry price. That's rounding error. And yet the majority of the world is looking for low returns. Now, there are several issues with aiming too low. The biggest one is that you actually get there. So success in aiming low is defined by you make your 20%. Whereas if you're aiming 10x, even if you fail, you might still do 3x. Furthermore, aiming too low has become the crowded trade. Everybody's afraid of risk. And I got to tell you, oftentimes the risk of not doing something is a lot higher than the risk of doing something. And yet we become so conditioned to be afraid that the majority of people are aiming too low. So aiming high is the uncrowded trade. There's almost nobody That's looking for 10x returns. Almost everybody is looking for very low returns. It's called Treasuries. The majority of people over the last 5 years have been invested in Treasuries, which has almost no returns. And because that's the crowded trade, they're not even going to get there. In fact, the yields on Treasuries have been negative over the last 5 years. Here's another issue with aiming too low. When the stakes are low, people people fight, right? And you hear this about oftentimes in academia. Because the stakes are so low, they fight over everything. They fight over parking spots, who's got the corner office. When the stakes are high, it brings people together. You realize it's all about growing the pie, whether it's sharing stock options, sharing the opportunity. Aiming high tends to build teams. It tends to Encourage people to collaborate. I mean, if the Earth was suddenly at risk of getting hit by a meteor, everybody would get together. We'd fight this common enemy together. So when the stakes are high, people tend to unite. When the stakes are low, people become dividers. One of the issues in healthcare is people see the— say that the costs are high. Well, one of the issues for cost being so high in healthcare, I've never heard anybody discuss. I think one of the things that's driving up cost in healthcare is that the pharmaceutical companies are aiming way too low. So guess what happens when you aim low? Let's say you've got 8 drugs out there for schizophrenia, and you try to bring a 9th one to market that's slightly better. Well, guess what? In order to show Any benefit, you gotta run massive trials requiring tens of thousands of patients for that small difference. So that's why the clinical trials cost hundreds of millions of dollars. The vast majority of drugs out there are me-too drugs trying to gain small incremental advantage over the status quo. And so because the development costs are so high, the price that we all pay as consumers is so high. So ironically, aiming too low within the healthcare system is one of the causes of costs being so high. I think the biggest cost of aiming too low is that it actually is depressing. So imagine being 40 and knowing how you're going to live, What you're gonna do, where you're gonna retire. I mean, you can see all the way through to the end. Linear thinking gets you all the way to the end, and seeing the end is pretty depressing. Whereas when you're aiming high, when you're aiming 10x, you have to think in curves. You can't see around corners, so life remains a mystery. You can remain engaged. Thank you.
