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The guy in the coal mine is ‘working harder’ than the CEO back in the air conditioned boardroom.
So why does the CEO make 100 times more?
One word: judgment.
Judgment is rare, leveraged, and has compounding effects.
In a world where machines, computers, and robots are doing more of the ‘work’, judgment is becoming way more valuable.
For example, say the miner gets 10% better at mining. That might add a few thousand dollars to the company’s bottom line over a year.
But what if the CEO finds a method to increase everyone’s mining skills by 10%? That’s a leveraged result that probably adds millions to the bottom line.
Let’s define judgment.
Specific knowledge = What only you know how to do.
Wisdom = Knowing when and how to apply it.
Judgment is where specific knowledge meets wisdom and gets results.
Judgment = Specific knowledge + Wisdom.
Think of judgment as the steering wheel. Specific knowledge as the engine. And wisdom as the GPS.
Without all three, you’re either stuck, lost, or headed full speed in the wrong direction.
Here are the key lessons for developing wisdom.
Lesson 1: Clear thinking beats intelligence.
The number one obstacle to clear thinking is not fully understanding reality.
Intelligence is great. But intelligence can be applied incorrectly.
Intelligence can be a liability if it’s pointed at the wrong target.
Take Quibi for example. Quibi was a short form video streaming platform. The idea was to produce mini shows with high production value.
Quibi raised about $1.75BN dollars from Disney, Time Warner, and Alibaba. They threw some of Hollywood’s most intelligent people into their dream.
But all the intelligence in the world couldn’t overcome the reality that people didn’t want their high production mini shows.
People wanted raw, authentic clips from TikTok, YouTube, and Instagram.
Meanwhile, TikTok used basic tools like authenticity, simplicity, and an algorithm that showed users what they actually liked to win the world.
They didn’t out-intellect Quibi. They just saw the truth faster.
Solving the right problem in a mediocre way is much better than solving the wrong problem. And you can always improve and refine your solution.
Not dealing with reality will keep even the smartest person in the world from achieving their goals.
Lesson 2: Identity blocks wisdom.
One of the biggest obstacles to seeing reality is usually our identity.
Seeing reality means understanding what people actually want, what’s truly driving them, and what the real levers are.
It’s not what you wish was true, but what is true.
If reality conflicts with our worldview, it’s really hard to read the situation properly.
Your brain isn’t wired to see reality clearly.
It’s wired to protect your ego.
That’s a bug.
Anytime identity overrides observation, judgment dies.
How many times have you seen people dish out some of the best advice you’ve ever heard while not being able to do the same for themselves?
It’s usually because some part of their identity is blocking them from seeing reality.
The best example of this is probably politics.
Wildly intelligent people fiercely argue for positions that are wrong because that’s what their ‘team’ believes.
Their identity is blocking their judgment.
We all have a gap between what we want to believe about the world, and how the world actually works.
The more you can narrow that gap, the better off you are.
So how do you narrow the gap?
Get some space between yourself and the situation.
Some people practice meditation. Some people use humor. Some people go on 10 mile runs.
Do what works for you but have a routine for finding some space.
Lesson 3: Gather mental models.
Mental models are great for developing wisdom.
The best resources I’ve read on this are (outside of MJ's stuff):
You want to search out models that are proven and have wide applications. Then you use your specific knowledge to select the right model and apply that to your situation.
I collect mental models like a nerd collects trading cards. Here’s a few that I’ve found particularly valuable with their real world application in building Twitter:
Models for avoiding failure
Inversion: Instead of asking ‘How do I succeed?’ ask ‘How do I fail?’. Focus on avoiding the failures and the solution will quickly become apparent.
When Jack Dorsey and team first started building Twitter, instead of asking “How do we get more users?”, they focused on “What makes people stop tweeting?” They killed features that added friction and optimized for simplicity.
Opportunity cost: There’s a real cost to doing nothing or choosing a worse option.
They focused on a minimalist interface and format instead of trying to build a ton of features and customization options. If you can type, you can use Twitter.
Falsifiability: If something can’t be tested or proven wrong, it’s not useful.
Most experiments were backed by A/B testing and data, not feelings.
Understanding systems
Compounding: Small and continual improvements grow significantly. For example, 1% better every day means that you’re actually 3,778% better at the end of a year.
The Twitter team also encouraged daily engagement with short, fast posts to build habit loops. 1% daily usage growth = exponential network.
Network Effects: The value of a system grows as the number of users increases.
The more people used Twitter, the more valuable it became. This goes for all social media platforms.
Second order Thinking: Most decisions have effects beyond their intended scope or what is easily seen.
The Twitter team also saw that this could change the nature of news reporting and virality. They built for these considerations and tried to optimize real-time reporting and virality.
Behavior and bias
Skin in the Game: Always know what’s in it for the other person.
Twitter founders were highly active on the platform and recruited high profile celebs and politicians to get skin in the game by using the platform. Barack Obama’s campaign success is partly attributed to his early mastery of the platform.
The Lindy Effect: The longer something has been around, the longer it is likely to stay around.
Short-form text has been a media staple since the telegram. Twitter’s initial 140 character limit played into this and got everyday users using the platform.
Expected value: Consider decisions in terms of their likelihood to succeed times the value you’ll get.
Twitter built low-cost features with a lean team that had the capability to scale almost infinitely.
Once you start spotting mental models, you can’t stop. Everything becomes a pattern, and you’ll never see the world the same way again.
Bottom line? Judgment is rare, and it doesn’t show up on a resume.
But it’s the difference between someone who gets lucky once, and someone who wins for a lifetime.
Work harder. But work harder to improve your judgment.
Judgment isn’t loud, but it’s the quiet force behind every lasting success.
So why does the CEO make 100 times more?
One word: judgment.
Judgment is rare, leveraged, and has compounding effects.
In a world where machines, computers, and robots are doing more of the ‘work’, judgment is becoming way more valuable.
For example, say the miner gets 10% better at mining. That might add a few thousand dollars to the company’s bottom line over a year.
But what if the CEO finds a method to increase everyone’s mining skills by 10%? That’s a leveraged result that probably adds millions to the bottom line.
Let’s define judgment.
Specific knowledge = What only you know how to do.
Wisdom = Knowing when and how to apply it.
Judgment is where specific knowledge meets wisdom and gets results.
Judgment = Specific knowledge + Wisdom.
Think of judgment as the steering wheel. Specific knowledge as the engine. And wisdom as the GPS.
Without all three, you’re either stuck, lost, or headed full speed in the wrong direction.
Here are the key lessons for developing wisdom.
Lesson 1: Clear thinking beats intelligence.
The number one obstacle to clear thinking is not fully understanding reality.
Intelligence is great. But intelligence can be applied incorrectly.
Intelligence can be a liability if it’s pointed at the wrong target.
Take Quibi for example. Quibi was a short form video streaming platform. The idea was to produce mini shows with high production value.
Quibi raised about $1.75BN dollars from Disney, Time Warner, and Alibaba. They threw some of Hollywood’s most intelligent people into their dream.
But all the intelligence in the world couldn’t overcome the reality that people didn’t want their high production mini shows.
People wanted raw, authentic clips from TikTok, YouTube, and Instagram.
Meanwhile, TikTok used basic tools like authenticity, simplicity, and an algorithm that showed users what they actually liked to win the world.
They didn’t out-intellect Quibi. They just saw the truth faster.
Solving the right problem in a mediocre way is much better than solving the wrong problem. And you can always improve and refine your solution.
Not dealing with reality will keep even the smartest person in the world from achieving their goals.
Lesson 2: Identity blocks wisdom.
One of the biggest obstacles to seeing reality is usually our identity.
Seeing reality means understanding what people actually want, what’s truly driving them, and what the real levers are.
It’s not what you wish was true, but what is true.
If reality conflicts with our worldview, it’s really hard to read the situation properly.
Your brain isn’t wired to see reality clearly.
It’s wired to protect your ego.
That’s a bug.
Anytime identity overrides observation, judgment dies.
How many times have you seen people dish out some of the best advice you’ve ever heard while not being able to do the same for themselves?
It’s usually because some part of their identity is blocking them from seeing reality.
The best example of this is probably politics.
Wildly intelligent people fiercely argue for positions that are wrong because that’s what their ‘team’ believes.
Their identity is blocking their judgment.
We all have a gap between what we want to believe about the world, and how the world actually works.
The more you can narrow that gap, the better off you are.
So how do you narrow the gap?
Get some space between yourself and the situation.
Some people practice meditation. Some people use humor. Some people go on 10 mile runs.
Do what works for you but have a routine for finding some space.
Lesson 3: Gather mental models.
Mental models are great for developing wisdom.
The best resources I’ve read on this are (outside of MJ's stuff):
- Seeking Wisdom: From Darwin to Munger
- Poor Charlie’s Almanack
- The Farnam Street Blog
- Anything by Richard Feynman and Naval Ravikant
You want to search out models that are proven and have wide applications. Then you use your specific knowledge to select the right model and apply that to your situation.
I collect mental models like a nerd collects trading cards. Here’s a few that I’ve found particularly valuable with their real world application in building Twitter:
Models for avoiding failure
Inversion: Instead of asking ‘How do I succeed?’ ask ‘How do I fail?’. Focus on avoiding the failures and the solution will quickly become apparent.
When Jack Dorsey and team first started building Twitter, instead of asking “How do we get more users?”, they focused on “What makes people stop tweeting?” They killed features that added friction and optimized for simplicity.
Opportunity cost: There’s a real cost to doing nothing or choosing a worse option.
They focused on a minimalist interface and format instead of trying to build a ton of features and customization options. If you can type, you can use Twitter.
Falsifiability: If something can’t be tested or proven wrong, it’s not useful.
Most experiments were backed by A/B testing and data, not feelings.
Understanding systems
Compounding: Small and continual improvements grow significantly. For example, 1% better every day means that you’re actually 3,778% better at the end of a year.
The Twitter team also encouraged daily engagement with short, fast posts to build habit loops. 1% daily usage growth = exponential network.
Network Effects: The value of a system grows as the number of users increases.
The more people used Twitter, the more valuable it became. This goes for all social media platforms.
Second order Thinking: Most decisions have effects beyond their intended scope or what is easily seen.
The Twitter team also saw that this could change the nature of news reporting and virality. They built for these considerations and tried to optimize real-time reporting and virality.
Behavior and bias
Skin in the Game: Always know what’s in it for the other person.
Twitter founders were highly active on the platform and recruited high profile celebs and politicians to get skin in the game by using the platform. Barack Obama’s campaign success is partly attributed to his early mastery of the platform.
The Lindy Effect: The longer something has been around, the longer it is likely to stay around.
Short-form text has been a media staple since the telegram. Twitter’s initial 140 character limit played into this and got everyday users using the platform.
Expected value: Consider decisions in terms of their likelihood to succeed times the value you’ll get.
Twitter built low-cost features with a lean team that had the capability to scale almost infinitely.
Once you start spotting mental models, you can’t stop. Everything becomes a pattern, and you’ll never see the world the same way again.
Bottom line? Judgment is rare, and it doesn’t show up on a resume.
But it’s the difference between someone who gets lucky once, and someone who wins for a lifetime.
Work harder. But work harder to improve your judgment.
Judgment isn’t loud, but it’s the quiet force behind every lasting success.
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