How To Be A Contrarian

Forty thousand people gather annually in May at Omaha, Nebraska. 

Most of them can’t place the city on a map. That doesn’t stop devotees who come from all over the world to hear Warren Buffett and Charlie Munger speak for five hours. They start queuing from 6am to get the best seats at the Berkshire Hathaway annual general meeting. No effort is spared. 

Forty thousand people doing the same thing. All of them self-described contrarians. The irony seems to be lost on them.  

It gets better. Investor Tren Griffin describes the scene:

“Sitting in the cheap seats listening to the conversations of people around me, I concluded that 10% of AGM attendees actually understand how Buffett invests. As Charlie Munger said once, 90% of attendees believe they are part of the 10%. Most are there because they trust Buffett.”

So much for not following the crowd. 

There is an allure, I suspect, to being a contrarian.

When I was in high school, I quoted Oscar Wilde often. “Everything popular is wrong”, I would write in my essays. Some five to six years later, I started publishing online and I had an article take off. Titled “Conformity is the Surest Path to Mediocrity”, it was my first taste of online virality on Medium. I felt validated.

Here’s the thing: it wasn’t well written. Yet, people liked it anyway. I can only conclude that it wasn’t so much my writing that people enjoyed, but the idea that we should all be different. Or the idea that everyone is doing something wrong.

Humans are social creatures. But as much as we like to belong into a group, we guard our individuality zealously. We go to great lengths to signal that we’re different. Often, that means taking disastrous steps that are counterproductive to what we’re trying to achieve.

Tolstoy once wrote that “happy families are all alike; every unhappy family is unhappy in its own way”. I think the same goes for being a contrarian.

Unhappy contrarians are in their position for various reasons. Some like the thrill of being a devil’s advocate. Others harbour a vague and dogmatic distrust of conventional wisdom. The rest take contrarian positions for the sake of it — they are a conformist of a different sort. All roads lead to unhappiness.

The happy contrarian, however, has the chief aim of being right. He arrives at an unpopular position because he thinks it is correct. He doesn’t mind that there are other voices telling him he’s wrong. So long as he has considered all the arguments available, he’s not afraid of taking a different position.

There are of course, many ways to be a happy contrarian. It seems to me that there are at least three necessary ingredients.

It’s The Process, Stupid

The first involves having the right inputs.

This is obvious, but also overlooked. It’s true that the Internet has democratised information such that we can learn just about anything we want. What’s also true is that we rarely venture outside our interests when it comes to learning. And when you consider that humans are mimetic creatures, there’s a very good chance we’re all just copies of one another, feeding our own confirmation biases.

Think about opinions. Everyone has one when it comes to social and political issues. A lot of them are strongly held. But if I asked you whether Python or C++ was a better computing language, you probably wouldn’t care, much less have an answer. After all, you have absolutely no interest in coding and would rather speak to humans than computers. Unless you’re a software engineer.

It’s not as though computer programming has no value. As Marc Andreessen declared almost a decade ago, software is eating the world. The reason you and I haven’t delved into programming, I imagine, is because none of our peers are doing it. Certainly, the subject is hard. Boring as well if you ask me. But I’ll bet that if you needed to pass a basic course just to be able to use Instagram or TikTok alongside your friends, you’d be able to do it. The need to be part of an in-group is a strong pulling factor.

Most fields don’t have this social pull. This means that you and I are unlikely to entertain —or even hear of — fields that are unpopular. But these areas offer valuable lessons and mental frameworks that are transferable. Think about how calligraphy influenced Steve Job’s views on design, and ultimately the Macintosh. Yet, most of us confine ourselves to fields that we’re already invested in; at best we venture to the edges of our comfort zone. It’s akin to stuffing ourselves with carbs and ignoring everything else available at the buffet line.

Want to think better? Dive into things outside your field of interest. In an email to his book club, the investor Patrick O’Shaughnessy wrote that “consistent with my belief that it is more productive to read around one’s field than in one’s field, there are no investing books on this list.” I think this underscores how ideas are easily transferable from one field to another. A lot of jobs fall under the category of figuring out what other people want; climb high enough on the corporate ladder and most jobs involve sales. Different fields, common lessons.

Better still, dive into an area that most find boring. My guess is that you’ll find opinions which are more nuanced and well-considered. Part of that I suspect, is that there is no social impetus to come up with hot takes and dunk on others. Material that is technical and dry attracts only the people who are most curious about the subject, and there’s a greater chance you’ll find a group who is more learned and willing to engage in good faith. If you’re in the global supply chain business, you’ll want to know how US-China relations are going to play out. But don’t read the latest analysis on the NYT or WSJ; read up on the Peloponnesian War instead. There might be less zingers which you can echo at the dinner table, but I promise you’ll learn more about superpower rivalry there.

Then there’s challenging your own beliefs. The best way to do that is to jump right into a pool of people who believe the exact opposite of what you do. Immerse yourself in their world: what they read, what they listen to, how they talk. It’s how you learn why another reasonable person might disagree with you. It’s also how you can steel man opposing arguments. If by the end your beliefs don’t change, that’s fine. You’ve already tested them.

Think you already know what this group might say? You’re probably wrong, especially if you’re American and politics are involved. I suspect the true objection isn’t that it’s a waste of time. The real difficulty is that it’s difficult on a psychological level to embed yourself with others who hold different beliefs. Scott Alexander put it best — “I Can Tolerate Everything Except the Out-group”. We don’t do this because it’s painful. But it’s important if you’re ever going to disagree and be a contrarian. You want your ideas to not only be wide, but also deep. No more filter bubbles and echo chambers.

Here’s a litmus test on the quality of your inputs. Could a stranger, examining the books you’ve read and the information ecosystem you’re plugged into, deduce with high certainty what your field of work and beliefs are? Certainly there would be material that is specifically related to your field: a lawyer would have legal textbooks at hand. But if you have diverse enough sources, it shouldn’t be easy to pinpoint what you think and where you stand. You might hold the same views and come to the same conclusions as your peer group. But to an outsider who examines just your inputs, you’d look like a contrarian.

Signal vs Noise

If we consider inputs as nutrition for the mind, it’s clear that it’s not only about what we consume. It’s about what we don’t as well. You have to pick up the signal and block out the noise.

There have been a number of jokes about how Mark Zuckerberg acts and speaks like a robot. Peter Thiel makes a more pointed observation: many of the people who’ve been successful in Silicon Valley seem to suffer from some form of mild Asperger’s. But unlike the first group, Thiel sees this as an indictment of society and not the founders themselves: why is anybody who is normal, talked out of their original ideas or interesting thoughts before they are even fully formed? Socialisation, he concludes, does you no good if your aim is to come up with original ideas.

This isn’t a new notion; the madness of crowds had been noted since at least the time of Nietzsche. Yet, it does seem more pronounced today. I’m not sure why exactly this is the case, but I’m confident that one reason is how the world is more interconnected than ever. Ideas can spread yes, but so do conventions and social cues on what’s acceptable. My bet is that the Overton window hasn’t really expanded; in some fields it might even have narrowed. Not good if you want to explore new things.

The solution is to block out the noise around you. After all, the validity of ideas doesn’t depend on social approval. There is of course the risk that you’re also ignoring voices which have perspectives you haven’t considered, but if you’ve already adjusted how you get your inputs, that risk is minimised. At this point, you’re doing the thinking; the synthesisation. You should’ve gotten your inputs already.

It might seem extreme, but it’s necessary because every great idea seems crazy at the start. Take Airbnb for instance. Who in their right mind would start a business in the hospitality industry without owning any property? Not only do you also have to convince homeowners to let strangers into their houses, but you also have to deal with regulators all around the world. No reasonable person would do it. Even an investor in technology like Chris Sacca passed on Airbnb, telling the founders that someone would get murdered and they’ll be in a lot of trouble.

I must admit that this involves some irrational confidence. Your well-meaning friends and family will likely try to stop you; in fact it would be their moral duty to do so. That’s why you need to drown out the voices. At least for awhile. If you’ve done the work and have diverse and differing inputs, you’ll know when you’ve gone wrong. The crowd wins this time.

But if you’ve been living in a bubble, that irrational confidence can spiral out of control. Sooner or later, you’ll turn into a conspiracy theorist. You’re still a contrarian of sorts, but a very unhappy one. Do the work ahead of time to avoid that.

The Old Cliche

We’ve talked about gathering different ideas and thinking independently so far. It’s time to talk about the doing.

Contrarians often take the path less-travelled. That much is clear. What’s less clear is why they do that. I think there are two reasons.

The first is that it’s the only way to really build the future. In some sense, the future is simply the set of all moments yet to come. To get to the future, it’s necessary that you do something that isn’t being done. Sure, sometimes the future involves more of the same. But if you want to make vertical progress and go from zero to one, things have to change. You’d need to invent cars instead of a way to make horses go faster.

The second and less abstract reason is that there are no rewards to be had in following the herd. Andy Rachleff put it best:

“Obviously, if you’re wrong, you don’t make money, but what most people don’t realise is if you’re right in consensus, you don’t make money because the returns [alpha] get arbitraged away.”

This is not only true of investing, but in other fields as well. The fishing is best where the fewest go. And because we all have a tendency to chase the sexiest thing, the path is simple for contrarians: do what’s boring instead.

The biggest benefit is that you’ll have less competition. But consider also that it’s also the way to make a significant impact. I don’t imagine any director at an investment bank will take too long to get over an analyst who has just left – there are plenty of smart and hardworking people ready to take the job. In a field like consumer goods or social work however, things are different. Your role isn’t going to be filled by another warm body within 72 hours. You might even find an opportunity that everyone thinks has been exhausted — who knew taxis were due for the next stage of evolution?

If you must be around the newest thing, consider working in a field tangential to it instead. During the California Gold Rush, people rushed from all over America right after hearing about the discovery of the vein of gold. The curious thing is that most miners made little money. Most were late to the scene, and actually lost money after factoring in the costs incurred. The pot of gold was instead found by merchants, who made a killing selling mining tools and everyday supplies. You might be familiar with one such name — that’s where Levi Strauss got his start. He was one of the few who not only went to the right place, but knew what to look for.

Taking the path less travelled is the most actionable step for anyone who wants to be a contrarian. Unlike gathering or synthesising ideas, you don’t need to be very resourceful or brilliant. All you need is to do what everyone else finds boring. Which can be a difficult thing if you’re smart and driven because there’ll be plenty of opportunities before you.

But that’s what it takes to be a contrarian.