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What Makes Someone Smart?

What Makes Someone Smart?

I recently found myself defending Twitter. My argument, which is one I’ve been making about the social-media platform for a long time, was,  “It’s ...

I recently found myself defending Twitter. My argument, which is one I’ve been making about the social-media platform for a long time, was,  “It’s where the smartest people in the world are talking and debating.”  

But when I said “smart,” I realized I couldn’t succinctly say what makes someone smart. The question nagged at me: What does it really mean to be smart? This led me to reflect on the shared qualities of those I consider to be the smartest people in the world, and to note how these traits translate into success in all areas of life. My findings, which I’ve outlined below, reveal valuable habits that everyone can learn from.

Smart people are playing a long-term game.
They make bets with their time, people and money that don’t have short-term payoffs.

They play a long-term game with people.  
Integrity is the manifestation of a personality type that is playing the long-term game. They are above lying. It's not appealing to them. Lying is a short-term win and they know they are just kicking that reckoning down the road. Because of this, they attract and can recognize other people with integrity. They’re aware of opportunities and situations where someone is of integrity, as it’s often difficult to do but easy to recognize if you have integrity yourself. As a result, they are surrounded by colleagues and groups that generate more opportunities and are proximal to more opportunities to capitalize.

They play a long-term game with their time. 
Compound interest exists not only in money but also with time: the more you focus your time, the more nonlinear the freedom you can create for yourself. I specifically use the word “freedom” here because smart people value their time much more than money. Their motivation for making money is to buy freedom. They are very selective of where their energy is being allocated. You will not find them, for example, in unwinnable or meaningless arguments with idiots. As a saying goes, “stupid people will beat you down and win with experience.” Smart people know not even to engage here because they will in fact lose. They are interested in only a few pursuits and maybe even laser focused on one at a time. It is easier to build compound interest when you’re not chasing many things or trying to be good at everything. They have energy preservation for what their focus is and—maybe even more importantly—this allows for more time for a proper recovery each day. They often use a heuristic with their time. That is, if their answer is not a "fuck yeah!" then it's a "no.".

And they play a long-term game with money. 
Debt is a short-term payoff game. If you have debt, you’ve overextended yourself for something you didn’t need for a short-term payoff that probably has to do with lacking self confidence. The best investors in the world are painfully patient. They wait and wait and wait until that one thing comes along and then they make the big bet. In venture, this only works about one in 20 times, but that’s enough for it to make all of the returns for a portfolio. Wasting time and money instead of being patient doesn’t allow for you to capture the biggest returns. Your capital allocation is spent inefficiently chasing short-term payoffs.

They are also above signaling and ideologies. 
Smart people do not feel a need to project or represent something that is not uniquely them and they’re too singular and successful to be drawn to groupthink. Their wealth, both physically, mentally and monetarily, has come from the returns of following their own path where they are able to differentiate and set themselves apart. The need for cheap endorphins, comfort of groupthink and ideologies were something they abandoned long ago.

They avoid big mistakes or ruin.  
Charlie Munger and Warren Buffet consistently claim that they’re not smart, they just try to make fewer mistakes. If you’re wondering how to make fewer mistakes, consider whether the mistakes you’re making now are because you sought a short-term payoff instead of the right long-term one. Speaking of Munger and Buffet, another trait of smart people is as follows …

They don’t believe they’re smart.  
The more intelligent they are or the more that people think they are smart, the more they feel like they have so much more to learn.

Their communication is clear, concise and economical.  
They don't use big words and they don't use unnecessary words to explain something.

When trying to understand, they ask what others would call dumb questions so that they can understand things from first principles.  
This is perhaps why Twitter is most rewarding for those who can convey complex ideas in a couple of sentences. And you'll often find these people asking way more questions than talking themselves. They're voracious learners and see something interesting to pull on in any conversation they are in.

They go out of their way to look for bad feedback.  
When someone pays you a compliment, you can say thank you and nod. But you can’t do anything about it. When someone gives you bad feedback, there is an action item to consider. Smart people not only do not take it personally (because they have the confidence not to), but they also seek it out because having others point out your blindspots is like having the cheat codes for life. This doesn’t mean that everyone who has negative feedback for you is correct, it just means that negative feedback is your superpower if you simply decide to look at it that way.  And it happens to be free.

They change their minds in an instant when new information is available.  The most successful first-round investor in the world once told me that they invest in people that are heat-seeking missiles who will pivot when they need to do so. It’s very rare that the first idea you had for your company ends up being the same idea that created the most wealth for stakeholders. Take for example Peter Reinhardt, the founder of Segment. He just sold his company to Twilio for over three billion dollars. Segment started as a classroom lecture tool that would allow students to click a button when they were confused. They observed one classroom where the professor asked the students to open their computers to use the product. Each student in a Boston University anthropology class opened their computers and went directly to Facebook. They walked up to the professor, apologized and then walked out. It was a complete flop. They called investors back and asked what they wanted to do with the money. The investors told them to keep it because they invested in the team. Then they failed again after they tried to build an analytics tool. In trying to solve another unrelated problem they discovered an unmet need for routing data to different sources using some lines of code they had built from the classroom software. It may seem obvious in hindsight to bury the classroom idea, but it’s difficult to abandon an idea that you pitched and promised would work. They could have kept fighting and trying to tweak it to make it work, but instead they quickly changed their minds when they observed the data.

Smart people are defensive about their inputs.  
They don’t allow information into their circle from untrusted sources or untrusted people. They have a reliable set of tools, which are often books.

Smart people read all day. Mostly books.   

Smart people are authentic.  
They are radically authentic. You cannot generate exponential returns from pretending.

They have figured out how to be happy.
This mostly comes from eliminating inputs that don’t work for them and by not adding things to their life to try to make them happy. How smart can you be if you haven't figured out how to be happy?

They understand people and people's tendencies.   
Seventy percent of all the venture returns in the last 20 years have been from marketplaces or, more specifically, from companies that have network effects. A network effect is when each additional node, player, users or person in the network creates incremental value. These entrepreneurs are matching supply with demand and bringing liquidity to what was otherwise an illiquid or non-existent marketplace. At the root, they understand the problem that people have on both sides and have created a way for them to transact. There isn’t a successful company out there that doesn’t understand how to solve a problem for people. No technology ever made a dollar. It was the application of that technology to a unique problem that created the returns. The more you understand people the more you can detect problems to be solved.

They think from first principles.  
They are not interested in abstractions or proxies. They like to think of problems at their very root and they make sure that they don’t offer solutions to problems unless they are at the first principle level of it.

They’ve learned to protect themselves from their own psychology, or at least have become aware of how many thoughts they have that are meant to fool themselves.  
They’re uniquely aware of how their minds might be trying to sabotage them or to try to fool them into the short-term pay off. This is usually through the ability to reason anything away.

Here’s the takeaway:
Smart people don’t waste time on unnecessary pursuits or people. They value their time, and find ways to have more of it. They are voracious, lifelong learners who think for themselves. And, perhaps most importantly, they haven’t just found success—they’ve found happiness. Together, these qualities are the blueprint for how smart people navigate life and make the most of it.


Image By: Kyle Glenn

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