Mental Models discussed in this podcast:
- Margin of Safety
- Backup Systems
- Failure Points
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Margin of Safety
Example of building a bridge
Example of loss of power
Scale (or Economies of Scale)
The volume of a sphere increases faster than the surface area. Therefore it is more efficient for vessels to be larger.
The more complicated a system is, the greater number of failure points.
You can move large objects with a small amount of force with a sufficiently large lever.
“Give me a large enough lever and I can move the world.”
As an investor with an engineering background, I believe I bring a unique perspective to investing in businesses. The mental models: margin of safety, backup systems, scale, failure points, and leverage originate in engineering are useful for investors.