Tool Proficiency

I have a friend who's high up in a hedge fund.

His job is to decide whether to buy or sell stocks in certain companies. And he makes 8-9 figure positions based on these decisions.

To do that, he talks to CEOs and CFOs all the time.

A few per week, minimum.

He's their "customer", after all. CEOs and CFOs want to raise the stock price of their companies and to do that they need to convince "the market" (aka: my friend) that they should buy their stock.

One thing he told me that stood out is that some of these C-Levels are extremely fluent in accounting, and others, less so.

The fluent ones can bridge the gap between a new company initiative/strategy/operational improvement and my friend's valuation model.

They can quickly go from "we're doing X" to "and this will change our working capital needs and re-investment needs in this way, which will affect our P&L, Cash Flow Statement, and Balance Sheet in these 5 ways".

(If you didn't understand the finance talk, no worries, I'll bring it back to earth – and to your job – in a second.)

The interesting part is that he told me that when he has a call with the ones who can do this, the call is 5X more productive, he can update his model in real-time and have more in-depth discussions.

He tends to invest more in these companies (assuming they're actually good) because he can understand them better with less time invested.

Other CEOs and CFOs are less fluent in accounting/finance so the meetings are less productive.

(Yes, some CFOs he talks to haven't mastered accounting and finance, but that's a topic for another day…)

My friend doesn't understand their company as much per hour talking to them (on a spreadsheet level, at least). He's less likely to invest in these companies even if they're great opportunities.

That's because their lack of proficiency in the tools of valuation makes my friend's job harder and more uncertain.

(Shouldn't he spend the time as it's his job, you ask? No. His bottleneck is time and he doesn't have to find all great opportunities, just a few.)

The Craft and the Tools

These CEOs and CFOs might be great at their craft.

Maybe they run great companies, enhance their culture, and make them innovative. Maybe they ensure it's profitable and liquid and that their credit lines are safe.

But because they don't have fluency in an important tool of their job, their stock price is not as high as it could be.

See, every job has its craft and its tools:

• A chef's craft is combining flavors and textures into a dish; their tools, the knife, the oven, charcoal, etc.

• A designer's craft is their creativity and ability to work with shapes and colors and typography; their tools, Photoshop, Figma, Illustrator, etc.

How good you are with your craft determines the ultimate quality of your output.

But being proficient with tools makes you work faster.

For us, knowledge workers, I'm talking about things like:

• Working with Excel only with keyboard shortcuts, never touching the mouse

• Doing quick mental math and estimations in a meeting so we can prove/disprove a hypothesis in 30 seconds, not 15 minutes

• Quickly redesigning a PowerPoint slide fluently in front of everyone to see if that's what the team needs, vs. "getting back to y'all later"

None of these things guarantee quality decision-making. But they help ensure the decisions get made faster.

Tool proficiency will never substitute how good you are at your craft. If just helps you work faster.

In other words… You don't need to have "tool proficiency" to be good at your job.

But to be great?

Then you might, because you'll get faster, and faster has a quality on its own.

It ain't about speed, it's all about the number of iterations

What's the difference between doing an accurate estimation in 30 seconds instead of 15 minutes?

Maybe you do have 14m30s to spare at the end of the day… Not a big deal.

Or is it?

Well, the difference is that if you can do it in 30 seconds, you can do it in the meeting. In front of everybody. And that could change the whole direction of the meeting.

(No one's gonna wait for your 15-minute math in a meeting, btw.)

You're iterating faster. You're making decisions with other people faster. This can cut weeks or months out of a project's length.

These things add up over a career...

It's the same with modeling just with keyboard shortcuts.

I don't know if you've ever known someone who could do that (very common in consulting and finance, not so much in other fields), but they're 3X faster…

… And this speed difference isn't really about finishing the model in 1 hour vs. 3 hours. It's about being able to model in real-time with other people watching and discussing the model.

The whole work dynamic changes when you have tool proficiency.

Just like my finance friend who gets way more out of each meeting when the CEO of the company has mastered accounting.

Working with someone who's mastered the tools of their trade is kind of like talking to someone who's fluent in your language.

Working with someone who hasn't is more like talking to someone using Google Translate.

The second person might have better ideas than the first… But if iteration matters (as it does in 99% of jobs), you won't be spending time talking to the Google Translate person – unless they're a freakin' genius.

There's a bandwidth difference.

And if you wanna be great, you've gotta have the bandwidth.

Keep working smarter.