The purpose of organizations (4/4/2025)

I wrote this essay for a new board of directors for a college club I help run. While certain aspects are context-specific, I think many of the ideas should be embodied by a broader set of organizations. As a kid, I always assumed that organizations such as schools and businesses were very efficient. They’re run by adults, and adults always know what’s best, right? The cracks in this thought have become very apparent to me over the last four years. I think the reality is that many organizations are driven by a sense of complacency. They move slowly and iterate on the developments made by their predecessors. In this essay I make the point that large leaps are vital. Like football, a winning team enters each play with the goal of getting a first down, but every once in a while, they take a shot at the end zone.

Blogs by some very successful people emulate this idea. If you’ve read them, you’ll see their ideas in this essay.

A Note to the New Board

Given that we have several new board members, I wanted to write a note about what I think about the club, university, and thought processes we should all have. Perspective is incredibly important and something most people don’t spend enough time crafting. It takes a conscious effort over an extended period of time to adjust how you view and think about things­—there are incredible gaps in what everyone thinks; failing to see those gaps reinforces mediocrity. I think writing is the best way to do this. There is a ton of fantastic literature that discusses the importance of writing. Without capturing your thoughts in writing, you've only engaged in mental approximation. Like a train that announces stations it never actually stops at, mental approximation acknowledges intellectual territories without truly exploring them. This is how I view things, and hopefully, it can inform what we’ll do over the next year.

Why does the club exist?

On our website, we say we’re dedicated to educating students about alternative asset classes. I think this is subordinate to a much more important purpose. Most people would say the purpose of any organization is to provide something of value. I think this is a good start, but it’s not right just yet.

When I look at the university’s finance ecosystem, I do see organizations that provide value. But they almost all make the same mistake: they travel by train. Trains are efficient. They’re fast, reliable, and easy to board. However, there are two problems with this: trains only go where tracks have already been laid, and trains can’t travel across oceans. Most student orgs (and the administration) ride the train. They follow precedent. They do what last year’s leaders did. They optimize, but they don’t take the risk of making large leaps to create new things of value. I would rather that this organization travel by boat across an ocean. There is a lot more uncertainty, a lot more risk, and maybe it will take a longer time. But at least we’ll be doing something no one has ever done before, and if we’re successful, we’ll be adding to the total value provided instead of just maintaining the current paradigm. Not making an effort to do so is irresponsible and unacceptable.

So, I think the purpose of an organization shouldn’t be to provide something of value but rather to build new things of value.

How do we build new things of value?

The first step in this process is to never criticize new ideas. Some very successful people have talked about this concept, so I’ll try to summarize.

The vast majority of people tend to be critical of new ideas. New ideas are fragile. That’s natural. There are always gaps in the creators’ thinking, but those gaps will be filled over time. At first, those gaps can make someone seem uneducated. And because of this, critics can easily look like experts. The best new ideas may have a 10% chance of working, but the payoff might be 10x. So, it’s easy to seem smart by pointing out the flaws.

This imbalance is incredibly important to understand. Here’s why: there is a good chance that the person proposing a new idea has thought about it much more than a critic. So instead of responding with criticism, ask yourself, what does this person know that I don’t?

There’s another reason why understanding this concept is critical. It’s inherently in the text above: new ideas with large potential are almost always criticized at first. Criticism is like a compass when traveling across an ocean. It’s an indication that you’re going in the right direction. If none of our ideas are being criticized, then we’re not thinking boldly enough.

In terms of what we do, this might feel minor. But I think it’s important to understand—both in this club and far beyond it.

The next step is to ask questions. At a distance, many things seem to have smooth edges, but if you get close enough, you can start to see the gaps. Question these gaps. Many of the best discoveries come from people questioning what everyone else takes for granted. Deeply think about what the business school currently does and question if it is truly the best way. I think this can happen in two ways.

One is proximity. The majority of students assume the administration is very proficient, but as we ran the club in our first year, the gaps in what the administration does became very clear. We constantly were shocked when we reached out to high-profile alumni, and they said they hadn’t ever been contacted by the school since graduating—many of these alums were thrilled we reached out and offered to help far beyond what we asked.

Secondly, I think you should be questioning the norm to an extent that feels excessive. When you walk through the business school, think about anything that could be better. Why did the architects of Grainger put the conference room right at the main entrance? Every time there is networking after an event, random students walk in and out. It’s unprofessional. One thing I do is write down one thing a day that I think is inefficient—some examples have been how renters are at a substantial disadvantage, why U.S. universities have such an emphasis on exams and not papers, and why after two decades of software reinsurance deals are still done on Outlook and Excel. Most of these ideas won’t be of much value, but they force you to think all the time, and all it takes is one good idea to make an impact.

Someone much smarter than me put this idea very well. In every era, people have believed things that are ridiculous. In the early 1600s, people believed the earth was the center of the universe; in 1692, people killed their peers because they believed they were witches. Is our time any different? It would be a remarkable coincidence if we were the first to get everything just right. What things do you believe that someone a century from now would think are ridiculous? Heuristic: Do you have any opinions you would be reluctant to share in front of a group of your peers? If your answer is no, you may want to think about that. If everything you believe is something you’re supposed to believe, could that possibly be a coincidence? Odds are it isn’t. Odds are you just think what you’re told.

What do we do with all of this?

The preceding ideas may be a bit conceptual. So, I want to get specific on what it means for this club. I don’t want this to be just a private equity club. I think we have a great group of ambitious people who can make an impact beyond this niche space—not taking advantage of that would be a shame. We have support from the administration, and some new people in the last few years have been massive; I think this gives us the capacity to do more than just private equity, even if that is still our main focus (it should be).

So, if you ever have ideas on things that can be better with the school, say something. If you have thoughts on new programs, say something. As I previously said, we will never criticize new ideas, no matter how crazy they seem. This doesn’t mean all new ideas will work, just that we should have a debate on value and feasibility.

We already have several programs. They are still feeble. They need a lot of work and improvement. I’m happy with our first year but also unsatisfied with our execution. We must do better at executing these programs.

Lastly, and most importantly, we need our culture to transcend a few years. This is why I wrote this. Every year, we will have new people executing our work. This is a huge disadvantage when you’re trying to do new things that at times take years to get right. If the club becomes complacent and stops trying to do new things all the time, then we’ve failed at our most important task as board members.