The Power of Ignorance

How Not Knowing One's Limitations Can Serve as an Asset

Orson Welles was a movie director, actor, and filmmaker, largely considered to be one of the greatest and most influential of all time.

His first film was Citizen Kane (that’s right, his first), which he co-wrote, produced, directed and starred in as the title character, Charles Foster Kane. It has been consistently ranked as one of the greatest films ever made. Welles made the movie when he was just 26 years old, with no formal experience, training, or knowledge of the movie business.

After reading a bit about Welles, I wondered how a 26 year old with no prior filmmaking experience or training could make one of the greatest films of all time? The details behind the making of the Citizen Kane are fascinating, and in Welles own words, only took place due to his ignorance of the craft.

I’ve listened to a number of great interviews between Welles and various TV personalities, and my favorite parts involve his describing how little he knew about making movies, even while filming Citizen Kane.

Read this great exchange between Orson Welles and Dick Cavett in an interview they conducted from 1970: (starts at the 0:45s mark)

Cavett:

I’ve always wanted to know the answer to this. It’s always told that when you were 26 years old and you made Citizen Kane, and they said you can’t do these things, and you can’t have the background in focus or whatever it was, and you can’t shoot a scene that way Mr. Welles or young Mr. Welles or whatever they called you then, and you knew that you could…how did you know this?

Welles:

Because I didn’t know any better. It comes from just sheer dumbness. You’re sure it’s got to be good, it’s just ignorance. There’s no authority in the world like it.

Cavett:

There’s gotta be something more than that, I mean technically, how did you know that…

Welles:

You know technically that the whole bag of movies can be learned in a day and a half? I kid you not.

Cavett:

How does it work, how do you do it?

Welles:

Get a guy who knows it, and ask him, and that’s the end of it. It isn’t much harder than making home movies. It’s just about three points harder. And all these guys who do it try to make a big mystery of it because that’s their living.

Welles then goes on to tell the story of his cameraman on Citizen Kane, coming to him before he started filming, and saying he wanted to work with Welles on the movie. When Welles asked why, the cameraman replied, “because you’ve never made a picture. You don’t know what cannot be done.”

There’s another great interview between Welles and Peter O’Toole, where O’Toole asks Welles some questions about the confidence needed to make Citizen Kane, and never having made a film before. This is what Welles had to say:

O’Toole:

What I’d like to know is where did you get the confidence to make a…

Welles:

Ignorance. Sheer ignorance. You know there’s no confidence equal to it. It’s only when you know something about a profession that you’re timid or careful.

O’Toole:

How does ignorance show itself?

Welles:

I thought that you could do anything with a camera that the eye could do or the imagination could do. And if you come up from the bottom in the film business you’re taught all the things that the cameraman doesn’t want to attempt for fear he will be criticized for having failed.

A couple other quotes that came from the same interview before I move on:

I didn’t know there were things you couldn’t do, so anything I could think up in my dreams, I attempted.

I got away with enormous technical advances simply by not knowing they were possible.

The great body of people involved were all new to film. Nobody’s ever been in front of a camera before and that was deliberate. We didn’t want anybody who knew anything because we thought it would change the dimension of the film.

The interview is 25 minutes long, and worth the watch.

Up until recently, I had never considered the benefits of ignorance, but this idea seems to apply to many, if not most creative pursuits.

Grammy award winning producer Rick Rubin, who I will mention frequently in future posts, has often talked about the benefits of ignorance and chimes in on this topic brilliantly during a conversation with Andrew Huberman.

“I had the advantage early in my career of making music without any experience which was helpful because I didn’t know what rules I was breaking. It wasn’t the intentional breaking of rules, I just did what seemed right to me, but I didn’t realize I was doing things other people wouldn’t do.”

Producer and record executive Jimmy Iovine had more to say on this topic in a conversation with Rick Rubin. Rubin tells a story of the first time he and Iovine met, Rubin was in college and played Iovine a record during a studio session. Iovine, already a seasoned producer and record executive, reacted by saying “I wish I could make something that simple.”

Iovine’s response to that memory was:

“It’s so funny you say that, because when you get to a certain point producing records, I found, you start making the first albums [for an artist] and even if you make that first album, you produce it like it’s their third. It’s just the innocence and the ignorance [that you no longer have]. You end up…you have too much information.”

Rubin chimes in:

“How powerful that innocence and ignorance is!”

“…and it didn’t make sense to me because you’re a professional, I’m a kid in school, I make this record not knowing anything, and your reaction was ‘yeah I wish I could do it like that.’”

Counterintuitively, these examples clearly highlight that ignorance can be an asset, even if, or especially if one doesn’t know it at the time. It also seems that without ignorance, some of the greatest films, records, or works of art may have never been made.

I’m reminded of this quote I wrote down, the source of which is unknown.

“All art is created and assessed out of a reaction to ignorance.”

Therefore, we must derive some benefit from not knowing. I wonder how many other pursuits, at least early on, benefit from, or even require some level of ignorance on the part of the participant, which then actually serves as an asset? Investing definitely fits the profile.

However, what I’m most fascinated with is how ignorance can go as far as to give one confidence. This is especially true for creative pursuits where not adopting static rules can allow for greater freedom of expression.

Think about this. One of the greatest filmmakers of all time didn’t know how to make movies, and was ignorant about every aspect of production. One of the greatest music producers and record executives of all time operated best with limited experience and information. Another producer won Grammy’s by breaking the rules that more experienced producers would have encouraged him to avoid. Yet all displayed tremendous confidence in their decision making and their work.

It’s here I think the greatest parallels to investing exist.

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Early in my investing career, I was fearless. I was a gunslinger who would load up on cheap stocks, crappy businesses and subpar management teams. Despite my lack of knowledge, I had near zero hesitation making something a 30-40% position. This was pure ignorance. I often say that the best and worst thing that ever happened to me is that the first stock I bought went up a lot. It was the best thing because if I lost a bunch of money after finally working up the courage to buy a stock for myself in my own account, I might have quit right then and there. It was the worst thing that happened to me because it made me feel like a genius. The company was an airplane leasing business, and I had a two-bullet point thesis; the company was profitable, and the CEO was basically the Godfather of the airplane leasing industry. After the stock went up 30% in short order, I remember having the thought: “investing is easy!” I actually believed that.

With my newfound confidence, I went on to have many similar two bullet point theses, while proceeding to lose a bunch of money very quickly. Then I was introduced to Buffett, and the rest is history. But I benefitted. Early on, I knew nothing of the risks I was taking, nor did I realize how expensive it would be to learn about some of those risks. I also had no idea what I was doing as an analyst or portfolio manager, yet thought I did. What’s more is that investing may be the only profession on earth where you can do everything wrong and still experience success (and worst of all, think you were responsible). In so many respects, I didn’t know what I didn’t know.

As a result, I was introduced to the many false positives of investing, including:

• Making a bad decision but experiencing a positive outcome

• Making a good decision but experiencing a negative outcome

Both happened to me in spades early on. However, when looking back, I’m almost glad I didn’t have a mentor or someone looking over my shoulder telling me what not to do, because they would have likely interrupted a very valuable part of the process of learning and improving as an investor. Sure, I probably would’ve saved a few bucks, but I needed to experience the growing pains on my own.

Quentin Tarantino, a subject for a future post, often talks about the benefits of making a movie at 27 years old, with no prior experience and never having attended film school. The result is not what you would think. The process took three years, and actually led to making a movie that was never released. Also by his own admission, the movie wasn’t any good. However, Tarantino treated that period in his life as his own film school. He said he learned what he was doing by the course of doing it. This can also be thought of as being allowed to fail with limited capital on the line.

That same mindset helped me immensely as my early ignorance allowed me to be a gunslinger while operating with relatively low stakes, which accelerated my learning curve, helped form my investment philosophy, and forced me to choose an area of the market on which to focus. When I finally started learning what could be considered the right approach for me, I was free to think about and consider only the things that truly mattered.

I was going through some old notes recently where I was reminded that Chuck Akre studied English in college. In an appearance on the Invest Like the Best podcast, he talked more about his lack of experience being beneficial.

“I had no background whatsoever in the business world; I was an English major and I’d been a pre-med student and had no courses in business whatsoever. So I had a clean canvas and a willingness and a desire to learn and so my voyage was: ‘What makes a good investor, what makes a good investment?’”

I never studied business or finance, nor did I grow up with investing as a household focus. However, when I began to make the transition to professional investor, I was able to learn the craft in a way that best suited me and made the most sense at the time. In addition, I came into the industry with a fresh perspective or as Chuck Akre said, a clean canvas. As a result, I approached investing with an open mind, leaving room to make connections between what I was doing, and my experiences in other areas of life. My unique approach is something that sets me apart, and remains very important as I continue to scale my business.

We are all taught early on that we should learn from the greats and shamelessly clone them, but eventually you come to find out that you have to adopt an approach specific to you as a person, and one that is built on the back of your temperament, personality and judgment. Ignorance provides a huge benefit to being able to do this, because it gives you the power to learn something at it’s core, allowing you to absorb it in a way that makes sense to you, which then allows you to iterate over time.

The phrase ignorance is bliss, exists for a reason. An inexperienced learner in any field allows one to explore and be creative in ways, as Rick Rubin said, they might not otherwise be if they knew the mistakes they were making.

My ignorance allowed me to build a foundation for what I’m doing now, likely before I was ready, and in a way that would have never happened with full knowledge of what I was doing. Taking the the necessary and unnecessary risks that help one figure out what works and what doesn’t is an integral part of learning anything.

To somewhat prove my point, after more than a decade into navigating public markets, I am much more risk averse now than I was when I started investing, even though I have more experience! Although my knowledge base, pattern recognition and ability to know when the odds are in my favor are more finely tuned, there is much more of a governor in place now than when I began (I also manage other people’s money, but it still rings true). As Jimmy Iovine said…I have too much information.

Yet, there are no regrets. Ignorance at the outset is the only way to transition through the various stages of knowledge in both investing and other creative pursuits. However, there are those rare times that I wish I could forget some of the things I’ve learned.

I’m reminded of the Bob Seger lyric from Against the Wind:

“Wish I didn’t know now what I didn’t know then.”

Adam Wilk is the Founder and Portfolio Manager of Greystone Capital Management LLC, a microcap focused, value based investment firm. He enjoys highlighting the connections between various disciplines and writing about the intersection of investing and creativity.