What the wise man does in the beginning, the fool does in the end.
— Warren Buffett
I was deep in a Buffett reading bender when I read this line and it had an unusual reaction in me. It sounds like it’s about timing at first — get in early, win. Get in late, lose. But upon further consideration, I don’t think that’s quite it.
I believe the deeper pattern is about understanding.
The first person to take an action usually understands it deeply. They have to. Nobody else is doing it, there’s no crowd to follow, no social proof. In fact, most people probably thought it’s a dumb idea. They’ve thought through why this specific thing makes sense when conventional wisdom says otherwise. And because they understand it, they can stick with it, adapt it, expand on it. The rewards are theirs alone.
Then others notice and start copying. These second-wave people still roughly understand the fundamentals. They’re not pioneers, but they get the mechanics. The returns are smaller now as there are more competition and higher costs. But it still works.
As something goes mainstream, a third wave shows up - people who have no idea why it works. They just see that it’s working.
I watched this happen with crypto. Early on, the people buying Bitcoin could actually explain the technology. Decentralization, trustless systems, why that mattered, their principles around it. By the peak, I was meeting people who couldn’t tell you what a blockchain was, but were absolutely certain they needed to buy in. The gap between “understands deeply” and “has no idea” had become enormous.
Same pattern with startup investing. Early-stage investors who’ve been doing it for years? They understand cap tables, dilution, how venture math actually works. They know most bets will fail. But during the boom years, I saw people who didn’t even understand how companies are ran, throwing money at startups. They were late because they understood nothing at all and made decisions based on what others are doing.
The wise man does in the beginning what the fool does in the end. Not because the wise man has better timing. Because he actually knows why he’s doing it.
I wrote this mostly as a reminder to myself. Before jumping on anything, make sure I can explain why it works from first principles. If I can’t, I’m probably the fool at the end.