Lessons from High-Stakes Decisions, with Polina Marinova Pompliano

29:26She works so hard. And then I read her story and I was like, wow, that's not a life I want. But I still learned from her as a person, even though I think that she probably doesn't have a life that a lot of people would want. She's very isolated. All she does is write. I think it probably has to do with the fact that she lost a child. And then after that death, she kind of started creating these fictional worlds that she could escape to. And so writing to her is a form of escapism. And she works so hard because she doesn't want to face the reality of it. Again, it's a human story. Yes, she's a celebrity author, but she's also very much a flawed human.

30:09Have you ever profiled someone whose subsequent actions have surprised you? After? Yeah, afterwards. Yes, actually. I would say Melinda Gates is probably one of those people because I interviewed her. I saw her on stage with Bill Gates. They did an interview together. And then I also wrote the dossier on her after listening to a lot of the interviews that she's done. It taught me, again, the idolizing thing, but also that people are people. They're going to emphasize things that they want you to kind of look away from. I learned that the healthiest thing that we can do as a society is approach things with skepticism.

30:58Neil deGrasse Tyson, he has something he calls the crystals test. You're walking down the street. You see somebody who's selling crystals. And he's saying, buy these crystals and they'll guarantee to change your life. So what do you do? Do you say, this is BS. Of course, they're not going to change my life. Or do you say, oh, my God, amazing. I'm going to buy seven of them. Whatever your answer is, he says, that's intellectually lazy. So even if you outright rejected it or if you accepted it as truth, both are wrong. because you haven't asked the questions, done the research, really vetted the situation to know maybe they could change your life.

31:39But the intellectually lazy response is the one that goes without any sort of probe and skepticism. And I think in our society, we want to put people on a pedestal and believe that what they say and their story is the truth. With the Neil deGrasse Tyson crystals test, the reason that so many of us are quick to either reject or accept an idea is because we're inundated with hundreds of ideas every single day. And we just need a heuristic. We need a shorthand to be like. Of course. Yeah. It's just in what areas of your life are you doing that? Right. The other thing alongside that is, especially if you're an investor, especially if you're running your own company, for example, it's so important to kind of curate those information streams.

32:28Ultimately, the things that you watch, listen to, read, or the people you surround yourself with, that's going to be the lens through which you see the world. I used to watch a lot of reality television. After a while, you kind of subconsciously start to view the world through the lens of, ooh, like relationships. Is he mad at me? Why did she text me that? The drama amps up. And it's okay to watch, I call it the junk food content, right? It's okay to have that. It's a sliver of your content diet if the majority is something actually productive or helpful to your thinking patterns. So doing a content audit like once a year requires you to sit down and objectively look at your calendar, look at the things that you're consuming on a day-to-day basis.

33:16Because I bet like a lot of us are on Twitter constantly inundated with things that may or may not be true, but we don't have the time to be skeptical and probe each one to find out whether it is. So it's like either filter that world or put some other sources of content in your diet. James Clear, I interviewed him, the author of Atomic Habits, and he told me that he has optimized his environment to be conducive to good ideas. So he's never out of ideas and his mind is never filled with bad ideas or false ideas, I guess I should say. He said that he'll have a stack of books everywhere in his house.

33:56So on the dining room table, on his nightstand, next to the TV. And he's like, if I'm ever at a shortage for an idea or something like that, I just pull a book and I start reading. You have to create an environment that is conducive for good, high-quality ideas versus the crystals of ideas. How do you do that then? And by the way, both James Clear and Annie Duke, who you mentioned earlier, have both been on this podcast. That's awesome. And they're both just absolutely wonderful. Annie Duke's been on, I think, two or three times. Okay, so you can teach me that. I'll mention that for any of the listeners who want to go listen to those episodes.

34:32We'll drop those links in the show notes. Both excellent, excellent guests, I'm sure. Yeah, yeah, they're incredible. We live in an environment where sources of information are mistrusted. Many sources of information are mistrusted, but there is wide variation in who trusts what. And in addition to that, we don't in today's society even have a common set of facts that we're starting from. It used to be that there was a set of facts and then you would have 30 different opinions about that. But now we don't even have an agreed upon set of facts. We have three or four. There's my truth. There's your truth.

35:17There's some other truth. And oh, you can speak your truth and then I'll speak my truth. And it's like, that's a poor use of the word truth. But yes. Right. So we don't even have an agreed upon set of facts. And then there's a wide variation of opinions about which facts are facts and which facts are not that. How do you cultivate a wise content diet in today's context? Yeah, it's very hard. So when I was at Fortune, I was sending a newsletter every single day called Term Sheet. It was just venture capital deals, who's raising money, who's buying who, who's whatever, private equity funds. That was coming from Fortune magazine, Term Sheet with Fortune.

36:01But then I realized that people trusted me and my perspective over the institution. They liked having a person to talk to and tell when they're wrong or say, oh, yeah, I agree with that. So I think I learned like, okay, hold on. I think people are starting to trust people more than these faceless institutions. And from there, we've seen kind of the unbundling, the people going out on their own, and the rise of independent media. And I really do think it's because we are way more likely to trust a person with their flaws that we know and we know their biases versus this faceless institution that says we are the source of truth.

36:44So yeah, I do think for better or worse, you pick who you trust. And you may know that, hey, from this set of scientific facts, they have it right or they have it wrong, but you can kind of form your own opinion about them. Well, that makes a lot of sense because when I think about content creators, I do know, or at least I think I know the biases of a variety of different content creators. And so I know that if I listen to something that's been framed by this individual, then I also would want to seek out that same topic framed by this other individual because they're coming from two very different sets of biases.

37:28Yes. Yeah. And I subscribe to newsletters with people who have wildly different biases, but at least I know. And then I see, okay, well, maybe the truth is probably somewhere in the middle, but I can make up my mind because everybody has biases. Right. Exactly.

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39:55People who have been reading the newsletter for a long time know that I grew up in Bulgaria, but my dad's side of the family was very, very radically anti-communist to the point where communism was there. They spoke out against it when a lot of people would just keep their mouths shut and not say anything. They actively spoke out against it. They went to labor camps. Some of them were killed. Some of them were imprisoned. And I come from that sort of mentality into, wow, look at America and, you know, things like that. We have freedom of speech here. I could never be a journalist in Bulgaria in the same way I could be here.

40:31Right. That's my bias. I put a premium on freedom of speech, whereas some people don't. I don't know. I find it liberating to put your cards out there and be like, this is where the things that I am saying are coming from. Take it or leave it. But I think most people are informed enough to know it's another perspective to consider. I think when you are upfront about this perspective was formed through this channel, it's this set of life experiences has gone into forming this particular perspective. I think when you're really upfront about that, people can empathize more. They can see how life experience X could lead to perspective Y.

41:14Yes. Yeah. And the other thing when we were talking about risk and uncertainty that I thought about is like, it really depends. Some people seek out risk simply because their lives have been more static and they're looking for adventure and they're looking for things to do and feel that adrenaline. For somebody who is an immigrant or the child of immigrants, I think you actually seek to eliminate risk and uncertainty, at least for me. My parents took the ultimate risk of moving us here, no money, nothing. And then my vision of success was no uncertainty. I want to stay at this company for the rest of my life because I thought that was certainty until you realize in the face of a recession or a pandemic or something like that, you may lose your job, which is 100 % of your revenue streams.

42:07Whereas if you are an independent entrepreneur or content creator, you can have several channels of revenue. So if one or two dry up, the other four are still viable. And that's actually less risky than working at one job and hoping you don't get laid off or fired. Right, right. So your definition of risk and stability changes over time. Yes. As it becomes more refined and more nuanced, right? And as you start unlearning some of the social conditioning. Yeah, totally. Right. Morgan Housel talks about that. He refers to that tail risk of what are the low probability but high magnitude events that would truly ruin us?

42:51Those are the things that we need to guard against. Totally. One of the stories that you told is of a mountain climber named Conrad Anker. And he, and I'll let you tell the story, but he ultimately, A, it didn't seem as though he could guard against what ultimately happened to him and Alex Lowe. And B, the thing that the reason he's alive today was really dumb luck. Yes. Despite all his training. So Conrad Anker, when I was doing my research on him, a lot of times you would Google like, how did Conrad Anker, and then the first search result says, how did Conrad Anker die? He's not dead. He's very much alive.

43:33He just has had some terrifying circumstances in his life. One of them is him and two fellow climbers were climbing Mount Shishapinga, I believe is how you pronounce it, but they were climbing and there was an avalanche and he happened to go right and they went left and he survived and they didn't. And the whole point is that sometimes the training, the everything, you can do everything right, but the outcome may just be as a result of dumb luck, being at the wrong place at the wrong time, things like that. And I think that that's actually much harder to grapple with because you may have done everything right and things still didn't go your way.

44:18And then you have to like cope with the consequences. Right. It's that randomness. Right. What lessons can we draw from that in terms of how people can steel themselves against variants that goes askew and in this particular instance, fatally so? Yeah, I really do think that there's what happens to you and then there's kind of the aftermath of how you deal with it. there's another story again it's a climber he's a skier but they do a lot of mountaineering and when he was younger he had two kids and a wife he was on an expedition and his wife and two kids were in a plane that plane crashed and they died so he lost his whole family then he got close with another mountaineer hillary they were both athletes they went together and just two years ago, I believe, she was swept away by an avalanche and he survived.

45:16And so he's like, I don't know what to make of this other than I have to evaluate my life and try my hardest to draw lessons of why this is happening to me. I used to say a lot of times that I got lucky doing something or things are lucky or man, that's just such bad luck. and what you learn and I have learned is that sometimes it's, you just have to kind of reframe that. So if you and I are walking down the street and we both exact same time, we both get hit by a bus, I can go to the hospital and somebody interviews me. It's like, what do you think? And I'd be like, my God, I was so unlucky to be standing right there when that bus came and hit me.

46:01But your answer may be, my God, how lucky that we were standing such a precise angle where the bus hit us, but we didn't die. So one person comes across or it takes away that they got really lucky in that situation. The other person just really unlucky. And I think that that perspective and depending on how you look at the world shapes how you're going to live the rest of your life. I think these extreme scenarios, unfortunately, do seem like life altering events. But then from that, what will you do with that experience? Conrad, he's become kind of a motivational speaker. He's written a book.

46:36He gave commencement speeches. And I really do think that as unfortunate as that experience was for him and his best friends, he's formed it into something that can at least not just shape his life in the negative, but inspire other people. Right. So when you were at Fortune, you were able to do something that I think many people in this audience would be quite jealous of, which is that you got to see Warren Buffett, who was a frequent guest at many Fortune events. But I actually want to shift off of Warren Buffett and talk about Warren Buffett's business partner, Charlie Munger, who has some incredible insight into what we've just been talking about, which is finding trusted sources of information.

47:24Yeah. Charlie Munger was big on trust. He often talked about how the highest form of civilization is a web of deserved trust. And we've been talking about how do you find good sources of information? How do you make good decisions in times of uncertainty? How do you shift your beliefs when the information changes, for example? He has talked about all of that. And one of the more interesting parts was about beliefs and how we're all kind of the unreliable narrator of our own life because we do minimize things. We emphasize other things to make order of the chaos, as you put it. So Charlie Munger.

48:08So first of all, I heard James Clear once say, why is it so hard for us to change our beliefs? Let's say even political beliefs. Why is it so hard for somebody as they gain new information to change their prior belief? It's not because the actual changing of the belief is hard. It's that when you're asking someone to change your belief, you're actually asking them to change their tribe. So you're actually asking the person to change out their friends, have different conversations with family members suddenly. You're not asking them to just change your belief. So Charlie Munger often says, he says that we'd all be a much better informed society if instead of saying, well, I believe this to the death, defending that to the death, it's you can only say you believe something if you can argue the opposition's side better than the opposition.

49:04Because then that actually means that you're probably informed, you know the rebuttal, you have taken your time to do the research. Otherwise, your opinion is probably not as valid as somebody who is well-informed on crystals, for example. Right, right. And so he often talks about that. And then another investor slash entrepreneur, Reid Hoffman, says that in terms of gaining people's trust, it's that you have to be consistent over a long period of time. He says the formula for trust is trust equals consistency plus time. So it's not enough to just be consistent for a week and it's not enough to just say, hey, you should trust me because of my credentials.

49:50It's like you have to show people. So, for example, I started my newsletter, The Profile, in February of 2017. And I told people my promise to the reader is I will not miss a week of sending this thing to you. I don't care what happens in the world. I have not missed a single Sunday of sending The Profile since February of 2017. And what is that now? Seven, almost eight years. But that was important to me because when my free newsletter added a paid layer to it, I knew that people trusted me enough to not run off with their money because they said, OK, I've seen her put this out every single week.

50:29I'm not worried about backing her financially and then her stopping. So, of course, in that period of seven and a half years, things have happened. There have been family emergencies. I've had to travel overseas. All these things that would normally be a very good excuse to not send the newsletter, I knew trust equals time plus consistency. So even if that Sunday edition wasn't as robust as I'd like it to be, I'd still send it. Or I'd have a backup edition that I could send in case of emergency. But I just knew that sending it was better than not. And I think that's true for any product you're selling, anything that book you're publishing, podcast you're producing.

51:16If you can fulfill the promise to the people that you have made once a month, twice a week, whatever it is, if they know that you will make good on that promise, then trust is almost inevitable. And the consistency element makes me think of compounding returns. Yes. Right. because the challenging piece, the sometimes frustrating piece about consistency is that when you're at the beginning of it, you feel as though the rewards aren't there. You're at the beginning of it and you're like, man, I've been so consistent for three weeks. Where's my sticker and gold star? Exactly. Yeah. And sometimes, yeah, you can do all the right things and it's just not that idea's time or the audience is just not there yet.

52:02But then once that trust flywheel starts, then it compounds. And I do think it spits off trust as a compounding mechanism. Right. Essentially, trust is the result of compounding consistency. Yeah. Right. And compounding consistency is everything. You profiled David Goggins, who He was 297 pounds. I never knew that he once was overweight. Right. Right? Because he's so fit. For people who don't know David Goggins, he is, how would you describe it? He's like, he's a well-known. Extreme athlete, distance runner, former Navy SEAL. Right. Yeah, exactly. He's the epitome of fitness. And one of the things that I want to leave your listeners with is that studying people, sometimes you think you have to copy them one-to-one in order to achieve the same results.

52:59But what I found, and I don't think that you should be David Goggins 100 % in your life. I think maybe you should be David Goggins in 10 % of your life. If you don't ever want to do something hard and you know it's good for you, just do it. And one of his things is that you should do one thing every single day that you don't want to do that absolutely sucks So if your goal is like i'm gonna run two miles every single day Oh, wait, I can't today because it's raining outside still go on a run even though it's raining and cold because that again It's almost like you're building trust with yourself In that consistency and that keeping a promise to yourself that you're gonna do what you set out to do Right.

53:43I've been trying to teach myself to drink black coffee, which I absolutely hate, but I'm trying to like make myself do it. Yeah. And I read the David Goggins chapter right as I was like pouring a black coffee and I was like, okay, okay, do one thing a day that sucks. Exactly, exactly. Not putting cream into this coffee is going to suck. But it's the little S. People have done much harder things. And I think one of the themes of our conversation in particular is that David Goggins talks about by doing small things, you're like, oh, this is an inconsequential thing that I just did. But actually, it's teaching your brain.

54:25He calls it callusing the mind. You're introducing friction in your day, whereas normally there wouldn't be. You would do anything to feel comfortable and to have your coffee taste amazing. But by doing small things every day that suck, you actually teach your brain that you can handle friction and you can handle things that are going wrong. So that's why I think in our culture, especially, people have become very fragile in the moments that matter most. His point is that by doing uncomfortable things every single day, you're actually creating friction for yourself so that you don't buckle in the big moments.

55:06It's not just athletic feats or things like that. For example, in business, you're going to have to negotiate. You're going to have to negotiate a deal. You're going to have to have hard conversations with someone. As an employee, you have to negotiate your raise. How can you practice the skill of negotiation that you hate so much? You can't reserve it for that one super important conversation once a year. You have to practice every single day so that your brain gets used to it. For example, go sell something on Facebook Marketplace and try to negotiate with the other person. It's an inconsequential, like you said, small s suck, but you are doing something uncomfortable and you're practicing.

55:45So the more you practice and dress rehearse for catastrophe, the more that those big uncertain whack you in the knees moments don't make you just collapse to the ground. Right. I love how you brought it back. I had to bring it back. Yeah. Good story symmetry. Dress or hers for catastrophe, but do it in the small ways because you're right. So much of the time we negotiate when there's 10 ,000 or 20 ,000 or 40 ,000 on the line, which is when we're accepting a new job offer, when we're buying a home, when we're buying a car. It's these really big ticket moments in life. And then if we don't get that tiny practice, that tiny daily or weekly practice, then we're unprepared for those few big moments that do matter.

56:40Exactly. And you don't want to practice on the very consequential$40 ,000 deal day. Right. Exactly. Well, thank you for spending this time with us. Thank you, Paul. I loved it. Where can people find you if they'd like to read more of your work? Yeah, you can find me on readtheprofile.com, which is my newsletter, or you can find the book at hiddengeniusbook.com. Perfect. Thank you. Thank you so much.

57:08Thank you, Paulina. What are three key takeaways that we got from today's interview? Key takeaway number one, Reid Hoffman's formula is trust equals consistency plus time, which is another way of saying trust is compounding consistency. And this applies whether you're building trust with clients, with employers or with business partners. Small, repeated demonstrations of reliability on a daily basis compound into a valuable professional asset. Charlie Munger often says, he says that we'd all be a much better informed society if instead of saying, well, I believe this to the death, defending that to the death, it's you can only say you believe something if you can argue the opposition's side better than the opposition.

57:59Because then that actually means that you're probably informed, you know the rebuttal, you have taken your time to do the research. compounding consistency. Compounding gains aren't just for your public equities investment portfolio. It's also for the professional capital, the social capital that you build at work, at home, and in your communities. So that compounding consistency is the first key takeaway. Key takeaway number two, job security is not what you once thought it was. What feels secure might actually carry hidden risks. Having one single full-time job, one single source of W-2 income, that might feel secure.

58:46It might give us the illusion of security. But without diversified income streams, it represents what in the investment world is known as concentration risk. By contrast, having multiple income streams can provide more stability, despite the fact that on the surface, it seems quote unquote riskier. Now that doesn't necessarily mean that you should quit your W-2 day job. If you love your day job, keep your day job as long as that's what makes you happy. But you can still mitigate that concentration risk by developing multiple income streams to supplement that day job income, which means not only will you be earning more and the more you earn, the more you can invest.

59:31But also you've actually reduced risk by eliminating single source failure. I think you actually seek to eliminate risk and uncertainty, at least for me. My parents took the ultimate risk of moving us here, no money, nothing. And then my vision of success was no uncertainty. I want to stay at this company for the rest of my life because I thought that was certainty until you realize in the face of a recession or a pandemic or something like that, you may lose your job, which is 100 % of your revenue streams. That is key takeaway number two. Finally, key takeaway number three. Use the small stakes to prepare for the big stakes.

1:00:16You don't want to wait for high stakes moments like your salary negotiation. You don't want to wait for that to practice having those tough conversations. because asking for a raise, asking for a raise is a five-figure conversation. You currently make$110 ,000 a year and you'd like to make$125 ,000. That's a$15 ,000 request. Do you want to go in cold? Do you want to practice that for the first time right in the heat of the moment? Or do you want to start in a controlled environment? We're not the astronaut that went blind on the ISS. Most of us are not going to be in that type of a life or death situation.

1:01:03But we are going to be having five-figure and six-figure conversations. We are going to be applying for jobs. And that hiring manager is going to say, what's your salary range? How much are you looking for? And we're going to have to be confident, be prepared, be calm in that moment. Or we're going to make an offer on a house and the seller is going to come back and say, this is what we're looking for. And we're going to have to make a quick decision that carries consequences with the zeros on the end, many zeros on the end. So practice for those moments because when it counts, you want to be ready.

1:01:51It's not just athletic feats or things like that. For example, in business, you're going to have to negotiate. You're going to have to negotiate a deal. You're going to have to have hard conversations with someone. As an employee, you have to negotiate your raise. How can you practice the skill of negotiation that you hate so much? You can't reserve it for that one super important conversation once a year. You have to practice every single day so that your brain gets used to it. Those are three key takeaways from this conversation with Paulina Marinova-Pompliano. Thank you so much for tuning in.

1:02:24If you enjoyed today's episode, please do three things. First and foremost, subscribe to our newsletter, affordanything.com slash newsletter. We send fresh insight there that you won't find anywhere else. That's affordanything.com slash newsletter. Completely zero cost. Second, open up your favorite podcast playing app. Apple Podcasts, Spotify, whatever that app is. Maybe it's YouTube. Open up that app and make sure that you hit the follow button so that you don't miss any of our amazing upcoming episodes. And while you're there, please leave us a review. Unless it's YouTube, in which case leave a comment, a like, and hit the notification bell.

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