#342 The Lessons of History (Will & Ariel Durant)

25:01They define good as that which survives and bad as which goes under. How many times do you and I talk about and repeat the quotes and the ideas of history's greatest founders on the importance of survival. One of my favorite lines on this actually came from Steve Jobs. He says, victory in our industry is spelled survival. Victory in our industry is spelled survival. A few years ago, I read a 700 page biography on Charles de Gaulle and everybody around him, Churchill, FDR, they just could not understand why the guy just refused to quit. And you could almost summarize his entire philosophy around, you know, fighting Hitler and making sure that France remains free, to his fantastic quote.

25:44He says, all that matters is to survive. The rest is just words. In a more business context, think about if you read Warren Buffett's shareholder letters. I think this is episode 227, Warren Buffett's essays, which is Warren's shareholder letters, but organized instead of by year, it's organized by topic, which is excellent. And he talks about that they play offense while others scramble for survival. Let me read from his shareholder letters. I think this was after 2008. I don't have the exact year, but I'm going to read this to you. And really, again, the reason I'm bringing this up is because a strong financial foundation is what allows you to survive, right?

26:19To not ever take risks of, you know, I'm going to risk the remote chance that my company goes under, my business dies to, you know, make a little bit of extra money. Warren and Charlie would smack you in the face if you did that. So Warren says, by being so cautious in respect to leverage, we penalize our returns by a minor amount. Having loads of liquidity, loads of cash, right? Having loads of cash lets us sleep well. Moreover, during the episodes of financial chaos that occasionally erupt in our economy, we will be equipped both financially and emotionally to play offense while others scramble for survival.

26:56What a line. We play offense while others scramble for survival. That's what allowed us to invest $15 .6 billion in 25 days of panic following the layman bankruptcy in 2008. They invested $15 .6 billion in 25 days of panic. And so what does this all have to do with religion? This is really a one sentence summary, which again, Will and Ariel Durant are gifted at. One lesson of history is that religion has many lives and a habit of resurrection. In other words, religion survives throughout history. All right, now we got into economics and the lessons are even more obvious for you and I. History reports that men who can manage men manage the men who can manage only things.

27:39And the men who can manage money manage all. So think about that. This is a note of myself that I think is a good summary of that. The strong rule the weak, the wise rule the strong, and incentives rule all. Then he goes into the fact that history is inflationary. So the bankers watching the trends in agricultural history, trade, inviting and directing the flow of capital, putting our money doubly to work, controlling loans and interest in enterprise, running great risks to make great, great, great gains rise to the top of the economic period. And this is, you know, if you read that sentence now, you're like, yeah, it's obvious.

28:16Like, look, I read this as many, many years ago, but it's like financial services are something like 8 % of GDP by size, but like 40 % by profit. I forgot what the exact stat was, but that's how I remember it. And we think, oh, this is like unique to our time. And then he goes back and he's like, well, this isn't unique to your time. He's describing the Medicis, the Fugers. I've done a bunch of podcasts. I did a podcast on Jacob Fugger. If you just search in your podcast player, it's the richest. I think it says like the richest man in history. The Rothschild did two episodes, two or three episodes on them.

28:46The Morgans. And so over and over again, these are the people that rise to the top of the economic pyramid. They're not the only ones, obviously the company builders too. Perhaps it is one secret of their power that having studied the fluctuations of prices, They know that history is inflationary and that money is the last thing a wise man would hoard. The experience of the past leaves little doubt that every economic system must sooner or later rely upon some form of a profit motive to stir individuals and groups to productivity. And then they reintroduce something they introduced earlier, the fact that humans are inherently unequal.

29:19The more complex, the more technologically advanced a society gets, the more you're going to see the differences in this human ability expand. Since practical ability differs from person to person, the majority of such abilities is gathered in the minority of men. The concentration of wealth is a natural result of this concentration of ability and regularly recurs in history. The rate of concentration varies with the economic freedom permitted. Deputism may for a time retard the concentration. Democracy allowing the most liberty accelerates it. And so even though this reappears over and over again, it does need alleviation.

30:00Really, concentration of wealth does not seem to be tenable. We conclude that the concentration of wealth is natural and inevitable and is periodically alleviated by violent or peaceable partial redistribution. In this view, all economic history is the slow heartbeat of the social organism. I like that they use the heartbeat metaphor there. And so what is interesting is right after the chapter in economics, they talk about government. And if we just went through, hey, you know, usually the most prosperous is when you have freedom. People can act in their own interests. Their incentives are more aligned than if you have the centrally controlled system.

30:36But yet, if you study human history, essentially every single government is going to default into an oligarchy. I didn't say that word correctly. Oligarchy is what I meant to say. So this is fascinating. If we were to judge forms of government from their prevalence and duration in history, we should have to give the palm to monarchy. Democracies, by contrast, have been hectic interludes. So what are they saying? Monarchy is the longest lasting and most common form of government in history. Democracies, by contrast, have been hectic interludes. Now, this is there is a statement or a reoccurring theme in history called the Iron Law of Oligarchy.

31:16And they go into detail about that here, and it has to do with this inherent difference in the abilities of human beings. Most governments have been oligarchies ruled by a minority, chosen either by birth or by a religious organization or by wealth. It is unnatural for a majority to rule, for a majority can seldom be organized and united into specific action, and a minority can. If the majority of abilities is contained in a minority of men, minority government is as inevitable as the concentration of wealth. See how they tied everything they've been like the past few themes together there? If the majority of abilities is contained in a minority of men, minority government is as inevitable as the concentration of wealth.

31:55The majority can do no more than periodically throw out one minority and set up another. And so the summary there is the iron law of oligarchy. And so a few pages later, it goes back to this idea that you and I keep talking about. This is why you should spend so much of your time learning and practicing so you can be better at your craft. Every advance in the complexity of the economy puts an added premium upon superior ability. Every advance in the complexity of the economy puts an added premium upon superior ability. And so a lot earlier in the book, we went over the fact that in the biology and history chapter, that war is a nation's way of eating.

32:32It promotes cooperation because it's the ultimate form of competition. And that the first biological lesson of history is that life is competition. And so this next sentence, although provocative, will not be surprising. War is one of the constants of history and has not diminished with civilization or democracy. In the last 3 ,421 years of recorded history, only 268 have seen no war. War, or competition, is the father of all things, the potent source of ideas, inventions, institutions, and states. And that idea that war, I've done a couple of podcasts on this, that war is a potent source of ideas.

33:13When it is literally life and death, you will see human ingenuity maybe at the apex. I mean, if you think about The General and the Genius, that book I did many, many years ago on the partnership between J. Robert Oppenheimer and General Leslie Grove. But there's actually an excellent book that speaks about this heroic effort for the United States industrial complex to turn on a dime in World War II and go from manufacturing things for consumers to manufacturing things to help the allies in the war. It's called Freedom's Forge. I read it. I did a podcast on it a long time ago. I think I deleted the podcast.

33:47I can't find it. But I'm going to reread that book because I think it's fascinating. It's really, it's on ingenuity and really leadership and how large groups of people can get things done incredibly fast, I think is the main lesson. The same causes of war are the same as the causes of competition among individuals. Acquisitiveness, pugnacity, and pride, the desire for food, land, materials, fuels, and mastery. War is the final arbiter. A nation must be ready, just like a company must be ready, at any moment to defend itself. And when its essential interests are involved, it must be allowed to use any means it considers necessary to its survival.

34:25So, you know, this goes on for many pages. And really, you can, again, another one sentence summary, whether the lesson that he derived through studying 100 centuries of human history. The Ten Commandments must be silent when self -preservation is at stake. Man is a competitive animal and his states must be like himself. And then if you have the book, I think you're especially going to be interested in the growth and decay chapter. They're talking about civilizations. I think with you and I, obviously, the lessons for companies jumps off the page. This is really why there's always more opportunity.

35:01You know, there's always room for a new company, a new startup, because on one point, we were all agreed. civilizations begin, flourish, decline, and disappear. Companies begin, flourish, decline, and disappear. So what determines if this challenge will be met? If we put the problem further back and ask what determines whether a challenge will or will not be met, the answer is that this depends upon the presence of creative individuals, what you and I call founders, right? Of creative individuals with clarity of mind and energy of will, capable of effective responses to new situations. Again, they're talking about civilizations, so they're talking about all kinds of things.

35:42It holds precisely true with founders of companies too. Will this new challenge be met? Well, the answer is that this depends upon the presence of a creative individual with clarity of mind and energy of will, capable of effective responses to new situations. and so we see not only the death of individuals but the death of entire civilizations and they're like well it's just depressing and really this is on ideas being immortal whether in individuals or in states death is natural and if it comes in due time it is forgivable and useful and the mature mind will take no offense from its coming but do civilizations die?

36:18again not quite Greek civilization is not really dead only its frame is gone and its habitat has changed it survives in the memory and in such abundance that no one life, however full and long, could absorb it all. And this is a great, again, you do a great job of summarizing in one sentence what they mean. Homer has more readers now than in his own day and land. The Greek poets and philosophers are in every library and college. At this moment, Plato is being studied by 100 ,000 discoverers of the dear delight of philosophy, overspreading life with understanding thought, meaning 100 ,000 people discovering Plato for the very first time right now.

37:00This selective survival of creative minds is the most real and beneficiary of immortality. Going back to this, if you can find an enduring need, you can build a business around that. All technological advances will have to be written off as merely new means of achieving old ends. We are driven by the same desires, the same proclivities. We just find different ways to satisfy them. Now we get into the mind of humans. You and I do this. I'm sure you do too. Our capacity for fretting is endless. And no matter how many difficulties we surmount, how many ideals we realize, we shall always find an excuse for being magnificently miserable.

37:42The study of history allows you to stand outside yourself and realize, hey, these feelings, that what I'm going through, what I desire, the things I love, the things that bring joy, the things that bring sadness, they are not unique to me. And I think it's so important to get control of our minds because we have this one shot. I love what D. Hawk said, the founder of Visa, when he said, life is a magnificent, mysterious odyssey to be experienced. We do not want our minds to make this one magnificent odyssey miserable. We must control our capacity for fretting since we know in nature, in human nature, it is endless.

38:16And then as expected, they find the perfect way to end a book on lessons of history. Some precious achievements have survived all the vicissitudes of rising and falling states, the making of fire and light, of the wheel and other basic tools, language, writing, art and song, agriculture, the family, social organization, morality and charity, and the use of teaching to transmit the lore of the family and the human race. That's exactly what's happening now. We're reading words of somebody that's no longer with us, who's been dead, you know, for almost 50 years. These are the elements of civilization, and they have been tenaciously maintained through the perilous passage from one civilization to the next.

38:57They are the connective tissue of human history. If education is the transmission of civilization, we are unquestionably progressing. Civilization is not inherited. It has to be learned and earned by each generation anew. If the transmissions should be interrupted for one century, civilization would die and we should be savages again. If progress is real, it is not because we are born any better or wiser than infants were in the past, but because we are born to a richer heritage, born on a higher level of that pedestal which the accumulation of knowledge raises as the ground and support of our being.

39:38The heritage rises and man rises in proportion as he receives it. To those of us who study history, not merely as a warning and a reminder of man's follies and crimes, but also as an encouraging remembrance of generative souls, the past ceases to be a depressing chamber of horrors. It becomes a celestial city, a spacious country of the mind wherein thousand saints, statesmen, inventors, scientists, poets, artists, musicians, lovers, and philosophers will still live and speak, teach and carve and sing. The historian will not mourn because he can see no meaning in human existence except that which man puts into it.

40:26Let it be our pride that we ourselves may put meaning into our lives, and sometimes a significance that transcends death. If a man is fortunate, he will, before he dies, gather up as much as he can of his civilized heritage and transmit it to his children. And to his final breath, he will be grateful for this inexhaustible legacy, knowing that it is our nourishing mother and our lasting life. that is incredible will and ariel durant can write they can teach and they can inspire for the full story highly highly highly recommend getting the book if you buy the book using the link that's in the show notes on your podcast player you'll be supporting the podcast at the same time that is 342 books down 1 000 to go and i'll talk to you again soon okay so just one quick update for you before you go.

41:24So this feature that I mentioned in this episode where I was on the phone with one of the world's largest asset managers, and within 20 seconds, I had an overview going back, you know, eight years of how some of history's greatest entrepreneurs thought about leadership. I've talked about that I'm constantly updating. Well, first of all, for founders notes, you know, every week, I'm adding more notes and highlights. So what's been taking place lately is a lot of people have asked for an ability to have like a one -time payment option for founders notes where that means not only if you sign up now you get access to every single highlight and note that i've ever done for the podcast but you'll get access to every single highlight and note i ever will do for the podcast which i think is a crazy value but also you get all the new features that i add for free and essentially what i'm building what i'm externalizing to the world is this is my own internal tool to keep track of every single thing that I'm learning on this crazy journey to try to really document, really condense and clarify the collective knowledge of history's greatest entrepreneurs.

42:28So I've said over the past few weeks, if you've been listening to these past episodes, that I've been doing using this, it's like an AI assistant. It's trained on all every single transcript. So every single word I've ever uttered on the podcast, all of my notes, all of my highlights. And I have over 20 ,000 notes and highlights in this notebook that I've been adding through this app called Readwise since 2018. Readwise is who I've partnered with to start building Founders Notes. We've been working on it maybe for half a year or something like that so far. The more I use the AI assistant, it becomes the feature that I use the most.

43:05I'm sitting here thinking, I don't know what the hell to call this thing. It's not Founders GPT. That's not good. I was like, is that a chat? Well, I don't chat with it. I ask it questions, but it's not a conversation. And so just some of the questions that I've been asking or other users have been asking, sending it to me because I've been asking people, it's like, hey, when you asked whatever I'm going to call this thing, we're calling it chat right now, but that's not going to be the name. I was like, whenever you ask chat something that you find is interesting and you like the answer, send it back to me because what I'm going to do is crowdsource the best questions and answers.

43:35And eventually you won't even have to search. I mean, you can't, you'll always be able to search, but eventually I'm just going to have like a library of, you know, the top 100, top 200 questions and answers. It's like this really targeted curriculum for entrepreneurs. So I've been asking stuff like, I need some unique ideas on how to find new customers. What advice do you have for me? What is the best way to fire a bad employee? How did Andrew Carnegie know what to focus on? How did Edwin Land find new employees to hire? Did he find any unusual sources to find talent? Can you give me a summary of Warren Buffett's best ideas?

44:03What are the most important leadership lessons from history's greatest entrepreneurs? It just goes on and on and on. And so when you ask this AI assistant these questions, it goes and searches. I mean, it does this relatively fast, although I want to make it even faster. So it goes and searches every single transcript, every single note. every single highlight. And you have to keep in mind, you know, I would say, I don't know, I don't know the percentage, but 70 % of my notes and highlights are never even make it into the podcast. And so it searches all this and then it grabs and essentially makes a summary of all these different ideas.

44:31And so it's like, oh, it's not a chat. It's like a synthesizer because the definition of synthesize is to make something by combining different things. And so a few existing subscribers have emailed me asking, hey, can I test this? I was calling a super search for a while, this new feature that I can't come up with the name of, right? I was like, maybe it's Founders Chat, maybe it's Founders GPT, maybe it's SuperSearch, maybe it's Synthesizer. And I was emailing back and forth with one of them who's testing this out for me. And he's like, oh, it doesn't do, these names don't do it justice to what you're actually creating.

45:02And he suggested that you should call it Sage. And it was fascinating because then he listed the, why he thought that he defined the word Sage. So there's two main definitions. One's a noun and one's an adjective. The first one is a profoundly wise person. I'm reading this. I'll tell you what popped immediately to mind. And this is not going to surprise you if you listen to a bunch of these podcasts. I think of Charlie Munger. I think of him as my personal sage. I think he's the wisest person I've ever come across. And so it says a profoundly wise person. This refers to someone with a deep understanding of life, accumulated knowledge, and sound judgment.

45:34That is every single person that you and I have covered on the podcast. So the reason I think this tool is going to be the one I use all the time, why I think it's super powerful. I've been telling you for a while, hey, don't sign up for Founders Notes. It is made for people with already existing successful companies, successful careers. That is still true. I think Sage brings it to a different level in the sense that, you see how I'm already referring it to Sage. I've said I was going to sleep on this, and I still could change the name, but I think this is it. Because if you look at the definition, but uh i'll get back to that in one second but what i really think is it's like oh no it's it's going to be for if you're going to invest and many people invest you know hundreds of hours you know even if you're listening to founders podcast this tool just makes perfect sense because it is the accumulated knowledge of everything that you've ever heard on the podcast and in some cases there's no way you're going to remember all this stuff because i said i think earlier in this episode you know i was asking questions on leadership lessons and i was pulling from podcasts I did seven years ago.

46:37There's no way that I could remember it. Like this has a perfect memory. I don't. So let me go back to this. Sage as a noun, it's a profoundly wise person. This refers to someone with a deep understanding of life, accumulated knowledge, and sound judgment. They're often looked to for guidance and advice. That is exactly the way I'm using it. I'm not chatting with them. You know, I'm asking this question. It's like, can you combine these ideas? I need to know something. I need to make an important decision in my business. Will this tool improve my decision -making, yes or no? Of course. I mean, come on.

47:11It's the accumulated knowledge of history's greatest entrepreneurs condensed and clarified, and you can have it on demand. Of course, that's going to make your decision -making over the life of your career better. And so that's the noun version, the adjective. It's a wise, discerning, or prudent. This describes someone who shows good judgment and makes well -considered decisions. You can't be so good at your job and so remarkable at your work that somebody wrote a book about your life if you didn't show good judgment and make well -considered decisions. That applies to every single person you and I are trying to learn from.

47:41And so whatever the name of this feature is, I think we're just going to ship it this week. We've been testing it internally for many weeks, I don't know, maybe two months, something like that. Then we have a bunch. It's out in the wild for existing subscribers, for people who are testing it. What I'm looking for is like, can you break it? and what I mean by breaking it is, is it crashing? Is it getting stuck? And so far has proved reliable. So now I am real hesitant. So here's the thing. I'm really excited to get this out because I think this is really cool, right? And it's only going to get better because I'm going to add more transcripts to it, more notes, more highlights.

48:13The underlying AI models will keep getting better and better. This thing's going to be crazy a couple of years from now. And I got a bunch of ideas and unfair advantages in the sense that there's a bunch of AI founders that listen to this podcast that have been giving me private product demos and saying, hey, you should grab this feature should add it here and I'll show you how to do it. So again, this is just an unfair advantage I think you have listening to this podcast and then hopefully subscribing to Founders Notes. So I have to straddle my excitement for this new feature with I don't want to release it to everybody and then it breaks because there's so many more people using it.

48:47So I think we're pretty sure, I was talking to the engineers at Readwise, the founders of Readwise, they're the ones helping me build this product. They're saying we should ship it this week. I've been using the version, right? And the actual live version that's in Founders Notes too. And I can't break it. So we're going to do a couple more days of testing. If there's nothing going wrong, it's going to be live. If you run into any issues when you use it, okay? You see the customer support email once you're logged into Founders Notes. Please email me. I will be monitoring. I have people helping me, but I will be looking at the emails as well.

49:18All I ask you is just be cool. Everybody has been cool. We just spent, I spent 150 days. I spent the last three days at the first Founders Only conference with 150 super driven, successful, ambitious, inspiring founders. It was incredible. We didn't record anything on purpose. Any event I ever do in the future, it's not going to be recorded. You have to be there. But what I was struck by is there's multiple billionaires there. There's super successful people. People have sold their companies for hundreds of millions of dollars. There's capital allocators responsible for tens of billions of dollars of capital.

49:51So everybody, it's just a group of business nerds. Business nerds that want to get better at their craft and get to the end of our lives, not dancing on a reservoir of untapped potential. And the amazing thing, other than the inspiration and learning and the relationships that we built, is I didn't run into any assholes. Everybody was cool. And so I think I can relate this feature. If you run into any issues, just email me. I will fix it. I don't even know if you will run into it. But keep in mind, this is a tool for me first, right? I'm building something that I need. The cool thing is just by externalizing it to you, then it becomes valuable.

50:26It's not something that's just some hidden talent or hidden secret that I have. And so there's no way I'm going to let it stay broken. I'm going to constantly fix it. I'm on top of it all the time. So that is my current thinking about it. Obviously, I'm always going to talk directly to you. I break the fourth wall. There is no fourth wall here. I'm always going to tell you the thinking I'm having about this, the evolution of the thinking, and what I have planned next. because this is going to be a full -fledged platform with the North Star of the ability to condense and clarify the collective knowledge of history's greatest entrepreneurs because I want it on demand so we can use it when we're making decisions throughout our entire career.

51:02So in addition to the AI assistant, whatever I'll name it, right, there's a bunch of different ways you can use it. When you sign up, you will get an email. It's a welcome email. It goes through. I wrote the welcome email. It goes through exactly how I use it. You can still search all my highlights. That's the feature before the invention of Sage or whatever AI assistant, whatever I call this thing. That was the feature I was using the most. So any topic that I was thinking about, I would just type it in the search bar. Sometimes it's a person. Sometimes it's a topic. Sometimes it's an idea. Sometimes I want to read about how did they think about patients?

51:31How did they think about monopolies? How did they think about moats? How did they think about incentives? And it would perform a keyword search for all my notes and highlights. And now we have this new feature with transcripts, which has made the search like 10 times better. because then you can search every single time I've mentioned it on the podcast. So you still have the ability to search my highlights. I've been getting a bunch of emails and DMs that people are using the highlight feed like I suggested, which is the highlight feed is just a it presents all my notes and highlights in a random order to you.

51:59It's almost like a smart Twitter feed. But instead of reading, you know, the ramblings of some crazy person online, you read a note or a highlight from one of the hundreds, you know, 300 books or whatever I have in in Founders Notes. And so multiple people have said, hey, that idea about replacing search, like reading the news for 10 or 15 minutes in the morning, I just read the highlight feed and it's actually a lot better. Think of it as a bunch of random ideas from history's greatest entrepreneurs that you search your morning with. And then the last feature I'll talk about, but even though there's two more listed in the welcome email, you can just read it after you sign up, but is the books feature.

52:33You go in and you can pick a book. Like I did this for Lessons of History, the book that you and I just covered. I read that book for the first time, I don't know, years ago. And so I had 31 previous highlights from that book. You can go in and read all my notes and highlights on a book in 5, 10 minutes for most of them. And you have a good idea of the key ideas for every single book. So if you want a tool that you can use for your entire career, I highly, highly, highly recommend you go to foundersnotes .com. That is foundersnotes .com, founders with an S just like the podcast, foundersnotes .com.

53:04and you can get access to what I truly believe is the world's most valuable notebook for founders. It is by far the best way to support the podcast. Thank you very much for listening. Thank you very much for the support and I will talk to you again soon.