#746 - Morgan Housel - 12 Unexpected Laws Of Human Psychology

23:46At the state level, I'm a Republican. At the local level, I'm a Democrat. And at the family level, I'm a socialist. It's such a brilliant. I think it's a great thing to say, like as the size of something changes, what you expect out of it and your relationship with it also changes. But also your nature must be able to adapt to the demands of the situation that you're in and the vertical that you're in. Okay, so a business is not just a thing, this amorphous thing, it's not just Tesla doesn't just make cars and invent shit. It also has to make money and like pay payroll and be in compliance and it deals with lawsuits and it does all of these other things.

24:25It's like, do you really want Elon steaming into the lawsuit department for the person that's just been run over by an autonomous car? Probably not. That's where you have different horses for different courses. Yes. Right. And this is, I suppose, the difficulty comes when you as an individual agent try to amalgamate all of this into one brain. You know, in an organization, you can specialize. You can chunk things down. You find the person that has the nature that you want. We want to be conservative in the accounting department. We want to be creative in the advertising department. Yes, totally.

24:58Fantastic. Like, don't get those the other way around. Or else you end up with boring ads and insane accounts. And a huge problem with entrepreneurship is the assumption that because you can understand a technical product that you know how to run the business of a technical product. It's pretty rare. So someone like Mark Zuckerberg is very rare. He had the technical chops to build Facebook, build it himself, and to run it today as a trillion dollar company. That's very rare. It's way more common to be an entrepreneur who knows how to build a product. And then as soon as it scales, you're like, I don't know what I'm doing here.

25:29I need to call in the big boys who know what they're doing. I mean, a good example of that was Uber, where Travis, like no one could have built Uber other than Travis Kalanick. His ability to take a risk, his willingness to just give the middle finger to the regulators was like no one else was willing to do that. And once Uber became a big company, probably nobody was worse at running a company than Travis Kalan, because that same attitude of like fuck the regulators, we're just gonna do our thing. Once Uber was a hundred billion dollar company, that's not the guy you were running. You can't tell you the game.

25:59So it's, so but that's more common to have like a different, like the person who was right to run it at this size is not the person who's right to run it at this size. I told you the story of Ben Francis last night. And I mentioned that Ben was founder, founder, CEO, step back as CEO, guy that used to run Puma or Reebok came in, then Ben came in as like CBO or something like something to do with brand or like some sort of consultant, step back, then came back in as CEO. And he said this thing on the podcast that really struck with me. and he said, when your ambitions for the brand are bigger than your ambitions for yourself, that's when you'll become successful.

26:35I like that. He was prepared to be like, hey, am I the best person for the job right now? Yes. Okay, let's not to 10 mil. Let's do that. Do I have the first idea about how to run a 20 million pound business? Not really income support from Reebok. We're now at a $3 billion business. Well, maybe it's actually that there's different challenges and it's useful for me to be back. And he was just completely prepared to put his own ego to one side and say, what am I supposed to do? So that shows a person who is right at multiple different stages, but not right at all stages. Yeah. I think there's an interesting alternative history in which Steve Jobs does not die in 2011 and keeps running Apple.

27:19What would Apple be today? Because the truth is after he left and Tim Cook came in, Apple did great, Apple did phenomenal. In terms of like unit soul, like net income, Apple has absolutely thrived under Tim Cook. And I think you'd actually make the argument that around the time that Steve Jobs happened to die, what Apple, the company actually needed was a Tim Cook. Because and what they needed before that was Steve Jobs. Like in the early 2000s, you needed a crazy meany act like Steve Jobs to come in and be like, I've got this crazy idea for new products and no one else is thinking of. That's what Apple needed.

27:52Once they came up with those products, what you needed was someone to come in and keep the trains moving on time, like Tim Cook. So there is a weird alternative history, and I'm totally making this up. It's anyone's guess. Steve Jobs doesn't die. He keeps running Apple. And into the ground. Yes. Yes. I actually don't think that's likely, but I think it's like a very real possibility that could have happened. You could, it depends what metric you want. Do you want to continue to have this sort of pioneering spirit, this person that's just like out there doing and crazy things and it's exciting and all the rest of it.

28:23Yeah, in the beginning. Yes, my hot take, I've shared with some people, and I say this tongue in cheek, I'm not actually making this bet. Within five years Elon Musk will either be a trillionaire or bankrupt, and there's like 50, 50 odds of either. That's my hot take. I don't actually take it that seriously, but he's a kind of person who is like completely incapable of slowing down. It's always just bigger bet, bigger bet, bigger bet, bigger bet. And eventually that might, that usually catches up with people. But it's so fascinating to watch while he's doing it. Yeah, yeah, really is. One of my friends that lives here in Austin was working for a company that recruited the highest level C -suite executives.

29:04So they didn't place Susano, was Jickey, or Tim Cook, but they went through the process with both of them. And what he was able to do, he had access to their internal company, intranet, and every archive and he was able to go in and see the biggest executives in the world and see what their recruiters were saying after they'd had this sit down. I was like, this is fucking fascinating. Tell me, what did you read? He said, well, there's a difference between the A players and the triple A players. He said the A players are in there and there's the usual stuff and there's often something that pops up that's maybe a little bit of a concern, but they're good.

29:42They're well rounded. He said, but the triple A players are are 10 times better and they stand out as that as well. I think in Tim Cook's, the first two words were absolute stud. The first two words of Tim Cook, Susanna was rock star, was like one of the first few sentences and you think, it's very interesting, like these people, they're more than just, like, again, I don't know much about either of the guys, but from the conversation I had, they're more than just business people. There's something like ineffable in them where people who are exposed to the best talent, the best paid, most highly placed talent on the planet for the biggest companies in the world, look at them and go, stood, rock star.

30:33Yeah, and I think like back to Apple, like once Steve Jobs invented the amazing products, The next step is, okay, can we literally make a billion iPhones and keep the quality as high as they need to be? And that's what you needed a Tim Cook for. And I don't know if Steve Jobs would have had that skill to keep that going. But you could also imagine a world which he doesn't die. And as everyone knows, the last ten iterations of iPhones have been exactly the same. And that would not have been the case under Steve Jobs. They would have, it would have kept innovating and created new things. Casualties of perfection.

31:03There is a huge advantage to being a little imperfect. I think it's always the case that people want to squeeze as much opportunity as they can out of everything in life, whether it's in your career or whatever it might be. And that invariably is going to eventually catch up to you. Like room for error and what you're doing is a massively important thing to have. You saw this in 2021 where in manufacturing, all over the world, the biggest trend over the last 20 years was efficient, efficient, efficient, just in time manufacturing. and then 2021 rolls around and there's a little bit of like what is was honestly like a hiccup in the global In England was a pleasure to get stuck in the fucking thingy canal everything collapse.

31:44Yeah everything breaks There was no leeway whatsoever for anything to go wrong in the system And you can imagine a world in which those companies that were doing just in time Manufacturing and then like collapsed in 2021 if they had actually held a little bit more inventory in their warehouses There are ROI would have been a little bit lower in 2019, but they would have actually been able to supply products in 2021. And so it's always a case that like having a little bit of room for error, having a little bit of leeway is great. And it's true in your personal life too. Most people these days have what I call thought jobs.

32:17Their job is to work with their head. It's not to dig a ditch or like pull ever. Their job is to make a decision with something. And in that world, what you really need more than anything else is time to think, time to ponder, time to like figure out a problem in your head. And what does that look like? It looks like sitting on the couch. It looks like going for a walk. It doesn't look like work, but most bosses will not allow that. Most bosses, even if you have a thought job, is like, I need you at your desk, moving your fingers on the keyboard eight hours a day. And so they don't have any time in their day for something that looks inefficient, but it's actually going to be like the thing that's actually critical to their job.

32:52Yeah, Rory Sutherland has this idea about no one gets fired for hiring and KPMG, which is the safe bet following the blueprint, doing the thing that signals busyness to a lot of people. Look at my average response time on Slack. That's really good and it's like, yeah, but did we hire you as a Slack replyer? Is that your job? To be the Slack response guy? Or is your job to be? So George, one of my good friends, is first job at social chain. They literally created a role for him. They called him innovation lead. I was like, that's like vague. What does that mean? Don't know. Not sure what it is.

33:32Just make a role for him. Put him in there. He'll do something cool. He used to go. This was Stephen Bartlett or company and they had all of these different big fan pages. So they were able to design social media marketing campaigns, but they were also able to deploy them because they had the pipeline. They had a two million person Harry Potter fan group or whatever it is. And George found that it was one of these open plan offices with fucking Astro turf everywhere and there's a slide and a ball pit, you know, going to classics sort of mid -2000s, or you type things. And George hated working in it, didn't like the open plan office, way too distracting, he needs a little bit more order.

34:09So he found that there was a room upstairs, all of these different places filming content. There was a room upstairs where they were trying to build the world's largest Harry Potter jigsaw puzzle, but no one could be bothered doing it. and it was like there was no time limit on the product, the project to be deleted and to be filmed. So he would go upstairs and sit on the floor in this empty room that was 40 feet by 40 feet with no one in it, no desk, no nothing, just a laptop on the floor and bits of Harry Potter jigsaw around him that he wasn't allowed to move because that would like wreck the continuity but he would go upstairs and sit surrounded by fucking Harry Potter jigsaw puzzle pieces.

34:45But that was his thing. His thing was I don't want to be the slack response guy. Yeah, that's not what I want to actually make a decision. Yeah, that's my thing. You're a big walker. I'm a big walker. Virtually every, I mean, whenever I write a book or an article, that was written during a walk. Like I don't think very well from sitting on my desk being like, okay, time to be creative. Time to work. It doesn't, it doesn't happen. You get good ideas in the shower. You get good ideas going for a walk, going for a run, get the gym. That's when things happen. So people, I think people intuitively understand that you need unstructured time in your day where you should just have like a four hour block in your calendar that says thinking time.

35:21But you can't do that. And it's because everyone wants to like squeeze efficiency and opportunity out of their calendar. Yeah. I had, I released each year the same annual template that I've done to do my end of your review. And I have to admit that this year, even though I sent out the one that I've done for five years, I actually changed it. So I did a completely different process. I love the new one that I did. So that will be available next year for the people that are listening. And I asked myself a really interesting question. I thought it was fucking interesting, which was, what do I think is productive but isn't?

35:55What do I do that I think is productive but isn't? Other stuff like, what would I do if I wanted to make 85 year old me miserable? What are the things I would continue doing? What would I do if I wanted to make 85 year old me, what would 85 year old me wish that I did more of? What do I think is productive that isn't calls, slack and WhatsApp, staying in on weekends? sitting at my desk when I'm not working. What is productive that I don't realize? Dinners with new people, attending events, travel, reading. That's so good. Like what you think is productive, but isn't, is like things that look like work.

36:31And what is productive are things that don't look like work. Like most people would be like, oh, going out for dinner, that's just pleasure. That's just, like, no. Last night. Last night, two chapters probably from you from my new book and a couple of quotes from me for yours. So Chris, you and I had dinner last night for two or three hours and I think both of us got tons of idea for watching way more than I've done by sitting down and I just trying to write. If I had skipped dinner and just sat in my hotel trying to work, I wouldn't have come up with absolutely nothing. But it's so hard for people particularly if they are employed by a company to do that because if you tell your boss, hey, I need a budget to go out with to go out to dinner with my smart friends three times a week and I need to expense that.

37:06And that's gonna pay off. Go fuck yourself. You need to sit at your desk and type and every boss thinks that. That's what's so hard. And I think that's also why it's very difficult to innovate within a company. Like what looks like productive work is not what's actually productive work. I wonder whether this is good -harts lore again when a measure becomes an outcome, it's ceases to be a good measure. If an organization that gets to a particular size starts to be broken down, anything that can ever be seen on a dashboard is dangerous because it removes all of the things that can't be seen on a dashboard, which for the most part are the things that are the highest outliers in terms of your return in any case.

37:43Yeah. I was telling you this idea of hidden observable metrics last night and a lot of the creativity and the biggest outlier returns that you're going to get are going to come from hidden metrics. They're going to be driven by hidden metrics, not observable metrics. Like yeah, sure. Your editor for your book probably needs to be observable metrics guy. Like how many hours did you make? How many times did you look at this one sentence? How much red ink did you use on the Sinsley? Yeah, yeah, yeah, yeah. Jeff Bezos talked about this recently on a podcast where he's like, a lot of metrics within businesses, maybe they made sense at one point, but then people just keep using them.

38:21And you're using the same metric and people don't ask, like, does this metric actually lead to success? Or is this just what we've been trained and what we've been told to do? And that's a lot of it too. So like, there might be some point in your career in which calls were productive. There might be like very early in your career, like your job is to cold call. like the number of calls you did, but if you keep that for the rest of your career, like you need to change the metrics and what you're following. That's why I think that it is an error for people to not see the advantage of saying yes to someone that comes through town.

38:54Someone's coming through town, they're in your town. Maybe they're only in your town for like two hours, they're gonna lay over or something, but they're allowed to leave the airport and maybe you can grab a coffee with them. Fucking go for the coffee with them. Like say yes to meeting new people. Dude, I stayed with Douglas Murray, You know Douglas is British political commentator, author, journalist. I stayed with him in New York, January two years ago when I first moved out to America. And I spent three days in Manhattan with him in his apartment. That three day period didn't do much for my liver because he likes to have cocktails.

39:32But I shit you not, it came up with like six life -changing insights that I still think about at least weekly. I feel like I can get that from a single book or a single podcast too. And it's a constant reminder to me that what does good work look like for me? Sitting on the couch in my sweatpants with a book. That's the most productive thing that I can possibly do. But even after doing this for 18 years, I still feel like I'm not working when I do that. It's really hard to actually switch your mindset and to being the saying, that's what I need to do. I was telling you before that Rob Henderson's one of my favorite people.

40:06He was sitting at that seat not long ago as well. And he, his most popular sub -starch article of last year, given he's done 5 ,000 word, 10 ,000 word breakdowns of advanced sociological textbooks and all this sort of stuff was 1 ,000 word blog posts called How I Read. And he's got this one line in it, which is reading is like going to the gym, you must dedicate time to it. And I think for me, still now, I think readings like somewhere between a relaxation activity, a leisure activity, and something I do when I have spare time. I don't think that about the gym. I think the gym is the thing that I make myself go and do.

40:45So a lot of people get frustrated at the fact that they don't read enough. First off, they should download my reading list which you can get at chriswolex .com slash books and psychology and money's in it. second thing that they should do is actually commit some fucking time to it. Like you have to because you're reading time, and this is me shouting at me, your reading time is always going to be the important thing that gets pushed to the side by the urgent thing. There's always going to be more slack messages. There's always going to be another fucking invoice for a plighted. There's always going to be emails or a call to take or something that you need to do or a fucking dinner that you need to get ready for.

41:16And you say, no, I can't. I've got a gym session at that time. Can we do it an hour later? No, I can't. I'm busy at that time, like, might be a bit odd to say, like, pushed in a back some reading, but like, that's the philosophy that you need to have going into it. I'll tell you how this impacts me. My wife, bless her, she's wonderful. If I'm sitting at my desk typing, she's like, oh, Morgan's working, I can't bother him. I work from home, I have a glass door in my office so she can see it. If I'm on the couch reading, she's like, oh, he's not working. Can you come help me fold the laundry? That's kind of thing.

41:46Her bar for interrupting me, if I'm reading, is so much lower than if I'm typing. And I don't blame her for that. Like, what looks like you're working is not what is actually productive. It's supposed to be hard. Everything worth pursuing comes with a little pain. The trick is not minding that it hurts. There's this great scene in Lawrence of Arabia where a guy pulls out a match, lights it up, and puts it out with his fingers. It doesn't even once. This other guy watching him is like, oh, let me try that. Pulls out the match, lights it up, puts his fingers on and goes, ah, it hurts. What's the trick?

42:22And Lawrence goes, the trick is not minding that it hurts. And it's like that is such a brilliant scene and that applies to almost everything. There is a cost to pay for almost anything and a trick in almost any endeavor in life is figuring out what the cost is and just being willing to pay it. It's true in investing of putting up with volatility, it's true in your career where there's a Jeff Bezos quote where he says like, look, if you can get to the point in your career where you enjoy half of it, where half of it is fun. That's as good as it gets. Like there's things in any job that just suck.

42:54It's like dumb, boring, admin work. And if you can get to where half of it is fun, that's great. You and I were talking about this last night in both of our careers. A lot of it is fun and very fulfilling. A lot of it is kind of just maniacal, just work. It's just capital W work. So I think in almost anything, figuring out the cost of it is the most vital part of being successful over time. And you see this a lot in people's careers. You and I are talking about this last night. Take someone who was Uber successful, Musk, Gates, Zuckerberg, those kind of people. If you actually drill into what it took for them to achieve that success, Michael Jordan, Copie, LeBron, all those kind of people, the cost that they paid to get that success in their personal life, often for their health, for their mental well -being is off the charts.

43:37But it's so common for us to look at them and be like, I want that life. I could, that looks like an amazing life. But when you actually factor in the cost of what it took you like, nah, I don't know, I don't know. It's the thing that I've been the most obsessed by, I would say, from a, other people's psychology perspective over the last two years, Tiger Woods, perfect example of this. I had an entire bit in my live show about this, James Joyce, you know, masterful author, but post -humusly, a long series of fart fetish love letters that he wrote to his wife were released on the internet. Like Salvador Dali, you know much about Dali?

44:15Complete maniac. His parents gave birth to a child ten months before him that they called Salvador and then almost immediately got pregnant again. That one died. They were adamant that Dali was the reincarnation of his dead older brother. That's how you entered the world. When he was a child's... No pressure. ...due to throw himself down the stairs. He found out that he was a masochist very early in life who'd throw himself down the stairs for fun. When he was giving suffocating inside of a deep sea diving suit that he had to be wrenched out of mid talk while he was giving a lecture he Married a woman who was married at the time.

44:54They were both married They both separated from their current partners got together and then Dali immediately started to treat her as halfway between a god and royalty so he bought her a castle and then would send formal letters of request asking to visit her in the castle that he bought her and who'd refer to his his muse and all the rest of it, but All of those things contributed to... That's how you end up painting like Milton Clarkson and stuff like that now. As brilliant as he was, DaVinci didn't do Dali and Michelangelo didn't do Dali. The only way we get Dali is by Dali being the throw myself down the stairs, lock myself inside of the deep sea diving suit, buying my future wife a castle person.

45:35That's the only way. There's a quote from Alex that I've spoke to him about, the start of last year, it's one of my favorite ones. Whenever I get to a low point where I think, why do I even bother? I just try to remind myself, this is where most people stop and this is why they don't win. A reminder for the gladiators in the arena who feel beat up and scarred with no hope in sight, building a business is hard, hard feels shitty. This is what hard feels like and this is why most people can't do it. But you can. This is what hard feels like was in my memo that I sent to the team this year. It's something he told me this great story about when pledges he was in a fraternity at college and he was like higher But whatever the pledges were whining about what they were being made to do and he said right I know everyone's having a pity party here So he calls them around and he says like who he thought that this was going to be easy no one puts the hands up He's like who he thought that this was going to be hard like everyone puts the hands up and he goes This is what hard feels like no I think in most endeavors in life, people perfectly understand the relationship between price and quality.

46:41You want a nicer car or a cost more, a bigger house and cost more. But that, like, understanding goes out the window when you're talking about career success or career fulfillment or personal health, things like that. Like, the relationship just kind of breaks down in their own mind. But it doesn't go away. Like, the higher the success, the higher the cost. I love reading biographies of entrepreneurs, of generals, whoever I might be, with very few exceptions. Do I finish the biography and think to myself, I want that person's life. What I think is I'm glad they existed. I'm so glad the world had that person that we can all benefit from.

47:14But though the crazy success comes with the cost that very few people, including most of the time myself, are not willing to pay. How can people not mind that it hurts more? I think when you talk about someone like Dolly, it's ingrained in them. I think whenever you have somebody like Musk, Zuckerberg, Jordan, Tiger Woods. There was not a decision that they made. They had to, they had to pursue. It's a compulsion. Several years ago, I heard Patrick O'Shaughnessy say that the single word that he would describe for most successful people was not driven, it's not motivated, it's tortured. That they wake up every morning just like, I'm tortured at the success that I have not achieved yet.

47:57And I have to go do this. I have to go work 24 hours. So some people I think are born with it and some people are not, which is why the success is so stratified. Once in a while, I think you have someone who is like a middling success and became a founder at age 50 and knocked it out of the park, but that's extremely rare. I think it's usually people for whom this is just in their blood. Yeah, yeah, again from Alex last year he said, uh, champions are broken. People look at champions and try to find something that they have that everyone else doesn't have, but it's the wrong way around. And champions don't have something that everybody else does have, which is an awkward.

48:32Which is like a sense of being fulfilled. Correct. And saying like that's enough. What was the Donner party? The Donner party was amazing. As you as a bread, I've never heard of the Donner party. Is that right? No. So back in the 1800s, there was a pretty wealthy family, the Donner clan. They were in Chicago, who were moving west as a lot of people were. And the Donner, they were very wealthy, but they were like driven to the wealth and the opportunity in the prosperity of California, which is the new land during this period. So they start making it out west. And this is, of course, before railroads are making it out on wagon train.

49:07And they start off, there's a very big party. It's more than 150 of them that start off. And at one point, they meet, I think they're in the middle of Nevada, and they meet this quack who promises them a shortcut. Who says, hey, like, the route between here and to pass through the Sierra Nevada mountains is pretty tough, but I know a shortcut. You can make your way around here. The shortcut turned it out, ended up being completely bogus. And it was nonsense. They eventually had to basically backtrack back to where they originally started from. That delay made it so now they were going to cross the sear and Nevada mountains in the middle of the winter, which is not when you want to be doing it.

49:42You want to cross it in the summer or the fall before the snow comes. They eventually hit the sear and Nevada mountains during what was the biggest winner in decades, the biggest snow dump. They got completely stuck and they had to resort to eating each other. cannibalism. And it's a her it's absolutely horrific story. I mean, one of the details that sticks out from there that just shows like the plate that they were in when they were eating each other and there were still dozens of them alive at this point. They would label the meat that was harvested to make sure that you did not have to eat your sister or your mother that you were eating somebody else's.

50:13I mean, the plate that they went through was extraordinary. And two things I've always like stuck out from me from the Donner party. Most people just focus on that element of the story. One of the things that Stucks out is sticks out is that they were they were already rich they were not going to California to because they're like we're broke And we want new they were they were just like seeking more they were already crushing it The other was they were in this situation specifically because they were all that tempted by a shortcut And look I'm all for efficiency. I'm all for doing things the right way But so many shortcuts are just cutting corners that's eventually going to backfire on you And they're like such a profound example of that The safest way to get what you want is to try to deserve what you want.

50:51That was from Manga. What does that mean? He mentioned this in several different contexts. The biggest that he mentioned in In was love. If you want to be loved, the way that you get that is to deserve to be loved. There's another quote from my friend, Brent B. Shore, when he's like, he says something along the lines of, marriage works when both you and your spouse devote your life to serving the other person and expect nothing in return. So you wake up and you're like, I'm here to serve my wife and I don't expect her to serve me back. If both of you do that at the same time, you're both serving each other without expecting anything else in return, it's magic.

51:27Think about what the opposite of that is, Neil Strauss said this the other week.

51:33Unspoken expectations are premeditated resettments. Unspoken expectations. Premeditated. Exactly. I think that's like Brent's exact point, and said more succinctly. That's really what it is. So I think, you know, and I think it's the truth for a lot of things. If you want to be wealthy, like you need to deserve it. If you want to be a successful entrepreneur, you need to deserve it. No shortcuts. It's all just like find the price and pay it. Keep running. Most competitive advantages eventually die. I think there are so many examples of this. One of the most interesting is Sears, which if you go back to the 70s and 80s, no other company in America had the moat that Sears did.

52:12It was completely unstoppable. What's he is for the Brits? Oh, are you kidding me? Come on. Sears was kind of the, it was the most successful retailer, mostly cloth and things like that department store, but they also sold washing machines, I kind of think. They're actually still around. It's like a Walmart type thing. Yes, but less big than, you know, less, less all -encompassing than Walmart, but they were everywhere. They were so dominant back in the day. Nobody could touch them. And they got so big that they started by, they bought Discover Card and like Dean Winter Stockers. they started like moving into all these other areas.

52:42No, it was truly the Walmart of its day, or even like the Apple of its day. I was just like, nobody compete with this. And then they lost everything and went bankrupt and then lost it. And if you dig back into what happened, I'm like, they became successful because they were so scrappy and so terrified of competitors. That's why they became successful. As soon as they got big, it all went to their head. And they were like, we're serious, nobody compete with us. They stopped innovating. they ignored this upcomer that was chasing them called Walmart completely ignored it. And by the time that they realized what had happened it was way too late they were gone.

53:15I think that's actually a very common story that it happens in individuals lives as well where the reason that you are working so hard is so that eventually one day you will achieve a level of success in which you don't have to work so hard anymore. That's what's motivating you is the dream that you can one day relax. So when you become successful you justifiably think I I can stop or can so hard. I don't need to grind as hard anymore. And then the moment you think that and it's justified, you think it's justified, you lose what actually made you successful to begin with. And then that's the downfall.

53:49And you see, like, there's this amazing interview many years ago with Mike Moritz, who is the head of Sequoia, the most successful venture capital firm that's ever existed. And Charlie Rose asked and they said, why has Sequoia been so successful for 40 years? Not over one market cycle. You've dominated for 40 years. And Mike Merritt said, we've always been scared of going out of business. And like, look, if there's anyone in Silicon Valley who has the right to say, it's because we're smart, it's because we're so good at what we do. He has the right to say that, but he didn't say that. He said we're terrified of going out of business.

54:24And that's like that, like you never let your guard down. What made you successful, you never let go of that. Isn't your business book only the paranoid surveillance? That's it, exactly. And, you know, there's, I think there's lots of different versions of this. I read recently that the unofficial motto of Nvidia, their unofficial corporate motto, is, we are always 30 days from going out of business. That's what they tell themselves in their meetings. We're always still... It's so decently hanging over there. Yes, but I think that's why there's at least one of the reasons why they're so successful.

54:53What mean you were talking about this last night and I think it's a brilliant frame and I want to spend more time building it out. but serotonin Morgan versus dopamine Morgan. And I think that the only the paranoid survive business model is dopamine company, not serotonin company. Yeah. Right? That is very vigilant, very anxious, very on edge, making sure that everything is heavily scrutinizing all of the different options and keeping abreast of competitors and having these sort of underlying resentments, but also knowing that I can't really bring them up because that's also not going to be good, but I'm gonna fucking hate them in any case.

55:30Yeah. It's that energy, it's that lean -in, it's that tentative, sort of very watchful energy. And I think that, especially if you are somebody that's close, not only close to the operating of a business, but also emotionally invested in the operating of a business, or if you're professional life and your personal life have blended in a way, it can be very difficult to not have what is effective professionally, curse you personally. Yeah. Right? Right, it is very, very good for you to be on edge in that manner. Very good. It is useful and effective as a business to be on edge in that manner. Yeah.

56:08It is catastrophic and destructive for you to be on edge in that same way in your private life. And what's so hard is that most people when they make a mistake, don't know it. They're blind to it. Whereas cutting back because you become successful is a cognizant decision. You know that you're like, because I become successful, I can now sleep in. I can now work fewer hours. You know you're doing it. You think it's justified. But what you are blind to is like what that's actually going to do to your career. And someone tweeted this just last week. They said, when does a startup lose its magic? And the precise moment when it happens for every one of these companies is when the CEO stops building the product.

56:45When the CTO stops coding, when the chief marketing officer is not writing the copy anymore. It's like once you become so big that the senior executives are detached from actually doing the work. When the musician stops writing their own songs, I know authors who when they become big, they have so much pressure and incentive to write more books, that they basically hire ghost writers or at least people to help. And that's when you lose the magic. You're not doing it yourself anymore. The same thing is so true in the world of podcasting and specifically YouTube,

57:23YouTube, guest booking, guest research, scheduling, titles, thumbnails, and branding. What actually matters? The longest points of leverage. Like if I spend six hours every single week on calls, just doing copywriting for seven videos, that's it. Yeah. So it's an hour of video. We spend an hour of video to come up with the right title and the right thumbnail because it's one of the longest levers that we have. Every single video that's ever gone out, I've touched. And I'm like, getting to the stage now, I was telling you this last night, I'm like, with operationalized things, I'm tired, like I don't get to just do the things that I used to do, but I also realize, and this is Layla Homos, the Alex's wife, I asked her, what are the things that you should outsource and what are the things that you shouldn't, one of the first things that she said, you shouldn't outsource the thing that makes the money or the impact.

58:10Yeah. Yes, yes, that's good. Outsource, everything else. Fucking get it made, get it cleaner, get it gardener, get it fucking driver, get it whatever you need. But don't outsource the thing that you're there to do. Yeah, I think you see this a lot in investing where you have someone who's a very talented investor Very good at picking stocks, finding the right business, and then they launch a fund What is launching a fund in tail half your time is gonna be fundraising half your time is gonna be accounting HR you got to hire people and then you're completely detached from what actually made you good to begin with and that is so common in any business I think it's I think it's I think if you like identifying that point If you can't effectively outsource those kind of things, I think if you are the entrepreneur, the CEO, whoever it is, and you get to a point where you're like, Hey, I've become really successful and I became this successful because I wanted to step back.

59:03You need to be honest with yourself and remove yourself from the situation. The people who fall into problems are like, I grinded for 20 years. Now I'm successful, but I'm not going to leave this business that I built. I'm going to stay here and just become fat, happy, and lazy. Yeah. That's when it eventually discrumbles. Yeah. The wonders of the future, it always feels like we're falling behind and it's always easy to discount the potential of new technology. It's so like very rare is there a single new invention that is amazing in and of itself. It's usually that you have a small invention and then 10 years later another small invention, 20 years later another small invention and those things come together and that's what create something amazing.

59:44Jeff Bezos talked about this recently where he was like, when he launched Amazon in the 1990s, he did not need to build a payment system. It already existed. It was called Visa, MasterCard. He didn't need to create a shipping system. It already existed. It was UPS. But like, he took all those things and combined them and built on top of them. And it's true for a lot of innovations of like, I mean, the most stunning example is Thomas Edison did not invent the light bulb. It was first invented by a guy named... a, uh, name, uh, Humphrey Davies, who was a Brit, who created something that looked exactly like the light bulb.

1:00:19I think 20 years before Thomas Edison, the difference was that light bulb that he built was impossibly bright. You would go blind by looking at it and it would only stay lit. You have a phone. What can I say? And it would only stay lit for like five seconds. What Edison did is he moderated the intensity and he lengthened the endurance of the light bulb. That was incredible, but let's not pretend that he built that flaming bulb from scratch. He didn't. He took what other people had done and built on top of it. And it's true for almost any invention of like obviously, obviously, Henry and Ford did not invent the engine.

1:00:53He didn't invent the wheel. He just like combined all of these things. So whenever a new invention comes out, I think it's very easy to be like, what is this useful for? And a lot of times the answer is like, we don't know, but someone like this is going to be something that somebody combines with other things in the future that's going to become something incredible. You've got a typical path of how people respond to what eventually becomes world -changing new technology. First, I've never heard of it. Then I've heard of it, but I don't understand it. I understand it, but I don't see how it's useful.

1:01:24I see how it could be fun for rich people, but not me. I use it, but it's just a toy. It's becoming more useful to me. I use it all the time. I could not imagine life without it. Seriously, people lived without it. It's too powerful and needs to be regulated. As Shufra almost every big invention, the two that are most interesting to me was the invention of the car and the airplane, which when both of those came out in the early 1900s, the first reaction to those was like, I don't understand why anyone would want this. The first car was so inferior to the horse and the first plane was so inferior to the train.

1:01:59So everyone looked at it and they're like, And what the hell is the use? And then it was like, oh, I see, it's a rich person's toy. If you're a, if you're a zillionaire, you're gonna have a car that you can put around town with I kind of get it. And then it becomes better and better. Both the car and the plane, the first uses that people saw for it was like, oh, we could strap a machine gun to this and use it in the army. Virtually nobody saw, even the people who worked in those industries, what it would become, which was like good for transporting people. And like nobody saw with the car, they're like, oh, this is gonna open up a new form of living called the suburbs and people can drive to the city now.

1:02:31Nobody saw those things coming. It was a very long path. It usually takes 10 to 20 years, at least, before people are like, oh, now I get it. You saw this, too. There's so many classic examples of, in the 1990s, of articles written in Time Magazine about like, why would anyone want to use the internet? How could anyone possibly like lug around the thing called a laptop? Nobody's ever going to do that. And it's easy to poke fun at those and you should poke fun at them. But it's actually common for virtually every new technology that you cannot fathom what it's going to eventually become. How should we interpret this consistent trend?

1:03:09Should we be less quick to cynicism and skepticism around things? It's also very common historically that people say we haven't had a big invention in 30 years. We used to innovate, but over the last 30 years, what can you think of that we've actually created? That's a very common view. And usually what's happening is that it's not that we We have an invented in 30 years. It's that it takes 30 years for us to recognize any invention. So we look back today and we're like, yes, the internet was big, but the internet came about 30 years ago. But if you go back to the 1990s, it was like, no, we really haven't invented much in a long time.

1:03:41Like it's always that lag and how long it takes you to understand how big something is going to become. And you can imagine that happening in 30 years from now. That in 30 years from now, we're like, oh, we haven't invented anything in a long time. But in 2024 we came up with the whatever it would be. That is such an obvious new technology. Because when we were inventing the car in the airplane or the transistor, the radio or the internet, very few people knew at the time what it was going to become. It takes decades for you to understand what it's actually going to be. Harder than it looks and not as fun as it seems.

1:04:14The grass is always greener on the side that's fertilized with bullshit. Which is a wonderful quote. I can never find who have originally said it. I can't take credit for it, but it's such a great quote. I think there's a truth in life that everything is sales. Everything is sales. And it's done in an innocent way. But a big part of this is that people tend to exaggerate and advertise what they're good at and hide the hard parts, hide the flaws. And it creates this view among virtually everybody that your success was much easier than it was. This business is better run than I think it is. I was talking to a friend a couple of years ago who was like, oh, this rival company is so much better run than the company I work for.

1:04:58There's so much more efficient, so much more organized. And I'm like, how do you know that? And basically what it is, is like from the outsider's perspective, everything looks like it's easier and better run than it actually is. But if you have the insider perspective of how the sausage is made, you realize like how inefficient virtually everything is. And so that's, I think that's a big part of life is just like realizing that success is harder than it looks. We talked about this earlier with Tiger Woods, Colby Bryant, Michael Jordan, all these people. Like if you actually dig into what their life is, it's infinitely harder than it looks.

1:05:31Did you see Elan on legs, where he said, my mind is a storm, those people would want to think that they want to be me, but they don't know, they don't understand. Because what people look at Elan and they're like, oh, we're just man in the world. He's got a golf stream. He's got big homes, I don't even think he actually does. but he has, he's worth a quarter of a trillion dollars. You can do anything you want. That seems like an amazing life. Like, no, I think if you actually dug into it, I think Elon is probably the bottom making this up 20 % of mental health in society. Tortured. I had this idea called the cookie test that I did on stage during my live show and it's kind of about this, but from the way that we perceive other people.

1:06:07So imagine that there's a cookie here and I decide that I'm going to make the decision about whether or not to eat it. And when I do that, this unholy war begins inside of my mind between, you know, there's platoons and one of them's got a dragon and there's a trebuchet and there's the, my old PT teacher, Mr. Henderson from your nine saying, you're a cookie, you're always been a cookie to, and you're always going to be a cookie to, and then after a little while, the better version of me succeeds and I turn away. That's what I saw internally. What you saw was some bloke, stare at a cookie for a while, and then turn away, hungry and sad.

1:06:48From the outside, everybody else looked like slick, rational agents and from the inside, we looked like wavering idiots because the asymmetry in what we observe of our own uncertainty and what we perceive of someone else's uncertainty is so asymmetric. I also had this idea about how people going through breakups or people that feel like they've been hard done by, or maybe they're whisting after a friend or a partner that they used to have, and we're able to romanticize, especially people that have scorned us or that have left us. There's something sort of particularly alluring in their aloofness, right?

1:07:24Yeah. But I think it's something that we can all take. You can use this asymmetry to your advantage as well. Think about how much more deep and dexterous and nuanced and subtle and finessed your thoughts are. Then even the person you know the best on the planet, your twin brothers, thoughts are that you know of. It's a one -ten -thousandth, one -one -millionth of what you have observed of yourself. So, if you are someone that's struggling with the wistfulness and I'm never going to be able to find anybody like them, there is also a very easy argument of then never going to be able to find anybody like me.

1:08:07Yeah. Because you only see this very rough, hewn version of them, where is the depth that you get of yourself is so much greater. There's also almost the opposite of this, which is Daniel Connman's observation that it's much easier to spot other people's flaws than your own. Even though you're very aware of what's going on in your head and your thought process and whatnot, it's very easy for me to look at your decisions and say like, oh, you're missing this and you're incomplete on this and you're making a bad decision here, but you can justify your own very, very easily. Because you know the internal dialogue in your head that's justifying your decisions.

1:08:40I'm doing this because of this reason and whatnot. Here's why I'm doing it. But for when I'm watching you, I only see the actions that you're taking. And I can just judge you much more objectively in that measure. But I think if you could see the thoughts going on inside of everyone else's head, you would see that the world is a thousand times crazier than you think it is. You'd see people are a thousand times more depressed than you think they are. They're a thousand times more creative than you think they are. They're a thousand times more evil than you think they are. Because what they're actually putting forth and speaking in the actions that they're taking is such a tiny percentage that was actually going on in their head.

1:09:16We had movies a long time before Neuralink or Elon Musk were even sort of objects in the pop culture, but like minority report, you know, the ability to be able to see what someone is thinking or be able to be prepared to do in future, to be able to predict that and then go after them. Was it minority report? No, it wasn't. What was the thing with Tom Cruise where they could see into the future and he had that big screen as people screaming into their iPods at the moment? I don't know, but it sounds good. It's great. Anyway, good movie. My Naruto report was the one with fucking Matt Damon, right?

1:09:51Morgan, why do you spend more time watching movies? I'm going to be in books. I'm reading books. Stop it. Stop it. Anyway, that's going to kill me. I can't remember it. Anyway, that movie, the ability or what we have at the moment, people are only culpable for the actions they take in the things that they say, not the thoughts that they have. There's no such thing as thought crime at the moment. And you can say, we're living a world that senses and all the rest of it, it's like, yeah, but if you keep your thoughts literally as fucking thoughts, no one knows. So, imagine if you got thought canceled.

1:10:21But that's my point, my point, everybody would be here. Yeah, that's where the toxic compassion thing that I was telling you about last night comes from, which I believe is, performative empathy is a front. It's a very shiny veneer that nasty people put over the front of their meanness to appear nice. Yeah, it's like a small gold bar that's been beaten so thin that it's in gold foil And it gives the illusion of something that's glittery But if you poke it a little bit, it's just a hole through the other side. Yeah, that's a great analogy. I like it Incentives the most powerful force in the world when the incentives are crazy the behavior is crazy People can be led to justify and defend nearly anything.

1:11:04I think people underestimate the extent to which the boundaries of their morality the boundaries of the actions that they're willing to take can be changed so easily if they're in incentives change. I saw this during the financial crisis of 2008 when people after the crisis, in a somewhat justifiable way would say those greedy Wall Street bankers who crashed the economy, I'm not saying that wasn't fully justified, but what almost every one of those critics didn't understand is that if they were a 25 year old mortgage broker at Goldman Sachs at Lehman Brothers, and your boss said, if you package these subprime bonds, we'll pay you $4 million this year.

1:11:42You would do the same thing. You'd have done the exact same. Nazi concentration camp guard, but in reverse. Yes, yes. And I think there's so many stunning examples of this, of when the social incentives, the tribal incentives, to do something that is objectively bad, but you can easily rationalize it by being like, well, this is the incentive for me to do the right thing. There is this documentary about El Chapo in Mexico, the drug lord. It was a pretty vicious, terrible guy. And they're going to this rural town in Mexico and they love El Chapo. All the people are just like, Chapo, Chapo, Chapo, he's so great.

1:12:19And they talk to him and they're like, well, yeah, like we live in absolute utter abject poverty. And Chapo would come in and build a schools, build us roads, give us food, pay for our children's wedding. We love the guy, absolutely love the guy. So when the incentives are there to overlook some element of someone's behavior, their personality. People just suck it up right away. Another stunning example of this. There's a book called What We Know. No, sorry, what we knew. And it interviews German civilians after World War II. And these are German civilians who experienced who are in Nazi Germany in the 1940s.

1:12:53And the book is just interviewing these people saying, what did you know? What did you see? Would you know about the Holocaust? What do you see about what was going on. And they're interviewing this German civilian woman. And she says, oh, you know, when Hitler came to power in the 1930s, everybody embraced him. And the interviewer is like, why? Like, how could you embrace this monster? And she says, well, you have to understand. In the 1920s, I'm paraphrasing her, the German economy fell apart. They had hyperinflation. Nobody had anything. Hitler came along and said, I have a better way. We're going to give you jobs.

1:13:22We're going to give you prosperity. And the woman says, Because in that situation, you do not say to that person, no, I don't want that. In that situation where you are in a desperate situation and someone come along and offer what looks like help, you take it. And that's, I think that was a very honest description of what happened in the situation that when the social incentives are to embrace something that is otherwise wicked and evil and terrible, like millions of people can embrace it if they're incentives for one aspect of their life are to embrace it. What about heaven's gate? So heavens gate was the cult.

1:13:56They eventually all killed themselves. They all committed suicide. But there's this amazing part of the heavens gate cult where at one point in their in their cultish behavior, they believe that there was a spaceship that was going to come save them. Come down, they could all board the spaceship. Everyone else on Earth was going to die, but they would be saved. They're waiting for the spaceship to come and they go to a store and buy a telescope so they can see the spaceship coming in. They go out, point up to the night sky, looking for the spaceship. Don't see anything. No spaceship. They bring the telescope back to the store where they bought it.

1:14:29And they said, this telescope is clearly broken. It doesn't work. And the store owner says, like, what? What happens to it? It looks like it works to me. And the heaven's gate guy says, it doesn't work because it doesn't show the spaceship. So it clearly doesn't work. The spaceship is obviously coming. But I can't see it. So the telescope is obviously broken. Like, when you firmly believe whatever kind of bullshit that you're going to believe. Any evidence that's going to come that to show you that you're wrong can easily just be purely dismissed. And that's like a humorous, I mean, it's kind of a sad, extreme example.

1:14:59But virtually everyone falls for this in some way. We're like, if you believe X, then evidence that X is not true can easily just be pushed away in a second. You see this a lot in the economy. We're like, if you are a pessimist and you're like, there's going to be a recession. We're in a recession. And then GDP data comes out and you're like, oh, it's actually pretty strong. By the way, that happened this morning. So many of the pessimists will be like, well, you got to dig into the numbers and see like, you can easily spend anything you want in order to justify the decision that you've already made.

1:15:29Pesimus gets to be right and optimist gets to be rich. I think that's by and large right. There's also a thing where a lot of economic pessimists pundits, they can be wrong forever and they're never penalized for being wrong because they're giving somebody a product that they really want. And a lot of what it is is I think at its core, I think there are a lot of people in the economy who are feel inadequate about their own position in the economy, and they literally fantasize about other people suffering economic. A transfer of wealth from the people who have to the people that they feel are. They literally fantasize about a stock market crash because if other people got poor, they would feel better about their own situation.

1:16:06And I think that is why economic pessimism in the punditry space is so like when it comes out, people are like, yes, that's what I want. like tell me the economy is going to hell, make some feel better about their own situation. Now you get it. Nothing is more persuasive than what you've experienced first hand. I read the saying, this is a pretty common that in military boot camps, this was during World War II, and I think it applies to any era. There would be so many soldiers who after boot camp would be filled with bravado, and they'd be like, I'm going to go get those Nazis. Like when I get out there, I'm going to come guns blazing, like watch out, here we come.

1:16:40And then the moment they are put on the front lines and a bullet wisors over their head, they're terrified out of their minds. There've been some studies that showed in their very controversial about whether this is actually true, that only a small fraction of the soldiers on the front line... Everfired they're gunned. Pulled their trigger. So many of them, and who's to say it would not be me or you either? I can't remember what it's called. There's a particular type of firing that it's like non -multi -firing or something like that. So they would do it, but they'd fire just in the air in the air because they couldn't end over the top of it I do not this is not a criticism in the slightest that even when you're facing a Nazi soldier Japanese soldier Whatever it would be to stick your gun at him and pull the trigger you just say I don't have an enemy I can't do that.

1:17:23I that's not I think there's a very good chance that I maybe you would fall in that situation too So this is one of the Interesting I guess incentives going back to one of the lessons we learned about the leiron of war Yes, it would be hard, especially if you hadn't gone through the training, but then you go through the training, which is basically trying to remove the type two thinking and just put you in type one. Like you see enemy bang, you see enemy bang, like it's not person, it's response, right? They're trying to drag it out of that deliberate thinking and into that responsive thinking.

1:17:54But kind of like the ever escalating ladder of nuclear weapons that you were talking about before, if my friend that I've been through bootcamp with just get shot and is either dead or injured, that's going to be pretty motivating for me to think, first off, I'm in that kind of a danger in it's either them or me. And secondly, fuck you, you just shot my friend. So you get this, almost, I would guess if you could track this, if you could study this appropriately, I bet that you will find the lethality and rate of firing of soldiers on the front lines will probably follow a U -shaped curve. There will not be some, then people will begin to die, threat will begin to increase, people will begin to fire more and more and more and more and more and more and then it will tail off on the other side.

1:18:41And at some point, this is a nuance that maybe doesn't even matter, but you're not firing to kill the enemy, you're firing to save yourself. It's just like you're in a situation where it's like it's either you or me. And I'm not in this is not about like the strategy of what we're doing. This is just a pure survival mechanism right now. But I think the broader point is like you do not know how you're going to respond to a situation until you've experienced first -hand. And the military is an extreme example, but this is true for like bear markets in the stock market. So common for people to say, if the stock market fell 50%, I would view that as an opportunity.

1:19:13I would back up the truck and buy more. And then it actually happens and they're like, oh, the sucks. I'm terrified. I don't want anything to do with this. It's like way easier to quote one buffer than it is to actually take those actions in the heat of the moment. A lot of this is because if I were to say, how would you feel if the stock market fell 50 %? By and large, you imagine a world in which everything is the same as it is today except stocks are 50 % cheaper. And in that world, you're like, oh, it's great. It's an opportunity. But the reason the market might fall 50 % is because - It's a pandemic.

1:19:43There's a pandemic, there's a terrorist attack, and in that situation, you're like, how would you feel if the market fell 50 % because it's the day after September 11th? and everyone on TV says there are more attacks coming that are gonna impact you. In that situation, you might be like, that's not such an opportunity anymore. That's always what happens. Time horizons. Saying, I'm in it for the long run, is a bit like standing at the base of Mount Everest, pointing to the top and saying, that's where I'm heading. Well, that's nice. Now comes the test. You see this so often of like, particularly investing, but this happens in a lot of areas in life, where people are like, I'm a long term, I'm in it for the long term.

1:20:21I'm a long term investor. You're like, great. That's a good mindset. But the long term is just a collection of short terms. And you need to experience all of those short terms. So a long term investor does not get to ignore the short term volatility, the short term recessions, the short term bear markets. You have to experience and endure all of those. So I think in investing very often, saying that you are long term is a cop out, to saying, I don't need to manage my behavior and my expectations over the next 12, 24, 36 months, when you do. A lot of this too is maybe you, the investor, the fund manager is a long -term investor, but are your clients, is your spouse, are they gonna put up with having a shitty year?

1:21:02Maybe you're willing to do it, but is your business partner willing to do it? Like saying your long term is very different than actually being a long -term person. How can people make the long run easier? If there's so many, you are missed a compounding, right? If there are so many gains to be accrued by playing long -term games with long -term people and long -term investments and piecing into the S &P and not being that fussed about what happens and looking at signal, not noise and all the rest of it, how can people improve their long -termism? One of the things, like one of the ways I've subtly changed how I think about investing over the last couple of years is a bigger realization of how much of successful investing is nature, nurture, leaning towards the nature side.

1:21:44I think some people are just wired to get it and some people are not. Charlie Munger made this point where he says, when young people learn about investing, they either understand it instantly or never at all. And it's one of those two. I think that's a little too black and white, but I think he's directly correct. That some people just get it. You and I were talking on the last night about, like what is the genetic soup that you're born with? You have no control over it, but yours is different than mine. It's different from everybody's. And so I think some people are much more able to think long -term than others.

1:22:14I'll tell you a little story. My brother -in -law is a social worker, works with very impoverished families, homeless families, children who are in terrible situations. And he was talking to this family at one point, a very impoverished family. And he said something along the lines of saving your money for the next week or the next month. And they laughed at him. And they said, oh, you're a future thinker. And he's like, what? And he said, you're a future thinker. They said, you gotta understand, when you're in our situation, you do not have a time horizon that exists beyond 24 hours. There's no such thing as next week.

1:22:48We don't know where we're gonna get dinner tonight. We're not, there's no next week. We're just like, our field of vision is 24 hours. And I think that's an extreme example, but there's a lot of people like that. Of like, when, if you say like, oh, you should invest for the next 30 years, They literally cannot envision what next month is gonna look like. So why would like next 30 years is completely an utterly theoretical for them? Who was that actress? Was it like Margot Robbie or someone that said, we're going to be married forever, I can see us being together for at least 10 years and then got...

1:23:18The divorce next month. That was Elizabeth Taylor of her one of like a dozen divorces that she got. Where she says like, yeah, there's no world in which we're ever gonna get divorced and she gets divorced 30 days later. So I think it's, yeah, it's, you know, people, there's a thing in psychology called the end of history illusion where people are very aware of how much they've changed in the past, but they completely misunderestimate how much they're going to change in their future. So if you compare Chris today to 18 year old Chris, you're like, oh, completely different. But if I said, who is Chris going to be at age 60?

1:23:51Most of the time you're going to be like, oh, probably very similar to who you are today, and that's not true. It's never true for anyone. Chris at age 60 is gonna be maybe as different as the difference between you and 18 year old Chris. But it's very hard to come to terms with that. Most people think they're gonna be the same person for the rest of their life, even if they know how much they've changed in the past. So it's easy to say, I'm gonna be married to this person forever. I'm gonna be a long -term investor forever. But things change. Like what you want out of life changes, your wisdom changes, your incentives change to push you to do something different.

1:24:21The converse is true when it comes to personal growth as well, that if you ask yourself, what would you tell you from ten years ago? You could go back in time and write them a tweet or send them a text or whatever. What are the things that you would tell them to start doing and stop doing and focus on and let go of? A lot of the time, people use that as a, it's a subtle brag, a humble brag about these are the things that used to be a malady for me, but now I've transcended. Yeah. I would wager that at least 70 % of the things that you in ten years from now would tell you today are things that you today would be things that you would tell you ten years ago.

1:25:06It's more just like a wish or a fantasy of like I wish I wish I knew this ten years ago, but frankly like do I actually even know it today? I wish I could accept this truth today. It's just that I stole the problem with it. you are your patterns and they continue to repeat. Yeah. And you, you are the common denominator between all of the different situations that you end up in. Is it that every single girl is a bitter, spiteful bitch that always wants to try and ruin your reputation and all the rest of it. So, well, what do all of those girls have in common with each other? The only thing that they have in common with each other?

1:25:42They knew you. It's you. You're the only common denominator. You can piece this together. Either that you chose them or you created them or you molded them or you did something, but it's fucking you. You're some other corollary where it says something like, if you meet one asshole, you've met one asshole. If you meet an asshole every day, you're the asshole. You're the asshole. Everyone you meet as a jerk, like this should be telling you something. Yes. Trying too hard, there are no points awarded for difficulty. I think it's true that in almost any endeavor, there's gonna be a very small handful of variables that drive the majority of your returns.

1:26:17It's true in business, careers, investing, relationships. And, I mean, it's definitely true in investing in particular, that in many endeavors in life, if you want to get better at golf, you should practice a lot. If you want to get better at basketball, you should practice a lot. If you want to get better at investing, you should do less. You should not practice more. You should not try harder. You should not pull more levels or levers or turn more knobs. You should do left. There are no points awarded for difficulty. And it is so counterintuitive in investing that the smartest people who into the best schools with the best education are the ones who try the hardest and very often earn the lowest returns.

1:26:58There is this thing that I read recently that as recently as a hundred years ago, the people who in society who had the worst medical care were the richest people. The rich got worse. They were fucking with it too much. because they could afford all the miracle cures sold by quack doctors that were actually just going to poison. And I think there is a perfect corollary with financial advice that some of the people who get the worst financial advice are the richest people who can afford the highest price consultants and advisors that tell them to justify their fee, to turn the knobs and pull the levers and fiddle with the system as much as you can to earn higher returns.

1:27:36Those are the people who 95 % of them are more are going to underperform the simple basic index fund. One of my favorite Rory Sutherland stories was Terminal 5, London Heathrow. You'll have been through it if you've ever flown international connecting through London. You go in and you go up this escalator set of stairs after that. There's like one bloke checking everybody's tickets. It's insane. And then you go upstairs and you're at the and you need to get rechecked to go through security. And they were getting complaints. There were too many complaints. The amount of time that people were waiting, they were missing flights, and they just couldn't deal with it.

1:28:16So as always, the humans of this situation looked at it like an engineering problem, an optimization problem. Let's get retrain the staff to be quicker. Can we fit more lanes in? Can we change the machines so that the machines move more quickly? Can we do all the rest of this stuff? And either Rory or one of Rory's friends stepped in and said before you drop 50 mail on this, you know, two football pitch -sized area of security machines, just let's see if we can find a behavioral solution to this. And sure enough, they did. And they just put signs along the queue that said 15 minutes from this point, 30 minutes from this point, 45 minutes from this point.

1:28:54And all of the signs were five minutes longer than the wait time. Make it easier for people. Because to to adjust their expectations. And they just got there and they were like, oh, I mean, it's 40 minutes, but you see it was supposed to be 45. This was the biggest thing with Zappos when it came out to the shoe company. They always did this intentionally. When you made your order, they would say, we'll deliver it by Friday. And it was always just a boldface lie. They knew they were gonna get it to you by Tuesday. That Tuesday. So then when it came on Tuesday, you're like, this is amazing. I thought it was gonna come Friday.

1:29:22And they always did it intentionally. Amazon does as well. I know this because I've been so in the mix with book sales. A lot of times on Amazon, they will intentionally quote you a ship date that is way longer than they know they can get it to you because they're always just managing your expectations and then when you get it earlier you're stoked. And almost never, it will happen once in a while but very rarely will Amazon quote you a ship date and then it comes later than that because they know even if it's one day late you're livid. If it's two days early you're a customer for life. What are the areas in which trying harder or touching it more like with investing touch it less is kind of the rule.

1:30:04Yeah. Don't stop fucking with it, right? You have an 1850s person at the doctor. Just stop fucking with it. I think if the endeavor is technical, then you need to mess with it more. Tiger Woods can hit a ball better than you and I because he knows how to angle his shoulder and swivel his hips and whatever way that lets him do it, that you and I can't. Investing is behavioral. So there's no, there's very like what really matters is like, can you leave it alone? Do you have the patience to leave it alone? Do you have the fortitude to endure the volatility? It's pure behavioral. It's not a technical thing to do.

1:30:38So I think whenever the endeavor is technical, you need to try harder. When it's behavioral, you need to try less. Why? I think in many ways relationships are behavioral as well. And if you wake up every morning, you're like, I need to make a list of all the ways that I can become a better boyfriend, a better husband. Like you're probably trying too hard. It's probably just a behavioral. Just like, can we just focus on like respect, admiration, like very simple behavioral things that are actually going to move the needle? Not like a list of the best presents that my wife is going to want for Christmas.

1:31:04That's trying too hard. Why are we so seduced by complexity? What makes it so attractive to us? I think very often it's the only signal that the person who's trying to help you, the consultant, the financial advisor knows what they're doing. And it's very clear in investing in finance, that simple works. Like low cost index fund, buy and hold, it works. But as a financial advisor, you can't make a living saying. You can't charge people a high fee for doing that. If you charge a high fee that you need to do to run your business, you have to be able to say, here's this black box that I created. And it's worth the fee because it's so complicated.

1:31:42And this is why I think a lot of people in finance too use jargon that's completely unnecessary. And a lot of academics use jargon that's completely unnecessary because simplicity is so synonymous in people's heads with, you don't know what you're talking about. And it's pretty rare that you have someone like Warren Buffett, let's say, who talks very simply, is very simple when he explains what he does and is crazy successful as well. It's usually like the lawyer, the financial advisor, he's sometimes the doctor is, and I think it's innocent. They're not, you know, trying to pull the wool over your eyes.

1:32:14It's an innocent way that they're doing it, but they're trying to justify their education, their intelligence and their fee with complexity. Yeah, it's simpleness is indistinguishable from cluelessness. I mean, it's very rare that you would have a healthcare company, though. It's like, why don't you eat some vegetables and go for a run? Like, they want to make it more complicated, and sometimes a complexity is necessary. I'm not saying it's always bad. But the difference between giving advice that is good and works, and running an advice business can be a mile apart. things that you don't understand create a mystique around people who do understand it as well.

1:32:47Yes. If I convince you that I know something that is so complicated that you can't even understand a single word of it, you're going to look at me or look at whoever it is and be like, oh my god, do you hear all the words he said? He's the always acronyms. Yeah. I experienced this first hand many years ago when a family member of mine, I accompanied her to a meeting with her financial advisor and this family member does not have a background in finance and she sits down and the financial hazard I'm sitting with her and the financial advisor mentioned something about the yield curve. And this family member just not in her head and moved along and I'm ever thinking myself she does not know what the yield curve is.

1:33:20She is no clue what the yield curve is. There's no fault of her home. It's not a simple topic. But the financial advisor I think maybe innocently too, you probably thought to himself like if I talk about the yield curve, I'll look really smart. Like I know what I'm talking about. Even if the person on the other end, but the person on the other hand is like, oh, he said something. I don't know. That's why I pay this guy. He knows things that I don't. And so it's like an intentional confusion. It's that reliable Signal of effort as well that we were talking about before it's the person who's slack response time is always under 15 minutes It happens to be online at three in the morning who always gets the but That's not always the highest point of contribution Yeah, in fact it can get in the way of being the highest point of contribution Yeah, I mean if you let's say you have like a lump in your body and you're like oh this might be cancer And you go in and get it x -rayed, get it in my red, whatever.

1:34:09And the radiologist goes, he's slacken his chair, and he looks at the x -rayed, he goes, you're fine. Yeah, out of here. Did you trust that guy? I think what you want is someone who's going to spend an hour with all of this tools, measuring things, to make it look like you really put some effort into this. So, like, very often effort is the only measurement that we have, complexity is the only measurement that we have, to say, like, this person knows what they're doing. Woon's heel scars last. What have you experienced that I haven't that makes you believe what you do and what would I think about the world like you do if I experienced what you have.

1:34:42I think it's so often in finance and politics and a lot of areas in life where people who are debating a topic about what you should do with your money or who's the best politician. They're not actually debating. They're people with different risk tolerance is different time horizons, different experiences talking over each other. So if you say, making this up, Tesla is a good investment. And I say, no, it's not. We might not actually be debating with each other. It might be that you have a higher risk tolerance than I do. And so I think when you realize that we're all just mirrors of the experiences that we've had in life.

1:35:15And I've experienced something very differently than you have. Even if we're both white men, roughly the same age, you grew up in the UK. I grew up in California. I experienced things that you didn't advise Versa. And even if we're very similar in so many regards, You know things about how the world works that I don't and vice versa. And it's true for every single person. And so like the idea that if I, I think it's a really good question to ask, who would I be and what would I believe if I were born to different parents? If I was born in a different generation, if I was born in a different country.

1:35:47And it's impossible to answer those questions. You don't know for any precision, but it's important to realize that if you were not born, where, when, and to whom, you were actually born to, you would be a completely and utterly different person. And you see this a lot, I mean, one thing that's really interesting is that the German stock market has actually performed like very well, since the end of World War II. It's actually done very well. But a lot of German investors want absolutely nothing to do with it. And you compare that to American investors who are like stock, stock, stocks, is like they can't get enough of the stock market.

1:36:19And a lot of why that is is because what happened to the German stock market in the 1940s went to zero, completely wiped out. And the people's grandparents or their parents who experienced that, like that left a social scar that was even passed down through the generations. So if you look at a German investor compared to an American investor, you might be like, man, the American investor is like, man, they're all in this. Like these guys are gun and for it. They're going to become rich and you guys are hanging out in bonds. Like what are you doing? And it's just because they experienced something that you didn't.

1:36:47And vice versa. Another example, Australia before COVID went almost 30 years with no recessions. Like a full generation never experiencing any economic decline. Well, that was because China had so much demand for like the iron ore that they were digging up. But because of that, in the United States during that period we had three recessions, two of which were like devastating and reshaped society. So two in American, a recession was a very real thing. Two in Australia and it was like a theoretical possibility. And the Australians of course are just as smart as us. They have the same textbooks, the same data.

1:37:19But they viewed economic risks completely differently. than we did. And I think you could say in that moment, where the Australians oblivious to recession risk or are Americans overly paranoid about it. There's no one right answer. All you can say is like, we've experienced very different worlds. We have very different takes on life. What's the difference between wounds and scars? I think a lot of it is wounds heal. And I mean, this analogy of like, if you go to the Pentagon in Washington, D .C., there is no sign of September 11th of the plane that hit the building. They rebuilt it. There's not a single scar of it anywhere.

1:37:55But if you go to Reagan Airport, one mile away, the wounds, pardon me, the scars of 9 -11 are everywhere. Take off your shoes, take your toothpaste out of your bag, take your belt off, going through security. All of that is a scar from 9 -11. So a lot of times like the physical damage of a recession or a pandemic or whatever it is, like heals very quickly. But the psychological trauma is going to leave a scar forever. You saw us at the end of World War II. Like Europe was rebuilt very quickly. The physical scars of the war were gone in 20 years or so. But the psychological trauma of the people who experienced that will never go away.

1:38:33And this was measured in the children who grew up in Germany, in the UK, in France during World War II. What was the psychological trauma that stayed with them through adults? It was very measurable compared to the children who didn't, let's say in the United States, where they knew it was not physical destruction. So even if the physical destruction is rebuilt, the scars last forever. And I think it's just the acknowledgement that we all have scars in one way or another from what we've experienced in life. And my scars are very different from yours. I had a conversation with a historian of existential risk.

1:39:05So he was looking at how scientific knowledge had progressed over time and how humanities awareness of our ability to go extinct through or not through our own hands developed. And he taught me this term called conceptual inertia, which is, you even bring it up in the same as ever where you say, there are murmurings amongst some of the scientists that maybe the earth isn't at the centre of the solar system, but most of them are a little bit scared to do it. But even after it was proven and accepted and people were stopped being burned at the stake by the church for suggesting that this was the case, it still took like two generations to accept it, to accept it, to actually infuse into the scientific discourse.

1:39:52Why? Well, because of conceptual inertia, because assumptions about the world move very slowly. Cultures able to sort of adapt quite quickly, but when it's a foundational thing, it takes a very long time. You almost have to wait for the generation who accepted it today. Yes, that's it. It's the constant, it's like the Max Plank World. Like science does not progress by new discoveries. It progresses when the old generation who used to believe something eventually dies and the new generation who didn't come up with the old dogma is now in charge. You tweeted a little while ago that there are 13 divorces among the 10 richest men in the world.

1:40:29Seven of the top 10 have been divorced at least once. What's the lesson to learn from that? One, it's a very small sample size. This is not like hardcore statistics, but But a variable that is so important to your lifetime happiness, like whether or not you get divorced, among a group of people who are so admired by society, I wish I could be one of the richest people in the world, is always been so fascinating to me. And to me, this is just like the scene versus the unseen or what you're paying attention to. When you look at one of the richest men in the world, you look at their net worth and you fantasize about what it would be like to have that much money, to have planes and yachts and mansions.

1:41:02what you don't see for a lot of those people. And it's too firm to say this is pure cause and effect. But a lot of those people were so focused on their career, a singular focus for their entire life, seven days a week for decades on end of attention on their business that came purely directly at the cost of their personal life. The relationships with their spouses, with their children, with their friends, wherever it would be. And so this is another of like careful what you wish for, and there's a cost of everything that's so easy to ignore. The most valuable personal finance asset is not needing to impress anyone.

1:41:37I mean, so much of spending in our society after basic needs are met and after things that actually impact you are met is spending money to show other people how much money that you have. Most of whom are strangers who are not even paying attention to you to begin with. I heard this structure that that was so good. It was a high in Toyota is a nicer car than an entry level BMW. Or you could also say a suite at the Hyatt is a nicer room than a basic room at the four seasons. There's various ways that you could spin this. And I think a lot of what it is is the high -end Toyota is filled with things that are good for you.

1:42:12Comfy seats, good sound system, moonroof, whatever it is. The entry level BMW is purely bragging rights. You're paying for the emblem. That's all you're paying for. To show other people like look at me, look how great I am. If you can just dispose of that in your life, with the need to impress strangers outside of your core family, friends, co -workers, whoever it might be, who like want you to be a good person. If you can dispose of that, I think that is a financial asset on your balance sheet that could literally be worth millions of dollars to you, just lacking the need to impress strangers.

1:42:43I think that there is a genetic set point for materialism. Everything's genetically heritable from our parents, around about 50 % of everything we are psychologically is inherited from our parents. And whatever combination of the Hexico Big Five personality traits contribute to materialism. Keeping up with the Joneses, how much do I believe that love is shown through gifts? How much do I think that it's important for me to give and receive gifts, etc., etc. And I would 100 % agree with you that the people for whom your next book is written and the people for whom die with zero by Bill Perkins is written.

1:43:25In many ways have different challenges that they need to get over the scarcity mindset and a concern and a discomfort about upgrading spending with their lifestyle and a fear about getting it wrong and all the rest of it. But you can also see it as a huge competitive advantage because the total amount of money that you need to meet the standard of living that you want to, I'll never forget this dude, one of the early podcasts I did with you, Sif and Johnny, and we were talking, I'd love to bring this back up to them because their business is like 30 times bigger than it was back then or something like that.

1:44:02They're making way, way, way, way more money. And I remember one of the guys talking about like some arbitrary number, like, you know, after 150 grand a year, you're like, I don't really know what, like, what do I do with that? Like, what am I going to do? Buy a nicer coffee? And it was that sentence. What am I going to do? Buy a nicer coffee? Yeah, that's good. Just really hit it. How am I going to say, well, what you're doing is, and we talked about this last night, and you're also talking about it with the BMW thing, the difference between flying coach and flying business is fucking madness.

1:44:30It's enormous. Yes. It's absolutely ginormous. It is double the cost. Maybe if you book it in advance, something maybe five times nicer. And an international flight, no comparison. But the difference between business and first is maybe another It's a brag. Or three times. It's bragging rights. The cost, but yeah, it's the fact that in business, people have to walk past you to get to economy. In first, you don't even see them. That's what you're going to pay $5 ,000 for. I've got to tell you this. So Michael Easter's most recent book, the scarcity mindset. the other stuff that's discussed. The effect, did you see that thing in there where planes in which the people going to economy have to walk through business have a nine times increase in passenger like complaints and to the argumentation?

1:45:17It's such a distinct, they call it like the poverty parade of like when coaches like watch masks. And I think there's some comedian I forget who it was but like it's like when the people are walking past people in first class, the first class people are like, man, it sucks, you couldn't have worked harder, you could have been sitting up here. And it's like, it's such like a pure stratification of in society. I had this interesting realization recent to my father -in -law, my wife's father grew up in abject poverty. He was homeless for some part of his childhood, and then became a very successful businessman.

1:45:51When my wife was 17 and thinking about going to college, her dad, who was by then a successful businessman, said, pick the most expensive school you can find. And to him, it didn't matter about the education. What mattered was showing himself what he had overcome in life. That to him, going from homeless to being able to send his daughter to whatever the most expensive school in the country was, he didn't know what it was, he didn't care what it was. That to him meant so much to him as a symbol of what he had overcome. It's the... I think a lot of spending is like that. It's a symbol to yourself of like, I used to be this, but now I'm this.

1:46:25Well, this, yeah. Yeah, well I think that's, you know, apart from the people who genuinely adore watches, that's what a lot of watches are to people. It is a very ostentatious display of signal. It's just a super, super strong signal. Talib, and I think you resurface this Talib quote, the world is split between those who don't know how to start making money and those who don't know when to stop. So good. Phenomenal framing, but I think that there is an equivalent twist when it comes to people who do personal growth, the world is split between people who don't know how to change their lives and the people who don't know when to stop.

1:47:03They apply to so many things. I was going to say I had a good one. I'll tee it up. Valuable first personal finance, I said, is not needing to impress anyone. Yeah, I had a great spending thing that I was going to say. Morgan, I appreciate the hell out of you, man. So my episode number five or six or something, it's honestly, I said it on the first episode. People need to go and buy the same as ever. I love it as a book. I think it's phenomenal. It's super easy read. You know, it's what's the audible? Seven hours, six hours, something like that. You're less than a half or five. Four and a half, five hours.

1:47:38Super easy read, chunked up into individual chapters. We've gone through loads of the stuff today. There's tons of more stories. Everyone needs to go and collect that. And where can they go? Where else can they keep up to date with the stuff you do? Most of where I am is Twitter. I'm most of where I am is Twitter, my handles. First and last name, Morgan Housel. Hell yeah, Morgan, I appreciate you. Thanks Chris.