AI Summary #
Here are the key takeaways from the podcast episode:
The importance of concise and valuable content: The host shares a story about how he once received advice from a successful author that “if the book is good, you don’t need to market it.” This highlights the value of providing clear and actionable insights, rather than lengthy or unnecessary information.
The power of humility and honest communication: The host cites examples such as the coach who replied to a question about his team’s defense by saying they probably wouldn’t be able to stop it, and the story of Ronald Reagan’s brothers, one of whom was given a room full of horse manure. These anecdotes illustrate the importance of being honest and humble in communication.
The danger of groupthink and confirmation bias: The host discusses how people tend to become outraged when criticized or when someone challenges their assumptions, rather than listening objectively. This is illustrated by examples such as the Red Cross’s struggles with morale among soldiers during World War II.
The importance of balancing risk and caution: The host shares stories about entrepreneurs who have taken risks and failed, but also notes the value of being realistic about the odds of success. He also references Robert Schiller’s work on housing prices and how the best way to find valuable information is often to look for the “ugly” or unsexy options.
The need for a balanced approach in life: The host discusses the importance of finding a balance between pushing oneself too hard (and taking unnecessary risks) and being naive or overly optimistic. He cites examples such as the rule of thirds for athletes, which involves finding a balance between feeling good, feeling okay, and feeling terrible.
The value of seeking out diverse perspectives and information: The host references the story of how Robert Schiller found home price data going back to the 1800s in an old book at the library. This highlights the importance of seeking out diverse perspectives and information, rather than relying on a single source or approach.
Overall, the host shares a collection of anecdotes and insights that aim to promote humility, honesty, and a balanced approach to life and business. He encourages listeners to seek out diverse perspectives, be realistic about the odds of success, and find value in the unsexy or “ugly” options.
AI Transcription #
We talk so much about investing on this podcast and the different ways to do it.
So before we get going, I want to let you know that this episode is brought to you by my friends at 10 East.
10 East is an investing platform for sophisticated investors to access private markets.
It brings the benefits of having your own family office without the cost and the headaches of doing so.
10 East is founded and led by Michael LaFell.
Forward deputy executive managing member at Davidson Keppner.
10 East core strategy is to apply institutional grade due diligence to more niche exposures across private markets in equity and credit and real estate.
The principles and partners at 10 East invested their own money in these deals to align interests.
To learn more, please check out 10 East.co.
That’s the number 10 East dot C O.
Welcome back.
I read this thing many years ago and I can’t find the name of the person who’s story I’m about to tell, but it shouldn’t matter.
It was back in the 1950s and there was a very successful business leader that a newspaper asked him to write a newspaper column every week.
And he said, you know, I don’t have time to do that.
I’m busy in all my other jobs.
I’m a CEO of a company.
I’m active in my community.
I don’t have time for a weekly newspaper column.
And the newspaper said, why don’t you just write a couple of very short random tidbits every week?
If that’s all you can give us, that would be great.
So he did.
And every week he had a newspaper column that was just a bunch of unconnected random tidbits about life.
It was just a bunch of quotes and philosophies, just a random brain dump every week.
And people loved it.
They loved it because everybody knows that the vast majority of nonfiction books or articles are too long.
They’re like, just just give me the point and then move on.
Don’t burden me with all this ramble and excessive fluff.
I think there’s actually a lot of value in just giving a couple sentences of neat and moving on.
And I’ve always loved that too.
I love reading those kind of articles and I like writing those kind of articles as well.
I don’t think everything needs to be a perfect coherent narrative from start to finish.
Of course, there’s an incredible time and place for that, whether it’s a fiction book or a long form article, of course.
But I think there’s actually a ton of value and just short quotes, very short stories, random tidbits where you can get a lot of value and insight out of two or three sentences.
So I’ve done that before.
I want to try to do it again today.
I want to share with you a dozen or so little ideas and short stories.
And my warning to you is that none of these have any relation to each other.
I don’t know if there’s even a cohesive theme.
It’s just little things that have come across that I found very interesting and hopefully you will too.
So here we go.
I once asked a successful author had a market at book and he waved me off and he said, if the book is good, you don’t need to market it.
If the book is bad, no amount of marketing will help.
Now, I think he was exaggerating.
I think his advice is maybe like 80% true, but it’s definitely 80% true.
And it applies to almost any product that the best marketing is a good product.
Charlie Munger once mentioned how sensational Costco founder Jim Synical’s career was.
My friend and podcaster David Sennra asked Munger.
He said, why are there so few speeches or interviews from Jim Synical?
Munger replied, because he was too busy working.
The most impressive people in the world do not spend their lives on social media or managing their publicity.
So sometimes the most impressive people are the ones where there is the least information about.
Russ Roberts, the great economist, once told the story that I thought was so interesting.
He said he kept hearing from World War II veterans about how much they hated the Red Cross.
And he thought the Red Cross, how could you possibly hate the Red Cross?
Who hates them?
And he asked where the animosity came from.
And he kept hearing the same thing over and over again.
The donuts, the donuts, the donuts, the donuts.
And here’s what happened back in World War II, the Red Cross set up comfort stations all across Europe, where allied soldiers could get a cup of coffee and a haircut and a donut.
And these services were free for American soldiers, but British and Canadian soldiers were charged a few cents.
And that set up a hierarchy among soldiers that hurt morale.
So eventually, a American general asked the Red Cross to start charging American soldiers a couple of cents as well.
And they hated it.
Because all of a sudden you had US soldiers who were used to getting free donuts, now they’re being charged a couple of pennies.
And they viewed it as the greedy Red Cross exploiting their hunger, like a greedy profiteer.
And that grudge lasted for decades after the war.
So two things to keep in mind here.
One, if you’re an entrepreneur, realize that if you give a product away for free, you cannot charge for it in the future.
So be very careful picking your business model.
And number two, for the rest of us, realize how emotional people become over even very reasonable changes in prices.
And realize that that is why inflation is often such an emotional topic.
Jerry Seinfeld recently said, quote, audiences are now flocking to stand up comedy.
Because it is something that you cannot fake.
It’s like platform diving.
You can say you’re a platform diver.
But in two seconds we can see if you are or you aren’t.
That’s what people like about stand up.
They can trust it.
Everything else is fake.
Seinfeld’s advice, after saying this, was quote, get good at something.
That’s it.
Everything else is bullshit.
The historian, T.H.
Hollingsworth, once published an analysis of life expectancy of the British purge.
And it showed this really peculiar trend.
Before the 1700s, the richest members of society had among the shortest lives.
The richest people lived meaningfully shorter lives than the overall population.
How could that possibly be?
The best explanation was that the rich were the only ones who could afford all the quack medicines and sham doctors who peddled hope.
But actually just increased your odds of being poisoned.
And I would bet good money that the same thing happens today with investing advice.
If a petty criticism about you is obviously false, you tend not to care.
If anything, it just makes the person who is criticizing you look dumb.
But if the criticism could be true, you might become outraged.
Because you know it’s a genuine attack on your identity.
Talking to Tim Ferris, Naval Ravacant once said quote, if I said Tim Ferris is fat, that would bounce right off of you.
But if I said Tim Ferris and Naval are fake gurus, that might hit us, right?
I thought about that line recently when I heard an FBI negotiator say that the number one way to spot someone covering up a lie is how angry and righteous they become when defending themselves.
After the November 1930 election, Republicans and Democrats held an even number of seats in the House of Representatives.
It was a perfect tie.
But by the time the members were sworn into office, 13 of them had died.
Most of them were Republicans.
And special elections to replace them fell in Democrats’ favor.
So by the time the Congress actually met for the first time, the Democrats held a comfortable majority.
Remember that the next time you hear a confident political forecast.
Nobody knows anything even when it looks obvious.
Here’s a similar story from investor Howard Marx.
He used to talk about the gambler, who one day hears about a race with only one horse in it.
So he bets all the money that he has.
And then halfway around the track, the horse jumps over the fence and runs away.
Another example of nobody knows anything even when it looks obvious.
A coach once described what he called the rule of thirds for athletes, which is that when training, one third of your day should feel good.
One third of your day should feel okay.
And one third of your day should feel terrible.
That is a good, balanced routine.
It’s when you know you’re pushing yourself but not too hard.
And taking risks but not overdoing it.
And you have challenging goals but not unrealistic ones.
And I think you can apply that rule of thirds to so many things.
Businesses, careers, relationships.
If it’s always terrible, you’re doing it wrong.
And if it always feels great, you are naive or oblivious or undershooting your potential.
You’ll economist Robert Schiller won the Nobel Prize in economics.
In part for developing a nationwide index of US housing prices that dates back to the 1800s.
Many years ago, I interviewed Schiller and I asked him, where did you find home price data going back to the 1800s?
And he did pan and replied, the library.
I love that.
Like I thought this was top secret information.
He said it’s sitting in the library.
He said it was just a book.
It was sitting in the library.
It was a book from the 1950s.
And he said, quote, I could recommend that book to you.
But nobody reads it.
Nobody reads it.
There is a well-known idea in real estate that you earn the highest ROI on the ugliest properties that nobody wants to own.
And I think the same is true for so many things in life.
It is the unsexy work where there’s a little competition where some of the biggest ideas are found.
A startup founder that I know was once trying to raise money from an investor.
And the investor told him, I love your idea.
But I think this business has a 20% chance of working.
And the founder replied, 20%.
Wow, you’re an optimist.
I think the odds are 10% max.
And this was from a founder who was devoting his life to this company with full passion and energy.
Jeff Bezos once said, quote, every startup is unlikely to work.
It is helpful to be realistic about that.
But that doesn’t mean that you can’t be optimistic.
You have to have this duality in your head.
On one hand, you know what the baseline statistics say about startup companies.
And on the other hand, you have to ignore all of that and just be 100% sure that it’s going to work.
And you’re doing both of those things at the same time.
You’re always holding that contradiction in your head.
And look, even if you’re not a startup founder, I think that applies to a lot of things.
Your career, maybe your relationships, and all of it.
It’s important to know the base rate of success.
It’s also equally important in just in terms of your ability to get out of bed in the morning to think that you can overcome that and push through.
Before playing the Cleveland Cavaliers, Spurshead Coach Greg Papavich was asked by the press, how his team could stop the cabs impressive run?
Somebody asked Papavich, they said, how do you feel your defense can get into passing lanes and stop it?
And Papavich replied, oh, we probably won’t.
I can give you some bullshit if you want.
I love that.
We need more of that kind of honesty because there is a fine line between motivational cheerleading and just straight up lying.
Ronald Reagan used to tell this story.
He said there were two brothers.
One of them was a dyed in the wool pessimist.
The other was an incurable optimist.
The parents thought that both kids were so unrealistic about life that they talked to a psychiatrist who came up with an idea for Christmas.
They said, give the pessimistic boy a room full of the most incredible toys and tell them that all the toys are just for him.
Give the optimistic boy a room full of horse manure and tell them that that’s all he’s getting.
That should cure them.
The parents did just that.
And when they checked on their boys on Christmas morning, the pessimist with all the toys was crying.
And he said, somebody is going to take all these toys away from me.
I just know it.
The optimistic kid with a room full of horseshit had never been happier.
He was grinning ear to ear and he was digging with a shovel frantically.
And he said, there’s got to be a pony in here somewhere.
Optimists and pessimists don’t respond to the information that they see as much as they do in interpretation of what they want to see.
That’s all for this week.
Thanks again for listening and we’ll see you next time.