#752: Terry Crews and Richard Koch

0:00:02 This episode is brought to you by Momentus.
0:00:07 Momentus offers high-quality supplements and products across a broad spectrum of categories,
0:00:12 including sports performance, sleep, cognitive health, hormone support, and more.
0:00:19 I’ve been testing their products for months now, and I have a few that I use constantly.
0:00:22 One of the things I love about Momentus is that they offer many single-ingredient and
0:00:24 third-party tested formulations.
0:00:27 I’ll come back to the latter part of that a little bit later.
0:00:32 Personally, I’ve been using Momentus Mag3n8, L-theanine, and Apigenin, all of which have
0:00:36 helped me to improve the onset quality and duration of my sleep.
0:00:41 Now, the Momentus Sleep Pack conveniently delivers single servings of all three of these
0:00:42 ingredients.
0:00:46 I’ve also been using Momentus creatine, which doesn’t just help for physical performance,
0:00:48 but also for cognitive performance.
0:00:53 In fact, I’ve been taking it daily, typically before podcast recording, as there are various
0:00:59 studies and reviews and meta-analyses pointing to improvements in short-term memory and performance
0:01:00 under stress.
0:01:03 So, those are some of the products that I’ve been using very consistently, and to give
0:01:06 you an idea, I’m packing right now for an international trip.
0:01:11 I tend to be very minimalist, and I’m taking these with me nonetheless.
0:01:16 Now back to the bigger picture, Olympians, Tour de France winners, Tour de France winners,
0:01:22 the U.S. military and more than 175 college and professional sports teams rely on Momentus
0:01:23 and their products.
0:01:27 Momentus also partners with some of the best minds in human performance to bring world-class
0:01:32 products to market, including a few you will recognize from this podcast, like Dr. Andrew
0:01:34 Huberman and Dr. Kelly Starrett.
0:01:39 They also work with Dr. Stacy Sims to assist Momentus in developing products specifically
0:01:40 for women.
0:01:44 Their products contain high-quality ingredients that are third-party tested, which in this
0:01:48 case means informed sport and/or NSF-certified, so you can trust that what is on the label
0:01:51 is in the bottle and nothing else.
0:01:55 And trust me, as someone who knows the sports nutrition and supplement world very well,
0:02:01 that is a differentiator that you want in anything that you consume in this entire sector.
0:02:02 So, good news.
0:02:06 For my non-U.S. listeners, more good news not to worry, Momentus ships internationally,
0:02:09 so you have the same access that I do.
0:02:10 So check it out.
0:02:15 Visit livemomentus.com/tim and use code TIM at checkout for 20% off.
0:02:27 Visit livemomentus.com/tim and use code TIM at checkout for 20% off.
0:02:32 This episode is brought to you by 8Sleep, I have been using 8Sleep pod cover for years
0:02:33 now.
0:02:34 Why?
0:02:37 Well, by simply adding it to your existing mattress on top like a fitted sheet, you can
0:02:41 automatically cool down or warm up each side of your bed.
0:02:45 8Sleep recently launched their newest generation of the pod and I’m excited to test it out
0:02:46 Pod4Ultra.
0:02:52 It cools, it heats, and now it elevates automatically, more on that in a second.
0:02:56 First, Pod4Ultra can cool down each side of the bed as much as 20 degrees Fahrenheit below
0:03:01 room temperature, keeping you and your partner cool, even in a heat wave.
0:03:04 Or you can switch it up depending on which of you is heat sensitive.
0:03:08 I am always more heat sensitive pulling the sheets off, closing the windows, trying to
0:03:10 crank the AC down.
0:03:11 This solves all of that.
0:03:15 Pod4Ultra also introduces an adjustable base that fits between your mattress and your bed
0:03:19 frame and adds reading and sleeping positions for the best unwinding experience.
0:03:23 And for those snore heavy nights, the pod can detect your snoring and automatically lift
0:03:28 your head by a few degrees to improve air flow and stop you or your partner from snoring.
0:03:33 Plus with Pod4Ultra, you can leave your wearables on the nightstand, you won’t need them because
0:03:36 these types of metrics are integrated into the Pod4Ultra itself.
0:03:41 They have imperceptible sensors which track your sleep time, sleep bases, and HRV.
0:03:45 Your heart rate tracking as just one example is at 99% accuracy.
0:03:47 So get your best night’s sleep.
0:03:54 Head to 8sleep.com/tim and use Code Tim to get $350 off of the Pod4Ultra.
0:04:03 That’s 8sleep, all spelled out, 8sleep.com/tim and Code Tim TIM to get $350 off the Pod4Ultra.
0:04:33 They currently ship to the United States, Canada, the United Kingdom, Europe, and Australia.
0:04:34 Hello boys and girls, ladies and germs.
0:04:36 This is Tim Ferriss.
0:04:40 Welcome to another episode of The Tim Ferriss Show where it is my job to sit down with world-class
0:04:45 performers from every field imaginable to tease out the habits, routines, favorite books,
0:04:49 and so on that you can apply and test in your own lives.
0:04:54 This episode is a two for one and that’s because the podcast recently hit its 10th year anniversary,
0:04:59 which is insane to think about, and past one billion downloads.
0:05:02 To celebrate, I’ve curated some of the best of the best.
0:05:07 Some of my favorites from more than 700 episodes over the last decade.
0:05:12 I could not be more excited to give you these supercombo episodes and internally we’ve been
0:05:17 calling these the supercombo episodes because my goal is to encourage you to yes, enjoy the
0:05:22 household names, the super famous folks, but to also introduce you to lesser known people
0:05:24 I consider stars.
0:05:29 These are people who have transformed my life and I feel like they can do the same for many
0:05:30 of you.
0:05:34 Perhaps they got lost in a busy news cycle, perhaps you missed an episode.
0:05:35 Just trust me on this one.
0:05:39 We went to great pains to put these pairings together.
0:05:47 And for the bios of all guests, you can find that and more at tim.blog/combo and now without
0:05:53 further ado, please enjoy and thank you for listening.
0:06:00 Next up, Terry Cruz, former NFL player, American film and television star of The Expendables,
0:06:06 Everybody Hates Chris and Brooklyn Nine-Nine, host of America’s Got Talent and bestselling
0:06:12 author of six books, including his memoir, Tough, My Journey to True Power.
0:06:17 You can find Terry on Twitter and Instagram @TerryCruz.
0:06:25 I thought we’d start somewhere that perhaps people wouldn’t associate you with if that’s
0:06:29 even English, but you guys get my drift and that is art.
0:06:33 So I went on to your Instagram profile not too long ago and I saw a number of different
0:06:39 profiles and then I started digging and I didn’t want to tease out too much because I want
0:06:40 to talk about it.
0:06:44 Can you tell us a little bit about your background with art?
0:06:52 You got to know, growing up in Flint, there were a number of obstacles, crazy, crazy obstacles
0:07:01 because I grew up at the height of the crack epidemic and also the demise of the auto industry.
0:07:05 So there were two things happening at once and they were both horribly bad.
0:07:13 It was like the 80s, probably late 70s, all the way through the 80s into the 90s was literally
0:07:16 the walking dead and it was real.
0:07:23 I mean, you had people who were cracked out, I had friends, family who one day, you know,
0:07:28 whatever good people the next day, they were stealing everything you had, all the way to
0:07:32 everyone you knew were losing their jobs and it was a panic.
0:07:39 And I remember there was two ways out and one was through music and performing, another
0:07:43 way was athletics, but art, you couldn’t get paid doing art.
0:07:44 You know what I mean?
0:07:48 It was kind of, everybody was like, that’s a wonderful picture, but you’re a starving
0:07:49 artist.
0:07:50 That’s the whole term, you know?
0:07:55 And I remember just saying, okay, I’m going to do this art thing, but I had to do the
0:07:58 football thing too.
0:07:59 And these were my ways out.
0:08:06 Now, I didn’t believe that I was actually going to get any kind of light as an artist,
0:08:12 but I had one teacher, one man, Mr. Eichelberg, I’ll never forget this.
0:08:15 He said, Terry, you are an amazing artist.
0:08:18 He was like, I’m the art teacher, you’re better than me.
0:08:20 And he said, you can go somewhere with this.
0:08:24 And I was like, okay, but you know, you know, nobody’s going to pay me to do this and nobody,
0:08:27 it’s good, but I got to use football.
0:08:32 Well, he filled out all the applications for me.
0:08:33 And I didn’t even know.
0:08:34 Wow.
0:08:36 It was crazy.
0:08:39 And he took my pictures and my paintings and everything that I did.
0:08:45 He took them, got them photographed, did all this stuff, sent them to Interlochen Arts
0:08:46 Academy.
0:08:47 Now, Interlochen is just world famous.
0:08:48 Big deal.
0:08:53 Big, big deal arts camp up in Northern Michigan near Traverse City.
0:08:57 And you study with people from all over the world.
0:09:02 And he literally came to me and told me, he already filled out everything.
0:09:08 And he said, Terry, you have a scholarship from Chrysler, full ride to go to Interlochen
0:09:09 Arts Academy.
0:09:12 And I was like, what are you talking about?
0:09:17 Like, you know, first of all, I didn’t think it was possible.
0:09:18 This is the deal.
0:09:19 There’s a lot of things.
0:09:25 It’s weird because you got to let people believe in you, but I didn’t believe in myself.
0:09:30 And when I got a chance to go to Interlochen and study with people from Europe and from
0:09:36 Brazil and from, and these was mainly music students and then they had art students and
0:09:43 it was just this and coming from Flint, I mean, coming from the hood and then this changed
0:09:44 my life.
0:09:50 Once I remember we had, and it was really big on competition, very, very big on competition.
0:09:55 It was like, if you were a violinist, you had to be the first chair and second chair.
0:09:58 And I remember all these kids were disappointed because they kept moving down and they would
0:10:00 just feel like they were crushed.
0:10:04 And the same thing with art, we had to do two drawings and we had the whole class doing
0:10:08 all these drawings and they said, put your drawings on the, on the wall and don’t put
0:10:10 your name on them.
0:10:13 We have this guy coming from the Cleveland Institute of Art.
0:10:17 He’s going to judge each painting and we want to see who’s the best.
0:10:22 And I was like, oh man, you know, and so I did my deal and I put on, it was a wall full
0:10:24 of art.
0:10:28 The art guy pointed at mine and he said, that one’s the best one.
0:10:35 But he went all the way across the room and he said that one and they were both mine.
0:10:46 And I was like, now life is a confidence game because then you could tell me nothing.
0:10:52 I was like, dammit, I’m good, you know, I got two arrogant, then I got arrogant.
0:10:57 I’m the best one here, you know, and then you have to be humbled some other way, you
0:11:04 know, um, but that letting me know, I was like, well, I can, I can do it, I can do it.
0:11:06 Like I’m really as good as these people.
0:11:08 This is all over the world.
0:11:15 And then I got a scholarship to Western Michigan University in art, but it was small.
0:11:18 It wasn’t full ride, but it was a small deal.
0:11:25 So I got an art scholarship and walked on to the football team and my mom passed away
0:11:27 about almost three years ago.
0:11:31 And she always would tell me, she was like, whatever you do, I know you’re doing all
0:11:36 this football stuff, you’re doing all this other thing, but never forget, you’re an artist,
0:11:37 babe.
0:11:40 You’re an artist.
0:11:51 I’m telling you, when I see what I’m doing right now and I get to do so many things that
0:11:53 so many people never got to see.
0:12:01 I get to go so many places and do so many things that none of the people who wanted
0:12:11 to were able to, I feel like there is a responsibility, but also if I don’t do it, everything they’ve
0:12:13 gone through is nothing.
0:12:21 You know, so the way I approached things is really, it’s kind of for everyone else.
0:12:23 You know, I have to try it.
0:12:25 I have to go for it.
0:12:33 And I knew even as I was doing football and I was doing all this stuff, I remember once
0:12:37 because football was hard, football was a very, very, again, another competitive deal.
0:12:40 You know, you would get on the team and I would get cut.
0:12:46 I was like, I have to depend on this art thing because this is what got me here.
0:12:49 And so I would go back in the locker room.
0:12:51 And this is how I was married.
0:12:52 I had two kids at the time.
0:12:57 I would go back in the locker room and go to the players and I would ask them if they
0:12:59 wanted their portraits painted.
0:13:02 And the weird thing is they were like, oh man, come on, man, you can’t do it.
0:13:07 And I was showing my portfolio and they were like, damn, dude, and I was like, look, man,
0:13:11 I want to paint you over this big, I’m going to put you and you’re going to be a giant
0:13:13 over the city and I can have wings.
0:13:16 You can have wings and you can do it.
0:13:20 And let me tell you, you know, football players are the most egotistical people in the world.
0:13:24 They were like, oh, damn, yeah, man, I want the wings, dog.
0:13:25 How much for them wings, man?
0:13:30 You know, I was like, oh, yeah, and I would do these masterpieces.
0:13:32 But you know, I have to tell you this too, I did have a scam.
0:13:34 I had a scam.
0:13:36 This is the scam in college.
0:13:40 In college, I would, because what happened is I was playing football.
0:13:45 But when you play football, you don’t get money for supplies.
0:13:46 You only get book loans.
0:13:48 See, scholarship is a chip.
0:13:52 All you got, I’m telling you, the NCAA is a chip, dude, the whole deal.
0:13:54 You are not a student athlete.
0:13:55 You are semi pro.
0:13:56 That’s all it is.
0:13:58 There’s no student in it.
0:13:59 Just putting it right now.
0:14:02 And what was crazy is that I was like, hey, but I want to study art.
0:14:04 They were like, why don’t you just study business or something?
0:14:09 So it’s easier to get by because the whole thing is just getting by.
0:14:11 Take a class so you can go to football practice.
0:14:12 But I was like, I’m an artist.
0:14:14 And they were like, OK, whatever.
0:14:19 So I would go to these labs and I would make, and this is what I had a plan.
0:14:23 In the summer, I would make probably 10 paintings.
0:14:25 And then I would make four of them really suck.
0:14:27 They would be really, really bad.
0:14:29 And I would bring those in in the beginning.
0:14:30 And these were these labs.
0:14:31 And I would go to the teachers.
0:14:35 And I was like, man, what’s wrong with this?
0:14:36 Help me out here.
0:14:40 You know, he was like, oh, Terry, oh my God, look, OK, we’re going to work on your
0:14:42 perspective, and we’re going to do this.
0:14:44 And I was like, yeah, no, help me.
0:14:49 And then I’d go home and then I’d go to practice for like a month and never do anything else
0:14:51 because I had the paintings done.
0:14:55 Then I’d bring another one in that was a little bit better.
0:15:02 And every day I did this the whole semester and then I would bring out the masterpieces.
0:15:08 And I was, you know, I say, look how much you helped me.
0:15:11 You took me from here to there, sir.
0:15:15 And they were like, you get an A, you are awesome.
0:15:21 And again, the whole thing was a scam, but I had to survive.
0:15:25 I had to find a way to stay in school because this is the thing a lot of people don’t know
0:15:27 is that they can take your scholarship.
0:15:28 It was crazy.
0:15:32 It was one of those things where you are there as a body.
0:15:35 And if you don’t perform, they’ll find a way to get rid of you.
0:15:42 When I was looking at your history and your book and your backstory, one thing that I
0:15:47 paid attention to as a pattern was an uncommon degree of self-reflection.
0:15:52 And that’s, I want to rewind the clock a little bit back to high school.
0:15:56 One of the stories that you put in tribal mentors is related to my question related
0:16:02 to favorite failures or a failure that set you up for later success.
0:16:03 Could you tell us a little bit about that, please?
0:16:04 Oh man.
0:16:05 Yes.
0:16:06 1986.
0:16:12 That was my senior year in high school and I went to Flynn Academy and it was a Class
0:16:17 C school, but we were highly ranked in the state.
0:16:19 And I was used to be a basketball player.
0:16:25 I mean, I was hard to believe now, but basketball was a big sport for me.
0:16:29 But I was the starting center on this team.
0:16:32 And what was wild is we were picked to go all the way in the state.
0:16:36 We had a superstar on our team and we had a really, really good team.
0:16:43 We played against a school who decided not to play, it was the district championship.
0:16:47 It was right at the beginning of the playoffs and these guys would take the ball down the
0:16:54 court and pass the ball to each other at the top of the court and wouldn’t play.
0:16:57 And we had a coach who was like, “Well, you know what?
0:16:59 I’m going to beat you at your own game.”
0:17:01 So we stayed in his own.
0:17:04 So we sitting there the whole time and I’m telling you, it was the most boring game of
0:17:06 all time.
0:17:09 We just sat there with our hands up and they passed the ball.
0:17:13 And if anything happened, somebody went and got it and you scored two and it was just
0:17:14 a mess.
0:17:16 So the score was really, really low.
0:17:24 They were up 47 to 45 and it was literally under a minute and I’m freaking out because
0:17:29 now we’re going to, it’s evident we’re going to lose because I’m going, “Man, this is a
0:17:31 dumb defensive strategy anyway.
0:17:33 We should have been going after it.”
0:17:39 But what happened is a guy through the ball, their guy through the ball cross court, I
0:17:45 intercepted it and with literally five seconds left to go.
0:17:48 And I take the ball all the way down the court.
0:17:53 You got to understand, I’m thinking, I had visions of, “Oh my God, this is the thing.
0:17:54 I’m the hero.”
0:18:01 You know, the heart is like pounding, I’m already at the party, you know what I mean?
0:18:06 And I go with this layup and I bring it up there and it totally, it gets around the rim
0:18:12 and it rolls off.
0:18:17 And let me tell you, that place goes nuts because it was the upset of the year and I
0:18:22 collapsed in a heat and I know my life is over.
0:18:23 And you got to understand.
0:18:27 And this is another thing, shame among men.
0:18:31 It’s like, “Oh, how could you do that, man?”
0:18:33 Other players were yelling at me.
0:18:37 The coach, I was in the locker room and he was like, “You had no business taking that
0:18:38 shot.”
0:18:40 And I stole the ball.
0:18:43 It wasn’t like, we didn’t have a shot anyway.
0:18:46 But he was like, “You have no business taking that shot.
0:18:47 You should have passed it.
0:18:49 Man, it’s your fault.”
0:18:52 And everybody in the room was like, “Yep.”
0:18:55 I was like, “They didn’t let me off one.”
0:18:57 And I remember just going, “Oh my God.”
0:19:00 And I went in the paper and the paper the next day was like, “Terry Cruz had a shot
0:19:02 and he missed.”
0:19:10 And let me tell you, it was the most, I mean, when you’re 16 years old, I was, I mean, beyond
0:19:11 Chris.
0:19:12 One guy was taunting me.
0:19:16 I got in a fight after the school and the whole thing and I was just like, “This is
0:19:17 awesome.
0:19:19 It’s horrible.”
0:19:23 And so it was a couple days went by and I was in the deepest funk.
0:19:28 I’m sitting on my bed and I shared my room with my brother.
0:19:31 But for some reason he wasn’t there because I always remember being there.
0:19:32 It was kind of crazy.
0:19:36 I don’t ever remember being alone except that time.
0:19:43 And I remember being alone and just thinking about, “Man, I should have passed it.
0:19:44 I should have passed it.
0:19:48 Maybe I messed up and what else could I have done?”
0:19:54 And then another little voice, he said, “I took the shot.
0:19:57 I took the shot.”
0:20:00 And I was like, “I did.
0:20:01 I did.”
0:20:02 And I kept thinking.
0:20:10 It was like, “Man, look, when you had the chance, when everything was on the line,
0:20:12 you took your shot, man.
0:20:13 You did that.
0:20:15 You did that.”
0:20:18 And all of a sudden I was like, “That’s right.
0:20:19 That’s right.
0:20:21 I took it.”
0:20:25 And I learned from then on, I said, “Man, wait a minute.
0:20:31 If I win or if I fail, it’s going to be on my terms.
0:20:33 It’s going to be up to me.
0:20:39 If I have the opportunity, I have to go for it.”
0:20:42 And then I felt really good about losing the game.
0:20:44 It was real.
0:20:47 Now, you can call it reframing.
0:20:52 A lot of people have scientific ways or psychological ways to do things.
0:20:58 But I learned always to kind of reframe things so that it’s to your advantage.
0:21:02 And you look at these things like, “Wait a minute.
0:21:04 You took the shot, man.”
0:21:09 And this is another thing, because what’s so crazy is that no one ever remembers that
0:21:11 game.
0:21:15 It’s one of the least important things in my life.
0:21:23 But the lesson I learned is still guiding me today, the fact that go for it.
0:21:24 Take your shot.
0:21:25 Take your time.
0:21:29 When you get that thing, when you have that opportunity, don’t mess it up.
0:21:35 Because this is another thing, and I want to tell you, Tim, the scariest thought ever
0:21:41 is one thing that blew me away is that you really do get what you want.
0:21:43 And let me tell you what I mean.
0:21:49 There have been times when you can be self-destructive.
0:21:53 And you think it’s something else, or you think, like, I discovered for a long time,
0:21:57 like, if I show up late for something twice, I don’t want it.
0:22:01 And you get what you desire.
0:22:06 Everything about you, you get what you want.
0:22:11 Now, the way your life is, truthfully, you want it.
0:22:12 And now, that’s hard.
0:22:15 That’s hard to say, because a lot of people are like, no, wait, there’s so many other options.
0:22:17 It’s this and this and this and this.
0:22:23 But the truth is, is that if you wanted something different, you’d change it.
0:22:24 And that hit me.
0:22:25 Like, it’s scary.
0:22:30 Because if I failed, or if I did, or if I showed up wrong, or messed up on something,
0:22:34 I was like, I didn’t really do what it took to get it.
0:22:40 Again, that comes from taking that shot way back in high school.
0:22:46 So one of the things I really appreciate about you, and that’s led me to want to reach out
0:22:50 to you, is how forthcoming you’ve been about your difficulties and some of the challenges
0:22:51 you’ve faced.
0:22:57 Because I think a lot of folks we see on magazine covers and so on, unfortunately, give people
0:22:58 the impression that they’re flawless.
0:23:03 They’ve all figured out, and then people feel uniquely flawed in some way, that they’re
0:23:05 damaged because they’re not that person.
0:23:06 That’s unachievable.
0:23:14 Could you share with us a story of any dark period in your life, and how you found your
0:23:18 way out of it, things that helped you too?
0:23:19 Navigate your way out of it.
0:23:23 There’s a lot of dark, dark times.
0:23:24 You know what?
0:23:27 I’m going to share this story, which changed my life.
0:23:32 I literally just got my first job in entertainment, and I was on a TV show called Battle Dawn,
0:23:38 where they literally put me in a cage, and I fought my way out.
0:23:41 It was so entertaining.
0:23:45 It was pre-MMA, so people hadn’t seen blood on TV yet.
0:23:46 We were like the first.
0:23:47 It was really nuts.
0:23:51 People were bleeding, going to the hospital, and it was called Real Warriors, Real Pain.
0:23:55 And I played this character called T Money, and that’s actually my wife’s pet name for
0:23:56 me now.
0:23:59 T Money.
0:24:04 And we call this the Christmas from Hell, because here I wanted to come home.
0:24:07 I went home to Flint, Michigan, with my family.
0:24:12 Now you’ve got to understand, my kids, at the time I had three, I have five total now,
0:24:16 but I had three kids at the time, and the girls were, and they were all girls.
0:24:17 They were very small.
0:24:22 They had never grown up with violence in the house.
0:24:27 They’d never seen it, and so I told my father, before I came, I said, “Hey man, don’t act
0:24:28 up.
0:24:31 Do not act up.”
0:24:36 And he said, “I ain’t going to do nothing,” you know, and I’m like, “Okay, so I’m bringing
0:24:37 a family.
0:24:42 I know it’s Christmas time, so just relax, man, and we’re going to be there to be fine.”
0:24:43 So we get there.
0:24:44 We’re having a good time.
0:24:46 My wife and I are going out.
0:24:51 We’re actually driving to Detroit to hang with friends, and I get this call.
0:24:53 It was a panic.
0:24:54 My aunt called me.
0:24:59 He said, “Cherry, your daddy hit your mother.”
0:25:03 In front of the kids, he got mad.
0:25:11 He knocked her tooth sideways, and I go, “I told him, I told him.”
0:25:18 Now literally, I stopped the car, we turned it around, I told my wife, “Okay, we’re going
0:25:19 to go over to my aunt’s house.
0:25:23 You take the kids, go to her aunt’s house, the whole thing, I’m done.
0:25:25 I’m dealing with this.”
0:25:28 First of all, I went in this house.
0:25:31 He was had the nerve to still be there.
0:25:34 And I said, “Dude, what are you doing?”
0:25:35 He was like, “Shut up, leave me alone.
0:25:38 I can do what the hell I want.
0:25:39 Boom.”
0:25:40 Let me tell you something.
0:25:44 I beat this guy for about an hour.
0:25:48 He was pleading for his life.
0:25:51 I was like, “I’m not a child anymore.
0:25:57 I am a grown ass man, and how does it feel?
0:26:02 You are about to get what my mother has felt.”
0:26:04 And I laid it on him.
0:26:08 He was hurt, bleeding, laid out.
0:26:11 I’m surprised I didn’t kill him.
0:26:16 And I felt not one ounce better.
0:26:22 I remember falling on the ground, crying in tears.
0:26:25 It didn’t make me feel one bit better, not one.
0:26:29 Like, now I was just down there with him.
0:26:33 This is the revenge I’ve dreamed about my whole life.
0:26:38 And now nothing, now I’m just like you.
0:26:42 And I remember it just feeling empty, cold.
0:26:47 It’s probably the darkest place I’ve ever been because this here’s the man who’s the
0:26:50 reason I’m here.
0:26:55 And I put him in his place, so to speak.
0:27:02 And I’ll never forget it was just the most hollow, hollow feeling I’ve ever had.
0:27:05 We got out of there, it took me years to overcome that.
0:27:08 Like, we got out of there, I got the kids out, we never came back.
0:27:12 I mean, we were like, forget the holidays, we’re not doing this.
0:27:19 But after years of therapy, and this was literally about six or seven years ago, what I’m talking
0:27:23 about happened like 99, okay?
0:27:28 So I go back, and I go back to my father.
0:27:32 And I’ve been listening to things and trying to do this thing correctly.
0:27:39 And I remember, I just said, I have to find one thing that I can tell him that he did
0:27:41 good.
0:27:44 And I said, and we call him Big Terry, because his name is Terry too.
0:27:53 So he said, Big Terry, man, I want to thank you because if it wasn’t for you, I wouldn’t
0:27:55 be here.
0:28:01 If I had to choose my parents, I’d choose you.
0:28:05 Because the truth is, he’s the reason I’m here.
0:28:08 If it was another person, I’d be another person.
0:28:12 So I said, if I had to choose my parents, I’d choose you.
0:28:15 And let me tell you something.
0:28:17 He just broke down.
0:28:21 He said, Terry, I’m sorry.
0:28:23 I’m sorry for beating your mom.
0:28:25 I’m sorry for everything I did.
0:28:29 Listen, man, those words broke him down.
0:28:37 He cried in my arms for about the same time as I was beating him years earlier.
0:28:42 And I was like, this is not hollow.
0:28:44 This feels good.
0:28:45 This is healing.
0:28:55 And I said, man, I have to use my strength for good.
0:28:59 Because everybody can knock somebody out.
0:29:05 But to give a hug with muscles is a whole other matter.
0:29:13 And I said, that is how, that’s the vulnerability, that’s the authenticity, that’s where real
0:29:18 healing takes place, because shame wants punishment.
0:29:22 It just wants to get back, boom, boom, and it’s temporary.
0:29:25 But guilt develops discipline.
0:29:30 When you admit I was wrong, because shame is one’s secrets and you don’t say anything.
0:29:32 But guilt says, I did it.
0:29:34 I’m sorry.
0:29:37 And then you develop discipline to change.
0:29:46 And then, again, it was one of the darkest periods in my life, but totally reversed.
0:29:50 And I decided, that’s going to be my life.
0:29:51 This is who I am.
0:29:54 Now, some people got their ass whooped up.
0:29:58 I’m trying to tell you in between now, because I’m trying to tell you, one thing is some
0:30:01 people try to take that, and you’ll be like, ah, I can push you, and I’m like, hey, get
0:30:03 out of the way.
0:30:14 But what I want to say is the big thing was, is that I knew that would never be the only
0:30:23 way I would ever use that is to protect, is to protect, not to get back, not for revenge.
0:30:29 There’s a time, but I’m telling you, man, that was a period that I learned forever.
0:30:33 Now again, my father, I wish I could say he changed.
0:30:40 He kind of went back through his old ways, but I’m healed, and I did the things I needed
0:30:41 to do.
0:30:46 I’m going to ask one more question, and it’s related to a question that I posed to you
0:30:54 in the book, because whether it’s looking at some of your early decisions as a child,
0:31:02 or the toughness that you showed in athletics, or doing what other people might consider
0:31:08 risky by trying to create your own category in many different worlds, or having that second
0:31:10 conversation with your dad.
0:31:14 I think there’s a quote that really exemplifies you, and it’s actually a quote that you gave
0:31:19 me in the book, and it was in answering the question, if you could have a giant billboard
0:31:22 anywhere with anything on it, what would it say and why?
0:31:25 And it begins with, God will not.
0:31:28 Could you give us that quote, please, and explain its importance?
0:31:34 Okay, God will not have his work made manifest by cowards.
0:31:38 Ralph Waldo Emerson, it’s my favorite quote.
0:31:48 I literally have it on my dressing room, put on the wall in giant letters, because fear
0:31:54 begets more fear, but courage just begets more courage.
0:32:02 And you don’t even get to be born unless your mother has the courage to have you.
0:32:11 Any great thing, any, just from literally creating a business to making art, it takes
0:32:18 this courage, it takes this willingness to be looked at, to be judged, you have to face
0:32:23 down your fears, and you have to step outside and go.
0:32:30 And it helped me to just lay out what I was afraid of, because that’s the big thing.
0:32:34 You have to ask yourself, what are you scared of?
0:32:37 And then you have to attack.
0:32:41 You literally have to lay out, I remember, now you tell about your swimming experience,
0:32:47 I was always, when you grew up in the ghetto, they kick you into the pool, and these are
0:32:50 not good experiences, okay?
0:32:53 And so, you know, we didn’t grow up on a nice pool and the beach and the whole thing.
0:32:56 It was like the hood, and it’s like, oh man, it’s not good.
0:33:01 So my first experience was horrifying, I almost drowned.
0:33:07 And so one of my fears was swimming, and I remember when I had a house with a pool,
0:33:12 and I remember going in the backyard, and just diving into the deep end over and over
0:33:17 again, to get rid of the fear, and it’s weird because you get near the edge and you go,
0:33:23 here I am, but I have to beat it, and so I would just jump in, and just keep jumping
0:33:28 in, and keep jumping in, until you’re not afraid anymore.
0:33:36 Because remember, it’s a confidence game, and that quote, just when you think about anything
0:33:42 that’s made, and anything that’s created, anything that you see, that you admire, takes so much
0:33:49 courage, because people are going to judge it, and people are going, ah, that sucks.
0:33:54 You know, especially in the age of the internet, who we, you know, everybody’s coming in and
0:33:59 chipping in with whatever they have to say, and you have to be willing, and you have to
0:34:00 be vulnerable.
0:34:07 This is why vulnerability is actually strength, because the vulnerability is part of courage.
0:34:11 You have to be willing to let people judge your stuff, willing to let people hear your
0:34:15 song, willing to let people hear you sing.
0:34:20 And it’s so wild, because I’ll never forget, I always got a story for that, is that the
0:34:26 first time I ever got a movie, it was a big movie, it was Arnold Schwarzenegger, it was
0:34:31 called The Six Day, and I’ll never forget, I’m like, I thought it was going to be like
0:34:35 a quick role, it turned out to be a big job that worked six months in Vancouver, and I’m
0:34:41 like, oh my God, and the first day I was on set, I had to say this line, Adam Gibson,
0:34:44 come with us, you know, please come with us.
0:34:49 And I remember they said, action, and I walked up on Arnold, and I was like, Adam Gibson,
0:34:51 we need you to come with us.
0:35:01 And he turned and looked at me, and I was like, huh, damn it, that’s Arnold Schwarzenegger.
0:35:06 And wait, and I mean lightning fast, everything went through my head, like you don’t deserve
0:35:10 to be here, you’re just a dumb football player.
0:35:15 You are a farce, these people are going to figure you out, you are fake, you’re a phony,
0:35:19 you fool everybody, it’s a rap, they’re going to find out, and they’re going to kick you
0:35:23 out of here, and that’s lightning fast.
0:35:26 And then something was wrong with the camera, they were like, oh, you know what, we got
0:35:32 a problem with the lights, and we got to give us five minutes, and this was all split second.
0:35:37 And I remember, because I froze, and I know I froze, and I remember I just went to the
0:35:44 side and I was like, Terry, you survived the NFL, and after I left the NFL, I was sweeping
0:35:48 floors, I was doing security, and then I went acting, and I said, do you want to go back
0:35:49 to sweeping floors?
0:35:51 Do you want to go back to security?
0:35:55 I said, man, go in there and see these lines, man.
0:36:00 And I literally was cussing myself out, and it was like, yo, get some guts, dude.
0:36:05 And I walked back in there, and they were like, actually, I was like, Adam Gibson, you know.
0:36:11 And Arnold was like, this guy likes his energy, he’s got a lot of his stuff, it’s amazing,
0:36:17 I like him, it’s really, and let me tell you, after that, I learned, go in, rush in, rush
0:36:18 in.
0:36:21 There’s never been a time, I’ve been acting for fricking almost 20 years, and there’s
0:36:25 never been a time, and that’s why I want to demystify this thing, there’s never been
0:36:33 a time that I don’t have those bubbles right before action, never, ever, it’s always there.
0:36:38 Don’t let anybody trick you and act like, oh man, I’m good, no, no, if they that good,
0:36:39 they don’t care.
0:36:44 I’m trying to tell you, if you care, you’re going to always be nervous, you’re going to
0:36:51 always have to face it, but when you walk in, it turns into a mirage, and it just starts
0:36:52 to disappear.
0:36:56 I remember on a set of white chicks, it disappeared.
0:37:00 I remember I was rolling, and I remember, Keenan Harvey wins, I was like, you got any
0:37:03 notes, Keenan, he was like, man, do what you do, man.
0:37:08 And I remember just flowing, and people who know, and a lot of people here who understand
0:37:15 it, if you’ve ever been in a flow, it’s amazing, there’s a time when all the writing just comes,
0:37:21 the lines just come, the job is smooth, you’re like, man, I can do this all day.
0:37:27 That’s by practicing, facing that fear, fear, just going in, going in, going in until you
0:37:32 hit that zone, man, it’s a high, like you will never, ever, ever experience.
0:37:36 I encourage everyone, and I’m not here, I’m here to demystify it.
0:37:52 You will be nervous, always, but go anyway, it’s beautiful, Terry Chris, all right.
0:37:56 Just a quick thanks to one of our sponsors, and we’ll be right back to the show.
0:38:00 This episode is brought to you by Element, spelled L-M-N-T.
0:38:02 What on earth is Element?
0:38:05 It is a delicious, sugar-free electrolyte drink mix.
0:38:09 Element is formulated to help anyone with their electrolyte needs, and perfectly suited
0:38:12 to folks following a keto, low carb, or paleo diet.
0:38:17 So if you’re on a low carb diet, or fasting, electrolytes play a key role in relieving
0:38:20 hunger, cramps, headaches, tiredness, and dizziness.
0:38:24 Sugar, artificial ingredients, coloring, all that’s garbage, unneeded, there’s none
0:38:26 of that in Element.
0:38:30 And a lot of names you might recognize are already using Element, it was recommended
0:38:32 to be by one of my favorite athlete friends.
0:38:37 Three Navy SEAL teams as prescribed by their Master Chief, Marine Units, FBI Sniper teams,
0:38:39 at least five NFL teams who have subscriptions.
0:38:44 They are the exclusive hydration partner to team you, say weightlifting, and on and on.
0:38:51 Get your free Element sample pack with any drink mix purchase at drinkelement.com/tim.
0:38:59 And if you’re an Element Insider, one of their most loyal customers, you have first
0:39:05 access to Element Sparkling, a bold 16-ounce can of sparkling electrolyte water.
0:39:17 Again, check it all out, drinkelement.com/tim, drinklment.com/tim.
0:39:24 And now, Richard Kosh, renowned investor and best-selling author of books on business
0:39:31 and personal success, including The 80/20 Principle and his most recent book, Unreasonable
0:39:33 Success and How to Achieve It.
0:39:42 You can find Richard on Twitter @richardkoh8020 Richard, welcome to the show.
0:39:43 I’m so thrilled to have you.
0:39:47 It is, in some respects, decades overdue.
0:39:49 And we were just chatting before clicking record.
0:39:53 Could you please get us started with wines and spirits?
0:39:57 It’s a great pleasure to be talking to you, Tim.
0:40:02 Thank you very much for all your generosity in giving me quotes to put on books and things
0:40:03 like that.
0:40:04 That’s very much appreciated.
0:40:09 I’m not sure that this is a great place to start, but I was just thinking that you had
0:40:11 reinvented the talk show.
0:40:18 And when I was 17, and I had the first job in Windsor, England, as a van driver for
0:40:23 a firm of wines and spirit merchants, they were called Lovey Bonds.
0:40:28 And they were probably about the most old-fashioned wine and spirit retailer you could possibly
0:40:29 imagine.
0:40:35 And one of the things which they did was deliver wine and spirits to quite a distinguished bunch
0:40:36 of people, actually.
0:40:42 I used to drive into Windsor Castle and give the brigadier his gin and so on and so forth.
0:40:45 But one of the other people that I used to visit was Michael Parkinson.
0:40:50 And Michael Parkinson, as you know, was a very successful sports writer and broadcaster
0:40:53 who then branched out into doing chat shows.
0:40:55 And some of the stuff which he did was marvelous.
0:41:00 I saw a clip the other day of him talking to David Bowie, and it was fantastic.
0:41:03 They were really enjoying themselves, and they were moving very smartly from point to
0:41:04 point.
0:41:09 And that made me think about you because I think you’ve reinvented the chat show on
0:41:11 podcasts, and it’s just amazing.
0:41:15 So anyway, that’s my non-story to start with.
0:41:21 Well, give me time to disappoint, and I appreciate the kind words.
0:41:27 And I should also say for people listening, those people who perhaps have read the various
0:41:32 policies on my website will note or received one in my auto response via email will know
0:41:34 that I say, “I don’t give quotes for books.
0:41:35 I don’t do forwards.
0:41:39 I don’t do,” and I have a very long list of do not do’s.
0:41:45 The reason that I’ve made an exception is that, and if anyone else fits this bill, feel
0:41:49 free to reach out because I know it’s going to be approximately zero.
0:41:55 If you’ve written a book like several of your books that have traveled with me for more
0:42:01 than 10 years from place to place that sit on my shelves face out as a reminder, feel
0:42:05 free to reach out, but that is going to be a very small number indeed.
0:42:07 And perhaps we could start.
0:42:13 This isn’t exactly the beginning, so to speak, but with the Bodleian Library.
0:42:19 And if you could explain what that is and take us into context from there, I think that
0:42:20 would be helpful.
0:42:26 The Bodleian Library is a fantastically beautiful building in Oxford, very close to the college
0:42:33 that I was at, and I used to sit in there in the stacks and look out of the window whenever
0:42:37 I could, but the great thing about it was that it had almost any book that you could
0:42:38 possibly imagine.
0:42:44 And one day, I decided that I wanted to read a book which I had read about called The Course
0:42:50 of Economic Theory, but it was in French written by our old friend, Vilfredo Pareto,
0:42:57 and it was published in Lausanne in, I think, 1896 and 97.
0:43:03 And I have no idea at all, Tim, why I wanted to read this book, because it wasn’t part
0:43:08 of my coursework or anything like that, but that was a book in which I discovered the
0:43:10 80/20 principle.
0:43:15 And he didn’t call it the 80/20 principle, as you know, but nevertheless, he had all
0:43:22 these algebraic equations which showed the wealth distribution in England in the 17th
0:43:28 century, 18th century, 19th century, and also in Italy, France, Switzerland, other countries
0:43:30 over those periods of time.
0:43:36 And what he found was that there was the same pattern of distribution of wealth against
0:43:43 the population, and a remarkably similar chart could be drawn from the algebra for any of
0:43:49 those countries or any time in order to show what proportion of wealth was owned.
0:43:53 And of course, it was a very small number of people or proportion of people who actually
0:43:56 owned most of the wealth or earned most of the money.
0:44:01 So you might say, well, that’s very arcane, and it’s not particularly interesting, but
0:44:09 I instantly thought, I can use this, I can use this to cheat in my examinations without
0:44:12 actually cheating.
0:44:18 And so what I did was to say, well, I do know that I’m going to have to write 11 papers
0:44:23 three hours long each at the end of my time in Oxford.
0:44:28 The Oxford degree is entirely determined by the final examinations.
0:44:32 There’s no assessment current or there are no previous examinations at all.
0:44:35 So it’s a very, very important thing.
0:44:42 But I had noted that on sample papers, there were something like 50 questions or whatever.
0:44:47 And it’s impossible to imagine that I could actually research or do work on 50 questions
0:44:49 times 11.
0:44:55 So I thought, well, maybe if there’s 80/20 principle applies, there will be some questions
0:44:59 which are asked much more frequently.
0:45:05 And lo and behold, I got the papers for the history exams for the last 20 years, and it
0:45:06 was absolutely true.
0:45:08 There was always a question about the French Revolution.
0:45:11 There was usually a question about the Russian Revolution.
0:45:16 There was always a question about the origins of the causes of the First World War and so
0:45:17 on and so forth.
0:45:22 So I said to myself, well, you know, I don’t need to study very extensively.
0:45:25 You could write the answers to three or four questions.
0:45:28 It was your choice during three hours.
0:45:35 So what I said was, I will research six subjects, no more for each paper.
0:45:38 And I will be word perfect.
0:45:40 I will have very obscure quotes.
0:45:43 I will use foreign languages that I don’t actually understand.
0:45:47 I will learn absolutely word perfect.
0:45:52 And if I do that, I don’t have to do much work and I will get a top degree.
0:45:54 And lo and behold, that is exactly what happened.
0:46:00 And then I thought to myself afterwards, gosh, this Manfredo was quite onto something, wasn’t
0:46:01 he?
0:46:04 So that was my introduction to the 80/20 principle.
0:46:06 Perhaps I’ll never look back in some senses.
0:46:12 You know what is, well, to me, so funny about that in part is that I did something very
0:46:13 similar.
0:46:16 I just was not aware of Pareto at this point.
0:46:24 But when I was doing my undergrad, I about halfway through began asking teachers to get
0:46:30 them some degree of sort of plausible deniability because I was hesitant to ask outright what
0:46:33 is going to be on the exam because they’re not supposed to answer such a question.
0:46:38 But I would ask teachers, or I would say rather, I know I need to study everything that we’ve
0:46:40 covered for the exam.
0:46:44 But if there are any particular areas you think I should focus on, would you mind telling
0:46:45 me?
0:46:46 And they were very forthcoming.
0:46:51 So it ended up having a very similar effect, although I definitely was pleased that in
0:46:55 most cases, not everything hinged on final exams.
0:47:00 I think I probably would have been crushed under the psychological intimidation of that
0:47:02 type of sink or swim setup.
0:47:04 Yeah, I was quite nervous in my exams.
0:47:09 But I found a solution to that, at least in the afternoons, was that after the morning
0:47:15 paper, I would go down the pub and have a couple of pints of beer.
0:47:17 And I found that calm my nose.
0:47:23 And it was notable that I got better results in the afternoon than I did in the morning.
0:47:31 Well, that could be in one of your next books if you haven’t covered academic hygiene and
0:47:32 preparation.
0:47:40 If we’re looking at formative periods, let’s just say high school, college, university,
0:47:46 however we want to label it, I’m looking at notes, as I do, in these types of conversations
0:47:51 from an interview you did with Boing Boing a long time ago, an outlet that I know very
0:47:52 well.
0:47:55 And one of the questions posed was, what advice would you give to a smart kid who’s
0:47:56 now in high school?
0:47:58 And you can feel free to fact check this incorrect.
0:48:01 But the answer I’m just going to read briefly and then I have a follow up.
0:48:06 Discover what you’re best at doing and enjoy that is different from what all of your peers
0:48:10 are doing that requires relatively little effort from you, then put huge effort into honing
0:48:14 that skill so that it becomes monstrously greater than anyone else’s.
0:48:19 Keep demanding that each year you make your peculiar talent more peculiar and much more
0:48:20 potent.
0:48:23 Use the skill to make the world a more interesting place.
0:48:26 Don’t care about making money if you have a fantastically different and useful skill,
0:48:28 everything else you want will follow.
0:48:36 So I have two questions, accurate or not accurate, “Secondly, what is your peculiar talent and
0:48:37 how did you discover it?”
0:48:41 Well, it’s totally accurate and it’s very easy to give advice and perhaps less easy
0:48:45 to originate the advice or at least to exemplify the advice.
0:48:51 I was always very, very interested in history because it enabled me to develop a certain
0:48:55 skill in analysis with non quantitative analysis.
0:49:01 I’m absolutely hopeless at numbers, but in terms of understanding structures, in terms
0:49:07 of understanding trends, in terms of really getting to grips with what might have happened
0:49:10 that other people had not noticed.
0:49:16 And that’s what I did and, you know, I came up with some pretty wacky ideas during my
0:49:21 time studying history, but I thought that they were plausible and the examiners must
0:49:22 have thought so too.
0:49:26 I mean, for example, it seemed to me that Hitler had been copied pretty much what Lenin and
0:49:27 Stalin had done.
0:49:33 So of course, Hitler was a great anti-communist and they were great anti-Nazis, but he actually
0:49:39 had followed Lenin’s policy, for example, of a one-party state which no one before Lenin
0:49:46 had really done, and of death camps for dissidents and enemies of the regime.
0:49:52 Again, no one had really done that, certainly not on such a ruthless scale as Lenin and
0:49:53 later Stalin did.
0:50:00 So it was my theory that Hitler had based his policy on the Bolsheviks and that’s just
0:50:01 a little example.
0:50:05 I’m not absolutely sure that’s true, but it’s plausible.
0:50:11 And it’s sort of trying to winkle out things that might be true, which are interesting
0:50:14 and important, but which no one else has spotted.
0:50:15 That’s what I try and do.
0:50:16 That’s what I enjoy doing.
0:50:21 So you mentioned hopeless with numbers now, or maybe I injected the hopeless.
0:50:27 But you were very self-deprecating with respect to numbers and numeracy.
0:50:34 And yet, people would look at your track record of investing as an example and ask, “How can
0:50:36 that possibly be the case?”
0:50:42 So again, in my notes, I have Betfair here, which I would love for you to explain, but
0:50:45 it adds that you couldn’t use their website.
0:50:48 Now, please explain.
0:50:49 Okay.
0:50:55 Well, the way of reconciling those two apparently different things, I do have a very good track
0:50:56 record.
0:51:02 Thank God, I’ve been very lucky or very fortunate, at least, in my investments, but it’s not
0:51:06 based on being an analyst in the conventional sense.
0:51:10 I got fired from the Boston Consulting Group because I was no good at doing financial and
0:51:14 market analysis, despite the fact that I was quite good at doing some other things, which
0:51:16 they didn’t value very much.
0:51:23 It is true that I’m not particularly numerate, but I believe that’s a skill which is readily
0:51:25 available from other people.
0:51:31 And as far as Betfair is concerned, I base my investment, as indeed all my investments
0:51:35 are based on the STAAR principle, which was something that the Boston Consulting Group
0:51:39 themselves had invented way back in the 1960s.
0:51:44 And this is the old chart of the DOGS, STARS, question marks, and cash cows.
0:51:50 So I never make an investment unless the business is a STAAR business or has the potential to
0:51:52 be a STAAR business.
0:51:57 And BCG’s definition, my definition of a STAAR business, is that market leader in a
0:52:04 niche, a defensible niche, where you can protect it against other people, other competitors,
0:52:05 and a high market growth rate.
0:52:07 BCG said more than 10%.
0:52:11 I’ve really tried to aim at more than 30%.
0:52:19 And the thing about Betfair was that a friend of mine in 2001 came along and said, “We started
0:52:20 this betting company.”
0:52:26 And I’m a gambler, I like gambling, and we think it’s completely different from anything
0:52:28 else because it’s not a bookmaker.
0:52:30 And I said, “Well, what do you mean?”
0:52:36 And he said, “Well, a bookmaker is someone who makes a book and basically offers odds
0:52:40 to punters gamblers who might want to bet on it.”
0:52:42 But Betfair doesn’t do that.
0:52:50 What it does is it started an electronic market which enables people to either act as a bookmaker
0:52:52 or to act as a punter.
0:52:59 So you can go onto the site and you can see, post it up there, the odds other people will
0:53:00 give.
0:53:04 And the odds for the punters are vastly better because there’s no bookmaker’s profit.
0:53:08 Now, I said, “Well, it can’t be true because Betfair has to make some money.
0:53:09 How do they make money?
0:53:10 What’s their business model?”
0:53:15 He said, “Well, they have a very small commission which they take and they only take that on
0:53:16 winning bets.”
0:53:18 So I said, “Well, that sounds like a fantastic idea.
0:53:20 So what’s the problem?”
0:53:24 And he said, “Well, do you want the real truth?”
0:53:26 And so I said, “Yeah, of course I want Anthony, of course I want the real truth.
0:53:27 What’s the problem?”
0:53:34 He said, “Well, no venture capitalist, no professional financial firm would invest in
0:53:35 this company.
0:53:40 When they first had their round, they started about six months previous to this.”
0:53:43 And he said then there was, from their point of view, a very good reason for that which
0:53:49 was none of the managers in the business had any experience.
0:53:51 I said, “Oh, you mean they didn’t have experience in the industry?”
0:53:55 He said, “No, no, they don’t have experience in the industry.”
0:54:00 Well, one of them used to be a professional gambler, but that’s not experience which venture
0:54:03 capitalists would recognize as being habitable.
0:54:06 He said, “No, they never run anything.”
0:54:12 And I said to me, “So, Anthony, you’re telling me that I should put money into a business
0:54:15 that has people running it, they’ve never run anything else?”
0:54:21 He said, “Well, one of them used to be a financial debt person at Morgan Stanley.”
0:54:26 And he was making, you know, he was trading loans and doing that sort of stuff.
0:54:29 And he said, “You know, trading loans is not a million miles away from running a betting
0:54:30 exchange.”
0:54:38 But the truth was that they really were all sports enthusiasts or gambling enthusiasts.
0:54:42 And none of them had any experience in management, which explained why it was only friends and
0:54:48 family who had been willing to invest in this particular company.
0:54:49 So I said to Anthony, “Well, what’s the attraction?”
0:54:51 He said, “It’s a star business, Richard.”
0:54:57 And Anthony had worked for me in L.E.K. and also in a company we set up after L.E.K. called
0:54:59 Strategy Ventures.
0:55:05 And so he knew that I knew that the way to make money in investing in small businesses
0:55:10 was to actually invest in something which could be or was a star business.
0:55:16 So even though it was tiny, and even though it was losing money, it was clear that Betfair
0:55:19 was indeed a star business.
0:55:20 And why was it clear?
0:55:21 Because no one else was doing what they were doing.
0:55:25 Their business model was completely different, their cost structure was completely different,
0:55:29 their customers were completely different, all of their customers were sophisticated and
0:55:35 quite large, not all of them, but most of them were sophisticated and quite large gamblers.
0:55:41 And so they didn’t compete with Ladbrooks or Corals, the other British bookmakers.
0:55:44 And in fact, they didn’t compete with anybody because there was nobody.
0:55:49 There was actually another firm set up originally in San Francisco called Flutter.
0:55:51 It had a slightly different business model.
0:55:55 So it had no competition, it had infinite relative market share.
0:55:58 So I said, “Well, that’s fantastic.”
0:56:01 So he said, “Well, let me give you the website.
0:56:03 You can go on and see how it works.”
0:56:08 Well, unfortunately, I couldn’t because I didn’t know how to work the website.
0:56:13 And I went along and talked to the people and just tried to make sure that it was indeed
0:56:20 a star business and that I thought that it could actually get some professional management
0:56:21 later on.
0:56:29 And so after an hour, I decided to invest £1.5 million in that business.
0:56:31 And they were quite shocked by that.
0:56:33 And they said, “Well, are you sure?”
0:56:37 And I explained to them what a star business was and how it was wonderful and how they
0:56:41 should be very pleased to be having a star business and all the rest of it.
0:56:43 But they were quite taken aback at that.
0:56:46 And they had been trying to raise money again from institutions.
0:56:48 They’d all said no.
0:56:53 And the mates that they had to put the money in originally, you know, didn’t want to put
0:56:57 more money in, particularly as they used that money much more quickly than expected.
0:57:01 The reason they used the money much more quickly than expected was that the growth was fantastic
0:57:08 and it was a tiny, tiny, tiny business, but it was growing at 40%, 50%, even 60% a month.
0:57:11 And I said, “Well, the other thing which I believe in apart from the star principle
0:57:13 is the compound growth rate.”
0:57:17 And so I looked at their financial projections and I thought they’re incredibly conservative
0:57:20 considering the market growth rate.
0:57:27 And so I invested and I went on to the board and about four years later, the Chaps had
0:57:33 an away day at which I said how wonderful star businesses were and so on and so forth.
0:57:39 And then I said, “And actually, last week, I decided it was time that I actually learned
0:57:42 how to use the website that you have.”
0:57:44 And they all fell about laughing.
0:57:45 They thought I was joking.
0:57:48 And I said, “No, I did, I think it’s great, great website.”
0:57:52 And they said to me, “Well, how could you possibly have invested in the business without
0:57:54 sort of going on to the website?”
0:57:56 And I said, “Well, it’s a star business.”
0:58:01 And they said, “I think I went down in their estimation quite considerably as a result
0:58:04 of that definition.”
0:58:06 And of course, now I use the website most days.
0:58:08 I think it’s a wonderful website.
0:58:12 I’ve sold my shares, so I’m not advertising the company or anything like that.
0:58:16 But I ended up making about 100 million pounds profit out of that investment.
0:58:19 So that’s the power of the star principle.
0:58:25 So how can someone who’s not numerate make money out of what is generally a highly-numerate
0:58:26 industry?
0:58:27 Well, the answer to him is very simple.
0:58:31 I believe in principles, and I believe in the star principle.
0:58:32 And it works.
0:58:35 I’m the only investor in the world that does this.
0:58:40 And I think I’m the only investor of the world at my scale, but doesn’t employ anyone.
0:58:44 And that does it on the basis of probably about a day or week of work.
0:58:47 I do use my personal assistants to do some of the work.
0:58:53 I do use contacts for special particular jobs, but I don’t have any staff.
0:58:59 And when I tell people this, they say, “Well, your portfolio is X, that’s absolutely unbelievable.”
0:59:03 I said, “Well, I’ve only got one question when I invest in a business.
0:59:06 Is it a star business or could it be a star business?
0:59:10 And once I’ve invested, I want to retain it as a star business or make it more dominant.
0:59:14 And the only question is, how do you do that?
0:59:18 And so life is very simple.
0:59:22 I’m laughing because we could have five hours and I’m going to run out of time before I
0:59:23 run out of questions.
0:59:24 So let’s bookmark a few things.
0:59:27 We’re going to come back to knowledge versus principles.
0:59:28 So we’ll bookmark that.
0:59:32 I want to just make it clear, at least from Wikipedia.
0:59:37 And Wikipedia, of course, is subject to debate, but often an accurate.
0:59:42 And Betfair is described as the world’s largest online betting exchange.
0:59:46 Just for those who are looking for some type of perspective and are not familiar with the
0:59:48 company.
0:59:51 And you had mentioned gambling and liking gambling.
0:59:56 I want to dig into that because it strikes me that you may enjoy gambling, but you’re
0:59:59 also very good at placing bets.
1:00:01 And those are not necessarily the same thing.
1:00:07 If we think about the psychological dynamics, drivers and criteria involved.
1:00:14 And I want to explain also to people listening that investing is a wonderful metaphor and
1:00:19 framework for exploring principles that apply elsewhere.
1:00:24 Thinking processes that apply elsewhere or perhaps even everywhere.
1:00:26 So my question for you is very specific.
1:00:28 1.5 million.
1:00:31 How did you decide on that bet sizing?
1:00:33 That was all the money I had.
1:00:34 Holy shit.
1:00:35 Wow.
1:00:36 Okay.
1:00:37 So you just pushed in all your chips?
1:00:38 Yeah.
1:00:39 All my liquid assets.
1:00:42 And this is quite typical for me.
1:00:43 I want to be full.
1:00:48 It’s something I’ll talk about later, which is that one of the things which is quite absurd
1:00:53 about me is that I actually don’t have very much money to spend and I don’t really mind
1:00:54 that.
1:00:57 I tend to, when I’m in London, for example, in normal circumstances, I would take public
1:00:58 transport.
1:00:59 I would go on a bus or the tube.
1:01:05 I would cycle if I possibly could, but I wouldn’t take a taxi or even an Uber unless
1:01:10 it was absolutely, you know, it was desperately short of time and I don’t believe in being
1:01:11 desperately short of time.
1:01:15 I always make sure I have plenty of time because I don’t want to be rushed and because I can
1:01:18 always use the time to think or whatever.
1:01:21 So how do I just decide on the bet size?
1:01:25 You know, it’s just a matter of what I have available if I think it’s a good bet.
1:01:29 I hasten to add I don’t make money out of my horse racing gambling.
1:01:34 That is purely an entertainment and I don’t place particularly large bets relative to
1:01:36 my net worth either.
1:01:41 If I can go for 18 months without having to put any more money in my account, I’m very
1:01:42 happy.
1:01:43 It’s a different kind of bet.
1:01:48 I mean, gambling, conventional gambling, whether it’s poker or it’s at the root casino or
1:01:54 it’s horse racing or it’s betting on tennis or baseball or football or anything like that.
1:01:58 I think there are people who make money at it, but they usually either have some inside
1:02:04 information or they are incredibly skilled at judging probabilities and they often have
1:02:05 even research.
1:02:12 I know someone who had 15 employees tracking football in order to see whether the odds
1:02:16 on particular football matches were right or not and he would take positions and he
1:02:19 made a lot of money out of that consistently every year.
1:02:23 But you know, someone like me who doesn’t know a lot about football, knows nothing about
1:02:27 football, doesn’t know a great deal about horse racing, is at a certain disadvantage.
1:02:32 I just I’d have a particular method which I use, which is based on looking not where
1:02:37 the horse came in the race, but on the time relative to other times.
1:02:40 And all that is calculated on the Racing Post website.
1:02:43 It’s called something called top speed.
1:02:47 And whenever I make a lot of money in horse racing, it’s because top speed has shown me
1:02:52 a horse which is not far away from the favourite, but might be at odds of 30 to 1 or in one
1:02:55 case it was even 330 to 1.
1:03:03 That’s unusual, but betting on companies is fantastic because if you understand how important
1:03:08 relative market share is, and if you understand whether or not a company is able to segment
1:03:14 itself and therefore have a defensible position in a particular segment like Betfair, then
1:03:20 it’s absolutely fantastic because you can, you know, you can basically invest and know
1:03:26 that you might lose your money, but overall, you’re going to do very well out of that.
1:03:30 And, you know, I have very rarely lost money on star businesses.
1:03:34 The cases where I’ve lost money is where I thought something might become a star business
1:03:35 and it wasn’t.
1:03:37 Does that answer your question?
1:03:38 It does.
1:03:42 And I have a whole handful more to follow up.
1:03:46 So you wrote an entire book on this, the Star Principle 2008 that was published in 2008,
1:03:50 spoken investing in star businesses, that was the focus.
1:03:58 When you say segment itself, businesses that can segment itself, and you mentioned Betfair,
1:04:00 what does segmenting itself mean?
1:04:08 It means that it defines the market in a way that nobody else has done or that very few
1:04:12 people do and therefore that it’s possible to become the market leader in it.
1:04:14 So Betfair is a very good example of that.
1:04:19 It’s a betting exchange, which is an electronic market where people can post bets on either
1:04:21 side by or cell.
1:04:26 It doesn’t take principal positions, as bookmakers do.
1:04:30 So it’s, once it’s overheads a covered, it can’t lose money.
1:04:37 And it competes against other betting exchanges, not against the big bookmakers, because anyone
1:04:43 who’s a big gambler isn’t going to go to Ladbrooks or Corals or the Tote or Paddy Power or any
1:04:48 of those conventional bookmakers, because they know that the bookmaker typically takes
1:04:51 out about 10% on each event.
1:04:57 And Betfair takes out maybe 2%, but that’s only half the time, if you win half the time
1:04:58 and lose half the time.
1:05:01 So it’s 1% plays 10%.
1:05:05 And therefore it means that the customer profile is completely different.
1:05:09 And the way that the cost structure operates is completely different.
1:05:16 So it’s a separate business segment, because it’s not competing with conventional betting
1:05:17 firms.
1:05:20 So it means that a company has to do something differently.
1:05:26 It either has to have a price advantage, and therefore a cost advantage in the way that
1:05:34 Betfair does, or it has to offer something which is so attractive that people will pay,
1:05:37 and if it’s the same price, they will actually go there.
1:05:43 So the three things that you want to do if you want to, what I call proposition simplify,
1:05:45 you have to have something which is very useful.
1:05:50 You have to have something which is easy to use, and preferably you want something which
1:05:54 is aesthetically pleasing, which gratifies you as a joy to use.
1:05:59 And if you think about any of the Apple devices, then they created their own segments with
1:06:07 the iPod and the iPad, and the iPhone, and other devices, because it was different from
1:06:12 conventional competition, even the Mac really didn’t compete head to head with IBM.
1:06:18 And anything where you can get a big price premium, for example, 30% plus, as Apple’s
1:06:22 been able to do on all of its devices, at least at the start, you have something which
1:06:29 is a separate segment, because it’s not competing against the low cost competitor.
1:06:34 And if you are going to be a low cost competitor, you want to be low cost in a segment which
1:06:39 is different from the other segments, because otherwise, the existing large companies will
1:06:41 eat you for breakfast.
1:06:46 You are unconventional in many different respects, and I’d like to ask you a personal question
1:06:53 you can feel free to decline to answer this question, but I’m very curious as to what
1:07:00 your investment portfolio looks like, what principles govern its composition, because
1:07:06 you had mentioned that you’re quite happy to have small amounts of liquid assets, cash
1:07:07 available.
1:07:12 So what does your portfolio look like, to the extent that you’re comfortable discussing
1:07:13 it?
1:07:15 What are the principles that govern its composition?
1:07:21 Well, it’s pretty much an illustration of the AT-Trends principle, but more so, I suppose
1:07:27 my most valuable single, I’ve got about 40 assets, companies in which I’ve invested,
1:07:33 and the most valuable company in the portfolio constitutes about half the total value, and
1:07:37 another one constitutes about a quarter of the total value.
1:07:43 And so in a way, that also simplifies my life, because if I take care of those two particular
1:07:48 assets and know that they’re going to do well, or think that they’re going to do well, then
1:07:49 I can be relatively relaxed.
1:07:57 I’m quite happy to increase my share in companies once I know, or think I know, and I’m not
1:08:01 infallible, that they are going to be successful.
1:08:07 So for example, the company that is my largest single investment, I started off with a relatively
1:08:12 modest investment that might have had about 2% of the company, and I’m now up to 60% of
1:08:13 the company.
1:08:18 And basically what I’m doing is buying my shares from the existing shareholders whenever
1:08:23 there is an opportunity to make an offer for shares, which is when I’ve got some money.
1:08:25 So that’s the principle.
1:08:28 I don’t have any rules on industry.
1:08:30 I don’t care what industry it’s in.
1:08:34 I don’t really care very much what the management is like, because the management doesn’t perform
1:08:37 management will eventually get replaced.
1:08:43 I don’t really care where it is, as long as it’s not, well, as long as it’s in Europe,
1:08:47 because I think I understand European markets, I won’t invest in the US because competition
1:08:52 is too great, and also because I don’t like the IRS.
1:08:55 And also, I don’t know anything about American investment.
1:09:04 So it’s basically a European portfolio, industry irrelevant, and I don’t care about concentration.
1:09:07 In fact, I rather like concentration.
1:09:12 Let’s go back to getting fired.
1:09:13 Just to warm up the conversation.
1:09:16 So what happened after you were fired?
1:09:21 And could you actually tell us more about the day that you were fired?
1:09:23 What was the conversation?
1:09:24 What was that experience like?
1:09:26 And then what happened after you were fired?
1:09:30 Well, it was a slow firing, and in fact, it was a very gentle firing.
1:09:36 BCG, like McKinsey, McKinsey invented the phrase “up or out.”
1:09:40 And at McKinsey, they would say that after three years, you would be assessed.
1:09:44 And if you were really good at their business, you would get promoted.
1:09:46 And if you weren’t, you’d be asked to leave.
1:09:51 But they would do it in a very, very nice way, because they were sort of dividing the
1:09:55 sheep and the goats, the sheep were the people who were good enough for McKinsey, and the
1:09:58 goats were people who were good enough to be McKinsey clients.
1:10:02 So that was their philosophy, and they were terribly nice to the people.
1:10:07 But in fact, it was kind of like, it was a form of, I don’t know, it was a form of sort
1:10:15 of psychological one-upmanship, because the people who left generally weren’t as bright
1:10:16 as the other people.
1:10:19 It wasn’t that they could do things that the McKinsey people couldn’t do.
1:10:25 It was that they weren’t as bright in terms of the strategy of a business and analysis
1:10:27 and so on and so forth.
1:10:28 So that worked extremely well.
1:10:35 Well, BCG did not have quite as rigid a formula as McKinsey, but they did have this policy.
1:10:41 But if after three or four years, you had not been made from a consultant into a manager,
1:10:45 a consultant was a typical entry level for someone who’d been to business school, you’d
1:10:50 be pretty much an anomaly, would be the way that they would probably put it, and therefore
1:10:54 you might start thinking about what you wanted to do.
1:11:00 And so I had a number of those conversations with people, but I said to them, look, you’re
1:11:01 dead wrong.
1:11:02 This was me.
1:11:07 This is me in my arrogant youth, and maybe I haven’t got rid of the arrogance altogether.
1:11:11 I said, look, I’m no good at analysis, but I can charm the clients.
1:11:13 I can talk to the clients.
1:11:20 I’m quite articulate, and I can understand what the issues are, the strategic issues,
1:11:21 and I can relate those to the clients.
1:11:25 So, you know, I might not be very good at being a consultant.
1:11:29 I might not even be very good at being a manager, but why don’t you make me a vice president,
1:11:32 because I can actually do rather well?
1:11:33 And they would chortle.
1:11:36 They would say, Richard, you know, we have to have a hierarchy.
1:11:41 And I said, well, you know, X, Adrian, for example, Adrian’s now a vice president.
1:11:47 We all know that he was a pretty good consultant, but he wasn’t a terribly good manager because
1:11:53 he couldn’t command the analysis, and that’s the heart of, you know, what BCG does.
1:11:54 So he had to rely on other people to do it.
1:11:59 But now he’s a vice president, he’s selling a lot of business very successfully and helping
1:12:00 clients.
1:12:03 So, I’m like Adrian, basically.
1:12:05 And they would, again, chortle a bit.
1:12:10 But eventually, a guy called, a very nice guy called Phil Hume, who later started Computer
1:12:15 Centre and made quite a lot of money out of Computer Centre, sat me down and said, Richard,
1:12:17 you know, you are running out of road a bit.
1:12:22 And I said, well, look, I got a fantastic assessment from Roy Barby the other day.
1:12:26 You know, he said, how much the clients love me, he said, yes, Richard, we know that.
1:12:29 But basically, you can’t do what is really our power alley.
1:12:33 So you maybe you’ll sort of think about looking around.
1:12:38 And I came out from that meeting thinking, is he right?
1:12:39 Is he right about this?
1:12:40 Or am I right?
1:12:43 And I thought to myself, well, maybe he’s right.
1:12:50 So I actually then very quickly went to other consulting firms, to McKinsey and to Bain
1:12:51 & Company, to see whether they-
1:12:54 I say something, Richard, just for a second.
1:12:59 That is for people who don’t have any context on management consulting.
1:13:03 When you say McKinsey, when you talk about Boston Consulting Group, when you talk about
1:13:07 Bain & Company, just as a point of reference for folks who may not be familiar with this
1:13:08 industry.
1:13:12 When I was studying at Princeton, there are exactly two industries that recruited heavily.
1:13:17 You had the investment banks, you had Goldman Sachs and a handful like that.
1:13:21 And then you had what were considered the elite of the elite of management consulting.
1:13:27 And that included McKinsey, BCG, in other words, Boston Consulting Group, Bain & Company,
1:13:28 and so on.
1:13:33 So these are the most prestigious names in the world of management or strategy consulting.
1:13:36 I just wanted to add that as a bit of background.
1:13:37 Yeah.
1:13:38 Thank you.
1:13:39 Sorry.
1:13:40 I always assume everyone knows and they don’t.
1:13:41 I mean, it’s a very-
1:13:44 When I was doing it, it was a very obscure industry.
1:13:46 And now it’s less obscure, but it’s still pretty obscure.
1:13:48 Anyway, I went to McKinsey.
1:13:53 They said, “No, you’re a bright guy, but we don’t think you should be doing this management
1:13:58 consulting stuff because you want to make decisions rather than advise.”
1:14:00 And I said, “Yeah, that’s probably true.
1:14:03 Bain & Company I’ll come back to in a second.”
1:14:05 I then said, “Well, maybe I should be a headhunter.”
1:14:10 And I was actually approached by firm headhunters, some of whom knew me personally.
1:14:16 And so I went off to see Egon Zender in Zurich with a view to becoming an Egon Zender was
1:14:21 the leading at that time, probably still is the leading European headhunter.
1:14:25 Just a footnote there for people, headhunting means recruiting, right?
1:14:30 A very high level and taking very large amounts of money from the clock.
1:14:35 So anyway, I talked to Egon Zender, and he offered me a job on the spot, and I was very
1:14:37 nearly accepted on the spot.
1:14:42 But when I sort of examined my heart, I came back to the conclusion that I thought BCG
1:14:47 was wrong and that I might not suit BCG, but I thought, you know, maybe I can get the job
1:14:49 in another consulting firm.
1:14:54 There happened to be another individual who had left the Boston Consulting Group and joined
1:14:59 Bain & Company, a guy who rejoiced in the name of Floyd Bradley III.
1:15:04 You might tell he was an American, very, very nice guy, quite a smart guy.
1:15:08 Anyway, so he, I arranged to have a drink with him and said, “I’m not too happy with
1:15:09 BCG.
1:15:11 I don’t think they’re moving me on fast enough.
1:15:14 How about Bain & Company, do you think that they would be interesting?”
1:15:18 He said, “Yes, they’re always looking for people that find it quite difficult to recruit
1:15:19 people at this stage.”
1:15:22 And so I said, “Fine, I’ll go along and talk to them.”
1:15:25 So I went along and talked to the head of the London office and he said, “We’ll send you
1:15:27 off to Boston.”
1:15:29 Now, this was very interesting for me.
1:15:34 It was my one chance, basically, to stay in the industry that I wanted to stay in.
1:15:39 The only problem with Bain & Company was that it had a reputation for being an extremely
1:15:47 hierarchical, strict, controlled, almost mystical outfit where you had to do what you were told.
1:15:53 Whereas BCG actually was a pretty freewheeling, entrepreneurial sort of firm, reflecting
1:15:58 the difference in character between the guy who had started BCG, Bruce Henderson, and
1:16:01 the guy who runs, or ran rather, Bain & Company.
1:16:06 I should say that he’s dead now, so I can’t be sued for libel or slander or whatever it
1:16:07 is and neither can you.
1:16:12 Although, I have the utmost respect for Bill Bain, as I come on and say it in a second.
1:16:14 So they sent me off to Boston.
1:16:15 So there I was.
1:16:19 I had a four o’clock appointment to see Bill Bain.
1:16:26 In the afternoons, I got off the plane, got a cab to Boston office, turned up at the desk
1:16:31 and said, “I’m here to see Mr. Bain at four o’clock.”
1:16:34 And the woman sort of looked a bit confused and numerous.
1:16:39 And basically, what had happened was that someone in the London office had not told
1:16:42 the Boston people, “Well, they’ve given me a ticket to go and see him.
1:16:45 They’ve given me an appointment time.”
1:16:50 Apparently, it had not somehow not got into the agenda of Mr. Bain.
1:16:51 So they said, “Come back following morning.”
1:16:53 So I went back following morning.
1:16:54 And there I was.
1:16:55 You know, I went through the offices.
1:17:01 They were, the offices were quite remarkable, they’re beautiful offices, but the associates,
1:17:04 the consultants and the researchers were all hunched together.
1:17:08 It was not quite a sweatshop, it was a very nice sweatshop, but you could see that they
1:17:13 were either expanding very fast or very tight on the rental cost.
1:17:18 And then I went into Bill Bain’s office and it was palatial.
1:17:24 You know, it was stuffed full of basketball and baseball trophies and insignia and paraphernalia
1:17:25 of all sorts.
1:17:31 And he was sitting behind this large desk and got up very graciously to meet me and said,
1:17:32 “Do you want anything to drink?”
1:17:35 And I said, “No, I don’t want anything, thank you.”
1:17:37 And then he started talking to me.
1:17:42 Well, it was very fortunate for me because I didn’t find out until afterwards, but it
1:17:44 turned out that Bill Bain was a historian.
1:17:45 That was his undergraduate degree.
1:17:50 And in fact, he had spent a year doing postgraduate research, which he eventually gave up because
1:17:55 he thought it was terribly boring and because he got offered a better job as the development
1:17:57 director of Vanderbilt University.
1:18:03 But during the course of that interview, Bill Bain said something and I thought, “Well,
1:18:06 I want to ask him a question,” but he was in full flood.
1:18:10 So I let him carry on talking until probably about 20 minutes afterwards.
1:18:15 And then I went back to it and said, “You know, if I got it right, Mr. Bain, you said earlier,
1:18:19 such and such and such and such, and I want to ask you a question about that, blah, blah,
1:18:20 blah.”
1:18:23 “You’re incredibly unusual,” and I said, “What?”
1:18:28 And he said, “Well, you’re a very good listener and not many people are good listeners.”
1:18:31 And I wasn’t aware that I was a good listener and maybe it was just that I was so desperate
1:18:36 to get a job that actually, I was actually listening, but I was also very curious about
1:18:42 the business because right at the start when I had joined BCG, I thought, “What a wonderful
1:18:44 industry this is.
1:18:49 It requires no work in capital and basically they charge huge fees.
1:18:51 They don’t pay people a hell of a lot of money.
1:18:54 Eventually they give them bonuses, which is where the work in capital comes from, the
1:18:58 difference between the standard pay and the markup, which is some of which is eventually
1:19:01 rebated to the professionals involved.
1:19:04 And it’s expanding very, very fast.
1:19:09 And they’ve got this great model called the growth share matrix because it’s got market
1:19:14 growth on one axis and it’s got the relative market share on the other.
1:19:19 So they call it a growth share matrix, but it’s more popularly known as the Boston box.
1:19:24 And it’s this thing which has cash cows, dogs, question marks and stars.
1:19:28 The one thing I just wanted to say also as an observation of friends who’ve come out
1:19:34 of McKinsey is that it seems that two by two matrices are very popular for organizing thought.
1:19:35 Yes.
1:19:37 And in fact, McKinsey went one better.
1:19:43 They developed an imitation of the Boston box, which was a three by three matrix.
1:19:47 But as always, economy is everything and it wasn’t as good and it isn’t as good in my
1:19:48 humble opinion.
1:19:55 Anyway, the end of the story is that Bill was quite taken with me and I quite surprised
1:20:00 and he said, “I want you to come and talk to Ralph Willard, one of the other founders
1:20:02 of Bain and Company.”
1:20:06 And Ralph was a very jolly chap and we got on very well and so on and so forth.
1:20:08 So they actually offered me a job.
1:20:13 And then I said to them, “Well, Ralph said, “How much do you want to be paid?”
1:20:17 And I said, “Well, I’m earning such and such at Boston Cosology Group, but obviously if
1:20:20 I’m going to take a step like this, I want a 50% increase.”
1:20:21 “50%?”
1:20:22 “That’s ridiculous.”
1:20:29 And I said, “Well, you know, maybe you can just make me an advance for joining and not
1:20:31 consolidate it into the salary.”
1:20:36 But you know, at that stage, I was feeling confident that they wanted me.
1:20:38 So I sort of raised the stakes a little bit.
1:20:42 It’s like the fact that at the beginning of the day, I was totally desperate and if they’d
1:20:46 offered me a job after an hour, I wouldn’t have cared what they were going to pay.
1:20:52 But anyway, they did eventually pay me quite a large amount of money to join and at the
1:20:57 same time, I then went back to BCG and said, “You know, I think you’re making a mistake,
1:21:01 but if you want me to leave, you know, I’ve got all this money, which I’m due in a few
1:21:05 months time as a bonus and the rest, please, can I have that?”
1:21:07 And to my surprise, they said, “Yes, okay.”
1:21:11 I mean, they were so desperate to get rid of me that they agreed.
1:21:16 So I made quite a bit of money from BCG and from Bain and Company.
1:21:19 So it was quite, apart from the fact that the previous two or three years have been very,
1:21:20 very miserable.
1:21:26 I redoubled my efforts to succeed at BCG, I worked 80 hours a week, I got fat in the
1:21:28 face from eating fast food at night.
1:21:32 I basically neglected my personal relationship, I stopped exercising.
1:21:38 It was a complete disaster and if I was to give advice to anybody who’s in a similar
1:21:43 situation or even a less desperate situation, I would say, “If you’re not succeeding in
1:21:49 a job, give up and go somewhere else where, you know, your talents can be better appreciated
1:21:52 or your talents are more suited to what that firm does.”
1:21:56 So I just, Tim, I just could not admit failure.
1:22:01 This was the thing, you know, I just, to me, personal success was absolutely essential
1:22:06 to my happiness and it affected my self-image and all the rest.
1:22:12 And I could not believe that these very intelligent people at BCG couldn’t see the things that
1:22:17 I could do and it would have been far better for me to say, “Well, you know, they just
1:22:22 have a different business model, analysis quantitative heavy-duty stuff is their bag
1:22:26 and you know, it’s not something I can do particularly well.”
1:22:31 And so please give up and stop and, you know, decide whether you want to be in the industry
1:22:35 or decide if you do want to be in the industry, go to a competitor.
1:22:39 So the long and short of that story is that it worked out extremely well in the end but
1:22:44 it was absolutely, ball-zaking, very unpleasant for a competitor.
1:22:50 I wanted my pound of flesh at the end of all the suffering that we’ve gone through.
1:22:58 What did Bain and Company appreciate about you or utilize in you that was not utilized
1:22:59 or appreciated at BCG?
1:23:05 Oh, it was, it’s very simple to answer that because I’ve always been interested in what
1:23:11 I call the theology of business and by that I mean the business model that a particular
1:23:18 firm has and BCG and Bain and Company were very, very interesting to me and this goes
1:23:20 back to your first question about, “What am I good at doing?”
1:23:27 I actually did analyze in my mind, not quantitatively, the business model that BCG had and the
1:23:32 business model that Bain and Company had and they used the same concepts.
1:23:38 They were all using it, both using the gross share matrix of Boston Box, etc., which incidentally
1:23:44 Bill Bain had helped to originate so it wasn’t really plagiarism and indeed BCG had put the
1:23:47 stuff out there in the public domain so it wasn’t, you know, they weren’t doing anything
1:23:53 underhand but they were using all BCG’s concepts but the firms were completely different and
1:23:56 let me try and describe how they were very different.
1:24:04 BCG, as I said before, was a very sort of decentralized company and the vice presidents
1:24:10 who were in charge of particular clients were sort of almost autonomous profit centers.
1:24:14 Bruce absolutely believed in the market.
1:24:19 He was a red toothed capitalist, you know, he really read in tooth and claw.
1:24:25 He really believed in competition and so on and so forth, so much so that he divided his
1:24:31 firm at one stage and this is quite interesting, this was before my time, but he divided the
1:24:38 firm into three different parts and his view was that if one of those firms had developed
1:24:43 a slightly different way of doing things or if they were successful for any particular
1:24:47 reason, then the other firms could learn from that and the market would clear as he was
1:24:54 fond of saying and what happened was that he put Bill Bain whom he had hired from Vanderbilt
1:24:59 University, where he was a development director and met Bill Bain because he had the begging
1:25:07 bowl out as an alumnus of Vanderbilt, Bruce is an alumnus and he asked Bruce, will you
1:25:11 give money to Vanderbilt University and Bruce said no, but come to Boston and we’ll talk
1:25:13 about giving you a job.
1:25:17 So you know, that was kind of like the back story from that point of view, but BCG was
1:25:25 very, very decentralized and even each individual consultant or all the professionals were actually
1:25:31 profit centers, they were rewarded at the end of the year, not on how well they’d done,
1:25:37 not on their team performance, not on anything really, but what he called their billability
1:25:42 which is a number of hours that they had actually built and incidentally, I was probably one
1:25:47 of the most billable people because I was willing to work for a long hours and because
1:25:52 initially at least anyway, people wanted me on their teams and if they didn’t want me,
1:25:58 I could even sell my own work so I had to be included in the people who were on that.
1:26:04 But it was very, very decentralized, Bain and Company on the other hand was a very, very
1:26:11 controlled and I actually called it Stalinist later on organization where it radiated out
1:26:18 from Bill, Bill did all the thinking initially and then the trusted vice presidents who included
1:26:24 Mitt Romney who was a great guy, guy I’ve got tremendous admiration for and four or
1:26:33 five other vice presidents and the formula in Bain and Company was very, very tight and
1:26:39 unforgiving which is that they generated all of their business from a relationship with
1:26:45 the chief executive or the head of the company, sometimes the president or the chairman of
1:26:49 the company but usually the chief executive or maybe they were president and chief executive
1:26:55 and they would not work for anybody who was not the top dog in the organization.
1:27:00 So they wouldn’t work for the head of Europe or they wouldn’t work for the head of manufacturing
1:27:08 or marketing or any other function but they had a spill which they gave to the chief executive
1:27:14 of a company which was Mr. Chief Executive we want you to be very successful because
1:27:17 if you’re very successful we will be very successful.
1:27:22 We’ve got this funny little stuff called strategy which really works and we can explain it to
1:27:28 but basically you should think of it as a wonderful formula kind of like a secret source
1:27:33 for increasing the market value of your company profits and the market value.
1:27:38 And if we do the work with your company your share price will double within the first year
1:27:44 or so or the first two years anyway and it will continue doubling every few years because
1:27:50 we have got a way of making the firm much more valuable and we can describe that but
1:27:59 it relies upon you being willing to accept us as equal partners and again this was very,
1:28:05 very different from the whole of the rest of the industry which was in a way salesmen
1:28:11 for hire or cabs for hire that you know consultants would do anything as long as they got their
1:28:15 daily rate and so on and so forth they didn’t really care too much about which firm are
1:28:19 working for they would work for competitors and so forth.
1:28:24 Bohnen company said we will only work for one company in an industry or later they refined
1:28:30 that to a competitive system which was slightly more sophisticated way of saying industry
1:28:37 and therefore you know we won’t work for your competitors you won’t hire our competitors
1:28:42 so therefore you would be giving a monopoly or strategy consulting or any other form of
1:28:47 consulting really to Bohnen company if you decided to hire them and the way.
1:28:48 It’s incredibly smart.
1:28:49 Yeah.
1:28:50 It’s very smart.
1:28:55 The only way they got clients Tim was that they had no website but that wasn’t unusual
1:28:56 at the time.
1:29:04 They had no business cards, they had no marketing literature and the only way and they were
1:29:09 very secretive the only way in which they got business was by personal recommendation
1:29:16 of one chief executive to another chief executive and then within that firm once the client
1:29:22 had been signed on you know Guinness or Dunn and Bradstreet or Baxter Travenal or whoever
1:29:32 it was they would then have almost a military operation where within each client organization
1:29:39 someone from Bohnen company would be assigned to work alongside or with nominally for you
1:29:43 know the head of manufacturing or the head of a particular product area or however the
1:29:50 firm organized itself and they would make sure that they understood what that person
1:29:56 was thinking they would help them by gathering this very valuable information which Bohnen
1:30:02 company did very very well about competitors and customers and costs of the competitors
1:30:05 and they would you know develop a relationship.
1:30:12 I couldn’t believe it when I was told by Bohnen company when I joined take the head of manufacturing
1:30:18 out to dinner and discuss things with I thought yeah last thing I want to do is have dinner
1:30:22 with the head of manufacturing who is a very boring man and it was all part of the job
1:30:29 and it was incredibly effective because you know whereas at BCG they would go away for
1:30:35 six months and they come back and give a presentation which was dazzling but then people in the
1:30:40 audience of the managers might were free to disagree with what was recommended and cast
1:30:46 often did cast doubt on the credibility of BCG as a result of that rightly or wrongly
1:30:52 usually wrongly in Bohnen company everything had to be pre-wired so all the work was specified
1:30:58 from the top down but it was validated from the bottom up so that once you’ve done a piece
1:31:03 of work you then had to show it to the relatively low level manager and make sure they agreed
1:31:08 with it and if they disagreed they could only disagree about data they couldn’t agree disagree
1:31:12 about concepts because we were the kings of concepts we knew relative market share was
1:31:19 important and we could explain why we weren’t unreasonable but nonetheless when it eventually
1:31:25 got to the chief executive and then later to the board it’ll all been pre-wired which
1:31:31 meant that everyone had agreed to everything and therefore there was no disagreement and
1:31:35 the only discussion which there be at the end of the presentation was about what Bohnen
1:31:42 always used to call next steps well let me tell you what next steps were next steps were
1:31:47 this is how we’re going to make our next million dollars by consulting to you on this issue
1:31:52 but of course it was justified because Bohnen company was a fantastic machine for getting
1:31:57 consensus in organizations and getting consensus about some very radical strategies which might
1:32:03 include getting out of half of businesses that they were in selling them or in some way
1:32:08 hiding them off or closing them down if they were cash-negative and no one would buy them
1:32:13 and then making acquisitions to strengthen existing businesses or even to go into new
1:32:17 areas where Bohnen company would do all the investigation because particularly if it was
1:32:22 outside the industry that the company knew about of course they had no idea so it was
1:32:29 a wonderful machine for getting growth from existing clients and this was what Bill Bohnen
1:32:35 always used to say I have no idea why everyone’s interested in new clients we don’t need new
1:32:40 clients we should have built in growth from existing clients if we’re doing our job correctly
1:32:43 if their profits are going up and the market value is going up and of course they didn’t
1:32:49 say no to new clients and they use the existing clients who are satisfied particularly those
1:32:54 who sat as non-executive directors outside directors on the boards of other companies
1:32:59 to say you know I’d like to show you some a sample of the work which Bohnen company
1:33:07 has done in our industry and I participated in one of those events in New York where we
1:33:13 were working for an information company and we went to present to a board of that information
1:33:19 company but one of the people on that board was the chief executive of a scientific company
1:33:27 and subsequently they hired Bohnen company largely because I think of the recommendation
1:33:31 of the chief executive and to a small degree the quality of the dazzling quality of the
1:33:38 presentation I made well as a result of that Bohnen company made me a partner normally
1:33:43 a partner a vice president whereas I went in as a consultant and that would normally
1:33:49 take several years well that happened after 18 months and it was a very interesting conversation
1:33:54 with Bill Bain when he told me that I was going to be a partner of the firm and what
1:33:59 he said to me was Richard you know I’m gonna say something which might surprise you you
1:34:04 know we’ve had our eye on you ever since you came and talked to me blah blah blah and I
1:34:08 want you to be one of my partners and I thought you know this is ridiculous I you know I didn’t
1:34:13 expect this and he said but there is something which we’re gonna do and I don’t think any
1:34:17 other firm in the world has ever done this not to my knowledge maybe you can correct
1:34:24 me but what they said was we are going to promote you but in only in nine months time
1:34:30 and it’s a done deal you know there’s no question that you’ll be one of my partners and I can
1:34:35 even give you something to sign and sign something myself but you know if we made you a partner
1:34:41 now people might wonder what on earth we were doing in that nine months you’ve got to behave
1:34:46 as though you’re already a partner without the authority of being a partner but just
1:34:51 through force of personality and through knowing that you are reflecting the same way of doing
1:34:55 things you will when we actually make the announcement that you are gonna be a partner
1:35:02 of the firm everyone will say well of course of course rather than say how come that cautious
1:35:10 got promoted that’s unbelievable so Bill was such a clever man at controlling his organization
1:35:15 and he didn’t work very hard but he didn’t work very long anyway but he gave a great
1:35:23 deal of thought to the procedures and to the management of his own company to make sure
1:35:27 that everything that happened in Bain and Company had been initiated in one way or another
1:35:32 by Bill Bain and make sure that that was the thing which was going to make the most money
1:35:38 for Bill Bain for Bain and Company and also making it sound as though it was an incidental
1:35:41 thing but it was very important it was a whole foundation of it for the client organization
1:35:50 it was just a fantastically well-run organization and it grew at 40% a year for 20 or 30 years
1:35:56 whereas BCG had struggled to grow at 20% Bain and Company fell on hard times I think in
1:36:01 the late 1980s because they did a leverage buyout but that’s another story I’m not going
1:36:07 to say any more about Bain and Company well I’m not gonna let you off the hook that easily
1:36:14 you said you explained rather what Bill Bain asked of you to behave like a partner even
1:36:17 though you won’t have the official title anyway we can’t make the announcement until nine
1:36:25 months hence in practice what did that look like what changed in your behavior or in what
1:36:30 you did oh it totally changed me it totally changed me for one thing it made me loyal
1:36:37 and I was always someone who was on the verge of committing you know self-destruction self-destructing
1:36:44 because because I’m a natural rebel I’m a non non-conformist I’m very opinionated and
1:36:50 almost unemployable and that was the conclusion everyone eventually came to but you know it
1:36:58 in BCG I was well known for going off script and I remember one of my appraisals was most
1:37:03 of the time Richard he’s like a volcano this guy wrote in a formal written assessment and
1:37:08 I’ve still got the assessment it’s lovely it said he’s like a volcano most of the time
1:37:15 he’s sort of you know working away and there are no rumblings and it’s all very smooth
1:37:22 but occasionally he erupts like a volcano and he says something to the client which
1:37:28 is not what we want the client to hear and he basically goes off at a tangent or he you
1:37:33 know he has his own view about things so when I’m with Richard and talking to the chief
1:37:40 executive of the NU you know a big information company in Holland or whatever I am very nervous
1:37:47 I never know what Richard’s going to say in Bainan company I’d have been fired if I’d
1:37:54 if I’d have said my vice president said you know something and I said I agree with 99.9%
1:37:59 of that but here’s a slightly different view on 0.1% I’d have been out of the door straight
1:38:06 away so it was it was a complete contrast so the first difference it made was I felt
1:38:11 very loyal to Bill personally and to the organization which I’d never really done before I didn’t
1:38:17 do loyalty I didn’t really do teamwork very well so that was the first difference it made
1:38:24 the second difference it made was that I decided that I would become much more direct with
1:38:29 the people who were working with me if they were at the same level if they were below me
1:38:33 and the organization or even sometimes if they’re slightly above me but I did it very
1:38:38 nicely and so if I thought they were going in the wrong direction I would say well you
1:38:43 know I’ve been thinking about this Fred and I think there’s a better way of doing it than
1:38:47 this instead of interviewing the customers in this segment we should interview in that
1:38:52 segment we should ask these questions rather than those questions etc etc so it made me
1:38:59 much more paradoxically to me it made me more diplomatic but it also made me more assertive
1:39:04 and so it was great I mean I actually thought gosh they’re gonna make me a partner and I’m
1:39:10 gonna be a very successful partner and that’s fantastic but it made me feel a little cautious
1:39:15 because although Bill Boehner signed a bit of paper and all the rest I knew that meant
1:39:22 nothing if he wanted to change his mind so I thought the prize is well within grasp but
1:39:27 I feel confident now it gave me confidence so I was able to do I was much more effective
1:39:31 as a result of that in fact I was probably more effective when I wasn’t a partner than
1:39:38 when I was because I was I wanted it so much but at the same time I felt in some ways although
1:39:44 nobody knew that I had authority in reality I did and that was a tremendous thing and
1:39:49 I don’t understand why firms don’t do this more broadly it’s a fantastic way of encouraging
1:39:54 personal development and also of keeping people who might otherwise decide to leave
1:39:59 before they’re given the nod that actually they are really appreciated and they are going to get
1:40:06 promoted. I was going to ask you more about LEK which was the consultancy you started which
1:40:12 experienced incredible growth and we may get to that but I want to skip ahead a little bit and
1:40:17 I’m going to do that in a foreshadowing fashion by mentioning the 80/20 principle which we’ll
1:40:22 come back to in an interview that I have in front of me a separate interview. The question is what
1:40:27 book has had the single biggest impact on your career and you answer my own book the 80/20 principle
1:40:31 because it’s sold more than a million copies and it’s been translated into more than 35 languages
1:40:36 it goes on and on about that which we’re going to return to and then you say at the end of the answer
1:40:43 that many of your books and much of your investing are related to ideas on strategy consulting and
1:40:48 you learn those firsthand not from books but that you can recommend a book called Perspectives on
1:40:57 Strategy edited by Carl Stern and George Stock. Can you speak to what people might learn in that
1:41:03 book and why you have recommended it? It’s a collection of the early perspectives of the
1:41:10 Boston Consulting Group and a perspective was what an evangelical group would call Attract I
1:41:17 suppose it would be something like 500 words maybe a thousand words pretty short it would be
1:41:24 snazily presented in the livery of BCG which was a very quite a nice dark green color and it would
1:41:32 be mailed to the senior directors of companies in America and Britain and then wherever BCG had
1:41:38 offices and the very valuable thing about the book is a lot of the stuff is by Bruce Henderson
1:41:47 himself but there’s also more modern stuff and it outlines the theory that BCG had in the early
1:41:54 days which I think is still entirely valid of competition, the experience curve, the Boston
1:42:03 box, the gross share matrix etc and it’s just a very very good primer and there are many many
1:42:08 books on business strategy including one which I’ve written but I think this is a very very good
1:42:15 thing and it’s very easy to read because it was deliberately designed to do that. Bruce laid out
1:42:21 the principles for the perspectives very clearly which was anything that a chief executive would
1:42:26 be likely to agree with was not argued I mean it was stated and anything that the chief executive
1:42:32 would be likely to disagree with which was quite a lot because BCG was on the mission of saying
1:42:37 companies should reduce their costs and reduce their prices steadily whereas the conventional
1:42:42 wisdom in business at that time was if you get a high price stick with it don’t worry too much
1:42:50 about the costs and Bruce had a whole theology around that and it’s great because it’s a
1:42:54 collection of those different perspectives and it’s over several years so you get the more
1:42:59 modern stuff as well I think it was published in 2000 or something like that so it is difficult
1:43:06 to get good books on strategy there’s a book by someone called Richard oh god I can’t remember
1:43:11 his name called good strategy bad strategy he’ll come back to me but anyway you type it into amazon
1:43:16 if you want good strategy bad strategy that’s actually a very good strategy book very not very
1:43:20 nice short strategy book and there’s my financial times guide to strategy we don’t give a small
1:43:27 plug to out of print at the moment but I’m producing the fifth edition as we speak at the same time
1:43:32 in the same period of time good strategy bad strategy by Richard Ruhmelt does that sound
1:43:39 correct god isn’t the web amazing aren’t you amazing it’d be far more impressive I was actually
1:43:45 pressing the keys and came up with that myself but I don’t do that well I’ll give away one of my
1:43:51 tricks and that is if I’m recording an interview like this I don’t use my keyboard I have my phone
1:43:58 on silent so that I can tap the screen without making noise to find you’re very clever well you
1:44:03 do that you can have a funky who did that for you but it’s very impressive that you do it yourself
1:44:08 that’s true well it’s just for on the spot tap dancing like that earlier in the conversation
1:44:14 I made a promise to the listeners and that was in the form of alluding to knowledge versus
1:44:21 principles which I think is perhaps a useful way to segue to the 80/20 principle and from
1:44:28 mergersandinquisitions.com which is a great website the distinction that I’ve read you drawing is
1:44:32 the following what I learned from consulting is exactly what I’ve been teaching knowledge is
1:44:36 great but principles are better principles or ideas that enable you to sort the knowledge
1:44:40 helps you to analyze it and get to the essence of the matter as simply and quickly as possible
1:44:45 would you like to add anything to why principles are important and the second part of that is
1:44:51 how did the 80/20 principle come to be as a book because it was a very much and sort of underground
1:44:56 became an underground bestseller so principles anything more that you would like to add and then
1:45:00 where did this book come from? No I think you put it very well I just think there are certain
1:45:05 meta-principles and I think there are probably only about half a dozen of them for the benefit
1:45:11 of myself and the people that I work with and invest with invest really in rather it’s basically
1:45:18 the 80/20 principle and the style principle so if you know what those are then you can look at the
1:45:23 business in a way that most people don’t look at the business very quickly and see whether there’s
1:45:28 potential for improvement and we’ll talk about that in regard to the 80/20 principle in a second
1:45:35 no doubt but how did the book come about well again that’s quite interesting it’s interesting to me
1:45:43 which is that I wrote something called the A to Z of management because I had an editor
1:45:48 who was currently working at Pearson and later left to start his own firm with another
1:45:54 editor there and the editor was called Mark Allen the other editor was called Richard Burton very
1:46:04 very skilled guys very nice guys and they were looking to sort of you know try and get something
1:46:09 by me published and Mark Allen said to me you’ve written this thing called the A to Z of management
1:46:17 which is basically a paragraph about various different concepts and it covered all the principles
1:46:24 I could think of it also covered important theorists in business and it covered anything
1:46:31 which was of interest in business and it also covered jargon phrases like you know what did
1:46:36 what did people mean by work in progress and stuff like that anyway I’d written half a page
1:46:43 on the 80/20 principle and I went to see Mark Allen one day in his offices in Covent Garden and
1:46:50 he said to me Richard I’ve got a book for you to write I said yeah and he said what about writing
1:46:55 a book about the 80/20 principle because you’ve got this half page on it here and it seems to be
1:46:59 quite an important thing you say it’s very important and I can understand it’s very important
1:47:05 so why don’t you write a book on that I said Mark I couldn’t possibly I can possibly write a book
1:47:12 about the 80/20 principle I’ve said it all in that paragraph and I could maybe pad it out to
1:47:20 a page if you really put a gun to my head I could write a chapter but I’m not going to write a whole
1:47:28 bloody book about this because there isn’t anything more to say and he said well I’m not so sure about
1:47:33 that then he decided that he would go off and start this other publishing company so he wasn’t
1:47:38 interested in me doing it for them and they had not got themselves organised so I went to see
1:47:44 a guy called Nicholas Brealy who was the publisher of the eponymous firm Nicholas Brealy
1:47:52 and very very very nice man but incredibly smart guy and I’d written a book for him called
1:47:57 Managing Without Management which was a title which he’d suggested was very clever because it
1:48:02 basically said managing in particular middle management was a complete waste of time and
1:48:08 so you could manage without it managing without management and the book wasn’t a huge success
1:48:13 but it sold I don’t know 20,000 copies which was good enough for Nicholas Brealy at that time
1:48:19 and I went to see him about another book shortly after I’d had the conversation with Mark Allen
1:48:25 and he said do you have another book in mind I said well not really but this this sort of idea
1:48:30 that someone’s given me and you know they’ve got first dibs on the publishing it if I could ever
1:48:34 write a book about it but I don’t think I could write a book about it and then I described him
1:48:38 what the Age of 20 principle was and honestly I didn’t take more than about 60 seconds because
1:48:43 there wasn’t much to say as far as I was concerned and he said the hairs on the back of my head
1:48:49 are rising and I said what do you mean I thought I thought he’d lost the clock
1:48:57 and he said that can be a big successful book and I said no I mean you know well maybe but
1:49:02 how do I pad it out to a book’s length he said go and do some research
1:49:07 you know you’ve mentioned the Alfred operator you know read the book again read all the other
1:49:11 stuff read all the stuff on the web you know and the truth was that there was a hell of a lot of
1:49:17 stuff on the internet and this was back in 1996 book was eventually published in 1997 you know this
1:49:23 was a golden beginning of the golden period of the internet and I hired a researcher and said find
1:49:28 out everything that’s going on on the internet on the Age of 20 principle that stage I didn’t know
1:49:34 how to use the internet so she came back and gave me this whole watch the whole file and I said Diane
1:49:41 is that all about the Age of 20 principle and she said yes and I said well maybe I could write a
1:49:48 book so anyway I went through it all and the more I went into it the deeper it actually and the more
1:49:54 interesting it was and so that’s how I ended up writing books so I went back to my original
1:49:59 guy Mark Allen said do you want to publish this book he said no we can’t we’ve left Pearson at the
1:50:04 time and we haven’t started our firm yet so I went back to Nicholas Brealy and he was very pleased
1:50:10 and that you know the first draft I produced he said very politely he said I think you go
1:50:16 need to go and do some more research and it was pretty hopeless actually but the second draft
1:50:22 I took back and he more or less published it as it was because by that stage I’ve worked it through
1:50:28 and it was a it was a great thinking exercise for me and the whole point about making a book
1:50:35 out of it was that I extended the reach of the principle the basic Age of 20 principles I’m
1:50:43 sure nearly all your listeners know is that if you look at any particular relationship between
1:50:49 sales and another variable or you look at time and another variable you might be interested in
1:50:59 it’s usually true that there are very few events or data which account for a large majority of the
1:51:07 total and so if you look at the profits of any company by customer usually there are a very
1:51:13 small number of customers a very small proportion of the total who account for 80% of the sales and
1:51:21 maybe more than 100% of the profits of a company and likewise if you do the same thing for products
1:51:26 you’re likely to find the same thing this was a well-known economic concept anyone had been to
1:51:32 business school and heard it was generally called the Pareto rule at that time but I wanted to call
1:51:38 it the 80-20 principle because it was more descriptive the rule to me sounded too deterministic
1:51:44 principle sounded to me exactly right so I actually invented I think the 80-20
1:51:48 principle I don’t know anyone ever called it that beforehand they would call it the 80-20 rule or
1:51:56 the Pareto rule so the idea seemed to me to be applicable well beyond the sphere that had been
1:52:04 used before which was for really analyzing sales and profits and I said well why can’t we use the
1:52:11 80-20 principle in other areas in people’s personal lives for example and so I became quite
1:52:19 fascinated by the connection between time and results and then it was a short hop from that to
1:52:25 extend that so basically I would say to people well the hypothesis and the whole thing about the
1:52:32 80-20 principle is not that it’s a rule but it’s an observation so you come up with a hypothesis
1:52:37 and then you test whether it’s true with data if you possibly can but with you know seeing if you
1:52:44 think it really is true if it’s something much more subjective and squishy so you actually could
1:52:52 then say well it’s probably true it may be true that 20% of your time generates 80% of your useful
1:52:58 output so tell me what the most valuable things are that you do and I would say that to people
1:53:04 at work and they would have no difficulty at all in saying well it was inventing this new product
1:53:09 or it was selling a large job to this particular customer or it was writing some copy which is
1:53:15 you know very very effective or it was making a website or whatever it was and I would say to them
1:53:20 well you know you’ve got to do more of that and less of the other stuff and I’d also say to people
1:53:26 that if you manage to do something which is hugely more valuable than the other stuff and you do that
1:53:30 in half a day take the rest of the day off and if you do that for two days take the rest of the
1:53:35 week off if you want to you know if you want to carry on working and do even more that’s right
1:53:42 but as Parkinson said work expands to fill the time available spending expands to fill the budget
1:53:47 which you’ve got to spend it whether it’s inside a firm or it’s your own money I was quite interested
1:53:55 incidentally in hearing an observation which one of your other interviewees said about the
1:54:01 Wall Street of the well I don’t know was it 1980s or whatever and basically people got very very
1:54:08 used to the money which they’d earned they were hugely overpaid but nevertheless they found ways
1:54:14 to use that and that was a big trap for them not for him but for the others because what they did
1:54:20 was that they got locked into working for Salomon Brothers or Goldman Sachs or whatever and after
1:54:26 a time they couldn’t really leave because their wives or their their own personal tastes had developed
1:54:31 to such an extent or their husbands they needed the money you know they had to have half a million
1:54:38 dollars a year they couldn’t live on less so I was saying to people well let’s extend this to your
1:54:44 personal life as well so if time is important at work then maybe time is important elsewhere and
1:54:50 maybe you get most of your happiness from a relatively small proportion of your time what are
1:54:56 the periods of time where you actually feel that you are being fulfilled but you feel you don’t
1:55:03 notice time escaping when you feel that this is great and you wake up and you find that you know
1:55:10 the night’s gone it might be playing poker it might be talking to friends it might be reading
1:55:15 something it’s very exciting might be going to see a movie or whatever but what are the times that
1:55:20 you are happiest and then just try and multiply those times and then I said well you could apply
1:55:27 that to friends let’s take the 80/20 hypothesis that you get 80% of your relationship satisfaction
1:55:33 from 20% of people I mean it’s a bit gross in a way but it’s very true I found when talking to
1:55:41 people that very often they spent time with people they didn’t really like very much I mean obviously
1:55:46 sometimes it was their boss so you know that was a disaster and they bloody well better get a different
1:55:53 boss or a different firm but sometimes it was as simple as things like well your spouse actually
1:55:57 liked these people but you didn’t so you ended up spending a lot of time with neighbors or with
1:56:04 other people or members of his or her family that you didn’t really want to spend and what you really
1:56:09 wanted to spend your time on was something different and so I said to people well you know you might
1:56:16 want to be a bit more ruthless about that and so there’s a chapter on happiness in the book which
1:56:21 I was rereading recently and I think it’s actually rather good I mean it’s taking with sort of rather
1:56:28 arcane dusty economic principle and then seeing whether it could apply to other areas of life
1:56:33 and I invented the concept of happiness islands well happiness island is part of your life which
1:56:38 is sort of not the main part of the life but when you get a huge amount of satisfaction from that
1:56:43 and I said well live on those happiness islands and try if possible to make them happiness continents
1:56:48 so if there’s a particular type of work which you like doing at work then try and get yourself in
1:56:52 a position where you’re spending all your time doing that sort of work and so on and so forth and
1:57:01 I see it in many ways as a kind of amateur version of the flow idea which is that you know that these
1:57:07 times according to the guy with the unpronounceable name I mean Hayley Chick.
1:57:09 Miguel Chex set me up something like that.
1:57:13 Yeah he’s written a couple of books about this it all boils down I mean I think that
1:57:18 I say 80 20 principle could be written on one page I think that could all be written on one page
1:57:24 but it’s a fantastic idea it’s a slightly more sophisticated way of saying what I was trying
1:57:30 to say and there’s stuff on there in money and all the rest of it so it was a reinterpretation
1:57:36 of the principle to apply it to not just to business but to people’s personal lives and
1:57:41 to try and say a few things which were really useful and which people could take away which
1:57:42 is what you do isn’t it.
1:57:47 It’s what I try to do it’s what I certainly try to do and for all the reasons you just
1:57:55 mentioned and many more this is why the 20 principle your book faces cover out on my bookshelf
1:58:01 and heads for a very very long time as a constant reminder could you share just as examples because
1:58:08 it may help people listening some examples of your own happiness islands or achievement islands.
1:58:14 Yes I can do that the things that I really like doing are writing books and making money and
1:58:20 making money through investments not through gambling or anything like that and talking to
1:58:26 people I really used to like going to dinner parties in the days when we had dinner parties
1:58:34 I really like to go for long walks of people but not many people but a few people that I know
1:58:40 we will discover something that we didn’t know we knew beforehand those are the things that really
1:58:45 are interesting doing something like this podcast is as a flow activity as far as I’m concerned
1:58:54 an 80/20 activity so it’s that sort of stuff it’s books it’s writing books it’s also reading books
1:58:59 and it’s talking to people and it’s also making money through investments.
1:59:11 Do you have any regular or scheduled check-ins or calendar reviews where you assess your life to
1:59:16 ensure that you’re allocating your time and energy to match what you know to be happiness islands
1:59:22 or achievement islands in other words how do you use if you do in any systematic way the 80/20
1:59:29 principle in your life? No is the short answer but let me qualify that a little bit I do something
1:59:35 which is very unsophisticated but other people have therapists and other people have personal
1:59:42 trainers and other people have you know quite elaborate systems for keeping track of their
1:59:49 objectives or their concerns their worries and so on and so forth I have bike rides every day
1:59:56 I go for a two-hour bike ride in the countryside it is every day unless I’m away or unless I’m in
2:00:01 cake town I’ve got a home in cake town it’s too dangerous to ride a bicycle there but everywhere
2:00:09 else I will ride a bicycle and I take pretty much the same route every day very uneventurous I’ve got
2:00:16 two alternative routes in Portugal for example and during those bike rides something will come up
2:00:21 sometimes not very often but something will always come up at the very least I will work out what I’m
2:00:26 going to do that day because that’s one output from a bike ride and it just happens automatically
2:00:31 I don’t even have to think about it. When do you do the bike rides? I presume in the morning.
2:00:36 In the morning yeah I don’t answer emails I don’t look at my phone I do have a cup of tea
2:00:41 and sometimes I take the dog for a walk but apart from that it’s the bike ride
2:00:45 it’s wonderful I mean you know I couldn’t do without it and in fact when I’m away
2:00:51 and I can’t ride a bicycle I’m talking to you from Gibraltar for example and I do spend a fair
2:00:58 bit of time in Gibraltar where I have an apartment but here it’s also too dangerous to ride because
2:01:03 the streets are too narrow and there I have to substitute going for a walk or going to the gym
2:01:10 but basically a form of exercise which is mindless which is you know not too difficult but enjoyable
2:01:13 where I can just relax and let my unconscious mind do whatever it does
2:01:18 that’s how I do those sort of things and occasionally I go and sit on my fish pond
2:01:26 with a notebook and say it’s time to think about some reflections I make a point of only doing that
2:01:31 when I’m in a good mood I never do it when I’m actually feeling slightly down I’m usually in
2:01:37 a good mood but it’s something to do when you’re being expansive rather than you’re doubting yourself
2:01:44 and I keep those notebooks and very occasionally also I wake up in the middle of the night
2:01:48 and I have thought of something that I had not thought of before
2:01:53 and then I have a notebook by the bed if it’s not by the bed it’s in my office which is very
2:02:00 close to my bedroom and so I will make a cup of tea put the light on write my thoughts put the book
2:02:07 down put the lights out go to sleep and those thoughts are usually quite seminal they’re very
2:02:12 very helpful but it all happens sort of automatically I don’t have any systems or anything like that
2:02:22 do you well I would say I have acute hypergraphia and take copious notes most of which end up never
2:02:28 being read and certainly most of which end up being completely unimportant but amongst all
2:02:34 the garbage there are occasionally useful things I find journaling very helpful for me different
2:02:40 forms it’s the writing which is important isn’t it it’s the writing the writing somehow ingrains
2:02:47 on your mind do you find that that I do find that it’s not as you say one may never review the notes
2:02:52 I do actually review my notebooks when I’m on a plane and got nothing better to do and no book to
2:02:59 read but it isn’t that it’s actually the process of I think the process of writing journaling is
2:03:04 very very very useful but I don’t do it every day and I don’t do it systematically I just
2:03:08 do it when I feel the need to do it I would say I have two different types of journaling and then
2:03:12 I’d like to ask you about your time at the pond in a moment and just what that actually looks like
2:03:16 and maybe some examples from what you’ve written down I would say I have two types of journaling
2:03:27 the first is almost entirely like emptying the garbage bin on a Mac to purge the system it is
2:03:34 simply to trap my monkey mind and all of the bullets ricocheting around inside my mind on
2:03:40 papers that I can get on with my day in a better fashion the second type is more deliberate and
2:03:50 objective driven where I might sit down and very explicitly do an 80/20 analysis of the types
2:03:54 that you’ve been describing looking at how my time is being used look at my calendar to see if
2:04:01 it actually matches what I say is important to me etc so there are I’d say those two main categories
2:04:08 morning pages from Julia Cameron’s template would be in the former as an example but
2:04:13 when you go to the pond and you sit down and you’re in an expansive mood and you journal
2:04:17 what does that look like is it’s stream of consciousness are there certain prompts that
2:04:22 you might use could you give us any real-world examples of what has come from those types of
2:04:29 sessions yes I mean what I do is I write reflections and I put the date and then I put numbers and
2:04:35 then I just start writing and one of the things that comes out from that which came out from that
2:04:42 recently was thinking about my investments and I was struck by the fact that I was average
2:04:49 to say I was average timing each investment would not be fair but I was spending a lot of time on
2:04:56 stuff that actually wasn’t at all important and I was doing it partly through interest partly
2:05:01 because I perhaps felt some residual sense of obligation to the people who were managing the
2:05:06 firm and other shareholders so you know one of the things which I decided was I was not going to
2:05:12 worry about any companies which were outside the first you know half dozen in terms of the
2:05:17 value of those companies unless the value was increasing very fast or had the potential to
2:05:23 increase very fast and the other thing which I realized because I’m always almost completely
2:05:28 invested was that that was not actually a terribly sensible thing to do and the next time I have a
2:05:35 major realization I should be prepared and I should have two or three companies which are new
2:05:41 companies in other words investments I have not yet made where they do have the potential to be
2:05:47 star businesses or they already are star businesses where I like the people involved and that’s a
2:05:52 sinner quite known for me that I don’t invest in things and this actually like the people
2:05:58 and where a relatively small amount of money might conceivably be another bet fair or whatever
2:06:03 so it’s quite easy for me because I’ve got a couple of companies are increasing in value quite
2:06:09 fast and I’m reasonably confident that they will continue to do so the next few years to be sort
2:06:14 of you know rather complacent about that but in order to maintain the sort of rate of return that
2:06:20 I’ve had historically and that I want I probably need to find a new bet fair or two or three new
2:06:26 bet fairs over the next five years and I should give a bit more attention to trawling for that and
2:06:32 talking to my contacts that might conceivably know such companies and actually you know I do
2:06:38 get some leads and don’t always follow them up very well so yes so it can be useful from that
2:06:44 point of view and the other thing which I’ve realized as a result of journaling in the last
2:06:50 few months is that I am too socially isolated I mean I’ve got some very good friends I don’t see
2:06:58 them as often as I as I would like and because I have such a really nice life living in very pretty
2:07:04 places and living in sunny places generally which is very important for me to be outdoors so that I
2:07:10 can play tennis or ride the bicycle or sit on the fish pond or whatever I ought to pay more attention
2:07:17 to social interaction and to spending more time with the people that I enjoy spending time but
2:07:23 they’re not they’re not close to where I am so those are sort of conclusions which have come up in
2:07:29 the last six months and then there are the more philosophical conclusions which you sometimes
2:07:35 come to which sometimes you write down for example one of the things which I’ve learned in the last
2:07:43 few years is I have been far too much of what I call a controller and far too little of what I call
2:07:51 an adventurer and my life has always run upon lines of saying I must do this I must achieve this I
2:07:55 must make this sort of amount of money I must have this type of job I must do this kind of thing I
2:08:02 must start a company and so on and so forth but recently I have realized that the people have
2:08:08 most fun in life are more the adventurer type than the controllers in fact to come back something
2:08:14 and I hope we’re going to spend a little bit of time on later on which is my new book Unreasonable
2:08:20 Success and How to Achieve It there are 20 people who changed the world in my opinion in that book
2:08:27 and it is not in the book at all but it’s something which I did after the event I divided
2:08:34 those very successful people into controllers and adventurers and I was quite surprised to find
2:08:41 the 14 of them were actually adventurers in one form or another and only six of them were controllers
2:08:47 there were some who were both but you know that was the count taking halves into account and for
2:08:54 example one of the people who was a controller in the book was the sort of my evil evil successful
2:09:02 person which was Vladimir Lenin and you know his life was pretty unpleasant because he was always
2:09:08 trying to control other people and it was a very uphill struggle and he achieved a great deal in
2:09:13 his terms I mean not things that I would approve of but he was the founder of practical communism
2:09:19 and he basically made communism a success in very large parts of the world a success in the
2:09:24 sense that they remained communist and they did develop the countries were perhaps not as fast
2:09:30 as they would have developed under a free market system but you know from that point of view he was
2:09:34 very very successful but he didn’t have much of a great time whereas some of the people who were
2:09:42 much more freewheeling for example the freewheeling Bob Dylan or even Otto von Bismarck they had much
2:09:48 more fun because they although they were determined to achieve things they relied upon events flowing
2:09:54 their way and they just bided their time until the right moment came along and then they then
2:10:01 they worked then they basically made a huge effort to control or not not control events but to
2:10:07 actually steer them one of the great quotes which I like is from Bismarck who said man cannot
2:10:13 control the flow of events all he can do is ride with them and steer so I you know sometimes you
2:10:19 get those sort of kind of philosophical reflections coming up more often though probably on a bike
2:10:24 ride and then I might write it down afterwards but I actually find it quite difficult to be
2:10:31 as radical as that just sitting down and writing I tend to write you know things which are
2:10:39 they’re much less important in a way they’re less distant let’s uh this was on my my next note to
2:10:47 segue into that is the new books let’s let’s talk about the the Genesis story and this is always
2:10:53 interesting to me as someone who occasionally tries to wordsmith things and that is the sort of
2:10:59 embarrassment of riches that you no doubt have in terms of possible subjects you could explore so
2:11:05 unreasonable success and how to achieve it you’ve written many books why this book I’ve always been
2:11:11 fascinated by success and I’ve always been fascinated by the discrepancy really between as I see it
2:11:18 the arbitrary nature of success in many ways which is that the people who are successful are not
2:11:25 necessarily the people who are most intelligent or most expected to succeed or who deserve it many
2:11:31 of the 20 people that I highlight in the book weren’t even competent and Winston Churchill was
2:11:36 prime example of someone who was quick failure through most of his career got one thing right
2:11:40 which was that Hitler was a threat to the world and that he knew how to deal with Hitler but
2:11:48 basically the man was a disaster and he thought the oratory would propel him to become prime minister
2:11:54 but you know as Herbert Asquith said it does not matter if you speak with the tongues of men and
2:12:01 angels if nobody trusts you it was directed exactly at Churchill so I’ve always been fascinated
2:12:07 by success but the actual genesis of the book as you said came on a train journey I was traveling
2:12:13 from Paris with a friend of mine to Lyon and I always take a book with me and I didn’t have a
2:12:20 book a new book that I wanted to read so I took an old book which was Malcolm Gladwell’s Outliers
2:12:26 and you probably remember that in Outliers the whole thesis is that success derives from deep
2:12:32 experience and long exposure to doing something in a very narrow field and he came up with the
2:12:39 idea of the 10,000 hours which is now a trope or something which everyone talks about and he gave
2:12:45 a couple of examples very early on in the book which resonate very nicely which are the Beatles
2:12:52 for example in 1960 they were just a rather poor high street band and then something happened to them
2:13:00 which was they went off to the strip clubs of Hamburg and they had to play seven days a week
2:13:05 eight hours a day and as John Lennon’s quoted in the book is saying we couldn’t help improve
2:13:11 with all of that extra experience and then he quotes the example of Bill Gates who because he
2:13:17 went to a private school which unlike the vast majority of schools at the time in America or
2:13:24 anywhere else had got computers you know he was able to acquire expertise in coding and how to use
2:13:32 computers and that was his sort of you know he got his 10,000 hours in very very quickly so the
2:13:38 problem with that thesis is that it’s not universally true it certainly applies to Bill Gates it certainly
2:13:45 applies to the Beatles and it applies to some other people as well but of the people that I looked at
2:13:51 that couldn’t explain it and what I did was I took 20 people whose life stories I knew well
2:13:55 some in some cases I knew them personally such as Bruce Henderson Bill Bain whom I talked about
2:13:59 before who were very important to me and hugely underrated in terms of the impact which they’ve
2:14:06 had on American and world business in my in my opinion but I took those people and then I said
2:14:13 would it be possible to do what Malcolm Gladwell set out to do and in my opinion did not succeed
2:14:19 in doing would it be possible to look at the causes of success for those people and identify
2:14:26 things which were common to all 20 people which they all had or did it might be an experience
2:14:31 that they had or it might be an attitude which they had or it might be a way that they exploited
2:14:37 particular opportunities would it be possible to look at that and say that there are things
2:14:42 which are so universally present that if you want to be what I call unreasonably successful which
2:14:47 is more than you deserve if you like there’s a terrifically successful in changing the world
2:14:51 the way you want to work change it it might be a small corner of the world it might be a big
2:14:58 corner of the world would it be possible to isolate the reasons for that and I looked at 50
2:15:03 possible reasons for example I looked at would you need to be a high risk taker and the answer was
2:15:07 of those 20 people only nine of them actually took very high risk of 20 people in my book
2:15:13 only nine of them actually took very high risk so that went away and then I narrowed it down
2:15:19 to nine reasons which were universally present in all of the cases and I did not throw people out
2:15:25 if they didn’t meet the nine requirements I was quite rigorous with myself I said no and the people
2:15:30 that aren’t the players that I took were besides Bill Burnett Bruce Henderson there was Jeff Bezos
2:15:36 Otto van Bismarck Winston Churchill Mary Curie Leonardo Leonardo da Vinci
2:15:41 Walt Disney Bob Dylan Albert Einstein Victor Frankl the guy who was shoved into a concentration
2:15:46 camp by Hitler but came up with a third wave of psychology after Freud and Adler and was probably
2:15:52 the first real existential philosopher Bruce Henderson mentioned Steve Jobs John Maynard
2:15:57 Keynes who saved the world from fascism and communism perhaps as a result of saying that
2:16:02 you didn’t have to have very high unemployment and the state could step in and that would be fine
2:16:08 under a liberal capitalist regime Lenin I mentioned Madonna Nelson Mandela
2:16:16 totally obscure guy who was imprisoned on Robin Island 17 years but somehow managed
2:16:22 to negotiate a democracy in South Africa J.K. Rowling Helena Rubinstein formed the
2:16:28 eponymous cosmetics company before anybody else had a cosmetics company the person who
2:16:34 I think was most successful of all of my 20 people Paul of Tarsus I don’t like calling
2:16:39 him Saint Paul because it makes him sound establishment figure he was never an establishment
2:16:45 figure he had this vision of the living Christ and he preached that throughout the Roman world
2:16:51 but he did something that none of the other followers of Jesus did which as you said following
2:16:57 a Jewish customer base if you like is not the way to make a new religion take off we don’t
2:17:03 want to be a very small sect within Judaism I actually want to convert people in the whole world
2:17:10 and therefore what we need to do is to turn you know that sort of Jewish religion that Jesus had
2:17:17 been enveloped within and take away from that the things which actually were universally
2:17:23 applicable so you know without Paul what eventually emerged as Christianity would never
2:17:30 have ever achieved lift off nor transcended its Jewish roots it’s a fantastically successful
2:17:34 you know I mean who would have thought that Christianity could actually succeed it was just
2:17:40 a miracle Margaret Thatcher was the other was the other one of the 20 people so I came up with
2:17:46 these nine things which were common to all of them I’ll rattle through those if you like definitely
2:17:52 feel free to list the nine but before we do that if you could just take a moment to define success
2:18:00 since many people define success differently could you speak to what that means in the context of
2:18:05 unreasonable success is it achieving what they set out to do or is it something else and then
2:18:11 would I would love to know what the the nine characteristics are yes it is I think success
2:18:17 is very subjective and can only be the person’s objectives and I mean people said to me what how
2:18:21 on earth can you put Lenin in the book and in fact at one stage I had Hitler in the book and that
2:18:25 publishers insisted on it being thrown out because they said the booksellers would never
2:18:30 if you see the book I said well we don’t like Hitler I’m favour of Hitler I said no Hitler’s
2:18:36 got to go so it’s value free in the sense that it is what they achieved which changed the world
2:18:41 the way they wanted to change it whether that was a good thing or a bad thing or an indifferent thing
2:18:48 that’s unreasonable success in one definition success is a whole continuum as far as I’m concerned
2:18:53 and you know I’m not against minor successes at all that absolutely great but what I was really
2:18:59 interested in in order to establish the most important cause is a major success is what I
2:19:05 called unreasonable success and I had four criteria for that you could say that in a word it’s undeserved
2:19:10 success but that’s that’s a little bit unfair firstly it’s such success in changing the world
2:19:16 it seems unreasonable for one individual to do that I mean we live in a world which is quite
2:19:23 collective and which is governed by culture and constraints which are quite immovable we think
2:19:28 the world’s changing very fast but in many ways the world doesn’t change very fast and then suddenly
2:19:34 it does and what usually is behind that is not a huge number of people doing something it’s an
2:19:40 individual deciding to do something and managing persuade other people to do that so it’s unreasonable
2:19:47 in a sense that one person has all of that impact secondly it’s success that is unexpected and was
2:19:53 not predicted when the individual was young or early in their career so it’s kind of you know
2:19:58 it’s success which comes from nowhere thirdly it’s success that goes well beyond what the individual
2:20:04 skills and performance seem to warrant and Winston Churchill a jolly good example of that some would
2:20:10 say that the British Prime Minister Boris Johnson is an example of that completely disastrous foreign
2:20:16 secretary probably completely incompetent in his dealing with the coronavirus but nevertheless I
2:20:20 think may well go down in history as a great prime minister because he has certain objectives that he
2:20:26 wants to achieve like making sure Britain did leave the European Union and maybe doing something about
2:20:33 the excessive price of housing in Britain fact that it’s almost impossible for young people to
2:20:39 actually buy a house these days and also you know Britain’s a hugely over centralized country
2:20:46 London centric country and there are left behind areas of Britain which basically is most of the
2:20:51 rest that’s not in the southeast of Britain and I think Boris Johnson wants him to do something
2:20:56 about that and if he’s able to do that that will be a fantastic achievement I know that you’re
2:21:01 interested in very practical things so in the book I discuss what do you do if you don’t have
2:21:07 self-belief and for example one of the things that you can do is to realize it has to be in a
2:21:12 specific domain or context and so you’ve got to identify that context where you could really change
2:21:18 things secondly find a fantasy mentor now this is I think it’s quite an interesting and perhaps
2:21:26 original concept I was driven to it by studying Bob Dylan because here this guy arrived in New York
2:21:35 completely unknown 19 years old but with a fantastically high ambition and one of the
2:21:41 things which he did was to seek out Woody Guthrie who was probably the template that he wanted
2:21:48 which was Woody Guthrie had been not only a folk singer but also a protester really and also
2:21:53 someone who wrote his own songs and in fact that was very unusual at the time and folk songs were
2:22:00 meant to be sort of arose from the folk not from individuals and Guthrie actually changed that he
2:22:06 wrote a lot of the original songs and Dylan did too he started writing his own songs one of which
2:22:13 was called The Ode to Woody and he went to the hospital in New Jersey where Woody Guthrie
2:22:19 was suffering from a terrible terrible disease called Huntington’s Syndrome and whether or not
2:22:25 Guthrie was really aware that Dylan was there whether he actually thought Dylan was
2:22:31 going to be the new Woody Guthrie is really unclear but it’s curiously irrelevant as well
2:22:37 because Bob Dylan took from that template that’s what he had to do he had to write his own original
2:22:42 songs he had to claim the heritage of Guthrie as some something which would perhaps get him some
2:22:48 publicity and attention and somehow he managed to get a contract with the all of the folk labels
2:22:54 rejected him but Columbia Records which was a blue chip you know firm obviously signed him
2:22:59 and then you know that gave him confidence and it gave him contacts and it gave him gigs and goodness
2:23:06 knows what else and he was able to produce albums and and then he was made and also of course he
2:23:13 hijacked in the sense the the protest movement with songs like Blowing in the Wind etc which made
2:23:19 him according to certain people the voice of the generation so it’s another way to find a fantasy
2:23:25 mentor thirdly to search for transforming experiences and I’ll say something about that in a minute
2:23:31 and fourthly to attract well-deserved praise and I’ll say something about one breakthrough
2:23:38 achievement also in a moment and then narrow your focus until your work is unique some of those are
2:23:44 landmarks as well so the first one being self-belief the second one is Olympian expectations that you
2:23:51 expect a huge amount from yourself and then from other people and the high priest of high
2:23:57 expectations is probably Jeff Bezos who’s always banging on about this and you know really believes
2:24:05 everyone in the senior management team has to be an absolute A player class A player and he says
2:24:09 you know if you put someone who’s not used to high expectations and a high expectations team
2:24:16 they will adapt but the reverse is also true if you have people who are not high expectation people
2:24:22 then people’s standards will slip and one thing that Bezos has been incredibly good at doing
2:24:28 is having the highest possible standards his mantra is customer service and unbeatable prices and
2:24:35 he’s totally inflexible on all that so the second thing is Olympian expectations the third one which
2:24:40 is particularly interesting because it’s really original I think and I was thrilled to discover
2:24:47 this in my research is transforming experiences every single one of these people have actually
2:24:53 an experience which transformed them in the sense that they went into the experience as one sort of
2:24:59 person and they came out as another sort of person or as someone who is a hundred times more powerful
2:25:04 or more effective every single one of them had that experience and again to take Bezos as an
2:25:11 example of that before he founded Amazon he was a failed investment bank at age 26 and a
2:25:20 headhunter decided to send him as a last resort to see a guy called David Shaw who had founded a
2:25:29 countercultural quantitative investment hedge fund and Shaw realized before anyone else did
2:25:38 and by about 1992 that the internet was going to be huge and that it could be huge not just for
2:25:44 information and all other things but for selling things for retailing so his idea was that his
2:25:52 firm which was called Desco D Shaw and company should develop a program for selling over the
2:25:59 internet and then it should start a company to do that and he put Bezos as the project leader on
2:26:06 that and he and Bezos got on very well like House on Fire there was the same extremely
2:26:12 quantitative extremely nerdy extremely ambitious sort of people and between the two of them they
2:26:19 developed the format for Amazon and they decided that the first category that they would go into
2:26:27 was books and they decided that they would allow people to write reviews on the sites etc etc etc
2:26:34 it was Amazon Blueprint as it happened and of course David Shaw wanted that to happen within
2:26:43 Desco but one day Bezos went to David and said I really want to do it myself and David Shaw took
2:26:48 him for a look to our walk around Central Park in which he tried to dissuade him but incredibly
2:26:54 generously David Shaw allowed Bezos to go off and found Amazon he didn’t even ask for a share
2:27:00 in the company but then that was David Shaw he was a very very self-competent guy and his firm
2:27:07 has been amazingly successful anyway so that was the transforming experience for Bezos for
2:27:12 we talked earlier about Bill Bain transforming experience for him was getting hired by BCG by
2:27:19 Bruce Henderson when he was the completely unqualified guy who’d never done any business
2:27:24 never done a business degree didn’t understand economics or whatever a history researcher who
2:27:30 managed to get a job as a development officer at Vanderbilt University where he met Bruce Henderson
2:27:38 and Bruce Henderson who had a tremendous nose for talent then decided to hire Bill Bain
2:27:44 and Bill Bain took to Boston Consulting Group BCG like a duck to water because he was a very
2:27:49 very smart guy and because the power of the concepts the concepts were so great and Bill
2:27:55 and Bruce developed them together essentially and then Bill decided to do the dirty on Bruce
2:28:01 and leave and form his own firm we would never have heard of Bill Bain if it had not been for
2:28:07 Bruce Henderson meeting him and deciding to hire him and the formative experience of working within
2:28:13 BCG let me ask you a question if I could Richard and I imagine you you might get to this I’m sure
2:28:19 you have an answer for it but before we move ahead if someone has not had a transforming
2:28:26 experience one might wonder if they’re listening to this is it possible to engineer a transforming
2:28:32 experience or do I sit on my hands and wait for lady luck to smile upon absolutely that’s the whole
2:28:37 point and one of the things I say in the book is that the whole point of trying to identify these
2:28:46 nine landmarks is that the people who actually visited them didn’t intend to they didn’t actually
2:28:51 say I need a transforming experience let’s have one they happen to them I mean for example the
2:28:56 transforming experience of Margaret Thatcher was having the Falkland Islands invaded by General
2:29:02 Gautieri of Argentina and she said that was the worst moment of her life but it was absolutely
2:29:09 the making as it happened of her and the experience of living through that and commanding the armed
2:29:16 forces and doing what everyone said was impossible which was recovering the the islands made it possible
2:29:21 for her then to do what she really wanted to do which was in her opinion reverse national decline
2:29:28 of Britain so yes the people who had these transforming experiences did not engineer them
2:29:34 but having seen how important it is understanding that you cannot in my opinion
2:29:40 admittedly from relatively small sample but it’s amazing that every single one of these people had
2:29:45 a transforming experience which is described in the book and I did not fake it I just you know I
2:29:50 didn’t throw anyone out because they hadn’t had a transforming experience I stuck to the rules
2:29:56 you can then say well I better have a transforming experience haven’t I and then you come to the
2:30:01 question well what is the most likely type of transforming experience which will put me in
2:30:08 luck’s path in order to then become much more powerful so it could be going to a particular
2:30:15 university and studying something which is very arcane and unusual it could be finding a very
2:30:22 high-growth firm like BCG or Boston Consulting Group or DE Shoring Company and then joining
2:30:30 that firm when it’s still very young because you won’t be on the forefront of developing you see
2:30:34 thing about companies in their early days is that they don’t know what they’re doing
2:30:38 and so if you don’t know what you’re doing you can be very creative about and if you’re involved
2:30:44 in that process you discover things that you never knew that you had and not only that you become
2:30:49 identified with them and you become powerful and you become perhaps a large shareholder
2:30:54 in the company and it’s completely different from joining a company which is on tram lines
2:30:59 where basically it’s not going to do anything radical and anything new it’s so exciting to
2:31:04 actually be part of the company that’s growing very fast doesn’t really know what it’s doing
2:31:10 but it’s got something some rare knowledge which actually means that it can be very very
2:31:14 successful and it doesn’t have to be company it could be a social organization it could be a
2:31:20 way of thinking it could be anything that’s growing very fast and where it’s unformed and
2:31:25 where you think you’ve got some affinity with it and the ability to contribute and be creative
2:31:31 it’s not easy to specify what someone’s transforming experience should be but I’ve tried it on a few
2:31:37 friends and good acquaintances and it’s amazing that actually we do in the end come up with
2:31:43 something which might actually work in some cases has before we get to the fourth I just want to say
2:31:49 a few things the first is that my experience maps very well to a few of the things that you just
2:31:55 described in the sense that when I was graduating from college and was suffering from all sorts of
2:32:01 quarter life crisis existential angst about what to do with my life and I asked a mentor
2:32:07 at the time what I should do what type of sector I should go into and his answer was it doesn’t
2:32:13 matter as long as it’s growing very quickly you want to be in something that is growing quickly
2:32:18 not in a sector that is in decline or stagnant and that ended up being exceptional advice and
2:32:25 I found that it also applies to where you place yourself that is to say one of the reasons by
2:32:30 example that I left San Francisco after effectively a decade was that I felt like it was a place
2:32:36 experiencing some degree of stagnation or even in decline and I moved to Austin Texas which was very
2:32:43 much a startup of a city it was rapidly growing expanding where it was still taking shape and
2:32:50 still could be shaped so I just wanted to reinforce what you said and on that point or I should say
2:32:56 moving on from that point what is the fourth of the nine landmarks yes I mean growth is
2:33:03 growth is everything I mean it ties in with the start principle the fourth one is one breakthrough
2:33:09 achievement now this is different Tim from the other eight landmarks in that it is not a how
2:33:15 to do it it’s a what to do and in some ways it’s a bit odd of me to put it forth because it’s the
2:33:20 culmination of everything else and all the others really lead to this but I wanted to put it in the
2:33:26 book fairly early because I wanted people to be thinking about this as they go through which is
2:33:34 what on earth are you going to do to change the world and you’re not going to succeed unless
2:33:39 it’s something really dramatic or you’re not going to succeed in being unreasonably successful
2:33:46 so you need to start thinking about that it might take you a decade it might take you several
2:33:53 decades to actually work out what it is but it has to be something that you believe needs to be done
2:33:59 it’s not a way of making you successful it’s a way of changing the world and if you define it in
2:34:06 those terms again it’s surprising you can actually come to some kind of resolution some kind of opinion
2:34:13 and for example once Lenin had had his transforming experience which was the hanging of his beloved
2:34:21 elder brother that he idolized and adored because he was implicated in an assassination attempt at
2:34:30 the Bazaar when he was 16 years old Lenin heard that his brother had been hanged instantly he
2:34:35 decided that his whole purpose in life was to smash the bourgeoisie and to cause revolution in
2:34:41 Russia and it was a ridiculous you know 16-year-old school boy a ridiculous idea and he wasn’t political
2:34:46 at all before he wasn’t he was a very nice sort of you know everyone liked him but he became very
2:34:53 bitter and twisted but he was so very effective so it’s one breakthrough achievement and it’s not
2:35:00 two it’s not three and it’s not one every five years it’s something that you do which it actually
2:35:05 is going to in some way change the world I mean my my breakthrough achievement was starting or
2:35:11 co-starting LEK it’s not on the comparable scale with people in the book but nevertheless it was
2:35:19 you know a very successful firm which gave huge opportunity to hundreds or thousands of young
2:35:26 people really who were trained and developed in that way and it also made an impact on the corporate
2:35:31 world as well we invented the idea of mergers and acquisition strategy consulting was completely
2:35:36 different from anything that anyone else had done so one breakthrough achievement is the fourth one
2:35:43 the fifth one is make your own trail which is you know basically become bloody minded and
2:35:49 work out a way of doing something that goes off path from everyone else and I described how to do
2:35:56 that the sixth one is to find and drive your personal vehicle again one of the discoveries in the book
2:36:02 is every one of these 20 people had some kind of vehicle which in some ways was sometimes it was a
2:36:08 concept more often it was an organization of some sort of company if it’s in the business sphere
2:36:14 or an organization more broadly defined if it isn’t the British state for example was the vehicle
2:36:22 for Margaret Thatcher and for Winston Churchill together with a particularly eclectic sense of
2:36:28 you know what they were trying to do the whole point about a personal vehicle is that the paradox
2:36:34 of the individual who actually does manage to change the world is that they can’t do it on
2:36:39 their own but on the other hand it doesn’t get average it’s not sort of a committee deciding
2:36:48 what to do so someone like Jeff Bezos decides to make internet retailing the thing which he does
2:36:54 and the thing that the everything store was the name that they gave it originally and no not just
2:37:00 to be a successful internet retailer within books but to be a successful retailer on the internet
2:37:06 everywhere and to be totally dominant in doing it you know an incredibly ambitious thing but in
2:37:12 order to do that he needed to have an organization which was totally under his control just the same
2:37:19 way that Lenin needed to have the Bolsheviks you know a group of people who were totally
2:37:26 dedicated to Lenin not very many of them but a couple of thousand and that is necessary so that
2:37:35 you you overcome the inertia that society and culture has so that an individual can change
2:37:39 things by being very determined about it but they don’t have to do it all themselves and
2:37:45 the choice of the vehicle is terribly important. May I ask just before we move on are there any
2:37:53 particular unusual or unorthodox examples that come to mind for both make your own trail and
2:37:57 find and drive your personal vehicle if you could give perhaps one for each?
2:38:06 Yes I mean your your own trail is is very much I think Walt Disney Land I don’t mean I do actually
2:38:13 mean Disneyland the thing about Walt Disney is that he couldn’t decide what he wanted to do initially
2:38:18 he was a very good actor when he was in high school and he used to do double acts with a
2:38:24 friend of his which were you know garnered a huge amount of praise and then he decided that he
2:38:29 actually wanted to be an artist but then he narrowed that down to being a cartoonist but
2:38:38 his firm which he started his studio which he started in I think 1923 in Los Angeles
2:38:44 was not very successful for first few years the big breakthrough that they came up with was Mickey
2:38:49 Mouse Mickey Mouse made all the difference because they gave a ridiculous story about a mouse who
2:38:57 wanted to woo a lady mouse by flying a plane it was a really silly story but what Disney did was
2:39:03 not only sort of this film called plain crazy which he turned into a very expensive film which
2:39:11 almost bankrupted him and his brother and various other people but he decided to give voices to
2:39:16 the characters from the screen which people had done before but never with cartoons so that was a
2:39:26 sort of you know his personal trail in the 1940s he became disillusioned with Disney as a corporation
2:39:32 it was a very successful corporation by that stage but nevertheless he was disillusioned with
2:39:36 the fact that they were trying to take him away from the studio he didn’t have the sort of excitement
2:39:44 of doing it he didn’t really feel that he was creating something new and so he went in to find
2:39:52 his own personal trail he actually spent quite a bit of time with Salvador Darley and they created
2:40:02 a very surrealist movie which then the board of Disney turned down and Walt Disney was outraged
2:40:08 by that and he had to tell Salvador that you know they did not think that having the board
2:40:15 approve it was anything other than a formality but the board said no you lost your marbles you know
2:40:20 as Peters and Waterman would say later stick to the knitting except they didn’t use those words
2:40:26 but that was that was what they said that’s what they meant and so Walt Disney decided to go off
2:40:34 and do something completely and utterly different which was invent Disneyland until then amusement
2:40:42 parks had been the province as Disney called them of hard-faced men who basically were thugs but
2:40:48 what he wanted to do was create something which would be a monument to the past the present and
2:40:53 the future of America and all that was best in America now you know the first time I ever went
2:41:01 to Disneyland which was in 1969 I hated it I thought it was too American and too plastic and all
2:41:07 rested but it was a fantastic achievement in the early 1950s and hugely successful commercially
2:41:14 again he was making his own trail the board again refused to invest in this they refused to put up
2:41:20 the capital for all the exploratory work for all the imagination that had to go into it
2:41:27 for building main streets and the fire station and Abraham Lincoln and the rest of it they said no
2:41:35 we’re not going to approve this Walt and Walt said well screw you in effect I will fund it
2:41:42 myself and so he sold his houses he sort of you know took second mortgages rather on his houses
2:41:48 he sold one of them took a second mortgage on the first house he found investors who would
2:41:53 do this and eventually the last minute that the Disney corporation decided that they would come
2:41:58 on board as well when they saw it was inevitable it was going to happen they initially refused to
2:42:04 let him use the characters Snow White and Donald Duck and all the rest of it but they said no if
2:42:12 you do that will sue you so if Disneyland had failed which was eminently possible Disney would
2:42:18 have been ruined and indeed the parent corporation might have been in some trouble one way or the
2:42:24 other but that was finding his own trail because he had this vision and he wanted to pursue it
2:42:31 and it was nuts basically so that’s an example of making your own trail finding and driving your own
2:42:36 personal vehicle well I think actually Lenin is a good example of that it was the Bolsheviks
2:42:47 you know initially the dissident revolutionaries in exile around about 1900 etc were dominated
2:42:53 by people he later called the Mensheviks by social revolutionists who were not as extreme
2:43:01 and uncompromising as Lenin and there was a conference I think in 1903 or something like that
2:43:09 at which Lenin deliberately antagonized the other people and said I want to have my own party I’m
2:43:14 going to split the revolutionaries and they said don’t do that we got you know there aren’t very
2:43:22 many others yeah please don’t do that but he said no I can demonstrate that if I have you know a
2:43:27 thousand people who are dedicated to me and to my way of doing things we can have revolution in
2:43:32 Russia now absurd because there are hundreds of millions of people in the Russian Empire
2:43:39 and how could it be that a thousand people could actually change that and have make successful
2:43:45 revolution but Lenin had an answer to that and it was a very good answer which was he said look
2:43:52 Russia is a very backward country it’s an autocracy it’s not like Germany or France or Britain where
2:43:56 you know there are lots and lots of different centers of power all of the power is concentrated
2:44:05 in the Tsarist army and the bureaucracy and there are only about 2000 people in Russia who actually
2:44:12 control things there are no independent centers of social pluralism I’m sure he didn’t use that
2:44:23 word but you know basically it’s a very top-down state and if 2000 people can rule Russia why not us
2:44:28 and that was his theory and actually proved to be absolutely correct so his vehicle
2:44:32 was splitting the revolutionary movement but having a group of people who are absolutely
2:44:38 dedicated to him and got shot if they didn’t if they weren’t so the vehicle is very very important
2:44:43 the vehicle doesn’t necessarily have to be very large but it hugely augments the power of the
2:44:48 individual but it’s not a compromise the vehicle must be totally the vehicle in the same way that
2:44:53 Bain and Company was Bill Bain’s vehicle you know he stepped out of line with Bill Bain you didn’t
2:44:58 get shot but you certainly got fired and so on and so forth Boston Consulting Group was Bruce
2:45:04 Henderson’s vehicle he did it a different way it was more let a thousand flowers bloom but nevertheless
2:45:11 unless you were interested in developing the concepts which was Bruce’s thing then you weren’t
2:45:16 going to succeed and he got people who are very good at doing that can I move on to the next three
2:45:20 I’m sorry I’m probably taking too much time oh no that’s that’s totally fine that’s why this
2:45:25 this conversation is long form so let’s move on to the next one okay the seventh one is
2:45:30 thrive on setbacks and this doesn’t sound terribly original but it is terribly important
2:45:35 you remember that Nicholas Nassim Talab wrote a book called Anti-Fragile which I think is probably
2:45:41 his best book and I do the thesis behind that as you know is that resilience is not the point
2:45:47 you actually have to like setbacks and the reason that setbacks can be very helpful
2:45:52 is two reasons one is they give you feedback and might tell you that you’re off you know you’re on
2:45:57 the wrong path and the other thing is that either you’re on the wrong path or you’ve got the wrong
2:46:04 tactics and you it’s quite important to distinguish between those two or that in fact the fact that
2:46:10 you’ve been unsuccessful in a big way means that you’re going to be very successful in a big way
2:46:16 it’s quite difficult to describe I also think about Winston Churchill and his wonderful failures
2:46:21 he went away from those failures obviously a bit depressed at times he went
2:46:27 did something completely different for a time getting out of politics after he ruined the
2:46:34 Gallipoli campaign the Dardanelles campaign in 1915 and sent you know several thousand people
2:46:39 to their deaths but from a harebrained scheme that he invented and he got out of politics for
2:46:44 time he joined the regular army and he went to the western front in in 1929 he was on the verge
2:46:50 of bankruptcy as a result of having invested heavily in stops in 1928 and when crash came along
2:46:57 wall street crash he was almost bankrupt he decided to and also he was very unpopular with his
2:47:06 fellow conservative leaders at that time because he’d made a number of mistakes in 1925 and going
2:47:10 on to the gold standard for Britain and in antagonising the miners leading to the general
2:47:15 strike of 1926 and alienating the whole of the organised labour movement so he was unpopular
2:47:20 with his party he was on the verge of bankruptcy he went off and did a huge lecture tour of America
2:47:25 which was very successful and then he got run over on Fifth Avenue by a car and suffered some quite
2:47:30 serious injuries but battered and bruised he got up and did it again and you can see from
2:47:36 what he writes that he thinks what’s happening to him is terribly important and most people would
2:47:41 say no this is a semi-comical drunk who’s basically had a series of failures but
2:47:47 you know Winston Churchill didn’t see it that way very very interesting this psychology of not
2:47:53 being resilient but actually really liking failures because they they make you seem important in
2:47:59 some ways and then the last two are acquiring unique intuition which requires deep knowledge and here
2:48:04 I think that I overlap a little bit with Malcolm Gladwell you know you really do the quality of
2:48:09 intuition as a function of the degree of experience that you’ve had in a very narrow field
2:48:14 but also your willingness to take notice of intuition which some people do and some people
2:48:20 don’t and the last of them is distort reality which is Steve Jobs’ phrase of course based on
2:48:29 star trek but what distort reality means is refusing to accept current reality and redefining a way of
2:48:38 making that different and convincing your followers in particular that you know how to get around
2:48:44 or distort reality convincing them that you have a reality distortion field it works it’s just
2:48:48 amazing and and Bruce Henderson did that Bill Bain did that all the other people in the book had
2:48:54 got a way of overcoming what was the incredulity of other people that they could actually really
2:49:01 change the world in a major way I would love to make a few observations based on a number of
2:49:07 things that you shared and also I’m going to follow that by asking you for an example of acquiring
2:49:13 unique intuition because this is of great interest to me but I want to mention one a piece of trivia
2:49:19 for people that ties into a name that came up several times Jeff Bezos thriving on setbacks
2:49:26 although he didn’t come up in that particular landmark description if you go to relentless.com
2:49:34 it will forward to where to amazon.com so relentless.com is one of the first domain names
2:49:44 pointed to that website and what strikes me is that many of these landmarks are reinforcing
2:49:49 for one another right so you have let’s just say self-belief olympian expectations and I’m
2:49:52 going to group them in a very deliberate way self-belief olympian expectations
2:49:58 one breakthrough achievement make your own trail find and drive a personal vehicle thrive on setbacks
2:50:04 and let’s take distort reality because I’m not yet familiar enough with the acquire unique intuition
2:50:11 but all of those to some degree seem to be enormously enabled when you have a longer term
2:50:19 vision and horizon in mind than your possible competition so if you look at Jeff Bezos right
2:50:26 he is one of the few examples of chief executive officers who have been given a pass by wall street
2:50:30 I mean he’s convinced his investors if you go back and read his annual letters which I encourage
2:50:35 everyone to do you can find a PDF of all past amazon annual letters there was always an emphasis on
2:50:43 long-term time horizon longer term than a quarter longer term than a year always longer term
2:50:49 bob eiger at disney is another great example of this toby luthky of Shopify is another incredible
2:50:55 example of this and it just strikes me that this longer term vision and time horizon enables a lot
2:51:02 of these and without that if you are in any sense feeling compelled to rush that you disable some of
2:51:07 these landmarks that’s just something that came to mind as you were describing I couldn’t agree
2:51:11 more I mean that’s absolutely true you need a long time horizon you need to expect that you’re
2:51:17 going to have massive impact but it might take a very long time but you need to be sure about what
2:51:23 you’re trying to do and you need to be sure that you’ll get there but you know time is kind of
2:51:29 you know there’s lots of time yeah so acquiring unique intuition could you perhaps give us an
2:51:33 example of that that you like and if there’s one outside of Steve Jobs that’d be great but you
2:51:39 could use Steve Jobs if you like I think jobs is great illustration of that but I’ll take Nelson
2:51:47 Mandela as my example on this Nelson Mandela was a leading member of the ANC who got caught and
2:51:54 convicted and sent off to prison a total of I think 19 years in prison a life sentence actually
2:52:01 he was quite lucky to escape the noose and we were very lucky that he did he was on
2:52:08 this island called Robin Island which I visited off Cape Town it’s a short boat ride away from
2:52:15 Cape Town maybe half an hour at most but it’s a world away and it’s a nasty horrible
2:52:21 stark it’s basically it’s a scrapyard essentially I mean it’s got rocks a lot of rocks and that’s it
2:52:28 I visited the cell in which he’d been incarcerated and it’s so small you wonder
2:52:34 how he could possibly have kept his self-respect but during that period of time something very
2:52:41 interesting happened the leaders of South Africa including PW Botha who was reckoned to be the
2:52:48 great crocodile sort of you know very very hostile to change actually realized that they’d painted
2:52:57 themselves into a corner and that they didn’t want to have the possibility of bloody revolution
2:53:04 and being driven into the sea as they as they saw it by the population of South Africa and the
2:53:10 whites were you know maybe five million people against 50 million plus who were blacks broadly
2:53:19 defined and the ANC were ratcheting up violence and the ANC were controlled by all of the Tambo
2:53:29 in Lusaka some distance away and here was this Nelson Mandela guy and he was when he was in prison
2:53:35 on Robin Island some interesting things happened one is that he acquired the charisma of the sort
2:53:41 of you know prison hero so that within the ANC he was viewed as the natural leader another
2:53:46 interesting thing which has happened was that there were various outside forces including the
2:53:55 British Commonwealth that in the 1980s sent people to Robin Island to talk to Mandela and
2:53:59 try and see whether you know there was any route forward there because they couldn’t speak to the
2:54:06 guys in exile in Lusaka or wherever they were and those guys were totally uncompromising
2:54:13 and were trying to cause civil war and they wouldn’t have got anywhere and so there were a group of
2:54:19 people who went there was a group from the Commonwealth called the eminent persons group very
2:54:24 self-deprecating and these eminent people went and and of course they talked to Nelson Mandela
2:54:29 because he was you know he was recognized to be almost the shop steward of the prisoners
2:54:35 and he’d formed this sort of university there where they you know basically developed knowledge
2:54:41 of this that and the other and somehow Nelson got the intuition that these people actually
2:54:48 wanted a deal they didn’t want this to be continued forever and they were willing to compromise in
2:54:53 some way that the hardline nationalists who were nasty horrible racists would do apartheid and they
2:54:57 shot people and they were extremely unpleasant there’s no doubt about it these people actually
2:55:03 wanted a solution and he was the first person to realize that the ANC had always said and Nelson
2:55:09 Mandela had always said we will not compromise but when he met some of these people from the
2:55:14 Commonwealth and when he met later some of the senior ministers from the government of the
2:55:23 nationalist party the ruling party he suddenly realized that a deal was possible and he said to
2:55:28 them you know if you really want a deal you’re going to have to have one person one vote and
2:55:32 they said we couldn’t possibly have that democracy no we don’t want democracy there are more blacks
2:55:40 than whites we can’t possibly do that but you know Nelson stuck to that and eventually he formed
2:55:46 personal relationships with the head of the secret service the secret police as it were
2:55:52 with the minister who was responsible for justice for the minister who was responsible for state
2:56:01 security including the prisons and eventually with pw both himself and it was all based on this
2:56:07 intuition that perhaps they could reach a deal and nobody else had that intuition nobody but
2:56:12 Nelson Mandela actually thought it was worthwhile pursuing talks with those people and they took
2:56:21 five years but in the end his intuition won out and the result was that instead of having a war
2:56:28 and bloodshed going on and possible revolution and the only question for people really was
2:56:33 whether that’d be five years or 50 years before the whites would be thrown out and massacred
2:56:40 instead of that you might have a transition to black majority rule and that could be done in a
2:56:48 controlled way where fwd clerk who succeeded boater would be the vice president and effectively the
2:56:55 mentor of Nelson Mandela i’ve talked personally to fwd clerk about these days for some reason
2:57:00 i had an opportunity to do that and you know he was quite clear about it if it had not a
2:57:05 beam for mandela and of course he said himself the odds against this would be a thousand it was
2:57:10 just based on this intuition that there might be a solution where everyone else thought there
2:57:16 wouldn’t be a solution and he would not have known that but for being in prison on robin island for
2:57:23 17 years and meeting all these people and gradually being able to size them up including the heads of
2:57:30 the prison who were varied in quality from unpleasant to brutal but nevertheless he worked
2:57:35 out the way the wind was going and nobody else did as i was working in south africa at the time
2:57:39 and we never thought that there was a possibility of any solution nobody but i talked to did
2:57:45 but Nelson Mandela had a different intuition i described that in the book and it’s very very
2:57:50 it’s very heartwarming and there’s some horrible stories in the book but it’s very heartwarming
2:57:56 intuition is hugely important thank you for sharing that example i think it’s a wonderful
2:58:00 place to start to wrap up this round one we may have to we may have to do a round two on the
2:58:06 podcast if you have the endurance sometime i would love that i would love to but richard i want to
2:58:12 ensure that people know where they can find you of course on on twitter they can find you at
2:58:21 richard kosh 8020 8020 richard kosh net you’ve written many books including many books that have
2:58:26 influenced me like the 8020 principle you have the star principle which we’ve mentioned a number of
2:58:34 times in your newest book is unreasonable success and how to achieve it i have just one more question
2:58:39 for you and then certainly i’m open to any closing comments or anything else that you would like to
2:58:43 share if i’ve omitted anything certainly or if there’s just anything in addition that you’d like
2:58:50 to put forth and i’ll start this question with a quote as prelude and this is from an interview
2:58:55 that i found with you and it relates to new year’s resolutions this is a quote which you can of course
2:59:01 feel free to correct but this is attributed to you once a year rather than doing new year’s resolutions
2:59:07 i ask the same question what did i do that meant the most to me and my family and friends and
2:59:12 sometimes strangers too and what could i do in the next year more of the same is not a bad answer
2:59:22 but something fresh too so this really struck me as an impactful question and good questions are
2:59:29 impactful so a is this something that you do and might recommend and number two are there any
2:59:39 other questions you might suggest listeners consider or ponder let just state on their minds
2:59:45 yes it is true and i think it’s right the question i would ask is one again from from the book which
2:59:51 is in your whole life what is your breakthrough achievement going to be if you want to change
2:59:58 the world how do you want to change the world and ponder that maybe on new year’s eve maybe
3:00:04 any other time there’s plenty of time to work it out but do you really want to have a major impact
3:00:11 on the world if you do what that’s really my question is a question i asked myself as well
3:00:17 i mean my own ambition is to have many more creative completely unreasonably successful people
3:00:23 and the thing i’m toying with which i don’t know if you think is a good idea or not is
3:00:29 offering to work with a number of people who have already been reasonably successful but
3:00:35 have not been unreasonably successful and take them through the process and see whether we can
3:00:42 generate some unreasonable success from a lot of people and to cascade that down and train other
3:00:48 people to do that because i think this methodology is robust and i think it could make a huge
3:00:52 difference to the world and i’d like to see whether i can demonstrate that in practice
3:00:58 through a few pilot studies so that’s my personal ambition i love that i think you should definitely
3:01:04 test it and it could be a spectacular failure or spectacular success but nothing ventured nothing
3:01:11 gained and you do like to bet so i figure this is is one good opportunity to do that and having
3:01:16 some experience with vetting i’m not volunteering myself but i would say run a competition
3:01:21 or have applications that are vetted and can be vetted in some very simple ways that you’re not
3:01:27 overwhelmed and pick a handful of finalists to take through that process and what i’ll suggest
3:01:35 just as a placeholder is that people follow you on twitter richard kosh 80208020 and if you decide
3:01:41 to do this you can share that on twitter and that can be at least a possible starting point so that
3:01:48 people are alert that this is a possibility and what a pleasure it’s been richard i feel
3:01:53 like i know you in the same way that perhaps some people i meet who listen to the podcast feel like
3:02:01 they know me but it’s been through your written words that i have have come to admire and use
3:02:07 quite frankly with great effect much of your thinking so i thank you very much for taking
3:02:13 the time today this has been an incredible incredible pleasure and i hope it’s not the last
3:02:19 indeed tim thank you very much indeed i reciprocate much more pleasure for me i’m sure it really is
3:02:24 great anyway thank you very much indeed and i look forward to talking to you again at some stage
3:02:32 maybe maybe a bit a bit more frequently that’d be wonderful well the the feeling is is definitely
3:02:38 mutual and to those listening i will have show notes for everything we’ve discussed including
3:02:45 all of the books all of the resources including the most recent work from richard which is
3:02:50 unreasonable success and how to achieve it at tim dot blog forward slash podcast you’ll have links
3:02:55 to all the names everything you can imagine so please do check that out if you’d like to indulge
3:03:03 in more exploration and until next time as always thank you for tuning in hey guys this is tim again
3:03:09 just one more thing before you take off and that is five bullet friday would you enjoy getting a
3:03:14 short email from me every friday that provides a little fun before the weekend between one and a
3:03:19 half and two million people subscribe to my free newsletter my super short newsletter called five
3:03:26 bullet friday easy to sign up easy to cancel it is basically a half page that i send out every
3:03:31 friday to share the coolest things i’ve found or discovered or have started exploring over that week
3:03:36 it’s kind of like my diary of cool things it often includes articles i’m reading books i’m reading
3:03:43 albums perhaps gadgets gizmos all sorts of tech tricks and so on they get sent to me by my friends
3:03:48 including a lot of podcast guests and these strange esoteric things end up in my field
3:03:55 and then i test them and then i share them with you so if that sounds fun again it’s very short
3:03:59 a little tiny bite of goodness before you head off for the weekend something to think about
3:04:04 if you’d like to try it out just go to tim dot blog slash friday type that into your browser tim
3:04:10 dot blog slash friday drop in your email and you’ll get the very next one thanks for listening
3:04:16 this episode is brought to you by eight sleep i have been using eight sleep pod cover for years
3:04:21 now why well by simply adding it to your existing mattress on top like a fitted sheet you can
3:04:27 automatically cool down or warm up each side of your bed eight sleep recently launched their newest
3:04:34 generation of the pod and i’m excited to test it out pod for ultra it cools it heats and now it
3:04:39 elevates automatically more on that in a second first pod for ultra can cool down each side of
3:04:44 the bed as much as 20 degrees fahrenheit below room temperature giving you and your partner cool
3:04:49 even in a heat wave or you can switch it up depending on which of you is heat sensitive i am
3:04:54 always more heat sensitive pulling the sheets off closing the windows trying to crank the ac down
3:04:59 this solves all of that pod for ultra also introduces an adjustable base that fits between
3:05:03 your mattress and your bed frame and adds reading and sleeping positions for the best unwinding
3:05:08 experience and for those snore heavy nights the pod can detect your snoring and automatically lift
3:05:13 your head by a few degrees to improve airflow and stop you or your partner from snoring plus with
3:05:17 the pod for ultra you can leave your wearables on the nightstand you won’t need them because these
3:05:22 types of metrics are integrated into the pod for ultra itself they have imperceptible sensors which
3:05:29 track your sleep time sleep phases and hrv their heart rate tracking is just one example is at 99
3:05:35 percent accuracy so get your best night’s sleep head to eight sleep dot com slash tim and use
3:05:40 code tim to get 350 dollars off of the pod for ultra that’s eight sleep all spelled out eight
3:05:48 sleep dot com slash tim and code tim tim to get 350 dollars off the pod for ultra they currently
3:05:54 shipped to the united states canada the united kingdom europe and australia this episode is
3:05:59 brought to you by mementis mementis offers high quality supplements and products across a broad
3:06:05 spectrum of categories including sports performance sleep cognitive health hormone support and
3:06:12 more i’ve been testing the products for months now and i have a few that i use constantly one of
3:06:17 the things i love about mementis is that they offer many single ingredient and third-party
3:06:22 test of formulations i’ll come back to the latter part of that a little bit later personally i’ve
3:06:27 been using mementis mag three and eight elphianine and apigenin all of which have helped me to improve
3:06:33 the onset quality and duration of my sleep now the mementis sleep pack conveniently delivers
3:06:38 single servings of all three of these ingredients i’ve also been using mementis creatine which
3:06:43 doesn’t just help for physical performance but also for cognitive performance in fact i’ve been
3:06:49 taking it daily typically before podcast recording as there are various studies and reviews and meta
3:06:54 analyses pointing to improvements in short-term memory and performance under stress so those are
3:06:58 some of the products that i’ve been using very consistently and to give you an idea i’m packing
3:07:04 right now for an international trip i tend to be very minimalist and i’m taking these with me
3:07:10 nonetheless now back to the bigger picture olympians tour de france winners tour de france
3:07:16 winners the us military and more than 175 college and professional sports teams rely on mementis
3:07:20 and their products mementis also partners with some of the best minds in human performance to
3:07:25 bring world-class products to market including a few you will recognize from this podcast like
3:07:31 dr andrew huberman and dr kelly starat they also work with dr stacey sims to assist mementis in
3:07:36 developing products specifically for women their products contain high quality ingredients that
3:07:41 are third-party tested which in this case means informed sport and or nsf certified so you can
3:07:46 trust that what is on the label is in the bottle and nothing else and trust me as someone who knows
3:07:52 the sports nutrition and supplement world very well that is a differentiator that you want in
3:07:57 anything that you consume in this entire sector so good news for my non-us listeners more good
3:08:03 news not to worry mementis ships internationally so you have the same access that i do so check
3:08:09 it out visit live momentus dot com slash tim and use code tim to check out for 20 off that’s live
3:08:22 mementis live e m o m e n t o us dot com slash tim and code tim for 20 off