Hello, friends. Welcome back to the show. My guest today is Morgan Housel. He's a partner at the Collaborative Fund, an investor, and an author. The world continues to change, but the hairless apes that inhabit it stay the same. So there must be some laws of human psychology which remain true no matter what time and place you're in.

And today, we get to go through some of the most fascinating ones.

I expect to learn what reasonable optimism looks like, the difference between overnight tragedies and long-term miracles, what we can by the divorces of the richest men on the planet, how people become victims of perfection, why most competitive advantages eventually die, and much more. Morgan is one of my favorite authors. He is one of the best writers on the entire Internet and both of his books are fantastic, and you should go and buy them. And this episode is great, and I love him very much. I hope that you enjoy it. Also, don't forget that this Monday, a brand new three-hour long episode goes live with Eric Weinstein, and you don't want to miss it. So navigate to Spotify or Apple Podcasts and press the subscribe button. I thank you. Trust really is everything when it comes to supplements. A lot of brands may say that they're top quality, but very few can actually prove it, which is why I partnered with Momentous. They make the highest quality supplements on the planet. They're literally unparalleled when it comes to rigorous third-party testing, and what you read on the label is what's in the product and absolutely nothing else.

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Who are the rational optimists?

I came up with the term rational optimist. I don't know if I did, but I don't know if I came up with a theory. But my idea was, if you think the future is just going to be great, that's not optimism. That's complacency. My definition of rational optimism was, you think the future is going to be better than it is today, but the path between now and then is going to be a disaster. It's going to be a constant field of landmines and setbacks and recessions and bear markets and pandemics and wars and terrorist attacks that you have to endure financially, psychologically, career-wise, in order to get the reward of optimism on the other end. It's like getting optimism and pessimism to coexist. That, I think, is realistic optimism.

Yeah, it's like the looking at price goes from here to here, but it doesn't go like that. Price goes from here to here by going...

Yeah, of course, you see it in the stock market where over a 10 or 20 year period, you can make a crazy amount of money. But in any given month, in any given week, in any given year, sometimes in any given decade, it's a disaster. And that's the price you have to pay in order to get the returns over 10 or 20 years.

So we went through some of your book, same as ever. One of my favorite things. Everyone needs to go and buy it now. It's super easy read, very, Very enjoyable. Next lesson I want to go through is When the Magic Happens, Stress Focuses your Attention in Ways That Good Times Can't.

There's so many examples in history of the world going through a crazy tragedy, wars, pandemics, awful things happen, millions of people die. And then you look back 20 years later and you realize that because of that incident, because of that war, because of that pandemic, there was this crazy amount of innovation and technology that took place because people were panicked and the incentives to innovate were off the charts. And you look back and you're like, Look, as terrible as that was, we created, because of that, all these inventions that everyone benefits from today. The most technologically innovative period in, I would say human history, took place in the 1930s and the 1940s, the Great Depression and World War II. It started with the Great Depression, which was, in analytical terms, the most The amount of productivity that increased in the 1930s is more than any other decade that's taking place because it was all by necessity. Every single business in America in the 1930s woke up and they were like, If we don't become more productive today, We're out of business tomorrow. So every business learned how to become more efficient. And what came from that was the supermarket, the laundromat, all these new businesses that were just designed to become more efficient.

The factory line really exploded during period. What Henry Ford did with the factory line in the 1910s and the 1920s, every business took up in the 1930s out of necessity. World War II comes along, and the incentives that happened because of that were just completely off the charts. During good times, boom times, people's incentive to innovate is, If I create a new product, I might become rich. That's your incentive. And that's a good incentive. You'll get people moving in that world. In the 1940s, it was, If we don't innovate and figure out new technologies, Adolf Hitler is going to control the entire planet. That was literally what was going on back then. So the scientific community, the government, businesses, overnight, they were like, All hands on deck. We need to innovate like there's no tomorrow. And what came out of that, in a very short period of time. I mean, I've summed it up like this. World War II began in 1939 on horseback. It ended in 1945 with nuclear fission. And what took place in those six years, what did we get out of it? Nuclear energy, jets, rockets, penicillin, all of these things that benefit the world in massive ways today.

And it specifically happened because people were panicked. You could also imagine a world, it's too early, in which 20 years from now, we look back at COVID and say, Look, because of what happened in 2020, there was probably 30 years worth of vaccine, mRNA research and understanding that got compressed into six months. And you could imagine a world, it's so consistent with history, where we look back and we're like, Look, COVID was terrible and shut the and millions of people died. But look what we got out of it because of this happened. You could even say something about work from home and just the change in culture that sped up during that period. So it's this idea, it's too much to say a silver lining of World War II. You don't want to go that far. It's a terrible thing. But it's this thing of be careful what you wish for. Society improves when the world is on fire, not when everyone is happy and their bellies are full and everyone's gainfully employed. That's when the magic happens.

What are the regular elements of when the magic happens? Is it being timebound? Is it people just being panicked? Is there some a threat? What are the motivators?

I think it's the power of incentives, and mainly it's the downside incentives. When the economy is strong, you have positive incentives. If I innovate, I might get rich. If I don't innovate, I'll still probably be fine. When you have the Great Depression or a war, it's downside incentives. It's if we don't innovate, we're all going to go out of business. We're all going to die. We're all going to be taken over. That downside incentive is what gets people to be like, Oh, shit, we need to go now. This is not a nice to have. This is a survival. We need to go. For example, in the 1940s, during World War II, the scientific community was literally digging through file evidence of what are some scientific papers? What did we discover 30 years ago? What's this thing about splitting atoms? Let's try to do this one right now. And they just went full bore. And you see what humans are capable of during a period like that. Now, there's a limit to it. If you are too stressed under too much pressure, it all breaks down. So not a lot of huge scientific innovations in the 1940s came out of Europe, with some exceptions.

But that was too much trauma, too much tragedy. The United States was like, we were panicked, but there was not physical destruction of our factories, so we could keep it going.

What are the costs that people pay for this? There has to be a reason why we're not moving at that pace all the time, despite the fact that it seems to give great returns. So there has to be some downside, which is disincentivizing people from doing it when we're not facing a war or a pandemic or a great depression.

I don't know if there is a financial cost that you could put to it, but I think it is that the Opposite of stress-induced innovation is when the economy is really strong, like right now. And in relative terms, everyone becomes fat and happy, and they don't wake up every morning a little bit panicked. I think most people will see this in their individual lives, where during a recession, even if you have a job, you're like, This is hanging by a thread here. I got to really show up early, be the first one to the office, and work really hard in a way that you don't tend to see that when everything is going well. So it's less about what... I think the cost during good times is just the cost of things going well, which is just a lack of urgency to get moving. The extreme example of this would be the trust funder who has no downside. If If they wake up and don't innovate, don't find a new job, they're fine. Nothing bad is going to happen to them. You see this in companies that are big and rich and successful. They atrophy over time.

You compare that to the scrappy startup. It's night and day.

I had McEn Murphy, who's a behavioral ecologist, halfway between behavioral economics and evolutionary psychology, sat in that seat. He was telling me that as the economy gets worse, the average BMI of women in playboy and centerfold mags goes up. And as the economy gets better, the BMI goes down. So there is a relationship between male preference for female body size and resource scarcity. If during periods of highly scarce resources where the future is very uncertain, you see a woman that is able to hold on to her body fat, you think, well, I mean, what an amazing hunter gatherer. She would be phenomenal to be with me. This would be great. And they've done this phenomenal study in canteen halls of universities, and they would show guys images of women before they had dinner and then in different iterations after they had dinner, and when they were hungry before they had dinner, they picked girls who were bigger.

I mean, this has been well known that in way earlier times, hundreds of years ago, thousands of years ago, that Women who are a little bit heavier were the more attractive ones. They were the healthier ones. The skinny people were the ones who were maybe facing famine. It's a pretty recent phenomenon of a preference for thinner women over time. That's a new thing.

One of my favorite quotes from When the Magic Happens is, The same people with the same intelligence have widely different potential under different circumstances. This ability to unlock that that was already there because of the external pressure. We were talking last night about Good Heart's law. When a measure becomes an outcome, it ceases to be a good measure. But a similar one is Parkinson's law. Work will expand to fill the time given for it. This is all of these things just coming down on top at the same time.

There's stories during World War II when FDR would be like, We need to start producing 20,000 planes per year, I think was the number. Everyone in the room was like, Mr. President, absolute maximum we can produce is 5,000 per year. He was like, 20,000 a year, go do it. They figured out a way to do it. It's so cliché that if there's a will, there's a way. But you see what people are capable of during those periods. Again, I think it's It's been true for my life. I'm sure it's true for your life. During different periods of things are going well or I got some big risks in my life right now, what you are actually capable of doing changes dramatically.

The biography, the Isaacson biography of Musk, I think, can be summarized as make insane demand with ridiculously short timeline and continue to push people until it happens. Underdeliver a little bit, but only by your own insane metric. And what that results in is you overdelivering buying a ridiculous margin.

Yeah. I know there's stories of Musk building, particularly at SpaceX, where someone will come to him and be like, Hey, this part costs $3,000. And Elon will be like, That part should cost $20. You need to go build it. And they're like, There's no. They're like, There's no, $20, go build it. Just like FDR. And they eventually figure it out. They eventually do it. And it makes you realize how much in life is an artificial constraint of laziness. Maybe that's the wrong word, But a good enough ism that if that is taken away, you realize you're capable of literally multiple times what you think you are.

Overnight tragedies and long-term miracles. Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in the blink of an eye.

So think about the really bad things that have happened in modern times. Pearl Harbor, September 11th, COVID. They literally happened in an instant, particularly Pearl Harbor in 9/11. It was like one hour, everything was fine, and the next hour, the world had gone to hell. And there's no equivalent of that with good news. What is the good news equivalent of Pearl Harbor, in which at 9:00 AM, everything's okay, and 10:00 AM, everything is amazing? There's no equivalent on the other to end. Good news tends to take a lot of time. It tends to play out slowly over the decades. So one of the best pieces of news to happen in our modern times is the massive decline in heart disease mortality. It's declined more than 70% since the 1950s. It has saved millions of lives because we're better at controlling blood pressure. Back in the 1950s, if you had a heart attack, you're dead. Whereas now, if you make it to the ER on time, there's a good chance you're going to pull through. They're going to get you out of it. Made massive strides. But we tend to ignore that because what happened is over the last 70 or 80 years, heart disease mortality improved like 2% per year.

And in any given year, you're never going to hear about that. There's never going to be breaking news on the New York Times. Like heart disease mortality improves by 70 basis points. You'll never hear about that. But the bad news that happens quick, you can't look away from it. And so I think it leaves people more pessimistic than they should be because they are constantly bombarded by the bad news that happened very quickly and you can't ignore. And the good news that is a slow compounding over 50 years, it's so easy to ignore. Even if over time, that good news is so much more powerful at improving lives than the bad news that happens quickly.

Overnight tragedies and long-term miracles. Such a lovely It's beautiful framing. Do you know the difference in climate-related deaths over the last 100 years? It's decreased by 50 times. Because so much of it used to be coal. A 98% decline. No, this is through climate mastery. Century. This is people that live in hot places being able to cool themselves down and people that live in cold places being able to warm themselves up. 98% reduction in the last century of people dying from climate.

It makes perfect sense when you say it.

And yet here, look at all of the people that are dying from climate. Not to say that climate change isn't something that we need to address, but it's this overnight tragedies and long term miracles in a single incident that's occurring at the same time.

Yeah.

You're like, Hang on a second. How can the climate related mastery, reduction in deaths, be 50 times better? Like, 98% reduction. But it's also the worst thing in the world, and it's killing everybody in poor countries. It happens so slowly.

You don't hear about it. Now, there is some bad news that plays out slowly over time. If you smoke cigarettes, that's like a slow compounding. Eventually, the bad news might hit you in a jerk when you die of lung cancer after 30 years. To be honest. But you're doing damage at a slow rate.

Maybe so would climate change moving forward as externalities. That might be an interesting one. Look at all of this energy we've got. Look at how we've fixed it. And it's like, yeah, but there's this weird just number that keeps ticking up the fucking CO₂ PPI and the sea level and a couple. It's whatever. But that's the thing that given enough time would be A long-term tragedy. Yeah.

So there are a lot of those things where by the time you do notice it, you're like, Oh, okay, that is a big deal. Now I can see it. I get it now.

Why does bad news stick out so much? Is it just because it's more salient to us?

I mean, it's always true from an evolutionary perspective that bad news is going to capture your attention. Threats are going to capture your attention more than opportunities, because in order to get the opportunity, you have to first survive the threat. So it's always been like that. But I think the biggest reason it occurs is just like we said, the bad news is happening so fast. You can't look away from it. It's true in the stock market as well. There are historically over time, there have been days, months, weeks where the stock market falls 10%, 20%. During COVID, the market fell 40% in four weeks, something like that. Very rarely, if ever, will that occur on the way up. Almost no examples of the stock market rising 40% in one month will never happen. The ability to go down very quickly, I mean, it's the classic cliché. I think it's escalator up, elevator down thing is usually how it works. But I think that's a good analogy for how a lot of things work in life, too. It's just the speed at which they occur gets your attention much more.

Tiny and magnificent when little things compound into extraordinary things.

I think it's pretty common to think that a big event in the world has to be caused by a big action, that if you're going to have a major war, a major recession, it has to be caused by something enormous that is causing that thing to happen. It's usually not the case. It's usually a bunch of really small things that interact in the right order that create this massive event. I mean, this is definitely true during the Great Depression, the biggest economic calamity in the history of this country. And what was it caused by? You had a stock market crash. Well, those happen all the time. You had a bank run. Those happen all the time. You had a dust bowl. That was like a- What's a dust bowl? The dust bowl was a period just around here in the middle of the country where... I mean, the back story is after World War I or during World War I, farmers in the United States were heavily incentivized to plant crops because we were trying to feed the starving Russians during this period. So the US government came in and said, As much corn as you can grow, we'll buy it from you.

I think it was $2 per bushel at the time, something like that. So tons of farmers.

That's a premium, presumably.

It was a huge premium. Tons of farmers from all over the country came to Kansas and Oklahoma and just planted, planted, planted way too much corn. And they were terrible farmers. They were just plowing up land in the most voracious way that they could. And then it all stopped and they all bailed and left these fallow fields to just sit there and dry up. So they got dusty. And then you had these massive dust storms that pretty much wiped out a region. These dust storms that were just as apocalyptic as you could imagine.

How did that impact the economy?

The entire farming region in the bread basket of the United States that was producing all this content was just wiped out. I mean, literally just covered in dust and wiped out a huge portion of the people. And so many of those people ended up just abandoning it. There was no way you could make a living here anymore. So that happened at the same time that you had a stock market crash and a banking run. All three of those things individually would have been bad. But then having at the same time, you get the Great Depression. And I think there's a lot of incidences like that over time. One of the most interesting ones was during the 1950s when we were experimenting with nuclear weapons, and this was the nuclear age of war, we started to build really small nuclear bombs. The idea was, yes, we can have a nuclear bomb that one bomb can wipe out a city. But we also want to use this technology for more tactical warfare. And they came up with really small bombs, one of which you could literally launch off of a shoulder fire like bazooka. And it was a nuclear bomb, but it was a very low yield.

So it would do a lot of damage, but this was not thermonucular weapons. And the idea was like, oh, great, we can use these tactically. There was a joke that they even came up with a nuclear hand grenade, but they couldn't find anyone dumb enough to throw it, which was the joke at the time. But the idea was that small weapons would be safe to use. But they were actually the riskiest thing in the world because mutually assured destruction was a real thing. And it made it so that the Soviets and the United States were not going to launch a thermonucular missile and wipe out a city because the other would just retaliate and the world gets wiped out. But if you had a small nuclear weapon that you were going to use, would you use that? The barrier to using that was much lower. But then if the Soviets used a small nuclear weapon on us, would that justify us to use a bigger one? Absolutely. The Cuban Missile crisis in the 1960s, the missiles that Russia had lined up to the United States, pointed at the United States, were in order of magnitude, lower yield than what we used in Japan during World War II.

Way smaller, the bombs that they had. But if they launched one of those, we would have retaliated with the full force, the biggest bombs that we had. So what created the biggest risk in nuclear war were not the big bombs. It was the small bombs that we were actually more likely to use. And so you have this tiny thing that we're like, Oh, it's a nothing. It's a nothing burger. But that was going to be the trigger to actual nuclear warfare. I just read this recently. This is not in the book. The guy who invented the machine gun, his last name was Gatling, the Gatling gun. He actually invented it with the idea that the machine gun would end all wars because it was so destructive and it was such a killing machine that every country would look at it and be like, we can't go to war. We're just all going to get wiped out. It's too deadly now. And so you have all these things that are well meaning.

Little do you know, Mr. Gatling. You won't believe what happened next.

Yeah. And so you have all these things where someone creates something that they either think is small or they're like, Oh, it's not that big of a deal to use it, but it just compounds into a much bigger thing.

So fascinating.

So the takeaway from all that to me is people underestimate the odds of big events because you think a massive recession needs to be caused by an economic meteor, and it doesn't. It can be five small events compounding at the same time. In just the right order that set off a chain reaction.

But this is evolution as well, right? This is how you go from single-cell eukreotic to prokriotic or the other way around, bacteria, an event somewhere, to me and you sat in front of microphones having a chat. Yeah.

I think if you are a skeptic of evolution, it's because you think, you make the jump of, how do we go from a frog into a human? That makes no sense. But you're like, well, if you have 0.000 infinite change in every generation and you compound that for a billion years, then you get something great. It's like the tiniest little thing for a massive amount of time, you get something amazing.

Elation and despair. Progress requires in optimism and pessimism to coexist.

I remember hearing this story from Admiral Stockdale, who was the highest-ranking POW in Vietnam. After he was released, he was talking about how some of the POWs behaved when they were in prison. He said, Do you know who did the worst as a POW? It was the optimist. Because the optimist would say, We're going to be home by Christmas. Then Christmas would come and go, and they were just crushed. They were just destroyed. He said, The people who did the best were the rational optimists, as I would define it. It'd be people who would say, We're going to go home by Christmas. No, I'm sorry. They would say, We're going to go home eventually. This war is going to end and you're going to see your wife again, but we're not going home by Christmas. No one's going home by Christmas. This is going to be a long war. That's who actually did the best. They could take optimism and pessimism at the same time and put them together and be a rational optimist. Another great example of this in business is Bill Gates, who in the 1970s, when he started Microsoft, took the biggest optimistic swing any entrepreneur has ever taken by saying, there's going to be a computer on every desk in the world.

The craziest bold vision anyone's ever taken. At the same time, he managed Microsoft as conservatively as you possibly could in terms of tons of cash on the balance sheet, no debt. He always said that he wanted enough cash in the bank so that Microsoft could make payroll for one year with no revenue. The most conservative way you can run a business. At the same time, he's taking this ridiculous swing for the fences. And I think there are so many other businesses that are just as good, if not better, at creating products than Microsoft might be. But they were managing the business with an equal level of optimism of leverage and debt, and they eventually just get wiped out. They run themselves over a cliff. So Gates could take massive optimism and crazy pessimism and be like, these things are going to coexist at the same time. And that's an analogy for how a lot of people do well over time. The pure optimist runs over a cliff. The pure pessimist never gets out of bed. The person who knows when each needs to come into play is who actually does well over time.

What's that Taleb thing about, I'm an authoritarian with my family, I'm a socialist with my community, I'm a Communist with my village.

He says, At the federal level, I'm a libertarian. At the state level, I'm a Republican. At the local level, I'm a Democrat. And at the family level, I'm a socialist. It's such a brilliant... I think it's a great thing to say, as the size of something changes, what you expect out of it and your relationship with it also changes.

It's also your nature must be able to adapt to the demands of the situation that you're in and the vertical that you're in. Okay, so a business is It's not just a thing, this amorphous thing. It's not just... Tesla doesn't just make cars and invent shit. It also has to make money and pay payroll and be in compliance, and it deals with lawsuits, and it does all of these other things. It's like, do you really want Elon steaming into the lawsuit Department for the person that's just been run over by an autonomous car? Probably not. That's where you have different horses for different courses. Yes. Right? And this is, I suppose, the difficulty comes When you as an individual agent, try to amalgamate all of this into one brain. In an organization, you can specialize, you can chunk things down. You find the person that has the nature that you want. We want to be conservative in the accounting Department. We want to be creative in the advertising department. Yes, totally. Fantastic. Don't get those the other way around, or else you end up with boring ads and insane accounts.

You're in big trouble. And a huge problem with entrepreneurship is the assumption that because you can understand a technical product, that you know how to run the business of technical product. It's pretty rare. So someone like Mark Zuckerberg is very rare. He had the technical chops to build Facebook, build it himself, and to run it today as a trillion dollar company. That's very rare. It's way more common for you to be an entrepreneur who knows how to build a product. And then as soon as it scales, you're like, I don't know what I'm doing here. I need to call in the big boys who know what they're doing. A good example of that was Uber, where no one could have built Uber other than Travis Kalenick. His ability to take a risk, his willingness to just give middle finger to the regulators, was like, no one else was willing to do that. And once Uber became a big company, probably nobody was worse at running a company than Travis Kalenick, because that same attitude of, Fuck the regulators, we're just going to do our thing. Once Uber was a $100 billion company, that That's not the guy you are running the place.

You can't play that game. But that's more common to have a different... The person who is right to run it at this size is not the person who's right to run it at this size.

I told you the story of Ben Francis last night, and I mentioned that Ben was founder, founder CEO, step back as CEO, guy that used to run Puma or Reebok came in. Then Ben came in as CBO or something, like something to do with brand or some consultant, step back, then came back in as CEO. And he said this thing on the podcast that really stuck with me. And he said, When your ambitions for the brand are bigger than your ambitions for yourself, that's when you'll become successful. I like that. That he was prepared to be like, Hey, am I the best person for the job right now? Yes. Okay, let's nought to 10 mil. Let's do that. Do I have the first idea about how to run a 20 million pound business? Not really. In comes the person from Reebok. We're now at a three billion dollar business. Well, maybe it's actually there's different challenges, and it's useful for me to be back in. And he was just completely prepared to put his own ego to one side and say, what am I supposed to do? So that shows a person who is right at multiple different stages, but not right at all stages.

Yeah.

I think there's an interesting alternative history in which Steve Jobs does not die in 2011 and keeps running Apple. What would Apple be today? Because the truth is, after he left and Tim Cook came in, Apple did great. Apple did phenomenal. In terms of units sold, net income, Apple has absolutely thrived under Tim Cook. And I think you'd actually make the argument that around the time that Steve Jobs happened to die, what Apple, the company actually needed was a Tim Cook. And it What they needed before that was Steve Jobs. In the early 2000s, you needed a crazy maniac like Steve Jobs to come in and be like, I got this crazy idea for new products that no one else is thinking of. That's what Apple needed. Once they came up with those products, what you needed was someone to come in and keep the trains moving on time, like Tim Cook. There is a weird alternative history, and I'm totally making this up. It's anyone's guess. Steve Jobs doesn't die. He keeps running Apple.

Into the ground?

Yes. I actually don't think that's likely, but I think it's It's a very real possibility that could have happened.

It depends what metric you want. Do you want to continue to have this pioneering spirit, this person that's just out there doing crazy things and it's exciting and all the rest of it? Yeah, in the beginning.

Yes. My hot take I've shared with some people, and I say this tongue in cheek, I'm not actually making this bet. Within five years, Elon Musk will either be a trillionaire or bankrupt, and there's like 50/50 odds of either. That's my hot take. I don't actually take it that seriously. But he's the person who He was completely incapable of slowing down. It's always just bigger bet, bigger bet, bigger bet, bigger bet. Eventually, that usually catches up with people. But it's so fascinating to watch while he's doing it.

Yeah, it really is. One of my friends that lives here in Austin was working for a company that recruited the highest level C-suite executives. So they didn't place Susanna, was Jicky or Tim Cook, but they went through the process with both of them. And what he was able to do, he had access to their internal company, Intranet and every archive. And he was able to go in and see the biggest executives in the world and see what their recruiters were saying after they'd had this sit down. I was like, this is fucking fascinating. Tell me, what did you read? He said, well, there's a difference between the A players and the Triple A players. So the A players are in there and there's the usual stuff. And there's often something that pops up that's maybe a little bit of a concern, but they're good. They're well-rounded. He said, But the Triple A players are 10 times better, and they stand out as that as well. I think in Tim Cook's, the first two words were absolute stud were the first two words of Tim Cook. Susanna was a rock star, was one of the first few sentences.

You think it's very interesting. These people, they're more than just Again, I don't know much about either of the guys, but from the conversation I had, they're more than just business people. There's something ineffable in them where people who are exposed to the best talent, the best paid, most highly placed talent on the planet for the biggest companies in the world, look at them and go stud, rock star.

Yeah. I think back to Apple, once Steve Jobs invented the amazing products, the next step is, okay, can we literally make a billion iPhones and keep the quality as high as they need to be. That's what you needed a Tim Cook for. I don't know if Steve Jobs would have had that skill to keep that going. But you could also imagine a world which he doesn't die. As everyone knows, the last 10 iterations of iPhones have been exactly the same, and that would not have been the case under Steve Jobs. It would have kept innovating and created new things.

Casuities of perfection. There is a huge advantage to being a little imperfect.

I think it's always the case that people want to squeeze as much opportunity as they can out of everything in life, whether it's in your career or whatever it might be. And that invariably is going to eventually catch up to you. Room for error in what you're doing is a massively important thing to have. You saw this in 2021, where in manufacturing all over the world, the biggest trend over the last 20 years was efficient, efficient, efficient, just-in-time manufacturing. Then 2021 rolls around, and there was a little bit of what was honestly a hiccup in the global supply chain.

Big tanker gets stuck in the fucking thingy canal.

Everything collapse. Everything breaks. There was no leeway whatsoever for anything to go wrong in the system. You can imagine a world in which those companies that were doing just-in-time manufacturing and then collapsed in 2021, if they had actually held a little bit more inventory in their warehouses. Their ROI would have been a little bit lower in 2019, but they would have actually been able to supply products in 2021. And so it's always a case of having a little bit of room for error, having a little bit of leeway is And it's true in your personal life, too. Most people these days have what I call thought jobs. Their job is to work with their head. It's not to dig a ditch or pull a lever. Their job is to make a decision with something. And in that world, what you really need more than anything else is time to think, time to ponder, time to figure out a problem in your head. And what does that look like? It looks like sitting on the couch. It looks like going for a walk. It doesn't look like work. But most bosses will not allow that. Most bosses, even if you have a thought job, is like, I need you at your desk, moving your fingers on the keyboard eight hours a day.

And so they don't have any time in their day for something that looks inefficient, but is actually going to be the thing that's actually critical to their job.

Rory Sutherland has this idea about no one gets fired for hiring KPMG, which is the safe bet, following the blueprint, doing the thing that signals busyness to a lot of people. Look at my average response time on Slack. That's really good. And it's like, Yeah, but did we hire you as a Slack reply? Yeah. Is that your job to be the Slack response guy? Or is your job to be... So George, one of my good friends, his first job at Social Chain, they literally created a role for him. They called him Innovation Lead. I was like, That's vague. What does that mean? Don't know. Not sure. They just make a role for him, put him in there. He'll do something cool. He used to go. This was a Stephen Bartlet's old company, and they had all of these different big fan pages. So they were able to design social media marketing campaigns, but they were also able to deploy them because they had the pipeline. They had a two million person Harry Potter fan group or whatever it is. And George found that it was one of these open plan offices with fucking astro-turf everywhere, and there's a slide in a ball pit, like one of the classic mid 2000s-y type things.

And George hated working in it, didn't like the open plan office, way too distracting. He needs a little bit more order. So he found that there was a room upstairs all of these different places, filming content. There was a room upstairs where they were trying to build the world's largest Harry Potter jigsaw puzzle, but no one could be bothered doing it. And it was like there was no time limit on the project to be completed and to be filmed. He would go upstairs and sit on the floor in this empty room that was 40 feet by 40 feet with no one in it, no desk, no nothing, just a laptop on the floor and bits of Harry Potter jigsaw around him that he wasn't allowed to move because that would wreck the continuity. But he would go upstairs and sit surrounded by fucking Harry Potter jigsaw puzzle pieces. But that was his thing. His thing was, I don't want to be the slack response guy.

I want to actually make a decision.

Yes, that's my thing.

You're a big walker. I'm a big walker. Whenever I write a book or an article that was written during a walk, I don't think very well if I'm sitting at my desk being like, Okay, time to be creative, time to work. It doesn't happen. You get good ideas in the shower, you get good ideas going for a walk, going for a run at the gym. That That's when things happen. I think people intuitively understand that you need unstructured time in your day where you should just have a four-hour block in your calendar that says thinking time. But you can't do that. It's because everyone wants to squeeze efficiency and opportunity out of their calendar.

I release each year the same annual template that I've done to do my end-of-year review. I have to admit that this year, even though I sent out the one that I've done for five years, I actually changed it. I It was a completely different process. I love the new one that I did. That will be available next year for the people that are listening. I asked myself a really interesting question. I thought it was fucking interesting, which was, what do I think is productive but isn't? What do I do that I think is productive but isn't? Other stuff like, what would I do if I wanted to make 85-year-old me miserable? What are the things I would continue doing? What would I do if I wanted to make 85-year-old me? What would 85-year-old me wish that I did more of? What do I think is productive that isn't? Calls, Slack and WhatsApp. Staying in on weekends, sitting at my desk when I'm not working. What is productive that I don't realize? Dinners with new people, attending events, travel, reading.

That's so good. What you think is productive but isn't is things that look like work. And what is productive are things that don't look like work. Most people would be like, Oh, going out for dinner, that's just pleasure.

That's just like, no. Last night, two chapters probably from you for my new book and a couple quotes from me for yours.

Chris, you and I had dinner last night for two or three hours, and I think both of us got tons of idea for content.

Way more than I've done by sitting down at my desk trying to write something.

If I had skipped dinner and just sat in my hotel trying to work, I wouldn't have come up with absolutely nothing. But it's so hard for people, particularly if they are employed by a company, to do that. Because if you tell your boss, Hey, I need a budget to go out to dinner with my smart friends three times a week, and I need to expense that, and that's going to pay off. Go fuck yourself. You just sit at your desk and type. And every boss Who else thinks that? That's what's so hard. I think that's also why it's very difficult to innovate within a company. What looks like productive work is not what's actually productive work.

I wonder whether this is good heart's law again. When a measure becomes an outcome, it ceases to be a good measure. If an organization that gets to a particular size starts to be broken down, anything that can ever be seen on a dashboard is dangerous because it removes all of the things that can't be seen on a dashboard, which for the most part are the things that are the highest outliers in terms of return in any case. I was telling you this idea of hidden observable metrics last night, and a lot of the creativity and the biggest outlier returns that you're going to get are going to come from hidden metrics. They're going to be driven by hidden metrics, not observable metrics. Yeah, sure. Your editor for your book probably needs to be observable metrics guy. How many hours-How many changes did you make? Yes. How many times did you look at this one sentence?

How much red ink did you use on this manuscript? Precisely, yeah. Jeff Bezos talked about this recently on a podcast where he's like, a lot of metrics within businesses, maybe they made sense at one point, but then people just keep using them, and you're using the same metric, and people don't ask, does this metric actually lead to success, or is this just what we've been trained, what we've been told to do. That's a lot of it, too. There might be some point in your career in which calls were productive. There might be very early in your career, your job is to cold call, the number of calls you did. But if you keep that for the rest of your career, you need to change the metrics in what you're following.

That's why I think that it's an error for people to not see the advantage of saying yes to someone that comes through town. Someone's coming through town, they're in your town. Maybe they're only in your town for two hours. They'll be a layover or something, but they're allowed to leave the airport. Maybe you can grab a coffee with them. Fucking go for the coffee with them. Say yes to meeting new people. Dude, I stayed with Douglas Murray. You know Douglas's? British political commentator writer, author, journalist. I stayed with him in New York January, two years ago, when I first moved out to America, and I spent three days in Manhattan with him in his apartment. That three-day period. Didn't do much for my liver because he likes to have cocktails. But I shit you not, it came up with six life-changing insights that I still think about at least weekly.

I feel I can get that from a single book or a single podcast, too. It's a constant reminder to me that what does good work look like for me? Sitting on the couch in my sweat pants with a book. That's the most productive thing that I can possibly do. But even after doing this for 18 years, I still feel like I'm not working when I do that. It's really hard to actually switch your mindset into saying, That's what I need to do.

I was telling you before that Rob Henderson is one of my favorite people. He was sat in that seat not long ago as well. And his most popular Substack article of last year, given that he's done 5,000-word, 10,000-word breakdowns of advanced socio-psychological textbooks and all this stuff, was a thousand-word blog post called How I Read. And he got this one line in it, which is, reading is like going to the gym You must dedicate time to it. And I think for me, still now, I think, oh, reading is like somewhere between a relaxation activity, a leisure activity, and something I do when I have spare time. I don't think that about the gym. I think the gym is the thing that I make myself go and do. So a lot of people get frustrated at the fact that they don't read enough. First off, they should download my reading list, which you can get at chriswillx. Com/books and psychology of Money's in it. Second thing that they should do is actually commit some fucking time to it. You have to because your reading time, and this is me shouting at me, your reading time is always going to be the important thing that gets pushed to the side by the urgent thing.

There's always going to be more Slack messages. There's always going to be another fucking invoice to reply to. There's always going to be emails or a call to take or something that you need to do or a fucking dinner that you need to get ready for. And you say, no, I can't. I've got a gym session at that time. Can we do it an hour later? No, I can't. I'm busy at that time. Might be a bit odd to say push dinner back because I'm reading, but that's the philosophy that you need to have going into it.

I'll tell you how this impacts me. My wife, bless her, she's wonderful. If I'm sitting at my desk typing, she's like, Oh, Morgan's working. I can't bother him. I work from home. I have a glass door in my office so she can see it. If I'm on the couch reading, she's like, Oh, he's not working. Can you come help me fold the laundry? That thing. Her bar for interrupting me if I'm reading is so much lower than if I'm typing. I don't blame her for that. What looks like you're working is not what is actually productive.

It's supposed to be hard. Everything worth pursuing comes with a little pain. The trick is not minding that it hurts.

There's this great scene in Lawrence of Arabia where a guy pulls out a match, lights it up, and puts it out with his fingers, doesn't even wince. This other guy watching him is like, Oh, let me try that. Pulls out the match, lights it up, puts his fingers on. He goes, Oh, it hurts. What's the trick? And Lawrence goes, The trick is not minding that it hurts. It's like, That is such a brilliant scene, and that applies to almost everything. There is a cost to pay for almost anything. A trick in almost any endeavor in life is figuring out what the cost is and just being willing to pay it. It's true in investing, of putting up with volatility. It's true in your career, where there's a Jeff Bezos quote where he says, Look, if you can get to the point in your career where you enjoy half of it, where half of it is fun, that's as good as it gets. There's things in any job that just suck. It's dumb, boring admin work. If you can get to where half of it is fun, that's great. You and I were talking about this last night.

In both of our careers, a lot of it is fun and very fulfilling. A lot of it is just menial, just work. It's just capital W work. I think in almost anything, figuring out the cost of it is the most vital part of being successful over time. You see this a lot in people's careers. You and I were talking about this last night. Take someone who was uber-successful, Musk, Gates, Zuckerberg, those people. If you actually drill into what it took for them to achieve that success, Michael Jordan, Copie, LeBron, all those people, the cost that they paid to get that success in their personal life, often for their health, for their mental well-being, is off the charts. But it's so common for us to look at them and be like, I I want that life. That looks like an amazing life. But when you actually factor in the cost of what it took, you're like, I don't know.

It's the thing that I've been the most obsessed by, I would say, from other people's psychology perspective over the last two years. Tiger Woods, perfect example of this. I had an entire bit in my live show about this. James Joyce, masterful author, but posthumously, a long series of fart fetish love letters that he wrote to his wife were released on the internet. Salvador Dali. You know much about Dali?

Complete maniac.

His parents gave birth to a child 10 months before him that they called Salvador, and then almost immediately got pregnant again. That one died. They were adamant that Dali was the reincarnation of his dead older brother. That's how you entered the world. When he was a child, Dali would- No pressure. Throw himself down the stairs. He found out that he was a masochist very early in life. He would throw himself down the stairs for fun. When he was giving a lecture, he was suffocating inside of a deep sea diving suit that he had to be wrenched out of mid-talk while he was giving a lecture. He married a woman who was married at the time. They were both married. They both separated from their current partners, got together, and then Dali immediately started to treat her as halfway between a God and royalty. So he bought her a castle and then would send formal letters of request asking to visit her in the castle that he bought her. And who would refer to as his muse and all the rest of it. But all of those things contributed to- That's how you end up painting like melting clocks and then stuff like that.

As brilliant as he was, da Vinci didn't do Dali and Michelangelo didn't do Dali. The only way we get Dali is by Dali being the throw myself down the stairs, lock myself inside of the deep sea diving suit, buying my future wife a castle person. That's the only way. There's a quote from Alex that I spoke to him about the start of last year. It's one of my favorite ones. Whenever I get to a low point where I think, Why do I even bother? I just try to remind myself this is where most people stop and this is why they don't win. A reminder for the gladiators in the arena who feel beat up and scarred with no hope in sight. Building a business is hard. Hard feels shitty. This is what hard feels like, and this is why most people can't do it. But you can. This is what hard feels like was in my memo that I sent to the team this year. It's something He told me this great story about when pledges, he was in a fraternity at college, and he was high up or whatever. The pledges were whining about what they were being made to do.

And he said, Right, I know everyone's having a pity party here. So he calls them around and he says, Look, who here thought that this was going to be easy? No one puts their hands up. It's like, Who here thought that this was going to be hard? Everyone puts their hands up and he goes, This is what hard feels like.

I think in most endeavors in life, people perfectly understand the relationship between price and quality. You want a nicer It costs more. Bigger house, it costs more. But that understanding goes out the window when you're talking about career success or career fulfillment or personal health, things like that. The relationship just breaks down in their own mind. But it doesn't go away. The higher the success, the higher the cost. I love reading biographies of entrepreneurs, of generals, whoever it might be. With very few exceptions, do I finish the biography and think to myself, I want that person's life. What I think is, I'm glad they existed. I'm so glad the world had that person that we can all benefit from. But the crazy success comes with a cost that very few people, including most of the time myself, are not willing to pay.

How can people not mind that it hurts more?

I think when you talk about someone like Dauley, it's ingrained in them. I think whenever you have somebody like Musk, Zuckerberg, Jordan, Tiger Woods, there was not a decision that they made. They had to pursue. It's a compulsion. Several years ago, I heard Patrick O'Shane, as he said, that the single word that he would describe for most successful people was not driven, it's not motivated, it's tortured. They wake up every morning just like, I am tortured at the success that I have not achieved yet, and I have to go do this. I have to go work 24 hours. Some people, I think, are born with it, and some people are not, which is why the success is so stratified. Once in a while, I think you have someone who is a middling success and became a founder at age 50 and knocked it out of the park. But that's extremely rare. I think it's usually people for whom this is just in their blood.

They have to do it. Yeah. Again, from Alex last year, he said, Champions are broken. People look at champions and try to find something that they have that everyone else doesn't have, but it's the wrong way around. Champions don't have something that everybody else does have, which is not what- Which is a sense of being fulfilled.

Correct. And saying, That's enough.

What was the Donner Party?

The Donner Party was amazing. You You, as a Brit, have probably never heard of the Donner Party. Is that right? No. Back in the 1800s, there was a pretty wealthy family, the Donner clan. They were in Chicago who were moving West, as a lot of people were. The Donner, they were very wealthy, but they were driven to the wealth and the opportunity and the prosperity of California, which is the new land during this period. So they start making it out West. And this is, of course, before railroads or making out on wagon train. When they start off, there's a very big party. It's more than 150 of them that start And at one point, they meet, I think they're in the middle of Nevada, and they meet this quack who promises them a shortcut, who says, Hey, the route between here and to pass through the Sierra Nevada Mountains is pretty tough, but I know a shortcut. You can make your way around here. The shortcut turned it out, ended up being completely bogus, and it was nonsense. They actually had to basically backtrack back to where they originally started from. That delay made it so now they were going to cross the Sierra Nevada Mountains in the middle of the winter, which is not when you want to be doing it.

You want to cross it in the summer or the fall before the snow comes. They eventually hit the Sierra Nevada Mountains during what was the biggest winter in decades, the biggest snow dump. They got completely stuck, and they had to resort to eating each other. Cannibalism. It's absolutely a horrific story. I mean, one of the details that sticks out from there that just shows the plight that they were in when they were eating each other, and there were still dozens of them alive at this point, they would label the meat that was harvested to make sure that you did not have to eat your sister or your mother. That you were eating somebody else's. I mean, the plight that they went through was extraordinary. And two things have always stuck out for me from the Donner Party. Most people just focus on that element of the story. One of the things that sticks out is that they were already rich. They were not going to California because they're like, We're broke and we want new... They were just seeking more. They were already crushing it. The other was they were in this situation specifically because they were tempted by a shortcut.

And look, I'm all for efficiency. I'm all for doing things the right way. But so many short shortcuts are just cutting corners that's eventually going to backfire on you. They were like such a profound example of that.

The safest way to get what you want is to try to deserve what you want. That was from Munga. What does that mean?

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

Think about what the opposite of that is. Neil Strauss said this the other week. Unspoken expectations are premeditated resentments. Unspoken expectations are premeditated resentments.

That's exactly it. I think that's Brent's exact point said more succinctly. That's really what it is. I think it's true for a lot of things. If you want to be wealthy, you need to deserve it. If you want to be a successful entrepreneur, you need to deserve it. No shortcuts. It's all just find the price and pay it.

Keep running. Most competitive advantages eventually die.

I think there are so many examples of this. One of the most interesting is Sears, which if you go back to the '70s and '80s, no other company in America had the moat that Sears did. It was completely unstoppable.

What's Sears for the Brits?

Are you kidding me? Come on. Sears was the most successful retailer, mostly cloth and things like that. Department store type. Department store, but they also sold washing machines, that thing. They're actually still around.

It was like a Walmart type thing.

Yes, but less big than that, less all-encompassing than Walmart. But they were everywhere. They were so dominant back in the day. Nobody could touch them. They got so big that they bought Discover Card and Dean Witterstock. They started moving into all these other areas. It was truly the Walmart of its day or even the Apple of its day. It was just like, Nobody compete with this. Then they lost everything and went bankrupt and then lost it. If you dig back into what happened, they became successful because they were so scrappy and so terrified of competitors. That's why they became successful. As soon as they got big, it all went to their head. They were like, We're serious. Nobody compet with us. They stopped innovating. They ignored this upcoming that was chasing them called Walmart, completely They ignored it. And by the time that they realized what had happened, it was way too late. They were gone. And I think that's actually a very common story. It happens in individuals' lives as well, where the reason that you are working so hard is so that eventually, one day, you will achieve a level of success in which you don't have to work so hard anymore.

That's what's motivating you, is the dream that you can one day relax. So when you become successful, you justifiably think, I can stop working so hard. I don't need to grind as hard anymore. And then the moment you think that and it's justified, you think it's justified, you lose what actually made you successful to begin with. And then that's the downfall. And you see, there's this amazing interview many years ago with Mike Moritz, who is the head of Sequoia, the most successful venture capital firm that's ever existed. And Charlie Rose asked him, he said, Why has Sequoia been so successful for 40 years? Not over one market cycle. You've dominated for 40 years. And Mike Moritz said, We've always been scared of going out of business. Look, if there's anyone in Silicon Valley who has the right to say it's because we're smart. It's because we're so good at what we do. He has the right to say that, but he didn't say that. He said, We're terrified of going out of business. You never let your guard down. What made you successful, you never let go of that.

Isn't there a business book, Only the Paranoid, Survive?

That's it, exactly. I think there's lots of different versions of this. I read recently that the unofficial motto of NVIDIA, their unofficial It's a separate motto is, We are always 30 days from going out of business. That's what they tell themselves in their meetings. We're always 30 days from going out of business.

This is so diamically hanging over their head.

Yes, but I think that's at least one of the reasons why they're so successful.

What me and you were talking about this last night, and I think it's a brilliant frame, and I want to spend more time building it out, serotonin Morgan versus dopamine Morgan. I think that the only the paranoid survive business model is a dopamine company, not serotonin in company. That is very vigilant, very anxious, very on edge, making sure that everything is heavily scrutinizing all of the different options and keeping abreast of competitors and having these underlying resentments, but also knowing that I can't really bring them up because that's also not going to be good, but I'm going to fucking hate them in any case. It's that energy. It's that lean in. It's that tentative, very watchful energy. And I think that especially if you are somebody that's close not only close to the operating of a business, but also emotionally invested in the operating of a business, or if your professional life and your personal life have blended in a way, it can be very difficult to not have what is effective professionally curse you personally. It is very, very good for you to be on edge in that manner. Very good. It is useful and effective as a business to be on edge in that manner.

It is catastrophic and destructive for you to be on edge in that same in your private life.

What's so hard is that most people, when they make a mistake, don't know it. They're blind to it. Whereas cutting back because you become successful is a cognizant decision. You know that you're like, Because I've become successful, I can now sleep in. I can now work fewer hours. You know you're doing it. You think it's justified. But what you are blind to is what that's actually going to do to your career. And someone tweeted this just last week. They said, When does a startup lose its magic? And the precise moment when it happens for every one of these companies is when the CEO stops building the product, when the CTO stops coding, when the chief marketing officer is not writing the copy anymore. It's like once you become so big that the senior executives are detached from actually doing the work, when the musician stops writing their own songs. I know authors who when they become big, they have so much pressure and incentive to write more books. Then they basically hire ghost writers or at least people to help. And that's when you lose the magic. You're not doing it yourself anymore.

The same thing is so true in the world of podcasting and specifically YouTube, YouTube more than podcasting. The creators that take their eye off the ball with guest booking, guest research, schedule Modeling, titles, thumbnails, and branding.

What actually matters.

The longest points of leverage. If I spend six hours every single week on calls just doing copywriting for seven videos, that's it. It's an An hour a video. We spend an hour a video to come up with the right title and the right thumbnail because it's one of the longest levers that we have. Every single video that's ever gone out, I've touched. And I'm like, getting to the stage now. I was telling you this last night. I'm like, I'm going to operationalize things. I'm tired. I don't get to just do the things that I used to do. But I also realized, and this is Leila Hormozy, Alex's wife. I asked her, what are the things that you should outsource and what are the things that you shouldn't? One of the first things that she said, you shouldn't outsource the thing that makes the money or the impact. Yeah. Yes. Yes, that's good. Outsource everything else. Fucking get a maid, get a cleaner, get a gardener, get a fucking driver, get whatever you need. But don't outsource the thing that you're there to do.

Yeah. I think you see this a lot in investing, where you have someone who's a very talented investor, very good at picking stocks, finding the right business, and then they launch a fund. What does launching a fund entail? Half your time is going to be fundraising. Half your time is going to be accounting, HR, you got to hire people. And then you're completely detached from what actually made you good to begin with. And that is so common in any business. I think if you... Identifying that point, if you can't effectively outsource those things, I think if you are the entrepreneur, the CEO, whoever it is, and you get to a point where you're like, Hey, I've become really successful, and I became this successful because I wanted to step back. You need to be honest with yourself and remove yourself from the situation. The people who fall into problems are like, I grinded for 20 years, now I'm successful, but I'm not going to leave this business that I built. I'm going to stay here and just become fat, happy, and lazy. That's when it eventually just crumbles.

Yeah. The wonders of the future. It always feels like we're falling behind, and it's always easy to discount the potential of new technology.

It's so very rare is there a single new invention that is amazing in and of itself. It's usually that you have a small invention, and then 10 years later, another small invention, 20 years later, another small invention, and those things come together, and that's what creates something amazing. Jeff Bezos talked about this recently where he was like, When he launched Amazon in the 1990s, he did not need to build a payment system. It already existed. It was called Visa, MasterCard. He didn't need to create a shipping system. It already existed. It was UPS. But he took all of those things and combined them and built on top of them. And it's true for a lot of innovations. The most stunning example is Thomas Edison did not invent the light bulb. It was first invented by a guy named Humphreys Davies, who was a Brit, who created something that looked exactly like the light bulb, I think 20 years before Thomas Edison. The difference was that light bulb that he built, it was impossibly bright. You would go blind by looking at it, and it would only stay lit. We overperform. What can I say? And it would only stay lit for five seconds.

What Edison did is he moderated the intensity and he lengthened the endurance of the light bulb. That was incredible. But let's not pretend that he built that flaming bulb from scratch. He didn't. He took what other people had done and built on top of it. And it's true for almost any invention. Obviously, Henry and Ford did not invent the engine. He didn't invent the wheel. He just combined all of these things. So whenever a new invention comes out, I think it's very easy to be like, What is this useful for? And a lot of times the answer is like, We don't know, but this is going to be something that somebody combines with other things in the future that's going to become something incredible.

You've We've got a typical path of how people respond to what eventually becomes world-changing new technology. First, I've never heard of it. Then, I've heard of it, but I don't understand it. I understand it, but I don't see how it's useful. I see how it could be fun for rich people, but not me. I use it, but it's just a toy. It's becoming more useful to me. I use it all the time. I could not imagine life without it. Seriously, people lived without it. It's too powerful and needs to be regulated.

It's true for almost every big invention. The two that are most interesting to me was the invention of the car and the airplane, which when both of those came out in the early 1900s, the first reaction to those was like, I don't understand why anyone would want this. The first car was so inferior to the horse, and the first plane was so inferior to the train. So everyone looked at it and they're like, What the hell is the use? And then it was like, Oh, I see. It's a rich person's toy. If you're a zillionaire, you're going to have a car that you can put her around town with. I get it. And then it becomes better and better. Both the car and the plane, the first uses that people saw for it was like, Oh, we could strap a machine gun to this and use it in the army. Virtually, nobody saw, even the people who worked in those industries, what it would become, which was good for transporting people. And nobody saw with the car, they're like, Oh, this is going to open up a new form of living called the suburbs. People can drive to the city now.

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

How should we interpret this consistent trend? Should we be less quick to cynicism and skepticism around things?

It's also very common historically that people say, We haven't had a big invention in 30 years. We used to innovate, but over the last 30 years, what can you think of that we've actually created? That's a very common view. Usually what's happening is that it's not that we haven't invented in 30 years, it's that it takes 30 years for us to recognize any invention. So we look back today and we're like, yes, the internet was big, but the internet came about 30 years ago. But if you go back to the 1990s, it was like, no, we really haven't invented much in a long time. It's always that lag in how long it takes you to understand how big something is going to become. And you can imagine that happening in 30 years from now. In 30 years from now, we're like, oh, we haven't invented anything in a long time. But in 2024, we came up with the whatever it would be. That is such an obvious new technology. Because when we were inventing the car and the airplane or the transporter, the radio or the internet, very few people knew at the time what it was going to become.

It takes decades for you to understand what it's actually going to be.

Harder than it looks and not as fun as it seems. The grass is always greener on the side that's fertilized with bullshit.

Which is a wonderful quote. I can never find who have originally said it. I can't take credit for it, but it's such a great quote. I think there's a truth in life that everything is sales. Everything is sales. And it's done in an innocent way. But a big part of this is that people tend to exaggerate and advertise what they're good at and hide the hard parts, hide the flaws. And it creates this this view among virtually everybody that your success was much easier than it was. This business is better run than I think it is. I was talking to a friend a couple of years ago who was like, Oh, this rival company is so much better run than the company I work for. They're so much more efficient, so much more organized. I'm like, How do you know that? And basically what it is, is from the outsider's perspective, everything looks like it's easier and better run than it actually is. But if you have the insider of how the sausage is made, you realize how inefficient virtually everything is. I think that's a big part of life is just realizing that success is harder than it looks.

We talked about this earlier with Tiger Woods, Kobe Bryant, Michael Jordan, all these people. If you actually dig into what their life is, it's infinitely harder than it looks from the outside.

Did you see Elon on Lex, where he said, My mind is a storm. Most people would think that they want to be me, but they don't. They don't know. They don't understand.

Because what people look at Elon and they're like, Oh, richest man in the world. He's got a golf stream. He's got big homes. I don't even think he actually does. But he's worth a quarter of a trillion dollars. He can do anything he wants. That seems like an amazing life. No, I think if you actually dug into it, I think Elon is in probably the bottom, making this up, 20% of mental health in society. Tortured.

I had this idea called the Cookie Test that I did on stage during my live show, and it's about this, but from the way that we perceive other people. Imagine that there's a cookie here and I decide that I'm going to make the decision about whether or not to eat it. When I do that, this unholy war begins inside of my mind between there's platoons, and one of them got a dragon, and there's a trebuchet, and my old PT teacher Mr. Henderson from Year Nine saying, You're a cookie eater, and you've always been a cookie eater, and you're always going to be a cookie eater. And then after a little while, the better version of me succeeds, and I turn away. That's what I saw internally. What you saw was some bloke, stare at a cookie for a while, and then turn away hungry and sad. From the outside, everybody else looked like slick rational agents, and from the inside, we looked like wavering idiots because the asymmetry in what we observe of our own uncertainty and what we perceive of someone else's uncertainty is so asymmetric. I also had this idea about how people going through breakups or people that feel like they've been hard done by, or maybe they're whisting after a friend or a partner that they used to have, and we're able to romanticize, especially people that have scorned us or that have left us.

There's something particularly alluring in their aloofness, right? Yeah. But I think it's something that we can all take. You can use this asymmetry to your advantage as well. Think about how much more deep and dextrous and nuanced and subtle and finessed your your thoughts are than even the person you know, the best on the planet, your twin brother's thoughts are that you know of. It's one 10,000th, one millionth of what you have observed of yourself. If you are someone that's struggling with the wistfulness, and I'm never going to be able to find anybody like them, there is also a very easy argument of they're never going to be able to find anybody like me because you only see this very rough, hewn version of them, whereas the depth that you get of yourself is so much greater.

There's also almost the opposite of this, which is Daniel Kahneman's observation that it's much easier to spot other people's flaws than your own. Even though you're very aware of what's going on in your head and your thought process and whatnot, it's very easy for me to look at your decisions and say, Oh, you're missing this and you're incomplete on this. You're making a bad decision here. But you can justify your own very, very easily because you know the internal dialog in your head that's justifying your decisions. I'm doing this because of this reason and whatnot. Here's why I'm doing it. But when I'm watching you, I only see the actions that you're taking, and I can just judge you much more objectively in that measure. But I think if you could see the thoughts going on inside of everyone else's head, you would see that the world is a thousand times crazier than you think it is. You'd see people are a thousand times more depressed than you think they are. They're a thousand times more creative than you think they are. They're a thousand times more evil than you think they are. Because what they're actually putting forth and speaking and the actions that they're taking is such a tiny percentage was actually going on in their head.

We had movies a long time before Neuralink or Elon Musk were even objects in the pop culture, but like Minority Report, the ability to be able to see what someone is thinking or might be prepared to do in future, to be able to predict that and then go after them. Was it Minority Report? No, it wasn't. What was the thing with Tom Cruise where they could see into the future and he had that big screen? There's people screaming into their iPods at the moment.

I don't know, but it sounds good.

It's great. Anyway, good movie. Minority Report was the one with fucking Matt Damon, right? Morgan, why do you spend more time watching movies?

What are you doing?

I'm reading books, man. Stop it. Anyway, that's going to kill me. I can't remember. Anyway, that movie. The ability or what we have at the moment, people are only culpable for the actions they take and the things that they say, not the thoughts that they have. There's no such thing as thought crime. At the moment. You can say, We live in a world that senses and all the rest. It's like, yeah, but if you keep your thoughts literally as fucking thoughts, no one knows.

Imagine if you got thought canceled.

But that's my point. My point- Everybody would be canceled. Yeah. That's where the toxic compassion That's where the thing that I was telling you about last night comes from, which I believe is performative empathy is a front. It's a very shiny veneer that nasty people put over the front of their meanness to appear nice. It's It's like a small gold bar that's being beaten so thin that it's in gold foil, and it gives the illusion of something that's glittery. But if you poke it a little bit, it's just a hole through the other side.

That's a great analogy. I like it.

Incentives, the most powerful force in the world. When the incentives are crazy, the behavior is crazy, people can be led to justify and defend nearly anything.

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

It's a Nazi concentration camp guard, but in reverse. Yes.

I think there's so many stunning examples of this, of when the social incentives, the tribal incentives to do something that is objectively bad, but you can easily rationalize it by being like, Well, this is the incentive for me to do the right thing. There's this documentary about El Chapo in Mexico, the drug lord, who was a pretty vicious, terrible guy. They're going to this rural town in Mexico, and they love El Chapo. All the people are just like, Chapo, Chapo, Chapo, he's so great. They talk to them and they're like, Well, yeah, we live in absolute, utter abject poverty. Chapo would come in and build us schools, build us roads, give us food, pay for our children's wedding. We love the guy. Absolutely love the guy. When the incentives are there to overlook some element of someone's behavior, their personality, people just suck it up right away. Another stunning example of this. There's a book called What We Knew. It interviews German civilians after World War II. These are German civilians who experienced, who were in Nazi Germany in the 1940s. The book is just interviewing these people saying, What did you know? What did you see?

What do you know about the Holocaust? What do you see about what was going on? They're interviewing this German civilian woman, and she says, Oh, when Hitler came to power in the 1930s, everybody embraced him. The interviewer is like, Why? How could you embrace this monster? She says, Well, you I have to understand. In the 1920s, I'm paraphrasing her, the German economy fell apart. They had hyperinflation. Nobody had anything. Hitler came along and said, I have a better way. We're going to give you jobs. We're going to give you prosperity. The woman says, In that situation, You do not say to that person, No, I don't want that. In that situation where you are in a desperate situation and someone come along and offers what looks like help, you take it. I think that was a very honest description of what happened in the situation, that when the social incentives are to embrace something that is otherwise wicked and evil and terrible, millions of people can embrace it if their incentives for one aspect of their life are to embrace it.

What about Heaven's Gate?

Heaven's Gate was the cult. They They essentially all killed themselves. They all committed suicide. But there's this amazing part of the Heaven's Gate cult where at one point in their cultish behavior, they believe that there was a spaceship that was going to come save them, come down. They could all board the spaceship. Everyone else on Earth was going to die, but they would be saved. They're waiting for the spaceship to come, and they go to a store and buy a telescope so they can see the spaceship coming in. They go out, point up to the night sky, looking for the spaceship. Don't see anything. No spaceship. They bring the telescope back to the store where they bought it. And they said, This telescope is clearly broken. It doesn't work. And the store owner says, What happens to it? It looks like it works to me. And the Heaven's Gate guy says, It doesn't work because it doesn't show the spaceship. So it clearly doesn't work. The spaceship is obviously coming, but I can't see it, so the telescope is obviously broken. When you firmly believe whatever bullshit that you're going to believe, any evidence that's going to come to show you that you're wrong can easily just be purely dismissed.

And that's a humorous, it's a sad, extreme example. But virtually everyone falls for this in some way. Where if you believe X, then evidence that X is not true can easily just be pushed away in a second. You see this a lot in the economy. Where if you are a pessimist and you're like, There's going to be a recession. We're in a recession. Then GDP data comes out and you're like, Oh, it's actually pretty strong. By the way, that happened this morning. Somebody the pessimist will be like, Well, you got to dig into the numbers and see. You can easily spend anything you want in order to justify the decision that you've already made.

Pessimists get to be right and optimists get to be rich.

I think that's by and large right. There's also a thing where a lot of economic pessimists, pundits, they can be wrong forever, and they're never penalized for being wrong because they are giving somebody a product that they really want. A lot of what it is, is I think at its core, I think there are a lot of people in the economy who feel inadequate about their own position in the economy, and they literally fantasize about other people suffering economically.

A transfer of wealth from the people who have to the people that they feel like they don't.

They literally fantasize about a stock market crash because if other people got poor, they would feel better about their own situation. I think that is why economic pessimism in the punditry space is so... When it comes people are like, Yes, that's what I want. Tell me the economy is going to own the hell. It makes them feel better about their own situation.

Now you get it. Nothing is more persuasive than what you've experienced firsthand.

I read this saying, this is pretty common that in military boot camps, this was during World War II, but I think it applies to any era, there would be so many soldiers who after boot camp, would be filled with bravado, and they'd be like, I'm going to go get those Nazis. When I get out there, I'm going to come guns blazing, like, Watch out, here we come. Then the moment they are put on the front lines and a bullet whizzes over their head, they are terrified out of their minds. There have been some studies that showed, and they're very controversial about whether this is actually true, that only a small fraction of the soldiers on the front line-ever fired their gun.pulled.

Their trigger.

So many of them, and who's to say it would not be me or you either?

I can't remember what it's called. There's a particular type of firing. It's like non-mortal firing or something like that. They would do it, but they'd fire just in the air.

In the air. Because they couldn't- Over the top of the- This is not a criticism in the slightest that even when you're facing a Nazi soldier, a Japanese soldier, whatever it would be, to stick your gun at them and pull the trigger, you just say, I don't have it in me. I can't do that. I think there's a very good chance that I maybe would fall in that situation, too.

This is one of the interesting, I guess, incentives, going back to one of the lessons we learned about earlier on. Of war, yes, it would be hard, especially if you hadn't gone through the training. But then you go through the training, which is basically They're trying to remove the Type 2 thinking and just put you in Type 1. You see enemy bang, you see enemy bang. It's not person, it's response. They're trying to drag it out of that deliberate thinking and into that responsive thinking. But the ever escalating ladder of nuclear weapons that you were talking about before, if my friend that I've been through boot camp with just gets shot and is either dead or injured, that's going to be pretty motivating for me to think, first off, I'm in that a danger and it's either them or me. Secondly, fuck you. You just shot my friend. So you get this almost... I would guess if you could track this, if you could study this appropriately, I bet that you will find the lethality and rate of firing of soldiers on the front lines will probably follow a U-shaped curve. There will not be some.

Then people will begin to die. Threat will begin to increase. People will begin to fire more and more and more and more and more Point, and this is a nuance that maybe doesn't even matter, but you're not firing to kill the enemy.

You're firing to save yourself. It's just like you're in a situation where it's like it's either you or me. And this is not about the strategy of what we're doing. This is just a pure survival mechanism right now. But I think the broader point is you do not know how you're going to respond to a situation until you've experienced firsthand. And the military is an extreme example, but this is true for bear markets in the stock market. So common for people to say, if the stock market fell 50%, I would view that as an opportunity. I would back up the truck and buy more. And then it actually happens and they're like, Oh, this sucks. I'm terrified. I don't want anything to do with this. It's way easier to quote Warren Buffet than it is to actually take those actions in the heat of the moment. A lot of this is because if I were to say, how would you feel if the stock market fell 50%? By and large, you imagine a world in which everything is the same as it is today, except stocks are 50% cheaper. And in that world, you're like, Oh, it's great.

It's an opportunity. But the reason the market might fall 50%, is because- It's a pandemic. There's a pandemic, there's a terrorist attack. And in that situation, you're like, How would you feel if the market fell 50%? Because it's the day after September 11th, and everyone on TV says there are more attacks coming that are going to impact you. In that situation, you might be like, That's not such an opportunity anymore. That's always what happens.

Time Horizons. Saying, I'm in it for the long run, is a bit like standing at the base of Mount Everest, pointing to the top and saying, That's where I'm heading. Well, that's nice. Now comes the test.

You see this so often, particularly in investing, but this happens in a lot of areas in life where people are like, I'm in it for the long term. I'm a long term investor. You're like, Great. That's a good mindset. But the long term is just a collection of short terms. And you need to experience all of those short terms. So a long term investor does not get to ignore the short term volatility, the short term recessions, the short term bear markets. You have to experience and endure all of those. So I think in investing, very often, saying that you are long term is a cop-out. Just saying, I don't need to manage my behavior and my expectations over the next 12, 24, 36 months when you do. A lot of this, too, is maybe you, the investor, the fund manager, is a long term investor. But are your clients? Is your spouse? Are they going to put up with having a shitty year? Maybe you're willing to do it, but is your business partner willing to do it? Saying your long term is very different than actually being a long term person.

How How can people make the long run easier? You are Mr. Compounding, right? If there are so many gains to be accrued by playing long term games with long term people and long term investments and piecing into the S&P and not being that fussed about what happens and looking at signal, not noise, and all the rest of it, how can people improve their long-termism?

One of the ways I've subtly changed how I think about investing over the last couple of years is a bigger realization of how much of successful investing investing is nature nurture, leaning towards the nature side. I think some people are just wired to get it, and some people are not. Charlie Munger made this point where he says, When young people learn about investing, they either understand it instantly or never at all. And it's one of those two. I think that's a little too black and white, but I think he's directionally correct, that some people just get it. You and I were talking the last night about, what is the genetic soup that you're born with? You have no control over it, but yours is different than mine. It's different from everybody's. And so I think some people much more able to think long term than others. I'll tell you a little story. My brother-in-law is a social worker, works with very impoverished families, homeless families, children who are in terrible situations. He was talking to this family at one point, a very impoverished family. He said something along the lines of saving your money for the next week or the next month.

They laughed at him and they said, Oh, you're a future thinker. He's like, What? He said, You're a future thinker. They said, You got to understand, when you're in our situation, you do not have a time horizon that exists beyond 24 hours. There's no such thing as next week. We don't know where we're going to get dinner tonight. There's no next week. Our field of vision is 24 hours. I think that's an extreme example, but there's a lot of people like that. If you say, Oh, you should invest for the next 30 years, they literally cannot envision what next month is going to look like. So why would... Next 30 years is completely and utterly theoretical for them.

Who was that actress? Was it It's like Margot Robbie or someone that said, We're going to be married forever. I can see us being together for at least 10 years, and then got- They got divorced next month.

That was Elizabeth Taylor, one of a dozen divorces that she got, where she says, Yeah, there's no world in which we're ever going to get divorced. And she gets divorced 30 days later. I think it's... There's a thing in psychology called the end of history illusion, where people are very aware of how much they've changed in the past, but they completely mis-underestimate how much they're going to change in their future. If you compare Chris today to 18-year-old Chris, you're like, Oh, completely different. But if I said, Who is Chris going to be at age 60? Most of the time, you're going to be like, Oh, probably very similar to who you are today. And that's not true. It's never true for anyone. Chris at age 60 is going to be maybe as different as the difference between you and 18-year-old Chris. But it's very hard to come to terms with that. Most people think they're going to be the same person for the rest of their life, even if they know how much they've changed in the past. So it's easy to say, I'm going I'm going to be married to this person forever. I'm going to be a long-term investor forever.

But things change. What you want out of life changes, your wisdom changes, your incentives change to push you to do something different.

The converse is true when it comes to personal growth as well, that if you ask yourself, what would you tell you from 10 years ago? You could go back in time and write them a tweet or send them a text or whatever. What are the things that you would tell them to start doing and stop doing and focus on and let go of? A lot of the time people use that as a... It's a subtle brag, it's a humble brag about, These are the things that used to be a malady for me, but now I've transcended. I would wager that at least 70% of the things that you in 10 years from now would tell you today are things that you today would be things that you would tell you 10 years ago.

It's more just like a wish or a fantasy of like, I wish I knew this 10 years ago, but frankly, do I actually even know it today? I wish I could accept this truth today. But frankly, I still have a problem with it.

You are your patterns, and they continue to repeat. You are the common denominator between all of the different situations that you end up in. Is it that every single girl is a bitter, spiteful bitch that always wants to try and ruin your reputation, all the rest of it? Well, what do all of those girls have in common with each other? The only thing that they have in common with each other. They knew you.

It's you.

You're the only common denominator. You piece this together. Yeah. Either that you chose them or you created them or you molded them or you did something, but it's fucking you.

There's some of the corollary where it says something like, if you meet one asshole, you've met one asshole. If you meet an asshole every day, you're the asshole. You're the asshole. If everyone you meet is a jerk, this should be telling you something.

Yes. Trying too hard. There are no points awarded for difficulty.

I think it's true. In almost any endeavor, there's going to be a very small handful of variables that drive the majority of your returns. It's true in business, careers, investing, relationships. It's definitely true in investing in particular that in many endeavors in life, if you want to get better at golf, you should practice a lot. If you want to get better at basketball, you should practice a lot. If you want to get better at investing, you should do less. You should not practice more. You should not try harder. You should not pull more levels or or turn more knobs. You should do less. There are no points awarded for difficulty. It is so counterintuitive in investing that the smartest people who went to the best schools, who have the best education, are the ones who try the hardest and very often earn the lowest returns. There was this thing that I read recently that as recently as 100 years ago, the people in society who had the worst medical care were the richest people.

The rich got worse. They were fucking with it too much.

Because they could have afford all the miracle cures sold by quack doctors that were actually just going to poison you. I think there is a perfect corollary with financial advice that some of the people who get the worst financial advice are the richest people who can afford the highest priced consultants and advisors that tell them to justify their fee, to turn the knobs and pull the levers and fiddle with the system as much as you can to earn higher returns. Those are the people who 95% of them or more are going to underperform the A simple basic index fund.

One of my favorite Rory Sutherland stories was Terminal 5 London Heathrow. You'll have been through it if you've ever flown international connecting through London. You go in and you go up this escalator, set of stairs after that. There's like one bloke checking everybody's tickets. It's insane. And then you go upstairs and you're at the top gang level of Terminal 5, and you're in a snake queue, and you need to get rechecked to go through security. And they were getting complaints. There were too many complaints. The amount of time that people were waiting, they were missing flights, and they just couldn't deal with it. So as always, the humans of this situation looked at it like an engineering problem. It was an optimization problem. Let's get, retrain the staff to be quicker. Can we fit more lanes in? Can we change the machines so that the machines move more quickly? Can we do all the rest of this stuff? And either Rory or one of Rory's friends, stepped in and said, before you drop 50 mill on this two football pitch-sized area of security machines. Just let's see if we can find a behavioral solution to this.

And sure enough, they did. And they just put signs along the queue that said, 15 minutes from this point, 30 minutes from this point, 45 minutes from this point. And all of the signs were five minutes longer than the wait time.

Make it easier for people to adjust their expectations.

They just got there and they were like, I mean, it's 40 minutes, but you see it was supposed to be 45.

This was the biggest thing with Zappos when it came out, too, the shoe company. They always did this intentionally. When you made your they would say, We'll deliver it by Friday. It was always just a bold-face lie. They knew they were going to get it to you by Tuesday, that Tuesday. Then when it came on Tuesday, you're like, This is amazing. I thought it was going to come Friday. They always did it intentionally. Amazon does this well. I know this because I've been so in the mix with book sales. A lot of times on Amazon, they will intentionally quote you a ship date that is way longer than they know they can get it to you because they're always just managing your expectations. And then when you get it earlier, you're stoked. Almost never, it will happen once in a while, but very rarely will Amazon quote you a ship date, and then it comes later than that because they know even if it's one day late, you're livid. If it's two days early, you're a customer for life.

What are the areas in which trying harder or touching it more. With investing, touch it less is the rule? Stop fucking with it. You're an 1850s person at the doctor. Just stop fucking with it.

I think If the endeavor is technical, then you need to mess with it more. Tiger Woods can hit a ball better than you and I because he knows how to angle his shoulder and swivel his hips in whatever way that lets him do it, that you and I can't. Investing is behavioral. There's What's very... What really matters is, can you leave it alone? Do you have the patience to leave it alone? Do you have the fortitude to- Bravery, courage. Endure the volatility? It's pure behavioral. It's not a technical thing to do. I think whenever the endeavor is technical, you need to try harder. When it's behavioral, you need to try less. I think in many ways, relationships are behavioral as well. If you wake up every morning, you're like, I need to make a list of all the ways that I can become a better boyfriend, a better husband. You're probably trying too hard. It's probably just a behavioral. Can we just focus on respect, admiration, very simple behavioral things that are actually going to move the needle, not a list of the best presents that my wife is going to want for Christmas. That's trying too hard.

Why are we so seduced by complexity? What makes it so attractive to us?

I think very often it's the only signal that the person who's trying to help you, the consultant, the financial advisor, knows what they're doing. It's very clear in investing in finance that simple works. Like low-cost index fund, buy and hold, It works. But as a financial advisor, you can't make a living saying that. You can't charge people a high fee for doing that. If you charge a high fee that you need to do to run your business, you have to be able to say, Here's this black box that I created, and it's worth a fee because it's so complicated. This is why I think a lot of people in finance, too, use jargon that's completely unnecessary. A lot of academics use jargon that's completely unnecessary because simplicity is so synonymous in people's heads with, You don't know what you're talking about. It's pretty rare that you have someone like Warren Buffett, let's say, who talks very simply, is very simple, and when he explains what he does, and is crazy successful as well. It's usually like the lawyer, the financial adviser, even sometimes the doctor. I think it's Innocent. They're not trying to pull the wool over your eyes.

It's an innocent way that they're doing it, but they're trying to justify their education, their intelligence, and their fee with complexity.

Simpleness is indistinguishable from cluelessness.

It's very rare that you would have a healthcare company. It's like, why don't you eat some vegetables and go for a run? They want to make it more complicated. Sometimes the complexity is necessary. I'm not saying it's always bad. But the difference between giving advice that is good and works and running an advice business can be a mile That's the hard part.

Things that you don't understand create a mystique around people who do understand it as well. Yes.

If I convince you that I know something that is so complicated that you can't even understand a single word of it, you're going to look at me or look at whoever it is and be like, Oh, my God.

You hear all the words he said?

Usually all those acronyms. I experienced this firsthand many years ago when a family member of mine, I accompanied her to a meeting with her financial adviser. This family member does not have a background in finance. She sits down and the financial adviser, I'm sitting with her, and the financial advisor mentioned something about the yield curve. And the family member just nodded her head and moved along. And I remember thinking to myself, she does not know what the yield curve is. She has no clue what the yield curve is. They're not at fault of her home. It's not a simple topic. But the financial advisor, I think maybe in a recently, too, probably thought to himself, If I talk about the yield curve, I'll look really smart. I know what I'm talking about. Even if the person on the other end, the person on the other hand is like, Oh, he said something I don't know. That's why I pay this guy. He knows things that I don't. And so it's like an It's intentional confusion.

It's that reliable signal of effort as well that we were talking about before. It's the person who's slack response time is always under 15 minutes, who happens to be online at 3:00 in the morning, who always gets the... But That's not always the highest point of contribution. In fact, it can get in the way of being the highest point of contribution.

Yeah. Let's say you have a lump in your body and you're like, Oh, this might be cancer. You go in and get it X-rayed, get it an MRI, whatever. The radiologist goes, Is slack He's sitting in his chair and he looks at the X-ray and he goes, You're fine. Get out of here. But do trust that guy? I think what you want is someone who's going to spend an hour with all of his tools measuring things to make it look like you really put some effort into this. Very often, effort is the only measurement that we have Complexity is the only measurement that we have to say this person knows what they're doing.

Wounds heal, scars last. What have you experienced that I haven't that makes you believe what you do? And what would I think about the world like you do if I experienced what you have?

I think it's so often in finance and politics and a lot of areas in life where people who are debating a topic about what you should do with your money or who's the best politician, they're not actually debating. They're people with different risk tolerances, different time horizons, different experiences talking over each other. If you say, making this up, Tesla is a good investment, and I say, No, it's not. We might not actually be debating with each other. It might be that you have a higher risk tolerance than I do. I think when you realize that We're all just mirrors of the experiences that we've had in life, and I've experienced something very differently than you have. Even if we're both white men, roughly the same age, you grew up in the UK. I grew up in California. I experienced things that you didn't and vice versa. Even if we're very similar in so many regards, you know things about how the world works that I don't and vice versa. It's true for every single person. The idea that... I think it's a really good question to ask, who would I be and what would I believe if I were born to different parents, if I was born in a different generation, if I was born in a different country?

And it's impossible to answer those questions. You don't know for any precision. But it's important to realize that if you were not born, where, when, and to whom you were actually born to, you would be a completely and utterly different person. And you see this a lot. One thing that's really interesting is that the German stock market has actually performed very well since the end of World War II. It's actually done very well. But a lot of German investors want absolutely nothing to do with it. You compare that to American investors who are like, Stock, stocks, stocks. It's like they can't get enough in the stock market. A lot of why that is is because, well, what happened in the German stock market in the 1940s? Went to zero. Got completely wiped out. The people's grandparents or their parents who experienced that, that left a social scar that was even passed down through the generations. If you look at a German investor compared to an American investor, you might be like, Man, the American investor is like, Man, they're all in this. These guys are gunning for it. They're going to become rich, and you guys are hanging out in bonds?

What are you doing? It's just because they experienced something that you didn't and vice versa. Another example, Australia, before COVID, went almost 30 years with no recessions. A full generation never experiencing any economic decline. Well, that was because China had so much demand for the iron ore that they were digging up. But because of that, in the United States, during that period, we had three recessions, two of which were devastating and reshaped society. To an American, a recession was a very thing. To an Australian, it was a theoretical possibility. The Australians, of course, are just as smart as us. They have the same textbooks, the same data, but they viewed economic risk completely differently than we did. I think you could say in that moment, were the Australians oblivious to recession risk or are Americans overly paranoid about it? There's no one right answer. All you can say is we've experienced very different worlds. We have very different takes on life.

What's the difference between wounds and scars?

I think a lot of it is wounds heal. I made this analogy of if you go to the Pentagon in Washington, DC, there is no sign of September 11th, the plane that hit the building. They rebuilt it. There's not a single scar of it anywhere. But if you go to Reagan Airport one mile away. The wounds, pardon me, the scars of 9/11 are everywhere. Take off your shoes, take your toothpaste out of your bag, take your belt off, going through security. All of that is a scar from 9/11. A lot of times, the Physical damage of a recession or a pandemic or whatever it is, heals very quickly. But the psychological trauma is going to leave a scar forever. You saw this at the end of World War II. Europe was rebuilt very quickly. The physical scars of the war were gone in 20 years or so. But the psychological trauma of the people who experience that will never go away. This was measured in the children who grew up in Germany, in the UK, in France during World War II. What was the psychological trauma that stayed with them through adults? It was very measurable compared to the children who didn't, say, in the United States, where there was not physical destruction.

Even if the physical destruction is rebuilt, the scars last forever. I think it's just the acknowledgement that we all have scars in one way or another from what we've experienced in life. My scars are very different from yours.

I had a conversation with a historian of existential risk. He was looking at how scientific knowledge had progressed over time and how humanity is of our ability to go extinct through or not through our own hands developed. He taught me this term called conceptual inertia, which is, you even bring it up in the same as ever, where you say there are murmurings amongst some of the scientists that maybe the Earth isn't at the center of the solar system, but most of them are a little bit scared to do it. But even after it was proven and accepted and people were stopped being burned at the stake by the church for suggesting that this was the case, it still took two generations to that to actually infuse into the scientific discourse. Why? Well, because of conceptual inertia, because assumptions about the world move very slowly. Culture is able to adapt quite quickly, but when it's a foundational thing, it takes a very long time.

You almost have to wait for the generation who accepted it to die. Yes, that's it. It's the constant. It's like the Max Planck quote. Science does not progress by new discoveries. It progresses when the old generation who used to believe something eventually dies, and the new generation who didn't come up with the old dogma is now in charge.

You tweeted a little while ago that there are 13 divorces Among the 10 richest men in the world, seven of the top 10 have been divorced at least once. What's the lesson to learn from that?

One, it's a very small sample size. This is not like hard core statistics, but a variable that is so important to your lifetime happiness, like whether or not you get divorced. Among a group of people who are so admired by society, I wish I could be one of the richest people in the world, has always been so fascinating to me. To me, this is just like the seen versus the unseen or what you're paying attention to. When you look at one of the richest men in the world, you look at their networth and you fantasize about what it would be like to have that much money, to have planes and yachts and mansions. What you don't see for a lot of those people, and it's too firm to say this is pure cause and effect, but a lot of those people were so focused based on their career, a singular focus for their entire life, seven days a week for decades on end of attention on their business that came purely directly at the cost of their personal life, their relationships with their spouses, with their children, with their friends, wherever it would be. This is another of careful what you wish for, and that there's a cost of everything that's so easy to ignore.

The most valuable personal finance asset is not needing to impress anyone.

It means so much of spending in our society after basic needs are met and after things that actually impact you are met, is spending money to show other people how much money that you have, most of whom are strangers who are not even paying attention to you to begin with. I heard this structure that I thought was so good. It was a high-end Toyota is a nicer car than an entry-level BMW. Or you could also say a suite at the Hyatt is a nicer room than a basic room at the Four Seasons. There's various ways that you could spin this. I think a lot of what it is, is the high-end Toyota is filled with things that are good for you. Comfy seats, good sound system, moonroof, whatever it is. The entry-level BMW is purely bragging rights. You're paying for the emblem. That's all you're paying for, to show other people like, Look at me, look how great I am. If you can just dispose of that in your life, with the need to impress strangers outside of your core family, friends, coworkers, whoever it might be who want you to be a good person.

If you can dispose of that, I think that is a financial asset on your balance sheet that could literally be worth millions of dollars to you. Just lacking the need to impress strangers.

I think that there is a genetic set point for materialism. Everything's genetically heritable from our parents. Around about 50% of everything we are psychologically is inherited from our parents. Whatever combination of the Hexaco Big Five personality traits contribute to materialism. Keeping up with the Jones is, how much do I believe that love is shown through gifts? How much do I think that it's important for me to give and receive gifts, et cetera? I would 100 % agree with you that the people for whom your next book is written and the people for whom Die with Zero by Bill Perkins is written. In many ways, have different challenges that they need to get over, scarcity mindset and a concern and a discomfort about upgrading spending with their lifestyle and a fear about getting it wrong and all the rest of it. But you can also see it as a huge competitive advantage Because the total amount of money that you need to meet the standard of living that you want to... I'll never forget this, dude. One of the early podcasts I did with Yusuf and Johnny, and we were talking... I'd love to bring this back up to them because Their business is like 30 times bigger than it was back then or something like that.

They're making way, way, way, way, way I don't really know what do I do with that? What am I going to do? Buy a nicer coffee? And it was that sentence. What am I going to do? Buy a nicer coffee.

Yeah, that's good.

Just really hit it home. And I was like, well, what you're doing is, and we talked about this last night, and you're also talking about it with the BMW thing. The difference between flying coach and flying business is fucking massive. It's absolutely ginome. It is double the cost. Maybe if you book it in advance, something- Five times nicer.

On an international flight, no comparison.

But the difference between business and first is maybe another two or three times the cost. But yeah, it's the fact that in business, people have to walk past you to get to economy. In first, you don't even see them.

That's what you're going to pay $5,000 for.

I got to tell you this. So Michael Easter's most recent book, The Scarcity Mindset, The Scarcity Effect. Did you see that thing in there where planes in which the people going to economy have to walk through business have a nine times increase in messenger complaints and argumentation.

It's such a distinct... They call it the poverty parade of when a coach has walked past. I think There's some comedian, I forget who it was, but it's like when the people are walking past people in first class, the first class people are like, Man, it sucks. You couldn't have worked harder. You could have been sitting up here. It's such a pure stratification in society. I had this It's an interesting realization recently, too. My father-in-law, my wife's father, grew up in abject poverty. He was homeless for some part of his childhood, and then became a very successful businessman. When my wife was 17 and thinking about going to college, her dad, who was by then a successful businessman, said, Pick the most expensive school you can find. To him, it didn't matter about the education. What mattered was showing himself what he had overcome in life. That to him, going from homeless to being able to send his to whatever the most expensive school in the country was. He didn't know what it was. He didn't care what it was. That to him meant so much to him as a symbol of what he had overcome.

I think a lot of spending is like that. It's a symbol to yourself of, I used to be this, but now I'm this.

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

That implies just so many things. What was I going to say? I had a good one. All teed up.

Valuable first personal finance asset is not needing to impress anyone.

No, I had a great spending thing that I was going to say.

Morgan, I appreciate the hell out of you, man. This is episode number five or six or something. Honestly, I said it on the first episode, people need to go and buy same as ever. I love it as a book. I think it's phenomenal. It's super easy read. What's the audible? Seven hours, six hours, something like that? Maybe less. Four and a half or five. Four and a half, five hours. Super easy read, chunked up into individual chapters. We've gone through loads of the stuff today. There's tons more stories. Everyone needs to go and collect that. Where can they go? Where else can they keep up to date with the stuff you do?

Most of where I am is Twitter. I'm always going to call it Twitter. Never X. Most of where I am is Twitter. My handle's first and last name, Morgan Housel.

Hell, yeah. Morgan, I appreciate you. Thanks, Chris. Get away, get on fence.