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There's a person in my life I just do not trust, like even though I spend a lot of time with this person, I just do not trust them. Like it's embarrassing to say, but I don't trust their motives. I don't trust them to follow through on anything. And that person is me. Like, you should not trust yourself like every and so decisions, it's like handing over bubble wrap to like a five year old, it's like, you know, what's going to happen.


So it's like, well, thought out rules have the property that they are ones that many parts of ourselves subscribe to. Poorly thought out rules I think don't have that property under are doomed if not to failure to misery at some level.


Hello and welcome. I'm Shane Parrish, and you're listening to the Knowledge Project, this podcast on our website, F-stop blog, help you sharpen your mind by mastering the best of the people have already figured out. If you enjoy this podcast, we've created a premium version that brings you even more. You get ad free versions of the show access before anybody else. Transcripts and so much more. If you want to learn more now, head on over to F-stop Blogs podcast or check out the show notes for a link.


My guest today is Sendhil Mullainathan, Professor of computation and behavioral science at the University of Chicago Booth School of Business and the author of Scarcity Why Having Too Little Means So Much. I have to say, this is one of my favorite conversations today. We talk about the lessons he's learned from his father, how creativity is the marrying of ideation and filtration, direct versus associated memory, what we can do to get better rules versus decisions, positioning over predicting outcome over ego and so much more.


You'll walk away with several new ideas that you can put it into practice right now that will help you become a better version of yourself. It's time to listen and learn. The Knowledge Project is sponsored by Medlab for a decade, Medlab, this helps some of the world's top companies and entrepreneurs build products that millions of people use every day. You probably didn't realize that at the time, but odds are you've used an app that they've helped design or build apps like Slack, Coinbase, Facebook Messenger, Oculus, Lonely Planet and many more.


Medlab wants to bring their unique design philosophy to your project. Let them take your brainstorm and turn it into the next billion dollar app from ideas sketched on the back of a napkin to a final ship product. Check them out at Medlab Dutko. That's Metal Abaco. And when you get in touch, tell them Shane sent you.


The Knowledge Project is sponsored by Greylock. Successful families know that wealth can create a curious dilemma. It creates benefits. It secures the future and creates opportunities. But it also presents challenges. How do you stay true to your values and ensure that future generations use their wealth wisely? Hawk is about helping you solve that dilemma by working with your family on both the financial and human elements that build long term well-being. If you value independence, transparency and authenticity and want to learn more, connect with them at great wealth dotcom.


This episode has also brought to you by 80-20. 80-20 is a new agency focused on helping great companies move faster without code. The team at 80-20 can build your next app or website in a matter of days, not months. Better yet, they can do it at a fraction of the cost. You walk away with a well-designed, custom tailored solution that you could tweak and maintain all by yourself without the need to hire expensive developers. So if you've got an app or website idea or you're just ready for a change of pace from your current agency, let the team at 80-20 show you how no code can accelerate your business.


Check them out at every 20 dot inc. That's eight zero two zero dot AI and see a Sendhil.


I'm so happy to get to talk to you.


Yeah, it's my pleasure. I'm really looking forward to chatting.


There's some I mean, you grew up in India until age seven, right. And then you moved to L.A. where your parents owned a video rental store.


I'm so curious as to sort of like what lessons you've learned from your parents.


Oh, my God. You know, for a while I contemplated writing a book about my dad, OK? And it was going to actually be a genuine book about my dad, meaning I thought it would be a great way to convey lessons from psychology and social science through my interactions with him, because he has just an insane font of good ideas, but also mixed with bad ideas. So it just shows raw creativity at work. So my favorite of his ideas, which is going to be the title of the book.


Was this idea he called me up one day, this is when I, you know, I graduated my Ph.D. as a professor and calls me up in his opening line. His opening gambit is, so you're an economist, right? I'm like, well, this point this fact should be OK to you.


But I didn't like where this is going because I don't even know if my dad thinks that economist is he's a senior economist. And like, yes, he said, OK, I need your help opening a bank.


Like, first of all, I that's so far from anything I know any of.


But I want to know where this story was headed. So I said, OK, but why do you want to start a bank? Who said, no, no, I've got a great idea. So there are a lot of people who believe in reincarnation, right? I said yes. So why should they go to the next life with nothing? So we'll start a bank, they give us a PIN code, they deposit their money when they're reincarnated, if they're reincarnated, they come back, they give us the PIN code and they get their cash.


Now, he says, we went either way, either we have definitive proof of reincarnation. That's a win in and of itself, or we have a lot of money from people who falsely believe in reincarnation.


And the best part was he said, I already have a name for it. I was like, what is it? He said, The Eternal Bahah,


love it.


And I. Isn't that amazing? And I thought that would be a great title for a book about my dad, the Eternal Bank, because it's sort of he has has all these stories and so on. So that was one of the the I think what I learned from my dad, many amongst many things, is just, you know, I think a lot of people aspire to think outside the box, but my dad doesn't even know where the boxes like he is just out.


And he really instilled that in me in such an intuitive way that I never even kind of I'm clearly not as creative as he is, but that somehow it it's like to this day I chafe at the box like I'm so not used to that.


We can't leave it at that one story.


We get to go into another one. But you could also they could also pay like 20 percent interest per annum on these bank accounts, right? Yeah.


Yeah, exactly right. We could really I mean, this is a financial idea that's just going to be all


I can only withdraw posthuman to this life. Yeah.


You need a proof of a death certificate to withdraw. That's that's all you need. So, yeah. So I if we can get that past the regulators, I think that's a good moneymaking idea. The other story is a little more poignant. It's a story. It's a story about, like I said, a lot. I had like written out like 20 of these because each of them, I thought, illustrated something about science. Like it's not just, oh, my dad is interesting.


Like this story, I thought illustrated something about creativity. Which is I think a lot of people forget that creativity is the marrying of ideation and filtration. That you need the capacity to generate ideas, but you also need the capacity to filter ideas, and these processes are in such fundamental opposition, if you have a good filter, you can't generate ideas because the world is as it seems like if you're like, oh, that idea or that idea won't work.


You just you don't have that other capacity if you have a good idea and you don't have a good filter. So one of the things I've struggled with and I know I love the way you think about sort of I call them tools of thought. You call them mental models. But what I think of tools of thought for me, one of the tools of thought I've been spending a lot of time working on my whole career is how do you how do you create ideation skills while also creating filtration skills?


Because they're they just don't sit well together in your head. They just they don't like each other, like one of them wants to see the world as it is and realize, well, you can't do this, you can't do that. The other wants to see the world without any constraints. And so I spend a lot of time on that internal tension. And so that that was going to be the point of that that eternal bank chapter.


Most people don't think of economists and innovation going hand in hand.


We dive into some of the work you've done on in terms of how you're better at, I guess, lack of filtering on information, like how do you think about that?


Like, go deeper.


One of the things that for me, I think helped with lack of filtration. I'll give you a couple of things. One, very mundane, just it's just it's mundane, but it's fundamental, which is, you know, we're social animals, actually. My favorite quote on this is Nick Epley, a colleague of mine has this awesome book, Mind Ways, in which he quotes these two primatologists and their husband, wife pair, I think. And they they have been studied.


They have studied baboons, I think, for their whole lives. And so they wrote a book with an awesome title. Baboon metaphysics, and in that book, he has a quote, which is just awesome, their quote is that no matter how you look at it, the problems of baboons can be summarized in two words other baboons. And I think of that quote all the time, other baboon's and so I think one of the filtration processes that's very like basic and obvious is the other baboon's problem.


Like if you are doing something creative, you can't expect the other baboons to be like, that's great. On the other hand, you got to somehow take feedback. You don't want to be the insane person on an island who's like, this is it? I've got a perpetual motion machine. So part of what I, I think creating a filtration mechanism is actually creating the right social filtration mechanism. How do you decide which other baboons to listen to?


How do you decide? What about what they're telling you? Do you want to listen to? So, for example, if you have an idea and there are a lot of people for whom I would trust the content of their criticism, meaning if they say, oh, this idea has this flaw, well, you're like, oh, OK, let me think about that flaw. Is it truly a flaw? What it makes it? So there are a lot of people who you would have that, but most people don't do that.


They give you the summary judgment. Oh, I think this is not a good idea or I think there are very few people for whom you can trust their summary judgment. So I think for me, the first issue is trying to be very open to feedback and criticism, but trying to get the feedback and criticism down to something granular rather than this sort of, oh, I don't like it, whereas every part of my personality really wants to say, you know, give me approval, tell me you like it.


Like, that's what I want to hear. And so I think one filtration mechanism, I think is architecting the social structure around you and having the discipline, which I'm not saying I have aspired to have that discipline to try to kind of not seek approval, nor to have the reflexive mechanism to just say, well, it doesn't matter what they say. No, no, it does matter what they say. And how do you get that?


That is that because you're specifically asking for a granular level, like you're like go deeper on this.


Like I really want to understand your criticism, or is it more effective to pick those people in the first place that are naturally prone to do that?


I I think definitely I think it's both. And I think I've also kind of tried to be the reverse. How do I become the kind of person who's giving granular criticism, like how do I or feedback positive or negative? And it's it's it's shockingly hard. So you're definitely right. Picking people is a big part of it. But you'd be amazed with, like, a little bit of guidance. Like part of it is leaning into the wind, which is really hard when someone says, oh, I just don't think this will work, you kind of and they're not giving anything granular.


It's like you have to say, OK, I don't like hearing that. That's really painful, but I have to just like, swallow and just say, OK, tell me why you think it won't work. And their first response most notably is some high level thing. So they're like, OK, I have to I have to sit here and let that wave pass me. That's going to be high level, whatever. And then you have to say, OK, is there something in there, high level thing that I can latch on to and say, oh, you mentioned X, tell me more about X, not everybody, but even people who start high level, a big fraction of them with a little bit of patience, you can get them down to the specific kind of thing that they're that is bothering them.


And it it's it's really hard because it's your instinct, like every every fighter instinct in you is to push back. It's like, no, no, no, that's not right. Now here I've already thought of that or I have an answer to that. And you probably do. But that's not the point. You kind of just need to lean into it. It's very hard. Like I, I find it. I think I'm getting better, but I, I find it very hard but rewarding when you do it well.


Are there specific sort of pieces of feedback that you're giving to people that seem consistent, like is there a pattern to some of the feedback that you're seeing that you you offer?


Oh, that's a really good question. I think one piece of feedback that I've noticed applies to many, many, like, you know, sometimes their business ideas, sometimes our ideas for research papers. It doesn't matter what the discipline is. One piece that I've noticed and it goes back to our sort of creativity infiltration thing is that many people, when they're exploring something new, gets stuck in the middle. They don't let the novel part of the thing fully express itself because they're afraid that that's too wild.


But then they don't let the filtration part fully express itself. So one thing I often say to people is like, OK, let's call this offense and defense. You're stuck in this middle ground right now with the idea where you're sort of playing some offense, you're sort of playing some defense. Let's actually just let one. Develop a lot before bringing in the other side, and it's kind of this weird thing that leads to ideas without when you're stuck in this weird middle at least of these ideas that are neither bold nor are they particularly pragmatic, like because you're not you don't have the discipline to be brutal on the pragmatic side, nor do the the courage to be brutally bold.


And it's and it's like I think people imagine that if you look at the timeline of their thinking, like, if I could just plot it, I can attach something to your head. I think they imagine the way things should look is a nice balance of boldness and pragmatism at every minute or hour. But really, I think it works much more effectively to be bold for days and then switch on a dime and just be pragmatic for days because it's easier to get into the pragmatic groove and be really brutal and then easier to get into the boldness groove and be really brutal.


And that's when, you know, it's like this tree has just enough time to grow because you've been bold, then things can attack it. And so that that I guess I call it the biorhythm of these two things developing a sense of that biorhythm is often what I notice an idea is. I'm like, well, this was good. But why did you why did you not get even more bold on this bit? And why not, like, just keep developing that and then usually there's an answer like, oh, I don't know if that would sell or if that's realistic.


So let's not worry about that. Let's first develop it. Then you can come back later and say, how do we make it something sellable? Maybe it's not like what do you lose? It's just an idea. You developed it, you saw it didn't work. OK, ideas are disposable. It's a great question because I hadn't really thought about it, but I think that's one of the general feedbacks that arise.


I love that response. I think, like, if you're stuck in that middle area, even if you're successful, you're only going to be incrementally successful. And if you're a failure, you're not going to be too far from success. So you're sort of like keeping yourself in this boundary where you can always convince yourself that you're sort of right or not very wrong instead of going for it and and moving that like Gaussian distribution out to these fat tails, like you're trying to stick within one standard deviation instead of I love it pushing it.


Oh, I love it. It's like a it's like a miss. I love that way of framing it. It's like a misguided form of hedging. Yeah. You're like, oh, I'm going to protect my downside risk. And you're like kind of just staying in that middle because, you know, in those countries it's misguided because it's comfortable and it's misguided because I like your gassin analogy. Look, you you're just thinking you're not doing yet. So don't worry if you think and the idea turns out to be awful, like a negative tale, you'll find out it's OK.


You'll find out in your head or while talking to people like if you don't take risks now in your head, when are you going to take the risks?


And that comes back to the baboon thing, right? When we're we're explaining these ideas to other people, we're seeking unconsciously their approval because we are social creatures. And so we don't want to be too far left field because then we're afraid our social group might shun us. And then it's not about the outcome. And in a way, it's about protecting our ego, protecting our view of ourselves and protecting our relationships.


That's that's a good point.


I do find that that's one thing I was just starting to work on, but I still find hard, which is I it's protecting the ego. It's like I want to be much more comfortable having people tell me that idea is really dumb and here's why I like it.


Yeah. Yeah


it still hurts.


Like I mean, I've been at this for how many years like at this point and it's astonishing. It could be an incoming Ph.D. student who's it's not even like it's not just praise from people who I think it's anybody. And somehow it could be the person, a random person on a train.


And they're like, really? I don't know. And I'm like, oh, no. Like, I feel that it's it's shocking how much it affects you.


And it sticks.


Right? Like, you can hear a thousand positive comments and then one negative.


And it's that one negative one that, you know, it's 11:00 p.m. at night and you're like, oh, it just can't shake it.


Speaking of, you were super young in college. You started your Ph.D. like nineteen. What was that like?


Yeah, yeah, I was. I was twenty eight. I think I was. I couldn't drink in the US, it's twenty one, I, I was always ahead of my grade, weirdly I was actually ahead by one less when I came here to the US when I was in fourth grade in India. Then I come here and the U.S. has aged restrictions, actually, and so they said, you're too young to be in fourth grade. So this period really put me back and it was like all the stuff I knew.


And so I was still ahead of my book and it was painful. But the reason I actually ended up being so far ahead has nothing to do with like, oh, like you must have shown young promise had nothing to do with that.


It was that you weren't Doogie Howser.


Exactly. I don't know that there was when I was about.


I don't know, 18 months, I guess, let's call it one year old out of something that age, we live in Bangalore and my dad would bring home mangos. Now, I don't know if he ever had an Indian mango, but like mangoes in India, especially during the right season. They are divine. So you bring home these mangoes. And I was just a little kid and I love mangoes. So, like, wherever he put them, I go and I grab them.


No one was looking and I just, like, rip it open and start eating it like a baboon, I guess. And then they developed a system where they would put them somewhere and they'd say, oh, the mango is here. But I didn't speak. I didn't know the word for mango, but apparently I pieced together where it was. So if they said that mango there, I'd go and get it and take it. So then they developed another word for mango, just a totally new word.


And this time they had put it up on a mantel. And in fact, you should know for this story is that in India, the floors are concrete. This will be important. So apparently, while they were all gone, I had already I pieced together that this was the word for mango, which they didn't know. So I like I still picture myself. I must have a tiny I went and took a chair, pushed it, and then I climbed up on that chair and like, I guess I couldn't reach the mangoes.


I must have climbed up on the edge of the chair like the the back to reach the mango. And I don't know whether I got it or not, but gravity being what it is, I just I started falling and I hit and my mom says she heard the worst thud in the world and she comes out and imagine what it must feel like. Her mother, there's a kid blood everywhere on this concrete floor, having hit like a concrete floor.


So then they took me to the hospital. The doctors basically didn't know if I'd survive. And then I did survive, I guess, as we now know, the spoiler. But the other thing that happened was they said, yeah, there is probably going to be damage as a result of this and we don't know what it is. And so I didn't talk like literally like almost no talking for a long time until they thought that was the dam, like they were like, oh, this is this is bad.


This is the problem. Until like what? I mean, I must have said a few words before this, but one of the first substantive things they said was apparently what I'm to my parents. And I said I said when I was three, all my friends are now going to school because they were like two years older. I want to go to school. And they're like, wow, this kid doesn't say anything. He says this whatever he says will do.


Now, he comes out with complete sentences and requests.


So they put me in school.


So I was like in school two years earlier as a result of this mango fiasco. And so I think I think it led to a lot of problems because when you're physically younger than everybody, you know, it's just not you're not socially developing very well. So I was not a well, socially well developed kid, I think is the best way of saying it. And grad school was was probably the first time, you know, that it's like it's like one of those perception things, like percentages like the age difference of two years when you're like 12 is a lot.


But by the time you hit twenty, twenty to twenty two. But they don't really make such a difference through undergrad. I didn't feel it as much, but in grad school I really didn't feel it just felt that people say, oh, you're young. But we had all been equally developed or underdeveloped depending on your view on things and that. Yeah. So that that part was nice.


Big influence for you early on. Was Richard Thaler at Cornell. He's the guy who got you to switch into econ, isn't he?


Yeah, yeah. I was a math and computer science major and I actually applied to the I defer the Ph.D. in computer science to say let me try this in economics. And so Thaler is amazing. The other person who really was both Thaler and this guy, Bob Frank, have you read any of Bob Frank's work?


No, I don't think so.


They're an amazing writer and he taught these classes. So one class he taught was called Applied Microeconomics, and it was a world class that I took it as an undergrad. And but what made the class exceptional was until then, I'd taken these classes in economics, which were basically just math like. And I was like, oh, this field is kind of like math. They just use math and they applied and that's it.


But in this class, even with a class, he did these cool exercises where he said, OK, every week you're going to have to go and find a thing in the world that this phenomenon applies to that no one else has written about. And I want you to write about it and how it fits or how it doesn't fit. And there was something terrifically interesting about navigating the world. But equipped with an idea like a scavenger hunt of sorts, how will I find this idea instantiated in the world around me that way of thinking of like you receive a new idea.


Don't judge it as rightness or correctness internally. Just use that as a way to spend the day looking for that thing in the world. That way of thinking was awesome. So that's a tool of thought I've kind of maintained for a long time. Like it's like I kind of think of it as what am I mulling right now? Like, have a top of mind muling thing and take that thing that normally and as you wander the world, kind of keep keep activated.


Like is this an example of Blinkx that I just learned about? Now we tend to do this naturally, but because we tend to do it naturally, we think we don't need to work on it. But it's actually it is a thing to work. It's just one of the many faculties of the mind. Yeah, it happens naturally. Doesn't mean happens often enough so that that that thing he did. But the other thing he did was he had this great phrase, I'm going to butcher it.


But he talked about how, you know, as an economist, you think of a botanist, think of how a botanist walking in the woods is walking in a very different woods than you or I like. It's just different for them, like same physical space, different mental space. And he said, you know, as an economist, the exact same thing is true for the social world. Like you should be able to walk a walk in the woods for you is a walk into a Starbucks, and you should be able to see things there that are different.


Now, I ended up doing a lot of psychology, but I think whether it's psychology or economics, I think the same idea is it's what's so exciting about social science. It's like it arms you with ideas that you can see refracted in just everyday life around you. So he was he was a big influence. And Thaler, of course, was a huge influence.


How do you check yourself on that? Like, how do you how do you not overfit what you're seeing when you're trying to fit it into sort of like this mental toolkit?


I think I think the first stage of learning is overfitting. I think you go when you have a new idea and you're trying to like upload it, so to speak, to use a computer science metaphor. We're trying to upload it. I actually kind of lean into Overfitting because I think of it as there are ideas that have been so rehearsed. They are all were activated to find. And it's like think of this way. Like when you're in a bad relationship, romantic relationship or friendship, you're like on edge about some things.


Oh, this is just another example of, like, their ideas that are just top of mind. They're looking to be instantiated. But in your regular life, you also have that like right now people in the US have just whether you're on the left or the right, they're on high alert for certain things, either as evidence of racism or evidence of that. And that's not to say they're not right. I mean, it's just it's just the fact of the mind.


There is a lot of racism, but that's that's a separate issue. It's just your mind is on high alert. And so what happens is when a new idea is trying to enter this ecosystem, it's competing against these highly active ideas, they're they're kind of blocking out the sun. So part of what you need to do is to just let them live for a bit. It's OK if they overfit, because the goal of this muling is not to get the accurate truth about the world.


It's to practice this new idea and to let it be getting its own activation. Once it's big enough, it's like think of it as a greenhouse. Once the plan is grown in the greenhouse, then you put it into the wild and there you have to trust all the other instincts you have the other ideas that are active that are going to be competing and say you think it's that you think it's that or your usual capacity to say, yeah, I did notice and I think this is it.


But is it that partly because we encounter these people who are almost just zealots about an idea, we think the big danger is being too into an idea. But as an uploader of an idea, we're not yet zealots and we have to trust in ourselves that once it's uploaded, we have a good ecosystem in our mind. But the overfitting is, I think, actually a feature. I don't think of it as a bug. It's part of the fun, too.


It's like, who knows if it's right? But this is another example of like and it doesn't matter if it's right, it's your practicing your singing skills.


There's a really interesting way to think about it. You said that's the first stage of learning. I'm curious as to what are the other stages of learning.


So I think once it's uploaded and it has the capacity to sort of notice, I think the next stage I often think of is and this is where a lot of ideas fall short, a lot of ideas have recognition capacity, meaning you can see them in the world. But they don't have generation capacity. What I mean is, once I've noticed this thing, so, you know, opportunity cost, once I've noticed this is an example of an opportunity cost that I'm neglecting, if you practice opportunity costs, you'll start noticing opportunity cost.


But for an idea to be generative, it then has to have a what's next? OK, I've now noticed it with opportunity cost. It has a straightforward next, which is OK now that you've noticed the opportunity cost to pay attention to it. So that's that's helpful. But to me, ideas are graded by how much depth they have in what's next. Let me give an example of an idea. Let me see if I can think of On the fly, which has both noticing, but also an endless capacity for a generation.


I'm spending a lot of time thinking now about metacognition, sort of, and I can tell you why we can come back to what got me on this path. It was actually not that what got me on this path was actually a study we did with people in the south side of Chicago, kids in the south side of Chicago. So there's actually a study on crime and it's totally different, but it's all about metacognition. So metacognition is the capacity or skill to become aware of one's own mental process.


So on the one hand, it seems kind of obvious. But if you say today, I'm going to try to notice and simply just notice a part of my mental process I had not yet been aware of. Now, that's interesting because what that is, is it's not just an observational thing. You'll notice it opens doors to things you never thought of. So as an example, how many questions you ask today? Are you meeting in that level?


Should you be asking more? This is a form of noticing that generate other questions and other ideas and other thoughts. So I think of the next stage as is this a you learn about an idea this way you learn, OK, this is an idea that's useful. I can I can upload it. It has a practical decision, implication. This is an idea that's generative. If I start doing this, other things open up in front of me is almost like the next stage is the evaluation of this thing in trying to understand.


And I think that's a really interesting way to look at it. I like that, as you were saying, sort of the first part is recognition and sort of overfit or the second part was recognition. But the first part was like overfitting.


I was almost coming back to sort of like your computer science Ph.D. that you deferred. You can still do it, by the way. You can.


I'm sure they'll let you back in.


But I was thinking about memory and how we have direct memory versus associative memory. Right. And so the direct memory is you learn a concept and you sort of have this the sense of it, and you see it in the original capacity in which you learned it.


So if you have a direct match, which is how a computer sort of matches right versus associative, which is like I have this general concept and I'm going to try to apply it here and here and now I can start to see it in the world. And even though it's not a perfect alignment, it's that associative match that we really want to hone in on and not the direct match, because direct match means you need to identify the problem in the exact specific way that you've seen it before.


And a lot of textbook learning is sort of like direct boccie, right? You're taking a concept from one discipline. You're applying it in that discipline with the same set of variables. The question might be worded differently, but you're really just fitting them into sort of like that's perfect.


In fact, it's that's such a crisp way of putting it, because that's the reason I think Overfitting is not a problem, because it's the type one, type two error. Yes, you can stay in this very narrow area. And the thing you were learned, it fits. It's fine. It's not overfitting. You can go out over here, OK? You get a bunch of fits that are false, whatever, but you find one which is outside the original domain and you're like, oh, it it is.


You're right. It's also what's super gratifying about a metaphor.


And now you see the world differently than other people because you're willing to sort of be wrong. And the overfitting come back to opportunity cost for a second here.


You brought that up. I would love to hear your definition of opportunity cost and how you apply that in your life.


Oh, that is a good question. This take me back some time. So let me try and I want to hear your definition. I think I think I have a different definition today than I would five years ago, ten years ago. For me, the opportunity cost is dictated by the hidden mental frame you have on the problem. So any decision you make, you are. Quite a bit narrowing the world down to some very tiny little world. Opportunity cost is the thing that is left out of that frame.


Because what you've decided is you said, should I go to dinner with my friends? How much will it cost? The opportunity cost is the fact that you've left undefined the other things you can do with your time, for example. Or how much will that cost is the stake or 20 dollars? I don't know. I'm using steak, I'm a vegetarian, but whatever is a steak or 20 dollars, the opportunity cost is the other things I could have spent the money on.


But you'll notice in the frame, and this is why opportunity costs are so insidious in the frame is the stakes or twenty dollars. The other uses are not in that frame. It's not steak or whatever movie. Then there's no opportunity cost at stake movie. It's all these choices where there is no or else and the frame doesn't provide an or else. Now that's not a it is a bug but it's also a feature because you couldn't possibly go about making your decisions in life, working through every other or else like you're going to pay 20 bucks.


You either want this thing or not. And and so I think opportunity costs are the hidden consequences that are left outside of your frame, whether it's for money or time. It's those things that then are neglected because they're exactly not part of how you frame this problem. So I think part of for me, more valuable than opportunity cost is to almost ask yourself what are the hidden alternatives that are or consequences that are being left out of this screen? And sometimes the answer is, look, I don't you know, I know that I might have some other value.


Fine. Just imagine another use of twenty dollars. That's at least one thing. Now, you brought from outside the frame into the frame. And I think there's a deeper lesson there than than just opportunity cost. It's it's construal I think is psychology sometimes use that phrase, which I like. It's how you've chosen to construe this decision. Leaves a lot of things out of there.


I think that's a really good way to look at it. I mean, one of the things that I struggle with is as an entrepreneur, like the opportunity cost is always to be working on the business. Right. So you're always you have this high hurdle for everything to begin with. And then you're sort of like constantly within reason. You're harmonizing your life between work and family. But you're you're also within reason trying to constantly raise the opportunity cost of what you're doing over time.


And I find it a really interesting way to think.


And people don't tend to think in terms of opportunity cost.


I'll give you an example, which is like I remember having a conversation with a friend who lived in the suburbs and they were like, it's so much cheaper to live here. And I was like, well, that depends on how you think about your time, right? Because you're spending you're spending 70 minutes each way commuting from door to door. You know, I'm spending 10. So you're spending an extra. Two hours a day in a car and like now look, what's your opportunity cost for that?


Now maybe you're listening to to an audio book and that's what you would do anyway. And maybe your your that's your transition from home to work and work to home. And you would do that anyway. And so maybe it's negligent and maybe it's not. But it also like if you start slapping well, you know, if you make 20 bucks an hour and you slap 20 bucks an hour on, well, that's forty dollars a day that it's a hidden cost that you don't really see.


And it's just a way to conceptualize, sort of like give people tools to think about it.


I love that example. One thing that might kind of add is a way to think about that example is that. Often times people think they're making money and space decisions like, oh, I got a bigger house, it'll cost a little bit more if I lived in the city. They vaguely, in the back of their mind, know they're also making a time decision. But in the choice in front of you, what's in front of you? It's like three bedrooms, a thousand dollars, two bedrooms.


They're like, oh, I can get more space for the same amount of money. But but the hidden object here is I love that I actually had this decision when I moved to Chicago. All the interesting things are downtown. My work is here in Hyde Park. It's like 30 minutes in Chicago is a terrible time to drive in, like anywhere. It's the traffic is bad. I was like, oh, everyone said, oh, you like to go out and do things, you should live downtown.


And this is like an example. It's it's really digging into the afternoon because I was like, OK, but then I'd be commuting every day to work. And how often like commute to work, how often like a mutual fund so that the algebra starts to like load up. But the other thing is, if you think of the psychology of time, I think that's the one place where I'd say sometimes people make time into money, which is a good juristic, but time doesn't operate like money.


Time is a unit of Objet whose value can range from the negative to the positive, like huge values, like what is boredom? Boredom is when there's like negative value. If you're waiting in line, you're like, I just want this to be over with. Give me a pill. So they're your value of time is negative. What is peak joy? I wish this moment could go on forever. So time it's not constrained by the normal laws at some level because we don't have every every opportunity for consumption isn't available to us.


So time actually is an object whose value we have the capacity to make more valuable or less valuable. So why am I saying in this context, what does a commute to work feel like? Menial work is fun, but commuting to work. What is a commute to, like, go out to eat at a nice restaurant, if you like? Yeah, the commute shitty, but you got something to look forward to going with some friends. You get to chat.


So it's not just the evening of hours commuting every day. And the same amount of time was being spent, the time is spent, like ultimately time is it is not really a spending thing. It's only being spent as a proportion to what the utility looks like during the use of it. And so I wouldn't say I spent time at this amazing play. No, I actually consume the time at this amazing. But I mean, it's like I consumed it.


I wish I could have more hours like that. I don't have the capacity. That's another layer.


I think your story, which I certainly experience, I think the I really appreciate you sort of adding that point to it, which is like even on the way home from that restaurant, you're talking about the stories from dinner. So there's there's some sort of value to it.


I've always thought and maybe miss correctly, I've sort of approached as I've gotten older. I approach time as something like it's finite. I don't get more of it. And what I value is optionality. So I will always try to spend money to create time versus spending time to create money in that sense. And, you know, it's super fortunate to be able to do that in a business. But the flip side of that is it also drives you to sort of think about time differently.




Which is you're not going to get more of you. I mean, with very few exceptions, more money is not necessarily going to buy you more time. It might buy you a couple of years at the end of life or a bit better medical care in the United States. But generally speaking, it's not. So you want to use wealth or money to create time. And I think that that's a really interesting way to think about it and how you value that time.


The utility on it is also an important consideration.


I think the the the utility of it is what interests me. One of the things I've been working on with the psychologist Mike Norton and is in the weeks he's the co-founders, is this app to help people reconceptualize how they see the world. And in there we have this thing. It's called peek in there. We have this set of moments around time. So one moment around time, which I like. We call the moments because her little experiences is trying to teach you things.


But one moment that I have that I like, which is we're trying let's not try now to bore the viewers listeners is just to sit there, close your eyes, turn on your stopwatch. And when you think a minute has passed. Open your eyes. Now, it's the most trivial thing in the world, like when you think a minute has passed now, there's a couple of things we get out of this exercise. We get people to do that in the one thing, the exercises do this with your partner, the differences in how time feels.


Is amazing between people. So that's what the second thing we get out of this is do this over the course of a week, like five times. It's shocking how the felt like if I told you, oh, Shane, I've been in a little time machine, it lets you move forward faster or slower on the on the ocean of time. You'd be like, that's just stupid. But I have it's called the mind.


Like, you yourself are floating through the sink faster or slower. And you really have any and people people think and it's true, some of it is like this conversation is flowing. So it's time goes really fast. So some of it is that it's external stimuli, but some of it is just internal, like once you start. So we try to get people to do this moment a few times. You start becoming aware there are just. Days where or hours, whatever, where you are kind of marching slowly through time, and I just want to say this because it's related to your point, the irony of it is that when that's happening, you don't think to yourself, well, I've got more time.


You're like, oh, this day is dragging.


So there's something peculiar about our hedonic experience. We all wish we had more time on our mortal coil would last longer. Yet when we have these moments where time is sort of stretched, it doesn't feel good. And so it's interesting to think about we almost want more time, but we also want it to go faster because those periods of flow was the most enjoyable.


That's a really good way to think about it.


I also wanted to ask you just before we move on this concept of time, as you were talking about the utility value of time, how do you compare like how do you factor in, I guess, feelings love family on one side, which is largely unquantifiable.


And then on the other side, you have money, you have other things that we seek as humans like status, power, wealth, and those are more quantifiable. And you're often trading these things off against one another. Can you just riff on that for a second?


It's a good question.


Let me let me do something lateral and it will come back to the exact question. At one of the other moments we have in Peak is to help people see that they don't. We're all hoarders. Here's what I mean. You invest a lot of time acquiring a partner or spouse who cares about you and loves you. Like you put a lot of energy into that. If you spent time, I'd say dollars. But that sounds creepy. But it is.


It's also dollars. That is like a lot of. OK, so now you've acquired in very crude terms this, quote, asset, how much do you actually enjoy that asset? You'd say, no, I value it. You know, my spouse and I do things together. OK, great. But say you're on a train ride somewhere and your board. Here's a simple way you can cherish that asset, we just sit there and go, oh, let me think about one thing I really like about myself.


I mean, that's the consumption of an asset you've hoarded, but like hoarders, what we actually do is acquired this shit, put it away somewhere and never actually consume it.


So, like, you have love that you've invested in. You've had experience of one of the things we have people do with something very trivial. It's just an exercise to get your camera zoom to a random period and you're in that thing. Look at one of the photos. You know, you can do that any time. So you keep taking these photos. But how many photos have you taken? How many bodies have you looked at? And and that's like you're not consuming this.


You're acquiring it gets perverse. And it seems almost wrong to just sit there looking at. But it's not your actually, that is the consumption you bought yourself. And it's what the value of all this hardware is. An example from the professional sphere then have to be it's like you work really hard, you become successful, like you have this awesome brand and you have like this is great. How often do you spend time enjoying aspects of that brand where you sit back and say, let me think what I was driving for five years ago or 10 years ago?


Let me think what that person would have said if I could, you know, you had Dannion for a podcast. I think if you if somebody had said to you, yeah, I'm going to have like Dannion for a podcast like that, just even knowing that's a thing that I mean and just cherishing it sounds so trivial, but we just don't do it. We don't actually engage in mental consumption. It's bizarre. We're in acquisition mode, not in consumption mode.


As you're saying that I was sort of thinking like, is this like a goal in relativity problem where we're like, we're on this train, we're holding a ball, you know, we're going 60 miles an hour so the ball doesn't look like it's moving. But to the observer on the outside, you know, we're moving 60 miles an hour.


And, you know, the you five years ago and the five years in the future is going to have this whole different reference point around you. And it's almost it's really difficult to mentally shift that perspective and go back five years and be like, man, if if I told you five years ago you were going to be in this position doing this, you would be a statistic.


Right. But you sort of miss this sort of happiness. And I'm riffing here a little bit and thinking out loud. But you miss the happiness because you're you're sort of like living in the moment. You're inching ahead. But what you really want to do is sort of like be able to time travel, right?


So you want to be able to make your your hindsight of your future self, your foresight of your present self, and you want to be able to, like, take these lessons, which is like what is life when I'm 90?


What is that going to look like and what is it going to mean? And then how do I take whatever I'm time traveling there and bring it back to me today so that I can use that to live a more meaningful life and sort of be a better partner and person and leader.


And absolutely, I like the relativity thing. Part of what you can do for yourself. So we tried this in one of these moments, and it started when I was like a while ago. There's a site. I forgot what it's called. We can look it up afterwards, but it lets you send I guess now you don't need to cite Google as a center later. It lets you send emails to yourself in the future, like future me. This is awesome.


You should write a few emails to yourself five years from now or even one year from now, the shock value, even at three months will blow you away. Here's what I'm thinking about today.


Yeah, write anything you want your three month from self, like I have opened a wormhole to you three months from now. I mean, it's like it's like a sci fi movie you get to talk to. It's unfortunately one way, but, you know, you can expect everything and anything you write know, it'll feel a little stupid. You're like, OK, you know, you get people to write this about whatever. It feels a little stupid.


But in three months you've got holy cow, that's what I was thinking. And so I think the relativity thing is I think part of it I think the other part of it is that we have this like, naive realism.


I think in a book you call this like the map is not the the territory, the territory. The map is not physical form of naive realism. I think. So let me explain what I mean, which is naive realism is like our thoughts are real, but there's a form of it. And I have been trying to figure out what else to call this, which is that the brain operates as it operates. So when we say, how do we get pleasure?


Well, it's a function of the brain in economics, like do utility function. That's not it. It's it's just some dumb thing. So I think we we imagine something feels unnatural to us about sitting there and saying, now I'm going to engage in this nostalgia. Whereas if we just had this nostalgic moment that filled this with endorphins like, oh, that's really nice. It's like, what the hell like that is just a stupid little I mean, it's just a piece of wetware.


It's not that. And so I think what no one really thinks about the fact that we are responsible for the creation of the mental habits, that then in turn create nostalgic moments at the right time, et cetera. And I think that that I think that's the other reason we don't think we just assume, well, if I was going to enjoy thinking about five years ago, it just would have happened or something.


I wonder if Facebook has data on that because they're doing this thing now.


And I only have three Facebook friends, so it's my mom, my dad, and sort of like my my great grandmother or my Facebook friends. And I use it to share photos of the kids. But one of the things I've noticed when I log in just to upload photos, I don't do anything else on there.


But when I upload photos is it's like four years ago, here's where you were and what you were doing. And it has these like little nostalgic moments for you. And I wonder what their data would sort of say about how that affects your mood, because I'm sure that they have enough of it to figure that out.


That's a great point. You write Facebook tries to create these kind of nostalgias. That's right. What I find amazing when we've had people do these moments in peak is you can have a week ago nostalgia, like pull out your calendar, look at what you were doing a week ago, be like, oh, that was a fun dinner. Like, it's crazy.


Since most of our since many of our memories sit external nowadays. This is such an easier exercise to do. I think that's the deeper lesson. We just kind of I think the deeper lesson for how we should think about psychology or mental models or anything in the next 20 years versus the last 20 years, which is that in the previous 20 years, we were forced to do everything in our heads. The next ten years, I think we'll be able to improve what's happening in our heads using digital tools, because so much of what happened in our heads are now digitized.


So we can look at that digital footprints and use that to improve how we're thinking and feeling, etc.. I think that's probably the biggest change.


I wonder if that will affect our feelings differently. Like, is it different that if you have this nostalgic moment and you remember traveling with your kids versus Facebook prompting you with the exact same thing, so you're actually getting the same memory, but the way in which you get it is different and how that would would change. You're right.


I think that's that's very that's a very astute observation. I think one of the reasons we have this feeling about the brain is that we attribute too much meaning to it. So when you remember this nice nostalgia trip with your wife somewhere. You not only enjoy the nostalgia, but you attribute to it as, oh, that's something that's important to me because I remembered it spontaneously. And if it were forced upon me or not forced or triggered externally, I wouldn't have that same attribution of like I must think that's important.


I think this is a crazy view we have of the brain is that like we know that we belch and fart and we don't attribute deep meaning to belches or farts. But the same belches and farts produced by the firing of our neurons are like, Oh, I thought about that.


I wonder what the hell are you just like interpreting these, you know, detritus that's produced by the mind?


Like, it's just it's just it turns out, shit, that's his job. Yeah.


So anyway, I'm switching subjects after celebrating your farts and. I'm curious as to how you run your day. I mean, you seem pretty spartan and discipline. What are the personal rules that you you live by.


Well, oh no, I'm not part of their discipline at all. I have. I have one thing I'm disciplined about in my life, like literally one I used to hold.


Hold on. Before you say that, you say you're not disciplined, didn't used to drive to the same sweet green every day in order to say you.


We've got friends in common here.


I did my research,


so I don't view that as discipline. I knew that as it entirely undisciplined man who likes weekly I.


My one discipline is I go to the gym every day. Like every other day starts like every day. So your first thing in the morning, first thing, and I think I learned a lot from establishing that habit. So, for example, one thing I learned was every day is much easier than four days a week. You might think four days a week is easier because it's less often, but every day removes the most difficult thing about life is choosing and every day removes choice.


When I wake up, I don't ask myself to brush my teeth. I don't ask myself. I go to the gym. I mean, I don't ask myself coffee. I don't they're not. There's nothing to be done. I'm on a conveyor belt. I'm sitting on the conveyor belt and I'm on the plane. It's going here. It's going where it's going. And so they every that's one lesson the every day really made a difference. The other thing that made a huge difference is in installing that everyday habit is to say the goal, as I said, is I go to the gym every day.


I didn't say I have a good workout every day or even have an OK workout. So literally, the only thing I need to do is to get to the gym, get on the treadmill or whatever, lift some weights. I can leave two minutes later. And you have to be honest with yourself. I have literally gone like this happened two days ago. I showed up at the gym and I was a little sheepish because people like I'm like out the front desk person who I know doesn't think I'm an idiot.


But like, I went, I, like, super tired. I got on the treadmill. I'm like, I'm not doing anything. I tried to lift some weight and I showed up, done check and I go home. And the thing you have to remind yourself is that's the victory that is I'm so proud of that day as opposed to the day where you had a great workout, whatever.


I had a great workout because it was whatever some. But I showed up that day. That's the victory. So that I think that that element of low bar, but consistent has worked so well in other aspects of life. Like I, I like to write, but I struggle with writing. And again, low bar, like when the when I've been in a good writing group, it's like it's going to sit down. The only thing I have to do is show up today.


The only thing I have to do is to write 50 words or 100 words, which, if people don't write, is like a quarter of a page. It doesn't seem like a lot. And that's the only thing I have to do. And if I don't want to do anymore, I can leave it. It's hard to keep that rhythm. It's hard to keep that discipline. But once you get yourself with the low expectations of the low bar, it works because then some days, many days after the hundred words, you're like, I can keep going.


And it really makes such a big difference.


I want to come back to sort of the establishing habits, I sort of think of that as like what are the like the ones that we consciously choose. We want to establish the correct automatic behaviors that are putting us on the greatest path toward success.


But before we do that, I sort of wanted to dive into a little bit about your your gym habit and how you made it every day. I sort of think of that as rules versus decisions. Right. And so you don't have to make a decision every day. You know, the rule is and you design these rules either to put you on the path to success because you know that you don't want to have to decide about this in the moment.


Like, I have a lot of friends experiment with dieting and it never seems to work. And I went up to one of my friends and I was like, your rule is you never eat dessert. And he's like, what do you mean, no, it's like, well, this way you're not deciding, you don't have to decide. That decision is premade. So you've pre made these decisions that put you on the path to success because you've identified in advance like this is the path and the trajectory I want to be on.


What are the rules and automatic behaviors that I can create for myself?


And then how do I how do I do that so that I don't actually have to decide? And you can also do that identity based. Right. Like I'm the type of person that goes to the gym every day. I'm the type of person that writes every day. I am a writer and then therefore I do it. And that's my rule. I write every day and now you're not thinking about it. You're establishing that that habit.


I love it. The social part of what you're saying is going to because once you tell people your rule. Then when your friend is dinner with somebody, say, why didn't you tell me you're a person who doesn't eat dessert like, you know? So they also have become kind of an enforcer because there's no I like the the rule versus decision has another element, which I really like, which is there's a person in my life I just do not trust.


Like even though I spend a lot of time with this person, I just do not trust them. Like, it's embarrassing to say, but I don't trust their motives. I don't trust them to follow through on anything. And that person is me. Like, you should not trust yourself like every and so decisions, it's like handing over bubble wrap to like a five year old, it's like, you know, what's going to happen. So it's like so rules versus decisions are in part, I think also the recognition that we can't you know, you have an uneasy relationship with yourself.


You like yourself, you trust yourself. Sometimes you don't have a lot. And so rules are this, like I think of was this lady, you know, in this democracy itself, this constitutional process that you say, OK, guys, we all agreed like this rule seems good to have to be careful in picking them. I think a lot of people I see they picked and I've done this myself, they pick rules willy nilly. That's just handing over power to the person in that moment who thought that was a good idea.


So it's like you want a protracted process for picking a rule like your friend. I would say fine, right down. No dessert. That's not the rule that you've decided, that's the rule that's been proposed. Now we're going to have a vote over the next week. Let's see how every self that shows up over the next week feels about the rule of no district. If at the end we've got a supermajority, then we know who's imposing that rule.


The Confederacy of cells that have appeared at different times, wanting different things. We all agreed this is a good rule. And so now we're implementing it. And so I think that that that gives rules. I think, well, thought out rules have the property that they are ones that many parts of ourselves subscribe to. Poorly thought out rules, I think don't have that property owner are doomed if not to failure to misery at some level.


Yeah, I was overgeneralizing a little bit. I mean, you do have to establish your own rules. That's the only way you're going to stick with them. But the idea is like your best self and yourself and you're sort of like all of yourselves are creating these rules to be like this is the type of person I want to be. This is the path I want to go. These are the dreams I want to accomplish. And then you can just ask yourself, what what would people who who have done this, we're doing this.


What would the rules be that are going to nudge me in that direction? So it could be like I'm not drinking, you know, every night of the week. I only drink Fridays and Saturdays. And then my rule is I cut off at nine.


And now that I mention this to sort of Danu when we were talking and he added an aspect to it that I, I, I think he's Surfest, an aspect I had never really consciously recognized, which is like people don't argue with rules and talking to you.


And I'm like, we wouldn't even argue with our own rules. So it's not that other people won't even argue with our rules because you can push back and you can get away with things. And the example Danny gave on the podcast was sort of I have a rule that I never agree to anything on the phone which prevents him from agreeing in the moment for sort of like social approval. But your rule with yourself, you would never really disagree with it because it would be the rule and the rule would be part of the identity.


And the identity is part of what you created.


I love it. I think that's such a nice way of putting it. And I think I think the mistakes I've made a not having enough rules, but also I think it's why you need this legislative process that allows this period of time where you have many parts of yourselves to register their dislike, like if they're like, no, look, I don't agree with the multiplicity of cells necessarily means I think some people are like this. I don't know how they'd like this where they just like wake up one day.


It is what I'm doing and then they do it on me. There's a lot of chaos inside me. I think there's a lot of chaos inside most people. So I think the legislative process is also within the rules. The wait to say you can't agree with this. We've all talked about it like that's it, because if you agree, you're in the vast minority. And so you're right. And then you don't disagree. It's like it's like in a constitutional democracy.


One reason we don't fight the laws is because the laws were made through a process with all. Agree with now when the law stopped being made through that process, as we're starting to see in a certain country, then people do suddenly disagree. So I think it's the it's the process is what lends credence to the moral weight of a rule like that.


I'm going to switch gears a little bit here. You founded a company, Ideas for Two, and then you sort of grew beyond you.


I'm curious as to how you did that.


And that was a conscious decision, like how was that? And psychologically like, how is that to right where you create something and then it no longer needs you?


I can tell you the philosophy and then the personal part. The philosophy part is if you've ever seen trees, it's almost obvious, but not much grows underneath the tree. A little bit of grass, grass can grow anywhere and trees cast shadows that inhibit growth. And I think the toughest thing in founding things, whether it's an organization like I did for two or whether it's in doing new research, the toughest thing is that you don't want to cast a shadow, but yet you have ego.


And so I noticed early on in a lot of things that I was doing, I was. Building more to make myself central inadvertently. Then I was asking my question, asking myself the question, how do I make myself obsolete? And if you think about this phrase programmed cell death, if you just ask yourself, what can I do with this idea, this research or with this organization that would let it do what it wants to do with it makes me obsolete.


That's actually a much better heuristic because it forces you to ask what parts of you are essential. OK, if that's essential, why can't you distill that communicate that so that now others can be like, what is so magical about you? Like, what is it? What you have good taste. OK, distill that. Understand why you think your taste is good. And it actually is an amazing personal growth because what it does is by preventing yourself from hiding behind your ego and your sense that there's something magical inside of me if it actually lets you grow because it lets you get.


Work on the hard problem of articulating and communicating and teaching the things that you think you're great at in that process, articulated knowledge is always better than articulated. Second, sure, you think you have good taste, but once you try to articulate those goals and communicate it, guess what? Other people can improve on that. They can be like, yeah, that maybe is a good starting point. And so it's this it's actually turns out to be a very painful because no one wants to not be wanted.


But but it's I found it incredibly valuable. Like, I think you can do this in any endeavor. I think you can, you know, any productive endeavor, not social endeavor, but any productive endeavor. You can ask yourself, OK, what is the thing I can do? Like you could do this in your life. You could say, what is the thing that I am so central at in this activity? Quake, how to articulate that and make that up?


How do I create obsolescence of self?


I'm curious a little bit as to how you felt about that, but maybe before you, because that's a hard thing to go through, right? You're going through like when you start something, you own the idea, you own the vision, you own the execution, and then you slowly sort of like wean yourself off of that and let other people take over.


But one of the things that I find really interesting about that is so often we want to be that focal point.


Right. And that's the limiting focal point. It's like the the ceiling of what we can achieve because everything has to go through us instead of enabling other people and unleashing their potential, even if their vision is slightly different than what your vision is.


I guess there are two parts that I put around it that might be helpful. There's control. It's like that was in your vision comment, like they want to go in that direction, you want to go in this. So there's control, which is just very basic. But then there's the the feeling of specialness, you know what I mean? Like, if if people come to you and you're the one who knows how to do something. That's so that feels great.


It feels like a value. I think the control one is just to sort of come to Jesus. You know, I'm not Christian. I know I like that phrase. It's the control. One is a come to Jesus moment where you have to ask yourself, what am I trying to accomplish? And you say, look, I cede control, but it gets to what I'm truly trying to accomplish or on this issue, I'm not willing to cede control because this is what I'm truly trying to accomplish.


It's like that's a very good pivot moment. I think the harder one is the feeling of specialness. I think that's the one where you you need to just because it is a road at your deeper sense of, like weight. If others can do this,


what does that mean about me? Yeah, exactly.


I'm not so special. Exactly. Yeah. I mean, I was thinking of the story. I was traveling with this former colleague about, I don't know, five, six years ago now. And we were sitting in this restaurant, this phone kept going off and we were trying to have a conversation, but his phone kept going off and he's like, they can't do anything without me. And I just looked at them and I was like, they're not the problem.


You are


right the problem is that you want to be this focal point, like as much as you're you're you're sort of complaining about it to me in the moment. This has been you for years. And so it's not a them problem.


It's like they're scared to act without you or you haven't enabled them to make those decisions and given them the knowledge they need. But given that you have the same people around you that you've had for years, it's really like you just want to feel good about you. And there's no sort of like I'm not putting you down. I'm not sort of like I'm just giving you a different observation onto it, which you can do with what you want, because it's OK to want those things.


I mean, that's fundamentally very human, right? Because that and especially in organizations and this is where I see it the most, I find it entrepreneurs are actually generally speaking, they're probably one or two standard deviations, a little bit better about this because they care more about the outcomes and less about who gets the credit. But inside organizations, how you get promoted tends to be a story, right? That story is like how you save the day and how everybody needs you.


And and the more compelling that story is, the better your trajectory in the organization instead of. Well, this person enabled this team to make decisions. Without them, they're redundant.


Well, that's a really good story, but that's a hard story to sell because it doesn't carry the same narrative weight.


That that is great. Yeah, I think that's well, first of all, kudos to you for telling your friend that there's a couple of parts of that story I want to unpack. One is, if you look at something you said, I want to just really pick up on, you know, your friend could have said, oh, yeah, and then it's OK for your friend, as you said, to choose and say, I like being the center.


I mean, that's that's what I like. Then it removes all this tension. And I like I think of it a little bit like sports, like on a sports team, like I watch basketball, you can be the person is like, I want to make the big shots, I want to take the big shots. But then you can't complain when the ball is passed you all the time. You can't be like, why is everyone except me?


Yeah. You said you wanted to be the first one. I got it. What do you like?


And so I think there's neither right nor wrong here, as you say, it's just the realization that it's one or the other and you're picking it. And if you just pick the one you like, I think that that I like now that's going to say, how did your friend respond when you when you told him this?


I mean, startled at first, but it prompted a really good conversation.


Right. And the conversation sort of dove into one of the aspects that we talked about in that moment was our need for excuses.


And so by keeping the power, we also have the excuse that somebody didn't execute properly, you know, like, you know.


So we have not only do we have this story in the narrative of how important we are, on one hand, we also have the story in the narrative. When things go wrong, it's always somebody else's fault. And that sort of reinforces that even though you're the decision maker, you know, you're in for. Oh, they didn't execute properly. They didn't. And so you always have this mental scapegoat. And I thought it was just really interesting way to think about it.


It's not right or wrong. I don't know. I think it's just something that we all need to dive into in ourselves. But it's really hard for us to see when we're doing that. And I mean, one of the biggest lessons I've sort of learned since becoming an entrepreneur is, oh, come over ego. Right? Like before it used to be about me and I was a knowledge worker.


And if I wasn't knowledgeable, then what was I right? If I didn't have the answer to this problem, that my whole question of the self-worth came into play because I can't tell a story to get promoted. And if I can't solve this problem, what does that mean about me and my employment and my my brain and my ability?


And people think of me as a knowledge worker, but then unconsciously, you try to make your idea right. And so you go out seeking all of this information that is sort of like. Reinforces your view and then unconsciously, you sort of undermine and sometimes consciously, I don't think I ever consciously did it, but you unconsciously undermine other people's ideas just to show that your idea is better.


Yeah, that's right. You were saying this is so good. I like the outcome of Riegle. Do you have for yourself a articulated like outcome mantra that you go back to think, OK, this is the bigger outcoming for? Does that make sense like like a TrueNorth outcome? Have you you have that or.


No, I don't think so. I mean, I look at this as like positioning over predicting like, I don't I can't predict the future. I just want to be positioned for multiple possible futures. And then inside the company, like inside the people that I work with, I'm trying to and consciously trying to empower them more and more and more. I make myself redundant to the point where I can start working on things that are two or three years in the future and less day to day and trust.


Even though people will make mistakes, they don't need to check with me. They they can just run with that. And that'll give us the velocity that we need to sort of allow us to do, because we have a very small team and I want to keep it small, like I don't want to I have no ambitions on having, like, hundreds of people or big staff or any of this stuff, because none of that matters are impact matters.


And what's going to cause the most impact, I think, is by empowering people to to do their thing and unleashing their potential.


And it's going to be a different type of potential than sort of like I would unleash in myself.


But it's nice.


You've taught me you've described two things that already feel like you do have an implicit outcome. Montera, which is like one is this positioning that like one outcome you want and you said this earlier, too, and time, talent, opportunity cost that you want to you want your opportunity cost to keep increasing. But that's like an interesting I never thought about this. It's a good outcome to say the outcome I'm aiming for is greater and greater optionality. That's that's a very reasonable outcome.


And it seems like it's giving you, at least implicitly, a north, the sort of like follow little.


I think we're we're too focused often on just predicting the future. And then and then our whole worldview reinforces that our prediction about the future is right in the stock market.


That's sort of like one angle to it. But we're doing it all the time at work. Right. We're picking a particular line and we're investing in it.


And I think that if you're right, that is always the most optimal solution in the moment. Right.


So there's always somebody you can compare yourself to who's doing the exact optimal thing in the moment.


But since the environment and the context in which we operate is always changing, eventually positioning wins.


But it never wins in the moment, but it wins over time. Right. So over over one hundred years, positioning is almost guaranteed to win. It can't do anything but win. But in the next one month or one week or even one year, it's always going to be the suboptimal solution.


And you're always going to have a comparison base of people around you. It at work financial returns in a quantitative way who are always generating more than you.


That's great. That's great. And the funny part of that is that person may even have just been someone who positioned themselves well earlier, but you don't see the positioning. You only see the outcome of the positioning. So you don't see the work actually happened earlier. They kind of put themselves. That's really nice. How do you I like that positioning versus predicting. How do you at some point does there come a time when you have to make your go all in big bet?


In other words, like how do you positioning yourself to get I don't know if you go all in, but you definitely sort of like maybe go way, way into it like a Kelly criterion, sort of like you're never going to go back to zero, but you're definitely going to overinvest in the when you know, when you can see the future with greater clarity. I think that that and there's different domains for all of us.


Like I remember one example of how I applied this in real life, because people always ask, like, what does that mean? I was like, well, in February, like I was at grocery stores, like getting rice and beans and putting it on the table. Right. And I was doing this with my kids who are 10 and 11. And they're like, Dad, you're crazy. Like, what are you doing? Because our dining room table was like full of food.


And I was like, well, I don't know what's going to happen in the future.


There's this thing coming.


And I was like, how do we position ourselves for if the grocery stores closed down, that we have provisions and we can sort of survive a couple of weeks.


And I said, if we're wrong, like, what do we lose?


And I was like about one hundred bucks. And if we're right, what do we gain? And so you have this asymmetry where, you know, for a very small amount of money, which we can will consume inevitably at some point in the future anyway. So we're just fast forwarding an expense we would already have. And then we're positioning for if this thing happens, then we're better prepared for that. And so you have this thing where I'm not trying to predict what happens.


I honestly have no idea. And I hope nothing happens because that would be the best case for the world. But the flip side of that is if something bad does happen, we're now in a better position than we would have been. But if you look at that like there's somebody else who's not doing that and then that's optimal, right?


They're not spending the money. They're not fast forwarding the expense that they would normally have and they're not bringing it forward. So they always look like they're in a better position.


I love that. I love that. I think for me, I as reflecting on you because I love your position, I said, reflecting on the positioning, it seems to me that make that work for me, I. I want to also understand how am I making the mostly incision, so we called it mostly not all in. I like that. It's mostly in it's almost like what allows you to have the patients. The position is to have the confidence that no, when the time comes in, to put a lot more of my kids, I trust myself to do that, too.


So it's almost like it's the pairing of the positioning requires some form of patience and trust. And so it's almost like if I if I had thought about my mostly in process, I think I'd also have more patients in the position part.


I like that pairing right where you are. And I think that what we're describing in a really roundabout way is like how Buffett has been the most successful investor in sort of like the last probably the history of the world, but definitely less sort of like 50 years where he's constantly just saving up cash and then deploying it when there's something that he feels is predictable.


And then he tends to invest in more predictable businesses to begin with. And I think that that's a really interesting way to think about things.


And when you have going back to the baboon problem, if you have a have a company that's controlled by no one shareholder, you end up with this suboptimal strategy where you're always you're almost forced to pursue the best strategy in the moment instead of the best strategy overall.


Whereas when you have a controlling shareholder, either be it through multiple voting shares or financially like we have with Berkshire Hathaway, you can just sit on cash and you don't have to worry about activist investors.


You don't have to worry about all this other stuff. And then you can take this short term suboptimal strategy and sort of exceed or outperform in the long run.


One thing I like about this is great, and the Buffett analogy is one thing I bet that it would help to apply this in personal life is that I think the other challenge of optionality or positioning is that the assets you're building, the options you're building, are hidden like in finance. If I were to go and acquire a set of options, they'd be on my books. I could see the options I acquired. Like if this were a sports team and the optionality we acquired or draft picks, the draft picks would be on the balance sheet.


I think what's so tough about doing this in our own professional lives is that we don't record. The optionality that we've created, so I wonder if to a degree, this would all become much easier just to track tracking, like literally say here are some options I bought myself and here's how I bought it for myself. And then you're like, oh, you know, how do I compare to that other baboon?


Yeah, they're earning returns right now, but look at the options I'm sitting on. And so I think there's a sports team I followed like this where in the short run they look really bad, but they were acquiring picks and so the balance sheet was not bad at all. So I wonder to what extent this is a hidden balance. You probably wonder if we just started writing down optionality, you would also then be better at doing that thing you shouldn't do, which is realizing shit.


If I say yes to this, I am actually extinguishing these options like it's coming at a cost that you don't realize. It's a practice that would make life much easier for me if I could somehow even start to articulate with these opportunities are that I'm creating. I love that.


And I love the idea of sort of like hidden options that you you might not even be able to see, but also hidden options that you can't predict will be there. But just the very nature of having options allows you to take advantage of those things in the short term.


I'm curious as to how you choose where you sort of go next, like you're always trying to predict where the puck is going to use the Wayne Gretzky sort of analogy.


Like, how do you think about that?


By the way? I've taken a lot out of this conversation. The positioning thing is something that right now I'm in I'm in an in-between period right now where I am struggling. So personally, this has helped me a lot because I am struggling with the patients needed. To be positioning because I think. You know, there's a few clearly big things that I'm just very confident about. Like what? So the this work I mentioned with Beck Weeks and Mike Norton, I think whether it's that the app I'm excited about, but the the idea and the metacognition.


Yeah, yeah. The the the peak app. But here's what I think I'm deeply sure about the puck is going. There's something happening at the nexus of technology. So let's call it specifically the fact that I now have the capacity to wrap a layer around your mind. That's attention, which is one of the core cognitive capacities and memory, the fact that I can wrap a digital layer around your mind for attention and memory. And we're getting better at that, that's like a that's so obvious.


The second thing that's so obvious is that. We have this literature that's bubbling up in psychology, that is unearthing insights about ourselves and people are I mean, your career is a testament to this. People are eager to learn those insights. So I think when you combine these two things, it naturally implies, OK, how do I create the thing that lets people get greater actionable insight about themselves, like themselves, not just in the general, but their life, as it's essentially like your story about your friend?


It's awesome because your friend has an asset and you who managed to say to him, hey, look, you know, this is not about them. This is about you. That is highly personalized, highly contextualized. Now, I don't think we're at that level. It's like, oh, we're going to do that tomorrow. But the combination of these things and it's not a digital solution alone, it's digital solutions that work with you. So, for example, one of the things your story made me think is that like, how do we get people to realize there's a simple question they can ask their friends and create the right moment to ask them.


That would be life changing, which is, hey, what do you know about me? That I don't know about myself,


right, exactly, which is a perspective it goes back to sort of like being on the train, right? Like, what do you see? What's your lens into this that I can't see? Because, I mean.


That's right. That's right. So I think that that angle, I think is very I think we're going to see a revolution both in behavioral science as a research discipline. So, for example, here's a telltale sign. Psychologists don't work on self-help. That doesn't make any sense. There's a whole ocean of people who in good faith want to improve themselves. How does the research discipline of psychology largely ignore this? And if you look at most people by behavioral economics, behavioral science books, they're sort of very highbrow self-help.


You wouldn't call it self-help lest you be chastised, but it's the deepest of human desires to improve oneself, understanding oneself.


So I think you see it at every level, that angle that that area is about the bubble. And we have the technology to implement it, I think is really is happening like clear area. But your question was more, how does one try to make such calls? I guess it comes down to thinking about not just your own thinking, but other people's thinking. So if I look at self-help. There's a big desire, so now you have to ask yourself, wait, there's a research discipline called psychology over here.


There's why is the market not being made, why is supply not meeting demand? So then it's partly about saying, what is it, a research psychologist that makes them allergic to doing this? And then if you can understand the inner logic, then you can ask the question, but will any pieces of that logic are amenable to change or will they naturally change over the next 10 years? Then I think you start to fray in this. And I think that that that type of understanding.


It's almost like having metacognition about other market participants, that is, I always say this is like if you can describe someone else's perspective on a problem so well that they themselves say, oh, yeah, that is what I'm thinking, then, you know, you have an arbitrage opportunity. Because you've said it as well as they have, and yet you see something they don't see. So it's like a really useful challenge to settle oneself, not to articulate what you believe, but to articulate what other market participants believe with such high fidelity that they would agree with you.


That's when you know that you found an arbitrage opportunity. Does that make any sense?


Oh, I love that. It's sort of like we've written about this on the website called The Right to have an Opinion. And that's effectively, you know, you shouldn't be entitled to an opinion until you can argue the other side better, then they can argue themselves.


And then at that point, you're entitled. You've done the work necessary to have an opinion. And I think that that's a really interesting philosophy for life and sort of like how you conduct yourself online in this age of, you know, sort of instant disagreeing with everybody and surface skimming. And, you know, we can't all have as many opinions as we have. And once you really ask yourself, like, can I articulate the other side of this better, then they can articulate it or do I really know what I think I know?


And often you discover that, no, you can't. And a lot of your opinions come from skimming headlines and you're like, oh, that headline I agree with. So it gets reinforced slightly in your mind. And then over time, as we have this filtration bubble around the information we consume, we get reinforced in our beliefs and more we get more conviction, I guess more confidence in them, even though we should, in a way, be getting less confidence as we learn more about a subject.


It's like the illusion of explanatory depth with respect to other people's opinions is like you say, right? It's like you say, hey, what is a thing? You say, OK, let's say tell me more like, oh, I got nothing else like the way, why do I have nothing else? Whereas we have tons of depth on our own opinions. Tell me more about what you think. Oh, I can go on for hours.


I wonder how we'll feel about a couple of things that we sort of like just loosely hit on there, which is one computer's telling you about something you can't see about yourself. So it's like your your ring or your Apple Watch or whatever that future technology is going, you know, we notice that you use negative words when you speak to these people or something.


Right. Like how will we feel about that being a computer versus a person? Will we feel better about it? Because now it's depersonalised or we feel worse about it? Because it's like why now you're making your surfacing? The fact my conscious level that you're monitoring, you're sort of like collecting data on me and you're wrong and we sort of justify why those technologies would be wrong. What's your take on that?


I think my take on that with all these technologies, I always go back to the elevator. So when the elevator is first built, no one wants to get into. Because if you think about it, it is frightening. This thing, this piece of metal is barreling through the sky. I mean, it's it's insane to get in an elevator if you objectively think about it. And if we were talking about elevators and how will people feel about elevators in the future.


And you were Otus! You know, just as have had this core belief, look, whatever you guys think today, you're not going to think it in 20 years. And he was right. They wouldn't think in 20 years. And I think part of what we forget is that like a lot of our our our resistance to things is just like that local one to two to three years of like what you know, even before, remember, people were like, how could anybody just talk via text?


I missed the time that you get used to every you know, you add that to everything. So I actually think that the advantage of the algorithm over the person is what you said, which is that once you get used to it, you know, even your friend, when you told him this fact, partly he must have, however nicely you said it felt the sting of judgment a little bit like, oh, shit, like now, whereas a computer doesn't have the sting of it.


It's like when I look at my Fitbit, it says, whatever, I don't it's like seven thousand steps is I'm judging me.


That is what it is.


But that's an objective fact versus like something about our mood or feelings, the way we talk, what we're missing, what once we have technology pointing out our blind spots like blind spot reduction is like the number one way to make better decisions. It's the number because we all have blind spots.


But when we have technology pointing at those blind spots, that is it's not as factual as like the number of steps you've taken or the the the decibels that you're hearing in your ear.


Or I think where we're going to head with this is already seen in sports is that an athlete has a coach who sits with them and looks at the tape. The tape is the objective and I'm going to help you interpret it and so you can fight the interpretation.


And that's an all too human process. But just the fact that we have so much objective data that we're going to share and look at to then interpret, that's going to be huge. And I think you're right, there's no algorithm and it's just not feasible to think of that interpretational process for most things. But I think the human interpretation just I think I think is how I think about is like we're all going to be quarterbacks or whatever tennis players now we're going to have in our professional lives all of this tape.


And we've already seen some early versions of this. There is a cool study with teachers where they improve their teaching by quite a bit. And the way they did the experiment was they videotape their actual classes and they had someone sit with them and it was even less than coaching. It was just watching together and just asking them simple questions like, did that go well? Do you notice something to even just a person's innocent own capacities to notice? When the data surfaced and someone foreseeable, they saw big improvements in teaching scores after.


Quite impressive. Just, you know, coaching on something like that. Now that teachers can be on tape, as you say, more and more decisions are on tape. You know, we have memos, we say, hey, should we invest in this thing? Great. Let's write a pro con. Everybody write their own pro con like that.


We have this database of decisions. And I think that's a very exciting area.


That's a really, really good Segway into sort of the next topic, which is you're somebody who straddles academics and sort of practical application.


How do you see academics sort of contributing to society and business and how do you see that role? Like what should that role be?


Academics produce the raw ingredients not in every place, but in many places, produce the raw ingredients off of which are converted to creativity and intelligence into product. And I think that that pipeline happens in the very banal like you see it in pharma, in pharma, biolabs produce molecules that might be useful for certain things or technologies that then pharmaco. So you see it in a very tight pipeline, but you see it in like the conversation we're having, like all this great behavioral science work that was done as pure research.


It was raw material by itself. It's just a set of studies. People have to then take that. And so I think this conversion process is is really one way I think about it. But the other way I think about it is that I think academia needs to also realize it flows back in the other direction, you know? So if you think in physics and you say, what are the great fields of physics in classical mechanics that went in one direction, that's clear.


But electricity, magnetism that did not go in this direction, that went the other way. People playing with electricity find these cool things about that created one of the core physical laws was going this way. Thermodynamics did not go this way. It went this way. So I think academia has this illusion that it's going this way as the only force. But there's a strong feedback loop. And so part of my career has been trying to, in my own life, enable that feedback loop so that I understand what happens over there.


And and I found that SUPERVALU, like, super enjoyable. Because especially in areas like this, like can beautiful science, it's just a practicing researcher would be foolish to think. But they're at the here, not like this area, so interesting, lots of people are touching it from lots of different places and you have a chance to contribute in both directions.


I like that a lot. I think it's really interesting to think about how the intersection of those exists today, but also how it changes over time and how technology will enable and sort of data will enable and also hinder progress.


In some ways.


I sort of want to end on the I've been exploring different ending questions to the podcast. I want to end with a new one, which is what do you want people to say about you when you're 90?


Oh, that is a great question. I want people to say about me when I'm 90, I think with the optionality to realize it. I think what I would want people to say when I'm 90 is hum. Oh, he changed how I think.


And if that's five people say it, I'd be happy at 50, but I think changing how people think is the most durable asset that you can create, because when people change how they think, they then produce in so many areas and so many of them, it's the ultimate force multiplier. So if I could contribute in some small way to changing how some people think, that would really mean a lot to me.


I think this conversation went a long way to doing that. Yeah, me too. And I'm going to remember the positioning thing. This is awesome. Thank you. This is so fun.


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