Kind: captions
Language: en
the odds of you dying broke are
extraordinarily High making money is not
about being smart it's about not doing
dumb things dumb things that virtually
all of you are going to do but if you
want to beat the odds and all but
guarantee you'll die rich there is a
really simple formula to follow the
question is will you be able to do it
I'm joined today by bestselling author
Morgan housel and we're going to lay out
the formula for wealth
creation the single biggest problem is
figuring out what you want what you're
good at what your risk tolerance is and
that's going to be a very unique answer
for you and I always cringe whenever
there's any kind of financial content on
TV or online or on YouTube where it says
you should do this and I'm like who are
you talking to are you talking to a
17-year-old day trader are you talking
to a 95-year old Widow are we going to
pretend like those are the same people
with the same goals and a big part of
this is I feel like a lot of financial
debates when people saying you should do
x no no no no you should do why they're
not actually disagreeing with each other
it's people with different goals and
different time Horizons talking over
each other and so so much of the
psychology of money is us being looking
in the mirror and being introspective
into saying who am I what do I want and
what's the best path for me and one of
the most dangerous things that you can
do is take your cues and get from get
your advice from people who are playing
a different game than you are you have
people who are chasing other people's
dreams and when it doesn't work or if
they get there they realize they're not
happy it's like yeah because that wasn't
your game that's not what you actually
wanted to begin with really what every
business is is solving somebody's
problem figuring out a problem for
someone else that's a very very basic
way to describe a business but you would
be surprised how many businesses ignore
that fundamental concept and when
they're making a product when they're
making a marketing plan whatever they're
forgetting that part of it what is a
problem that somebody else has and what
can we do to fix that one that really
sticks out to me here that I wrote about
a lot in the psychology of money is the
math behind compounding is not intuitive
at all to most people so all wealth
comes from compounding compound interest
that's very basic but the math behind it
always screws people up I frame it this
way if I asked you what is 8 plus 8 plus
8 plus 8 you could you could figure that
out in 5 seconds but if I said what is 8
time 8 time 8 time 8 time 8 your head
your head explodes you can't figure it
out like we're just not meant for
compounding or a simple statistic like
this 99% of War it's net worth he's
worth $100 billion 99% of that came
after his 60th birthday bananas was
accumulated after his 60th birthday that
number doesn't doesn't compute doesn't
make sense in people's heads because
that's how compounding works if he
retired at age 60 when he was worth $1
billion you would have never heard of
him the only reason he's successful and
has gained so much wealth over time is
because of how long he's been doing it
for it's because it's not just because
he's a good investor it's because he's
been a good investor for 70 years and
that's where all the money comes from so
that too is so easy to overlook like
people look at Warren Buffett and they
say how did he do it how did he pick
stocks what is he looking for how does
he think about valuation and management
teams those kind of things and that's
all important but the secret is that
he's been a good investor for 80 years
that's all of it and most people don't
have that kind of patience whether
they're an entrepreneur or just an
individual investor it's like how can I
make money fast and if you try something
new and it's not working you give it a
month or maybe six months before you're
like this isn't working I had to move on
to something else when all of the big
fortunes over time whether it's from an
entrepreneur or an investor have come
from people who are doing roughly the
same thing for an inordinate amount of
time and for most people in investing if
you're investing in the stock market
it's a one way to get wealthy over time
the secret is that average returns
sustained for an above average period of
time will lead to Magic that's all you
need to do everyone in the the stock
market is like how can I earn the
highest Returns what are the stocks I
can own this year that are going to
double what like how can I get money
fast and most of the time that's not the
strategy that you want that's not what's
going to earn you the most money over
time what's going to earn you the most
money is how can I earn what are the
best returns that I can sustain for the
longest period of time and if you can
just be average for 20 or 30 years
you're going to end up in the top 2% of
investors over
time there's uh a quote that you said
goes like this in finance spending less
than you make saving the difference and
being patient is maybe 90% of what you
need to know to do well so if it really
is that basic and I've had people on the
show that say very similar things yeah
and yet I mean it when I say that the
vast majority of the people listening to
the sound of my voice right now are
going to die broke yeah so what is it in
our minds that trip us up why can't
people do that I think for well first
there's a lot of societal pressures
pushing you away from that there's a
huge societal pressure that you're not
rich enough and even if you have money
you need to spend more of it your your
house isn't big enough your car is not
nice enough your clothes aren't flashy
enough so even when you get the money
holding on to it is a completely
different thing and my definition of
wealth is the money that you have not
spent yet that's what it is it's the
house you didn't buy the cars you didn't
buy that's what wealth is so earning
money to begin with is very difficult
for some people and for those who do
keep hold like holding on to it is a
whole another set of problems
that there's all these social pressures
pushing you away from when you frame it
as earn money save the difference invest
and be patient it's very very simple but
the social pressures like the math is
not difficult the social pressures
pushing you away from that are enormous
and then I think for even the people who
understand that basic equation it's too
simple for them to take seriously if you
look at that and say that's 90% of what
you need to know like okay but now let's
get into the fun stuff let's start
trading options like that's that's
what's intellectually stimulating for
them and so that's where their mind goes
even if that's that's how you chop your
fingers off in investing so for some
people it's too simple Health might be
the same of like eat a balanced diet get
some exercise and sleep eight hours okay
that might be 90% of what you need to
know for it but it's not exciting it's
not exciting for people so they're not
going to pay attention to it a lot of
what I write about in same as ever is
that the best story wins not the best
idea not the right idea not the accurate
idea not the best answer the best story
that gets people to nod their heads is
what's going to win in every Endeavor in
life business politics money investing
when you tell a story and people sit up
in their seats and they're like oh I
like that that sounds good that's the
person who wins that's who gets people's
attention and so in investing even if
what you need to know is very basic the
people who are telling a better story
and a more exciting story those are who
are going to get the followers and
that's where all the attention is going
to go to okay so how do we combat that
if you've seen uh or read I guess not
scene I think it was in The Odyssey
where the guy wants to hear the sounds
of the sirens so he says strap me to the
Mast so that I can't go anywhere and all
of you put wax in your ears so you can't
hear anything and then I'll be able to
hear you know the the song that calls
men to crash upon the
shore what is the thing that we can do
that has that kind of effect so that we
can know what to do and actually do it
this is a little bit fatalistic but I
think there's a lot of people who won't
be able to and we we're never going to
live in a world in which everyone in
society perfectly understands how to
make money and keep money and invest
money the reason that there is
opportunity in investment markets is
because most people are doing it wrong
that's who you're getting the
opportunity from if everyone did it
right there'd be no opportunity so we're
never going to live in a world in which
we're like we've solved the investing
problem everybody gets it in a way that
we've s we've you know uh eradicated
malaria from the United States like
we're never going to get to a point
where like we've eradicated bad
financial behavior it's never going to
happen so the truth is it's it's just
going to be very difficult a lot of of
it is just the social pressures and
think of a world where everyone tomorrow
is twice as Rich everyone just magically
there's no inflation but everyone's net
worth doubles tomorrow in that world
your expectations would double overnight
too because you don't just want to be
rich you want to be richer than your
neighbors so as everyone else gets
richer their inflations go their their
expectations inflate as well and so even
if everyone's making great decisions and
saving money and getting wealthier what
you actually want is to be richer than
other people and so no matter even if
we're all making great decisions and
becoming richer we're still going to
have that little bit of insecurity
that's pushing us towards bad decisions
so that part I think is never going to
is never going to change I do think at
the individual level for the some people
who can take this to heart and put it in
their own life I think it's trying to
figure out what your goals are and that
can be very different from the goals
that Society tells you that you want and
I think for most people not everybody
but most people at their core what they
actually want from money is independence
and autonomy they it's not that they
want a big house and a flashy car and a
private jet they want to wake up every
morning and say I can do whatever the
hell I want today even if what they want
to do is go to work they don't want to
be told by somebody else what to do they
don't want to have a boss or a banker
telling them what to do and when to do
it they want to be independent and
autonomous and so if that's your goal a
lot of a lot of doors open up in finance
of like that's my goal for money I just
want to be independent I'm not that
materialistic of a person I just want to
make sure that nobody's telling me what
to do I want to wake up and do
everything on my own terms I think a lot
of people are like that but then the
goal is like okay I want to build up a
net worth that allows me to do that
enough money so that I'm not beholden to
other people's whims and one way to
think about it is that every dollar of
savings that you have is a piece of your
future that you own it's a claim check
on your time in the future and you can
flip that around and say every dollar of
debt that you have is a piece of your
future that somebody else owns it's a
claim check that they have on your time
and your work in the future so viewing
it like that like just that fundamental
goal of like that's what I'm after and
most people haven't defined what they're
actually after with money it's this
vague just like I want to be rich why
and it seems like a dumb question
because of like oh it seems great but
once you define why you actually want to
get there it might be different for
everyone then I think a lot of these
strategies
clarify it's very interesting all of
that makes a lot of sense to me the only
thing I will push back on is I think the
I think it was Charlie merer that said
the world doesn't run on Greed it runs
on Envy Y and so I will use that as a
counter to I don't I agree that people
want freedom but I think it's a distant
second subconsciously they're not
obviously being thoughtful about
prioritizing it but I think that comes a
distant second to what you said before
which is I want to dunk on my neighbors
yeah and so if you want a society to get
violent and actually turn on itself and
start literally shooting people in the
streets all you need to do is up the jny
coefficient so that totally agree
totally agree and for people that don't
know that phrase the jinny coefficient
is not absolute wealth it's the
differential in wealth between the rich
and the poor it's wealth inequality
exactly and so I think about this in
American terms uh even correlated to
what I've heard you say which is in the
1950s things were way worse than they
are now y but just just on like
objective every objective measure in
life expectancy the average size of the
house the average median American
adjusted for inflation is way better
today than they were in the 50s except
for one number and that's expectations
that based on how wealthy some people
are you could use the Genny coefficient
to measure that you know in the 1950s
for a lot of various reasons there was
not a lot of wealth inequality the gap
between rich and poor was much lower
than it was before or since a lot of
that was just like an echo from World
War II of how companies were managed and
the top marginal tax rate was 91% back
in the 1950s so you you didn't have CEO
making $30 million a year there were no
athletes making $30 million there were
no billionaire hedge fund managers it
just didn't exist and so in the 50s most
people looked at their neighbors and
their co-workers and everyone else in
their town and said relative to that
person I'm doing pretty well and so even
if their incomes were lower than they
are today and they're living in a
smaller house and driving shittier cars
and going on worse vacations they felt
great because relative to everybody else
around them they were doing pretty well
and I think what has happened over the
last 80 years is that on average our
incomes have gone up our net worths have
gone up our life expectancy has gone up
but so have everybody else's and so our
our expectations have gone up by even
more so I think there's a lot of people
for whom their income is doubled but
their expectations have tripled yeah and
they feel like they're worse off and
that's that's a formula that it's an
absolute recipe for misery you can
imagine a world in which our grandkids
are earning twice as much as us and have
way better Medical Technology they've
eradicated disease they they live in
Global Peace and they're no happier for
it because their expectations go up and
you can say that because the world that
you and I live in today is
indistinguishable from Magic 100 years
ago if someone 100 years ago could see
today's world with something as simple
as antibiotics they they wouldn't know
to what to make of it it would just look
like pure Utopia but are we actually
happier for it today how like how many
times do you wake up grateful for
antibiotics it just becomes something
that you expect and you're not grateful
for it and and everyone's like that I'm
like that everyone's like that like it
takes about 2 seconds for a new luxury
Innovation to become a baseline
necessity and so we can sit here today
and dream about eradicating cancer and
Ai and all these things that are like so
fun to dream about and would be great
things for society and if we're lucky
enough to have them we'll get used to
them in two seconds and so that's a big
problem with money it's just like if
your expectations grow with your
Prosperity you're never going to be
happy there's this great quote from the
philosopher monu he said this 300 years
ago he said if you just want to be happy
that's very easy to do but people want
to be happier than other people and
that's a very difficult thing to do and
one of the reasons he said is because we
think that other people are happier than
they actually are he said that 300 years
ago but now think what is social media
has done to that where now when we're
judging other people's prosperity and
happiness you go on Instagram and look
it's all fake it's all a curated
highlight real nobody posts on Instagram
the vacation photo of their kids crying
or fighting with their spouse it's all
the curated highlights if not airbrushed
highlights and that inflates everybody
else's expectations when they grow go on
and they say why how come I'm not as
beautiful rich and happy as they are
yeah and so that's we we live in a world
which like mon monu said that 300 years
ago if he saw today's world he I think
he would double down on that by an order
of magnitude yeah just be like yeah this
is exactly what I know to be true about
Humanity it's always been true it's just
so much worse now yeah this is what I
worry about when I think about um how
people avoid the Trap Of Dying broke how
they can get the freedom that they want
it to your point isn't so much about
money money is going to be a huge part
of the equation I don't want to lie and
as I always tell people money is more
powerful than they think it's just
different than they think yeah um but
the thing I want people to understand is
what is going to stop you from
generating wealth is your own mind
um it's funny because if I want to have
a clip or something that I do go not
necessarily viral but do very well all I
need to do is yell at people and be a
drill sergeant that's what people want
me to be and the reason is they want me
to intoxicate them with certainty they
want me to tell them precisely what to
do how to behave to stop doing that to
do this the bad news is the only thing
that I have that level of aggression and
certainty around is that people
shouldn't be so certain like that I will
yours think You' answer and it's never
going to be questioned you're going to
get hit by a freight train 100% And you
have got to cultivate like a deep sense
of distrust in your emotions particular
and if someone says here's the secret to
getting Ro here's the path to getting
rich just follow these three steps
that's what people want to hear that
sense of certainty just tell me how to
do it tell me the formula the truth is
there's no form
it's there are mindset ideas there
psychological ideas but everyone wants
the drill sergeant this is going to tell
them exactly what to do and how to do it
because that's that seems like the
easier path when a lot of like one of
the bestselling books of all time in
finance is is Napoleon hell's Think and
Grow Rich oh my God the book changed my
life it's a great it's a great book and
one of the Thor the keys of it is like
you have to Envision and imagine the
success that you're going to have in
order to get there it's a very vague and
nebulous point but I think that that's
the point is like if the secret to
wealth is like this very vague and
nebulous thing it's not do this do that
and step three you're rich it just
doesn't exist it doesn't exist here's
what I took away from thinking Grow Rich
and this that book I remember where I
was written like the 1920s very long old
he was I assume he was interviewing
effectively the robber barons of the day
like going around like who are the
people that have just amassed all this
wealth and I was on a plane I was broke
broke at the time and flying to see my
wife in who is now my wife then my
girlfriend to England and all the stops
you can imagine to get the cheapest
ticket possible um
and he says in the book like hey I've
given you the secret on every page of
this book but it's still not sinking
into you yeah and I'm like what I was
like what has he said on every page of
the book and then I was like oh if I
believe I can I can it but if I believe
I can't then then I won't right and I
was like oh my God that that thing in
that book changed my life in fact before
we started rolling I said to you I have
the saying I call the only belief that
matters yeah which is that if you put
time and energy into getting better at
something you will actually get better
at that thing yeah it wasn't directly
from him but it was a combination of him
and Carol D who wrote the book mindset
that made me realize oh my God it look
as somebody who's built businesses I
will just tell you you cannot wish your
way to success but if you don't believe
it's possible then you won't do the
things you need to do to get good at the
skills you need to get good at in order
toate wealth or whatever it is I think
whether it's an entrepreneur an investor
or a politician or an athlete a common
denominator that they have is just like
this incredible belief in their own
skills that they can do it no matter how
hard it's going to get that they can do
it themselves that they can eventually
get there this like like ridiculous
confidence in their own ability to get
[ __ ] done is a common denominate you're
going to see a lot of those people but
back to like Napoleon Hill that's the
idea of like if you believe in it you
can do it and if you don't believe in
yourself you're not going to get that
that's very different than the drill
sergeant saying do X Y and Z and then
step three Is wealth because I think
what Napoleon Hill told you was the
truth of like like let's leave aside the
actual like technical idea of like
believe in yourself and you can get it
done there there is no formula for
getting it done believe in yourself is a
vague nebulous concept but everyone out
there wants the hack everyone else wants
the shortcut of he' like follow the
three steps follow this simple trading
algorithm and you'll get rich tomorrow
but we can give them this is what drives
me crazy you've already given it to them
spend less than you make invest what you
save and give it a long time so it
becomes what you said earlier about but
your mind is going to [ __ ] with you yes
you won't like that it's not complex
you're going to be drawn to these very
like difficult things and there's H do
you have anything to say to that cuz
there's I'm going to move us on to like
this other thing that you said in your
book that I was like I totally disagree
with this oh good I that's this this is
what this is what I like talking about
the most the one thing I'd say is the
idea of spend less than you make and
save the difference is is much easier
said than done so as a formula that you
can put is it not going to work 100% of
the time over the last 100 years anyway
we no one can predict the future but
over the last whatever 120 years yeah
that would work every time yeah it's
just that most people won't do it
because it's harder than it is to say
okay so then before we move to the next
thing which I will take a note to make
sure I don't forget but uh why why is it
harder so cultural you're going to be
Instagram's going to push you to spend
more money got it y Envy is going to
push you to spend more money and to
pursue more money and to constantly move
the goalpost okay yeah is there anything
else or is it literally Master those two
things and you're golden the last point
I'd bring up and I don't know if I agree
with this 100% but I thought it was it
was profound when he said it there's a
Charlie Monker quote where he says when
teaching Financial skills to young
people they either get it instantly or
never at all
and I think what he's saying is like on
the nature nurture Spectrum some people
are just not wired to get it and some
people are are very naturally wired to
get it instantly I've often thought
before I heard Monger say that I've
often thought 10% of people don't need
any help with their money they naturally
understand it it just makes sense to
them compound interest makes sense it's
in it's intuition another 10% cannot be
helped they're compulsive gamblers no
matter what you tell them they're
they're always just going to be making
terrible financial decisions I think
that's that's roughly right so there's
always going to be a subset of the
population for whom no matter what you
tell them or what information you give
them it's it's never going to
click if that okay so the gambling thing
that wipes out 10% but that would mean
80% you have a shot and I don't buy it I
think that there is
a given that the answer is so simple in
fact let me make this about the body for
a second I can tell you exactly how to
get sixpack abs it won't work some of
the time it will work all of the time to
a person I don't care what disease you
have literally nothing it will work
every time if you let me control what
that person eats I will get them to now
they might have weak ass six-pack abs
because they're not doing sit-ups yeah
but you're going to get them this is a
question of how much body fat are you
storing and if I remove enough calories
from your diet people are going to hate
this but this is [ __ ] true if I
remove enough calories from your diet
you are going to lose fat that that is
just a fact of nature there is no way
around it there's nothing you can do to
stall it out if you let me completely
control your calories will control your
body fat it will be different for
different people but it will work 100%
of the time yeah and so the question
becomes then why is everybody fat yeah
and they are fat because they don't care
enough they have not built the
discipline and I hate that this one is
true they may not meet minimum
requirements intellectually that just
there is a sad reality to be faced that
there is a point at which you drop below
the requisite IQ and you're never going
to make it yeah uh they are a wash in
bad ideas which is where I focus I am
entirely obsessed with I think the vast
majority of people can make the change
but they they're going to have to get
rid of their bad ideas and supplant them
with effective ideas not even going to
pass moral judgment on I'm not even
going to call them good ideas I'm just
going to say there are ideas that work
there ideas that don't work and how do
you know whether you're pursuing an idea
that works or not you're getting the
result that you want or you're not
getting the result that you want now we
can go into a whole thing about if you
don't know what your goal is of course
you're going to fail which you mentioned
earlier and a huge huge swath of
humanity has no idea what their goal is
and so they are not going to be able to
get to it just because they've never
taken the time to articulate it but okay
all of this was a response to you saying
that there's this huge percentage in the
middle 80% that doesn't fall into either
of those two categories wants and needs
good advice yeah so I will say I still
think the vast majority of them are
going to fail and I think the vast
majority of them that want and need good
advice are probably not getting good
advice you can reboot your life your
health even your career anything you
want all you need is discipline I can
teach you the tactics that I learned
while growing a billion dooll business
that will allow you to see your goals
through whether you want better health
stronger relationships a more successful
career any of that is possible with the
mindset and business programs and impact
Theory University join the thousands of
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today the huge majority of the financial
services industry by the way are by and
large good honest well-meaning people
the incentives of of the system are to
push people away from the best financial
behavior because if you are a stock
broker if you are a fund manager you're
not going to make a career you're not
going to make your money telling people
to buy index funds and go to the beach
you want them trading you want them
churning in and out that's how you as a
broker as a fund manager are going to
make your money okay and then so so much
of the industry is pushing people
towards the worst thing that they need
to do because the incentives to do it
are huge and in finance if you have a
business model where you're taking 1% as
your fee 1% on trillions of dollars
across the industry is a shitload of
money so the incentive to push people
towards doing things that they shouldn't
be doing is off the charts and that's a
huge part of this too I mean it might be
similar in health where it's like the
incentive of the food companies is to
make food that is good tastes good and
is addictive it's not to give you
healthy food they they couldn't care
less and I think by and large they're
good honest well people but the
incentives are to push you away from
what you should be doing I'm in a weird
mood today so I'm going to say okay look
as somebody who made my wealth in food
yeah trust me there are amazing people
out there and I am I have a lot of
respect for myself because I cost myself
hundreds of millions of dollars doing
the right thing that I knew was like oh
this isn't going to be as popular but
it's going to have the right Metabolic
Effect but I will say there are a lot of
people that are probably dirt bags I'm
not saying I met them I'm just saying
when you look at oh God in fact this is
from your book uh bag no no no you're
going to remember this in a second uh I
think this is really smart I summarized
it as um oh God circumstances make the
monster yeah but it's actually from the
Russian poet the Russian poet that you
quoted God I'm forgetting his name uh he
he has a crazy name yes but basically he
say you can turn anyone into a monster
in two weeks correct and he was he was
saying he was talking about it in terms
of people who went to the gulg and
people who were good honest Noble smart
wise caring calm peaceful people two
weeks in the gag and their monsters two
weeks of starvation isolation torture
whatever it would be and you're a
monster that'll do it and you and I
would do that too everybody would I
imagine becomes bad there's no question
but and in two weeks of starvation or
torture or whatever it might be
isolation at what point are you willing
to you know start attacking people for
your basic needs kind of thing that was
that was his point and because of that
we underestimate what Society is capable
of doing yes in a bad way because
everyone is calm and peaceful and by and
large well-meaning right now it takes
two weeks to turn that around yep yeah
that that is scary and I think very true
so going back to the the food industry
so given the perverted in perverted
incentives I have a feeling even though
they may be
like minus the bad incentives amazing
people the incentives get hard to
overcome yeah and this is why I think so
many people succumb so uh dear viewers
thank you for showing up because I care
obsessively about one thing I really
because I acknowledge the role of luck
in my life I am obsessed with trying to
give people the ideas that I feel
separate me from people that have not
had had my kind of success I got the
ideas at the right time I had the right
Constitution to get very frustrated with
the way that normal business was being
done and all of My Success was sort of a
accidentally timed Rebellion against
that that ended up being just absolutely
the right time for pure luck oh so I am
hellbent to give people the ideas that
are going to help them so you are Your
Own Worst Enemy you are going to create
all the problems in your life the reason
that you know the right thing to do in
both your body and in money because
we've told you them in this episode so
if you were hearing my voice now unless
you're skipping around randomly you know
what to do now maybe you don't believe
me I guess we'll set that aside for a
second but assuming that people do
Embrace those ideas I still think
they're going to fail and so I want to
dismantle what what happens
psychologically that leaves them to fail
now to do that though I need to ask you
first do you think they can be changed
or do you simply speak to the 10% that
fall into the they'll get it and do
something I think I'm speaking to the 50
to 80% who want and need good advice do
I think everyone can change no because I
feel like if I like my saying of spend
less than you make invest be patient I
almost to to rag on my own idea I almost
view that as saying if you get people to
stop fighting there'll be no more Wars
you're like yeah no kidding but it's not
going to happen and it's like it's a
it's a when you make it that simple it
highlights all that you need to do but
that's not pretend that that's going to
be easy and let's not pretend that
anybody that everybody can do it I think
that's that's where I fall down and to
the point of same as ever it's it's
always been like that bad financial
behavior has always existed and I think
it will always exist because of the
natural human emotions of envy and
wanting to one up your neighbor and
Rising expectations I think those have
all they're such an innate part of human
behavior and because those exist it's
never going to get to a point in society
where everybody is making good financial
decisions okay is is a room to improve
at a broad level I mean the fact that
Finance is almost ex not taught
whatsoever in schools is absurd you have
to take Tri you have to take
trigonometry but not basic personal
finance so so is there is there room to
improve the masses absolutely and even
at that level when the masses start
getting a lot of financial education
what has been most young people's uh
introduction to finance in the last
couple years it's Robin Hood which I'm
I'm sure that company too is run by good
and honest people but it's an it's an
app that's designed to get you to start
gambling not to invest for the long term
not to learn about businesses to buy the
stock that's going up between now and
lunchtime is what they want you to do
which every Financial study every
academic study would show that's the
single worst way that you can invest so
even when you have a new product that's
getting people into the game by and
large because of the incentives of the
game it's not pushing you to do the
right thing yeah agreed um here's
something that I say frequently that
really drives people crazy but I'm going
to say it anyway because um I speak to
the 2% of people that I know can and
will change yeah uh just to throw
another number out that I have
completely made up it it is while I
think the vast majority of people that
listen to the show are in the 2% I think
that the World At Large breaks into
roughly 98% if you're an adult got a
whole thesis on kids but if you're an
adult 98% of people are so stuck in the
frame of reference are never going to
make a change 2% will they're hyper
malleable and they're going to figure
this out okay uh the thing that I say
that people hate is that I like my house
to be chalk full of terrible food Oreos
ice cream cakes all of that whatever
because I don't eat based on what's
tasty and delicious I don't eat based on
what the industry is telling me I should
want I eat based on my goals so I don't
spend money based on what I'm excited
about or this that and the other I base
what I spend my money on on my goals now
I am a drunken sailor when it comes to
investing in my business so I want to be
very clear I recognize I'm playing a
very dangerous game in bus fair enough
all the critiques in the world I will
take them on uh but in terms of you I
advise people to have bright lines in
their life so the reason that I don't
eat bad food when I shouldn't is because
I have bright lines that I'll eat
anything I want on a Saturday yeah but
if today is a Tuesday and it is then I
know that I can't have Oreos and
cupcakes and cookie and whatever but do
you think you have an abnormal amount of
willpower that 99% of people don't in
that situation can I tell you a story
yeah yeah please okay uh when I leave
for college my
mother basically pushes me out the door
and I am weak and fragile and I'm like I
don't think I want to leave I want to
stay here go to the same school my
friends are going to play it safe and my
mom is like Over My Dead Body you said
you were going to go to USC you were
going to USC you were going to chase
your dreams and you're going to make
them all come true then I actually go to
USC and my mom spends every day after
that trying to get me to move back home
and so one day finally this was like
maybe 10 years ago I'm like Mom I have
to ask you pushed me out of the house if
you hadn't I would have just stayed at
home so why push me out if you're going
to work so hard just to try to get me
back without missing a beat Morgan she
says oh I just always assumed you were
going to fail and come home wow and I
was like whoa Now by this good thing she
didn't tell you that at 100% 100% my mom
was always my biggest cheerleader she's
amazing but I was like wowa she was so
nonchalant oh yeah I just assumed you
were going to fail wow now I asked my
best friend what did you think of me
when I was in high school he goes uh I
just assumed you were going to
marshmallow your way through life he was
like you were so lazy and then my now
father-in-law when I went to ask for his
Blessing to marry his daughter he said
no wow he was like bro I mean obviously
he didn't say bro but he was like I
don't think you're going to be able to
provide for my daughter and at the time
he was right now the thing I want people
to understand all of those people
accurately identified where I was in my
life at that time I was profoundly lazy
I did whatever came easily I ran from
anything that challenged me I I had a
fixed mindset so I was trying to put
myself in the rooms where I was the
smartest person and the second I hit
somebody smarter than me I would turn
and run in the opposite direction this
is why my obsession with the only belief
that matters I didn't think I could get
better and so my whole life was an echo
of I don't think I can get better so I'm
just trying to position myself to look
cool now in the moment I'm not willing
to put my head down for 10 years and get
good at something and outperform people
so everybody that was like oh bro this
guy is headed for a disaster had
accurately identified where I was at
that moment in my life yeah now what
they underestimated was the power of
Shame and my desire to impress my wife
enough to sleep with her that's so and
so then my wife also was very good
people are not going to like this word
with with love in her heart and all the
best intentions and it worked out great
I couldn't be more grateful but she was
very good at manipulating me so it was
like when she saw me being lazy cuz she
thought the way she was going to affect
the world was not directly herself it
was going to be through me okay we we
came of age in a different time boys and
girls so my wife who is now an
entrepreneur always thought she was
going to be a mother and that was going
to be her whole thing so she just
thought a subconsciously she probably
wasn't even thinking about it but I'll
manipulate him she didn't use that word
but I'll influence and he'll go do the
magical things that I know he will
become capable of doing yeah and I ended
up by reading things like Napoleon Hill
on and on and on I ended up cobbling
together this mindset that allowed me to
be successful so I don't want people to
Discount me and say oh he's exceptional
I could never do what he did because
he's different I'm built differently now
but I wasn't at the time and so any
anybody that writes off my story you
writing off my story puts you in the 98%
because you're looking for reasons to
stay where you're at instead of finding
reasons to be like oh word I'm going to
do that how can I do there this is not
your point but I'm curious when I hear
that story how much of the rejection
from your father-in-law or and those
kind of stories motivated you to get
better and it was it was what you needed
to get off the couch here here is the
honest answer so earlier you said that
one of the things that successful people
have is just this unrelenting belief in
themselves but I also think that they
have an absolute Terror inside that
they're not good enough to be successful
abely it is this weird dichotomy that
was first crystalized by Alex horos
thank you Alex shout out uh it's crazy
and it is so true of me I've always had
an insane belief that I was going to get
rich now that makes sense now because
people know the punchline of my life but
dude when I was a kid nobody I knew his
wealthy met a wealthy person nothing my
whole family used to make fun of me
literally they would mock me because I'm
I'm going to be rich one day they were
like get out of here so that is when I
go to my father-in-law I am broke I have
this Vision in fact when I went to
propose I don't even think I had a job
so he's like oh God you're living with
in my ex-wife's house you're you've
gotten my daughter to fall for you which
is already horrifying on a 100 levels
and he had taken himself from a tiny
village not a town a village in the
island of Cypress which I never even
heard of until I met my wife uh he taken
himself from that to running one of the
largest shipping companies in the world
crazy Journey so this guy's looking at
me like oh my God like this kid is going
nowhere fast I also don't blame him for
thinking that it's easy to poke fun at
him but just knowing what I know now
it's like I get why he would have said
that for sure yeah so at that time I'm
laying in bed in the morning for 4 to 5
hours I only get out of bed because my
girlfriend who's working to support us
both to live in her mom's house P.S uh
she would come home at lunch and her one
request that since I wasn't working that
I make her a sandwich and I would get up
in my pajamas and finally get out of bed
after 4ish hours and I would make her
that sandwich oftentimes like slap Dash
together because she was like walking in
the door
and I was a wash and shame yeah and I
was like I told told her I'm going to
make her rich I told her father because
I ended up proposing even though he said
no yeah and I was like sir I hear you I
respect that but I do want to tell you
I'm going to propose to your daughter so
she says yes and now I'm like whoa I'm
really ashamed of myself yeah and I need
to make a change but if I hadn't ever
gotten ashamed if I had never met
somebody and made big promises and then
knew I wasn't living up to them I
wouldn't have done it and because it
ends up up taking me unfortunately the
story of my life is not oh my God the
next thing I do I get rich it's like
almost 15 years of oh God we're so poor
my wife is clipping coupons we only have
one car I'm bumming rides off my
employees like it was crazy yeah uh so
through all of that it
was am I ever going to make it and I
can't let my father-in-law be right now
I want to be very clear nobody was ever
kinder to me he was once he realized
this is happening whether I want it to
or not he was warm emotionally available
just a generous generous human being and
I'm so grateful yeah um and I did
apologize to him because he he gave me
probably the best business advice I've
ever received but I rejected it at the
time because I still had a fixed mindset
y uh so anyway yes without getting
slapped around in that way and being
completely ashamed of myself I never
would have done it I I I have a friend
Patrick oasy who says if you had to
describe in one word the mindset of the
most successful entrepreneurs the word
that he would use is tortured is then
they wake up every morning and they're
like they're terrified they have this
big goal that they need to meet they
have this audacious thing they're trying
to accomplish and they're not there yet
so you would think it's not driven it's
not passionate it's tortured every day
they wake up tortured and I think a lot
of people in their life will get to that
Rock Bottom moment and that's that's
what they need the opposite of this the
polar opposite of that are the spoiled
kids who grow up with everything and
they can wake up comfortable and under a
warm blanket every single day and that's
the shirt sleeves to shirt sleeves in
three generations kind of idea like
explain what that means you have someone
who starts with nothing and they're
tortured they're terrified they're going
to be left behind a shirt they can they
can't they can't do it they're in shirt
sleeves because they're a bluec collar
worker right they're terrified they make
a lot of money and then they have one
generation who maybe like kind of can
follow it up a little bit kind of keep
the family together a little bit the
grandchildren who are just the
grandchildren of very rich people are
the ones who develop a cohabit at 17 and
never accomplish anything and blew all
the money and so there's a lot of
families like this you and I were
talking earlier about the Vanderbilts
which to me is one of the most
interesting examples of the mega Rich
families because they had more money
adjusted for inflation they had almost
half a trillion dollars back in the
1800s and in three or four generations
it was all gone and the three or four
generations that inherited all the money
and they were all getting hundreds of
billions of dollars during this period
And even if you were a cousin you were
getting the equivalent of five or 10
billion dollars during this period
they're all miserable they were all
miserable and I think a lot of the
reason was none of them accomplished
anything other than being born in the
right name they were not entrepreneurs
themselves they didn't build anything
themselves they didn't accomplish
anything themselves other than spending
their ancestors money and they're all
miserable for it and you need someone
who's like who can wake up terrified of
their position in the world and that's
going going to give them the drive to
actually go out and build something
themselves and you and I were talking
earlier the first Vanderbilt Heir who
did not get any money is Anderson Cooper
from CNN and his mother was Gloria
Vanderbilt she's the last one who got a
trust fund Anderson got nothing and he
talks about that that's probably why
he's so successful and he's probably the
happiest Vanderbilt Heir in 200 years
because he was the first person who had
to do it himself who he knew when he
woke up when he was 18 or 20 years old
he said I have to make a name for myself
the fact that his last name is Cooper
and it's not Vanderbilt means that he
like he had nothing going for him no
trust fund no name I'm sure he had
connections and doors are open to him
but I think that's a telling thing too
like that's what drives people it's not
having endless resources it's the
opposite it's waking up
terrified and a lot of entrepreneurs who
keep it going are like this too there's
this great interview with Mike meritz
who is the founder of seoa which is the
most successful Venture Capital firm
that's ever existed and not only are
they successful but they've been
successful for 4 40 years which is a
very long time in VC so he's doing this
interview with Charlie Rose and Charlie
Rose says what's your secret to being
this good for 40 years and Mike Merit
says we've always been scared of going
out of business and this is a guy who is
like an order of magnitude more
successful than anybody else if there's
anyone who has the right to brag and say
the reason I'm successful is because I'm
so smart it's Mike meritz but he doesn't
he says I'm terrified of going out of
business and he said we never assume
that what we've accomplished in the past
is going to transfer to to tomorrow so
he's still waking up scared terrified
tortured maybe and that's why he can
keep his success going for such a long
period of time and there's such a long
history of people using their paranoia
and insecurity to become successful and
then as soon as they become successful
they allow themselves to take a break
because they're like I made it I met the
goal I'm at the mountain toop I don't
need to be scared anymore I was SC like
the reason I was working so hard is so I
didn't have to be scared anymore so then
as soon as that fear goes away and they
become comfortable with their succcess
it's all over and what made them
successful is gone and then it starts to
unwind so many companies are like this
Sears GM JC Penney the reason that they
failed is because they got so successful
they just got fat happy and lazy and you
see that with individuals too and when
you see someone like Mike Moritz who
pushes back against that wildly
successful the guy is a Deca billionaire
and he's terrified of going out of
business that is such a rare and unique
mindset yes it goes back to you need
emotions to make a decision but you
really have to distrust your emotions
yeah and I find that people it's ironic
because most people are just absolutely
devoid of self-esteem and all that but
somehow still manage to once they get an
idea in their head they they trust that
emotion not an idea in fact as I was
saying those words I was like something
doesn't feel right they trust their
emotions and they don't have a clear
idea a and so this comes back to okay to
me so I really want to I if if you and I
disagree I want to debate this until the
end of time uh I think that the reason
that most people won't be successful is
they cannot control their emotions yeah
yeah and what's going to end up
happening is they don't have a clear
thesis on what they're investing against
they're going to in the Euphoria when
it's a bull market and everything's
going great they're going to be like
this is going to last forever and
they're going to invest accordingly and
so they will buy at the top and then
they're going to panic as the number
drops because of the emotion they'll
forget that they didn't have a thesis in
the first place they're just buying
based on emotion effectively gambling
and as it comes down they're going to
sell at the bottom and so what becomes
the simplest and best advice in the
world Buy Low sell high they