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0:00One of the topics you talk a lot about is doing things that other people may not approve of. >> Yeah. >> And now with your social network, you're around many billionaires and you get to observe them. What is something that billionaires do that would surprise the majority of the population? >> Um >> [sighs] >> I don't know if it would surprise them, but it might be I guess it would probably be jarring for many of them um in in close quarters. Is it probably be surprised by the level of agency that billionaires will demonstrate? Like they're almost all of them are just they they come up to their own conclusions on their own and if everyone disagrees with them, then great because they got there by disagreeing with the masses. And so like you can't have an exceptional outcome and also do what everyone else does. Like it's they're antithetical.

0:48Like you can't. And so you're you know, kind of by definition going to get people who reason for themselves. And I think that that's like it's such an it's such an underappreciated and underestimated component of success to get outsize returns. You can get you can get beta, right? You can get the normal returns. And I say not just from an investing perspective, but just from like a life perspective. If you just like like get life beta, right? If you just follow the norms, like you will get a normal outcome. If you don't want a normal outcome, then by definition you can't follow the norm, which then means that you will be uh you will be an outcast. You'll be in the out group. You will be not the norm. Um and then people have to in some way resolve that discrepancy.

1:31Um or that apparent discrepancy. And so and the more outsize the return you want, typically like almost like the more um willing to disagree or you know, willing to disagree with with common with convention you have to be. And so I would say that that's uh probably the a huge through line for all of them. Um Beyond that, um focus on leverage, focus on what they're going to get, you know, return on time, return on effort. I see that as a a huge thing.

2:06And if you are able to make decisions for yourself and get the highest returns possible, which is only enabled by making decisions for yourself, then you typically get better returns than people who don't. >> I've interviewed now eight billionaires. I found two two necessary components. One is going non-consensus, doing something away from everybody else, >> Totally. >> for many years, >> Yeah. >> typically. And two is some compounding. Either it's network effects where it's like Facebook, every new user,

2:32>> Mhm. >> or it's a marketing advantage or some financial advantage. So, it's literally like running in the opposite direction. Everyone's walking in one direction, you're not only going in the opposite, you're sprinting >> in. Yeah. >> like 90 miles per hour. And everyone's looking at you like you're an absolute maniac. >> No, but I I I think >> And and for like nine years. And people I think that's one of the things. People do not realize how painful that is for nine years. >> This is why I think that first point that you made and I just made about like being able to buck consensus or reason from first principles, reason for for yourself is that if you only believe what you believe or act in the way that you act because of other people's approval or it's because someone else's idea, it's very difficult to maintain conviction for an extended period of time. And so, if you find yourself waffling, it's simply because the ideas that you're adhering to are not your own.

3:22If you if you derive something from zero and built the foundation of whatever reasoning you have for whatever outcome or conclusion you have, and you believe in all the math or, you know, the reasoning that you're you're basing basing the the decision on, if so if someone just if the whole world shouts at you that 2 + 2 is 5, if you're like, it's here I mean, here's two bottles and here's two bottles and 1 2 3 4, like that's what it is, you're and if you know that there's a big pile of money if you're right on that, then you're almost excited that most people don't agree with you because you're like, it's just going to mean a bigger pot at the end. And so, I think that it's so difficult for most people because thinking is very hard.

4:02It takes It takes effort. >> You almost need to create a bunker of like-minded people that believe in what you believe and you could basically like stress test each other's theories or have somebody stress test and then be like, are you seeing what I'm seeing? Often times we have the same thing. We're emerging media and limited partners literally trillions of dollars of people have gone on this podcast. We're at 5 trillion now. >> That's amazing. >> And now it's become a little bit more consensus than the beginning. People are like, why are you running a media business? Why not an asset manager? You were like, this is that This is the right to win. This is a competitive advantage. So, it's it's even the most obvious things, if they're non-consensus, it could seem like you're an idiot.

4:41>> Yeah, you're like, well, explain to me how this decreases the likelihood that I get more deals. >> Yeah. >> [laughter] >> Or explain, here's my logic, poke holes in the logic. Forget about what everybody else is doing, but here's kind of my business plan. And sure, like I want to actually improve. Which Where are the big holes here? >> Yeah, what assumptions Yeah, what assumptions am I basing this on that you think are wrong? Cuz there's obviously going to be some assumptions that we're not going to prove and so some of them are going to be wrong or could be wrong. And how wrong can I be and still be right?

5:11Um and how many of them can be wrong and I still be right? And so I like, we call them need-to-believes, but like if we have some big bet, it's like, what are the need-to-believes for this for this to work? And if we're comfortable with the like there's really only one need-to-believe and we we think it's likely, then it's like, well, hell, like let's let's push. Let's push our chips in. >> This rooting of conviction, I think is the most underrated thing, one of the most underrated things in investing. The joke is people ask when to buy, they never ask when to sell.

5:39>> Yeah. >> And I'll give you a good example. Let's say your friend told you to buy Bitcoin at $100 a decade ago. You >> probably would have sold at 140 once it went down from 160. >> right. >> So, you could have bought Bitcoin. >> Yeah. >> But, if you had spent, you know, 10, 15, 200 hours really understanding Bitcoin and stress testing it and understanding the strengths and the weaknesses, you might have hold

6:04>> Yeah. >> hodled because you actually had conviction. So, I think it's this investment of time and understanding and rooting of conviction that helps you weather any kind of storm. >> And I think the only way that you can have that level of conviction is either you're delusional um or you have it in some sound argument that you reasoned. And I will also say this is probably like one one wrinkle that I would add to the the two elements of like high agency, some sort of leverage, or compound, you know, some element that speak gives them better returns is the willingness to change on a dime if something of some part of their reasoning was proven untrue. So, it's not like they're romantic with the truth.

6:48>> Mhm. >> Not romantic with their process of getting the truth. And so, if if you said, "Here, these are the these are my five points and this is why I'm I'm going all in on this thing." If someone says, "Well, I think this one's wrong and here's my evidence." My experience um the people that I've seen that are most successful will just look at that. They'll take like a big long "You're right. We need to change everything." And then it's just like and then they take action. >> Right.

7:15>> Cuz they're like, "Wow, this whole pillar that I that I based this whole, you know, thesis on is actually incorrect. And so, I need to change everything now." >> And Andreessen Horowitz defines this as strong conviction loosely held. >> Yeah. I love that. >> The ability to have very strong conviction, but yet be able to revise them when new data comes up. >> He's great. He's a G. I love his ex. Real quick, if you were a business owner and you were not growing as fast as you like, I'd like to give you a free gift.

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