going back to our conversation of Munger, he has a lot of very good quotes about, the best way to do well is to avoid making avoidable mistakes.
There's a certain context in which that's true.
And those are the high stakes things that are difficult to reverse, that are very expensive, that are very destructive.
Yeah, those are the things you absolutely don't want to screw up.
And on the other end of the spectrum, where you have more latitude, screwing up more is a way to increase your rate of learning and to increase your knowledge.
And that gathering of knowledge has compound returns in and of itself.
And so in many areas of both life and business, more experimentation means more mistakes, but it also means more results and more growth.
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Today I'm speaking with Josh Kaufman.
Josh wrote one of the best business books of all time, The Personal NBA.
In this conversation, we talk about rapid skill acquisition, mental models, decision -making, overcoming fear and so much more.
It's time to listen and learn.
You grew up in a small one -stop like Midwestern town with no role models and like entrepreneurship or business, and you came to write one of the best -selling business books of all time with The Personal NBA.
How did that happen?
It's kind of weird.
A long circuitous route.
Yeah, so I grew up in a little town called New London in North Central Ohio.
Think light manufacturing a little bit and agriculture.
So one stoplight, there's a McDonald's.
I think this happened before I moved to the town, but the story is that the town shut down, they called off school and had a parade full of tractors when the McDonald's opened in my hometown.
So yeah, I grew up not around business at all.
Most of my role models were the teachers at the school.
Those were the adults I interacted with on a day -to -day basis.
And most of the adults either worked a farm or they made a commute to one of the larger towns in the surrounding area and did some light manufacturing, I think rural Ohio stuff.
Yeah, my investigation into business didn't start until I was a few years into college.
That was my first real exposure to business as a topic of study and something that really once I started learning about it was fascinating to me.
And that was the University of Cincinnati.
Cincinnati, yeah, Cincinnati, Ohio.
The reason that I went to the University of Cincinnati was to me, and I think this is relatively common for folks from my neck of the woods is that you went to college to get a job.
That was the purpose.
It wasn't the high -minded liberal arts, let's go to broaden yourself, all of this thing.
It's like, no, you're gonna study something that's useful and then you're going to get a job because that's the purpose of education.
So the reason that I went to the University of Cincinnati was they had this awesome extended internship program called a cooperative education co -op program.
And the benefit of that is I was going to spend way less time in the classroom and more time working in a real functioning business.
And so in theory, you do well in your co -op and you have a job coming straight out of college.
So yeah, I spent, it was a five -year program and I spent three and a half of those years learning in the classroom.
And I spent a year and a half of that learning full -time working for what ended up being a very large business, Proctor and Campbell.
Yeah, one of the largest companies in the world.
That was my introduction to business as a topic.
Which must've been like a crazy place to go right away, like right outside of school, you end up at one of the largest consumer product companies in the world.
Well -honed processes, I would imagine not super entrepreneurial.
And then how did that translate into sort of the personal MBA?
The personal MBA, a couple things.
It was mind bending working at a company that large.
So I went, I think the only real commercial experience I had was working over the summer for a computer place that built computers and fixed computers.
I would drive down to help an old lady figure out how to open her email, like that kind of stuff.
And so walking into this business that is gigantic.
It took a while to wrap my head around exactly what an organization of that size, how it works, what are all the pieces, how does everything fit together.
I had this experience growing up working in these very small businesses, the computer store, mowing lawns for people.
This was back like 1998, 1999.
So developing websites for people.
So I had some experience in the smallest of the small businesses in the world.
And the internship experience was the largest of the large, doesn't get much bigger than that.
And so what I wanted to do with their personal MBA was I was walking into a job where a lot of people that I was going to be working with had just graduated from a top 15 MBA school.
It didn't make sense for me to quit my job and borrow a bunch of money, go back to school.
To come back to the kind of job I already had, I just wanted to learn what I needed to know to succeed.
And so the personal MBA became a project where instead of going to school, I decided to read and research on my own.
And the litmus test for what became the ideas in the personal MBA, the book, was trying to find all of the business concepts that make sense in both of those domains.
Like what are the ideas that you need to know to succeed in the hugest businesses in the world or in the type of business that you can start by yourself on a weekend.
And then you could test it against all of these sort of like top 15 MBAs that were coming in?
Yes. That's great. Like where did Munger come into this?
Because I remember Charlie Munger and mental models being a huge influence.
And the personal MBA is basically a book of mental models that people need to know for business.
Was Munger sort of like something you discovered as you were doing this research or?
Munger, I discovered Munger, I would say two or three years into the project actually.
So I was reading and researching on my own, just picking up any business book that looked interesting.
And what I found was that there was a larger set of books that helped.
So for example, influence by Robert Cialdini, not necessarily a business book, it's a psychology book.
And so I was reading and researching.
And at that time, it's kind of the early advent of the blogging period.
And I came across Lessons in Elementary Worldly Wisdom, the transcript of Charlie Munger speech.
And when I came across that, it was a revelation.
It's like, this is exactly what I've been looking for.
This is exactly what I've been trying to do.
Of course, here's another rabbit trail into, let me read everything that Charlie Munger has ever written or look at all of his speeches, all of the things that he's done.
And it was fascinating and illuminating and it was focused on investors.
So people who are making capital allocation decisions.
And at this point, I think I was a year out of college.
And frankly, I didn't have a whole lot of capital to invest.
Theoretically, as an investor, yes, this is a wonderful tool.
But what I was looking for is this approach.
What are all of the ideas that are essential for a business person to know?
What helps you succeed?
How can you understand the world around you in a useful way?
But I was looking at it specifically in the context of practitioners or entrepreneurs.
If you're going to run a business, if you're going to work in a business and improve it, what does that set of mental models look like?
And so the personal MBA as a book became just that.
Like let's take this idea of mental models which is very valuable, very useful for everyone and apply it in this specific context.
So no matter what industry you work in, what market you're operating in, what your personal experience in business looks like, what is the small set of business concepts you need to understand in order to do your work well?
I'm curious as to how you would define a mental model.
So for me, mental models are concepts or ideas or representations about how something in the real world works.
And they are useful because of this wonderful capability that we have in our minds, which is mental simulation.
And so I think the analogy that makes the most sense is when you go to a skilled car mechanic, the mechanic has a mental representation of what a car is, how it works, what are the pieces, how do they fit together.
And if you're seeing something weird in the engine or you're hearing something weird in the engine, that mental representation gives them a way to hone in on exactly what's going on.
I think in the same way, a skilled business person has a set of mental representations about what a business is, how it works, how the pieces fit together.
And when you have an accurate working mental representation, you can use your mind to simulate what's going on, what you should be seeing, what you're not seeing, if you change something in your marketing or your sales process, how that's going to affect the rest of the business.
So yeah, mental models are for mental simulation and the best business people in the world have more and more accurate mental models to draw from.
So they have a more comprehensive understanding of what a business is, how it works, how to make it better.
And then they're able to use that mental representation in the context of a real business to make changes, run experiments, try different things and keep doing what works and stop doing what doesn't.
And if you do that over a long enough period of time, the business as a whole becomes much, much better.
I think one of the things that Munger also said was, there's very few models that carry the bulk of the weight of the thinking and the outcomes.
What are the ones in the personal MBA that you see repeatedly the most useful in your own day -to -day life and the feedback that you're getting from people reading it?
So the personal MBA, it's actually, it's baked into the structure of the personal MBA.
So the book is roughly three parts.
Part one is all about business, what they are, how they work.
Part two is about people because businesses are created by people for the benefit of other people.
And so if you don't have a working understanding of how people work, you're going to have a really difficult time.
And then part three is about systems.
So what are complex systems?
What are some of the principles that can help you think about or reason about complex systems and having that knowledge is what helps you start to tweak or experiment in a complex system in a way that's not going to have hopefully unanticipated consequences, negative third or fourth or fifth order effects,
that kind of thing.
The organizing principle in the first part of the book about business is something that I call the five parts of every business, which is essentially a working definition of what a business is and what a business does.
And just very briefly, a business has five parts.
They create something valuable for other people, just value creation.
Marketing is attracting attention and getting people interested in whatever it is you have to offer.
Sales is about the process of taking someone who is interested, a prospect, and getting them to pull out their wallet, checkbook, credit card, and give you money for this thing that you've made.
Value delivery is the part of the process where you actually give your customers what they have paid for, because if you don't, you're not running a business, you're running a scam.
And finance is just the process of looking at the inflows and outflows of money and answering two very important questions.
A, is more money flowing in than flowing out?
Because if not, you have a problem.
And B, is it enough?
Is it enough to compensate you for the time and attention and energy that you're continuing to invest in the business?
Because if it's not, then that business has a sustainability problem.
There's not a good reason for you to keep doing whatever it is that you're doing.
And so what I found with particularly new business people or people who are trying to start a venture for the first time, having that understanding of businesses always have these five parts, and these five parts have very specific concrete goals attached to them.
I found that it's helps new business people really wrap their minds around, okay, what are we dealing with here?
This is a relatively constrained set of concerns.
I can think about them, I can reason through them.
And this is when somebody is trying to write a business plan for the first time.
My advice to them is very simple.
Take out a sheet of paper.
You have five sub -heads, value creation, marketing, sales, value delivery, and finance.
And if you can sketch out in detail what each of these processes look like in the business, you'll be in really good shape.
That's all you need to do.
And so yeah, instead of having business be this amorphous and nebulous blob of things I need to do to make money, it helps to have that deconstruction, to know exactly what you need to do and in what order, and to be able to look at what you're missing so you can fill in the blanks.
What are the ones that you keep coming back to personally again and again?
Like what are the ideas from not just the book, but like are you finding yourself more in the complex systems?
Are you finding yourself more in the people?
Like what are the models that you repeatedly use when you're making decisions?
Yeah, I think about the ideas in working with yourself and working with other people all the time.
So it's really helpful to have a working understanding of sunk cost.
It's useful to have a working knowledge of Acrazia.
Like when you're trying to get yourself to do something you know you should be doing, but somehow there's some sort of barrier that's keeping you from doing that.
I think at this point I've worked in enough businesses and started enough of my own businesses that the business side of things is relatively fluid.
It doesn't take a whole lot of mental effort or energy to keep those things in mind right now.
But you are the instrument that you use to get things done in the world.
And so the debugging your own mind and trying to anticipate how others are thinking and feeling and trying to optimize around that, there's still a tremendous amount of effort and skill that's valuable in that domain.
And I find myself thinking about those sorts of things quite often.
Let's double click on that for a second.
How do we debug our own brain?
I think it's helpful to understand one of the things that I've found in terms of a technique that I use a lot is logging.
So just trying to pay attention to what it is that you're doing, what you're trying to do.
And then writing down both what you accomplish in the course of the day, but also the decisions that you make and the places where you get stuck.
Or you've been trying to make progress in a certain area for a while and it's just not working, or you're feeling uncomfortable, or there's a decision that you need to make that you're not making for whatever reason.
I think a lot of times, people will just sit with that and not do anything about it.
Like mentally and emotionally, they get bound up about certain decisions.
And unless you are making a concerted effort to capture what those decisions are and go back into your thought process and try to figure out why, why am I stuck on this particular thing?
What information do I need that I don't have yet?
Like who could I talk to about this?
Is there an experiment that I could run to try it this way and see if it works?
All of those things, it's pretty straightforward to do them.
It's the remembering to do them.
And the consistent noticing when there's a barrier and then trying to deconstruct and go a little bit deeper into why that barrier might exist in the first place, that's the practice.
And it really is just something that you need to pay attention to and just go back to every single day.
I'm super curious about that.
I mean, it sounds like it's a very active form of reflection.
You're reflecting on sort of like what's happened to you.
You've had an experience reflecting upon that experience and you're trying to figure out the next steps or what went wrong.
And the writing is really the work of the reflection, if you will.
Yeah, it's a daily review process combined with getting into the habit of making notes as you're doing the work, which I think has a couple of benefits.
A, it's just good practice to track how you're actually spending your time and energy or investing your time and energy instead of just relying on your memory to do that.
Because our memories aren't very good at keeping track of what we really do.
I think there's another cognitive and emotional benefit to doing this, which is all of us are involved in something hopefully that we care about that's important to us.
Oftentimes those projects are very complex and take a long time, take a lot of energy, take a lot of effort.
The to -do list can be thousands of items long.
And so if you're gauging your mental and emotional conception of progress on is my to -do list done yet?
The answer to that day after day, week after week, year after year is no, it's not done yet.
Therefore it's hard to feel good about what it is that you've done in a day.
At least for me, the practice of daily logging has been very helpful in terms of feeling like, no, I did 20 things today.
Here's exactly what those are.
Here's how it's related to what it is I want to do.
And you get the double benefit of giving yourself credit for the things that you are doing to push the ball forward.
And then also having this rich corpus of information that you can go back to and evaluate your process, evaluate your decisions and make improvements from there.
I like that a lot. I think one of the things I struggled with, especially as a knowledge worker, was just sort of like, what's my product?
Like, what's tangible at the end of the day?
I would come home and I'm like, what did I do today?
And it's like, I wrote an algorithm.
And that's not very tangible, right?
Like, you lose track of the bigger goal, you sort of, you think about it differently.
But yeah, I find that really interesting.
There are many conversations.
One thing that you're amazing at is synthesizing information across a broad domain.
You have this unparalleled skill.
What's your process for that?
How would you teach that to somebody else?
Like, walk me through how you do that.
It's like, it blows my mind.
I think in terms of technique or process, there's two steps to it.
One is the more input that you have from a wide variety of sources, the more material that you have to work with.
So I think if we invert that into what a lot of people don't do is they pay attention to a very narrow set of sources or all of their, their reading, their research, their experimentation, their investigation is in one very narrow domain and they don't really stray outside of that.
The wider you look, the wider the variety of sources that you have coming into your brain, the more access to interesting insights and connections you would have.
So yes, reading broadly, experimenting broadly, having experiences in different domains and trying to bring those domains together, that's the first part.
And I think once you do that, and this was very much the process for the personal MBA, I read hundreds, thousands of business books over a very long period of time.
And when you do that, you start to see the same ideas come up over and over and over again.
And so there's a certain frequency analysis that you can do on paying attention to the ideas, the organizing structure, the names, the concepts, the relationships that keep coming up over and over as you are doing this wide exploration.
And that's a really good point or that there's something about that that's particularly important, that's worth knowing, that's worth understanding.
And then when you come across those things, they become natural targets for the next round of research or exploration or experimentation.
When you're doing the sort of wide coverage, are you also, like you said, thousands of books, hundreds of thousands, are you going across time as well?
Like, are you looking at 60s, 70s, 80s, 90s, 2000s, or is it sort of like, what are the last 100 best -selling business books and then pulling them out?
So when you're getting these ideas, how do you know that they're also not gonna disappear across time?
This might be a distinguishing factor of the research process.
I try to narrow down what I'm reading to mostly books that you could fit into the framework of how to think about fill in the blank.
And so I'm not reading a bunch of biographies, I'm not reading a bunch of entertainment or call it trend pieces.
I remember a book from a couple years ago of the rising trend of Twitter.
That's not a good investment in terms of this kind of research.
I want to read something like Influence, which is how to think about cognitive biases in the specific application of persuasion and sales.
I want to read On Writing Well by William Zinser to get in my brain how to convey nonfiction material in a clear, concise way.
And so I think the more practical and application -oriented a source is that that narrows down the scope considerably because there's a bunch of sources that I'm not necessarily paying attention to, not to say that there's not value there, it's just not the same kind of thing.
But then that allows because looking at it from the standpoint of application really lets you say, okay, here are the techniques that keep coming up, here are the concepts that come up over and over again.
And that's where you really start to see the commonalities across approaches and across philosophies.
I like that for sort of like how you created, what you were writing about or how you thought about things.
But you also do this for subjects that are completely unrelated to that.
I mean, I remember the first time I met you, I think we talked about water bottles for like 45 minutes.
You've done a deep dive into sort of like microphones and audio equipment and like your ability to just take in a huge amount of information and distill it.
Like walk me through how you do that with something tangible like a water bottle or a microphone or something you've done recently that I don't even know about.
Because you're doing, it's sort of like the same process.
Like you're gathering this information, you're distilling it, you're...
Yeah, so in those other domains, I usually have a specific problem that I want to solve.
Like there's a reason that I'm doing it or there's a reason that I care about it.
And that's where the exploration and experimentation piece comes in.
I don't necessarily know what's going to work in advance, but I do know that I have a problem that I care about and a way to solve it, which is I can collect a whole bunch of different examples and test them out or put them through a process of comparing A versus B over and over and over and over again.
If you do that for any significant length of time, you start noticing which are the things that solve your problem better and which are the things that have some significant drawbacks.
And so, yeah, I don't know if there is any magic here aside from curiosity and interest and patience, just being willing to test a whole bunch of different things beyond what you would usually do in the context of satisficing, like just trying to get to good enough as quickly as you can or just picking
something that somebody else recommends and going with that recommendation blind.
I think just even a relatively small amount of experimentation can get you further down the line of what is the best X for Y problem, then you can find reading in a book or searching the internet or asking a friend about it.
I'm curious as to what your personal process is for making decisions if you've actually formulated one or like how do you go about doing that for something, say medium significant to high significance.
I approach high significant decisions with a good degree of caution.
And there is, you can think about this in terms of value of information.
And so if you go through, for example, a research process or an experimentation process, trying to collect as much information about this particular decision as you can, there's a value of information in the sense of the more information that you collect that can give you good signal to help you hone
in on what looks to be the best decision you can make at a point.
But there's also a cost of information of all of that research, all of that experimentation, you're spending time, you're spending attention, you're spending energy in order to collect it.
And so I usually, I am far, and this is just personality, I'm far more in the optimizer, maximizer camp of decision making, like I wanna try to get to the best that I can, given the time and energy budget that I have set aside for this particular thing.
And do you do that in advance, like your time and energy budget?
You're like, I have two days to decide this or?
Yeah, I try. But I'm also of the inclination that I'm going to make that time and energy budget as big as I can possibly make it.
That's not necessarily optimal in the sense that, there are some things like, for example, if you're choosing a water bottle, you can probably satisfy on that.
They'll all hold water, it'll be fine.
But if you care about, so one thing that is, I know about myself, I care about the tools that I use.
I care about the things that are in my environment day to day.
And so yeah, I'm willing to have a larger time or energy budget about certain things that I use often that I care a lot about or that produce a particular result that I want.
Yeah, it's always like, here's my budget.
And then I'm going to collect as much information as I can with the amount of resources and attention at my disposal and then go with the best one that I know at the time.
How do you filter that information?
Like how do you find high quality sources of information?
Are there sort of like tips or tricks that you found?
Is it, I mean, internet reviews seem, generally pretty useless.
This is where recommendations are worth their weight in gold.
So if there's a source that you trust that talks about a specific thing in a specific way, that's very good signal.
Reviews can be good signal if they include the information that this is what I was trying to do.
And this is the problem I was trying to solve.
And this is how this particular resource solved this problem or helped me with this, provide a solution in a very concrete way.
I don't pay much attention on the review front to, oh, this was really interesting.
This was enjoyable.
This was a fun use of my time because that's, I mean, if you're looking at a fiction book, that's exactly what you're optimizing for.
But if you're trying to solve a problem, you're really looking for, I needed something to do X.
I tried a bunch of different things where I tried this one, it solved my problem.
Then that automatically goes on the consideration set of like things that I should pay attention to, things that I should try.
And do you find there's some sort of like triangulation with that as well?
Because if people are trying to solve the same problem over and over again with the same products, like you're getting the variables that probably matter to solving that particular problem, or am I just sort of, yeah.
No, I think that's accurate.
I think there's also, and it's important to talk about this in the experimentation exploration context.
When you're doing this sort of research, there's always a certain amount of malinvestment.
Like you buy a microphone that doesn't work for you.
You buy a water bottle that's highly reviewed and it ends up leaking or being annoying in some way.
And there's a certain amount of waste in the process of doing this exploration, which is really annoying.
Like you would hope to avoid most of that.
But I think in a lot of domains where you're doing synthesis or you're doing optimize -y sort of research, that malinvestment is a form of tuition.
It's the price that you're paying to gather information about this domain that you care about.
And so, if the problem is worth solving at all, it's probably worth having an experimentation budget where in the process of trying things, you'll find some things that work and some things that don't.
And hopefully you can minimize that cost for sure.
But you're always going to have a certain amount of part of the process or part of the materials or part of your sources that just aren't going to work out.
And then there's nothing wrong with that.
That's to be expected.
Well, it's interesting you say there's nothing wrong with it.
I think in organizations, there's definitely an expectation that we're not going to fail.
Experimentation is sort of, I mean, as much as they talk about celebrating failure, there's not a big tolerance, especially for sort of like big failure, right?
If you're going to fail, it's going to be a little failure and you can't try these big bold ideas, but also personally, as you were saying that, I'm like, there's something about that that we just don't want to admit to ourselves, whether it's an ego thing or whatever it is, like there's a niche there
and almost an arbitrage, if you will, for people who are willing to do that and suffer through a few iterations to find something or even at work, like just the ability to fail is culturally generally unacceptable.
Yeah, this gets back to loss aversion, right?
We hate to feel like we're losing.
We hate to feel like we're making bad decisions in the context of an organization, looking bad in front of other people, giving them a reason to question our judgment about future things that might be more important.
And there's also a scale in which failure is more or less acceptable.
And so, yeah, for the big important life or organizational decisions that you can't screw up because the consequences of screwing up are so big, that just indicates that you need to have a bigger research budget or experimentation budget, information collection budget in order to optimize that as much
as you can by the time a decision absolutely needs to be made.
But yeah, I think it's one of those things that people are too conservative when it comes to doing that exploration bit because the mistakes, because the waste, were too emotionally attached to wanting to avoid those things, then is really good and proper and valuable in that context.
I think this is, going back to our conversation of Munger, he has a lot of very good quotes about the best way to do well is to avoid making avoidable mistakes.
There's a certain context in which that's true, and those are the high stakes things that are difficult to reverse, that are very expensive, that are very destructive.
Yeah, those are the things you absolutely don't want to screw up.
And on the other end of the spectrum, where you have more latitude, screwing up more is a way to increase your rate of learning and to increase your knowledge.
And that gathering of knowledge has compound returns in and of itself.
And so, in many areas of both life and business, more experimentation means more mistakes, but it also means more results and more growth.
I like that. I mean, I think that if we're learning, that's just a big footnote to that, right?
Because we all know somebody with 20 years of experience, but it's like the same year repeated over and over.
So experience isn't enough to learn something.
I'm curious as to hear you riff on sort of how, not only do we acquire skills, but how do we learn something?
Maybe we can separate those.
So let's go with like, how do we learn something?
And then maybe is that different than rapid skill acquisition, or where do they overlap?
Yeah, I think the first thing to delineate is knowledge and skill are two completely different things.
So knowledge in the learning sense, gathering information, forming these concepts.
So like the personal MBA is a book of business knowledge.
It is not a book of business skill, in the sense that skill is being able to perform in a particular way with an objective that you care about.
So you should be able to see yourself in the real world doing something to produce a particular result in a reliable, repeatable way.
That's what skill is.
I think a lot of people conflate the two.
So going to school often gives you knowledge, some of that knowledge is useful, some of that knowledge is not.
And then skill is usually gathered in the context of doing the thing that you care about doing.
With skill in general, the best approach is, I really like this phrase, how quickly can you start making mistakes?
How quickly, how can you get to the point of, yeah, learn a little bit about the topic, whatever it is that you're trying to do, because that helps you understand what performance looks like.
It helps you self -correct.
So as you're doing the thing you're trying to do, if you make a mistake, you're capable of recognizing and correcting that mistake in the moment.
But skill is always gained in the context of practice.
And there's been a lot of research over the years about what effective practice is, what it looks like, how you do it.
It's often called deliberate practice.
So you are not distracted, you're focusing exactly on what's going on, you are paying attention to your performance and correcting yourself as you go.
And then you are also paying explicit attention to small variations in what you're doing, trying little experiments.
If I do it this way, how does it turn out?
If I do it that way, how does it turn out?
And I think back to your question, what separates people who are good at something in a skill context versus people who are great at something, is that they are much better at doing that very fine experimentation in the moment, paying attention, learning the variations, learning the exceptions.
And that's what allows them to develop great skill in a wide variety of circumstances when it comes to that particular domain.
You've had experience with this, I presume.
A little bit, yeah.
I think that, it's really fascinating to me because when you were talking about that, one of the things I'm hearing is that the, again, the ability to fail, the ability to play is part of being able to do something, not only learning, but if you're learning with an instructor, do you lose that ability
to play? Do you lose the ability to fail because they're always correcting you before you sort of get too far out of line?
No, so it's related.
It's not exactly the same thing.
And so usually, when you're learning a skill, one of the things that allows you to learn that skill faster or pick up that skill faster is what's called a fast feedback loop.
And so there should be a very short period of time between making a mistake or not performing in the way that you want to perform, recognizing that there's something to be improved and then making the adjustment, making the improvement.
And so what an excellent instructor or coach or someone who is a teacher, somebody who's helping you develop the skill, what they give you primarily, aside from having some knowledge and experience about what performance looks like, is they are a party that is outside of yourself who can take an objective
look at exactly what it is that you're doing and they can notice the fine variations, the small mistakes, the things that you might not even notice and then the feedback loop so they can stop you, they can call it out, they can help you correct it in the moment.
Whereas you might not even recognize that you're making a mistake.
That's the value of having a coach.
And I think that a lot of the most effective forms of practice are all of those things that give you that fast feedback loop, whether there's somebody outside of you coaching and highlighting when things need to be improved or even just like going through the process of learning a little bit about what you're
trying to do before you start doing it.
The value of that is that fast feedback loop, recognizing when you made a mistake.
A tangible example of that, so both of my kids are learning how to play the piano and the method that they're using, which has worked phenomenally well, it's called the Suzuki method of music, you don't even start by playing notes on the keyboard.
You start by listening to music.
And the reason is by the time you sit down in front of the keyboard to play a piece, you already know what it's supposed to sound like.
And so while you're playing, you hit a wrong note, you know immediately that that note is not correct and you need to go back a little bit and affix it.
And so that form of fast feedback allows you to progress far more rapidly than you otherwise would because you are able to make those fine variations in the act of practicing.
It's like the first thing you're learning is how to correct yourself when you make a mistake or how to acknowledge that you've made a mistake is probably the better way to word that.
How does that translate into the workplace?
Like not piano, but like I'm in the workplace, I wanna be better at my job.
And there's a subset of skills that that involves from presenting to everything else, but it seems like the ability of other people to give you feedback in the workplace has largely gone away for various reasons, whether they don't wanna hurt your feelings or whatever's going on.
Or in some ways they compete with you.
Your colleagues rarely come up to you and say, Hey, Josh, here's the one thing holding you back from getting a promotion that I wanna get to, right?
So you have the semi -competitive environment, but your boss is busy and they're not always able to coach you.
And how do we learn to give ourselves feedback or identify where we've made mistakes from everything from writing emails to presenting to, I'm curious to hear your thoughts.
I think one of the most valuable tools we were talking about logging earlier.
This is another one of those areas where keeping a daily log of what you're doing and how your internal understanding of how you did, what went well, what didn't go well, what you would try the next time.
Just having that reflection loop is one of the best things that you can do for yourself to both capture what's happening in the moment, how you did, as well as go back and look at it later.
So maybe you're a manager and you have a few direct reports, you have a one -on -one meeting with one of them.
And you take some notes about what you talked about, how you were feeling during the meeting, how it seems like they were feeling, how they were reacting.
And then if you get feedback from the outside world later, like your direct report comes back later and said, yeah, that thing that you said during our meeting the other day, that really didn't work for me, or that made me feel a certain way or all of that, you can contrast your contemporaneous experience
with what you're doing at the point when it happened to the feedback and the information you're getting from the outside world.
And you can use that contrast to experiment in certain ways or do things differently the next time around.
It's that reflective loop that lets you get better at some of the soft skills that are otherwise really difficult to improve.
The same thing goes for something like speaking.
And so when you speak, even if it's just for yourself, make a recording.
Give yourself the opportunity to see yourself from the outside doing this thing that you want to get good at.
I know from experience, going back and watching that both takes time and is oftentimes a little bit painful or a little bit uncomfortable.
But it's that form of feedback that allows you to focus on certain areas of your performance that you want to improve and then make a plan to improve those in very specific ways.
Does that make sense?
Yeah, I think that's very actionable and doesn't really rely on other people so much.
I like the idea of having a reflection loop for yourself where you're putting it on you.
And I mean, ultimately it is on you, right?
Nobody owes you anything and you need to figure out a way to get better at the skills that matter for your particular job.
Yeah, and I think you'll see in a wide variety of domains, the people who have the habit both of learning and experimenting, but then also reflecting and capturing their progress and deciding what to do next consciously instead of just trying a bunch of things, throwing spaghetti against the wall, that kind
of approach. The more deliberate and focused and intentional you are about this process of improvement, the more you're going to improve per unit of time.
Yeah, I think that reflection is a largely misunderstood component of learning.
And I think that without reflection, we don't really learn as maybe the uptake of learning is much slower without it.
I would almost say we don't really learn without some sort of pain or reflection angle to learning.
I mean, if you put your hand on a hot stove, you learn really quickly because you have a pain response in your brain.
But reflection is the work of learning.
Honestly, I think of it as that.
And if you think of it as that, it changes the questions you ask other people too, because now you're not asking other people what to do.
You're asking them to basically open their mind about the reflections on their experiences they've had.
So you have an experience and they reflect on it.
So I want to learn from you.
I'm not going to say like, what do I need to do in this case?
I want to say like, how did you think about it?
What did you see? What were the raw inputs?
How did you see those kind of aggregating and playing out over time?
If you had models and analytic models about how you thought about it, what were those models?
And then how does that, to your point earlier about time, right?
Like how does that fast forward in time?
And how can we anticipate that playing out?
And if you do that with three or four different people in a certain domain, you can triangulate on the variables that really matter in a given decision.
And it's really easy to ask people what to do.
And I think that that's really, we default to that because we're busy.
But then we're just sort of getting the answer, but we're not getting the experience.
We're not getting the learning that comes with the experience.
So we don't know the edge cases.
And it's like our friend, Tim, who's got the, there's a line cook and a chef, right?
They both can follow the same recipe, but when something goes wrong, the chef can diagnose almost instantly why, because they've done the work they've reflected on.
The line cook has a much different level of experience and level of reflection.
And so it's much harder for them to diagnose.
Absolutely. I love that analogy.
Such a good one. Yeah, Tim is so good, man.
I'm going to switch subjects a little bit here, but I'm curious to hear your thoughts on, he wrote a book about the Hydra and I'm curious to hear your thoughts on overcoming fear.
And it seems like we're often, and this goes back to something we were talking about earlier about making mistakes, like we're scared to make mistakes.
We don't, and if we do want to deviate, we want to deviate just a little bit, not too much.
That way if we fail, and it's loss aversion.
And even if the upside's huge, we don't want to lose.
So I'm curious to hear your thoughts on the research you've done on overcoming fear.
And if there's a moment in your life that you can think of where you've had to overcome fear.
The book that you're referencing, How to Fight a Hydra, is a book about many interesting, difficult to approach topics.
So it's about ambition in the sense of wanting to do something big, or wanting to do something you've never done before.
It's about fear, it's about fear of the unknown, not knowing what to expect, not knowing if you're going to be able to do this thing that you want to be able to do.
It's about uncertainty.
So not having all of the answers in advance, not knowing exactly what you're going to need to do or how you're going to need to grow in order to get to the end result.
And it's about risk.
It's about facing the very real possibility that you're going to invest your time, your energy, your money, your life in something that might not produce the results that you're hoping for.
In the process of writing that book, my process is very research -based.
I'm reading, I'm trying things.
My inclination is to take a non -fiction tack on explaining how to do all of this well.
And when I was working on the book, subjects like risk or uncertainty, lack of locus of control, all of those things, if you think about it too much, if you consider it too accurately, they become very uncomfortable very quickly.
Because it's really like coming to terms with the things that you control and the things you can't.
And the very real possibility that this thing that you want to do is a dead end.
That's not going to work for you.
And so there are things that we can do to minimize uncertainty, to minimize risk, to maximize our locus of control.
And so the process of writing a book, how to write a Hydra is fiction.
And what I was trying to do in that book is instead of explaining how to do it in a list format or advice, do A, B, C, D, E, F, G.
What I was trying to do is help readers have a more accurate mental simulation of what it looks and feels like to use these sorts of ideas on a practical level.
So show someone doing it instead of explaining necessarily how to do it.
And I think a lot of it, the early steps are a formal acknowledgement of you are signing up to do something difficult and uncertain that might not work.
That's a very real possibility.
And so I think a lot of people early on in the process will either let that stop them right there.
Like if I can't be guaranteed that this works, I'm just not going to do it.
That is not necessarily a constructive response for a lot of the bigger, more ambitious things that we want to do.
But then also by recognizing it, you rob it quite a bit of its power.
So instead of it trying to be this inconvenient truth that you are trying to push to the corners of your mind and ignore and a lot of the compensating behaviors in terms of cognitive and behavioral psychology that appear when we're dealing with these sorts of things, they tend to appear when we're trying
to suppress acknowledging an accurate statement around the world or about the world.
And so by acknowledging exactly what it is you're trying to do, acknowledging that it's uncertain and risky and you don't know exactly what you're going to need to do or how you're going to need to grow at the start, that puts you on a very firm footing with reality because it helps you acknowledge
there are ways that I need to grow in order to face this challenge.
There are things that might get in the way of accomplishing this goal.
Let me figure out what they are.
There are risks that if something goes a certain way, I'm not going to get what I want.
What are those risks?
And what are the things that I can do to alleviate at least the known risks, the things that I can do something about?
And I think all of those things, they don't solve the problem in the sense of removing the uncertainty, removing the risk, making it a 100 % guarantee that you're going to get what you want, but they make the project much easier to approach and your experience of doing the things you need to do to get
what you want becomes much easier, much less stressful, much more approachable in a way that the big nebulous project is not.
I like that. I mean, I often think of this as like when you're talking about risk, there's sort of additive, subtractive risk and then there's multiplicative risk.
And, you know, that's a helpful framework to sort of be like, well, if it fails, like what's the worst case outcome?
You know, rarely is it multiplicative and you're going back to zero.
And in some cases, people just think that other people have this ability, like entrepreneurs are just born with this ability to have no fear and pursue their dreams.
And what would your response be to that?
There are no born people who know exactly what's going to happen.
And so another way of putting it is we expect ourselves to be omniscient and omnipotent and we are not and neither is anybody else.
And so I think dropping that as much as we can or at least acknowledging our preference of like we would like to know what's going to work or what's not gonna work before we do it, that would be a wonderful capability to have.
Every business person, every investor on the face of the earth would give up their entire everything that they own in order to have that capability because with it, you could do anything.
I think just coming to terms with these are fundamental aspects of reality.
They can't be run around.
They can't be hacked.
They can't be eliminated in the context of anything that we want to do with our lives.
These are inherent facts about the world that we live in.
And so accepting that that's the way things are, it's the first part of the battle.
If you don't do that, you're gonna have a really hard difficult time doing anything else.
But once you get past that, that's where the exploration and experimentation, trying new things, taking informed risks.
So pushing in ways that probably aren't going to kill you or do permanent damage, but might represent a real breakthrough in this area that you care about.
You start to see when the fear stops, and there's an idea that I talk about in the personal MBA called threat lockdown.
It's our mind's defensive mode.
When we feel like our world is out of control or there's some scary, risky, bad thing that can happen to us, our natural response is to lock down.
We go into defensive mode, we try not to stick our neck out.
We try to... Make it super conservative.
Yes, we're minimizing exposure.
And it's important to understand that's a physiological response and it's built in there very, very deeply.
And so if you recognize that that is something that is a part of all of us, what are all of the things that you can do to debug or disable that threat lockdown response long enough to do the exploration, to do the experimentation, to do the things that will actually get you closer to where you want
to be from where you are now.
And I think the more you're able to focus on...
I don't know if this is gonna work, but I'm gonna try it.
And any result gives me more information.
It gives me more data about the world.
It improves my skills and improves my capabilities of acting in the world.
That is a win regardless of whether or not that discrete experiment actually moves things forward or not.
You are becoming a better, more skilled person by virtue of doing the thing that you're trying to do.
I like that. One thing I would maybe add to that and I would love to hear your reaction to it is the people you hang around make a huge difference for your risk tolerance too.
So if you're sort of like five closest friends are very intolerant of any risk, it's gonna be that much harder for you to take a risk.
And I noticed this sort of when I left government, everybody was like, oh my God, you're crazy, right?
Because nobody wanted to leave.
You're leaving this guaranteed well -paid job, extremely well -paid, great job, I love my job, but you're leaving this to do something so uncertain.
And being around people at work was one thing.
And then my parents also thought I was crazy.
But my friends were like, what took you so long?
And it was very different my reactions and where my brain tended to go.
So when I was telling people at work, it's like, oh, maybe I'm missing something.
Like maybe, and that's a healthy response as well, but it's sort of like, then you start doubling down on all the negatives and the uncertainty and it could become self -reinforcing.
And then with my other friends, it's like, oh, I have a bit more freedom and I feel like I know it's gonna work out even if it's unfounded.
Yeah, and I'd take that one step further, which is sometimes your friends or your peer group can violate your expectations about what's possible in a particular area.
And so, one of the most valuable things that your peer group can do or the people you surround yourself with, they can have experiences that you wouldn't expect would work.
They can try things that you've never tried before.
They can do experiments that maybe don't work out and you can learn from that.
And so just having a group of people who are trying to do roughly the thing that you're trying to do and they're making their own risks.
They're doing their own experiments.
They're collecting data and then sharing back.
There's an enormous amount of value in that.
And so having a group of people that you can trust to be honest about the process and supportive of you and your own attempts to push in this particular direction, that's something that is very difficult to replicate or replace.
There's enormous value in that.
We were talking earlier about sort of side projects and rabbit trails and you were saying how they're undervalued.
Can we expand on that?
This is something that, let's bring it back to a mental model.
So combinatorial effects are things that happen when you bring other sometimes unrelated things together in a new and valuable way.
Skills have combinatorial effects.
So the more experiences, the more capabilities that you have in sometimes wildly different areas, each of those capabilities brings the possibility of combining it with something else in your wheelhouse in a way that works particularly well.
I think the classic business example of this is in the founding of Apple when Steve Jobs takes a calligraphy class and then typography and that element of design becomes an instrumental part of the very first Macintosh computers.
That's an example of bringing something that seems completely out of left field.
Like what did computers and calligraphy have in common?
But it turns out when you do some experimentation and you apply what you learn in one area to a completely different area, you can unlock a lot of value.
And so it also reminds me, there's one of the way back XKCD cartoons was like the value of things to my career.
Like this degree that I went to school for whatever or the weekend in high school that I spent hacking together a Pearl script, that form of experimentation, like just trying a bunch of things, learning how certain things work.
Sometimes it's the side projects.
Sometimes it's the things that you were doing just because you were interested or just because you cared about it or just because you wanted to see if you could push the state of the art in a particular area.
Those are the things that end up providing an unexpected enormous amount of value from my own life.
The personal MBA was a side project.
I planned on, at that point in my life, I had a really good job, had a similar experience to you in the sense of, I remember, so my dad was an elementary school principal and then towards the back half of his career, he was a principal.
He was a teacher first and then a principal.
My very first year out of college, I had a job where I was making more than he had made in 25, 30 years in education.
And I remember when I went home and I told him that I was quitting my job to start my own business.
It's like, what are you doing?
That's crazy. Like, why would you give up this sure thing in order to do this thing that you have no idea whether it's going to work or not?
The reason I did it was because the project was valuable, demonstrably valuable to a lot of people.
I had data to suggest that if I invested more time and energy here, it would pay off.
And yeah, there was uncertainty there.
There was risk there.
I was giving up something that was valuable in exchange for something that I didn't know the value of.
But the only reason it was a possibility in the first place was because I decided to invest a portion of my time and energy in this crazy side project that I had no idea how it was going to turn out, but the upside of it happens to be a lot more than I could have expected at the beginning.
Yeah, I think a lot of people don't understand sort of linear versus nonlinear and exponential upside.
I mean, you traded a very linear, probably stable, but great career for, you know, in some ways, a lottery ticket on a nonlinear outcome.
Yeah, and I think, yeah, maybe a little bit more than a lottery ticket.
Because the lottery ticket, you have no information at the beginning.
Yeah, yeah. And so the nice thing about all these side projects, because you're doing experimentation and because you're doing iteration, all of those experiments give you data from the world about, is this working for me?
Is this working for other people?
And the more information you collect, the more confidence you have about, you know, if I do more in this area, is it going to pay off?
And you could affect your outcome too.
So like, yeah, it's not a pure lottery ticket, but it's definitely, you know, not guaranteed either.
Another one of the sort of side projects you're thinking about right now is social status.
Can you, I'd love to hear your riff on that for a second.
Yeah, I've been thinking about social status for many years now.
And it's one of those things, it came up very early in my research, because fact of the matter is, from a business context, if you build positive social signals into your business in some way, shape or form, if the people who you want to become your customers look at your offer and say, yeah, this is gonna make
me look really good, then the offer is immediately more enticing than it would be without that social status.
You know, and the value of that to a customer is astounding.
Classic example, a Rolex does not tell time better than Timex.
In fact, it's probably worse.
But that's not the reason that people buy Rolexes.
People buy Rolexes for the status signal because there's something, they are trying to communicate an intangible quality about themselves in a visible way.
So something, making something that would otherwise be invisible, visible to other people in a way that they can understand and appreciate and value.
So there's a value in understanding social status, being able to use it, being able to apply it consciously to produce a particular result.
The other part is that social status is at the root of sometimes the biggest mistakes or the dumbest investments.
The things that we look back in our lives and say, yeah, I really wish I wouldn't have done that.
I call that status malfunction.
So sometimes there are things that we want to do in our life for our career that are particularly status heavy.
We think they're gonna make us look really good in front of other people.
And yet there are drawbacks, there are costs, there are trade -offs that we should consider that we don't because the lure of status in terms of a psychological or emotional weight is so big that we just kind of blow over all of those things.
And we make the dumb decision just because we think it'll make us look good.
Is there an example that comes to mind?
We'll use the example from the personal MBA.
I make an argument very early on in the book that that business school in very many senses is primarily about status signaling.
It's about signaling that you are part of a group of serious, qualified business people, sophisticated operators, people who are competent, people who know what's going on, people who can make big things happen in the world.
There is nothing that's taught in business school classrooms that you are not capable of learning and understanding and applying on your own.
There's not, full stop.
Even so, people are willing to spend.
So the latest estimate that I've heard when you calculate all of the costs of going to a top program, so tuition fees, cost of living, opportunity to cost of lost wages.
When you calculate the whole thing, there are, if I'm remembering correctly, nine schools that have just passed the $400 ,000 mark in terms of total cost of a program.
That's a very expensive status signal.
And there are some people in some circumstances for whom that will be a good, or at least neutral investment.
And there are a lot of people in the world for whom that will be a millstone around their neck for the rest of their life.
And so I was noticing this subtext in a lot of my work, both in the personal MBA, in the first 20 hours, in How to Fight a Hydra, where you can often get much better results if you're willing to examine, look at, and take seriously the lower status option and evaluate that in terms of does this help
me get what I want in a faster, more direct, less expensive, less risky, less uncertain way?
And making those trade -offs for people on the mental and emotional side is really difficult because passing up a high status option that's in front of you very often feels difficult.
It feels like a very real loss.
People have a hard time giving up status when it's offered to them.
And so yeah, I've been thinking about this for a very long time, and it's an intrinsically difficult problem, but I think it's a problem that's very valuable to think about.
I think it's really interesting because status also keeps us in organizations.
It keeps us compliant in all of these subtle ways.
There's this almost tacit agreement that when I'm in a meeting and my boss is there, that if I go along and get along, I have a chance at that chair one day, but if I ruffle some feathers or cause difficulty, then I'm not gonna be able to climb this corporate ladder, which is largely a status symbol,
the titles, all of these things.
I find it really interesting about people that pass on that and people that gravitate towards titles and position.
And it's just a really interesting sort of characteristic to notice.
Yeah, and I think it also applies to your personal definition of success.
And so even people late in their careers, in our modern society, statuses is very often attached to having a lot of money, having a very large organization, being well known by tens, hundreds of thousands, millions of people, tens of millions of people, hundreds of millions of people.
And even people who have reached from a different reference level or a different reference group, an enormous amount of success don't feel it because there's always the next rung on the ladder to climb.
There's always the next thing that you could be doing.
There's always one more step.
To raise your profile a little bit, yeah.
And so I think of the Munger quote, somebody else is always going to have more money than you.
This is not an emergency.
And the same goes for somebody else's is always going to have more followers on Instagram or a bigger email list or a bigger book launch or whatever your reference.
Somebody's gonna get rich quicker than you.
And so in the absolute, when you look at your life in the grand scheme of things, the vast majority of us that are listening to this podcast, we live better than the highest status people lived as early as like a hundred years ago.
There's no question.
Like, would you choose to be a king or an emperor in an era before antibiotics or after antibiotics?
Like, it's crazy. And yet the emotional experience that we have does not reflect the reality of what we could feel if we defined status in a different way or if we were more careful about or careful, deliberate, intentional about how we think about success and status.
It's never been so visible that other people have more status.
And it's really interesting because it's on particular variables now too, right?
Like it used to be, you sort of lived on your street.
You could see that Joe got a new car or whatever.
And it's this one reference point, but it's your little tiny community.
But now you're inundated with Instagram and Facebook and you're connected in a way that everybody is always doing something that you wanna do in one particular aspect of your life.
Somebody's got a new car, somebody's going on vacation, somebody's got a really found, a really attractive partner.
You sort of like, and then you're constantly feeling less about yourself.
I'm curious, you sort of talked about success.
How do you define success?
Yeah, I thought about this a lot when I quit my job to do my own thing.
And for me, success is working on projects that I value and I think are important with people that I like in a way that allows me to take care of myself and my family.
That's it. And so if I'm doing those things, I'm being successful.
If one or more of those things are slipping, then something needs to change.
And part of that was a reaction to the realities of working in a big corporate environment.
So I saw a lot of people who were working on projects they didn't care about.
I saw a lot of people who were trying to get into the upper rungs of management and they weren't particularly enjoying the role or the company of the people that they were working with.
And I saw a lot of people who didn't spend time with their family and invested all of their waking hours in pushing the organization forward, even if they were carrying severe personal costs to do so.
That to me, with my values, with my priorities, that status function.
If I do that, I am making a poor decision that's going to lead to a lower quality of life and lower enjoyment of life for me because of status, because of the lure of that.
And so yeah, it's really, it's interesting from the perspective of knowing a lot of people in a lot of different industries who have big businesses with lots of employees who launch books that sell many, many copies.
All of this, whatever data point you use to make the comparison, there's always going to be someone bigger.
And I found it really helpful to think about this idea of status malfunction, to use that as an opportunity to take a step back and evaluate and say, no, like there are certain brass rings that if I decided to pursue them, I would be actively making my life worse in ways that I care about.
And I found it a very valuable check step to before committing to something, be like, is this really going to improve things or is this something that feels enticing because of millions of years of human psychology and evolutionary development?
But in the end is leading to an outcome that I don't want.
You have to set your own scorecard.
I think that's a great place to end this conversation, Josh.
Thank you so much. Shane, it's been a pleasure.
Thanks so much for having me.
Hey, one more thing before we say goodbye.
The Knowledge Project is produced by the team at Frontump Street.
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If you have comments, ideas for future shows or topics, or just feedback in general, you can email me at shane at fs .blog or follow me on Twitter at Shane A.
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Until the next episode.
Thank you.
