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Optimalminimal. Likethis, I have thetwo, I can run flat out for a half mile before my hands startshaking.

Can I ask you a personalquestion?

Now I just sit in the front of thetime.

What if I could beout? I'm a cybernetic organism living this show where metal and the skullare.

Late in theday, in the fairytaleshow.

Hello boys andgirls, ladies andgerms.

This is TimFerris. Welcome to another episode of the Tim Ferris show where it is my job to sit down with world-class performers from every field imaginable to tease out thehabits,routines, favoritebooks, and so on that you can apply and test in your ownlives.

This episode is a two for one and that's because the podcast recently hit its 10th yearanniversary, which is insane to think about and past one billiondownloads.

Tocelebrate, I've curated some of the best of thebest.

Some of my favorites from more than 700 episodes over the lastdecade.

I could not be more excited to give you these super comboepisodes.

And internally we've been calling these the super combo episodes because my goal is to encourage you toyes, enjoy the householdnames, the super famousfolks, but to also introduce you to lesser known people I considerstars.

These are people who have transformed my life and I feel like they can do the same for many ofyou.

Perhaps they got lost in a busy newscycle.

Perhaps you missed anepisode.

Just trust me on thisone.

We went to great pains to put these pairingstogether.

And for the bios of allguests, you can find that and more at Tim.log slashcombo.

And now with a furtherado, please enjoy and thank you forlistening.

Firstup, TerryCruz, former NFLplayer, American film and television star of theexpendables, everybody hates Chris and Brooklyn9.9, host of America's Got Talent and bestselling author of sixbooks, including hismemoir,Tough, My Journey to TruePower.

You can find Terry on Twitter and Instagram at TerryCruz.

I thought we'd start somewhere that perhaps people wouldn't associate you with if that's evenEnglish, but you guys get mydrift.

And that isart. So I went on to your Instagram profile not too long ago and I saw a number of differentprofiles.

And then I started digging and I didn't want to tease out too much because I want to talk aboutit.

Can you tell us a little bit about your background withart?

You got toknow, Imean, growing up inFlint, there were a number ofobstacles.

Imean,crazy, crazy obstacles because I grew up at the height of the crack epidemic and also the demise of the autoindustry.

So there were two things happening at once and they were both horriblybad.

Imean, it was like the80s, probably late70s, all the way through the 80s into the 90s was literally the walkingdead.

And it wasreal. Imean, you had people who were crackedout.

I hadfriends,family, who oneday, whatever good people the nextday, they were stealing everything youhad.

All the way to everyone you knew were losing their jobs and it was apanic.

And I remember there was two waysout.

And one was through music andperforming.

Another way wasathletics.

Butart, you couldn't get paid doingart.

You know what Imean? It was got everybody'slike, that's a wonderfulpicture.

You're a starvingartist, that's the wholeterm.

And I remember justsaying,OK, I'm going to do this artthing, but I had to do the footballthing,too.

And these were my waysout.

Now, I didn't believe that I was actually going to get any kind of light as anartist, but I had oneteacher.

Oneman,Mr.Eichelberg, I'll never forgetthis.

He's theTerry, you are an amazingartist.

He waslike, I'm an artteacher.

You're better thanme. And hesaid, you can go somewhere withthis.

And I waslike,OK,but, youknow, nobody's going to make me dothis.

Nobody, it'sgood, but I got to usefootball.

Where he filled out all the applications forme.

And I didn't evenknow. This iscrazy.

And he took my pictures and my paintings and everything Idid, he took and got aphotograph, did all thisstuff, sent him to interlocking artsacademy.

Now, interlocking is just worldfamous.

Bigdeal.Big, big deal arts camp up in NorthernMichigan, in your TraverseCity.

And you studied with people from all over theworld.

And he literally came to me and toldme, he already filled outeverything.

And hesaid,Terry, you have a scholarship fromChrysler, fullride, to go to interlocking artsacademy.

And I waslike, what are you talkingabout?

Like, youknow, first ofall, I didn't think it waspossible.

This is thedeal. There's a lot ofthings.

It's weird because you got to let people believe inyou.

But I didn't believe inmyself.

And when I got a chance to go to interlocking and study with people from Europe and from Brazil andfrom, and these was mainly musicstudents.

And then they had artstudents.

It was justice and coming fromFlint.

Imean, coming from thehood.

Andthen, this changed mylife.

Once Iremember, wehad, and it was really big oncompetition,very, very big oncompetition.

It waslike, if you were aviolinist, you had to be the first chair and secondchair.

And I remember all these kids were disappointed because they kept moving down and they would just feel like they werecrushed.

And the same thing withart, we had to do twodrawings.

And we had the whole class doing all thesedrawings.

And theysaid, put your drawings on the wall and don't put your name onthem.

We have this guy coming from the Cleveland Institute ofArt.

He's going to judge eachpainting.

And we want to see who's thebest.

And I waslike,oh,man, so I did mydeal.

And I puton, it was a wall full ofart.

The art guy pointed atmine.

And hesaid, that one's the bestone.

But he went all the way across theroom.

And hesaid, thatone. And they were bothmine.

And I waslike,now, life is a confidencegame.

Then you could tell menothing.

I waslike, there wego. I got twoarrogance.

And then I gotarrogant.

I'm the bestone. And then you have to be humble some otherway, eventhough.

But that wouldn't let meknow.

I waslike,well, I can doit.

I can doit. I'm really asgood.

Thesepeople, this is all over theworld.

And then I got a scholarship to Western Michigan University inart.

But it wassmall. It wasn'tfull-ride.

But it was a smalldeal. So I got an art scholarship and walked on to the footballteam.

And my mom passed away about almost three yearsago.

And she always would tellme.

She waslike, whatever youdo, I know you're doing all this footballstuff.

You're doing all this otherthing.

But neverforget, you're anartist,babe.

You're anartist. I'm tellingyou, when I see what I'm doing rightnow, and I get to do so manythings.

That so many people never got tosee.

I get to go so many places and do so many things that none of the people who wanted to were ableto.

I feel like there is aresponsibility.

Butalso, if I don't doit, everything they've gone through isnothing.

So the way I approached things isreally, it's kind of for everyoneelse.

I have to tryit. I have to go forit.

And Iknew, even as I was doing football and I was doing all thisstuff, I rememberonce, because football washard.

Football was avery,very,again, another competitivedeal.

You would get on the team and I would getcut.

And I waslike, I have to depend on this artthing, because this is what got mehere.

And so I would go back in the lockerroom.

And this is how I wasmarried.

I had two kids at thetime.

I would go back in the locker room and go to the players and I would ask them if they wanted their portraitspainted.

And the weird thingis, they werelike,oh,man, comeon,man, you can't doit.

And I would show them myportfolio.

And they werelike,damn,dude.

Ha, and I waslike,look,man, I want to paint you over thisbig, I'm going to put you and you're going to be a giant over thecity.

And I can have wings and you can doit.

And let me tellyou, football players are the most egotistical people in theworld.

They werelike,oh,damn,yeah,man, I want thewings,dog.

How much for themwings,man?

And I waslike,oh,yeah.

And I would do thesemasterpieces.

But I have to tell youthis,too.

I did have ascam. I had ascam.

This is the scam incollege.

Incollege, Iwould, because what happened is I was playingfootball, but when you playfootball, you don't get money forsupplies.

You only get bookloans.

See, scholarship is agem.

Oh, I'm tellingyou, the SAA is agem,dude, the wholedeal.

You are not a studentathlete.

You are asemi-pro. That's all itis.

There's no student init.

Just put it in rightnow.

And what was crazy is that I waslike,hey, but I want to studyart.

They werelike, why don't you just study business orsomething.

So it's easier to getby.

Because the whole thing is just gettingby, take aclass, so you can go to footballpractice.

But I waslike, I'm anartist.

They werelike,OK,whatever.

So I would go to theselabs, and I wouldmake, and this is what I had atplan.

In thesummer, I would make probably 10paintings.

And then I would make four of them reallysuck.

Like, they would bereally, reallybad.

And I would bring those in andbegining.

And these were theselabs.

And I would go to theteachers.

I waslike,man, what's wrong withthis?

I waslike, help me outhere.

He waslike,oh,Terry,oh, myGod,look,OK, we're going to work on yourperspective, and we're going to dothis.

And I waslike,yeah,no, helpme.

And then I'd gohome, and then I'd go topractice.

But I goup. And never do anythingelse, because I had the paintingsdone.

Then I'd bring another onein.

I was a little bitbetter.

And then we'dsay, I did just a wholesemester, and then I would bring out themasterpiece.

And Iwould, youknow,later, I'dsay, look how much you helpedme.

You took me from here tothere,sir.

And I waslike, you wereawesome.

Andagain, the whole thing was ascam.

But I had tosurvive. I had to find a way to stay inschool, because this is the thing a lot of people don't know is that they could take yourscholarship.

It wascrazy. It was one of those things where you are there as abody.

And if you don'tperform, don't find a way to get rid ofyou.

When I was looking at your history and your book and yourbackstory, one thing that I paid attention to as a pattern was an uncommon degree ofself-reflection.

And that's why I want to rewind the clock a little bit back to highschool.

One of the stories that you put in tribal mentors is related to my question related to favoritefailures, or a failure that set you up for latersuccess.

Could you tell us a little bit aboutthat,please?

Oh,man,yes.1986. That was my senior year in highschool.

And I went to FlynnAcademy.

And it was a class Cschool.

But we were highly ranked in thestate.

And I was used to be a basketballplayer.

Imean, I was hard to believenow.

But basketball was a big sport forme.

But I was the starting center on thisteam.

And what was wild is we were picked to go all the way in thestate.

We had a superstar on ourteam.

And we had areally, really goodteam.

We played against a school who decided not toplay.

It was the districtchampionship.

It was right at the beginning of theplayoffs.

And these guys would take the ball down the court and pass the ball to each other at top of the court and wouldn'tplay.

And we had a coach who waslike,well, you knowwhat?

I'm going to beat you at your owngame.

So we stayed in hisown. So we sit in at a wholetime.

And I'm tellingyou, it was the most boring game of alltime.

We just sat there with our hands up and they passed theball.

And if anythinghappened, somebody went and gotit.

And it was you scoredtwo.

And it was just amess. So the score wasreally, reallylow.

They were up 47 to45. And it was literally under aminute.

And I'm freaking out because now we're goingto, it's evident we're going to lose because I'mgoing,man, this is a dumb defensivestrategy.

Anyway, we should have been going afterit.

But what happened is a guy threw theball, their guy threw the ball acrosscourt.

I interceptedit. And with literally five seconds left togo.

And I take the ball all the way down thecourt.

You got tounderstand. I'mthinking, I had visionsof, oh mygod, this is thething.

I'm thehero. The heart is like pound and youjust, I'm already at theparty.

You know what Imean? And I go with this lamp and I bring it upthere.

And it totally gets around the rim and itrolls.

And let me tell you that place goes nuts because it was the upset of theyear.

And I collapse in aheat.

And I know my life isover.

And you got tounderstand.

And this is anotherthing.

Shame amongmen. It'slike,oh, how could you dothat,man?

Another, your other players were yelling atme.

Thecoach, I was in the lockerroom.

He waslike, you had no business taking thatshot.

And I stole theball. It wasn'tlike, we didn't have a shotanyway.

But he waslike, you have no business taking thatshot.

You should have passedit.

Man, it's yourfault. And everybody in the room waslike,yup.

And I waslike, they didn't let me offone.

And I remember justgoing, oh myGod.

And I went in thepaper. And the paper next day waslike, Terry Cruz had a shot and hemessed.

And let me say it was the mostdark.

Imean, when you're 16 yearsold, I waswho, Imean, beyondChrist.

And one guy was tauntingme.

I got in a fight after the school and the wholething.

And I was justlike, this isawesome.

It'shorrible. And so it was a couple days wentby.

I was in the deepestfont.

I'm sitting on mybed. And I shared my room with mybrother.

But for somereason, he wasn'tthere.

Because I always remember beingthere.

It was kind ofgreat. I don't remember being alone except thattime.

And I remember beingalone.

And just thinkingabout,man, I should have passedit.

I should have passedit.

Maybe I messed up and what else could I havedone?

And then another littlevoice.

Hesaid, I took theshot.

I took theshot. And I waslike, Idid.

Idid. And I keptthinking.

It waslike,man,look, when you had thechance, when everything was on theline, you took yourshot,man.

You didthat. You didthat.

And all of asudden, I waslike, that'sright.

That's righthere. I tookit.

And I learned from thenon.

Isaid,man, wait aminute.

If I went in or if Ifailed, it's going to be on myterms.

It's going to be up tome.

I, if I have theopportunity, I have to go forit.

And then I felt really good about losingagain.

It wasred. It wastotally.

Now, you can call itrepraining.

A lot of people have scientific ways or psychological ways to dothings.

But I learned always to kind of reframe things so that it's to youradvantage.

And you look at these thingslike, wait aminute.

You took theshot,man. And this is anotherthing, because what's so crazy is that no one ever remembers thatgame.

It's one of the least important things in mylife.

But the lesson I learned is still guiding metoday, the fact that go forit.

Take yourshot. Take yourtime.

When you get thatthing, when you have thatopportunity, don't mess itup.

Because this is anotherthing.

And I want to tellyou,Tim, the scariest thought ever is one thing that blew me away is that you really do get what youwant.

And let me tell you what Imean.

There have been times when you can beself-destructive.

And you think it's somethingelse.

So youthink,like, I discovered for a longtime, like if I show up late or somethingtwice, I don't wantit.

And you get what youdesire.

Everything aboutyou, you get what youwant.

Now, the way your lifeis,truthfully, you wantit.

And now that'shard. That's hard tosay, because I'd belike,no,wait, there's so many otheroptions.

There's this and this and this andthis.

But the truthis, is that if you want it somethingdifferent, you changeit.

And that hitme.Like, it'sscary.

Because if Ifailed, or if I didme, if I showed upwrong, or messed up onsomething, I waslike, I didn't really do what it took to getit.

Again, that comes from taking that shot way back in highschool.

So one of the things I really appreciate about you and that led me to want to reach out to you is how forthcoming you've been about yourdifficulties.

And some of the challenges youfaced, because I think a lot of folks we see on magazine covers and soon,unfortunately, give people the impression that they'reflawless.

They've all figuredout.

And then people feel uniquely flawed in someway, that they're damaged because they're not thatperson.

That'sunachievable. Could you share with us a story of any dark period in your life and how you found your way out ofit, things that helpedyou,too?

Navigate your way out ofit.

There was a lot of darktime.

You knowwhat? I'm a pseudo-thisstory, which changed mylife.

I was literally just got my first job inentertainment.

I was on a TV show called BattleDome, where they literally put me in acage, and I fought my wayout.

Youknow, it was soentertaining.

It waspre-MMM. So people hadn't seen Blood on TVyet.

We were like thefirst. It was reallynuts.

People were bleeding going to thehospital.

It was called RealWarriors, RealPain.

And I played this character calledT-Money.

And that's actually my wife's pet name for menow.

She'slike,hey,T-Money.

And we call this the Christmas fromHell, because here I wanted to comehome.

I went home toFlint, Michigan with myfamily.

Now, you got tounderstand, mykids, at thetime, I hadthree.

I have five totalnow, but I had three kids at thetime.

And thegirls, and they were allgirls.

They were verysmall. They had never grown up with violence in thehouse.

OK? They never seenit. And so I told myfather, before Icame, Isaid,hey,man, don't actup.

Do not actup. And hesaid, I ain't going to donothing.

And I'mlike,OK, so I'm bringing on afamily.

I know it's Christmastime.

So justrelax,man. And we're going to bethere.

It'll befine. So we getthere.

We're having a goodtime.

My wife and I are goingout.

We actually are driving toDetroit, the hang withfriends.

And I get thiscall. And it waspanic.

My aunt calledme. He's acherry.

His daddy hit yourmother.

In front of thekids, he gotmad.

He knocked her toothsideways.

And I toldhim. I toldhim.

I toldhim.Now,literally, I stopped thecar.

We turned itaround. I told mywife,OK, we're going to go over myass.

You take thekids, go to the asshouse.

The wholething, I'mdone.

I'm dealing withthis. First ofall, I went in thishouse.

He was had to nerve to still bethere.

And Isaid,dude, what are youdoing?

He waslike, shutup. Leave mealone.

I can do it the hell Iwant.

Boom! Let me tell yousomething.

I beat this guy for about anhour.

He was pleading for hislife.

I waslike, I'm not a childanymore.

I am a grown-assman. And how does itfeel?

You are about to get what my mother hasfelt.

And I laid it onhim. He washurt,bleeding, laidout.

I'm surprised I didn't killhim.

And I felt not one ouncebetter.

I remember falling on theground,crying, andtears.

It didn't make me feel one bitbetter.

Notone. I waslike, now I was just down there withhim.

This is the revenge I've dreamed about my wholelife.

And nownothing? Now I'm just likeyou.

And I remember it just feelingempty,cold.

It's probably the darkest place I've ever been because this is the man who's the reason I'mhere.

But I put him in hisplace, so tospeak.

And I never forget it was just the mosthollow, hollow feeling I've everhad.

We got out ofthere. It took me years to overcomethat.

We got out ofthere. I got the kidsout.

We never cameback. We really werelike, forget theholidays.

We're not doingthis. But after years oftherapy, and this was literally about six or seven yearsago.

So I'm talkingabout,like,99.

So I go back to myfather, and I've been listening to things and trying to do this thingcorrectly.

And Iremember, I justsaid, I have to find one thing that I can tell him that he didgood.

And Isaid, and we call him bigTerry, because his name is Terrytoo.

So it's a big Terryman, I want to thankyou, because if it wasn't foryou, I wouldn't behere.

And if I had to choose myparents, I'd chooseyou.

Because the truthis, he's the reason I'mhere.

If it was anotherperson, I'd be anotherperson.

So Isaid, if I had to choose myparents, I'd chooseyou.

And let me tell yousomething, he just brokedown.

Hesaid,Terry, I'msorry.

I'm sorry for beating yourmom.

I'm sorry for everything Idid.

Listen,man, those words broke himdown.

He cried in my arms for about the same time as I was beating him yearsearlier.

And I waslike, this is nothollow.

This feelsgood. This ishealing.

And Isaid,man, I have to use my strength forgood.

Because everybody can knock somebodyout.

But to give a hug with muscles is a whole othermatter.

And Isaid, that is how that's thevulnerability.

That's theauthenticity.

That's where real healing takesplace.

Because shame wantspunishment.

It just wants to getback.

Boom,boom. And it'stemporary.

But guilt developsdiscipline.

When you admit I waswrong.

Because shame is when secrets and you don't sayanything.

But guiltsays, I didit.

I'msorry. And then you develop discipline tochange.

And I'm getting it was one of the darkest periods in mylife.

But totallyreversed. And I decided that's going to be mylife.

This is who Iam. Now some people got their asswhoop.

I'm trying to tell you in betweenit.

Now, I'm trying to tellyou, one thing is some people try to take that and you'relike, I can pushyou.

I'mlike,yeah, get out ofit.

That's what I want tosay.

The big thing was that I knew that would never be the only way I would ever use that is toprotect.

It's toprotect. Not to getback.

Not forrevenge. There's atime.

But I'm tellingyou,man, that was a period that I learnedforever.

Nowagain, myfather, I wish I could say hechanged.

He kind of went back through his oldways.

But I'mhere. And I did the things I needed todo.

I'm going to ask one morequestion.

And it's related to a question that I post to you in the book because whether it's looking at some of your really decisions as a child or the toughness that you showed in athletics or doing what other people might consider risky by trying to create your own category in many different worlds or having that second conversation with yourdad.

I think there's a quote that really exemplifiesyou.

And it's actually a quote that you gave me in thebook.

And it was in answering thequestion, if you could have a giant billboard anywhere with anything onit, what would it say andwhy?

And it beginswith, God willnot.

Could you give us thatquote,please, and explain itsimportance?

Oh,baby. God will not have his work made manifest bycowards.

Ralph Waldo Emerson is my favoritequote.

I literally have it on my dressingroom, put on the wall in giant letters because fear begets morefear.

But courage just begets morecourage.

And you don't even get to be born unless your mother has the courage to haveyou.

Any greatthing,any, just from literally creating a business to makingart, it takes thiscourage.

It takes this willingness to be lookedat, to bejudged.

You have to face down your fears and you have to step outside andgo.

And it helped me to just lay out what I was afraidof.

Because that's the bigthing.

You have to askyourself, what are you scaredof?

And then you have toattack.

You have to literally have to layout.

Iremember, now you tell about your swimmingexperience.

I wasalways, youknow, when you grow up in theghetto, they kick you intopool.

And these are not goodexperiences,okay?

Andso, youknow, we didn't grow up on a nice pool in the beach and the wholething.

It was like the hood and it'slike, ohman, it's notgood.

So my first experience washorrifying.

I almostdrowned. And so that one of my fears wasswimming.

And I remember when I had a house with a pool and I remember going in the backyard and just diving into the deep end over and overagain.

If you get rid of the fear and it's weird because you get near the edge and yougo,man, you'reright.

You have to beatit. So I was just jumping and just keep jumping in and keep jumping in until you're not afraidanymore.

Becauseremember, it's a confidencegame.

And thatquote, just when you think about anything that's made and anything that'screated, anything that you see that you admire takes so much courage because people are going to judgeit.

People are going to sigh thatsucks.

Especially in the age of theinternet.

Who arewe? Everybody's coming in and chipping in with whatever they have to say and you have to be willing and you have to bevulnerable.

This is why vulnerability is actually strength because the vulnerability is part ofcourage.

You have to be willing to let people judge yourstuff.

You have to be willing to let people hear yoursong, willing to let people hear yousing.

And it's so wild because I'll neverforget.

I've got a story forthat.

The first time I ever got amovie, it was a bigmovie.

It was ArnoldSchwarzenegger.

It was called The SixthDay.

And I'll neverforget. I'mlike, I thought it was going to be like a quickrole.

It turned out to be a big job that worked six months in Vancouver and I'mlike, oh myGod.

And the first day I was onset.

I had to say thisline, AdamGibson, come withus.

Please come withus. And I remember theysaid,action, and I walked up on the Arnold and I waslike, AdamGibson, we need you to come withus.

And he turned and looked at me and I waslike,oh.

I waslike, never does ArnoldSchwarzenegger.

And Imean, lightningfast.

Everything went through my head like you don't deserve to behere.

We're just a dump footballplayer.

You are afarce. These people are going to figure youout.

You arefake. You're afoamy.

You fooledeverybody. It's awrap.

They're going to find out and they're going to kick you out ofhere.

That's a lightningfast.

And then something was wrong with thecamera.

They werelike,oh, you knowwhat?

We got a problem with the lights and we got to give us fiveminutes.

This is all splitsecond.

And I remember because Ifroze.

I know Ifroze. I remember I just went to the side and I waslike,Terry, you survivedNFL.

Do you wantto, and after I leftNFL, I was sweepingfloors.

I was doingsecurity. And then I went toacting.

And Isaid, do you want to go back to sweepingfloors?

Do you want to go back tosecurity?

It'slike,man, going down the city'slines,man.

And I literally was cussing myselfout.

It waslike,yo, get someguts,dude.

And I walked back in there and they werelike,actually, I'mlike, AdamGibson, youknow?

And,wait, and Arnold waslike, this guy likes hisenergy.

He's got a lotof, it'samazing.

I likehim. It'sreally, let me tell you afterthat, Ilearn, goin.

Russian.Russian. There's never been atime.

I've been actingfor, for almost 20 years and it's never been atime.

And that's why I want to demystify thisthing.

I've never been a time that I don't have those bubbles right beforeaction.

Never.Ever. It's alwaysthere.

Don't let anybody trick you and actlike,oh,man, I'mgood.

If they're thatgood, they don'tcare.

I'm trying to tellyou, if youcare, you're going to always benervous.

You're going to always have to faceit.

But when you walkin, turn into a morage and it just starts todisappear.

I remember on a set of whitechicks.

Itdisappears. I remember I was rolling and I'mkidding, I waslike, you got anynotes,Keaton?

You waslike,man, do what youdo,man.

And I remember justflowing.

And Imean, people whoknow, and a lot of people here who understandit, if you've ever been in theflow, it'samazing.

Like there's a time when all the writing justcomes, the lines justcome, the job issmooth.

You'relike,man, I could do this allday.

That's by practicing facing thatfear,fear,fear, fear just goingin, goingin, going intoyou, hit thatzone.

Man, it's ahigh, like you willnever,ever, everexperience.

I encourageeveryone. And I'm not here to bedemystified.

You will benervous.Always.

But goanyway. It'sbeautiful.

TerryCruz. Allright. Just a quick thanks to one of our sponsors and we'll be right back to theshow.

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And now RichardCosh, renowned investor and best selling author of books on business and personalsuccess, including the 8020 principle and his most recent book on reasonable success and how to achieveit.

You can find Richard on Twitter at RichardK.O.C.H.

8020.Richard, welcome to theshow.

I'm so thrilled to haveyou.

It is in somerespects, decades overdue and we were just chatting before clickingrecord.

Could you please get us started with wines andspirits?

It's a great pleasure to be talking to youTim.

Thank you very much for all your generosity in giving me quotes to put on books and things likethat.

That's very muchpre-shared.

I'm not sure that this is a great place tostart, but I was just thinking that you had reinvented the talkshow.

And when I was 17 and I had the first job inWindsor, England as a van driver for a firm of wines and spiritmerchants, they were called lovey bonds and they were probably the most old fashioned wine and spirit retail you could possiblyimagine.

And one of the things which they did was deliver wine and spirits to quite a distinguished bunch of peopleactually.

I used to drive into Windsor Castle and give theBrigadier, his gin and so on and soforth.

But one of the other people that I used to visit was MichaelParkinson.

And MichaelParkinson, as youknow, was a very successful sports writer and broadcaster who then branched out into doing chatshows.

And some of the stuff which he did wasmarvelous.

I saw a clip the other day of him talking to David Bowie and it wasfantastic.

They were really enjoying themselves and they were moving very smartly from point topoint.

And that made me think about you because I think you reinvented the chat show on podcasts and it's justamazing.

Soanyway, that's my non-story to startwith.

Well, give me time to disappoint and I appreciate the kind words and I should also say for peoplelistening, those people who perhaps have read the various policies on my website will note or received one in my auto response viaemail.

People know that I say I don't give quotes forbooks, I don't doforwards, I don't do and I have a very long list of do notdo's.

The reason that I've made an exception is that if anyone else fits thisbill, feel free to reach out because I know it's going to be approximatelyzero.

If you've written a book like several of your books that have traveled with me for more than 10 years from place to place that sit on myshelves, face out as areminder, feel free to reach out but that is going to be a very small numberindeed.

And perhaps we couldstart, this isn't exactly thebeginning, so tospeak, but with the Bodleian Library and if you could explain what that is and take us into context fromthere, I think that would behelpful.

The Bodleian Library is a fantastically beautiful building inOxford, very close to the College of Isaac and I used to sit in there in the stacks and look out of the window whenever Icould.

But the great thing about it was it had almost any book that you could possiblyimagine.

And one day I decided that I wanted to read a book which I had read about called The Course of Economic Theory but it was in French written by our oldfriend, Vilfredo Parato and it was published in Lossurne in I think 1896 and97.

And I have no idea at all Tim why I wanted to read this book because it wasn't part of my coursework or anything like that but that was a book in which I discovered the 8020 Principle and he didn't call it the 8020 Principle as you know but nevertheless he had all these algebraic equations which showed the wealth distribution in England in the 17thcentury, 18thcentury, 19th century and also inItaly,France,Switzerland, other countries over those periods oftime.

And what he found was that there was the same pattern of distribution of wealth against the population and a remarkably similar chart could be drawn from the algebra for any of those countries or any time in order to show what proportion of wealth was owned and of course it was a very small number of people or proportion of people who actually owned most of the wealth or earned most of themoney.

So you might say well that's very arcane and it's not particularly interesting but I instantly thought I can usethis, I can use this to cheat in my examinations without actuallycheating.

And so what I did was to say well I do know that I'm going to have to write 11papers, three hours long each at the end of my time inOxford.

The Oxford degree is entirely determined by the finalexaminations.

There's no assessment current or there are no previous examinations atall.

So it's avery, very importantthing.

But I had noted that on sample papers there were something like 50 questions or whatever and it's impossible to imagine that I could actually research or do work on 50 questions times11.

So I thought well maybe if this80, 20 principle applies there will be some questions which are asked much morefrequently.

And lo and behold I got the papers for the history exams for the last 20 years and it was absolutelytrue.

There was always a question about the FrenchRevolution.

There was usually a question about the RussianRevolution.

There was always a question about the origins of the causes of the First World War and so on and soforth.

So I said to myself well yeah I don't need to study veryextensively.

You could write the answers to three or fourquestions, it was your choice during threehours.

What I said was I will research sixsubjects, no more for each paper and I will be wordperfect, I will have very obscurequotes, I will use foreign languages that I don't actuallyunderstand.

Absolutely wordperfect.

And if I do that I don't have to do much work and I will get a top degree and lo and behold that is exactly what happened and then I thought to myselfafterwards, gosh this man for eight I was quite ontosomething.

So that was my introduction to the 80 20principle, perhaps I'll never look back in somesenses.

You know what is well to me so funny about that in part is that I did something verysimilar.

I just was not aware of Pareto at this point but when I was doing my undergrad I about halfway through began asking teachers to give them some degree of sort of plausible deniability because I was hesitant to ask outright what is going to be on the exam because they're not supposed to answer such a question but I would ask teachers or I would say rather I know I need to study everything that we've covered for the exam but if there were any particular areas you think I should focuson, would you mind telling me and they were veryforthcoming.

So it ended up having a very similar effect although I definitely was pleased that in most cases not everything hinged on finalexams.

I think I probably would have been crushed under the sort of psychological intimidation of that type of sink or swimsetup.

Yeah I was quite nervous in my exams but I found a solution to that at least in the afternoon's was after the morning paper I would go down the pub and have a couple of points of beer and I found that calm my nose and it was notable that I got better results in the afternoon than I did in themorning.

Well that could be in one of your next books if you haven't covered academic hygiene andpreparation.

If we're looking at formative periods let's just say high school college university however we want to labelit.

I'm looking at notes as I do in these types of conversations from an interview you did with Boeing Boeing a long time ago and I'll let that I know verywell.

And one of the questions posed was what advice would you give to a smart kid who's now in high school and you can feel free to fact check this incorrect but the answer I'm just going to read briefly and then I have a followup.

Discover what you're best at doing and enjoy that is different from what all of your peers are doing that requires relatively little effort from you then put huge effort into honing that skill so that it becomes monstrously greater than anyone else's keep demanding that each year you make your peculiar talent more peculiar and much more potent use the skill to make the world a more interestingplace.

Don't care about making money if you have a fantastically different and useful skill everything else you want willfollow.

So I have two questions accurate or not accurate quote secondly what is your peculiar talent and how did you discoverit?

Well it's totally accurate and it's very easy to give advice and perhaps less easy to originate the advice or at least to exemplify the advice I was always very very interested in history because it enabled me to develop a certain skill in analysis with non quantitative analysis I'm absolutely hopeless at numbers but in terms of understanding structures in terms of understanding trends in terms of really getting to grips with what might have happened that other people had not noticed then that's what I did and you know I came up with some pretty wacky ideas during my time studying history but I thought that they were plausible and the examiners must have thought so I mean for example it seemed to me that Hitler had been copied pretty much what Lenin and Stalin had done so of course Hitler was great and anti-communist and they were great anti-nances but he actually had followed Lenin's policy for example of a one party state which no one before Lenin had really done and of death camps for dissidents and enemies of the regime again no one had really done that certainly not on such a ruthless scale as Lenin and later Stalin did so it was my theory that Hitler had based his policy on the Bolsheviks and that's just a little example I'm not absolutely sure that's true but it's plausible and it's sort of trying to winkle out things that might be true which are interesting and important but which no one else has spotted that's what I try and do that's what I enjoy doing so you mentioned hopeless with numbers now or maybe I injected the hopeless but you were very self-deprecating with respect to numbers and numeracy and yet people would look at your track record of investing as an example and ask how can that possibly be the case so again in my notes I have Betfair here which I would love for you to explain but it adds that you couldn't use their website now please explain okay well the way of reconciling those two apparently different things I do have a very good track record thank god I've been very lucky or very fortunate at least in my investments but it's not based on being an analyst in the conventional sense I got fired from the Boston consulting group because I was no good at doing financial and market analysis despite the fact that I was quite good at doing some other things which they didn't value very much it is true that I'm not particularly numerous but I believe that's a skill which is you know readily available from other people and as far as Betfair is concerned I based my investment as indeed all my investments are based on the star principle which was something that the Boston consulting group themselves had invented way back in the 1960s and this is the old chart of the dogs stars question marks and cash cows so I never make an investment unless the business is a star business or has the potential to be a star business and BCG's definition my definition of a star business is that market leader in a niche a defensible niche where you can protect it against other people other competitors and a high market growth rate BCG said more than 10 percent I've really tried to aim at more than 30 percent and the thing about Betfair was a friend of mine in 2001 came along and said we've started this betting company and I'm a gambler I like gambling and we think it's completely different from anything else because it's not a bookmaker and I said well what do you mean and you said well a bookmaker is someone who makes a book and basically offers odds to punters gamblers who might want to bet on it but Betfair doesn't do that what it does is it started an electronic market which enables people to either act as the bookmaker or to act as a punter so you can go on to the site and you can see posted up there the odds other people will give and the odds for the punters are vastly better because there's no bookmakers profit now I said well it can't be true because Betfair has to make some money how do they make money what's their business model he said well they have a very small commission which they take and they only take that on winning bets so I said well that sounds like a fantastic idea so what's the problem and he said well do you want the real truth and so I said yeah of course I want Anthony of course I want the real truth what's the problem he said well no venture catalyst no professional financial firm would invest in this company when they first had their round they started about six months previous to this and he said then there was from their point of view a very good reason for that which was none of the managers in the business had any experience I said oh you mean they didn't have experience in the industry he said no no they don't have experience in the industry but well one of them used to be a professional gambler but that's not experience which venture capitalists would recognize as being unhappable he said no they never run anything and I said to me so Anthony you're telling me that I should put money into a business that has people running it they've never run anything else he said well one of them used to be a financial debt person at Morgan Stanley and he was making you know he was trading loans and doing that sort of stuff and he said you know trading loans is not a million miles away from running a betting exchange but the truth was that they really were all sports enthusiasts or gambling enthusiasts and none of them had any experience of management which explained why it was only friends and family who'd been able to invest in or been willing to invest in this particular company so I said to Anthony well what's the attraction he said it's a star business Richard I'm not Anthony had worked for me inL.E.K.

and also in a company we set up afterL.E.K.

called strategy ventures and so he knew that I knew that the way to make money in investing in small businesses was to actually invest in something which could be or was a star business well even though it was tiny and even though it was losing money it was clear but bet there was indeed a star business and why was it clear because no one else was doing what they were doing their business model was completely different their cost structure was completely different their customers were completely different all of their customers were sophisticated and quite large all of them but most of them were sophisticated and quite large gamblets and so they didn't compete with ladbrooks or corals the toe to the other British bookmakers and in fact they didn't compete with anybody because there was nobody there's actually another firm set up originally in San Francisco called Flutter it had a slightly different business model so it had no competition it had infinite relative market share so I said well that's fantastic so he said well let me give you the website you can go on to see how it works well unfortunately I couldn't because I didn't know how to work the website and I went along and talked to the people and just tried to make sure that it was indeed a star business and that I thought that you know it could actually get some professional management later on and so after an hour I decided to invest 1.5 million pounds in that business and they were quite shocked by that they said well are you sure and I explained to them what a star business was and how it was wonderful and how they should be very pleased to be having a star business and all the rest of it but they were quite taken aback at that and they had been trying to raise money again from institutions that all said no and the mates that they had to put the money in originally you know didn't want to put more money in particularly as it used that money much more quickly than expected the reason it had used the money much more quickly than expected was that the growth was fantastic it was a tiny tiny tiny business but it was growing at40%50% even60% a month and I said well the other thing which I believe in the part from the star principle is compound growth rate and so I looked at their financial projections and I thought they're incredibly conservative considering the market growth rate and so I invested and I went on to the board and about four years later the Chaps had an away day at which I said how wonderful star businesses were and so on and so forth and then I said and actually last week I decided it was time I actually learned how to use the website that you have and they all fell about laughing they thought I was joking and I said no I did I think it's great great website and they said to me well how could you possibly have invested in the business without sort of going on to the website and I said well it's a star business and they said I think I went down in their estimation quite considerably as a result of that and of course now I use the website most days I think it's a wonderful website I've sold my shares I'm not advertising the company or anything like that but I ended up making about a hundred million pounds profit out of that investment so that's the power of the star principle so how can someone who's not numerate make money out of what is generally a highly numeric industry well the answer to him is very simple I believe in principles and I believe in the star principle and it works I'm the only investor in the world that does this and I think I'm the only investor in the world of my scale but doesn't employ anyone and that does it on the basis of probably about a day a week of work I do use my personal systems to do some of the work I do use contacts for special particular jobs but you know I don't have any staff and you know when I tell people this they say well your portfolio is x that's I'm I'm believe absolutely unbelievable I said well you know I've only got one question when I invest in business isn't a star business or could it be a star business and once I've invested I want to retain it as a star business or make it more dominant and the only question is how do you do that and so life is very simple I'm laughing because we could have five hours and I'm going to run out of time before I run out of questions so let's bookmark a few things we're going to come back to knowledge versus principles okay so we'll bookmark that I want to just make it clear at least from Wikipedia and Wikipedia of course is subject to debate but often an accurate and Betfair is described as the world's largest online betting exchange just for for those who are looking for some type of perspective and are not familiar with the company and you had mentioned gambling and liking gambling I want to dig into that because it strikes me that you may enjoy gambling but you're also very good at placing bets and those are not necessarily the same thing if we think about the psychological dynamics drivers and criteria involved and I want to explain also to people listening that investing is a wonderful metaphor and framework for exploring principles that apply elsewhere thinking processes that apply elsewhere or perhaps even everywhere so my question for you is very specific 1.5 million how did you decide on that bet sizing that was all the money I had wow okay so you just pushed in all your chips yeah they're all my liquid assets you know and this is quite typical for me I mean I want to be full and it's something I'm talking about later which is that I one of the things which is quite absurd about me is that I actually don't have very much money to spend and I don't really mind that I tend to when I'm in London for example in normal circumstances I would take public transport I would go on the bus or the tube I would cycle if I possibly could but I wouldn't take a taxi or even an Uber unless it was absolutely you know it was desperately short of time and I don't believe in being desperately short of time I always make sure I have plenty of time because I don't want to be rushed and because I can always use the time to think or whatever so how do I just decide on the bet size is you know it's just a matter of what I have available if I think it's a good bet I hate some time I don't make money out of my horse racing gambling but that is purely an entertainment and I don't place particularly large bets relative to my net worth either you know if I can go for 18 months without having to put any more money in my account I'm very happy it's a different kind of bet I mean gambling conventional gambling whether it's poker or it's the root casino or it's horse racing or it's betting on tennis or baseball or football or anything like that I think there are people who make money at it but they usually either have some inside information or they are incredibly skilled at judging probabilities and they often have you know even research I know someone who had 50 employees tracking football in order to see whether the odds on particular football matches were right or not and he would take positions and he made a lot of money out of that consistently every year but you know someone like me who doesn't know a lot about football knows nothing about football doesn't know a great deal about horse racing is it a certain disadvantage I just I'd have a particular method which I use which is based on looking not where the horse came in the race but on the time relative to other times and all when it's calculated on the racing post website it's called something called top speed and whenever I make a lot of money in horse racing it's because top speed has shown me a horse which is not far away from the favorite but might be a odds of 30 to one or one in one case it was even 330 to one that's unusual but betting on companies is fantastic because if you understand how important relative market shareers and if you understand whether or not a company is able to segment itself and therefore have a defense school position in particular segment like Betfair then it's absolutely fantastic because you can you know you can basically invest and know that you might lose your money but overall you're going to do very well out of that and you know I have very rarely lost money on star businesses the cases where I've lost money is where I thought something might become a star business and it wasn't does that answer your question it does and I have a whole handful more to follow up so you wrote an entire book on this the Star Principle 2008 that was published in 2008 working investing in star businesses that was the focus when you say segment itself businesses that can segment itself and you mentioned Betfair what does segmenting itself mean it means that it defines the market in a way that nobody else has done or that very few people do and therefore that it's possible to become the market leader in it so Betfair is a very good example of that it's a betting exchange which is an electronic market where people can post bets on either side by or sell it doesn't take principal positions as bookmakers do so it's once it's overheds a cover it can't lose money and it competes against other betting exchanges not against the big bookmakers because anyone who's a big gambler isn't going to go to Ladbrook's or Corals or the Toad's or Paddy Power or any of those conventional bookmakers because they know that the bookmaker typically takes out about10% on each event and Betfair takes out maybe2% but that's only half a time if you win half a time and lose half a time so it's1% plays10% and therefore it means that the customer profile is completely different and the way that the cost structure operates is completely different so it's a separate business segment because it's not competing with conventional betting firms so it means that a company has to do something differently it either has to be have a price advantage and therefore a cost advantage in the way that Betfair does or it has to offer something which is so attractive that people will pay even if it's the same price they will actually go there so the three things that you want to do if you want to what I call propositions simplify are you have to have something which is very useful you have to have something which is easy to use and preferably you want something which is aesthetically pleasing which gratifies you as a joy to use and if you think about any of the Apple devices then they created their own segments with the iPod and the iPad and the iPhone and other devices because it was different from conventional competition even the Mac really didn't compete head-to-head with IBM and anything where you can get a big price premium for example30% plus as Apple has been able to do on all of its devices at least at the start you have something which is a separate segment because it's not competing against the low cost competitor and if you are going to be the low cost competitor you want to be low cost in a segment which is different from the other segments because otherwise the existing large companies will eat you for breakfast you are unconventional in many different respects and I'd like to ask you a personal question you can feel free to decline to answer this question but I'm very curious as to what your investment portfolio looks like what principles govern its composition because you had mentioned that you're quite happy to have small amounts of liquid assets cash available so what does your portfolio look like to the extent that you're comfortable discussing it what are the principles that govern its composition well it's pretty much an illustration of the 8020 principle but more so I suppose my most valuable single I've got about 40 assets companies in which I've invested and the most valuable company in the portfolio constitutes about the half the total value and another one constitutes about a quarter of the total value and so in a way that also simplifies my life because if I take care of those two particular assets and know that they're going to do well or think that they're going to do well then I can be relatively relaxed I'm quite happy to increase my share in companies once I know or think I know and I'm not infallible that they are going to be successful so for example the company that is my largest single investment I started off with a relatively modest investment that might have had about2% of the company and I'm now up to60% of the company and basically what I'm doing is by my shares from the existing shareholders whenever there is an opportunity to make an offer for shares which is when I've got some money so that's the principle I don't have any rules on industry I don't care what industry it's in I don't really care very much what the management is like because the management doesn't perform management will eventually get replaced I don't really care where it is as long as it's not well as long as it's in Europe because I think I understand European markets I won't invest in the US because competition is too great and also because I don't like the IRS and also I don't know anything about American investment so it's basically a European portfolio industry irrelevant and I don't care about concentration in fact I'd rather like concentration let's go back to getting fired just to warm up the conversation so what happened after you were fired and could you actually tell us more about the day that you were fired what was the conversation what was that experience like and then what happened after you were fired well it was a slow firing and in fact it was a very gentle firing BCG like McKinsey McKinsey invented the phrase up or out and McKinsey they would say that after 3 years you would be assessed and if you were really good at their business you would get promoted and if you weren't you'd be asked to leave but they would do in a very very nice way because they were sort of dividing the sheep and the goats the sheep were the people who were good enough for McKinsey and the goats were people who are good enough to be McKinsey clients so that was there they're philosophy and they were terribly nice to the people but in fact it was kind of like it was a form of I don't know it was a form of sort of psychological one-upmanship because the people who left generally weren't as bright as the other people it wasn't that they could do things that the McKinsey people couldn't do it's that they weren't as bright in terms of the strategy of a business and analysis and so on and so forth so that worked extremely well BCG did not have quite as rigid a formula as McKinsey but they did have this policy but if after three or four years you had not been made from a consultant into a manager the consultant was a typical entry level for someone who'd been to business school you'd be pretty much an anomaly would be the way that they would probably put it and therefore you might start thinking about what you wanted to do and so I had a number of those conversations with people but I said to him look you're dead wrong this was me this is me in my arrogant youth and maybe I haven't got rid of the arrogance altogether I said look I'm no good at analysis but I can charm the clients I can talk to the clients I'm quite articulate and I can understand what the issues are the strategic issues and I can relate those to the clients so you know I might not be very good at being a consultant I might not even be very good at being a manager but why don't you make me a vice president because I could actually do rather well and they would torture they would say rich you know we have to have a hierarchy and I said you know ex Adrian for example Adrian's now a vice president we all know that he was a pretty good consultant but he wasn't a terribly good manager because he couldn't command the analysis and that's the heart of you know what BCG does so he had to rely on other people to do it but now he's a vice president he's certainly a lot of business very successfully and helping clients so I'm like Adrian basically and they would again torture a bit but eventually a guy called very nice guy called Phil Hume is laser-started computer center and make quite a lot of money out of computer center sat me down and said Richard you know you are running out of road a bit and I said well look I got a fantastic assessment from Roy Barbies the other day you know he said how much the clients let me say yes rich we know that but basically you can't do what is really our power on me so you maybe you sort of think about looking around and I came out from that meeting thinking is he right is he right about this or am I right and I thought to myself well maybe he's right so I actually then very quickly went to other consulting firms to McKinsey and toBain & Company to see whether they say something Richard just for a second that is for people who don't have any context on management consulting when you say McKinsey when you talk about Boston Consulting Group when you talk aboutBain & Company just as a point of reference for folks who may not be familiar with this industry when I was studying at Princeton there are exactly two industries that recruited heavily that you had the investment banks you'd Goldman Sachs and a handful like that and then you had what were considered the elite of the elite of management consulting and that included McKinsey BCG in other words Boston Consulting GroupBain & Company and so on so these are the most prestigious names in the world of management or strategy consulting I just wanted to add that as a bit of background yeah I'm sorry I will assume everyone knows and they don't I mean it's a very when I was doing it was a very obscure industry and now it's less obscure but it's still pretty obscure anyway I went to McKinsey they said no you're a bright guy but we don't think you should be doing this management consulting stuff because you want to make decisions rather than advice and I said yeah that's probably trueBain & Company I'll come back to in a second I then said well maybe I should be a headhunter and I was actually approached by firm headhunter some of whom you meet personally and so I went off to see Egon Zender in Zurich with a view to becoming an Egon Zender was the leading at that time it probably still is the leading European headhunter just a footnote there for people headhunting means recruiting right very high level and taking very large amounts of money from the top so anyway I talked to Egon Zender and and he offered me a job on the spot and I it's very nearly accepted on the spot but when I sort of examined my heart I came back to the conclusion that I thought BCG was wrong and that I might not suit BCG but I thought you know maybe I can get the job in another consulting firm there happened to be another individual who had left the Boston Consulting Group and joinedBain & Company a guy who rejoiced in the name of Floyd Bradley III you might tell he was an American very very nice guy quite smart guy anyway so he I arranged to have a drink with him and said I'm not too happy with BCG I don't think they're moving me on fast enough how aboutBain & Company do you think that they would be interesting yes they're always looking for people that they find it quite difficult to recruit people at this stage and so I said fine I'll go along talk to them so I went along and talk to the head of the London office and he said we'll send you off to Boston now this was very interesting for me it was my one chance basically to stay in the industry that I wanted to stay in the only problem withBain & Company was it had a reputation for being an extremely hierarchical strict controlled almost mystical outfit where you had to do what you were told whereas BCG actually was a pretty freewheeling entrepreneurial sort of firm reflecting the difference in character between the guy who had started BCG Bruce Henderson and the guy who runs or ran ratherBain & Company I should say that he's dead now so I can't be sued for libel or slander or whatever it is and neither can you although I have the utmost respect for Bill Bain is not come on and say it in the second so they sent me off to Boston so there I was I had a you know I four o'clock appointment with to see Bill Bain in the afternoon so I got off the plane got a cab to their off Boston office turned up at the desk and said I'm here to see Mr Bain at four o'clock and the woman sort of looked a bit confused and numerous and basically what had happened was that the someone in the London office had not told the Boston people or they'd given me a ticket to go and see him and given me an appointment time apparently it had not somehow not got into the agenda of Mr Bain so they said come back following morning so I went back following morning and there I was you know I went through the offices they were the offices were quite remarkable beautiful offices but the associates the consultants and the researchers were all hunched together it was not quite a sweatshop it was very nice sweatshop but you could see that they were either expanding very fast or very tight on the rental cost and then I went into Bill Bain's office and it was palatial you know it was structural or a baseball trophies and insignia and paraphernalia of all sorts and he was sitting behind this large desk and got up very graciously to meet me and said do you want anything to drink I said no I don't want anything thank you and then he started talking to me well it was very fortunate for me because I didn't find out until afterwards but it turned out that Bill Bain was a historian that was his undergraduate degree and in fact he had spent a year doing postgraduate research which he eventually gave up because he thought it was terribly boring and because he got offered a better job as the development director of Vanderbilt University but during a course of that interview Bill Bain said something and I thought well I want to ask him a question but he was in full flood so I let him carry on talking until probably about 20 minutes afterwards and then I went back to him and said you know if I got it rightMr.

Bain you said earlier such and such and such and such and I want to ask you a question about that blah blah blah and he said you're incredibly unusual and I said what and he said well you're a very good listener and not many people are good listeners and I wasn't aware that I was good listener and maybe it was just I was so desperate to get a job that actually I was actually listening but I was also very curious about the business because right at the start when I had joined BCG I thought what a wonderful industry this is it requires no working capital and basically they charge huge fees they don't pay people a hell of a lot of money eventually they give them bonuses which is where the working capital comes from the difference between the standard pay and the markup which is some of which is eventually rebated to the professionals involved and it's expanding very very fast and they've got this great model called the growth share matrix because it's got market growth on one axis and it's got the relative market share on the other so they call the growth share matrix but it's more popularly known as the Boston box and it's this thing which has cash cows dogs question marks and stars the one thing I just wanted to say also as an observation of friends who have come out of McKinsey is that it seems that two by two matrices are very popular for organizing thought yes and in fact McKinsey went one better they developed an imitation of the Boston box which was a three by three matrix but as always economy is everything and it wasn't as good and it isn't as good in my humble opinion anyway the end of the story is that Bill was quite taken with me and I quite it's quite surprised and he said I want you to come and talk to Ralph Willard one of the other founders ofBain & Company and Ralph was a very jolly chap and we got on very well and so on and so forth so they they actually offered me a job and then I said to them well Ralph said how much do you want to be paid and I said well I'm earning such and such a Boston consultant group but obviously if I'm going to take a step like this I'm150% increase50% that's ridiculous and I said well you know maybe you can just make me an advance for for joining and not consolidate it into the salary but you know at that stage I was feeling confident that they wanted me so I sort of raised the stakes a little bit it's like that at the beginning of the day I was totally desperate and if they'd offered me a job after an hour I wouldn't have cared what they were going to pay but anyway they did eventually pay me quite a large amount of money to join and at the same time I then went back to BCG and said you know I think you're making a mistake but if you want me to leave you know I've got all this money which I'm due in a few months time as a bonus and rest and please can I have that and to my surprise they said yes okay I mean they were so desperate to get rid of me that they agreed so I made quite a bit of money from BCG and from Baining Company so it was quite apart from the fact that the previous two or three years have been very very miserable I redoubled my efforts to succeed at BCG I worked 80 hours a week I got fat in the face for meeting fast food at night I basically neglected my personal relationship I stopped exercising it was a complete disaster and if I was to give advice to anybody who's in a similar situation or even a less desperate situation I would say if you're not succeeding in a job give up and go somewhere else where you know your talents can be better appreciated or your talents are more suited to what that phone does so I just Tim I just could not admit failure this was the thing you know I just to me personal success was absolutely essential to my happiness and it affected myself image and arrest and I could not believe that these very intelligent people at BCG couldn't see the things that I could do and it would have been far better for me to say well you know they just have a different business model analysis quantitative heavy duty stuff is their bag and you know it's not something I can do particularly well and so please give up and stop and you know decide whether you want to be in the industry or decide if you do want to be in the industry go to a competitor so the long and short of that story is it worked out extremely well in the end but it was absolutely bullsaking very unpleasant I wanted my pound of flesh at the end from all the suffering I've gone through what did Ben and company appreciate about you or utilize in you that was not utilized or appreciated at BCG oh it was it's very simple to answer that because I've always been interested in what I call the theology of business and by that I mean the business model that a particular firm has and BCG and Bony Company are very very interesting to me and this comes back to your first question about what am I good at doing I actually did analyze in my mind not quantitatively so business model that BCG had and the business model that Bony Company had and they used the same concepts they were all used both using the the gross share matrix of Boston box etc which incidentally Bill Bony had helped to originate so it wasn't really plagiarism and indeed BCG had put the stuff out there in the public domain so it wasn't you know it wasn't doing anything underhand but they were using all BCG's concepts but the firms were completely different and let me try and describe how they were very different BCG as I said before was a very sort of decentralized company and the vice presidents who are in charge of particular clients were sort of almost autonomous profit centers Bruce absolutely believed in the market he was a red tooth capitalist you know he really read in tooth and claw he really believed in competition and so on and so forth so much so that that he divided his firm at one stage and this is quite interesting this before my time but he divided the firm into three different parts and his view was that if one of those firms had developed a slightly different way of doing things or if they were successful or any particular reason then the other firms could learn from that and the market would clear as he was fond of saying and what happened was that he put Bill Bane whom he had hired from Vanderbilt University where he was a development director and met Bill Bane because he was had the begging bowl out as an alumnus of Vanderbilt Bruce's an alumnus and he asked Bruce will you give money to Vanderbilt University and Bruce said no but come to Boston and we'll talk about giving you a job so you know that was kind of like the backstory from that point of view but BCG was very very decentralized and even each individual consultant or all the professionals were actually profit centers they were rewarded at the end of the year not on how well they'd done not on their team performance not on anything really but they're what he called their bill ability which there's a number of hours that they had actually build and incidentally I was probably one of the most billable people because I was willing to work very long hours and because initially at least anyway people wanted me on their teams and if they didn't want me I could even sell my own works I had to be included in the people who were on that but it was very very decentralized Bane and company on the other hand was a very very controlled and I actually called it Stalinist later on organization where it radiated out from Bill Bill did all the thinking initially and then the trusted vice presidents who included Mitt Romney who was a great guy guy I've got tremendous admiration for and four or five other vice presidents and the former in Bane and company was very very tight and unforgiving which is that they generated all of their business from a relationship with the chief executive or the head of the company sometimes the president or the chairman of the company but usually the chief executive or maybe they were president and chief executive and they would not work for anybody who was not the top dog in the organization so they wouldn't work for you know the head of Europe or they wouldn't work for the head of manufacturing or marketing or any other function but they had a spill which they gave to the chief executive company which wasMr.

Chief Executive we want you to be very successful because if you're very successful we will be very successful we've got this funny little stuff called strategy which really works and we can explain it to but basically you should think of it as a wonderful formula a kind of like a secret source for increasing the market value of your company profits and the market value and if we do the work with your company your share price will double within the first year or so or the first two years anyway and it will continue doubling every few years because we have got a way of making the firm much more valuable and we can describe that but it relies upon you being willing to accept us as equal partners and again this was very very different from the whole of the rest of the industry which was in a way salesman for hire or cabs for hire that you know consultants would do anything as long as they got their daily rate and so on and so forth they didn't really care too much about which firm are working for they would work for competitors and soforth.

Bain and company said we will only work for one company in an industry or later they refined that to a competitive system which was sort of slightly more sophisticated way of saying industry and therefore you know we won't work for your competitors you won't hire our competitors so therefore you'll be giving a monopoly or strategy consulting or any other form of consulting really to Bain and company if you decided to hire them and the way it was incredibly smart yeah very smart and the way which they got clients to him was that they had no website but that wasn't unusual at the time they had no business cards they had no marketing literature and the only way and they were very secretive the only way in which they got business was by personal recommendation of one chief executive to another chief executive and then within that firm once the client had been signed on you know Guinness or Dunham Bradstreet or Baxter Travino or whoever it was they would then have almost a military operation where within each client organization someone from Bain and company would be assigned to work alongside or with nominally for you know the head of manufacturing or the head of a particular product area or however the firm organized itself and they would make sure that they understood what that person was thinking they would help them by gathering this very valuable information which Bain and the company did very very well about competitors and customers and costs of the competitors and they would you know develop a relationship I couldn't believe it when I was told by Bain and company when I joined take the head of manufacturing out to dinner and discuss things with I thought yeah I just last thing I want to do is I have dinner with the head of manufacturing who is a very boring man and it was all part of the job and it was incredibly effective because you know whereas at BCG they they would go away for six months and they come back and give a presentation which was dazzling but then people in the audience that the managers might were free to disagree with what was recommended and cast often did cast out on the credibility of BCG as a result of that rightly or wrongly usually wrongly in Bain and company everything had to be pre-wired so all the work was specified from the top down but it was validated from the bottom up so that once you've done a piece of work you then had to show it to the relatively low level manager and make sure that they agreed with it and if they disagreed they could only disagree about data they couldn't disagree about concepts because we were the kings of concepts we knew relative market share was important and we could explain why we weren't unreasonable but nonetheless when it eventually got to the chief executive and then later to the board it all been pre-wired which meant that everyone had agreed to everything and therefore there was no disagreement and the only discussion which there'd be at the end of the presentation was about what Bain always used to call next steps well let me tell you what next steps were next steps were this is how we're going to make our next million dollars by consulting to you on this issue but of course it was justified because Bain and company was a fantastic machine for getting consensus in organizations and getting consensus about some very radical strategies which might include getting out of half of businesses that they were in selling them or in some way hiding them off or closing them down if they were cash negative and no one would buy them and then making acquisitions to strengthen existing businesses or even to go into new areas where Bain and company would do all the investigation because particularly if it was outside the industry that the company knew about of course they hadn't they had no idea so it was a wonderful machine for getting growth from existing clients and this was what Bill Bain almost used to say I have no idea why everyone's interested in new clients we don't need new clients we should have built in growth from existing clients if we're doing our job correctly if their profits are going up and the market values going up and of course they didn't say no to new clients and they use the existing clients who are satisfied particularly those who sat as non-executive directors outside directors on the boards of other companies to say you know I'd like to show you some a sample of the work which Bain and company has done in our industry and I participated in one of those events in New York where we were working for an information company and we went to present to a board of that information company but one of the people on that board was the chief executive of a scientific company and subsequently they hired Bain and company largely because I think of the recommendation of the chief executive and to a small degree the quality of the dazzling quality of the presentation that I made well as a result of that Bain and company made me a partner nominally a partner vice president whereas I went in as a consultant and that would normally take several years well that happened after 80 months and it was a very interesting conversation with Bill Bain when he told me that I was going to be a partner of the firm and what he said to me was Richard you know I'm going to say something which might surprise you you know we've had our eye on you ever since you came and talked to me blah blah blah and I want you to be one of my partners and I thought you know this is ridiculous I you know I didn't expect this and he said but there is something which we're going to do and I don't think any other firm in the world has ever done this not to my knowledge maybe you can correct me but what they said was we are going to promote you but in only a nine months time and it's a done deal you know there's no question that you'll be one of my partners and I can even give you something to sign and sign something myself but you know if we made you a partner now people might wonder what on earth we were doing in that nine months you've got to behave as though you're already a partner without the authority of being a partner but just through force of personality and through knowing that you are reflecting the Bain way of doing things you will when we actually make the announcement that you are going to be a partner of the firm everyone will say well of course of course rather than say how come that cautious got promoted that's unbelievable so Bill was such a clever man at controlling his organization and he didn't work very hard but he didn't work very long anyway but he gave a great deal of thought to the procedures and to the management of his own company to make sure that everything that happened in Bain and Company had been initiated in one way or another by Bill Bain and make sure that was the thing which was going to make the most money for Bill Bain for Bain and Company and also I'm making it sound as though it's an incidental thing but it was very important it was a whole foundation of it for the client organization it was just a fantastically well-run organization and it grew at40% a year for 20 or 30 years whereas BCG had struggled to grow at20% Bain and Company fell on hard times I think in the late 1980s because they did a leverage buyout but that's another story I'm not going to say any more about Bain andCompany.

Well I'm not going to let you have the hook that easily you said you explained rather what Bill Bain asked of you to behave like a partner even though you won't have the official title and we can't make the announcement until nine months hence in practice what did that look like what changed in your behavior or in what youdid.

Oh it totally changed me it totally changed me for one thing it made me loyal and I was always someone who was on the verge of committing you know self-destructing self-destructing because because I'm a natural rebel I'm a non-conformist I'm very opinionated and almost unemployable and that was the conclusion that everyone eventually came to but you know in BCG I was well known for going off script and I remember one of my appraisals was most of the time Richard he's like a volcano this guy wrote in a formal written assessment and I've still got the assessment most lovely and said he's like a volcano most of the time he's sort of you know working away and there are no rumblings and it's all very smooth but occasionally he irats I'm a volcano and he says something to the client which is not what we want the client to hear and he basically goes off at a tangent or he you know he has his own view about things so when I'm with Richard and talking to the chief executive of the new you know big information company in Holland or whatever I am very nervous I never know what Richard's gonna say inBain & Company I'd have been fired if I if I'd have said my vice president said you know something and I said I grew99.9% of that but here's a slightly different view on the north point one was I'd been out of the door straight away so it was it was a complete contrast so the first difference it made was that I was I felt very loyal to build personally and to the organization which I never really done before I didn't do loyalty I didn't really do teamwork very well so that was the first difference it made the second difference it made was that I decided that I would become much more direct with the people who were working with me if without the same level if they would below me in the organization or even sometimes if they're slightly above me but I did it very nicely and so if I thought they were going in the wrong direction I would say well you know I've been thinking about this Fred and I think there's a better way of doing it than this instead of interviewing the customers in this segment we should interview them in that segment we should ask these questions rather than those questions etc etc so it made me much more it paradoxically to me it made me more diplomatic but it also made me more assertive and so it was great I mean I actually thought gosh they're going to make me a partner and I'm going to be a very successful partner and that's fantastic but it made me feel a little cautious because although Bill Bannon signed his bit of paper in all rest of it I knew that that meant nothing if he wanted to change his mind so I thought were the prizes well within grasp but I feel confident now it gave me confidence so I was able to do now as much more effective as a result of that in fact I was probably more effective when I wasn't a partner than I was when I was because I was I wanted it so much but at the same time I felt it in some ways although nobody knew that I had authority in reality I did and that was a tremendous thing and I don't understand my firms don't do this more broadly it's a fantastic way of encouraging personal development and also of keeping people who might otherwise decide to leave before they're given the nod that actually they are really appreciated and they are going to getpromoted.

I was going to ask you more about LEK which was the consultancy you started which experienced an incredible growth and we may get to that but I want to skip ahead a little bit and I'm going to do that in a foreshadowing fashion by mentioning the 80-20 principle which will come back to in an interview that I have in front of me a separate interview the question is what book has had the single biggest impact on your career and you answer my own book the 80-20 principle because it sold more than a million copies and it's been translated into more than 35 languages it goes on and on about that which we're going to return to and then you say at the end of the answer that many of your books and much of your investing are related to ideas on strategy consulting and you learn those first hand not from books but that you can recommend a book called Perspectives on Strategy edited by Carl Stern and GeorgeStock.

Can you speak to what people might learn in that book and why you have recommendedit?

It's a collection of the early perspectives of the Boston Consulting Group and a perspective was what evangelical group would call attract I suppose it would be something like 500 words maybe a thousand words pretty short it would be snasily presented in the livery of BCG which was a very quite a nice dark green color and it would be mailed to the senior directors of components in America and Britain and then wherever BCG had offices and the very valuable thing about the book is that a lot of the stuff is by Bruce Henderson himself but there's also more modern stuff and it outlines the theory that BCG had in the early days which I think is still entirely valid of competition the experience curve the Boston box the crochet matrix etc and it's just a very very good primer and there are many many books on business strategy including one which I've written but I think this is a very very good thing and it's very easy to read because it was deliberately designed to do that Bruce laid out the principles for the perspectives very clearly which was anything that Achief Executive would be likely to agree with was not argued I mean it was stated and anything that Achief Executive would be likely to disagree with which was quite a lot because BCG was on the mission of saying companies should reduce their costs and reduce their prices steadily whereas the conventional wisdom in business at that time was if you could get a high price stick with it don't work too much about the costs and Bruce had a whole theology around that and it's great because it's a collection of those different perspectives and it's over several years so you get the more modern stuff as well I think it was published in 2000 or something like that so it is difficult to get good books on strategy there's a book by someone called Richard oh god I can't remember his name called good strategy bad strategy he'll come back to me but anyway you type it into Amazon if you want good strategy bad strategy that's actually a very good strategy book very not very nice short strategy book and there's my financial times guide to strategy we're under the small plug to out of print at the moment that I'm producing the fifth edition as we speak at the same time in the same period of time it's strategy bad strategy by Richard Rumelt isn't the web amazing aren't you amazing if you farm on credit I was actually pressing the key using came up with that myself but I don't do that but I'll give away one of my tricks and that is if I'm recording an interview like this I don't use my keyboard I have my phone on silence so that I can tap the screen without making noise to find it very clever well you do that you can have a funky who did that for you but it's very impressive that you do it yourself that's true well it's just for on the spot tap dancing like that earlier in the conversation I made a promise to the listeners and that was in the form of alluding to knowledge versus principles which I think is a perhaps a useful way to you segue to the 80-20 principle and from mergers and inquisitions.com which is a great website the distinction that I've read you drawing is the following what I learned from consulting is exactly what I've been teaching knowledge is great but principles are better principles are ideas that enable you to sort the knowledge helps you to analyze it and get to the essence of the matters as simply and quickly as possible would you like to add anything to why principles are important and the second part of that is how did the 80-20 principle come to be as a book because it was a very much and sort of underground became an underground bestseller so principles anything more that you'd like to add and then where did this book comefrom?

No I think you put it very well I just think there are certain meta principles and I think we're probably only about half a dozen of them for the benefit of myself and the people that I work with and invest with invest in rather it's basically the 80-20 principle and the style principle so if you know what those are then you can look at the business in a way that most people don't look at the business very quickly and see whether there's potential for improvement and we're talking about that in regard to the 80-20 principle and the second though down but how did the book comeabout?

Well again that's quite interesting at least interesting to me which is that I wrote something called the A to Z of management because I had an editor who was currently working at Pearson and later left to start his own firm with another editor there and the editor was called Mark Alan the other editor was called Richard Burton very very skilled guys very nice guys and they were looking to sort of you know try and get something by me published and Mark Alan said to me you've written this thing called the A to Z of management which is basically a paragraph about various different concepts and it covered all the principles I could think of it also covered important theorists in business and it covered anything which was of interest in business and it also covered jargon phrases like you know what did what did people mean by working progress and stuff like that anyway I've written half a page on the 80-20 principle and I went to see Mark Alan one day in his offices in Covent Garden and he said to me Richard I've got a book for you to write I said yeah and he said what about writing a book about the 80-20 principle because you've got this half page on it here and it seems to be quite an important thing you say it's very important and I can understand it's very important so why don't you write a book on that I said Mark I couldn't possibly I couldn't possibly write a book about the 80-20 principle I've said it all in that paragraph and I could maybe pad it out to a page if you really put a gun to my head I could write a chapter but I'm not going to write a whole bloody book about this because there isn't anything more to say and he said well I'm not so sure about that then he decided that he would go off and start this other publishing company so he wasn't interested in me doing it for them and they had not gotten so I was organized so I went to see a guy called Nicholas Breely who was the publisher of the eponymous firm Nicholas Breely and very very very very nice man but incredibly smart guy and I'd written a book for him called Managing Without Management which was a title or cheesed yesterday it was very clever because it basically said managing a particular middle managing was a complete waste of time and so you could manage without it managing without management and the book wasn't a huge success but it sold I don't know 20,000 copies which was good enough for him around Nicholas Breely at that time and I went to see him about another book shortly after I'd had the conversation with Mark Allen and he said do you have another book in mind I said well not really but this sort of idea that someone's given me and you know they've got first dibs on the publishing it if I could ever write a book about it but I don't think I could write a book about it and then I described him what the 820 Prince for was and honestly I didn't take more than about 60 seconds because there wasn't much to say it's fine as I was concerned and he said the hairs on the back of my head are rising and I said what do you mean I thought he lost the plot and he said that can be a big successful book and I said no I mean you know well maybe but how do I pad it out to a book slate he said go and do some research you know you've mentioned Wilfredo Parater you know read the book again read all the other stuff read all the stuff on the web you know and the truth was that there was a hell of a lot of stuff on the internet and this was back in 1996 but was eventually published in 1997 you know this was a golden beginning of a golden period of the internet and I hired a researcher and said find out everything that's going on on the internet on the 820 Prince with that state I didn't know how to use the internet so she came back and gave me this whole whole whole file and I said Diane is that all about the 820 Prince book and she said yes and I said well maybe I could write a book so anyway I went through it all and the more I went into it the deeper it actually and the more interesting it was and so that's how I ended up writing books so I went back to my original guy my Alan said do you want to publish this book he said no we can't we've left Pearson at the time and we haven't started our firm yet so I went back to Nicholas Brilly and he was very pleased and that you know the first draft I produced he said very politely and I think you don't need to go into some more research and it was pretty hopeless actually but the second draft I took back and he more or less published it as it was because by that stage I worked it through and it was a it was a great thinking exercise for me and the whole point about making a book out of it was that I extended the reach of the principle the basic 820 Prince was I'm sure nearly all your listeners know is that if you look at any particular relationship between sales and another variable or you look at time and another variable you might be interested in it's usually true that there are very few events or data which account for a large majority of the total and so if you look at the profits of any company by customer usually there are a very small number of customers a very small proportion of the total who account for80% of the sales and maybe more than100% of the profits of a company and likewise if you do the same thing for products you're likely to find the same thing this was a well-known economic concept that anyone had been to business school and heard it was generally called the Pareto rule at that time but I wanted to call it the 8020 principle because it was more descriptive a rule to me sounded too deterministic principle sounded to me exactly right so I actually invented I think the 8020 Prince I don't anyone ever called it that beforehand they would call it the 8020 rule or the Pareto rule so the idea seemed to me to be applicable well beyond the sphere that has been used before which was for really analyzing sales and profits and I said well why can't we use the 8020 principle in other areas in people's personal lights for example and so I I become quite fascinated by the connection between time and results and then it was a short hop from that to extend that so basically I would say to people well the hypothesis and the whole thing about the 8020 principle is not but it's a rule but it's an observation so you come up with a hypothesis and then you test whether it's true with data if you possibly can but with you know seeing if you think it really is true if it's something much more subjective and squishy so you actually could then say well it's probably true it may be true that20% of your time generates80% of your useful output so tell me what the most valuable things are that you do and I would say that to people at work and they would have no difficulty at all and say well it was inventing this new product or it was selling a large job to this particular customer or it was writing some copy which is you know very very effective or it was making a website or whatever it was and I would say to them well you know you've got to do more of that and less of the other stuff and I'd also say to people that if you manage to do something which is hugely more valuable than the other stuff and you do that in half a day take the rest of the day off and if you do that for two days take the rest of the week off if you want to you know if you want to carry on working and do even more that's right but as Parkinson said work expands to fill the time available spending expands to fill the budget which you've got to spend it whether it's inside a firm or its your own money I was quite interested incidentally in hearing an observation which one of your other interviewees said about the Wall Street of the well I don't know is it nineteen aces or whatever and basically people got very very used to the money which they'd earned they were hugely overpaid but nevertheless they found ways to use that and that was a big trap for them not for him but for the others because what they did was that they got locked into working for Salomon brothers or Goldman Sachs or whatever and after a time they couldn't really leave because their wives or their own personal tastes had developed to such an extent or their husbands they needed the money you know they had to have half a million dollars a year they couldn't live on less so I was saying to people well let's extend this to your personal life as well so if time is important at work there may be time is important elsewhere and maybe you get most of your happiness from a relatively small proportion of your time what are the periods of time where you actually feel that you are being fulfilled but you feel you don't notice time escaping when you feel that this is great and you wake up and you find that you know the night's gone it might be playing poker it might be talking to friends it might be reading something it's very exciting might be going to see a movie or whatever but one of the times that you are happiest and then just try and multiply those times and then I said well you could apply that to friends let's take the 80-20 hypothesis that you get80% of your relationship satisfaction from20% of people and it's a bit gross in a way but it's very true I found when talking to people that very often they spent time with people they didn't really like very much I mean obviously sometimes it was their boss so you know that was a disaster and they that you all better get a different boss or a different firm but sometimes it was as simple as things like well your spouse actually like these people but you didn't so you ended up spending a lot of time with neighbors or with other people or members of his or her family that you didn't really want to spend and what you really wanted to spend your time on was something different and so I said to people well you know you might want to be a bit more ruthless about that and so there's a chapter on happiness in the book which I was rereading recently and I think it's actually rather good I mean it's taking the sort of rather arcane dusty economic principle and then seeing whether it could apply to other areas of life and I invented the concept of happiness islands well happiness island is part of your life which is sort of not the main part of the life but when you get a huge amount of satisfaction from that and I said well live on those happiness islands and try if possible to make them happiness continents so if it's a particular type of work which you like doing at work then try and get yourself in a position where you're spending all your time doing that sort of work and so on and so forth and I see it in many ways as a kind of amateur version of the flow idea which is that you know that these times according to the guy with the unpronounceable name and he held check check set me I something like that he's written a couple of books about this it all boils down I mean I think that I say 80 20 principles could be written on one page I think that could all be written on one page but but it's a fantastic idea it's a slightly more sophisticated way of saying what I was trying to say and there's stuff on there in money and all rest of it so it was a reinterpretation of the principle to apply it to not just a business but to people's personal lines and to try and say a few things which were really useful and which people could take away which is what you do isn'tit?

It's what I try to do it's what I certainly try to do and for all the reasons you just mentioned and many more this is why the 80 20 principle your book faces cover out on my bookshelf and has for a very very long time as a constant reminder could you share just as examples because it may help people listening some examples of your own happiness islands or achievement islands yes I can do that the things that I really like doing are writing books and making money and making money through investments not through through gambling or anything like that and talking to people I really used to like going to dinner parties in the days when we had dinner parties I really like to go for long walks of people that not many people but a few people that I know we will discover something that we didn't know we knew beforehand those are the things that really are doing something like this podcast is as a flow activity as far as I'm concerned 80 20 activity so it's that sort of stuff it's books it's writing books it's also reading books and it's talking to people and it's also making money through investments do you have any regular or scheduled check-ins or calendar reviews where you assess your life to ensure that you're allocating your time and energy to match what you know to be happiness islands or achievement islands in other words how do you use if you do in any systematic way the 80 20 principle in your life no is the short answer but let me qualify that a little bit I do something which is very unsophisticate but other people have therapists and other people have personal trainers and other people have you know quite elaborate systems for for keeping track of their objectives all their concerns their worries and so on and so forth I have bike rides every day I go for a two hour bike ride in the countryside it is every day unless I'm away or unless I'm in Cape Town I've got a home in Cape Town it's too dangerous to ride a bicycle there but everywhere else I will ride a bicycle and I take pretty much the same route every day very unadventurous I've got two alternative routes in Portugal for example and during those bike rides something will come up sometimes not very often but something will always come up at the very least I will work out what I'm going to do that day because that's one output from a bike ride and that just happens automatically I don't even have to think about it when do you do the bike rides I presume in the morning yeah I don't answer emails I don't look at my phone I do have a cup of tea and sometimes I take the dog for a walk but apart from that it's the bike ride it's wonderful I mean you know I couldn't do without it and in fact when I'm away and I can't ride a bicycle I'm talking to you from Gibraltar for example and I do spend a fair bit of time in Gibraltar where I have an apartment but here it's also too dangerous to ride because the streets are too narrow and there I have to substitute going for a walk or going to the gym but basically a form of exercise which is mindless which is you know not too difficult but enjoyable where I can just relax and let my unconscious mind do whatever it does that's how I do those sort of things and occasionally I go and sit on my fish pond with a notebook and say it's time to think about some reflections I make a point only doing that when I'm in a good mood I never do it when I'm actually feeling slightly down I'm usually in a good mood but it's something to do when you're being expensive rather than you're doubting yourself and I keep those notebooks and very occasionally also I wake up in the middle of the night and I have thought of something that I had not thought of before and then I have a notebook by the bed if it's not by the bed it's in my office which is very close to my bedroom and so I will make a cover to put the light on right my thoughts put the book down put the lights out go to sleep and those thoughts are usually quite seminal they're very very helpful but it all happens automatically I don't have any systems or anything like that do you well I would say I have acute hypergraphia and take copious notes most of which end up never being read and certainly most of which end up being completely unimportant but amongst all the garbage there are occasionally useful things I find journaling very helpful for me different forms it's writing which is important isn't it it's the writing the writing somehow ingrownes it on your mind do you find that that I do find that it's not as you say one may never review the notes I do actually review my notebooks when I'm on a plane and got nothing better to do and no book to read but it isn't that it's actually the process of I think the process of writing journaling is very very very useful but I don't do it every day and I don't do it systematically I just do it when I feel the need to do it I would say I have two different types of journaling and then I'd like to ask you about your time at the pond at a moment and just what that actually looks like and maybe some examples from what you've written down I would say have two types of journaling the first is almost entirely like emptying the garbage bin on a Mac to purge the system it is simply to trap my monkey mind and all of the bullets ricocheting around inside my mind on papers that I can get on with my day in a better fashion the second type is more deliberate and objective driven where I might sit down and very explicitly do an 80-20 analysis of the types that you've been describing looking at how my time is being used look at my calendar to see if actually matches what I say is important to me etc so there are to this two main categories morning pages from Julia Cameron's template would be in the former as an example but when you go to the pond and you sit down and you're in an expansive mood and you journal what does that look like is it stream of consciousness are there certain prompts that you might use could you give us any real-world examples of what has come from those types of sessions yes I mean what I do is I write reflections and I put the date and then I put numbers and then I just start writing and one of the things that comes out from that which came out from that recently was thinking about my investments and I was struck by the fact that I was average to say I was average timing each investment would not be fair but I was spending a lot of time on stuff that actually wasn't at all important and I was doing it partly through interest partly because I've perhaps felt some residual sense of obligation to the people who were managing the firm and other shareholders so you know one of the things which I decided was I was not going to worry about any companies which were outside the first half dozen in terms of the value of those companies unless the value was increasing very fast or had the potential to increase very fast and the other thing which I realized because I'm always almost completely invested was that that was not actually a terribly sensible thing to do and the next time I have a major realization I should be prepared and I should have two or three companies which are new companies in other words investments I have not yet made where they do have the potential to be star businesses or they already are star businesses where I like the people involved and that's a sinner quite known for me that I don't invest in things and this actually like the people and where I relatively small amount of money might conceivably be another bet bet or whatever so it's quite easy for me because I've got a couple of companies that are increasing in value quite fast and I'm reasonably confident that they will continue to do so the next few years to be sort of rather complacent about that but in order to maintain the sort of rate of return that I've had historically and that I want I probably need to find a new bet fair or two or three new bet fairs over the next five years and I should give a bit more attention to trawling for that and talking to my contacts that might conceivably know such companies and actually you know I do get some leads and don't always follow them up very well so yes so it can be useful from that point of view and the other thing which I've realised as a result of journaling in the last few months is that I am too socially isolated I mean I've got some very good friends I don't see them as often as I as I would like and because I have such a really nice life living in very pretty places and living in sunny places generally which is very important for me to be outdoors so that I can play tennis or ride the bicycle or sit on the fish pond or whatever I ought to pay more attention to social interaction and to spending more time with the people that I have spent in joy spending time but they're not close to where I am so those are sort of conclusions which have come up in the last six months and then there are the more philosophical conclusions which you sometimes come to which sometimes you write down for example one of the things which I've learnt in the last few years is I have been far too much of what I call a controller and far too little of what I call an adventurer and my life has always run upon lines of saying I must do this I must achieve this I must make this sort of money I must have this type of job I must do this kind of thing I must start a company and so on and so forth but recently I have realized that the people have most fun in life are more the adventure of type than the controllers in fact to come back something and I hope we can spend a little bit of time on later on which is my new book unreasonable success and how to achieve it there are 20 people who changed the world in my opinion in that book and it is not in the book at all but it's something which I did after the event I divided those very successful people into controllers and adventurers and I was quite surprised to find the 14 of them were actually adventurers in one form or another and only six of them were controllers there were some who were both but you know that was the count taking halves into account and for example one of the people who was a controller in the book was sort of my evil evil successful person which was Vladimir Lenin and you know his life was pretty unpleasant because he was always trying to control other people and it was very uphill struggle and he achieved a great deal in his terms I mean not things I would approve of but he was the founder of practical communism and he basically made communism a success in very large parts of the world a success in the sense that they remained communist and they did develop the countries were perhaps not as fast as they would have developed under a free market system but you know from that point of view he was very very successful but he didn't have much of a great time whereas some of the people who were much more freewheeling for example the freewheeling Bob Dylan or even Otto von Bismarck they had much more fun because they although they were determined to achieve things they relied upon events flowing their way and they just bided their time until the right moment came along and then they then they worked then they basically made a huge effort to control or not not control events but to actually steer them out one of the great quotes which I like is from Bismarck who said man cannot control the flow of events all he can do is ride with them and steer so I you know sometimes you get those sort of kind of philosophical reflections coming up more often though probably on a bike ride and then I might write it down afterwards but I actually find it quite difficult to be as radical as that just sitting down and writing I tend to write you know things which are they're much less important in a way they're less distant let's this was on my my next note to segue into that is the new books let's let's talk about the the Genesis story and this is always interesting to me as someone who occasionally tries to wordsmith things and that is the sort of embarrassment of riches that you know doubt have in terms of possible subjects you could explore so unreasonable success and how to achieve it you've written many books why this book I've always been fascinated by success and I've always been fascinated by the discrepancy really between as I see it the arbitrary nature of success in many ways which is that the people who are successful are not necessarily the people who are most intelligent or most expected to succeed or who deserve it many of the 20 people that I highlight in the book weren't even competent and Winston Churchill was prime example of someone who was a complete failure through most of his career got one thing right which was that Hitler was a threat to the world and that he knew how to deal with Hitler but basically the man was a disaster and he thought the oratory would propel him to become prime minister but you know as Herbert Asquith said it does not matter if you speak with the tongues of men and angels if nobody trusts you it was directed exactly at Churchill so I've always been fascinated by success but the actual genesis of the book as you said came on a train journey I was traveling from Paris with a friend of mine to Leon and I always take a book with me and I didn't have a book a new book and I wanted to read side to book which was Malcolm Glad was Outliers and you probably remember that in Outliers the whole thesis is that success derives from deep experience and long exposure to doing something in a very narrow field and he came up with the idea of the 10,000 hours which is now a trope or something which everyone talks about and he gave a couple of examples very early on in the book which resonate very nicely which is the Beatles for example in 1960 they were just a rather poor high street band and then something happened to them which was that they went off to the strip clubs of Hamburg and they had to play seven days a week eight hours a day and as John Lenin was quoted in the book as saying we couldn't help improve with all of that extra experience and then he quotes the example of Bill Gates who because he went to a private school which unlike the vast majority of schools at the time in America or anywhere else had got computers you know he was able to acquire expertise in coding and how to use computers and that was his sort of you know he got his 10,000 hours in very very quickly so the problem with that thesis is that it's not universally true it certainly applies to Bill Gates it certainly applies to the Beatles and it applies to some other people as well but of the people that I looked at that couldn't explain it and what I did was I took 20 people whose life story is I knew well or some in some cases I knew them personally such as Bruce Henderson Bill Bain who I've talked about before who were very important to me it's usually underrated in terms of the impact which they've had on American and world business in my opinion but I took those people and then I said would it be possible to do what Malcolm Gladwell set out to do and in my opinion did not succeed in doing would it be possible to look at the causes of success for those people and identify things which were common to all 20 people which they all had or did it might be an experience that they had or it might be an attitude which they had or it might be a way that they exploited particular opportunities would it be possible to look at that and say that there are things which are so universally present that if you want to be what I call unreasonably successful which is more than you deserve if you like there's a terrifically successful in changing the world the way you want to work changing it might be a small corner of the world it might be a big corner of the world would it be possible to isolate the reasons for that and I looked at 50 possible reasons for example I looked at would you need to be a high risk taker and the answer was of those 20 people only nine of them actually took very high risk of 20 people in my book only nine of them actually took very high risk so that went away and then I narrowed it down to nine reasons which were universally present in all of the cases and I did not throw people out if they didn't mean the nine requirements so I was quite rigorous with myself I said no and the people that I the players that I took were besides Bill Bernan Bruce Henderson there was Jeff Bezos Otto Van Bismarck Winston Churchill Mary Curie Leonardo Leonardo Da Vinci Walt Disney Bob Dylan Albert Einstein Victor Franco the guy who was shoved into a concentration camp by Hitler but came up the third wave of psychology after Freud and Adela and was probably the first real existential philosopher Bruce Henderson mentioned Steve Jobs John Maynard Keynes who saved the world from fascism and communism perhaps as a result of saying that you didn't have to have very high unemployment and the state could step in and that would be fine under a liberal capitalist regime Lenin I mentioned Madonna Nelson Mandela totally obscure guy who was imprisoned on Robin Eilum 17 years but somehow managed to negotiate a democracy in South Africa J.K Rowling Helena Rubenstein formed the eponymous cosmetics company before anybody else had a cosmetics company the person who I think was most successful of all of my 20 people Paul of Tarsus I don't like calling him Sape Paul because he makes him sound establishment figure he was never an establishment figure he had this vision of the living Christ and he preached that throughout the Roman world but he did something that none of the other followers of Jesus did which is he said following a Jewish customer base if you like is not the way to make a new religion take off we don't want to be a very small sect within Judaism I actually want to convert people in the whole world and therefore what we need to do is to turn you know the sort of Jewish religion that Jesus had been enveloped within and take away from that the things which actually were universally applicable so you know without Paul what eventually emerged as Christianity would never have either achieved lift off nor transcended its Jewish roots so fantastic and successful you know I mean who would have thought that Christianity could actually succeed it was just a miracle Margaret Thatcher was the other was the other one of the 20 people so I came up with these nine things which were common to all of them our rattle through those if you're not definitely feel free to list the nine before we do that if you could just take a moment to define success since many people define success differently could you speak to what that means in the context of unreasonable success is it achieving what they set out to do or is it something else and then what I would love to know what the the nine characteristics are yes it is I think success is very subjective and can only be the person's objectives and I mean people said to me what how on earth can you put Lenin in the book and in fact at one stage I had Hitler in the book and that publishers insisted on it being thrown out because they said the booksellers would never say if you see the book I said well we don't like Hitler I'm favor with it though I said no Hitler's got to go so it's value-free in the sense that it is what they achieved which changed the world the way they wanted to change it whether that was a good thing or a bad thing or an indifferent thing that's unreasonable success in one definition success is a whole continuum as far as I'm concerned and you know I'm not against minor successes at all that absolutely great but when I was really interested in in order to establish the most important causes of major success is what I called unreasonable success and I had four criteria for that you could say that in a word it's undeserved success but that's a little bit unfair firstly it's such success in changing the world it seems unreasonable for one individual to do that I mean we live in a world which is quite collective and which is governed by a culture and constraints which are quite immoverable we think the world's changing very fast but in many ways the world doesn't change very fast and then suddenly it does and what usually is behind that is not a huge number of people doing something it's an individual deciding to do something and managing persuade other people to do that so it's unreasonable in the sense that one person has all of that impact secondly it's success that is unexpected and was not predicted when the individual was young or early in their career so it's kind of you know it's success which comes from nowhere thirdly it's success that goes well beyond what the individual skills and performance seem to warrant and Winston Churchill a jolly good example of that some would say that the British Prime Minister Boris Johnson is an example of that completely disastrous foreign secretary probably completely incompetent in his dealing with the coronavirus but nevertheless I think Maywell go down in history as a great prime minister because he has certain objectives that he wants to achieve like making sure Britain did leave the European Union and maybe doing something about the excessive price of housing in Britain in fact that it's almost impossible for young people to actually buy a house these days and also you know Britain's a hugely over centralised country London centric country and there are left behind areas of Britain which basically is most of the rest but it's not in the south east of Britain and I think Boris Johnson wants to do something about that and if he's able to do that that would be a fantastic achievement I know that you're interested in very practical things so in the book I discuss what do you do if you don't have self-belief and for example one of the things that you can do is to realise it has to be in a specific domain or context and so you could identify that context where you could really change things secondly find a fantasy mentor now this is I think it's quite an interesting and perhaps original concept I was driven to it by studying Bob Dylan because here this guy arrived in New York completely unknown 19 years old but with a fantastically high ambition and one of the things which he did was to seek out Woody Guthrie who was probably the template that he wanted which was Woody Guthrie had been not only a focusing up but also a protestor really and also someone who wrote his own songs and in fact that was very unusual at the time and folk songs were meant to be sort of arose from the folk not from individuals and Guthrie actually changed that he wrote a lot of the original songs and Dylan did too he started writing his own songs one of which was called the ode to Woody and he went to the hospital in New Jersey where Woody Guthrie was suffering from a terrible terrible disease called Huntington syndrome and whether or not Guthrie was really aware that Dylan was there whether he actually thought Dylan was going to be the new Woody Guthrie is really unclear but it's curiously irrelevant as well because Bob Dylan took from that template that's what he had to do he had to write his own original songs he had to claim the heritage of Guthrie as something which would perhaps get him some publicity and attention and somehow he managed to get a contract with all of the folk labels rejected him but Columbia Records which was a blue chip firm obviously signed him and then you know that gave him confidence and it gave him context and it gave him gigs and goodness knows what else and he was able to produce albums and then he was made and also of course he hijacked in the sense the protest movement with songs like Blaine in the Wind etc which made him according to certain people the voice of the generation so it's another way to find a fantasy mentor thirdly to search for transforming experiences and I'll say something about that in a minute and fourthly to attract well deserved praise and I'll say something about one breakthrough achievement also in a moment and then narrow your focus until your work is unique some of those are landmarks as well so the first one being self-belief the second one is Olympian expectations that you expect a huge amount from yourself and then from other people and the high priest of high expectations is probably Jeff Bezos is always banging on about this and you know really believes everyone in the senior management team has to be an absolute a player class a player and he says you know if you put someone who's not used to high expectations and high expectations team they will adapt but the reverse is almost so true if you have people who are not high expectation people then people's standards will slip and one thing that Bezos has been incredibly good at doing is having the highest possible standards his mantra is customer service and unbeatable prices and he's totally inflexible on all that so the second thing is Olympian expectations the third one which is particularly interesting because it's really original I think and I was thrilled to discover this in my research is transforming experiences every single one of these people have actually an experience which transformed them in the sense that they went into the experience as one sort of person and they came out as another sort of person or as someone who is a hundred times more powerful or more effective every single one of them had that experience and again to take Bezos as an example of that before he founded Amazon he was a failed investment banker age 26 and a headhunter decided to send him as a last resort to see a guy called David Shaw who had founded a countercultural quantitative investment hedge fund and Shaw realized before anyone else did and by about 1992 that the internet was going to be huge and that it could be huge not just for information and all other things but for selling things for retailing so his idea was that his firm which was called Desco D Shaw and Company should develop a program for selling over the internet and then it should start a company to do that and he put Bezos as the project leader on that and he and Bezos got on very well like how some father it was same extremely quantitative extremely nerdy extremely ambitious sort of people and between the two of them they developed the format for Amazon and they decided the first category that they would go into was books and they decided that they would allow people to write reviews on the sites etc etc etc it was Amazon blueprint as it happened and of course David Shaw wanted that to happen within Desco but one day Bezos went to David and said I really want to do it myself and David Shaw took him for a look to our walk around Central Park in which he tried to display him but incredibly generously David Shaw allowed Bezos to go off and found Amazon he didn't even ask for a share in the company but then that was David Shaw he was a very very self-competent guy and his firm has been amazingly successful anyway so that was the transforming experience for Bezos for we talked earlier about Bill Bain transforming experience for him was getting hired by BCG by Bruce Henderson when he was the completely unqualified guy who'd never done any business never done a business degree didn't understand economics or whatever a history researcher who managed to get a job as a development officer at Vanderbilt University where he met Bruce Henderson and Bruce Henderson who had a tremendous nose for talent then decided to hire Bill Bain and Bill Bain took to Austin Consulting Group BCG like aDr.

Walter because he was very very smart guy and because the power of the concepts the concepts were so great and Bill and Bruce developed them together essentially and then Bill decided to do the dirty on Bruce and leave and form his own firm we would never have heard of Bill Bain if it had not been for Bruce Henderson meeting him and deciding to hire him and the formative experience of working withinBCG.

Let me ask you a question if I could Richard and I imagine you you might get to this I'm sure you have an answer for it but before we move ahead if someone has not had a transforming experience one might wonder if they're listening to this is it possible to engineer a transforming experience who do I sit on my hands and wait for Lady Luck to smile uponit.

Absolutely that's the whole point I mean one of the things I say in the book is that the whole point of trying to identify these nine landmarks is that the people who actually visited them didn't intend to they didn't actually say I need a transforming experience let's have one it happened to them I mean for example the transforming experience of Margaret Satcher was having the Falkland Islands invaded by a general Galtieri of Argentina and she said that was the worst moment of her life but it was absolutely the making as it happened of her and the experience of living through that and commanding the armed forces and doing what everyone said was impossible which was recovering the the islands made it possible for her then to do what she really wanted to do which was in her opinion reverse national decline of Britain so yes the people who had these transforming experiences did not engineer them but having seen how important it is understanding that you cannot in my opinion admittedly from relatively small sample but it's amazing that every single one of these people had a transforming experience which is described in the book and I did not fake it I just you know I didn't throw anyone out because they hadn't had a transformed experience and I stuck to the rules you can then say well I better have a transformed experience happened I and then you come to the question well what is the most likely type of transforming experience which will put me in Luxe Path in order to then become much more powerful so it could be going to a particular university and studying something which is very arcane and unusual it could be finding a very high growth firm like BCG or Boston Consulting Group or DE Shoreing Company and then joining that firm when it's still very young because you won't be on the forefront of developing you see thing about companies in their early days is that they don't know what they're doing and so if you don't know what you're doing you can be very creative about it and if you're involved in that process you discover things that you never knew that you had and not only that you become identified with them when you become powerful and you become perhaps a large shareholder in the company and and it's completely different from joining a company which is on tram lines where basically it's not going to do anything radical and anything new it's so exciting to actually be part of the company that's growing very fast doesn't really know what it's doing but it's got something some rare knowledge which actually means that it can be very very successful and it doesn't have to be a company it could be a social organization it could be a way of thinking it could be anything that's growing very fast and where it's unformed and where you think you've got some affinity with it and the ability to contribute and be creative it's not easy to specify what someone's transforming experience should be but I've tried it on a few friends and good acquaintances and it's amazing that actually we do in the end come up with something which might actually work in some cases has before we get to the fourth I just want to say a few things the first is that my experience maps very well to a few of the things that you just described in the sense that when I was graduating from college and was suffering from all sorts of quarter life crisis existential angst about what to do with my life and I asked a mentor at the time what I should do what type of sector I should go into and his answer was it doesn't matter as long as it's growing very quickly you want to be in something that is growing quickly not in a sector that is in decline or stagnant and that ended up being exceptional advice and I've found that it also applies to where you place yourself that is to say one of the reasons by example that I left San Francisco after effectively a decade was that I felt like it was a place experiencing some degree of stagnation or even in decline and I moved toAustin, Texas which was very much a startup of a city it was rapidly growing expanding where it was still taking shape and still could be shaped so I just wanted to reinforce what you said and on that point or I should say moving on from that point what is the fourth of the ninelandmarks?

Yes I mean gross is gross is everything I mean it ties in with the stock principle the fourth one is one breakthrough achievement now this is different from the other eight landmarks in that it is not a how to do it it's a what to do and in some ways it's a bit odd of me to put it fourth because it's the combination of everything else and all the hours really lead to this but I wanted to put it in the book fairly early because I wanted people to be thinking about this as they go through which is what on earth are you going to do to change the world and you're not going to succeed unless it's something really dramatic or it's not going to succeed in being unreasonably successful so you need to start thinking about it it might take you a decade it might take you several decades actually work out what it is but it has to be something that you believe needs to be done it's not a way of making you successful it's a way of changing the world and if you define it in those terms again it's surprising you can actually come to some kind of resolution some kind of opinion and for example once Lenin had had his transforming experience which was the hanging of his beloved elder brother that he idolized and adored because he was implicated in an assassination attempt at the czar when he was 16 years old Lenin heard that his brother had been hanged instantly he decided that his whole purpose in life was to smash the bourgeoisie and to cause revolution in Russia and it was a ridiculous 60 years old school ridiculous idea and he wasn't political at all before he wasn't he was a very nice sort of you know everyone liked him but he became very bitter and twisted but also very effective so it's one breakthrough achievement and it's not two it's not three and it's not one every five years it's something that you do which it actually is going to in some way change the world I mean my my breakthrough achievement was starting or co-starting lek it's not on the comparable scale with the people in the book but nevertheless it was you know a very successful firm which gave huge opportunity to hundreds or thousands of young people really who were trained and developed in that way and it also made an impact on the corporate world as well we invented the idea of mergers and acquisition strategy consulting which is completely different from anything that anyone else had done so one breakthrough achievement is the fourth one the fifth one is make your own trial which is you know basically become bloody minded and work out a way of doing something that goes off path from everyone else and I describe how to do that the sixth one is to find and drive your personal vehicle again one of the discoveries in the book is that everyone of these 20 people had some kind of vehicle which in some ways was sometimes it was a concept more often it was an organization of some sort of company if it's in the business there or an organization more broadly defined if it isn't the British state for example is a vehicle for Margaret that you're and for and for Winston Churchill together with a particularly eclectic and it's sense of you know what they were trying to do the whole point about a personal vehicle is that the paradox of the individual who actually does manage to change the world is that they can't do it on their own but on the other hand it doesn't get average it's not sort of a committee deciding what to do so someone like Jeff Bezos decides to make internet retailing the thing which he does and the thing that the everything store was the name that they gave it originally and no not just to be a successful internet retailer within books but to be a successful retailer on the internet everywhere and to be totally dominant in doing it you know an incredibly ambitious thing but in order to do that he needed to have an organization which was totally under his control just the same way that Lenin needed to have the Bolsheviks you know a group of people who were totally dedicated to Lenin not very many of them but a couple of thousand and that is necessary so that you you overcome the inertia that society and culture has so that an individual can change things by being very determined about it but they don't have to do it all themselves and the choice of the vehicle is terriblyimportant.

May I ask just before we move on are there any particular unusual or unorthodox examples that come to mind for both make your own trail and find and drive your personal vehicle if you could give perhaps one foreach?

Yes I mean your your own trail is very much I think Walt Disney Land I don't mean I do actually mean Disney Land the thing about Walt Disney is that he couldn't decide what he wanted to do initially he was a very good actor when he was in high school and they used to do a double acts with a friend of his which were you know garnered a huge man prize and then he decided that he actually wanted to be an artist but then he narrowed that down to being a cartoonist but his firm which he started his studio which he started in I think 1923 in Los Angeles was not very successful for the first few years the big breakthrough that they came up was Mickey Mouse Mickey Mouse made all the difference because they gave a ridiculous story about a mouse who wanted to woo a lady mouse by flying a plane it was a really silly story but what Disney did was not only sort of this film called plane crazy which he turned into a very expensive film which almost bankrupted him and his brother and various other people but he decided to give voices to the characters from the screen which people had done before but never with cartoons so that was a sort of you know his personal trail in the 1940s he became disillusioned with Disney as a corporation it was a very successful corporation by that stage but nevertheless he was disillusioned with the fact that they were trying to take him away from the studio he didn't have the sort of excitement of doing it he didn't really feel that he was creating something new and so he went in to find his own personal trail he actually spent quite a bit of time with Salvador Dali and they created a very surrealist movie which then the board of Disney turned down and Walt Disney was outraged by that and he had to tell Salvador that you know they did not think that having the board approve it was anything other than a formality but the board said no you lost your marbles you know as Peter's and Waldemann would say later stick to the knitting except they didn't use those words but that was what they said that's what they meant and so Walt Disney decided to go off and do some completely utterly different which was invent Disneyland until then amusement parks had been the provinces Disney called them of hard faced men who basically were thugs but what he wanted to do was create something which would be a monument to the past the present and the future of America and all that was best in America now you know the first time I ever went to Disneyland which was in 1969 I hated it I thought it was too American and too plastic and all rest it but it was a fantastic achievement in the early 1950s and hugely successful commercially again he was making his own trail the board again refused to invest in this they refused to put up the capital for all the exploratory work for all the imagination that had to go into it for building main streets and the fire station and Abraham Lincoln and all rest of it they said no we're not going to approve this Walt and Walt said well screw you in effect I will fund it myself and so he sold his houses he sort of you know took second mortgages rather on his houses he sold one of them took a second mortgage on the first house he found investors who would do this and eventually the last minute the Disney corporation decided that they would come on board as well when they saw it was inevitable it was going to happen they initially refused to let him use the characters snow white and Donald Duck and all rest of it but they said no if you do that will sue you so if Disneyland had failed which was eminently possible Disney would have been ruined and indeed the parent corporation might have been in some trouble one way or the other but that was finding his own trail because he had this vision and he wanted to pursue it and it was nuts basically so that's an example of making your own trail finding and driving your own personal vehicle well I think actually Lenin is a jolly good example of that it was the Bolsheviks you know initially the dissident revolutionaries in exile round about 1900 etc were dominated by people he later called the Mensheviks by social revolutionists who were not as extreme and uncompromising as Lenin and there was a conference I think in 1903 or something like that at which Lenin deliberately antagonized the other people and said I want to have my own party I'm going to split the revolution roots and they said don't do that we got you know there aren't very many of this you know please don't do that but he said no I can demonstrate that if I have you know a thousand people who are dedicated to me and to my way of doing things we can have revolution in Russia now absurd because there are hundreds of millions of people in the Russian Empire and how could it be that a thousand people could actually change that and make successful revolution but Lenin had an answer to that and it was a very good answer which was he said look Russia is a very backward country it's an autocracy it's not like Germany or France or Britain where you know there are lots and lots of different centers of power all of the power is concentrated in the Zaris army and the bureaucracy and there are only about 2000 people in Russia who actually control things there are no independent centers of social pluralism I'm sure he didn't use that word but you know basically it's a very top-down state and if 2000 people can rule Russia why not us and that was his theory and actually proved to me absolutely correct so his vehicle was splitting the revolution movement but having a group of people who are absolutely dedicated to him and got shot if they didn't if they weren't so the vehicle is very very important the vehicle doesn't necessarily have to be very large but it hugely augments the power of the individual but it's not a compromise the vehicle must be totally the vehicle in the same way that Bain and Company was Bill Bain's vehicle you know he stepped out of line with Bill Bain you didn't get shot but you certainly got fired and so on and so forth Boston Consolid Group was Bruce Henderson's vehicle he did it a different way it was more let a thousand flowers bloom but nevertheless unless you were interested in developing the concepts which was Bruce's thing then you weren't going to succeed and he got people who were very good at doing it can I move on to the next three I'm sorry I'm probably taking the next time oh no that's that's totally fine that's why this this conversation is long-form so let's move on to the next one okay the seventh one is Frive on setbacks and this doesn't sound terrible original but it is terribly important you remember that Nicholas Nassim Talab wrote a book called anti-fragile which I think is probably his best book and the thesis behind that as you know is that resilience is not the point you actually have to like setbacks and the reason that setbacks can be very helpful is two reasons one is they give you feedback and might tell you that you're off you know you're on the wrong path and the other thing is that either you're on the wrong path you've got the wrong tactics and it's quite important to distinguish between those two or that in fact the fact that you've been unsuccessful in a big way means that you're going to be very successful in a big way it's quite difficult to describe I also think about Winston Churchill and his wonderful failures he went away from those failures obviously a bit depressed at times he went to did something completely different for a time getting out of politics after he ruined the Gallipoli campaign the Dada Nels campaign in 1915 and sent you know several thousand people to their deaths from a hairbrain scheme that he invented and he got out of politics for time he joined the regular army and he went to the Western front in in 1929 he was on the verge of bankruptcy as a result of having invested heavily in stops in 1928 and when well crash came along Wall Street crash he was almost bankrupt he decided to and also he was very unpopular with his fellow conservative leaders at that time because he'd made a number of mistakes in 1925 and going on to the gold standard for Britain and in antagonizing the miners leading to the general strike of 1926 and alienating the whole of the organized labor movement so he was unpopular as party he was on the verge of bankruptcy he went off and did a huge lecture tour of America which was very successful and then he got rye over on tith avenue by car and suffix and quite serious injuries but battered and bruised he gone up and did it again and you can see from what he writes that he thinks what's happening to him is terribly important and most people would say no this is a semi-comical drunk who's basically had a series of failures but you know Winston Churchill didn't see it that way very very interesting the psychology of not being resilient but actually really liking failures because they they make you seem important in some ways and then the last two are acquiring unique intuition which requires deep knowledge and here I think that I overlap a little bit with Malcolm Gladwell you know you really do the quality of intuition is a function of the degree of experience that you've had in a very narrow field but also your willingness to take notice of intuition which some people do and some people don't and the last of them is distort reality which is Steve Jobs's phrase of course based on star trek but what distort reality means is refusing to accept current reality and redefining a way of making that different and convincing your followers in particular that you know how to get around or distort reality convincing them that you have a reality distortion field it works it's just amazing and Bruce Hennerson did that Bill Bender all the other people in the book have got a way of overcoming what was the incredulity of other people that they could actually really change the world in a major way I would love to make a few observations based on a number of things you shared and also I'm going to follow that by asking you for an example of acquiring unique intuition because this is of great interest to me but I want to mention one a piece of trivia for people that ties into a name that came up several times Jeff Bezos thriving on setbacks although he didn't come up in that particular landmark description if you go to Relentless.com it will forward to where to Amazon.com so Relentless.com is one of the first domain names pointed to that website and what strikes me is that many of these landmarks are reinforcing for one another right so you have let's just say self-belief Olympian expectations and I'm going to group them in a very deliberate way self-belief Olympian expectations one breakthrough achievement make your own trail find and drive your personal vehicle thrive and setbacks and let's take distort reality because I'm not yet familiar enough with the acquire unique intuition but all of those to some degrees seem to be enormously enabled when you have a longer term vision and horizon in mind than your possible competition so if you look at Jeff Bezos right he is one of the few examples of chief executive officers who have been given a pass by Wall Street I mean he's convinced his investors if you go back and read his annual letters which I encourage everyone to do you can find a PDF of all past Amazon annual letters there's always an emphasis on long term time horizon longer term than a quarter longer term than a year always longer term Bob Iger at Disney is another great example of this Toby Lutke of Shopify is another incredible example of this and it just strikes me that this longer term vision and time horizon enables a lot of these and without that if you are in any sense feeling compelled to rush that you disable some of these landmarks that's just something that came to mind as you're describing it I couldn't agree more I mean that's absolutely true you need a long time horizon you need to expect that you're going to have massive impact but it might take a very long time but you need to be sure about what you're trying to do and you need to be sure that you'll get there but you know time is kind of you know there's lots of time yeah so acquire unique intuition could you perhaps give us an example of that that you like and if there's one outside of Steve Jobs that'd be great but you could use Steve Jobs if you like I think Jobs is great illustration of that but I'll take Nelson Mandela as my example on this Nelson Mandela was a leading member of the ANC who got caught and convicted and sent off to prison total of I think 19 years in prison life sentence actually he was quite lucky to escape the noose and we were very lucky that he did he was on this island called Robin Island which I've visited off Cape Town it's a short boat ride away from Cape Town maybe half an hour at most but it's a world away and it's a nasty horrible stark it's basically it's a scrapyard essentially I mean it's got rocks a lot of rocks and that's it I visited the cell in which he'd been incassarated and it's so small you wonder how he could possibly have kept a self respect but during that period of time something very interesting happened the leaders of South Africa including PW both are who was reckoned to be the great crocodile sort of you know very very hostile to change actually realized that they painted themselves into a corner and that they didn't want to have the possibility of bloody revolution and being driven into the sea as they as they saw it by the population of South Africa and the whites were you know maybe five million people against 50 million plus who were blacks broadly defined and the ANC were ratcheting up violence and the ANC were controlled by all of the TAMBO in Lusaka some distance away and here was this Nelson Mandela guy and he was when he was in prison on Robin Island some interesting things happened one is that he acquired the charisma of the sort of you know prison hero so that within the ANC he was viewed as the natural leader another interesting thing which has happened was that there were various outside forces including the British Commonwealth that in the 1980s sent people to Robin Island to talk to Mandela and try and see whether you know there was any route forward there because they couldn't speak to the guys in exile in Lusaka or wherever they were and those guys were totally uncompromising and were trying to cause civil war and they wouldn't have got anywhere and so there were a group of people who went there was a group from the Commonwealth called the Eminent Persons group very self-deprecating and these Eminent people went and of course they talked to Nelson Mandela because he was recognized to be almost the shop steward of the prisoners and he formed this sort of university there where they basically developed knowledge of this and the other and somehow Nelson got the intuition that these people actually wanted a deal they didn't want this to be continued forever and they were willing to compromise in some way that then hardline nationalists who were nasty horrible racists do apartheid and they shot people and they were extremely unpleasant there's no doubt about it these people actually wanted a solution and he was the first person to realise that the ANC had always said and Nelson Mandela had always said we will not compromise but when he met some of these people from the Commonwealth and when he met later some of the senior ministers from the government of the nationalistparty, the rulingparty, he suddenly realised that a deal was possible and he said to them you know if you really want to deal you're going to have to have one person one vote and they said we couldn't possibly have that democracy you know we don't want to democracy there are more blacks and whites we can't possibly do that but you know Nelson stuck to that and eventually he formed personal relationships with the head of the secretservice, the secret police as it were with the minister who was responsible for justice with the minister who was responsible for state security including the prisons and eventually with PW both that himself and it was all based on this intuition that perhaps they could reach a deal and nobody else had that intuition nobody but Nelson Mandela actually thought it was worthwhile pursuing talks with those people and they took five years but in the end his intuition one out and the result was that instead of having a war and bloodshed going on and possible revolution and the only question for people really was whether that'd be five years or 50 years before that whites would be thrown out in massacred instead of that you might have a transition to black majority rule and that could be done in a controlled way where FWD Clerk who succeeded Boatah would be the vice president and effectively the mentor of Nelson Mandela I've talked personally to FWD Clerk about these days for some reason I had an opportunity to do that and you know he was quite clear about it if it had not been for Mandela and of course he said himself the odds against this would be a thousand what it was just based on this intuition that there might be a solution where everyone else thought there wouldn't be a solution and he would not have known that but for being in prison on Robin Ireland for 17 years and meeting all these people and gradually being able to size them up including the heads of the prison who were varied in quality from unpleasant to brutal but nevertheless he worked out the way the wind was going and nobody else did as I was working inside Africa at the time and we never thought that there was a possibility of any solution nobody but I talked to did but Nelson Mandela had a different intuition and I described that in the book and it's very very it's very heartwarming and there's some horrible stories in the book but it's very heartwarming intuition is hugely important thank you for sharing that example I think it's a wonderful place to start to wrap up this round one we may have to we may have to do around two on the podcast if you have the endurance sometime I would love to but Richard I want to ensure that people know where they can find you of course on on Twitter they can find you at Richard Cache 80 20 80 20 zero Richard Cache dot net you've written many books including many books that have influenced me like the 80 20 principle you have the star principle which we've mentioned a number of times in your new book is unreasonable success and how to achieve it I have just one more question for you and then certainly I'm open to any closing comments or anything else that you would like to share if I've omitted anything certainly or if there's just anything in addition that you'd like to put forth and I'll start this question with a quote as prelude and this is from an interview that I found with you and it relates to New Year's resolutions this is a quote which you can of course feel free to correct but this is attributed to you once a year rather than doing New Year's resolutions I ask the same question what did I do that met the most to me in my family and friends and sometimes strangers to and what could I do in the next year more of the same is not a bad answer but something fresh to so this really struck me as an impactful question and good questions are impactful so A is this something that you do and might recommend and number two are there any other questions you might suggest listeners consider or ponder let gestate on their minds yes it is true and I think it's right the question I would ask is one again from from the book which is in your whole life what is your breakthrough achievement going to be if you want to change the world how do you want to change the world and ponder that maybe on New Year's Eve maybe any other time there's plenty of time to work it out but do you really want to have a major impact on the world if you do what that's really my question is question I asked myself as well I mean my own ambition is to have many more creative completely unreasonably successful people and the thing I'm tying with which I don't know if you think it's a good idea or not is offering to work with a number of people who have already been reasonably successful but have not been unreasonably successful and take them through the process and see whether we can generate some unreasonable success from a lot of people and to cascade that down and train other people to do that because I think this methodology is robust and I think it could make a huge difference to the world and I'd like to see whether I can demonstrate that in practice through a few pilot studies so that's my personal ambition I love that I think you should definitely test it and it could be a spectacular failure or spectacular success but nothing ventured nothing gained and you do like to bet so I figure this is one good opportunity to do that and having some experience with vetting I'm not volunteering myself but I would say run a competition or have applications that are vetted and can be vetted in some very simple ways that you're not overwhelmed and pick a handful of finalists to take through that process and what I'll suggest just as a placeholder is that people follow you on Twitter Richard Cosh 8028-020 and if you decide to do this you can share that on Twitter and that can be at least a possible starting point so that people are alert that this is a possibility and what a pleasure it's been Richard I feel like I know you in the same way that perhaps some people I meet who listen to the podcast feel like they know me but it's been through your written words that I have come to admire and use quite frankly with great effect much of your thinking so I thank you very much for taking the time today this has been an incredible incredible pleasure and I hope it's not the last indeed Tim thank you very much indeed I reciprocate it's much more pleasure from me I'm sure it really is great anyway thank you very much indeed and I look forward to talking to you again at some stage maybe a bit more frequently that'd be wonderful well the feeling is definitely mutual and to those listening I will have show notes for everything we've discussed including all of the books all of the resources including the most recent work from Richard which is unreasonable success and how to achieve it at Tim.plog forward slash podcast you'll have links to all the names everything you can imagine so please do check that out if you'd like to indulge in more exploration and until next time as always thank you for tuning in hey guys this is Tim again just one more thing before you take off and that is five bullet friday would you enjoy getting a short email from me every friday that provides a little fun before the weekend between one and a half and two million people subscribed to my free 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