Invest Like the Best with Patrick O'Shaughnessy - Sam Hinkie, Boyd Varty, Charlie Songhurst - Trail Magic - [Invest Like the Best, EP.323]

Starting point is 00:00:00 This episode is brought to you by Teegas, the modern research platform for leading investors. I'm a longtime user and advocate of Teegis, a company that I've been so consistently impressed with that last fall, my firm, Positive Sum, invested $20 million to support Teegis's mission to expand its product ecosystem to unify and streamline investor research processes. In addition to the library of 55,000 transcripts, Teagis now combines at-cost, on-demand calls with a full suite of financial workflows, whether it's quantitative analysis, company disclosures, management presentations, earnings calls, TECIS has tools for every step of your investment research. They even have over 4,000 fully drivable financial models. TECIS's maniacal focus

Starting point is 00:00:41 on quality as well as its depth, breadth, and recency of content makes it the one-stop end-to-end research platform for investors. Move faster, gather deep research to build conviction, and surface high-quality alpha-driving insights to find your differentiated edge with Tegas. As a listener, you can take the TIGS platform for a free test drive by visiting tegis.co slash Patrick. Before we transition to the episode, I want to highlight the Founders podcast, which is part of our Colossus network. David Senra, who hosts founders, has devoted his life to learning from history's greatest entrepreneurs, and every week he distills the lessons of a different founder.

Starting point is 00:01:16 If you want an entry point, I highly recommend starting with episode 136 on Estée Lauder or episode 288 on Ralph Lauren. I hosted David on Invest Like the Best last summer, and it's hard not to walk away. insanely energized after listening to any episode with him. You can find a link to founders and those episodes and the show notes of this conversation. You can also search all past transcripts on our website, join colossus.com. Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. Invest Like the Best is part of the Colossus family of

Starting point is 00:01:58 podcasts, and you can access all our podcasts, including edited transcripts, show notes, and other resources to keep learning at join colossus.com. Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaunacy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of positive sum or O'Shaunacy asset management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of positive sum or Oshonnessy asset management may maintain positions in the securities discussed in this podcast.

Starting point is 00:02:38 Hello, everyone. Today's episode is a little different. Rather than share a new conversation I have put together a few of my favorites from the past six and a half years of doing this show. I often listen back to these for inspiration, energy, and their timeless ideas on life and investing. Internally, we call these forever episodes because they'll likely still be as relevant and popular a decade from now as they were when they first aired. Each of these is a significantly shortened version of the original episode. The first conversational you'll hear is with Sam Hinky. Sam worked for more than a decade in the NBA,

Starting point is 00:03:11 helping pioneer the use of data and analytics, originally with the Houston Rockets and finishing off as the GM of the Philadelphia 76ers. In life after basketball, Sam has launched his own venture capital fund, 87 Capital. Sam's approach to everything is about finding great people, and he has taught me more about that topic than just about anybody else. The second discussion is with Boyd Vardy. My original conversation with Boyd way back in 2017 had a huge impact on me and I'm sure you'll hear why. He grew up in the South African wilderness, living amongst and tracking wild leopards. He talks about the art of tracking and how the same

Starting point is 00:03:44 strategy for pursuing animals in the wild can be applied to all aspects of our lives. Rather than following well-trodden paths, we should all explore and look for original experiences. Listen for it because he might still have the best answer I've ever heard on the podcast. The last conversation you'll here is with Charlie Songhurst. Charlie is the former head of strategy of Microsoft and a prolific investor, having personally invested in nearly 500 companies for his career. Within one minute of meeting Charlie, you can tell that his mind is sparkling with ideas and curiosity. It's no wonder he was among the most commonly requested guests. Charlie would always come up when I asked top investors and CEOs who I should have on the show, and he often still comes up as people's favorite guest.

Starting point is 00:04:25 Sam, Boyd, and Charlie are all exceptional in their own way, and I hope you enjoyed these condensed versions of our conversations. You'll find links to the full original episodes in the show notes. Enjoy and please share them with friends and loved ones who you think will benefit from these great and original thinkers. I think one of the things we agree on is that you kind of keep digging on anything and you ultimately come back to people, that people drive just about everything. And I know at the Rockets, you told me before that if you weren't spending your time on finding a great player or finding a great personnel or staff member to join you in the center office, you're kind of annoyed. So talk about how back then you shaped your life so that it was always

Starting point is 00:05:05 as focused on people as humanly possible. I'm a deep believer that people are a power law too, whether you're running a small company or whether you're running a big company, like your ability to attract the best in the world, I think is so incredible. Even right now, like one of the things I sort of watch the most closely, I don't sort of deal in politics at all. But what I watch the most closely is how welcoming are we to the best in the world to come here and do the thing as a country. I think that's terribly important. Awesome people bring you more awesome people. They compound over time. They sharpen your own thinking and they materially add to what it is you're trying to do. I've yet to find advantages that overwhelm that. I'll give you one example. Sometimes I say this and it gets

Starting point is 00:05:49 me in trouble, but I believe it. I think I care about the value of recruiting more than almost anyone I know. I think getting in amazing people at the start in the middle, at the end, all the way through, having an ever raising bar that someone has to clear. It's not quite everything, but often it's close. What's the most amazing thing that stands out in memory that you've seen somebody do in the first couple months of either working with them or having invested with them? So maybe this is a strange story, but it's one that comes to mind. When I was in Houston at the Rockets, we traded for James Harden, and he was 22, almost maybe he's 23 years old. And we traded for him three days before the regular season. He came in.

Starting point is 00:06:30 Our team had sort of been somewhat gutted to get him at the time. And so he came in, and I went to the very first practice. And he was sort of lacing his shoes up. And so were the other guys. And he had met everyone. He'd met them hours before. The coach blows the whistle and it's like, hey, you know, time to get going. Everyone come down here.

Starting point is 00:06:46 All the players get together. and coach gives his little thing for a minute. Here's what we're going to do. Here's the first station we're going to, etc. And everybody goes to put their hands in. And James says, tuck your shirts in and tucks his in. And 14 players tucked their shirt in. And from that moment forward, it was like the new alpha is here and a whole bunch of ways.

Starting point is 00:07:08 And at the time, you're thinking, I hope he can back it up. And I hope this goes well. And I hope he's going to be amazing. And you're not sure. There was a little bit of uncertainty. Think of it like a sort of a power vacuum, a little bit of. of uncertainty that lasted for about 45 seconds. And at the end of that, it was like a signal sent that there's a new way to do things. And I have ideas about what those would look like,

Starting point is 00:07:29 quite forcefully said, do it. Maybe that's where he's cute in hindsight, because James has turned out to be an amazing player. But that combined with, he bawled out his first game and the next night he went for like 45. That combined with amazing performance out of the gate was not hard to imagine. You were on a new trajectory. It reminds me of the episode in that incredible Jordan documentary when they play the Olympic pickup game. And he sort of bests Magic's team. And there's this incredible tension and Magic relieves it in the bus, basically handing the Alpha Crown over to Jordan. What are the different brands of leadership that you saw and learned from in sports at either the executive central office level, coaching level, or player level that you still carry with you?

Starting point is 00:08:13 The way I think about coaching is very much how I think about parenting. And I think translates in lots of other places that your ability to drive change is about the quality of your relationship, not your hierarchy. We used to talk about this with our kids. When your kids are two years old, you're like, don't do this, do this. You're hopefully a benevolent dictator. But there's a bunch of rules. Don't touch the stove. Don't put that in your mouth.

Starting point is 00:08:37 They have to listen. If they don't, they're draconian consequences. Now, draw some line out in the future. they're 25. How much authority do you have over them? Not that much. You can guilt them into some things. Maybe if you're still supporting them in one way or another, there's some ramifications for their behavior. But most of your ability to influence them, which isn't that what we all want, is to be able to influence the people we care about, particularly for their own good, is about the quality of the relationship you've built up over time. I think about it that you're

Starting point is 00:09:09 sort of pouring yourselves into people you care about so that they will call down the line when they don't have to do what you say at all, when they're their own people, but they still respect your opinion and think he might be able to help. Coach might be able to help me in this situation. Dad might be able to help me in this situation. I think that notion is critical. I tell founders this all the time, sorry, you might be working for the CTO. The CTO might be the most valuable person here, she might be. And if you don't know that, better to get your head around it quick. Because she leaves, this all falls apart. Your ability to sort of influence her and influence her towards the kind of vectors you want the company to go towards is going to be everything. So start

Starting point is 00:09:49 investing in the quality of that relationship right now. It's never too late, but you better get going. One of the coolest things that you and I have discussed often about the modern world is that many times we can run this process of filling your way to the bottom of someone's experience or thinking without actually having to talk to them. You're able to follow. of breadcrums, digital breadcrumbs, we'll call them, whether they intended to leave it behind or it was sort of a natural course of their behavior. Can you talk about what your interest is in digital breadcrumbs and how you use them? If I can't find breadcrumbs sort of in the wider world, I'll often ask them for them. I'll often ask people like, send me an awesome book or send me

Starting point is 00:10:23 something cool to read or send me something really influential to you or send me something you've written. So I end up reading lots of senior theses from college or old things they wrote or old posts or one of the recent investments I made is in a company I'm really excited about, obviously, just happened a few months ago called scout app.a.I. And I got deep into the founders there. Deep. I'm watching videos of their parents talk about their life journey. I'm reading the medium posts of one of the founders over the last several years and reading all of his medium highlights. And it's not hard to say like, in this case, his name is Shrey. If Shray is thinking about this topic at this age and this topic at this age and is deeply curious about this.

Starting point is 00:11:03 and sort of gave the clap on Medium for this, that this was interesting. And his GitHub repository looks like this. That's all super interesting. Likewise, one of the other founders, he had been producing these YouTube videos for the last seven or eight years, going through one thing after another, showing how he's doing his own thinking. And so you could see him at a very early age. He's quite young. You could see him in a very early age criticizing the larger system and thinking about what his expectations were and how that matched.

Starting point is 00:11:32 I often think of it the other way. If you wanted to understand me better, I'm 42. If you went back, call it for the last 30 years until I was 12, and just found one person per year and talk to them about me and ask them a set of questions, that's all me. The middle of that distribution is me. You'd find a hater. You should discount that.

Starting point is 00:11:51 You'd probably find my mom. You should discount that. She'd be too nice. Everybody else would be like, oh, Sam is awesome at this and sucks at this and is frustrating at this and is amazing at this. And we love him for. this. True, true, true. That's roughly true. And I've changed plenty, but the sum total of all that is useful. And so to the extent people have written blogs or posted things on Twitter or

Starting point is 00:12:14 created some artifact that I think of they've sort of buried in time that I can go find, that's often amazing because you get a chance to see people over a long period of time. It doesn't mean you agree with all their ideas. No one would have agreed with all my ideas when I was 25 or 35. We all change a lot. But you see sort of where they are and you can kind of watch them grow throughout it. My favorite version by far is when you find someone on Twitter or something you like and then you realize they have a blog and you'll find the blog and you're like, oh my God, it's like a diamond mine, the whole thing. This is the first time when I found Patrick McKenzie's blog. I was like, what? I have to read all of these. I've known him enough on Twitter

Starting point is 00:12:52 to know I respect the way he thinks. I love the way he writes. And so I have to read all of these. Then I have a new problem. How do I read all these? What order should I read them in? Where should I start. Who knows more about his essays than I do? I felt the same way when I found sort of Paul Graham's stuff. I need to get into the good stuff as fast as possible. And I will probably read it all. But in case I don't, I want to make sure I've read all the good stuff, even if I only read two thirds or three quarters. I want to make sure I got 95% of the value, even if I only did 80% of the work. There's an example you've told me before that I'd love you to recount here of how you first came across the person who I believe now is the assistant GM still at the Rockets back in your sports days. because I think it's a great example of this breadcrumb concept. And I'm kind of harping on this because I just think it's like a strategy that's mispriced. I don't really know many people that do enough of this. It's typically not the way that people or deals or investments are approached. I think the world is making it more and more valuable to do this. So could you tell us that story? The assistant GM of the Rockets right now is Eli Whitus, who I got to know and must have been 2008.

Starting point is 00:13:54 At the time, he had just started a blog. But prior to that, there had been a sort of a message board, an open forum where people would post all sorts of interesting analysis. Back then, it was called APBR metrics. It was the way in which people communicated, sort of think of it like, you know, hacker news or something today, in this space at the time. And there was a prolific poster who was quite good under a pen name. And after a while, it became clear that that person sort of docks themselves. Think of it like someone like Slate Star Codex or something, where Eli said, you know what, I'll go ahead and say that was me. That was me that's been doing it all this time. It's like, oh, that's interesting because there's this trove of information. It's him. And then at the same time,

Starting point is 00:14:29 he started this blog and the first blog post for years, I've told people, I tell people now, if you see something awesome, send it to me. I'd love to read it. He has his first blog post, and by the end of the first day, four or five people have sent it to me. And it's amazing work. And I'm like, oh, that's wild. And I'd heard a little bit about him from another friend of mine. And I was like, oh, that's super interesting. A week or two passes. And there's another blog post. And by noon, four or five people have sent it to me. And I'm like, oh, my gosh, this is massively good. And the primitives you would have to understand to do this kind of work, not to mention alone, are massive another week or two passes.

Starting point is 00:15:00 And here comes another blog post. And by now I've got it like hooked into an RSS feeder back then. I read it quickly. And I just printed it out and walked down to Darryl Morey's office. And I said, I'm about to hire this guy. I haven't met him yet, but I'm about to hire him today. And he said, why? And I printed off what he had done.

Starting point is 00:15:15 And he said, I get it. Let me know how it goes. The truth is we did real interviewing and we spent a bunch of time with him over many, many weeks to try to understand him better. We did hire him based on that. I like processes where you hire people. where you run a tournament, where there's an actual tournament. But he was a number one seed in the tournament, to be clear, based on his prior record

Starting point is 00:15:34 and that that was massively influential for how we would think about him. So because of the amazing amount of work he had done, it was clear to us that we needed a couple of things to happen. One, we needed him join forces with us. And two, we needed him to stop leaking this stuff out to the internet. He was bleeding away small amounts of competitive edge for us. That was half percent here, one percent there. It wasn't huge.

Starting point is 00:15:56 But I didn't have great confidence that he wouldn't leak out. 10% of it in one big post. That might only be 10 more days away. He's been now, what is it, 2020. He's been at the Rockets now 12 years and he's done amazing work there. But much of that was on the backs of his early writing where he could show what he knew. He didn't have to say, oh, I learned fast. It was obvious he learned fast. He didn't have to say, oh, I'm hyper-passionate about this. It was obvious he was. You've told me this story before, but I've never actually then asked what was he writing about? That post one, two, three, whichever one really stood out in memory. What was he writing about and what was so impressive about it? Things that were mispriced

Starting point is 00:16:31 in basketball at the time. How to think about shot location data, how to think about defense at large. These were the kinds of things that even back then that were wildly misunderstood. One obvious example is if you get an open three on the wing and no one's within 10 feet of you and you make it, well, fine, we should give you some credit, but it's not that hard a shot. You're pretty open. We should probably give the passer and the coach and the screener a bunch of credit. We should probably dock the defender. If you've hit an amazing shot, call it Kyrie Irving at the end of game six or game seven, I guess, an amazing shot that's quite difficult. You should get an amazing amount of credit for that. There's some luck in that. But there's a ton of skill in that too. Those were

Starting point is 00:17:10 the kinds of things that he was adjusting. But to do that, you had to have an underlying set of data that was quite robust at the time. And then the skills and abilities and sort of at that time, industry know-how to be able to build on top of them. What are the best ways that you've learned to avoid transactional type people. Slow down. Slow down. And a whole bunch of ways. Drives transactional people nuts.

Starting point is 00:17:34 Fine with me. I'm trying to learn that. I'm trying to learn that. So you read a book, I'll read a book. You don't want to read a book? Cool. You read a book? We don't have time to read a book.

Starting point is 00:17:41 You got to know by Friday? No problem. I'm out. I'm out. You did this to me. Yeah. Yeah, for sure. I'm accused of being on occasion,

Starting point is 00:17:49 you know, heartless or a data wonk or ruthless. And to be clear, I can be in a bunch of ways. I am super big-hearted for the people in my truck. It matters a lot to me, but shouldn't there be a high bar for who you trust? If you trust them, shouldn't you be trying to play a more infinite game where everyone trusts each other more and more and you're trying to compound that trust over time? The very notion of that, a lot of people are uninterested in, no problem. That's totally fine with me. But yeah, I would say slowing down is a common technique. What was the thing that you did along the path ultimately to a GM job that increased your odds of ultimately getting

Starting point is 00:18:27 one of those jobs the most. Where did you pick up the most probability points on that journey? Thought hard about what other people are trying to accomplish. And I tried to shape my language in a way they could hear it. That's half of what I talked to founders about. It's just that how to build the API of the other person's brain. It doesn't matter what you say. It matters what they hear. And it matters how they feel. That's not a way to manipulate someone. It's a way to deeply understand their set of problems. And to the extent you have edge, and you won't always, to the extent you have edge, define it clearly in a way that aligns their incentives with that solution. That's mostly it. All of the people that I talked to along the way that gave me more and more scope, more and more

Starting point is 00:19:16 leash to be me and to lean into the kinds of things I want to do. Almost all of those conversations started just that way. How have you thought about shaping, I'll call it the game. You're in a new game now and I think your interest is in spending as much time as humanly possible with the sort of exceptional people that we've outlined in an ever of different ways. But that's hard work. Like there's a lot of people out there. You've got to kiss a lot of frogs typically in a process like this. You mentioned 500 deals down to maybe five investments, something like this. How do you think about designing the game itself into which you are now placing yourself for the next big chapter of your career. What are you optimizing for? What are the rules of that game that you're

Starting point is 00:19:56 trying to make different than the normal way things are done that you observed in the venture ecosystem when you stepped into it? For sure, the way I thought about it was could you design a world where you could spend nearly all your time with amazing people? That's one. And where you could get leverage on seeing around the bend a little bit, that mattered to me. And where patience and temperament are rewarded. All three of those things mattered, but they matter because I believe those are areas to spend time in. And there are areas I enjoy spending time in that I sort of take energy from. So I love being around incredible people. That ought to be obvious.

Starting point is 00:20:28 I'm a sucker for the old sort of Netflix parlance of stunning colleagues. I thought about could you design something where 70 or 80 or 90% of your time were just those people? By the way, at 87 capital, I can very much do that in that anyone I hire into the firm is a part of that. And any entrepreneur I choose to spend time with is a part of that. And any entrepreneur that I pledged to spend Bukus of time with, I chose. So if I chose them poorly, shame on me. I get to decide if they're stunning colleagues that take up my Tuesday or not. Secondly, I think in decades by nature, like, where's this thing going? What are people thinking about? What are the second and third order effects to this shift that we're seeing here? And I want there to be

Starting point is 00:21:09 leverage on that kind of thinking, not momentum trading for this week versus next, but leverage on trying to see around the bend. And then lastly, some of this is a, we call a personality quirk, I think, which is I'm super steady, sometimes annoyingly so. I'm hard to fire up. I don't mind being alone, in my opinion, for a very long time. Can you get to a place where that kind of steady temperament is rewarded and build an ecosystem with that kind of trust? Where people say, yes, we two believe in this kind of approach and that we can first slowly and over time with more and more leverage turn this wheel that generates the things that you're interested in. And then for me personally, it's quite easy to sort of design a vehicle like this because the things I'm actually after,

Starting point is 00:21:56 I'm trying to compound wisdom and trust and try to figure out life better and try to figure out business because I'm deeply curious about it and to try to understand how to compound trust with a very small set of people, very small meaning hundreds, not thousands, and how to sort of compound trust with them over a very long period of time because I think that builds the snowball that is amazing and one that's to be clear deeply fun for me one quick story I'll tell you on that Mark Andreessen has this line that I love that sometimes he says he's like looking at his phone and people are annoyed and he's like of course I'm looking at my phone the best of seven billion people in the planet this is the best they can muster so yeah it's interesting I'm looking at it

Starting point is 00:22:34 I would say I'm kind of like that but different I told you I you know we sit in a meeting like I'm into you, fully into you. I'm not looking at all for sure. My phone is filled with people in my life that I've invested in over a long period of time and invested in with a lowercase eye. These are my friends and people that I care about. Some of these people I've spent 15 years with, some of them 15 months with, and they're sending me awesome stuff. They've found a read. They're telling me incredible insights they've come across. It's a freaking treasure trove. When I wake up in the morning, I'm so excited to look at my texts, which is maybe not super healthy, but I am because for someone like me that likes being dependable for those folks in your tribe,

Starting point is 00:23:14 it's intoxicating. Here is said person that I love, that I chose, that I very much led into my life eight years ago or eight weeks ago. And here they are with a real question. They're not asking me piddly stuff. They call me with big stuff and say, I'm thinking about this. What do you think? This just happened. What should I do? Here's my approach. Please beat it up. I'd love that. That only can from the way I've tried to live my life for several decades now, which is to really pour into a, again, a relatively small set of people. I often sort of think about it as like fewer, deeper relationships. I very much want that. I don't have any need to run an organization with tens of thousands of employees because I very much think about it in my mind's eye, the 10 or 20 or 50 that I spend the most time with and that I sort of get the most energy from and that honestly are the most rewarding personally for me. What are the strangest things that you've seen thus far in your time really focused on early stage investing? Extra points for things which just persist but seem crazy to you on the investor or founder side. Of course, I believe the way I'm going about this has some inherent edge, even if small,

Starting point is 00:24:28 that has some inherent edge in it, which is why I'm doing it, that I think I see the world in a certain way that will persist and will compound over time. I say that. That's my like intro to say the notion that in seven or eight minutes you'd say with a founder, that's it. I'm done. I got you. I want to do this. I find very strange. By the way, I might in those first seven or eight minutes say this is amazing. I really like her. She is wicked smart. I'd like to learn more. I don't say I'm done. And that race, I find a little strange that others think about it that way. Now maybe to the extent maybe if something comes along that's very much in my wheelhouse, that I've looked at not two companies, but 50 companies, and I'm looking for it to be a certain way. Maybe I'll be that aggressive, too, on something when I meet someone with a unique approach that I've been looking for, but I think it will be rare. And I much prefer the sort of getting to know someone. It doesn't have to be months and months, although that's ideal, years and years is even more ideal.

Starting point is 00:25:27 But the notion that 10 minutes in you turn your brain off, I think people do that in interviewing. I think it's a huge mistake, huge mistake, that you ask a set of open-ended questions and make a set of unconscious judgments two minutes in and call it a day. That's how we end up with some of the silliness that we do sometimes in hiring, where a bunch of unconscious biases creep in. I want to finish the conversation basically where we started, which is with this idea of breadcrumbs. One of the reasons that I love doing this podcast,

Starting point is 00:25:56 especially with friends like you, is that these are breadcrumbs, right? We're putting something out for hopefully founders out there to listen to and be attracted to a certain set of attributes. which are different and distinct and unique, and that's a very cool thing. I think what you've highlighted for us today is how powerful those things can be planned or unplanned to create the right kind of serendipity in someone's trajectory. How would you suggest people listening to this that want us throughout some of their own breadcrumbs begin to think about doing that? Right. Right. And put your thoughts out, particularly if you're proud of them, particularly if you want to make them better.

Starting point is 00:26:32 This is something I really only come to understand, I think, in the last several years, last couple of years, which is the returns to writing well and the returns to getting better and better at writing. I love the way, I'm a Stripe fan in a whole bunch of ways and their business and their founders and all of that. I love the way Patrick talks about that they're in some ways kind of writing to the unborn employees at Stripe. You can have a meeting and you can have an all-hands meeting and Stripe must have 2,500 employees, maybe 3,000 employees these days. They could do an all hand Zoom meeting and it would capture all those. What do you do about the 3,000 and first? employee. What do you do about the 6,000th employee? What do you do about the 30,000 employee? And one of the ways

Starting point is 00:27:12 to do that is to write down what you were thinking at the time, to write down where you thought the things should go, to write down why you made the decision you did so that someone that starts on the job next week or next decade could learn from it in a way that is useful. I'm a, most of the writing I do is sort of among my friend group. And I share things I've written and documents and things with a small set of friends around me. I don't do a whole lot of that publicly to date. I just think it's terribly critical as a way to sort of put your mark in the sand about what it is that you believe. And by the way, people may not agree with you. You may get criticized massively about it. But over time, it ends up being a shelling point where many people will sort of come your

Starting point is 00:27:52 way if they resonate with it one way or another. You just maybe connect two dots. Which is so interesting. A friend of mine and the CEO of a company called Bottomless in which I'm an investor has this idea that the internet is the space of infinite possible actions. and that a lot of what's so magical about technology and software is making stuff that was not readable to software, legible to software. Basically, what you're describing is a human making themselves legible to the internet. When you do that, weird, cool stuff just starts to happen. Your people find you. I'm smitten by all these examples. Imagine being Charlie Munger and meeting Warren Buffett over dinner. And it's like, yeah, of course they were rude to everybody for 90 minutes.

Starting point is 00:28:34 Of course they ignored everyone. Of course they got deeper and deeper into a private conversation in the middle of a large dinner. I don't want to overdo it. Soulmates or something, but close. Intellectual sparring partners that in some crazy world both worked for whatever Warren's grandfather or vice versa, however it works. You come across this person and you can't find the bottom and you're like, oh my gosh. I don't know if either one of them went home that night and said, I want to call this person every day for the rest of my life. But it's believable that they would. And it's believable that they would say,

Starting point is 00:29:09 finally, there's someone else out there that I can shadow box with and pressure test my thinking with. It's surely been an amazing feeling in my life when I've come across those people. And of course, they're not hundreds of them, but dozens of them or more. It's an awesome feeling. I think it's such a wonderful place to close this awesome conversation. I sometimes think about what will I title these things as I'm having the conversation. And this one might be called find your people. everything you've done, the way you've architected the conversation and your activity has been to find the right people and develop incredible relationships with them. So I think it's a wonderful place to close. Sam, as always, thank you so much for the time and a great conversation. Thanks, Patrick. Maybe a really fun place to start would be there's a story in your book about an experience with your dad with a black mamba. Yeah. To give people a sense for what your childhood was like. And then we'll use that as a springboard for everything else we'll talk about. When I was about nine years old, I went to hunt an impala with my father.

Starting point is 00:30:07 And we had sussed out the terrain and the land sort of fell away. And there was a termite mound which would have been, which was a perfect position for us. And so we creeped up onto the termite mound and we were laying with our chests on it and our legs sort of, and the mound kind of rose up. So we were leaning up against it. And I looked over the top of the mound and down the clearing, I could see the Impala. And I was waiting for the shot and eventually had presented itself. and I took the shot.

Starting point is 00:30:33 And as I took the shot, the herd kind of scattered. But they didn't run away. They scattered and then they stopped, which sometimes they do when they get a little bit stunned. And so my father said to me, just keep looking through the sight and see if you can just be certain that that Impala's gone down. And so we're lying there,

Starting point is 00:30:49 I'm looking through the sight, and I just felt this movement on my leg. And I remember just taking my eye away from the scope and just peering down. And immediately I saw this coffin shape, head and moving over the back of my leg was about a two and a half three meter black mumba. And I knew snakes. I was passionate about snakes as a kid.

Starting point is 00:31:10 So I immediately knew this is as bad as it gets. If it bites you, you know, it's a couple of minutes and you just, you're gone. So I grabbed my dad. I said to him, oh shit, dad, there's a mumba. So he starts looking around like where, like it's somewhere around us. And I said to him, no, it's honest, look down. Then he looks down and I felt him start to shake. and I knew we mustn't move, so I said to him, don't move, do not move.

Starting point is 00:31:34 So we stayed there really still and it just perused all over us. And then at one point it turned and it started like coming up the mound towards where our sort of heads were and I thought, God, if it gets like up around the face, that's going to be a little bit too much. And I look over at my dad and I can see blood coming out of his mouth and he has bitten the inside of his cheek with so much tension that he's bitten a cut clean into it. And then the snake turned and it started to move away. from us. And I remember the way that the mound was shaped. There was the sort of direction to go directly away from the snake had a thick buffalo thorn that had kind of scragled over the side of the mound. So we watched it get away and its tail was still on my foot and my dad grabbed me. He said,

Starting point is 00:32:16 let's go. And he pulled me and I remember he tucked me in behind him and he put his head down and he ran through this buffalo thorn. And when we came out the other side, he had a piece of the thorn and the branch broken off like in his head. It looked like an antler across his face. and thorns in his jacket and blood coming out of his mouth. And I was completely unharmed because I had been behind him. And we got away and we stopped and I remember he just hugged me. And then my sister, who had been waiting for us in a vehicle, we like walked up. She said, what the hell happened to you?

Starting point is 00:32:45 Both of us were completely white. And then we got home and I thought I would tell my uncle about it. I said to him, you know, I had this crazy experience. He was a wildlife documentary filmmaker. I was hoping to get some sympathy. And the only thing I got was, did you manage to film it? I was like, come on. A little bit different experience than, you know, my Saturdays go to a soccer game or something like that.

Starting point is 00:33:06 Can we go back a bit to your early experiences with tracking? So in reading your book and thinking about this conversation ahead of time, this was the topic that I was most excited for because I think it's the most pervasive. And actually, I think it applies very directly to investing. And what I would say, the overarching truth is, is that any time you're trying to do something via a playbook, or a pre-written set of rules, you're toast. Emerson has this great line that I have pasted. I paste up quotes places to remind me. And this one is maybe a top five one, which is simple.

Starting point is 00:33:42 It's that imitation is suicide. That if you are trying to just do what made someone else successful, maybe you'll have some nominal success from the external standpoint, but you won't really do anything interesting or maybe true. So the idea of tracking is, I think, one that we can explore. and I'd love to hear the early stages of this. I don't know how old you were, who you were with, how you learned, can you learn, can you even teach tracking or do you just have to kind of watch it and do it yourself?

Starting point is 00:34:11 Let's jump off from your early experiences. Yeah, I mean, tracking is really the thing that has become central to me now. And I think of myself as trying to live as a tracker, trying to step away from actually following the footprints of animals and apply those principles to my life for sure. So I got introduced to it at a young age, and there were two brothers, and then they had some half-brothers who grew up south of Londa Lodosie. Their names were the Imchongos. And my uncle was very close with this man called Elmond Mchongo, and Almond was a true naturalist.

Starting point is 00:34:47 He had grown up hunting and gathering, and he had, from a young age, fed himself off the land. He knew where to get water. He knew how to get a war dog out of a hole. He knew how to rob a beehive. he knew how to find a mockaby. I mean, just an incredible naturalist. And so my early experiences were with him because I used to go out every morning. Four in my uncle would wake me.

Starting point is 00:35:08 We would get in the land river. We would go out and we would go and track leopards at that stage because he was a documentary filmmaker. So my first experiences were with Elman. And what struck me was this kind of openness with which he approached every morning. There was a paradoxical openness because he wanted to find a leopard. but in order to do that he had to drop the idea of finding a leopard and work with what was presented to him, work with the track, work with an alarm call, work with some birds calling. And so he was, it was this weird state of incredible, rigorous dedication and yet complete

Starting point is 00:35:45 fluidity and openness. And that was very formative. And then when I was, when I was about 19, I had sort of this introduction to tracking. And I had a sense of it, but I wanted to take. it to the next level. And then I spent a year with this well-known local bush poacher. He was, he was, the reason I wanted to be with him is because he had some of these old school skills and he had fed himself off the land for years. And so I spent time with him and that was, that was my tracking went, it took a huge step forward because he would put me in the front

Starting point is 00:36:18 and he wouldn't help me. He would say go. And sometimes it would be days and days of, you know, losing the track, going back. And he would just look at me. And I would say, okay, can you just give me the next track? And then I'd walk tight circles for a while and eventually I would get it. And then occasionally he would track and I would drop into his rhythm and get a sense of the process. Because some of the great trackers, they follow and then so they go track for track and then they leave the track and they cut ahead. And they'll walk a half circle loop up ahead and just try and cut the track again. And they trust themselves to see it.

Starting point is 00:36:53 And so then they start to jump ahead on the track and they'll walk big arches. seeing if the animal hasn't cut this way, hasn't cut this way, okay, cut the track again. And they speed up, or they know there's water up ahead. So they have this very, the process is always evolving. It's not just one thing. Sometimes you're following, sometimes you're using speculation, sometimes you're cutting ahead, sometimes you're using local terrain, sometimes you hear an alarm call.

Starting point is 00:37:17 So I really got a sense of that from him. And then finally, these two trackers who have now become my real mentors, was this guy called Alex Fendenhiefen, and Almond's brother, Renia, Simchongo, they've become the people who I'm now out with all the time. And they are probably two of the best trackers in the world. I would say they're in the top five or ten in the world. And my tracking has again gone to a different level, just being out with them for hours and being put on the track

Starting point is 00:37:45 and being shown what the level of things they're noticing, the details they're noticing, the thought process that they bring to it. And so it's this kind of, as I said, like it often begins with sitting around a fire and just listening. And then somewhere out there in the wilderness, a lion roars. And the first act of it is it could be anywhere out there. You try and get a sense of it, but it's this willingness to go. You know, it's this willingness to try. It's thousands of hectares out there, but we're going after that lion.

Starting point is 00:38:19 And even that, you know, that's a threshold in itself. the decision to know, knowing that there's an impossibility to it. And yet, if we go and try and we use our skill, there's also a chance. And as you practice it more, it becomes more and more likely. I would love to hear about this concept you have of a full day on the track. Like from morning to night, the transitions that matter sort of the archetypical movement throughout a day. Because I just think that's a beautiful kind of concept. And I know it's one that you've been thinking quite a lot. about recently. So maybe tell us a little bit about that kind of perfect day of morning to night on the track. Yeah, I mean, and one of the things we've tried to do on the track your life retreat is

Starting point is 00:39:01 I wanted it to be an experiential space and I wanted it to be a metaphorical space the entire time. So everything that we do throughout the day is talking about the dynamics of creating, the dynamics of finding your way back onto being on track, the dynamics of finding what you're looking for, And so the first thing is waking up. You know, literally we wake up earlier than anyone else at 4.30 in the morning. And one of the things that I've realized working with people over the last 10 years is that if you're a human being, as a matter of course, you will fall asleep in your own life. It will happen. It's part of being human is there'll be a place where you sort of, you go off track and you fall asleep in your own life.

Starting point is 00:39:49 And I've had a lot of men say to me, I just, I feel like. I've been automatic. I haven't even been awake in my own life. And so the first dynamic of tracking is okay, waking up and we literally wake up really early. And we wake up really early, get in the vehicle, it's 430, the stars are still out, the night is still still, and we head out for the next metaphorical movement, which is waiting for the call. And in the hero's journey, the call is always the first thing, but there's a kind of preparation that has to happen for the call. And so we get our out into the wilder parts of the park and the guys get off the vehicle and we make our coffee and we sit and usually waiting for the call is actually being in stillness and the act of tuning back in.

Starting point is 00:40:35 It's actually we sit there in the dark, we drink our coffee and we listen and we pay attention to what's going on around us. And inevitably what happens if we're doing that is that we will hear the call because we've prepared ourselves. Now we tuned in. We're actually on the lookout for and attention is a kind of magical thing. Part of waking up in your own life is saying, I want to wake up in my own life. Part of hearing the call is just saying, okay, it's time for me to start listening again.

Starting point is 00:41:02 It's time for me to tune in. And if that happens, that's where attention is magical. Something will cross your path if you turn your attention back on. And normally we'll hear a call or we'll hear the movements of animals. Something starts to speak to us in that space. And then the call for me is also like, the thing you know that if you don't do it, you'll go out of integrity with yourself. So if you're sitting there in the darkness and dawn is just starting to break and we hear a lion call nearby,

Starting point is 00:41:31 if we don't go look for it, there's something off inside of us. So we know it when we see it. And then if you get the call, that gives you something to aim at. We now have an intention. We heard rhinos moving in this area. We heard a lion roar. We've got a broad idea of what to aim at. So that's sort of like the broader vision.

Starting point is 00:41:50 And then we've got to move towards it, and what we'll need then is a first track. We need a place to start. And the first track is, you know, and it's so magical when you're driving around and you want to get on a trail, and then boom, there's the track of a rhino that's crossed your path. Boom, there's the track of a lion that's moved through the area. And like on that first morning, we tracked rhinos. And, you know, the park is huge. Somewhere out there is the rhinos.

Starting point is 00:42:16 But if we have the first track, we have the first small movement towards. what we're looking for. And what I say to people all the time, this movement towards yourself is going to start with the smallest thing you can do to take you more towards yourself. Most people want to say like, okay, well, you know, I want to move to being the best version of myself, or when I know exactly what the next move for me is, I'll do it. But actually you've got to break it down into a series of much smaller moves, things that take you a little bit closer to what you're looking for. And if you can identify enough small movements, enough first tracks, towards what you're looking for, it's going to start to take you. And so that rhino out there

Starting point is 00:42:58 could be anywhere, and we dial that infinite possibility down to a first track, and then a next first track, and then a next first track. And then we start to string that trail together. And as you saw guys like Alex and Rennius and the trackers we were working with, and yourself and the other guys in the group. At first you don't know what the trail is because you're learning the characteristics of the track and then in the space of a few hundred yards it starts to pop. You start to know what you're looking for. And that I call track awareness where you're actually training your brain, you're training your eyes and you're training yourself to see the subtle signs of your trail. You're training yourself to see your path forward. And that's why body tracker, one of the

Starting point is 00:43:45 exercises we do is so important because in the metaphor, you've got to train your body to feel when it's on track and it will speak in emotions and sensations. When you run into a feeling of expansion, you've got to know, that's my track. When you meet someone who's inspiring and you have that feeling as you're talking to them like you, you, you, you've got to see that track and you can train yourself to feel how life is speaking to you. So that becomes the next movement, developing track awareness and then we start to follow. It's remarkably true and it's actually a good excuse to get back to the morning hours that we spent trailing the rhino because first of all, there's all these different kind of states and we would take turns as lead tracker, meaning it's on us to find

Starting point is 00:44:29 the next track and follow this thing for all sorts of weird different little environments. And that's a profoundly different feeling than being at the back of the line where it honestly feels more like a walk, a beautiful walk, than something where your attention needs to be incredibly focused. And it's amazing how quickly you can pop between those states, kind of like the dogs we talked about at the beginning. Talk a little bit about that experience where, and I'm thinking here specifically about this obsession with goals that we all have. And in this case, the goal is, you know, a rhino. And the important point here is in the morning, we didn't find them, right? Like we had to stop because it was getting really hot and we had to go eat and, you know,

Starting point is 00:45:05 we were on the trail for five hours or something like this and we didn't find them. And you had some interesting thoughts at the end of that, that despite the lack of, you know, achievement or whatever, to take a look back and realize what happens. So talk about like the side effects, I guess, of what happens on the track. The one thing is, is that once you start tracking and there's an intention, you're not just walking through the woods. You're moving forward with intention. And then, and every person who gets on the front feels that. It's like there's a story that's being told on the ground. And every time you see a little bit of the rhinos side toe, little bit of its front toe, where it's turned, where it's cut, where it lay down, the story

Starting point is 00:45:44 continues to unfold. And up front, there's this amazing feeling of you're being led forward and your eye scans the ground. Boom, there's the track. You move forward in that direction. Your eye scans the ground, you don't see anything. And then suddenly you see it and you move forward. And then you see where the calf had walked close to the mother. And then you see where the mother had rubbed her nose on that log where she had scratched. And there's this whole narrative. And you are being led, and you'll remember we dropped down into that little Tamburtee grove. And it was just this beautiful area, the trees, the way the steep banks of the riverbank, and the way they had moved down there and they'd slept for a while.

Starting point is 00:46:23 There was no ways in a thousand year that you could have just walked there. There was this really strong feeling that the rhinos were taking us to places that we could never have gone. And by the way, a place that a car could never have reached. So that's something I've been thinking about it as well, which is, we're here, there are paths. There are well-trodden paths and then there are smaller game trails and it's interesting to see the sizing of the paths and obviously the range rovers form these these big paths but in certain ways that limits you so much to what you can see and I can't stop thinking about that because we never would have seen that little grove in a car. Yeah and the metaphor is

Starting point is 00:46:59 so strong because in life there are big pathways you know when when Joseph Campbell says if you can see your whole life laid out before you it's not your life. The culture presents us with the roads of where we should go, but the tracker goes somewhere else. The tracker is guided by a different set of trails, and they let themselves go where they don't know to go on the track. They go where the track takes them. And so if you can identify your inner tracks, what really speaks to you, and follow those, it's going to take you somewhere totally unexpected and that's why I believe people who live like trackers they innovate they create new ways of living they're original because they're moving forward on a different guidance system and it's not

Starting point is 00:47:45 one where the culture is presenting to them and it will take you to unknown places just like every track we followed here took us to a place we could never have thought we should drive there to check there were no roads to the places we went we went to parts of the reserve by following the tracks that no people no other people will go to can we expand a little bit little bit on this notion of culture and the role that it plays in our decision in our living and how you think about it. That was one of the more interesting topics that we covered kind of again and again. And the contrast, because there's positives to culture. Yeah, absolutely. And I think we all kind of know those. But maybe talk about the negative aspects to culture and how it kind of stands

Starting point is 00:48:20 in conflict to this way of living as a tracker. Let me sort of maybe lay down my sort of core principle, which is like really the center of the tracking metaphor. I believe that inside of you is a wild self. And the wild self, it's coded into you almost. It's like a part of your DNA in some ways. And it knows what you're here to do. It knows your purpose. It knows uniquely for you. And it's different for every person, what brings you to life, what nourishes you, what inspires you. So that is in us. It doesn't have to be created. It's there. Overlaying the wild self is the social self. And we need some social self because we're social animals. But in a heavily consumeristic culture and in the structuring of modern society, the social self becomes so dominant that it overwhelms

Starting point is 00:49:19 the wild self. And we find ourselves trying to be all the things that the culture tells us to be. and it's so pervasive from the time you're young, whether it's media, whether it's how to live a good life according to the culture, what's valuable, what's meaningful. And you'll know the social self because it's full of shoulds, well, I really should. This is what I should do. And it's full of have to. Well, you have to do that. And as I said, we need a little bit of it, but most of it has overrun the wild self. And the wild self, it has tracks.

Starting point is 00:49:51 And those tracks are in sensations in the body, things that make us forget about. time, the feeling of expansion, joy, peace, or the way it speaks. And we have to shift our attention onto those tracks and learn those tracks and begin to follow the tracks of the wild self. And it will start to take us to unexpected places. It will start to guide us away from all the rationales of what we should do to a deeper dimension of what we're here to do. And that's how I think you really find your way to your way to your own tracks and the understanding that you actually know you actually know what's calling you. If you could shed the roles, if you could shed all the things that the culture told you

Starting point is 00:50:37 to be, there would be something else inside of you that could guide you. One of the things, the phrases that we used a few times through the week and something I think a lot about is the ordering of chaos on behalf of others. And it makes me think of another term we've used you and I, which is like funny Venn diagrams or goofy Venn diagrams where you have these weird intersection of interests or of talents or whatever that might be another way of thinking about tracks. I think people, they feel that they should be doing a certain thing, but I'm curious what you think about what happens when that person is not good at that thing. How much of this

Starting point is 00:51:10 pursuit do you think needs to be the intersection of those two things, not just your wild self and what you're interested in, but what you're actually like naturally inclined to be good at as well? I think that there will be a correlation though. I think that there will be, if you listen to that thing that is speaking inside of you, it will be something very fundamental to you. So it won't be a case of, like, let's take you, for example, I don't believe that what calls you from the inside, you'll have an inclination towards and you'll, you'll tend to be good at it. This podcast, for example, you love connecting with people, you love learning, you're naturally interested, you're naturally curious. So it pulled you into something that was a correlation of all of those

Starting point is 00:51:51 parts of yourself. And because you're naturally into it, I mean, you're going to get better at it continuously, but it's your natural inclination. So I don't think the wild self will pull you into something that is not, you're naturally not inclined to. That's more the social self that says, okay, here's what you should be good at. The wild self will not pull you into something that is not in you. Does that make sense? It does. I'd love to take the position of a cynical listener out there. And maybe talk about the most common objections that you think about yourself or that you hear from others that are like, ah, you know, this sounds great, but like it's not realistic, it's not pragmatic. Culture is culture. Society is society. We've built up this massive

Starting point is 00:52:31 edifice and this is what we've got. Not everybody can go do this. So what are sort of the most cynical takes that you've heard on some of these ideas and how do you respond to them? The most classic thing is 100% of the time, well, I would do that if I had the money, if I could. That's like the base level. And that's where I think the design element does come in. Okay, fine. Stick with that then. But how do we find, is that fulfilling you? No. Okay, well, then how do we find what would be a little more fulfilling? Well, you know, I like being outdoors. Okay, well, then let's start by bringing a little bit more of that in. But yeah, I mean, here's the bottom line is in my 20s. I was like a zealot. I would convince everyone else that it was possible.

Starting point is 00:53:16 Now I don't, you know, I maybe don't try and convince the cynic. Because, you know, fine, be cynical, do what you want to do. But if something else is calling, if you have another longing, and if you feel that there is something else you're meant to be doing, well, then why not start? If you don't and you're like, this is how it is and this is what it is, cool, I'm not going to try and convince you. You know, I mean, I'm, I think what I'm saying is that we begin these journeys when we decide to begin them. And not a moment before. And sometimes a catalytic event will start it. You get sick.

Starting point is 00:53:58 You have a heart attack. You get divorced. You get fired. And suddenly it's like, okay, well, what now? And sometimes that will, suffering will start the journey. Sometimes you just have a calling inside of you. and if you have the calling then you may as well start tracking

Starting point is 00:54:14 you may as well start tuning your attention you may as well start trying things you may as well start going out there into the unknown you may as well move into the wilderness of life start to find something that's more fitting to you and if you're a total skeptic and you don't believe it and you're happy then cool you're not going to you know if you're happy

Starting point is 00:54:33 you're not going to be inclined to look if you're a total skeptic and you're unhappy and you're just in the grind and it's eating you alive, well, then that's on you. You mentioned money. Having done this a few times, I think everyone would agree like, wow, great. I wish I could flip a switch and be in a better alignment or higher integrity, as you say. What are the other major excuses or barriers that you see as most common to letting this happen?

Starting point is 00:55:03 So money is a big one. You know, I don't have the money. If I had the money, I would do it. What are the other, like, big excuses that you see? I'm not sure I would call them excuses, barriers. I mean, one is that we live in a culture that people really want to know. So when I know what I'm meant to be doing, then I'll make a move. That's when I'll take the big leap.

Starting point is 00:55:24 You know, everyone's always talking about the big leap. And that's not how it works. You've got to be willing to move forward into the unknown and make the space and be in a state of unknown for a while. because that's where you're going to find you're going to find a first track and a first movement and great entrepreneurs know this you know they know you you find out one thing

Starting point is 00:55:45 then you find out another thing then you don't know how to do it for a while then you do know how to do it so that's one thing the other thing is is people want to know every movement they want to know all the pieces that they'll have to do before they do it so like once I was coaching a guy I remember he said I'm totally burnt out so I said to him

Starting point is 00:56:06 but he said you know i've got all these responsibilities i've got all these i've got his family i got all this stuff so i said to him okay cool what and he's like i don't know what i need i don't know how to move forward i don't know what it is i said to him okay cool just go quiet for a moment go inside yourself and just feel for one thing you need one thing you need so he's like oh man i don't know if i want to do this i said to him just shut up go quiet just and and here with me tell me one thing you need goes quiet it goes quiet for a few minutes, he looks up and he says, I need some time completely by myself. But how does that help me? I mean, that's not going to take me anywhere. And I said to him, you know, that's the first track. You got to go and get some of the one thing you know you need.

Starting point is 00:56:56 That's the, that's one track. And then because you go and take some time, another thing will arise out of that. And then another thing. But you can't know the whole, you can't know the whole process. But if you can know the one thing you need and go and get it, the next thing will open up, the next thing will open up. That's the whole process. What's the single most memorable tracking experience that you have? Well, I have one with Alex and Rennius. We tracked a single male lion.

Starting point is 00:57:26 We tracked him for three or four hours. And he got to a place where the lion's tracks teed onto the tracks of a herd of buffalo. And right there, he laid down next to a pile of buffalo. dung, and this is the track telling you, and he rolled over into the track, into the buffalo dung, and he was covering himself in dung, and he's going to go hunt those buffalo. It's an amazing image. You can see where his tails shift, it's all laid out in the sand on the ground. Then he stands up and he starts walking, and Rinius was picking his tracks amongst the track, like the ground had

Starting point is 00:58:01 been churned up by the hooves of the buffalo. He was picking his track, and he was walking zigzags, and he'd get one track, and he'd get a second track, and he was charting a course and then he would, where he saw the track, he would look up at a tree and he would use the tree as a marker. That's generally the line that the lion is moving on. And then he would get it cut it again. And he was just saying, I just keep trusting myself. Just keep trusting yourself. And then there was a place where the tracks of three lionesses came in and joined him. So suddenly you saw the males track and then the track of a female and then a second female and a third. And lions are the only sociable cats. So on the ground, suddenly you can see where the tracks are all

Starting point is 00:58:39 touching each other, they're walking next to each other, and they're rubbing each other as the pride has joined up. And then about maybe a kilometer ahead of us, a battlier eagle dropped down. And Rennier stopped us, and he said, you see when that eagle drops down, it means one of two things. Either a buffalo is given birth to a calf, and the eagle is eating the afterbirth, or these lions have killed. So we went up ahead, and when we got to where the eagle had landed, it flew up, and the the ground had given way to like scrubby grass. It's very difficult to see tracks. Alex and I were walking around, we're looking for the tracks everywhere. We couldn't find it. Rainia stood very, very still. And it was interesting to me when he lost the track, he became still for a moment. And because

Starting point is 00:59:24 he was standing still, he saw these flies going past him. Zin. Zio! Zeeo! And then he started to follow the flies. And then he put his nose up and he started sniffing. And literally he caught the scent of meat. and he walked us in on the remains of a small buffalo calf. And immediately, as he saw the carcass, the lions that obviously move off, I saw him doing, it's a kind of calculation, but it's in his body. He's not thinking about it rationally. He felt the sun on him, so he feels the heat building. He sees the size of the carcass.

Starting point is 00:59:58 It was a small calf. He knows that there are four lions, one male and three females. And as he was doing it, I realized I was thirsty. So if I'm thirsty, that lion is probably getting thirsty. So it's very alive. And then Alex and I continued to look for the tracks. Where had they gone from the carcass? Rania stood up.

Starting point is 01:00:16 He just started walking. We said, where you're going? He said, I'm going. I know where the water is. So we were about three or four miles from the river. And he walked down through the clearings. He completely forgot about the tracks. Went down to the edge of the river.

Starting point is 01:00:28 Cut a game path on the edge of the river. And we started walking along the river's edge. Walked like that for maybe 10 or 15 minutes. And up ahead of us through the reeds, we saw this beautiful canvas, elephant bull was walking towards us. And they kicked the ground and a little puff of smoke came up and drifted. And Alex and Wren stepped in the direction that the sand had drifted, this little puff of dust. They're stepping downwind. They stepped downwind and they got in under a little palm tree.

Starting point is 01:00:58 And this elephant bull walked past us maybe two or three meters away. And for a moment, I remember he's towered over. his shadow was on us. And on the game path, he smelt where we had walked. He picked up the sand and he was smelling our footprints. And I just felt this incredible energy kind of sensory awakeness. And then he walked past us. As he moved away, we got back on the game path.

Starting point is 01:01:24 And now there's these big, beautiful elephant, huge tracks on the game path in the soft sand. About 100 meters down the track, the lion track, the lion track, come back onto the path, and now on top of the tracks of the elephant are the tracks of the lions. And we've just seen the elephant. So we now know we are close. And Renia said to me, come up to the front. So my job now is to follow the tracks, and he's putting me on the tracks because he wants, him and Alex want to look over my shoulders into the brush ahead so that they can see the lions before the lions see us.

Starting point is 01:01:59 And we start to follow in the beautiful lion tracks in powdery sand, the whole pride walking in a line along this game path. And up ahead of us, 200 yards, a monkey starts to alarm. Ew, ew, ew, ew, yeah. We know that, and I can see the monkey looking down into the river. We know those lines are moving ahead of us. Keep going, get to where the monkey's over our head. He's still looking down the river, shouting, and then an anayala starts to alarm, one of these

Starting point is 01:02:24 antelope. So it's an incredible feeling of being in the story, the narrative. You can see the tracks. Everything is talking to you. The monkey's talking to you. The anyala is alarming. a squirrel starts to call and you're immersed in this unfolding story and it's like the sense of you and the track start to collapse and it's one story and it also occurred to me that you could walk down that

Starting point is 01:02:48 trail as a non-tracker someone who was completely shut down and all of that could be going on and you could miss it you know this incredible information language this whole escape is guiding you there's it's it's telling you and you could miss it we go for about another 50 meters and then there's this amazing thing, all the tracks are going away from us, and then suddenly, on top of all of the tracks going away from us, there's one set of tracks facing back towards us. And what's happened is the female at the back of this line of lions moving, she can't smell us, she can't hear us, but as we're tracking her, she's starting to get a feeling, something behind her saying, there's something there. And I think it's because we're dropping into the resonance of the lions,

Starting point is 01:03:34 we're moving like them, we're starting to connect in some way. She's feeling something. So she stops and she turns and she looks back down the path. And she doesn't see us, but it's just a beautiful moment in the tracks. You know, she's starting to get a sense that you're back there. And then the tracks cut off the riverbank and they went down into thick reeds. And we had a little bit of a, we called an endaba, a bit of a meeting. We said, are we going down there?

Starting point is 01:04:00 And Renia said, let's just take a little look. And so we went down on a hippo path where the hippos come in and out of the river and it made like a tunnel in the reeds. So we move, we like crouch down, we crawl through this tunnel. And then it opened up into a little sandy beach. And if you see it, I should tell you, if you see lions on foot, one of two things happens. One, they get a fright, they run away from you. They take cover. Or two, and particularly when they have cubs or meat, you start to hear a growling.

Starting point is 01:04:29 it sounds like a dirt bike. And then you see one of the females or one of the males. Usually it's a female if there's cubs. And she just locks you in the most intense, I'm going to massacre you gaze. And slowly she starts to walk towards you. And there's like an intent to the walk. And the head is down and the tail is lashing.

Starting point is 01:04:54 And she starts to walk faster and faster and faster. And then it becomes a trot. and then it becomes a full-on charge. And the whole time she's growling. She comes in and at that moment, your only hope is to stand your ground. So everyone grabs each other. You start shouting and usually she'll come and stop two or three meters.

Starting point is 01:05:11 The sand flies up. You get sand in your teeth in your eyes. It's terrifying. And everyone stands and you shout. And then what's happening is while she's got you there growling at you, the other females taking the cubs away. So you stand, my uncle used to say to me, lions are afraid of your courage.

Starting point is 01:05:26 You have to stand your ground, otherwise you'll get eaten. So she turns and she moves away and then you get away. So this is all going through my mind as I crawl through a hippo path in a thickly reeded river. And we come out onto this open beach and we go over to the little stream of water. And I can see where the male lion has come in to drink. And then the first female, there were three females with him. Then the second female, and the third female. And this is all in the tracks telling you.

Starting point is 01:05:57 And this is how it can help you. Then a fourth set of tracks, fourth female. And then I saw tracks of what I thought briefly as I glanced at it was a civet. A civet is like a small raccoon-like creature. I saw the tracks of the civet, and then the three of us, all looking at the sivet track, realized at the same time, that's not the tracks of a civet. That's the tracks of a cub. And Alex looked at it.

Starting point is 01:06:20 Rennius, who's a black shangun man, went completely white. And Alex looked at me, and he milded a profanity. and he grabbed the top of his head and we realized now we are down in the river and the pride has joined up with a female with cubs and all of us just sank down onto our haunches and we sat there incredibly still because we know the lines are now very very close and you don't want to be in between the mother who stashed the cubs somewhere in the reeds now we're in her way and it's because it's a terrifying situation and I saw Rennius and this is this is experience. I saw him listen very intently to the soundscape around us. And he was listening

Starting point is 01:07:05 for subtleties in bird calls that I don't know, that he knows. Little indicators of where the lions might be, because birds have a very unique language, but it's subtle. Some of it is very obvious when they're alarming, but some of it when the lions have laid down, when they're not moving, is much more subtle. And he heard, he got a sense that they had moved a little bit away from us. And he clicked once and he pointed us back up the path. And I mean, our hearts were in our throats. We stood up and we moved up the path and we got to a tree on the riverbank and we looked down and then we saw them down in there with the cubs. And we didn't get charged. No one got bitten. No one got mauled. But the experience of it again was just this incredible alive.

Starting point is 01:07:54 And in some ways, again, his experience, there's a chance if we had been by ourselves, we would have blundered on and we would have got badly, badly charged. But, you know, I watch all these Discovery Channel things and everything is like, death week, deadly snake wig. Like, if you actually are listening, if you're actually aware, if you actually take the time to learn about the wilderness, it talks to you. And it doesn't want to tear you up. that's not the animal's natural inclination. They're actually, if you learn the language, it can be a very, very safe environment. So I like to just pause and recognize the single best answer to any question that I've ever asked anybody. That was incredible.

Starting point is 01:08:40 Perfect bridge into my last and always my favorite question that I ask everybody, which is, what is the kindest thing that anyone's ever done for you? Well, I had this guy who I used to track with. His name was Sully. and he was just a tremendous human being. If you drove past Sali out on the reserve, he was in his car, you and his, you drove past each other on a dirt road,

Starting point is 01:09:01 you just kind of waved at each other, you look up in your rear mirror, he stopped the car, and he's waiting there just in case you need help with anything, and you decide like you might want to come back and ask for some, we had that one guest who said, he would look after people on safari so incredibly well, everything they needed.

Starting point is 01:09:18 He was so attentive. this guy said to him, Sali, you are pathologically helpful. But in 2001, we were tracking a leopard together. And the tracks ran up the side of the river. And it was a hot day. And because it was hot, I went into the water. I had rolled my sleeves up and I was walking in the water. And it was clear water, sort of knee-deep, running over sand.

Starting point is 01:09:44 And as I walked upstream, this little sandbank sort of fell away. And there was a place up ahead where a. a branch, a tree had fallen over and the branches were in the water and it was a little, there was a little rapid there and, you know, if it had been a horror movie, people would have been like, don't go in there. But I sat down just on the edge of that rapid and Sully was on the far bank and the croc was, the crocodile was in this little depression, came out, grabbed me by the leg, when a crocodile bites you, just the force of the bite is the first thing. It was just like you immediately, I immediately knew I was in trouble.

Starting point is 01:10:19 And it tried to pull me down into the water. And I reached up and I grabbed this branch. I started shouting. And it couldn't get me all the way. And it bit me a second time my foot went down its throat. It spat me out. And I started and I kind of pulled myself up into the tree. And then over and I looked down on my leg, my leg was mangled.

Starting point is 01:10:40 And then I kind of got over onto the bank. And I was in a, I was in quite a dangerous position on the bank. I think it probably could have grabbed me again. But I was trying to like sort out how to get my leg to stay. together. And Sully, who was on the far bank, saw me, he saw me come out of the water, he saw the mangled leg. And so he knew that between him and I in this deeper channel, there was a crocodile. And he just booked straight in. He came straight towards me. He went straight into the channel. He knew there was a crock in there. He waded across it. And he got to me, he grabbed me, picked me up.

Starting point is 01:11:12 He's a freakishly strong guy. Pick me up. And he carried me up onto this bank. And he took his shirt off and he wrapped my leg in the shirt, got me back to the vehicle, and got me to safety. But just not the blink of an eye, you know. And when I talk about that to audiences, sometimes I'll say to them, I don't know how many people you know who come into a deep channel of water that they know has a crocodile in it that's just try to eat a person. But for him, it didn't even blip on his radar that there was something exceptional about it. And it was like that that to me is the core of the more collective psychology of Ubuntu. It's just if you're in trouble, I'm in trouble. I love the heuristic from prior guests, Peter Attia, where you measure wealth by the number of

Starting point is 01:12:03 people that you would give a kidney to. Yeah. So maybe we'll change that to the number of people you would dive head first to crock infested waters to try to save. And a great heuristic for the idea, the closing thought on the idea of the village that. people within that village are those kinds of people for whom you would do something like that. And this has been just a total blast, just chock full of fantastic stories and lessons and fresh perspectives on the world. So I deeply appreciate your time. People are going to love this one. Thank you. Thank you. It's so great to be with you and I appreciate your time. Charlie, I like starting these things in a unique way. And one idea that you've had is to have people

Starting point is 01:12:47 stack rank their vices of power, money, and fame. I'd love you to begin by explaining why you're interested in this idea and what you've learned from the answers over the years. So it's a two-part question. One is the virtues, which is working with people you like, working on amazing problems and having impact, and then the three vices, power, money, and fame. And you can't avoid them. They have to be stacked ranked separately. And it's really trying to get at the differences between, there's no good answer, but there are definite good fit answers. So someone who's interested in power tends to be better at execution. Someone's more interested in money tends to think more about some capital efficiency. I tend to avoid people interested in fame. But if you are doing

Starting point is 01:13:30 something in showbiz, it would presumably be the number one criteria. If you think about the difference between sort of impact intellectual interest working with people, you really get impression of where people are going to be happy and where they're not going to be happy. You also start to understand why certain organizations do so well. So SpaceX, if you think about it, stacks high on all three. It's intellectual interesting. You're working with amazing people and you have huge utilitarian impact in the world. Whereas if you're working in FinTech, you're less likely to sort of have that utilitarian

Starting point is 01:13:56 positive impact. Any especially memorable or interesting series of answers that you've gotten on the two stack ranks that come to mind? A lot of people have negative utility from fame. a lot of people start with power and then when you push them, it's actually money, but they don't want to say it. And that's more true outside of the U.S. culture than it is in the U.S. It's particularly true with Europeans. And so a lot of it is trying to get people to actually say what they truly believe as opposed to say what they think they should say.

Starting point is 01:14:30 I'm curious in what context, whether it be interviewing prospective founders, interviewing potential hires or others, you find it most interesting and useful? All of the above. The founder one is fascinating because you actually end up going down different lines in helping them, depending on whether they answer the power and the money. Founders that answer with power tend to need help more on managing their startup capital efficiently. They tend to be the ones that spend more.

Starting point is 01:14:53 They tend to be the ones that over-expand. They're often too aggressive. Conversely, the ones that answer money tend to be very capital-efficient, but often slightly too cautious, slightly under-aggressive, sometimes. sometimes not willing enough to stamp their authority on the company and make it the culture that it needs to be to be successful. I'd love to take a step back now and introduce you to the audience a little bit. One device that I've been using with people on the podcast is to ask you to give the thumbnail two-minute sketch of your life and career up until this point.

Starting point is 01:15:25 Studied Politics, First, for the Economics at Oxford, ended up very brief at McKinsey, then at Microsoft, and then sort of bumbled my way into becoming an investor and do a lot of angel investing. So I think I've done about 500 angel investments. I think the actual numbers 483 and about 300 in the portfolio at the moment. I believe you ran strategy at Microsoft. What exactly did that entail and what is most memorable about that time? There's so many memories working with amazing people. The hostile acquisition of Yahoo as an attempt was just unbelievably intellectually fascinating, trying to buy a company in a hostile acquisition for I think it's $47 billion. dollars and just the drama and the soap opera. And realizing how much part of dependency matters

Starting point is 01:16:09 and big deals, how much a casual comment misinterpreted by one side or the other actually changes the outcome. It's remarkable how little system theory there is in the sense of if you ran experiments again and again, I think you'd get a lot of different results in M&A activity. Whereas in things like product usage, good products and bad products would probably be the same in each experiment. $483 investments is a crazy amount. I want to come back to your time at Microsoft, probably later on and talk in more depth about strategy. But given the sheer volume of investments that you made, I think a great place to begin our conversation is your idea or you're thinking around why startups succeed and fail. I'd love to begin by you outlining sort of what, if anything, is shared in common across those 483. So are there certain features that you're always looking for and sort of how your process works and then we'll get into the success and failure? of startups. In some ways, it's two tie together. So I think the dominant sort of failure mode for startups is the same at each different stage. So at sort of pre-seed to seed, you basically have a failure to achieve labor productivity, which is only just a polite way of saying, the team doesn't

Starting point is 01:17:17 come together, doesn't gel and produce good output. Usually a team that just produces good work will generate enough sort of kinetic energy to get continuing funding. Once you're sort of going from seed to series A, it's another single cause, which is failure to get product market fit. You're basically on the search for demand curve, and you either find one or you don't find one. And this is where you've got the highest element of pure chance in the startup. It always feels akin to sort of gold prospecting in the California Gold Rush, which is you can be good or you can be bad, you can do the right thing, you can do the long thing, but there's some ill-adjucible amount of chance. The wisest prospector with the best maps and the most intelligent strategy,

Starting point is 01:17:58 sometimes just won't find it, and someone will just fall a street, put the pan in a stream, and gold will come out. And there really is a little nexus of serendipity at this stage. Then when you move to Series A, it's really all about labour productivity, but in a different form, it's can the manager scale? And one of the fallacies is most early stage started founders think they're managers, and they're actually not. What they have is a team that's actually managing them. Because when you're managing, say, 10 or less people and you're spending time with them every day, what's actually happening is they're managing you by inference because they know you well enough and they talk to you enough to work out what your desires are. So as long

Starting point is 01:18:39 as you're articulate and energetic and sort of engaged, you actually don't have to manage. The team manages you upwards. But when you scale to 30 people, to 90 people or above, you no longer have those personal connections, and you have to move to formal management techniques. And that's like a sort of Fermi paradox great filter. It wipes out an amazing amount of startups. And the way that's devinced is a collapse in the labour productivity per person. There's a term in microeconomics called managerial dis-economies of scale. And I think in some ways the angle of the decline of productivity per person is the difference between the sort of the stripes, the great startups, and the failures. And maybe if you're a great

Starting point is 01:19:18 startup, as you go from 10 people to 100 people, output per person drops 15%. And if you're a bad startup, it actually drops over 90% with the result that often 100 people startups produce less than they did when they had 10 people, because the managerial collapse has been so extreme. And one interesting thing is, if you look at the companies get by big, maybe there's a sort of interesting explanation where more of the shared attributes was an instinct for the sort of structures and processes of management that were shared between Gates, Zuckerberg, Bezos, the Carlis all these sort of super-talented people. Because my guess is they didn't receive formal instruction on it.

Starting point is 01:19:53 Their VCs and advisors weren't that helpful on it. It may be either by chance or by skill, they just sort of intuitive their way through it. Then when you get beyond that sort of series B and beyond, I think it's institution building. And one of the interesting problems is the sort of people that become entrepreneurs are often full of energy and sort of flexibility, almost a sort of combination of street smart and book smart.

Starting point is 01:20:14 But there's a point where they've hit product market fit where actually what they're doing is repeating a process at scale. And to repeat a process at scale, you need to build an institution. And often that sort of is almost arithmetic to their personality. If you're going to take a revenue from 42 countries, you really need a well-developed finance department. Once you get to a certain size, you will always be in court cases because of be sued by ex-employees, you'll have patent infringement suits, you'll be debt-collecting customers

Starting point is 01:20:42 that didn't pay. Like this shift to sort of building an institution with instruments. norms, institutional values, and institutional culture, and all the boring stuff of building strong finance department, strong legal department, strong HR department, that again is a big filter. And so those are sort of filters by stages. What's interesting is some of those you can do when you sort of meet someone in pre-seed. One interesting thing is I sort of close my eyes and think, can I imagine this person in a public company conference school, remembering the, I sit in the Microsoft earning schools. And I'm thinking, can I imagine them sitting as a sort of CEO next to their CFO talking with all the

Starting point is 01:21:15 sort of Wall Street Equity analysts in the by side and the phone and just be incredible enough and deep enough and mature enough to pull that off. It's a fascinating set of framing. The one that jumps out is maybe most interesting to me is this idea of the declining curve of people's productivity. And in your experience, whether or not that is something that is typically innate to the founder, meaning they just handle that naturally and with a plum, or if instead it's something perhaps that could be coached. And if it's really just a set of best practices that are fairly universal that founders just don't get? I think the irony is it is absolutely something that can and should be coached, but often isn't. So often the people that get it intuitively are the people that

Starting point is 01:21:56 survive, but there's no need for that. It can just be coached in. And I think a lot of it is you get this very strong transition. When you're a very small startup, most of the people you're employing just come in and do their job and go home. And the drawback of that is you tend to end up having to do type management, a lot of micromanagement. And the beauty of it is you tend to get a very low level politics within the organisation. Then you get this transition to where you're hiring people that are sort of execs, would be the sort of headhunters description, VPs, senior people. And the beauty of these more senior people is you can give them much more complex tasks, build me a product division doing this, go open European markets for me. And the drawback is it,

Starting point is 01:22:38 anyone capable of those complex conceptual abstractions necessary to do that tends also to be capable of politics. And because the world is not composed of saints, as an organisation scales, the level of Indonesian politics increases exponentially. Someone wants to send to me, the difference between a great company is one where the execs spent only 25% of their time playing politics. And a bad one is so they spent 50% of their time playing politics. And that delta is the entire Gaussian bell curve from the best Fortune 500 company to the worst. And I think one of the things that really matters as a founder is acting as a dampener on politics.

Starting point is 01:23:13 So reducing interneasian warfare, reducing the tendency for marketing to try and take control of the sales funnel, reducing tendency for the head of sales to want to take over sort of inbound marketing. It's trying to stop the CFO controlling spending so tightly that you don't get positive return capital investments by sales. Trying to stop sales getting so much control over spending. that your margins go out of control. All those boundary conditions between sort of BP leaders and functional heads, defining those well and managing through that transition is just so important.

Starting point is 01:23:46 And there's nowhere where someone learns that through the process of entrepreneurship. One of the things that's, I think, very interesting about people's careers in general, is the early stages and the personalities go into them, often have negative correlation with the later stages. So if you look at a sort of McKinsey or Goldman Sachs analyst, often what they need is attention to detail, strong work ethic, high diligence, high conscientiousness in sort of by factors, all those sort of things. If you look at middle management at those companies, they need good project management, good ability to abstract and structure problems, good ability to pull a team together and create team morale, and the sort of being cost of detail and the technical knowledge

Starting point is 01:24:23 matters less. And then if you look at the sort of partner level in those firms, often all that matters is relationship building and sales and charm and the ability to empathise with the client and connect with them. And so it's very hard to find people that are stars in all three parts of those careers. And I think it's the same with entrepreneurship. The street smart entrepreneur at sort of pre-seed who can raise money with a good narrative and get energy and recruit people and sort of create a sort of sense of momentum and a spree decor is often very negatively correlated with the sort of personality that wants to put in quarterly HR reviews and QBR reporting and really make sure that the finance team is ticking at a later stage.

Starting point is 01:25:07 And then conversely, often the entrepreneurs do very well later find the early stage capitalizing hell and earth because in some ways they're so tightly gripped to reality and they're slightly pessimistic, which makes them very good at sort of avoiding chaos, often makes them very bad at pitching. I'd love to hear your thought on this interesting concept that actually our mutual friend Graham and I have batted around quite a lot, which is this notion. The term we use based on a blog post by guy named Rick Burton is that. idea of an alien here is used as the best possible compliment to a founder, where it's somebody

Starting point is 01:25:39 that just has sort of what seems to be an unfair and privileged access to some sort of underlying substrate, the thing that is going to build the business. And they just kind of know what to do. They have an incredible first principles mindset, typically, and say Bill Gates would be a great example of this. I think Bezos would be a great example of this to use obvious ones. What do you think of that idea that in some ways the absolute best founders are in some sense alien and distinctly unique people. I will maybe for the Socratic sake of it, sort of take the opposite argument and say, I think one of the mistakes that's fallen to is just sort of seeing sort of evanescent genius. Because you're seeing people at the height of their powers, you're not seeing them on the way up.

Starting point is 01:26:18 There's that famous clip of Bezos, I think in 99, with Amazon sprayed and spray paint in the back of the office. It would be really interesting if you talk to him, whether he is similar to the Bezos of today. Because in the intervening 20 years, remember, you've got this incredible training program for the mind. They're working every hour in the startup. They're talking with the smartest people. They're constantly getting new information. They're hiring. They're firing.

Starting point is 01:26:49 So their pattern recognition of executives get so much better. They've got a million failed initiatives. So they have all these learnings of what not to do. They've got all the things that have worked and they've seen what's scaled. They've seen the commonality. And so how much of that is sort of looking at. an athlete at the peak of their performance and not seeing the 10,000 hours of practice that got them there. And I could almost argue you could invert it and say, what are actually the causes

Starting point is 01:27:14 of mortality and how do we just avoid suffering that mortality this year? And if you survive long enough, maybe greatness eventually becomes you. So one of the things I think that is perhaps underestimated is if you want to live forever, maybe don't start thinking about study centenarians. work out how to not die of a DUI, like drink driving or any of the, or smoking 20 cigarettes a day. And to some extent, the same in entrepreneurship is it would be amazing. And of course, the problem with sort of the observation of the world is people spend a lot of time studying greatness. They don't study failure. They study Mohammed Ali. They don't study all the heavyweight boxes that flaked out after losing their first match. But maybe if you study all of those,

Starting point is 01:27:54 you can find a commonality in their mistake. Maybe they all, I don't know, offered their chin to the opponent or something. And in startups, I think there are. common mistakes. There's an original sin about capital raising. I see so many startups three to five years in, still haunted by a bad capital raise at the beginning, some investor they don't want, some valuation that was hopefully dilutive and puts VCs off now. Often, one of the things that I see collate very well with success is how quickly they exit their first employee that doesn't fit. And I think what that's actually showing is, are they willing enough to be disagreeable to make the company what they want? And so the willingness

Starting point is 01:28:32 across that chasm, and often you're dealing with young founders, that's a major infraction point. And if you don't do it, that often reads to a toxic culture and bad results. Then there's sort of more subtle melodies, like turning things into an academic project, particularly with founders with very strong academic backgrounds, often in deep tech and PhDs. They're sort of like generals fighting the last where they think of prestige as a currency, because it is in academia. And so they just think, if we do amazing work and we tell the world about that amazing work, good things will happen because as a holistic that did work, but it means they don't engage with revenue, they don't get quite product market fit, it's too much a sort of ivory tower intellectual

Starting point is 01:29:11 exercise. Or conversely, do they just sort of think we get momentum, we get revenue, we get traction, it all work, and they haven't really thought about the deep microeconomics and unit economics of a scaling company. And so I almost inverted and say, don't study greatness, study failure, and work out how not to be that. If you're sort of thinking of history, trying to be as good Roman empress, Augustus, would be really, very difficult. Not being as incompetent as a curricula,

Starting point is 01:29:38 seems really easy. And so, as a practical advice, not making the catastrophic mistakes and just surviving long enough feels like a good strategy. There was some general somewhere that said, it's not that good soldiers become veterans. It's that lucky soldiers become veterans,

Starting point is 01:29:55 but veterans are good soldiers. Meaning just the luck of survival, in the first few hours, put you up an experience curve. And I see entrepreneurs transform in those first 36 months of leadership and management. And half of it is just stay alive till you get good. We've talked a little bit about recruiting as someone that all of a sudden seems like half my time has spent just recruiting people in all different directions. Curious how early you encourage entrepreneurs to make that a major part of what they do and whether or not that effectively lasts the rest of their career if they're successful?

Starting point is 01:30:30 So I think recruiting is way underestimated, precisely because in an early company, people replicate themselves. So because people tend to hire, not so much in their own image, but with that own set of biases, all the initial people you hire will influence all their other hires. And so you can either get this sort of upwards, iterating culture of excellence, or you can get this downwards iterating culture of excellence. So those first few hires are utterly critical. And I think people way underestimate just the math of the return, which is, it seems excessive to say spend 100 hours hiring a person. But if you're only hiring 10 people, that person is 10% of the output of your company for the next seven years if they stay. But then if they hire as well, they may actually

Starting point is 01:31:14 contribute to 10% of the productivity of the company for the first decade, both by their own labors in the years, but also in terms of the way they themselves accrued. So I think people just sort of underestimate the power of the math here and don't focus on bias that entrepreneurs often have of going for speed and the desire to move fast. And partly this has sort of come out of startup culture because of the synergies of network effect businesses where speed oftenly does matter. But 99% of startups don't have strong network effects. 80% don't have them at all, maybe 19% only have weak network effects. And in those, quality matters far more. And so going slower, spending an enormous amount of time picking exceptional people that are deeply synergetic, it's exceptional in and of themselves,

Starting point is 01:32:02 and then have deep and meaningful synergies with the other team members, creates this thing, which is a sort of algebraic functional labor output. And I almost think that's how you have to think in the first year. How do I find amazing stand-down people that are all. also synergetic, and so my net labour output of the firm is super high. And the biggest mistake I see is when they're panicked to hire someone because they need sort of a job done, and so they just go for the earliest person. And then, sorry, to monarchy, the pernicious mistake is the change in hiring rate based on the amount of capital available to the startup. So what you notice, if you go after it is hiring is not consistent of a quarter-by-quarter basis. It bulges after each capital raise,

Starting point is 01:32:45 pre-seed seed, A, B, and then it's attenuated almost to nothing in the six months before the next capital race. So the sort of entrepreneur is like the proverbial sailor coming into port who spends all their money and then doesn't have any months afterwards, but it's in hiring. And if you think about that, that's absolutely insane because what's the chance that you can find, say you're hiring 10 people? What's the chance you can find eight in the first 90 days, that it's right to find eight in the first 90 days and then only like to find two in the next 540 days. your chance of coming across the exceptional people is so much lower than if you space that out evenly. And because you'll know the existing people and see them working together, if you hire two in that first quarter, each next one you hire, you will understand their synergies with the existing team so much more. What have you seen successful founders do to make sure that when

Starting point is 01:33:37 recruiting, they're able to win the best candidates out there? So it's one thing to be patient and spend the time to identify them. You also have to hold out on a attractive proposition to those very talented people who presumably have other opportunities as well. So what have you learned about the best recruiters in terms of how they market the opportunity and market the firm? I'll give a sort of a basic cynical answer and then a sort of aspirational answer. The cynical one is just be in a labor market sort of low competition. You really don't want to be sitting there in San Francisco trying to close your candidate when John Collison's trying to close the candidate as the alternative because John's going to win.

Starting point is 01:34:14 Knowing John, I agree. He's one of the greatest sex of his age, but you see this actually happen. Whereas if you're hiring that person in Kiev and their other option is working in outsourced IT for Deutschebank, it's a much, much easier win. So in some ways, what you want to find is where are then incredibly qualified people in weekly competitive labor markets? And that is a much easier filter than actually being good at the clouting and a much more powerful one. You're much better being a heavyweight boxer who's not very good fighting right weight boxers than you are getting good as a heavyweight boxer.

Starting point is 01:34:45 And it's the same. You're better going and competing in a market where the other recruiters are lightweight because they're boring industrial firms with tenure-based promotions. So that's one. And then two, look, it's some combination of sort of painting a vision that people want to be part of, understanding what they themselves are motivated. So it goes back to those sort of early questions. Are they motivated by working with great people? Are they motivated by utilitarian impact? Are they more motivated by things like money and power? It goes back to just getting the impression that they want to spend time with you. Do they actually want to spend every day with you as a founder? Because these companies are small. It's not like you're accrued by a big company and the hiring BP. You may be going to spend an hour a month with. You're going to spend a lot of time with this founder. So there has to be a natural desire to do this. And then third, I think there's just a sort of sense of being in a sort of gang that's going to succeed,

Starting point is 01:35:35 a sense of we happy few, to quote, sort of Shakespeare, of just, I want to be with this because this is going to be something that changes the world. and it's going to be an adventure and fun. And that cliche, the journey will be the award will be true, and the economic outcome will be a reward. And when I look back to impact will have a reward. And if you get that trip tech, you'll close them. I asked once a group of people, what, if any specific sector or category of companies, they would invest in if they could only choose one for the rest of their career.

Starting point is 01:36:03 And one person said communications, because you'll always have some monopoly to pick from, which is sort of a classic expression of the network effect idea. I'll go for, if you pick two axes, one core axis is boredom and the other is complexity. You want highly boring and highly complex because everything in the universe is a supply and demand curve and you just get insufficient supply of entrepreneurs in the highly boring but highly complex space and therefore you get elevated returns. So if you go to the quadrants, you've sort of got the whole simple side, boring and simple and complex and simple. It's just too hard to get differentiation without enough complexity. That's when you get commoditization. If you go for interesting and

Starting point is 01:36:40 complex, you get brilliant entrepreneurs. This is a problem, say, with space tech as an area of innovation. Every single person involved with space is basically a brilliant genius who's passionate about their work and loves it. And so very, very strong and metastodynamic. On the other hand, if you hang out in audit software, accounting software, you're sitting in an area that's complex, but no one wants to boast they do it at a dinner party and what you might call the sort of spiritual rewards of the industry a lower. And therefore, you just get less by of entrepreneurs, therefore the chance of the entrepreneur succeeding is significantly higher. Well, Charlie, I feel like I could do this with you almost weekly basis and be sort of

Starting point is 01:37:16 endlessly entertained by your prolific interest in so many different things. I'll certainly remember this conversation as one that's a reminder that investing in business are complicated. And if you want to spend your career in those spaces, you better love it because there are so many variables and so many things happening and you have to develop your own niche and your own strategy. My closing question for everybody in each of these conversations is to ask for the kind of thing that anyone's ever done for you? Oh my God, there are so many. There are so, so many examples.

Starting point is 01:37:46 I think it's probably a recurrent one of often my enthusiasm has been greater than my competence. And it's the people that bet on the enthusiasm more than the competence. I'm internally grateful to them. I love that. Again, you're sometimes describing my life. So I know exactly what you mean. And it is a wonderful thing. And a major category of these answers is betting on somebody early. Seeing something in them and taking that risk is always a great kindness. Well, Charlie, this has been a highlight of my early week, even though it's just Monday. I really appreciate your time and I've loved all your insight. Thank you. Thank you. If you enjoy this episode, check out join colossus.com. There you'll find every episode of this podcast complete with transcripts, show notes, and resources to keep learning.

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Invest Like the Best with Patrick O'Shaughnessy - Sam Hinkie, Boyd Varty, Charlie Songhurst - Trail Magic - [Invest Like the Best, EP.323]

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