Motley Fool Hidden Gems Investing - Ryan Holiday on Decision-Making, Stoicism, and Comfort Zones

Episode Date: July 14, 2024

Steve Jobs was famous for his micromanagement, but he never visited Apple’s manufacturing plants in China.  Ryan Holiday is a best-selling author and a student of stoic philosophy. His latest book is Right Thing, Right Now: Good Values. Good Character. Good Deeds. Dylan Lewis caught up with Holiday for a conversation about: - How investors can implement stoic philosophy.   - Why Holiday gave up on marketing spend for his business. - The cost of getting outside of your comfort zone.  Company mentioned: AAPL Host: Dylan Lewis Guest: Ryan Holiday Producer: Ricky Mulvey Engineer: Tim Sparks Learn more about your ad choices. Visit megaphone.fm/adchoices

I think one of the really exciting things about the world that we live in now is how accessible like basic entrepreneurial practices have become. Like anyone could throw up a Shopify store and sell things, right? Anyone could build a platform and talk to an audience. So instead of it being this thing that like the elites in Hollywood are doing or that the business people in Wall Street are doing, it's a thing you yourself are doing. I'm Mary Long, and that's Ryan Holiday, a bestselling author, business owner, and student of Stoic philosophy.

His latest book is Right Thing, Right Now, Good Values, Good Character, Good Deeds. My colleague Dylan Lewis caught up with Holiday for a conversation about how investors and entrepreneurs can use Stoicism in everyday life, Holiday's realization about advertising spend and what he's doing instead. Plus, why even retail investors should participate in proxy votes. So I think I want to just start out with your overall journey with stoicism and what brought you to it and kind of how you've gone through it over the last decade. Yeah, I realized in retrospect, there's sort of a long tradition, this idea of like somebody passing on this book and going, hey, this worked for me, it might work for you.

which is effectively how Stoicism has spread for 2000 plus years. There's actually a little note in Marcus Aurelius' Meditations, The Emperor of Rome, and he's thanking his philosophy teacher for passing along to him the works of Epictetus. He says, thank you for loaning me the copy of Epictetus' lectures out of your own library. And that's sort of what happened for me. I just got past Marx, Aurelius and Epictetus and I read it and I was sort of like, where's this been my whole life? This is what philosophy is. We think of philosophy as these abstract questions. We think of philosophy as theoretical, but really it was that. It's like people trying to make sense of the world, trying to find some bearings in a confusing, overwhelming thing called human

existence. And that was my interaction with it almost 20 years ago. And I wouldn't say I am a stoic. I would say I am a student of stoicism. I don't think it's a thing you arrive at so much as a thing you are trying to understand and to do your best to apply in your own life. You mentioned that there's this sense of something that you're working through. And in the book, you're focused on justice in particular. And that's kind of the topic that you're working through. In the book, you break it down. You have the me, the we, and the all with respect to justice. Can you kind of walk me through that micro to macro view? What I've been doing now for the last five years, this series on the cardinal virtues. So the four

virtues of stoicism are courage, self-discipline, justice, wisdom. And I did courage, I did discipline, and then this one's about justice. And I think when people think of justice, they think obviously the legal system, they think about whether something's against the law or not. Obviously, that's a component of it, but really justice is sort of the standards we hold ourselves to, the way we treat other people, and then our sense of our obligations to the world, our interconnectedness between sort of all people. And so the book is kind of a journey through that. First off, what are some kind of standards of behaviors, rules, a code of conduct? How does one think about getting involved, getting engaged? And then finally, sort of what is our sense of the whole, our connection, our oneness as a species? And then, of course, all living species interconnected in that way. That's kind of the journey of the book from this really simple, straightforward version of justice to a much more broader and all encompassing kind of justice. Does that structure in that order kind of reflect your own journey with it?

I think so. I think so. Look, I came to stoicism originally like a lot of people thinking about what it could do for me, you know, how it could help me. how to, you could think about it as, as an investor, you know, at first it's sort of, how do you become more rational? How do you become more self-controlled? And then as you master these sort of basic kind of inward things, then you can take that back out in the world and choose sort of how you're going to apply that. And if you think about these other virtues, right? Courage and self-discipline, of course, these are essential virtues in success and life, But ultimately, to what end is one applying them?

To what cause is one applying them? This is where the virtue of justice comes in. A lot of the examples that you work through in the book are these historical figures that we have the benefit of history playing out and seeing that path that they've forged forward. I know also, though, on the micro level, people can read something and say, this is speaking to me and to my ideology. What happens when the individual ideology kind of rubber meets the road and interacts with society where other people may say on the other side of something, yes, I also feel like I am on the right path here. I also feel like I'm doing the right thing.

Yeah, that's the interesting thing, right? People have been courageously fighting for causes that we now regard as morally bankrupt for as long as there have been causes and as long as there's been history. And this is the tension, of course. Very rarely, as the philosophers say, is anyone wrong on purpose. And in fact, most of the time, we think we're doing the right thing. This is where the virtue of wisdom comes in. In retrospect, sometimes those causes seem like we can empathize, we can see how it made sense. And then in other cases, you're talking about slavery, something, you can see the profound self-serving logic and the leaps that the people had to go through in order to justify or rationalize something to oneself. So yeah, it's tricky. And look, what I didn't set out to do is write a book about a bunch of specific policies per se. But I think this idea of what's right, This idea of our obligations to each other, this idea of integrity, these are pretty universal

ideas that I think we probably agree with more than we disagree with each other. So that's an interesting tendency that we have, right? When we talk about doing what's right or doing the right thing or talk about justice, there is this part of us that I think immediately goes to these kind of exceptions or these really morally complex edge cases. And that's almost a way of letting ourselves off the hook of like the pretty basic decisions we can all make day to day that we're largely in agreement about. But we also make excuses for we let ourselves get away with. One of the through lines I noticed with a lot of the figures that you profile is this willingness.

And sometimes it's an accident. Sometimes it's very intentional to get outside of their own comfort zone, kind of get outside their own bubble. And having that be something that kind of helps with that internal development, it's a tough time for that for a lot of people. I mean, what's your advice for someone looking to do that more? Yeah, I think how the other half lives, what other people's experiences are like, what the consequences of this thing that you believe in or that you've accepted actually are for other people is such a destabilizing experience in many ways. And this is probably partly why we don't want to know, right? If we know, if we see it up close, we don't have to think about it. One of the sort of an offhanded comment in the book that I was kind of blown away by,

but I was reading that Steve Jobs actually never visited any of the Apple's factories in China. And, you know, here you have a guy who's a notorious micromanager, incredibly detailed oriented has every opinion you could imagine on how things should be done where efficiencies could be found probably not a coincidence that he never hops on a plane and checks it out right because if he sees it maybe it's harder to sleep at night if he sees it it's harder to justify and i think i don't i don't mean to say this to judge him specifically because here i am holding an iphone But but we don't want to know because we don't want to have to do what knowing demands of us and what our conscious conscience demands of us once we know.

Yeah, we can't plead ignorance anymore. Yes. Yes. There's a reason we try to make it illegal to, for instance, film what happens inside factory farms. Right. It's it's it's the people covering the thing up in cahoots with us who don't want to know. right? We don't want to know because if we know, it doesn't taste so good anymore. That reminds me a bit of something that comes up in the book. You talk about this idea that it is not a real principle. A principle that you have is not a real principle unless it costs you money. Unless you have some skin in the game and you begin to feel the impact of a decision that

you've made, our audience is overwhelmingly an investing audience. We are folks who are thinking about companies and thinking about the ways that we put our money to work. It can mean know, a bunch of different things. What do you think that looks like as a decision-making tenant for investing? I think one of the really exciting things about the world that we live in now is how accessible like basic entrepreneurial practices have become. Like anyone could throw up a Shopify store and sell things, right? Anyone could build a platform and talk to an audience. So instead of it being this thing that like the elites in Hollywood are doing or that the business people in Wall Street are doing, it's a thing you yourself are doing. And so this question of whether Nike should use sweatshops in China suddenly is a real decision that you have to make when you're deciding where you're going to get your T-shirts made that you're printing on.

Right. And, and what I, what I hope from this is not, oh, suddenly you have a bunch of empathy for these CEOs and you go, oh, I see why they do it. Right. What we should take from this is, okay, now my ethics are bumping up into my business decisions. And how am I going to square those two? How am I going to get those to fit together? And that's been, you know, if I'm just an author who sends a digital manuscript to my publisher and then they send me royalty checks, you know, that's one version where I don't have to think about any of this. But I self-published two children's books a couple of years ago. And then suddenly I'm going, OK, I can print it in China and it costs $8 a copy or sorry, it costs $3 a copy or I can print it at this, you know, printer in the US that's been here for 100 years. and it's $5 a copy. And now I have to make that decision. I have to decide whether it's worth $2 less per unit to me to do something that I wish these other people would do, right? And that's the question that we all face. And so, yeah, we talk about these ideas like, hey, I wish investors would hold these companies accountable. You are now said investor.

You don't own 20% of the company, but you do have proxy votes. And do you throw that mailer in the trash when it shows up in the post office or when you get the email from your brokerage? Or do you actually say, no, hey, I know this probably isn't going to make a difference, but the principle of it counts and I'm going to do it. Or do you say, hey, look, I don't like the leadership of this company anymore. I don't think I don't like the direction they're taking the company, both as an investor and as a human being. So I'm going to divest myself. Right. I'm I'm actually going to do it. So, again, instead of petitioning your your university to divest from this or that, what are you doing with your portfolio? And this idea that your decisions matter, that your votes matter is, I think, a really critical part of this virtue of justice. It's ceasing to pretend that this is somebody else's problem.

I want to ask you about one of those as it relates to your own business. I had read a little while back that you'd made the decision to essentially stop advertising. Yes. And that you had basically taken what was your marketing budget and put it elsewhere. Was that something that was a principle-based decision for you? Yeah. Like a lot of online businesses, you can very effectively and cheaply target people on Facebook and Instagram and all these social platforms. And so you're spending money and your primary judgment of whether this is effective or not is whether you're earning an ROI on said

dollars. So you spend $5, did you make $6 back? This is how you're thinking about it. And one of the things that struck me as the amount of advertising spend was going up every month, sure the ROI was going up, but it just hit me. I was like, okay, if I stop, like if I ceased to do this, would anyone notice, right? So I'm spending tens of thousands of dollars a month and the only difference it's making is whether it's directly driving conversions to my business or not. And then I thought, okay, but if I started to spend tens of thousands of dollars a month making stuff, right, like making articles, making videos, hosting a podcast, et cetera, if I were to cease at some point, the things that I made would still exist, right? And I also thought, okay, if 100 people see this ad and one person buys it, I'm saying that was an effective ad, right?

Even though 99%, 99 people said, this is worthless to me. But what if I write an article and 100 people read it, and then one person becomes a customer as a result? It was still valuable to the 99 people. They just didn't purchase anything from me. It still had a positive contribution. We could argue how much or how little, but it still was a delivering of value that wasn't justified or unjustified based on the conversions it generated.

And so, yeah, we pivoted the business and I just, I spend basically all the money that I used to spend on advertising, making stuff. And so I give away so much content, you know, so much stuff and it converts at roughly the same amount, but I'm happy with it. I feel like it's a service and I know it's having like actual impact on people. And, and, and it, it doesn't just disappear when I stopped doing it. So it sounds like you've, you've maybe gone one for one on that decision, or maybe it's even been a successful shift and you're seeing more on that spend back, but also that it's

something you would have been comfortable doing, maybe even taking a small haircut on because it was more fulfilling. Yeah, totally. And, and I, yeah, I don't actually know exactly the, the, the tricky part is it is much harder to measure, right? it's harder to measure, but it also, it lasts longer. So I think in the end, it works out better, but yeah, you're making a short-term trade off it. And just the decision, like you just think about, you go, okay, the advertising budget of Budweiser is how many billions of

dollars a year. And what is the lasting significance of said contribution, right? It's, it's, it's, it's nothing. Brain space, mostly brain space. Yeah. Like, like you have all these brilliant minds spending so much time trying to make these things that are by definitions, interruptions and, uh, often misleading or, you know, whatever. And so I, I, again, this isn't a decision everyone has to make. I'm not saying advertising is immoral. It's just the decision to say, Hey, what what is the output of my efforts and how can i how can i best direct those efforts to have ideally um additional impact or or how can i think about making this as positive of an interaction as everyone involved like i was talking to john mackie the the founder of whole foods uh once and

He was saying that he just had this decision, this insight one day that his vendors mattered too. So it wasn't just like, how much money is he making and how much is he saving the customer? But how is he treating everyone from the animal or the plant that ultimately becomes a product to the supplier, to the shipper? and just thinking about like, hey, who is involved in this process from having an idea to selling the thing to a customer? Now, look, obviously we're in business to make money. I'm not saying this is a charity, but what are decisions you can make along the way? And some of these decisions are going to cost you money, but oftentimes they're going to make you money and maybe it evens out. But how do you make decisions so you can have as much positive

impact as possible? And how can you also make decisions to minimize negative impact when it's preventable, right? That's just, I think, something we all have the power to think about. I'm curious what your take is on so much of the development and investment we've seen in artificial intelligence, particularly because so much of the conversation is around content and that is where you and your business spend so much time. Yeah. You know, it's, it's interesting watching these companies train themselves on like things that I've done, right? Like inside all these AI networks is, is millions of words of writing from people like me. And then sort of spitting it back out at you is, is a strange sort of surreal experience.

And then at the same time, you know, this goes to the point is then it's like, well, I need a drawing made and I don't want to pay someone for it. So I'll just use chat GPT. I'm not immune from this. I think we all understand there are these things that have sort of ethical implications. And then we make kind of short-term financial decisions based on what's easier for us. I don't know. Right now, when I look at AI, I see it sort of replacing a lot of stuff that wasn't super good. And I think it'll probably do worse at... It'll be a harder slog to be able to do things at an elite level. But the law of nature is that eventually everyone and everything becomes replaceable or disrupted. And I guess how

one prepares for that is maybe more the virtue of discipline... Or sorry, the virtue of wisdom. I'm curious how you personally have processed and maybe changed how you process some of these things as the layers of complexity get added on and you're trying to maintain the stoic mindset where you're going from, it's not just me, it's these people I work with, it's this company that I own and these people whose livelihoods depend on me. What has that looked like for you? Yeah, and I think this is a reason it's good to be involved. Like, if you think of philosophy as this thing you do in a classroom or that it's what, you know, sort of tenured academics get to do, well, then it's going to be divorced from reality. Look, do I love that the world seems like it's falling to pieces? Do I love that there's these disruptive technological changes that are happening, you know, these macro environmental things happening? No, but I also sort of understanding what the Stokes say, go, well, this is an opportunity to like actually have the rubber meet the road.

Like, you know, the Chinese expression, may you live in interesting times. We live in interesting times and then it is an opportunity to kind of practice and wrestle with these things. I would love for everything to be easy and for everyone to get along. That's not the world we live in. And so kind of having to deal with that complexity, I think is an ongoing challenge. I don't think I always get it right, but I do try to take a beat and go, I wouldn't have chosen for it to be this hard, but that it is this hard is an opportunity to apply these things and to really think about them. I know you're a pretty big runner. Is that part of the philosophical processing? Is that part of the habit-based way of giving yourself that space? Yeah, definitely. I'm not a big meditator, but I like to get outside. I like to get active. And that's where I tend to do a good chunk of my thinking. And I also think being active, wrestling with the part of you that wants to not do it, and then the part of you that knows it's good for you to do it. This is also kind of not just philosophical, but it's practice.

You know, the ability to will yourself to do things that are hard, that are expensive, you know, in all senses of that word, that get you out of your comfort zone. That's a really important skill to build. I have the benefit now of talking to you after the book surge and the initial launch. And so I hope you're caught up on sleep. I know you're doing a lot of traveling, but I was following along with some of the book launch vlogs. And I think early on, you kind of talked about how I think an early reviewer or someone who had read the book or something like that had maybe missed the mark on something, or you felt had maybe misinterpreted some of the points of the book. What do you find that people tend to miss

when it comes to the philosophy? Well, I think stoicism is really easy to stereotype. This has no emotions. This stuffs it all down. This is invulnerable. And then I think sometimes people take my work and they'll call it like bro-icism or something. It's easy to mock people who are interested in improving themselves, right? Earnestness is the the easiest thing to make fun of. And I've just learned over the years that that's just going to be a certain percentage of people. And you got to be prepared for it. You got to accept it. You got to deal with it. And I try to go, look, was it possible to get nothing but glowing reviews? Of course not. Citizen Kane doesn't even have a perfect score on Rotten Tomatoes.

Right. Like there's going to be a certain percentage of people that don't like what you do. And this is an idea that Mark Struess actually talks about in meditations. He goes like, OK, so you met one of those people like you knew there was a percentage of people that were going to be in that camp. Well, this is one of them. Why are you surprised? You know, but but there is this part of us that intellectually goes, yeah, I know, not I'm not for everyone. And then we meet someone who's not for us and we're like, what is this? I can't let this stand. And I think I've gotten better at just accepting, hey, I'm not for everyone. I know who I'm for. I'm going to do my thing and I'm going to let the chips fall where

they may. An idea that comes up in the book that I really loved was that you're better off in a lot of ways starting out by giving rather than asking for something. And so on that note, I'm delighted to be talking to you about your book, but I'm curious, maybe over the last month or two, a book that you've really enjoyed that you've read? Oh, great question. I just read this book called The Art Thief. I read it last night. Like I read it in less than 24 hours.

It was so good. And it's about this guy who is basically the greatest art thief of all time. And he was basically addicted. He had this like almost mystical, magical reaction when he would fall in love with a piece of art. And he just like had to have it. Like almost all art thieves are stealing so they can resell it on the black market.

And he just stole all this art and put it in his bedroom, which was in his mother's house in his attic. Wait, is this a true story? It's a true story. It's incredible. It's one of the best books I've read in quite some time. I just thought it was absolutely amazing. That's fantastic. There's the summer reading recommendation right there.

Yes. To close us out, this is the third book in a series of four. Yeah. You mentioned courage, self-control. This is justice. Wisdom is next. Can you give us a little preview? Yeah. Wisdom is the one I saved the last because it's in a way the hardest one to have any justification for writing. You know what I mean? Like the last thing you want to do is call yourself wise. So I was really thinking about how I was going to write this book. So I've been working on it now for about a year and I'm about two thirds of the way done. And I don't even have a title for it yet. I'm still trying to crack that part of the puzzle. But the idea of

it is the virtue that tells you where all the other virtues are, right? What's the right amount of something? What are the causes worth putting yourself out there for? How much courage is too much? How much is not enough? There's a great working definition of wisdom is wisdom is knowing what's what. And that's kind of been the working definition of the book. How do you sort of get a sense of life, get a sense of what to do in each and every situation? And that's hopefully what the book will help people do. The book is Right Thing Right Now. Ryan Holiday, thank you so much for joining us. Yeah, thanks for having me. As always, people on the program may have interest in the stocks they talk about,

and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Mary Long. Thanks for listening. We'll see you tomorrow.