The Startup Ideas Podcast - How To Invest Like An Optimist With Morgan Housel

Episode Date: April 28, 2022

Morgan Housel (@morganhousel) sits down with host Sahil Bloom for a deep dive on money and success. Morgan shares the powerful story of how he went from a 20-year-old with an 8th-grade education to a distinguished writer and partner at The Collaborative Fund. We also cover humility, independence, and insecurity. Three assets that have helped drive Morgan's success, as well as financial caution and the importance of over-preparedness.►► Want more community? Learn more here: http://trwih.comTHIS EPISODEMorgan Housel: https://twitter.com/morganhouselSahil Bloom: https://twitter.com/SahilBloomProduction & Marketing Team: https://penname.co/FIND US ON SOCIALTwitter: https://twitter.com/_trwihInstagram: https://www.instagram.com/_trwihTikTok: https://www.tiktok.com/@_trwihWeb: https://trwih.comSpotify: https://open.spotify.com/show/6aB0v6amo3a8hgTCjlTlvhApple: https://podcasts.apple.com/us/podcast/where-it-happens/id1593424985SPECIAL THANKS TO OUR SPONSORS🌟 This episode is brought to you by LEX. We’re always looking for breakthrough businesses. And, our audience has repeatedly asked how they can invest in commercial real estate. Lex is the easy answer. LEX turns individual buildings into public stocks via IPO, so you can invest, trade, and manage your own portfolio of high-quality commercial real estate. It’s so simple to get started today.Sign up for free at https://www.lex-markets.com/room and get a $50 bonus exclusively for our audience when you deposit at least $500. It’s a no-brainer.🌟 This episode is brought to you by ButcherBox. If you love high-quality meat and fish we can’t recommend them enough. We personally love their NY strips at the moment.Right now they are offering free ground beef for life and $10 off your first order. But this offer only lasts until Saturday at 11:59 PM EST. Use the code ROOM at checkout and make sure to go to butcherbox.com/room to get the offer.

We never have thought that yesterday's success guaranteed tomorrow's success. We've always been paranoid. And I think that's a great mentality for a lot of things in life, in your personal life, in your personal career, for your business, whatever it might be. Just if you're lucky enough to be successful, the acknowledgement that it does not guarantee you anything for tomorrow. Nothing. Guys, I am so excited to share this episode with you.

It was an amazing discussion one-on-one with Morgan Housel, the author of Psychic of psychology of money and a prolific writer, creator, investor, extraordinaire. I was really privileged to get to have this discussion. Honestly, he was amazingly transparent, vulnerable, and shared a lot of new insights and ideas from everything on investing to life, to fatherhood, and dealing with insecurity. So it was an amazing conversation. I think you guys are going to love it. And let's just dive right into it. What's up, man? How you doing? Good to see. Thank you so much for doing this. I appreciate it. Yeah, of course.

Let me ask you first. How's the podcast going? The podcast is great. You know, it's like a, podcasts are interesting. It's a whole different growth challenge. I mean, it's not dissimilar from like a newsletter or a blog and the fact that there's no natural discovery. So you sort of have to figure out what your mechanism is for like jamming it through the algorithm to get it out to people. Mine is obviously Twitter for doing that. You know, you have a large audience and you can leverage it. for that. But it's an interesting and like entirely different growth challenge. But it's been a blast.

It's been a lot of fun. That's cool. Awesome. So, you know, Morgan, I'm really excited to have you on. And I would, I would start off, I guess, by just saying the reason I'm so excited and the reason I admire you so much as a person is you're a unique individual because you are both successful, highly successful, and also one of those people that doesn't take yourself too seriously. And as it turns out, the overlap of those two circles is actually quite narrow, the Venn diagram, if you will. And so I'm excited to get to chat with you. I've always really admired your work, your writing. And this is a real privilege to get a chance to go deeper with you today. Well, thanks. I'm stuck to here. I appreciate that. Thanks.

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So one of the things that I always think is important to start off, you know, any discussion, any interview is this idea of like determining the person's map of reality. You're familiar with the concept, I assume, but for anyone that hasn't heard of it, it's sort of, you know, this idea that we all have a specific map or lens through which we view the world and through which we perceive things. And I think it's important to understand what someone's map of reality is as you kind of dive in and to understand their perspective. So, Maybe we just start there and see where it takes us. What do you think your map of reality is, Morgan? What has shaped your map of reality over the course of your life? Well, one thing that I think about a lot, and maybe this gets back into what you said before about not taking myself too seriously, is the extent to which I should be like a car mechanic or a grocery bagger or an Uber driver with no offense to those professions. but the fact that I'm here doing this, if you look at the trajectory of my life, is crazy. There was absolutely nothing about me when I was a young adult when I was a teenager that would have said, you know, that would have predicted any of this whatsoever.

I've talked about this before on another podcast. I don't want to rehash it too much, but I have no high school education. I didn't have. I basically have an eighth grade education. And then I went to college after that. But I had this gap in my teenage years where I was, I was dumb as a rock, waste of a, waste of a, waste of a breath, whatever adjective you want to use, I had absolutely no intelligence. And it wasn't like, oh, I skipped high school because I was so smart. No, it was not that in the slightest. You know,

if you, if you were to meet me when I was 19 or 20, I had an eighth grade education and it showed. It was, it was that. And I think I thought and everyone else around me thought and my parents thought that I would be, you know, an $8 an hour service worker for the rest of my life. And that was, that was my expectations. And I'll tell you, I was okay with it. I was totally okay with that. That was, so I think coming from that and then being here, wherever here is, my, that map of reality, it's, it's, but I'll tell you, yes, it's, it's cool. Like, that's, it's, it's fun for me to think about that journey. But it also is like kerosene for imposter syndrome and this feeling of like, oh, this is all going to end and I'm going to be pushed back to where I belong. So I feel like,

that's the, that's the, the, the other. side of this that often goes undisclosed for people in this situation. So that's so interesting. You know, one of the things that comes up in kind of researching and learning more about your background is your parents lived on a commune, like a farming commune. And I thought that was such a unique. I mean, when I was thinking about what I perceived to potentially be your map of reality, I thought that might be an interesting part of it of like your parents, you know, had a very

interesting trajectory in their own lives. and your dad became a doctor at or decided to become a doctor at age 30, which is very unique. So how much of that, like your parents having a, maybe at the time actually it wasn't that different, I guess, you know, at the time when they were probably living on the farm commune, maybe that was actually like the cool thing to do probably at that era in American society. But how much of that kind of impacted your, you know, young upbringing and how you perceive the world? You're definitely right that when they move there.

lived there in the 1970s, it was the cool thing to do. That was like the hippie movement, full-blown. It was like an awesome, awesome thing to do. I would say both my parents grew up in fairly affluent households. And then, so it was their choice to be like, screw all of that. We're going to go move to this commune and rebel against everything that they had. I think it impacted my upbringing substantially because, well, in two ways. And my brother, who was five years older than me, had more of this. But I saw two very distinct sides growing up. You know, when I was a young child, my parents were students and we were completely flat

broke. We had absolutely nothing. It was not homelessness. It was not that. But we had no money whatsoever. And then my dad became a doctor when I was, I don't know, 10, 12, something like that. And things changed. And so I think seeing both sides of that is important because I feel like most people growing

up only see one side of it. Maybe they grow up poor. Maybe they grew up very wealthy. It's relatively the same throughout their childhood. Seeing the stark black and white contrast, and again, for my brother who was like 16 when that contrast happened, that was like a shock. It was just like shock and awe.

Because most people adapt to whatever their situation is. So I say, when I grew up, when I was seven years old and we were flat broke, I didn't know it and I didn't care. I lived a guy had a great childhood. I loved playing. I love digging in the dirt and climbing trees. No, but I didn't care. I thought it was great.

But then when you see that other side, you're like, wow, there's another, there's another world out here. So that was one way it impacted us. The other was when I went on my little teenage journey of not going to high school, I was skiing throughout my entire teenage years. Oh, you were ski bomb. I was, I was a complete ski bomb. I grew up in Lake Tahoe and I was a competitive ski racer. And the high school thing was school kind of gets in the way of ski racing. So I'm not going to do it.

that was basically what it came down to. And I remember at one point reading, I'm sorry to interrupt you. I remember at one point reading a story that you wrote about a close friend of yours who you had skied with for a long time in Tahoe competitively, who tragically passed away in an avalanche. And how much that impacted you during that period as well? Has that been a formative experience? And I apologize for rehashing something that's clearly an upsetting of

event in your life. But it does strike me as something that is you've been sort of introspective about it and what it's meant to you in terms of how you live your life. So I'm curious how that impacted those years and then your decision to kind of start to blossom into the intellectual that you are today as well. Yeah, it actually had a huge impact because of the timing that happened. And there were two of them actually, two of my friends growing up with that we were, we were skiing together all that day. And they did an extra run where I wasn't, I wasn't, what them. I was going to go pick them up at this out of bounds area where we would ski and they were killed in an avalanche during that during that run that they did by themselves. So when it happened,

I was, I was 17, which in the ski racing world is kind of the shit or get off the pot moment of like either you're pro or you're not. Like when you're 15, you can kind of hack your way through it. 17, it's kind of like, okay, you're either going to the big leagues or you got to figure something else out. So, and then two months after my friends died, I broke my back skiing. So between those those moments, it was like, okay, it's time for me to go do something else. It's time for me to kind of hang it up and figure out what's next. It took me years to figure out what was next. I had a couple years from age 17 to 20 where I was just kind of hacking it through,

not really doing much of anything. But that was, I think that event was, it shaped me in a lot of ways. It shaped. It was obviously, it was the first, it was the first bad thing that ever happened to me. I had a really good childhood upbringing. Everything was great, very loving household, great friends. everything was, so that was the first bad thing that I had ever experienced in my life, and it was a really bad thing.

So that had a big impact. But also just timing-wise, it was actually a great forcing function to be like, okay, time to go do something else. Right. Well, it relates to very closely to the sort of first rabbit hole I wanted to go down with you, which is this recent piece that you put out called Deep Roots, which I thought was a fantastic piece. If people haven't seen it, we'll add it to the show notes.

But it all kind of ties into this idea of, like the dots in your life. You know, the Steve Jobs famous commencement speech, I forget what year, 2005 maybe at Stanford, he talked about the dots connecting in your life and how it's basically impossible to connect the dots looking forward. You have no idea. And his example was he took this calligraphy class where he was just like bumming around at Reed.

He had dropped out and he was bumming around and took this calligraphy class. And there was absolutely no reason why a calligraphy class would ever be impactful for your life, like totally useless set of skills. But then it became an integral part of how they thought about creating beautiful type fonts when they were doing that at Apple. And so he talks about it that you can never connect those dots looking forward. But in hindsight, you look at them and you say, wow, this weird chain of events led to where I am today and to this set of circumstances. And you wrote very beautifully about that as it relates to money and investing and second order thinking. But it ties into this point of what we're talking about, I think, of a terrible event in your life.

that you can somehow now trace to all of these different things that shaped you into the future. And so I wanted to just talk and kind of talk to you about this idea of forecasting. And like as investors, we all sit and try to think about, oh, I'm going to try to predict the future. Right now, there's a million things going on in the world, right? Like Russia's invasion, inflation, inflations through the roof. You know, the consumer economy is kind of teetering. And so you sit around and you can spend hours and hours. trying to predict the future. But as you point out in your article, it's almost impossible to do

with any level of intellectual humility. It's like basically impossible to do because the world is so damn complex. So can you just talk a little bit about that and, you know, the frameworks that you've kind of been using to think about that problem? I think anytime you'd really piece together why a chain of events has happened, if you're really honest about the long chain of events of how you got there. It could be so absurd that you realize that it's just how hard it is to predict things. I think about to use this like a really quirky personal example. When I started at college, they had like an orientation lunch for all the new students and you sat by your major, the biology students here, the econ students here. And I got there and I was trying to get into

the business school, but the business school table was all full. There were no more seats. So I was like, okay, I guess I'll sit with the economics students because economics is closely related to business. like I'll sit at this table. I sat next to this girl who became a very close friend of mine. She's wonderful. And she introduced me to my now wife. So it was, it's like, like that's just like a simple chain of events of like this table I wanted to sit at was full. So I randomly sat at this table. And now we got two kids and we've been together for 16 years. And I'll give you my example of that exact thing because it's very similar. So in seventh grade, uh, I was trying to impress a random girl who I had a big crush on. And for some reason I decided the way I was going to impress

this girl was the test, the social studies test we were going to have the next day, I had noticed was sitting on the table printed out all the copies of it that we were going to take. And so I bragged to her like, hey, I can get the test for tomorrow. And she was like, no, you won't, you won't do it. And so I went in and I took it. And I gave it to her. And I didn't even cheat on the the damn test, which is the funniest thing in hindsight. But someone snitched. I got caught, I end up, you know, getting a zero on that test. So I get like a D in the class, seventh grade, whatever. It shouldn't matter. But as a result of that, I had a bad grade for the class. And so I didn't go, I didn't get into private school, which was kind of the plan my

parents had had for me, was that I was going to go to private school for like eighth grade on through high school. Because I didn't go to private school, I met my wife, my sophomore year of high school at our public high school. And I met this girl at the time. We end up dating long distance did the whole thing and our son is being born next month. So because of this like stupid decision that I made, you can now trace that all the way to I'm sitting in our house. My wife is somewhere nearby and we are having our first, our first child next month. And here's what's true with all of the due respect to both of our wives. If I had sat at the business table and if you had gone to private school, things may have worked out great as well. So the alternative history is not

necessarily better or worse. We just know it's vastly different. different. And everything is like that. I use this example in my book of like, why are student loans so high today? Well, one of the reasons is because in the early 2000s, there was a huge demand for college when the job market was so weak. People are like, I can't get a job. I might as well go to college or I need to go to college to make sure I can get a job in this really tough market. Huge demand for college. Why was the economy so weak? Why was a jobs market week? Well, because there was a financial crisis. Why was there a financial crisis? Well, there was a housing bubble. Why was their housing bubble? Well, interest rates were cut too low. Why were interest rates cut too low? Well, because 9-11, that was a big part of it. So just from right there, by the way, you could keep going with that. But why are student rates so hot? Why are student loans so high today? Because of 9-11? And like, no one would tie those together. And on the morning of September 11th, no one was like, oh, here come the student debt. Nobody made that. Nobody would ever make that connection. But you can piece it together pretty clearly. Now, there is a thing called the narrative fallacy, which is like putting something,

like sometimes putting these things together in a way that makes sense. Like I just did can be like it's not, it's not that clean. I think mostly the narrative fallacy is when you piece together things going forward. It's when, for example, on the morning of 9-11, people say consumers are never going to travel again, which was not true. But it was a narrative that made sense. But I think looking back the narrative fact, like that piece and get of that narrative does make more sense. It makes sense in hindsight.

And when you realize how absurd it is in hindsight, then you realize, you realize that any skill that you think you might have looking forward is like, is so, do we have no clue what's going to happen next? One of the examples I like from this, too, like a positive example, are the number of incredible things that came from World War II. One of the biggest ones that's easy overlooked is penicillin, which was basically, it was discovered in 1929, and then it was basically a laboratory toy in the 1930s. And it wasn't until World War II that we were like, hey, we have all these six soldiers

and we need to keep them healthy. what is this like crazy mold that might be antibacterial? Like great, make 10 million doses and give it to the soldiers. And that was kind of the birth of antibiotics. And like, would we have discovered it without World War II? Like, yes, probably. But I think you can draw a straight line between World War II and antibiotics coming online in the 1940s. To say nothing about like jet airplanes and rockets and nuclear energy, all these like

amazing things, GPS, radar that happens specifically because of the war. Now, nobody, when the war, began would be like, oh, here come all the amazing technologies, but it's exactly what happened. Yeah. And now we're in a similar period, right? Like with COVID and the massive disruption and the impact it had on the world, you could argue, you know, that there are going to be those similar unbelievable things, technological innovations that get created as a result of this. But similarly, you need to have humility around the fact that we are not going to be able to predict what those things are looking forward with any degree of.

certainty. Totally. And the obvious one that people use these days that might end up being the big one is MRI. That's like that's like the easy. That's the narrative fallacy of like, oh, because of COVID, we're going to have all these MRI drugs, which might be true. It is true so far. But there's going to be things 10 years from now that would be so absurd that you and I 10 years from now will be like, hey, because of COVID, we have the X, whatever it might be. And connecting those dots is going to be like the craziest thing you've ever imagined. You know that's going to be the case. Whenever there's an upheaval in your personal life or in the economy in the world, 10 years in the future, there's this crazy chain of events that led to something either really good or really bad, by the way, that you

never could have seen coming. The whole takeaway for it is just humility and forecasting. It's like the whole idea of like pro entropic investing. I recently heard, I think from Antonio Gracius. I think it was on a Invest like the Best podcast with Patrick O'Shaugnesty. And he talks about like companies and ideas that benefit from that chaos. sort of relates to Talab and anti-fragility and that whole general concept. But when you think about these periods of chaos, there are going to be certain ideas, certain technologies, things that benefit

from that chaos and get created because it just sparks all of these new collisions of ideas, people, concepts, etc. That good things come out of. It's like chaos theory, right? All of a sudden there's this movement in this one, you know, area that creates something amazing. Yeah. And a lot of bad things come about that too. So to me, one of the most important things here, when you have humility and forecasting is such a preference for survivorship and endurance and durability so that you can stick around long enough for those positive surprises to actually pay off. You know, to state the obvious, if you are, if this is 2008 and you got pushed out of the market,

you got foreclosed on, whatever it would be. Like you did not stick around long enough to enjoy the rebound and the new technologies and whatever it would be. So that's when you have that humility and forecasting, there's this great quote from talent that I like, too. where he says, invest in preparedness, not in prediction. That's what I think it is. Like, we can't predict what the good or the bad is going to be,

but I can invest in making sure that I am durable enough to stick around to experience whatever it might be in the future. You also tweeted another Teleb quote recently that I thought was great about, you know, if something, if you're thinking that something is irrational for like a really long period of time. Your definition of rationality is probably just off if something has remained irrational in your mind for so long, which I thought was, it's a very funny, it's a very funny quote. I mean, he's like a treasure trove of, uh, of great quotes, though. He's great. And my, and my, and my, I was going to say, my, my example from this is that there is a, there is a cohort of investors

who have think, who have thought that the market has been overvalued for the last 30 years. And at some point, you're like, maybe your model is wrong. I don't know. Maybe like, like, like, maybe this is a 30-year bubble or maybe you're not calculating this right. So that's why, like, the market looks irrational to them. But if something has been irrational for a long period of time, I think what you're actually just observing is the normal craziness of human behavior. Well, it's like the hilarious case study of recession predictor people where like you, if you accurately predict a recession once, you forever are the guy that accurately predicted that

recession. And if you just keep predicting recession, you're eventually going to be right, right? You're like, I don't know whether it's you that's written this in the past, but someone has or you just say, you know, like a recession will come. And it's just a question of, you know, is it one year, three years, five years, seven years, 10 years, like you're going to be right eventually. And you can get paid to go on CNBC for the rest of your life as the guy who accurately predicted the whatever year recession if you just do it once. Totally. Like if you just go on and say, we're going to have a recession, it's only a matter of time. People are like, oh, that's a big deal.

And then if it happens four years later, they're like, oh, he said it. He said it was only a matter of time. And it was only a matter of time. It actually, it's the, the absurdity of financial media is hard to overstate. Like, I was watching CNBC the other day. And they had a former, I'm forgetting who it is. They had a former Fed board, uh, individual on. And they asked him very directly like, so are you telling your client?

that you think a recession is coming. And he said something to the effect of, oh, no, I wouldn't say that. I'm telling them that it's more likely. It's probably 45 to 50% likely now versus the 30 that it was before. And I was sitting there just like, how is this possibly relevant, valuable information for anybody? Because I have no idea what 30% versus 45% likely means to my portfolio. What does that mean? What do I do?

Not only like what do you do as a client, but also the, the idea that anyone can be like, oh, the odds used to be 30%, but now they're 40% is insane, it's insane that you're being like that technical about it. I think the best way to summarize financial media was, this is 10 or 12 years ago. Jim Kramer was on John Stewart show, the Daily Show. And Jim Kramer, like John Stewart was poking fun about how crazy, how dumb some of the segments are on CNBC. And Kramer said, I'm paraphrasing, he said, you know, John, you have to, understand we have 17 hours of live TV to fill every day. And Stewart said, maybe you could cut down on that. Like that's, that's the solution here. That's not the excuse. That's the fix. And think about if you had like 24-7 live TV of like the trucking industry or the shipping industry or like the chemistry industry. There's nothing to talk about. And it should be the same in business news, but we want there to be 24-7 live.

coverage and therefore, like the only way to fill the time is just kind of by making shit up sometimes. Yeah, and it's this whole idea that everything has to be breaking news, right? Like, everything is news and, you know, new things that have happened and newness and they put breaking next to everything. And I've heard you talk about this before. And I think it's such a great point that the best stuff is evergreen. The best writing is evergreen. The best ideas are Evergreen. They're not only relevant for the 10 minutes that after you post them. They're relevant forever. And I know you've kind of strived in your career as a writer to write things that will be relevant 10 years from now. If someone reads them, it's going to change the way they think. It's

going to provide them with frameworks or a lens through which to evaluate problems that do come about in the future. And you strike me as an interesting character in the financial world because you don't come across as someone that cares deeply about money in like a gross sense, you know, of you don't strike me as someone that like wants to be the richest person in the world and, you know, have the yachts and the planes and the cars and do all of that. And yet you write so eloquently about money. So what do you think has kind of formed that for you and why are you, you know, different in that sense? I have no desire to be the richest man with the yachts and the Ferraris.

I probably have an above average desire for independence. I want to be independent more than most people. And therefore, I think it's easier for me to have some concept of what is enough money. Like, how much do I need to be independent? And if I've checked that box, then everything else above that is really superficial. And I think that's where it comes from. Some of that might be, if I were to be like deeply introspective, it might be like some sense of insecurity.

I think some of my desire for independence is out of fear that this is all going to end. So like I need to become independent as soon as possible so that I can leave on my own terms versus leaving on somebody else's terms. I'm getting fired, whatever it might be. I think that's probably the roots of it. But that's that's where it is. I think I just view money as a tool towards independence versus a tool to gain social aspirations and like wave your peek. cock feathers and show everyone how rich you are. So like I like nice things. I like nice homes and nice cars and whatnot, but independence is above that like 10x. That's all I really care about.

So I want to tap into this a little bit more. A few years ago, you were on Shane Parrish's podcast, The Knowledge Project. And you talked about your one of your bucket list items was true financial independence and this feeling that anything could go wrong and you'd be okay. A, do you feel like now you've gotten there? I mean, you've sold a book that has sold a million copies, have a new job, I think, since then with collaborative fund and being there. A lot of things have changed in your life. And then B, where do you feel like that insecurity comes from? Why do you feel like you have that? I actually feel like I have that as well. So that's the root of the question from my perspective. To answer to the first part, yeah, I think it's largely there. maybe not 100% because it's easy to move the goalpost, even if you're trying not to get a treadmill. It's easy to do that. But I think for the most part, it's roughly there.

And I'm proud of it. It's the thing I'm most, I'm proudest of in my personal life outside my wife and kids, I'd say it's something that I think is like a really key contributor to my, I wouldn't say happiness. I would say just well-being. Like it's not that independence makes me happy. It's that it removes an anxiety that used to be there, which is great. That's a benefit.

it, but it's very different from happiness. What was the second part of your question? I forget. That feeling of insecurity. Oh, yeah, yeah, yeah. You know, because I have that as well, and I still have that to this day. And I know a lot of people who do, who I consider highly successful and that I don't, you know, from the outside looking in shouldn't have that insecurity, but do.

So can you just double click on that a little bit? I would say it's, that's a good thing. I'd say if you don't have that insecure, the absence of that insecurity is probably the definition of ego. And like I think you want, I think you want that insecurity. You shouldn't try to get rid of that. Once you get rid of it, that's when you're screwed. Once you're like, I'm so talented.

I'm so good. I could do, I could, I could make a zillion dollars doing anything tomorrow. That's when it's like, you're probably in trouble. I think, I think there's a very heavy, there's a very healthy dose of insecurity. One of my favorite little quotes was many years ago, Charlie Rose was interviewing Mike Moritz of Sequoia. and he said, why has Sequoia been so successful for 40 years? Not just in the last market cycle, but 40 years.

And Mike Moritz said, we've always been scared about going out of business. And Charlie Rose is like, that's like, you're the most successful. He said, we've never taken anything for granted. We never have thought that yesterday's success guaranteed tomorrow's success. We've always been paranoid. And I think that's a great mentality for a lot of things in life, in your personal life, and your personal career, for your business, whatever it might be. Just if you're lucky enough to be successful, the acknowledgement that it does not guarantee

you anything for tomorrow, nothing. And I think that's where that insecurity for me comes from. And for me, it was, it was probably like maybe the humble background that I had and graduating in the teeth of the financial crisis as lots of people did was like, I want to, I don't want to rely on other people to judge whether I'm worth it to be in a job. to judge whether they should hire me, to judge whether I should stay around, to try to figure out what my, what my salary is that they think I'm worth. I don't want to rely on the kindness of strangers for that. I want to do it all myself. It was also another, and I'm sure this is a universal

trait. It was just to me, like the absolute worst feeling I could have as a husband and a father would be looking my wife and kids in the eye and saying, like, we're in trouble. And, you know, The word husband derives from, like, to provide is what it comes from. That's why like animal husbandry. It's like taking care of, providing for. And I feel like if I ever got to that point where I couldn't provide, I couldn't, give them what they needed, not what they wanted, but what they needed, I would have utterly failed at life.

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Sign up for free at Lex dashmarkets.com slash room and get a $50 bonus when you deposit at least $500. dollars. Josh Wolfe has this wonderful quote on this similar topic, similar to what you said with Mike Moritz, that failure comes from the failure to imagine failure, which I always think it's so sharp. It's obviously like a funny play on words, but it is very, very true in my own experience that when you actually fail, it's just because you didn't prepare for those crazy chance events. And I've heard you talk about this in the past that the rocking events, the things that truly shake you, shake society, et cetera, are never things that you could have predicted having happened. And it relates to your Deep Roots article again, there are never things that

you could have predicted. You didn't have a wide enough imagination to predict that, like, no one had it on their, you know, on their scorecard that a global pandemic was going to shut down the economy and every single service worker was going to be out of work. You've said that before. And so you didn't, but by definition, whatever allocation you have or whatever you, you know, have done with your house, your personal finances, your investing, et cetera, is not prepared for that thing because you just didn't think about it. It wasn't there. And so you've written this, and I think it's very smart to, and it relates to this point around insecurity and not wanting to ever have to look your family in the eye and say that, that you, by definition, because of that fact that

you didn't realize these things could ever happen, you need to have sort of an extra little, like, you know, the tail risk event pool. that just exists out there so that you know that you won't ever have to have that conversation and have that feeling and that discussion. And what's hard about that is that what that really means is having a layer of cushion in your finances that doesn't make sense, a layer of conservatism that seems like it's excessive. Because the only way that you're going to prepare for the events that you cannot imagine, that you cannot foresee, that you cannot predict is if you have a level of security that doesn't

make sense. If you are only saving and preparing for the events that you can foresee, you are going to miss the ones you can't foresee 10 times out of 10. And the ones that you can't see coming are always the ones that do the most damage. I mean, let's say you are 95 years old today and you're on your deathbed. You're looking back at your life over the last 90, 95 years. And if I asked you, hey, what were the biggest economic risks that you face in your life? You would not say, oh, in June of 1985, we missed non-farm payrolls by $100,000. Like you would not say anything like that. If you were looking back, you would say COVID 9-11, World War II, the Great Depression,

the oil spikes of the 1970s, those are the biggest risk. And the common denominators of all of those are that nobody saw them coming before they happened. The biggest risk that you would look back and be like, oh, that mattered more than anything are things that no one saw coming. I had a recent example of this where every January, the economist, which I think is a great publication, one of the best. Every January, they sent out a big issue called like looking at the year ahead. And in January of 2020, their look ahead, of course,

did not say anything about COVID-19, of course, but that was all that mattered. And then two weeks ago, I got the January 2020 edition. I think it was lost in the mail. So I got it in like March. And of course, there is nothing in there about Russia, Ukraine. Because in January, January, no one was talking about that. So here it is, like, the most astute publication in the world that I really admire. And their look ahead in two of the last three years was a joke. It was a joke. It was completely detached from reality. And that's not a criticism against them. To me, that's just an example of risk is what nobody can see coming. It's what nobody can see coming. And that will be the case, I guarantee you, the biggest economic news story over the next 12 months is

something that no one on Twitter or anywhere else is talking about. And the biggest story of the next decade is something that no one is talking about. And I can say that confidently because it has always been the case and it always will be the case. It's why I absolutely love, by the way, to go back to Taleb, his barbell investment strategy, I think is what he calls it, which is this idea that like 90% of your money should be in the absolute safest, you know, risk free, like truly risk-free, by the way, like really safe, hopefully cover inflation, although now maybe that's more challenging investments. And then 10% should be the highly, you know, risk on things that maybe benefit from these insane spike events, you know, the like the crazy crypto thing

or whatever it is that you're putting out there, but that you know that 90% of your capital is truly safe from these insane, insane events. It's like, yeah. So I think, I don't know if this was exactly it, but I think his recommendation was like 90% treasuries, 10% way out of the money call option, something like that. And to me, like the more practical everyday version of that is just this philosophy of save like a pessimist and invest like an optimist. Like if you can save like a pessimist with the idea that all of history is a continuous chain of surprises and setbacks and disappointments and pandemics and all these things that like suck. And all of history is a continuous chain of that and it always will be.

So you say with the idea that like I need to survive and endure all of the unpredictable nonsense, but if I can survive it, if I can endure it and stick around long enough, well then in the long run, humans are really innovative and they fix things and they solve things and they rebuild and they recover. And so I want to invest like an optimist. So it's just like saving like pessimism in the short run so that you can survive long enough to enjoy the compounding of the long run is how I think about it. Yeah. And to put it into your own words too from your piece. the saving like a pessimist is because of the humility you have about the absurdity of forecasting the future. And then the investing like an optimist comes from having that wide imagination about what all of those potential futures can look like. And so you can sort of map it exactly to that.

Yeah, it's totally it. It's always been the case in history that we have, you know, very smart people have said the innovations are done. Look, in the last 50 years, we've done some amazing things. things, but going forward, it's just, it's like, we've picked the low-hanging fruit. That's true today. It was true 50 years ago, 100 years ago. And I think it just becomes, like you said, a failure of imagination about what we can do. Because let's say it was 1920. And you were looking at like, hey, what are the next, the big innovation is going to be for the next 25 years. You, of course, could not have foreseen World War II. And therefore, you could not have foreseen, like I said, penicillin, nuclear energy, rockets, jet airplanes, radar, GPS, internet,

satellites. It was impossible to see those because you could not have seen World War II coming. So a lot of it is just a failure of imagination that when we look forward, we think linearly of just like, oh, this is the world today and it's going to progress very step by step. And if I think about it in those terms, like, oh, there's not a lot of innovations, but the world's never linear. It's like a slow couple years and then like, boom, everything breaks. The world breaks once per decade on average. It always has. I think it always will. And during those breakages, That's where you get these step function innovations. I think it was Charles Duell, who was the head of the U.S. Patent Office.

Something around 1900 was the one that said the famous quote that everything that can be invented has already been invented. And obviously hilariously wrong in hindsight. But at the time, and at many points in history, as you point out, people really thought that, that like the major innovations have already been made. and so everything going forward is going to be incremental. And obviously, knowing what we know, that just cannot be true. I got into an argument with a friend, this guy, Nick Huber, who's on Twitter, like a somewhat controversial figure, sweaty startup. He's, you know, has the, like, made the, like, tomato farm joke that went super viral a year or so ago.

But I got into a debate with him about this because he basically said that technology is not going to impact our lives incrementally over the next 10 years. And I just, the absurdity of saying something like that, knowing what we know about how much every 10 year period, technology has impacted our lives incrementally is it's just, it's astounding to me. Yeah. I think, I think it's usually true that when a new innovation comes about, it takes 10 or 20 years for it to really start, like, weaving its way into society. So it's easy in any period of time to look at the new innovations of the last five years and be like, oh, those aren't going to do anything. but you can't imagine where they're going to go. I mean, some examples of this is like even when the car came about, like the automobile, it was for a long time inferior to the horse.

Like when it came about, it broke down every hundred feet and it was loud and the roads weren't equipped for it and there were no gas stations. You could have named like a dozen things about why the car is never going to work and why the horse is always going to be superior. And that was true. That wasn't like you weren't missing something. That was true. You just couldn't foresee that like, oh,

Well, actually in 20 years, there's going to be gas stations everywhere, and the roads are going to be paved. And the cars are going to be quieter and they'll be more reliable. And in that world, it's actually going to be amazing. So I think it's always the case. I mean, I'm sure that was true for like the early internet. I'm sure early in the day it was like easier and more efficient to fact something than it would to email something when people didn't have emails, you know? Yeah, and it's always easier to say why something is not going to work than it is to predict out all the things that need to change for it to work. I think about that net right now with a lot of the Web 3 technology space and how it's very easy to like dunk on it, right?

And say there's a lot of deficiencies and, you know, it's slow or it's insecure or there's a hacks or whatever. You can come up with a million reasons why decentralized tech is not going to dominate the world in the way that, you know, Web 3 officinados think it is. But can I sit down and think about, you know, a handful of things that might change that could completely shift that perspective? probably it's just a lot harder to do i also think about in the same thread of what are things that we absolutely believe now that we are hilariously wrong about and that we will be proven hilariously wrong about a hundred years from now and i heard an interview where you talked about this in the context of a great book that i also read the gene um which basically was talking about how 150 years ago our perception of what the gene was and the human geno

was so fundamentally off what we now know to be the case and to be true. And it got me thinking about, like, and I think you used the example of like people thought that there was a full grown child, like a mini full grown child within human sperm. In sperm, right. And then there was another theory that was really popular for a long period of time, which is that sperm sculpted menstrual blood. And that's where humans came from. And the logic that they used was when a female gets pregnant, she stops shedding menstrual blood. She stops having her period and therefore the blood stays inside. So that must be the human and the spur must be sculpting the blood into the human. And that was a popular medical idea for centuries. Which we can crack up

about now. Like I'm sitting here laughing. This is hilarious. But literally was the common understanding of something. Along really smart, educated people. A question that I, that I have a lot that like, I think by definition you can't answer is who is the modern like Galileo? Like who has this idea where everyone's like, that guy's crazy. Lock him up. He's a nut and he's totally right. He's 100% right about what it is. But it completely goes against everything that we know to be quote unquote 100% true. And you know that's going to be the case. You know those people are out there. Another like more modern example, James Garfield, the president died in, what was that, 1870s or 1880s, something like that because the best doctor in the United States of America did not believe in germs. So James Garfield was

shot. He tried to be assassinated. He survived the bullet, but his doctor stuck his like muddy finger into the bullet wound, moving it around. And then James Garfield got this incredible infection. And the doctor thought that infection was good. He called it like a good healthy pus. And that pus was like a good that pus was a sign of healing. And then he died from the infection. And this was the president of the United States during our like great, great grandparents' lives, like not that long ago. And so you know there's going to be something like that 100 years from now, that there's going to be some medical treatment that you and I are doing today that we're going to look back and be like, how could we be so dumb? I mean, in our parents' life, that was smoking cigarettes. Yeah. That was

medically recommended in the 1920s and 30s. And now we look back today. We're like, oh, my God, what were we thinking? And so I think, again, by definition, you can't answer what that is, but we're going to look back and laugh or be really disappointed. I do wonder, whether there is something fundamentally different today. Like when you bring up the question of who is that person out there that is kind of being ostracized or, you know, just ignored, plain ignored for whatever their idea is, that will in 100 years be the like genius that we look back on, oh my God, they came up with this idea. Because I, and the reason I wonder whether it's different today is because of the internet

and social media and how ideas proliferate and find their little micro communities that espouse them and can support them and promote them. And I do wonder whether because of that, because any idea can now reach millions of people, you know, people can go tour around the world, talk about whatever their crazy ideas are, I wonder whether that has changed it a little bit versus the days when, you know, your reach as an individual was really geographically confined. See, I buy that. I would also buy the exact opposite if someone said it's actually worse today because the ability to cancel people is so much greater than it ever has been. I equally believe in both sides of that,

that it's easier to get your crazy ideas attention, and it's also easier for your crazy ideas to ruin your life. Do you worry about that as a public figure with a large internet presence and Twitter presence? Do you worry or ever feel insecure about the risk of that? Yeah, particularly, of course, the things that would be innocent, not that I would like be trying to do something or say something like yeah I think it it I don't know if it worries me but I've because I feel like I'm a pretty open book online I'm not really there's not a lot that I'm hiding but so much I think can be misconstrued and whatnot and there's definitely times where I'll be talking with friends in private and there's a joke that we're telling that is a normal joke that you know men in their 30s would tell in private but I'm like God if like if like if we're telling you sent us to the wrong person. There's times where it's just like, you know, a lot of people who work in tech security, work in IT security will say like nothing is private. You have no privacy anywhere

ever. And there's times where it's like, yeah, that's, that's kind of frightening. Because every single person in the world says things in private that they do not want online, everyone without exception. And so that gets a little concerning. You and I actually, our first interaction, kind of, you know, direct interaction was because someone tried to like cancel me or dunk on me for a like legitimate joke reply to a snarky tweet that you put out if you recall this like somebody you tweeted something um and i replied like some joke basically making fun of like banking culture and like oh a tier two banking analyst something or the other and someone came out and dunked on me and so i deleted it and then i sent you a message and was like imagine taking my joke that seriously and we kind of laughed

about it that like no matter what you put out there, there is someone that is going to take it way too seriously and extrapolate it out to your character, right? It's like the whole idea that, you know, you should, you probably shouldn't take everything and like put it on to someone's character versus just to whatever, a joke, whatever it is that they're saying, like fundamental attribution error or something like that. Totally. There's also like online on social media, there's the road rage phenomenon where once you're not talking to a person, you're talking to a person, talking to a handle, then all humanity goes out the window. And it's just like in road rage, it's easy to like flip someone off and scream at them. But if you actually get out of your car

and see the person, you probably shake hands and be like, hey, I'm sorry. I didn't mean any harm. Like it's so easy to dehumanize people when you're talking or when you're dealing with, when you're not looking at their face. And I think that really goes in, in social media, where you misconstrue what people mean. And it's easy to create a character. of who they are and what they want when you're just dealing with their handle. This is a common challenge or pushback I have to the Web3 ethos of pseudonymity. And it's a massive concern that I have. So I tweeted out, again, maybe slightly controversial.

I tweeted out this Mike Tyson quote recently, which I think is an amazing quote, not a referendum on Mike Tyson as a human being, just like full disclosure. nothing to do with my like like or dislike for the guy, but he, he once said social media made y'all way too comfortable with disrespecting people and not getting punched in the face for it. And I think it's so funny because it's really true, right? Like you can openly disrespect someone with zero repercussions. And it used to be, if you're in a bar and you do that, you lose your teeth. If you say something to someone, you have to know, like, if you think about it just from a pure like risk spectrum standpoint, like risk and expected value.

If you were going to say something to somebody, it used to be that the upside was like everyone goes, yeah, and you kind of got the guy. Like, that's great. But the downside was also, he turns around and sucks you in the damn face. Yes. And so you had to do that calculus. There was the full spectrum. With social media and whether you're pseudonymous or not, that risk side is now like here. It's just been narrowed where I don't have to worry about getting punched in the face.

Maybe I have to worry about the person getting mad at me or like taking a screenshot and sharing it, but definitely not getting punched in the face. But it's almost the opposite. Not only are you not going to get punched in the face, you're probably going to get a thousand retweets, which you like. Like, not only do you have no downside, you have all, you have huge upside by being a troll. And yeah, it's, that's a, that's a tough thing. The quote tweet phenomenon of like how easy it is to dunk on people and get a bunch of likes for it is a very sad reality of Twitter at scale.

It's also why, and I think Packy McCormick, a friend of mine was, one that said this, it's also why a lot of large accounts as you reach scale become more and more fortune cookie because it becomes the safest thing to do because you don't get dunked on. I think this is true for me. If I were to go back and look at my tweets from five years ago, I probably took way more risk than I do today because the downside as your following grows increases as well. I think that's definitely true. I've also done this a handful of times, not very often, but if someone says something really terrible about me on Twitter, just really, like not just casual trolling, but just really mean.

I will, I mean, 99% of the time I ignore that, but once in a while, I've DM that person and I've said, hey, I'm really sorry I offended you. I'll try to do better next time. Like kill them with kindness. Every single time, without exception, every time I've done that, they have written back and said, hey, I'm sorry, I didn't mean, I shouldn't have, I shouldn't have been so mean. I'll delete the tweet. And this, I think, gets back to the road rage phenomenon of like when you're dealing with the handle, it's easy to be that jerk.

And then once as soon as you realize that you're actually dealing with a human being, like most people are actually pretty civil. Most people are actually pretty nice. And so I think I do that just because I think it's interesting to see how quickly the demeanor changes once they realize they're dealing with a real human being. I've done the exact same thing and had the exact same experience. Every single time. It's crazy. I had somebody. I put out this thread explaining what Swift was right as the sanctions were coming out.

And it went quite viral. And at the end of it, we had planned to do an episode where we would talk about Swift and the impact of all of it. So I'd linked to the podcast. And someone shared it and said, like, oh, this guy, you know, trying to profit from, you know, the deaths of Ukrainian citizens. And I sent the person a message and just said, like, hey, man, that clearly wasn't my intent. Like, I'm not trying to profit from anybody's death. Like, we're going to do an episode. I want people to tune into it.

Like I get it. I sort of understand like maybe like on the margins of it. But come on. You like you know that that wasn't the intention. And he immediately had that same reaction like, okay, I deleted it. Thanks for reaching out to me. You know, I'm sorry that I did that. It was a gut reaction.

Yeah. And that's like I don't know if it's good or bad to see that because you realize how easy it is to be a troll because you realize that the people who are doing it don't understand exactly what they're doing. It would be one thing if people who were a troll knew what they were doing. And they're like, the world needs to hear this, this criticism. And this person truly is awful and I need to let the world know it. But 99% of the time, that's not the case.

It's just the barriers to entry of in civil behavior are so low on social media. Yeah. No, it totally makes sense. I mean, it's the challenge that I think everyone faces as they continue to scale and continue to share. I would say that the good definitely outweighs the bad. I mean, the ability to reach people all around the world, how many people your writing has reached at this point, your book, you know, sold over a million copies and continues to reach people. It's quite amazing when you think about all the opportunities. It has afforded creative people to go out and put things out into the world that reach people at scale.

You have a few followers yourself, I think. And you've had a couple of tweets that have gotten like a few hundred likes, I think. A few hundred. A few hundred. So I know we're kind of starting to run into the end of. time here. And I don't want to, I don't want to let you go before asking for a few, a few final questions. One would be, you are a prolific writer. You, I don't know, at this point, you've written thousands of articles, I imagine, from your days at the Motley Fool,

on now to your kind of weekly post with collaborative fund and all of the writing you've done the book, et cetera. What is your process? Like, are you writing every single morning, from a creative standpoint, are you reading a lot every day? Like, what is your actual process and your kind of framework that allows you to be such a prolific writer of really evergreen content? I read a lot and I spend a lot of time just kind of aimlessly wandering around thinking, going for walks or sitting on the couch and just trying to like throw thoughts around. Actually sitting down in a Google Doc and writing is a very small minority of what I do. the huge majority of it is just trying to form thoughts and come across little examples and data and whatnot.

So almost every day that I have during the week is unstructured. There's very little on the calendar. And a lot of it is just kind of casually reading, sitting on the couch and reading a book or listening to a podcast or scrolling Twitter or talking to a friend on the phone. It's things that do not look like work to anyone. But what it is is just like, I'm just trying to find the idea for the next article or some story. What are the most consistent things that you read? Like, what are you reading on a consistent basis? You mentioned the economist.

I think that's a phenomenal one. What are the other things you're consistently reading? The most consistent is probably history books. That's probably like takes up the lion's share. They have absolutely nothing to do with investing or the economy most of the time. but I just think they're insights into how people think. And if I can gain an insight into how people think, I'll be able to tie that back to investing. That's always how I look at the process.

And so that's what most of it is. It's an interesting perspective because most of your writing, you know, people would characterize it as financial writing. You know, you work at a venture fund. You're not writing about venture investing. You're not writing about startups. You're not writing about really the stock market all that often. You're writing about the world, frameworks, perspectives, mental models. You're not calling them any of those things or branding it in any specific way.

But when I read your work, I find myself coming back to it because it encourages me to think about things that I'm seeing around me in a different way or in a new light. That's why I find it so interesting because you're not a financial, I mean, you're not a financial writer. You're writing about basically everything, the world around us. I'm trying to, I think that that's right. And I'm trying to write about how people think and how people think is 100% of what matters in startups and in venture capital and in the stock market and whatnot. So they do, they all do all tie together, but I want to get there in a roundabout way. And I think if you can learn something, if you can find something about human behavior that is true in multiple disciplines, you found like something that is very powerful in human behavior.

So if you can notice how people react to risk in medicine and in military, history and in politics and in relationships and in education and all these other facets of life, if you start seeing like there's this behavior that keeps coming up, it almost certainly applies to investing as well. People don't think about risk in their investments any differently than they think about risk with their health. For example, there's all these things that fall under the same umbrella. And I think it's much more interesting and more complete to think about investing through the lens of those other fields rather than the narrow, tiny little lens. lens of finance through a finance textbook. I think that's like so incomplete to view the economy

just through the lens of an economist. But if you view the economy through the lens of economics and sociology and psychology and history and political science and biology and all these and geopolitics, all these other things that have nothing to do with economics, you understand the big picture so much better. As the son of an economist, I can definitely say that that economists are notoriously wrong about the economy. Yeah. And it's sort of the hammer to a nail. You're right?

Like to a hammer, everything looks like a nail. If that is your lens, if that is the framework, if that is your map of reality, everything in your life is going to guide you to that specific one answer. And if you don't view it from those other perspectives or think in that multidisciplinary manner, you're going to have a really hard time. Yeah.

I mean, I think most fields are some mix of that. Like, I heard this great quote recently. I'm going to butcher it. But this person, it was a geologist. And he said, there's no such thing as geology. Geology is where chemistry and physics and astronomy and all these other fields like overlap. That's what geology is. And to be a good geologist, you need to be a good chemist.

You need to be a good physicist. You need to be a good astronomer. Like all these, all these things like mixed together. And I think that's really true for economics as well, that you can be an amazing economist if you don't really have any economics background, but you really understand psychology, you really understand politics, you really understand sociology, you really understand, like all these things, all these different things, the mixture of those, the intersection of those, is going to make you a really astute economist.

It would also make school much more interesting and engaging for kids if we were able to teach and learn that way in a way that's not so compartmentalized across subjects, because the reality is they all bleed into each other. other. And so how do you kind of, it's an interesting thought experiment for another day, but how do you reframe our traditional education system to allow children to learn in that way where you're going across, it's more networked learning. You're kind of going across different subjects and pairing things together that seemingly don't make sense, but that actually lead to much more compounded knowledge growth. And here's the thing. I think most colleges try to do that with general end requirements.

Like if you are a computer science major, you have to take psychology, 101 and biology, et cetera. So they try to do that. But where they fail is that they never blend them together. They still, all of those courses live in their own little silo. And they're never woven together to be like, hey, here's what psychology teaches us about economics. You take psychology and then you switch gears and you take economics, but you never blend

them together. Two final questions for you. Most recent book that you really enjoyed. I read the biography of Charles Lindberg, who of course was the first man to fly across the Atlantic in 1927. He flew from New York to Paris. And it's not an exaggeration that he was the most famous man in the world when that occurred. It just completely blew people's minds. The airplane had been around for about 20 years, but Charles Lindbergh flying across the Atlantic was the first time that the entire world was like, oh shit, this is a big deal. This is going to change everything.

This is not a little toy to fly you across town. This is going to completely change the world. He was 25 when that occurred and became the most famous man in the world. And then his his life was kind of a series of downfalls after that. A couple years after that, his two-year-old son was kidnapped and murdered. And then in the 1930s, he kind of cozied up to the Nazis, which destroyed his credibility, of course. And so his life was, I think, I think probably more than any other modern human, his life was extreme highs and extreme lows. And the book just describes how he took it and how he dealt with it. And she's just a really fascinating person. Is it Lindberg by Scott Berg?

That's it. Yep. Okay. Awesome. All right. Well, I'm going to order it. And then my final question for you, I mentioned it earlier. My first child son do in about a month, lessons or one thing that you would provide by way of advice.

When my wife was pregnant with our first child, our son, we went to dinner at a house of some friends who had young kids themselves. and their advice was love the kid that you have, not the kid that you want. That is a little bit of preparation to say that your child is going to be hard in unique ways. Every child is hard in their unique ways. And every child is going to do things that you didn't expect and that maybe you didn't necessarily want. You thought it was going to turn out differently. But just love the kid that you have rather than the one that you want. Maybe it's like the Charlie Munger quote that the key to happiness is low expectations.

That's a great advice for a new parent, yeah. Great way to end. Thank you so much, Morgan. This was amazing. So many takeaways for people, and I think it's going to be, I think it's going to be an amazing one for people to listen to. Thanks, man. This is fun.

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