We Study Billionaires - The Investor’s Podcast Network - TIP171: The Power of Moments w/ Dan Heath (Business Podcast)

Episode Date: December 31, 2017

Today’s guest is Dan Heath and he’s a three-time New York Times best selling author. Dan is graduate of Harvard and is also a Senior Fellow at Duke University. During the show we talk about Dan's newest book, The Power of Moments.  IN THIS EPISODE, YOU’LL LEARN: How to change your life and business through significant moments. Which moments that can create short-term and long-term happiness. How to level up on your skill set, just like a computer game. Ask The Investors: What is the intrinsic value of Bitcoin? BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Dan Heath’s book, The Power of Moments – Read reviews of this book. Dan Heath’s website. Preston and Stig’s new Bitcoin Resource. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: Bluehost Fintool PrizePicks Vanta Onramp SimpleMining Fundrise TurboTax Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey, how's everyone doing out there? We are really excited to bring you today's interview because we have Dan Heath with us, and he's a three-time New York Times bestselling author of famous business books. He's the author of Switch, Made the Stick, and also the book that we're going to be covering and talking about today, which is called The Power of Moments. Dan is a graduate of Harvard and is also a senior fellow at Duke University. And the reason we're covering this book is because so many people in our audience are business

leaders or executives, and they could take some of these lessons and use them to positively influence their employees or coworkers. And of all the books that I've read in 2017, this one would definitely be in the top three that I've read. Not only that, but as you'll quickly find, Dan Heath is an incredible storyteller, and he has some really profound ways of explaining why the power of moments are important for business leaders that take advantage of. All right, I hope you guys enjoy this interview as much as I enjoyed talking with Dan. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected.

All right, so I am so excited to have Dan Heath here with me. I read this book, Dan, and I can honestly say this thing was a home run. This was such a fantastic read. I was captivated. The stories in it were fabulous. So I'm really excited to talk about this. And thank you for taking time out of your day to join us here on the show. Appreciate that.

Thanks for having me on. So the first thing that I think whenever I'm looking at this book and all the stories that are in it is where in the world did you get the idea for this? Like what triggered your thought process to write a book around this idea? Because it's such a fascinating thing once you start pouring into it. You know, there is actually a very specific moment in time that I look back on as the birth of this topic. My brother Chip and I were sitting in our dad's office at his home in Durham, North Carolina.

It was Christmas. And we were in the midst of a discussion about a book that we later abandoned. And this is a book we've been working on for maybe six months. And in this brainstorming that day in the office, it just became clear to us that we were kind of forcing it. We weren't that excited about the topic, the conversation had become this slog. And at some point in that conversation, we got on this tangent about moments. I'm not even sure how we ended up here. I think it was just some desperate attempted procrastination, to be honest with you.

But we started just this whirlwind brainstorming about why it is that in virtually any length of experience that you have in life, there are a handful of moments that stand above the rest. And in fact, with time, those moments may be the only thing you retain from the experience. And the weird thing is that that's true of a dinner. You know, you might have a spectacular appetizer or a great glass of wine. It's true of a semester in college. You know, you might remember one professor in a particular road trip. It's even true of your life as a whole.

You know, you talk to the people in their 70s or 80s or 90s about their lives, and it's easy for them to come up with a dozen moments that may have shaped who they are. And so we started talking about just this insane power that particular moments seem to have that one moment might have 10x or 100x, the meaning and memorability of all the rest. And so we started brainstorming at first is this kind of intellectual exercise. But then it occurred to us. There are a lot of people in the world who are in the business of shaping moments. You know, you think about Disney World and the fact that there's somebody there who was trying

to scope out the best place for families to take their photos and to set up these little, you know, landmark photo opportunities. You think about the Olympic medal ceremony, you know, that kind of moving moment when someone who's won the gold medal stands on the podium and the anthem plays. And just what a beautiful moment that is. And somebody in human history sat down and scripted out what that would look like and talked about the details. We even talked about my brother had heard the story about BMW. The story is that they had this engineering team that was working to perfect the ignition moment. You know, you turn the key, you push the button and the engine.

brooms to life and that my brother had heard that they made use of kind of acoustic trickery and other things to make that moment seem really mussely into the kind of thing that will get your pulse pumping as a driver. And so as we went through this discussion, I mean, we spent two hours just on this manic brainstorming session about moments and the research that ties to moments and the stories of moments and political moments and emotional moments and personal moments. and we come out at the end of this, all our family's sitting in the living room, and we kind of triumphantly announced that we've got a new book. It's going to be a book about big, powerful, defining moments.

And as we announce this, we look around the room and there's this kind of visible sense of relief on their faces, because apparently all of them hated the prior book idea, were just too nice to tell us. So that was the birth of this book. I love it. So whenever I hear that moment, especially what you're talking about with BMW, that's a branding and marketing thing. I mean, really, it's branding and marketing. When we're talking business, you know, we're talking more business here than investing. When a business is developing a brand and a market for something, what better way to do it than that moment that you're talking about?

So I guess my question for you would be this. So we have a lot of business leaders and executives that listen to the show. How can they use this approach of constructing a moment to benefit their companies, whether it's branding or it's just employee recognition? Talk to us about some of those ideas. Let me tell you a story that I think captures the meaning for business leaders. So there's this hotel in Los Angeles called the Magic Castle Hotel. And I know you've got listeners all around the world. So if you've never stayed there, I want you to just picture in your mind the Magic Castle Hotel.

Okay, now what I want to tell you next is whatever is in your head right now, it looks nothing like that. It is actually a two-story apartment building built in the 1950s that was later converted to what is effectively a motel. It was painted bright yellow. It is utterly average to look at. It looks nothing like a castle. The rooms are average. The lobby is average. The courtyard where the pool is is average.

So that would be the end of this story if it weren't for one particularly. remarkable fact, and that is that this hotel, the Magic Castle Hotel, is ranked the number two hotel in Los Angeles, according to TripAdvisor, based on thousands of reviews. It outranks hotels like the Ritz Carlton, like the Four Seasons. And so you just kind of slap your forehead and say, how could that possibly be true? Well, the executives of the Magic Castle have figured out what moments can do. So if you stay there as I did, you start noticing that they do these remarkable things, one of which is there's a cherry red phone mounted by the pool and just above it is a sign that says popsicle hotline. And so if you're brave enough to go over and pick up the phone, somebody answers

popsicle hotline, may I help you? And you can order up grape and cherry and orange popsicles delivered to you right at poolside on a silver tray by someone on. wearing white gloves like an English butler all for free. They have a snack menu where you can get for free, Cracker Jack, Sour Patch Kids, cream soda, just for asking for it at the front desk. They've got a board game menu, a movie menu. They'll do your laundry for you. If you drop it off in the morning, they'll have it back to you at the end of the day. We've got magicians that do tricks in the lobby. And so when you start to understand that side of their business, now you can understand and how people could really appreciate this experience,

how they could find it one of the highlights in their vacation, even though a lot of the amenities might be very poor by Ritz Carlton standards. And so I think the importance of that story, to me this is not a story about popsicles or even a story about the hospitality industry. This is a story about experience. And what we know from research and memory is that when people look back on their experiences,

they don't just kind of load them up like a video that you can watch. beginning to end that in fact most of what we experience fades out and what we're left with our particular moments and there's actually some research that explains why we remember the moments we do in fact there are two kinds of moments that we disproportionately recall there's the peak of the experience which is the most positive moment in a positive experience and there's the ending it's called the peak end principle and so when you catch on to that as someone in the business world especially service leaders, what you realize is that to have a really great experience for the people you serve, whether that's customers or patients or students or otherwise, not every aspect of that

has to be brilliant. Not every aspect has to be perfect. I think there's this illusion that in order to do something great, it's got to be nonstop greatness. Every detail has to be perfect. And in fact, what we know is that a lot of great experiences are actually mostly forgettable, but occasionally remarkable. And that's the story of the Magic Castle, that despite a lot of average, a lot of mediocrity, these special moments like the Popsicle Hotline, that's what endures in their customer's memory. That's what makes the experience special. But here's the bottom line, these remarkable moments don't plan themselves. And so if you're in the business of providing service to customers and you haven't thought carefully about peak moments, that's a huge opportunity.

I absolutely love that. What a great story and so much fun that you talk to us about how we probably envisioned this hotel. I almost had this Disneyland kind of image in my head whenever I read the name the first time in the book until you started describing the facilities. and I was thinking, why would it have such great views? But it really makes me think of a quote that we had a few times on the show, by Marangelo, let's say something like,

people will forget what you said and what you did, but they will never, ever forget how you made them feel. So I guess my next question would be, is that really what this comes down to in terms of what is it that those businesses are doing? Are they targeting people's emotions? And how do they do it? No question. Yeah, emotion is at the heart of what makes experiences powerful, what makes moments powerful. And in the book, the book is organized according to four elements that we saw recurring again and again in different kinds of peak experiences. And those four elements are first elevation. These moments tend to produce positive emotions like joy or delight or surprise. That's the popsicle hotline story. It's a great moment of elevation. You know, on a sunny Los Angeles day, someone brings you a popsicle on a silver tray.

The second trait is insight. What we found is that there are moments in life when you're just kind of thunderstruck by a realization. Maybe it's something you've realized about yourself. Maybe it's a moment when you realize, you know, I can't take another day of this flipping job like this is it, you know, these epiphanies, these realizations. The third element of defining moments is pride. If you look at people's careers in the moments they remember from that,

they tend to remember these moments where they were recognizing. for something they had done. Maybe you got an award or maybe you were praised for some work you had done or maybe you accomplished something you weren't sure you'd be able to. Maybe you weren't recognized by others, but you just felt this intense sense of pride having conquered something big that you'd set out to do. And then finally, the fourth element of these moments is connection that so often these special moments tend to draw us closer to other people, whether that's in a one-on-one relationship or often groups bond in moments that require them to, to do something dramatic, something that forces them to struggle.

Think about boot camp as kind of a classic example of that. A bunch of people who are strangers to each other and different in so many ways are bonded for life as the result of this kind of grueling experience that they have to go through together. So when we talk about creating better experiences for the people we care about, whether that's customers or patients or employees, these are the ingredients we have to work with. You know, what we know is that great experiences hinge on peak moments. That's the first part of the story.

And then the second part of the story is that peak moments are built from elevation, insight, pride, and connection. So I'm sure you get a lot of emails and feedback from your readers. And what would you say is the most surprising feedback that you've received from some of your readers on the book? I think some of the most surprising feedback is just people kind of chuckling at their own organizations about how bad they are at this stuff. I'll give you an example. We did some work for a retail bank in Australia. And we were talking about retail banks are unusual businesses in that they have such a long trajectory with customers. I mean, you could have a relationship that last 30, 40 years. And because of what banks do, they're often part of really important events in your life. You get married,

you know, you're adding someone to your account or you switch jobs and you may have new sources of income or income dropping off. They're managing your mortgage. That's a really important thing. And so we talked about how emotional these moments are. And we were talking in particular about the importance of transitions, which is a theme in the book. If you look at the big rituals that cultures evolve over time, so often these rituals are pegged to transitions. So think about a wedding day and the ceremony and the dancing and the food.

I mean, it's a ceremony to celebrate a transition in a couple's. life. Graduation, ceremony to celebrate a transition, rights of passage ceremonies, you know, ranging from Kinsenierras to bar mitzvahs. They're pegged to transitions. And so when you catch on to that, it makes you start paying attention to the transitions that are important in your work or in your life. And so back to this bank, we were saying, you know, think about the moment when you finally pay off your mortgage, you know, potentially 30 years later. You've been diligent. You've made every payment. That is a heck of a transition, not to mention an end back to the peak end principle. And so we were saying, you know, the way this should work is that when you make that final

payment, someone comes out and visits you from the bank, knocks on your door, they've got flowers, and they've also got your deed. And they shake your hand and they say, you know, great job. You've been at this a long time. Here's the deed to your house. That's an emotional moment. That's a peak moment. And then someone in the back of the room raised their hand and said, you know, not only do we not do that, we actually charge people a deed transfer fee when they complete their mortgage, a deed transfer fee. And so, you know, back to your question, it's like what people are sending us a lot of times are the deed transfer fee equivalents from their respective organizations. It's just like they have these epiphanies where they

slap themselves on the forehead and say, how could we have missed that, that we're actually charging people money at this moment that should have been the culmination of a long and successful relationship. What an example. Because I mean, when you think about it, they're doing the exact opposite of what they should be doing. That's amazing. They're squandering. I mean, banks like many businesses talk a great game about relationships and all the TV ads, you know, have people holding hands and soft lighting and we're all about the customer relationship. Well, here's an example of where they're just essentially taking dynamite to a a relationship and taking a positive, emotional, culminating moment and turning it into a minor

transaction fee. I mean, that's just malpractice. Oh, my gosh. So, Dan, I have to admit, one of my favorite stories in this book was the poop story. I know the people hearing this right now are like, what is he talking about? I want you to tell this story because whenever I was reading this in your book, I was literally like, this is a flipping home run what he's saying right here. So can you tell our audience this story, the poop story? Absolutely. Okay. So let me, let me give you some backstory. First of all, I feel a little silly saying poop. The word we use in the book is the S word for feces by design, as we'll get to in a minute. But just for the sensitive ears in the audience, we'll, we use poop. So backstory. A lot of communities in the world are still

practicing open defecation, you know, i.e. people pooping in public. And as you would expect, comes with a lot of health consequences. It can lead to the spread of diseases like cholera, hookworm, roundworm, schistosomyasis, some more. It's a really bad problem. And so a lot of social sector organizations are trying to fight this. And for many years, the obvious solution to this problem was, well, if people are pooping on the ground in public, let's give them some latrines.

Let's give them some facilities. So they have a place to dispose of their waste properly without endangering their neighbors of themselves. So there was an organization called Water Age. that had funded the construction of some latrines in northern Bangladesh. And our story starts with a guy named Dr. Kamal Carr, who was hired to go assess that work. So they paid him to go to Northern Bangladesh and check out, you know, were the latrins installed properly, were people using them and so forth.

So Dr. Carr, it's K-A-R, by the way. He goes to this community. He found latrines were perfectly well built. They were installed properly. He also found something that was a little. more surprising and that was everywhere he went in the fields around the villages he stepped on poop open defecation was still rampant there despite the latrines and he said it was an eye-opening moment for him because he realized you know that the development organizations in the world had been thinking about open defecation as a

hardware problem like if we just get enough latrines out there we're going to fix this but what dr carr was seeing was it wasn't that simple. Some villages were simply, you know, set in their habits. They'd always done it one way and they weren't going to switch. And others were kind of confused by the latrines. Like in some places, the latrines were some of the fanciest materials in the whole village. And they felt uncomfortable, you know, kind of defecating in one of the best built places in the village. And so Dr. Carr realized that open defecation wasn't a hardware problem. That's a behavioral problem. That until the people in a particular their area wanted to change, the mere existence of latrines wasn't going to help.

And so he developed a methodology that's called community-led total sanitation, abbreviated CLTS. That sounds super boring, but let me tell you, this is anything but a boring process. Let me just walk you through what happens. So a facilitator that practices the CLTS methodology, picture a stranger arriving in a village, he kind of shows up and says, hey, I'm studying the sanitation profiles of different villages. Do you mind if I look around and ask you some questions?

And so he tries to hang around long enough that he's got a small crowd with him. And he conducts a walk from one side of the village to the other. And he starts by asking some questions. You know, he says, well, where do people poop here? And so they point him to the right place. And he kind of lingers there uncomfortably. They're a little bit embarrassed. You know, there's poop everywhere.

But he gets interested. He says, you know, whose poop is this? And he waits for something. someone to raise their hand. And he asked, did anyone poop here today and a few more hands go up? And then he asked really seemingly gross questions. You know, why is this poop yellow? Why is this one brown? And, you know, there's flies everywhere. He says, are there often flies here? And people nod. And then, you know, maybe there's a chicken kind of pecking around in the area. And he asked, you know, do you eat this kind of chicken? He's been trained to only ask questions. You know, he's not there

to pass judgment or assert the truth. He's just asking questions. And so they finish this walk, they come back to a big public space. And by now the crowd has grown a little bigger because people are just curious about what's going on here. And he asked them to draw out in the dirt a rough map of the village. And so they sketch out, you know, the boundaries of the village and then landmarks. Yeah, you know, here's where the school is. Here's where the church is. And there's a stream that flows this way. And then he asked the people around to put a stone or a leaf to mark where their individual homes are. And so they're kind of drawing this community map and the dirt together. And once the map has been kind of fleshed out, he brings out this bag of yellow chalk that he's brought. And he asked them to sprinkle some yellow chalk on the places where people poop. And he says, where there's more poop, use more chalk. And so people are kind of giggling nervously. But the kids get a kick out of this. They love to sprinkle the chalk.

And of course, they know where the areas are. So they do that. And they've marked the open defecation areas. And then the facilitator says, well, what about in an emergency? Let's say, you know, if there's a rainstorm or if you have diarrhea and you just can't make it to that area. And so out comes more chalk and, you know, now people are scattering it all around. Sometimes it's just around people's homes, you know, because they can't make it to the common areas. And at this point, it's hard to miss that basically the entire village is covered in yellow chalk.

And the crowd is starting to get a little bit anxious. There's just a weird energy. They're a little bit disgusted, a little bit embarrassed. they're not sure where this is headed. And at that point, the facilitator asked for a glass of water. So someone provides the water and he asks a woman in the crowd, which you feel comfortable drinking it. And she says, well, yes, of course.

And he asks others. And they say, yes, we would drink it. He then pulls a hair from his own head. And he said, what's in my hand here? The crowd says, a hair. And he says, can you see it clearly from where you are? And they say, no, not really. And then he walks over to a pile of poop.

near the area where they're meeting and he visibly, you know, dips this hair into the poop. And he comes back and he plunges that dirty hair into the glass of water. He swirls it around. He hands the glass to one of the villagers and asks him to take a drink. And the man refuses for obvious reasons.

And the facilitator says, well, why do you refuse? And the guy says, well, because it has poop in it. The facilitator looks puzzled and he says, how many legs does a fly have? People say six. Facilator says, right, and all those legs are serrated. Do you think flies pick up more or less poop than my hair did? More. Do you ever see flies on your food? Yeah. Then do you throw out the food after you see the flies there? Not usually. Then what are you eating? And that's the moment that Kamal Carr calls the ignition moment.

At that moment, the truth is really inescapable. And at that point, Dr. Carr describes that the discussion tends to spiral out of the facilitator's control. People are agitated by this. And they start saying, you know, we can't continue this. This is crazy. This is madness. We've got to stop this.

And they often ask the facilitator what they should do, but the facilitator won't answer. He says, you know, you know your village better than I do. You're free to choose anything you want, including continuing to do. what you're doing today. And so that's the trigger. That's the spark for the behavior change that's responsible for this behavior. And Dr. Carr admits this is a brutal process. I mean, this is very, very uncomfortable.

But it is also effective in their experience. Like in Bangladesh, where this methodology, CLTS became a cornerstone of the work, the rate of open defecation declined from 34% to 1%. And I think to, I mean, this is just, just a crazy, moving, powerful, emotional story. If I could sort of zoom out for a minute and talk about, well, what does this have to do with the rest of us?

I think what's distinctive about this story is that all the villagers already had all the information that they needed to come to the same conclusion. Right? There is no news being added by this facilitator. They already know where they poop. They already know the flies, you know, flit between the poop and the food. There's no news. but the way that this was set up, it caused them to, as we say in the book, trip over the truth.

And to trip over the truth is to experience an insight that packs an emotional wallop. It's like when you have a sudden realization that you didn't see coming and one that you know viscerally is right, that's when you tripped over the truth. And in the book, we go on to explain how as communicators, we can use the same strategy to get our audiences to kind of have those visceral moments of realization. Wow, what a great story. And it really goes back to the title of the book, The Power of Moments. This is not just about your money and business. This is about how to change your behavior, how to change your life through the power of a moment. It's life changing. It reminds me of some research that was done by a psychologist named Roy Baummeister

who studied people who have these sort of sudden realizations, you know, people who join cults and later leave them or alcoholics who become sober or you know intellectuals who were once communist and then recanted communism and he said that in these situations these realizations were often characterized by what he called a crystallization of discontent which was you know one moment kind of one of those lightning bolt moments when an array of misgivings or complaints suddenly became linked in a global pattern. So imagine just in your mind just a hundred scraps of cloth that are laying there. And then in an instant, they're all knitted together and you can see the hole suddenly. You know, you might imagine a husband who has a really bad temper and he has a ferocious outburst one day. And his wife

suddenly realizes that these outbursts aren't just him having bad days. They're actually a defining character trait. And in that instance, she realizes not only the truth about her husband, but also the fact that she can't bear it anymore. That's the crystallization of discontent. And that's what we saw in the CLTS story, right? That in an instant, all those fragments of truth that were already there were suddenly stitched together because of what this facilitator did. Let's take a quick break and hear from today's sponsors.

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sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Let me ask you this, Dan. So going back to your original discussion about the mortgage and when you were acting as a consultant, you guys were able to identify something that was really obvious to you, but

for everyone else in that community was completely oblivious. They just never saw it that way. How does a person listening to this conversation go over? about seeing those kind of things now. If I'm an executive of company X and I'm hearing this conversation, I'm thinking, how can I construct a moment from my employees or how can I construct them with this? So how do I go about like what's the methodology for trying to discover that moment or that opportunity for a moment?

How do you think through that? Yeah, great question. And I think that even though these stories are a bit dramatic, you know, the poop story and cult members and so forth, there's a very practical lesson here. So I'll give you a concrete business example. So a guy named Scott Guthrie, who's one of the top execs at Microsoft, about six or seven years ago, he was tapped by Steve Ballmer, who was the CEO at that time, to lead their cloud computing service called Azure. And so Guthrie hadn't been in Azure. And so getting to know the new unit, he started with some visits of customer sites.

He wanted to hear customer feedback, however things going. And his visits tended to be pretty consistent. He found, he realized that customers appreciated the technology. They thought it was a good feature set, but it wasn't very customer-friendly. And so if you kind of freeze there, here's a guy who has an insight. He knows that in order for Azure to deliver on its potential, it's got to become more customer-friendly. Question is, how do you communicate that? Is there a way to get people to trip over the truth?

Well, here's what he did. He called an off-site meeting with his new team. He invited all the senior managers and software architects. And when they got to the offsite, he gave them a challenge. Build an app using Azure, just like one of their customers might have to do. And it wasn't designed to be a difficult challenge. You know, this was not like a development Everest. He was asking them to climb.

But what he found is the team really struggled. Some couldn't figure out how to use certain features. At least one team couldn't even figure out how to sign up. And Guthrie later told a reporter it was a complete disaster. But of course, that was the point, right? That was the moment of getting them to trip over the truth. They had to see this for themselves. And once they had, they had that emotional willingness to change.

And by the end of the second day of the offsite, they'd produced a plan to completely rebuild the platform. So if you kind of reverse engineer all these stories that we've talked about, what you find is a three-part recipe. You find a clear insight. You know, I know Azure isn't custom-friendly enough. that's compressed in time, right? There's something that can be condensed down to a moment,

the moment when you realize, hey, we've been eating each other's poop in that village or the moment at the offsite when they realize, hey, I can't even sign into my own software package. And then the third part of that recipe is that it's discovered by the audience itself. And that's probably the most important part of the recipe is that the aha moment happens in their heads,

not yours, and that you didn't just attempt to take an aha moment that you'd had, you know, condense it to a PowerPoint or an Excel document and shove it across the table. And so I think that's the lesson for communicators is can you create a situation where your audience can have the same epiphany that you had? Can you replicate not just the factual information, but the actual discovery of it? You know, there was a couple moments in your book that reminded me of Tony Shea and a book that he wrote called Delivering Happiness, where you're talking about the difference between last.

lasting happiness and short-term happiness. Talk to us about the research that you did on this, because I find this such an important point for people, regardless of the investing or the business side of things. I think just in general to become a happier person in life, this is so important. So tell us what you uncovered. Well, I'll tell you about something from the discipline of positive psychology,

which your listeners probably know is a part of psychology that's devoted to studying what makes people happier. And there is what I would consider maybe a, greatest hit of positive psychology that's called a gratitude visit. And the gratitude visit is a very simple idea. I'll share with you the way that Martin Seligman, who's considered the godfather of positive psychology, here's how he describes it. Close your eyes. Call up the face of someone that's still alive who years ago did something or said something that changed your life for the better. someone who you never properly thanked, someone who you could meet face to face within the next month.

Do you have a face in mind? So your task is to write a letter of gratitude to that person and deliver it in person. The letter should be concrete, maybe 300 words-ish, be specific about what he or she did for you and how it affected your life. Let that person know what you're doing now and mention how often you remember what they did or said for you. And this sounds really simple, right? It's just kind of an elaborate thank you for someone who's been important in your life. It might be a mentor. It might be a colleague.

It might be a relative. It might be an old teacher. But what they found is the people who conduct a gratitude visit see their happiness level spike for a full month afterwards, a month. I mean, back to your point about short-term versus long-term happiness, we can all think of a lot of things that will spike our happiness levels for five minutes or an hour. You know, I would go directly to the nearest Krispy Kreme for that five minute rush. You know, I mean, that's a sure thing. And so here's an example of a moment that every single person listening to this can create and probably should create because we all have a lot of people that deserve our gratitude.

It's not easy. I mean, it's hard to force yourself to sit down and articulate something like this. It's personal. It can make you feel vulnerable or uncomfortable. But I'll tell you what, I mean, there is not a person alive who's ever. done this that regrets it. It is such a powerful thing. Not only for you, let's keep in mind, even though it spikes your happiness levels. Imagine how it feels for the other person to receive a compliment like that. Absolutely. Hey, so we're good friends with Jesse Itzler here at the

Investors podcast. We've had them on our show three times. I ended up doing a simulated climb of Mount Everest with him earlier this year. Yes, it was insane. And Jesse is just a great guy. And Whenever I was out at the Everest event, I got a chance to meet his wife, Sarah Blakely. And you talk about Sarah in your book. And I love this story that you tell about Sarah. And I would really like it if you could share some of these insights with our audience of Sarah's story. And most importantly, tell our audience about Sarah's dad. Yeah, I love this story because, you know, one of my worst fears about this book is, you know, we tell some stories like Popsicle Hotline that are sort of fun and clever.

and my fear is that parents are going to read this and think that they've got to do a bunch of like cutesy stuff like now every birthday has to have a bounce house or something you know that it's it's about these grandiose and it's really not about that and I think this blakley story illustrates that so first some backstory I have to admit when I first started researching this I knew of spanks but I didn't really know what spanks were and so maybe if there are other people out there in my boat I'll just share some some basics. So there's a famous story about when Blakely kind of discovered the idea for Spanx. She was getting dressed for a party. She had a new pair of fitted white pants she wanted to wear, but she had a dilemma. She wanted to wear her panty hose underneath the pants because

they have kind of a slimming effect. But she also wanted to wear sandals. And for sandals, you need bare feet. You don't have bare feet with panty hose. So what should she do? Should she wear the hose or not. And so she has this inspiration. This is a moment of insight. She cut off the feet of her hose so she can have the best of both worlds. But it wasn't that great of an innovation because, you know, the severed ends of that hose kept kind of rolling up her legs in an uncomfortable way. But she thought, hey, if we could do this right, we could create a real version of this. Women are going to love this. So, you know, fast forward to 12 years later, she had become the youngest self-made female billionaire in history.

And so people come up to her these days and they say, you know, I was cutting the feet out of my hose years before you thought of it. How come I'm not the billionaire? And to me, this is the real part of the story that separates Sarah Blakely from the others. Because as most of the listeners will know, I mean, both investors and executives, the idea is often a vanishingly small part of the success. So thousands of women probably had this idea, but there's only one Sarah Blakely. Why did she succeed?

Well, let me tell you about the kind of gauntlet of failure that she had to run in order to make this idea come to life. So first of all, virtually everyone that she needed to recruit to her side was male. And virtually none of them understood anything about this. In fact, at one point, she was trying to find some IP lawyers and she met with this one law firm. So picture them around a table. basically all men and Sarah Blakely. And she noticed one of the lawyers kept looking around the room like a little bit suspiciously. And it was just strange.

And then much later the lawyer confessed to her that in that meeting, he thought her idea was so bad that he thought she was sent with like a candid camera crew or something. And so he was trying to find the camera in the room. The textile mills that she needed to crank out a prototype of Spanx were all. I mean, all managed her own by. men and none of them understood what she was trying to do. It was only when one mill owner shared the idea with his daughters who told him, hey, call this woman back. That's a good idea that she finally had a chance to get the prototype made. And so the real question is not where did this

idea come from. The real question is, how did she survive just getting door after door after door slammed in her face? And so there are two answers to this. The initial answer is Sarah Blakely before founding Spanx had spent years, I mean years, selling fax machines cold. Talk about a hard degree of difficulty. When she started her job as a fax machine salesperson, her boss handed her a phone book. That was her lead set and gave her a zip code as turf. And she had to go door to door selling fax machines. As anyone listening to this podcast bought a fax machine from a door to door salesperson,

that's Sarah Blakely. But even if we go one step further and we say, well, how did she have enough grit to survive that gauntlet of fax machine selling? She says one important thing happened in her childhood. She said when her family would have dinner, her dad would always ask her and her siblings a question at the dinner table. And his question was, what did you guys fail at this week? What did you guys fail at this week? and Sarah Blakely said if we had nothing to tell him he'd be disappointed and it seems counterintuitive right that he's encouraging them to fail but she said he knew that many people become paralyzed because they're afraid they're going to fail they're afraid of what others are going to think and so they create this very safe riskless life but she said my father wanted us to try everything and feel free to push the envelope and his attitude taught me this is her talking his attitude taught me to define failure as not trying something I want to do instead of not achieving the right outcome.

And so back to the point of the book, this is an example of how even in a moment, a question at the dinner table as a parent, you can have an effect on your child that you may not even realize you're having. I mean, that's how powerful a moment can be. I really like that story. Another story that I really like from your book is your story about how to look at your life like a computer game where you can sort of level up. and which is I think something that you cannot just use for your business, but also in your

personal life in terms of achieving your next goal. Could you please tell that story? Yeah, I think this is a really subtle but really practical idea. And it involves, we talked earlier about moments of pride. And so our quest here is for the things that we want in life, can we come up with a way to ensure that there are enough moments of pride along the journey that it keeps us on the journey. So let me explain what I mean. A lot of people listening, especially if they're Americans

and, you know, were raised with one language, you know, may dream of learning a second language. I know I've always thought about. I'd love to learn Spanish someday. And so if you think about how most people conceptualize that mission in their minds, number one, I would point out, it's not at all clear what the moment of celebration is.

I think it's Jim Collins that talks about the champagne test. Like when do you crack the champagne? Well, it's very amorphous in this case. When do you know Spanish? So we're running a race without a clear finish line. But worse than that, what are the finish lines in route to that master goal? So I think the way most of us think about it is in order to know Spanish, well, I'm going to have to try to squeeze in a Spanish study session. And then I'll have to squeeze in another Spanish study session.

And then I'll do some homework and then I'll do some practice. And it's kind of like the way we're thinking about it is you take your medicine, you take your medicine, you take your medicine, you take your medicine, you take your medicine, and then someday you quote unquote know Spanish. And so when you conceptualize a mission that way, it's no surprise that the vast majority of us fail. We don't get there. And so Chip and I had come across a book from a guy named Steve Cam, K-A-M-B, called Level Up Your Life. And he's got what I consider an antidote to that. he talks about being inspired by the structure of video games, which, you know, if you've ever gotten addicted to a video game in your life, I'm of the kind of Pac-Man and Donkey Kong era, but I love the hell out of those games. And you know, it's just level after level, each one's slightly harder than the previous one. But this is the important part. Every level is fun. So I never finished Donkey Kong, never. But I still had fun. And I don't regret the time I invested in it, which is very different from a lot of the things we conceptualize for ourselves. So anyway, back to the book, Steve Cam wanted to learn to play the violin.

That was his learning Spanish kind of mission. And so rather than fall into the trap of just thinking about it as got to do a lesson, got to do a lesson, got to do a lesson, someday I'll be able to play the violin. He created these video game inspired levels for himself. So level one was committing to one violin lesson per week for six months. So that was kind of like the boot camp. And that one's not a lot of fun, to be honest, but the rest of these are much better. So level two is to complete Celtic fiddle tunes, a book by Craig Duncan.

Level three is learning to play concerning hobbits from the fellowship of the ring. Level four is to sit and play the fiddle for 30 minutes with other musicians. Level five is to learn to play the promontory from the last of the Mohicans. And the kind of in battle, the moment of popping the champagne is to sit and play the fiddle for 30 minutes in a pub in Ireland. And isn't that great? Because you see what he's doing there. Number one, he's clarifying what's the end? And the end is that vision of himself in a pub in Ireland.

I mean, what a great fantasy. Like, that's something that will keep you sustained for a long time. But even more than that, what he's done is he's created a succession of intermediate finish lines, each one of which is fun and satisfying on its own merits. So learning to play the song Concerning Hobbits from the Fellowship of the Ring, which is a movie he just adored. that's something he can get to much, much quicker than that in fantasy, but it provides a moment of pride in and of itself. And so, you know, back to Spanish, we would be much wiser not to think of it as a succession of kind of boring lessons that we have to endure, but in terms of levels.

You know, level one might be, can I order a meal in Spanish with proper pronunciation? That's something you can do in two weeks. Level two might be, you know, have a simple conversation. You know, how is your day? Where are you from in Spanish with a taxi driver who speaks Spanish? Level three is glance at a Spanish newspaper and find one headline in the newspaper that you can understand. Level four might be to follow the story in a Spanish cartoon. Level five might be read a kindergarten level book in Spanish.

And so you see how dramatically that reshapes the mission. It's like every one of those levels is cool. every one of those levels comes with a moment when you feel like, okay, I've done something. And then finally, every one of those levels is such that even if you quit after that level, you still feel like you've accomplished something. And that's the Donkey Kong story, right? It's like if you conquer seven out of 100 levels, you still feel good about conquering seven levels. And there are so many aspects of our life that I think this strategy would apply to

that would keep us experiencing moments of pride and continuing on to the next finish line. You know, it's funny, we were talking with Jesse Itzler, who I mentioned earlier on the show, and we had made the comment that you've got to be passionate about something that you're doing. And Jesse interrupted me, and he says, no, you don't have to be passionate about the thing or the end state. You need to be passionate about the journey. And when you're talking about, and it was really a profound moment for me because I was like, wow, that was pretty profound, and that makes a lot of sense. And when you're talking about these levels and basically creating the journey, and when you think about how you play a video game, when you play the video game, you're not like super excited because you finish that last level.

You were having fun along the entire journey, every one of those levels. And if you don't treat your life like that, I think a lot of people are going to absolutely, like you said, just quit. They're not enjoying the process or the journey. They're thinking too far to the end state and forgetting everything else in between it. Exactly right. And I think what's important for us to realize is that we have some control over this, that we can be shaping the journey. You know, it's like we talk about in the book, there's a kind of architecture of pride. And if we understand that architecture, we can create our own journeys.

Like I have a friend who is a history buff. And learning about history is another one of those things that could be very amorphous. When will you, quote, unquote, know history? Well, never in a certain sense. And so what he did was he turned his interest in history into a, quest. And the quest was that he's going to read the biography of every American president, starting with George Washington all the way up to Donald Trump, in order. And so it became like this, you know, back to that mental image of multiple finish lines rather than one. Now he's got 45

finish lines. And every time he finishes a biography, he goes and he buys like the presidential coin with that president, which is like a nice kind of visual or souvenir from the experience. And then he goes on to the next ones. And sometimes, the quest is fun and easy, like when you read about George Washington, sometimes it can be incredibly painful. I think it was Millard Fillmore that he said he barely survived the process of reading that book. But that's what a quest is like, right? Sometimes it's easy and sometimes it's hard, but the point is that we can bring structure to quest that keeps us on the road. All right. So, Dan, thank you. This was just fabulous. Your book was incredible. And I'll tell you,

we read a lot of books. And I really mean that your book was incredible. The name of the book is The Power of Moments. Dan, if people want to learn more about you, where can they find you? They can find us at heathbrothers.com. That's Heath H-E-A-T-H. And all of our books are there. We've got a book about communication, a book about change called Switch, and a book about decision-making that might be a particular interest to the investing crowd. That book is called Decisive. Absolutely amazing. Thank you, Dan, for coming on the show today. Hey, thanks a million. It's been fun. Let's take a quick break and hear from today's sponsors.

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All right. Back to the show. All right, so this is the point in the show where we play a question from the audience, and this question comes from Elizar. Hello, guys. I hear you guys talk a lot about Bitcoin and cryptocurrencies. And the thing I never understand about these cryptocurrencies is where's the fundamental value? I understand you guys talk a lot about stocks and equities with the fundamental value approach and evaluating companies in terms of what's the return you expect based on good businesses.

and I hear a lot of jargon being thrown around about how quickly it's being accepted and certain thresholds regarding that. But the thing I just don't understand about Bitcoin is that I don't really see any intrinsic value as opposed to other currencies, for example, which are backed by basically IOUs by the government, which are valuable intrinsically

because if anyone wrote an IOU, you would hold that piece of paper as intrinsic value relative to the reliability of the credit of the person who issued that IOU. So, for example, the U.S. government is pretty good. But these Bitcoins, what's stopping people from suddenly deciding, you know what, we are not interested in them anymore, and then just selling them and not really having any interest in it anymore? So really that's my question.

In essence, I don't really understand where the fundamental value in cryptocurrencies are. Thanks. So I really like this question. I think this is a question that most people out there, I would argue 90% of the general public at a minimum would probably agree with your position and not understand how this has any intrinsic value. Because at the end of the day, it's just a bunch of ones and zeros that are distributed across all these different servers around the world. And so how does that have any type of value? And so this is how I would explain it to you and why I think that there is fundamental value. here. So when you look at the way fiat currencies work today, what's the fundamental value of a

fiat currency? Well, it's backed by the government. The government insures the fact, like the FDIC here in the United States. If some emergency happens, your money's in the bank, they'll back up to, I think, what is it, $250,000 at this point. So what are they backing that up with? They're backing it up with more printing. So what they're really saying by having an FDIC insured is that, you know, If all the credit contracts, and I think we got to have a conversation about what money is whenever we get into this. So real quickly, money is really two things. You got a monetary baseline, which is an actual unit, which is just ones and zeros that the Fed keeps. They have a monetary baseline.

From that monetary baseline, you also have credit that's created on top of that. It's a fractional reserve banking that's created on top of that. Most of the money, the dollars in the system is credit. And so that's why we have these big credit cycles that expand and contract because most of it's credit and that credit can dry up and it can expand and that it can dry up and it can expand. When you're talking about cryptocurrencies, it's just monetary baseline. There's no expanding and contracting of the credit with it.

And what's that backed by? Well, it's backed by faith. People that believe that the protocol will not be updated and that there are. are incentives in place. It's the ultimate game theory that people say that will keep the protocol and check because the people that will hold the majority of the coins aren't going to want them to be increased

or the monetary baseline to be increased. So if you buy into that, then there's an intrinsic value in the fact that the monetary baseline can't be manipulated. But history has proven that fiat currencies that are backed by nothing have always, have always been manipulated.

by their monetary baseline and has been increased. We've seen that with the dollar. You can pull up any chart of the dollar for the last hundred years, and you can see that the dollar is devaluing, and devaluing it somewhat of a rapid pace. And so that's what it really comes down to, is do enough people globally have faith in a mathematical solution through blockchain technology on Bitcoin

that the protocol will not be adjusted? You've got a lot of people forking the protocol and trying to mimic the protocol. But as long as you have a network effect and more and more people continue to join that network, the protocol will not adjust the monetary baseline. So you have to have faith. You have to believe in that being a better store of a unit of measure than government's doing that. My personal opinion is I kind of buy into it a little bit. Now, we're not talking price right now because the price is going in wild swing.

because it's brand new. There's people that are adopting it. There's people that are trying to short sell it. There's all sorts of things that are happening. But if you asked me if I would be surprised in 10 years from now, if Bitcoin was a global currency that a lot of people were using, that would not surprise me in the least bit. I would not be surprised at all if that was what happened in 10 years from now.

So this is the quote that I'll take from rate value. And this isn't exactly word for word. But it goes something like this. Don't think about how you want the world to be. Try to understand what the world is and how it does function. And so whenever I think about how this might play out, whether you want Bitcoin to work or you don't want it to work or you want fiat currencies to remain dominant, backed by a government,

whatever, you have to take your opinions out of it and you have to think what is going to actually happen here. And for me right now, it kind of seems like this whole crypto movement is going to become real. And I think there's going to be a lot of bumps along the way. And I mean a lot of bumps and big bumps going up and going down. But I wouldn't be the least bit surprised to see it really come to fruition based on the network effects that we're seeing on the protocol today. You know, it's such an interesting argument that on one side you might say that it doesn't have any value because it's not backed by government.

And then the other side says it has value because it's not backed by government. which is just kind of ironic. The more you think about it and the more that you study your thing, economic history, there is a lot more to it. And let me just give you a few examples. So in Russia, for instance, in 1992, so this was the first year after the economic reform, retail prices in Russia increased by 2,520%. So think about that.

But think about that today, where we are looking back at 1980 in the States and saying, well, you know, inflation was 13, 14%, like we don't want that to happen. And no, we don't want inflation like that to happen, but we definitely don't want Russia to repeat itself for 2,520% inflation in one year. And this is not just ancient history. If we look at what's happening in Venezuela right now, so just the first nine months. of 2017, they had more than 500% inflation. So basically what I'm trying to say here is that while we in developed countries are

talking about, you know, it's volatile, we believe in the established system. Well, we probably have a good reason to do that. And it probably makes a lot of sense for people, call it the top one billion people in the world not to buy Bitcoin because like, why would you? You can, in 24 hours, you can have access to a bank account, you can get credit, you can trade international markets. It makes not a lot of sense. But if you're one of those six billion other people or whatnot, it probably makes sense. I think it's around $3 billion.

They're completely unbanked. And then there's another $3 billion that can get access to a bank account. It's just very, very difficult and it doesn't have as much utility. Perhaps for them, it makes a lot of sense because they're not necessarily afraid of going back to in 1980 scenarios with 10% inflation. They might have afraid of 500% inflation in nine months or even more. And I think that really also goes back to what is the intrinsic value of something like Bitcoin.

And whether it's Bitcoin or another cryptocurrency, I really think that the storage of value is just so valuable. And that's probably the highest utility that you can think of. I mean, often Bitcoin is compared to gold. It's typically called the digital gold. And if Bitcoin were to be priced at the same level as gold, it will be up around 500,000 US dollars for one coin. Now, I'm not saying that this is what it should be. You know, you might have good arguments why it should be 10% of that or 5% of that or whatever it is. But a lot of the arguments that you have about something like cryptocurrencies that you can't spend that in stores. I mean,

you can't spend gold most places, but you can find multiple places where you can cash it in. And that's also what you see with cryptocurrencies. And if you think about gold, you know, yes, there is some utility to gold, but it's actually very little if you really think about it. It really comes a lot from the trust that you can always find valuing in gold. So I think for me, if I were to invest in Bitcoin, I think like the storage of value is the most important thing. You know, it's quite a transition because we've never seen anything like this ever before. We've never seen anything that was a distributed network that was a store of value.

That's never happened. This whole blockchain thing is brand new. I mean, it's never happened before. And I think that that's going to take a lot of time, if this does go all the way and this really does become a global currency, that's going to take a lot of time to convince the general public that that's that's safe and something that they actually want to possess. And I don't think that that's something that you can just sit down and have a casual conversation with anybody because you really, you got to understand a lot of things. Number one, you've got to understand game theory. I mean, this is all wrapped around game theory in the way that cryptocurrency work. You got to understand monetary policy. You got to understand what's happening with these central banks and that they're in a

race to devalue their currency so that they can manufacture growth inside their own country. You've got to understand branding and marketing and how powerful that is to sway opinion and build trust. There's so many factors that are wrapped into this that that's not going to happen quickly. It's going to take time if this does go all the way. And I think that that's really important for people to keep an open mind about it. And if you don't buy into it, heck, you might be smarter than us. But I think that it's important that you keep an open mind and that things could continue to move this way. And although it doesn't seem like there's any intrinsic value,

I can tell you one thing. If there's $10 trillion of value pumped into this thing, as far as the market cap goes, guess what? There's value there. You can take a Bitcoin at that price, and you can go buy a Ferrari with that, and that Ferrari is real. Like, I don't care what anyone says there's no intrinsic value.

There'll be intrinsic value there if you have that many people on the network using this stuff. And that's important. That's really important for people to not rule it out because maybe they don't understand some of those nuances. And maybe they do understand those nuances and they just completely disagree with the fact that it's going to go in that direction. So amazing question.

And I think that it's something that a lot of people are thinking about. I wanted to bring an argument to the table, really a counter argument. And whenever I say counter argument, it might sound like Preston I or Super Bowl on Bitcoin. And I don't know if we are. Like, if anything, we see yourself more as, you know, media that a lot of people are talking about Bitcoin.

So we're talking about Bitcoin and we really want to try to understand it. If a lot of people are talking about bonds, we would talk a lot more about bonds. So I really just want to point out. I'm not saying to buy or sell or saying it's a good or bad idea. We really try to cover it from that angle.

I would like to bring an argument to the table that Raul Paul, who we had on several times on the podcast, he said because he's not necessarily bare on Bitcoin Perse. say, but he's definitely bare on the price. He's saying that the price would dramatically go down next year. And basically, what he said was it reminded him of Cisco. So back in the days where the internet was all the rage and people were buying, you know, clicks and banners and all that were like

outrageous evaluations. What happened back then was that since Cisco provided a lot of the infrastructure to the internet. It was like if you're really bull on the internet and you didn't know if you should invest in Microsoft or some of the millions of other companies that were not Microsoft, the easy play was just to invest in Cisco because no one really knew what the internet was about. He argues there's a parallel with what's happening today with if you're bull on blockchain. I think most people will agree that there is so much potential in the technology of blockchain. then you can more or less see Bitcoin as an application, like Gmail. If Gmail were to go down, nothing would happen to the internet.

And saying that, you know, this is more or less a spin-off. It's something that is now available because of blockchain, but it's not necessarily something that would go up in price because blockchain would become more popular. I really like that argument. I think it's a very insightful argument, and it really made me think of everything that could go wrong, I guess. Well, I got another one that I think could go wrong.

So when you're talking about the most superior protocol to do store value, when you're talking blockchain specifically and you're talking about the way Bitcoin works, you've got to have this mining mechanism in place, you've got to expend a lot of energy in order to secure that network. What happens if another protocol comes along that does that much more efficiently? that basically performs the same function that you're able to transact a digital file or a digital unit of measure to another person

that's not copyable, but you're able to do it at a much lower expense from a mining and energy and all that kind of. And that would be a whole other discovery, like blockchain technology was a discovery. There's a thing out there called Internet of Things that's using a thing called a Tangle, which takes no mining whatsoever,

Now, I don't know that much about this, but that's a threat. That is an absolute threat to the protocol that is a different protocol that could potentially be implemented, and it could take all the market share. And for people that maybe are so wrapped up in the Bitcoin specifically or any one of these other protocols like Ethereum or whatever, if you're so wrapped up and so headstrong that that's going to go all the way, I think you're potentially have a major gap in your understanding of how to assess risk to something. And so I think people need to really be on the lookout for other ideas. And I think that the whole network effect is definitely a very powerful force behind all of this. It's very hard to overcome a network effect as strong as Bitcoin. But that doesn't mean it can't be done. So I think people need to be very cognitive of all the things that could potentially go wrong

because that list is somewhat unknowable. And I think you've got to be on your toes. So we're very big fans of this, but I think we're big fans because we're excited about the change in the finance sector in general and how this could all change. Like to be honest with you, since the last recession, I've been thinking to myself, how in the world do these central banks get out of this? How does this all end? Do we keep printing into the negative territory? And I'm giving the bank $100. I'm getting back $95 a year later. Like, how does this end? And, To be honest with you seeing some of this crypto stuff is getting me excited because maybe that's how this starts shaking out. I don't know, but it's a potential solution. It's something that could actually start making interest rates go back up if it starts getting massive option.

And that's exciting. That kind of stuff's very exciting. And that's why we really like talking about it and learning more. So going back to your question. So we previously talked about if we should compare Bitcoin to gold, say they would have the same market cap. and with the available coins that's in the system right now, it would be around $500,000. Also try to make another comparison.

And that would be to talk about the transaction fees. And it's not so that when you do transaction with Bitcoin, everything is completely free, but it's significantly cheaper. And if we think about what is the amount of the total transaction fees right now, it's around $300 billion every year. And I tried to take Visa's gross margin, that's around 8%. I said that if you had a company with trading a P of 20, and then this specific Bitcoin company you would have 20% market share.

And if we do that, we come up with a price per coin of around $60,000. Then I tried to look at what if the utility, the true utilities was remittance. And you have around 600 billion a year, carried out about 200 million people, and put in, again, some criteria and you might agree or disagree, and you can tweak it yourself, but say that the savings of transaction costs would be around 10%. So Western Union, they charge 9%, just like that. But say that the combined transaction cost would be 10%. Again, trading ad-a-p around 20%, and say that Bitcoin could handle 20%,

of this market, then you have a price per coin around $15,000. I think that the problem that Bitcoin is really trying to solve, that is store of value. Now again, that's not the same as saying that it's worth exactly the same as gold because it's trying to solve the same thing. But I do think that has more validity. If you think it's transaction costs and you think Bitcoin is better because it's safer, you're not a big believer in some of the other cryptocurrencies that might solve this problem slightly better, or if you disagree and you think this is a question about remittance, rather being the utility, then you might want to include that instead in your intrinsic value. We'll also like to take the opportunity to talk about a new tool that

Preston created that's really evaluating the price action of Bitcoin. So please go ahead. Trace Mayer is a guy that I really respect in this space. He's extremely smart. He's been playing in crypto since specifically Bitcoin since like 2011. He has a very large net worth because he's been playing in this stuff for so long, well in excess of $100 million. And so the way Trace, you know, some of the stuff that I've read from Trace, when he's looking at price and trying to understand if it's a good time to buy or simply hold, he was looking at a multiple, the price that it's currently trading at today or the price that it's at today compared to the 200-day moving average. And so he put out some numbers on some different blog posts that he did comparing the price

to the 200-day moving average. And I found it quite interesting. So when he put the price out there, he only compared it a couple times in history. He had like maybe eight different times where the multiple was a 10 and the multiple was a three. And he's kind of showing those price points. And then he said, you know, based on the 200-day moving average, this is where the price would be if the multiple was a five, a seven, or whatever. Well, I looked at the data and I said, said, well, you know, five or eight data points or whatever clearly aren't enough to really kind of understand where this goes. So I wanted to chart it out and look at the statistics on it. So I did a statistical analysis of the price over the 200-day moving average for every single

day since Bitcoin was originally started. And what I found was some really interesting results. And what I did is I bought the domain, mayormultipal.com, and we named it after Trace, because Trace's last name is Mayor. So it's Mayormultiple.com, and I basically published all the statistical analysis that I did on this multiple. And it was really fascinating stuff. And something that I found that was really interesting is right now in December of 2017, the multiple is really high, way higher than it normally is. So this multiple is typically around a 1.4. So if the 200-day moving average is 1,000, then the price would be.

1,400 is what is the average for Bitcoin is about a 1.4. Today, in fact, just a couple days ago, it hit a 5 or like a 4.5. So if the 200-day moving average was 1,000, the price was like 5,000. It was really high. And this is very uncharacteristic. In fact, this has only happened two other times in the history of Bitcoin. And every time this has happened, the price has come back down to about a 1.4 within like 15 or 30 days. It's really fast. So based on the stats that I'm looking at, the price has only been this high, like 3% of the time it's been this high. And my expectation is that the price is going to come down significantly in the weeks ahead based on the statistics that we've done. But who knows? That's based on the past and we've got to look towards the future

and we have no idea what that future means. So based on historical results, we'd say that the price is very high and then it's expected to come down. But who knows? We might be in a different environment with the derivatives and everything else. We don't know that. But if you guys want to check out the statistics that I did on this, it's really interesting stuff. It's at mayormultecom. Check it out. Yeah. And as people can tell, you know, Prest and I, we're pretty excited about cryptocurrencies. So on maimulteble.com, we actually, we're starting to compile all the various resources that we can find about Bitcoin that we might think is. You're is useful to you, at least it's been useful to us in our journey to really understand this.

So we would really like to use this resource, not just for us, but really share it with the community. So together we can help understand this. So we just wanted to put that out there that as we go along, there will be podcasts in there about cryptocurrencies, videos, and a few other resources. Yeah, and if you guys are listening to this and you know of a good resource, send it to us on Twitter, send it to us on email, but get it to us so we can add it into the index so people can learn. Like, for example, there was a, like, 70 or 65 video lesson from Princeton University completely free that's listed on this resource that I've taken and I loved it. It was amazing. I can't believe it was free. We want to add these things into the resources so we can all help

each other try to understand what the heck is going on. Ellazar, thank you for this question. I don't even know if we gave you a decent answer. I think our answer is we don't know. We don't know. but there's a lot of interesting things out there that we've got to be aware of and remain vigilant. So thank you for going to AsktheInvesters.com. If for anyone else out there, if you want to get a question played on the show, go to Asktheinvesters.com. You can get your question played on the show. And for Alizar, we're going to give you a free subscription to our intrinsic value course. It's a thing and I made.

It's 18 lessons long. It's on the TIP Academy page on our website. And we just want to give that to you to say thanks for recording the question and being an active member in our community. We really appreciate that. All right, guys. That was all that Presta and I had for this week's episode of The Investors Podcast. We see each other again next week.

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