#270: Investing Wisdom from Marc Andreessen, Peter Thiel, Reid Hoffman, Chris Sacca, and Others

This episode contains some of the best lessons I've learned about investing, making money, and growing your personal wealth. It was inspired by my recent talk with Ray Dalio https://tim.blog/2017/09/13/ray-dalio/, which has been incredibly popular and led to many additional questions about money and investing. There is no doubt we need to create systems and procedures that work for each of us. What works for me might not work for you. But you can learn from some of the smartest money managers in the world, and this includes billionaires and legends in the world of finance. This episode includes tips and recommendations from: Marc Andreessen https://en.wikipedia.org/wiki/Marc_Andreessen Chris Sacca https://en.wikipedia.org/wiki/Chris_Sacca Reid Hoffman https://en.wikipedia.org/wiki/Reid_Hoffman Peter Thiel https://en.wikipedia.org/wiki/Peter_Thiel Seth Godin https://en.wikipedia.org/wiki/Seth_Godin I also share my own personal investing strategies, and the methods I use to assess risk and reward. Enjoy! This podcast is brought to you by 99Designs http://99designs.com/tim, the world's largest marketplace of graphic designers. I have used them for years to create some amazing designs. When your business needs a logo, website design, business card, or anything you can imagine, check out 99Designs. I used them to rapid prototype the cover http://99designs.com/tim for The Tao of Seneca, and I've also had them help with display advertising and illustrations. If you want a more personalized approach, I recommend their 1-on-1 service http://99designs.com/tim. You get original designs from designers around the world. The best part? You provide your feedback, and then you end up with a product that you're happy with or your money back. Click this link http://www.99designs.com/tim and get a free $99 upgrade. Give it a test run… This podcast is also brought to you by Ascent Protein https://www.ascentprotein.com/tim, the best protein I've ever tried. Ascent is the only US-based company that offers native proteins — both whey and micellar casein — directly to the consumer for improved muscle health and performance. Because the product is sourced from Ascent's parent company, Leprino Foods — the largest producer of mozzarella cheese in the world — it's entirely free of artificial ingredients and completely bypasses the bleaching process common to most other whey products on the market. If you want cleaner, less processed protein, which I certainly do, go to ascentprotein.com/tim for 20 percent off your entire order. https://www.ascentprotein.com/tim

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  At this altitude, I can run flat out for a half mile before my hands start shaking.

• 0:06Speaker 01

  Can I ask you a personal question?

• 0:08Chris Sacca?

  No, we're just in an appropriate time.

• 0:12Speaker 01

  I'm a cybernetic organism, living tissue over metal endoskeleton.

• 0:22Tim Ferriss?

  This episode is brought to you by AG1, the daily foundational nutritional supplement that supports whole body health. I do get asked a lot, what I would take if I could only take one supplement. And the true answer is invariably AG1. It simply covers a ton of bases. I usually drink it in the mornings and frequently take their travel packs with me on the road. So what is AG1? AG1 is a science-driven formulation of vitamins, probiotics, and whole food sourced nutrients. In a single scoop, AG1 gives you support for the brain, gut, and immune system. So take ownership of your health and try AG1 today. You will get a free one-year supply of vitamin D and five free AG1 travel packs with your first

• 1:03Tim Ferriss?

  subscription purchase. So learn more, check it out, go to drinkag1.com/tim. That's drink A G one, the number one, drinkag1.com/tim. Last time, drinkag1.com/tim. Check it out.

• 1:24Tim Ferriss?

  Well, hello, ladies and gentlemen. Welcome to the Tim Ferriss Show. This is Tim Ferriss. In every episode, as you may know, it's my job to deconstruct world-class performers to tease out the habits, routines, tactics, etc. that make them the best at what they do. And after nearly 300 of these conversations, you or I start to spot patterns, at least common skills. And I sometimes like to put together themed episodes that pull the best advice, tidbits, in one particular area, in this case, investing, from multiple

• 1:59Tim Ferriss?

  Geniuses and top of the heap competitors. So this episode contains some of the best lessons I've come across related to investing, or more generally speaking, making money, growing your personal wealth, et cetera. And if you look at the best investors, whether that is for their personal finances, or say, fund finances, and these are two very different things that I'll mention briefly, you'll notice that the frameworks they use to make decisions have to be very, very refined. And this is often the case for, say, poker phenoms as well, which is why I like to look at people who appear to be gamblers, who are in fact investors.

• 2:41Tim Ferriss?

  They're very good at resource allocation, thinking through asymmetrical reward, so capped downside, but potentially near limitless upside, et cetera, and how they make those decisions. So whether or not you're interested in investing, the thinking systems represented by the people you're going to hear from are very, very valuable and can be applied to rational decision-making so you're less emotionally reactive. Okay, a few caveats. Number one, I am not an investment advisor or professional. I do not play one on the internet. So it works for me, may not work for you.

• 3:19Tim Ferriss?

  Talk to your registered, qualified, professional, financial people and consult a common sense specialist before doing anything really stupid, please. Okay, you need to create systems, procedures, et cetera, that work for you, and your risk tolerance is probably very, very different from the people you will hear from. Nonetheless, you're going to hear from who I consider some of the smartest investors on the planet, including billionaires, legends from the world of finance, and so on. Part of what sparked me to put this together was the popularity of a recent episode, which was an interview I did with Ray Dalio.

• 3:59Tim Ferriss?

  Ray Dalio has been called the Steve Jobs of investing, and he is the founder, and I suppose he could talk... Along the lines, manager, I think he's the CIO currently of the world's largest hedge fund, $160 billion under management, Bridgewater Associates. If you want to hear that, which catalyzed this, you can listen to that separately at tim.blog/rae. Super popular episode, so you can check that out. But Ray does not appear in this one. Instead, we have a different cast of characters. So coming up, I talk to Marc Andreessen. Mark is the co-founder of Andreessen Horowitz, one of the most successful venture capital firms in the world. Mark also co-created the highly influential Mosaic internet browser,

• 4:43Tim Ferriss?

  or web browser, and co-founded Netscape, co-founded LoudCloud, which sold to Hewlett-Packard for a cool $1.6 billion. He's considered, rightly so, one of the founding fathers of the modern web.

• 4:55Speaker 04

  And then the other thing we have in venture is when we make a decision, we then become committed to that company in that category. And so, we can't invest in their competitors, including, by the way, their competitors that don't even exist yet.

• 5:05Tim Ferriss?

  Then, we have my friend and super angel investor, also venture capital investor, Chris Sacca, who shares some of his wisdom as it relates to investing.

• 5:17Chris Sacca?

  Only get involved in deals where I know I can personally impact the outcome.

• 5:22Tim Ferriss?

  I also talk to the so-called, and he doesn't call himself this, but other people do, the oracle of Silicon Valley, Reid Hoffman. One of the nicest guys you will ever meet. Reid is the co-founder and executive chairman of LinkedIn. He was previously executive vice president at PayPal, which was purchased by eBay for $1.5 billion.

• 5:40Speaker 05

  The reason why frequently, you know, companies rise and fall is because they learn to play one game, they got good at it, and then the marketplace changes, and now it's a new kind of game, and you have to adjust to playing that new game. And that's actually, in fact, part of recognizing when a strategy applies.

• 5:58Tim Ferriss?

  Next up, I speak with Peter Thiel, a name that certainly had a lot of buzz in the last few years. One of the co-founders of PayPal and the first outside investor in Facebook.

• 6:08Speaker 06

  But I think the fundamental philosophical question of what do people agree merely by convention, and what is the truth?

• 6:16Tim Ferriss?

  Finally, I speak with Seth Godin, who is a fantastic reality check whenever I'm confused by something that perhaps I'm optimizing for from a mathematical standpoint. He never fails to deliver a lot of very powerful, common sense advice that is not common at all. In fact, it's usually something that should be obvious but is hidden in plain sight. And so I rely on him a lot for good advice. He's one of the best marketing minds in the world. He's crafted incredible life for himself. The author of 18 bestselling books at last count. What you might not know is that he's also founded several companies.

• 6:53Seth Godin?

  Once you have enough for beans and rice and taking care of your family and a few other things, money is a story.

• 7:01Tim Ferriss?

  So without further ado, let's get started. And I'll kick it off with just a few comments and precautionary notes. Number one is that anything I mention is going to be your miles may vary, meaning that investing, allocating resources, making decisions depends a lot on very highly personalized factors. Okay. And I should also draw a distinction between personal finances. So you might ask someone, say, how they manage if they have, say, a million dollars in the bank, $100,000 in the bank, $10,000 in the bank, or more, how would they then create a portfolio for their personal finances with that capital? That

• 7:42Tim Ferriss?

  is a very different question than how do you invest risk capital? Or how do you invest in high-risk, high-potential-return asset classes? And many of the people you're going to hear from have both personal finances, of course, but they manage funds. And the economics and mathematics of funds are such that the risks are contained because, for instance, in a venture capital fund, how does that work? The way venture capital works, and I'm going to oversimplify this, just in the interest of time, but you say, "I want to create a venture capital fund." So Tim Ferriss decides he wants to create a venture capital fund. "And I want to invest in blockchain and cryptocurrency-related companies." That's not something I'm doing, but let's just say-

• 8:26Tim Ferriss?

  That's the case. Highly, highly speculative, in some cases, high-risk asset class. I don't want to risk all of my money doing this, but I know people who want to participate in, say, cryptocurrency. So I'm going to go talk to, say, sovereign wealth funds or pension funds or groups that have endowments, for instance, for universities who have a percentage that is put to the side for venture capital or something even higher risk as a categorization. I go to them, I say, "I have this unique approach to finding very promising blockchain companies. And here is my investment thesis," and I show them a fancy PowerPoint and hopefully convince them to give me money.

• 9:07Tim Ferriss?

  This is not my money. I may have some of my own money in the fund, but not necessarily. And then what happens is I have, let's just say, $30 million from all these assorted folks. Those are my limited partners. I am the, let's just call it, owner of the venture capital firm. So I'm the general partner. I could have other general partners. And in the most primitive terms possible, I will probably have what's called a 2-in-20 structure. So what this means is, for the money that I have in a given fund, so I raised $30 million for Ferris Crypto 1, that's the fund, I will get a 2% management fee based on my assets under management.

• 9:50Tim Ferriss?

  So, or it's a little more complicated than that, but let's just, for the sake of simplicity, say I get 2% of that $30 million, if it's all deployed into investments, each year. And I think I'm getting that right. And then you get a 20% profit share effectively. So if that $30 million becomes $60 million, I get 20% of that $30 million upside, or $6 million. And you can see how, as you start to raise bigger funds that are $100 million, $500 million, and then you're raising a new fund every few years, let's say, how the numbers get very, very, very big, if you are good. Now, the important point here is not the structure of venture capital funds. If you're interested in that, I highly recommend a book called Venture Deals.

• 10:36Tim Ferriss?

  There's also one called Zero Gravity that goes into how venture capital works. But it is to point out that the way you will invest other people's money in high-risk asset classes is not generally how you are going to invest all of your personal finances. So many of the folks that you will hear from are operating from a fund basis, or that is what they are known for, and they don't discuss their personal finances publicly. So I will give you a personal finances example with the express understanding that it does not mean you should mimic it. But I have found that as a heuristic, it's very helpful for me to think of my investing,

• 11:18Tim Ferriss?

  to use a term borrowed from Nassim Taleb, who wrote The Black Swan, or Fooled by Randomness, barbell investing. And this really means that if you look at the risk profile of different investments from extremely, extremely low risk, and maybe another podcast will come back and talk about different ways to define risk, really, really low risk, so that could be treasury bills, could be cash, could be any number of things, and then all the way to the far right, you have extremely high risk. That could be, say, certain types of currency, could certainly be early-stage startups, and so on. I then have a barbell representation in terms of capital allocation. That means that I'm putting

• 12:03Tim Ferriss?

  the vast majority of what I have into extremely, extremely, extremely conservative investments. And for many people, that might be low-cost index funds, for instance, whether that's through a service like Wealthfront, which I am involved with as an investor myself, in the company itself, that is, and/or a Vanguard, or say Dimensional Funds, something like that. And then you go all the way to the other end, and I also invest with a cap, a small percentage of my liquid net worth in highly speculative but potentially high-return startups. And I only do that in this barbell distribution.

• 12:51Tim Ferriss?

  Because I have advantages and I would not recommend that anyone invest in higher risk asset classes, meaning there is, say, a 20 to 50% chance that you will go to zero in that particular investment. And those are somewhat arbitrary numbers, but not that far off. If you assume that, say, at least three out of five startups you invest in are probably going to go to zero, or be the walking dead for a period of time before having a soft landing where the company gets bought for a nominal sum and because you invested early, you're not in line in such a way that you get any return, etc. Okay,

• 13:33Tim Ferriss?

  so just assume that when you're on the far right side of the barbell, you're putting in money that you can afford to lose, that will not negatively impact your lifestyle, one iota if it goes to zero. That is the rationale, or at least the mentality you have to have. And in such cases, you should not play in said sandbox unless you have, say, and these are only one of many advantages, you could have an informational advantage, which I have, say, after 17 years in Silicon Valley, where I know people who know a lot of things. So I have an information flow advantage. Then you could have, say, an analytical advantage, which, for instance, Renaissance might have, which is a hedge fund, very,

• 14:18Tim Ferriss?

  very quantitative. You could have a behavioral advantage, which I don't think I have. And case in point, I'm a very, very bad public equities investor. Warren Buffett would have an emotional advantage or behavioral advantage, in so much as he and Charlie Munger appear to have little to no emotional response to what they would call Mr. Market. But the up and down fluctuations, which can sometimes be wild and cause people to sell at the wrong time or buy at the wrong time. And I have found I'm particularly sensitive to selling at the wrong time. So for anything...

• 15:04Tim Ferriss?

  That would present itself as a handicap, given that weakness I've identified in myself, I should let someone else make the decisions or automate it with, say, low-cost index funds of some type. All right, so those are the prefacing statements. Sorry it took a little longer than expected, but those were all, I think, very important to cover before we get into the nitty-gritty. So, find what works for yourself, ignore what doesn't, create what is uniquely your own, but do not risk what you can't afford to lose. All right? So, while the barbell, for instance, approach has been very helpful for me, it is not appropriate for many, many people out there listening. All right, let's get to the rest.

• 15:48Tim Ferriss?

  Marc Andreessen, @Pmarca, that's P-M-A-R-C-A, on Twitter, is a legendary figure in Silicon Valley and worldwide. Even in the epicenter of tech, it's very hard to find a more fascinating icon. He's considered, like I said, one of the founding fathers of the modern web or slash internet, which makes him one of the few humans to create software categories used by more than a billion people, multiple software companies. Mark is now co-founder and general partner of the VC, that is venture capital firm Andreessen Horowitz, where he's quickly become one of the most influential and dominant tech investors in the world.

• 16:32Tim Ferriss?

  You see a lot of people who change their mind almost too frequently.

• 16:36Speaker 04

  That's right.

• 16:36Tim Ferriss?

  With inconsequential facts, perhaps. How do you think about advising a company that's struggling as to whether they should stay the course or pivot, as they would say?

• 16:48Speaker 04

  Yeah, yeah. So, we have, we see both cases. We see both, we see both cases, both failure cases. We see companies that are just, they're almost, this fail-fast thing is frankly completely out of hand. And I'm old-fashioned, or I come from, people like to succeed. Like, it's like...

• 17:02Tim Ferriss?

  Great.

• 17:03Speaker 04

  I like to say like we before this word pivot like we didn't have like when I was when I was a founder, when I first started out, we didn't have the word pivot, right? We didn't, we didn't have a fancy word for it. We just called it a fuck up.

• 17:12Speaker 04

  So like I'm old fashioned on this. Like I like to succeed. I think succeeding should be the goal, not failing, and certainly not failing fast or slower, any other form of failing. So, so I get really kind of cranked up about this. But, but we do see companies that literally every time we meet, every time I meet them, they pivoted like. And so every time I meet them, they're off to something new and, and they're, it's like, I don't like watching a rabbit go through a maze or something. They're just never, they're never going to converge in anything because they're never going to put the time in into actually figuring it out and getting it right. But then you, you do see the other case. And this is what the, where the fail fast thing came from is you do see their case. You see people who just absolutely are determined that will just pound their head against the same wall for years and years and years and years. And it's at a certain, and you admire them for their determination. And then at a certain point, it just becomes obstinance, right? And then you're just, and at some point it becomes self-destructiveness.

• 17:55Speaker 04

  It becomes Don Quixote. You're just tilting against windmills, you know, kind of arbitrarily. And so those are poles. We do see behavior at the poles. You know, the question you're asking is of course the key question, which is like, okay, what's, what's in the middle? How do you know? And frankly, I don't think there's an answer to that. I think that's, or the answer is judgment. I think, I think that's the test. Basically, there's, I think there's a couple of key tests for, for founders, or for that matter, for investors in these kinds of decisions. I think that's one of the really core tests is, you know, do you fundamentally have the judgment to be able to make that call? Knowing by the way, that either, either way could be a big mistake. Like, you know, nobody's going to tell you, you're not going to get any confirmation from anybody that, oh yeah, you made the right call. Like that, you're not, you're not going to realize, like if you change and then succeed, it's all great. But by the way, you might have succeeded at the old thing even better.

• 18:38Speaker 04

  If you change and fail, you know, you'll never know whether the old thing would have worked. Like, you know, the, the counterfactual, like, you know, science, they call it the counterfactual. You, you never know the counterfactual. The way my brain is wired, I'm always thinking in terms of the counterfactuals. I'm always thinking in terms of the way things could have been. Right? The, the world evolved in a certain way, kind of as a consequence of people making all these decisions on the fly. People could have very easily made a different set of decisions. The world could have ended up in a very different place. And so the idea that you're ever going to know the consequence of your decision, I think is probably a fallacy. Or what the alternative would have been.

• 19:06Tim Ferriss?

  Right.

• 19:06Speaker 04

  Like the relative, relative result of your decision. And so I, I, I just think you, you basically have to fall back on judgment and you have to fall back on some sense of the intangibles.

• 19:15Tim Ferriss?

  And when you're looking to say stress test ideas and

• 19:22Tim Ferriss?

  If we look at it in, say, the case of a partner meeting here. So you mentioned hedge fund managers and I read a profile of Ray Dalio at one point, I guess it's Bridgewater Capital. And they talked about his, his meetings and how they stress test ideas and, and how people need to defend ideas. How does a good partner meeting go? If someone, say, proposes, I was going to say a trade, an investment.

• 19:46Speaker 04

  An investment.

• 19:47Tim Ferriss?

  That is a substantial investment.

• 19:49Speaker 04

  Yeah.

• 19:50Tim Ferriss?

  What then happens from that point to a yes or a no?

• 19:53Speaker 04

  Yeah.

• 19:54Tim Ferriss?

  Decision.

• 19:54Speaker 04

  So we don't get to, hedge fund manager can reverse himself. Hedge fund manager, bad trade, the next day he can turn around and take the opposite trade. We, we don't get to do that. Right? So when we invest, it's with, it's knowing that we're in for 10 plus years, basically is our assumption. So it's into, and by the way, when we make an investment decision, it's a, it's a commitment of dollars. It's also a commitment of somebody's time. And, and by the way, the organization's time and bandwidth. And there's only so much of that. And then the other thing we have in venture is when we make a decision, we then become committed to that company in that category. And so we can't invest in their competitors, including, by the way, their competitors that don't even exist yet. Right? And so, you know, for example, the investors in Friendster were more, more likely than not completely, not only maybe unwilling, but also unable to invest in Facebook when it came along because they were conflicted. Because the founder of Friendster would have

• 20:37Speaker 04

  said, you know, you can't, you can't invest in a competitive company. And so, so our decisions are big decisions and they have serious consequences for the future of the firm. So on the one hand, it's very important to us to have a full discussion and get all the facts on the table and really kind of vet these things out. On the other hand, we're trying to preserve, we're trying to preserve the, the contrarianism of kind of at the core of what we do, the, the, the strong non-consensus views. We're trying to be able to invest in the things that really are unusual and odd that other people aren't taking seriously. And one of our theories about venture capital is that, so everybody thinks like in investing, it's like you either make a good investment or a bad investment. I actually think that's not the big issue. I think the issue, at least in venture capital, is whether you make a good investment or a great investment. And I think good is the enemy of great. We see many companies that are just fine and that are, you know, yep, you know, founders are

• 21:21Speaker 04

  good and the market seems good and the product seems good. The customers kind of like it and they got a little revenue and it's kind of all fine. But those companies tend to never go anywhere. And then every once in a while, we'll see these companies that just have some extremely strong strength, some extremely kind of, you know, special, wonderful thing going on that, by the way, may have all kinds of problems and issues, but there's something at the core of what it is that's really special and magical. And those are the ones that we want to do. What we're trying to do is basically stock our portfolio with just investments like that. And so to capture that, you can't have, you know, it'd be very easy in a conversation about the weaknesses of something to beat the idea to death and you never invest. And so the, the rule that we have, and then, and then you would only invest in the consensus ones, you'd only invest in the very good ones as opposed to the great ones, and then you would fail as a firm. So, so we have to kind of, we have to do, again, both things at the same time.

• 22:06Speaker 04

  We have to, we have to try really hard to encourage the strong non-consensus thinking, but also have the full discussion to make sure that we really stress test that thinking. So the way we do it is basically each of our GPs has the ability to pull the trigger on a deal without a vote or without consensus. And, and, and this is what we say is if the person closest to the deal has a very strong degree of positive, you know, commitment enthusiasm about it, then we should do that investment, even if everybody else in the room thinks this is the stupidest thing they've ever heard of. However, you don't get to just go do that yourself completely on your own without stress testing your own thinking. And so it's the responsibility of everybody else in the room to stress test the thinking. And if necessary, we actually create a, we create a red team, right? We'll actually formally create sort of the countervailing force and we'll, we'll designate some set of people to counter argue the other side.

• 22:50Speaker 04

  It's like a debate team. Yeah, basically, right. And then, and then, and then the way that we try to, you know, and this is fraught with like, there's all kinds of ways this can go wrong because like, what if I bring in a deal or what if Ben brings in a deal or what, you know, versus the new person bringing a deal or whatever. And so what Ben and I try to do is we, we, we do this to each other. Right? And so whenever he brings in a deal, like I just beat the shit out of it. Right? Just like, and I may think it's the best idea I've ever heard of, and I'll just like trash the crap out of it, right? And try to get everybody else to pile on. And then at the end of it, if he's still pounding the table saying, no, no, this is the thing, then we all say, okay, we're all, you know, we're all in, we're all behind you. Right? And then, and then it's a, it's a, it's a disagree and commit, you know, kind of culture. By the way, he does the same thing to me. Right? So we, we basically, it's the torture test.

• 23:32Tim Ferriss?

  What are some of the keys to fighting well in, I think it seems key to many different types of relationships, personal business or otherwise, the ability to conflict resolve or just fight well and then make up. So it seems like. You and Ben have, not my words, but like fought like cats and dogs, but you always kind of get over it.

• 23:54Speaker 04

  We prefer old married couple.

• 23:55Tim Ferriss?

  Old married couple. There is a story, I don't know if it's accurate, about Netscape, early days, something related to an interview with a journalist. Do you know the story I'm talking about?

• 24:06Speaker 04

  It's in Ben's book.

• 24:07Tim Ferriss?

  Okay, so, right, that's, okay, here we go.

• 24:09Speaker 04

  Including the email you're about to reference.

• 24:11Tim Ferriss?

  All right, so could you, could you, could you describe this for people who are unfamiliar?

• 24:14Speaker 04

  I really think you, for that, you gotta read, you gotta read, you gotta read Ben's book. Let's just say, we started out our relationship with vigorous disagreement, and we've continued that to this day.

• 24:24Tim Ferriss?

  But how do you?

• 24:25Speaker 04

  This is a family podcast, I don't want to use it.

• 24:28Tim Ferriss?

  Oh, it's not a family podcast.

• 24:30Speaker 04

  If you want all the bad, Ben's book, The Hard Thing About Hard Things, it's in the book.

• 24:34Tim Ferriss?

  And I'll put it in the show notes. The, how do you, you guys got off to a very aggressive start. How did you identify that Ben was someone worth having those types of disputes with? That there was a value in what he brought to the table as opposed to just another person that you were butting heads with, who is not worth keeping at the table?

• 24:58Speaker 04

  So honestly, there were, there were three, there were three things. So one is, he would, he would talk back to me, so he would like argue right back at me.

• 25:04Tim Ferriss?

  He wouldn't just go into the field.

• 25:05Speaker 04

  He would just roll over, like he would argue right back, and a lot of, a lot of which, you see this, and if you just observe a lot of companies over time, or investment firms, or whatever, you know, everything, you know, there's, there's a temptation, everything must have become a hierarchy, and then the people always don't, have tributations about speaking truth to power. And a lot of what I've always found the really sort of wise and smart leaders are trying to do is they're, they're trying to actually find the people in the organization who will actually talk back. It's actually, you know, it's one of the ways to really get ahead, you know, there's certain organizations where the way to get ahead is to talk back to the leadership, right? That's how you get noticed. By the way, there are other organizations where that doesn't work at all, and I would recommend getting out of those as fast as possible. We try to be, at least Ben and I want this organization to be one where people will actually speak truth to power and, and argue back at us just like anybody else.

• 25:48Speaker 04

  And so, which is why he and I argue so much, is because we want to set the, set the model, and set the precedent. So that was one, is he would talk back to me, too, is he was often, if not always, right. And I wouldn't say always, just because nobody is, but like, he was very smart and, and very clear thinking. And then the third thing is, I saw something early in him that he was just amazing working with people, which is not something I think has ever been necessarily true of me, but he was just, like, watching him in front of a group of people was just routinely magical. In terms of how he could get people, how he could communicate with people in a very clear way, how he could be very fact-based, but he could really make people feel, you know, kind of in a really fundamental way. And so that that combination, you know, made it clear that he was somebody very special.

• 26:29Tim Ferriss?

  Chris Sacca, @Sacca on Twitter, S-A-C-C-A, is a billionaire and founder of one of the most successful venture capital funds in history. It may end up being the most successful in history. It is called lowercase capital. That's the firm. And you can think on that for a second. Took me a while to figure out why that was so funny, which is embarrassing to admit. He's an early-stage investor in many companies that have exploded, including Twitter, Uber, Instagram, Kickstarter, and many more. In this segment, we discuss specifically how Chris chooses founders and investments, what differentiates Wall Street from, say, Silicon Valley investors, and total immersion theory.

• 27:10Chris Sacca?

  The total immersion thing is like a religion. When you get it, you get it.

• 27:13Tim Ferriss?

  Right.

• 27:14Chris Sacca?

  And I went from dragging my ass around the pool, just kicking too hard and paddling too hard, to when total immersion hit me, I could suddenly swim a couple miles and get bored. And so I was just there as an apostle man. When you were like, I'm struggling with swimming, I was, I was just geeking out. In the same way, you can get going on lifting techniques and stuff like that. I'm like, you're in my world now. I'm gonna, I'm gonna talk about swimming. But the same with the investing stuff. I mean, I was really lucky when it came time for me to get started as an investor. I had many, many guys there paying it forward and teaching me about the game. Guys like Josh Koppelman at First Round, Tony Conrad at True Ventures, really being generous with their time and helping me figure out what was going on. The guys at Industry Ventures were indispensable for

• 27:56Chris Sacca?

  me, Hans Wildens and his team. And so, and so for me, when you came along and started asking questions about that, not only I feel like I was paying it forward again, but in the same way you and I never invest in a simple idea, the execution is everything, I don't feel like I'm really giving any secret away by telling you what the approach is. You still have to go execute on it, right? So I can give you my lens on how I think about this stuff. Things other people have taught me, things I think I might have improved upon, etc. But I can lay that playbook on you. And if you're not good at this, you can't fake it.

• 28:32Tim Ferriss?

  Right.

• 28:33Chris Sacca?

  And so I don't have any fear in disclosing my secrets to B teamers because they're not going to end up competing with me. In your case, you're good at it. And so it's become an incredible side business for you in addition to everything you do with media. But there's no fear in putting that stuff out there. And the other lesson they taught me is that if I get to you and teach you some of this stuff, you're going to naturally be an ally of mine in this industry. So if I can get in there and kind of teach you how do I think about the world? How can I be helpful to companies? And you start using that same method, then we're going to end up doing deals together. And you and I have, and we've made a fair amount of money doing that. And so I didn't want to leave that unanswered.

• 29:16Tim Ferriss?

  It's really been fun to watch you evolve and grow and experiment also in investing. And just coming back, we can rewind the clock back to your upbringing a little bit later on. But just since we're on the topic, what were some of the pieces of advice that you were given by, say, the guys that you mentioned or other people early on that helped you to approach early-stage investing in a more intelligent way?

• 29:44Chris Sacca?

  Yeah, I mean, a couple of guys have said things that I've now taken in an amalgam and have codified. So I have rules for investing now that were definitely influenced by a lot of these guys giving me advice and things that I've now put to work. So one is only get involved in deals where I know I can personally impact the outcome. Now, there's no guarantee that I can take it from X to sold or X to IPO, but I need to know that I can have a material impact to make something more likely to succeed. So the second rule I've developed, and this is again influenced by guys along the way who've given me advice, is start with something that's already great.

• 30:26Chris Sacca?

  That you can make more awesome, you know, but don't start with something shitty that you think you can make good. And that's hard. Like, when you work in a company, and a lot of your listeners I know work in big companies, you have to work on the shit that somebody hands you, right? So you're just dealt a really, you're dealt the two seven. You're like, well, okay, that's what the boss gave me. I gotta play this hand out. When you get into investing, your default stance should be no, because most deals suck. Most deals won't make money. Most companies will fail. And the temptation always is you see your first deal and you're like, okay, I can know I can be helpful to these guys. I know I can make this shitty thing better. And so your first few deals are always the worst.

• 31:04Tim Ferriss?

  That's how I lost, yeah, 50 grand on my first deal. And I was just like, oh, it's like four, 25% of what I had hypothetically allocated. After two years, I was just like, oh, my God.

• 31:13Chris Sacca?

  No, that's because you get in that room and you're like, okay, I know how I can make this thing better, right? And you forget that you need to start from something that's already independently pretty damn good, and then make it better. So our third principle is, is give yourself a chance to get rich. And that was something that was influenced more by a lot of these fund investors who were like, hey, it's all well and good to throw 25K around into some of these deals, but most of them won't be home runs. Most of them won't turn into unicorns. Most of them are going to require a ton of work. A bunch of those will fail, but a bunch of them will be successful to the tune of doubling that money, but over years and years of work. And so I've sold companies, I sold a company to Amazon where I saw 3X on a $50,000 investment

• 31:58Chris Sacca?

  in a fund. By the time my fund got paid back and I got my part back and I was, had been busting my ass in that company for a couple of years, like I barely had money left to buy the guy's dinner to celebrate the deal. And so, so that's another thing is leaving ourselves enough room to benefit from scale, going in at prices that are low enough that if the company is as successful as we think it's going to be, we've given ourselves a chance to get rich. And then the fourth thing that I think we evolved internally, or that I involved, was just be proud of every deal. There's stuff that I've passed on that I just don't regret it at all. It seemed like maybe a good way to make money, but I don't have to explain to my kids that's how I made money. And so, so those are kind of the guiding principles that I think have been shaped.

• 32:40Tim Ferriss?

  Categorically, what would some of those be?

• 32:44Chris Sacca?

  You know, mistype domains.

• 32:46Tim Ferriss?

  Right.

• 32:47Chris Sacca?

  So that's a great way to make money. People are stupid and they mistype stuff all the time. And you can put ads on sites that don't really look like ads. Subscription businesses that make it impossible for you to get your, to cancel your subscription ever.

• 33:01Tim Ferriss?

  Forced continuity.

• 33:02Chris Sacca?

  Yeah, you can sign up online, but you need to send them a postcard, you know, to, to cancel, like that kind of stuff. I see that stuff, right? You know, people making up substantiated, unsubstantiated claims about the effectiveness of their stuff. You know, this, this anonymous content stuff that just, you know, was just going in bad places. So I just want to be really proud of our deals. And so those I think are some principles that have been shaped by a lot of these guys giving me advice along the way.

• 33:31Tim Ferriss?

  What are, when you meet with founders for the first time, what are, is there anything that disqualifies them quickly? Are there certain sort of red flags that you look for?

• 33:43Chris Sacca?

  Yeah, so this, this has evolved over time. You know, I've now been doing this for a while and have done, you know, over a hundred deals. And have seen a bunch of those work out and I've seen a bunch of them not work out. And I read all the posts that my peers in the industry write, other VCs, I, you know, everyone's constantly stabbing at, hey, what is the rule? Like, how do you, how do you get into one of these meetings? So let me first have a couple of parameters. One is I almost only invest in things that are already live in production. Just no hypotheticals, no ideas. I think there might be one exception to that, and it was a particularly gifted entrepreneur that I already worked with before. But other than that, we look for stuff that is, that is already actually being, you know, has users, that has,

• 34:30Chris Sacca?

  that can demonstrate that the team is capable of building and launching stuff together and getting it out there in the market. But that said, the, the one thing that will turn me off right now is if I see. That in the pitch, the founder is trying to convince themself. If I can pick up on any hint that they don't, in their marrow, believe in this story, then it's no dice. As I look at all the most successful founders I've backed, the thing they have is inevitability of success. There are no conditional statements coming out of their mouths. There's no like, "Well, if it works, it would be rad." Instead, it's just always...

• 35:15Chris Sacca?

  You talked to Kevin System at Instagram when he was working on it himself. He was literally a sole guy working on the product. And he's like, "So when we get to 50 million users, we'll roll out this other stuff." And you're just like, "Wait." He's just peering into the future, kind of looking through you into something in the future. And you're just like, "I gotta get along for the ride with this guy." The same thing when you talk to Evan Williams. When it comes to talking about the likelihood of success of his products, he just knows. Like, he just knew Twitter would be a big thing. He knows Medium will be a big thing. He doesn't need to convince you of that right now. He just knows.

• 35:56Chris Sacca?

  You talk to Patrick and John Collison at Stripe, and of course, they're building for this thing to be a big dominant company, and it just will be. You've spent time with Travis. You're an investor in Uber. Was there any doubt at any time that Uber would dominate the planet? Yeah, no doubt. There's no doubt.

• 36:14Tim Ferriss?

  Can you just share? There's an anecdote. I think we probably talked about Uber drinks at some point, but the Wii Tennis.

• 36:23Chris Sacca?

  Wii Tennis? Travis, Wii Tennis?

• 36:25Tim Ferriss?

  Yeah, could you tell the story?

• 36:26Chris Sacca?

  So, it's a few years ago, we're up at my house, and we live up in the mountains in Truckee. And it was over the holidays, so my parents were there. I think it was actually New Year's Day. So Travis and I had been... We have a tradition up there on New Year's Eve. We go snowshoeing at midnight and drink champagne out in the meadow and stuff. So I think we were pretty...

• 36:48Chris Sacca?

  It's a pretty rough morning, but Travis is sitting on the couch and my dad senses some weakness and he challenges him to a game of Wii Tennis. So, on the Nintendo Wii. My dad's not a bad player, he's pretty good. So they, Travis is like, "Okay, Mr. Sacca, sure." And he picks up the controller and they play the first couple of games and they're tight games, but Travis wins them. And my dad is there taking like full swings with the paddle, you know, and he's like breaking a little sweat. And Travis is still blurry from the night before, barely breaking his wrist and he's beating my dad. And my dad's like, "What the hell is this?" And then there was that Inigo Montoya moment, Princess Bride style, Travis turns to my dad and says, "I'm sorry, but I'm not left-handed." You know, I forget if it was left or right, but he switches hands of the controller. And the next three

• 37:32Chris Sacca?

  games, my dad never touches the ball. There were no points scored on any of Travis's serves. And I was like, "What the hell is going on? Like, what is this?" And after the torture got to me too much, Travis just says, "Well, let me take you to the global leaderboard. I'm sorry, I got, you know, Mr. Sacca, I didn't mean to be holding out on you." And he goes to the global leaderboard and Travis Kalanick was ranked number two in the world at Wii Tennis.

• 37:57Tim Ferriss?

  In his spare time.

• 37:57Chris Sacca?

  Now, Uber was already a thing then. Like, literally, he was already building a startup, but he's just so obsessive, so competitive. And that's the thing, is we look across the portfolio at all the most kick-ass companies, that's something they just have, you know, right up front, is that they're not hoping and praying for success, they know what's going to happen.

• 38:18Tim Ferriss?

  What books or resources, outside of personal relationships and these mentors that you've had, the compliments and so on, are there any particular books or resources that have helped you become a better investor?

• 38:28Chris Sacca?

  Yeah, I think most of those, though, are not business books, per se.

• 38:32Tim Ferriss?

  That's perfect. That's great.

• 38:33Chris Sacca?

  Because, so I didn't get a business degree, I didn't do an MBA. I took a couple of classes and it was enough to show me it was a total farce. I did get a law degree, which is an even bigger farce, but that's for another episode. So, so I never had formal business training.

• 38:49Chris Sacca?

  And so I don't really, and I tried to look at a few of those like instant MBA books and stuff like that. I even bought some books on venture capital and they're just such a, so goofy. And by the way, part of that is because now we have so many great venture capitalist bloggers who are just an open book about the industry who teach it. So Brad Feld comes to mind first. Fantastic. Longtime friend and mentor. Brad at Feld Thoughts has done series over the years where he breaks down each aspect of a term sheet, how to understand it, and the deal documents. And this is what we think is important and these are things we think could go away. Josh Koppman and his team have done a lot of work on that. We've now seen Y Combinator

• 39:30Chris Sacca?

  and the guys at Fenwick and West and Cooley building templated documents that are really, really watered down and pro entrepreneur and just kind of have taken out a lot of the legacy bullshit that didn't need to be in those documents. And so there's a lot of this learning that can happen now without having to buy books and without having to go to school. And so that's been fantastic. But where I worry about the valley and about investors as well as entrepreneurs is in the development of everything off the ball a little bit. But as a 40-year-old, the people my age who were computer science majors in college, they, that was a major just like any other major. They still had to go get a summer job. They mowed lawns, waited tables. They had time in their curriculum to go study

• 40:15Chris Sacca?

  abroad, to volunteer. They had these really well-rounded lives. And so, working with people my age and older at Google who are computer scientists was great because they had not just these amazing, amazing math and science skills, but a diversity of experience that informed great product decisions, as well as just collegiality. What ended up happening is computer science degrees got so popular and so valuable that those kids didn't have to pay for school much anymore. And their only work experience was like TA-ing a class, not actually getting their ass kicked digging ditches or anything. And the curriculum was rigorous enough that these guys didn't get to go study abroad. And there was no opportunity

• 40:58Chris Sacca?

  to go do volunteer work and live in the developing world at all. And so as a result, I actually found we were starting to have a generation of not just entitled, you know, people talk about the entitlement of the millennials when it comes to workout things and stuff, but they weren't just entitled.

• 41:14Chris Sacca?

  But they just had such narrow band perspectives on the world. They were missing empathy. So they weren't able to put themselves in the shoes of the folks they might be building a product for, what the problems of a world might be. And so I am constantly looking for opportunities for myself and for the founders you work with to broaden the scope that they have on the world such that they can build something on a more informed basis, an emotionally informed basis. So, I mean, I really think empathy isn't, it's a word that's been kind of reduced to signal like, oh, somebody's, you know, somebody hurt their foot and I feel bad for them.

• 41:57Chris Sacca?

  Instead, I think much more poignantly, empathy is about can I see the world through that person's lens? Can I figure out what matters to them? What are they afraid of? What's bothering them? What do they think is limiting them right now? What's their hope? And if I can do that, then it's a lot easier for me to build something for them and to sell it to them and to help them and to build a longer-term partnership with that person.

• 42:21Tim Ferriss?

  Reid Hoffman, I've mentioned him already, @ReidHoffman, both on LinkedIn, you can find him, Reid Hoffman, or on Twitter, @ReidHoffman, is often referred to as the oracle of Silicon Valley because of his investing track record, which includes Facebook, Airbnb, Flickr, and many more. Noted venture capitalist David Zee, who many entrepreneurs I know love, he's incredible in his own right, that's S-Z-E, says of Reid, quote, and then he in brackets, "is arguably the most successful angel investor in the past decade." And just as a quick backstep, I talked about venture capitalists. Angel investors are investing with their own ships typically.

• 43:03Tim Ferriss?

  So they do not have a 2 and 20, they have a 0 and 100 split, no management fee, and 100% of the returns are the losses. And in this short conversation, you will learn how Reid processes questions to make better investment decisions. If you were giving advice to, say, someone leaving Stanford undergrad and they had, they had no gaming background, how might, what would you recommend they do to try to develop strategic ability or thinking?

• 43:37Speaker 05

  Even though there's a lot of different paths to it, most people think they're better at strategy than they are. And so you really have to actually really hold up a very clear, you have to have a very deep self-awareness of, am I in fact really good at it? Because like having an idea or saying, like for example, you say, well, I just do this. Well, one move, a real strategy is actually built up off a, you know, what are your competitors doing? What is their mindset? What are their assets? How are they gonna move? How are you gonna move? What are your, what are your edges? What's the way that you can make that work? How is it when they're playing against you, you can still play to win? So games are a very good way to do that.

• 44:19Speaker 05

  And getting a lot of different exposure, not to computer games, because computer, you know, AI strategies are usually not that interesting, but against other people is very useful. I think it's also useful to read some, which I did as a child, you know, military strategy, Sun Tzu, Bon Klauswitz, other sorts of folks, more modern folks. And to think about kind of like, what are the set of principles that when you're thinking about how to, how to win a game that's in contention, in conflict? And then a lot of people also, of course, have some sports knowledge on this too, although one of the things that's frequently a little limiting on sports is that the sports game

• 45:04Speaker 05

  that a person tends to do, they tend to be like, I play soccer, or I play football, or I play basketball. And then they have a very deep sense of what the strategy is there, but they haven't played enough different kinds of games, enough different circumstances. You know, it's, it's like understanding like, well, what happens if I change these four rules in basketball? Right. Right. You know, how would you play the strategy now? Totally. That, that's the kind of thing, because actually, in fact, most of the circumstances you find yourself in, actually, in fact, you have to figure out, what is the current game look like? And how do you play that? And that's of course, also, by the way, the reason why frequently, you know, companies rise and fall is because they learn to play one game, they got good at it, and then the

• 45:48Speaker 05

  marketplace changes, and now it's a new kind of game, and you have to adjust to playing that new game. And that's actually, in fact, part of recognizing when a strategy applies.

• 45:59Tim Ferriss?

  Absolutely, yeah. I was just having a conversation with someone about the rise and fall of Kodak yesterday. And of course, this is sort of the disruptive theme that one encounters so much in Silicon Valley. I wasn't planning on asking this, but I'd be so curious to hear, given your experience with regulatory risk and so on, what do you feel, if you have an opinion, Uber has done well? And what could they have executed more effectively or strategically?

• 46:31Speaker 05

  So what they've done well is essentially quickly deploying their product so that it's clear that there's a bunch of people who are benefiting from it, both consumers and drivers in various circumstances, so that there is an ecosystem of people by which you go, "Look, see, we can actually add a lot of positive to the system." I think that's been kind of one of the things that they've done most positively within it. On the negative side, you know, the company tends to be very combative. And, you know, when you actually think about the mental space in which regulators tend to operate, they tend to have gone into

• 47:13Speaker 05

  that job because they view themselves as protectors of important groups in society, whether they're consumers, or workers, or other folks. And so they don't tend to respond very well. It's not a competitive game with them. It's not you bulldoze through them or over them. They're actually, in fact, what they want is, they want to know that their concerns are being answered. And it's frustrating, of course, for the company, because, you know, the regulators are being triggered by, you know, competitive interest, like, you know, taxi cab companies and other kinds of things, which want the world to stay only exactly as it is, which is not actually good for anyone to just say, you know, "The way that we're going to run is the way that we were running in the 1950s, and that's the

• 47:56Speaker 05

  way we're going to be running in 3000." You know, that's obviously not a very good idea. So actually, in fact, innovation and change and the pushback is frustrating. But nevertheless, when you're interfacing with the regulators, you have to interface with them with the understanding that they're, they may be conservative, they may be slow to change, they may be risk averse, but their goal is a mission of protecting society. And so you should interface with them on that channel, more than on the...

• 48:24Speaker 05

  Just get out of my way, I'm innovating. And I treat you like I treat a competitor. And that's, that's, that creates a lot of unnecessary friction.

• 48:31Tim Ferriss?

  Right, no, that makes sense. You are, of course, considered a company builder. You've had an integral part in building some massive successes, but you're also very well regarded as an investor. And I would love if you could tell the story of getting introduced to Mark Zuckerberg and how you decided to be one of the first investors in Facebook.

• 48:55Speaker 05

  Well, actually, I could have told you I was interested in investing in Facebook even before Mark Zuckerberg. I tracked the product. I thought it was extremely well done. When I tracked it, you know, he and his co-founders, Dustin, Chris, and others, were in Boston, you know, going to Harvard.

• 49:16Tim Ferriss?

  Right.

• 49:16Speaker 05

  And so I went, ah, it's too much of a hassle. I was angel investing, it's too much of a hassle. As a venture capitalist, I probably would have flown out there. But I was like, it was an angel, too much of a hassle. And so I kind of went, oh, that's cool. And then went back to it. And then I got this call from Sean Parker, who I'd known from his work at Plaxo and, you know, is a good product inventor and good systems thinker on these things. And Sean said, I've just met these really good guys, you know, Mark Zuckerberg and others, who are doing this thing, Facebook, that I'm joining, that's really awesome. And I'm like, oh, that's really cool. Are you moving to Boston? He's like, no, no, they're here. I'm like, oh, that's interesting. He's like, yeah, and we're looking for investment. I'm like, I would definitely like to meet with them. You know, I'm super interested in this.

• 50:00Speaker 05

  I tend to think, and one of the things I said, which is, I think, totally, you know, even though it's probably the most expensive economic decision I've made in my life, but it all in a good outcome, I said, look, you know, when I did, when I led the Series A in Friendster, I got a lot of pushback on, am I having my keg and eating it too? Because even though I don't see any conflict between Friendster and LinkedIn, you know, it just generated all this stuff. And part of having integrity and having, you know, a high sense of ethics is not just having it, but also making some work to appear to have it. So actually, I think we should do is we should have Peter Teal lead the round. And I'll follow because then Peter can be the board member. And even though I'm super interested in this, I think that's probably the best thing to happen.

• 50:45Speaker 05

  And so my actually very first meeting with Zuckerberg was at Peter Teal's office with Sean there, who I'd known, and with Zuck. And then Matt Kohler was there as well, and who was working for me at the time. And that was our very first meeting. But, you know, basically, the meeting was very confirmatory because I'd already seen the product, already known the product was really amazing, already seen it having traction. And really, what I learned from the meeting, which is hardly a surprise, especially now in retrospect, was that Zuckerberg, extremely smart, very much of a learning machine, very good at the evolution of technologies. And so, but I'd already more or less was positive.

• 51:29Speaker 05

  You know, if he'd said, I don't want to meet with you, but you want to put in money, I probably would have put in money anyway.

• 51:33Tim Ferriss?

  Right. And did you, what was Mark Pincus's role at that point, or his involvement with Facebook?

• 51:43Speaker 05

  Well, actually, so the way, Mark had also, Pincus had also known Sean Parker back from Napster days. Pincus had done an early startup called Freeloader. But part of actually how Mark got involved in the Facebook investment was separately, Mark and I had bought a patent called the Six Degrees Patent, since it has some number, which describes the viral expansion of a system. And, you know, again, kind of on the ethics basis, I went, look, Mark and I are partners on this. We're actually trying to protect all these new Web 2.0 viral companies. That's our principal goal in this patent, in going and buying this patent.

• 52:28Speaker 05

  But, you know, given that Facebook's also in this, I should in fact split the investment with Mark because, you know, basically, it's part of being a good partner with him. And so that's part of how Mark, now, he also had known Sean Parker, and Sean had talked to him about it as well. So there's a bunch of different things. But that's fundamentally how Pincus also became a Series A investor in Facebook.

• 52:57Tim Ferriss?

  Peter Thiel, @peterthiel on Twitter, that's T-H-I-E-L, has been involved with some of the most dynamic companies to emerge from Silicon Valley, both as a founder and investor. He also certainly has some fascinating stories related to Gawker Media and others, which we may talk about another time. Peter's first startup was PayPal, which he co-founded in 1998 and led to a $1.5 billion acquisition by eBay in 2002. After eBay, Peter founded Clarium Capital Management, a global macro hedge fund. He's done so much. He's also launched Palantir Technologies, an analytical software company, which is,

• 53:39Tim Ferriss?

  I suppose, an understatement, which now books more than $1 billion in revenue per year, and he serves as the chairman of that company's board. Peter has invested more than 100 startups. He was the first outside investor in Facebook, and he consistently questions assumptions, which allows him to think differently.

• 53:55Speaker 08

  Why do so many investors spray and pray instead of focusing on just five to seven companies in each fund like you do at Founder's Fund? And second part of the question, do you have any rules that you follow or tips for those who want to invest in early-stage ventures more intelligently?

• 54:12Speaker 06

  I think people would say that they spray and pray because of some sort of portfolio theory, some sort of diversification theory. And if that's true, that might work. I don't actually believe that to be true. I think the real reason people spray and pray in their investing is that they are lacking in any conviction and perhaps because they're too lazy to really spend the time to try to figure out what companies are ultimately going to work. One of the reasons I do not like that sort of approach to investing is that I don't think it's good to treat companies as lottery tickets. I think it's terrible to treat the founders of companies as lottery tickets.

• 54:55Speaker 06

  And I think it's actually not just sort of a bad thing morally to treat people as lottery tickets, I also think it's really bad as an investor. As an investor, you know, once you say that there's a small probability of a big payoff, small number times big number normally equals a small number. And so, once you're thinking in lottery ticket terms, you've already psyched yourself into writing checks without thinking and therefore losing money. And so, I think the anti-lottery ticket approach is to try to be concentrated because that forces you to have high levels of conviction before you write a check of any size and then I think you'll do much better.

• 55:33Speaker 08

  What does philosophy have to do with business and how has your study of philosophy helped you in your investing and career today?

• 55:40Speaker 06

  I'm not sure how much the formal study of philosophy matters, but I think the fundamental philosophical question is one that's important for all of us. And it's always this question of what do people agree merely by convention and what is the truth? And this is always the fundamental distinction in a society is there's a consensus of things that people believe to be true and maybe the conventions are right and maybe they're not. And we never want to let a convention be a shortcut for truth. We always need to ask, is this true? And this is always where I get at with this indirect question, tell me something that's true that very few people agree with you on. Silicon Valley is a place that is laden with conventional thinking.

• 56:24Speaker 06

  And one of the reasons that it may afflict Silicon Valley even more than the rest of our society is that there are so few markers. One of the things we're focused on in Silicon Valley is the future. And the future is not always a clear thing. People can be uncertain about it. And when they're uncertain about the future, they will try to find shortcuts involved looking at what other people say about the future. And when everybody simply is listening to everybody else, that's the definition of a bubble or of a mass psychosocial insanity. And so, I think this question of trying to think for yourself, trying to break through convention is always important, but perhaps even more in Silicon Valley than most places.

• 57:08Speaker 08

  What do you think the future of education looks like?

• 57:11Speaker 06

  I don't like the word "education" because it is such an extraordinary abstraction. I'm very much in favor of learning. I'm much more skeptical of credentialing or the abstraction called "education." And so, there are all these granular questions, like, "What is it that you're learning? Why are you learning it? Are you going to college because it's a four-year party? Is it a consumption decision? Is it an investment decision, where you're investing in your future? Is it insurance? Or is it a tournament, where you're just beating other people?" And our elite universities really like Studio 54, where it's like an exclusive nightclub. I think if we move beyond the education bubble that we're living in today,

• 57:55Speaker 06

  the future will be one in which people can speak about these things more clearly. And we will talk about, is it an investment decision? Is it a tournament? Is it a trade or vocational skill that you're developing? I think engineering is the opposite of education because it is actually a specific skill that people are learning. And it's sort of, engineering as a discipline cuts the most against the banality that we're always told, that you're just learning how to learn, or you're not learning anything in particular, you don't know why you're learning things. Engineering is sort of the anti-education in that sense. And I think it's in some ways a paradigm for the way I think it will be more in the future. I think we will have much less of a "one-size-fits-all" approach.

• 58:39Speaker 06

  I think the big, tracked institutions are delivering less and less and charging more and more. And so, I think we are sort of at a point where things will look very different. One of my friends suggested that we are at a point in education that's like the place where the Catholic Church was on the eve of the Reformation. It had become sort of a very corrupt institution. It was charging more and more for indulgences, people thought. They could only get saved by going to the Catholic Church, just like people today believe that salvation involves getting a college diploma. And if you don't get a college diploma, that you're going to go to hell. I think my answer is in some ways like that of the reformers in the 16th century. It is the same disturbing answer,

• 59:24Speaker 06

  that you're going to have to figure out your salvation on your own.

• 59:28Speaker 08

  What are your daily habits and routines?

• 59:30Speaker 06

  I always feel I'm a terrible person answering that question since things are very unstructured on many ways. But I'd say one thing that I try to do every day is to have a conversation with some of the smartest people I know and continue to develop my thinking. So I'm trying to learn new things. I find that I learn them from other people and it's often people with whom I've had conversations for a long time. So it's not an MTV approach where you talk to a new smart person every day. It's one where you have sustained conversations with a group of friends or people you've been working with for a long time and you come back to thinking about some of these questions. And that's how I find I really continue to learn every day

• 1:00:15Speaker 06

  and expand my thinking about the world.

• 1:00:17Speaker 08

  What one thing would you most like to change about yourself or improve on?

• 1:00:21Speaker 06

  It's always hard to answer this since it sort of begs the question of why I haven't already improved on it. But I would say that when I look back on my younger self, I was insanely tracked, insanely competitive. And when you're very competitive, you get good at the thing you're competing with people on, but it comes at the expense of losing out on many other things. So if you're a competitive chess player, you might get very good at chess but neglect to develop other things because you're focused on beating your competitors rather than on doing something that's important or valuable. And so I've become, I think, much more self-aware over the years about the problematic nature of a lot of the competitions and rivalries

• 1:01:06Speaker 06

  that we get caught up in. And I would not pretend to have extricated myself from this altogether. So I think every day it's something to reflect on and think about, how do I become less competitive in order that I can become more successful?

• 1:01:21Speaker 08

  What did you want to achieve by writing Zero to One?

• 1:01:24Speaker 06

  When you write a book like this, you're trying to reach as broad an audience as possible. There's much that I've learned in the last 15 years as both an entrepreneur and investor in the technology industry, and I wanted to share some of these lessons, not just at Stanford, but also in Silicon Valley and with the wider world. I think this question of technology is critical to our society in building a better future in the 21st century, and I think there's both sort of an alarmist and a hopeful part of this book. The alarmist part is that if we do not get our act together and innovate more, we will have a bleak and stagnant century ahead of us. And on the other hand, the positive side is that there's absolutely nothing about all

• 1:02:08Speaker 06

  the great ideas having been found. It's not the case that all the low-hanging fruit has been picked. There's a great deal of things that can be done, that people can achieve. There are many great secrets left to be unlocked in the decades ahead. And so I think it is primarily a cultural question of what we need to do to get back to the future.

• 1:02:31Tim Ferriss?

  Seth Godin on Twitter, @thisissetsblog. This is Seth's blog. I was having trouble with my THs. It's hard, folks, that part of English. Have you ever noticed that? But a lot of other people speak other languages. Anyway, Seth Godin has one of the most popular blogs in the world. You can find it by simply typing Seth into the Google, and he will pop right up. In 2013, Seth was inducted into the Direct Marketing Hall of Fame. He has founded several companies, including YoYoDine and SquidDoo. He also turned the book publishing world on its ear by launching a series of four books via Kickstarter. He's done a lot of experimenting in publishing, so I watch him very, very closely. That campaign reached its goal in just three hours and became the most successful book project, at least then, in Kickstarter history.

• 1:03:17Tim Ferriss?

  What opportunities were you offered, doesn't have to be specific, that you're glad you turned down? Are there any particular examples that come to mind? And if not, I can move on. But I'm just curious if there are any opportunities that you've turned down. For me, for instance, one of them would be like... Every reality TV show invite I've ever had, I'm thrilled and I was I was extremely tempted early on. But in retrospect, extremely happy I said no to all of that.

• 1:03:49Seth Godin?

  Yes, that's, this is a great point. TV runs deep in our culture. So they wanted me to be on that super famous one and then that other one. And I never hesitated in saying no, because that's the moments when you decide who you want to be. Right. And so I paid extra careful attention to the question and extra careful attention to my answer. And it resonated. I would say the biggest shift, which is for Silicon Valley people, hard to get your arms around because there's a game being played there. And it's just a game I've opted out of is when I was at Yahoo during the Renaissance in 1999.

• 1:04:34Seth Godin?

  Bill Gross, who's a super nice guy, came to me and asked me to be head of marketing for the company he was building. It had Steven Spielberg on the board. It was teed up to be, you know, the seventh next IPO. And there were a billion dollars in stock options on the table. And I said to myself, well, if I say yes to this, I've decided what I do for the rest of my life, which is say yes to the next one, because I don't need to say yes to this to buy cilantro and vodka. Why would I say yes? It's because I like the game. And I didn't say yes. And even though the billion dollars in stock options never came around,

• 1:05:16Seth Godin?

  I think I'd be even more proud of it if they had, because the money is a story. Once you have enough for beans and rice and taking care of your family and a few other things, money is a story. And you can tell yourself any story you want about money. And it's better to tell yourself a story about money than you can happily live with.

• 1:05:39Tim Ferriss?

  Could you, could you elaborate on that a little bit? What is, what is your story about money? Is it what you just said? Because this is a really important point. It's something I've been trying to mull over and in the last year or so in particular.

• 1:05:54Seth Godin?

  Well, let me start with the marketing story about money, which is take.

• 1:06:01Seth Godin?

  A $10 bill and go to the bus station and walk up to someone and say, I'll sell you this $10 bill for a dollar. And you should actually do this. No one will buy it from you. And there are a few reasons for this. The first reason is no one goes to the bus station hoping to do a financial transaction. The second one is only an insane person would try to sell you a real $10 bill for a dollar. And dealing with insane people is tricky. So it must not be a real $10 bill and you should just walk away. Now, let's try a different thing. Put a $10 bill in your neighbor's mailbox when he's not home and run away. Do it the next day, do it the third day.

• 1:06:44Seth Godin?

  On the fourth day, ring your neighbor's doorbell and say, I'm the guy who left three $10 bills in your mailbox. Here's another one. You want to buy it for a dollar? You'll sell it. Because your neighbor knows you're crazy, but you're crazy in a very particular way. And you've earned the trust that it's a real $10 bill, right? So we assume that $10 bills are worth $10, but no, it's a mutual belief. And if the belief isn't present, they're worth nothing. Now we get to our internal narrative about money. Is money that number, it's not even pieces of paper anymore, it's a number on a screen. Is that a reflection of your worth as a human? Right?

• 1:07:29Seth Godin?

  One of the things that Derek said on your podcast that I sort of disagree with is that being rich is a signal, a symbol, that you've created a lot of value for a lot of people. I think lots of times that's just actually not true. And there are lots of ways to create value for people, and most of them do not involve money. So what we have to decide, once we're okay, once we're not living on $3 a day, once we have a roof, once we have healthcare, is we have to decide how much more money and what am I going to trade for it? Because we always trade something for it, unless we're fortunate enough that the very

• 1:08:11Seth Godin?

  thing we want to do is the thing that also gives us our maximum income. And I don't think that merely because some blog decides that people with big valuations are doing better, that doesn't mean you should listen to them.

• 1:08:28Tim Ferriss?

  So when you think of the word, if you even think of this word, but if when you hear the word successful, who's the first person who comes to mind for you and why?

• 1:08:41Seth Godin?

  You know, my parents were successful because of how many people they mattered to. My friend Jacqueline Novogratz, who I think should win the Nobel Prize, who runs the Acumen Fund is insanely successful. She is changing whole continents of the earth by bringing an idea to the fore and doing it relentlessly for year after year after year.

• 1:09:05Seth Godin?

  And then I think about, you know, people in my neighborhood who are successful because they get to shovel their neighbor's walk who's elderly and it snowed last night. And that privilege and that trust lets them live a successful life.

• 1:09:24Tim Ferriss?

  Is there anything you've changed your mind about in the last few years?

• 1:09:29Seth Godin?

  Other than the web being dumb.

• 1:09:31Tim Ferriss?

  Other than the web being dumb?

• 1:09:33Seth Godin?

  Yeah, there are, there are, there are a bunch of things. You know, I have changed my mind in each direction about the book industry, about it not mattering, then about it mattering, and now about it being in a sad but slow decline. I've changed my mind about the big companies in the center of our internet. I think that they changed around the same time I changed my mind, maybe before that. They went from being really profoundly useful, important public goods that created enormous value to being public companies where there's so much pressure

• 1:10:18Seth Godin?

  on management by everyone who works there to make the stock price go up that they don't. Often make decisions in the public good anymore. And I was probably naive to think that they would keep doing it, but they are stopping.

• 1:10:32Tim Ferriss?

  What is something that you believe that other people think is crazy or insane? And this is a bastardization of Peter Thiel question that he uses in interviews sometimes.

• 1:10:43Seth Godin?

  But I think that, deep down, I am certain that people are plastic in the positive sense, flexible and able to grow. I think almost everything is made, not born. And that makes people uncomfortable because it puts them on the hook. But I truly believe it.

• 1:11:04Tim Ferriss?

  Well, there you have it, folks. The collected wisdom, just a small sampling from some of the smartest investing minds I've ever bumped into. And now I want to hear from you. Please let me know. What did you like about this episode? What do you want to hear more of? What did you not like? What topics or themes would you most like me to explore? Please let me know. I love your feedback. Just ping me on Ztwitels on Twitter, at T Ferriss, T F E R R I S S. Or you can leave a comment at tim.blog/podcast. And until next time, and as always, thank you guys so much for listening. Hey, guys.

• 1:11:49Tim Ferriss?

  This is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric, as I do. It could include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short.

• 1:12:30Tim Ferriss?

  It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to fourhourworkweek.com. That's fourhourworkweek.com, all spelled out, and just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it.

• 1:12:50Tim Ferriss?

  This episode is brought to you by Ascent Protein, the cleanest, least processed protein I've ever consumed, and I have tried just about everything. Since well before The 4-Hour Body, I've started my day with 20 to 30 grams of protein, first thing. That has been part of my routine. But I don't always have the time or necessarily the desire to cook an entire meal. So, what to do? Protein powders can be a fast way to get this protein need met, but most products are full of crap. They're bleached, they have excess sugar, terrible artificial sweeteners, or just straightforward, low-grade, low-quality protein. Ascent contains zero artificial ingredients, and the parent company is actually a cheese

• 1:13:34Tim Ferriss?

  manufacturer, so they produce their own native proteins. It's really fascinating, and I've looked at their processing it takes, where it took them about five years to develop. You can mix the protein in as little as four ounces without any clumps or issues of mixability whatsoever, and they nailed the taste. They tested, for instance, for the chocolate version, 282 different versions. They put a lot of money and a lot of time into R&D for this particular product. And they have both whey and mycello casein, so if you want to, say, improve body composition and recovery overnight, slow release, you can take the mycello casein, or in my case, whey protein, I would take post-workout, for instance, or in the morning.

• 1:14:19Tim Ferriss?

  So, check it out. These guys are really fascinating. Visit ascentprotein.com/tim. That's A-S-C-E-N-T-P-R-O-T-E-I-N.com. Ascent, like first ascent going up. Ascentprotein.com/tim, and you will receive 20% off your entire purchase. If you want a very quick 20 to 30 gram dose to start your day or after workout, this is a fantastic option. It is arguably the best that I've found. So, again, check it out. Ascentprotein.com/tim.

• 1:14:53Tim Ferriss?

  This episode is brought to you by 99designs. I've used 99designs for ages, since even before podcasting was a thing. And I've used them for all sorts of graphic design needs. They are fast and they are convenient. Whether you need a logo, website, book cover, or anything else, I've done competitions, for instance, for book covers related to the Four Hour Body. 99designs makes great design accessible to everyone, and it makes the process so much easier. And I used them recently for artwork and illustrations inside of my Tao of Seneca set of books. So this is a collection of Stoic writing and modern interviews and so on. So for the Tao of Seneca, I decided to use their one-to-one project service.

• 1:15:38Tim Ferriss?

  In this case, you invite a specific designer to your project, agree on a price, and then work together until you're satisfied. And the artwork just blew my mind. You have to check it out, I kid you not. So you can check out some of the artwork from Tao of Seneca, as well as some artwork and logos and so on that your fellow listeners have had made, at 99designs.com/tim. That's 99designs.com/tim. I really suggest you check it out. And right now, you guys can receive a free $99 upgrade on your first project. This gets you, I think, 130% more submissions, so people who want to work with you and give you first drafts of what you're looking for.

• 1:16:22Tim Ferriss?

  To access your free design, please visit 99designs.com/tim and click the link on the landing page. That's 99designs.com/tim.