#466: Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and The Art of Gambling

Richard Koch (@RichardKoch8020 https://twitter.com/RichardKoch8020) is an entrepreneur, investor, former strategy consultant, and author of several books on business and ideas, including four on how to apply the 80/20 principle in all walks of life. His investments have grown at 22 percent compounded annually over 37 years and have included Filofax, Plymouth Gin, Belgo, Betfair (the world’s largest betting exchange), FanDuel, and Auto1. He has worked for Boston Consulting Group and was a partner at Bain & Co. before joining Jim Lawrence and Iain Evans to start LEK, which expanded from three to 350 professionals during the six years Richard was there. In 1997, Richard’s book The 80/20 Principle https://www.amazon.com/80-20-Principle-Secret-Achieving/dp/0385491743/?tag=offsitoftimfe-20 reinterpreted the Pareto Rule, which states that most results come from a small minority of causes, and extended it beyond its well-known application in business into personal life, happiness, and success. The book, substantially updated in 2017, has sold more than a million copies, been translated into roughly 40 languages, and become a business classic. It was named by GQ magazine as one of the top 25 business books of all time. His new book, published on August 13, 2020 https://richardkoch.net/books/607-unreasonable-success-and-how-to-achieve-it, and available in the US in December, is Unreasonable Success and How to Achieve it https://www.amazon.com/Unreasonable-Success-How-Achieve-Unlocking/dp/1642011363/?tag=offsitoftimfe-20. In it, Richard charts a new map of success, which he says can propel anyone to new heights of accomplishment. High success, he says, does not require genius, consistency, all-round ability, a safe pair of hands, or even basic competence — but it does require the nine key attitudes and strategies he has identified. Please enjoy! *** If you enjoy the podcast, would you please consider leaving a short review on Apple Podcasts https://podcasts.apple.com/us/podcast/the-tim-ferriss-show/id863897795?mt=2/iTunes? It takes less than 60 seconds, and it really makes a difference in helping to convince hard-to-get guests. I also love reading the reviews! For show notes and past guests, please visit tim.blog/podcast https://tim.blog/podcast/?utm_source=podcast&utm_medium=podcast&utm_campaign=podcast-description. Sign up for Tim’s email newsletter (“5-Bullet Friday”) at tim.blog/friday https://go.tim.blog/5-bullet-friday-1/. For transcripts of episodes, go to tim.blog/transcripts http://tim.blog/transcripts. Discover Tim’s books: tim.blog/books http://tim.blog/books. 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Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tim Ferriss?

  Well, hello, boys and girls, ladies and germs. Whether you're here, across the pond, in the pond, or otherwise, this is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. What I just said will make sense in a moment. It is my job on every episode to deconstruct world-class performers, to tease out the favorite books, the habits, routines, forms of journaling, whatever it might be, that you can test and apply in your own lives. My guest today, I've wanted to have on for a very long time. His name is Richard Koch. Richard is an entrepreneur, investor, former strategy consultant, and author of several books on business and ideas, including four books on how to apply the 80/20 principle in all walks of life.

• 0:44Tim Ferriss?

  He also has a wonderful British accent, which is why I talked about "across the pond." His investments, because he's not just a theoretician, he's a practitioner. His investments have grown at 22% compounded annually over 37 years. That's a long time. Try that with a small number and see what happens. Richard's investments have included Filofax, Plymouth Jin, Belgo, Betfair, which is the world's largest betting exchange, we talk about this one quite a bit, FanDuel, and Auto1. He has worked for the Boston Consulting Group and was a partner at Bain & Co., that's Bain & Company, before leaving to start LEK with Jim Lawrence and Ian Evans, which expanded from three to 350 professionals during the six years Richard was there.

• 1:27Tim Ferriss?

  In 1997, the 80/20 Principle, the book, reinterpreted the Pareto Rule, extending the observation that most results come from a small minority of causes, which was well-known in business, into personal life, happiness, success, and more. The book, substantially updated in 2017, has sold more than a million copies. I have bought many of those myself and given copies away. It's been translated into roughly 40 languages and become a business classic. It was named by GQ Magazine as one of the top 25 business books of all time. His new book, published on August 13, 2020, is Unreasonable Success and How to Achieve It. In it, Richard charts a new map of success which he says can propel anyone to new heights of accomplishment.

• 2:11Tim Ferriss?

  High success, he says, does not require genius, consistency, all-around ability, a safe pair of hands, or even basic competence, which is reassuring, but it does require the nine key attitudes and strategies he has identified. We dig into all of this and more in this conversation. It's important to note, I had a great time doing this, that's not important, but the following is important, that we talk about a lot in the world of investing and consulting, because I want to give you all a lens into his thinking. So rather than listening to someone say negotiating is important, I would prefer to dig into real world examples of what they have done. So you can learn how to fish, metaphorically speaking,

• 2:55Tim Ferriss?

  as opposed to being given a fish in the form of some type of fortune cookie parable, or something like that. So we get into a lot of concrete details in investing and consulting, and those are lenses through which you can look at many, many areas in your own life, whether it's personal or business. So I just wanted to explain that, and I think that's enough preamble. We get into a lot. We get into the art of gambling, 80/20 principle, happiness islands, achieving unreasonable success, ball aching insights, journaling, Walt Disney, and lots more. You can find him on Twitter, @RichardKosh8020, and online, richardkoch.net.

• 3:39Tim Ferriss?

  This episode is brought to you by Viori Clothing, spelled V U O R I, Viori. I've been wearing Viori at least one item per day for the last few months, and you can use it for everything. It's performance apparel, but it can be used for working out. It can be used for going out to dinner, at least in my case. I feel very comfortable with it. Super comfortable, super stylish. And I just want to read something that one of my employees said. She is an athlete. She is quite technical, although she would never say that. I asked her if she had ever used or heard of Viori, and this was her response. "I do love their stuff. Been using them for about a year. I think I found them at REI, first for my partner,

• 4:23Tim Ferriss?

  t-shirts that are super soft but somehow last as he's hard on stuff. And then I got into the super soft cotton yoga pants and jogger sweatpants. I live in them, and they too have lasted. They're stylish enough, I can wear them out and about. The material is just super soft and durable." I just got their Clementine running shorts for summer and love them. The brand seems pretty popular, constantly sold out. In closing, and I'm abbreviating here, but in closing, with the exception of when I need technical outdoor gear, they're the only brand I've bought in the last year or so for yoga, running, loungewear that lasts and that I think look good also. I like the discreet logo. So that gives you some idea. That was not intended for the sponsor read. That was just her response via text. Viori, again spelled V U O R I,

• 5:08Tim Ferriss?

  is designed for maximum comfort and versatility. You can wear it running, you can wear their stuff training, doing yoga, lounging, weekend errands, or in my case, again, going out to dinner. It really doesn't matter what you're doing. Their clothing is so comfortable and looks so good. And it's, it's non-offensive that you don't have a huge brand logo on your face. You'll just want to be in them all the time. And my girlfriend and I have been wearing them for the last few months. Their men's Core Short, K O R E, the most comfortable lined athletic short is your one short for every sport. I've been using it for kettlebell swings, for runs, you name it. The Banks Short, this is their Go to Land to Sea Short is the ultimate in versatility. It's made from recycled plastic bottles.

• 5:51Tim Ferriss?

  And what I'm wearing right now, which if I had to pick one to recommend to folks out there, or at least to men out there, is the Ponto Performance Pant. And you'll find these at the link I'm going to give you guys. You can check out what I'm talking about. But I'm wearing them right now. Their Thin Performance Sweat Pants, but that doesn't do them justice. So you got to check it out. P O N T O, Ponto Performance Pant. For you ladies, the Women's Performance Jogger is the softest jogger you'll ever own. Viori isn't just an investment in your clothing, it's an investment in your happiness. And for you, my dear listeners, they're offering 20% off your first purchase. So get yourself some of the most comfortable and versatile clothing on the planet. It's super popular. A lot of my friends have now

• 6:33Tim Ferriss?

  noticed are wearing this. And so am I. VioriClothing.com/Tim, that's V U O R I clothing.com/Tim. Not only will you receive 20% off your first purchase, but you'll also enjoy free shipping on any US orders over $75 and free returns. So check it out. VioriClothing.com/Tim, that's V U O R I clothing.com/Tim, and discover the versatility of Viori Clothing.

• 7:07Tim Ferriss?

  This episode is brought to you by Athletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is inevitably Athletic Greens. I view it as my all-in-one nutritional insurance. I recommended it in 2010 in The Four Hour Body, and I did not get paid to do so. I've used it ever since. Developed from a complex blend of 75 vitamins, minerals, and whole food sourced ingredients, Athletic Greens is a greens powder engineered to help fill the nutritional gaps in your diet. So I always try to do things through whole foods, but this covers my bases. Right now Athletic Greens is offering you their vitamin D3 K2 liquid formula free with your first purchase. Two vital nutrients for a strong immune system and strong bones. So simply visit athleticgreens.com/tim to

• 7:50Tim Ferriss?

  claim this special offer today and receive the free D3 K2 bundle with your first purchase. That's up to a one-year supply of vitamin D as added value when you try their delicious and comprehensive all-in-one daily greens product. Again, that's athleticgreens.com/tim.

• 8:09Speaker 01

  At this altitude, I can run flat out for a half mile before my hands start shaking. Can I ask you a personal question?

• 8:18Speaker 02

  No, it would seem inappropriate.

• 8:21Speaker 03

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

• 8:34Tim Ferriss?

  Richard, welcome to the show. I'm so thrilled to have you. It is, in some respects, decades overdue, and we were just chatting before clicking record. Could you please get us started with wines and spirits?

• 8:48Richard Koch?

  It's a great pleasure to be talking to you, Tim. Thank you very much for all your generosity in giving me quotes to put on books and things like that. That's very much appreciated. I'm not sure that this is a great place to start, but I was just thinking that you had reinvented the talk show. And when I was 17, and I had the first job in Windsor, England, as a van driver for a firm of wines and spirit merchants, they were called Lovey Bonds. And they were probably about the most old fashioned wine and spirit retailer you could possibly imagine. And one of the things which they did was deliver wine and spirits to quite a distinguished bunch of people, actually. I used to drive into Windsor Castle

• 9:32Richard Koch?

  and give the Brigadier his gin and so on and so forth. But one of the other people that I used to visit was Michael Parkinson. And Michael Parkinson, as you know, was a very successful sports writer and broadcaster who then branched out into doing chat shows. And some of the stuff which he did was marvelous. And I saw a clip the other day of him talking to David Bowie, and it was fantastic. They were really enjoying themselves and they were moving very smartly from point to point. And that made me think about you, because I think you reinvented the chat show on podcasts. And it's just amazing. So anyway, that was, that's my non-story to start with.

• 10:08Tim Ferriss?

  Well, give me time to disappoint, and I appreciate the kind words. And I should also say for people listening, those people who perhaps have, have read the various policies on my website will, will note or received one in my auto response via email will know that I say I don't give quotes for books. I don't do forwards. I don't do, and I have a very long list of do not do's. The reason that I've made an exception is that, and if anyone else fits this bill, feel free to reach out, because I know it's going to be approximately zero. If you, if you've written a book, like several of your books

• 10:50Tim Ferriss?

  that have traveled with me for more than 10 years from place to place that sit on my shelves face out as a reminder, feel free to reach out. But that is going to be a very small number indeed. And perhaps we could start, this isn't exactly the beginning, so to speak, but with the Bodleian Library. And if you could explain what that is and take us into Context from there, I think that would be helpful.

• 11:18Richard Koch?

  The Bodleian Library is a fantastically beautiful building in Oxford, very close to the college that I was at. And I used to sit in there, in the stacks, and look out of the window whenever I could. But the great thing about it was that it had almost any book that you could possibly imagine. And one day, I decided that I wanted to read a book which I had read about, called The Course of Economic Theory, but it was in French, written by our old friend, Wilfredo Pareto. And it was published in La Salle

• 11:54Richard Koch?

  in, I think, 1896 and 97. And I have no idea at all, Tim, why I wanted to read this book, because it wasn't part of my coursework or anything like that. But that was a book in which I discovered the 80-20 principle. And he didn't call it the 80-20 principle, as you know, but nevertheless, he had all these algebraic equations which showed the wealth distribution in England in the 17th century, 18th century, 19th century, and also in Italy, France, Switzerland, other countries over those periods of time. And what he found was that there was the same pattern of distribution of wealth against

• 12:39Richard Koch?

  the population. And a remarkably similar chart could be drawn from the algebra for any of those countries or any time, in order to show what proportion of wealth was owned. And of course, it was a very small number of people or proportion of people who actually owned most of the wealth or earned most of the money. So you might say, well, that's very arcane, and it's not particularly interesting. But I instantly thought, I can use this.

• 13:10Richard Koch?

  I can use this to cheat in my examinations without actually cheating. And so what I did was to say, well, I do know that I'm going to have to write 11 papers, three hours long each, at the end of my time in Oxford. The Oxford degree is entirely determined by the final examinations. There's no assessment current or there are no previous examinations at all. So it's a very, very important thing. But I had noted that on sample papers, there were something like 50 questions or whatever. And it's impossible to imagine that I could actually research or do work on 50 questions times 11.

• 13:56Richard Koch?

  So I thought, well, maybe if this 80/20 principle applies, there will be some questions which are asked much more frequently. And lo and behold, I got the papers for the history exams for the last 20 years. And it was absolutely true. There was always a question about the French Revolution. There was usually a question about the Russian Revolution. There was always a question about the origins of the causes of the First World War and so on and so forth. So I said to myself, well, you know, I don't need to study very extensively. You could write the answers to three or four questions. It was your choice during three hours. So what I said was, I will research six subjects.

• 14:40Richard Koch?

  No more for each paper. And I will be word perfect. I will have very obscure quotes. I will use foreign languages that I don't actually understand.

• 14:54Richard Koch?

  Absolutely word perfect. And if I do that, I don't have to do much work and I will get a top degree.

• 15:01Richard Koch?

  And lo and behold, that is exactly what happened. And then I thought to myself afterwards, gosh, this man Pareto was quite on to something, wasn't he? So that was my introduction to the 80/20 principle. And yeah, perhaps I'll never look back in some senses.

• 15:17Tim Ferriss?

  You know what is, well, to me, so funny about that in part is that I did something very similar. I just was not aware of Pareto at this point. But when I was doing my undergrad. I about halfway through began asking teachers to give them some degree of plausible deniability because I was hesitant to ask outright what is going to be on the exam because they're not supposed to answer such a question. But I would ask teachers, or I would say, rather, I know I need to study everything that we've covered for the exam, but if there are any particular areas you think I should focus on, would you mind telling me? And they were very forthcoming. So it ended up having a very similar effect, although I

• 16:00Tim Ferriss?

  definitely was pleased that in most cases, not everything hinged on final exams. I think I probably would have been crushed under the psychological intimidation of that type of sink or swim setup.

• 16:13Richard Koch?

  Yeah, I was quite nervous in my sense, but I found a solution to that, at least in the afternoons, was after the morning paper, I would go down the pub and have a couple of pints of beer. And I found that calmed my nerves. And it was notable that I got better results in the afternoon than I did in the morning.

• 16:35Tim Ferriss?

  Well, that could be in one of your next books, if you have uncovered academic hygiene and preparation. Now, if we're looking at formative periods, let's just say, high school, college, university, however we want to label it, I'm looking at notes, as I do, in these types of conversations from an interview you did with Boing Boing a long time ago, an outlet that I know very well. And one of the questions posed was, what advice would you give to a smart kid who's now in high school? And you can feel free to fact check this and correct, but the answer, I'm just going to read briefly, and then I have a follow up. Discover what you're best at doing and enjoy that is different

• 17:17Tim Ferriss?

  from what all of your peers are doing, and that requires relatively little effort from you. Then put huge effort into honing that skill so that it becomes monstrously greater than anyone else's. Keep demanding that each year, you make your peculiar talent more peculiar and much more potent. Use this skill to make the world a more interesting place. Don't care about making money. If you have a fantastically different and useful skill, everything else you want will follow. So I have two questions. Accurate or not accurate, quote, secondly, what is your peculiar talent? And how did you discover it?

• 17:50Richard Koch?

  Well, it's totally accurate and it's very easy to give advice and perhaps less easy to originate the advice, or at least to exemplify the advice. I was always very, very interested in history because it enabled me to develop a certain skill in analysis with non-quantitative analysis. I'm absolutely hopeless at numbers. But in terms of understanding structures, in terms of understanding trends, in terms of really getting to grips with what might have happened that other people had not noticed, then that's what I did. And, you know, I came up with some pretty wacky ideas during my time studying history,

• 18:33Richard Koch?

  but I thought that they were plausible and the examiners must have thought so too. I mean, for example, it seemed to me that Hitler had been copied pretty much what Lenin and Stalin had done. So of course Hitler was a great anti-communist and they were great anti-Nazis, but he actually had followed Lenin's policy, for example, of a one-party state, which no one before Lenin had really done, and of death camps for dissidents and enemies of the regime. Again, no one had really done that, certainly not on such a ruthless scale as Lenin and later Stalin did. So it was my theory that Hitler had based his policy on the Bolsheviks. And that's just a little example.

• 19:17Richard Koch?

  I'm not absolutely sure that that's true, but it's plausible. And it's sort of trying to Winkle out things that might be true, which are interesting and important, but which no one else has spotted. That's what I try and do. That's what I enjoy doing.

• 19:34Tim Ferriss?

  So you mentioned hopeless with numbers. Now, or maybe I injected the hopeless, but you were very self-deprecating with respect to numbers and numeracy. And yet, people would look at your track record of investing as an example and ask, how can that possibly be the case? So. Again, in my notes, I have Betfair here, which I would love for you to explain, but it adds that you couldn't use their website. Now, please explain.

• 20:09Richard Koch?

  Okay, well, the way of reconciling those two apparently different things, I do have a very good track record, thank God. I've been very lucky, or very fortunate, at least in my investments, but it's not based on being an analyst in the conventional sense. I got fired from the Boston Consulting Group because I was no good at doing financial and market analysis, despite the fact that I was quite good at doing some other things which they didn't value very much. It is true that I'm not particularly numerate, but I believe that's a skill which is readily available from other people. And as far as Betfair is concerned,

• 20:51Richard Koch?

  I base my investment, as indeed all my investments are based, on the STAR principle, which was something that the Boston Consulting Group themselves had invented way back in the 1960s. And this is the old chart of the dogs, stars, question marks, and cash cows. So, I never make an investment unless the business is a STAR business, or has the potential to be a STAR business. And BCG's definition, my definition of a STAR business, is that market leader in a niche, a defensible niche, where you can protect it against other people, other competitors, and a high market growth rate. BCG said more than 10%. I've really

• 21:32Richard Koch?

  tried to aim at more than 30%. And the thing about Betfair was that a friend of mine, in 2001, came along and said, we've started this betting company, and I'm a gambler, I like gambling, and... We think it's completely different from anything else because it's not a bookmaker. And I said, well, what do you mean? And he said, well, a bookmaker is someone who makes a book and basically offers odds to punters, gamblers who might want to bet on it. But Betfair doesn't do that. What it does is it started an electronic market, which enables people to either act as a bookmaker or to act as a punter.

• 22:16Richard Koch?

  So you can go on to the site and you can see posted up there, the odds other people will give. And the odds for the punters are vastly better because there's no bookmakers profit. Now, I said, well, it can't be true because Betfair has to make some money. How do they make money? What's their business model? He said, well, they have a very small commission which they take and they only take that on winning bets. And so I said, well, that sounds like a fantastic idea. So what's the problem? And he said, well, do you want the real truth? And so I said, yeah, of course I want, Anthony, of course I want the real truth. What, what's the problem? He said, well, no venture capitalist, no professional financial firm would invest

• 23:00Richard Koch?

  in this company. When they first had their round, they started about six months previous to this. And, and he said, then there was, you know, from their point of view, a very good reason for that, which was none of the managers in the business had had any experience. I said, oh, you mean they didn't have experience in the industry? He said, no, no, they don't have experience in the industry. Well, one of them used to be a professional gambler, but that's not experience which venture capitalists would recognize as being.

• 23:33Richard Koch?

  He said, no, they never run anything. And I said to me, so, Anthony, you're telling me that I should put money into a business that has people running it, have never run anything else? He said, well, one of them used to be a financial debt person at Morgan Stanley and he was making, you know, he was trading loans and doing that sort of stuff. And he said, you know, trading loans is not a million miles away from running a betting exchange. But, you know, the truth was that they, they really were all sports enthusiasts, all gambling enthusiasts. And none of them had had any experience of management, which explained why it was only friends and family who'd been able to invest in, or been willing to invest in this particular

• 24:18Richard Koch?

  company. So I said to Anthony, well, what's the attraction? He said, it's a star business, Richard. And Anthony had worked for me in L E K and also in a company we set up after L E K called Strategy Ventures. And so he knew that I knew that the way to make money in investing in small businesses was to actually invest in something which could be or was a star business. Well, you know, even though it was tiny and even though it was losing money, it was clear that Betfair was indeed a star business. And why was it clear? Because no one else was doing what they were doing. Their business model was completely different, their cost structure was completely different, their customers were completely different.

• 25:00Richard Koch?

  All of their customers were sophisticated and quite large, well, not all of them, but most of them were sophisticated and quite large gamblers. And so, you know, they're, they didn't compete with Ladbrokes or the other Corals, the Toads, the other British bookmakers. And in fact, they didn't compete with anybody because there was nobody. There was actually another firm set up originally in San Francisco called Flutter. It had a slightly different business model. So it had no competition, it had infinite relative market share. So I said, well, that's fantastic. So he said, well, let me give you the website and you can go on and see how, how it works. Well, unfortunately, I couldn't because I didn't know how to work the website.

• 25:45Richard Koch?

  And I went along and talked to the people and just tried to make sure that it was indeed a star business and that I thought that, you know, it could actually get some professional management later on. And so after an hour, I decided to invest.

• 26:03Richard Koch?

  One point five million pounds in that business. And they were quite shocked by that. They said, well, are you sure? And I explained to them what a star business was and how it was wonderful and how they should be very pleased to be having a star business and all the rest of it. But they were quite taken aback at that. And they had been trying to raise money again from institutions that all said no. And the mates that they had who put the money in originally, you know, didn't want to put more money in, particularly as they used that money much more quickly than expected. The reason that they used the money much more quickly than expected was that the growth was fantastic. It was a tiny, tiny, tiny business, but it was growing at forty percent, fifty percent, even sixty percent a month.

• 26:45Richard Koch?

  Um, and, you know, I said, well, you know, the other thing which I believe in apart from the star principle is compound growth rate. And so I, you know, I looked at their financial projections and I thought they're incredibly conservative considering the market growth rate. And so I invested. And I went on to the board and about four years later, the chaps had a, um, an away day at which I said how wonderful star businesses were and so on and so forth. And then I said, and actually, last week, I decided it was time that I actually learned how to use the website that you have. And they all fell about laughing. They thought I was joking. And I said, no, I did. I think it's great, great website.

• 27:30Richard Koch?

  And they, they said to me, well, how could you possibly have invested in the business without sort of going on to the website? And I said, well, it's a star business. And they said to me, I mean, I think I went down in their estimation quite considerably as a result of that.

• 27:47Richard Koch?

  And of course, now I use the website most days. But, uh, and I think it's, I think it's a wonderful website. I've sold my shares, so I'm not advertising the company or anything like that. But I ended up making about a hundred million pounds profit out of, out of that investment. So that's the power of the star principle. So, so how can someone who's not numerate? Make money out of what is generally a highly numerous industry. Well, the answer to him is very simple. I believe in principles and I believe in the star principle. And it works. I'm the only investor in the world that does this. And I think I'm the only investor in the world of my scale that doesn't employ anyone. And that does it on the basis of probably about a day a week of work. I do use my personal assistants to do some of the work.

• 28:32Richard Koch?

  I do use contacts for special particular jobs. But, you know, I don't have any staff. And, you know, when I tell people this, they say, well, you know, your, your portfolio is X. That's unbelie- absolutely unbelievable. I said, well, you know, I've only got one question. When I invested a business, is it a star business or could it be a star business? And once I've invested, I want to retain it as a star business or make it more dominant. And the only question is, how do you do that? And so life is very simple.

• 29:04Tim Ferriss?

  I'm laughing because we could have five hours and I'm going to run out of time before I run out of questions. So let's bookmark a few things. We're going to come back to knowledge versus principles. Okay, so we'll bookmark that. I want to just make it clear, at least from Wikipedia. And Wikipedia, of course, is subject to debate, but often inaccurate. And Betfair is, is described as the world's largest online betting exchange. Just for, for those who are looking for some type of perspective and are not familiar with the company. And you had mentioned gambling and liking gambling. I want to dig into that because it strikes me that you may enjoy gambling, but you're also very good at placing bets. And those are not necessarily the same thing.

• 29:49Tim Ferriss?

  If we think about the psychological dynamics, drivers and criteria involved. And I want to explain also to people listening that investing is a wonderful metaphor for and framework for exploring principles that apply elsewhere. Thinking processes that apply elsewhere or perhaps even everywhere. So my question for you is very specific. 1.5 million. How did you decide on that bet sizing?

• 30:23Richard Koch?

  That was all the money I had. Holy shit. Wow. Okay. So you just pushed in all your chips? Yeah, they're all my liquid assets, you know, and this is quite typical for me. I want to be full.

• 30:37Richard Koch?

  Something I'll talk about later, which is that I, one of the things which is quite absurd about me is that I actually don't have very much money to spend and I don't really mind that. I tend to, when I'm in London, for example, in normal circumstances, I would take public transport. I would go on the bus or the tube. I would cycle if I possibly could, but I wouldn't take a taxi or even an Uber unless it was absolutely, you know, I was desperately short of time. And I don't believe in being desperately short of time. I always make sure I have plenty of time because I don't want to be rushed and because I can always use the time to think or whatever. So how do I just decide on the bet sizes? You know, it's just a matter of what I have available if I think it's a good bet.

• 31:17Richard Koch?

  I hasten to add, I don't make money out of my horse racing gambling. That is purely an entertainment and I don't place particularly large bets relative to my net worth either. And if I can go for eighteen months without having to put any more money in my account, I'm very happy. It's a different kind of bet. I mean, gambling, I think, is gambling, conventional gambling, whether it's poker or it's at the casino or it's horse racing or it's betting on tennis or, or baseball or football or anything like that. You know, I, I think there are people who make money at it, but they usually either have some inside information or they are incredibly skilled

• 31:58Richard Koch?

  at judging probabilities and they often have, you know, even research. I know someone who had fifty employees tracking football in order to see whether the odds on particular football matches were right or not. And he would take positions and he made a lot of money out of that consistently every year. But, you know, someone like me who doesn't know a lot about football, knows nothing about football, not, doesn't know a great deal about horse racing. You know, is, is it a certain disadvantage? I just, I, I, I have a particular method which I use, which is based on looking not where the horse came in the race, but on the time relative to other times. And all that is calculated on the Racing Post website. It's called something called top speed.

• 32:42Richard Koch?

  And whenever I make a lot of money in, in horse racing, it's because top speed has shown me a horse which is not far away from the favourite, but might be at odds of thirty to one, or in one case it was even three hundred and thirty to one. That's unusual, but betting on companies is fantastic. Because if you understand how important relative market share is, and if you understand whether or not a company is able to segment itself and therefore have a defensible position in a particular segment like Betfair, then it's absolutely fantastic. Because you can, you know, you can basically invest and know that you might lose your money, but overall you're going to do very well out of that.

• 33:26Richard Koch?

  And, you know, I have very rarely lost money on star businesses. The cases where I've lost money is where I thought something might become a star business and it wasn't. Does that answer your question?

• 33:37Tim Ferriss?

  It does, and I have a whole handful more to follow up. So you wrote an entire book on this, The Star Principle 2008. It, that was published in 2008, work in investing in star businesses, that was the focus. When you say segment itself, businesses that can segment itself, and you mentioned Betfair, what, what does segmenting itself mean?

• 34:01Richard Koch?

  It means that it, it defines the market in a way that nobody else has done, or that very few people do, and therefore that it's possible to become the market leader in it. So Betfair is a very good example of that. It's a betting exchange, which is an electronic market where people can post bets on either side, buy or sell. It doesn't take principal positions as bookmakers do. So it's, um, once its overheads are covered, it can't lose money. And it competes against other betting exchanges, not against the big bookmakers. Because anyone who's a big gambler isn't going to go to Ladbrokes or Corals or the

• 34:42Richard Koch?

  Toad or Paddy Power or any of those conventional bookmakers, because they know that the bookmaker typically takes out about 10% on each event. And Betfair takes out maybe 2%, but that's only half the time if you win half the time and lose half the time. So it's 1% plays 10%. And therefore, it means that the customer profile is completely different and the way that the cost structure operates is completely different. So it's a separate business segment because it's not competing with conventional betting firms. So it means that the company has to do something differently. It either

• 35:22Richard Koch?

  has to be have a price advantage and therefore a cost advantage in the way that Betfair does, or it has to offer something which is so attractive that people will pay, even if it's the same price, they will actually go to go there. So, you know, the three things that you want to do if you want to, what I call proposition simplify, are you have to have something which is very useful, you have to have something which is easy to use, and preferably you want something which is aesthetically pleasing, which gratifies you as a joy to use. And if you think about any of the Apple devices, then they created their own segments with the iPod and the iPad and the iPhone and other devices because it

• 36:07Richard Koch?

  was different from conventional competition. Even the Mac really didn't compete head to head with IBM. And anything where you can get a big price premium, for example, 30% plus, as Apple's been able to do on all of its devices, at least at the start, you have something which is a separate segment because it's not competing against the low cost competitor. And if you are going to be the low cost competitor, you want to be low cost in a segment which is different from the other segments because otherwise the existing large companies will eat you for breakfast.

• 36:42Tim Ferriss?

  You are unconventional in many different respects. And I'd like to ask you a personal question. You can feel free to decline to answer this question, but I'm very curious as to what your investment portfolio looks like, what principles govern its composition? Because you had mentioned that you're quite happy to have small amounts of liquid assets, you know, cash available. So what does your portfolio look like to the extent that you're comfortable discussing it? And what what are the principles that govern its composition?

• 37:18Richard Koch?

  It's pretty much an illustration of the 80/20 principle, but more so, I suppose my most valuable single, I've got about forty assets, companies in which I've invested, and the most valuable company in the portfolio constitutes about the half the total value, and another one constitutes about a quarter of the total value. And so in a way, that also simplifies my life, because if I, if I take care of those two particular assets and know that they're going to do well, or think that they're going to do well, then I can be relatively relaxed. I'm quite happy to increase my share

• 37:56Richard Koch?

  in companies once I know, or think I know, and I'm not infallible, that they are going to be successful. So, for example, the company that is my largest single investment, I started off with a relatively modest investment that might have had about 2% of the company, and I'm now up to 60% of the company. And basically what I'm doing is buying my shares from the existing shareholders whenever there is an opportunity to make an offer for shares, which is, you know, when I've got some money. So that's the principle. I don't have any rules on industry. I don't care what industry it's in. I don't really care very much what the management is like, because if the management doesn't perform, management will eventually get replaced.

• 38:42Richard Koch?

  I don't really care where it is, as long as it's not, well, as long as it's in Europe, because I think I understand European markets. I won't invest in the US because competition is too great, and also because I don't like the IRS, and also I don't know anything about American investment. So it's basically a European portfolio, industry irrelevant, and I don't care about concentration. In fact, I rather like concentration.

• 39:15Tim Ferriss?

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• 40:01Tim Ferriss?

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• 40:45Tim Ferriss?

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• 41:11Tim Ferriss?

  Let's go back to getting fired.

• 41:15Tim Ferriss?

  Just to warm up the conversation. So what happened after you were fired? And could you actually tell us more about the day that you were fired? What was the conversation? What was that experience like? And then what happened after you were fired?

• 41:33Richard Koch?

  Well, it was a slow firing. And in fact, it was a very gentle firing. BCG like McKinsey, McKinsey invented the phrase up or out. And at McKinsey, they would say that after three years, you would be assessed. And if you were really good at their business, you would get promoted. And if you weren't, you'd be asked to leave. But they would do it in a very, very nice way. Because they were sort of dividing the sheep and the goats. The sheep were the people who were good enough for McKinsey. And the goats were people who were good enough to be McKinsey clients. So that was their philosophy. And they were terribly nice to the people. But in fact, it was kind of like, it was a form of, I don't know. It was a form of sort of psychological one upmanship.

• 42:18Richard Koch?

  Because the people who left generally weren't as bright as the other people. It wasn't that they could do things that the McKinsey people couldn't do. It was that they weren't as bright in terms of the strategy of a business and analysis and so on and so forth. So that worked extremely well. Well, BCG did not have quite as rigid a formula as McKinsey. But they did have this policy that if after three or four years, you had not been made from a consultant into a manager. A consultant was a typical entry level for someone who'd been to business school. You would, you know, you'd be pretty much an anomaly, would be the way that they would probably put it.

• 43:00Richard Koch?

  And therefore, you know, you might start thinking about what you wanted to do. And so I had a number of those conversations with people. But I said to him, look, You're dead wrong. This was me. This is me in my arrogant youth and maybe I haven't got rid of the arrogance altogether. The, the, I said, look, I'm no good at analysis, but I can charm the clients. I can talk to the clients. Um, I'm quite articulate and I can understand what the issues are, the strategic issues, and I can relate those to the clients. So, you know, I might not be very good at being a consultant. I might not even be very good at being a manager, but why don't you make me a vice president?

• 43:43Richard Koch?

  Because I could actually do rather well. And they would chortle. They would say, Richard, you know, we have to have a hierarchy. And I said, well, you know, X, Adrian, for example, Adrian's now a vice president. We all know that he was a pretty good consultant, but he wasn't a terribly good manager because he, he, he couldn't command the analysis and that's the heart of, you know, what BCG does. And so he had to rely on other people to do it. But now he's a vice president. He's selling a lot of business very successfully and helping clients. So, you know, I'm like Adrian, basically. And they would again chortle a bit. But eventually, a guy called, very nice guy called Phil Hume, who's later started

• 44:26Richard Koch?

  Computer Centre and made quite a lot of money out of Computer Centre, uh, sat me down and said, Richard, you know, you are running out of road a bit. And I said, well, look, I got a fantastic assessment from Roy Barbie the other day, you know, and he said how much the clients love me. He said, yes, Rich, we know that. But, but basically you can't do what, what is really our power ally. So, so, um, maybe you sort of think about looking around. And I came out from that meeting thinking, is he right? Is he right about this? Or am I right? And I thought to myself, well, maybe he's right. So I actually then... Very quickly went to other consulting firms, to McKinsey and to Bain and Company to see whether

• 45:11Tim Ferriss?

  May I say something, Richard, just for a second? That is, for people who don't have any context on management consulting, when you say McKinsey, when you talk about Boston Consulting Group, when you talk about Bain and Company, just as a point of reference for folks who may not be familiar with this industry, when I was studying at Princeton, there were exactly two industries that recruited heavily. You had the investment banks, you had Goldman Sachs and a handful like that. And then you had what were considered the elite of the elite of management consulting. And that included McKinsey, BCG, in other words, Boston Consulting Group, Bain and Company, and so on. So these are the most prestigious names in the world of of management or strategy consulting.

• 45:54Tim Ferriss?

  I just wanted to to add that as a bit of background.

• 45:57Richard Koch?

  Yeah, I'm saying, sorry, I assume that everyone knows and they don't. I mean, it's a very, when I was doing it, it was a very obscure industry. And now it's less obscure, but it's still, it's still pretty, pretty obscure. Anyway, I went to McKinsey, they said, no, you're a bright guy, but we don't think you should be doing this management consulting stuff because you want to make decisions rather than advise. And I said, yeah, that's probably true. Bain and Company, I'll come back to in a second. I then said, well, maybe I should be a headhunter. And I was actually approached by firm headhunters, some of whom knew me personally. And so I went off to see Egon Zender in Zurich with a view to becoming,

• 46:38Richard Koch?

  and Egon Zender was the leading at that time, probably still is the leading European headhunter.

• 46:44Tim Ferriss?

  Just a footnote there for people, headhunting means recruiting, right?

• 46:48Richard Koch?

  At a very high level and taking very large amounts of money from the client. So anyway, I talked to Egon Zender and he offered me a job on the spot. And I very nearly accepted on the spot. But when I sort of examined my heart, I came back to the conclusion that I thought BCG was wrong. And that, you know, I might not suit BCG, but I thought, you know, maybe I can get the job in another consulting firm. There happened to be another individual who had left the Boston Consulting Group and joined Bain and Company, a guy who rejoiced in the name of Floyd Bradley III. And you might tell he was an American, very, very nice guy, quite a smart guy. Anyway, so he, I arranged to have a drink with him and said, you know,

• 47:34Richard Koch?

  I'm not too happy with BCG. I don't think they're moving me on fast enough. How about Bain and Company? Do you think that that they would? Do you think that they would be interesting? Yes, they're always looking for people that they find it quite difficult to recruit people at this stage. And so I said, fine, I'll go along, talk to them. So I went along and talked to the head of the London office and he said, we'll send you off to Boston. Now, this was very interesting for me. It was my one chance, basically, to stay in the industry that I wanted to stay in. The only problem with Bain and Company was that it had a reputation for being an extremely hierarchical, strict, controlled, almost mystical outfit, where you had to do what you were told.

• 48:20Richard Koch?

  Whereas BCG actually was a pretty freewheeling entrepreneurial sort of firm, reflecting the difference in character between the guy who had started BCG, Bruce Henderson, and the guy who runs, or ran rather, Bain and Company. I should say that he's dead now, so I can't be sued for libel or slander or whatever it is, and neither can you. Although I have the utmost respect for Bill Bain, and so I'll come on and say it in a second. So they sent me off to Boston. So there I was, I had a, you know, a four o'clock appointment with, to see Bill Bain. In the afternoon, so I got off the plane, got a cab to their Boston office,

• 49:00Richard Koch?

  and turned up at the desk and said, I'm here to see Mr. Bain at four o'clock. And the woman sort of looked a bit confused and nervous. And basically, what had happened was that the, someone in the London office had not told the Boston people, although they'd given me a ticket to go and see him, given me an appointment time. Apparently, it had not somehow not got into the agenda of Mr. Bain. So they said, come back following morning. So I went back the following morning. And um there I was, you know, I went through the offices, they were, the offices were quite remarkable, they're beautiful offices, but the associates, the the consultants and the researchers were all hunched together.

• 49:42Richard Koch?

  It was, you know, it was not quite a sweatshop, it was a very nice sweatshop, but you could see that they were either expanding very fast or very tight on the rental cost. Um. And then I went into Bill Bain's office and it was palatial. You know, it was stuffed full of basketball and baseball trophies and insignia and paraphernalia of all sorts. And he was sitting behind this large desk and got up very graciously to meet me and said, do you want anything to drink? I said, no, I don't want anything, thank you. Uh. And then he started talking to me. Well, it was very fortunate for me because I I didn't find out until afterwards. But it turned out that Bill Bain was a historian, that was his undergraduate degree. And in fact, he had

• 50:25Richard Koch?

  spent a year doing postgraduate research, which he eventually gave up because he thought it was terribly boring. And because he got offered a better job as the development director of Vanderbilt University. But during the course of that interview, Bill Bain said something and I thought, well, I want to ask him a question, but he was in full flood. So I let him carry on talking until probably about twenty minutes afterwards. And then I went back to it and said, you know, if I got it right, Mr. Bain, you said earlier such and such and such and such, and I want to ask you a question about that, blah, blah, blah. And he said, you're incredibly unusual. And I said, what? And he said, well, you're a very good listener and not many people are good listeners.

• 51:07Richard Koch?

  And I wasn't aware that I was a good listener. And maybe it was just I was so desperate to get a job that actually I was actually listening. But I was also very curious about the business because right at the start, when I had um joined B C G, I thought, what a wonderful industry this is. It requires no working capital. And uh basically, they charge, you know, huge fees. They don't pay people a hell of a lot of money. Eventually, they give them bonuses, which is where the working capital comes from, the difference between the standard pay and the markup, which is some of which is eventually rebated to the professionals involved. Um. And it's expanding very, very fast. And they've got this great model.

• 51:48Richard Koch?

  Called the growth share matrix because it's got market growth on one axis and it's got the relative market share on the other. So they call it the growth share matrix, but it's more popularly known as the Boston box. And it's this thing which has cash cows, dogs, question marks and stars.

• 52:07Tim Ferriss?

  The one thing I just wanted to say also is an observation of friends who have come out of McKinsey is that it seems that two by two matrices are very popular for organizing thought.

• 52:17Richard Koch?

  Yes. And in fact, McKinsey went one better. They developed an imitation of the Boston box, which was a three by three matrix. But as always, economy is everything and it wasn't as good and it isn't as good in my humble opinion. Anyway, the, the end of the story is that Bill was quite taken with me and I was quite surprised. And he said, I want you to come and talk to Ralph Willard, one of the other founders of Bain and Company. And Ralph was a very jolly chap and we got on very well and so on and so forth. So they actually offered me a job. And then I said to them, well, Ralph said, how much do you want to be paid? And I said, well, I'm earning such and such at Boston Consulting Group,

• 53:01Richard Koch?

  but obviously if I'm going to take a step like this, I want a 50% increase.

• 53:05Speaker 02

  50%?

• 53:06Richard Koch?

  That's ridiculous. And I said, well, you know, maybe you can just make me an advance for, for joining and not consolidate it into the salary. But, you know, at that stage, I was feeling confident that they wanted me. So I sort of raised the stakes a little bit despite the fact that at the beginning of the day, I was totally desperate. And if they'd offered me a job after an hour, I wouldn't have cared what they were going to pay. But anyway, they did eventually pay me quite a large amount of money to join. And at the same time, I then went back to BCG and said, you know, I think you're making a mistake, but if you want me to leave, you know, I've got all this money which I'm due in a few months' time as a bonus and the rest, and please can I have that? And to

• 53:51Richard Koch?

  my surprise, they said, yes, okay. I mean, they were so desperate to get rid of me that they agreed. So I made quite a bit of money from BCG and from Bain and Company. So it was quite, apart from the fact that the previous two or three years had been very, very miserable. And I was, I redoubled my efforts to succeed at BCG. I worked eighty hours a week. I got fat in the face from eating fast food at night. You know, I basically neglected my personal relationship. I stopped exercising. It was a complete disaster. And, you know, if, if I was to give advice to anybody who's in a similar situation, or even a less desperate situation, I would say, if, say, if you're not succeeding in

• 54:34Richard Koch?

  a job, give up and go somewhere else where, you know, your talents can be better appreciated, or your, your talents are more suited to what that firm does. So I just, Tim, I just could not admit failure. This was the thing, you know, I just, to me, personal success was absolutely essential to my happiness. And it affected my self-image and all the rest. And I could not believe that these very intelligent people at BCG couldn't see the things that I could do. And, you know, it would have been far better for me to say, well, you know, they just have a different business model, you know, analysis, quantitative, heavy-duty stuff is their, is their bag. And, uh, you know, it's not something I can do particularly well.

• 55:18Richard Koch?

  And so please give up and stop and, and, you know, decide whether you want to be in the industry or decide, you know, if you, if you do want to be in the industry, go to a competitor. So the long and the short of that story is that it worked out extremely well in the end, but it was absolutely balls-aching, very unpleasant. I wanted my pound of flesh at the end of all the suffering that we'd gone through.

• 55:44Tim Ferriss?

  What did Bain and Company appreciate about you or utilize in you that was not utilized or appreciated at BCG?

• 55:53Richard Koch?

  Oh, it was, it's very simple to answer that because I've always been interested in what I call the theology of business. And by that, I mean the business model that a particular firm has. And BCG and Bain and Company were very, very interesting to me. And this comes back to your first question about what am I good at doing? I actually did analyse, in my mind, not quantitatively, the business model that BCG had and the business model that Bain and Company had. And they used the same concepts. They were all using, both using the the growth share matrix of Boston Box, et cetera, which, incidentally, Bill Bain had helped to originate. So it wasn't really plagiarism.

• 56:36Richard Koch?

  And indeed, BCG had put the stuff out there in the public domain. So it wasn't, you know, they weren't doing anything underhand. But they were using all BCG's concepts. But the firms were completely different. And let me try and describe how they were very different. BCG, as I said before, was a very sort of decentralised company. And the vice presidents who were in charge of particular clients were sort of almost autonomous profit centres. Bruce absolutely believed in the market. He was a, he was a red-toothed capitalist. You know, he really read in tooth and claw. He really believed in competition and so on and so forth.

• 57:18Richard Koch?

  So much so that, that he divided his firm at one stage, and this is quite interesting, this was before my time, but he divided the firm into three different parts. And his view was that if one of those firms had developed a slightly different way of doing things, or if they were successful for any particular reason, then the other firms could learn from that. And the market would clear, as he was fond of saying. And what happened was that he put Bill Bain, whom he had hired from Vanderbilt University, where he was a development director, and met Bill Bain because he was, had the begging bowl out as an alumnus of Vanderbilt, Bruce as an alumnus. And he asked Bruce,

• 58:04Richard Koch?

  Will you give money to Vanderbilt University? And Bruce said, no, but come to Boston and we'll talk about giving you a job. So, you know, that was kind of like the backstory from that point of view. But BCG was very, very decentralized. And even each individual consultant was, or all the professionals were actually profit centers. They were rewarded at the end of the year, not on how well they'd done, not on their team performance, not on anything really, but their, what he called their billability, which is the number of hours that they had actually billed. And incidentally, I was probably one of the most billable people because I was willing to work very long hours.

• 58:47Richard Koch?

  And because initially, at least anyway, people wanted me on their teams. And if they didn't want me, I could even sell my own work. So, so I had to be included in the people who were on that. But it was very, very decentralized. Bain and Company, on the other hand, was a very, very controlled, and I actually called it Stalinist later on, organization where it radiated out from Bill. Bill did all the thinking initially. And then the trusted vice presidents, who included Mitt Romney, who was a great guy, guy I've got tremendous admiration for, and four or five other vice presidents.

• 59:31Richard Koch?

  And the, the formula in Bain and Company was very, very tight and unforgiving, which is that they generated all of their business from a relationship with the chief executive or the head of the company, sometimes a president or the chairman of the company, but usually the chief executive or maybe they have a president and chief executive. And they would not work. For anybody who was not the top dog in the organisation. So they wouldn't work for, you know, the head of Europe or they wouldn't work for the head of manufacturing or marketing or any other function.

• 1:00:11Richard Koch?

  But they had a spiel which they gave to the chief executive of the company, which was, "Mr. Chief Executive, we want you to be very successful because if you're very successful, we will be very successful. We've got this funny little stuff called strategy, which really works and we can explain it to you. But basically you should think of it as a wonderful formula, a kind of like a secret source for increasing the market value of your company, profits in the market value. And if we do the work with your company, your share price will double within the first year or so, or the first two years anyway, and it will continue doubling every few years

• 1:00:52Richard Koch?

  because we have got a way of making a firm much more valuable and we can describe that. But it relies upon you being willing to accept us as equal partners. And again, this was very, very different from the whole of the rest of the industry, which was in a way, salesmen for hire or cabs for hire, that, you know, consultants would do anything as long as they got their daily rate and so on and so forth. They didn't really care too much about which firm they're working for, they would work for competitors and so forth. Bane and Company said, "We will only work for one company in an industry," or later they refined that to a competitive system, which was a slightly more sophisticated way

• 1:01:38Richard Koch?

  of saying industry. "And therefore, you know, we won't work for your competitors, you won't hire our competitors." And so therefore you'd be giving a monopoly on strategy consulting, or any other form of consulting really, to Bane and Company if you decided to hire them. It's incredibly smart. Yeah. It's very smart. And the way in which they got clients, Tim, was that they had no website, but that wasn't unusual at the time. They had no business cards, they had no marketing literature, you know, and the only way, and they were very secretive, the only way in which they got business was by personal recommendation of one chief executive to another chief executive.

• 1:02:24Richard Koch?

  And then within that firm, once the client had been signed on, you know, Guinness or Dun & Bradstreet or Baxter Tram or whoever it was, they would then have almost a military operation where within each client organisation, someone from Bain & Company would be assigned to work alongside or with nominally for, you know, the head of manufacturing or the head of a particular product area or however the firm organised itself. And they would make sure that they understood what that person was thinking, they would help them by gathering

• 1:03:06Richard Koch?

  this very valuable information, which Bain & Company did very, very well, about competitors and customers and costs of the competitors. And they would, you know, develop a relationship. I couldn't believe it when I was told by Bain & Company when I joined, you know, take the head of manufacturing out to dinner and discuss things with. I thought, yeah, the last thing I want to do is have dinner with the head of manufacturing, who's a very boring man. And, you know, it was all part of the job and it was incredibly effective. Because, you know, whereas at BCG, they would go away for six months and they'd come back and give

• 1:03:46Richard Koch?

  a presentation which was dazzling. But then people in the audience, the managers, were free to disagree with what was recommended and often did cast doubt on the credibility of BCG as a result of that, rightly or wrongly, usually wrongly. In Bain & Company, everything had to be pre-wired. So all the work was specified from the top down, but it was validated from the bottom up. So that once you've done a piece of work, you then had to show it to the relatively low-level manager and make sure that they agreed with it. And if they disagreed, they could only disagree about data, they couldn't disagree about concepts because we were the kings of concepts. We knew relative market share was important

• 1:04:29Richard Koch?

  and we could explain why. We weren't unreasonable. But nevertheless, when it eventually got to the chief executive and then later to the board, it had all been pre-wired, which meant that everyone had agreed to everything. And therefore, there was no disagreement. And the only discussion which there'd be at the end of the presentation was about what Bain always used to call next steps. Well, let me tell you what next steps were. Next steps were, this is how we're going to make our next million dollars by consulting to you on this issue. But of course, it was justified because Bain and Company was a fantastic machine for getting consensus in organizations and getting consensus about some very radical strategies, which

• 1:05:13Richard Koch?

  might include getting out of half the businesses that they were in, selling them, or in some way hiving them off, or closing them down if they were cash negative and no one would buy them. And then making acquisitions to strengthen existing businesses, or even to go into new areas, where Bain and Company would do all the investigation, because particularly if it was outside the industry that the company knew about, of course, they had no idea. So it was a wonderful machine for getting growth from existing clients. And this was what Bill Bain always used to say, I have no idea why everyone's interested in new clients. We don't need new clients. We should have built-in growth from existing clients if we're doing our job correctly,

• 1:05:58Richard Koch?

  if their profits are going up, the market value is going up. And of course, they didn't say no to new clients. And they used the existing clients who are satisfied, particularly those who sat as non-executive directors, outside directors on the boards of other companies, to say, you know, I'd like to show you a sample of the work which Bain and Company has done in our industry. And I participated in one of those events in New York, where I was sort of, you know, we were working for an information company, and we went to present to a board of that information company. But one of the people on that board was the chief executive of a scientific company.

• 1:06:41Richard Koch?

  And subsequently, they hired Bain and Company largely because, I think, of the recommendation of the chief executive, and to a small degree, the quality of the dazzling quality of the presentation I made. Well, you know, as a result of that... Bain and Company made me a partner, nominally a partner, a vice president, whereas I went in as a consultant and that would normally take several years. Well, that happened after eighteen months. And it was a very interesting conversation with Bill Bain when he told me that I was going to be a partner of the firm. And what he said to me was, Richard, you know, I'm going to say something which might surprise you, you know, we've had our eye on you ever since you came and talked to

• 1:07:26Richard Koch?

  me, blah, blah, blah, and I want you to be one of my partners. And I thought, you know, this is ridiculous. I, you know, I didn't expect this. And he said, but there is something which we're going to do, and I don't think any other firm in the world has ever done this, not to my knowledge, maybe you can correct me. But what they said was, we are going to promote you, but only in nine months' time. And it's a done deal. You know, there's no question that you'll be one of my partners and I can even give you something to sign and sign something myself. But, you know, if we made you a partner now, people might wonder what on earth we were doing. In that nine months, you've got to behave as though you're already a partner without the authority of being a partner.

• 1:08:10Richard Koch?

  But just through force of personality and through knowing that you are reflecting the Bain way of doing things, you will, when we actually make the announcement that you are going to be a partner of the firm, everyone will say, well, of course, of course, rather than say, how come that Kosher's got promoted? That's unbelievable. So it's, Bill was such a clever man at controlling his organisation. And he didn't work very hard, but he, it didn't work very long anyway, but he gave a great deal of thought to the procedures and to the management of his own company to make sure that everything that happened in Bain and Company had been initiated in

• 1:08:52Richard Koch?

  one way or another by Bill Bain and make sure that that was the thing which was going to make the most money for Bill Bain, for Bain and Company. And also, I'm making it sound as though it's just an incidental thing, but it was very important, it's the whole foundation of it for the client organisation. It was just a fantastically well-run organisation.

• 1:09:12Richard Koch?

  And it grew at forty percent a year for twenty or thirty years, whereas BCG had struggled to grow at twenty percent. Bain and Company fell on hard times, I think in the late nineteen eighties because they did a leveraged buyout, but that's another story. I'm not going to say any more about Bain and Company.

• 1:09:32Tim Ferriss?

  Well, I'm not going to let you off the hook that easily. You said, you explained, rather, what Bill Bain asked of you, to behave like a partner, even though you won't have the official title and we can't make the announcement until nine months hence. In practice, what did that look like? What changed in your behavior or in what you did?

• 1:09:53Richard Koch?

  Oh, it totally changed me. It totally changed me. For one thing, it made me loyal. And I was always someone who was on the verge of committing self destruction, self destructing because, because, you know, I'm a natural rebel, you know, I'm not, I'm a nonconformist, I'm very opinionated and almost unemployable. And that was the conclusion that everyone eventually came to. But, but, you know, in BCG, I was well known for going off script. And I remember one of my appraisals was, you know, most of the time, Richard, he's like a volcano, this guy wrote in a formal written assessment, and I've still

• 1:10:36Richard Koch?

  got the assessment, it's lovely. It said, he's like a volcano, most of the time, he's sort of, you know, working away, and there are no rumblings, and it's all very, very smooth. But occasionally, he erupts like a volcano. And he says something to the client, which is not what we want the client to hear. And he basically goes off a tangent, or he, you know, he has his own view about things. So when I'm with Richard and talking to the chief executive of the new, you know, big information company in Holland or whatever, I am very nervous.

• 1:11:14Richard Koch?

  I never know what Richard's gonna say. In Bain and Company, that was, you know, I'd have been fired if I'd, you know, if I'd have said, you know, my, my vice president said, you know, something and I said, I agree with ninety nine point nine percent of that, but here's a slightly different view on naught point one percent. I'd have been out the door straight away. So it was, it was a complete contrast. So the first difference it made was I was, I felt very loyal to Bill personally and to the organisation, which I'd never really done before. I didn't do loyalty. I didn't really do teamwork very well. So that was the first difference it made. The second difference it made was that I decided that I would become much more

• 1:11:59Richard Koch?

  direct with the people who were working with me. If they were at the same level, if they were below me in the organisation, or even sometimes if they're slightly above me. But I did it very nicely. And so if I thought they were going in the wrong direction, I would say, well, you know, I've been thinking about this, Fred, and I think there's a better way of doing it than this. Instead of interviewing the customers in this segment, we should interview them in that segment. We should ask these questions rather than those questions, et cetera, et cetera. So it made me much more, paradoxically to me, it made me more diplomatic, but it also made me more assertive. And so, you know, that was, it was great.

• 1:12:42Richard Koch?

  I mean, I actually thought, gosh, they're gonna make me a partner and I'm gonna be a very successful partner and that's fantastic. But it made me feel a little cautious because although Bill Bain has signed his bit of paper and all the rest of it, I knew that that was, meant nothing if he, if he wanted to change his mind. So I thought the prize is well within grasp. But I feel confident now that it gave me confidence. And so I was able to do, I was much more effective as a result of that. In fact, I was probably more effective when I wasn't a partner than when I was because I was, I wanted it so much. But at the same time, I felt in some ways, although nobody knew that I had authority, in reality, I did. And that was a tremendous thing.

• 1:13:26Richard Koch?

  And I, I don't understand why firms don't do this more broadly. It's a fantastic way of encouraging personal development and also of keeping people who might otherwise decide to leave before they're given the nod that actually they are really appreciated and they are gonna get promoted.

• 1:13:42Tim Ferriss?

  I was going to ask you more about LEK, which was the consultancy you started, which experienced incredible growth. And we may get to that, but I want to skip ahead a little bit, and I'm going to do that in a foreshadowing fashion by mentioning the 80/20 principle, which we'll come back to. In an interview that I have in front of me, a separate interview, the question is, what book has had the single biggest impact on your career? And you answer my own book, The 80/20 Principle, because it's sold more than a million copies and it's been translated into more than 35 languages. It goes on and on about that, which we're going to return to. And then you say at the end of the answer that many of your books and much of your investing are related to ideas on strategy consulting. And you learn those firsthand,

• 1:14:27Tim Ferriss?

  not from books, but that you can recommend a book called Perspectives on Strategy, edited by Carl Stern and George Stock. Can you speak to what people might learn in that book and why you have recommended it?

• 1:14:41Richard Koch?

  It's a collection of the early perspectives of the Boston Consulting Group. And a perspective was what evangelical group would call a tract, I suppose. It would be something like 500 words, maybe 1,000 words, pretty short. It would be snazily presented in the livery of BCG, which was a very, quite a nice dark green color. And it would be mailed to the senior directors of companies in America and Britain, and then wherever BCG had offices. And the very valuable thing about the book is that a lot of the stuff is by Bruce Henderson himself, but there's also more modern stuff.

• 1:15:25Richard Koch?

  And it outlines the theory that BCG had in the early days, which I think is still entirely valid. Of competition, the experience curve, the Boston box, the grocery matrix, et cetera. And it's just a very, very good primer. And there are many, many books on business strategy, including one which I've written. But I think this is a very, very good thing. And it's very easy to read because it was deliberately designed to do that. Bruce laid out the principles for the perspectives very clearly, which was anything that a chief executive would be likely to agree with was not argued. I mean, it was stated.

• 1:16:08Richard Koch?

  And anything that the chief executive would be likely to disagree with, which was quite a lot, because BCG was on the mission of saying companies should reduce their costs and reduce their prices steadily. Whereas the conventional wisdom in business at that time was if you get a higher price, you know, stick with it and don't worry too much about the costs. And Bruce had a whole theology around that. And it was, it's great because it's a collection of those different perspectives and it's over several years. So you get the more modern stuff as well. I think it was published in 2000 or something like that. So it is difficult to get good books on strategy. There's a, there's a book by someone called Richard, oh God, I can't remember his name,

• 1:16:53Richard Koch?

  called Good Strategy, Bad Strategy. He'll come back to me. But anyway, you can type it into Amazon if you want. Good Strategy, Bad Strategy. That's actually a very good strategy book, very nice short strategy book. And there's my Financial Times Guide to Strategy. We'll give a small plug, dude. Out of print at the moment, but I'm producing the fifth, fifth edition as we, well, not as we speak, but, but at the same time, in the same period of time. Good Strategy, Bad Strategy by Richard Rumelt. Does that sound correct? God, isn't the web amazing? Aren't you amazing?

• 1:17:27Richard Koch?

  It'd be far more impressive if I was actually pressing the keys and came up with that myself, but I don't do that.

• 1:17:33Tim Ferriss?

  Well, I'll give away one of my tricks, and that is if I'm recording an interview like this, I don't use my keyboard. I have my phone on silence so that I can tap the screen without making noise to find things like that.

• 1:17:47Richard Koch?

  Very clever. Well, you do that. You can have, you can have a flunky who did that for you, but it's very impressive that you do it yourself.

• 1:17:53Tim Ferriss?

  That's true. Well, it's just for on-the-spot tap dancing like that. Earlier in the conversation, I made a promise to the listeners, and that was in the form of alluding to knowledge versus principles, which I think is perhaps a useful way to segue to the 80/20 principle. And from mergersandinquisitions.com, which is a great website, the distinction that I've read you drawing is the following. What I learned from consulting is exactly what I've been teaching. Knowledge is great, but principles are better. Principles are ideas that enable you to sort the knowledge, helps you to analyze it and get to the essence of the matter as simply and quickly as possible. Would you like to add anything to why principles

• 1:18:34Tim Ferriss?

  are important? And the second part of that is, how did the 80/20 principle come to be as a book? Because it was a very much, and sort of underground, became an underground bestseller. So principles, anything more that you would like to add? And then where did this book come from?

• 1:18:48Richard Koch?

  No, I think you put it very well. I just think, you know, there are certain meta-principles, and I think there are probably only about half a dozen of them. For the benefit of myself and the people that I work with and invest with, invest in rather, it's basically the 80/20 principle and the STAR principle. So if you know what those are, then you can look at the business in a way that most people don't look at the business very quickly and see whether there's potential for improvement. And we'll talk about that in regard to the eighty twenty principle in a second, no doubt. But how did the book come about? Well, again, that's quite interesting, at least interesting to me.

• 1:19:29Richard Koch?

  Which is that I wrote something called the A to Z of management. Because I had a, an editor who was currently working at Pearson and later left to start his own firm with another editor there. And the editor was called Mark Allen, the other editor was called Richard Burton, very, very skilled guys, very nice guys. And they were looking to sort of, you know, try and get something by me published. And Mark Allen said to me, you've written this thing called the A to Z of management, which is basically a paragraph about various different concepts. And it covered all the principles I could think of.

• 1:20:13Richard Koch?

  It also covered important theorists in business. And it covered anything which was of, of interest in business. And it also covered jargon phrases like, you know, what did, what did people mean by work in progress and stuff like that? Anyway, I'd written half a page on the eighty twenty principle. And I went to see Mark Allen one day in his offices in Covent Garden. And he said to me, Richard, I've got a book for you to write. I said, yeah. And he said, what about writing a book about the eighty twenty principle? Because you've got this half page on it here and it seems to be quite an important thing. You say it's very important and I can understand it's very important.

• 1:20:58Richard Koch?

  So why don't you write a book on that? I said, Mark, I couldn't possibly. I couldn't possibly write a book about the eighty twenty principle. You know, I've said it all in that paragraph. And, you know, I, I could maybe pad it out to a page. You know, if you really put a gun to my head, I could write a chapter. But I'm not going to write a whole bloody book about this because there isn't anything more to say. And he said, well, I'm not so sure about that. Then he decided that they he would go off and start this other publishing company. So he wasn't interested in me doing it for them and they had not got themselves organised.

• 1:21:39Richard Koch?

  So I went to see a guy called Nicholas Brearley, who was the publisher of the eponymous firm, Nicholas Brearley, and very, very, very nice man, but incredibly smart guy. And I'd written a book for him called Managing Without Management, which was a title which he suggested. It was very clever because it basically said managing, in particular middle management, was a complete waste of time. Uh, and so you could manage without it, managing without management. And the book wasn't a huge success, but it sold, I don't know, twenty thousand copies, which was was good enough for for Nicholas Brearley at that time. And I went to see him about another book shortly after I'd had the conversation with Mark Allen.

• 1:22:24Richard Koch?

  And he said, do you have another book in mind? I said, well, not really, but this this sort of idea that someone's given me. And, you know, they've got first dibs on the on publishing it if if I could ever write a book about it. But I don't think I could write a book about it. And then I described him what the eighty twenty principle was. And honestly, I didn't take more than about sixty seconds because there wasn't much to say as far as I was concerned. And he said, the hairs on the back of my head are rising. And I said, what do you mean? I thought I thought he'd lost the plot or something like that. And he said, that can be a big successful book. And I said, no, I mean, yeah, well, maybe, but but, you know. How do I pad it out to a book's length? He said, go and do some research.

• 1:23:10Richard Koch?

  You know, you've mentioned Wilfredo Parater, you know, read the book again, read all the other stuff, read all the stuff on the web, you know. And the truth was that there was a hell of a lot of stuff on the internet. And this was back in nineteen ninety six, book was eventually published in nineteen ninety seven. You know, this was a golden, the beginning of the golden period of the internet. And I, you know, and I hired a researcher and said, find out everything that's going on on the internet, on the eighty twenty principle. At that stage, I didn't know how to use the internet. And so she came back and gave me this whole wodge, the whole file. I said, Diane, is that all about the eighty twenty principle? And she said, yes. And I said, well, maybe I could write a book. So anyway, I went through it all.

• 1:23:55Richard Koch?

  And the more I went into it, the deeper it actually, and the more interesting it was. And so that's how I ended up writing books. So I went back to my original guy, Mark Allen, and said, do you want to publish this book? He said, no, we can't. We've, we've left Pearson at the time. And we haven't started our firm yet. So I went back to Nicholas Breely and he was very pleased. And, and that, you know, the first draft I produced, he said, very, very politely, he said, I think you don't need to go and do some more research. And it was, it was pretty hopeless, actually. But the second draft I took back and he more or less published it as, as it was. Because by that stage, I'd, I'd worked it through.

• 1:24:38Richard Koch?

  And it was a, it was a great thinking exercise for me. And the, the whole point about making a book out of it was that I extended the reach of the principle. So the principle, the basic eighty twenty principles, I'm sure nearly all your listeners know, is that if you look at any particular relationship between sales and another variable, or you look at time and another variable that you might be interested in, it's usually true that there are very few events or data which account for a large majority of the total. And so if you look at the profits of any company by customer.

• 1:25:23Richard Koch?

  Usually, there are a very small number of customers, a very small proportion of the total, who account for eighty percent of the sales and maybe more than a hundred percent of the profits of a company. And likewise, if you do the same thing for products, you're likely to find the same thing. And this was a well-known economic concept. Anyone had been to business school and heard, it was generally called the Pareto Rule at that time. But I wanted to call it the eighty-twenty principle because it was more descriptive. A rule, to me, sounded too deterministic. Principle sounded to me exactly right. And so I actually invented, I think, the eighty-twenty principle. Anyone ever called it that beforehand?

• 1:26:07Richard Koch?

  They would call it the eighty-twenty rule or the Pareto Rule. And so, it was, the idea seemed to me to be applicable well beyond the sphere that had been used before, which was for really analyzing sales and profits. And I said, well, why can't we use the eighty-twenty principle in other areas, in people's personal lives, for example? And so I became quite fascinated by the connection between time and results. And then it was a short hop from that to extend that. So basically, I would say to people, well, the hypothesis, and the whole thing about

• 1:26:49Richard Koch?

  the eighty-twenty principle is not that it's a rule, but it's an observation. So you come up with a hypothesis and then you test whether it's true with data if you possibly can, but with, you know, seeing if you think it really is true, if it's something much more subjective and squishy. So you actually could then say, well, it's probably true, it may be true, that twenty percent of your time generates eighty percent of your useful output. So tell me what the most valuable things are that you do. And I would say that to people at work and they would have no difficulty at all in saying, "Well, it was inventing this new product," or "It was selling a large job to this particular

• 1:27:32Richard Koch?

  customer," or "It was writing some copy which is, you know, very, very effective," or "It was making a website," or whatever it was. And I would say to them, "Well, you know, you've got to do more of that and less of the other stuff." And I'd also say to people that if you manage to do something which is, you know, hugely more valuable than the other stuff, and you do that in half a day, take the rest of the day off. And if you do that for two days, take the rest of the week off, if you want to, you know, if you want to carry on working and do even more, that's right. But, you know, as Parkinson said, work expands to fill the time available, spending expands to fill the budget which you've got to spend it, whether it's inside a firm or it's your own money.

• 1:28:13Richard Koch?

  I was quite interested, incidentally, in hearing an observation which one of your other interviewees said about the Wall Street of the, well, I don't know, was it 1980s or whatever? And that, you know, basically people got very, very used to the money which they'd earned, they were hugely overpaid, but nevertheless, they found ways to use that. And that was a big trap for them, not for him, but for the others. Because what they did was that they got locked into working for Salomon Brothers or Goldman Sachs or whatever. And after a time, they couldn't really leave because their wives or their, their own personal

• 1:28:55Richard Koch?

  tastes had, had developed to such an extent, or their husbands, they needed the money. You know, they had to have half a million dollars a year, they couldn't live on less. So I was saying to people, "Well, let's extend this to your personal life as well." So if time is important at work, then maybe time is important elsewhere. And maybe you get most of your happiness from a relatively small proportion of your time. What are the periods of time where you actually feel that you are being fulfilled, that you feel, you don't notice time escaping, you know, when, when you feel that this is great? And you wake up and you find, you find that, you know, the night's gone.

• 1:29:37Richard Koch?

  It might be playing poker, you know, it might be talking to friends, it might be reading something that's very exciting, might be going to see a movie or whatever. But what are the times that you are happiest? And then just try and multiply those times. And then I said, well, you could apply that to friends. Let's take the eighty twenty hypothesis that you get eighty percent of your relationship satisfaction from twenty percent of people. I mean, it's a bit gross in a way, but it's very true. I mean, I found when talking to people that very often they spent time with people they didn't really like very much. I mean, obviously, sometimes it was their boss. So, you know, that was a disaster. And they bloody well better get a different boss or a different firm.

• 1:30:22Richard Koch?

  But sometimes it was so simple as things like, well, your spouse actually liked these people, but you didn't. So you ended up spending a lot of time with neighbors or with other people or members of his or her family that you didn't really want to spend. And what you really wanted to spend your time on was something different. And so I said to people, well, you know, you might want to be a bit more ruthless about that. And so there's a chapter on happiness in the book, which I was rereading recently. And I think it's actually rather good. I mean, it's taking this sort of rather arcane, dusty economic principle and then seeing whether it could apply to other areas of life. And I invented the concept of happiness islands.

• 1:31:05Richard Koch?

  Well, happiness island is part of your life, which is sort of not the main part of the life. But when you get a huge amount of satisfaction from that. And I said, well, live on those happiness islands and try if possible to make them happiness continents. So if there's a particular type of work which you like doing at work, then try and get yourself in a position where you're spending all your time doing that sort of work. And so on and so forth. And I see it in many ways as a kind of amateur version of the flow idea, which is that, you know, that these times, according to the guy with the unpronounceable name, uh, Mihaly Mikael Cekseth, something like that. Yeah. And he's, he's written a couple of books about this. It all boils down. I mean, I think

• 1:31:50Richard Koch?

  They say eighty twenty principle could be written on one page. I think that could all be written on one page, but but it's a fantastic idea. It's a it's a it's a slightly more sophisticated way of saying what I was trying to say. And there's stuff on there in money and and all the rest of it. So it was a reinterpretation of the principle to apply it to not just to business, but to people's personal lives and to try and say a few things which were really useful and which people could take away, which is what you do, isn't it?

• 1:32:21Tim Ferriss?

  That's what I try to do. That's what I certainly try to do. And for all the reasons you just mentioned and many more, this is why the eighty twenty principle, your book, faces cover out on my bookshelf and has for a very, very long time as a constant reminder. Could you share, just as examples, because it may help people listening, some examples of your own happiness islands or achievement islands?

• 1:32:47Richard Koch?

  Yes, I can do that. The things that I really like doing are writing books and making money and making money through investments, not through gambling or anything like that, and talking to people. I really used to like going to dinner parties in the days when we had dinner parties. I really like to go for long walks with people that are not many people, but a few people that I know. We will discover something that we didn't know we knew beforehand. Those are the things that really are interesting. Doing something like this podcast is a flow activity, as far as I'm concerned, an eighty twenty activity.

• 1:33:29Richard Koch?

  So it's that sort of stuff. It's it's books, it's writing books, and it's also reading books, and it's it's talking to people, and it's also making money through investments.

• 1:33:42Tim Ferriss?

  Do you have any regular or scheduled check-ins or calendared reviews where you assess your life to ensure that you're allocating your time and energy to match what you know to be happiness islands or achievement islands? In other words, how do you use, if you do in any systematic way, the eighty twenty principle in your life?

• 1:34:07Richard Koch?

  No, is the short answer. But let me qualify that a little bit. I do something which is very unsophisticated. Other people have therapists and other people have personal trainers and other people have, you know, quite elaborate systems for for keeping track of their objectives or their concerns, their worries and so on and so forth. I have bike rides. Every day I go for a two hour bike ride in the countryside. It is every day unless I'm in a unless I'm away or unless I'm in Cape Town. I've got a home in Cape Town and it's too dangerous to ride a bicycle there. But everywhere else

• 1:34:47Richard Koch?

  I will ride a bicycle. And I take pretty much the same route every day, very unadventurous. I've got two alternative routes in Portugal, for example. And during those bike rides, something will come up sometimes, not very often, but something will always come up. At the very least, I will work out what I'm going to do that day because that's what I that's one output from a bike ride and it just happens automatically. I don't even have to think about it.

• 1:35:16Tim Ferriss?

  When do you do the bike rides? I presume in the mornings?

• 1:35:19Richard Koch?

  In the morning, yeah. I don't I don't answer emails. I don't look at my phone. I do have a cup of tea and sometimes I take the dog for a walk. But apart from that, it's the bike ride. And it's it's it's wonderful. I mean, you know, I couldn't do without it. And in fact, when I'm away and I can't ride a bicycle, I'm talking to you from Gibraltar, for example, and I do spend a fair bit of time in Gibraltar where I have an apartment. But here it's also too dangerous to ride because the streets are too narrow and there I have to substitute going for a walk or going to the gym. But basically, a form of exercise which is mindless, which is, you know, not not too difficult, but enjoyable,

• 1:36:01Richard Koch?

  where I can just relax and let my unconscious mind do whatever it does. That's how I do those sort of things. And occasionally, I go and sit on my fish pond with a notebook and say, it's time to think about some reflections. I make a point of only doing that when I'm in a good mood. I never do it when I'm actually feeling slightly down. I'm usually in a good mood, but it's something to do when you're being expansive rather than you're doubting yourself. And, you know, I keep those notebooks and very occasionally also, I wake up in the middle of the night and I have thought of something that I had not thought of before. And then I have a notebook by the bed, or if it's not by the bed, it's

• 1:36:45Richard Koch?

  in my office, which is very close to my bedroom. And so I will make a cup of tea, put the lights on, write my thoughts, put the book down, put the lines out, go to sleep. And those thoughts are usually quite seminal. I mean, they're very, very helpful. But it all happens sort of automatically. I don't have any systems or anything like that. Do you?

• 1:37:08Tim Ferriss?

  Well, I would say I have acute hypergraphia and take copious notes, most of which end up never being read, and certainly most of which end up being completely unimportant. But amongst all the garbage, there are occasionally useful things. I find journaling very helpful for me, different forms.

• 1:37:32Richard Koch?

  It's the writing which is important, isn't it? It's the writing. The writing somehow ingrains it on your mind. When you, when you do, do you find that, that?

• 1:37:41Tim Ferriss?

  I do find that.

• 1:37:42Richard Koch?

  It's not, as you say, one may never review the notes. I do actually review my notebooks when I'm on a plane and got nothing better to do and no book to read. But, but it isn't that. It's actually the process of, I think the process of writing, journaling is very, very, very useful. But I don't do it every day and I don't do it systematically. I just do it when I feel the need to do it.

• 1:38:05Tim Ferriss?

  I would say I have two different types of journaling. And then I'd like to ask you about your time at the pond in a moment and just what that actually looks like and maybe some examples from what you've written down. I would say I have two types of journaling. The first is almost entirely like emptying the

• 1:38:22Tim Ferriss?

  The garbage bin on a Mac to purge the system. It is simply to trap my monkey mind and all of the bullets ricocheting around inside my mind on paper so that I can get on with my day in a better fashion. The second type is more deliberate and objective driven, where I might sit down and very explicitly do an 80/20 analysis of the types that you've been describing, looking at how my time is being used, look at my calendar to see if it actually matches what I say is important to me, et cetera. So there are, I'd say there's two main categories.

• 1:39:03Tim Ferriss?

  Morning pages from Julia Cameron's template would be in the former as an example. But when you go to the pond and you sit down and you're in an expansive mood and you journal, what does that look like? Is it a stream of consciousness? Are there certain prompts that you might use? Could you give us any real world examples of what has come from those types of sessions?

• 1:39:25Richard Koch?

  Yes. I mean, what I do is I write reflections and I put the date and then I put numbers and then I just start writing. And, you know, one of the things that comes out from that, which came out from that recently was thinking about my investments. And I was struck by the fact that I was average, to say I was average timing each investment would not be fair, but I was spending a lot of time on stuff that actually wasn't at all important. And I was doing it partly through interest, partly because I perhaps felt some residual sense of obligation to the people who were managing the firm and other shareholders.

• 1:40:07Richard Koch?

  So, you know, one of the things which I decided was I was not going to worry about any companies which were outside the first, you know, half dozen in terms of the value of those companies, unless the value was increasing very fast or had the potential to increase very fast. And the other thing which I realized, because I'm always... You know, almost completely invested was that that was not actually a terribly sensible thing to do. And the next time I have a major realisation, I should be prepared and I should have two or three companies which are new companies, in other words, investments I have not yet made, where they do have the potential to be star businesses or they already are

• 1:40:49Richard Koch?

  star businesses, where I like the people involved. And that's a sin I quite known for me, that I don't invest in things unless I actually like the people. And where, you know, a relatively small amount of money might conceivably be another betfair or whatever. So it's quite easy for me, because I've got a couple of companies that are increasing in value quite fast, and I'm reasonably confident that they will continue to do so the next few years, to be sort of, you know, rather complacent about that. But, you know, in order to maintain the sort of rate of return that I've had historically and that I want, I probably need to find a new, you know, a new betfair or two or three new betfares

• 1:41:30Richard Koch?

  over the next five years. And I should give a bit more attention to trawling for that and talking to my contacts that might conceivably know such companies. And actually, you know, I do get some leads and don't always follow them up very well. So, so, yes, so it can be useful from that point of view. And the other thing which I've realised as a result of journaling in the last few months is that I am too socially isolated. I mean, I've got some very good friends. I don't see them as often as I would like. And because I have such a really nice life, living in very pretty places and living in sunny places generally,

• 1:42:11Richard Koch?

  which is very important for me to be outdoors, so that I can play tennis or ride the bicycle or sit on the fish pond or whatever, it's, I ought to pay more attention to social interaction and to spending more time with the people that I enjoy spending time, but they're not, they're not close to where I am. So those are sort of conclusions which have come up in the last six months. And then there are the more philosophical conclusions which you sometimes come to and which sometimes you write down. For example, One of the things which I've learnt in the last few years is I have been far too much of what I call a controller and far too little of what I call an adventurer.

• 1:42:56Richard Koch?

  And, um, you know, my life has always run upon lines of saying, I must do this, I must achieve this, I must make this sort of amount of money, I must have this type of job, I must do this kind of thing, I must start a company and so on and so forth. But recently, I, I have realised that the people who have most fun in life are more the adventurer type than the controllers. In fact, to come back to something, and I hope we're going to spend a little bit of time on later on, uh, which is my new book, Unreasonable Success and How to Achieve It. There are twenty people who changed the world, in my opinion, in the, in that book. And it is not in the book at all, but it's something which I did after the event.

• 1:43:42Richard Koch?

  I divided those very successful people into controllers and adventurers, and I was quite surprised to find that fourteen of them were actually adventurers in one form or another. And only six of them were, uh, controllers. There were some who were both, but, but, you know, that was the count, taking halves into account. And for example, one of the people who was a controller in the book was a sort of my evil, evil, successful person, uh, which was Vladimir Lenin. And, you know, his life was pretty unpleasant, uh, because he was always trying to control other people and it was, you know, it was a very uphill struggle.

• 1:44:23Richard Koch?

  Uh, and he achieved a great deal in his terms. I mean, not things that I would approve of. But he was the founder of practical communism and he basically made communism a success in very large.

• 1:44:36Richard Koch?

  Parts of the world are success in the sense that they remained communist. And they did develop the countries where perhaps not as fast as they would have developed under a free market system. But, you know, from that point of view, he was, he was very, very successful, but he didn't have much of a great time. Whereas some of the people who were much more freewheeling, for example, the freewheeling Bob Dylan, or even Otto von Bismarck, they, they had much more fun because they, although they were determined to achieve things, they relied upon events flowing their way and they just bided their time until the right moment came along and then they, then they worked, then they basically made a huge effort to control, or not, not control events, but

• 1:45:21Richard Koch?

  to, to actually steer them. One of the great quotes which I like is from Bismarck, who said, "Man cannot control the flow of events, all he can do is ride with them and steer." So I, you know, sometimes you get those sort of kind of philosophical reflections coming up, more often though, probably on a bike ride, and then I might write it down afterwards. But I actually find it quite difficult to be as radical as that, just sitting down and writing. I tend to write, you know, things which are, they're much less important in a way, they're less distant.

• 1:45:58Tim Ferriss?

  Let's, this was on my, my, my next note to segue into, that is the new books. Let's, let's talk about the genesis story. And this is always interesting to me as someone who occasionally tries to wordsmith things. And that is the, the sort of embarrassment of riches that you no doubt have in terms of possible subjects you could explore. So Unreasonable Success and How to Achieve It, you've written many books, why this book?

• 1:46:29Richard Koch?

  I've always been fascinated by success and I've always been fascinated by the discrepancy, really, between, as I see it.

• 1:46:37Richard Koch?

  The arbitrary nature of success in many ways, which is that the people who are successful are not necessarily the people who are most intelligent or most expected to succeed, or who deserve it, you know. And many of the people, many of the 20 people that I highlight in the book, weren't even competent. And Winston Churchill was a prime example of someone who was a complete failure through most of his career. Got one thing right, which was that Hitler was a threat to the world and that he knew how to deal with Hitler. But, but basically, the man was a disaster, and he thought that oratory would propel him to become prime minister, but, you know, as Herbert Asquith said, "It does not matter

• 1:47:21Richard Koch?

  if you speak with the tongues of men and angels, if nobody trusts you." And it was directed exactly at Churchill. So I've always been fascinated by success, but the actual genesis of the book, as you said, came on a train journey. I was travelling from Paris with a friend of mine to Lyon, and I always take a book with me, and I didn't have a book, a new book that I wanted to read, so I took an old book, which was Malcolm Gladwell's Outliers. And you probably remember that in Outliers, the whole thesis is that success derives from deep experience and long exposure to doing something in a very narrow field.

• 1:48:04Richard Koch?

  And he came up with the idea of the 10,000 hours, which is now a trope, something which everyone talks about. And he gave a couple of examples very early on in the book, which resonate very nicely, which are the Beatles, for example, in 1960, they were just a rather poor, high-street band, and then something happened to them, which was that they went off to the strip clubs of Hamburg, and they had to play seven days a week, eight hours a day.

• 1:48:34Richard Koch?

  And as John Lennon's quoted in the book as saying, we couldn't help improve with all of that extra experience. And then he quotes the example of Bill Gates, who because he went to a private school, which unlike the vast majority of schools at the time in America or anywhere else, had got computers, you know, he was able to acquire expertise in coding and and how to use computers. And that was his sort of, you know, he got his 10,000 hours in very, very quickly. So the the problem with that thesis is that it's not universally true. It certainly applies to Bill Gates, it certainly applies to the Beatles, and it applies to some other people as well. But of the people that I looked

• 1:49:18Richard Koch?

  at, that couldn't explain it. And what I did was I took 20 people whose life stories I knew well, some in some cases, I knew them personally, such as Bruce Henderson, Bill Bain, who I've talked about before, who were very important to me and hugely underrated in terms of the impact which they've had on American and world business, in my in my opinion. But I took those people and then I said, would it be possible to do what Malcolm Gladwell set out to do, and in my opinion, did not succeed in doing? Would it be possible to look at the causes of success for those people and identify things which were common to all 20 people, which they all had or did, it might be an experience

• 1:50:01Richard Koch?

  that they had, or it might be an attitude which they had, or it might be a way that they exploited particular opportunities? Would it be possible to look at that and say that there are things which are so universally present that if you want to be what I call unreasonably successful, which is more than you deserve, if you like, terrifically successful in changing the world the way you want to work, change it, it might be a small corner of the world, or it might be a big corner of the world. Would it be possible to isolate the reasons for that? And I looked at fifty possible reasons. For example, I looked at, you know, would you need to be a high risk taker? And the answer was of those twenty people, only nine of them actually took very high risk.

• 1:50:43Richard Koch?

  Of twenty people in my book, um, only, only nine of them actually took uh very high risk. So that went, went away. And then I narrowed it down to nine reasons uh which were universally present in all of the cases. And I did not, I did not throw people out if they didn't meet the nine requirements. I was quite rigorous with myself. I said, no. And the people that, the, the, the players that I took were, besides Bill Burns and Bruce Henderson, there was Jeff Bezos, Otto van Bismarck, Winston Churchill, Mary Curie, uh Leonardo, Leonardo da Vinci, Walt Disney, Bob Dylan, Albert Einstein, Viktor Frankl, the guy who was shoved into a concentration camp by Hitler, but came up with the third wave of psychology after Freud and Adler,

• 1:51:28Richard Koch?

  and was probably the first real existential philosopher. Bruce Henderson, I mentioned, Steve Jobs, John Maynard Keynes, who saved the world from fascism and communism, perhaps as a result of saying that you didn't have to have very high unemployment. Um, and the state could step in and that would be fine um under a liberal capitalist regime. Lenin, I mentioned, Madonna, Nelson Mandela, totally obscure guy, who was imprisoned on Robben Island seventeen years, but somehow managed to negotiate uh a democracy in South Africa. J K Rowling, Helena Rubinstein formed the eponymous uh cosmetics company before anybody else had a cosmetics company.

• 1:52:12Richard Koch?

  The person who I think was most successful of all of my twenty people, Paul of Tarsus. I don't like calling him Saint Paul because it makes him sound, you know, establishment figure. He was never an establishment figure. He had this vision of the living Christ and he preached that throughout the Roman world. But he did something that none of the other followers of Jesus did, which, as you said, you know, following a Jewish customer base, if you like, is not the way to make a new religion take off. We, we don't want to be a very small sect within Judaism. I actually want to convert people in the whole world. And therefore, what we need to do is to turn, you know, that sort of Jewish religion that Jesus had, had, had been enveloped within.

• 1:52:59Richard Koch?

  And take away from that the things which actually were universally applicable. So, you know, without Paul, what eventually emerged as Christianity would never have either achieved liftoff nor transcended its Jewish roots. So fantastically successful, you know, I mean, who would have thought that Christianity could actually succeed? It was just a miracle. Margaret Thatcher was the other, was the other one of the 20 people. So I came up with these nine things which were common to all of them. And I'll, I'll rattle through those if, if, if you like.

• 1:53:34Tim Ferriss?

  Definitely. Feel free to list the nine, but before we do that, if you could just take a moment to define success, since many people define success differently, could you speak to what that means in the context of unreasonable success? Is it achieving what they set out to do? Or is it something else? And then would, I would love to know what the, the nine characteristics are.

• 1:53:58Richard Koch?

  Yes, it is. I think success is very subjective and can only be the person's objectives. And, you know, I, I mean, people said to me, why, how on earth can you put Lenin in the book? And in fact, at one stage I had Hitler in the book and the publishers insisted on it being thrown out because they said the booksellers would never sell it if it was in the book. I said, well, we don't like Hitler, in favor of Hitler. I said, no, Hitler's got to go. So it's, it's value free in the sense that it is what they achieved which changed the world the way they wanted to change it, whether that was a good thing or a bad thing or, or an indifferent thing. That's, that's unreasonable success in one definition. Success is a, is a whole continuum as far as I'm concerned.

• 1:54:40Richard Koch?

  And, you know, I'm not against minor successes at all, that absolutely great. But what I was really interested in, in order to establish the, the most important causes of major success is what I called unreasonable success. And I had four criteria for that. You could say that in a word, it's undeserved success, but that's, that's a little bit unfair. Firstly, it's such success in changing the world. It seems unreasonable for one individual to do that. I mean, we're, we live in a world which is quite collective and which is governed by culture and constraints which are quite immovable. We think the world's changing very fast, but in many ways the world doesn't change very fast. And then suddenly it does.

• 1:55:22Richard Koch?

  And what usually is behind that is not a huge number of people doing something. It's an individual deciding to do something and managing to persuade other people to do that. So it's unreasonable in the sense that one person has all of that impact. Secondly, it's success that is unexpected and was not predicted when the individual was young or early in their career. So it's kind of, you know, it's success which comes from nowhere. Thirdly, it's success that goes well beyond what the individual's skills and performance seem to warrant. And Winston Churchill, a jolly good example of that. Some would say that the British Prime Minister Boris Johnson is an example of that, completely

• 1:56:03Richard Koch?

  disastrous Foreign Secretary, probably completely incompetent when he's dealing with the coronavirus. But nevertheless, I think may well go down in history as a great Prime Minister because he has certain objectives that he wants to achieve, like making sure Britain did leave the European Union and maybe doing something about the excessive price of housing in Britain. The fact that it's almost impossible for young people to actually buy a house these days. And also, you know, Britain's a hugely over-centralised country, London-centric country, and there are left behind areas of Britain, which basically is most of the rest that's not in the south-east of Britain. And I think Boris Johnson wants to do something about that.

• 1:56:46Richard Koch?

  And if he's able to do that, that would be a fantastic achievement. I know that you're interested in very practical things. So in the book I discuss what do you do if you don't have self-belief? And for example, one of the things that you can do is to realise it has to be in a specific domain or context. And so you've got to identify that context where you could really change things. Secondly, find a fantasy mentor. Now, this is quite an, I think it's quite an interesting and perhaps original concept. I was driven to it by studying Bob Dylan. Because here this guy arrived in New York, completely unknown, 19 years old.

• 1:57:29Richard Koch?

  But with a fantastically high ambition. And one of the things which he did was to seek out Woody Guthrie, who was probably the template that he wanted, which was Woody Guthrie had been not only a folk singer, but also a protester really, and also someone who wrote his own songs. And in fact, that was very unusual at the time, and folk songs were meant to be sort of, they rose from the folk, not from individuals. And Guthrie actually changed that. He wrote a lot of original songs. And Dylan did too. He started writing his own songs, one of which was called The Ode to Woody. And he went to the hospital in New Jersey where Woody Guthrie was suffering from a

• 1:58:12Richard Koch?

  terrible, terrible disease called Huntington's Syndrome. And whether or not Guthrie was really aware that Dylan was there, whether he actually thought Dylan was going to be the new Woody Guthrie is really unclear. But it's curiously irrelevant as well, because, because Bob Dylan took from that template. That's what he had to do. He had to write his own original songs. He had to claim the heritage of Guthrie as some, something which would perhaps get him some publicity and attention. And somehow he managed to get a contract with the, all of the folk labels rejected him, but Columbia Records, which was a blue chip, you know, firm, obviously, signed him.

• 1:58:57Richard Koch?

  And then, you know, that gave him confidence and it gave him contacts and it gave him gigs and goodness knows what else. And he was able to produce albums and, and, you know, then he was made. And also, of course, he hijacked, in a sense, the protest movement with songs like, you know, Blowing in the Wind, et cetera, which made him, according to certain people, the voice of the generation. So it's another way to find a fantasy mentor. Thirdly, to search for transforming experiences, and I'll say something about that in a minute. And fourthly, to attract well-deserved praise, and I'll say something about one breakthrough achievement also in a moment. And then narrow your focus until your work is unique.

• 1:59:41Richard Koch?

  Well, this, these are, some of those are landmarks as well. So the first one being self-belief. The second one is Olympian expectations, that you expect a huge amount from yourself and then from other people. And the high priest of high expectations is probably Jeff Bezos, who's always banging on about this. And, you know, really believes everyone in his senior management team has to be an absolute A player, class A player. And he says, you know, if you put someone who's not used to high expectations on a high expectations team, they will adapt. But the reverse is also true. If you have people who are not high expectation people, then people's standards will slip.

• 2:00:25Richard Koch?

  And one thing that Bezos has been incredibly good at doing is having the highest possible standards. You know, his mantra is customer service and unbeatable prices, and he's totally inflexible on all that. So the second thing is Olympian expectations. The third one, which is particularly interesting because it's really original, I think, and I was thrilled to discover this in my research, is transforming experiences. Every single one of these people had actually an experience which transformed them in the sense that they went into the experience as one sort of person and they came out as another sort of person, or as someone who is a hundred times more powerful or more effective. Every single one of them had that experience.

• 2:01:10Richard Koch?

  And again, to take Bezos as an example of that. Before he founded Amazon, he was a failed investment banker aged 26, and a headhunter decided to send him as a last resort to see a guy called David Shaw, who had founded a countercultural quantitative investment hedge fund. And Shaw realised, before anyone else did, by about 1992, that the internet was going to be huge, and that it could be huge, not just for information and all other things, but for selling things, for retailing.

• 2:01:50Richard Koch?

  And so his idea was that that his firm, which was called Desco, D Shaw and Company, should develop a program for selling over the internet and then it should start a company to do that. And he put Bezos as the project leader on that and he and Bezos got on very well, like a house on fire, the same extremely quantitative, extremely nerdy, extremely ambitious sort of people. And between the two of them, they developed the format for Amazon. And they decided that the first category that they would go into was books. And they decided

• 2:02:31Richard Koch?

  that they would allow people to write reviews on the sites, et cetera, et cetera, et cetera. It was Amazon blueprint as it happened. And of course, David Shaw wanted that to happen within Desco. But one day, Bezos went to David and said, I really want to do it myself. And David Shaw took him for a two hour walk around Central Park in which he tried to dissuade him. But incredibly generously, David Shaw allowed Bezos to go off and found Amazon. He didn't even ask for a share in the company. But then that was David Shaw. He was a very, very self competent guy and his firm has been amazingly successful anyway.

• 2:03:13Richard Koch?

  So that was a transforming experience for Bezos. We talked earlier about Bill Bain. Transforming experience for him was getting hired by BCG, by Bruce Henderson, when he was the completely unqualified guy who'd never done any business, never done a business degree, didn't understand economics or whatever, managed a history researcher who managed to get a job as a development officer at Vanderbilt University, where he met Bruce Henderson.

• 2:03:43Richard Koch?

  And Bruce Henderson, who had a tremendous nose for talent, then decided to hire Bill Bain. And Bill Bain talked to Boston Consulting Group, BCG, like a duck to water. Because he was a very, very smart guy. And because the power of the concepts, the concepts were so great. And Bill and Bruce developed them together, essentially. And then Bill decided to do the dirty on Bruce and leave and form his own firm. We would never have heard of Bill Bain if it had not been for Bruce Henderson, this meeting him and deciding to hire him and the formative experience of working within BCG.

• 2:04:21Tim Ferriss?

  Let me ask you a question, if I could, Richard, and I imagine you you might get to this. And I I'm sure you have an answer for it. But before we move ahead, if someone has not had a transforming experience, one might wonder, if they're listening to this, is it possible to engineer a transforming experience? Or do I sit on my hands and wait for lady luck to smile upon me?

• 2:04:45Richard Koch?

  Absolutely, that's the whole point. I mean, one of the things I say in the book is that the whole point of trying to identify these nine landmarks is that the people who actually visited them didn't intend to. And, you know, they didn't actually say, I need a transforming experience, let's have one. They happened to them. I mean, for example, the transforming experience of Margaret Thatcher was having the Falkland Islands invaded by General Gutiérrez of Argentina. And she said that was the worst moment of her life, but it was absolutely the making, as it happened, of her and the experience of living through that and commanding the armed forces and doing what everyone said was impossible, which was recovering the

• 2:05:29Richard Koch?

  the islands, made it possible for her then to do what she really wanted to do, which was, in her opinion, reverse national decline of Britain. So, yes, the people who had these transforming experiences did not engineer them. But having seen how important it is.

• 2:05:47Richard Koch?

  Understanding that you cannot, in my opinion, admittedly from relatively small sample, but it's amazing that every single one of these people had a transforming experience, which is described in the book, and I did not fake it. I just, you know, I didn't throw anyone out because they hadn't had a transforming experience and I stuck to the rules. You can then say, well, I better have a transforming experience, haven't I? And then you come to the question, well, what is the most likely type of transforming experience which will put me in luck's path in order to then become much more powerful? So it could be going to a particular university and studying something which is very arcane

• 2:06:27Richard Koch?

  and unusual. It could be finding a very high-growth firm like BCG or Boston Consulting Group or DE Shaw and Company and then joining that firm when it's still very young because you won't be on the forefront of developing. You see, the thing about companies in their early days is that they don't know what they're doing. And so if you don't know what you're doing, you can be very creative about it. And if you're involved in that process, you discover things that you never knew that you had. And not only that, you become identified with them and you become powerful and you become perhaps a large shareholder in the company. And it's completely different from joining a company which is, you know, the

• 2:07:11Richard Koch?

  on tram lines, where basically it's not going to do anything radical and anything new. It's so exciting to actually be part of the company that's growing very fast, doesn't really know what it's doing, but has got something, some rare knowledge, which actually means that it can be very, very successful. And it doesn't have to be a company, it could be a social organisation, it could be a way of thinking, it could be anything that's growing very fast. And where it's unformed and where you think you've got some affinity with it and the ability to contribute and be creative. It's not easy to specify what someone's transforming experience should be, but I've tried it on a few friends and good acquaintances.

• 2:07:54Richard Koch?

  And it's amazing that actually we do in the end come up with something which might actually work in some cases has.

• 2:08:01Tim Ferriss?

  Before we get to the fourth, I just want to say a few things. The first is that my experience maps very well to a few of the things that you just described in the sense that when I was graduating from college and was suffering from all sorts of quarter-life crisis existential angst about what to do with my life. And I asked a mentor at the time what I should do, what type of sector I should go into. And his answer was, it doesn't matter as long as it's growing very quickly. You want to be in something that is growing quickly, not in a sector that is in decline or stagnant. And that ended up being exceptional advice. And I've found that it also applies to where you place yourself.

• 2:08:44Tim Ferriss?

  That is to say, one of the reasons, by example, that I left San Francisco after effectively a decade was that I felt like it was a place experiencing some degree of stagnation or even in decline. And I moved to Austin, Texas, which was very much a startup of a city. It was rapidly growing, expanding, where it was still taking shape and still could be shaped. So I just wanted to reinforce what you said. And on that point, or I should say, moving on from that point, what is the fourth of the nine landmarks?

• 2:09:18Richard Koch?

  Yes, I mean, growth is growth is everything. I mean, it ties in with the start principle. Yes, the fourth one is one breakthrough achievement. Now, this is different, Tim, from the other eight. Landmarks in that it is not a how to do it, it's a what to do. And in some ways, it's a bit odd of me to put it forth because it's the culmination of everything else. And all the others really lead to this, but I wanted to put it in the book fairly early. Because I wanted people to be thinking about this as they go through. Which is, you know, what on earth are you going to do to change the world? And you're not going to succeed unless it's something really dramatic.

• 2:10:03Richard Koch?

  Or you're not going to succeed in being unreasonably successful. So you need to start thinking about that. It might take you a decade, it might take you several decades to actually work out what it is. But it's, it has to be something that you believe needs to be done. It's not a way of making you successful. It's a way of changing the world. And if you define it in those terms, it's again, it's surprising. You can actually come to some kind of resolution, some kind of opinion. And for example, once Lenin had had his transforming experience, which was the hanging of his beloved elder brother that he idolized and adored. Because he was implicated in an assassination attempt at the Tsar.

• 2:10:50Richard Koch?

  When he was 16 years old, Lenin heard that his brother had been hanged. Instantly, he decided that his whole purpose in life was to smash the bourgeoisie and to cause revolution in Russia. That was his, and it was a ridiculous, you know, 16 year old school boy, ridiculous idea. And he wasn't political at all before. He wasn't, he was a very nice sort of, you know, everyone liked him. But he became very bitter and twisted, but also very effective. So it's, it's one breakthrough achievement, which, and it's not two, it's not three, and it's not one every five years. It's something that you do. Which it actually is going to in some way change, change the world. I mean, my, my breakthrough

• 2:11:33Richard Koch?

  achievement was starting or co-starting L E K. It's not on the comparable scale with the people in the book, but nevertheless, it was, you know, a very successful firm which gave huge opportunity to hundreds or thousands of young people really who were trained and developed in that way. And it also, you know, made an impact on the corporate world as well. We, we invented the idea of mergers and acquisition strategy consulting, which is completely different from anything that anyone else had done. So one breakthrough achievement is the fourth one. The fifth one is make your own trial, which is, you know, basically become bloody minded and work out a way of doing something that goes

• 2:12:15Richard Koch?

  off path from everyone else. And I describe how to do that. The sixth one is to find and drive your personal vehicle. Again, one of the discoveries in the book is every one of these 20 people had some kind of vehicle, which in some ways, sometimes it was a concept. More often, it was an organisation of some sort of company, if it's in the business sphere, or an organisation more broadly defined if it isn't. The British state, for example, was the vehicle for Margaret Thatcher and for, and for Winston Churchill, together with a particularly eclectic sense of, you know, what they were trying to do. The whole point

• 2:12:56Richard Koch?

  about a personal vehicle is that the paradox of the individual who actually does manage to change the world is that they can't do it on their own. But on the other hand, it doesn't get averaged. It's not sort of a committee deciding what to do. So someone like Jeff Bezos decides to make internet retailing the thing which he does and the thing that, you know, the everything, everything store was the name that they gave it originally. And not just to be a successful internet retailer within books, but to be a successful retailer on the internet everywhere and to be totally dominant in doing it.

• 2:13:36Richard Koch?

  You know, an incredibly ambitious thing, but in order to do that, he needed to have an organization which was totally under his control. Just the same way that Lenin needed to have the Bolsheviks. You know, a group of people who were totally dedicated to Lenin, not very many of them, but a couple of thousand. And that is necessary so that you you overcome the inertia that society and culture has. So that an individual can change things by being very determined about it, but they don't have to do it all themselves. And the choice of the vehicle is terribly important.

• 2:14:15Tim Ferriss?

  May I ask, just before we move on, is there, are there any particular unusual or unorthodox examples that come to mind for both make your own trail and find and drive your personal vehicle, if you could give perhaps one for one for each?

• 2:14:32Richard Koch?

  Yes, I mean, your your own trail is is very much, I think, Walt Disneyland. I don't mean, I do actually mean Disneyland. The thing about Walt Disney is that he couldn't decide what he wanted to do initially. He was a very good actor when he was in high school and he used to do double acts with a friend of his, which were, you know, garnered a huge amount of praise. And then he decided that he actually wanted to be an artist, but then he narrowed that down to being a cartoonist. But his firm, which he started, his studio, which he started in, I think, nineteen twenty three in Los Angeles, was not very successful for the first few years.

• 2:15:15Richard Koch?

  The big breakthrough that they came up with was Mickey Mouse. Mickey Mouse made all the difference because they gave a ridiculous story about a a mouse who wanted to woo a lady mouse by flying a plane. It was a really silly story. But what Disney did was not only sort of this film called Plain Crazy, which he turned into a very expensive film, which almost bankrupted him and his brother and various other people. But he decided to give voices to the characters from the screen, which which people had done before, but never with cartoons. So that was the sort of, you know, that was

• 2:15:53Richard Koch?

  his personal trail. In the nineteen forties, he became disillusioned with Disney as a corporation. It was a very successful corporation by that stage. But nevertheless, he was disillusioned with the fact that that they were trying to take him away from the studio. He didn't have the sort of excitement of doing that. He didn't really feel that he was creating something new. And so he went into, you know, to find his own personal trail. He actually spent quite a bit of time with Salvador Dali and they created a very surrealist movie,

• 2:16:34Richard Koch?

  which then the board of Disney turned down. And Walt Disney was outraged by that. And he had to tell Salvador that, you know, they did not think that having a board approve it was anything other than a formality, but that the board said, no, you lost your marbles, you know, as Peterson Waterman would say later, stick to the knitting, etc. They didn't use those words, but that was the, that was what they said. That's what they meant. And so Walt Disney decided to go off and do something completely and utterly different, which was invent Disneyland. Until then, amusement parks had been the province, as Disney called

• 2:17:16Richard Koch?

  them, of hard faced men who basically were thugs. But what he wanted to do was create something which would be a monument to the past, the present, and the future of America, and all that was best in America. Now, you know, the first time I ever went to Disneyland, which was in nineteen sixty nine, I hated it. I thought it was too American and too plastic and all the rest of it. But it was a fantastic achievement in the early nineteen fifties and hugely successful commercially. Again, he was making his own trail. The board again refused to invest in this. They refused to put up the capital for all the exploratory

• 2:17:57Richard Koch?

  work, for all the imagination that had to go into it, for building Main Street and the fire station and. You know, Abraham Lincoln and all the rest of it. They said, no, we're not going to approve this, Walt. And Walt said, well, screw you, in effect. I will fund it myself. And so he sold his houses. He sort of, you know, took second mortgages rather on his houses. He sold one of them, took a second mortgage on the first house. He found investors who would do this. And eventually, at the last minute, the Disney Corporation decided that they would come on board as well, when they saw it was inevitable it was going to happen.

• 2:18:38Richard Koch?

  They initially refused to let him use the characters, Snow White and Donald Duck and all the rest of it. They said, no, if you do that, we'll sue you. So, you know, if Disneyland had failed, which was eminently possible, Disney would have been ruined. And indeed, the parent corporation might have been in some trouble one way or the other. But, but, but, you know, that was finding his own trail, because he had this vision and he wanted to pursue it. And it was nuts, basically. So that's an example of making your own trail. Finding and driving your own personal vehicle. Well, I think actually Lenin is

• 2:19:17Richard Koch?

  jolly good example of that. It was the Bolsheviks. You know, initially, the dissident revolutionaries in exile around about nineteen hundred, etc., were dominated by people he later called the Mensheviks, by social revolutionists who were not as extreme and uncompromising as Lenin. And there was a conference, I think in nineteen oh three or something like that, at which Lenin deliberately antagonized the other people and said, you know, I want to have my own party. I'm going to split the revolutionaries. And they said, don't do that. We've got, you know, there aren't very many of us. Yeah, please don't do that.

• 2:20:01Richard Koch?

  But he said, no, I can demonstrate that if I have, you know, a thousand people who are dedicated to me and to my way of doing things, we can have revolution in Russia. Now, absurd, because there are hundreds of millions of people in the Russian Empire. And how could it be that a thousand people could actually change that and make successful revolution? But Lenin had an answer to that, and it was a very good answer, which was, he said, look, Russia is a very backward country. It's an autocracy. It's not like Germany or France or Britain where, you know, there are lots and lots of different centers of power. All of the power is concentrated in the Tsarist army and the bureaucracy.

• 2:20:46Richard Koch?

  And there are only about 2,000 people in Russia who actually control things. There are no independent centers of of social pluralism. I'm sure he didn't use that word. But, you know, basically, it's a very top-down state. And if 2,000 people can rule Russia, why not us?

• 2:21:12Richard Koch?

  And that was his theory and actually proved to be proved to be absolutely correct. So his vehicle was splitting the revolutionary movement, but having a group of people who are absolutely dedicated to him and got shot if they didn't, if they weren't. So the vehicle is very, very important. The vehicle doesn't necessarily have to be very large, but it hugely augments the power of the individual. But it's not a compromise. You know, the vehicle must be totally the vehicle in the same way that Bain and Company was Bill Bain's vehicle. You know, you stepped out of line with Bill Bain, you didn't get shot, but you certainly got fired. And so on and so forth. Boston Consulting Group was Bruce Henderson's vehicle. He did it a different way. It was, you know, more "Let a Thousand Flowers Bloom",

• 2:21:53Richard Koch?

  but nevertheless, unless you were interested in developing the concepts, which was Bruce's thing, then you weren't going to succeed. And he got people who are very good at doing it. Can I move on to the next three? I'm sorry, I'm probably taking too much time.

• 2:22:09Tim Ferriss?

  Oh, no, that's that's totally fine. That's why this this conversation is long form. So let's move on to the next one.

• 2:22:14Richard Koch?

  Okay, the seventh one is thrive on setbacks. And this doesn't sound terribly original, but it is terribly important. You remember that Nicholas Nassim Taleb wrote a book called Anti-Fragile, which I think is probably his best book.

• 2:22:26Tim Ferriss?

  I do.

• 2:22:27Richard Koch?

  And the thesis behind that, as you know, is that resilience is not the point. You actually have to like setbacks. And the reason that setbacks can be very helpful is is two reasons. One is they give you feedback and might tell you that you're off, you know, you're on the wrong path. And the other thing is that is that either you're on the wrong path or you've got the wrong tactics and it's quite important to distinguish between those two. Or that, in fact, the fact that you've been unsuccessful in a big way means that you're going to be very successful in a big way. It's quite difficult to describe. I also think about Winston Churchill and his wonderful failures. He went away from those failures, obviously a bit depressed at times.

• 2:23:12Richard Koch?

  He went and did something completely different for a time, getting out of politics after he'd ruined the Gallipoli campaign, the Dardanelles campaign in 1915 and sent, you know, several thousand people to their deaths from a harebrained scheme that he'd invented. And he got out of politics for a time. He joined the regular army and he went to the, he went to the Western Front. In 1929, he was on the verge of bankruptcy as a result of having invested heavily in stocks in 1928 and when the crash came along, Wall Street crash, he was almost bankrupt. He decided to, and also he was very unpopular with his fellow Conservative leaders at

• 2:23:55Richard Koch?

  that time because he'd made a number of mistakes in 1925 in going on to the gold standard for Britain and in antagonising the miners, leading to the general strike of 1926 and alienating the whole of the organised labour movement. So he was unpopular with his party, he was on the verge of bankruptcy. He went off and did a huge lecture tour of America, which was very successful. And, and then he got run over on Fifth Avenue by a car and suffered some quite serious injuries, but battered and bruised, he gone up and did it again. And you can see from what he writes that he thinks what's happening to him is terribly important. And most people would say, no, this is a semi-comical drunk who's basically had a series of failures. But.

• 2:24:39Richard Koch?

  You know, Winston Churchill didn't see it that way. Very, very interesting, the psychology of not being resilient, but actually really liking failures because they, they make you seem important in some ways. And then the last two are acquiring unique intuition, which requires deep knowledge. And here I think that I overlap a little bit with Malcolm Gladwell. You know, you really do, the quality of intuition is a function of the degree of experience that you've had in a very narrow field, but also your willingness to take notice of intuition, which some people do and some people don't. And the last of them is distort reality, which is Steve Jobs's phrase, of course, based on Star Trek. But

• 2:25:21Richard Koch?

  what distort reality means is refusing to accept current reality and redefining a way of, of making that different and convincing your followers in particular that you know how to get around or distort reality, convincing them that you have a reality distortion field. It works. It's just amazing. And Bruce Henderson did that. Bill Bain does that. All the other people in the book had got a way of, of overcoming what was the incredulity of other people that they could actually really change the world in a major way.

• 2:25:56Tim Ferriss?

  I would love to make a few observations based on a number of things that you shared. And also I'm going to follow that by asking you for an example of acquiring unique intuition, because this is of great interest to me. But I want to mention, one, a piece of trivia for people that ties into a name that came up several times, Jeff Bezos, thriving on setbacks, although he didn't come up in that particular landmark description. If you go to relentless.com, it will forward to where? To amazon.com. So relentless.com is one of the first domain

• 2:26:36Tim Ferriss?

  names pointed to that website. And what, what strikes me is that many of these landmarks are reinforcing for one another, right? So you have, let's just say, self-belief, Olympian expectations. And I'm going to group them in a very deliberate way. Self-belief, Olympian expectations, one breakthrough achievement, make your own trail, find and drive a personal vehicle, thrive on setbacks.

• 2:27:04Tim Ferriss?

  And let's take distort reality because I'm not yet familiar enough with the acquire unique intuition, but all of those to some degree seem to be enormously enabled when you have a longer term vision and horizon in mind than your possible competition. So if you look at Jeff Bezos, right, he is one of the few examples of chief executive officers who have been given a pass by Wall Street. I mean, he's convinced his investors, if you go back and read his annual letters, which I encourage everyone to do, you can find a PDF of all past Amazon annual letters. There was always an emphasis on long term time horizon, longer term than a quarter, longer term than a year, always longer term.

• 2:27:49Tim Ferriss?

  Bob Iger at Disney is another great example of this. Toby Lutke of Shopify is another incredible example of this. And it just strikes me that this longer term vision and time horizon enables a lot of these. And without that, if you are in any sense feeling compelled to rush, that you disable some of these landmarks. So that's just something that came to mind as you were describing these.

• 2:28:15Richard Koch?

  I couldn't agree more. I mean, that's absolutely true. You need a long time horizon. You need to expect that you're going to have massive impact, but it might take a very long time. But you need to be sure about what you're trying to do, and you need to be sure that you'll get there. But, you know, time is kind of, you know, there's lots of time.

• 2:28:33Tim Ferriss?

  Yeah. So acquiring unique intuition, could you perhaps give us an example of that that you like? And if there's one outside of Steve Jobs, that'd be great, but you could use Steve Jobs if you like.

• 2:28:44Richard Koch?

  I think Jobs is a great illustration of that. But, but I'll take Nelson Mandela as my example on this. Nelson Mandela was a leading member of the ANC who got caught and convicted and sent off to prison.

• 2:29:02Richard Koch?

  Total of, I think, nineteen years in prison, a life sentence, actually. Uh, he was quite lucky to escape the noose, and we were very lucky that he did. He was on uh this island called Robben Island, which I visited off Cape Town. It's, you know, it's a short boat ride away from Cape Town, maybe half an hour at most. But it's a world away and it's a nasty, horrible stark. It's basically uh, it's a scrapyard, essentially. I mean, it's got, it's got rocks, a lot of rocks, and that's it. I visited the cell in which he'd, he'd been um incarcerated and it's so small. You wonder how he could possibly have kept his self-respect.

• 2:29:44Richard Koch?

  But during that period of time, something very interesting happened. The leaders of South Africa, including P W Botha, who was reckoned to be the great crocodile, sort of, you know, very, very hostile to change, actually realized that they'd painted themselves into a corner. And that they didn't want to have the possibility of um bloody revolution and being driven into the sea as they, as they saw it by the population of South Africa. And the whites were, you know, maybe five million people against fifty million plus who were blacks broadly defined. And the ANC were ratcheting up violence.

• 2:30:30Richard Koch?

  And the ANC were controlled by all of the Tambo in Lusaka, some distance away. And here was this Nelson Mandela guy. And he was, when he was in prison on Robben Island, some interesting things happened. One is that he acquired the charisma of the sort of, you know, prison hero. Uh, so that within the ANC, he was viewed as the natural leader. Another interesting thing which has happened was that there were various outside forces, including the British Commonwealth, that in the nineteen eighties sent people to Robben Island to talk to Mandela and try and see whether, you know, there was any route forward

• 2:31:13Richard Koch?

  there, because they couldn't speak to the guys in exile in Lusaka or wherever they were. And those guys were totally uncompromising and were trying to cause civil war. And they wouldn't have got anywhere. And so there were a group of people who who went, there was a group from the Commonwealth called the eminent persons group, very self-deprecating. And these eminent people went and of course they talked to Nelson Mandela because he was the, you know, he was recognised to be almost the shop steward of the prisoners. And he'd formed a sort of university there where they, you know, basically developed knowledge

• 2:31:53Richard Koch?

  of this, that and the other. And somehow Nelson got the intuition that these people actually wanted a deal. They didn't want this to be continued forever. And they were willing to compromise in some way, that the hardline nationalists who were nasty horrible racists do apartheid and they shop people and they were extremely unpleasant, there's no doubt about it. These people actually wanted a solution. And he was the first person to realise that. The ANC had always said, and Nelson Mandela had always said, we will not compromise. But when he met some of these people from the Commonwealth and

• 2:32:33Richard Koch?

  when he met later some of the senior ministers from the government of the nationalist party, the ruling party, he suddenly realised that a deal was possible. And he said to them, you know,

• 2:32:51Richard Koch?

  If you really want to deal, you're going to have to have one person, one vote. And they said, we couldn't possibly have that democracy. No, we don't want democracy. There are more blacks than whites. We can't possibly do that. But Nelson stuck to that. And eventually he formed personal relationships with the head of the secret service, the secret police, as it were, with the minister who was responsible for justice, with the minister who was responsible for state security, including the prisons, and eventually with P W Botha himself. And it was all based on this intuition that perhaps they could reach a deal. And nobody else had that intuition.

• 2:33:35Richard Koch?

  Nobody but Nelson Mandela actually thought it was worthwhile pursuing talks with those people. And it took five years. But in the end, his intuition won out. And the result was that instead of having a war and bloody bloodshed going on and possible revolution, and the only question for people really was whether that would be five years or 50 years before the whites would be thrown out and massacred. Instead of that, you might have a transition to black majority rule. And that that could be done in a controlled way, where F W de Klerk, who succeeded Botha, would be the vice president

• 2:34:19Richard Koch?

  and effectively the mentor of Nelson Mandela. I've talked personally to F W de Klerk about these days. For some reason, I had an opportunity to do that. And he was quite clear about it. If it had not have been for Mandela, and of course, he said himself, the odds against this would be a thousand to one. It was just based on this intuition that there might be a solution, where everyone else thought there wouldn't be a solution. And he would not have known that, but for being in prison on Robben Island for 17 years and meeting all these people and gradually being able to size them up, including the heads of the prison, who varied in quality from unpleasant to brutal.

• 2:35:01Richard Koch?

  But nevertheless, he knew, he worked out that the way the wind was going. And nobody else did, as I was working in South Africa at the time. And we never thought that there was a possibility of any solution. Nobody I talked to did. But Nelson Mandela had a different intuition. I described that in the book and it's very, very, it's very heartwarming. There's some horrible stories in the book, but it's very heartwarming. You know, intuition is hugely important.

• 2:35:28Tim Ferriss?

  Thank you for sharing that example. I think it's, it's a wonderful place to start to wrap up this round one. We may have to, we may have to do a round two on the podcast if you have the endurance sometime.

• 2:35:39Richard Koch?

  I would love to, yeah, I would love to.

• 2:35:41Tim Ferriss?

  But Richard, I want to ensure that people know where they can find you. Of course, on, on Twitter, they can find you at Richard Koch 8020, Richard Koch dot net. You've written many books, including many books that have influenced me, like the 8020 Principle. You have the STAR Principle, which, which we've, we've mentioned a number of times. And your newest book is Unreasonable Success and How to Achieve It. I have just one more question for you, and then certainly I'm open to any closing comments or anything else that you would like to share. If I've omitted anything, certainly, or if there's just anything in addition that you'd like to put forth. And I'll start this question with

• 2:36:25Tim Ferriss?

  a, a quote as prelude. And this is from an interview that I found with you. And it relates to New Year's resolutions. This is a quote, which you can, of course, feel free to correct, but this is attributed to you. "Once a year, rather than doing New Year's resolutions, I ask the same question. What did I do that meant the most to me and my family and friends? And sometimes strangers too? And what could I do in the next year? More of the same is not a bad answer, but something fresh too?" So this really struck me as an impactful question. And good questions are impactful. And so, A, is this something that you do

• 2:37:08Tim Ferriss?

  and, and might recommend? And number two, are there any other questions you might suggest listeners consider or ponder, let gestate on their minds?

• 2:37:21Richard Koch?

  Yes, it is true. And I think it's right. The question I would ask is one, again, from, from the book, which is, in your whole life, what is your breakthrough achievement going to be?

• 2:37:34Richard Koch?

  If you want to change the world, how do you want to change the world? And ponder that, maybe on New Year's Eve, maybe any other time. There's plenty of time to work it out. But do you really want to have a major impact on the world? If you do, what? That's really my question. It's a question I ask myself as well. I mean, my own ambition is to, is to have many more creative, completely unreasonably successful people. And the thing I'm toying with, which I don't know if you think is a good idea or not, but, but is offering to work with a number of people who have already been reasonably successful, but have not been unreasonably successful.

• 2:38:19Richard Koch?

  And take them through the process and see whether we can generate some unreasonable success from a lot of people. And to cascade that down and train other people to do that. Because I think this methodology is robust and I think it could make a huge difference to the world. And I'd like to see whether I can demonstrate that in practice through a few pilot studies. So that's my personal ambition.

• 2:38:43Tim Ferriss?

  I love that. I think you should definitely test it. And it could be a spectacular failure or spectacular success, but nothing ventured, nothing gained. And you do like to bet. So I figure this is, is one good opportunity to do that. And having some experience with vetting, I'm not volunteering myself, but I would say run a competition or have applications that are vetted and can be vetted in some very simple ways that you're not overwhelmed. And pick a handful of finalists to take through that process. And what I'll suggest, just as a placeholder, is that people follow you on Twitter, Richard Koch 8020, 8020. And if you decide to do this, you can, you can share that on, on Twitter.

• 2:39:26Tim Ferriss?

  And that can be at least a possible starting point so that people are, are alert that this is a possibility. And what a pleasure it's been, Richard. I feel like I know you in the same way that perhaps some people I meet who listen to the podcast feel like they know me, but it's been through your written words that I have have come to admire and use, quite frankly, with great effect, much of your thinking. So I thank you very much for taking the time today. This has been an incredible, incredible pleasure, and I hope it's not the last.

• 2:40:04Richard Koch?

  Indeed. Tim, thank you very much indeed. I reciprocate. Much more, much more pleasure for me, I'm sure. It really is great. Anyway, thank you very much indeed, and I look forward to talking to you again at some stage. Maybe, maybe a bit, a bit more frequently. That'd be wonderful.

• 2:40:21Tim Ferriss?

  Well, the feeling is definitely mutual. And to those listening, I will have show notes for everything we've discussed, including all of the books, all of the resources, including the most recent work from Richard, which is Unreasonable Success and How to Achieve It at tim.blog/podcast. You'll have links to all the names, everything you can imagine. So please do check that out if you'd like to indulge in more exploration. And until next time, as always, thank you for tuning in. Hey, guys. This is Tim again. Just a few more things before you take off. Number one,

• 2:41:01Tim Ferriss?

  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. It's just a little tiny bite of goodness before you

• 2:41:43Tim Ferriss?

  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.

• 2:41:58Tim Ferriss?

  This episode is brought to you by Athletic Greens. I get asked all the time, what I would take if I could only take one supplement? The answer is inevitably Athletic Greens. I view it as my all-in-one nutritional insurance. I recommended it in 2010 in The 4-Hour Body, and I did not get paid to do so. I've used it ever since. Developed from a complex blend of 75 vitamins, minerals, and whole-food sourced ingredients, Athletic Greens is a greens powder engineered to help fill the nutritional gaps in your diet. So I almost try to do things through whole foods, but this covers my bases. Right now, Athletic Greens is offering you their Vitamin D3 K2 Liquid Formula free with your first purchase. Two vital nutrients for a strong immune system and strong bones. So simply visit athleticgreens.com/tim to claim this special offer today and receive

• 2:42:43Tim Ferriss?

  the free D3 K2 bundle with your first purchase. That's up to a one-year supply of Vitamin D as added value when you try their delicious and comprehensive all-in-one daily greens product. Again, that's athleticgreens.com/tim. This episode is brought to you by Viori Clothing, spelled V-U-O-R-I. Viori. I've been wearing Viori at least one item per day for the last few months, and you can use it for everything. It's performance apparel, but it can be used for working out, it can be used for going out to dinner, at least in my case, I feel very comfortable with it. Super comfortable, super stylish, and I just want to read something that one of my employees said.

• 2:43:26Tim Ferriss?

  She is an athlete, she is quite technical, although she would never say that. I asked her if she had ever used or heard of Viori, and this was her response. "I do love their stuff, been using them for about a year. I think I found them at REI, first for my partner, t-shirts that are super soft but somehow last as he's hard on stuff. And then I got into the super soft cotton yoga pants and jogger sweatpants. I live in them and they too have lasted. They're stylish enough, I can wear them out and about. The material is just super soft and durable. I just got their Clementine running shorts for summer and loved them. The brand seems pretty popular, constantly sold out." In closing, and I'm abbreviating here, but in closing, with the exception of when I need technical outdoor gear... They're the only brand I've bought in the last year or so for yoga, running,

• 2:44:10Tim Ferriss?

  loungewear that lasts and that I think looks good also. I like the discreet logo. So that gives you some idea. That was not intended for the sponsor read. That was just her response via text. Viori, again spelled V U O R I, is designed for maximum comfort and versatility. You can wear it running, you can wear their stuff training, doing yoga, lounging, weekend errands, or in my case, again, going out to dinner. It really doesn't matter what you're doing. Their clothing is so comfortable and looks so good. And it's not offensive that you don't have a huge brand logo on your face. You'll just want to be in them all the time. And my girlfriend and I have been wearing them for the last few months. They're men's Core Short, K O R E.

• 2:44:55Tim Ferriss?

  The most comfortable lined athletic short is your one short for every sport. I've been using it for kettlebell swings, for runs, you name it. The Banks Short, this is their Go to Land to Sea Short, is the ultimate in versatility. It's made from recycled plastic bottles. And what I'm wearing right now, which I had to pick one to recommend to folks out there, or at least to men out there, is the Ponto Performance Pant. And you'll find these at the link I'm going to give you guys. You can check out what I'm talking about, but I'm wearing them right now. They're thin performance sweatpants, but that doesn't do them justice. So you've got to check it out. P O N T O, Ponto Performance Pant. For you ladies, the women's performance jogger is the softest jogger you'll ever own. Viori isn't just an investment in your clothing, it's an investment in your happiness.

• 2:45:40Tim Ferriss?

  And for you, my dear listeners, they're offering 20% off your first purchase. So get yourself some of the most comfortable and versatile clothing on the planet. It's super popular. A lot of my friends have now noticed are wearing this, and so am I. Vioriclothing.com/tim. That's V U O R I clothing.com/tim. Not only will you receive 20% off your first purchase, but you'll also enjoy free shipping on any US orders for over $75 and free returns. So check it out. Vioriclothing.com/tim. That's V U O R I clothing.com/tim. And discover the versatility of Viori Clothing.