Optionality: How To Make Your Own Luck In Life - Richard Meadows | Modern Wisdom Podcast 269

Richard Meadows is a journalist and author. Life doesn't come with an instruction manual. How to organise our lives to be efficient but have options, to be take advantage of routine and enjoy variety is one of the hardest balancing acts we face. Today expect to learn why you should earn as much money as you can when you're young, how to make life changing choices under uncertain conditions, protect against financial disaster, develop a system to create our own luck and much more... Sponsors: Get 20% discount on the best coffee in Britain with Uncommon Coffee’s entire range at http://uncommoncoffee.co.uk/ (use code MW20) Extra Stuff: Follow Richard on Twitter - https://twitter.com/meadowsrichard Buy Optionality - https://amzn.to/397R4lJ Get my free Ultimate Life Hacks List to 10x your daily productivity → https://chriswillx.com/lifehacks/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom #finance #investing #lifedesign - Listen to all episodes online. Search "Modern Wisdom" on any Podcast App or click here: iTunes: https://apple.co/2MNqIgw Spotify: https://spoti.fi/2LSimPn Stitcher: https://www.stitcher.com/podcast/modern-wisdom - Get in touch in the comments below or head to... Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx Email: [email protected]

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

• 0:00Chris Williamson?

  Hello you beautiful people, welcome back.

• 0:04Chris Williamson?

  Onto today's guest, I am joined by Richard Meadows, who is a journalist and an author. Optionality is a term from finance and with his background in the investing world, Richard used the principles of optionality to create an entire life design philosophy that allows him to constantly be making his own look. Life doesn't come with an instruction manual and how to organise our lives to be efficient but have options and to take advantage of routine but enjoy variety is one of the hardest balancing acts that we face. So today, expect to learn why you should earn as much money as you can when you're young, how to make life-changing choices under uncertain conditions, how to protect against financial disaster, how to develop a system to create your own look and much more.

• 0:47Chris Williamson?

  This was such a surprise gem, I was intro'd to Richard from Julian, who's a listener of the show, and he just blew me away. We're proper kindred spirits and yet another bromance under the wing, but he's super cool. There's so much to take away from today and if you enjoy it or if there's something that really resonates with you, then let me know @chriswillx wherever you follow me, Instagram, Twitter, et cetera, et cetera.

• 1:10Speaker 01

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• 2:34Chris Williamson?

  Oh, that's it. Let's listen to Richard Meadows talk about how to make our own look.

• 2:58Chris Williamson?

  Richard Meadows, welcome to the show.

• 3:00Speaker 06

  Thank you for having me.

• 3:01Chris Williamson?

  Pleasure to have you on, man. So, optionality. What is optionality?

• 3:07Speaker 06

  The simplest definition of optionality is the right, but not the obligation to take action. So you can do something if you want, but you don't have to. And my argument is that optionality is a pretty good proxy for human flourishing in general, just being able to maximize your capabilities as a human being and have the maximum range of possibilities open to you.

• 3:34Chris Williamson?

  So would that suggest that naturally as humans, our level of well-being and flourishing is directly proportional to how many different options we can take in life?

• 3:44Speaker 06

  I think it's less of a quantitative thing and more qualitative. So it's about the caliber of the options that are available to you. So I draw a distinction between having a lot of choices in the consumer capitalism frame, where you can go to the supermarket and choose between emptying different varieties of pasta sauce or laundry detergent, but like having high-quality options is more important. So being able to... Uh, you know, work in a career that you that you find meaningful or satisfying or being able to have good relationships with the people around you. Um, that's that's really the key.

• 4:24Speaker 06

  And it's not so much about being sort of floating on cloud nine and being euphoric all of the time, but also having the right to choose to do things that are really hard or that involve some degree of, uh, not necessarily suffering, but perhaps some degree of hardship or sacrifice. Um, because it's sort of a broader definition of human flourishing that goes beyond the simple hedonistic pleasures.

• 4:50Chris Williamson?

  How do you see optionality manifesting in the real world then? That's a nice concept. But what what does it actually look like when it enters our lives?

• 4:59Speaker 06

  Yeah, so I've got a framework for cultivating optionality that basically looks like taking this lens and applying it to all the little decisions of daily life. Uh, so I'll give you a couple of concrete examples. Um, so what we're really looking for, uh, overall is any sort of decision or action you can take that has a a small cost or a small downside. It doesn't require a lot of money or effort to take out the option, but it leads to an open ended upside. So it could, uh, it could have basically unlimited possibility and it could be really transformative for your life. Um, so one simple example of that would be, uh,

• 5:44Speaker 06

  you know, like, uh, emailing someone you admire that takes you two minutes or, uh, or whatever it might be to pen an email to someone. And amazingly, with the, you know, with the the power of the internet, you can get in touch with just about anyone that you can imagine. And then they might even write you back and it could be the beginning of a mentorship or you could have some kind of relationship or just, uh, find it to be a meaningful interaction. So the poss- uh, the the downside cost there is, um, you know, very small. It's not that hard to do. And The possible, the possible positive outcome is very large or open ended. So in most cases, nothing will happen. Maybe they don't email you back and that's fine because you've, you've lost essentially no, nothing.

• 6:27Speaker 06

  Um, but in the event that they do, uh, there's a sort of a, the, the potential for transformative upside. So my idea is to take this framework of optionality, which is a concept from the world of finance. And, and just look at the, look at a lot of decisions, uh, through this framework and look for those asymmetries. So, uh, what's the downside? What's the upside? And, uh, what can I do that has a pretty small effort and might lead to a, a large payoff? And then just systematically collect as many of those options a- as you can and build a sort of portfolio. So even if most of them don't work out, uh, you're sort of constantly, uh, attuning yourself to serendipity and, and luck. You know, it's sort of a, a system for making your own luck.

• 7:12Speaker 06

  Um, so yeah, I could give more examples of, of those sort of asymmetries if, if you like. Um, there's also, uh, the negative optionality, which is something like being in debt. So if you take on a consumer debt, you have the obligation to do something, but not the right. So it's an, an inversion of the original formula. Um, and again, one of the most powerful things I would argue that anyone can do is to, uh, remove those sources of negative optionality in your life. So be extremely cautious of situations where, um, the upside, the possible return, the reward, the bounty is limited. So it's fixed, it's capped. But the potential downside is, uh, is bottomless or infinite.

• 7:57Speaker 06

  So this is the sort of the Russian roulette archetype where you spin the barrel. Maybe you win a hundred bucks or sort of impress your mates at bar. But in the event that you lose, you lose everything, uh, lights out. So that's the framework, um, hunt for the asymmetric opportunities, uh, which are loaded in your favor and steer well clear of the, uh, the, the options and decisions which have a negative asymmetry. Um, where there's a possibility that will lead to some kind of total ruin.

• 8:28Chris Williamson?

  What are some of the other common situations that you see people getting negative optionality wrong or that negative asymmetry?

• 8:35Speaker 06

  Yeah, so in the financial realm, which is my sort of main area of expertise, one of them would be something quite boring, like, let's say you've got a car and

• 8:48Speaker 06

  lawyers in the UK, but you drive around without insurance. Now, your potential upside from not bothering to take out insurance, I mean, like indemnity or liability insurance, is you're saving X hundred dollars or pounds on the insurance premium, right? Now, the potential downside is that you T-bone someone's Jaguar at the intersection and you're on the hook for, you know, whatever it might be, several hundred thousand pounds or you're sort of out of commission altogether. So I think insurance is like almost an inversion of the concept of optionality because it protects you against those large downside risks.

• 9:28Speaker 06

  Another good example might be during the, you know, the COVID-19 situation or disaster preparedness more generally whereby it's helpful to have a bunch of medicines that you need, stockpiled and some basic food and water and supplies in the event that something unexpected happens. It costs you very little to take those precautions. I mean, you're gonna, you're gonna eat the food either way, it's sort of bugger all in the scheme of things. And in the event that you need it, you're really, really, really gonna need it. So failing to take simple protective measures like that, I would also argue is sort of

• 10:13Speaker 06

  a failure of imagination and a, and a kind of a common risk management mistake where people are just like not necessarily thinking about it through this lens of like, there are these big risks out here, do I have an opportunity to mitigate them by taking some relatively cheap, straightforward actions?

• 10:33Chris Williamson?

  The number one rule of the game is to never be out of being able to play.

• 10:38Speaker 06

  Exactly right. Yep, yep, you can take risks, you can lose, it's fine, it's, it's, it's necessary to lose, but you can never lose so bad that you can't come back.

• 10:49Chris Williamson?

  Did you see Bill Ackman's trade at the start of this year?

• 10:56Speaker 06

  I don't think so. Tell me about it.

• 10:58Chris Williamson?

  So it's being dubbed the new big short. So obviously the big short was that famous film made about the fellow Christian Bale played that shorted the housing market. And Bill Ackman, who I'm sure that you know, a very famous short seller on Wall Street. He was the guy that was adamant that Herbalife was a scam. And I think he's still short on Herbalife, even though he hasn't taken them down yet. The beginning of this year, he foresaw that COVID was going to have a significantly bigger impact on the entire world financial market than anybody had priced in. So he took out a very special type of insurance, which is kind of like put options. It's a bit sort of complex to explain and I definitely can't do it. But there's also YouTube videos out there if anyone wants to dig into it further.

• 11:42Chris Williamson?

  But the long and short of it is he made more money than the man from the big short. And the difference is it didn't take him three and a half years. It took him about four weeks, billions and billions and billions of dollars in the space of about four weeks, because this man foresaw that. And that's kind of the same, right? Like the potential risk that he had was to just continue ticking over with this particular type of insurance, but the upside was so asymmetric in his favor that it made total sense.

• 12:14Speaker 06

  Yeah. Yeah. Yeah, no, that's interesting. So the guy who I've learnt the most about optionality from is called Nassim Taleb. And he's an options trader and he did something very similar during the 2008, 2009 global financial crisis whereby I think he was buying put options. I think he was buying auto money puts and he was sort of every day loading up and taking these small manageable losses and he could see something bad was going to happen with the buildup of. Accumulation of risk within the financial system. And so when it all went to pieces, you know, everyone lost their shirt except for him because he'd been waiting for just such

• 12:57Speaker 06

  an opportunity with these small, steady, predictable kind of losses. And then the upside, when it came, yeah, is the same kind of scenario where it's essentially, it could run on forever. And so my understanding is that he made his fortune by being a bit of a contrarian and positioning himself to profit from misfortune and disaster. So yeah, kudos to Bill Ackman too. I'll have to have a look at that.

• 13:23Chris Williamson?

  Yeah, he crushed it, man. You're gonna love that story. Another good example of negative asymmetry would be having unprotected sex or texting whilst driving. Like you're talking about a marginal increase in pleasure for a potential 18-year commitment or a health risk. And then the equivalent for texting whilst driving, like, you know, you're looking at potentially time in jail, a fine at the bottom end, or ending some poor person's life because you're not properly looking. All for what? For replying to a meme a little bit quicker in a group chat that everyone's gonna forget about within the next five seconds?

• 14:05Speaker 06

  Yeah, that's, I love that. I wish I'd included the unprotected sex one in the book. That's fantastic.

• 14:13Chris Williamson?

  It's a, it's a conversation that we've had a number of times, looking for these sort of asymmetric opportunities and avoiding these asymmetric risks. Do you see any asymmetries manifesting more in the sort of social realm, rather than just in the financial realm? Did you come across any of those?

• 14:31Speaker 06

  Yeah, I have. I think most of them are positive asymmetries that you can exploit, but I'd rather, sorry, I'll touch on the, on the negative ones to begin with. So I think. The main negative one would be just this, the social contagion effect whereby the people you surround yourself by uh a responsible, they kind of shape you and mould you and they shape, they shape your outcomes in a really surprising way, just because humans are so malleable and so um we're so good at kind of unconsciously imitating one another. So, something that I say which might come across as quite mercenary and cruel in the book, but I think is a

• 15:13Speaker 06

  actually a necessary thing to do is to um excise the the really toxic people from your life, if you're unlucky enough to have them in your life and perhaps having taken steps to try and actually help them and do something about it, but um yeah, there, there's this phenomenon whereby things don't get worse in a linear fashion, they tend to uh spiral downwards faster and faster. So if you have, if your social group, if your friends or your family or whoever it might be uh uh constantly exerting a negative influence over you, the hard and possibly, probably correct thing to do is to get some distance from them. Um possibly, you know, you may or may not cut them out of your life altogether, but definitely sort of um

• 15:58Speaker 06

  acknowledge this idea that uh, you know, you can, uh you don't, you don't have to, you don't have to feel obligated to to be tethered to someone just because you have a shared history indefinitely. And I, I certainly found that quite powerful um idea myself, having been brought up with the notion that uh, you know, it, it's like, it's very you, you have to love unconditionally from now until the end of time for your friends or family. Like, um and there's no, uh there's no way to get any distance from that. Um, yeah, and then the, the more positive happy side of the equation is just uh. It's a big old world and it's never been easier to connect with people.

• 16:42Speaker 06

  And it's incredibly easy to get in touch with people. I mean, I kind of, I know this, uh, I'm, so I'm a journalist by trade and it's surprisingly easy to find people's contact details online. Um, so it's mostly a question of, uh, I don't know what you'd call it motivation or confidence or something like that where you can put yourself out there. And, and sort of find your tribe of people more easily than at any other point in history. And the manner in which you do so, uh, usually involves something like being good at email

• 17:20Speaker 06

  or having a presence on Twitter or on, uh, you know, contributing to open source libraries if you're a programmer or inhabiting certain forums, um, uh, or putting yourself, the, the, the next level version of that would be changing your geographic proximity. So actually upping and moving to, uh, San Francisco if you're big into tech or New York, if you're big into finance or whatever it might be, um, and putting yourself in the proximity of the kind of people who you are likely to get along with. So that's like not as an attractive an option insofar as it requires you to live in San Francisco. But, um, uh, yeah, there's, there's lots of things that you can do to sort of build social capital

• 18:02Speaker 06

  uh, that don't require a lot of effort and that could potentially change your life. And I'm, I'm sort of speaking from experience here. Um, having, having done that almost by accident. And I think that people have this idea that you can't really be strategic about things like relationships, like it's somehow, it's, uh, it's gauche or, uh, it's not, it's not the done thing. Um, so I think if you apply this framework where you actually say, hey, this is important to me.

• 18:31Speaker 06

  I'm going to put an effort in a strategic, cultivated, deliberate way. That's really powerful, just having that real, having that realisation and thinking more carefully about where you're devoting your, your time and your energy.

• 18:43Chris Williamson?

  Do you have any triggers that help you to continue doing that in life? One of the things that I often find is I'll come across a concept like this that we're discussing here, or pretty much anything else to do with personal growth. And the issue for the most part, isn't my buy-in. I fully believe that this could have a really positive impact in my life, but I need to instantiate it somehow. I need to have a trigger or some sort of little mantra or a reminder of some kind that allows me to actually enforce it into reality.

• 19:16Speaker 06

  Hmm. Yeah, I mean, I like the idea of, of, uh, chunking down difficult concepts into little mantras that you can remind yourself of. I definitely have a few of those myself. Actually, I have like a, almost like a catch-all mantra. I'm not sure if I should even say it out loud, but I will.

• 19:38Speaker 06

  There's a line, I hope it doesn't lose its magic juju. So there's a line that, that goes, at first say to yourself what you would be and then do what you have to do, uh, which is from Epic Tetus. I think you're, you're sort of big into the, the Stoics, aren't you? So you'd probably be familiar with him, but yeah, it's just this idea of, um, there ain't nothing to it but to do it. So, um, I, I have little tricks like that, but my, my main, uh, my main weapon for making all these trade-offs in a smoother fashion, uh, you know, making these short-term pain, long-term gain type, uh, trade-offs is, uh, basically to systematise everything.

• 20:20Speaker 06

  And what I mean by that is, uh, put in place, uh, certain practices and habits and constraints that.

• 20:28Speaker 06

  Um, just make the process of getting to where I wanna be uh smooth, so it doesn't require willpower on a daily basis. Uh, and in the realm of finance, an example of that would be uh instead of sort of saying to myself, I'd like to save X amount of money and I'll and I'll try really hard not to not to blow my pay packet. Um, just to set up an automatic transfer after payday that goes straight out of the bank account, um, straight into your investment account. And then you have to live on whatever's left over. And at no point in the process do you feel friction or pain. It's perfectly automated. Um, and you ju- you just get by and you sort of adapt to the to the new normal um of however

• 21:11Speaker 06

  much you've you've left yourself for spending money. Uh, and there's a there's a bunch of tricks like that, um, which I find really useful um for both and both both practically in terms of actually implementing these these what I think of as trades. Um, and psychologically, in terms of knowing that uh, no matter what your outcome is, you're putting in the work. So you're following your system day after day and you're doing the right things. And maybe it will, maybe it won't pay off um immediately. You don't know exactly when it will pay off and you don't know uh what form,

• 21:54Speaker 06

  what will the payoff look like, but you can feel good about the fact that you're following your your system and you're and you're stacking up uh what I what I think of as these juicy asymmetric options. So um, I I should probably give a concrete example of that as well, which would be something like reading books, I think, is just like changed my life, probably like no other practice has. And the reason that I like to read books, I mean, quite apart from the enjoyment factor is that uh they're cheap. You you can buy them cheap or you can get them from the library for free. And then you don't know what's in there. You don't know what idea you're gonna encounter, what new practice you're gonna pick up. And you you sort of get to gaze out upon the world through

• 22:37Speaker 06

  someone else's eyes. So that's the small cost and the and the very large potential upside.

• 22:44Speaker 06

  And then if you have this practice, just read a, just read a, read a fucking book, like read a book. Um, rather than watch TV or something like that. Just, just read the fucking book and then it will pay off at some point. You don't, you don't know how, you don't know, you don't know what it's gonna be. Until you, until you get there and it will, it'll surprise you every time. So the practice is, is really what matters. You don't, you, it's not sort of like you have to see the future and predict it's gonna be exactly this and this is gonna lead me on to part, this is gonna lead me to this path and that's gonna result in this opportunity. Um, if you become the kind of person who does such and such activity, and I would include sort of reading in that bracket.

• 23:25Speaker 06

  Um, it's gonna pay off. It's, it's just gonna pay off and you can feel good about that.

• 23:31Chris Williamson?

  So much to go through there, man. It sounds like I'm, uh, talking to a kindred spirit here. Certainly one of the things that I've done this year, which has made a big difference, a little mantra I've had in my head has been, um, this is why you're here. So when things get hard or you feel discomfort, the reminder is that that's what you're here for. You're here for the slightly uncomfortable learning experience. It's because you're learning something difficult and worthwhile. You're there for the burn in the gym. You're there for the slight level of hunger or tiredness or whatever it is at the end of the day. Because you are on a calorie restricted diet or because you've trained hard that day or whatever it might be. This is why you're here. Lean into your discomfort as if you invited it through the door. And then talking about systematizing some things that you want to do.

• 24:16Chris Williamson?

  Um, a good hack for that, sleep with your phone outside of your bedroom and don't watch Netflix after a particular time at night. The only choice that you have to do is to read a book or go to bed early. Either way you win. So those are two ways that I've instantiated, uh, things that I want as long-term lifestyle changes into a daily practice. One thing that I can see as a potential problem here is optionality being polarized with optimizing. Like if you're always exploring new options, you can't exploit and double down into certain things. How do you deal with that?

• 24:53Speaker 06

  Right, yeah. I'm glad you brought that up. Yeah, so that's the, that's the fundamental trade-off is exploring and exploiting. So, um, well, to begin with, I think it's, it's never a bad idea to maintain some level of optionality. So in other words, to devote some small portion of your time to be constantly exploring um, and opening up possibility right until you're on desk door kind of thing. Um, but then, yeah, after a certain point, you do have to switch from, uh, from trying to open up new possibilities to just actually execute on something and sort of grab on to it with both hands.

• 25:31Speaker 06

  So my model for that is the optimal strategy for switching from exploratory mode to exploit mode is a function of, uh, the volatility of the domain in question and of your timeframe in that domain. So it actually varies depending on what it is that we are talking about. So, um, let's say that you, uh, you're kind of, you're in your teens or early twenties and you're, and you're, and you're trying to get a handle on fitness and nutrition and workouts and stuff. It's a good idea to, uh, try a bunch of things and see what sticks and see what you like and dislike.

• 26:11Speaker 06

  Just again, from the point of view of not trying to do battle with yourself and just make life easy on yourself. Um, so that, that would be a point where you want to do a lot of exploration. But obviously you don't want to be that guy who's constantly doing the hot new thing and never actually makes progress with anything. Um, and it's, uh, the disease of fuck around it is, so you have to commit to something. Um, yeah, and then in that particular domain, uh, the volatility is not increasing. So that implies that as soon as you've found something that you are into and that you've, that, that, that you feel good about, you actually basically lock then, then and just, uh,

• 26:56Speaker 06

  Get after it indefinitely. And you can keep trying little things here and there, but you should, you should do just enough exploration to find out about your own personal preferences and what works for you and then just get after it. So the reason that that is that that that you should approach it that way is because the human body and the the sort of, um, what would you call it? Like the the interventions for physical fitness are not changing. Like the barbell, oh, well, calisthenics is thousands of years old. And then the barbell, I think, is at least a couple hundred years old and dumbbells, dumbbells go right back to ancient Greeks. So, um, eh eh, the body itself, like it changes in on an on an evolutionary timescale, but it doesn't change over the course of,

• 27:37Speaker 06

  uh, your own life, except in, um, in the sense of aging. So, uh, because the domain is relatively stable, you don't benefit from constantly exploring and seeing if new opportunities are cropping up like, it's not like the laws of physics will change one day and suddenly, um, you know, CrossFit will be out and, uh, you know,

• 27:59Speaker 06

  horseback equal chase will be in or something like it's there's there's there's no point in, um, positioning yourself for uncertainty because there is no real source of uncertainty there. Um, and then, uh, to give a counterpoint of a an opposite sort of scenario, if we talk about career planning, um, the argument that I make is that you have to be open to exploration, uh, much more so than in a domain like physical physical health. Because the world is changing, there is a lot of volatility. And you can't necessarily, uh, lock yourself into something and then put your feet up and just exploit.

• 28:37Speaker 06

  Because, um, uh, you know, let's say you have this model where you're a specialist, you're very good at one thing. And you have, this is the old model of the the job for life, forty years and a golden handshake. Um, you lock yourself into that, you don't broaden your skills. And then the, you know, the robot apocalypse comes along and and takes your job or, um.

• 29:00Speaker 06

  Yeah, you know, one of these sort of, I mean, it doesn't even have to be one of these outlandish AI scenarios, just the more mundane reality of industries collapsing. Um, so you've, you've sort of concentrated all of your career capital in this one domain and it serves you very well over the short term. And what you can't see in the background is this, is this large accumulation of sort of silent risk. So you might be all right, you might make it to retirement and, and nothing bad happens, but if your job suddenly gets outsourced to, um, you know, to Bangladesh or, or, or India, or whatever it might be, you're screwed, right? You haven't, you haven't sort of diversified yourself, um, you don't have options. So, um, that's the downside resilience case for, um,

• 29:44Speaker 06

  always being exploratory and, uh, in a domain which is changing quickly. But the more attractive side of that is the, uh, is looking at the upside, um. You know, like, thinking about emerging technologies and emerging fields. Things are changing, things change now within the course of our lifetime. I mean, within the course of like a single year or a single, certainly a single decade. And if you have broad set of skills and you are interested, you take an active interest in the world and you're sort of a curious person. You can position yourself to benefit from these things. I mean, like, uh, I think we were talking about Bitcoin just before we had record. Like, imagine being one of those guys who was, uh,

• 30:27Speaker 06

  buying Bitcoin for thirty cents each or whatever, because you're a geek and you're interested in this new weird money thing that no one else has ever heard of. Um, just because you, you, you're sort of, um, taking a broad interest in life and not just being like, oh, I'm the, you know, I'm the, uh, I'm the chief widget maker at the widget factory. And I'm good at what I do and I'll never broaden my horizons any further than that. Um. Yeah, does that make sense?

• 30:56Chris Williamson?

  Absolutely, man. Yeah, totally, totally does. The that insight of optionality being inverse to the level of volatility within the system makes a whole ton of sense.

• 31:12Chris Williamson?

  And I guess this year, Covid uproar, upheaval, it's just the year of optionality. But if the future is uncertain, how do we become more confident about our decisions? Shouldn't we just constantly be worried about the future, especially given that technological change and society is moving so fast now?

• 31:32Speaker 06

  Hmm.

• 31:34Speaker 06

  Yeah, I mean, this goes back to what I what I find to be psychologically comforting about optionality. So at this point, it might help to sort of mention my model for what is what are the raw ingredients of optionality. So I break it down to financial capital, i.e. how much savings you have and how little debt you have, health capital, how fit and healthy and energetic you are, social capital, the strength and quantity of your relationships, and and knowledge capital, which is the depth and breadth of your skills and experiences. And if you have, if you focus on all four of those buckets and you and you're sure not

• 32:16Speaker 06

  to neglect any of them, I think you can kind of feel confident about the future, even though you don't know what's coming. Because let's say 20 years from now, I wouldn't have a clue what I'm going to be doing in a grain like in a fine grained kind of a sense. I don't know. I don't know what sport I'll be playing. I don't know exactly who my friends will be. And I don't know what I'll be doing for work. But it will in any possible conceivable scenario, it will be extremely useful for me to have all four of those buckets full so that I'm in a good position to execute on whatever makes sense at that point in time in my life and my career and that future version of me. So I find it extremely comforting.

• 33:00Speaker 06

  I mean, the probably the simplest and most obvious version of this is that anyone who's ever been in debt or who's just had a shitty job and sort of struggling to make rent, it's just a horror. Horrible position to be in, like you feel powerless and you can't relax and it sort of bleeds over into every other area of your life. And getting yourself in a position where you've cleared your consumer debt, for example, and you've got like a bit of an emergency fund in case the shit hits the fan, it's just such a, it's such a powerful thing to do. And it doesn't actually, it's, you know, like, it's not changing anything in the sense that

• 33:41Speaker 06

  uh, maybe you still work the same job and your life looks more or less the same, but just psycho, even psychologically, it's a powerful position to be in. So, yeah, my argument is that if you build up these sort of central assets, um, these real, real core valuable sources of optionality, uh, that alone is extremely comforting. It's never not going to be useful to have a big chunk of change sitting in the back. So you're well positioned. Maybe an investment opportunity comes along. Maybe you're the guy who finds out about the thirty cent bitcoins, right?

• 34:18Speaker 06

  Like, maybe, uh, you have an idea to start a small business or you want to quit your job and take a sabbatical and launch a podcast or whatever it might be, right? Like, it's always going to be useful and you're like, uh, I don't know, you, you just feel a certain sense of security and possibility when you have all of these things topped up. Uh, so I think that, yeah, the future is kind of scary, but you can, you can take some of the sting out of it. And maybe even make it into an exciting thing. That would be the ideal, where you're kind of intrigued about what will happen. I mean, just from like, yeah, it is, I mean, the world is a fairly wild place right now. And if you can,

• 35:00Speaker 06

  if you can be the perfect stoic and sort of remove yourself from it a little bit, it is almost entertaining, isn't it? Like, it's just so bizarre.

• 35:09Chris Williamson?

  Yeah, it is. I got asked on a podcast, I was guesting on someone's show this week and they asked me like, what do you want to do in 50 years? What do you want written on your tombstone? And I've never really been that good at long-term planning. I think it's a function of being curious. If anyone is super, super curious, you're always aware of just how many things you're not doing, rather than the things that you are.

• 35:36Speaker 06

  Yeah.

• 35:38Chris Williamson?

  That to me is just like, man, I don't know. I get the sensation. I get the impression that when I start a family, I'm currently single and don't have kids, but I get the impression that when I start a family, that's probably going to be a sledgehammer of emotions that I'm not ready for, that's probably going to whitewash most of the other stuff that I do in my life. But I might be wrong. And given the fact that I don't have that input and I do tons of different things, I was like, I don't know, man. But that, you've given me a comfort blanket there, man. Like, I've just got options. I've got optionality.

• 36:12Speaker 06

  Yeah.

• 36:12Chris Williamson?

  Talking about the absolute fundamentals, what is the fundamental best way for someone to start opening up the optionality they have in their life?

• 36:25Speaker 06

  Um, I think the single most important thing that anyone could do is probably to attack the financial side of things, only because, well, I'll tell you a little story. So I, yeah, I used to be a business reporter, had a good job, enjoyed it very much, but I was starting to get a bit bored and sort of getting that three-year itch kind of thing. And I came across this subculture called Financial Independence Retire Early, or the FIRE movement. And I started getting into their stuff and their main thing is like, you go into kind of hardcore frugality mode and you think really carefully about what's important

• 37:08Speaker 06

  to you and cut out any extraneous spending, repay debt aggressively. So I did that and I saved like enough, a big enough chunk of change to eventually sort of quit my job, not in a permanent retirement sense. But in a sort of go take a sabbatical and work on other projects sense. Um. And that was like, that was the the little the lifestyle experiment that launched a thousand ships kind of thing like that was the most powerful move I've ever made, I think. Um. And that is very accessible to most people. So, um.

• 37:47Chris Williamson?

  What was the figure? What was the figure that you hit?

• 37:51Speaker 06

  I I hit a hundred thousand uh New Zealand dollars. I think I hit it in the in the greenback about a year later. So, um, yeah, enough money for me to go and travel and um do my thing and uh have some space to breathe and and think about other projects, but not enough to retire on permanently. But just the principles of doing that um are so powerful and like money i- is not quite the same thing as optionality. But it's a it's a it's a one of the most powerful ingredients because if you have money, again, you have the right but not obligation to spend it however you see fit.

• 38:32Speaker 06

  So you can't buy everything with money, but you can make a pretty good uh make a pretty good attempt at it. Um. So one underrated way of, or maybe it's not underrated, but one powerful way of uh of having more optionality is to take that, use something like that frugal approach, I think, especially when you're a young man or young woman. Um. And you can uh you don't necessarily have to have an ex- an extravagant lifestyle and try to keep up with your peers. Uh. You can just sort of, again, it's a short term pain, long term gain thing. You can just uh um sort of set yourself up to be in a stronger position a little bit later down the track. So I would highly encourage anyone who's listening to this, who is thinking about like

• 39:18Speaker 06

  they you don't feel if you don't feel powerful, if you don't feel like you're in a position where you could um where you could take a punt, where you could take a risk and start your own project, or where you could walk away from your job because you don't like your boss, you don't like your coworkers or something. Um. Yeah, I think if you want to give yourself some power, what you want to do is start being more intentional about your spending. I've got a lot of tips in the book and start trying to build up the net worth, start trying to get rid of debt. And then that puts you in a really strong position. You can you can walk away from a shitty situation. You can you can retrain or upskill. You can take a sabbatical to launch your passion project. You can cut back to part time hours, you know, maybe to spend more time with your

• 40:02Speaker 06

  family or or or put more effort into your health or whatever it might be. And I feel like that's an unusually accessible intervention that a lot of people could use. And with the exception of people who are really doing it tough and they're already sort of living on living on the smell of an oily rag, the great majority of young, you know, tradespeople and professionals could use those strategies to get themselves in a good position. So yeah, I think that's probably the simplest step to get started.

• 40:40Chris Williamson?

  I remember I had a conversation while I was on a photo shoot, maybe about six or seven years ago with this older lady. She's probably about the age that I am now. So I'm thirty two. She may be like thirty two, something like that. She was telling me about her and her husband and I'd just bought my second house. My first rental, so I had my own and then I bought a second one for buy to let. And she's telling me, oh, we've just got our eighth house. And I'm talking about all the different things. And I was like, so what's the plan? And she says, well, me and my husband have done all of this. We started a business together. We got married early. It's twenty two. We started a business together and been working on this business and building up this property portfolio along alongside it. Now we've got the manager that's been with us for ages. She's going to run the business and we front loaded our wealth. And it was that term that stuck with me. So

• 41:24Chris Williamson?

  we front loaded our wealth acquisition to the point now where we're going to go travel the world for the next four years. And then we're going to settle down and we're going to start a family. And I was like, holy fucking shit. That's it. If compounding is the eighth wonder of the world, which I think we all agree it is, then front loading that wealth as quickly as possible. And it's something that I I ended up doing purely by fortune rather than by design. But it's certainly put me in a strong position. Now I have my house plus three other rentals and I have a nice sort of steady pot of cash. And it also means that even my own home, because I let

• 42:07Chris Williamson?

  two rooms out to my buddies, even that's paid for. You know, the whole world could go to hell in a handbasket and I'd still, it has done this year. And financially, I know that I'm still sorted. And the converse of that is kind of the live, young, wild and free advice that's often given to people. And I get that, like, don't get me wrong. Being young is a time for you to adventure and to do new things and to be a little bit reckless as well. But at the top of this episode, we talked about the number one rule of the game is to never be out of playing and locking yourself in, going bankrupt, getting into a business at 23 years old with zero business experience and

• 42:47Chris Williamson?

  some shady business partner and having a bankruptcy on your record, or having a terrible credit rating because you've run up a ton of different cars on repayment finance or a bunch of credit cards because you wanted a new 50 inch TV or whatever, you know, upside 50 inch TV, downside shit credit rating for the next decade. That's a pretty big asymmetric risk that you've got going on there. So yeah, certainly. And that, the beautiful thing about front loading wealth is that you front load, if you haven't done it up until now, now is the time to start. You can be 75 listening to this and you're better off front loading wealth than you are

• 43:27Chris Williamson?

  backloading it now. I had Morgan Housel on, a guy that wrote the psychology of money. And he said that 90% of Warren Buffett's net worth was generated after his 65th birthday.

• 43:44Speaker 06

  Is that right? Holy shit.

• 43:47Chris Williamson?

  That's how powerful compounding is.

• 43:50Speaker 06

  Yeah.

• 43:51Chris Williamson?

  So yeah, I'm all about that. Front load that wealth. Why didn't you decide, right, I've got my 100,000 here. I'm now going to continue to work and just build up like some insane amount of cash. And then go for not, not whatever is the, I can't remember what the first two letters are. Retire early, financial independence, retire early. Uh, why not like financial independence, retire at an all right age, but wealthy as fuck?

• 44:20Speaker 06

  Yeah, well, um, so I could have done that. That was my initial plan, but the problem was that, hey, I'm a journalist and journalists are not really making bank. So it would have been a bit of a slog and I wouldn't have retired super wealthy. I would have been, um, you know, I would have had a pretty Spartan existence if I wanted to do the early retirement thing, which is fine. And, you know, I'm actually okay with that. Um, but what I wasn't okay with was sort of having this super distant future focused, um, idea of distant happiness. So it took me right out of the moment because this idea of retire, financial independence, retire early is like,

• 45:04Speaker 06

  the whole point of the game is to check out the earliest opportunity. So it's very, it's a very kind of negative framing. Um, work is bad and you must escape, right? So, um, I wasn't prepared to keep doing my job, which I was no longer wildly interested in, for 10 or 15 more years, um, to get to the point where I could retire properly. Because I had all these other things that I wanted to experiment with. And also I was in, I hadn't done my overseas experience, which is a sort of grand tradition in New Zealand. You have to go out and have your gap year or, or whatever, and do the banana pancake trial and that sort of thing. Um, so I didn't want to squander my youth and my mobility and, um,

• 45:49Speaker 06

  and sort of lock myself into this future thing. So I just decided like, I'm going to, I'm going to pull the plug right now. Um, this is enough to make some big changes to my life and, uh, you know, maybe look for some higher leverage opportunities. So, um, uh, you know, like,

• 46:08Speaker 06

  Being a salary earner is fine. It's great in some way, in many ways. It's sort of comfortable and you have that stability. Um, but I think I like that Naval line that, you know, the way to get wealthy is to own something, is to own a piece of something like you with your houses or, you know, you with your podcast or, um, you know, you own a stake in a business, you start your own business, you, and the fundamental difference there is you capture the upside, right? Not your boss, not the shareholders of the, the conglomerate that you work for. Um, possibly there's, uh, there's a, there's a stronger element of downside risk and it's a bit more of a speculative play, but you get to capture all the gravy. So that's, that's like, I mean, thank God that

• 46:53Speaker 06

  I did quit my job and go off and wander and sort of, um, try some of these higher leverage, uh, more speculative plays because that's actually how, um, I'm, you know, the other path would have been okay. I could have gone back to work and um, had a pretty good existence, but like now I'm financially independent, just having, um, without having to work full time or do anything that I don't want to do.

• 47:16Chris Williamson?

  What are the, um, what are the roots of leverage that you, you have favorited over the last few years?

• 47:23Speaker 06

  So investing is my main thing and that is how I've also sort of generated, um, uh, most of my wealth. Um, so what I'm looking for is again asymmetries. Um, I don't know if you want to get into investing at all. Um, but, um, yeah, like looking for neglected opportunities and things that kind of intersect with my own skill set or experience or, um, uh, like things that are available to me that aren't necessarily available to everyone else. So I'm not talking about S and P five hundred, which every man and his dog can go on and trade. Um, things where you have some insider knowledge or you have a personal connection.

• 48:07Speaker 06

  Um, and therefore there's an opportunity, there might be an asymmetry to exploit. Um, and then the other things would include somewhat entrepreneurial ventures like, uh, not, yeah, I don't know if I'd call them entrepreneurial, but, uh, writing a blog, uh, writing this book I've just finished where you are having a punt, you're, uh, you know, you. You, the downside cost is the time it takes you to write the thing and you, you know, sort of pay for various expenses. And then you give yourself a shot at, again, collecting quite a large upside, whether that comes financially. Um, which is infamously difficult to make money through books, but you, it's always possible that you get the, the sleeper hat or the runaway hat.

• 48:50Speaker 06

  Um, and then also in terms of, um, creating other opportunities, so broadening your reach and your audience and, um, you never know who's gonna read it and who's gonna get in touch. So, uh, yeah, I've been, yeah, I, I, I suppose I spent my sabbatical, uh, collecting those kind of options, like, uh, meeting new people and, uh, trying some uncertain ventures, uh, that don't have a steady paycheck associated with them. And then, uh, yeah, I've just been lucky that some, my stable of options have started paying off. Um, interestingly, after I'd written almost all of the book, so, um, this is not a sort of, one of those things where you create a cute story after the fact to explain, uh, your success, like,

• 49:33Speaker 06

  I didn't know that this would happen, but I was putting myself in the best position possible for it to happen.

• 49:40Chris Williamson?

  I love it, man. And speaking in Naval language, you're leveraging on media and capital. And the one that I feel like Naval actually misses off, which is kind of the, the social slash network slash renown effect. Um, and it's a kind of a combination of all of those. Is there an elephant in the room, talking about what you've just brought up there and then the point I made before about front-loading your wealth? Is there a bit of an uncomfortable elephant in the room that there is, if you want to have a family, there is a little bit of a time bracket on this? That we need to spend a little bit of time avoiding debt and accruing fat stacks of cash?

• 50:23Chris Williamson?

  We also know, for most of us, we don't want to be a parent to a newborn child at 50. So there is a kind of a window in terms of long term lifestyle design that we need to slot ourselves into. And for women, the window perhaps is made even smaller. Although, a statistic from 2019 in the UK, more women had children over the age of 40 than under the age of 20. Yeah.

• 50:51Speaker 06

  Wow.

• 50:52Chris Williamson?

  If you're cool stat, but you you understand the paradigm I'm talking about.

• 50:56Speaker 06

  I do, yeah. So you're absolutely right. But I think the the the good news is that it's not necessarily a bi phasic thing where you're in this mode now and then you switch to this mode after a certain point, or because you're having a family or whatever it might be. You can sort of move in and out of different modes. I'd probably, again, go back to the exploring and exploiting thing. Or, you know, risk on or risk off modes. And you can you can do it like multiple times throughout a lifetime. So my preferred model is for a young a young

• 51:36Speaker 06

  person. First, spend some time actually building some career capital. I reckon that's always the way to go. And what I mean by that is accumulate some skills, get paid to be less dumb, basically, get a get a regular job. You know, like, you'll also meet people through the job, hopefully, and make you repay your student debt if you have if you have one, or at least have a have a crack at it.

• 52:02Chris Williamson?

  And also learn how the workplace works as well. Learn how to have a disagreement with your boss, learn what it is to get up at 7am every day, etc, etc.

• 52:12Speaker 06

  Yeah. Yeah. And maybe get a taste for what you don't want to live through, I suppose. Yeah, like, it's that thing, I don't know if, yeah, if anyone who's ever done like manual labour, or maybe worked in a hospitality or a restaurant, I think.

• 52:28Speaker 06

  If you're in a shit job, um, not that I'm saying all those jobs are shit, I just mean if it happens to be a shit, a shitty version of that job. Um, that's pretty good motivation, right? Um, you don't wanna, you don't wanna, uh, you don't wanna think of yourself like forty years from now doing the same thing. So I think there's sort of a character building element to it as well. Um, where everyone should really have to do, have to do that. But anyway, you, so you, you go through a phase where you're trying to be useful and, you know, you're young and dumb, you don't know anything, like just pick up, pick up skills, become useful. Then maybe you do your um, exploration where you start. Maybe you go out into the world and you take risks because you don't have a mortgage necessarily, you don't have kids.

• 53:11Speaker 06

  At that point, this is, it's not a surprise that so many entrepreneurs are um, in their, even in their late teens or early twenties, like it makes perfect sense. Then, if your ambitions don't work out and you wanna have a family or whatever, you can take risk off, you can um, you know, sell your business if you've got it started, or just sort of, sort of work a, a regular salary job and uh, and, and step things back. But that's not the end of the road. So, interesting uh, statistics, I think. The most successful entrepreneurs tend to be in their fifties or um, certainly older, like the Zuckerberg's of the world are actually.

• 53:51Speaker 06

  Um, there's a lot of them, but that doesn't actually necessarily uh, relate to their success and it might even be the opposite.

• 53:59Chris Williamson?

  Oh dude, they're, they're incredibly rare. There's a, a really famous diagram floating around a couple of years ago. Where it was talking about the founders of some of the biggest companies in the world and when they founded the companies and it was like Bill Gates in his fifties and Steve Jobs and he's been blah, blah, blah, blah, blah, blah. The only reason I can see that we have adolescents worth billions and billions of dollars is a function of the fact that Silicon Valley's valuations of companies has become completely detached from their actual worth. And it's more a quirk of the particular way that our economy's set up at the moment, i.e. Silicon Valley doesn't know what the fuck it's doing. And is just chucking chucking money at anything that moves in a desperate attempt that

• 54:43Chris Williamson?

  it's going to go to the moon. So yeah, I totally agree, man. You can win at almost every stage of life now. There's these kids, these like seven, I remember this seven or eight year olds who had a YouTube channel reviewing toys. And he's like, one of the biggest YouTubers in the world a couple of years ago. And you can flip that round to the the Warren Buffett story where you make 65% or you make 90% of your net worth after your 65th birthday, you know, like there is a full lifetime of success opportunities. And you really, as long as you're never out of the game, you only need to hit that moonshot once, ideally earlier on, because then you get more time to enjoy it. But you only need to get it right once.

• 55:26Speaker 06

  Yeah, yeah, no, you're absolutely right. I mean, my own personal plan was if my little ventures didn't pay off, I was because I do quite want to have a family at some point. I thought that I would return to the workforce and, you know, have a reasonable job and a good career and maybe do the kids and house and family thing. And then, yeah, at some distant point down the track, save up another stack of cash or get in a get in a good financial position and then go do something wild again, you know, like go try and start a company or, you know, sell everything and go traveling or whatever it might be.

• 56:07Chris Williamson?

  I think dude, I think that kind of whatever you'd call it, that second, second youth, when the kids leave home, I think we're going to see that more as we've got more frictionless travel, people who've grown up with a traveling mindset and an entrepreneurial mindset, rather than the kids leaving home and your parents retiring to the country. It's like the kids leave home and your parents retire to five different countries a year, Airbnb being their play, their way, their way around the world, doing all of the stuff they just didn't quite have time to complete when they were 25. And I think that's going to be super cool. I certainly know, given my wanderlust, and it sounds like you've got the same. That would absolutely be something that I would be looking to do, like not just going away

• 56:52Chris Williamson?

  on wanky DFDS seaways, tours and cruises, which like everyone's mum, mum and dad seem to be obsessed with at the moment. Like, you know, going and heading off to all the countries that you didn't get a chance to, or going on an expedition, or going dog sledding, you know, all that sort of stuff. I think that hopefully we'll, we'll see that and it'll be a really, it'd be a really fucking cool world if that was the case. And it's also going to plug a ton of wealth and income into more varied countries. You're going to take wealth that's been created in the developed world and plug it into the developing world in a really nice way.

• 57:31Speaker 06

  Yeah, that's right. It's even doable with kids in tow. I mean, I don't know how much of a sort of logistical mission that is, but when I've been wandering around, I've met a bunch of families who are actually doing the nomadic, digital nomad lifestyle with their kids. And it's, it's pretty cool for the kids because they get to, you know, like I'm thinking of this family who have got two young boys and the boys are in a Thai school, learning Thai at this formative age. And that's normal for them. That's their life. So yeah, I think that can be, that's even a possibility as well as to make it sort of a

• 58:07Chris Williamson?

  So many options. So many options, Richard. Right. So you've got, you've got these 10 principles for optionality. And we've kind of gone through a few of them, but there's some in here that I think are really cool. So can we do a sort of a quick fire? And have you just explained some of these to us?

• 58:26Speaker 06

  Yeah, of course.

• 58:27Chris Williamson?

  Perfect. So number two, sorry, number three, beware of geeks bearing formulas.

• 58:37Speaker 06

  Yeah. So.

• 58:41Speaker 06

  There's a, okay, so in the world of finance, uh, people love to come up with very fancy models that they think have some predictive power about what's going to happen to the stock market or oil or bitcoin or whatever it might be. Um, and they use these models to decide how much risk they're willing to take in terms of asset allocation and timing and all these kind of decisions that they have to make. Um, now, when people do that on their own behalf, that's okay. You know, you can be a trader, you can, you can go on Wall Street bets, you can, you can have a play. And if you screw up, then because, you know, because

• 59:22Speaker 06

  your Fibonacci retracements were wrong or whatever, um, like that's on you and, and, you know, maybe it's a learning experience or something, right? But, but the danger is that everyone has exposure to the financial system as a whole and people who are making these kind of decisions on your behalf because, uh, you know, they're investing your retirement fund for you or pension fund or whatever it might be. So, um, there's this tendency throughout human history, but especially in the financial realm to sort of have, have too much confidence in these, uh, in these predictive models, which only ever offer

• 1:00:04Speaker 06

  a very simplified version of, uh, of like a complex chaotic system. And then when the models are wrong, uh, things work out very, very badly. So during the, the GFC, for example, actually during the credit crunch, um, yeah, that, uh, there's this, the story I recount in the book where the Goldman Sachs guy whose fund has just lost thirty percent or something is saying like, oh, this was a twenty, it was a twenty Five standard deviation move outside of our models and it happened multiple days in a row like it's a it's a total freak accident and the funny thing is that like

• 1:00:44Speaker 06

  these freak accidents happen all the time and it's not that it's not that the universe is just sort of taking the piss it's that the models are broken the models are wrong

• 1:00:56Speaker 06

  so the the more general lesson to sort of extrapolate out from that is just

• 1:01:03Speaker 06

  if you're making any kind of decision that's based on an equation or a model also very popular in the financial independence retire early movement just don't put all your don't put all your faith in it just remain open to the possibility that you might be wrong or that your model might be wrong and sort of plan accordingly because historically if you sort of trust in the numbers too much like you know so and so is a sure thing you will be you will be proven wrong in a in a sort of a devastating fashion

• 1:01:38Chris Williamson?

  Around about once every decade as well.

• 1:01:44Speaker 06

  Yeah, yeah, yeah, I mean it will it will happen in your lifetime, yeah, for sure.

• 1:01:49Chris Williamson?

  Number five, generating better options is much more important than trying to make perfect decisions.

• 1:01:57Speaker 06

  So if you think about when you go you're going through daily life and you're just presented with this massively expensive array of options and I mean expensive in terms of attention and and mental bandwidth

• 1:02:17Speaker 06

  and the vast majority of them just don't matter so we're sort of blind to them because we are so used to it but like what clothes you wear what exactly what brand of cereal you're eating and all the product selections that you make the route that you drive the people you associate with the emails you check the websites you look at blah blah blah blah blah like if you add all of that up we're talking about like millions of branching paths in front of you at any given point in time you could order anything you want you could look at any website on the entire internet or watch any TV show or film so

• 1:02:55Speaker 06

  a lot of people try to optimize those branching trees of possibility so

• 1:03:03Speaker 06

  Sort through the umpteen different um brands of of detergent and figure out the exact best one for me. Or um you know, like, find out the exact TV show that I should watch or uh you know. Like, basically putting a ton of thought into these decisions that don't have any sort of asymmetric payoff because. You know, you you choose the uh you choose this brand of laundry detergent over that one, like, it's not going to be sort of wildly exciting either way. And you you're white, so what or whatever. Um. So the point that I'm making there is that. You don't need to worry about the vast majority of those of choices that are presented to you in in daily life.

• 1:03:46Speaker 06

  You're much better off sort of pruning quite a lot of those pathways and trying to put your channel, your efforts into. Uh looking for the actual asymmetric opportunities that are going to be powerful to you. So uh instead of. Um so uh instead of walking down the breakfast cereal aisle and trying to decide which type of cereal you should eat. The a high a a higher leverage option to be thinking about is like um. Do I want to be eating cereal or, you know, like, do I want to have breakfast at all? What is the concept of breakfast? Like, is this just a myth sold to us by Mr. Kellogg or whatever, right? So like, um um the point being not that you should skip breakfast, but just that like.

• 1:04:29Speaker 06

  Uh maybe that's a maybe that's a more um interesting uh potentially rewarding option to think about than like the very specific. Uh difference between one brand and the other instead of scrutinizing ingredient panels and that sort of thing.

• 1:04:43Chris Williamson?

  So I suppose, go ahead, sorry.

• 1:04:45Speaker 06

  No, go on.

• 1:04:46Chris Williamson?

  Going one level of abstraction back.

• 1:04:48Speaker 06

  I was just gonna say that um my with my with my tinfoil hat on, um my conspiracy theory is that like. I don't know if this is an an an exact deliberate ploy or not, but um.

• 1:05:01Speaker 06

  When you have all these options sort of dazzling you, you're essentially trapped. And this is the, this is what the, this is what the consumer capitalist system wants from you is to keep you obsessing over this narrow range of standardized options so that you don't make the big, uh, high leverage decisions to, uh, you know, stop consuming in certain ways or, um, uh, change up your, your life in a more meaningful way because you're just constantly trying to make these low level, boring, um, low payoff decisions. Sorry, go on, you were gonna say something.

• 1:05:33Chris Williamson?

  Yeah. So the illusion of choice that we're given as a consumer still traps us in the matrix of making decisions as a consumer. It doesn't actually allow us out of the maze. It just gives us different flavors of cheese within it.

• 1:05:51Speaker 06

  Yeah, I love that. That's a great way of putting it.

• 1:05:53Chris Williamson?

  Um, one of the things I thought, first off, a good heuristic, I suppose, would be to take one step of abstraction back from the question that you're asking and just think about it from first principles about like, do I need to do this? Do I need to do X? Uh, well, I get my car cleaned every Saturday. Okay. Well, like, could, could you get away with getting it cleaned every other Saturday? Do you actually need to get it cleaned at all? Like, what's gonna happen? Could you get it cleaned every six months? Is there a different way that you can get it cleaned? Can you go for a machine as a hand washer, this, that and the other? Another thing that made me think about is a Naval quote, play stupid games, win stupid prizes. And that very much, I think, talks about

• 1:06:33Chris Williamson?

  the, it speaks to a number of different things, but one of them is the obsessing that we happen to have over easy decisions because it allows us to push away the difficult ones. So I'll never forget, uh, this is when I was like maybe 23, 24. So, you know, I was on my way to buying my first house and I was the director of a pretty successful events company and I had a fair bit of money behind me. And I remember I was, I must have spent five minutes debating between two different types of yogurt based on the deal that was on. It was like four for three pounds.

• 1:07:10Chris Williamson?

  Like like seven for eight pounds, but there were different yogurts and there was some different flavors and this one's, oh, this one's got a little bit more protein and well, there's a little bit more trans fats in the other one. And I remember I had to take that step back, go one level of abstraction away and go, Chris, what, what on earth are you doing? Like this is, this is absolutely insane. In the time that you were here, you could have gone home and done something with far more leverage that would have genuinely added value to your life. But it's because I hadn't made the decision around which mortgage broker I wanted to use, or because I hadn't, you know, the, the hard, the hard thing, I hadn't sent the application off to whatever lawyer company. That's what I was hiding from. And yeah, I,

• 1:07:51Chris Williamson?

  I really that play stupid games, win stupid prizes. Also ties into it. It's a really easy way to identify the negatively asymmetric games that we're talking about. So stupid games is unprotected sex. A stupid game is texting whilst driving. A stupid game is putting your entire net worth into some expert algorithm trading advisor that some kid on Instagram's decided to tell you that you should use. And another one of those, the most, the most obvious one, which really struck home at me that when I realized it was, what is the prize you win for always responding to messages within 24 hours? Because we all do that. We all check

• 1:08:32Chris Williamson?

  our inboxes, our social media, Instagram, Twitter, Facebook, whatever it might be, TikTok. We all, I don't even, I don't know if TikTok has an inbox. We all check those. But what's the prize that you get for being the fastest replier in the lands? Like genuinely, these people, especially as you start to accrue a little bit of social capital and you get more incoming than you have outgoing. And most of the incoming is people wanting something from you, whether it be an answer to a question, or just the sense of belonging to do whatever. Like, that's cool. And satiating that desire is, is, is fine. And it's a nice way to connect. But what's the prize that you win for being the fastest person on the trigger for that? It's absolutely nothing. It's noise, not signal.

• 1:09:17Chris Williamson?

  And that-

• 1:09:18Speaker 06

  Yeah. Well, actually, the prize that you win is that people expect that from you as well in the future. And then it sort of becomes a trap of your own making.

• 1:09:26Chris Williamson?

  It's a curse.

• 1:09:27Speaker 06

  So, yeah, you, yeah, yeah. I mean, this is, that's my, that's my excuse for why I only reply to emails once a week or something. Thanks. Thanks for giving me that excuse.

• 1:09:36Chris Williamson?

  That's fine. Spectacular success is a matter of putting irons in the fire.

• 1:09:42Speaker 06

  Yeah, so this comes back to the idea of looking for these asymmetric opportunities and following your systems day in, day out. Basically, my frame on luck is that quite a lot of success in life does boil down to luck of one variety or another. You know, perhaps the sort of the genetic blessings that you've been bestowed with or not been bestowed with, or your parents' childhood traumas, or whatever it might be. But you can't be fatalistic about it and sort of blame your entire station in life on, you know, deterministic events. You, you actually do have to take responsibility. So how do you balance that?

• 1:10:26Speaker 06

  It's not, it's, it's, it's clearly not a matter of just, you know, vibing with the universe and putting out your, your intentions, the secret style. But it's also, yeah, it's, it's also not to say that there's nothing you can do. So my frame for optionality is, well, you can make your own luck. So look for those asymmetric opportunities and just snap them up. Just build a portfolio over years and you don't know, you can never be sure if they will pay off if you take one of these speculative plays. And probably they won't. You know, the, the chances are against you in any given one of them, but the idea is you're building a portfolio.

• 1:11:11Speaker 06

  One of them is going to pay off at some point in time, at which point you're going to be okay. So you just keep stacking up opportunities wherever you see them and maximizing your chances of getting lucky. So you can't, there's no guarantees. I can never say you're definitely gonna, you know, all your dreams are gonna come, gonna come true and- You know, life's gonna be sunshine and lollipops, but like, you can definitely put yourself in the position of uh of getting a transformative upside and it's that it's that stoic principle again of focus on the things that are within your control. Universe could could either make you or break you at any point along the way, but you can you can give yourself the best possible chances of uh

• 1:11:55Speaker 06

  of actually getting a good outcome.

• 1:11:58Chris Williamson?

  Hoarding options indefinitely is for cowards.

• 1:12:03Speaker 06

  Right, so

• 1:12:06Speaker 06

  if you are on your deathbed and you're very wealthy, then then um one view of the world is that you've done very well for yourself and are admirable. And another view of the world is that you fucked up because, you know, it's that that Jesus thing that uh you know, a rich uh a camel will pass through the eye of a needle more easily than a rich man will make it into the into the kingdom of God. So um uh into into heaven, sorry. So uh optionality has diminishing returns because it's sort of raw potential and you don't wanna just be sitting on raw potential indefinitely. Uh it's very useful to always maintain uh some level of optionality, but

• 1:12:46Speaker 06

  the point is to take risks, like the point is to do something and uh sort of leave the world in a in a better place than you found it. So uh looking at money, for example, uh if you have a bunch of money and you don't deploy it anywhere, I you know, you just sort of have it uh mouldering way under your mattress or whatever it might be. You could have invested that money, you could have you could have deployed the capital to the place where it can actually be do the most good. Or you could have uh spent it and put it back into the economy, or you could have given it to someone who will get a much higher return on investment from that money. So if you're just hoarding options uh until the end of time, um My argument is that uh once you've made good, once you've got yourself in a comfortable

• 1:13:31Speaker 06

  position, you're taking care of you and yours. Um I think it is sort of a, not a, I don't, I don't necessarily wanna frame it as a requirement, but like, it's a very attractive opportunity to use your expanded range of choices to help open up other people's uh options and capabilities. Just because you've already tapped out, you've hit the point of diminishing returns. You don't need more opportunities, you don't need more money, you don't need more friends, right? The, these things are, you can't have an infinite number. Um it's not gonna help you, but it'll be transformative to other people. So this is sort of my, my sort of preaching bit, but like, yeah, I would like to see people um open up their options uh in a selfish

• 1:14:14Speaker 06

  way, because why not, but also then use their position to uh to help our other people.

• 1:14:19Chris Williamson?

  I suppose this isn't just limited to financial either. So you can imagine someone perhaps in a relatively okay, middle-class position, who's maybe had a ton of different ideas, you know, for invention, maybe they're, maybe they're a low-level engineer or a coder or something like that, but it was safe for them to stay within the particular firm that they were at and they made it to fifty-five and got a big fat pension because they'd been with them for thirty years. But had they have decided to deploy on some of those options, they could have had so much more flourishing, they would have felt better, the world would have actually been raised up, the whole consciousness of the world would have been improved because of whatever the cool thing is that they're gonna do. So that would be hoarding options

• 1:15:04Chris Williamson?

  in one way. And then I suppose as well, people can hoard their networks. It's built into my blood because my business is that of a club promoter, but I adore linking people in. This guy, this guy, you need to get him on your podcast and this author, you should speak to this person and they're probably sick of it. They're probably sick of me constantly sending emails like poor Greg McEwan that wrote Essentialism, like I've become his booking agent, like constantly, mate, mate, you need to go on Ben Bergeron's podcast and this guy loves you and this guy loves you. It's just as well he's got an assistant, so he's not being hassled with it. But my point is that a lot of the time, you can imagine someone would not only hoard perhaps money,

• 1:15:43Chris Williamson?

  they would hoard intellectual wealth and some of that would be conscious, i.e. a fear of committing to it, because as soon as you put a target or a goal out into the world, you give yourself the chance of not achieving it, which is failure, which is scary. But another side of it would be someone consciously doing it. I don't want to share my insights about the financial market, my networks about this, my spare room in the house, which is currently unoccupied, a lower rental rate that allows a family to move in, or you know, all of these different things. There's a ton of different ways that people can be cowardly by not acting on options. And

• 1:16:24Chris Williamson?

  certainly this year for me, I've thought that

• 1:16:30Chris Williamson?

  trying to err on the side of action first. In my experience, we all are quite hesitant creatures and that makes sense because we're both predator and prey evolutionarily, which is an odd situation to be in. We can be eaten by stuff, but we also eat stuff. So we're tentative by nature, but erring on the side of action, David Allen's two-minute rule is like a really good one for just day-to-day stuff, but even bigger than that, like, okay, what would it take for me to get this, the minimum viable product of me starting this thing going, or me beginning that friendship with that person, or me saying something to that girl over the far side of the room, or pick whatever it is that you want, having that conversation with my boss that I think treats me a little bit badly.

• 1:17:14Chris Williamson?

  All of these different things, until you put them out into the world, until you actually decide to commit, they're just notions, they're just fucking ephemeral clouds, these weird thoughts that no other human except for you are going to be aware of. And erring on that action-first mindset is something that I definitely want to cultivate more in myself, and I think a lot of other people would benefit from too.

• 1:17:39Speaker 06

  Yeah, I agree. I think especially if, uh, if the costs of doing so are minimal and it's basically like a motivational issue or um, sort of, yeah, just pulling finger, like just make a little experiment, make a small bet and then iterate, right? Like, you know, you'll learn something from it. But yeah, I like that framing. I think you should definitely be um, uh, trying to uh, get more data about the world as quickly as you can, which will usually look like doing something. Just make sure it's a reversible thing or that it doesn't um, expose to any kind of large obligation. Um, and then take that, and then take the action.

• 1:18:14Chris Williamson?

  Yeah. Uh, what is a concept from Taleb that more people need to know about? One that perhaps isn't as common as the black swans and anti-fragility and stuff like that?

• 1:18:28Speaker 06

  Yeah, um, I love his, uh, his idea of a barbell strategy. Well, it's not actually Taleb's idea, but he does write about it, which is basically uh, uh, taking a sort of uh, biomodal approach to life where you're extremely extreme and aggressive in one particular uh, domain and then you're very conservative, like hyper-conservative uh, at the same time. So you can think about like a, yeah, like a barbell, there's one big lump and then there's another big lump and then there's nothing. And you know, there's just a thin line in the middle. Um, so I've, I've found that really useful um, in all sorts of areas, actually. So uh, just to give you an example, um, I have this

• 1:19:07Speaker 06

  like barbell strategy for buying stuff. So what that means is I want to have the best in-class stuff, uh, things that really bring me joy and that I love and that might be quite expensive, um, and that are, you know, very good quality. Or I want to have like whatever the cheapest version of that is, like the very, the thing that I pick up at the thrift shop without giving any particular thought to, or the thing, maybe I buy some fast fashion item or something because I don't particularly care about it. And then I want to have nothing in the middle. I don't want to have like middle-of-the-road stuff where I have to think about it and it's not that great. Or I pay quite a lot of coin for it and um, it's not going to last me very long. Um, so yeah,

• 1:19:51Speaker 06

  I kind of, I've found that quite, uh, quite liberating, uh, thinking about, also forces you to think about like, what, again, what is, what is worth having, what is worth concentrating on?

• 1:20:02Chris Williamson?

  What are some of the examples of products that you've applied that thought process to?

• 1:20:08Speaker 06

  Yeah, so I have um uh there's a there's a community called Buy It For Life on Reddit, which I think is pretty cool. And well, uh maybe I'll give you some context. I've been travelling for about uh four years since I quit my job and I've been living out of a suitcase. So I haven't owned anything and I got rid of I got rid of everything before I left. Um so I had my sort of core kit of clothing that I could wear over and over again. It's made out of merino wool. Um and it then that's expensive and then I put some thought into acquiring. And then I'd also just pick up sort of bits and pieces as I was travelling um with basically no thought put into them, like, you know, a T-shirt for working out or whatever. And then if if if it gets dirty or stolen or something,

• 1:20:50Speaker 06

  I don't care. It's just, you know, it cost me two dollars or whatever it might be. Um and then since coming back to New Zealand, I'm sort of thinking of moving into getting settled down a little bit and actually wanting to acquire possessions. So I'm using the principles of this Buy It For Life community to think about what are the things that uh I will have that I could potentially buy forever. So I'm right now, right now, I'm researching chef's knives and pots and pans. I want, yeah, I want to get it once and I want to look after it and be intentional about it and care for it forever. So this is on my um hyper sort of aggressive, expensive end of the barbell. Um something that I will that will I will use every day. I'll get a lot of utility out of and pleasure out

• 1:21:35Speaker 06

  of. Um and that's worth actually diving through that annoying consumer capitalism labyrinth for. But I don't want to do that like with some middle of the middle of the road stuff and do it five years later when this one craps out on me, you know?

• 1:21:49Chris Williamson?

  Hmm. Yeah, that is cool. I had a Rory Sutherland on the show recently, a behavioural economist from Ogilvy Advertising, one of the most unique force of nature humans on the planet. And he was talking about

• 1:22:03Speaker 06

  Oh, he's great.

• 1:22:03Chris Williamson?

  Exactly the same thing. And he spoke about how he thinks middle of the road fashion is dead. So the Marks and Spencer's or the Debenhams of the world, which is sort of fifty quid for a pair of jeans, or You know, sort of thirty five quid for a T shirt is just from a psychological perspective, totally mute because you get a particular rush when you get a bargain, when you get a where it wants for a fiver piece of clothing and you also get a nice rush and a sense of satisfaction when you buy a hundred and thirty quid pair of replay jeans that you know are going to be around for a decade. But you don't really actually get any sense. It's

• 1:22:47Chris Williamson?

  just that I've, I've paid a fair price for a fair item. This isn't exciting. Like it's, it's okayly made. I'm not, I'm not really that excited about it. I'm gonna have to care about it, but I didn't really pay that much to care about it that much. It's just so vanilla. And yeah, man, the, the barbell strategy is one also that I'm a huge fan of from Taleb. Richard, man, I really, really have enjoyed today. It feels like we could have done many more of these and perhaps we will do in the future. Optionality, how to survive and thrive in a volatile world will be linked in the show notes below on Amazon. If this has been the sort of thing that you've enjoyed today, then I highly recommend that you go and pick it up. Any other things that you want to plug? Where else should people check you out online?

• 1:23:29Speaker 06

  Um, yeah, I think come and say hello at my blog, which is the deep dish.org. I encourage people to reach out and say hello because, you know, I want to build it about my network and it's one of those cheap options to take out. And yeah, if you want to know about the book, go to optionalitybook.com and you can see a little preview and some what people are saying and also get links to the various retailers.

• 1:23:54Chris Williamson?

  Awesome, man. Thank you so much for today.

• 1:23:57Speaker 06

  Oh, thanks for having me, Chris. It's a pleasure.

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