#680: Richard Koch — Revisiting the 80/20 Principle, The Power of Optimistic Journaling, Studying History to Improve Investing, and The Grand Beliefs of Winners (Plus: The Toxic Beliefs of Losers)

Brought to you by Eight Sleep’s Pod Cover http://eightsleep.com/Tim sleeping solution for dynamic cooling and heating and Wealthfront https://wealthfront.com/tim high-yield savings account. Richard Koch (@RichardKoch8020 https://twitter.com/RichardKoch8020) is an entrepreneur, investor, former strategy consultant, and author of several books https://richardkoch.net/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, 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, rewritten in 2022, has sold more than a million copies, been translated into roughly 40 languages, and has become a business classic. It was named by GQ as one of the top 25 business books of all time. Richard’s latest book is Unreasonable Success and How to Achieve It https://www.amazon.com/Unreasonable-Success-How-Achieve-Unlocking/dp/1642011363/?tag=offsitoftimfe-20. He has two upcoming books: 80/20 Beliefs, which identifies the very few beliefs in our lives that strongly influence what we do, and, therefore, the results we get, as well as 80/20 Daily, a collection of 365 short daily readings using the 80/20 philosophy to achieve the good life. Please enjoy! * This episode is brought to you by Eight Sleep http://eightsleep.com/Tim! Eight Sleep’s Pod Cover http://eightsleep.com/Tim is the easiest and fastest way to sleep at the perfect temperature. It pairs dynamic cooling and heating with biometric tracking to offer the most advanced (and user-friendly) solution on the market. Simply add the Pod Cover http://eightsleep.com/Tim to your current mattress and start sleeping as cool as 55°F or as hot as 110°F. It also splits your bed in half, so your partner can choose a totally different temperature. Go to EightSleep.com/Tim http://eightsleep.com/Tim and save $250 on the Eight Sleep Pod Cover. Eight Sleep currently ships within the USA, Canada, the UK, select countries in the EU, and Australia. * This episode is also brought to you by Wealthfront http://wealthfront.com/tim! Wealthfront is an app that helps you save and invest your money. Right now, you can earn 4.55% APY—that’s the Annual Percentage Yield—with the Wealthfront Cash Account http://wealthfront.com/tim. That’s more than eleven times more interest than if you left your money in a savings account at the average bank, according to FDIC.gov. It takes just a few minutes to sign up, and then you’ll immediately start earning 4.55% interest on your savings. And when you open an account today, you’ll get an extra fifty-dollar bonus http://wealthfront.com/tim with a deposit of five hundred dollars or more. Visit Wealthfront.com/Tim http://wealthfront.com/tim to get started. * [06:18] What3Words. [12:59] Upbeat fish pond reflections. [15:04] Journaling toward optimistic investment. [17:14] Betfair vs. bookmakers. [27:42] How history ties in with investment strategy. [33:47] Assigning probabilities. [36:56] The cows, the stars, and the question marks. [45:41] 80/20 happiness. [57:36] A qué será, será quandary. [1:06:48] Toxic beliefs and terrible templates. [1:11:24] A meeting with Bill Bain. [1:14:41] Charm school. [1:15:08] Why Bain & Company was a better fit than BCG had been. [1:17:34] The formula. [1:25:04] Identifying one's own toxic beliefs. [1:35:04] Opposites to toxic beliefs. [1:41:53] Churchill's helpful delusion. [1:47:46] The formation of grand beliefs. [1:51:06] How grand beliefs can become toxic. [1:53:37] Pattern interruption. [1:56:08] The Oxford Experience for 99/1 people. [2:09:04] A bespoke request for hands-on art. [2:11:33] Useful beauty. [2:18:55] Parting thoughts. * For show notes and past guests on The Tim Ferriss Show https://tim.blog/podcast, please visit tim.blog/podcast https://tim.blog/podcast/?utm_source=podcast&utm_medium=podcast&utm_campaign=podcast-description. For deals from sponsors of The Tim Ferriss Show https://tim.blog/podcast, please visit tim.blog/podcast-sponsors https://tim.blog/podcast-sponsors 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 https://tim.blog/transcripts. Discover Tim’s books: tim.blog/books https://tim.blog/books. Follow Tim: Twitter: twitter.com/tferriss https://twitter.com/tferriss Instagram: instagram.com/timferriss https://instagram.com/timferriss/ YouTube: youtube.com/timferriss https://www.youtube.com/timferriss Facebook: facebook.com/timferriss https://www.facebook.com/TimFerriss/ LinkedIn: linkedin.com/in/timferriss http://linkedin.com/in/timferriss Past guests on The Tim Ferriss Show http://tim.blog/podcast include Jerry Seinfeld https://tim.blog/2020/12/08/jerry-seinfeld/, Hugh Jackman https://tim.blog/2020/06/26/hugh-jackman/, Dr. Jane Goodall https://tim.blog/2020/04/16/jane-goodall/, LeBron James https://tim.blog/2018/11/27/lebron-james-mike-mancias/, Kevin Hart https://tim.blog/2020/05/20/kevin-hart/, Doris Kearns Goodwin https://tim.blog/2018/09/07/doris-kearns-goodwin-leadership/, Jamie Foxx https://tim.blog/2015/12/06/jamie-foxx/, Matthew McConaughey https://tim.blog/2020/10/19/matthew-mcconaughey/, Esther Perel https://tim.blog/2017/05/21/esther-perel/, Elizabeth Gilbert https://tim.blog/2020/05/08/elizabeth-gilbert/, Terry Crews https://tim.blog/2017/12/20/terry-crews-how-to-have-do-and-be-all-you-want/, Sia https://tim.blog/2020/08/12/sia/, Yuval Noah Harari https://tim.blog/2020/10/27/yuval-noah-harari/, Malcolm Gladwell https://tim.blog/2016/06/21/malcolm-gladwell/, Madeleine Albright https://tim.blog/2020/05/27/secretary-madeleine-albright/, Cheryl Strayed https://tim.blog/2017/03/30/cheryl-strayed/, Jim Collins https://tim.blog/2019/02/18/jim-collins/, Mary Karr, https://tim.blog/2020/11/11/mary-karr/ Maria Popova https://tim.blog/2014/10/21/brain-pickings/, Sam Harris https://tim.blog/2020/05/15/sam-harris-2/, Michael Phelps https://tim.blog/2021/01/21/michael-phelps-grant-hackett/, Bob Iger https://tim.blog/2020/01/16/bob-iger/, Edward Norton https://tim.blog/2019/10/31/edward-norton-motherless-brooklyn/, Arnold Schwarzenegger https://tim.blog/2015/02/02/arnold-schwarzenegger/, Neil Strauss https://tim.blog/2014/06/24/neil-strauss/, Ken Burns https://tim.blog/2019/09/12/ken-burns/, Maria Sharapova https://tim.blog/2017/08/26/maria-sharapova/, Marc Andreessen https://tim.blog/2016/05/29/marc-andreessen/, Neil Gaiman https://tim.blog/2019/03/28/neil-gaiman/, Neil de Grasse Tyson https://tim.blog/2019/10/03/neil-degrasse-tyson/, Jocko Willink https://tim.blog/2016/09/21/jocko-willink-on-discipline-leadership-and-overcoming-doubt/, Daniel Ek https://tim.blog/2020/12/03/daniel-ek/, Kelly Slater https://tim.blog/2020/09/08/kelly-slater/, Dr. Peter Attia https://tim.blog/2019/11/27/peter-attia-fasting-metformin-longevity/, Seth Godin https://tim.blog/2016/02/10/seth-godin/, Howard Marks https://tim.blog/2018/09/25/howard-marks/, Dr. Brené Brown https://tim.blog/2020/02/06/brene-brown-striving-self-acceptance-saving-marriages/, Eric Schmidt https://tim.blog/2019/04/09/eric-schmidt/, Michael Lewis https://tim.blog/2020/05/01/michael-lewis/, Joe Gebbia https://tim.blog/2018/03/08/joe-gebbia-co-founder-of-airbnb/, Michael Pollan https://tim.blog/2018/05/06/michael-pollan-how-to-change-your-mind/, Dr. Jordan Peterson https://tim.blog/2021/03/01/jordan-peterson/, Vince Vaughn https://tim.blog/2017/05/31/vince-vaughn/, Brian Koppelman https://tim.blog/2020/04/23/brian-koppelman/, Ramit Sethi https://tim.blog/2019/05/07/ramit-sethi/, Dax Shepard https://tim.blog/2020/11/18/dax-shepard/, Tony Robbins https://tim.blog/2014/10/15/money-master-the-game/, Jim Dethmer https://tim.blog/2020/05/18/jim-dethmer/, Dan Harris https://tim.blog/2020/11/19/dan-harris/, Ray Dalio https://tim.blog/2017/09/13/ray-dalio/, Naval Ravikant https://tim.blog/2015/08/18/the-evolutionary-angel-naval-ravikant/, Vitalik Buterin https://tim.blog/2021/03/08/vitalik-buterin-naval-ravikant/, Elizabeth Lesser https://tim.blog/2021/03/16/elizabeth-lesser/, Amanda Palmer https://tim.blog/2019/04/18/amanda-palmer-2/, Katie Haun https://tim.blog/2021/02/18/katie-haun/, Sir Richard Branson https://tim.blog/2017/10/09/richard-branson/, Chuck Palahniuk https://tim.blog/2020/09/02/chuck-palahniuk/, Arianna Huffington https://tim.blog/2017/10/18/arianna-huffington/, Reid Hoffman https://tim.blog/2015/08/31/the-oracle-of-silicon-valley-reid-hoffman-plus-michael-mccullough/, Bill Burr https://tim.blog/2017/09/17/bill-burr/, Whitney Cummings https://tim.blog/2015/06/26/whitney-cummings/, Rick Rubin https://tim.blog/2015/05/15/rick-rubin/, Dr. Vivek Murthy https://tim.blog/2020/03/26/vivek-murthy/, Darren Aronofsky https://tim.blog/2017/09/09/darren-aronofsky/, Margaret Atwood https://tim.blog/2022/02/22/margaret-atwood/, Mark Zuckerberg https://tim.blog/2022/03/24/mark-zuckerberg/, Peter Thiel https://tim.blog/2014/09/09/peter-thiel/, Dr. Gabor Maté https://tim.blog/2018/02/20/gabor-mate/, Anne Lamott https://tim.blog/2021/07/09/anne-lamott/, Sarah Silverman https://tim.blog/2022/01/12/sarah-silverman/, Dr. Andrew Huberman https://tim.blog/2021/07/06/andrew-huberman/, and many more. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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

• 0:00Tim Ferriss?

  This episode is brought to you by SecureFrame. SecureFrame's industry-leading compliance automation platform, paired with their in-house compliance experts and former auditors, helps you to get audit-ready in weeks, not months, so you can close more deals faster. I polled a ton of you online on social and reviews came back, which were overwhelmingly positive for SecureFrame. SecureFrame simplifies and streamlines the process of getting and staying compliant to the most rigorous global privacy and security standards. They help thousands of businesses achieve compliance with security and privacy frameworks, including SOC 2, ISO 27001, HIPAA, PCI, and GDPR. SecureFrame is the most comprehensive security and compliance automation platform with hundreds of integrations,

• 0:44Tim Ferriss?

  built-in security training, vendor and risk management, and more. You continuously detect and remediate misconfigurations across your technology stack. You also get complete visibility with actionable insights on critical security and privacy compliance issues. Security training for SOC 2, HIPAA, PCI, DSS, GDPR, and more are built into SecureFrame's platform. You can quickly meet security and privacy compliance requirements and save time signing, tracking, and reporting on required training. SecureFrame provides unmatched expert guidance every step of the way with their 30-plus former auditors and industry professionals. SecureFrame helps you quickly achieve and maintain compliance so you can focus on other things, like serving your customers, scaling your business, and growing revenue. So, consider automating your security

• 1:29Tim Ferriss?

  and privacy compliance with SecureFrame. Schedule a demo today at SecureFrame.com, as it sounds, SecureFrame.com, and tell them Tim Ferriss, that's me. Tim Ferriss sent you to unlock 10% off for your first year. Again, that's SecureFrame.com. And during your demo, tell them that Tim Ferriss sent you to unlock 10% off for your first year. One more time, SecureFrame.com.

• 1:55Tim Ferriss?

  This episode is brought to you by Eight Sleep. Temperature is one of the main causes of poor sleep and heat is my personal nemesis. I've suffered for decades tossing and turning, throwing blankets off, pulling the back on, putting one leg on top and repeating all of that ad nauseam. But now I am falling asleep in record time. Why? Because I'm using a device that was recommended to me by friends called the Pod Cover by Eight Sleep. The Pod Cover fits on any mattress and allows you to adjust the temperature of your sleeping environment, providing the optimal temperature that gets you the best night's sleep. With the Pod Cover's dual-zone temperature control, you and your partner can set your sides of the bed to as cool as 55 degrees or as hot as 110 degrees.

• 2:36Tim Ferriss?

  I think generally in my experience, my partners prefer the high side and I like to sleep very, very cool. So stop fighting, this helps. Based on your biometrics, environment and sleep stages, the Pod Cover makes temperature adjustments throughout the night that limit wake-ups and increase your percentage of deep sleep. In addition to its best-in-class temperature regulation, the Pod Cover sensors also track your health and sleep metrics without the need to use a wearable. So go to eightsleep.com/tim, all spelled out, eightsleep.com/tim and save $250 on the Eight Sleep Pod Cover. That's eightsleep.com/tim. Eight Sleep currently ships within the US, Canada and the UK, select countries in the EU and Australia.

• 3:17Tim Ferriss?

  Again, that's eightsleep.com/tim to save $250 on the Eight Sleep Pod Cover.

• 3:24Speaker 01

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

• 3:31Speaker 02

  No, this is inappropriate.

• 3:35Speaker 01

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

• 3:47Tim Ferriss?

  Hello, boys and girls, ladies and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to interview and deconstruct world-class performers, to tease out the stories, the routines, the habits, the beliefs that you can emulate to improve your own lives. My guest today is a fan favorite. He's been on once before. He always delivers a lot of actionable advice and learnings. His name is Richard Koch. K O C H. Richard is an entrepreneur, investor, former strategy consultant, and the 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 an average of 22% compounded annually

• 4:30Tim Ferriss?

  over 37 years and have included Filofax, Plymouth Gin, Belgo, Betfair, FanDuel, and Auto One. For those who don't have any reference for that, that is absurdly, absurdly good. He has worked for Boston Consulting Group and was a partner at Bain & Co. before joining Jim Lawrence and Ian 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, reinterpreted the Pareto Rule, which states that most results come from a small minority of causes and extended it beyond its well-known applications in business into personal life, happiness, and success. The book, rewritten in 2022, has sold more than a million copies, been translated into roughly 40 languages,

• 5:15Tim Ferriss?

  and has become a business classic. It was named by GQ as one of the top 25 business books of all time, and it is a book that has had a huge impact on my life and one that I have recommended for at least a decade at this point. Richard's latest book is Unreasonable Success and How to Achieve It. He has two upcoming books, 80/20 Beliefs, which identifies the very few beliefs in our lives that strongly influence what we do and therefore the results we get. And we talk about some of these 80/20 beliefs in this conversation, as well as 80/20 Daily, a collection of 365 short daily readings using the 80/20 philosophy to achieve the good life. You can find him

• 5:55Tim Ferriss?

  Online at Richard Koch dot net. Again, that's Richard K O C H dot net and on Twitter at Richard Koch eighty twenty. And now, without further ado, please enjoy a wide ranging, I think, very fun, certainly very actionable conversation with Richard Koch.

• 6:18Tim Ferriss?

  Richard, it is so nice to see you in person and be sitting across from you.

• 6:23Richard Koch?

  It's so wonderful to see you sitting across from me as well, in my kitchen table as well, which is fantastic. Thank you very much for coming.

• 6:30Tim Ferriss?

  Absolutely. At your kitchen table in this beautiful house, which is full of natural light, looking out at all sorts of greenery, the birds in the background couldn't be more pleasant. And before we started recording, I took a bathroom break, as I often do, part of my pregame ritual, and I walked past a fireplace and there was a small square piece of wood with three words on it, Gambit's payout. So Gambit's payout. And I thought, I should ask about that first, because I'm sure there's a story behind it. What is the story behind this?

• 7:10Richard Koch?

  Well, I'm an investor in a company called What Three Words. I don't know if you've heard of What Three Words, but the basic idea is that there are trillions of squares on earth, and each square is about the size of just outside my front door. And it's a method of trying to identify where people are in order to have deliveries happen where the address system is not particularly good. So I'm an investor in this company. It's a wonderful, wonderful British company.

• 7:39Tim Ferriss?

  Could you explain, just maybe by way of example, what that means? So they're satellite identified squares?

• 7:45Richard Koch?

  Yes. And you don't even need to be online, but it's basically mapped, and therefore anyone that's got the key to it can deliver to where someone is. It was originally designed by a guy who was in the music business, and he and his band would arrange to meet at Glastonbury or somewhere. But of course, The classroom is vast, you know, there's a huge field there and they would always miss each other. So he reckoned that, you know, if you could find a way of describing something, which was not a whole series of alpha numeric things, you know, B, A, you know, huge, long, meaningless thing, but was three English words, it could be in any foreign language as well,

• 8:27Richard Koch?

  then you would be able to find exactly where the person was and exactly where they get the stuff delivered. So they might want it in the garage, for example, they might want it in a different joining part of the house. And so they basically spent a huge amount of money mapping the whole world into trillions of these little squares. And the system now works. And car manufacturers can use it in order to provide directions and mapping. And it's a wonderful system and it's very, very economical. There is a unique three words for everyone. If you're involved in a car crash or accident of any kind, you can identify where you are to

• 9:11Richard Koch?

  the emergency services or to anyone else in order to be found as quickly as possible, without any mistake, without the ambulance or the police going here and there, you know, basically trying to find where you are.

• 9:24Tim Ferriss?

  So I didn't anticipate going down this side avenue, but it's interesting. So I'll pursue it and then we'll come back to the, these particular three words, which hopefully are not like doxing you and exposing you in some strange public way. But if, for instance, I have something delivered to my front porch and it's banana, eggplant, Susan, whatever it might be. If I then travel and have a car accident, how does that series of three words get mapped or associated with the new location, which I couldn't have predicted?

• 9:58Richard Koch?

  The system would be able to find where you were. We're in a completely different location. You wouldn't have those three words. There'd be a completely different three words.

• 10:07Tim Ferriss?

  I see, I see. Right, associated with where you are.

• 10:09Richard Koch?

  The police would have that, all the emergency services would have that and so forth. So all you would have to do would be identify where you are on the telephone. You just basically drop a pin and then they can find you.

• 10:21Tim Ferriss?

  Wow, and does that involve some type of hardware pairing? Where you have some type of card or any piece of hardware that identifies where you are to match it with the database of the system?

• 10:33Richard Koch?

  It requires you to actually have the car.

• 10:36Tim Ferriss?

  Right.

• 10:37Richard Koch?

  Be part of the system.

• 10:38Tim Ferriss?

  I see.

• 10:38Richard Koch?

  So Mercedes is on the system, various other car manufacturers are. And they're going through the process of basically signing up all the big car manufacturers and some of the small ones as well around the world.

• 10:48Tim Ferriss?

  Well, you know, I have to just say that you have such an eclectic range of investments in seemingly, well, perhaps not seemingly, completely disparate sectors and technologies serving completely different, I suppose, well niched down customer bases. Not to say that they're small, some of them are very huge. Where do these three words come in?

• 11:13Richard Koch?

  This is what, by complete coincidence, I've got right outside my front door and it's gambits, [BLEEP] and payout. Now, I'm a strategy guy. I do strategy in order to make money by venture capital investments. And gambits, yeah, that's the strategy. And then payout is huge bonanza. And, you know, I don't want to be big headed, but I've done very well in my investments. And, you know, payout is the operative word. And that's why we're sitting in this nice house and all the rest of it. Yeah. So aren't I lucky? I know everyone's gonna hate me. They're gonna think, oh, the guy's so smug, we don't like him.

• 11:55Tim Ferriss?

  No, I think the numbers speak pretty well to the track record. So I think it's fair enough to say. It would be more concerning, I think, if you had the line related to the 22% compound annually over 37 years and then we were sitting in some back alley and you were eating out of a garbage can. That would be more incongruous and cause more problems.

• 12:18Richard Koch?

  Well, lots of people come to see me and they think that I've been in a much more palatial place. And of course, what happens is that you buy somewhere and you live in it. I've been living in this particular house in Portugal for some of the year for, I'm not very good at mental arithmetic, it's actually 15 years.

• 12:34Tim Ferriss?

  Yeah, nobody can fact check you, so it's okay.

• 12:35Richard Koch?

  And so, you know, it's a nice place, but it's, you don't get the impression that it's, you know.

• 12:42Tim Ferriss?

  It's not Versailles.

• 12:43Richard Koch?

  Yes.

• 12:43Tim Ferriss?

  I think it's very comforting, has a comforting feeling to it. What is it called? Higa? Something like that in.

• 12:51Richard Koch?

  It's a bit zen. I've got a fish pond that I do all my thinking on, and the fish go round and round, wait for me to feed them.

• 12:59Tim Ferriss?

  So let me ask you, this is gonna be a whole collection of diversions, but that's sort of how my mind works. So in the last conversation that we had, you mentioned the fish pond, and you also mentioned, related to the fish pond, and I quote.

• 13:15Richard Koch?

  Oh dear.

• 13:17Tim Ferriss?

  Yeah. 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. It's something you do when you're being expansive rather than when you're doubting yourself. Could you say a bit more about that, if that is still the case?

• 13:35Richard Koch?

  Yes. What would you like me to say?

• 13:38Tim Ferriss?

  Why is that important? Because I think that many people, including myself, if I'm feeling stuck or overwhelmed or whatever, that is often when I journal most. But you do the opposite, it would seem.

• 13:49Richard Koch?

  That's true. That's true. I mean, I know that you have made a very good TED speech about fear and the importance of people revealing their fears. And I thought to myself, well, maybe I should do it. Nah.

• 14:01Tim Ferriss?

  You seem to be doing just fine.

• 14:02Richard Koch?

  Yeah, because, you know, I think I'm actually quite good at being upbeat, but I'm not very good at being downbeat. I've never had, I mean, I obviously respect the fact that a lot of people have mental problems of one sort or another. I've never felt down for more than about three hours.

• 14:18Tim Ferriss?

  Wow.

• 14:19Richard Koch?

  Yeah. And it's something to be very grateful for.

• 14:22Tim Ferriss?

  Yeah, I would give you every dollar and every one of my bank accounts to trade for that.

• 14:27Richard Koch?

  What I'm very good at doing is actually imagining upside. And a lot of people say the whole point of being a venture capitalist is that you think about the downside, what can go wrong and all the rest of it. I disagree with that because in the venture capital business, you make a huge amount of money on very few investments and you probably lose money on nearly all the rest. That hasn't actually been completely true about me. I've only lost money on probably about three or four investments, total loss.

• 14:55Tim Ferriss?

  You got me beat on that front, too.

• 14:57Richard Koch?

  Yeah.

• 14:59Tim Ferriss?

  But. Mental health check. Richard one, Tim zero.

• 15:03Richard Koch?

  I'm very lucky. I do genuinely believe that I'm quite good at what I'm doing, but I have been unbelievably lucky. Every single major investment has had an inflection point somewhere, which was pure luck.

• 15:16Tim Ferriss?

  So before we get to the luck, because of course, by virtue of having some systematic way of approaching and vetting, or finding and vetting investments, you've systematized increasing the surface area to which luck can stick. And I'm borrowing that expression from someone else, whose name I'm sadly forgetting. Before we get to that, let's talk about the journaling. So not when you're feeling down, but when you're feeling expansive. What does that look like?

• 15:48Richard Koch?

  Let's do it in regard to investments and then we'll do it in regard to more important things in life. But as far as investments are concerned, what I say to myself is, what are the opportunities which we're not fully exploiting? And I'm a great believer, Tim, that there are always huge opportunities out there. They're out there, but most people don't grasp that. Most people don't believe it, and most people don't do anything about it, even if they believe it. And I'm one of the people who actually is a mega, mega optimist in regard to things that are important to me, and the investments are quite important to me. So I try and imagine, how do we make a hundred times return on this investment?

• 16:32Richard Koch?

  Not how do we try and make 10 times return? And of course, it doesn't always work. And my success stories cluster in the sort of, you know, 10 to 25 times total investment. Because one of the things that I do is if I've invested in a company and it's going really well, I buy more shares in it. So I increase my stake in the company. So the average return is not going to be a hundred times. But on the first tranche of the Betfair investment, it was a hundred times. So what I'm trying to say is how could this be unbelievably successful? What would have to happen to make it unbelievably successful? And sometimes it's relatively easy. Sometimes it's actually not that difficult to do.

• 17:15Tim Ferriss?

  Can you give an example of a case where it was maybe easier or simpler than people would expect?

• 17:22Richard Koch?

  Well, Betfair is a very, very good example because this was a company which in the early days ran out of money.

• 17:27Tim Ferriss?

  Could you, just for people who didn't hear our first episode, and I do recommend everyone listen to the first episode because there's a lot of history and a lot of context. But these are independent episodes and they can be treated as such. But for people who are not familiar with Betfair, would you mind just saying a sentence or two about what Betfair is?

• 17:45Richard Koch?

  Betfair is the world's largest, by a huge margin, the world's largest betting exchange. And what a betting exchange means is that you and I exchange bets. Now, obviously, we don't do it in person, we do it through a website and it's all anonymous. But nevertheless, it's not a system that's used for, still the great majority of betting in the world takes place with bookmakers. Bookmakers are these horrible things. Now, these are terrible people because they've got big satchels. You go to the races, the horse races or the greyhound races, and you see these people arrive with, you know, satchels. And of course, you don't really know how much is in there. But when they're going home, they're bulging. Because actually, what they do is they take a profit on each race.

• 18:30Richard Koch?

  And they construct the book such that unless there's a very, very unusual movement in the betting at the very last minute, they're totally covered, they always make a profit on each race. The overround depends on the number of runners in the race. But the overround goes from 10% usually to about 25%. And in a race with A large number of horses such as the Grand National, it can be as much as 150%, which means that for every dollar that someone wages, 50 cents profit is made by the bookmaker. Now, on races which are not as important as the Grand National or have very few horses in them, it might be as little as 10%, but it's a huge amount of money.

• 19:14Richard Koch?

  And so there was a guy called Bert Black, Andrew Black to be more formal, and he came up with this idea, why don't we make an electronic system like the stock market where bets can go through this thing and instead of people having to pay 10% or 20% to the bookmakers each time, they pay 2%, 2% commission and they only pay if they win. So on average it can be 1%. And so it's hugely better, it sounds like a commercial advertisement, doesn't it? But, you know, I'm no longer on the board of Betfair and I'm not terribly sympathetic to them because they won't let me lose enough money. And that's another story. But they

• 19:56Richard Koch?

  restrict the amount of money that I lose. Sometimes I win, sometimes I lose on a year. If I'm actually losing money, they actually restrict the amount of money I can put in as the new stake. And I try to tell them that, you know, I've got a lot of money and I don't think they believe me. So I've never gone to the stage of actually sort of, you know, sending in my audited financial statements or anything like that. But, yeah, anyway, so I'm out of favor with Betfair and they're out of favor with me. But it's a wonderful system because if you gamble a lot, it means that your money can go much further, you can make larger stakes and you can actually win money. With the bookmakers, it's impossible

• 20:38Richard Koch?

  to win money over more than a very short period of time because they close the account. Yeah, huge house advantage and then they cut their losses. So to come back.

• 20:48Tim Ferriss?

  Okay, so bit fair. Disintermediation, sort of classic technology play in a sense. And you were saying you're communing with the fish at the fish pond, notebook in hand. Maybe it was not exactly the fish pond, but the exercisable work. And you ask, how could this be 100x return? Or how could this be an extraordinary success? And it was an example of where there was perhaps a simple tweak or addition or something like that. What did that look like?

• 21:19Richard Koch?

  Firstly, the concept, I just thought was unbelievable because anyone who's a serious gambler should be betting through a betting exchange. They should not be betting through bookmakers. That's a really dumb thing to do. But it was easier than that because the company started, and I have to say this, and I hope they're not listening, but the people who started the company

• 21:38Tim Ferriss?

  It's just you and me at a table.

• 21:39Richard Koch?

  Didn't really know what they were doing. And they, no reason that they should have known what they were doing. I mean, they were brilliant in their own way. Andrew Black, absolute genius. But he'd never worked in a company as a manager. He'd never worked in financial services. He'd never worked in gambling. He'd been a professional gambler, so he understood gambling. But he didn't understand business. And they were pretty thin in terms of the other people who understood business. So they went around the city of London, this was back in 2000, the year 2000, and they tried to raise money from professional venture capitalists and anybody else that would be a professional, so investment banks and people like that. And they all came back sort of, you know, totally incredulous and said, you haven't

• 22:24Richard Koch?

  got anybody who's been the chief executive of anything in your company. You haven't got any people who've actually worked in business before at a senior level. How do you expect us to give you money for this idea, however brilliant the idea was? And all of the professional people, the people who ran the Racing Post, the newspaper and all the rest of it, took a look at it and thought, you know, this idea is not going to fly. It was perfectly obvious to me as someone who was a gambler that it was really attractive, that, you know, my money could go much further, I could have bigger bets, and I wouldn't have to fatten the sexuals of these horrible bookmakers. So it was a blinding glimpse of the obvious, that it ought to grow enormously. But not only that, Tim, it was growing.

• 23:09Richard Koch?

  So after nine months, they ran out of money. They'd raised money in the first round from their friends and family. And people have mortgaged their houses and, you know, they tried to put as much money as possible in, but they weren't rich people and they didn't have a lot of money. Sounds like gambling. Yeah, exactly. Well, gambler's as well, probably, some of them. And so they ran out of money and then they went back to all the people that they'd seen before, professional venture capitalists, and said, we've run out of money. Can we have some more? And they said, well, we weren't going to give you money in the first place. We're certainly not going to give it to you now that you're on the verge of bankruptcy. It's important to look at the causes of that, the outflows. If it's because you're growing faster than you can manage, that's a quality problem.

• 23:52Richard Koch?

  That's the point. It was growing at 30% a month. And then it went up to 40%. I looked, I asked them, what, just tell me one simple fact. Every month since you started, in the last nine months, what were your billings? And what was the growth rate? The numbers were tiny, really tiny, but the growth rate was fantastic. And at one point, they were growing at 60% and 100%. I think this was just about the time when I put my money into it, which meant that their monthly revenues were doubling. And anyone who understands anything about arithmetic and exponential growth knows that that doesn't have to carry on for very long before you have a very big business. And if I had a very big business, because they didn't have to have betting shops and

• 24:38Richard Koch?

  other premises, and they didn't have to have a whole lot of overhead, they had a fairly simple internet system, and that was great. And they spent money, you know, they had to upgrade it over time as they got more customers. But the margins in the business for them were very high. They were only taking 2% of the total amount of money stake. The total amount of money stake pretty soon became very, very large. And their costs were a fraction of that 2%. So it didn't take a genius, sitting on the fish pond, to say, hey, if they continue to grow at this rate for the next five years, or even if it went down to 10% a month, then I'm going to make a fortune out of this. And I put as much money as I got into that company.

• 25:21Richard Koch?

  It was a million and a half pounds at the time. It's all the spare cash that I had. And then when the opportunity came to buy shares from some of the early investors, I pwned it up again.

• 25:31Tim Ferriss?

  Where did you get the money to pony up?

• 25:33Richard Koch?

  From successful investments that I've made before.

• 25:35Tim Ferriss?

  I see. So there was some intervening period of time.

• 25:38Richard Koch?

  Yeah, before that. First of all, I invested in FileFX and that made a seven times return. This was in the 1990s. Then I invested in Belgo, the Mool Frit restaurant, mussels and chips, french fries, and that made me a six times return. And then I invested in Plymouth Gin, where I was incredibly lucky, which is another story, but we happened to get the top spot on the ratings of the experts on gin. BBC Television got together 30 experts, so-called, in tasting gin, and the gin which they selected.

• 26:19Tim Ferriss?

  Did they all have the last name Koch?

• 26:22Richard Koch?

  We didn't even pay them any money. No, I mean, we didn't know this was going on. We got a call from the food and drink programme at BBC and said, you might want to tune in at seven o'clock in the evening.

• 26:33Tim Ferriss?

  Wow.

• 26:35Richard Koch?

  We had no idea. That was a very lucky investment and we sold it to Vin and Sprit, which was the Swedish state liquor monopoly, which owned Absolute Vodka. And they paid us more than they should have done for the company and, you know, we made a 16 times return on that.

• 26:51Tim Ferriss?

  So let's hit pause for a second. So a couple of things I want to mention. First is we're going to segue into sort of a broader lane outside of venture capital. I do want to say, you're mentioning the, not bookies, what was the term that you used?

• 27:09Richard Koch?

  Nasty horrible bookmakers.

• 27:11Tim Ferriss?

  Bookmakers, yes, who take the percentage. I will say that has an uncanny resemblance to some venture capitalists, not all, who rely on their management fees and not their performance bonuses. As a friend said to me, he went to business school and there was a very famous, I won't mention him by name, venture capitalist who was teaching a class and he said, venture capital is a lot like sex. He said, when it's good, it's great. And when it's bad, it's still pretty good.

• 27:37Tim Ferriss?

  But you certainly. Have the multiples to speak to the bona fides. Let's take a step back and this actually relates to our conversation over dinner last night where we were having some very, very nice white wine with mackerel, one of my favorites. If you're not eating mackerel, folks, I tell you, you're losing out. In any case, I asked everyone around the table what they studied in school. So we can expand on this, but you mentioned history and I asked a number of follow up questions. So how is it that you go from studying history to being the successful founder of strategy consultancy firm and private equity slash venture capital firm? Do those things tie together?

• 28:19Richard Koch?

  Yes, they're absolutely tied together because history is great at teaching you to think. So history is all about counterfactuals, you know, what could have happened as well as what did happen? What were the causes of the First World War? Why did Lenin manage to establish the communist state which lasted for 70 years? Why did Hitler, who was complete loony and a very nasty piece of work? How did he manage to become the Chancellor of Germany in 1933? And then the rest is unfortunately all history. But those questions are difficult questions and I think the teaching of history, I'm very passionate about teaching of history in schools in particular.

• 29:02Richard Koch?

  I think it's the best possible way that people can think about scenarios and venture capital investment is absolutely thinking about scenarios and they can imagine how something will go very badly wrong and the whole of money is lost and they can imagine how you can make a huge amount of money.

• 29:23Tim Ferriss?

  Could you speak just for a definition of terms again? We covered that fair. Counterfactual, what does this mean?

• 29:30Richard Koch?

  It means it didn't have to happen like it happened. So a counterfactual to the outbreak of the First World War in 1914 would be there was no war. The Kaiser went to see his relatives in Buckingham Palace and they had a drink and they decided that they would defuse the situation. And sure, the Archduke Franz Ferdinand had been assassinated, but you didn't necessarily have to mobilize all the troops in Europe because one guy had been bumped off by an anarchist or and. And

• 30:06Tim Ferriss?

  The whole story of that assassination is pretty insane as well. Just the number of things that had to happen for that to even turn out.

• 30:13Richard Koch?

  Yes, exactly. So, so all these things were complete freak occurrences. I think Lenin coming to power was a complete freak. That would not have happened if the Germans and the Swiss had not given him safe passage to Finland Station in Leningrad, what became Leningrad, St Petersburg at the time. And if Lenin had not got there, the democratically elected social revolutionary party would have been in power. And it was a middle of the road, I suppose you'd call it, left wing capitalist political party. It was a bit like the British Labour Party or the Democrats in the US today.

• 30:51Tim Ferriss?

  If we take the examination of history, we put it under a microscope. We see these many examples where things didn't have to turn out the way they turned out. And there are multiple failure points or potential failure points. If something very tiny hadn't happened, then this very large thing would not have been a consequence of it. How do you, and if, if I'm interrupting and you had more to add beforehand, please feel free to do that. But how do you then connect that to, say, making a successful investment? If you could just connect those dots.

• 31:22Richard Koch?

  Okay, it's really saying the future is terribly, terribly uncertain. I mean, one of the great historians that was at Oxford when I was a student there was Alan Taylor, AJP Taylor, a socialist, left wing sort of guy, but he was a very, very good historian. And he said, "The future is a land of which there are no maps." So when you look back in history, everything seems inevitable. But when you look forward in history, it's wide open. And so in thinking about an investment, you always got to say, what is the most likely thing that can happen and what are the outlying things that could happen?

• 32:02Richard Koch?

  So the most likely thing for Betfair, for example, was that the growth rate of 60% a month would go down to 10% a month or 5% a month. But all you then need to do is to run the numbers on what the implications of that would be for the future. And a more cheerful scenario, even more cheerful scenario would be that the growth rate was sustained for a little bit longer at a tiny percent more. And then you'd make a huge amount of money. Another scenario would be the government closed it down because there was no legislation. Which covered an online betting exchange.

• 32:38Tim Ferriss?

  Yeah, that happens a lot more in tech than people would like to admit.

• 32:42Richard Koch?

  Yeah, you know, they could have been closed down and, you know, there's a labor government there. And thank God the labor government was not a loony left labor government. And, you know, you can just see the story, all these poor working class people who haven't got very much money being taken to the cleaners by this nasty betting exchange.

• 33:02Tim Ferriss?

  Now, are you speaking about the?

• 33:04Richard Koch?

  Not the nasty book, mate. No, politicians would forget about the bit that they don't want you to know.

• 33:10Tim Ferriss?

  Right.

• 33:10Richard Koch?

  But nevertheless, you know, it was trading on gambling and gambling is an addiction. It's like alcohol, et cetera, et cetera. So a lot of people from the left and the right are opposed to gambling. So it could have gone wrong, but then you do an expected value calculation and you say, well, if it doesn't go wrong, I can make a hundred times my money. If it does go wrong, I lose all my money. Let's assume that the probability of it going wrong is more than 10%. Then you still, on an expected value basis, as long as it wasn't your only investment. But if you've got a portfolio of investment, then you can just go ahead and make the investment.

• 33:46Tim Ferriss?

  So my next question was going to be how you assign probabilities. I would love to know how you think about that because this applies not just to investing. I want to make this clear to folks. We're talking about investing because it is a discreet, explicit way of looking at points on the scoreboard. It's a little easier to assess success and failure, right?

• 34:06Richard Koch?

  It's objective.

• 34:08Tim Ferriss?

  Imagine if baseball didn't have any statistics, right? It's like, how would you say who was a good player? You track the numbers and you can do that in investing as well. Whereas in life, if we're talking about somebody who is quote unquote, successful, but we don't have metrics, it's a lot harder, but this type of thinking applies to so much more.

• 34:22Richard Koch?

  Yes, it does.

• 34:23Tim Ferriss?

  How do you assign probabilities? How do you think about assigning probabilities so that you can do the expected value? And if you could run through an example, just for people who aren't familiar with that type of simple calculation, that'd be super helpful. But how do you assign the probabilities? Cause that seems like one of the toughest challenges, maybe.

• 34:39Richard Koch?

  I, I look at the fish and I sort of, you know, clock a number from the air. Now, there are people. And some of them I've employed in the past, you know, who would go through a whole series of spreadsheets in order to try and work out. But I just say, what's my best guess? And then I will double the best guess or half the best guess. And then I've got a low case and a high case. It's very, very simple.

• 35:05Tim Ferriss?

  Do you think that being an optimist or seeing the upside more than you see the downside is a liability in that case?

• 35:11Richard Koch?

  Well, it's a liability unless the optimism is justified. And, and at that stage, I'm trying to be realistic. And I might ask other people who are more sane than I am, that is less optimistic, to actually make the same calculations. And then I just look at what the results of those are. But it's not rocket science.

• 35:33Tim Ferriss?

  Especially when you have even a few months of data. Right? I mean, you have something to look at. It's not just an idea on a napkin.

• 35:44Tim Ferriss?

  Just a quick thanks to one of our sponsors and we'll be right back to the show. This episode is brought to you by Wealthfront. There is a lot happening in the U.S. and global economies right now. A lot. That's an understatement. Are we in a recession? Is it a bear market? What's going to happen with inflation? So many questions, so few answers. I can't tell the future. Nobody can, but I can tell you about a great place to earn more on your savings. And that's Wealthfront. Wealthfront is an app that helps you save and invest your money. Right now you can earn 4.55% APY. That's the annual percentage yield with the Wealthfront Cash Account. That's more than 11 times more interest than if you left your money in a savings account at the average bank, according to FDIC.gov. So why wait? Earn 4.55% on your cash today.

• 36:29Tim Ferriss?

  Plus it's up to $5 million in FDIC insurance through partner banks. And when you open an account today, you'll get an extra $50 bonus with a deposit of $500 or more. There are already nearly half a million people using Wealthfront to save more, earn more and build long-term wealth. So why wait? Visit wealthfront.com/tim to get started. That's wealthfront.com/tim. This was a paid endorsement by Wealthfront.

• 36:57Richard Koch?

  Can I just say that this question about history being important, I've got another empirical justification for this because I would bring into the courtroom Exhibit A, which is Bill Bain. Now, Bill Bain was the founder of Bain & Company, which was probably the most successful strategy consulting or consulting firm in the world during the 1980s, 1970s, 1980s. It was founded after the Boston Consulting Group, set up by Bruce Henderson, who was a pioneer. He was like the Charles Darwin of strategy. You know, he believed in competition and he saw basically a Darwinian world of competition and he worked out system for that.

• 37:39Richard Koch?

  And Bruce founded the Boston Consulting Group, which I worked for for a time. They fired me. So I still think it's a wonderful, wonderful company and I think they're probably right to fire me. And that story we covered in episode one, for people who wanted to get to that. I wouldn't tell the story if it hadn't been a happy ending. The happy ending actually hinged very much on Bill Bain. Because when I knew that BCG were going to fire me, Tim, I arranged an interview with Bill Bain and I was very lucky to do that because he was the head of the company. But they were looking for people at that stage because they were growing at 40% a year. And there's a theme in this, which is very, very high growth. Bill Bain was a complete genius because he was a historian.

• 38:24Richard Koch?

  He did not have an MBA. He did not have an engineering degree. He did not have a quantitative degree of any kind. He was a historian. And he then met Bruce Henderson when he was trying to raise funds. He gave up history research, he thought that was very boring. And then he got a job with his old university in Tennessee. And his job was to raise money. So since Bruce Henderson was an alumnus of the university, Bill goes to see Bruce. And Bruce refuses to give him any money to the university, but says, why don't you come to Boston because I'd like you to meet some of my colleagues and we might give you a job.

• 39:07Richard Koch?

  The colleagues were totally aghast at the idea that Bill Bain should become not just a member, but quite an important member of the Boston Consulting Group. They said, this guy... Is really intelligent, but he's totally unqualified. He has no credentials whatsoever. And sure, he's very intelligent, but lots of priests are very intelligent. We're not going to hire a whole bunch of priests, are we? So I'm sorry if I'm digressing a bit. PCG, Priestly Consulting Group.

• 39:40Richard Koch?

  Well, I think that would go down quite well, actually. Holy shit. So anyway, so Bruce then hands, at the end of the day, he hands these assessments that all his senior people had made of Bill Bain, all of them giving a thumbs down to actually hiring him. And he says to Bill, Bill, what do you think about what my colleagues have said? And then Bill Bain reportedly said to Bruce, Bruce Henderson, with the greatest of respect to your colleagues, they are wrong because I understand how to make a consulting firm very, very successful. And I know how to sell to people who've got a lot of money and chief executives of companies.

• 40:25Richard Koch?

  Cause I've raised a huge amount of money for the university, even though you decided in your mean way, and it didn't exactly spell it out quite like this, not to do that. So I'm going to be very successful. Thank God that he rejected Bill Bain's plea for funds for the university. Otherwise, what a trajectory that could have taken. But anyway, so Bill Bain then worked in the Boston Consulting Group. He was one of the co-inventors of the growth share matrix, the cows, the stars, the question marks. I have no idea what that is. This is the greatest, how could you not know this? This is the greatest bit of strategy. Story of my life, Richard. Take a piece of paper and draw a line down. Make four quadrants. The axes are the growth rate of the market.

• 41:11Richard Koch?

  Whether it's high or low, below 10% or above that. And the other axis is the relative market share. So a business that is in the top left hand quadrant, because BCG drew their graphs backwards, was high growth, but it was high relative market share. In other words, in very simple English, it was the leader in its particular niche. And my investments have all been, my successful investments have all been star businesses.

• 41:41Tim Ferriss?

  Did you mention a cow? Am I making that up? Did you just mention, you said star? Well, there's some other word that you threw in.

• 41:46Richard Koch?

  Cash cows.

• 41:47Tim Ferriss?

  Oh.

• 41:48Richard Koch?

  Cows.

• 41:49Tim Ferriss?

  Like, how do cows fit into this? Okay, I just wanted to make sure.

• 41:52Richard Koch?

  You have to be in the right mood to get that one.

• 41:54Tim Ferriss?

  I just wasn't sure where you'd slipped into my sparkling water. Okay, got it. Cash cows.

• 41:59Richard Koch?

  Honestly, I haven't had anything to drink. We drank a lot last night, but I haven't drunk anything today. No, so a cash cow is the leader.

• 42:09Tim Ferriss?

  Now you're speaking my language. I think I go to cash cows.

• 42:11Richard Koch?

  Cash cow is something that throws off cash because it's low growth and it's very profitable because it's the market leader. A star business is a business that is in a high growth market and therefore is going to grow much faster. And because it's the leader in its segment, it's going to be very profitable if it isn't very profitable already, because it's going to have either higher prices than people who are, have a lower market share because it has less brand reputation or less popularity, or it's going to have lower costs because it's got greater scale, or it's going to be both. It's like sailing across the Atlantic and discovering that there's, you know, land at the other end, even if it's not the Indies. Once it's done, everyone says, we'll go to America.

• 42:56Richard Koch?

  But before it's done, it wasn't obvious. It enabled BCG and then later Bain and Company to make tens of millions of dollars.

• 43:07Richard Koch?

  Very early in the game, when they weren't very large.

• 43:09Tim Ferriss?

  Quick question about that. Is that in their selection of clients and therefore banking on future billing?

• 43:15Richard Koch?

  No.

• 43:16Tim Ferriss?

  Or it was using that as a way of thinking about helping their clients?

• 43:19Richard Koch?

  Exactly, the latter. So in other words, they go to big diversified companies. Don't forget in the 1970s.

• 43:25Tim Ferriss?

  Right. They would go to a GE and be like, you need to get rid of these

• 43:28Richard Koch?

  Get rid of this.

• 43:28Tim Ferriss?

  20 divisions or whatever.

• 43:29Richard Koch?

  And, and one of the things that you had to get rid of were most of the question marks, which were very high growth, very sexy because they're in very high growth markets like artificial intelligence today, but never having a cat in hell's chance of actually becoming the market leader. So what BCG said and what Bain and Company said to those companies is sell them, you know, get out while the guy is good because it's a sexy business, sexy market.

• 43:55Tim Ferriss?

  But never going to be the leader.

• 43:56Richard Koch?

  Never going to make any money.

• 43:57Tim Ferriss?

  I do get interrupted with a very mundane question. A cat's chance in hell, is that a real expression?

• 44:02Richard Koch?

  [laughing]

• 44:03Tim Ferriss?

  Poor cat. I have heard snowball's chance in hell, but do cats get thrown in there too?

• 44:08Richard Koch?

  I misspoke. I meant to say dog.

• 44:11Tim Ferriss?

  Oh, wait. I've never heard that either. Poor dogs too. Dogs' chance in hell. Oh, no, that's okay. I don't want to interrupt the flow. I just, the imagery is so strong and your, your adorable dog is right next door.

• 44:23Richard Koch?

  Well, of course, dogs were on the matrix as well, but cats weren't, which was catastrophic.

• 44:28Tim Ferriss?

  Oh, you are, you are the master of the puns. I've noticed this.

• 44:34Richard Koch?

  I'm descending to doggerel. Don't worry about it.

• 44:36Tim Ferriss?

  Oh, boy. So this matrix, and you said they did it backwards. Does that mean that something that's going well would grow up into the left?

• 44:44Richard Koch?

  No.

• 44:45Tim Ferriss?

  It was like a mirror image?

• 44:46Richard Koch?

  What it meant was the, the, the thing which had the greatest sales was on the left rather than the right. Normally, you would say if it's bigger, I mean, this is something I don't approve of at all, which is that, you know, we tend to think about time as always disappearing and that if something's bigger.

• 45:06Richard Koch?

  It's actually gonna be to the right of the graph. BCG put the bigger thing on the left. So the cash cow and the star were on the left. Whereas if you logically, they should have been bigger than the other side. And I don't know, someone made a mistake and it just got grandfathered in.

• 45:29Richard Koch?

  It was one of the greatest charts.

• 45:31Tim Ferriss?

  Oh, I'm not criticizing the chart.

• 45:32Richard Koch?

  But it was, but they made a mistake.

• 45:34Tim Ferriss?

  Yeah, well, you know, just think how, how big it could have been if they'd just got the bigger things on the right side. All right, let's segue for a second here. Broadly speaking, how do you apply some of these principles? And I know we've discussed this on some level before. And you mentioned Oxford, we are going to come back to Oxford purely out of self-interest. I have a question about that. But what are some of the ways that you have found most effective to apply some of this type of thinking to your own life? Or in terms of looking at, in the case of your investments, these critical few investments? Cause like you said, in venture capital and in many types of investing, if you look

• 46:15Tim Ferriss?

  at people who have amassed vast sums of wealth, they generally have high concentration. And then they, in some cases, diversify to protect against downside and stain wealth. But to build it, people usually have very concentrated positions. To do that, if there is some element of skill involved, you need to know how to separate the critical few from the trivial many, in a sense. What are some of the most impactful ways that you've applied that type of thinking, 80 20 principle, et cetera, to your, your own life outside of business?

• 46:49Richard Koch?

  Well, you've supplied the answer, which I was, wanted to give you, but the answer is the 80 20 principle is the link. Between the investment performance and venture capital is an extreme form of this. It's not eighty twenty, it's ninety nine one or something like that. And network businesses are the same thing and wealth is the same thing, you know. I mean, just think about Bezos or Musk, you know, just think how much money they've managed to make out of essentially one investment each, which has been fantastically successful. So the eighty twenty principle runs through like in a stick of rock, the seaside's name is sort of, you know, always running through it.

• 47:32Richard Koch?

  It runs through the whole of my thinking in terms of my own success or money, but also things like happiness. I'm trying to think, what are the few things that I need to do in order to attain what I want? What is the twenty percent or what is the one percent or whatever? And I think in happiness, and I'm very, very keen on talking about happiness because I've been thinking about this a lot recently, personally and for other people. Happiness depends on very, very few things. For a start, there's an argument which says that we have a baseline happiness level and we gravitate back to it.

• 48:14Richard Koch?

  And it is connected in some obscure way to genetics. But I've never actually seen a good explanation of how it is related to genetics. But nevertheless, it is intuitive in a way and people give examples of when you get married, you're suddenly very happy or when you fall in love, you're very happy. When you get married, you're still very happy. A year later, you may be no more happy than you were a year before you met Mr. Right or Miss Right. And so that's temporary and you revert to your habitual baseline happiness level. And this baseline happiness level also is evidenced when people win the lottery. Lottery, right. They have a lot of money, they spend a lot of money.

• 48:58Tim Ferriss?

  Or have a catastrophic accident in some cases, right?

• 49:01Richard Koch?

  Yeah, driving their Porsche rather too fast. But yeah, the evidence actually on lotteries is very mixed and it isn't as simple as people say. All the evidence, if you look at it on a subjective level of people reporting, is that people who are wealthier are actually, on average, happier than people who are poor. And this is true if you look at it in countries, it's true if you look at it within a particular country. And it's also true if you look at it in terms of people's lives. I don't know very many people who've become very rich, who are much more miserable than they used to be, or indeed not happier than they were. And it's often said that the pursuit of material things is useless.

• 49:45Richard Koch?

  But what about medicine? What about dentistry? You know, before the 20th century, very few children actually lasted beyond five years. And as a result of medicine improving immensely and also hygiene improving immensely, that's down to a negligible level. Imagine the trauma for a mother or a father, you know, in seeing three or four of their children die before the age of five. That's a huge amount of human suffering. And that's removed. People forget about that. Dentistry, you know, when I was growing up, a visit to the dentist was a cause for great trepidation.

• 50:30Richard Koch?

  And I remember the dentist having this drill, this enormous drill, putting it in my small mouth when I was about nine years old. And it just made such a horrible noise that you just knew it was going to be painful, even if it wasn't particularly painful. Nowadays, you don't get that. Dentistry has improved immensely. And dentistry actually also affects lifespan. And you look also at the fact that unless people get cancer these days, they're likely to last much longer than they would have done a generation ago, much longer. You know, maybe depending on the country, might be the average length of life might have been 50 years. About not that long ago, you know, 30 or 40 years ago. And now it's 80. Now, what does that mean?

• 51:14Richard Koch?

  Well, it not only means that people can live longer and healthier lives than they used to live, but it also means that there are fewer bereaved people, and that also is an enormous cause of pain and suffering.

• 51:26Tim Ferriss?

  How do we jump from the macro, the sort of societal, national level, to the personal? So for yourself, you said very few things really matter when it comes to happiness. And just for, not to beat a dead horse, but this is kind of my role. How would you define or think about happiness? Just so we are all on the same page as to what that means to you. Is it just a general sense of well-being?

• 51:52Richard Koch?

  Yes, I mean, well, the way that sociologists and psychologists do that is they ask people to rate their happiness on a one to 10 scale, and they interpret the results. It's a subjective rating. And a lot of people say, well, people don't really know whether they're happy or not, or they pretend to be happy when they're not happy. I just don't believe that. I think that people generally do know how happy they are, and when they give you a rating, they are giving you an honest rating. But if you ask people, have you actually deviated significantly from what you say now? You say eight, okay, so that's pretty good, very good, today. Was it true that you were always in a range of six to 10?

• 52:35Richard Koch?

  I mean, that's something that, for example, Yuval Noah Harari, whom I know you've interviewed, says that there's a little bit of leeway there, but there's not a hell of a lot of leeway. But have you ever met someone who's had a really miserable childhood, and then when they left home, have actually enjoyed life a lot? I've met many, many people like that. That shouldn't be the case if the baseline level is correct. But the argument goes much beyond that, which is to say, even if it was correct, you don't have to assume that it's immutable. You don't have to assume it cannot be changed. And If you want to be happier, there are various ways of doing it.

• 53:19Richard Koch?

  Again, one of the best documented findings of sociology is that people who are married are happier than people who are not married. Now, of course, there's no worse than an unhappy marriage or partnership. I make no distinction at all between a long-term relationship and a marriage because not everyone gets married these days. But it's a very good bet to be married rather than to be single throughout your life. So, but coming back to eighty twenty, that's one thing that you can do, which is to make sure that you have a long-term relationship with someone, preferably someone that you really like. It's gonna make a huge amount of difference. And there are various other subsidiary things. For example, I think it's very important if you're, from a purely selfish point of view,

• 54:04Richard Koch?

  if you want to be happy, you want to be in a relationship with someone who's very happy themselves. Yeah. It makes a huge amount of difference. You know, there are some people who are just incredibly difficult to live with because they're miserable. It also, you know, all the research shows that there's a guy who's got a love lab called Don Gottman. I think he's in Chicago. Sure, yeah, Gottman. There are very few indicators of whether people are gonna get divorced or whether they're gonna have a happy long-term relationship. One of them is that they're friends. They actually like each other. Well, that's a spining glimpse of the obvious, isn't it? But how many married people do you know who actually really don't have the same interests or they don't share the same pastimes in any regard?

• 54:47Richard Koch?

  They might have different values, but they're married. You know, well, that's a pretty dumb thing to do. So the first thing to do is make sure that you have a successful, long-term relationship. And if you do that, you're going to be pretty happy. The second thing that you must do, according to all the research, is you've got to love your job.

• 55:06Richard Koch?

  Now, many people don't love their jobs. And one of the reasons that they don't love their jobs is because they're doing it for money. Now, I think money's wonderful. I think money can help to make you happier. But if to earn a lot of money, you have to work for a boss who's an ogre, or you know, just not very nice, or inconsiderate, or makes you work very, very long hours, and you know, doesn't really care about your welfare, you're going to be much more miserable than working for a boss who's relatively relaxed, cheerful, happy person themselves. But how many people don't like their boss? It's ridiculous. Absolutely, you should resign, or you should poison the boss, or bump them off, you know, absolutely. So, you know, that's a very, a very, very simple thing.

• 55:49Tim Ferriss?

  No killing of the boss, folks.

• 55:52Richard Koch?

  Sorry. No liability. It's what I said, it's not what he said. And we don't like lawyers, anyway, so go away, boys.

• 55:58Tim Ferriss?

  Send your lawyers letters to Gambit's [BLEEP] payout, please.

• 56:03Richard Koch?

  I'll be back to [BLEEP] that, bro. Anyway, you get the picture. And then, you know, one of the things that I say in the 80/20 book, which you very kindly helped say is worth reading from people, the 80/20 principle, is that why don't you spend more time on the things that you like? So, a lot of people say, well, pleasures, you know, this is not very spiritual, you know. People like pleasures. Would you rather spend an evening with people that you enjoy spending an evening with? Or would you rather spend an evening with people that are miserable?

• 56:33Tim Ferriss?

  I think the former, yeah.

• 56:35Richard Koch?

  And it's amazing, I go around asking people, who are your best five friends in the world? And the people come up with a list. And then I say, who are the five people that you spend most time with? And very often, the lists are completely different. And that tells you that that person, they might be happy, but they're certainly going against the grain.

• 56:55Tim Ferriss?

  They're handicapping it.

• 56:55Richard Koch?

  Yeah. And again, people, you know, some people like living where they live. Other people find it noisy and unpleasant. Other people find it too boring. Why don't you go and live somewhere that you actually really like, that suits you, that has the same sort of people that you enjoy seeing in the street? Why don't you do that? Most people, it just doesn't cross their mind. I mean, I think in America, it's one of the redeeming features of America is that people do move around a lot. But we're talking in Portugal and the indigenous Portuguese, they don't move. There are a relatively few number of things that you do. And of course, you have to read one of my books to find out what they are, but they're absolutely obvious.

• 57:36Tim Ferriss?

  Well, hold on, we'll get plenty of people to read the books because I recommend the books and I actually gave, I mean, I gave you some wording, you know, some writing to use when you launched the revised edition of the 80/20 Principle, which I never do because it had a huge impact on my life. But not to over tease people, when you are working with or talking to friends or others about happiness, what are some of the questions that you ask them? Like the five, who are your closest five friends? Who do you spend the most time with? And incongruity there.

• 58:09Richard Koch?

  It goes a bit beyond 80/20. I'm now writing a book called 80/20 Beliefs. And in order to do that, I've interviewed 50 people that I know very well and who I trust to tell me the truth and they trust to tell me some of the intimate things about your life, particularly what went wrong. And I ask them two questions, very simple questions. One is, is there any belief that has really made a big difference in your life that at any stage you have changed? So you used to believe X and now you believe Y. And 90% of the people, nine out of 10 of the people, that's a very small sample, but

• 58:51Richard Koch?

  it's an extraordinary coincidence if they're all saying this and it's not quite true generally, say that they have at some stage changed an important belief. And the belief, I'm not talking about something which is an academic belief, you know, where you might believe that one politician is better than another, or you might believe in green values or you might not. I'm talking about belief that has made a big difference in your own life. And why has it made a big difference in your own life? Well, it's because you've acted in a certain way and that's generated certain results. So I ask people, what belief have you changed? And very often, that in fact, almost invariably, triggers a saying that I actually believed

• 59:35Richard Koch?

  something which was not in my own interests, and I call that a toxic belief. For example, a friend of mine, who's about sixty years old, she looks a lot younger. We'll call her Sally, shall we? Sally had quite a nice life. She moved from England, which as you know is cold and rainy and horrible, to South Africa, which as you know is sunny and very nice, to Cape Town, actually, which is the nicest place in South Africa, unless you happen want to track wild animals. It's good for almost everything else. It's got wonderful beaches, it's got mountains, it's got very nice food, and it's quite cheap as well. So, you know, it's a good idea to go to Cape Town if you if you want. It's slightly dangerous now, so, but that's another matter.

• 1:00:20Richard Koch?

  Anyway, she had a very nice life, until the last five years. And in the last five years, catastrophe struck. Her husband was diagnosed in the very early stages of having Alzheimer's disease. And he decided that in order to give his wife Sally a chance, he would commit suicide. Awful. Obviously, you know, an awful thing and trauma, you know, for for her as well. And then shortly after that happened, Covid happened, and Covid, you know, there are many hard luck stories about Covid. But but the one which Sally tells is that she had two dogs, and the dogs were very

• 1:01:02Richard Koch?

  important to her, you know, and particularly important after her husband was gone. And she, in in the Covid regime in South Africa, she wasn't allowed to take the dogs out at any stage of the twenty four hours of the day without risking.

• 1:01:22Richard Koch?

  Imprisonment and having the dogs shot. In other words, you couldn't take them out to do their business or anything like that. You couldn't take them out for any exercise. And if the police stopped you, they would quite likely shoot the dogs and put you in prison. So she decided that this was not a very nice society to live in any longer. She loved living in South Africa, but then she decided to do something about it. The point is, for the first fifty five years of her life, she'd followed the lead of her husband and other people. She'd gone with the flow. The way that she explained it to me was saying, I believe, case or a surah, whatever will be, will be. The future's not ours to see. Case or a surah.

• 1:02:06Richard Koch?

  So in other words, she trusted to fate and fate was very good to her. When her husband had gone and when the Covid regime in South Africa was so unpleasant, she decided that she could no longer go with the flow. And she took a very brave decision that she would up sticks, sell her house in Cape Town and come and live as it happens in Portugal. And that has been enormously successful. It is absolutely, to come back to my earlier theme, it's transformed her happiness. By pure chance, she's met a guy that she's getting married to now. They are very happy together and she's very, you can see that her eyes line up.

• 1:02:50Richard Koch?

  She's really, really happy. Three or four years ago, she was in the depths of depression and sort of, you know, she was wondering whether she should follow her husband in terms of committing suicide. So it is possible, if you take charge, to actually do something. And that's why I hate this concept of the baseline happiness level. Because Marx said philosophers have tried to describe the world. The point is to change it. And similarly, happiness levels, you know, it's not useful telling you about the baseline happiness level and saying, well, they don't say it, but they almost imply that it's inevitable and you can't transcend that. So if you're an H, you're stuck between six and 10,

• 1:03:31Richard Koch?

  depending on the weather and circumstances and whether good things have happened to you that day or whatever. But, you know, you can't go down to a three. Or if you're a three, you can't go up to a 10. But there are many cases that I know where people have actually transformed themselves. You know, I know someone who was incredibly miserable for a very long time. And why was he miserable? This person was miserable because he grew up in a very well off, upper middle class family. He said he was born with a silver spoon in his mouth. And he expected that life would carry on in being easy. And of course, when he left home and had to earn a living, he discovered that actually things were very difficult.

• 1:04:16Richard Koch?

  Now, things were not quite as difficult as he imagined they were. I mean, for example, he started a very, very successful business and he ran that business for six years and made a lot of money from selling it. So when I was talking to this chap who I'll call Alexander, Alexander, I said, you must have got a degree of self-confidence and good feeling from your experience in starting and running and selling this business. And he said to me, you must be joking. Those six years were years of high anxiety. I was constantly firefighting. It seemed so difficult to me. It seemed so difficult. And I said to him, well, you know, it didn't seem difficult observing it.

• 1:04:58Richard Koch?

  And he said, well, actually, it was because I expected things to be easy. And you remember, M. Scott Peck wrote a book which starts, "Life is difficult." This is one of the great things about life. If you understand this, you can transcend it because you anticipate that things are going to be difficult and you can take pride in sort of, you know, overcoming difficulties. But if you expect there are going to be no difficulties, obviously you're going to be disillusioned. And so, paradoxically, this miserable sounding philosophy which says life is difficult is actually a wonderful philosophy because it means that you can take pride in getting over difficulties. But when you're confronted with difficulties, what you do is like Alexander and say, it's too difficult.

• 1:05:42Richard Koch?

  It shouldn't be this difficult. Then obviously you're going to be miserable despite objectively having a great success.

• 1:05:51Tim Ferriss?

  Yeah, it makes me think of, and I wish I had the attribution, but happiness equals reality minus expectations in a sense. And this is also very reminiscent of Marcus Aurelius and Meditations, of course, but how did Alexander, if he did, make the switch? Did he make the switch?

• 1:06:08Richard Koch?

  He did make the switch, but it took him about 20 years. And he said from the time that he could start a business when he was in his early 30s and from being aged 40 onwards, then he got into a pretty dark place at one stage. And then he started going to 12 steps meetings where people sit around and say, you know, I've had these difficulties. I've reconstructed my life and I'm on the path to recovery. He also took some therapy and he also reflected on why he was miserable. And he did realize it was miserable because he expected life to be easy and it wasn't. Very often, having the insight into what a toxic belief is, is the

• 1:06:53Richard Koch?

  first step to actually being able to overcome it. Very often, we don't realize what toxic beliefs we have and therefore we suffer from them. I mean, in my own case, I had a pathological need to be successful. And when I was in my early twenties, as I recounted, I got employed by the Boston Consulting Group, which was wonderful. I loved the company. I still think it's a great company. I still think the people in are very interesting, intellectually very interesting as well. And the whole thing, you know, was great, except for the fact they didn't like me very much. So, you know, that was a bit of a, bit of a problem. I suffered,

• 1:07:34Richard Koch?

  I mean, I know that this sounds ridiculous, but I really suffered in my soul for two or three years, being miserable because I wasn't successful.

• 1:07:44Tim Ferriss?

  Successful meaning financially successful?

• 1:07:46Richard Koch?

  Not only financially successful, I wanted to be successful.

• 1:07:49Tim Ferriss?

  Being esteemed by the colleagues and so on.

• 1:07:50Richard Koch?

  And this was my first serious job. I hadn't been successful in my two previous jobs either, but there were good reasons for that. At least I could rationalize them. I worked for Shell and it was a terrible company to work for because it was very bureaucratic. And people were thinking about how much they were going to make when they retired. And could they retire at 50 rather than at 65? So that, you know, a ridiculous company. And then I worked for another company, which was much, much better, but I wasn't particularly successful at that either. So it was very important to me that I got good credentials. I got a good business school degree. I got a good degree from Oxford. I knew I was intelligent and actually I was able to make quite a lot of money even

• 1:08:35Richard Koch?

  in BCG because they had a system of billability, which said you get paid according to how many hours you bill. And I made sure that I billed a lot of hours and I had various strategies for doing it. But I couldn't do what the BCG people really admired, which was heavy duty financial and market analysis. I'm actually, I think dyslexic with numbers. I'm not very good at mental arithmetic. I'm very good at concepts.

• 1:09:03Tim Ferriss?

  You didn't have the fish pond then. You needed a fish pond.

• 1:09:05Richard Koch?

  Anyway.

• 1:09:06Tim Ferriss?

  Wait, may I pause? So don't, I want to bookmark for a second, but I can't let this go because this is just how I am. I'm like Suti with an apple core, some inside baseball. Richard's lab loves apple cores. The ways for billing hours successfully? What were some of your, your ways for billing hours successfully?

• 1:09:27Richard Koch?

  Well, I made sure that I had some clients that liked me.

• 1:09:31Tim Ferriss?

  Always helpful.

• 1:09:32Richard Koch?

  And I did a lot of work, which was solitary. In other words, the case team was me and maybe a junior assistant. And I was actually quite good at selling business as long as they weren't looking to be wowed in terms of heavy duty analysis. And I'm quite intuitive, you know, so I could come up with what the company should do and they quite liked that. But my colleagues didn't like that. And the more successful I was at selling business, the more they frowned on it because you said, you know, you're not using a proper case team, you're not doing it the BCG way. Where's the heavy duty financial analysis? Where's the final presentation?

• 1:10:10Tim Ferriss?

  Where's the lifting that gives you a hernia?

• 1:10:11Richard Koch?

  It's got whiz bang and sort of, you know, road to Damascus stuff and there's a vision, you know, you prove that black is white and they're investing in all the wrong things and they're stupid. Whereas I wouldn't, I wouldn't go along to clients and say you're stupid. I would, I would say, you know, you're very clever because you're doing this and the other. What this, that and the other was what I wanted them to do, not what they really were doing. So I used a little bit of elementary common sense and psychology. So yeah, I had some clients who really liked me, but

• 1:10:41Tim Ferriss?

  You weren't fitting to the template.

• 1:10:42Richard Koch?

  I didn't fit the template. But my point is,

• 1:10:45Tim Ferriss?

  Yeah, you were pathologically addicted.

• 1:10:46Richard Koch?

  A pathological belief that I had to be successful at BCG.

• 1:10:51Tim Ferriss?

  Right, right, right.

• 1:10:52Richard Koch?

  That was stupid.

• 1:10:53Tim Ferriss?

  Yeah, you had the constraint on it.

• 1:10:54Richard Koch?

  That was very stupid. You know, and then afterwards I thought, well, am I not suited to strategy consulting? I said, yes, I am suited to strategy consulting. I understand the concepts very well. I can actually work out what people should do. Not bad at emotional intelligence. And so why don't I give it a go at another firm? So I went along to talk to McKinsey. They rejected me. So that was fine. And then I managed to weasel away to go and see Bill Bain. Now, this is where it gets very interesting for me at least. Because I had disappointment with Bill Bain. To get there, I got through the London office who were very desperately short of people. So they thought that I would do and they sent me off to see Bill Bain.

• 1:11:40Richard Koch?

  And that was so lucky for me because Bill Bain was actually historian. I didn't know this at the time. And so he said, what was your undergraduate degree? And I said, history. And we had a 20 minute conversation about history of counterfactual stuff. And he obviously enjoyed that. But I said to him, Mr. Bain, I really want to know why it is that your company is growing faster than the Boston Consulting Group. And I really want to understand if there is a formula behind it, what the formula is. And this was music to Bill's ears because what he'd done was work out a way of having a relationship, long term relationship with a client. BCG would work for anyone. Bain and Company, again, is 80

• 1:12:22Richard Koch?

  20 consistent, would only work for the top dog, the chief executive in a large company. And they wouldn't work for the head of a country. They wouldn't work for the head of marketing or anything like that. And they would, again, like me on the fish pond, they would then say, how big could this be? And I was, we don't want to continually be churning clients.

• 1:12:45Tim Ferriss?

  Am I right in saying that they also folded into that had the some type of requirement that they would offer sort of category exclusivity or not work with, I will not work with you, client, your competitors, but in exchange, I ask, and what would they ask?

• 1:13:04Richard Koch?

  They'd ask that you don't work with our competitors. In fact, they put it rather more bluntly than that. They said, we won't work for your competitors and you won't work for ours. And the effrontery of this, you know, it was breathtaking. And, and of course, they did it quite smoothly. You know, Bill was a great salesman. He didn't actually want to sell business. As soon as possible, he managed to delegate that to other people. But it was incredible. He was saying, we have got something really valuable to offer. They believed in the formula. They believed in the gross share matrix, even though it involves shooting dogs. But, you know, they, it was like evangelical, you know, and people

• 1:13:46Richard Koch?

  compared the Bain is to the Moon is, and they talked about Bain is and the rest of it. There was a lot of truth behind that because they were fanatical. And the most important thing in a performance appraisal was attitude.

• 1:14:00Richard Koch?

  And when I heard that, I thought, this is ridiculous. This is just brainwashing. But actually, I came to believe that it was true. But all of the people in Bain and Company were on the same side. In BCG, there were factions. You know, there was a faction which was the English people thinking that they were smarter than the Americans, for example. And there's the intellectual faction, and there was the banking faction. You know, basically, it was like a mosaic. And a lot of energy was being generated, but it was at cross purposes. So in Bain and Company, there might be less intellectual firepower, but there was more energy because everyone was working in the same way.

• 1:14:41Tim Ferriss?

  How did they assess attitude? Do you remember?

• 1:14:45Richard Koch?

  Yeah, they sent you to charm school.

• 1:14:49Richard Koch?

  And if you didn't, if you didn't pass through the charm.

• 1:14:51Tim Ferriss?

  Well, hold on, hold on. All right. So elaborate on what this means. I'm guessing you're not, you know, practicing walking with a book on your head and arranging silverware. What were you, what were you doing?

• 1:15:00Richard Koch?

  They didn't send me to charm school. I was too senior to get.

• 1:15:03Tim Ferriss?

  You were charming enough.

• 1:15:04Richard Koch?

  Yeah, I think they ticked that box erroneously, but never mind. So what happened in that interview was that Bill Bain and I got on like a house on fire. He enjoyed the interview. He went and got one of the top five people in the company beneath him. Guy called Ralph Willard, who was a big fat man, but enormously cheerful and enormously optimistic and can do sort of person. And also a very clever man and a very nice man. I say that because he liked me a lot. But Bill Bain said to him, you know, I've had this great chat with Richard and I think we want to hire him. You don't do that. It undercuts your bargaining power and all the rest of it. So he said to Ralph, you know, will you talk to Richard and work out how much we're going to pay him?

• 1:15:49Richard Koch?

  And then, of course, that was an invitation to me to tell them how much I was earning a lot of money at the Boston Consulting Group and. Ralph looked at me and said, you may be very good Richard, but you're very expensive. Anyway, and I became a partner in Bain and Company in record time. I remember there were people in Boston Consulting Group who, when I was fired as a consultant, were managers and they wanted to become vice president, which was equivalent to a partner in Bain and Company. I became a partner from being a consultant within a year and that was faster than these people in BCG could get promoted to vice president from manager. So they couldn't understand this at all.

• 1:16:31Richard Koch?

  And the truth is that Bill Bain decided there and then that I could be a partner of his. So of course I liked working in Bain and Company.

• 1:16:39Tim Ferriss?

  But you had to step outside of the maybe implicit constraint that you had applied to yourself, which was I need to be successful within BCG.

• 1:16:51Richard Koch?

  BCG, yeah. So it was good enough to be successful within Bain and Company. The reason that I was asking all these questions though, Tim, was that from the very beginning, from the very first week that I'd been in BCG, I knew that I wanted to start a strategy consulting firm. Why did I want to start a strategy consulting firm? Because they made a lot of money. And one of the things that I had had as an ambition from nine years old was to be a millionaire. But I saw strategy consulting and being part owner of the strategy consulting firm, having seen or imagined anyway, how much money Bain and Company was making, most of which ended up in Bill Bain's pocket. I wanted to be the owner of the strategy consulting firm.

• 1:17:34Richard Koch?

  So I was asking Bill what the formula was out of visceral interest. And, you know, he thought, well, Richard would really wants to understand the Bain way of doing things. That wasn't true. I did want to understand it, but I didn't want to understand it because I wanted a 15 year career in Bain and Company.

• 1:17:50Tim Ferriss?

  What did he say?

• 1:17:52Richard Koch?

  In terms of formula. Well, now he explained the relationship, the whole thing, you know, he explained the speech that he would give to the chief executives, you know, we won't work for your competitors, you won't work for ours. And he had various things, but one of the other dictor that he had was to say to them, we are going to make a lot of money for you, your profits are going to go up, but we don't want you to refuse, place any arbitrary limit on our budgets. So if we recommend at the end of the study, which has been very successful, that we do something else, you are going to say yes. Basically, it's a partnership. We're going to make you a lot of money, you're going to make us a lot of money. And Bill Bain was,

• 1:18:37Richard Koch?

  this is another thing about being a historian, Ron, a business person or an MBA, he wasn't really fascinated by the nuts and bolts of consulting. He was really interested in making money. And he recognized that this was highly levered because the companies that he was working for were very big companies and they were quoted on the stock market. So you knew what the value was of getting a certain increase in profits and increase in the growth rate of revenues and profits. And so it was very easy to see, like me sitting on the fish pond and thinking about Betfair, that this was a formula for making an extraordinary amount

• 1:19:17Richard Koch?

  of money. And he later capped that by going into the private equity business and helping those companies that they invested in make a lot more money. So they did the same sort of analysis. Was Bain Capital or? Yeah, Bain Capital, yeah, exactly. And Bain Capital made more money, actually including for most of the early Bain partners, because they put money into it, which then became enormously valuable. So anyway, so Bill Bain is exhibit.

• 1:19:49Richard Koch?

  A in terms of proving that historians can make money. And not only that, it goes deeper than that, which is like Bruce Henderson, Bill Bain stopped consulting as soon as he possibly could. There was a lovely story about this, which I don't think I've put in any of my books. But the lovely story was that he would be asked by a new client to go and work on a case. And in the early days, it was quite difficult to refuse if it was done in Brad Street or Baxter Travenor. Bill Bain going to say, no, I'm not going to work on this assignment. I want to have an easy life. I don't want to do consulting. So what he would do is go along with Ralph Willard to see the chief executive at the beginning of an assignment.

• 1:20:34Richard Koch?

  The chief executive has asked that Bill Bain actually works on the assignment. Bill didn't say yes, but but he arranged a meeting with the chief executive and Ralph Willard and himself. And they would get in and they would have some pleasant trips. He would talk about sport, you know, last night's baseball match or whatever. And he would research whether the chief executive was interested in that particular sport. Anyway, they'd talk about that for five minutes. And then Bill Bain would then stand up. He'd stand up and say to the chief executive, I'm sorry, but I've got to go now. And the reason I've got to go is I want to leave you with Ralph. You're like Ralph. Ralph is really good. Ralph is better than me.

• 1:21:16Richard Koch?

  And then he would stand up and walk away and go back to Boston. So the startled chief executive would then do something, they'd turn to Ralph and say, are you better than Bill Bain? And Ralph would say something, this is all worked out in advance. Ralph would say, well, Bill certainly thinks so. And I happen to think that his judgment is very good. And they'd collapse in laughter and the chemistry would be assured from that point onwards. Genius. I must tell you this because the thing that was quite extraordinary about Bill was he worked out how to run a consulting firm without doing any work. Or we're doing probably about two days work a month.

• 1:21:56Richard Koch?

  And and the way that he did that, apart from extreme delegation, was that he had a monthly worldwide partners meeting.

• 1:22:05Richard Koch?

  And all of the partners had to attend. Now, I thought it was nonsense to go from London to Boston for a one day meeting. And so I didn't turn up for the first day of the the first drinks in the evening. And one of my colleagues, who was later to be a partner with me in in L A K, Ian Evans, was whispering on the phone. He was saying, you've got to get here. You've got to get to Boston. Bill's furious. And I said, no, I've got a client emergency. I don't want to go to Boston anyway. You know, I don't want to fly. It's ridiculous flying overnight and I don't like flights. He said, you've got to get here. So when I turn up, Bill makes a beeline for me. And I say to myself, this is great. Bill thinks

• 1:22:45Richard Koch?

  I'm important. And he said to me, Richard, did you did you not know that we were starting the partners meeting this evening with drinks and dinner? And I said, yes, I had a client emergency bill. And he said, I was beginning to stutter at this point. And he said, Richard, I wanted to be clear. When we have a partners meeting, you have got to be here or you will no longer be a partner. And then and then he would Clear as crystal. Then he smiled and said, and welcome and have a drink. So that was that was how he was like. He had red lines, you know, basically, all partners had to be there at the partners meeting. Not only that, but what they had to do was to say on the clients

• 1:23:26Richard Koch?

  that they were responsible for, how much revenue they made in the previous months, how much revenue they're going to make in each of the next three months. They did that in front of everyone. Yes, of course. Yeah. Public humiliation or public Applause. Applause. Yeah, exactly. And people would actually, they'd they'd break into applause and someone, budget was going up, you know. That was the one thing that Bill was concerned about. You know, if it'd been Bruce, for a start, Bruce would never have a partners meeting. You know, he didn't see the point of that. To him, it was all a matter of concepts. And he wasn't really interested in the revenues. If they were good enough and continue opening

• 1:24:05Richard Koch?

  offices and swan around the world and sort of, you know, basically terrorize the consultants in a different office, then Bruce was was happy. Bruce was not a very nice human being. Although he was a genius. The global campaign of terror from branch to branch. He was so bad. That demotivating people, that all the people underneath him eventually said to him, "Look, Bruce, this is not working." People would go to Cy Tillis, who was the head of London office when I was there, and say, "Do you know what he did to me?" And actually, Cy mentioned this during the memorial service for Bruce Henderson after he died.

• 1:24:47Richard Koch?

  And he said, Cy was very dry sense of humor, he said, "It was not necessary to ask who they were talking about." You know, I mean, I used to joke about it. I said, "If you hear that Bruce is on his way, jump out through the window."

• 1:25:03Tim Ferriss?

  Escape. So let's come back to toxic beliefs. I imagine, I've been thinking about this myself for my own history, and there are certainly examples, but some of them that I've then changed. I mean, there's a recency bias here. It would be, for instance, I could never reengage with art the way I thought that I did, or the way that I did when I was younger. And I have, it's only been in the last month, and there are reasons for that, but it has led to such an uptick in my general sense of well-being and happiness that it's head spinning. It's really unbelievable how much of a difference it's made. I mean, it was an integral part of my entire life for so long, and then I just let it go

• 1:25:46Tim Ferriss?

  because I was time to grow up and be an adult and focus on career, et cetera. But for people who are listening and they're thinking to themselves, "I'm sure I have disabling beliefs," but it's kind of like a visual blind spot. We all have a visual blind spot. Most people, I would say, sure, most people listening are probably not even aware that there is a visual blind spot. And then they certainly, given that that's the case, even if they do know, they don't spend a lot of time thinking about it. How do you find your own toxic belief? Or is there a... Common set of candidates, are there certain common toxic beliefs?

• 1:26:21Richard Koch?

  Yeah, there are, there are, such as what will be, will be is a common toxic belief. Another toxic belief is that life should be easy. Another toxic belief would be that it was absolutely essential, like me, to make money or to be successful in this particular job, that would be a toxic belief. Another toxic belief, which is very widespread, is if the organisation tells me to do something or to move to a job that I don't really want, it would be a black mark against me to not actually take that promotion. And I remember, two people were teachers, and they both had the experience of being asked to do something which was an administrative matter.

• 1:27:05Richard Koch?

  And they both did it, and they both hated it. One of them was to be head of year, and what head of year means is you're responsible for discipline. And what that means is that if a kid's naughty, you go and talk to their parents. You can imagine, that's not a particularly pleasant job, it's always sort of, you know, following up on a problem. And teachers like teaching, believe it or not, you know, that's the whole point. And so they said, I love teaching in the classroom, but having, you know, the particular person I'm thinking of, having done this head of year thing for six months, I decided that it was very stressful and I didn't want to continue doing it. But I thought that I had to do it, and I talked to, this is, to come back to your question,

• 1:27:48Richard Koch?

  this is one of the ways of doing it, is talk to a friend. She said, you know, I talked to my brother about this, and he said, nonsense, you know, they, they won't fire you, and it won't be a black mark if you tell them that you don't want to do this, because nobody wants to do it. And so she went to the headmaster and said, you know, Exactly that. And he said, okay, yeah, yeah, we could see that you weren't happy in that. Carry on. And far from it being a black mark against her, the next year she was promoted to head of English. So we build up this picture in our mind that organizations are much more ogre-ish, and sometimes the boss is much more of an ogre than they really

• 1:28:28Richard Koch?

  are. Sometimes they are an ogre, of course, but very often they're not. And the organization is more realistic than the individual. But there's often the sense that people who have an overdose of the, what I call the Protestant work ethic, think you can't disagree with the boss, you can't disagree with the organization. And that's another very common toxic belief. And in the book, 80/20 Beliefs, I will list about a dozen, which I think encompass the great majority of toxic beliefs. But there's one way of dealing with this, which is to get a friend, go out, have a meal, have a few drinks perhaps, and sit down and then

• 1:29:09Richard Koch?

  hand them a list of toxic beliefs and say, I think I might be suffering from a toxic belief. Which one do you think it is? And of course, they'll zoom in on the one which is obvious. It's always easier to spot someone else's toxic belief than it is to spot your own. And then you swap and you return the favor. And you say, yeah, that's probably right.

• 1:29:32Tim Ferriss?

  Let's have another round of schnapps. You know, Bill, I've been meaning to tell you. I'm gonna help you out here. This approach of peer review is so incredibly valuable. And I have multiple cases throughout my life of going through this exercise in one capacity or another, not necessarily with toxic beliefs. But I read a book ages ago in high school, actually, called Mental Toughness Training for Sports. And it completely changed my life and experience at the time, which I don't say lightly, but it provided you with effectively various criteria, qualities, let's say. And then you're ranked from one

• 1:30:17Tim Ferriss?

  to 10 or something like that. And the recommendation in the book was, take this page. Make copies, give it to five people who know you really well. Could be coaches, teachers, they don't necessarily have to be peers in the sense of other students in my case, and have them rank you from one to 10 in these various categories. And then for anything, say, less than a five, here's your next action. And it was remarkable to me how the divergence between how self-aware I thought I was and how completely blind I was to certain weaknesses. And that informs every step I took after that with wrestling specifically.

• 1:30:56Tim Ferriss?

  And I went from being at best middle of the pack, probably, let's just say, lower 30% in terms of technicality and performance, to being probably for a period of time, the best wrestler on the team for that subsequent season. It was remarkable how quickly change could take place, even with longstanding beliefs or behaviors. Like, the change doesn't have to, at least in my personal experience, it doesn't have to take a long time.

• 1:31:25Richard Koch?

  No, it doesn't. I mean, I actually categorized the 50 people. Forty of them said they had a toxic belief. How long did it take for them to realize the toxic belief existed? And how long did it take to actually change the belief into a more positive belief? And it was remarkable, Tim, that in nearly all cases, once someone had actually recognized the belief, once they'd rumbled it, as it were, then it was very easy. If people didn't rumble it-

• 1:31:59Tim Ferriss?

  You say rumble.

• 1:32:00Richard Koch?

  Rumble. Rumble is a great English expression. It means they've discovered it.

• 1:32:04Tim Ferriss?

  Ah, I like that.

• 1:32:05Richard Koch?

  They've flushed it out.

• 1:32:06Tim Ferriss?

  I'm gonna use that and confuse the shit out of all my American friends.

• 1:32:09Richard Koch?

  So, once they'd realized, if you like-

• 1:32:13Tim Ferriss?

  No, I like rumble.

• 1:32:14Richard Koch?

  Rumble. Okay. Once they'd rumbled the belief, then it's easy to get rid of it. But if they didn't, then they could carry on for 20 years. And then they might go through a lot of therapy, they might go, you know, and gradually discover it. But there's another method, which I have discovered is very effective, which is if someone is suddenly, or at least in the next last six months or last year, much unhappier than they used to be, and particularly if they're suffering stress, then there's a toxic belief- Lurking there, which needs to be rumbled. You don't automatically jump to knowing what the toxic belief is.

• 1:32:56Richard Koch?

  But if you say, actually, great unhappiness or great stress is a signal that there is a toxic belief, now let's try and work out which one it is. So I actually had a slight disagreement with my agent about this. And I sent her an early draft of the book. And she said, well, you know, I'm not convinced it's as easy as you say is to change a toxic belief. And I said, well, actually, you're right about that, my dear agent. You're absolutely right about that. But that's because they don't realise that they've got it. And once they realise that they've got it, then it is remarkably easy. Because no one wants to be unhappy and stressed if they understand the cause of it, obviously.

• 1:33:41Richard Koch?

  And too often, we actually think things which are not in our interests. They're ideas which have been implanted in us by our parents, by our teachers, by our schoolmates, by our friends, or they're in the general culture, that we actually must do something. And one of the things that is my particular bug there is working hard. You know, people think there's some virtue in working hard. And of course, working hard, you know, some people like working hard. But beyond a certain point, it becomes counterproductive. And it's always because they were brought up that way. You know, we used to think that if you were a decent human being, trying hard to be good

• 1:34:25Richard Koch?

  and the rest of it, you had to work hard. It was part of the package. But there are so many examples of people who don't work hard, who make a much greater contribution, like Bill Bain or Bruce Henderson, despite having a charmed life, once they've somehow come to a major insight, which can have huge consequences. And you don't need to work hard. When I was working at the Boston Consulting Group, 70 or 80 hours a week, I was failing. The longer I worked, the worse it got and the worse the stress got. To the point where, you know, I was thinking of throwing up work altogether. They are related to each other.

• 1:35:04Tim Ferriss?

  Is there an opposite to the toxic belief? A yin to the yang?

• 1:35:11Richard Koch?

  Yeah.

• 1:35:11Tim Ferriss?

  Well, I guess it's not quite yin to the yang.

• 1:35:12Richard Koch?

  There are two opposites.

• 1:35:13Tim Ferriss?

  Because you can do without the, you can do without the toxic belief.

• 1:35:15Richard Koch?

  There is a minor opposite and a major opposite. So the minor opposite, although very important, is what I call good beliefs. So I then asked my second question of people. You remember the first question was, have you changed an important belief in your life? Which I don't define it as a toxic belief because I said it could be good or it could be bad, but it always turns out to be bad. And then my second question is, well, tell me about the three or four beliefs that have made a difference in your life, where you've actually acted upon those beliefs? And which two or three or four beliefs, or maybe only one belief, do you actually believe? Has that actually been a good belief from that point of view?

• 1:35:59Richard Koch?

  It has good consequences for you and for other people. Then you get another list of about 10. For example, some people say, I follow my conscience, which sounds very sort of goody goody and all rest it, but actually psychologically makes a lot of sense. Because if you follow your conscience, you can make a decision and you always feel good about yourself from that point of view. Other beliefs which are very useful are karma, you know, belief that what goes around comes around and sooner or later, if you're a bastard, it will catch you out. You know, people will stop inviting you to dinner or they'll, they'll say nasty things about you or whatever. People's reputations are very important, particularly in business, but in any walk of life, I think in any walk of life, actually.

• 1:36:43Richard Koch?

  People who are disrespectful or don't behave well, eventually get found out in some way or another. So karma is another one. Kindness, just the idea of kindness. This is particularly popular amongst women, I have to say, in my sample, very small sample, probably not statistically significant, but a lot of women, almost half of the women mentioned kindness. And I knew. Because I knew the people, that they were kind people, they weren't just saying that pro forma.

• 1:37:12Tim Ferriss?

  What was the belief that kindness is a virtue?

• 1:37:16Richard Koch?

  Yeah, well, very often, in fact, the children, he said, my mother said, "I particularly praise my children when they've been kind to other children." So it's kind of a double whammy from that point of view. But it's, you know, you go out of your way to make life a little more comfortable for people that you can see are suffering. And I think, you know, despite sounding a bit sexist, I think women generally are more attuned to that than most men. Oh, other beliefs which are important. One of the things which I found very, very interesting was that most of the people who were apparently happiest, and I believe were happiest,

• 1:37:59Richard Koch?

  had either a religious belief or a philosophical belief, which made sense to the world. It might be a belief in evolution, for example, totally contrary to what most people think. It should be a religious belief. But if people really did believe that there was some logic to life, whether or not it might mean that there was no logic, but anyway, something that explained everything. Evolution's very good at that because people can explain almost anything by evolution, usually flagrantly in my view. Or if people have a religious belief, it didn't matter if they were Buddhists or fundamentalist Christians. It didn't really matter whether the belief was intellectually respectable or not.

• 1:38:42Richard Koch?

  If people really believed it, then it was quite effective in terms of the actions that people took. And you don't have to do the right thing for the right reason. You can do the right thing for the wrong reason. And so the people who were less happy didn't have any strong religious or philosophical beliefs.

• 1:39:01Tim Ferriss?

  They didn't have any scaffolding for

• 1:39:03Richard Koch?

  Yeah, exactly, yeah.

• 1:39:04Tim Ferriss?

  making meaning of reality in some sense.

• 1:39:07Richard Koch?

  One of the other beliefs which was very important was optimism. People who were optimistic were happier and more productive than people who were not. And books have been written about how you can actually become more optimistic. It's not something which is immutable. There are ways of becoming more optimistic.

• 1:39:26Tim Ferriss?

  These are the minor opposites to the toxic beliefs?

• 1:39:29Richard Koch?

  Yes. Some of them not quite so minor.

• 1:39:33Tim Ferriss?

  Right.

• 1:39:33Richard Koch?

  So, good beliefs. There are toxic beliefs, good beliefs, and what else do you think there are on top of that?

• 1:39:39Tim Ferriss?

  I mean, it's gotta be better than good. Or bigger than good.

• 1:39:43Richard Koch?

  Yeah, they might be great, but I'd turn them grand, because the problem with grand beliefs is that they are grand, and they may be grandiose as well as grand. So they're not necessarily good, and when they're not good, they're extremely bad. But they are beliefs which are almost messianic. Very interesting thing this.

• 1:40:03Richard Koch?

  Of my fifty people, eight of them had actually a belief which they got when they were very young, usually before they were teenagers, which was completely unfounded and completely implausible. So in my own case, it was that I would become a millionaire.

• 1:40:20Tim Ferriss?

  When you're nine.

• 1:40:21Richard Koch?

  By extrapolation, very rich, completely. I mean, I think I've described before how that happened, but it was a complete accident. But once I'd got the belief, I started thinking, what would I need to do in order to become a millionaire? So one of the things that I did was start a stamp company, a company collecting postage stamps. And it wasn't wildly successful, but it did teach me a few things, and we did make a little bit of money. And then I was always looking for ways to make money, again, related to stamps. When there's a commemorative issue, an event happens like England winning the World Cup, as happened in nineteen sixty-six when I was sixteen.

• 1:41:04Richard Koch?

  They overstamped the existing stamps with England winners. So it was kind of almost like a toy printing outfit. And those stamps went on sale at the post office. You can imagine, everyone wanted the England winner stamps. And they were sold out in most post offices throughout the day. And what I did was I get on my bicycle and I went to every single post office in Windsor and tried to buy as many of these stamps. And some people would refuse to sell me any. Some people would say, you can have three. Other people would give me whole sheets of the things. As long as I could pay for them. And those became immensely valuable. Now, it made me a few thousand pounds, but you know,

• 1:41:47Richard Koch?

  it all helped and it was sort of looking for opportunities like that that made a big difference. What are some other examples of grand beliefs? A very common one is I want to be Prime Minister or President. Now, you might smile at that and say that's completely unrealistic. There were two people in my sample. One said, I want to become Prime Minister. This person is now a Cabinet Minister. If they hadn't have had that belief, although it's very unrealistic, probably he won't become Prime Minister. But you'd never know, he's got a chance of becoming, he's got a lot closer to it than most people would think. Another person's grand belief was that they would play a prominent role in politics without defining what they'd be.

• 1:42:31Richard Koch?

  That person's the head of probably the most respected London think tank at the present time. So it gives you a focus and it gives you an ambition and you're sensitized to try and find those opportunities. Yeah, creates a selective attention. Yeah. Another person had the belief that they would find a cure for cancer. Now, it hasn't happened yet, but this person is making considerable progress on that. And I think there's a fifty fifty chance that in your lifetime, if not in mine, he will actually do that. It's extraordinary for someone who was not a scientist, who was just an engineer. He's now going to scientific conventions and talking to people about about that. So it's a grand belief.

• 1:43:16Richard Koch?

  Hitler's grand belief was that the Jews should be wiped out. So, you know, the grand belief is not necessarily a good thing. And, you know, that was quite a commonplace belief in Vienna when he grew up. Are there other positive historical examples of this that stand out to you? Well, Winston Churchill is the opposite of Hitler. His belief was stop Hitler. And

• 1:43:40Richard Koch?

  I don't know if you've gone into the career details of Winston Churchill, but he was incredibly unsuccessful. He actually was a cabinet minister very early on in his life, but he messed everything up hugely. He was responsible for several hundreds of thousands of people dying in the Dardanelles in the First World War. He was responsible for taking Britain on to the gold standard at a completely unrealistically high exchange rate against the US dollar in 1925. He was opposed to a very minor measure of self-government in India in the 1930s. He lost all credibility with his senior colleagues. He got thrown out of the cabinet.

• 1:44:23Richard Koch?

  He was in the wilderness completely in the 1930s. And the only thing that saved Churchill's career was Hitler, because he was an extreme patriot. He thought the British Empire was the best thing on earth. He'd grown up in a environment and in a school at Harrow, where they sang songs about Queen Elizabeth I defeating the Armada. So you can see that, given the conditioning like that, if someone like Hitler comes along, he thinks, well, possibly this is a threat to the British Empire, and I've got to do something about it. There's a fascinating story in one of the biographies by Andrew Roberts, the most recent biography of Churchill.

• 1:45:07Richard Koch?

  When he was 16 years old, and this is well documented, he told a friend that there was going to be a future terrible war. He didn't give any dates or anything like that. But he said, during this war, I'm going to rise to a very high position in England. And in my high position, I will save London from being bombed.

• 1:45:29Tim Ferriss?

  How old was he when this happened?

• 1:45:30Richard Koch?

  16.

• 1:45:31Tim Ferriss?

  What do you make of that? That's very specific.

• 1:45:34Richard Koch?

  Well, it is. And he said it to someone who became a minister and who actually wrote it all down contemporaneously. And Andrew Roberts believes the story. Well, the way that I interpreted that is that Churchill was delusional. He thought, in this very schoolboy sort of way, that England was going to come under threat, which is not totally implausible, that there'd be a war, and that he, Winston Spencer Churchill, would be the person who saved the country. Well, that was nuts. But actually, when Hitler came along and started appearing to be a menace to Britain,

• 1:46:13Richard Koch?

  who in the whole of the British establishment would say, we better worry about Hitler? Almost nobody else worried about Hitler. The Prime Minister Neville Chamberlain said Hitler's a man we can do business with. When he gives his word, he will stick to his word. David Lloyd George said the same thing. So did many other writers, including George Bernard Shaw. You know, they thought Hitler may have come up with some ridiculous ideas in the 1920s, but he was beyond that. He wasn't going to do anything bad. But Churchill said, mark my words, the Munich Agreement in 1938 is a complete disaster. Hitler said he's not going to invade Czechoslovakia, he's not going to invade Poland.

• 1:46:58Richard Koch?

  Don't believe him. And Neville Chamberlain said, no, he's given his word, his signature to the bit of paper I'm carrying as peace in our time. And, you know, it was complete rubbish. So when Hitler had done his worst in 1940, the only person that they could choose to replace Neville Chamberlain was actually Churchill. The King didn't like it. The majority of the Conservative Party didn't like it. The Labour Party didn't like it because he'd been very rude about the trade unions and had broken the general strike in 1926. He was very unpopular. But nevertheless, he said, this is what we must do to save the world. And he did. It's unbelievable.

• 1:47:42Richard Koch?

  So delusions can be very helpful sometimes.

• 1:47:46Tim Ferriss?

  As I listen to these grand beliefs and as the audience listen to these various grand beliefs, they may have some questions of their own. So the question number one might be, what if I cannot identify one of these grand beliefs? Do I need to try to identify a belief? Because maybe when I was a kid, I thought I would be an astronaut, but I'm not an astronaut. How do I go about finding that grand belief? Or is the exercise to try to create a new grand belief that I can then use? Or is it both? Well, how would you answer these questions?

• 1:48:22Richard Koch?

  I don't think that everyone, Tim, should actually have a grand belief. I think you either have it or you don't. And I don't think there's much point in trying to manufacture a grand belief. Because when you're beyond the age of fifteen, it's probably pointless anyway. The great value of having a grand belief is that it changes your whole mindset when you're at a very impressionable age. Most people, when they get beyond twenty and all the rest of it, would say, this is unrealistic. The whole point about a grand belief is that it's unrealistic. But you don't realise it's unrealistic and therefore you might possibly achieve it. There were three other instances of people who, in one form or other,

• 1:49:06Richard Koch?

  believed that they were going to make a lot of money or be very successful. And because they- This is in your sample set? In my sample, yeah. So there are eight people who had a grand belief out of fifty. So very, very small numbers. But I was staggered. I thought I was the only one with one of these stupid juvenile beliefs. So it's much more common than perhaps, and most of them had not told anyone else that they'd had this belief. I remember there was one of the ones who had a political belief, said that his belief was held up to ridicule in the school assembly after he'd left. He left at age sixteen and went to a sixth form college because he couldn't stand

• 1:49:51Richard Koch?

  being in the school, which was a very regimented, traditional school. And he said that the geography master stood up in the assembly a few months after he'd left and said, you might know that when people leave school, we ask them why they're leaving and what their future career is going to be, what job they think they're going to have in the future. And he said, and this person wrote down Prime Minister. And he said, you know, it's ridiculous for one of you to think that you're going to be Prime Minister. What a dick. And when my friend had actually found out about it, he didn't identify who the person was. Confirm the validity of his decision.

• 1:50:36Richard Koch?

  This was someone who left three months ago. You might remember that they left and they looked like this. No, he didn't say that. But my friend was incandescent, so he reports with anger, saying, how dare this man, who's only been a geography teacher in his whole career. Be the judge of potential. Say it's completely unrealistic for you to become prime minister. That just made me more and more determined to become prime minister, or at least to get close to it. And so these beliefs are quite visceral. I mean, they, you know, whether they're good beliefs or bad beliefs, I think, beliefs at an early stage, they're the flip side of a toxic belief. So for example, my actual grand belief was that I'd make a lot of money. I'd be a millionaire.

• 1:51:21Richard Koch?

  But later on, I had a toxic belief, which was a variant of that, which is nothing in my life is more important than making money. And it was so ridiculous that when I had made a lot of money, in the year 2000, my net worth doubled. And it doubled very much in the last three months. And that was because two companies that I'd invested in, FanDuel and Auto One were the companies. In the case of Auto One, they did an IPO in the first quarter of the following year. In the case of FanDuel, there was an offer made by Flutter, which was in a way descended from Betfair, to buy out the minority stake of which I was part in FanDuel.

• 1:52:03Richard Koch?

  And it was a very generous offer. So there I was, I had 300 million pounds in cash. And my net worth had gone up to a billion pounds from 500 million pounds. I'm sorry if that sounds like boasting, but. But, but the odd thing was I was miserable. And I was miserable because I felt responsibility. Here I'd got this sort of, you know, wonderful track record of 22% compound after-tax returns. And I just felt, what do I do in the next five to 10 years in order to continue this track record? So there I was desperately trying to spend this money. I invested in the company we talked about earlier, what, Three Words, and made a very large investment in that. And invested in some other companies. And.

• 1:52:49Richard Koch?

  It was stressful because, you know, there was a lot at stake. And then I, I suddenly had a realization at the end of that year. This is stupid. Why should I feel under stress to make more money? When I've already got more money than I can possibly spend in my lifetime. Even giving away is going to be, you know, quite difficult. Don't write in to me, please, and ask me for donations. Because I've decided what to do with my money. And it's, it's not, it's not one for you. Um, but anyway. How stupid can you be to have a lot of money and be anxious about it? But the strength of the belief was very strong. I mean, it lasted for a very long time.

• 1:53:32Tim Ferriss?

  Yeah.

• 1:53:32Richard Koch?

  So, you know, I do think that these grand beliefs can sometimes be toxic beliefs as well.

• 1:53:37Tim Ferriss?

  How did you pattern interrupt? In the sense that like your experience, I've heard of many experiences. In some cases from acquaintances or friends. Very often from others outside of those circles. Who get to a point, they are what they might consider post economic. They've worked so hard or made very smart decisions, but they put a lot of energy into getting to a point where they don't have to worry about money. And they find new ways to worry about money.

• 1:54:08Richard Koch?

  Yeah.

• 1:54:08Tim Ferriss?

  So it used to be reaching a number. They far surpassed that number. And now it's about their annual compounded annual growth rate, something like that. They find a new way to worry about money. They know it's stupid, but they cannot seem to stop. Or they don't have compelling alternatives. So they keep playing these dumb games with themselves. How did you interrupt that?

• 1:54:32Richard Koch?

  It's either very difficult or it's impossible, or it's very easy. And this is, it's the flip side about.

• 1:54:38Tim Ferriss?

  I buy it so far.

• 1:54:39Richard Koch?

  I mean, I, I actually came to, when I was, I was thinking about beliefs. And I said, you know, there are all these toxic beliefs. And isn't it strange how people have got these toxic beliefs? And I realized I had one myself. It was a variant, you know, it wasn't, I needed to make money. It was very important and it was the most important thing. And I said to myself, is this going to make me happy? So, I mean, my only advice to people is to say, you know, is it going to make you happy? And also is getting rid of the belief going to enable you to get rid of some stress? Because stress up to a certain point is very functional, but beyond a certain point, it's paralyzing. So you ask yourself a very simple question, and we should ask ourselves these whenever we're thinking about our lives in a serious way. We should say,

• 1:55:24Richard Koch?

  is it making me happy? What beliefs do I have? And is it making me happy? And if it's not making me happy, it's not going to make other people happy. And one of my points about happiness is that happiness is probably the least selfish thing that you can pursue. Because if you're happy, you're going to make a lot of other people happy as well. If you're miserable.

• 1:55:41Tim Ferriss?

  Yeah, that's a really important.

• 1:55:43Richard Koch?

  You're going to make other people miserable. And whenever I'm tempted to be a bit downbeat or misanthropic, I say to myself, this is very selfish. So get out of this particular pattern of thinking.

• 1:55:55Tim Ferriss?

  Yeah, you know, like turning away these sincere, loving listeners who want to ask you for all of your money.

• 1:56:02Richard Koch?

  Well, I'm no saint.

• 1:56:06Tim Ferriss?

  So I need to scratch an itch that I mentioned earlier, and this is related to Oxford. So I'm going to give you a cue, and then I'd love for you to unpack it. And then I have a bunch of selfish questions, or self-interested questions, at the very least. So the Oxford experience for 99/1 people, and that's 99 slash 1. So think again along the lines of 80/20, 99/1, which perhaps you could explain. But what is the Oxford experience for 99/1 people, or what could it be?

• 1:56:41Richard Koch?

  I've been talking to the head of my old college.

• 1:56:45Tim Ferriss?

  What is the name of your old college?

• 1:56:47Richard Koch?

  I'd rather not say, actually.

• 1:56:48Tim Ferriss?

  Oh, okay. You don't have to say.

• 1:56:50Richard Koch?

  No, I don't see why I shouldn't. People can look it up very easily.

• 1:56:53Tim Ferriss?

  Why does it matter?

• 1:56:54Richard Koch?

  It's Wadham College, Wadham College, Oxford. W A D H.

• 1:56:56Tim Ferriss?

  Does that expose you in some strange way?

• 1:56:58Richard Koch?

  I mean, it's giving the game away a little bit. It might be premature, because we haven't done it yet.

• 1:57:03Tim Ferriss?

  Oh, yeah, I see what you're saying. Right, right, right. So we could scratch that.

• 1:57:06Richard Koch?

  No, no, no, no, no, that's fine. Don't scratch it. That's fine.

• 1:57:09Tim Ferriss?

  Editor, don't scratch it.

• 1:57:14Richard Koch?

  So it started because they were interested in me making a donation to a college. And I said, yeah, fine, I can make a donation to college. But rather than make a donation, can I also give you some thoughts about, you know, about your finances? And the head of the college was very gracious and said, yeah, that's fine.

• 1:57:34Tim Ferriss?

  I'm sure he was thrilled. We love donations with lots of strings attached. I'm just kidding.

• 1:57:41Richard Koch?

  And I said, yeah, okay. He said, we're losing money on our undergraduates. Every undergraduate that we educate costs us twice what we can actually charge.

• 1:57:53Tim Ferriss?

  Holy shit.

• 1:57:53Richard Koch?

  They can charge nine thousand two hundred pounds a year. And we make a loss on that because we've got a tutorial system. A tutorial system is very labor intensive. A tutorial system means that instead of people going to lectures, what you do is you have a tutor and either alone or with one other student, you go and see them every week and they give you a subject for an essay and they tell you which books and articles to read. And then a week later, you go along to them again with a bit of fear and trembling and you've got your essay there and they don't sort of tell you to hand it over. They make you read it out. It's just a form of sadism. And then they interrupt you halfway through and say, well, it's interesting that you say this,

• 1:58:38Richard Koch?

  Richard, but isn't it true that? And then they give you a complete opposite view and you get challenged. And that's very good for you, although it's terrifying to start with. And you can actually get into quite an intelligent discussion. And you, as a student, you know, 18 year old student, have got the benefit of the personal attention of someone who's a world expert in this particular field. And they're telling you that your thinking is all screwed up. Or sometimes, very occasionally, they tell you, that's really good. Yes, you've got, you're on to something there, but have you also considered this, that and the other? It's a wonderful system. I think I would never have made the money that I've made or have whatever success I've had in life, had it not been for that experience of having

• 1:59:23Richard Koch?

  that tutorial system. So I'm very happy to to give my old college some money. But I said, look, let's try and work out why you're losing money. And they said, well, it's very simple. You know, we're losing money on every undergraduate. Okay. So I say, well, maybe you should have more graduates. And they say, no, we don't want to do that. We like teaching undergraduates. We think it's very useful. And we're quite passionate about that. So you've got to continue teaching these undergraduates. Why can't you charge more money? We can't charge more money because that's set by the government. Why can't you get more overseas students? We can't get more overseas students because the regulator won't allow us to go over a certain percentage. So then I'm sort of running out of ideas. And then I said to look, Oxford terms last for

• 2:00:08Richard Koch?

  eight weeks, don't they? And they said, yes, and there are three terms a year. So even I can do the mental arithmetic that three times eight is 24. That's 24 weeks of the year that you're actually operating this educational factory. Let's call it a factory. And again, even I can work out that the capacity utilization on that basis is 46%. You know, you're closed more than you are open. Is there a way of doing it? And I said, well, let's think about the 80 20 principle. The 80 20 principle says that if you want a new set of customers, you might as well go for the customers that can afford the most and can benefit the most. So I'm going

• 2:00:49Richard Koch?

  to call these people 991 people. So what you want to do is go and talk to the most very successful companies in Britain and throughout the world, and identify the very most successful people within those companies. Very probably, they're going to be the people at the top of the company, aren't they? Or the close to the top of the company. Okay, it's become quite fashionable, and I think very useful for people to have a period of sabbaticals. You know, this originated, I think, in academia itself. But more and more companies, very successful companies, investment banks, consulting firms, even venture capital firms, marketing experts, anyone who's found a corner.

• 2:01:35Richard Koch?

  Where they've got a very high relative market share, they're very successful at doing what they're doing, they're making pots and pots of money. But the people who are at the top of those companies, actually, very often, who've been responsible for making lots and lots of money, are exhausted volcanoes. They're basically, they've been doing the same thing for the last 10 years. They need some new ideas. And they also need a break. So, one of the things that my old firm- Exhausted volcanoes. L K got a guy called Stuart Jackson, who became the chief executive long after I'd disappeared. And he said, "You've got to have a three-month sabbatical every five years. It's not optional.

• 2:02:19Richard Koch?

  You know, you've got to do it, and you've got to do something which refreshes your mind as well as your body and all the rest of it." So, I think, perfect. What we'll do is we'll do sabbaticals for people who have been very, very successful. And what are we gonna do? We're not gonna talk about business. Because most of the people who are good target markets for this, what I call the Oxford Experience or the Waddam Experience, are going to be people who, in one way or another, relate to business. They don't have to be in business, but if they're gonna make a lot of money, you know, they could, in theory, be artists, or they, you know, they could be brain surgeons. Most likely, they're going to be related to business.

• 2:03:00Richard Koch?

  So what we're gonna do is set up a course which has nothing whatsoever to do with business, but which is a good intellectual training. And so, let's come up with a list of 10 things that you can teach that people might be interested in buying. And they came up with a list, and it includes things like the history of art. It's amazing how many people who have been very successful and know nothing at all about art, actually want to study the history of art. It's a very, it's a very fashionable subject these days. So there's history of art. There's philosophy. You know, again, that's a lot of interest, as you know, in Greek and Roman philosophy. So let's study philosophy and see what they had to say about this.

• 2:03:45Richard Koch?

  There's also things like- The history of the last 300 years, again, quite a few people have said to me, including former investment bankers, my weak suit is actually history. I've got no context for the modern world. I don't understand how the modern world developed. Other people said, what about psychology or sociology and so on. So, you know, we've got a list of 10 possible options. Oh, meditation. Meditation is enormously important, but there's an intellectual grist behind it. It's not, it's not just sort of, you know, touchy feely sort of stuff. You know, there are some really profound roots to meditation and you have to understand the history of Buddhism and et cetera, et cetera, et cetera. Can you

• 2:04:30Richard Koch?

  teach that? Yes, we can teach that. So what I said is, okay, what we do is we get people to come from organizations, we mix them up in terms of background and we put them in triads, in trios, groups of three people, and then they have the tutorial system and they come and they agree to study, you know, the same subject for eight weeks at a 17th century, beautiful 17th century college, Waddam College Oxford, with the most wonderful gardens behind. Never mind that the weather is terrible. People are going to really benefit from this experience and we'll do it in the spring and the summer. So that's all right. So you don't have to worry about that.

• 2:05:11Tim Ferriss?

  My main question that I wrote down in preparation for hearing all about this was, best time of your question, Mark?

• 2:05:19Richard Koch?

  Well, it's the spring and summer vacation. So it's basically from May, June, July, August, September. Yeah. So those are the times that it's safe to go to England in my book. And if you live there anyway, it doesn't make any difference.

• 2:05:39Tim Ferriss?

  Yeah, sure. If you're already there, it doesn't matter. How would you think about, and I understand this hasn't been decided, but how would you think about pricing something like that, just for a window into how you determine that?

• 2:05:49Richard Koch?

  Very expensive. No, my, my idea is that we throw in. Everything, the tuition, we throw in lots of food. We throw in the accommodation in this seventeenth century beautiful building. Slightly impractical, but never mind. And we throw in food. And most important of all, we throw in lots of wine because we've got wine sellers, which are very fine wines. And we make it a very enjoyable experience and we also have weekly lectures and apart from the tutorials, but the tutorial is the sort of, you know, bedrock of the thing. And how do we price it? We charge fifty thousand pounds.

• 2:06:28Tim Ferriss?

  Yeah.

• 2:06:28Richard Koch?

  So, you know, it's about, what's that, seventy thousand dollars or something like that. Yeah. And it's a lot of money, but for an organisation that's been very successful and is thinking about sending, you know, half a dozen people, it's nothing. It's a, it's an absolute drop in the ocean. And if one of those people comes up with a creative idea, which is going to generate a new product or a new way of doing business comparable perhaps to what Bruce Henderson or Bill Bain came up with, you know, as a result of thinking, that's what they did. That, you know, they thought very carefully and they were very bright people. You know, if they come up with an idea like that as a result of the sabbatical, it's going to pay for itself many, many, many times over.

• 2:07:11Richard Koch?

  And also, the other great attribute is that we'll organise people into groups of three people. They can't be from the same organisation, they have to be from a different background and they have to be from a different country. And it's going to be a very intense experience for those three people and they're going to get to know each other. They might hate each other as a result of the eight weeks they spend together, but they might become best friends. Or they might work out a business rationale where the organisations in some way can collaborate with each other. So this is a wonderful idea and, you know, they should be queuing up. So anyone who's very interested in this, contact me and I'll put you in touch with the Warden of Waddam and he can sign you up for this.

• 2:07:53Tim Ferriss?

  We should figure out a contact form so you're not getting seven million emails about this. We'll figure that out, we'll put something in the show notes. And let me ask you then a couple of, well, a few ideas, I'll throw out some ideas too. So there's, there's an event that I've attended before called Dialogue and I haven't been in a while, but in the early days especially, I really enjoyed it when the, the groups were smaller and. Thinking about, oh man, if I ended up kind of like the movie Step Brothers, if people have seen that, it's a comedy, but if I ended up bunking, you know, if one of my two team members of the triplets, if I didn't get along with one, but I had to see them every day for eight weeks, I might just leave. I might pull the ripcord if I'm being honest with myself. But with the one not saying alternative, maybe it's a compliment,

• 2:08:38Tim Ferriss?

  just to diversify the interactions. But what Dialogue does very well is they have assigned seating for every meal. And they decide on the composition of each table. And then one person is tasked with, just typically for dinners, leading the conversation. So there's one conversation per table, Jeffersonian style. So in this case, it's generally more than three people. So it'd be five or six or seven or something like that. And it's absolutely spectacular. It makes such a big difference. I will say that if there's the possibility, if I could put in a bespoke request.

• 2:09:11Richard Koch?

  You want a freebie?

• 2:09:14Tim Ferriss?

  No, not a freebie. I'll pay. But the, I think there would be a huge demand also from entrepreneurs. Maybe they are the CEOs of companies they've built, who are looking for a defensible excuse. They need something that will not look like unemployment on LinkedIn for, say, one or two or three months to rest themselves and get out of the exhausted volcano category. I think there would also be a huge demand for that. As far as upside and financial possibilities, that's all great. And that's icing on the cake, but they just want a fucking break.

• 2:09:53Richard Koch?

  Yeah, absolutely.

• 2:09:54Tim Ferriss?

  Hang out and have some wine around some gardens.

• 2:09:55Richard Koch?

  Can you imagine working in a high-pressure organization for 20 years, clawing your way to the top of that organization, and then finding that they still want you to work for 50 or 60 hours a week? 50, well, not 52 weeks a year, but maybe 48.

• 2:10:11Tim Ferriss?

  Oh, sure.

• 2:10:13Tim Ferriss?

  And then on your time off, you're thinking about the stuff.

• 2:10:15Richard Koch?

  Yeah, and then your only option to go from mega, mega work is you retire and then you've got nothing to do.

• 2:10:22Tim Ferriss?

  Yeah.

• 2:10:23Richard Koch?

  So it's stupid.

• 2:10:25Tim Ferriss?

  People who claw that effectively.

• 2:10:26Richard Koch?

  It's really stupid and you know.

• 2:10:27Tim Ferriss?

  Don't do well in retirement generally. So my bestoke request, which is more of a suggestion, but if it ends up happening, then I will certainly participate. If there were, in addition to history of art, an art option, there was more hands on. So I'll get very specific here. If you could bring in some people who were formerly or currently, but probably formerly given the duration, say artists, concept artists, background artists, et cetera, from places like Pixar. And maybe you had a couple of different tranches, right? There was, say, very, very beginner, starting from scratch folks who were doing gesture drawing and so on, using traditional materials, but then also having some folks who are bringing

• 2:11:08Tim Ferriss?

  in digital tools, which has been a huge key to unlocking my ability to enjoy art again. It's the ability to hit undo. My God, is that a lifesaver. I would absolutely participate in that. And I would probably participate in other things, language, for instance, if there are an option to really just focus on that. It sounds lovely. So in any case, I think that's a winner.

• 2:11:31Richard Koch?

  No, I think your request is right. I mean, I think art is hugely important. I absolutely believe that the Western civilization would not be what it is today if it had not been for the Renaissance and the artists. And, you know, we wouldn't have all these beautiful churches with frescoes and, you know, we wouldn't have lots of things. And art moves on, you know, and arts, I don't know, it probably is cumulative to a degree because people invent perspective, for example, and then all the art looks a lot more interesting. And then people do tech stuff. So, you know, that's another dimension and all the rest. So it's progressive, but it's also, there are different periods, you know, even Picasso had about six different periods of his life.

• 2:12:15Richard Koch?

  He didn't always draw people like they were, you know, sliced up. So, you know, it's, I think art is enormously important. Don't forget artists either. You know, I mean, I happen to know, one of my best friends is an artist who's got two paintings in the Tate, not the modern one, but the old one. There's Tate Britain is what they call it now. Yeah, I'm sure he would be delighted to come along and talk to people and look at the art of someone like you. I mean, you showed me some of the pictures that you've been drawing yesterday, and I thought they were fantastic. I actually, I said to myself, I want to show that to Colin Smith, who's the chap involved. I'd really like to introduce you to him because

• 2:12:58Richard Koch?

  he might think they're no good, but I doubt it. And I think people need encouragement.

• 2:13:03Tim Ferriss?

  People do need encouragement. And I actually, I'm gonna, this is very much out of left field, but I want to put it out there. If you are an artist, specifically a comic book artist, or if you're involved with sequential art in Portugal, please ping me on Twitter, because last night, I'm not gonna name names, but the girlfriend of a mutual friend of ours showed me art that was made by a seven-year-old here in Portugal that blew my mind. This kid has so much potential. He's so incredibly developed for his age. I don't think he's had any formal training whatsoever. It's incredible. And it would just be such, it

• 2:13:44Tim Ferriss?

  would make me so happy to try to connect him with someone in Portugal who's walking the walk and is doing what he dreams of doing, because I think he could be one of the greats. I mean, it sounds like a very big statement. It is, but I was absolutely blown away by how talented this kid is. So I'm not that kid. But I do know that I have some predisposition. I've resurrected this interest, this love. And to have these experts who are practitioners, who love what they do, who are not just teaching material, right? Because you could go and try to memorize Wikipedia for material, but they're imbuing you with a sense of excitement and passion and love, and ultimately, hopefully, helping you to develop confidence so that

• 2:14:29Tim Ferriss?

  you can actually continue exploring these things. I just, I love everything about it.

• 2:14:35Richard Koch?

  Yeah, and I think it's very important for business as well, because business is increasingly a matter of beauty. I mean, you think about the Apple devices, they are beautiful at a certain level. And, you know, Steve Jobs apparently took the people to MoMA in New York Museum of Modern Art and said, you know, what we want to do is create things which are in the same category. That sounds like a crazy left field sort of thing to do, but it worked, you know, and they did create, you know, I think the iPhone is actually quite a beautiful thing.

• 2:15:07Tim Ferriss?

  Jobs studied calligraphy also, and I will say that there are the direct implications of art. And I was reading an excellent book, I'm blanking on the name, it's about the function and history of comics. Really wish I could remember the author's name, but I read this book and I believe it was in this book that he talked about art and defined it as anything that does not have human-produced art, as anything that does not have a fitness function in the sense of reproduction or survival. Anything that falls outside of those two.

• 2:15:42Richard Koch?

  Anything that's not utilitarian, in other words, anything that's not useful, yeah.

• 2:15:46Tim Ferriss?

  Yeah, yeah.

• 2:15:46Richard Koch?

  In a narrow possible sense, but what is more useful than beauty?

• 2:15:51Tim Ferriss?

  All right, I don't object here, but I'm saying, so we could differently go down a rabbit hole. I think we need more wine for that. Maybe tonight we'll have a good argument about this. What I was gonna make is-

• 2:16:00Richard Koch?

  What's been more wine? We haven't had any so far.

• 2:16:02Tim Ferriss?

  Good lord, yeah, I think I'm a white belt signing up to spar with a black belt here. But the point I was gonna make is there are the obvious connections, right? Steve Jobs studies calligraphy, that informs the typefaces of the Macintosh, et cetera, et cetera. But then there are these perhaps non-obvious radiating effects that I've experienced where I'm getting involved with playing around with painting. I mean, I spent two and a half hours digitally painting something yesterday. It was very challenging. I made all sorts of mistakes, but I was completely engrossed in it and lost in a way, maybe found in a way, that I often experience in deep states of meditation. But I'm not gonna meditate for two and a half hours on a daily basis. This was effortless, in a sense.

• 2:16:48Tim Ferriss?

  And if you could imagine, what if I could accrue some, say, the benefits of meditating for two hours a day while doing something else, or- Put in a more maybe concrete sense, you know, recharging your batteries. What would you do with that extra energy? So what I've found is by doing this thing, which even some of my friends have said, they haven't labeled it frivolous, but they're like, okay, man, hey, whatever floats your boat. Fine. That's great. You know, enjoy it. Hello, dog. Am I speaking your language? Do you like beauty too?

• 2:17:18Richard Koch?

  The dog is wagging her tail.

• 2:17:20Tim Ferriss?

  What a lovely pooch. I have experienced this new wellspring of energy, which I can then apply to everything. So it's also helping me to grow this fundamental, underlying currency of energy that then applies to everything else. It's just been incredible. So I do hope people are able to find more options for themselves. And I want to mention one thing before I forget, which is if you want to delve into history, maybe we can get some recommendations from you too. But one of my favorite ways to delve into history in the last 10 years has been listening to what is still my favorite podcast. It's an oldie but goodie. Hardcore History by Dan Carlin.

• 2:18:04Tim Ferriss?

  I had him on the podcast, interviewed him ages ago. I suggest that people could start. There are series on World War I, series on World War II, but I really enjoyed Profits of Doom is one option. They're very long. They're like audiobooks. In this case, this is probably four hours long. Profits of Doom, which talks about Lutheran Reformation and all sorts of craziness that happened subsequent to that in Germany, which you can listen to. And Wrath of the Khans, which is about Genghis Khan, I think is the pronunciation they use in that. And it's four or five episodes on the Mongols. And Genghis Khan, who was incredibly fascinating, incredibly intelligent,

• 2:18:46Tim Ferriss?

  very sophisticated strategist, not necessarily just the sort of folklorian brute that many people associate his name with. Richard, is there anything else that you would like to talk about before we wind to a close? And maybe perhaps grab a bite to eat? Is there anything else that we should discuss? Anything else I didn't ask that you'd like to touch on? Anything at all?

• 2:19:12Richard Koch?

  There is one other thing, which is I'm not only writing one book, I'm writing another book at the same time, and this book is called Eighty Twenty Daily. I know that you're interested in Stoicism, for example, and there've been a very successful set of daily readings, so you have 365 readings from Stoics and others. Yeah, Daily Stoic by Ryan Holiday, friend of mine. It's very good, it's a little tedious after a certain time, but I said, well, why wouldn't it be a good idea to have a set of readings related to not just the eighty twenty principle, but what I call the eighty twenty philosophy? Because without being too grandiose, I do think there are huge depths, which I haven't plumbed personally, I'm sure there's far more there, about the eighty twenty principle.

• 2:19:56Richard Koch?

  You remember that when it was first suggested to me that I write about the eighty twenty principle, I told the editor, who was concerned I could probably spin it out to about five pages, but I certainly couldn't write a book. I ended up writing four books about it, and they're not desperately repetitive, I think, maybe slightly repetitive, but I've set myself the task of writing 365 ideas about life, the universe and everything, which are related in some way, some people might say rather tenuous way in some cases, but which are fundamentally related to eighty twenty. And to me, eighty twenty is far more than a technocratic thing, it's about creating a better life for yourself and for other people.

• 2:20:41Richard Koch?

  And to do that, you need to be able to get results in a way which is very highly productive. So it sounds technocratic, but it's actually quite deep. So, for example, you were talking a few minutes ago about the impact of art in terms of increasing energy, well, I think that's a very eighty twenty concept in itself. Totally. I haven't got one of the 365 daily readings about that, but I will have, I think, by the time I've finished. Anyway, this book is going to come out next year, as indeed Eighty Twenty Beliefs is going to come out. It's going to be sensationally successful, putting my optimistic hat on and my marketing and investment hat on. And I actually think people will find it very, very interesting, and if you don't blame

• 2:21:26Richard Koch?

  me, because I've tried hard... To make it, every single one is about a different subject, but they're all related to each other in one way or another through the eighty twenty principle. And it's attempt to say it's about living. So there's a lot of stuff in there which says one way or another, don't work too hard. There's a lot of stuff which says one way or another, don't follow the rules, break the rules. There's a lot of sort of, you know, non-conformist. In a way, it's, I suppose it goes back to the sort of, you know, flower power and all that, you know, which I think is, you know, much misunderstood. I think that the attempt to stimulate creativity and get out of the straitjacket of working

• 2:22:10Richard Koch?

  too hard and being monochrome and boring. You know, I think business is not boring and monochrome. And the people in the nineteen fifty's who did it, did it one way, but we can do it in a multicolored and a much more enjoyable way. Get enjoyment out of life, but also do things which are gonna help other people in one way, giving them ideas or giving an inspiration or whatever. Anyway, so that's my little advertisement, as you Americans would say, for eighty twenty daily.

• 2:22:43Tim Ferriss?

  Richard, that's an advertisement. Oh, wait, I'm American, I did it. I will be first in line. Your writing, I've said this before, I'll say it again, your writing has had a huge impact on my life and I will certainly be first in line for both of these. Eighty twenty daily and eighty twenty beliefs, it never gets old. It always bears repeating, reinforcing, recontextualizing, seeing in new situations and scenarios. The eighty twenty principle, power law distributions, they're everywhere. It's not limited to business at all. Business just happens to be, at times, a very crystalline chessboard on which you can see things that are hard to see in other places.

• 2:23:28Tim Ferriss?

  But it shows up in biology, it shows up in every aspect of life you can possibly imagine. And for that reason, I will continue to read and reread your work and think about these things and journal on these things. They're so incredibly powerful and so.

• 2:23:47Tim Ferriss?

  Leveraged. If you want to mimic Archimedes and find a lever long enough that you can move the world, you have to pick the right rocks to put them under and you have to choose the right levers. And these are principles that are incredibly helpful for doing that.

• 2:24:05Richard Koch?

  Yep. Well, thank you very much indeed to my, can't say thank you enough. That's very grateful to you. Thank you.

• 2:24:12Tim Ferriss?

  Absolutely. And to everybody listening, you can find Richard at richardkoch.net. That's Richard K O C H dot net. You can find him on Twitter at Richard Koch eighty twenty. The new books are eighty twenty beliefs and eighty twenty daily. As always, we will have show notes at tim.blog/podcast with links to everything. And till next time, be just a little kinder than necessary, not just to others, but also to yourself. And sometimes that involves cross examining your thoughts, not believing everything you think. And thank you all for tuning in. Take care, everybody.

• 2:24:51Richard Koch?

  Thank you.

• 2:24:53Tim Ferriss?

  Hey guys, this is Tim again. Just one more thing before you take off, and that is five bullet Friday. Would you enjoy getting a short email from me every Friday that provides a little fun before the weekend? Between one and a half and two million people subscribe to my free newsletter, my super short newsletter called five bullet Friday. Easy to sign up, easy to cancel. It is basically a half page that I send out every Friday to share the coolest things I've found or discovered or have started exploring over that week. It's kind of like my diary of cool things. It often includes articles I'm reading, books I'm reading, albums, perhaps gadgets, gizmos, all sorts of tech tricks and so on that get sent to me by my friends, including a lot of podcast guests. And these strange esoteric

• 2:25:38Tim Ferriss?

  things end up in my field and then I test them and then I share them with you. So if that sounds fun, again, it's very short, a little tiny bite of goodness before you head off for the weekend, something to think about. If you'd like to try it out, just go to tim.blog/friday, type that into your browser, tim.blog/friday, drop in your email and you'll get the very next one. Thanks for listening. This episode is brought to you by Eight Sleep. Temperature is one of the main causes of poor sleep and heat is my personal nemesis. I've suffered for decades tossing and turning, throwing blankets off, pulling the back on, putting one leg on top and repeating all of that ad nauseam. But now I am falling asleep in record time. Why?

• 2:26:20Tim Ferriss?

  Because I'm using a device that was recommended to me by friends called the Pod Cover by Eight Sleep. The Pod Cover fits on any mattress and allows you to adjust the temperature of your sleeping environment, providing the optimal temperature that gets you the best night's sleep. With the Pod Cover's dual-zone temperature control, you and your partner can set your sides of the bed to as cool as 55 degrees or as hot as 110 degrees. I think generally in my experience, my partners prefer the high side and I like to sleep very, very cool. So stop fighting, this helps. Based on your biometrics, environment and sleep stages, the Pod Cover makes temperature adjustments throughout the night that limit wake-ups and increase your percentage of deep sleep. In addition to its best-in-class temperature regulation, the Pod Cover sensors also track

• 2:27:05Tim Ferriss?

  your health and sleep metrics without the need to use a wearable. So go to eightsleep.com/tim, all spelled out, eightsleep.com/tim and save $250 on the Eight Sleep Pod Cover. That's eightsleep.com/tim. Eight Sleep currently ships within the US, Canada and the UK, select countries in the EU and Australia. Again, that's eightsleep.com/tim to save $250 on the Eight Sleep Pod Cover. This episode is brought to you by SecureFrame. SecureFrame's industry-leading compliance automation platform, paired with their in-house compliance experts and former auditors, helps you to get audit-ready in weeks, not months, so you can close more deals faster.

• 2:27:46Tim Ferriss?

  I polled a ton of you online, social and reviews came back, which were overwhelmingly positive for SecureFrame. SecureFrame simplifies and streamlines the process of getting and staying compliant to the most rigorous global privacy and security standards. They help thousands of businesses achieve compliance with security and privacy frameworks including SOC 2, ISO 27001, HIPAA, PCI and GDPR. SecureFrame is the most comprehensive ...security and compliance automation platform with hundreds of integrations, built-in security training, vendor and risk management, and more. You continuously detect and remediate misconfigurations across your technology stack. You also get complete visibility with actionable insights on critical security and privacy compliance issues.

• 2:28:30Tim Ferriss?

  Security training for SOC 2, HIPAA, PCI, DSS, GDPR, and more are built into SecureFrame's platform. You can quickly meet security and privacy compliance requirements and save time assigning, tracking, and reporting on required training. SecureFrame provides unmatched expert guidance every step of the way with their 30-plus former auditors and industry professionals. SecureFrame helps you quickly achieve and maintain compliance so you can focus on other things like serving your customers, scaling your business, and growing revenue. So, consider automating your security and privacy compliance with SecureFrame. Schedule a demo today at SecureFrame.com, as it sounds, SecureFrame.com, and tell them Tim Ferriss, that's me. Tim Ferriss sent you to unlock 10% off for your first year.

• 2:29:14Tim Ferriss?

  Again, that's SecureFrame.com, and during your demo, tell them that Tim Ferriss sent you to unlock 10% off for your first year. One more time, SecureFrame.com.