Graham Duncan — Talent Is the Best Asset Class (#362)

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Hello, boys and girls ladies and germs is Tim Ferriss and welcome to another episode of the Tim Ferriss show where it is my job to deconstruct world-class performers of all different types, whether they come from military Entertainment Sports business.

It's pretty wide spectrum in today.

My guest is Graham.

Duncan can find him at Graham Duncan blog East rocket.

com at at Graham.

Duncan NYC on Twitter Graham is the co-founder of East Rock capital investment firm that manages approximately 2 billion for a small number of families and their charitable foundations before starting East Rock 14 or so years ago Graham worked at two other investment firms.

He started his career by co-founding an independent Wall Street research firm Graham graduate from Yale to be an Ethics politics and economics.

It's a lot of stuff.

He is a member of the Council on Foreign Relations and serves as co-chair of the Sun Conference Foundation, which funds pediatric cancer research Josh waitzkin the one Oregon mutual friends will probably pop up here and there in this conversation thought of most often as the basis for Searching for Bobby Fischer.

Although he would cringe to give me limited hat calls Graham quote the tip of the spear in the Realms of teletracking and Judgment of human potential and high stakes mental Arenas and quote.

That is a very Josh sense and the gram it is a real pleasure to be sitting here with you and we've had many conversations.

We haven't caught up in a while.

We've also had terrible food poisoning together along with Josh.

I feel like we've we've seen each other in high-stakes.

Mental physical Rena's we if I recall correctly almost decapitated each other when learning to paddle board with Josh and I am excite I teach at for a lot of reasons.

Number one.

I always learn something when we sit down and talk and I don't think of you first and foremost as an investor.

I eat you certainly do that very well.

But I enjoy watching your thinking and listen to think except that I think that for people who are in the audience and who might be wondering right off the bat.

How will this apply to me? It is hopefully transferable to a just about Angelman.

I think that clear thinking is really a lot of what we'll be discussing but for people who just heard this by Ayo, and our kind of scratching their heads as to what you exactly do.

How do you how do you explain what you do? Well, I try to find people who are better at doing nothing than I am at doing that thing.

And I first came to this 20 years ago.

I just started a firm with Professor my not yell and we are running this independent research firm, and I had hired a sales guy who wear two years and we're going to group meeting and he says to me at a certain point Graham.

What the fuck do you do here at that point? I had some hiring and firing 30 minutes to me as I sat there for 30 seconds because it's the fuck do I do and I you know Robert when you first interviewed to come to our firm you were applying to be an analyst and I was interviewing you as an analyst.

I didn't see your eyes light up when we talked about.

Political analysis or economic analysis, but then you proceeded to stalk me for the following four weeks.

You called me at home back.

Then you emailed me twice a day and I had this moment Revelation.

I was also interviewing salespeople Robert Ramirez salesperson and you trusted me enough to come and try it and now you've built our entire business and I'm not a good analyst.

I'm not a good salesperson, but I put you in that team now we built this thingy that I put you into this positive feedback loop that we are calling a business here and that's what I do and I feel like it's a I wouldn't pick that skill out of the lineup as my thing.

It's the cards.

I was dealt with what I end up being compulsive about and interested in this way the world seems to like me doing it, but it's kind of an odd.

It's a it's an odd center-of-gravity.

But today I think about it it my mission in life is to get as many people as possible into positive feedback loops and There's a it's a it's a good skill to have because it's right next to the weakness of mine which of them kind of lazy.

Twilight getting the design right up front so that I don't have to like it I'd had to be talking to Robert once a week as a political analyst saying you're not do this don't do that that way but I don't But I don't want to put something into somebody I want to have them do the thing that they want to do anyway, and if you if you construct organizations and teams that way that you unlock a lot of stuff to bring me today.

I use that flush a lot cuz I act in effect as a general contractor for family to manage their wealth in order to do that my team and I meet over a thousand times a year to try to hire the best investment Craftsman of Any Given sub strategy and sometimes those Craftsman those investment managers who were trapped inside large organizations start their own problems on their own over there helping you unleash all this extra investment energy engenius if they weren't accessing in their prior context and we get to participate in that together with them so it's now been 20 years, but I feel like I've basically been playing different variations of the same game at that time.

How old were you roughly twenty-four 24? I'm sure a lot about this and I won't make this just ate a list of Josh quotes by me.

I was texting with him and he reiterated I think we just said and Josh my apologies.

I know we didn't talk about me reading your texts up front.

But this is pretty safe.

So cord genius for grab is to finding funky a plus that funky word on up at some point.

We can talk about 8 plus potential metal performers in the finance space and then he then he goes on you have systems and Frameworks that you use for this at 24 though.

I I would be really curious to hear you.

try to describe wouldn't need you good at it and then also if there's anything that comes to mind, is there any any is there are other things that you see that other people tend not to see or are there any types of questions that you ask yourself that even at that point? Perhaps you had picked up along the way this is is there is there anything that comes to mind? Well, I think of it is having a certain taste in people and I like taste because it and I think I had a certain taste back then and it's evolved and I can articulate a little better than I could back then but I mean if you think it tastes like paste over judgment because judgement implies there's one answer.

Where is taste is you have a certain taste in podcast guest right there something similar to the group and you could pick up Tim guest out of a lineup in a tall dark and handsome.

So taste like I told I'm pretty thing back then I think the Imposter thing kind of helped because I I knew I was trying to hire people who are better at doing nothing than I was at doing it and I knew I couldn't do it until I was forced to say, okay what constitute the Excellence in this thing? And I.

We have hired a bunch of in that contact.

We hired a bunch of sales guys, and they actually didn't like cold calling and a lot of sales guys understand.

I really don't like the rejection of cold calling and I found this one guy for whatever reason thrives on it.

I know somebody who are the client or prospective client of ours back then he said I still dream this guy Robert is trying to get me on the phone and I wake up in cold sweat in the middle the night we built our entire business on this guy and that that's so there's this like this.

Yeah try to get seen and I'm just I find myself curious about what makes people tick in this way that I don't get tired of it.

And how is that taste evolved to today? So if a component of that taste or At least alerting, your spider-sense is identifying certain outliers saying preferences behaviors back then like Robert thriving on cold call rejection.

What are your taste look like? Today or more recently or what constitutes your taste when you were Scouting For Talent OR Value Inn in talent in in the world let you know operate.

Well, I like framing I read once that people are like musical instruments in the range of notes.

They can play is dependent on the range of tensions that they've learned a whole and I like that music that everybody whatever they're playing right now.

There is actually other notes they can play in a different context.

So as an example of tension, I'm focused on right now in the USA manager at world is I think there's something really interesting about the tension between someone's intensity and integrity or if you double-click on each of those aggression and humility.

And if you if you would have ranked to try to use a concrete example, I've written an essay before.

David Tepper.

I don't know David Tepper Houston in the public domain news on CNBC.

He's written some and I think of David Tepper many ways as the platonic ideal of a good hedge fund manager in a good investor.

Work phone but you're going to do people for Trump the expression as as that mix of like super aggressive and taking a position of an equity or debt security from 0 to 20% of the fund with no no hesitation if you were and yet if you were on the other side of a transaction with him, he's not going to do something that you characterize as I mean, you would never say fragile in it, but I could be overly aggressive like he's playing the game because he enjoys it but he has an ethical core and I feel like that tension by Goldman Sachs a this term is someone commercial and I think of that I love that we write words and I think of commercial as people give off this Vibe of I'm going to create more value than I capture here for some reason or transactional is trying to capture all about you.

And people who are commercial balance that tension of aggression and integrity or aggression and humility.

They tend to together they like doing business with each other until you hit these pockets of people with that.

How do you test for something like that or stress test it in the sense that I would imagine many of the people.

If not all of the people who make it to the point that they're interacting with you or your team.

I have already cleared a lot of hurdles and they've already checked a lot of boxes and many of them will be good at selling themselves and no one is going to volunteer that they lack Integrity one thing.

I was very very very skilled and intelligent in a deceptive.

How do you try to evaluate that? Evolution of my process has been I just treat my interview as one perspective and then people think of references of the thing you do after the fact I to me, it's the whole thing references and getting the sense of how someone's interacting in a repeated duration game in this thing.

We call financial markets to me.

That's does.

It doesn't people generate trust and it's like this intended laughs at the Vets around them in the truck sits in the heads of everybody.

They've been erected with overtime and my job is to see how everybody else they've been attracted with their employees their former bosses their peers end up relating to them in the way because of the body of work they've had in the past.

And so we did that dinner with Chris Fussell that time I think Crystal and Gem crystals language around trying to assess someone's credibility and then based on that assessment how much decisions based To me, that's so beautiful.

And that's exactly how I think about what I do too and they have this formula credibility equals proven confidence plus relationships plus integrity.

And so what I'm trying to do when I'm trying to understand friend since someone's Integrity is understand how they behaved in Pryor moments of stress, right? So 2008 was it amazing for anybody that still investing was around in 2008.

It's a great moment to check in on how they behave during that period because that was like an earthquake going off and it tested every single possible human relationship be tested when people were Partners in investing and they're both portfolio manager has a lot of people got divorced after that limited partners the people invest in hedge funds and the general partners that has to build relationships does the people's relationships from the banks to have been around awhile to me an interesting question is what happened in 08 Like an am I'm sure we'll have additional crises soon that will again enable us to separate those who behave well from those who behave badly in those periods of stress.

So it's super focused and then I have a series of questions.

I asked people that I feel like hats High signal value.

But but again, I try to have a lot of humility and a light grip on my ability in want, you know, in a one-hour meeting to to figure that out.

What are some of the the high signal questions that door that you Steve filter through overtime and have found to be particularly useful when you come to mind or types of questions that I think applies whether you're looking for, you know an OBGYN for your wife to have a kid or anyting is you ask somebody if you are high Somebody to do this one right here you would you use to hire that is a question because it captures is their definition of success and also captured some new on that.

You wouldn't even known to ask about my wife and I were looking for was my question and one guy said well, but what you're maximizing for is the downside and if you have some sort of if the baby is in distress, you need a good NICU to my primary criteria gives needle to carrier unit the best Nic Q's are usually attached a teaching hospital is like Mount Sinai.

So I would look for affiliation of that doctor with a good NICU and then I would also act as his secretary was I would ask the nurses because the nurses know who freaks out during tricky situations and who's got ice in their veins and who makes good decisions who treats Well in those settings in the nurses, let the good nurses went to work for the best doctors in that hospital setting.

I actually have thought that the equivalent in financial markets are the Traders the Traders are the receiving end of a portfolio managers decisions and they often have a very strong sense of who the good investors heart like David tepper's Trader.

I bet my and again, I don't know this but my hypothesis would be there in awe different type of because they're on the receiving end of when he's buying when everybody else is freaking out that you have to be careful and one of the Arts of references I think is controlling for the context in the perspective of the reference Giver traitors like traitors.

If somebody doesn't afraid of what happened there.

They may not think as highly of this for play measure.

He's really more of a buy-and-hold person and doesn't get them.

Okay, that could be true.

But it also could be just they were in the super concentrated portfolio.

They only buy one thing you so but I really like what criteria would you use the other question is it improves your own criteria for the next interview? That is that's that's that's really really fascinating chatting with a friend of mine Toby who's the CEO of Shopify and the way he learned the business side is he went to Silicon Valley and met with let's just call it a dozen venture capitalist does an engineer and each meeting he would pick up new questions new terminology be able to answer one more question and it just improved his ability to move that not only venture capitalist, but also to learn the lingo on the terminology question related to The references themselves.

So the most folks out there if they think of references whether they have provided references or been references where they're trying to hire is you ask the person you are interviewing or will be interviewing for their references.

They give references who they expect to give.

Fries and then you get in contact with those people said there there's a piece of which questions to ask when there's a piece of which people to talk to how to how do you what is your process look like for determining who to talk to as references.

So I actually think the candidate giving you references is used mostly you want to find off list references.

If you can in one advantage of interviewing a ton of people in a given thing is off and you know people that they work with another context or they didn't give but I actually find on list references like bizarrely high signal about you because what happens is after 10 minutes on a reference.

Run out of like nobody wants to lie, they run out of this script they run out of their script.

And so one of my closest friendships in the business was when somebody runs another family office was calling me on a reference somebody and at my job, I went into that call taking it.

Okay.

I like this guy.

We don't have money with my but I respected me suck me as a reference list.

OK and the guy sat on me for an hour and would not allow me to basically give you know of a positive endorsement without specifics and either of the beginning of the end of a reference.

I'll say, okay what I hear you saying is you're kind of giving this guy a 7 on the net promoter score.

Is that right? Or I'll just ask on a one-to-ten what's your level of endorsement of this person? If it if I was calling you on a reference on let's make up a fictional assistant that work for you for years ago.

I was debating.

All right.

Well first we know each other it's why would I would do it in person I track it down as a temp.

So what's the skinny but let's say we don't know each other that well and I'll call you on the phone.

I wouldn't be trying to understand.

Okay.

Are you still in touch with that assistant? What's your like? What's the social Dynamic? I make it safe for you.

I'm calling 20 people.

I'm not passing any of that information back to the Canada unless you ask me to so you need to make it safer for them.

But at the end I've got an effect on aggregate number for net promoter scores on a different person you start seeing patterns after reference number for in and then you know, you can stop cuz you're hearing the same thing over and over again and this I mean I'm a very primitive of course you've done infinitely more hiring, but I remember this bit of advice that I was given by.

Think about you.

It was some blanking on who exactly it was Kyle Maynard is who it was a quadruple congenital amputee use climb Kilimanjaro and a star wrestler fast healer.

I think from might have been it was from it was from a very successful CEO and it was the rank X could be anything from 1 to 10.

Do you can use a 7 and I've used that in restaurants.

I've used that for so many things and it removes that safe mild endorsement.

When you are when you are then speaking to these references who have been provided are there any other? Any other approaches you use to spare it out weaknesses somebody in in anyway, I'm just curious and I'm in the references pick up on this Vibe and I wanted to help the candidate construct the best environment for them.

Right? Cuz that's there's no got your to it.

Like we're all crazy.

We all have lots of weaknesses into one thing.

I see other people in the cold roast me do is that they have one thing that I see other people who are an equivalent rolls to me who is a have this gacha writing which I don't agree with like to all I'm trying to do is help the person get in the best possible contacts for them.

And so so that's I feel like that stance unless it's a lot more because venue Same side up too late to talk about former boss or set with what you go into it in the tone that you transmit to compliment their strengths and weaknesses.

What would that person be good at night because then it's like because and then I actually use that and then I can help help that person try to make sure I feel like people have sometimes it is that there are products in my opinion in Investment Management.

There are no products.

They only humans and that's why I'm so focused on the people side of it and it that the only product is the mindset of the individual and the decisions that were going to make crochet.

I can leave from here right now.

If you were invested in a fund of Fidelity in the portfolio manager leaves and there's a new portfolio manager from my perspective.

That's a completely new decision right there.

Where is some people have a mentality but I'm looking to put out starts for the I think I'm A Dangerous Minds at which is I need to put out some assets and to do that.

I'm going to invest in some products.

I think you don't want to have the mindset of I need to put out assets.

Like you always want to feel comfortable holding cash and there should be no pressure but my to work and then secondarily, it's took that you're going in my world were pretty indifferent on do we have people in house or out out in the field most of the time external teams are the most commercial people want to run their own firms.

And so we have a bias to overtime of constructive what I think of as a team of teams, but It's not you know, it's not a product of products.

There is no makes a lot of sense to me and this may or may not be I want to bring up a term the Josh suggested bring up in this may not be the right place.

But that's okay because this podcast this is always all over the place spot like Memento wild beasts it ask ask him about wild gardening.

Now.

I'm going to laugh at this is actual literally wild gardening and it's just a complete non sequitur, but you put in quotation marks he so he calls me because I don't like to force it.

I don't want so there's a there's a great piece in the Atlantic Monthly from years ago where someone looking at the temperament of children divided them into orchids and dandelions, and it's a little It's similar to the the Susan Cain high-sensitivity.

There's another thing car named Elaine Aron u.

s.

Is concept of highly sensitive children hsc's me ideas that if you get orchids can be so beautiful, but they need just the right context.

They need the right light temperature and dental ins are just lower maintenance, but maybe have less potential.

That's not the right language, but they the dandelions you don't have to worry about the context as much and so I think I'm partly what I do is back to the the system design is okay.

Let's get everybody into a positive feedback loop doing what they're actually compulsive about what they actually have a chance of being world class at and I don't like Trying to stick a dandelion where it doesn't want to be your north of where it doesn't want to be and I ain't go recovering a lot that relates to Talent selection and asking the right questions.

We're definitely going to spend some time on questions that you ask yourself as well since that's mean it in part a large part was thinking is a day today, but I want to talk a bit about ambiguity or cases that are not exceptionally clear.

So you if you talked to say 20 references and all 20 come back and say this person is fantastic.

Let me list the ways then that's one thing work.

They're all negative.

But I No doubt, you've had instances where you get negative feedback or perhaps you have a lot of positive within one on a scale of one to ten and some very intense.

Very negative.

How do you how do you handle cases like that? How do you think through something? That is not at least at first glance extremely obvious.

A lot of life is like this or if there any cases any examples not naming names but of holding those contradictory perspectives as long as you need to to make sense of them and so for me people can my wife buy Business Park and experience me is indecisive at times because I'm so tolerant of holding the ambiguity on somebody being really good at something cuz everyone's genius is right next to their dysfunction, I think and so until you're clear on it.

It can feel intimidated.

You just don't get clear in which case there's no need to do anything but one Central strategy.

I have a feeling it was just spending more time with them.

You know, we got to know each other well underneath these intense.

Surfing trips where we almost drowned.

I must be headed you and then we got food poisoning butt and I like in general out of the conference room and not being pitched something across table and I like hurting other context to interact with people and if there's ambiguity or envolent will look at investment with them.

If you look at something that's live with someone you learn so much about how they're actually underwriting at the mental models.

Are you using when you mean by underwriting in this case work that an individual or say a deal team has done to get comfortable advocating for an investment at a particular price until like people will say they're attractive relative to the risk in this case and by by saying my underwriting they're putting their their personal reputation behind the projections and they're taking ownership of of the outcome of that.

Analysis, so if it if we were looking at a real estate investment in Washington DC in a potential hotel, we would rather than investing in a fund we would if we're getting a note of a new partner spend a lot of time on that literally looking at that hotel investment and understanding the how the sponsors looking at at the end.

That way you get to know all this is what they're really focused on.

This is what their strengths are and maybe we should keep an eye out for these weaknesses or if we make the investment in a fund of there's this is something we keep an eye on this for people who may not have put the pieces together.

I want you to correct me here, but you're you are in effect.

You have us as clients your Limited partners family offices.

So these are wealthy families who wants your help and then choosing difference investment teams and you are a bit in in West was that the team coach was selecting the players as well and trusts us to be there out shorts Chief investment officer.

Seriously, give us full investment discretion over their wealth outside of their personal property and we manage that as one pool for them and diversified across as a classic.

So we messed that pool and say a commercial real estate project in Seattle.

That would make a real estate partners.

That are local there or in hedge fund Partnerships run by the best teams.

We can plan all over the world.

So somebody's got a fund will look at their fund if they have an SPV a special purpose vehicle where they're investing in a publicly traded security or a private investment will look at that.

They want to start a fund will help him start a fund if they don't need our capital in a sieve contacts, but they just are looking for arm's length normal limited partners will do that.

So we try to be as opportunistic and open-minded as possible about it.

And are there any other patterns that you've spotted in the hell let you end up selecting the does well.

and the reason I ask is that from from what I've observed in this is not my world, but just hanging out on the sidelines every once in a while glancing over it my perception of what you do is that you're you're picking folks meaning investors, who are They're not Tepper necessarily.

Right? I mean they are kind of rookie MVPs or maybe that's not the right description.

But you may not have a ton of data on these folks.

Feel free to correct any of that.

So are there any any other characteristics that seem to pop up more often than not in these in the people of end up doing? Well that you select I'd say in addition to that aggression humility tension a second when I think about is originality and triage or these two week notice that the people who do best tend to have lots of ideas.

There's a academic named Gene Simmons who studied genius across field and he observed that whether it was Bach or any given scientist the sheer number of compositions.

That buck had were like, huh? Good times more than average composers and some of his lousy his lousy pieces of music were inferior to his peers the time but then he also ended up with some great pieces.

So there's something around just sheer quantity of ideas and original thinking that characterizes a lot of them specifically.

So I feel like as you in any feel like think when you start to achieve Mastery you start off and people start creating their own language to capture the Nuance that they're saying that makes them good at their thing and Investment Management.

Buffett is kind of a Shakespeare of the initiate.

Everybody is living in his language and in his mental model to the point where it's limiting.

So I feel like a 25 year old sometimes will be saying I'm sitting on cash just waiting for the fat pitch and I can't tell whether he knows he's quoting Buffett or not.

Even if he's doing it consciously he's living In this contract, which is a super useful construct, but the if he proceeds to become The Temper of his generation, he will heal generators on language over the course of a subsequent 20 years.

And so when people use a lot of jargon and cliches and language that at times doesn't feel like their own to me.

That's a sign that may be there a little bit earlier and they could use another stage of apprenticeship or another you'd suggest that we would probably wait till to a later stage and then that second component people have lots of ideas.

They're usually not that good at killing them to its attention with this tree.

I was mentality of look I'm here to make money.

I'm going to force Rank and somebody's going to die here and I'm going to choose these I'm going to save these for people and let this guy died, right is that tree High situational awareness.

I'm making live trade-offs here.

I think that's a quality that really good portfolio managers have where they can Force rank their portfolio and they can kill their own ideas.

And you see that often and then just back to aggressiveness.

I was interviewing a guy he was talking about what he's looking for one question.

I'd like to ask if you're hiring in Emma's what criteria are you looking for the animals and people who've been managing money.

Imagine people before begin to look for things in their analysts that make those analyst most valuable to them right into there's there's often signal in the way.

The answer that guy said no I'm looking for is a trace of fear in myself that this guy is coming for me, but he will replace honey.

And I think what is capturing is that at that level of intensity that obsessiveness that you see in a minority probably in any field because of just they they found their game the game they want to play in there.

They bring in intensity and obsessiveness to it that overtime.

They're just working so much harder and there so that you know, it's like Wayne Gretzky.

You know hockey at age 5 right like he's obsessed.

It is just going over and over and over again and obsessed with in this really distinctive way Warren Buffett from my young age obsessed John Arnold obsessed.

You mentioned you mentioned Something I want to come back to you for a second, which I made it I don't think I misrepresented think I'll probably get it but they mentioned Buffett and the terminology in a language freezing to popularize is all originated the popular Rises and how people can parrot that with needing you to wonder whether they really understand what they're speaking about or simply repeating something from someone who's while required reading.

This makes me think of Richard Fineman and how his dad used to tell him that there's a big difference in a pair of raising your between knowing the label write the word and phrase and understanding what that label is intended to represent and You can learn so much about not only others but yourself in your own thinking I look at the language that you use and one of the questions I wanted to ask you because it came up when you were in trouble mentors was how you improve your own thinking and the soonest that stuck out to me and I'm going to track it down here.

And this was in response to what is one of the best for the most worthwhile Investments you've ever made and I'll just I'll skip around here.

But the first line was I invest a disproportionate amount of my income paying for Evergreen collection of trainers and coaches and you mentioned a handful and one of them you said is the most gifted listener I've ever encountered.

She surfaces my hidden assumptions the ones that hold me rather than me holding them and teaches me to ask better and better questions.

How does whether it's this person specifically or others help you to surface your hidden assumptions.

This strikes me is so so key to just about everything and investing just happens to magnify the consequence of assumptions and how would a coach help you to surface your hidden assumptions? Or how might that this particular is within this Bob Keegan School of the he's a professor at Harvard and he has a theory about adult development which is it the process of moving through adulthood is one of increasing your mental complexity and increase in the number of things that used to be you used to be subject to assumptions.

You had you couldn't see and making them object over time.

So an example for many people would be if they grew up in a religious context are they actively choosing their religious beliefs or did they arrive at them because their parents and Community are there everyone was swimming in those beliefs together? And so will I feel like a really good coach can do is buy listening of the way your make it the listing the way I'm making some So something can observe you're actually assuming acts your grip.

I think it was gripped like your grip on certain things is really tight.

And if if if a Coach can find what you're gripping really tightly and that you're actually not you can you can't articulate the opposite of this belief you have that might be a sign that you have Identity or ego caught up in that thing.

Can you think of an example so one assumption my business partner pointed out to me recently that I seem to have and I'll be holding a little bit strongly is when he was calling futurism that I'm ready for things to be disrupted and paranoid about disruption in this way that he observed is I'm holding.

I got a little bit too tight of a grip around things.

So we're investing in a hotel where there might be a risk surround climate change extra focus on the climate change or if we're investing in somebody about investor who's often going long things that Silicon Valley trying to disrupt My part is observation is that I will be extra focused on wrists around that I think he's totally right once he said that it kind of clicked and I realized okay now that doesn't mean I drop it.

It just means when it comes up.

It's more object to me that so in any case like that would you practice? Articulating the opposite as you mentioned earlier, and I'm just as my mind is digesting this right now.

I'm thinking of I don't think you have read you've read so many books.

It's just boggles the mind and so that she may be familiar with the Byron Katie, but the she has something called the work which I think is if to be careful with using it as your only hamburgers and just start looking for nails everywhere, but be part of that practice is taking this belief that is causing you and I'm not saying this is this is an example here, but causing you some amount of discomfort or stress or anxiety and then Going through the exercise of stating the exact opposite, right? So my dad should be on his not real tampon.

They making up like my Dad should be more attentive to my mom and then stated in a number of different ways.

Like my Dad should be less attentive to my mom.

My mom should be more attentive to my dad etcetera.

And you you have to is from the exercise look for.

data points were even a small shred of evidence that you could put down if you were trying to make those arguments and it helps to disentangle emotion and attachment from your initial statement when your partner brings to light something that you might be gripping tightly like this.

What are the next steps after that or it is just the waiting out enough.

It's kind of like licking an optical illusion and you're like, oh you see how you look at it this way.

It's actually an old woman's face and said in our last and you can never again look at that and not see the old ones face the Byron Katie workshops of hair.

I think she's amazing.

I knew it.

I knew it across the street salad place sweet dreams and I was in there maybe three months ago listening to Byron Katie's new book a mind at home with itself and Byron Katie and her husband Steven Mitchell walk into the restaurant.

Order salads and then proceeded to sit right next to me.

I thought I took a picture of it because I thought I might be tripping and computer later and no one was there and I will tell you they proceeded to have the most mindful meal.

I think I may have ever witnessed.

There's some Gru's who out of context you think, you know are not walking there talk in this particular case.

I have I can affirm that she is like her stage presence to attend.

You've seen around Stadium all the time and try to find her Christian credibility on that extra high.

Yeah.

I think her thing of you know, what's the belief is it true? What's the opposite of that? Can you absolutely know it's true.

How do you feel when you think that thing what would you be without this? Peta number months ago and I can confirm what you just said that she she is exactly what you would serve expecting.

Hope her to be based off of the metaphysics can get pretty mind bendy.

If if if you go that direction but the framing of using the word retract timeout labels belief without this belief as opposed to thought is also really key right? It's like something you take its a statement you take to be true and it's just framing it that way puts it under a different lens.

But your question, I think I may have a little bit of ego identity around being unconventional or being into technology disruption and not thinking that the status quo is going to continue what my business partner is pointing at his just watch that and now that we have it on the table when evaluating investment.

It's You know, I don't be self-conscious about bringing up the paranoia cuz I think it's a it's a useful life to have but being aware that I'm just a tiny bit subject to that is really useful.

And if you're looking at a team, whether that's Within These officers you or sitting in your office is right now or keep us in your power Zone investing wind.

When do you choose to? Search each individual person to offset by Seas like this.

Vs.

Hiring another person to provide a Counterpoint and the reason I asked is and I'm getting way above my paygrade here.

But you look at the Buffett and Munger right and buffets searching for bargains and wants to buy a discount and then Munger is I'm going to get slaughtered on the internet.

I'm sure but as soon as teaching him over time that there are cases where you can buy at market value for a fair price if the growth trajectory is really high and they see the complement each other.

Very very well.

How do you think about I see each person developing the Counterpoint to look at the opposite versus hiring to end up with that optimal mixture to grip so I'm trying to figure out so sometimes I'll I'll hook up someone who is long Tesla with someone who has short Tesla and when you're when you're witnessing that exchange you can see whether the person is long Tesla and the person short tests.

Are they actively seeking, you know disconfirming evidence or is it an ideological thing? And Tesla is a little bit of an extreme example because it's very ideological on both sides.

Is that really a great example for that reason, but if you can see it because it's more extreme that right now on Twitter the shorts are in mosque in the people were long are going back and forth.

The vast majority of them are not actually looking to hold the other person's perspective.

In a team context you can you can witness whether there's somebody is already there in the hedge fund industry in the private Equity industry.

What school is that? The boundary of the firm is pretty fluid.

So sometimes it portfolio manager of one firm will have a close relationship with one to five other portfolio managers need to find here just for folks so p.

m.

Right before they measure the investment decisions and sizing the announcements in that portfolio the main it's the main role in inside of I mean inside a large room that have multiple depending on I meant more CIO but but if you had anything but we'll have external relationship sometime and sometimes those by side relationships will be testing each other's thinking and that buffett-munger thing often exists across firm.

My so they don't have to be within the boundary of the firm to the the the looking for disconfirming evidence.

I want to stick with for a second.

So this is this is something you see certainly in any good scientist them and it's they're not setting out to prove acts.

They are coming up with a hypothesis and then hopefully in in is unbiased and objective away possible not possibly fully fully objective trying to assess and the end actively look for disconfirming evidence if it exists or if they can isolated, how do you how do you train how could one train themselves to get better at doing that? Are there any could be as seemingly indirect as you like? I'm just I'm just wondering if it seemed like one step would be developing what we talked about earlier this ability to take whatever assumption or bias you have and then view it as an object.

They are aware of it and some meditation can help with that doing something like Byron Katie can help with that other other other things for the Derp precursors to looking for disconfirming evidence or that have it itself that can be of help to cultivate an underlying paranoia that you're missing.

Something is really useful in the best portfolio managers have that.

They're just not that cute that sense that I'm and maybe you dial that up by remembering my regularly reviewing all the mistakes you made into thinking, okay? 10% of the time I see things clearly and 10% of the time.

I miss it.

You know one thing about financial markets in the publicly-traded side is your heart rate is a really good purple a manager's hit rate is like 65% like it's off the charts in 55% will do just fine in a lot of cases depending tickly on their slugging percentage what percentage of how do they size the winners vs losers if you want to size the winners how much bigger than the losers so there's something around how do you maintain paranoia and humility? I think one tricky thing in the hedge fund space is being on the record in any way in the form of writing letters or being in on CNBC or being in the public domain probably on the margin makes it harder to drop it like a hot potato and go short and to me the most skill purple and managers.

Have an identity not as I am smart.

And therefore I make money or I am good at Financial stocks, but the meta identity is I'm a money maker.

And if that involves right now if in this era in this moment in history, that's going long Tesla.

I'll go on Tesla logo short Tesla.

I'll go short Tesla but there's no baggage.

I'm never walking into a guy who we have a ton of money with her.

I really really respected.

He was short SolarCity and it was on the morning that musk announced he was at Tesla was buying Solar City and I expected this guy to be moping around and super pissed at MUSC and he was laughing.

He was enjoying the audacity that my plug is in this game.

And oh my god, I didn't even I knew it was a possibility.

I didn't think he was going to have the Hotspot to do that right like that mentality that Schumer that lightness Got this one wrong on to the next one.

If she got took a purple Avenger ever wrote about something in the letter he doesn't happen to you.

But if you did I would have no qualms that the following month.

He can easily be short the position.

He just until one nice thing of financial markets is that long short thing that they building to to make money by it going up and make money by going down and change your position in this reminds me of something Josh decided some time ago, which was that he wouldn't at least maybe as a change but I doubt it is changed his current circumstances.

I wish you will get it to you but very unlikely Steven many keynote right now.

He stopped getting Keynotes because he felt like it would entrench his thinking and calcify his positions because Huda Beauty repeating these statements.

And Concepts that you've been be less likely to subconscious layer consciously to modify this this is something I asked everyone and maybe you've heard this before but there any particular books that you have gifted the most to other people.

They don't they don't have to relate to what we've been discussing it all but you are so widely read do any stand out as books that you've gifted it recommended often other people yasso in financial markets.

I really like this somewhat obscure book called the aspirational investor by the sky.

Ashvin chhabra who runs Jim Simons family office Jim Simon started Renaissance Technologies, which is the dominant Clinton in bathing suit, I like about Renaissance and he has his line on a New Yorker profile of him that he thinks what he has is really good taste in interesting problems.

They use of the word taste and it's a similar like I do end this guy runs has been used to run the endowment at The Institute for advanced studies and in the book, he identifies what he sees as the flaws in modern portfolio Theory which of totally dominated prevailing belief start investing for decades and has been suggested totally different approach to perform a construction based on how people actually behave and what they actually care about and so that's that's a buckeye get out of a lot of theirs on the culture side of somebody starting a firm.

I'm looking over your shoulder cuz I've got a bunch of them on the bookshelf here at tribal leadership by Dave Logan.

They love goes through as it looked at thousands of organizations and puts them into categories.

And Phil Jackson former coach of the Chicago Bulls has observed that NET Framework in in that Logan discusses in trouble leadership is the best framework for understanding world-class team to this come across we can go into the temperatures culture code by Daniel Coyle.

I give people what would we do you find the value in that book? This book has come up a lot on the Pike.

I still have not read it.

It's come up in many different context.

What is that book about which telescope he's looking at a bunch of different cultures Pixar Navy Seals.

It's got three others or something.

He's looking for patterns among what make people disproportionately effective as as a culture and I think he captures some of the Nuance that if you're trying to set up teams, you expose you to that may be a good guest another book on my homework lesson check.

I also like the tools I give that out.

Sometimes that's by Phil Stutz and Barry Michels.

Have you ever heard of that? I have screenwriters work in entertainment.

Call Justin there in Hollywood and they treat a lot of screenwriters.

I see they have a bunch of good hacks and some of the most honorable mention of my name but a few of the documentary filmmakers for on a very short list documentary filmmakers who create massively commercially successful documentaries have a recommended this book to me.

They they have this whole analogy of saying this model of take to get to what you want.

You have to go through some pain sits at the deposit.

Can you describe her people who went off as if they haven't? Huff has developed a way of exposing himself to the cold and methodology around exposing himself to the cold that he now teaches to millions of people.

Thanks to you and Laird Hamilton and others highlighting the Iceman in some cases because you do you need to watch your fingers and toes but he is he's he is a number of training approaches.

Although one sometimes wonders how much of what he can do is attribute vs.

Training but forever cold exposure and also for breath-holding, I don't think it's off the rails, but from shallow water blackout in the pool, you're doing brothel training never do it in water.

There's no really no good reason this metaphor of The base of the coaching you on your self-talk and there they say you should rub your hands together and say bring it on when you're anticipating doing some thing that is going to be painful and it and the use the metaphor of going into the cold water at the at the beach and that regular embracing of discomfort is a skillet with skin is also into and a theme of like learning to because it with can cause of the other side of pain but it's at its Embrace get getting used to exposing yourself to paint on a regular basis to the point where you don't bounce off of it starts in Michael's observe that in their work with producers agents screenwriters Excedrin Hollywood that people were avoiding doing the things I need to do to their bouncing off of it until you can create a skill and a mechanism to make yourself go into it and get in that habit and they got like six of them.

My kids like will our hands together and be thinking okay bring it on 2 x so I wonder if Josh got this from you.

I mean I arrive at this but with with his son.

He would take cold showers and you would always say it's so good and he taught his son to say it's so good with these short freezing cold showers and son is 4 years old the time and also taught his son to enjoy going out and what other people would consider bad weather the rain storms and so on so that's an example right? I'm just making yourself making the rain object.

So I think what Josh is observing is that for most people they are subject to the weather and they're experiencing the weather is acting on them play and a hack around that is to say basically know I enjoy the rain.

I'm going to find what I enjoy in it and and make it Not the world happening to me, but but bring the locus of control internally down.

I think he's doing there.

What I mean any of their about that they sell more books behind me.

Then feel free to to mention them.

I like a finite and infinite games which has been going around a lot of his other book breakfast at the victory is James Carter is really good.

He had him to an event had fun Retreat.

We had a couple years ago and spent some time with him and he said he's very very profound guy.

He was observing that I asked him how it came up with the concept of fun.

It was the infant games and he said he was watching his kids play and he noticed that there were some games like card games or baseball excetera where their whole motivation and intent was to have the game end and get the trophy and then you noticed there are other games they were playing where they're more Fantasy games were their goal is recruit other people to play in that game with them such as him as their dad and the goal was to keep the game going as long as possible.

I think it's a super profound insight.

Of the different ways.

You can relate to games in your life that you can see the game you're playing and but she doesn't give in the book.

He mentioned as a religious studies scholar.

He thinks Buddhism and Judaism or two infinite games.

I guess in religious studies.

Neither of those has a central Authority or central army.

So it's unlike Catholicism.

They have difficulty making sense of Wyatt persist over time and Toad the framework of its own internet game those people budicin and Jews are recruiting to various trees people into their game and wanting to just keep playing the game for its own sake I thought that was interesting framing.

How does how do you how does the distinction of finite and infinite games apply to finance? Now I thought I think it does a player who the manager would be for instance trying to hit a certain number of net worth and then leave the game and that's okay.

But that makes it less valuable of a partner for my perspective and the incentives can get kind of weird.

Once they are cheap that that worth if they actually stick to another reality is most people move the bar that everybody wants to have all along the income Spectrum.

Everybody wants to have two times where they are right now, but in general I seek out Partners who are playing my experiences infinite players who are enjoying the game for its own sake and are going to keep playing in and want to recruit other people in and there's not that's back to the distinction between being commercial and transactional this thing about the abundance mentality behind somebody's commercial who's trying to create Value in the capture.

That's like leaving room for other people in this way.

So it how do you how do you test for that? Or how do you get that is it might be lower on the hierarchy of needs in assessing talent.

But if it if it is something that you try to assess how do you assess it? And if they're if there's somebody who's thinking? Okay, I found this thing.

I love to do.

I'm going to do it for the next 20 years and I'm not going to make short-term accommodations to what's going on in the market or with my limited partners with my team experience it around time Horizon.

How do you how do you ask around the question especially after this podcast comes out okay their business.

I know if there is there indications of just subtle mental framing's on Mi some people start investment firms because it's the time of their career where they've kind of their friends have started investment firms.

They can no longer stay at the container there in and they need to start but it it's not an approach goal.

It's almost an avoidant call.

It's like, okay.

This is the time where I'm supposed to do this.

I'm going to do this a different set that are like, okay.

I found the thing.

I love I found a ball.

I like to hit and I'm going to do it in this new form because that implies to me a longer time Horizon.

And I know it's a cliche but a Love of the Game itself, like they're not and you took away David tepper's money.

And made him start at scratch right now.

I think he'd enjoy it.

Like he's just found the thing he loves and who else has long for Jocko willink? I think if I would invest in something Jocko did I think he has that exact infect his much are right as default aggressive.

He had that makes them aggressive in humility.

And if you think he's coming back from Iraq, he does Hilti Brittany's entering your world podcast thing and then, I don't know.

I just really admire the way he's doing his own thing.

He has that that mix of time Horizon.

Having an idea executing on it you guys, you know each other in terms of X sniffing around the direct question and it it seems like perhaps much like your tell me about tell me about that would happen 2008.

You can maybe also along the lines of looking at how politicians have voted on things as opposed to asking them what they will do.

It just made me think that I'm looking at time Horizon and some intrinsic versus extrinsic motivations and so on you could do it all success along the same lines that y combinator has at least historically by asking a lot of questions around what people do in their what they've built in their spare time and thinks That which will not be a direct answer the question but could act as indicators that point to serve in general pattern of behavior and motivations and programs to NC mountains have high signal for my perspective.

So it like they have this question to ask themselves.

Can you say this person is an animal and not smile like your references based on your interactions with them.

I think they're King in on the same quality of aggression or intensity that I am Buffett uses passion and Common Sense Ray dalio uses assertiveness and open-mindedness, but I think everybody is honing in on this paradoxical tension that I was talking about earlier.

So sorry what was up.

I'm not even sure I ask a question.

It was more of an of an observation and and wondering if there are other ways to ask around the the direct question.

Verizon which which I mean you are to give a few examples of so, I think it's been answered.

So let's let's pick up on on one thing.

You also mentioned in passing Which Wich all refresh for four people listening by reading a quote and I'm going to get this name wrong.

So maybe you can this is a quote that you introduced me to and it was it was one of of two candidates for answering question what you would put on a gigantic billboard anywhere and that you can put anything on this or metaphorically speaking write a message to get out to millions or billions people.

So can you read this it is it is stuck in my mind and I've Revisited it so many times but I don't know the proper pronunciation IPA who's a philosopher it and my UEFA.

I think he used to be at Princeton has this quote.

It's not how well you play the game.

It's deciding what game you want to play right? And so you had mentioned Game, if you are aware that you're playing the game.

So what what is the what is the relevance or importance of this this quote real read it one more time.

So it's not how well you play the game.

It's deciding what game you want to play.

So I think that's a way of making your game moving it from being subject to it to object sew an example would be I think I remember people are obviously playing the game of making money and they're keeping score in terms of how much money they make or how much Fame the accumulator how much power they accumulate and making that game object to them and then just making sure that you still want to play that game is I think what his quotes about I ended up writing an essay by tried to capture the various stages of Mastery and Investment Management.

It's on a Blog that's on my site and to me that quote allows you to come to zoom out and say okay a different stages of my wife.

I'm going to play different games what game am I playing right now? And can I see it? That's what the coaches in the coach.

I've used in the past helps you do is say okay.

You're clearly optimizing right now for this just make sure you actually want that.

That's the game you want to pull out of your gun is leading.

It's the right wall was just make sure video game.

It's the recall that I'm down here in this corner of the of the mountain range.

Do I still want to climb this mountain or is that a local maximum and I should actually zoom out and had a completely different direction you've mentioned this to me before and even be in trouble Mentor.

It makes me think of the David Foster Wallace.

A commencement speech we just been turned into books in his online in various forms, but yes, here it is right here at is the this is water and the story of what is it? The two the two young fish together swing by the old the old fish and goldfish doesn't Bassinger.

How's the Waterboys or something like that? But he's capturing so beautifully in that in that convention speeches that we all have water.

There are things there water to us at every stage of our life and the fun project is to try to see it and see it at each stage.

And when I think of it even the development your development over the course of the last several years on your podcast like you're able to see your wrestling with different stuff you're able to see your own quirks in a different way than you were five years ago.

And I think that's the process of adult development.

That's what Keegan is pointing to as the different stages.

I do the podcast in part because it helps me to sue the water hits.

It forces me to try to ask questions or make statements and articulate things that would otherwise just bounce you out of my head consciously or subconsciously list of the pie guy sexually, it's cool for me to try to discern which water I happen to swimming in.

I was just what you meant, which makes a lot of fun.

The Greg McClelland is a rescission.

I said it that way for a long time the Q and Brake pressure to go on the work event on the project with his Consulting Partners rather than be at the hospital with his wife, right? She was having a baby that's a developmental language.

That's a developmental moment where you saying? Basically he's moving from socialized to self authoring.

He's saying basically know my partner's don't Define the scorecard hear the scorecard is my scorecard.

I decide what's a priority to me and I'm never going to I'm going to remind myself of this the rest of my life by embarrassing myself by telling the story over and over again, so I don't do it again.

I feel like essential basically that's what he's capturing and I think a lot of different moments on your podcast that's people are wrestling with.

Okay.

What? What can I see at that moment? What did they used to not be able to see and let stay out of its kind of beautiful 3 unfolding that we're all doing.

And you said you had an opportunity to observe.

I don't know dozens hundreds thousands of careers, or at least look examined probably thousands of different careers.

How do you think about careers or career advice? I know that we've had some exchanges using the metaphor of the river which might be a good place to to start and then I have some other other questions relate to that but maybe we can begin with that of of a river with two Banks one side is chaos in the other side is order something Dan Siegel who is a neuroscientist came up wit