Business Tricks We've Learned From Gamblers, Pickup Artists, & Feynman

alright we're live sean i've got a story for you and miss story i'm gonna take a weird take on this i have a weird take on this and i'm gonna appeal to all the young single men out there alright this your specialty younger i'm single man let's go i feel like i could rule word i know i could be what i want to put at all in it like a days off on a travel listen back the story is about ed thor have you ever heard that name at thor sounds like a swim no it does sound like a swim but he's not so ed thor i'm reading his biography called man for all markets so ed thor today he's ninety one so what does that mean he's born in the nineteen forties he's nineteen thirties ed thor he grew up as a math whiz kid he was like a a a prodigy at a young age grew up in a very poor household didn't have a lot of money but as a young kid when he was like twelve and thirteen years old he got moved up a bunch of grades and he took a bunch of standardized test and at the time when he lived in california he got something like the highest scores in california for high schoolers when he was like thirteen years old and at the time they didn't have calculators but they had like little counting devices and he would take these tests without these counting devices because he couldn't afford them and he still crushed it he killed it so eventually ed thor he gets a scholarship to berkeley and then he goes to ucla where he gets his phd in mathematics and he becomes the professor and he starts going down this track where he's in his thirties and he's this brilliant professor whatever but then he does something interesting he gets interested in applying his theories to real life situations because he's like reading these academic papers and he's like this is cool and all but we gotta to apply this stuff and his specialty was probability and statistics and he got super interested in how he could use his theories to beat blackjack oh this is the gambling guy i saw this guy on tim ferris so this guy's interesting is because he's done so much more than just these few little stories i'm gonna tell but basically you could actually verify this blackjack is what fifty one percent chance the house is gonna win is that right it like fifty one forty two one fifty two or something like that yeah so it's a small margin but back in the sixties when he was kinda getting going he had this theory where he thought that if he saw the the cards on the table he could have a higher probability of getting twenty one because he basically could count cards changing the ratio of fifty one percent in the user's perspective so he it was fifty one percent chance of winning the house was forty nine percent chance so he creates this paper where he explains all of this and inevitably people are like man this is just some academic theory there's no way that you're gonna be able to do this and so thor is is is a fun guy and he's like we gotta approve it so he builds out this blackjack table at his house and he gets his wife till smoke cigarettes and blows cigarettes smoke into his face while she's talking to him and like annoying him and then he has friends come over who like our drinking alcohol and like yelling in his face as if he's at a casino to distract him and he spends a handful of months doing this and it starts working he's like i think this actually can work i think i can do this and he publishes this paper and all these people reach out he gets hundreds of letters but eventually he gets those this one letter from this guy and named manning and manny he doesn't really know it at the time but after a while ed kinda realizes that manny is basically in the mob he helped make boot leaking a thing in the twenties when alcohol was illegal and manny goes hey ed let's see if you can actually pull this off i'm gonna front you ten grand and we're gonna split the winning ten grand at the time the sixties is something like eighty grand so it was a lot of money particularly for a professor who's making the equivalent of the hundred a hundred and fifty thousand dollars back then and so they go and they spend this week this weekend at a a casino in las vegas and they make eleven thousand dollars in profit and ed like holy moly this thing works but he doesn't really wanna become like totally a professional gambler but he's really interested in proving his theories and eventually he writes a book on this and if you google ed thor blackjack book he wrote this book at the sixties that was a massive hit and to to ed this was all just a big like fun game a way to like prove that his research wasn't just academic but it could actually be used and this book was a massive hit and it was one of the first times that academic research was like used in real life and it went straight to the masses as opposed to him publishing more papers but this meant now that he was known the casino world in the casino world back then vegas was just getting going and so it was small enough that they all the casinos could know what ed looked like and all the dealers would know what he looks like and what his name is and so he eventually goes back at every handful of weekends and he has to wear disguise and he's but he still ends up ends up cleaning them all out and next he goes well blackjack was cool let's see if i can do this with ro and so he goes you know ro is a little bit unlike blackjack where i don't even know if there is necessarily at least it doesn't appear so there's a lot of skill because it's all like where the ball lands on this spinning wheel but he has this weird theory that if he can see if he can like quickly count how fast the wheel is going and where the ball starts and where it hits the wheel somehow he's able to calculate fifty one percent in his odds where the ball is going to land and this sounds like a crazy idea right i mean that just sounds impossible to me as somebody who has spent a lot of time at ro wheel being able to figure out while the wheel is turning where the ball is gonna land and it i mean when the ball hits it bounces like in know random direction based on the spin and the speed and everything like for somebody to do that in their head would be i'd have to see that to believe that it sounds impossible right and that's what interested him is is he was a master nerd and he was really fascinated with the game of proving his theories correctly and so what he did was he took a small computer and he basically assemble the small computer and the way it worked is he would have a two person team and so he would be at the table placing the pet and he had have two people on the side and they had these little small computers and they had little buttons in their shoes and they would calculate where they thought the ball was gonna roll to and they would tap their feet in order to keep the cadence of the wheel right and it would help him predict where the ball was gonna go and that music the the the taps it kinda sounded like music would go into his his earpiece that he was wearing and he would make a bet and this was actually the world's first wearable you know like an iphone or like like an i watches as a wearable this was the world's first wearable and it worked and he killed it he made a lot of money and he wrote a book on this he did it again but now we're gonna fast forward to him ten years doing these experiments he's got some money something like a hundred thousand dollars at the time which was a lot of money for a professor and he needs to invest his money because he just doesn't want it sitting there and so he spends a few months learning everything he can about investing basically just reading books he just read lots of books and as he said he wanted to understand the math behind all of this and so he starts in investing in publicly traded companies and he loses a lot of money at first he said i had to pay my tuition to mister money market because it gets a lot of it wrong but then he discover discovers options and this part is a bit out of my expertise to explain how he does this but it involves both shorting a company and buying the company's actual stock so predicting the company's stock is going to go down while buying the stock but in doing that he studied the the the option that he was going to purchase as well as the current stock price and in doing that he was able to hedge it so he would only lose a little bit amount of money but make a whole bunch of money and for him he actually didn't look at any of the stock information as in what the company was selling so you know you have guys like you value investing and they're like well i think that those brand is undervalued that wasn't him it was all just a math came to him but after a year two it starts working and he starts making a little bit of money and so now we're in the seventies and there's another professor at his university who starts hearing that ed is now investing in stocks and he's doing quite well he's tells some of his coworker he's like i might make more of my more than my salary this year investing it's going quite well and so one of his professors has invested his money the professors money in this small little fund called buffett associates and of course it was run by this guy warren buffett out of omaha and this professor was like hey this guy who i invested in warren he's gonna wind down his fun he's crushed it for me but he just wrote this letter saying he can't find any more good deals which in the seventies buffett actually paused investing for like five years he didn't want invest because he's like i can't find any good deals right now i'm gonna sit and do nothing i'm gonna wind down my fund and the professor goes hey look this guy is running down as fun why don't you you know he's got some free time i'm friendly with him i'm gonna invite him over to my house i'll invite you over and we'll just shoot the shit and maybe you'll have a new friend in the investing industry because you don't really know anyone else doing this i'll i'll help make the introduction buffet it comes over for dinner and ed thor and him get along beautifully hand in hand like pots and pans they're they're really close they become great friends and they love hanging out that debt and a few weeks after the the dinner the professor goes hey look ed i was kinda testing you i kinda wanted warrant to like like kinda see what's up with you he gave he gave a thumbs up he said you're really smart and that your ideas are good can i take this money that i got back from warren buffett and give it to you to invest and it's like taking other people's money that's not really what i i've been doing i i've just been doing this for my own if you guess i'll try it and so he teams up with another guy and they raised something like five million dollars over the course of six months and they have buffett stamp of approval and so they start basically one of the very first hedge funds ever and particularly a he's a quan which is common nowadays but at do was the first quan where he didn't really look at the companies he just looked at the numbers and he killed it so over the course of thirty years he made something like twenty to twenty five percent per year which is massive i don't know what what is buffett made you know probably something like that but over the course of buffett is like twenty yeah yeah it's like twenty but over the course of like sixty years yeah yeah for a lot longer and so ed thor basically invented counting cards with blackjack mh and then made a book on it he invented this ro game and the world's first wearable which all these things by the way eventually became illegal they weren't illegal or i don't know if it's illegal or against the rules but they basically are banned in casinos because of him and he part all this learning and all this experience into creating the world's first hedge fund and becoming the one of the first quan and he knocks it out the park that guy kills that i think he made something like eight hundred million dollars and then eventually fast forward to today or more like two thousand and five he shuts down his fun because he's like i have enough i don't need anymore this has been fun while lasted i'm out he's one of the few guys to just be winning and he just says that's enough i'm done so he completely shuts it down so now he's ninety two years old he still does push ups and pull ups he's really into fitness he does not look ninety i i saw him on the tim ferris podcast i can't have been that long ago he was eighty nine men on that tim ferris book yes like a he looks honestly like somebody's early sixties he looks great yeah and here's the part where i promise i'm gonna try weave this into advice to the young man ed thor is so fascinating to me and the reason he's fascinating to me is because i don't know if you'll admit to this you probably will if you did it did you ever read that book the game did you ever read like books on like how to meet women not only did i read the game not only did my girlfriend in high school buy the game for me before i went to college as a goodbye gift was that her breakup gift it's already not gonna we're not a stay the other but let me help you out here not only did those two things happen two nights ago i reread the game and i'm a married man i reread the game because i was like that book was amazing back then i wanted to learn the style of it i was what was great about that books i went back and i reread it two nights ago so it's crazy you brought it up so it that's a great book so anyone most men in their in their thirties nowadays probably read that when they're fourteen it was like the bible because all of us nerds like i desperately really wanna be loved how do i be loved whatever and there was a lot of bullshit in that book rather the number times i use the cube test like there's not a won't do campus that didn't get the cube test for me which one was the cube test it's like a cold read where you're like i want you to close your eyes imagine a cube but it's it's floating in the desert how big is the cube but if they say it's big they're self confident if they say it's small they have no week is the cube see through is a colored oh it's it's kind of see through well you'd you don't let people in easily but when you do you really do connect with people at a deep level so me and then you just go on so on and so forth about the relationships and about their their way they view the world or by the end of it like this guy this guy gonna be the friend zone it's really what happened to me but i think for for better look at people who probably work better than that they are like a cat and you're just holding a string just like trying to entertain them and they're like yeah i'm done with you it's another thing about cat string theory that's actually another principle they have but well and this is where it gets really nerdy but one of the parts of that book and that whole movement there was a lot of bullshit in that book and then that movement but one of the parts that i always took the heart was the best way to attract others both men and women is to be an interesting person and what that means is basically people like ambitious people and being passionate about hobbies is under that umbrella of being ambitious and i remember as a kid i love that because i'm like wait you're telling me i just like work on myself and i will attract others that sounds like the greatest thing ever and and and i believe it to be true as i've gotten older i've noticed i've gotten less interesting and the reason i've gotten less interesting there's a few reasons there the first is that i've developed higher expectations towards most things that i do or rather i've just developed expectations as opposed to just doing something just for fun like you do think as a kid just because you're intrigued you know like i don't know where this is gonna go but i'm just gonna i'm just gonna follow it whereas now there's expectations for everything that i do and i wanna have i'm i'm a little bit more interested in the outcome the other thing that i've noticed lately about me and why i've become less interesting is because i've been distracted with social media just like how you're typing right now as i'm talking to you it's so much easier to be distracted nowadays with twitter and slack an email and text i find myself getting so distracted and so i don't have a significant amount of like deep thought or like going deep on something it's more so like i'm being on the defense where people throw information at me and i react to it as opposed to like spending time pursuing something that interests me just because it interests me and so the reason why i thor the reason why i i like reading about him in particularly for young men listening is he's kind of inspired me to just pursue more hobbies just for the sake of learning and here's an example when he was developing his game he basically went and bought old ro table at an auction for like five hundred dollars and he just sat at home in the evening with his wife and they're were like hey let's just see if we can like count this game it it was almost like what's that one get board game called settlers of katana yeah you know how like people just like get into that random stuff and they're like let's just see we can master this game it sounds fun and that's exactly how it started with him a lot of these things that became massive outcomes for him they were just like interesting little hobbies for him and they started very rudimentary have you ever read about doctor richard simon of course so fe was one of the guys who was important for a variety of reasons including helping make the atomic bomb and all these things and he had little like weird things about them where he's like why can dogs smell so good he's like well i asked myself that and then i just put my head closer to the floor and i noticed i can smell things on the floor and like that's like like it's like really simple ways to like prove or dis disprove a theory where you start at like very basic principles and you're like let's just see if this works you know just khan used to call himself he had some tagline for himself when he was making content he used to say hey it's me justin your favorite founders favorite founder and that was i how you always talked to about social your favorite founders favorite founder and i feel like fine man is kinda that it's like your favorite guru favorite guru or your favorite thinker favorite thinker it's like everybody who you love their thoughts they love fine man and the fine technique because they love all fe books in his writings however do you respect respects fine yeah i think tim ferris is holding companies is called fe inc or something like that that's actually genius to just be like yes simon and ferris associates there's yourself with them just like oh yes this is the korean and musk consultancy well how can i help you yeah just like borrow from their credibility but there's guys like f and ed thor is now in that a sphere where they just get interested in some things that seem so silly and they do it at a very rudimentary level and it goes from level to level to level to level but it starts at level one you know knows is exactly like this jack smith jack smith is like that yeah jack smith is he's one of these guys jack is a buddy of ours you're really good friends with them i think you've known it for a lot longer than than i have but he is such an interesting guy he built companies he said i built a company called v sold it his whole origin story was one of the very first podcasts on this that feat so if you go back jack was in there and he talked about you know when he was a high school or what he was doing flipping things on ebay and then how he hacked his way into an accelerator then once he was in the accelerator how he figured out this ad tech company how the experts told him there's no way son you don't understand how the ad business works he's like yeah that's my strength i don't understand how this works so when i approach it it's i'm gonna approach it differently and what he did was the whole the way the whole ad industry work was all based on cpm impressions so it's a billboard how many people are gonna see this billboard that's how i charge you and he's like well that's kinda stupid if i was advertising i don't want people to see it i want people to buy for me or i want people to download my app i want the action so what if we just paid for the action and it became cpa instead of cpm and so he reinvented in a way i that's a little bit generous i would say there's other doing this but jack and his go founder created v sold it for seven hundred million dollars and it was really based around this mobile gaming ad network that was gonna do things a little differently the way other people were doing them he sold it for seven hundred fifty million when he was twenty nine years old fuck crazy stuff and for example like again thinking from first principle so like what should the ad be everybody else did video ads and so you would be playing game it would stop a video would take over the screen and it would be a video commercial and then you'd be like when when can i click the x so i get back to playing a game and what jack realized was he's like well the best way to advertise a game is actually just play the game for a second oh it's it's about shooting the ball into this hoop well like let him try to shoot a couple times they miss and they wanna it and they make it and then now they got a sample so they created an ad unit that was just a mini version of the game that worked way better than the video ad and it was again many times over of just thinking from first rentals how can i do this but now since selling the company he had his thor enough moment where he did not need to go create another company and instead got really into other things he's like you know i to buy an office chair he goes and he looks he's kinda uni unexpectedly he's like well certainly there's been some studies on the best way to sit so what is the best way to sit and he'll go and he'll read research papers about the best way to sit and he'll test chairs and he ultimately ends up building this crazy ergonomic chair himself in his garage over the period about six or eight months did you see the chair it looks like a dentist he's laying down in this crazy position and it's like a a work chair but at any time if you ask i'm like hey what are you go to nowadays he felt zero pressure or at least caved to zero of the pressure of having some important sounding answer because he just did what was important to him rather than what sounded important to others so he'd be like just you know just messing around you're like what does that mean like what do you do every day jack he's like well i'm working on trying to build a chair you're like i'm really interested chairs and you know sitting it's i i sit for six hours a and i just thought well why don't i sit in a better chair and i can start with the researching chairs so i'm bought fifty two chairs i've been testing them and then i've decided to you to build my own this the best of each of these that's what he'll do for one year and then next he'll do something completely different just off of his curiosity and the cake one year for his birthday the cake that his wife made for at his party was shaped like an amazon box because he'd orders so many chairs or so many whatever things that he's interested in that the he had a room in his home just dedicated to all the box is yeah he had a small like fba fulfilled by amazon facility in his it is pantry just to test out every single product and at one point they'd banned up on amazon they ban him on amazon for returning too much stuff because he would buy all of this stuff to test it out but yeah jack is perfectly like that but does this resonate with you where you're like i need to just pursue more things without having a big outcome in mind we haven't been talking a time but that's become the theme of my i don't know the last twelve fifteen months or so i heard this quote have all said this thing on some podcast and he goes too many of us live where we're doing things today for some future reward some some future payoff i'm not doing what i wanna be doing now but i'm putting in the time i'm putting in the work and putting in the effort for some future payoff it goes that's understandable we all start there he's like but the day you start doing things where the the thing you're doing in and of itself is the reward that's the day you've retired people think retirement is when you stop working you go sit down you chill you do nothing it's not that you do nothing is that you do the things you wanna do because the act of doing them itself is the payoff and you're not sure there might be some upside in the future but that's not why you did it and when i heard that i was like okay that's what i need to be doing i don't know how i'm gonna get there and i've many times i had little d horse off of that where i start to do something opportunistic because oh it's gonna pay off in the future but i've just continue to bring myself back to that that moment which was i want this next chapter in my life to be all about i'm doing things where the only criteria is the act of doing it has to be rewarding enough for it to been worth it and that one criteria eliminates like ninety eight percent of the possible things i wanna do because if i'm honest with myself and i say what do i wanna do this because it might make a bunch of money or it might pay off in this thing later it doesn't might it could be business related it could be relationships related could yeah why do i wanna meet this person or go to this event oh because it might lead to something i don't know i'm only going to this event if the event itself is the payoff i'm only hang out with this person if they hang out is the payoff not because it's gonna lead to something else it can be you determine what that is do you determine have you what i that's actually really hard it's figuring out what the play is what i realized is it's less of a thing so i thought like you're just asking me this question i thought it's a thing i gotta find my thing my new thing that's the thing i just love to do and i'm doing it for the sake of doing it i realized is is it's fundamentally different it's not a thing it's a approach and it's a filter and so actually it's a question that i ask at the beginning of any anything i'm gonna do that day which is am i doing this for some deferred payoff some deferred benefits or am i doing this because i actually enjoy doing this and so it changed the way i everything so for example with my workouts there was a version of workouts that i did because whatever just just bite bite the bullet just do this and you're gonna it'll pay off later when you get fit versus well why don't i just do workouts that the workout itself is so satisfying of course if i do that i'm gonna do it more often i'm gonna do it with my full effort and i'm gonna still get the roar in end so i started working with this like boxing coach or playing basketball different things that i wasn't doing before because i was willing to settle for doing something that today kinda sucks but in the future maybe it's gonna turn out great and i realized i'd live basically like thirty five years of my life with the this kinda sucks now but oh it's gonna it's all gonna pay off in end i it's a false choice you don't have to do that you can just filter every activity on is the act of doing this gonna be worth it even if it's challenging it doesn't mean everything is so happy but is the act of doing this the reward or am i doing this only for some future payoffs so it became a a filtering criteria not a one thing so for example i told you was reading the book the game the other day why did i do that i was i reading a book in the middle of the day especially an old book that i'd already read before that had no relevance to me because i'm not trying to be a pickup artist or hit on women anymore right that's not i was but it was the thing i was most interested in that moment and so i did it because the act of doing it was the reward because i was most interested in it and i've done that with other hobbies like picked up playing the piano and i started doing other things that are all falling into this bucket and i've never been so you can hear it in my voice i've never been so switched on after making this sort of shift in the way i chose what to work on and that's a very i'm gonna say the p word that that's a very privileged way to go about it which is if you hit the lottery like maybe we have or i mean we've worked hard but we've got lucky as well where that's a very privileged way to go about it and so i do think you have to eat shit for a certain period of time and also get some luck but yeah i'm very drawn to this way of living i'm not sure that that's true look one hundred percent true the reason i say that is first whenever somebody calls me privilege i'm like that's a compliment i think they they mean it as an insult they people use it as a ag not you in this case but i'm saying most people if you call someone privilege you're trying to tear them down i want my life to be described as one of privilege just the point you're giving me a compliment that's like saying wow you're really good at so this comes listening you or whatever i want my life to be described that way that is a goal of mine and i just mean that because most people will treat that as a negative and then they try to make so smaller right so a little bit of like the tall poppy syndrome where if you have the freedom to do something and you are not doing it because you're worried about how it looks or how it sounds or how it others don't have that privilege you're wasting your privilege and i think that's a it's bad thing i mean that's let me answer the other part which is i would say that the most successful project i've ever done more than any of the companies ever built or any job ever had has been this this podcast this podcast from a usage like people listen to this they like it so customers are happiest financially it's a very lucrative product that affords a very good lifestyle but also just the my enjoyment of it but they're active doing it i don't do this episode for some future payoff i this episode because it's gonna be fun to do enjoy this conversation with this conversation by the time we click stop i've got my payoff and when i started the podcast i literally wrote down that i'm gonna lose money doing this that i expect that nobody will listen to this and i'm gonna do it anyways because it'll be so fun to record these episodes talking to interesting people and learning that it will make it worth it and i wrote it i may i this google doc share it says my forecast is i will lose ten thousand dollars a year doing this my forecast is that really nobody but my mom is gonna listen to this thing and it's still worth doing what were the other predictions so i got into this position because i made a choice like that four years ago right like that that and so i don't think i also thought well you gotta eat it for while before you get to go do the fun things i don't believe that that's actually true i know that's one hundred percent true think about it let's say you're a forty year old landscape kids it is one way to do things i know a bunch of engineers who work on projects that they are personally interested in they build personal projects and one goes kinda nowhere two goes kinda nowhere but it doesn't matter they're building up their skills they're having fun doing it and sure enough by the third the fourth the fifth either they built up skills where they're a highly valuable person that gets brought into a project that's already working and they get paid handsome for it or they one of their projects takes off but the whole time they were just doing the thing that they really like to do i think that there is one way to win in which is grind in eat shit and pay your dues work up the ladder of pick whichever cliche you want and that that is a way to win i know several people that from the beginning they were driven by working on the things that were interesting to them like an adult type of guy right and when they when they're working on things that were interested in it led to good outcomes because when you work on things that are interesting you work on it longer harder than than a person who's just doing it for reward you get better at it and when you get really good at something that's when payoffs tend to come well i believe that can be true and also it can be true that it's more challenging logistically for certain people for example you're a blue collar labor but three kids at forty years old you work from six am to seven pm and you're like there's just no time and i just gotta pay bills i do think that it's just more challenging for many of the people listening right now i believe you are totally right which is we probably have a lot of college educated particularly college age kids who don't have too much responsibility and they should lean into this this thing and i completely believe that to be true and i believe it also to be true that as you grow this type of mindset gets stamped out of you the world wants you to be vanilla yeah absolutely but ask a different question of the people we know that are successful just give me a rough number what percentage do you think got there through the grind do shit they didn't like that paid off in an un sexy way and then now they work on things that are more interesting pleasurable that they're driven by curiosity they're driven by fashion they're driven by ever versus people that made it by following things they were curious about maybe it was a bit of a lonely road for a it maybe other people maybe it wasn't a hot market but it became hot but they were there already right that happens a lot what percentage would you say to i'm just curious roughly how how you would think about it is it like only five percent got successful through following their own their own interests fundamentally or do you think that it's fifty fifty they got it and got successful falling their interest versus following what was more proven if i had to guess sixty to seventy percent of the people who we know who we would consider wealthy enough that money doesn't really matter probably made money in a way that looking back they were like that was really hard and miserable and i don't think i can do that again and then a large percentage of them now i would say like fifty percent of them then go and pursue something that truly interests them and the other fifty percent just do the playbook again and are miserable while earning a great living yeah so it's roughly let's say twenty twenty five percent you think maybe we're in the the bucket that i'm talking about which is they were just doing what's interesting to them and that happened to become something that was very successful versus people who yeah chose things that were not as interesting or not as fun for them but they thought we're gonna have a payoff and it did and here's why y comb is like the stereotypical silicon valley like story you go to y comb how long is y comb eight or twelve weeks three months three months yeah okay so you go with one idea and you only have twelve weeks to decide if this is gonna to work or not and by week six they say dude this sucks you should pivot this amazing idea you had to do credit card processing or to do something else that people want to give you money for and so they just go fuck it whatever i gotta go down that path but that path that they're signing up for is a ten year journey or more and so there wasn't too much thought with it and so they're just like man i just gotta get a win however way i can and i only have another six weeks until i've gotta go do demo day so i've gotta just settle on something and move forward and do it and i think that that mentality is often what a lot of internet based businesses are built on so i think that's a little unfair to yc because for example if i think that does happen but one of the things that happens to those pivot because i've invested in a lot of we yc companies have pivot and also if you read a programs say one of the things program advises heavily against is the what he calls playing start it's like playing house where you sort of just try to manufacture a startup up idea that you think might work or think might be good he's like the best way to figure out a startup up idea is to scratch your own niche and to look at your own life and figure out in what place am i already living in some future that other people aren't but i could build a product that would help them get there or what's a pain point we've discovered along the way of doing this that we could solve so yes they pivot quickly and they pivot in the middle of y but usually the advice that you should pivot to something the like the itch that you want scratched the problem that you are currently having or the thing you you uniquely understand because of the way you live your life versus what other people do and the biggest success is out of yc have typically been right i agree that airbnb guys renting after their own apartment to make way or brian armstrong doing coinbase because he lived in argentina and dealt with the currency issues it was interested in bitcoin these were not ideas that fundamentally sounded good the biggest successes i think are done that way yeah but not the average success i think that's exactly right i think the most successful people will work that way but the average or the majority are not that way and i think that's probably the truth statement i would have to go look the white comb companies but there's not that many twenty three year olds that know anything about payroll processing software but there's a lot of twenty five year olds or whatever who have created something really cool like that our friend jack why did he do v i think he was curious of solving problems but he didn't have a problem wanted success more than he wanted he wanted to he was like this just seems like intriguing i guess like yeah let's just someone made a shift would also say some there's a con con compounding factor which is that for a lot of the people who are our friends the thing that they are interested is the game so it's not the industry that they that was the passionate thing the passionate thing was playing the game of business can i give you two related things i came up for me i don't know if you remember this but when the open drama was going on with they fired sam alt one of the things that came out was maybe they have ag gi internal and everyone's like no they probably don't have a but maybe there was some breakthrough because he had gone at some conference and said there are these moments with open ai where you're sitting in a room and you get to see a demo and your mind gets blown you've seen in the future the world is not the same because of what you just saw he goes that just happened about three weeks ago and people didn't know what it was but he was kinda just like teasing a little bit and just he wasn't even trying to make a hype thing he was just trying to say like what it's like to work there he he was trying to use it for some other reason but people took that and they're were like man they must have sam mom said that or an employee said that sam all had said that and so people started speculating mean what is it and then these leaks happen they start talking about this thing called qs do you remember this do you remember this qs thing yeah i don't know what it is though so qs i'm i'm not a ai phd researcher so i don't know exactly but the idea is like there are different algorithms or different methods you can use to do something and qs is a certain technique and so people were like oh qs does that mean they're using the either the q technique or the star technique or whatever that's not what people are using today but maybe there's something there and so this thing leaks it's not been confirmed yet whether that's was or wasn't a thing but what ended up happening was there was a whole bunch of smart people that suddenly started sniffing around that technique and just recently a bunch of research papers got published saying that they're seeing amazing performance using this technique and so as this guy came on and he talked about that this is actually a phenomenon that happens frequently so i'll i'll just tie this together this guy robert kwan was tweeted i don't know this guy he tweeted this little story that i liked and he said claude shannon once told me that as a kid he ever been stuck on a jigsaw puzzle and his brother was passing by and said you know i could tell you something that would help you with this puzzle but now i'm not i'm gonna do it that's all the brother said but that was enough of a hint for claude to solve the puzzle the great thing about the hint is that you can always give this to yourself so basically there's this this phenomenon that happens in human behavior which is that if you knew that there might be a win do you don't even need to know what the thing is that alone will increase your probability of success do you know i don't know what else claude shannon did do you remember how i told you ed thor went to the ro table and it required two people to be in the crowd he was his buddy that was the other guy so in fact if you look it up the there's like it's called i think it's like the thor shannon principle and it's like the theory of so claude shannon who this guy's is referencing he was the guy who was tapping his foot to sell outdoors which is pretty funny so the second story that's the same principle is about c so c this online competitive place for solving you know problems riddles puzzles puzzles whatever it is i think i don't know it's all coding or if it's just math puzzles so this guy replied in the thing he goes one of my favorite casual facts is that any anytime that the leader board gets stagnant for a while in in any competition if one team suddenly makes a jump that will automatically cause multiple independent teams to quickly reproduce the same breakthrough with no knowledge of how the first team made the breakthrough and isn't that kind of amazing how it's like it's the four minute mile right what's the name of the so when prior to roger ben are running four minute miles people were only like three seconds like four zero three four zero four which is quite a long distance away from four minutes but basically when roger ban did it roughly four other runners also broke four minute miles within like three months of roger ban are doing it right so the same thing just happened to me in one of my businesses so in one of my businesses we had there was a marketing tactic or channel that we had looked at we'd had even kinda dabble with but we didn't didn't exactly know how to do it it seem like a puzzle we didn't know how to solve so we put it on a shelf for a while and then i heard a whisper that somebody else was just crushing it using that channel now i don't know what they're doing i don't know the technique that they're doing i don't know how much they're crushing it i just heard enough to know that they are crushing it and immediately we mobilized and that same channel that looked kinda like a dead thing before to us we didn't really know how to make any progress we still didn't have any technique nobody gave us a tool of how to make progress just the knowledge that somebody else was making progress in that same channel fired us up got us going and we immediately found a breakthrough and over the weekend we did like thirty grand in revenue on this one channel and it reminded me of the same principle of just the knowledge that there is a solution actually increases your probability of getting to a solution just the knowledge that somebody else has found a solution without telling you how at all will increase your probability and i think that's one of the things about this podcast that should help people it's one of the ways to use this podcast is that you're not gonna do exactly what any of the stories we tell this podcast do but just hearing other people's success just hearing other people ran a four minute mile will make you run a four minute mile we've had this with our friends too people who are saying within you know i'm gonna make x amount of money in why months right we had a friend that was like i'm gonna try to make a million dollars in three months and just hearing that question i didn't have that question before just hearing that question got me to start thinking about ways you could do it then hearing that somebody did it immediately made me wanna figure out how and even though it was not gonna do any of the things that they did it allowed me to figure out a solution that would be able to do that i think that's one of the most underrated learning techniques you can have or or like success techniques you could have what's that called the m mfa paradox that you can become more successful following somebody else even though you don't know what they did just the fact make it up this is and this is like way less cool than artificial intelligence but similarly when morning brew in the hustle were first getting going with the newsletter business we had the exact same thing happen multiple times where eventually i became one time austin came over after we had both sold and i was like hey you wanna see something cool and the i go pull up your computer i'll pull up mine i know you got a document that shows everything that you guys were doing per month let me show you mine and you show me yours and it was the exact same thing by the way it was we were we were seeing little inkling of what the other person was doing as it was happening and we kinda replicated each other's success and it absolutely happened the same way before we started this podcast you said what topics do you have it i'm feeling a little uni inspired and i have to say you win a blue ribbon today because you have completely put a beautiful bow tie on this thing that i brought you you brought so many good interesting tidbits to add to the story of ed thor that was pretty good well can i can i leave you with one framework i have one story so the framework is you know when ed was beating blackjack or beating a ro what's the first step that he had to do before he beats the house what is step absolute step zero before he even figured out how to beat the house i don't know just how to do it at home believing that it could be done right believing that it could be done and this is cheesy but it is very true and by the way things that are cheesy but true are underrated because smart people write off cheesy things because they're cheesy because they've heard them before but they haven't actually acted on it so their under priced assets are things that are cheesy and true because they're ignored by other smart ambitious people i remember when i went to this tony robbins event on the second day there's another guy who who hosts it the other guy he starts off with a game of simon says to kinda of warm up the audience and you just think there's a warm up because they want you to be engaged as an audience they want you to be active do something interact a little crowd start so he starts as simon says hey we're gonna play simon says now this is a room of about six thousand people so so there's six thousand people are good play simon says and he's like the winner it gets to come on stage or like that the yeah the winner gets to come on stage and you're gonna get this thing i forgot what it was some some good prize but again there's six thousand people so you know whatever good luck so he starts and he says simon says blah blah blah and then like he immediately gets like half the people on the first one and so for example he goes alright you because ready to play stand up and every everybody stands up he says he didn't say simon says stand up so you only do the thing says simon says but if he just says an instruction and you do it without saying simon says you're out this guy clearly read the book the game exactly so he's got us on the cat string theory we were disobey obeying his commands so the game starts half people get out on the first round it whittle it down within five minutes he's down to the winner winner gets up on stage blah blah and he had the final ten people he said stay standing you don't get to come on say just stay standing and then he called on somebody he's like the guy who's standing you got to the final ten the guy next to you when did you get out he's like i got out like the second round he goes let me ask you something did you believe you were gonna win and the guy i was like no i mean so many people silly we game i i don't know i didn't even think about it he goes that's interesting ask next question did you believe you were gonna win no it goes so raise your hand if you when we started the game you believe that you could win only like you know five percent of the audience raise hand it goes so all of you thought you were competing with six thousand people the only competition was amongst these fifty people who actually believe that there was a way to win and he's like i'm gonna leave you with two two ideas number one if you're gonna play the game decide to win so funny he's he's like you don't have to win every but if you decide to play you should decide to win and because the second thing is that in life you believe you're competing with a much bigger pool of people that you actually are because the majority of people aren't even playing the game and other the people who playing the game and most them don't even believe that they can win you were only competing with the people who actually believe that there is a way to win and so similarly with this guy cracking blackjack cracking with lit that's a game i thought was impossible to crack until i read the book i think it's called bringing down the house or something like that that's the other blackjack card counting book and immediately my mind shifted into oh blackjack is a beat game we beat this game and suddenly i started to learn things suddenly i started to to understand how do you actually beat the game of lunch i need compelled me into action alright let's pause real quick i gotta do the thrill of the shi where i'm gonna give you a thrill here but teach you something i think is a very important principle that any founder should know and i'm a tell you about a company that's doing it well alright so the thrill of the show is have you ever heard of the law of category be familiar with this i've not i think it's from the book to twenty two immutable laws of marketing and in that book it's talking about marketing how do you actually stand out how do you do the hard thing in business which is stand out get your brand out there get customers and get them coming to you versus you just chasing them down and hunting them one by one how do you get market pull and the law of category is very simple principle which is that you'd rather own a category than participate in one if you can't be the first in a category you'd rather create a new category altogether and that is something that many people have done so for example i'll give you i'll give you one in the podcasting space so we're we're a podcast and this podcast started off very un differentiated we started off just as interviews with successful people just what that's what every business podcast is interviews with successful people how did you do it it's all past past facing how did you do it we started to stand out when mean and you got on here we started going a little future facing which is hey what trends what opportunities do you see what's going on right now in the market that you think somebody could be capitalizing on so suddenly we were in a new category so how many podcasts were there that we're talking about stuff that you know opportunities and transit that you could be capitalizing on for the next twelve months versus what did you do fifteen years ago successful person and even when we invited a guests on we said gotta bring some ideas what opportunities do you see today now we're not just gonna ask about the thing you did in the past even further than that is you ever seen hot ones that show where the guy interview celebrities but instead of just interviewing them they're eating hot wings while they're doing it escalating and in hot it's the law of category that show became super popular gets millions of views on youtube and he gets the best guess because he's the only podcast that does that he's the only show doing that he created his own category and now if you came in and you tried to do a show like that guess what they would say oh it's kinda like hot ones they own that category they own that that niche and so the law of category is a very small principle which is that without taking more effort if you simply just define a new category you now have a a reason to buy an rt t a reason for customer to come use your product come use your service well the company that sponsored today's podcast wander is a great example of exactly that these guys basically said well you have luxury hotels you got the four seasons you got what's that fancy one ama oman that everybody's going into nowadays you got the luxury fancy hotels and then you have stay in a house like airbnb where you get the home you know you get stay in at home multiple rooms and a kitchen and all that but it's not as luxury and turnkey and just a beautiful everything's taking can care of your experience so they created a new category which is hotel homes so luxury homes that are on par with the nice luxury hotels but it's a house instead of being in a building in a skyscraper you get a you get a a a backyard a pool a asana you get a kitchen you get everything you want in a home but you get the guarantee that it's gonna be luxury unlike an every and b so i think that they've done a great job as why they've grown so fast they did i think like twelve million in bookings in the last twelve months because they created their own category there isn't anybody else who's really in that category where they actually manage the property and therefore can guarantee a certain quality of service great thrill pretty good chill i love the sc and show please no i think your show was great so if you wanna use them wander got wonder dot com slash m what do they get i think they get three hundred dollars off the first step if if you go to one dot com slash m m so that's our personal code that's it just for listeners of this pod you download the app if you if you do that you get three hundred bucks off stay so you get three hundred bucks off and you're entered into a giveaway that's gonna be they're giving away a free wander stay so if you're one of the people who are doing this and remember the principal that's in this podcast you'd if you enter you gotta believe that you can win go ahead and enter and you might win the free wander travel so check it out wander dot com slash m m i think you said last time i go you know i'm not sure how many people are gonna do this so if you're one of the people that actually does it you've got a pretty good chance of actually winning exactly so that's w a n d e r dot com slash m f m alright back to the episode so i have a funny story i'll i'll tied it up with this which is that people have heard of a vicious cycle oh that's a vicious cycle and they'll say it's you know poverty is a vicious cycle you don't have money so therefore you don't you can't buy the best food or or or education and therefore you end up staying you know you you don't get the best opportunities and therefore you stay poor vicious cycle right we've all heard of vicious cycle well good thought experience is what is the opposite of a vicious cycle a virtuous cycle what's a virtuous virtual cycle on a virtuous virtual cycle virtuous cycle is gonna tony robinson is basically if you believe so if you have high conviction that something can happen we've all had moments in our life where we're we are like i am convinced that i could do this or that it can happen then you'll take a different level of action so belief drives action the amount of belief drives the amount of action so little belief will drive little action which drives a little result a lot of belief takes you to drive take a lot of action which drives a bigger result and guess what once you see that result it reinforces the belief so if you start with a little belief you take a little actually get a little result you'll be like i knew it i knew the shit wasn't gonna work it lowers your belief even more takes even lower action lower result and the opposite happens where if you're heavy believer you take a shit ton of action shit ton an actual will start to yield result and your belief will say i knew it i knew we could do this i i knew we'd get progress you take even more action and it just becomes a virtual cycle and so that is one of the things that i think is most important if you are stuck or if you're at a plateau or you're not exactly what you wanna be step zero is you have to somehow trick yourself into raising your level belief that it is possible one way to read books about other people who have already done it or talk to other people who who've done it imagine yourself doing it whatever ask yourself questions until you aren't worked up into a fever that this this this is gonna work because that's the only chance you have of taken enough action to actually get a result i wanna hear from the listener the people who have made it this far if they feel like i feel right now which is like i wanna run through a fucking wall you're just like you're like a guy you're like a pastor right now you know you're like well one of these like black churches where you're like dancing at screaming it a shit and i'm just like in the crowd like dancing it as well i feel good i am yeah so now let me tell you a quick blackjack story of this so i read this book and i become convinced that we can do i tell my buddy trevor i said trevor we could do this we can bring down the house we can count cards we can get rich blackjack he says say no more trevor trevor is a believer he's down what age you perfect park perfect trait the partner being down we're i don't know twenty one years old and we're seen in the college did you read the whole book or the whole book alright but again because we have a ton of belief we find a way to take action i'm living in north carolina there's no casino in carolina what am gonna do fly of vegas no no the belief drives action there's a belief causes me to find a way i realized hey in south carolina there's a river boat and that boat was like boat out into international waters and then you can gamble because in it's international waters that's the beauty of the world it's it got international waters anything goes so we drive down the south carolina we get on this river boat and we drive up but before we do that we spend three weeks practicing and the same it's the same system you have a counter who's gonna be keeping count you have a signal who's gonna signal in the whale so trevor the counter trevor got the focus i'm the communicator i'm the signal guy and our buddy dan is gonna be the whale and was your signal the whale job is to come over he's ag he's a greg scariest character because the the trick when you count charges is you need to wait until the deck is stacked in your favor where there's more let's say aces and bad the low cards are out so the count is high and then you need to vary your bet size so that's actually how you win as you bet more when the deck is hot you bet less one when it's not but if they casino sees you wearing your bet like that to kick you out so that's why you need two players you know one guy who's counting and the guy who comes in to make the bet he needs to start with a big bet so he only comes in when the deck is hot and so he comes in and we're like dan you gotta act like a drunken and idiot and you're just plop down your whole spec on this one hand and this you're just gonna and then you're gonna double oh screw it we went play it again as long as the deck is hot and when the deck is not hot we're gonna signal you to leap what's your signals to them so we have two signals you have the signal where you're supposed to come over which is basically it was me with my arm like you know kind of like like this is where i want i'm holding my arm like this but i'm behind it's like standing behind it's hard to i'm sitting down but just a standing posture so i'm standing behind trevor trevor county trevor has a verbal signal to me so you create a a word for every number so let's say you know the deck is if there count just one which is a very bad count he would just say he's he's just say alright alright uno mas uno mas like one more hand but that just signals me the count is one one if there was two he'd be like i'd be like gosh shit balls balls we got two balls that's why there's two and then he'd be like three and he need he'd be like you he that thing from three and we use like basketball player names or whatever and like we had and you wanna get the guy in on counts like ten eleven twelve something like that and he'd be like dude i've had a dozen chances now and so we practice for weeks on this and we're in our dorm room we're skipping class and we're just practicing practicing practicing signals boom boom bets and we're running simulation so we have our friend this girl like who was our friend she was the dealer and she would deal that out we're like every time cleaning up this shit works and so we drive down the south carolina we get on the river boat we go dan's got his drunken drunken tourist costume on trevor the the the guy who's just bored he's just sitting there he's betting the minimum but he's counting and i'm the signal or i'm trevor buddy and so and so what what ends up happening is count gets hot we get to ten and i signal but in the rural world conditions are a little different dan's not as lot different because he's so busy being in his drunk character that he's actually acting like an idiot he's not paying attention to anything that we're doing so he's actually getting a drink so he misses ten count starts to drop but but it's at eight i'm like okay whatever still eight's it's still good let's signal i might go back to ten so i say you don't dan sees the signal he starts coming over now our dorm room was kinda small he's at the he's farther away so it takes him a little bit of time by the time dan gets a table and he tries to cash in is he tries to put down the bet when the counts like you know six or something like that and he puts his money down there they're like well we have to color it up for sure to exchange of cash for chips know that on this one so the the hand gets dealt out it nukes the count back down to two dan's hand is visibly shaking oh my god this stuck he catches in like a thousand dollars or the chips this is like big money for he takes thousand dollars worth the chips he's ready to bet big but the count is now too and trevor like balls man balls dude and and dan he's supposed to take balls he's supposed to leave dan is in he's blacked out at this point he's not drunk blacked up but he's just got tunnel vision like he's so locked into his character and the stupid things that he's saying to the dealer he's completely ignoring the signal and so he just puts the thousand dollars on and we're both like balls balls balls balls like what's happening why are you betting this the worst time to bet and we just get wiped out into ads and all your money lost all of our money and we were like the book made it seem a lot easier than it's because the book it immediately works and it starts a series of events that just escalate into them being baller and yeah that was it's sort of like the game it's kinda same with the game okay so we go back home we're licking our wounds we're like damn what the hell man and he's like i'm sorry it was harder in real life we're like alright whatever all good man we gotta the belief was still high that hey there's a way to use blackjack to make a lot of money so we said you know what screw what if we're the house and so we decide to create an underground blackjack club at school where will just be the house this these movies go one or two ways now you're on you're on option b for a great movie exactly so we we try to become the house now we're playing molly game basically so we again start running these simulations we're like this is great like the house has an edge we're winning this is like it's a no brainer so we and our friend the whole time was just like you guys are idiots like you've already wasted you know one month of time on the stupid plan number one now you're on stupid plan number two he's like this is an even dumb plan we're like dude do you talking about we're the house you ever heard about the house's edge like we can't lose or the house and he's like okay so we're we're like again two weeks into our like every night we're simulating this we're trying to run like we're like typing excel like how much money are we like so gonna be winning or losing you're not gonna cheat you're just gonna no we're gonna be that's it and so he's like okay watch this so our friend comes it just like owns us he walks it he's like alright yeah i wanna bet he bets he loses or a bit more loses and we're like see told you told you this can convert because he's like cool and he's like hey give me all my fucking money back and we're like no dude he's just like you're gonna give me all my money back right now or and we're like what are you to be this up he's like no i'm just gonna call the cops and you're running a blackjack ring in your room right now that's actually like like a you know that's like a serious crime and you're gonna get kicked out of school or you're gonna give me my eight hundred dollars back and we were like oh you win yeah head of the eight dollars back and we're were like damn it yes you didn't you didn't see the part of the scene and molly game where she gets beat up for doing this and this guy just instantly pointed out the fatal flaw which is basically you know this is a crime they can any in time just bust us we would have to move the game every week and like somehow know that this guy's not gonna screw us over but every player who lose money would always have the ultimate leverage so that's when i learned about leverage and i learned that leverage it is more important than an edge you should have went back to the casino it's it sounds like the stupid idea actually could've have maybe to work if your buddy day and girls shit together the reality is that casinos i i don't i don't know why people don't i mean i guess people do talk about this but casinos use six acts and they use auto shuffle now and so the ability for the deck to get really hot has been cut down dramatic and so you know they basically use six decks which will smooth out the variance and then they auto shuffle and they shuffle before you get through the whole shoe so the whole point was like you need to get where a lot of the cards have been used there's only a small number of cards left and that that small number of cards is gonna a higher portion of a face cards for you but that just doesn't nearly happen anymore so i don't really know where the edge edges i don't think there's an edge this has been a roller coaster i feel like i i i've got my money's worth after listening to this and i should've have just been learning out of code the whole time in college i should've have just been learning how to code and i would have made a lot more money than all of my hair brain schemes to to make money or playing league of legends one of the two this was very good this was a good episode it is that the pod that's it the part alright that's pot i feel like i could rule to where to i know i could be what i want to put at all in it like a days off on a go travel never looking back