Why rich families stay rich? | Author of Psychology of Money shares wealth secrets | Morgan Housel

I am grateful that Elon Musk exists. I am grateful that Jeff Bezos exists. I would never want to be them.

You don't need 300 pages to get across one idea. You have a complete country yokel with no education who does unbelievably well financially. And then you have this Harvard-educated Wall Street titan who loses everything at the same time, where the person with no education but the right behavior outperforms the person with the highest education with the wrong behavior. Procter & Gamble has a higher chance of making more money over the next hundred years than OpenAI. The more you are snubbed while poor, the more you enjoy displaying being rich. They bullied you. I'm going to show that bully who made fun of me when I was seven years old. I'm going to make fun of him by buying a big house and a fast car and a flashy watch, and that's why you're doing it.

That's what Musk was talking about. He said you might think you want to be me, the richest man in the world, but he pointed — he said it's a mess. It's a storm up here. But that's why they're successful is because they probably can't sleep at night because they're so tormented with the problems they're trying to solve.

What do you want out of your Harvard education? And if you go back to the 1950s, '60s, '70s, overwhelmingly what the students said they wanted out of Harvard was a philosophy for how to live a good life. In the last 20 or 30 years, it's completely shifted to now almost every Harvard student, when you ask them what do you want out of this education, money. Money.

I'm Morgan. What's up? So good to be here. Thanks for having me.

Yeah, thank you. I had a long flight over.

It's totally worth it.

I enjoyed it too. I've learned a lot in the 30 minutes you and I had coffee before this as well.

The real stuff behind the scenes.

Well, thank you. Thank you. That's a good person to be second to. Adam's wonderful.

Of course. Yeah. Yeah. No, he's great. He's a very good communicator and very good at taking complex topics that most academics would explain in Greek terminology that is not understandable, and Adam can just tell a good story around it. That's why he's very good at it.

Well, let me first say I think most of it is unexplainable. And you know, a lot of people don't like the word luck because they don't — if I say that you're lucky, I look jealous. And if I say that I got lucky, that hurts me a little bit. I don't want to admit that, too. So people don't like luck. The phrase that I think is more appropriate is: what is repeatable? What could you do over and over and over again? And so Michael Jordan could be at his level game after game after game. So it's obviously not luck. Tiger Woods could play at his level game after game. It's obviously skill. But there's a lot of things like what can you repeat? And I think in music and movies and maybe books, there is a thing where it's like, yes, there are top-tier authors and musicians and actors, but can you repeat that level of success over and over again? It's very, very difficult.

So I think as a big answer, there's not a lot — I think there is some element of luck to it, but I would say this: when I pitched Psychology of Money to the publishers in 2019, I've talked about this before, every American publisher rejected it, every single one. Publisher after publisher, 20 publishers said no, it's never going to work. And they, by and large, the ones who were kind enough to give feedback, most of them didn't, they just ignored us. The ones who did give feedback had two pieces of feedback that we kept hearing. One: there's nothing in Psychology of Money that hasn't been said 100,000 times by other people. There's no new information in this. And number two, none of the chapters really have a cohesive theme. I just bounce around from idea to idea. And when they would say, 'What is the big idea from this book?' I'd say, 'I don't really have one. It's just kind of a collection of essays about finance.' And the essays are about topics that people have repeated 100,000 times before. And so every publisher would say, 'It's never going to work. It's not what people want to read.' In my mind at the time, as a big reader myself, forget writer, but as a big reader, I was like, 'No, that's the book that I want to read. I think that would actually be good.' And everybody knows one of the biggest problems with non-fiction books in particular is you don't need 300 pages to get across one idea. So if you have a book that is one — here's my one idea, now let me ramble about it for 300 pages. People don't like — you don't need that after the first two chapters. You don't need it. You get it. So there's even books that I recommend to people: 'Oh, you should read that. It's a great book' that I didn't make it past chapter 4, but chapters 1 through 4 were very good. I learned a lot, but I don't need to hear the rest of this. And so my idea was like, look, the chapters are very loosely related to behavioral finance, but I'm going to jump all over the map here. And if you want to start the book on chapter 17, you can do that because these chapters all live independently. And the second point, I'm not saying anything new. So much of finance — we talked about Adam Grant can just explain things better. So much of finance, there's nothing new that needs to be said. Everything about finance has already been discovered. Has been discovered sometimes hundreds, thousands of years ago. But by and large in the financial media, it's not said very well. It's written — a lot of people in finance, because you can make a lot of money in finance, it attracts a lot of very smart, high-IQ people. And a lot of times those people want to use their big brains and their big credentials to show off how smart they are with big words, complex phrasing and whatnot. And so in my mind, I don't have the IQ to do that. I'm not smart enough to make it complicated. So in my career it's always: can I just tell an interesting story about compound interest? Everybody knows what compound interest is. I'm not breaking any news here, but if I can tell an interesting story behind it, I would want to read that. And so I think maybe at the high level I wrote a book that I wanted to read, which sounds obvious, but I think a lot of authors don't have that mindset. They start off and say, 'What will other people want to read?' And then they try to work towards that. I just wrote the book that I wanted.

Yes, that's exactly it.

All three of my books have been that. And I think most non-fiction books should be that. Particularly like a non-fiction business book. If you're writing a history book, it can be one cohesive theme all the way through. Biography, one cohesive theme. If it's a business non-fiction book where you're talking about high-level economic finance concepts, I think it should be a collection of essays because I think there's almost no topic in that realm that needs 300 pages of explanation.

You know, the story that I started the premise of Psychology of Money with was — this was probably around 2009, no, probably around 2010, and I was working at The Motley Fool at the time. And I read newspapers all the time, have for many, many years, every morning read as much as I can. And just by coincidence, in the same day I stumbled across two stories. One was about a woman named Grace Groner, who was a complete average, very humble woman. She was widowed. She never married. She never had kids. She worked as a secretary who had recently died. She was 100 years old and she left $7 million to charity. And so that was a big news story at the time. The second story that I came across was about a Wall Street executive, his name was Richard, who was as high-flying as you can imagine, went to Harvard, was a vice chairman at Merrill Lynch, very wealthy, retired to become a philanthropist who went bankrupt — he was super leveraged up on a bunch of homes he was building and went bankrupt during the financial crisis. And I came across those stories in the same day, and I remember being like, the juxtaposition between that: you have a complete country yokel with no education who does unbelievably well financially, and then you have this Harvard-educated Wall Street titan who loses everything at the same time. And that, you know, each of those stories individually is an interesting story. Next to each other, you're like, you guys, that's how money works. You don't need a big education, you just need the right behavior. Because Grace Groner was patient, she was humble, she had a low ego, she wasn't trying to outperform anybody else, and she does amazing. But Richard was, in my view, high ego, wanted to outcompete other people, wanted to show off, wanted to get a lot of attention, and he loses everything. And I think there's very few fields that are like that, where the person with no education but the right behavior outperforms a person with the highest education but the wrong behavior. It's a very unique thing to finance.

Oh yeah. I mean, of all the robber baron families of the late 19th century — the Carnegies, the Rockefellers, JP Morgans, and the Vanderbilts — you know, it's very, very difficult to have that much money and to have it do well over the generations after the founder. It's an extremely difficult thing to pull off. And I think actually the Rockefellers probably did the best. You know, the Rockefellers still have billions of dollars today, 130 years after the money was made. That's astounding. They protected it very well. The Carnegies, you know, their big thing was we're going to give away as much money as we possibly can. So go to any small town in America, you'll find a Carnegie library. And that's astounding. That's pretty cool. The Vanderbilts, I think, probably did the worst of everyone who was trying to manage that. And I think a lot of it just came from the personality of the original money maker, Cornelius Vanderbilt. It's a very — I mean, they're all unique personalities, but I think it's safe to say that John D. Rockefeller and Andrew Carnegie had lower egos than Cornelius Vanderbilt. I wouldn't say low, but lower. Cornelius Vanderbilt, I think, really had just such an ultra-competitive personality. And a lot of it was he came from such nothingness and built his way up to become what he was, that he wanted to create — the purpose of the family was to be rich. Now I think the purpose of the Rockefellers and the Carnegies was to use your money to do good in the family and throughout the world, particularly the Carnegies. The purpose of the Vanderbilt family was just make as much money as you can. And so when you read the biographies of the Vanderbilt heirs who came after Cornelius Vanderbilt, there's a very good book called Fortune's Children, which was written by a guy named Arthur T. Vanderbilt III, one of the heirs himself, that outlines kind of short biographies of all the Vanderbilt heirs who come afterwards. And it is a wild and kind of sad story because when your family is built off of nothing but money, you realize that a lot of these people, they were told who they could marry, where they could live, how they could live, the lifestyle that they could live. And you have this irony of they were the richest family in the world, but they had no independence. They were beholden to the money. The money was the boss. The money was the dictator. And a lot of them were — I would venture to say almost all of them were miserable. And maybe miserable is a wrong word, but you start — very much controlled, no freedom. But also as an ordinary person myself reading the book and saying, I would never want that life. And it makes you realize, particularly for young people, it's easy to look at that like, wow, can you imagine being a Vanderbilt heir, Rockefeller? That would be such an amazing life. Read their biographies. You might change your mind. You know, here in the United States, there's a recent documentary, so I've just been reading a lot about it recently. John F. Kennedy Jr., President Kennedy's son, who died very tragically in a plane accident in 1999. You read about his life, you do not want that life at all. Miserable. I mean, forget the fact that of course his dad was assassinated, which is, you know, we could end there and it's a terrible life. But even after that, as an adult and a young adult, not a fun life whatsoever. Very easy. I think a very important skill in life is to have a lot of wisdom and to think carefully about who you admire and who you aspire to be. They're two different things. Because I can admire Cornelius Vanderbilt. Amazing businessman, built something incredible. You could admire that. Do not aspire to be him. I can admire Elon Musk.

Because there's a lot of times in the world where I am grateful that Elon Musk exists. I am grateful that Jeff Bezos exists and Mark Zuckerberg. They've built products that I can benefit from. And I would never want to be them. The reason by and large that these people are so successful is because they have devoted every single second of their life to their company and it came at the expense of everything else. Their family life, their mental health, sometimes their physical health. And so David Senra, a very good podcaster, he's interviewed or he has profiled about 400 entrepreneurs on the podcast Founders. And he says that of the 400 people that he's profiled, there's only one or two that he would look at and say, 'I would want that life. That seems like a pretty great life.' The other 398 you say, 'I admire you for what you built and I would never want your life.' That's important. You know, so people are very different in this. So there's no clear answer on what you should do. But I've always admired, you know, there's a song by the Foo Fighters and there's a line in there that says, 'There goes my hero. He's ordinary.' And I always love that line because I think who I want to be in my core is an ordinary person. Now, a lot of people do not want that. And we can define ordinary however you want. But to me, what really matters is like if I have a family who loves me and health and something to look forward to and some good books, that to me on a scale of 1 to 100, that gets me to like a 96. Then like there's maybe some things above that that can get me to a 98 or 99, but the vast majority of what's going to give you a good life are the simple, ordinary things.

That's what Musk was talking about. He gave a podcast a couple years ago and he said — I'm paraphrasing — but he said you might think you want to be me, the richest man in the world, but he pointed — he said it's a mess. It's a storm up here. And like, yeah, but that's why they're successful is because they probably can't sleep at night because they're so tormented with the problems they're trying to solve. I admire that. I don't envy it.

Most of them you have never heard of and that's the point. I did some work for a family several years ago and they were worth $8 billion, and I came out to do some consulting for the grandkids, talk about money kind of thing. And when they reached out to me, I said, 'Well, let me do some research on this family.' Nothing. Go online, search their name. Every database, nothing. Nothing. They had a unique name, too. Like the name that you would be able to find. Yeah. Their name is not Joe Smith. I couldn't find nothing. And that was very intentional. They went out of their way to make sure that no, they're not on any list. They donate their money anonymously kind of thing because I think — and they would not describe it this explicitly — but they wanted to do the opposite of the Vanderbilts. The Vanderbilts were — the purpose of the family is to be rich, right? And this family was — the purpose: yes, we are rich and we're grateful for that, but that is secondary to we want to be a good family who is otherwise normal. And they didn't live a normal life. They lived like very wealthy people, but they were some of the most down-to-earth, seemingly ordinary people when you talk to them that I've met. So I think the families that use their money as a tool to live a better life for themselves and to donate and give others, versus the wealthy families that use it as a yardstick of status and they associate their net worth with their self-worth, and because their net worth is high, they assume they're better than everybody else. I think that's really what it gets down to. The more that you can be a wealthy person or have children as a wealthy person and you can say, 'Yes, we have more money than other people, but we're not better than them. We're not better.' And in fact, some of those people who have much less money than us are better than us. They're more moral. They're better. They have better family lives and whatnot. That's pretty important. I recently just on a plane the other day watched a documentary on Netflix on the Murdoch family news. And that's another one of just — I mean, have you seen the show Succession? A little heard about Succession. I mean, it's well known that was based off of the Murdochs. It's — that's another one where you look at it. You know, those children were born multi-billionaires. And you watch a documentary and you're like, I would never want that. I would much rather have parents who were school teachers, firefighters. That would be a better life.

After. After he turned 60, right?

I think it tends to be true that the long-term family wealth are made their money in products and services that don't change tremendously over time. There's some counter examples to that I can think of. But by and large, you know, the Rockefellers still have money today because oil is as valuable today as it was 130 years ago. But there were plenty of families 130 years ago who were making money in radios, let's say, that didn't make it anymore. And so I think if there's any takeaway from that in your personal life, like forget becoming one of the richest families in the world, but the value in money over time and investing over time is how long you can keep it going for. It's not can you make an incredible product that's going to explode over the next two or three years. There can be value in that. But I think a lot of the enduring family wealth comes from families who are like, look, we make a product that was valuable 100 years ago and it's valuable today. So Procter & Gamble, you know, they make toothpaste and toilet paper and diapers, things that are boring, don't attract a lot of attention and whatnot, but that has a higher odds of creating more wealth over the next hundred years than any AI company has today. I mean, that's a provocative statement, right? Procter & Gamble has a higher chance of making more money over the next hundred years than OpenAI. I would say that about like a dry cleaning shop. Yes, absolutely. You know what I mean? Or like a pest management, pest control company. Yeah. And that's exactly — we're doing some home renovations now. And the contractors who are doing it, they've been at our house every day for a year. So we've become like close with these guys. So my wife and I were talking to them yesterday and we're talking about AI. And my wife turns to these people who are carpenters and plumbers and she says, 'You guys are fine. You guys are going. You got all the job security in the world. It's everybody else who has to worry.' But I think that's less about the disruption and more about people are going to want their kitchens remodeled 100 years from now in the same way that they were 100 years ago. Now maybe there's going to be robots that do it for us and new technology that helps with it, but the product in itself is not going to go away.

I don't know if I would phrase it as generally more well behaved, but there are definitely regions and countries around the world that have very different financial behavior. And I think a lot of it has to do with what those cultures have experienced in the previous hundred years. So let me give you examples of this. The German stock market since the 1950s has done very, very well, incredibly well, in some periods better than the United States. But if you go to Germany and you talk to Germans about, hey, do you invest in the stock market? You guys all rich? You invest? No. What stock market? No, we don't invest in the stock market. It's just kind of out of sight, out of mind. And it's similar if you go to Australia, South Africa, Canada, these places, their stock market performance has been very good over a long period of time, and by and large they don't want to invest in it. One of the reasons for someone like Germany is you have to remember at the end of World War II, Germany was in rubble. Everything was destroyed. And to the extent that the people survived in that, the message that they had from that was focus on downside protection. Don't shoot for the stars and try to get as wealthy as you can. Just hold on to what you got. And so what became popular as investments was real estate, gold, things that have more enduring value. And as a whole society across Europe, really what the government started focusing on was downside protection, universal health insurance, which we don't have in America, strong government pension plans, which we by and large don't have in America. And so culturally, because they had a very different experience — the United States did not face physical destruction in World War II. Lost a lot of lives, but not physical destruction. I think at the end of the war, as a cultural level, Americans said we want uncapped upside, and Europeans and Japanese said we want protected downside. And so I think that's — what's important about that is the Americans and the Europeans, I think, think that they are thinking independently. That Americans say like we want unlimited upside potential because that's what's best, and the Europeans say no, no, you want downside protection because that's what's best. They're actually just mimicking the cultures that have ingrained in their society by their ancestors. And so that sticks around. Now, how long that can stick around for is something else. You know, will Europeans keep thinking that as we get 100 years past World War II, 200 years past World War II? I don't know how long it can stick around for, but I think what we assume is independent thinking is actually just a cultural echo.

I wrote in The Art of Spending Money, I found this incredible headline. I thought it was incredible, from 1929, the peak of the Roaring Twenties, just before the Great Depression, when there was a lot of money, a lot of spending, a lot of debt. And the headline was, 'The more you are snubbed while poor, the more you enjoy displaying being rich.' So if you grew up poor and people made fun of you, that's your insecurity. They bullied you. That's your insecurity. Once you get some money when you're an adult, you're like, I'm going to show them. I'm going to show that bully who made fun of me when I was 7 years old. I'm going to make fun of them by buying a big house and a fast car and a flashy watch. And that's why you're doing it. I think that's a big thing, that a lot of our behaviors, mine too, are just echoes from things that happened years, decades, sometimes generations ago.

Yeah. I mean, there's some too, like a lot of in the 1960s and '70s, the companies that were being run, the big corporations, was run off of a philosophy that would have been very consistent with a CEO who was a soldier during World War II and knew how to manage a very large organization with a very hierarchical, top-down — you know, there's a general and he gives orders and you follow the orders, you never question people above you — and that was how it was run. And as the years went on, as the generations went on, that kind of shifted until now in the Silicon Valley style of like it's kind of a flat organization and everyone just wears a T-shirt and calls each other by their first name kind of thing. It's just a very different philosophy. But that too, I think, is just a generational echo of what we've experienced.

I think they're close cousins to each other. But happiness, I think, which is what people chase and want, is — I think people know when they're happy. If just like, you know, you're at a party with your friends and everyone's laughing and you're like, 'Ah, this is so much fun. This is great.' That's happy. Happiness is always a short-term emotion, though. Almost nobody is happy for more than a couple minutes at a time, max. It comes and goes. And I've equated it to humor, where if you hear the funniest joke you've ever heard, you laugh for 30 seconds. You don't laugh for 10 years. So humor is a short-term emotion. Happiness is the same. I think what people actually want — when you daydream, and when I daydream about having a nicer house or having this kind of lifestyle that would be amazing, and I'm like, 'Oh, that would be great.' What I'm actually doing, I'm not imagining myself being happy. I'm imagining myself being content. So when I daydream like, 'Oh, if I had that house, life would be great.' What I'm imagining is being in that house and saying, 'This is all I need. I don't need a bigger house. This is the one that's perfect and that feels great.' That's why the daydream is fun. But what you're imagining is contentment, not happiness. And so I think that's what you should aspire to. You should aspire to get to a point in your life where you're like, I got everything I need. I don't need anything else. Now, it's very difficult to do. And you can never do it at the society level because the birth of all innovation and all progress is people waking up in the morning and saying this is not enough. We need better. We need ambition. So lack of contentment is a wonderful thing at the society level. At the individual level, if you want a really good life and the life that I think you're probably daydreaming of, you need to go out of your way to foster a little bit of contentment. Easier said than done, but that's the goal.

I think that's probably true. And I think you see that across societies. I think Europeans are more content than Americans. They're more family-oriented on their time off. They have more time off, and on their time off, I think they're more likely to hang out with their family and go for a nice walk. Americans are more just, I got to get rich as fast as possible at the expense of everything. And so I think Americans are less content than other societies. But I don't know what's right or wrong. There is no right or wrong. I think there's a lot of good that comes out of America that Europeans could learn from. There's a lot that Europeans do, right, that Americans could learn from. It's just a different way of living.

I think it comes down to how you think about happiness versus contentment.

Right. One of the things I think is interesting — do you remember MySpace, social media, 20, 25 years ago? The founder of that company, I don't know his last name, Tom was his name. And when you joined MySpace, Tom was your first friend. He like automatically, he was your first follow. He's the founder of MySpace. He sold MySpace, I think, to News Corp or something and made a chunk of money himself. I want to say, if I remember correctly, he made like 100 million bucks for himself and kind of disappeared after that. But he still has an Instagram account, and on his Instagram account he looks like he's living an amazing life. He's like traveling around the world and going hiking in Bali and like living a great life. And someone made this comparison one time. Compare that to Mark Zuckerberg. Mark Zuckerberg has made way more money, way more prestige, built Facebook, which makes MySpace look like just a little joke on the side. Who has a better life? There's no right answer to that question. But if I looked at that, would I rather have — these are ridiculous numbers, I understand — would I rather have a hundred million dollars and have total freedom to wake up and hang out with my family and play some music and go for a hike and take a nap at 1 in the afternoon, or a hundred billion dollars and work 90 hours a week and have half the world hate you and potentially be responsible for the decline in teenage mental health and wars? Which of those lives would I — there is no right answer. Some people might listen to that and say, 'I'd rather have Zuckerberg's life.' More power to you. I would look at that and be like, it's not even a — of course I'd want Tom's life. And so I think about that a lot. I'm ambitious. I want to grow my career. I want to sell more books. So this is not about saying reject success. But I also have to remind myself like the life that I actually want is content. And to be content you have to have some limitation on that ambition.

No. I don't think he's content, but I think he would be beside himself with depression if he had the MySpace life. And a finer point is they couldn't do it. Zuckerberg, Bezos, Gates, all those people, they're so hyper-competitive and so hyper-ambitious. I don't think they have a choice than to do that. And so everyone is different. I would never want that, but they obviously do because they keep doing it. And I would guess Tom — obviously I don't even know his last name, let alone know him — but I guess Tom from MySpace didn't want it, otherwise he would have kept chasing it.

I saw this study recently that I thought was very interesting and it was a study that was tracking Harvard incoming students, going back to like the 1950s, and every year it would ask them — there's a survey and one of the questions is what do you want out of your Harvard education. And if you go back to the 1950s, '60s, '70s, overwhelmingly what the students said they wanted out of Harvard was a philosophy for how to live a good life. That was the goal of going, that's what they wanted. In the last 20 or 30 years, it's completely shifted to now almost every Harvard student, when you ask them what do you want out of this education, money. Money. I want — or specifically I want job skills that are going to lead to a high...

Sure, that's what they want. So there's been a very stark shift, and I think now obviously that shift predates social media, but what social media did — and I think cable TV did this as a first order, and then social media just took it to outer space — was it made your comparison group the ultimate measure of your life.

And so people stopped asking, 'Am I happy? Am I satisfied with my life?' And they started asking, 'Am I happier than him? Am I prettier than her? Am I richer than them?' And so everything stopped being about yourself and everything became relative to others. Now, that's always been true. Everything's always been relative. But social media made your comparison group literally the entire planet.

And the feed that you are comparing yourself by was curated by the smartest minds in technology who make very good money to spend 24 hours a day for the last 20 years creating an algorithm that is designed very effectively to give you the most FOMO — to make you feel, every time you open it up, like there are people out there who are happier, prettier, richer, more successful than you are, no matter how successful you are.

And now I'm on social media. I have Instagram. I have Twitter. I'm part of this as well. It is a very strong pull to do it. And as a writer — and this is good, I think there's a balance here between watching people do things better than you and learning from that and saying, 'Wow, so for me as a writer, oh, that person wrote an article, it's really good. What can I learn from that? Maybe I can try to emulate that style.' That's a good thing.

It's very different when you wake up every morning and you just say, 'God, everyone's getting ahead of me,' and even though I have a good career and a good family and I'm in good health, everyone out there appears to be doing better than I am. And everyone knows — every single person knows someone who on Instagram posts a life that looks amazing.

But if you actually know them in real life, you're like, 'Their life is falling apart. They're about to get divorced. They just got laid off from their job. They're buried in debt,' but you don't know it. And then you extrapolate that — how many other people am I watching on social media that appear to be doing great and are just not? And so not only have we hyper-expanded who we are comparing ourselves to, we are comparing ourselves by a completely false misrepresentation of what their life actually is.

And this gets back to like, 'there goes my hero, he's ordinary.' A lot of the people who I look up to and I actually would want that person's life — I do know them quite well and they have a great life — that's not the kind of person that would have a big social media account at all.

And so now if there's any hope here, I think particularly the young generation, particularly Gen Z, knows that everything I just said is true. The older generations don't. They're delusional about it. And so you hear these stories about people whose baby boomer parents will text them and be like, 'I found a video of Sasquatch on an airplane. Can you believe this?' Like, 'Mom, it's AI. It's not real.' But they believe it.

Whereas the young people know — they're like, 'This is all fake. Forget the AI videos.' They know that the algorithm is just taunting them. But the older generations don't. And so my hope is that as Gen Z, in the next 10 years, as they become more established adults, they'll be like, 'This is a drug and I don't want it anymore. I want to get rid of it.' And so I think there's an irony — I think it's the younger generations who are going to rebel against it first.

And the older generations who grew up without social media will become the ones who are the most addicted to it. It's already happening. I mean, I can say that about my parents. They're more on their phone than my nephews and nieces.

I think that there's always been, particularly for young investors, the sense of FOMO — the sense of like there's people out there who are making more money than I am and I need to chase that. But when I was 17 years old, it was like a couple of my buddies talking about it and somebody would probably exaggerate if not lie and be like, 'Oh, I was trading this penny stock and I made 10,000 bucks.' It was probably BS anyways, but that gave me FOMO when I was 17. 'Oh, Billy's doing it. I got to go do it too.'

But now on social media, it's like, forget about it. And how many of the TikTok accounts, the Instagram accounts of day traders posting their winnings — this is made up. It's just made up, selling a course. But if it gives somebody else a sense of FOMO and then they're like, 'I got to go out there and do it as well.'

The other thing that's really true — this is very true in America, but I think it's true in a lot of places in the world — is if you feel like there are no good paths available to you in the workplace. If you don't feel, whether it's right or wrong, if you don't feel like there's no opportunity for me to work hard and earn a higher salary, if you believe that, people in that situation become very risk-taking because they feel like there's no chance for me to work my way up the corporate ladder, I might as well put it all on some crazy coin.

I mean, the entire Bitcoin and then what happened after that — Bitcoin was okay, but all the other coins that came and went. So if you believe that hard work is the key to success, then you'll say, 'I'm going to go to college. I'm going to save my money. I'm going to buy low-cost index funds, save up for the down payment on a house.' You'll do that. And people did that.

If you think that opportunity is not available to you, you might as well throw it all on black and gamble and see what happens here. And so I think a lot of the increase in risk-taking among young generations is actually a reflection of their lack of optimism about their future.

For whether it's in Robinhood or the betting apps, is actually a reflection of young people not being optimistic about their future. They don't feel like there's a lot of opportunity for hard work to pay off. And if you don't think hard work is going to pay off, you might as well just gamble it all away.

And I wrote about this in 'The Psychology of Money.' If you look at lottery tickets in the United States, 90% of scratcher tickets are bought by the poorest Americans. 90% are bought by the bottom 10% of income earners. People who are struggling to buy groceries buy the most lottery tickets.

At first glance, you say, 'That's crazy. What are you people doing? That's insane. Why are you doing that?' But through the framework of if you don't think hard work is the key to your future, you might as well gamble it, it starts to make a little bit more sense.

Someone asked me this a couple weeks ago and I blurted this answer out without thinking about it, but afterwards I was like, 'No, I think that is how I feel.' I think two things about college. Number one, there's almost nothing that you learn in college that you can't learn on either YouTube or ChatGPT. Almost nothing. And better probably. And for free.

And I will move mountains to get my children into a good college. I believe both of those things.

Well, for me, college was not about education. I honestly can't recite one damn thing that I learned in school that I still use today. But it was one of the most important experiences of my life because I think most — not all, but most — 18, 19, 20-year-olds are not quite ready to be thrown into the deep end of the work world. They're not quite mature enough yet, particularly boys.

And so college is a very good stepping stone in between childhood. It's a buffer between childhood and adulthood, and where you're going to have a certain level of responsibility that you need. You're going to meet a lot of very unique people that are your same age and want the same things you do. And that's — I met my wife in college. That was the payoff for me. Unbelievable. And so that's what made it worth it.

And so I don't think I learned anything in college. That's not an exaggeration. And what's interesting is that while I was in college and paying a fortune in tuition, I was very interested in investing and finance. And so when I had free time, I would go to Barnes & Noble, the bookstore, and read finance books.

And I didn't even think about it back then, but I look back and I'm like, I was paying so much in tuition to learn nothing. And then I was going to the bookstore and learning everything for free. And part of that is because I was learning it on my own terms. And something that you learn on your own, you will remember. If you are forced to learn it by a professor who says memorize this formula the night before the test, it doesn't do anything for you when it comes from within.

But when I was doing it for my own education, that stuck with me and I can still tell you books that I read 25 years ago during those Barnes & Noble visits that I could still recite what I learned, even though I remember nothing from college. And so I think there's more and more of that today.

No. And so it depends on what your family background is and your ability to pay for it. Outside of maybe medicine and law, there's almost no degree that's going to be worth graduating with $300,000 of student loans. And I say maybe medicine — like maybe if you're going to become a brain surgeon, then actually the ROI is there. Anything below that is hard.

Now, it's true in the United States, different in other countries, but there are ways that you can go to college in the US without racking up that much debt. So, myself, I went to a local community college. Very cheap, kind of low-end school. I went there for two years. It was basically free. I may have paid $100 a semester or something. I got my credits from that and then I transferred into a more prestigious four-year university where I went for two years. And so I have a degree from a high-tier university that I only went to for two, two and a half years and cut the cost in half.

And so you could do that. You could go to community college for two years, transfer to a state school, graduate with a good degree from a good school without a ton of debt. That option exists for people. It gets very problematic when you have people who don't have money, don't have family resources, but they're like, 'I'm still going to go to this high-end private school and bury myself in debt.' By and large, it's not their fault because society and maybe their parents have told them that it's worth it. And I think by and large it's not. It almost never is.

And the same people who understand that they can't afford a Ferrari — they're like, 'Of course I need to drive a Honda Civic, not a Ferrari' — those same people are like, 'Yes, but I want to go to this private school that we can't afford.' And so I think we've done a lot of damage at the society level by convincing people that they should be buying something that they obviously can't afford because we told them that college is so important.

Yeah. It was almost like escape velocity, college was for them. But how many of those stories — and maybe not all of them — but how many of those stories are they mistaking cause and effect? And the reason that they were so successful is not because they went to Harvard. They got into Harvard because they're so smart and ambitious. And if they didn't go to Harvard, they would have done just as well if they went to some lower school.

I think there's a lot of that that exists. And we've placed so much prestige on the universities that when someone is successful, we say, 'Oh, but she went to Harvard. They went to Harvard. They went to Princeton.' That's not why they went to Harvard. They got in because they're so smart.

I have a good friend of mine who told this story. I thought it was so insightful. He said when he was 15 years old, he came from a not wealthy family — in fact, a poor family in a poor region of America. And when he was 15, he was like, 'I want to get into Harvard.' And he just said he devoted every waking moment from when he was 15 to 18 to figuring out how to do it. He would stay up till 2 in the morning reading message boards about people who would do it and how they did it. He had a whiteboard in his room.

He had a whiteboard in his room where he was like, 'I need to do these extracurriculars. I need these test scores to get that test score. I need to take this training course to get me there.' And he got into Harvard and went to Harvard and became successful in his career.

He is obviously not successful in his career because he went to Harvard. He's successful because he has that mentality of 'I have a goal, there's a problem, there's a way to achieve it, I'm going to go after it and get it.' That's why he's successful. He would have been successful anywhere else he went, and he works in venture capital. If he had wanted to become a doctor or an engineer, whatever, he would have been just as successful because of who he is.

It's too easy of a story to say because I went to Harvard, because I work at McKinsey, whatever it might be, that's why I'm successful. Those places just attract people who know how to solve problems.

I would ask you, do you think the young generation is breaking away from that at all yet?

Wow.

Yeah. I think part of the answer for me is not whether college is worth it or not, but what do you do during those years as you transition from childhood to adulthood. So, it's called age 18 to 22, the college years. If you don't go to college, it depends what you do during that time.

If you're working full-time, traveling, meeting a lot of people, gaining a lot of really important job skills, working your way up, then you can do fantastic. But if during that time you're going to do what a lot of particularly young men would do — like, 'I'm going to party, I'm going to drink, I'm going to smoke, I'm going to do this' — well, then no, that's not good.

And to the extent that college is keeping you out of that bad behavior — that if you go to college, you're going to have peers who are like, 'We can't just drink all day. We got to study for the test tomorrow' — even though there's plenty of fun that happens at college, you know, and that's where I think that transitional babysitting role, as silly as that sounds, is actually one of the values that college adds.

And it was important for me. And this gets back to like, even if I don't think my kids will learn that much, I'll still move mountains to get them into a good school.

And there's also a thing where, for better or for worse, it is a signaling endeavor. And so everything that I just said about you and I kind of diminishing Harvard and Princeton — you know and I know that if someone says 'I went to Harvard,' you already know something about them. And so that exists. I don't think it exists to the degree that it did 15 years ago, and it's diminishing, but it's still very powerful.

I think that name still remains powerful, but other names or other practices have taken precedence. So if someone says that 'I started this company when I was 16 and raised Series B from Sequoia' — there you go. I think that trumps the new thing. The Sequoia brand trumps the Harvard brand a little bit now.

People are always going to be status-seeking creatures. We have to be, because back to the comparison set — there's no objective measure of wealth and success. Everything is just what do I have relative to you? And so as long as that's the case, people are going to want to put themselves in a hierarchy, and education being one of those hierarchies.

And you see this a lot. I always wince when I see this, but you have people who are 50 years old that brag about where they went to college, and usually when that's the case it's because they haven't achieved anything else in their life. That's all that they have is like, 'Well, when I was 18 I went to a good school.' Like, okay, that's all you've achieved, but still they do it. And because it is such a signaling endeavor that peaked in college and then never again.

Wow.

Can you imagine Michelangelo teaching you about art? You had no idea.

Yeah. You know something about this.

I think in a weird way, back to — I think the value of college, this is certainly true for me, was the social endeavor. It was not the classroom professors, it was hanging out with, in my case, 30,000 other kids who were my age and had the same goals and ambitions that I did. That was so important to me. And I met so many people, including my wife. That was so great.

And so here's the analogy I make. At conferences, corporate conferences, everyone gives the same feedback: fewer panels, fewer keynotes, more networking. That's what they want. They don't go to the conference to listen to the panel. They go to meet other people and that's the value. And I think college is some of that as well — of like less lecture, less homework, more maybe structured interaction with your peers and with local businesses and whatnot. That's where all the value is.

And so it would be something like that. And it would be less lecture and more internship.

I mean, you see this — it varies by field, but particularly in finance you hear from people, if you hire a new finance grad, on their first day of work, their first week of work, the boss realizes that this person knows nothing about finance. Nothing practical about finance. They can recite a couple formulas that have no practical knowledge in what they do. But it tends to be true that after a four-year degree, you might know nothing about your field, and that is such an indictment on the system.

So many times too in college — this was true when I was there, but I think a lot of students would say this — if you have a guest lecturer. So you're taking a finance class and the professor says, 'Hey, tomorrow this managing director from Goldman Sachs is going to come in and give the lecture.' That's what you learn from — the person who's actually doing it.

Now, I have a lot of respect and admiration for college professors, at least some, most of them, let's say, but it tends to be true that the reason that they're there — maybe not the reason, but a consequence of them being there — is that they don't have real-world experience. Some of them do, some of them had their career and then they became that, a small percentage, but a lot of them don't have experience in the thing that they're teaching.

And that's why you're going to learn so much more. And I remember I had an investment banking internship when I was in college, and in the first week they said something along the lines of, 'Forget everything that they taught you. None of it is relevant. Let me tell you how investment banking works.' And you kind of have this thing of like, 'What did I just pay for? You told me to forget it.' But it's true.

That in the real world, the skills that you need — so in finance, let's just use that as an example, that's obviously not everything — but in finance, if you were going to teach it, different now in the AI age, but when I was doing it, the skill that you needed was Excel and PowerPoint. Like that was the skills you needed. How much do you think they taught us that? Zero. And now AI does that all for you anyway, so maybe you don't need it anymore.

But the skills that you actually needed were not what they were teaching, because the person teaching it was not a managing director at Goldman Sachs, was a finance professor, and that's what they had always done.

Yeah, that's exactly it. They taught the same class over and over again.

Now, I do want to reiterate that I think there's a lot of very good, smart, noble professors who add a lot of value to society. But there could be a disconnect between — I think the way I'd phrase it is what a lot of professors are very, very good at are teaching you how to become a college professor, because that's their skill.

If that's your goal, if your goal is to become a professor yourself, they're the best people in the world to teach that because that's what they do. Of course, I could maybe teach someone how to become an author. I could not teach them how to become a banker because I've never done that.

I would push back and say it's not that they don't want to own homes and cars, it's that they can't afford them. And I've talked about this before, but I think the biggest societal problem in the United States and many different countries is the lack of home affordability. It is such a huge, huge problem and it goes so far beyond the cost of housing.

Because for the majority of people, particularly in America, where this was established as a cultural limit that you had to go past, was owning a home was a step towards adulthood. It was a very clear box to check on the way there. And if you can't check that box because you can't afford it — and by and large you cannot — it's not an exaggeration to say that particularly in American cities, unless you work in tech, finance, or your parents are helping you, you can't buy a home.

And that was not true 20 years ago. It was absolutely not true 30 or 40 years ago. It's a very different thing. And all the evidence would show that if you can't afford to own a home — not rent, but own a home — those people have fewer kids. They have higher rates of alcoholism and drug abuse. They have lower marriage rates. Like, go on down the list.

We have a good family friend who is in her late 20s, happily married, good job, can't afford a home, and so they're not having kids because of that. And so it trickles down from there. And it's a huge, huge problem. And what should be so frustrating to people is that it's a choice.

It's a choice that society has made to make homes this expensive because we don't build enough. It's a simple supply and demand. You don't build enough homes. And the reason they're not getting built is by and large it's illegal to build homes where people want to build them. It's a zoning issue.

And other cities around the world — you know, the example that gets thrown around very often is Tokyo. Bigger and denser than anything in America and relatively very, very cheap housing relative to anything in America because they build. They just let people build.

And in the United States, home prices in Texas relative to California, it's completely night and day. A small part of that is geography — Texas is so flat you can just build and build and build relative to the mountainous Seattle or California. But most of it is just a policy choice that has been made. And I think if more people really understood the ramifications of it, there would be more focus on it.

I think a lot of it gets back to what we talked about earlier — of if you don't feel that your options in life are good, you become more risk-seeking. Part of risk-seeking is 'might as well spend the money today. Why would I save it for the future?' If you feel like there's no reward to saving and investing it for the next 30 years, then you won't do it. You'll just spend it all today. You'll spend it on clothes, travel, whatever it might be.

And to the extent that you're going to quote-unquote invest it, it's going to be day trading on Robinhood kind of thing. So, this is a very different mentality. I would say though, is it a very different mentality compared to when I was a teenager? I think it's marginally different. I think no generation in their teens and 20s — there's almost no generation for whom that is their finest hour.

Like they're transitioning from childhood into adulthood. And if you looked at my generation in our teens and 20s, it wasn't that great. We didn't do a lot of good things. The baby boomers in the 1970s, not their finest hour. And so I think it's easy to judge the young generation, which right now is Gen Z, and say, 'They're irresponsible, they're not saving. My generation did it better.' That's been going on forever.

And you could easily imagine 20 years from now — this is almost guaranteed — that Gen Z will be in their 40s and they're going to look back at Gen Alpha, is that the next generation? And say, 'Look at these lazy kids. When I was young, we were doing it right.'

And so it's always like — it was not that long ago that I remember that the narrative was, 'Look at these coddled, lazy millennials, they're never going to turn out to be anything.' And now it's the millennials that are saying, 'Look at these lazy, coddled Gen Z, they're not going to turn out to be anything.' So I think a lot of this is same as ever. It's always been happening.

I think ideally you would start saving in your teens and 20s. But very few generations would actually do that. And so I think there's still time for them to do it. And just because they're not saving much money when they're 23 years old, you know, as long as you're pulling your life together when you're in your 30s and 40s, that's when things really matter. Now, better if you start saving in your 20s. That's when compounding really — the runway you have in front of you is really going to turn into magic at that point. But there's still hope for them yet.

One thing I think about is a lot of what I want out of money is independence. A lot of what I want in life is independence. I want to do things my way, on my time scale, on my time horizon, and be independent.

Now it's very common for people to say, 'I want to be an entrepreneur because I want to be independent. I don't want a boss telling me what to do.' It's a very common thing and I admire that. It's easy to overlook that when you are an entrepreneur, it's not that you have no boss. It's that everybody is your boss.

Every client is your boss. Every regulator is your boss. Your employees that you hire — now you're relying on them and whatnot. So it's actually the opposite of what you think. And you're swapping one set of problems for another. I think usually much deeper and bigger problems that you have.

And so when you're an employee, your problem is well your upside may be limited and capped. You have to play politics inside the company if you want to get promoted. You could get laid off at any point from decisions that you had nothing to do with. So that's a problem. When you become an entrepreneur, the list of problems you have in front of you is endless and never-ending.

And a lot of times particularly in the early stages, what a startup is is like you wake up every morning and a hundred things on your plate are on fire. And they are existential to the life of your company, right? And you have to put out those fires all day and if you're lucky, you make it back to bed in the evening and wake up tomorrow and do it again the next day.

And it's easy for people to look at the allure and the charm of being an entrepreneur — 'I'm my own boss and unlimited upside.' It's true. It's great. It's wonderful. And discount the problems and the stress that that's going to come with.

I would say I did not at all have the personality to be an entrepreneur. And it's okay to admit that. And I think a lot of people don't. They don't want to admit that actually what they wanted was a simple life in front of them. And actually the skills that they brought to the table were much more conducive to being a good employee than being a good entrepreneur.

Now I would also say I always felt about myself in my own career that I could do good work but I was not a good employee. And I struggled with that for a long time because as I said I didn't have the mentality to be an entrepreneur. I feel like I really wanted a stable paycheck. I'm not ashamed to admit that.

But I also felt like I, particularly in writing where it's kind of an art, I was like, I just need to do my own thing. I don't want anyone telling me what to write, when to write, how to write it. I want to do my own thing but I want to be an employee too. There was a big contradiction there for a lot of my career.

And then in the last five or 10 years kind of got to a point where I was like, okay, I can be I guess a content entrepreneur, a book entrepreneur, whatever you want to define that you're an entrepreneur. I've never felt like it. I don't have any employees. I'm a one-man band.

And I think the reason I haven't hired anyone is I don't have the entrepreneurial mindset. But I think it's okay. I think my message is it's okay to admit that. There's nothing shameful with that. You can add a lot of value to yourself, your family, and your society by being a good employee.

And so I think we've probably romanticized entrepreneurship more than it should be. It should be romanticized. It's a wonderful thing and it can add a lot of value. It is the core of innovation and whatnot. And it's provided wonderful lives for a lot of people. Easy to discount the other side of the equation that comes with it.

Before that, you were kind of a servant.

Yeah. Yeah. Either you're a servant or you're a freelancer, right? Essentially, like...

Or maybe the concept of massive company employment becomes a thing, and the future is more of a more diffused level of lots and lots of small companies rather than one mega company that employs a million people.

And so maybe, maybe 30 years from now, instead of one Google, there's hundreds of different tech companies that are all kind of having their niche. And that would not be a bad thing whatsoever. Some people thrive in the big corporation environment. They have the personality and know how to work the politics enough to do that. But I think a higher number of people, more people would do better in a smaller company culture where it feels more intimate. You know, people, there's more transparency about how the decisions are being made. So maybe it's like a college football. It's like a football team rather than a company.

Rather than an army.

A small company is a football team. There's a captain, there's a coach, there's an owner of the football team, but there's much more transparency about your role, how you fit into the organization, how you're adding value, what behaviors would make you subtract value. And like at a football team, they know that.

But there's probably a lot of employees at Google and Amazon and Microsoft where it's just not clear to anybody what your role is, how you're adding value, whether it would make any impact, whether you got fired tomorrow or not.

You know, particularly on a football team, if you screw up and you let your teammates down, they're going to let you know and you know it.

And so that sense of ownership of like I'm responsible for my job and my performance, I think it can get diminished at the big company level where you just more feel like kind of a cog in the system. And where sometimes you are the safest in those big companies is hiding in the shadows. Don't make a lot of fuss and ruckus. Just kind of show up. Don't make anyone angry.

But you can only delay your, you know, stay there with this. It'll come to you. It'll come.

I think one of the messages here is that there are a lot of different ways to have a great career. You can have a great career at a big company. You can have a great career as an entrepreneur. You can have a great career as a freelancer or a small company. You have to figure out what your personality is. Mine was I would never thrive in a big company. Just couldn't do it. I would never thrive as a pure entrepreneur, even though I've ended up as a quasi entrepreneur. I don't know how to describe it. You just have to figure out what your personality is and what's going to work for you. There's no one-size-fits-all advice for it.

No, not at all. For my own life, just using me as a proxy here, my outlook on life changed completely as soon as I became a father. I think every parent would say that. Instantly, in one second, my goal switched from myself to my son at the time, our firstborn. And so, and I will not be the same person 10 years from now as my kids are growing older and going off on their own and whatnot. I'll have very different goals and outlooks then as well.

And so there's a thing in psychology called the illusion of history, which means we are very cognizant of how much we have changed in the past, but we underestimate how much we're going to change in the future. And so when I look at my life, I am so different today than I was 15 years ago. But if you ask me who am I going to be 15 years from now, I think roughly the same person I am today. But it's wrong. I'm going to be very different 15 years from now. So we change a lot over time.

Without, I mean, same as me with being an author. I did not go into it saying I'm going to be a book entrepreneur, but now that I am, I couldn't imagine anything else. Yeah.