And I was like, "What have you been doing?" He's like, "Well, I actually, I'm a public investor. I invest in public stocks."
You're like, "Oh, you lose money for a living."
Yeah. I was like, "I'm pretty nosy. Do you have your laptop on you? Pull up your brokerage account right now." And he did.
So, check this out. A few weeks ago I met this guy in Hamptons and basically his story is that a while back he sold his company and he made something like eight figures in money after he sold his business. And I was like, "What have you been doing?" He's like, "Well, actually, I'm a public investor. I invest in public stocks."
You're like, "Oh, you lose money for a living."
Yeah. I was like, "I'm pretty nosy. Do you have your laptop on you? Pull up your brokerage account right now." And he did. And I was looking through his whole brokerage account and I want to show you his results. But basically he's had nearly a 22% annual return for the last decade, which is amazing. But that's not the interesting part. I had this idea where we basically exported his brokerage account and we put it in Claude and we asked it, over the last 12 years, how many decisions did you make a year? A decision is defined as how many stocks you bought or sold in a year. And if I remember correctly, he's roughly owned around 15 stocks over the last decade or so, give or take five. But what was interesting is that he only made 2.9 decisions a year. And we put together this cool graph and there were some years, I believe three out of the last 10 years, he made zero decisions, and at most he made six decisions in a year.
So let me just read the kind of... because this is a great graphic by the way. So if he had put $100 in when he started, so this is 2014, so 12, 13 years, his annual return is 21.8% versus 13.5% for the S&P 500. For three years, he did nothing. That was the longest stretch of no activity. That was 2022 to 2025. And it looks like he beat the market 11 out of 12 years. It was only one year where he didn't beat the market, and that was 2022. And basically, if you were to invest around $10 million when he started, I think that math is something like $60 million depending on what part of the year you started. The reason why it was interesting to me is even though I preach patience, I mean, I preach all this, I sound very smart when I preach this, but you know, you and I are very similar. We move a lot and we oftentimes mistake movement with progress. And I thought it was really interesting to see this guy's numbers every single year. Because when you think about three decisions a year, that's four months of just thinking, planning, plotting, not doing anything, zero action.
What, by the way, what was he owning? Is it like he basically bought the FAANG stocks or was he buying obscure things? What was he doing?
They weren't obscure. One was a very... I don't want to reveal too much of his info, but one was a very large travel stock. So like imagine a popular airline or something like that. Another one was a popular clothing stock. It wasn't Lululemon, but imagine like a Lululemon, things like that.
And so when you say he's got four months of thinking, was it actually four months? Like was he just sitting every day and doing research basically? Is that his actual day-to-day task or was he more of a passive investor, kind of set it and forget it, and then sometimes would hear something or learn something and decide to make a change?
So I texted him. I go, "Hey, I want to talk about this. Do I have your permission?" He said, "Yeah." And then I said, "How do you actually make decisions?" Because I am curious. You know, 2.9 decisions a year. What are you actually doing? He said, "I study a few things that I can understand and I study them very deeply. I keep very detailed notes and then I just wait for an opportunity. [Blank] company, for example, I had studied them extensively for about six months prior to COVID and I really liked it but I thought it was expensive. And so I spent a lot of days writing notes about it, documenting my research, saying what I'm learning, the annual reports, and I keep an eye on it. And then when the market presented itself and the opportunity presented itself and it got cheap enough, I bought it that day."
So he is doing the Buffett thing, right? He's basically spending every day learning and then when there's a moment in time, going ahead and making a position. What surprised you the most? Was it the number of decisions? What else surprised you?
A few things surprised me. The first thing is, you know, we love having investors on here from Howard Marks, um...
And we're not investors, not exactly. You know, sometimes maybe it's like a side hobby, but I'm interested in those people because I'm very curious, because it's such a black and white way to figure out someone's decision framework. Because there's very clearly like, I thought about this, I executed this, whereas with startups it's a little bit more iterative where you can go back in time and fix something because you can kind of build it on the fly a little bit. And so I'm very fascinated by this. And there's this cool quote, it's by Warren Buffett, he says his investment strategy is lethargy bordering on sloth. That's like the cornerstone of his investment thesis, which I thought was interesting. And I was like, that's so fascinating. And we had Kevin Ryan on the podcast. Kevin Ryan is a guy who owns sort of like an incubator, a startup lab. I don't know how you'd describe it, but they've launched a handful of like tens of billions of dollar startups. And he was like, I basically get one good idea a year. And I thought that was interesting, that a lot of the people who I admire, they do tend to make very few decisions throughout the year. The second thing is that they don't agonize over very small decisions. I know that this is something that I do often, and I think the way that you fix this is you determine what decision is reversible and which isn't. And for the ones that are reversible, don't sweat over them. Don't agonize over them. I actually think there's a world where you're quite good at this, where you're good at categorizing which decisions are important versus which aren't. Would you agree?
Yeah, I do think I do that pretty well. But it's because on this show we have spent hours talking to some of the best investors alive. Well, lucky for you, the team at HubSpot, they have pulled out the principles that matter most and turned it into a very simple, easy to read wealth guide. It's 35 principles from the top investors. We're talking guys who have been on the pod like Howard Marks, Mohnish Pabrai, Monish Pabrai, Cathie Wood, and a ton of others. So, these are all their frameworks, their mental models, their rules. Basically, how to play the long game and how to avoid ruin. You can get it in the link below.
My default state is I don't care. So it's pretty easy then, everything is ruled out unless it has a real reason I need to care. Whereas I think if your natural wiring is the opposite, where you really are anxious or you think about everything, and you think about everything, it feels like everything matters by default. If that's your default, it's very hard to then pull down 89 different things and convince yourself that they don't matter to find the one that does. So I think it's a lot of just your kind of nature in that sense, of my nature is to not really care about most things.
My nature is the opposite, which is I tell myself, well...
Like the way you do one thing, there's all these cute phrases we tell ourselves, the way you do one thing is the way you do everything. Therefore if you have a typo in this sentence, you're going to make bad business decisions. Yeah. You're just a mess. And so that tends to tell my neurotic voice, my neurotic voice is kind of like telling myself, oh well, everything matters. But the last two things I noticed, these people, I was trying to write down like trends I've noticed amongst these people, is that they know their circle of competence quite well. And there was a time where I was telling my friend, I was like, hey, have you thought about investing in this company? And I made this argument. I was like, I'm not actually going to do it, but I do like to study it. And he was like, yeah, that all sounds really good. I don't know anything about that industry though. So, no, I would never do that and I've not ever thought of it. And there's this weird thing where they say no, not because it's a bad opportunity, just because it's not within their realm of genius. And then the last thing was they tend to write their ideas down. Where they will write it down, oftentimes you'll notice people write premortems. Have you heard of a premortem, where you write down everything that can go wrong? Like, was I still happy? You don't want to do this thing called resulting, where you say this was a bad decision because the result was bad. It should be this was a bad decision because the input or the framework was bad. And so they'll do things like premortem, or they journal, or they'll make arguments to themselves on why this is or is not a good idea. So those are some of the trends I've noticed. But I thought this was really cool to see on paper how many decisions a year this guy's making, who is a retail investor who's outperformed the market.
Have you heard of the Jack Dorsey premortem he did before he started Square?
So Jack Dorsey had helped create Twitter. You know, supposedly it was his idea for Twitter and he was the CEO of Twitter for a long time. So his next company was going to be Square, and it is very easy when you just were the guy who created Twitter and all of Silicon Valley has purchased real estate on your balls, and you know, it's very easy to get high on your own supply. And so what did Jack Dorsey do? He humbled himself with a premortem. And so before he started Square, I think he created a list called 140 reasons why Square will fail. And he wrote down 140 reasons why. And he gave it to...
Can we put buying real estate on your balls into the Hall of Fame?
You know, sometimes it's like words just come out of your mouth before you can think about it. That one, I had the idea and I made a decision and I said, I'm going to let this one fly. Yeah, that one won its place in the Hall of Fame.
Some farts were not meant to be silent. Let's put it that way. And I decided to let that one rip. Okay. So yeah. So Jack Dorsey wrote this thing and he said it was very useful because it's kind of the Charlie Munger thing where, tell me if you know, all I want to know is where I'm going to die so I know not to go there. And if you know the reasons your company might fail in advance, and not avoid the elephant in the room, well then you can actually design a company that's going to achieve despite those potential failure modes. You also... so while you were talking about this, I was thinking about Mark Zuckerberg while you were talking about it, because he recently has been doing a lot of press. He's on a bit of a victory lap at the moment, which feels honestly a little premature because AI changes, the leader changes every six months of who seems like they're dead versus who seems like they're ahead. And right now Meta is doing really well and so he's really excited and he's going out and talking a bunch. But the stock agrees that it was a good decision so far.
Right. Sure. So he's doing all kinds of stuff. He's dropping f-bombs in interviews now, which he, you know...
That doesn't seem natural. What?
There's two different ones. We could play the clips, but the first one, he's in the backyard. He's barbecuing. And so it was some... he was like FaceTiming somebody, and they were like, "Oh, Mark, you smoking meats again?" Because remember like...
Many years ago when he was trying to be cool and casual and he...
He outed himself as a robot basically.
And he was like, I'm just smoking some meat in the smoker and he tried to have like a chilled four-hour barbecue stream that didn't go well.
So this time he was like smoking meat, like what type of meat? He goes, whatever the f*** we want.
And then the second one, he did an interview with Alexander Wang, who Alexander Wang is I think the youngest billionaire in the world right now. So Alex Wang was a kind of math olympiad kid who then went on to start Scale AI, which was one of the first big data companies for these AI labs. Meaning the AI labs need data to train their models. Where do you get that data? It takes a lot of... it's a grindy kind of operational business to go collect and have clean data for the labs. So Scale was doing that. Ultimately, Meta bought it for I think $15 billion or bought like a huge chunk of it and acquired... they basically, a big part of it was just getting Alex. And so they asked Zuck, in the interview they were like, why Alex? And he's like, yeah, it's kind of weird, right? Like what is this data guy going to do with the social media guy and that's going to be like the leading AI lab? How does that work? This is why he just kissed him on the mouth. And he's like, this is my golden... basically verbally kissed him on the mouth. So they're sitting there on Cheeky Pint and he says, I tried to meet as many of the great founders of his kind of age group, his generation, as I could. And I would try to meet as many of them as I could. And he said, I just realized Alex is the guy. He's the guy and that's it. He's the guy. And he's complimenting him like in this just more absolute, not overly intellectual thing, but he's the guy. And they were talking about how Meta was getting trounced when they were doing VR and he was calling, talking about the metaverse and then it was just kind of like it wasn't really working. He had made a big bet. I think he put like $60 billion or so. They put an absurd amount of money into developing this. Like 10 times the amount that they spent developing the iPhone was spent on Oculus and the VR program and had produced nothing on par with the iPhone. So in terms of popularity and users actually wanting it.
And so he was wrong in that. But when AI came around, he correctly pivoted to it and he said out loud, he goes, "Yeah, this is a type of game where you don't get judged by your mistakes. You're only judged by the things you got right and how right you got them when you got them right." And so he kind of has given himself permission to make mistakes, but make the type of mistakes where if I'm right, I'm going to be right in such a major way that it wipes out the history of all the battles I lost because I won the war. And if you know Zuck, he loves the Roman Empire. He loves war. His favorite game was Civilization. And if you see, even his shirts are like Latin for, you know, it's always like Latin phrases for like give me Zuck or give me nothing, you know, like stuff that used to be about Caesar. And so I just think it's an interesting idea that's very different than investing, of what you were talking about, where investing, Warren Buffett's famously is like, rule number one of investing is don't lose money. Rule number two, don't forget rule number one, where it's about not making mistakes. Whereas entrepreneurship is the opposite. You can make tons of mistakes as long as when you do get something right, you have enough chips on the table and you actually get them right in a big enough way. Bezos talks about this like in baseball, the most you can get from a great hit is four runs. But in business, you can get a thousand runs with one correct swing of the bat. And so you just have to focus on getting those correct swings of the bat because when you do, it's a 1,000x. It's a 10,000x.
Can I ask you a question about this? I want to ask about the Zuck stuff, but for Alex Wang, he's 29, so Scale was a $14 billion company. So one of the largest private companies, maybe top 200 or something whenever he was bought, or top 100. When I hear what you're describing, it's sort of like you're saying Zuck was saying this guy is technical and knows what he's talking about, and I've interviewed all these people, and you almost sounded like you were describing him as an individual contributor. Are you saying that this guy led a $14 billion company? And typically if you're the CEO of a company that big, you're not the smartest in the room, you're just pretty good at a bunch of the important stuff. But when you described him, it was like, oh, he's a great leader, he's good at everything, and also he knows AI better than all these other people.
So what he said about him specifically was his strategic mind, so figuring out what should we be doing, his clarity of communication, so his ability to communicate that effectively. And then his strong beliefs on execution. So for example, that for Meta to win in AI, they needed to have an extremely small team working on it, not a big team. So talent density, how talent density was one of the most important factors in victory in AI, meaning what you don't want is 2,000 pretty smart people on this. You want 20 or max 200 extremely smart people who can all hold the problem in their head, the whole project in their head, and they all know each other and they're talking to each other and it's tight and there's not too many voices in the room and that it should be extremely flat the way it's organized. So he had these very strong opinions that Zuckerberg believed was the correct answer and that because of that they should go ahead and try to pull it off. So that's what he kind of described as his attributes of what it meant when he said he's the guy.
So a leader kind of, for sure, like leadership ability, not he's not doing all the work.
Another interesting part of this was, I think it was on Semafor's podcast and Semafor was asking him, so how did he know that you were good at those? How did you even meet the guy? How did you even meet Mark Zuckerberg? Why did you meet? He's like, "Well, you know, Meta was one of our big customers at Scale." But he goes, "Yeah, Zuck kind of just does this every once in a while, like every few months, you know, he would just hit you up." And he's like, if I ever sent him a question in WhatsApp, like, "Hey, what do you think we should do about this?" I would get this extremely thorough, extremely crisp WhatsApp message that's almost like a blog post length delivered back to me. He goes, "That's just one of Zuck's superpowers. He's an extremely good writer. He's extremely clear in his thinking and he's able to, the way most people send short quick text messages, he's able to send long thorough text messages in the same amount of brain power, like in the same time that it takes a normal person." And then the exact opposite was true, he goes, he also is quite humble for a guy who basically runs one of the most valuable companies in the world. He would always just text me, "Hey, what do you think we should do about X?" And it wasn't just me. He's sending that to, you know, 20 people that are not on the official board of advisors. He's not waiting for the quarterly board meeting to discuss this with these five-star generals. He would just, anybody who he thought was smart, he'll just say, "Hey, what do you think we're getting wrong here? Hey, what do you think we should be doing about this?" And, you know, he's not necessarily going to just do what we say, but he's constantly seeking from very smart people their take. And then he's also using that to assess the talent of those people, of who he thinks is consistently giving him back high signal on those things.
So I guess there's like two sides of the spectrum. But basically there are people where it's a dictatorship and they, for example, Cornelius Vanderbilt was basically sort of like the Elon Musk of the 1800s. He was the richest man in America and he was known for just like, he would make decisions with very little transparency. People wouldn't know why he was doing it. He was described as shrewd, where he would make a decision and people would be like, "We have no idea why you're doing that." And six months later it would reveal itself like, "Oh, he was right. He predicted this. He was doing all this stuff in secrecy." But then there's so many other leaders that tend to make decisions almost in a consensus way, which is very different from the popular belief on how leaders are. And I have noticed that when you and I have hung out with people that are 100 times more successful than I am, oftentimes they'll ask my opinion and in my head I'm like, I'm way dumber than you. Why are you asking my opinion? And I could tell that they're gathering information and I have found that to be like a superpower amongst a lot of leaders.
Yeah, there's a... what's that thing called, Dunning-Kruger, the Dunning-Kruger effect, where if you know nothing about a subject, you have very little confidence. If you know a little bit about the subject, you have this false sense of too much confidence on it. And then as you actually learn more about it, you realize how little you really knew and your confidence on the subject dips. Right? And this is why black belts in jiu-jitsu who've been doing it for 20 years are the ones who talk about how like, I'm still a beginner. I'm a beginner at this. I'm still just figuring this stuff out. There's so much more that I don't know than what I do know. And then you have Jonah Hill who becomes a blue belt. It's like, I'll murder anybody who fights me. You know, like it's like you get that blue belt confidence. The blue belts feel like black belts and the black belts feel like blue belts. Like it's this weird thing that happens with how much you know about a subject. And it does seem like, you know, some of the smartest people are the ones who are the quickest to a) admit how little they know, b) understand how big of a factor luck is in their success, and c) constantly be searching for insight from people who on paper should be, you know, less accomplished, less intelligent about the subject than they are, because they know they're kind of always hunting for anything that resonates, anything that has some signal to it, and they know it can come from different places and they're humble enough to do it.
The shitty part about doing this podcast is I signed up for an executive coach and I've done three or four sessions with him plus this assessment and he was like, "You're really self-critical of yourself." I'm like, "Dude, it really sucks. My job is I hang out with the people who are the best in the world at everything they do." And he was like, "You described yourself as lazy. You said that you're not ambitious." He's like, "You seem very ambitious." I'm like, I am hanging out with literally the 30th richest person on earth. When you compare whatever it is I am doing compared to that, it is actually quite challenging because I realize what the levels are and how high they go. And every once in a while, I will definitely like on myself for feeling that way. Do you feel that way sometimes?
I mean, I try not to, but I definitely feel that way. You know, comparison is the thief of joy, you know, like, yeah, that's definitely true. The only way to cope with it is to do two things. One, get comfortable in the game you're playing, that, oh, I'm not playing the game that those guys are playing. Those guys are trying to change the world or they're trying to be the richest guy in the world or they're trying to have the most power, they want to run for president. I don't want to do any of those things. And so that's the first thing, is like get really comfortable in what game are you actually playing. And I don't think most people even are aware of what game they're playing in life. Like if you ask a normal person or even you ask one of your smart friends, do you think they know what game they play?
No. And in fact, I've been doing this exercise where I've been asking people, like before they ask me advice or whatever, if they're wanting to brainstorm with me on their problem, I'm like, well, where are you trying to be in five years? And they'll be like, I don't know. I've never thought about that. Like there is a... even amongst really successful people, driven people, there is a lack of like the end state looks something like this.
So I want you to imagine, close your eyes and imagine a friend who is somebody you respect, smart, accomplished, let's say somebody you think is smarter than you and more successful than you. All right. If you ask that person, what game are you playing? What do you think would be the words that come out of their mouth? They'd be like, "What are you talking about?" Like it would be like shock.
Okay. So first they're confused. What are you even really asking me? And then you sort of explain, well, we're all playing some sort of game. And maybe LeBron James is playing right now. LeBron James, age 42, is playing a game of I'm trying to defeat father time and catch Michael Jordan. That's really what he's doing. So he's trying to defy the laws of aging to keep playing basketball at age 42. And then he goes and joins Philly because he wants to win a championship and he wants to, you know...
really cement himself as the greatest of all time. Right now, it's him and Jordan who are comparing. That's the game LeBron is playing in the NBA. Now, another player on his same team might be playing a different game, Jaylen Brown, who just left the Celtics, um, or, you know, got traded away from the Celtics, and he was always the number two there. And I think he wants to show what he's really capable of. He wants to show that this, you know, I would say this year he's playing a game of proving himself. It's a prove-myself game. I want to prove I'm one of the best players and they made a mistake trading me away.
And most of the NBA players that probably, if you talk to them, I've talked to a couple of these guys. They're like, I'm just trying to have fun and make a good living.
Yeah, exactly. I'm trying to, you know, get this bread while the bread is there for the getting, you know. I'm trying to make my first All-Star team. I'm trying to get that next contract. I'm trying to do something. And so, if you break it down into the Aaron Sorkin way of thinking about things, the hero has something that they want and there's something that stands in their way. That's a story: intention and obstacle. And so, you know, for example, when we were in our 20s, what was the game we were trying to play? If we're honest, it was trying to make it. And I think make it meant be a successful person, make money. You know, become a multi-millionaire was, I think, both of our goals. Hence, you know, part of the spirit of this podcast, why it works, cuz we kind of shared that chase. That's when we met. And we were both chasing that same thing. We were both playing that same game. Now, we played it different ways, but we were both fundamentally playing that game. And then when we got into our 30s, it was like we started playing a different game. It was this family. I'm going to start a family while still being successful, but not in the sweaty, grindy way I played in my 20s. And I didn't know what that meant, but I knew that's what I was trying to do. And figured out how to do that through some combination of investing and having kids and doing all this good stuff. And, you know, then you might play a different game at a different phase. And so, what about that person you were thinking about, what game do you think they're actually playing? Probably just trying to, um, do the same thing they were before, which is they're already successful, but they want to go a level above and be more successful and more powerful and more prominent.
And what's the why on that?
They don't feel like they have enough. They feel like they won their game and they need to win another game in order to feel whole.
