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Lewis HowesLewis Howes

Become a Master of Finance with Harvard Professor Mihir Desai (with Lewis Howes)

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Mihir DesaiguestLewis Howeshost
Aug 2, 201746mWatch on YouTube

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Transcript

  1. 0:00 – 2:54

    Why Mihir Desai Wrote The Wisdom of Finance

    1. MD

      Debt is fantastic. So if you're a poor person and you wanna access opportunities you couldn't access otherwise, there's only one way to do that. It's through borrowing.

    2. LH

      Mm.

    3. MD

      You wanna live in a house you don't have any right to live in, how do you do it?

    4. LH

      Borrow.

    5. MD

      You borrow. [laughs]

    6. LH

      Yeah.

    7. MD

      You wanna invest in education, you don't have the resources, how do you do it?

    8. LH

      You borrow.

    9. MD

      It's like a liberating thing. So people don't understand that piece of it, and then they don't understand the dangers.

    10. LH

      [upbeat music] All right. Welcome back everyone to the School of Greatness podcast. We have a Harvard professor in the house today. His name is Mihir, Mihir Desai. Is that right?

    11. MD

      Exactly right.

    12. LH

      Mihir Desai.

    13. MD

      Exactly.

    14. LH

      Good to see you.

    15. MD

      Good to meet you.

    16. LH

      Thank you so much for being here.

    17. MD

      No, my pleasure, Lewis.

    18. LH

      We got connected through, I guess, Eric Barker mentioned coming on the show.

    19. MD

      Exactly.

    20. LH

      And then I checked out your stuff. I always vet it with Christine, and I'm like, "See if this guy's legit-

    21. MD

      [laughs]

    22. LH

      ... and if this will be interesting," and you passed the test for it to be interesting enough.

    23. MD

      The Christine test.

    24. LH

      Yes.

    25. MD

      Very good. Excellent.

    26. LH

      Uh, you've got this book called The Wisdom of Finance: Discovering Humanity in the World of Risk and Return. Um, and you've been s- teaching finance, entrepreneurship, business. You, you teach at the entrepreneurship program and the law school at Harvard, correct?

    27. MD

      Exactly, yeah.

    28. LH

      For 18 years you've been teaching there.

    29. MD

      Yeah.

    30. LH

      You've been writing journal papers for 18 years, right?

  2. 2:54 – 5:23

    Financial Illiteracy and the Rich Dad Poor Dad Comparison

    1. LH

      How come we're never taught these things growing up in s- you know, elementary school, high school, college? How come these things are never really taught until you get to college unless you take those classes?

    2. MD

      Yeah.

    3. LH

      And then we're just kind of illiterate with finance, and we're broke and don't know what to do with the rest of our lives.

    4. MD

      I mean, like, you think about student debt or you think about credit card debt, or even as an example, I, I know doctors who come out, they start a private practice, they have no clue what they're doing financially. It's like-

    5. LH

      Zero clue

    6. MD

      ... it's, and it's kind of a crime, right? [laughs]

    7. LH

      Yeah.

    8. MD

      In fact, the level of financial literacy is so low, and if you think about the mistakes people are making, like the terrible mistakes they make with debt, I mean, they're, they're life-changing decisions. [laughs]

    9. LH

      Mm-hmm.

    10. MD

      And if you don't have some basic-

    11. LH

      Can haunt you for the rest of your life.

    12. MD

      Yeah. They-

    13. LH

      Yeah

    14. MD

      ... they hang over you forever. Um, and we don't do anything. In fact, that's one of the th- I was joking with my daughters, I have three daughters, and, uh, one of my girls was telling me, like, the next project should be the kids' book version.

    15. LH

      Mm-hmm.

    16. MD

      And I-

    17. LH

      That's true

    18. MD

      ... and it-

    19. LH

      Yeah, it's true

    20. MD

      ... it kinda struck me as crazy, but, uh, these ideas, you gotta get them to kids.

    21. LH

      Yeah.

    22. MD

      Because if you don't get them to kids, they'll never, they'll never learn it.

    23. LH

      So is this like the advanced version of Rich Dad Poor Dad, then? Is this kind of like... 'Cause that's the story of, like, a rich dad and a poor dad-

    24. MD

      Yeah

    25. LH

      ... and what they did-

    26. MD

      Yeah

    27. LH

      ... and how they bought and how they whatever.

    28. MD

      Yeah. You know, it's funny, because that book, you know, it's kinda e- in a way it might be easy to ridicule, but-

    29. LH

      Mm-hmm

    30. MD

      ... it has had an amazing impact.

  3. 5:23 – 8:44

    Debt as a Liberating Tool and the Education Decision

    1. MD

      So I think there's a couple. You know, one is borrowing and debt.

    2. LH

      Mm-hmm.

    3. MD

      I think people either think it's terrible, um, which is wrong. It's wonderful.

    4. LH

      Borrowing money-

    5. MD

      Yeah

    6. LH

      ... and having debt.

    7. MD

      Having debt. I mean, the thing, what people don't realize is, and it's always been demonized through history, right? Like, so Socrates said it was, you know, immoral to charge interest. And religions, a lot of religions don't allow, uh, payment of interest, but they don't realize-

    8. LH

      Hm

    9. MD

      ... that actually debt is fantastic. So if you're a poor person and you wanna access opportunities you couldn't access otherwise, there's only one way to do that. It's through borrowing.

    10. LH

      Mm.

    11. MD

      You wanna live in a house you don't have any right to live in- How do you do it?

    12. LH

      Borrow.

    13. MD

      You borrow. [laughs]

    14. LH

      Yeah.

    15. MD

      You wanna invest in education, you don't have the resources, how do you do it?

    16. LH

      You borrow.

    17. MD

      It's like a liberating thing. So people don't understand that piece of it, and then they don't understand the dangers, right?

    18. LH

      Mm-hmm.

    19. MD

      They don't understand the dangers, which is once you do that, it is a really, really serious commitment. [laughs]

    20. LH

      Yeah.

    21. MD

      And you can find yourself in a world, and I tell the story of what's called debt overhang, which is this finance idea which you have so much debt that you can't actually do the, the best things for yourself because it's, like, looming over you, and that is the trap people fall into.

    22. LH

      Yeah.

    23. MD

      So they kind of either ignore the real virtues of it, or they kind of just say, "Well, it's great, and I'll just do it. It's not a big deal."

    24. LH

      So, yeah.

    25. MD

      So that, I think, is one big piece on the personal side for-

    26. LH

      How do we, how do we make a decision of knowing, like, okay, I'm stuck in this rut, and if I go to this school that costs me 50 grand a year, I don't know what Harvard is, maybe it's 80 grand a year now, um, then I'm gonna get the opportunities and the in- insights that will help me for the rest of my life. But I'll have a half a million in debt from four years-

    27. MD

      Exactly

    28. LH

      ... that's gonna take me the rest of my life to pay off.

    29. MD

      Yeah. Well, so here-

    30. LH

      So how do you make that decision? [laughs]

  4. 8:44 – 11:26

    Luck vs. Skill and the Case for Index Funds

    1. MD

      So I think the other big thing that people struggle with in finance and outside-

    2. LH

      Uh-huh

    3. MD

      ... of finance is they think there's a lot of skill in finance.

    4. LH

      In, in what? In managing, making, investing money?

    5. MD

      In managing money and investing money, and when they get good results, they think it's their skill.

    6. LH

      Mm.

    7. MD

      So the lesson of finance is it's almost impossible to tell the difference between luck and skill, other than over the long run. Right? So you got a buddy, and I got a buddy. And the buddy says, "You know what? I beat the stock market like three years in a row, five years in a row. I'm awesome."

    8. LH

      Yeah, yeah.

    9. MD

      And the answer is, "I have no idea if you're awesome." [laughs]

    10. LH

      Right.

    11. MD

      You may be awesome.

    12. LH

      The market may have just been going up-

    13. MD

      Exactly

    14. LH

      ... and you just got in at the right time and whatever.

    15. MD

      And in fact, like, you know, the, there's this old coin tossing trick, right, which is you get 80 people in a room. You toss a coin 10 times, and you kind of go through it, and then you say, "Who got nine heads?" Maybe one or two people. "Who got 10 heads?" You're pretty much guaranteed to get somebody in that room get 10 heads.

    16. LH

      Mm.

    17. MD

      And then you ask that person, you know, "How did you do it?"

    18. LH

      [laughs] Yeah.

    19. MD

      And the person, of course, will honest- usually answer honestly, which is, "It was luck."

    20. LH

      Yeah.

    21. MD

      But when you're a mutual fund manager, and you beat the market 10 years in a row-

    22. LH

      I'm the man. Or the woman

    23. MD

      ... you, I'm the man, I'm the woman. [laughs]

    24. LH

      [laughs]

    25. MD

      And I did it, right?

    26. LH

      Yeah.

    27. MD

      And so I think people think there's a lot of skill.

    28. LH

      Uh-huh.

    29. MD

      And it's, the truth is, it's really almost very, very hard to beat the market persistently. There may be a few people out there who can do it well over the long run. I don't know who they are. You don't know who they are.

    30. LH

      Right.

  5. 11:26 – 16:23

    Practical Rules for Saving and Investing

    1. MD

      Yeah.

    2. LH

      Yeah. What should we be doing with our money, then?

    3. MD

      So that's a great question.

    4. LH

      Yeah.

    5. MD

      Um, so it kind of depends on who you are, right? So let's think about a typical kind of person.

    6. LH

      Yes.

    7. MD

      Let's say working, and they have a income stream.

    8. LH

      Uh-huh.

    9. MD

      Maybe they have a family. So in terms of savings, the first thing is save.

    10. LH

      How much?

    11. MD

      You know-

    12. LH

      As much?

    13. MD

      ... the truth is, um, very few people over-save.

    14. LH

      Mm.

    15. MD

      Right? So what does over-saving mean? Over-saving means I'm depriving myself today so that when I retire, I have more.

    16. LH

      Mm-hmm.

    17. MD

      Very few people make that mistake. [laughs]

    18. LH

      Yeah. [laughs]

    19. MD

      Like, 98% of people are making the mistake of not depriving themselves today so they can have more later.

    20. LH

      Mm-hmm.

    21. MD

      So for almost all people, it is save more than you're doing now.

    22. LH

      Mm-hmm.

    23. MD

      That's almost universal, you gotta-

    24. LH

      As much as you can.

    25. MD

      Yeah, I mean, as much as you can. And at some point you're gonna be saying to yourself, you know, uh, "I'm skimping too much. I'm making myself unhappy-"

    26. LH

      Right, right

    27. MD

      ... "because I'm living in a shack."

    28. LH

      [laughs] Yeah.

    29. MD

      And I'm like, "I don't need to live in a shack."

    30. LH

      Eating ramen noodles is worth-

  6. 16:23 – 18:18

    Startup Investing and Desai's Own Money Habits

    1. LH

      Yeah. Do you feel like as a, as a professor, you follow your own advice? 'Cause there's a lot of people that teach that don't actually do what they say you should do.

    2. MD

      I do most of it right.

    3. LH

      Most-

    4. MD

      Well, what I just said.

    5. LH

      Yeah.

    6. MD

      I, I'll tell you what I do wrong. Well, let me just say what I do right.

    7. LH

      You invest in startups. [laughs]

    8. MD

      Well, I used to, I used to write checks, uh-

    9. LH

      Oh, yeah

    10. MD

      ... to friends and former students, and I do that less now.

    11. LH

      Mm.

    12. MD

      Because I just, you know, I'm just more measured about the way I think about things.

    13. LH

      Mm.

    14. MD

      And I think the startup scene is so crazy right now, frankly, in addition. Um, I think the thing I do wrong is I, like everybody, I tend to overestimate, you know, my abilities a little bit. So I like investing.

    15. LH

      Mm.

    16. MD

      I do it a little bit. I think if you actually look, I think I've done, you know, pretty well, but I think if you actually looked at my returns-

    17. LH

      Mm-hmm, over time it's-

    18. MD

      ... I think I'm probably way overestimating my ability.

    19. LH

      Yeah, yeah, yeah.

    20. MD

      And if you thought about, like, if I just parked it somewhere-

    21. LH

      [laughs]

    22. MD

      ... I would've probably done better, and I would've spent less time in my life, like, wasting on that.

    23. LH

      Yeah.

    24. MD

      So I probably overestimate my abilities, and I think everybody does.

    25. LH

      Everyone.

    26. MD

      But I do follow all the tax stuff. I do follow all the indexation stuff.

    27. LH

      Oh.

    28. MD

      No paying fees.

    29. LH

      Yeah.

    30. MD

      Um, I actually worry sometimes that I save too much. Like, I worry that I'm s- I'm too worried about things in the future.

  7. 18:18 – 22:21

    Optionality and Jane Austen's Take on Risk

    1. LH

      Yeah. Huh. What are some of the lessons we should be knowing or understanding about finance and the wisdom behind it?

    2. MD

      Well, so in the book-

    3. LH

      Risk and return and all that stuff.

    4. MD

      Yeah, so in the book, what I try to do is take these ideas that people in finance would be in a textbook, right? And I basically try to explain them just using stories.

    5. LH

      Without graphs and charts and-

    6. MD

      No graphs, no equations

    7. LH

      ... stuff that hurts my brain.

    8. MD

      And they hurt a lot of people's brains.

    9. LH

      Yeah.

    10. MD

      And there's no reason to do that that way, right? So for example, um, risk management, which is about options and diversification, like some of the most complex derivatives.

    11. LH

      Mm-hmm.

    12. MD

      So in the book, the way I try to explain it is I use Jane Austen and Pride and Prejudice. So there's like a, she's a fantastic English novelist.

    13. LH

      Mm-hmm.

    14. MD

      And she basically tells a story of these young women who are facing risk in the marriage market, right? There's like these suitors who come along, and some of them are drunks, and some of them have a lot of money, but they're mean.

    15. LH

      Hmm.

    16. MD

      And some are nice, but they don't have any money [laughs] . You know, and it's all about that.

    17. LH

      Sure, sure. Yeah, yeah.

    18. MD

      It's like that's the whole plot line.

    19. LH

      So what do I wanna, do I wanna have this debt of someone mean to me for the 40 years?

    20. MD

      E- exactly. Or do I wanna like be with someone I'm happy with but we'll never make it, you know, economically.

    21. LH

      There's no passion or something.

    22. MD

      Exactly. [laughs]

    23. LH

      You're like-

    24. MD

      This is exactly what Jane Austen is about, right?

    25. LH

      Uh-huh.

    26. MD

      And so these young women are really exposed. And men, by the way, she points out, have it really easy. 'Cause if men make a mistake, it's okay.

    27. LH

      Oh.

    28. MD

      In the 19th century, right?

    29. LH

      Sure, sure.

    30. MD

      But women, if you make a mistake in the marriage market, it's over.

  8. 22:21 – 25:06

    Bankruptcy, Failure and Robert Morris

    1. MD

      I do that with options in the book. Um, I do that with bankruptcy. So the, I really like the bankruptcy chapter, comes at the end. Um, but I tell the story of this guy, Robert Morris, who I'm sure, I imagine you've never heard of, nobody's ever heard of.

    2. LH

      No.

    3. MD

      That's what's great about the story, nobody's ever heard of him. [laughs]

    4. LH

      Yeah.

    5. MD

      So he's the richest man in the colonies.

    6. LH

      Okay.

    7. MD

      Uh, he finances the Battle of Yorktown with his personal scrip, okay? George Washington asks him to be the first Secretary of the Treasury before he asks Alexander Hamilton.

    8. LH

      Hmm.

    9. MD

      And he says no. So why does he say no? He says no because he lost some wealth during the Revolutionary War helping the, you know, young republic.

    10. LH

      Mm-hmm.

    11. MD

      And Washington says, "Become the first Secretary of the Treasury." He's like, "No, go ask Hamilton. I gotta rebuild my wealth." He goes back, he rebuilds his wealth. He owns, uh, 40% of New Jersey, like the state.

    12. LH

      Hmm.

    13. MD

      He owns a quarter of the District of Columbia, which was gonna become the capital. And then he goes bankrupt. And what did we do to people who went bankrupt back then? He went to jail.

    14. LH

      Wow.

    15. MD

      And he went to jail, and he was sitting in a jail in Philadelphia. He went from the richest man in the colonies owning-

    16. LH

      To jail

    17. MD

      ... to jail. Because that's how-

    18. LH

      He probably owned the land where the jail was

    19. MD

      ... [laughs] so that's actually, uh, so the reason I tell that story is that's how we used to think about failure.

    20. LH

      Wow.

    21. MD

      We used to think about failure, people fail, they're morally problematic, they need to be punished.

    22. LH

      Wow.

    23. MD

      So the reason I tell that story is George Washington visits him in the jail in Philade- in Philadelphia. And he actually, it's a great story 'cause George Washington risks yellow fever. I mean, these jails were terrible. And he and other founding fathers look at Robert Morris sitting in jail, and they're like, "Something's wrong."

    24. LH

      Mm-hmm.

    25. MD

      This guy helped us finance the Revolution-

    26. LH

      Right

    27. MD

      ... and he's sitting in jail. That leads to the way we rethink bankruptcy with the 1800 Act of Bankruptcy, 1800, 1800 Bankruptcy Act, which where we basically say, "No more punishing people who fail." So now what do we do with people who go bankrupt? We actually prioritize them starting again, right?

    28. LH

      Yeah.

    29. MD

      We're like, "We're gonna protect you from the creditors Right? We're gonna actually get you a, a clean slate.

    30. LH

      Yeah, yeah.

  9. 25:06 – 28:43

    Leverage, Commitments and Reputation

    1. MD

      The other example that I, I kinda like is leverage.

    2. LH

      Hmm.

    3. MD

      So this is about the-

    4. LH

      Talk about that.

    5. MD

      Yeah, so that's about debt, right?

    6. LH

      Yeah.

    7. MD

      And people in finance love leverage. They're like... 'Cause their fortunes have been built on leverage. [laughs]

    8. LH

      Mm-hmm.

    9. MD

      Um, think about a lot of people, especially in real estate, a lot of areas, it's been built on leverage. They borrow money, and then it allows them to own assets they have no right to own.

    10. LH

      And they leverage that asset, right?

    11. MD

      They leverage that asset, and then if things go well, their returns are outsized, right? Because leverage, that's what leverage does to your returns. And so I kinda talk about that, but then what I try to do in the book is say, you know, that's totally analogous to commitments. You know, what is debt? It's a commitment. It's like a really, really serious commitment.

    12. LH

      Mm-hmm.

    13. MD

      Um, so I do this via The Merchant of Venice, a Shakespeare story, right? Nominally, it's about debt. This is the play where Shylock is this money lender, and he's like, "I want a pound of your flesh 'cause you didn't pay me back." People think it's about debt. It's really about commitments. Like, it's about commitments between people.

    14. LH

      Mm-hmm.

    15. MD

      So the point of the story is that commitments are like debt. They allow you to do things you wouldn't be able to do otherwise.

    16. LH

      Hmm.

    17. MD

      Commitments to people, to spouses, to families, to jobs, to organizations. You get to do things you can't do by yourself.

    18. LH

      For example, what do you mean?

    19. MD

      So I give a couple of examples. So I talk about these two artists. Um, one is George Orwell, who wrote 1984, and one is Jeff Koons, who's a modern artist. You may have heard of, he's makes these massive sculptures.

    20. LH

      Yeah.

    21. MD

      So George Orwell is a low-leverage guy. He is, like, living in London. Everybody wants a piece of him after World War II. He's like, "I'm going away." He goes to the Scottish islands, Hebrides Islands, and he spends three years alone, and he writes 1984 by himself.

    22. LH

      Hmm.

    23. MD

      That's low leverage. He's not committing to anybody.

    24. LH

      Right.

    25. MD

      He's doing it all by himself.

    26. LH

      Right.

    27. MD

      Jeff Koons I think is arguably the greatest modern artist. Um, the Whitney Museum in New York had a retrospective of just him for the whole building. He creates these sculptures that are the size of this room. One's called Play-Doh. They're made of metal and glass and just incredible stuff. He has 150 people in his factory. He doesn't actually know how to use the material-

    28. LH

      Hmm

    29. MD

      ... that he's working with. He relies on other people who use that material.

    30. LH

      It's kinda like the, the visionary.

  10. 28:43 – 32:25

    Standout Students and Why Work Ethic Beats Raw Smarts

    1. LH

      Who's the smartest person you've taught come through one of your classes?

    2. MD

      Wow. So I've had, I've had the good fortune to, you know, teach a lot of great people.

    3. LH

      Mm-hmm.

    4. MD

      [sighs] God, you know, I have had, um... I am so proud of a lot of my former students, so it's kinda hard for me to think about that.

    5. LH

      It's hard to choose one. I get it, yeah, yeah.

    6. MD

      Um-

    7. LH

      There may be a few that you can think of who've done-

    8. MD

      Well-

    9. LH

      ... extraordinary things or...

    10. MD

      God, you know, I'll t- I'll tell you... I'll give you kind of a bunch of different people 'cause I think it's useful to kind of-

    11. LH

      Mm-hmm

    12. MD

      ... There are different types of people, right?

    13. LH

      Mm-hmm.

    14. MD

      Um, so an entrepreneur who, there's, you know, entrepreneur who I think is really spectacular, um, Sarah Kauss. She built S'well. You know the water bottles?

    15. LH

      Yeah.

    16. MD

      S'well.

    17. LH

      Yeah, yeah. Very popular right now.

    18. MD

      She's spectacular, and I, you know, I, I don't think she'd mind me telling you. You know, I had her as a first-year student at HBS, and she was, she was really nervous about finance.

    19. LH

      Hmm.

    20. MD

      And she was really, you know, nervous. And she has just built, like, a great company-

    21. LH

      Yeah

    22. MD

      ... out of something that, you know, the water bottle business. You might not have even thought about, but she's made it into something aesthetically beautiful.

    23. LH

      Mm-hmm.

    24. MD

      Like, that's spectacular.

    25. LH

      Yeah.

    26. MD

      Um, I'll give you another type of person 'cause that's like an entrepreneur type of person. Uh, another type of person is I've had a couple of authors.

    27. LH

      Hmm.

    28. MD

      So, um, Lee Carpenter has written a book about Navy SEALs.

    29. LH

      Hmm.

    30. MD

      Uh, Gail Lemmon wrote Ashley's War, which is a spectacular story. I think they, like, took a totally different path.

  11. 32:25 – 36:52

    The Parable of the Talents and Making the Most of What You're Given

    1. MD

      And in fact, just, just to go back to the book a little bit, the, one of the, there's a story in the Bible, um, called the Parable of the Talents.

    2. LH

      Mm-hmm.

    3. MD

      It's, like, this great story in the Bible. It's a-

    4. LH

      The Parable of the Talents, right?

    5. MD

      Yeah.

    6. LH

      Is this the one with the, the father gives his son talents or something? What, how's it go?

    7. MD

      It's great. So here's the story, which is, um, there's a master who's supposed to be God.

    8. LH

      Okay.

    9. MD

      And he's going out of town, and he's got these three servants, and he says, "I'm going out of town. You've got to take care of my talents." So talents today are, like, these special things we have, like, that make us special.

    10. LH

      Mm-hmm.

    11. MD

      Back then, it was money.

    12. LH

      Yeah.

    13. MD

      Ta- the origin of the word talents is money. So he gives one guy, he's like, "Look, here are five talents. Take care of this. I'm going out of town." Gives another guy three talents. He says, "Take care of this. I'm going out of town." He gives the third guy one talent, and he says, "I'm going out of town. Take care of it." He comes back, and obviously he's supposed to be God in this story-

    14. LH

      Mm-hmm

    15. MD

      ... and these are, like, normal people. So the guy with five talents comes to him and says, "You know, Master, I took your five talents, and I invested it, and, uh, I lent it out, and I made it into 10 talents." And he gives it back to the master. And the master says, "Wonderful. Enter the Kingdom of God." Second person says, "I took your three talents and I made it into six talents." And the master says, "Great job. Welcome into the Kingdom of God." Third guy is like, "You know, I only had one talent, and I was a little nervous, and I wanted to make sure and have it, so I buried it. It's here, and I want to give it back to you." And the master says, "You're out." You know, "You're damned. You didn't do what you were supposed to do." So the reason I love that story is it's about-

    16. LH

      Mm

    17. MD

      ... um, it's about how you're given these incredible gifts and you have to use them. It also, in the value creation chapter, it's kind of exactly what finance says about value creation, you know, which is you're a steward for resources. You gotta do more than people expect you to do.

    18. LH

      Mm.

    19. MD

      In finance, that's called beating your cost of capital, because otherwise you've wasted, you've wasted an opportunity. [laughs] And if you just sit on things, that's actually value destroying. It's not value creating.

    20. LH

      Mm.

    21. MD

      So that parable, it's just like your story about this athlete, right?

    22. LH

      Yeah, yeah.

    23. MD

      Um, but it's a really weird parable, though, right? 'Cause this young, this one guy [laughs] who had one talent, he's, like, the poorest guy.

    24. LH

      [laughs]

    25. MD

      And he, just because of his fear, he gets damned, right?

    26. LH

      Mm-hmm.

    27. MD

      He gets, like, literally cast out of the Kingdom of God.

    28. LH

      Yeah.

    29. MD

      But it's a powerful story for saying, you know, we are all given a lot, and you have to make everything you can out of it.

    30. LH

      Yeah.

  12. 36:52 – 39:26

    Lessons from 18 Years of Teaching

    1. LH

      What's the greatest lesson you've learned over the last 18 years of teaching?

    2. MD

      You know, uh, well, let me say a couple... Let me say two things, right? So one is I learned something about teaching. Um-

    3. LH

      The art of connecting with your-

    4. MD

      Yeah

    5. LH

      ... students and-

    6. MD

      And it's really, it's fundamentally w- when I teach best, and I don't always teach great, but when I do, it's like an act of empathy, right? Like, you've gotta go into the other person's... Y- you have to think about how the other person is thinking about it.

    7. LH

      Mm-hmm.

    8. MD

      So too many people who are teachers are, especially in an academic environment, it's like about my ideas. I'm projecting it onto you. And fundamentally, it's about empathy.

    9. LH

      Mm-hmm.

    10. MD

      Like, if you w- if you can get in other people's shoes, then you can help them understand something.

    11. LH

      Yeah.

    12. MD

      Um, and then the second thing, that's about teaching, just about what it is really, because it is kind of my life's work along with-

    13. LH

      Yeah

    14. MD

      ... research and writing. Um, I think the big lesson, though, you learn from teaching, and especially where I teach, it's, it's, you know, humility. You don't know who, who the kids are who [laughs] are gonna go do great things.

    15. LH

      Yeah.

    16. MD

      You know, you sometimes see them, and you kinda get a sense, but everybody has something different in them, and people who in a classroom don't say anything or don't do anything, you come, they come talk to you later, and they're, like, spectacular.

    17. LH

      Hmm.

    18. MD

      And then, like, these people who, you know, are always talking and always saying stuff and sound really smart, they're actually kind of empty vessels.

    19. LH

      Mm-hmm.

    20. MD

      You know, so you're, you're a little bit-

    21. LH

      Don't judge people.

    22. MD

      Yeah, don't judge people. And you're a little more humble about, um, everybody has different capacities, and I don't, I judge people much less than I used to-

    23. LH

      Mm-hmm

    24. MD

      ... because I just, I don't know what your capacities are, right?

    25. LH

      Yeah.

    26. MD

      You know, I don't know what you're really great-

    27. LH

      Kid in the back of the class who doesn't speak could be, like, the next best whatever.

    28. MD

      Yeah.

    29. LH

      You know?

    30. MD

      And I think that's the related part is, you know, encouragement is so important.

  13. 39:26 – 46:35

    Final Class Lesson, the Power of Stories, and Defining Greatness

    1. LH

      Let's, um, let's imagine that it's your, it's your final class you're ever gonna teach.

    2. MD

      [laughs]

    3. LH

      And the world is connected to your mic right now, and they're all gonna be in your classroom listening to you. They can all understand English. And you have your final lesson to share to the largest classroom, and you'd have 60 seconds to share-

    4. MD

      Oh, wow

    5. LH

      ... any lesson you want.

    6. MD

      Y- I thought you-

    7. LH

      Roughly 60 seconds

    8. MD

      ... if you're gonna ask questions like this, you should send them in advance, man.

    9. LH

      I should.

    10. MD

      [laughs] This is unfair.

    11. LH

      Yes.

    12. MD

      No, this is a great question.

    13. LH

      Yes.

    14. MD

      It's a spectacular question.

    15. LH

      If you had one lesson that you'd had to share to the world, and this was like, "All right, after this lesson, you don't get to hear any more from me. You don't get any more books from me. You don't get any more research. Here's my greatest thing I could teach."

    16. MD

      Oh, gosh. So-

    17. LH

      [laughs] No pressure

    18. MD

      I know, exactly. So I would say two things. Um, uh, and one is gonna sound very current, uh, but the other one is gonna be a little more transcendental. So I think the current thing I would say is we have got to figure out, uh, and I'm not, like, a big environmental guy-

    19. LH

      Mm-hmm

    20. MD

      ... but we gotta figure this out. And like, we're really in a very perilous situation, and you gotta take that seriously. I mean, this isn't even my area-

    21. LH

      Right

    22. MD

      ... but I've come to believe it, and I think we don't even understand, like, the existential risk that we're facing.

    23. LH

      Mm-hmm, mm-hmm.

    24. MD

      And then the second thing I would say is, you know, f- fundamentally, you know, kindness and generosity are massively underestimated. The power of those things, uh, is just incredible. I'm not saying I've lived up to that, by the way.

    25. LH

      Mm-hmm.

    26. MD

      Just to be clear, I don't think I have. Um, but you know, I've become convinced that that is the most kind of important... When I see this in my children or I see it in many people, I say, "That's the attribute we need more of."

    27. LH

      Mm-hmm.

    28. MD

      And everybody has this capacity for it, and yet on, we layer on top of it, you know, intellectual stuff and other stuff, but that core thing is the thing we all have to get back in touch with-

    29. LH

      Mm-hmm

    30. MD

      ... 'cause it's so important to the future.

Episode duration: 46:51

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