Deconstructing Success Down To The Psychological Level - Morgan Housel

1. 0:00 – 1:15

   What is Rational Optimism?

   1. CWChris Williamson0:00

      Who are the rational optimists?

   2. MHMorgan Housel0:02

      I c- I came up with the term "rational optimist." I don't know if I did, but I don't know if I came up with the theory, but my idea was, if you think the future is just gonna be great, that's not optimism. That's complacency. My- my definition of rational optimism was you- you think the future's gonna be better than it is today, but the path between now and then is gonna be a disaster. It's gonna be a constant field of landmines and setbacks and recessions and bear markets and pandemics and wars and terrorist attacks that you have to endure, financially, psychologically, career-wise, in order to get the reward of optimism on the other end. So it's like getting optimism and pessimism to co-exist. That, I think, is realistic optimism.

   3. CWChris Williamson0:41

      Yeah, it's like the looking at price goes from here to here, but it doesn't go like that. Price goes from here to here by going (imitates bouncy sounds) .

   4. MHMorgan Housel0:49

      Yeah, of course, you see it in the stock market, where, you know, over a 10 or 20-year period, you can make a crazy amount of money. But in any given month, in any given week, in any given year, sometimes even in any given decade, it's a disaster. And that's the price you have to pay in order to get thr- through returns over 10 or 20 years.

   5. CWChris Williamson1:05

      So we went through some of your book, Same as Ever, one of my favorite things. Everyone needs to go and buy it now. It's a super easy read, very, very enjoyable. Next lesson I want to go through is "when the

2. 1:15 – 11:04

   The Benefits of Stress for Innovation

   1. CWChris Williamson1:15

      magic happens." Stress focuses your attention in ways that good times can't.

   2. MHMorgan Housel1:20

      There's so many examples in history of the world going through a crazy tragedy, wars, pandemics, awful things happen, millions of people die. And then you look back 20 years later, and you realize that because of that incident, because of that war, because of that pandemic, there was this crazy amount of innovation and technology that took place because people were panicked, and the incentives to innovate were off the charts. And you look back, and you're like, "Look, as terrible as that was, we created, because of that, all these inventions that everyone benefits from today." The most technologically innovative period in, I would say, human history took place in the 1930s and the 1940s, the Great Depression and World War II. It started with the Great Depression, which was, in analytical terms, the most... Uh, like the- the amount of productivity that increased in the 1930s is more than any other decade that's taken place, because it was all by necessity. Every single business in America in the 1930s woke up, and they were like, "If we don't become more productive today, we're out of business tomorrow." So every business learned how to become more efficient, and what came from that was the supermarket, laundromat, all these new businesses that were just designed to become more efficient. The, um, the factory line really exploded during this period, what Henry Ford did with the factory line, uh, in the 1910s and 1920s. Every business took up in the 1930s out of necessity. World War II comes along, and the incentives that happened because of that were just completely off the charts. During good times, boom times, people's incentive to innovate is, "If I create a new product, I might become rich." That's your incentive, and that's a good incentive. You'll get people moving in that world. In the 1940s, it was, "If we don't innovate and figure out new technologies, Adolf Hitler is gonna control the entire planet." That was literally what was going on back then. So the scientific community, the government, businesses, overnight, they were like, "All hands on deck. We need to innovate like there's no tomorrow." And what came out of that, in a very short period of time, I mean, I've summed it up like this. World War II began in 1939 on horseback. It ended in 1945 with nuclear fission.

   3. CWChris Williamson3:35

      (laughs)

   4. MHMorgan Housel3:35

      And what took place in those six years, what'd we get out of it? Nuclear energy, jets, rockets, penicillin, like all of these things that benefit the world in massive ways today, and it specifically happened because people were panicked. You can also imagine a world, it's too early, in which 20 years from now, we look back at COVID and say, like, "Look, because of what happened in 2020, there was probably 30 years worth s- worth of vaccine mRNA research and understanding that got compressed into like six months." And you could imagine a world, it's so consistent with history, where we look back and we're like, "Look, COVID was terrible and shut the world down and millions of people died, but look what we got out of it because of this happened." You could even say something about work from home and like, just like, the change in culture that sped up during that period. So it's kinda this idea, it's too much to say a silver lining of World War II. You don't wanna go that far. It's a terrible thing. But it's this thing of like be careful what you wish for. Like society improves when the world is on fire, not when everyone's is happy and their bellies are full and everyone's gainfully employed.

   5. CWChris Williamson4:38

      Wh-

   6. MHMorgan Housel4:38

      That's when the magic happens.

   7. CWChris Williamson4:39

      What- what are the regular elements of when the magic happens? Is it, uh, being time-bound? Is it people just being panicked? Is there some sort of a threat? Like what- what are the, uh, motivators?

   8. MHMorgan Housel4:52

      I think it's the power of incentives, and mainly it's the downside incentives. When the economy is strong, you have positive incentives. If I innovate, I might get rich. If I don't innovate, I'll still probably be fine. When you have the Great Depression or a war, it's downside incentives. It's, "If we don't innovate, we're all gonna go out of business. We're all gonna die. We're all gonna be taken over." That downside incentives is what people, it gets people to be like, "Oh shit, we need to go now. This is not a nice-to-have. This is a survival. We need to go." And so, for example, in the 1940s, during World War II, the scientific community was like literally digging through file cabinets of like, "What are some, like, scientific papers?" Like, "What did we discover 30 years ago? What's this thing about splitting atoms? Like let's try to do this one right now." And they just went full bore. And you see what humans are capable of during a period like that. Now there's a limit to it. The- if you're- if you are too stressed, under too much pressure, it all breaks down. So not a lot of huge scientific innovations in the 1940s came out of Europe-

   9. CWChris Williamson5:49

      Mm-hmm.

   10. MHMorgan Housel5:50

       ... with some exceptions, but that was too much trauma, too much tragedy. The United States was like, we were panicked, but there was not physical destruction of our factories, so like we could keep it going.

   11. CWChris Williamson6:00

       What are the costs that people pay for this? Like w-There has to be a reason why we're not moving at that pace all the time, despite the fact that it seems to give great returns, so there has to be some sort of downside which is disincentivizing people from doing it when we're not facing a war or a pandemic or a great depression.

   12. MHMorgan Housel6:22

       I don't know if there is a financial cost that you could put to it, but I think it is that the opposite of stress-induced innovation is when the economy is really strong, like right now. And in relative terms, everyone becomes fat and happy, and they don't have the... they don't wake up every morning p- a little bit panicked. I mean, I think most people will see this in their individual lives, where during a recession, even if you have a job, you're like, "I, I... this is kinda hanging by a thread here. I, I gotta, I gotta really show up early, be the first one to the office, and work really hard," in a way that you don't tend to see that when everything is going well. So it's less about, like, what i-... I think the cost, uh, during good times is just, like, the cost of, of things going well, which is just, like, a lack of urgency to get moving. I mean, the, the extreme example of this would be the trust-funder, who has, like, no downside. If, if, if, if they, if they wake up and don't innovate, don't find a new job, they're fine. Nothing's, nothing bad is gonna happen to them. And you see this in, like, companies that are big and rich and successful. They kind of atrophy over time. And you compare that to the scrappy startup, it's night and day.

   13. CWChris Williamson7:25

       I had Macken Murphy, who's a behavioral ecologist, halfway between, uh, behavioral economics and evolutionary psychology, sat in that seat. He was telling me that as the economy gets worse, the average BMI of women in Playboy and Centerfold mags goes up, and as the economy gets better, the BMI goes down. So, there is a relationship between, uh, male preference for female body size and resource scarcity.

   14. MHMorgan Housel7:58

       Hmm.

   15. CWChris Williamson7:59

       If, during periods of highly scarce resources where the future is very uncertain, you see a woman that is able to hold on to her body fat, you think, "Wow," I mean, "What an amazing hunter-gatherer. She would be phenomenal to be with me."

   16. MHMorgan Housel8:14

       Yeah.

   17. CWChris Williamson8:14

       "This would be great." And they've done this, um... an, uh, phenomenal study in canteen halls of universities, and they would show guys images of women before they had dinner and then in different iterations after they had dinner, and when they were hungry, before they had dinner, they picked girls who were bigger.

   18. MHMorgan Housel8:36

       I mean, this has been well-known that, like, in, in way earlier times, hundreds of years ago, thousands of years ago, that women who were a little bit heavier were the more attractive ones. They were the healthier ones. There were the... (laughs) and the skinny people were the ones who were, like, maybe facing famine. And then, so it's, it's a pretty recent phenomenon of, like, a preference for thinner women over time. That's a new thing.

   19. CWChris Williamson8:55

       One of my favorite quotes from When the Magic Happens is, "The same people with the same intelligence have wildly different potential under different circumstances."

   20. MHMorgan Housel9:04

       Yes.

   21. CWChris Williamson9:04

       This ability to sort of unlock that that was already there-

   22. MHMorgan Housel9:09

       Yeah.

   23. CWChris Williamson9:09

       ... uh, because of the external pressure. We were talking last night about, um, uh, Goodhart's law, um, when a measure becomes an outcome, it ceases to be a good measure, but a similar one is Parkinson's law, right? Uh, work will expand to fill the time given for it.

   24. MHMorgan Housel9:26

       Yes.

   25. CWChris Williamson9:26

       And this is kind of, like, all of these things just coming down on top-

   26. MHMorgan Housel9:31

       Yeah.

   27. CWChris Williamson9:31

       ... at the same time.

   28. MHMorgan Housel9:31

       I mean, there's stories during World War II when FDR would be like, "We need to start producing 20,000 planes per year," I think was the number, and everyone in the room was like, "Mr. President, the absolute maximum we can produce is 5,000 per year." And he was like, "20,000 a year, go do it."

   29. CWChris Williamson9:47

       (laughs)

   30. MHMorgan Housel9:47

       And they figured out a way to do it. They figure... if they're, like... it's so cliché that if there's a will, there's a way, but you see what people are capable of during those periods. And again, I think that's, that's been true for my life, I'm sure it's true for your life. During different periods of things are going well, or, like, I got some big risks in my life right now, y- what you are ca- actually capable of doing, like, changes dramatically.
3. 11:04 – 14:51

   Good News Takes a Lot of Time

   1. CWChris Williamson11:04

      tragedies and long-term miracles. Good news comes from compounding, which always takes time, but bad news comes from a loss in confidence or a catastrophic error that can occur in the blink of an eye.

   2. MHMorgan Housel11:15

      So think about the really bad things that have happened in modern times. Pearl Harbor, September 11th, COVID. They, they literally happened in an instant, particularly Pearl Harbor and 9/11. It was like one hour everything was fine, and the next hour, the world had gone to hell. And there is no equivalent of that with good news. What is the good news equivalent of Pearl Harbor, in which at 9:00 AM everything's okay and 10:00 AM everything is amazing? There's no equivalent on the other end. Good news tends to take a lot of time. It tends to play out slowly over the decades. So one of the best pieces of news to happen in our, in our modern times is the massive decline in heart disease mortality. It's declined, like, more than 70% since the 1950s. It has saved millions of lives 'cause we're better at controlling blood pressure. Eh, back in the 1950s, if you had a heart attack, you're, you're dead. Whereas now, if, if you make it to the ER on time, there's a good chance you're gonna pull through. They're gonna get you out of it. Made massive strides.... but we tend to ignore that because what happened is over the last 70 or 80 years, heart disease mortality improved like 2% per year. And in any given year, you're never gonna hear about that. There's never gonna be breaking news on the New York Times like, "Heart disease mortality improves by 70 basis points." You'll never hear about that. But the bad news that happens quick, you can't look away from it. And so I think it leaves people more pessimistic than they should be, because they are constantly bombarded by the bad news that happen very quickly and you can't ignore, and the good news that is a slow compounding over 50 years, it's so easy to ignore, even if over time that good news is so much more powerful at, like, improving lives than the bad news that happens quickly.

   3. CWChris Williamson12:52

      Overnight tragedies and long-term miracles. Such a lovely, beautiful framing. Do you know the difference in climate-related deaths over the last 100 years? It's decreased f- by 50 times.

   4. MHMorgan Housel13:07

      'Cause so much of it used to be cool?

   5. CWChris Williamson13:08

      A 98% decline. Uh, no, this is through climate mastery. So this is, um, people that live in hot places being able to cool themselves down-

   6. MHMorgan Housel13:15

      Mm.

   7. CWChris Williamson13:15

      ... and people that live in cold places being able to warm themselves up.

   8. MHMorgan Housel13:17

      Mm.

   9. CWChris Williamson13:18

      98% reduction in the last century of people dying from climate, right?

   10. MHMorgan Housel13:24

       It makes perfect sense when you say it.

   11. CWChris Williamson13:25

       And, and yet here, look at all of the people that are dying from climate. Not to say that climate change isn't something that we need to address.

   12. MHMorgan Housel13:32

       Right.

   13. CWChris Williamson13:32

       But, uh, it's so... It's this overnight tragedies and long-term miracles-

   14. MHMorgan Housel13:37

       That's exactly it.

   15. CWChris Williamson13:38

       ... in a single incident that's occurring at the same time.

   16. MHMorgan Housel13:42

       Yeah.

   17. CWChris Williamson13:42

       And you're like, hang on a second, how can the climate related mastery reduction in deaths be 50 times better, like 98% reduction, but it's also the worst thing in the world and it's killing everybody in-

   18. MHMorgan Housel14:00

       Yeah.

   19. CWChris Williamson14:01

       ... in, in, in poor countries?

   20. MHMorgan Housel14:02

       'Cause it happens so slowly, you don't hear about it. Now there is some bad news that plays out slowly over time.

   21. CWChris Williamson14:06

       What like?

   22. MHMorgan Housel14:06

       If you smoke cigarettes, that's, that's like a slow compounding, and eventually the bad news might hit you in a jerk when you die of lung cancer after 30 years.

   23. CWChris Williamson14:13

       To be honest-

   24. MHMorgan Housel14:14

       But you're doing damage at a slow rate.

   25. CWChris Williamson14:15

       Maybe so would, um, climate change moving forward as externalities. That might be an interesting one.

   26. MHMorgan Housel14:21

       Yeah.

   27. CWChris Williamson14:21

       Look at all of this energy we've got. Look at how we've fixed it. And it's like, ah, yeah, but there's this, like, weird just number that keeps ticking up, the fucking CO2 PPI.

   28. MHMorgan Housel14:30

       Yeah.

   29. CWChris Williamson14:30

       Uh, uh, and the, uh, uh w- sea level and a couple... And it's like, ah, ah, it's, uh, well, you know, it's whatever. But that's the sort of thing that given enough time would be a, a long term tragedy.

   30. MHMorgan Housel14:42

       Yeah, so there are a lot of those things where by the time you do notice it, you're like, "Oh, okay. That, that, that is a big deal. Now, now I can see it. I get it now."
4. 14:51 – 21:25

   Why Is Bad News More Memorable?

   1. CWChris Williamson14:51

      bad news stick out so much? Is it just because it's more salient to us?

   2. MHMorgan Housel14:54

      I think it, I mean, it's always true from an evolutionary perspective that bad news is gonna cap- capture your attention. Threats are gonna capture your attention more than opportunities, 'cause in, in order to get the opportunity, you have to first s- survive the threat. So that's, it's always been like that. But I think the biggest reason it occurs is, just like we said, like the bad news is happening so fast, you can't look away from it. It's true in the stock market as well. There are historically, over time, there have been days, months, weeks where the stock market falls 10%, 20%. During COVID, the market fell 40% in four weeks, something like that. Very rarely, if ever, will that occur on the way up. Almost no examples of the stock market rising 40% in one month. Will never happen. So, like, the ability to go down very quickly, I mean, it's the classic cliche. I think it's, um, escalator up, elevator down kind of thing is usually how it works. But I think that's a good analogy for how a lot of things work in life too. It's just, like, the speed at which they occur gets your attention much, much more.

   3. CWChris Williamson15:51

      Tiny and magnificent when little things compound into extraordinary things.

   4. MHMorgan Housel15:55

      I think it's, it's pretty common to think that a big event in the world has to be caused by a big action, that if you're gonna have a major war, a major recession, it has to be caused by something enormous that is causing that thing to happen. And it's usually not the case. It's usually a bunch of really small things that interact in the right order that create this massive event. I mean, this was definitely true during the Great Depression, like the biggest economic calamity in the history of this country. And what was it caused by? You had a stock market crash. Well, those happen all the time. You had a bank run. Those happen all the time. You had a dust bowl. That was, like, kinda unique.

   5. CWChris Williamson16:31

      What's a dust, what's a dust bowl?

   6. MHMorgan Housel16:31

      The Dust Bowl was a period just around here in the middle of the country where... I mean, the backstory is, uh, after World War I, or during World War I, farmers in United States were heavily incentived, incentivized to plant crops because we were trying to feed the starving Russians during this period. So the US government came in and said, "As much corn as you can grow, we'll buy it from you." I think it was $2 per bushel at the time, something like that. So tons of farms.

   7. CWChris Williamson16:56

      That's a premium, presumably.

   8. MHMorgan Housel16:57

      Huge, it was huge premium. Tons of farmers from all over the country came to Kansas and Oklahoma and just planted, planted, planted, way too much corn. And they were terrible farmers, they were just, like, plowing up land in the most, like, voracious way that they could. And then it all kind of stopped and they all bailed and left these fallow fields to just sit there and kind of, uh, dry up. So they got dusty, and then you had these massive dust storms that would, that pretty much wiped out a region. These dust storms that were just, like, as apocalyptic as you could imagine coming-

   9. CWChris Williamson17:26

      But how did that impact the economy?

   10. MHMorgan Housel17:28

       The entire farming region in the bread basket of the United States that was producing all this grain was just wiped out. I mean, literally just covered in dust, uh, and wiped out, I mean, a huge portion of the people, and so many of those people ended up just, uh, just abandoning it. There was no way you could make a living here anymore. So that happened at the same time that you had a stock market crash and a, and a banking run. All three of those things individually would've been bad, but them happening at the same time, you get the Great Depression. And I think there's a lot of incidences like that over time. One of the most interesting ones was during the 1950s when we were experimenting with nuclear weapons, and this was the nuclear age of war.We started to build really small nuclear bombs. The idea was le- yes, we can have a nuclear bomb that one bomb can wipe out a city, but we also wanna use this technology for more, like, tactical warfare. And they came up with really small bombs, one of which you could literally launch off of a shoulder fire, like bazooka. And it would, it was a nuclear bomb, but it was like a very low yield. So it would, it would do a lot of damage, but this was not like, like thermonuclear weapons. And the idea was, like, "Oh, great. Like, we can use these tactically." There was a joke that they even came up with a nuclear hand grenade, but they couldn't find anyone dumb enough to throw it, which was the joke at the time. But the idea was that small nuclear weapons would be safe to use. But the actually, they were actually the riskiest thing in the world, because mutually assured destruction was, was a- a- a- a real thing, and it made it so that the Soviets and the United States were not gonna launch a thermonuclear missile t- and wipe out a city, 'cause the other would just retaliate and the world gets wiped out. But if you had a small nuclear weapon that you were gonna use, would you use that? Like, the barrier to using that was much lower. But then if the Soviets used a small nuclear weapon on us, would that justify us to use a bigger one?

   11. CWChris Williamson19:13

       Yeah.

   12. MHMorgan Housel19:14

       Absolutely. The Cuban Missile Crisis in the 1960s, the missiles that Russia had, uh, you know, lined up to the United States, pointed at the United States, were in order of magnitude lower yield than what we, we used in Japan during World War II. Way smaller, the bombs that they had. But if they launched one of those, we would've retaliated with the full force, the biggest bombs that we had. So these, like, what created the biggest risk in nuclear war were not the big bombs. It was the small bombs that we were actually more likely to use.

   13. CWChris Williamson19:43

       Mm.

   14. MHMorgan Housel19:43

       And so you have this tiny thing that we're like, "Oh, it's a, it's a nothing, it's a nothing burger." But that was gonna be the trigger to actual nuclear warfare. I just read this recently, this is not in the book. The guy who invented the machine gun, his last name was Gatling, the Gatling gun, uh, he actually invented it with the idea that the machine gun would end all wars, because it was so destructive and has, it was such a killing machine that every country would look at it and be like, "We can't go to war. We're just all gonna get wiped out. It's too deadly now." And so you have all these things that are, like, well-meaning- (laughs)

   15. CWChris Williamson20:13

       Little do you know, Mr. Gatling-

   16. MHMorgan Housel20:15

       (laughs)

   17. CWChris Williamson20:15

       ... the beginning of a-

   18. MHMorgan Housel20:16

       You won't believe what happened next.

   19. CWChris Williamson20:18

       Yeah, yeah, yeah.

   20. MHMorgan Housel20:18

       And so you have all these things where someone creates something that they either think is small or they're like, "Oh, it's not that big of a deal to use it," but it just, like, compounds into a much bigger thing.

   21. CWChris Williamson20:27

       So fascinating.

   22. MHMorgan Housel20:28

       So the takeaway from all that to me is, like, people underestimate the odds of big events, because you think a massive recession needs to be caused by, like, an economic meteor, and it doesn't. It can be, like, five small events compounding at the same time in just the right order that set offs a chain reaction.

   23. CWChris Williamson20:44

       But this is evolution as well, right? This is how you go from single cell eukaryotic to prokaryotic, or the other way around, uh, bacteria and events somewhere, to me and you sat in front of microphones having a chat.

   24. MHMorgan Housel21:00

       Yeah, yeah. It's never... Yeah. And, like, I- I think if you are a skeptic of evolution, it's because you think, you make the jump of, like, how do we go from a frog into a human? That makes no sense. But you're like, well, if you have .0000 infinite change in every generation, and you compound that for a billion years, then you get something great.

   25. CWChris Williamson21:19

       Lots of things can happen.

   26. MHMorgan Housel21:19

       It's like the tiniest little thing for a massive amount of time, you get something amazing.

   27. CWChris Williamson21:24

       Elation and

5. 21:25 – 28:55

   Progress Requires Pessimism & Optimism

   1. CWChris Williamson21:25

      despair. Progress requires an optimism and pessimism to co-exist.

   2. MHMorgan Housel21:30

      I remember hearing this story from Admiral Stockdale, who was, um, the highest ranking, uh, POW in Vietnam. And he was talking, after he was released, he was talking about how some of the POWs behaved when they were in prison. And he said, "Do you know who did the worst as a POW? It was the optimists. 'Cause the optimists would say, 'We're gonna be home by Christmas.' And then Christmas would come and go, and they were just crushed. They were just destroyed." And he said, "The people who did the best were, like, the rational optimists." A- a- as I would define it, it'd be people who would say, "We're gonna go home by Chris-" No, no, I'm sorry. They would say, "We're gonna go home eventually. This war is gonna end, and we're, you're gonna see your wife again, but we're not going home by Christmas. No, no one's going home by Christ- this is gonna be a long war." That's who actually did the best. Like, they could take optimism and pessimism at the same time and put them together and be a rational optimist. Another great example of this in business is Bill Gates, who, in the 1970s when he started Microsoft, took the biggest optimistic swing any entrepreneur's ever taken in, by saying like, "There's gonna be a computer on every desk in the world." Like, the craziest bold vision anyone's ever taken. At the same time, he managed Microsoft as conservatively as you possibly could, in terms of, like, tons of cash on the balance sheet, no debt. He always said that he wanted enough cash in the bank so that Microsoft could make payroll for one year with no revenue. The most conservative way you can run a business. At the same time, he's taking this ridiculous swing for the fences. And I think there are so many other businesses that are just as good, if not better, at creating products than Microsoft might be. But they were managing the business with an equal level of optimism-

   3. CWChris Williamson23:10

      Mm.

   4. MHMorgan Housel23:10

      ... of, like, leverage and debt, and they eventually just get wiped out. They run themselves over a cliff. So Gates could take massive optimism and crazy pessimism and be like, "These things are gonna co-exist at the same time." And that's an analogy for how a lot of people do well over time. Like, the person, like, the pure optimist runs over a cliff. The pure pessimist never gets out of bed. The person who knows when each needs to come into play is who actually does well over time.

   5. CWChris Williamson23:34

      What's that Taleb thing about, uh, like, "I'm an authoritarian with my family-"

   6. MHMorgan Housel23:39

      Oh, yeah.

   7. CWChris Williamson23:39

      ... "I'm a socialist, uh, with my community. I'm a communist with my-"

   8. MHMorgan Housel23:43

      He says-

   9. CWChris Williamson23:43

      ... "village."

   10. MHMorgan Housel23:44

       He says, "At the federal level, I'm a libertarian. At the state level, I'm a Republican. At the local level, I'm a Democrat. And at the family level, I'm a socialist."

   11. CWChris Williamson23:52

       (laughs)

   12. MHMorgan Housel23:52

       It's such a brilliant... I think it's a great thing to say, like, as the size of something changes, what you expect out of it and your relationship with it also changes.

   13. CWChris Williamson24:03

       I mean, it's also your nature must be able to adapt to the demands of the situation that you're in and the vertical that you're in. Okay, so-A business is not just a thing, this amorphous thing. It's not just... Tesla doesn't just make cars and invent shit, it also has to make money and, like, pay payroll and, and, uh-

   14. MHMorgan Housel24:21

       Yeah.

   15. CWChris Williamson24:21

       ... be in compliance, and it deals with lawsuits, and it does all of these other things. It's like, do you really want Elon steaming into the lawsuit department-

   16. MHMorgan Housel24:30

       Right.

   17. CWChris Williamson24:30

       ... for the person that's just been run over by an autonomous car? Probably not. That's where you have different horses for different courses.

   18. MHMorgan Housel24:37

       Yes.

   19. CWChris Williamson24:37

       Right? And this is, I suppose, the difficulty comes when you as an individual agent try to amalgamate all of this into one brain. You know, in an organization, you can specialize, you can chunk things down. You find the person that has the nature that you want. "We want to be conservative in the accounting department. We want to be creative in the advertising department."

   20. MHMorgan Housel24:58

       Yes, totally.

   21. CWChris Williamson24:58

       Fantastic. Like, don't get those the other way around, or else you end up with boring ads and insane accounts.

   22. MHMorgan Housel25:03

       You're in, you're in, you're in big trouble. And a huge problem with entrepreneurship is the assumption that because you can understand a technical product, that you know how to run the business of a technical product. It's pretty rare. So someone like Mark Zuckerberg is very rare. He had the technical chops to build Facebook, build it himself-

   23. CWChris Williamson25:19

       And operate it.

   24. MHMorgan Housel25:19

       ... and to run it today as a trillion dollar company. That's very rare. It's way more common for you... to be an entrepreneur who knows how to build a product, and then as soon as it scales, you're like, "Ah, I don't know what I'm doing here. I need to call in the big boys who know what they're doing." I mean, a good example of that was Uber, where Travis... Like, no one could have built Uber other than Travis Kalanick. His ability to take a risk, his willingness to just give the middle finger to the regulators, was like, no one else was willing to do that. And once Uber became a big company, probably nobody was worse at running a, a company than Travis Kalanick.

   25. CWChris Williamson25:50

       (laughs)

   26. MHMorgan Housel25:50

       Because that same attitude of like, "Fuck the regulators, we're just gonna do our thing," once Uber was $100 billion company, that's not the guy you want running the place.

   27. CWChris Williamson25:58

       Can't play that game anymore.

   28. MHMorgan Housel25:58

       You can't play that game. So it's... So, but that's more common to have, like, a different... Like, the person who is right to run it at this size is not the person who's right to run it at this size.

   29. CWChris Williamson26:07

       I told you the story of Ben Francis last night, and I mentioned that Ben was founder, founder CEO, stepped back as CEO, a guy that used to run Puma or Reebok came in. Then Ben came in as, like, CBO or something, like something to do with brand or, like, some sort of consultant, stepped back, then came back in as CEO. And he said this thing on the podcast that really stuck with me, and he said, "When your ambitions for the brand are bigger than your ambitions for yourself, that's when you'll become successful."

   30. MHMorgan Housel26:35

       I like that.
6. 28:55 – 35:30

   Hiring the Greatest Leaders

   1. CWChris Williamson28:55

      one of my friends that lives here in Austin was working for a company that recruited the highest level C-suite executives. So they didn't place Susanna Wasjicki, uh, or Tim Cook, but they, uh, went through the process with both of them. And what he was able to do, he had access to their internal company intranet and every archive, and he was able to go in and see the biggest executives in the world and see what their recruiters were saying after they'd had their sit down.

   2. MHMorgan Housel29:26

      Mm.

   3. CWChris Williamson29:26

      And I was like, "This is fucking fascinating."

   4. MHMorgan Housel29:28

      Yeah.

   5. CWChris Williamson29:28

      "Tell me, what did you read?" And he said, "Well, there's a difference between the A players and the triple A players." So the A players are in there and there's, you know, the usual stuff, and there's often something that pops up that's maybe a little bit of a concern, but they're, they're good, they're well-rounded." And he said, "But the triple A players are 10 times better, and they stand out as that as well." I think in, um, Tim Cook's, the first two words were "absolute stud"-

   6. MHMorgan Housel29:58

      Mm.

   7. CWChris Williamson29:58

      ... were the first two words of Tim Cook. Uh, uh, "Susanna was a rockstar" was, like, one of the first few sentences. And you think... It's very interesting, like, these people, they're more than just, like-Again, I don't know much about either of the guys, but from the conversation I had, it... They're more than just business people.

   8. MHMorgan Housel30:18

      Yeah.

   9. CWChris Williamson30:18

      There's something, like, ineffable in them where people who are exposed to the best talent, the best paid, most highly placed talent on the planet for the biggest companies in the world look at them and go, "Stud."

   10. MHMorgan Housel30:32

       Yes.

   11. CWChris Williamson30:32

       "Rockstar."

   12. MHMorgan Housel30:33

       Yeah. And I think, like, back to Apple, like, once Steve Jobs invented the amazing products, n- the next step is, "Okay, can we literally make a billion iPhones and keep the quality as high as they need to be?" And that's what you needed a Tim Cook for. And I don't know if Steve Jobs would've had that skill to keep that going. But you could also imagine a world in which he doesn't die, and as everyone knows, the last 10 iterations of iPhones have been exactly the same, and that would not have been the case under Steve Jobs. They would've, uh, would've kept innovating and created new things.

   13. CWChris Williamson31:01

       Casualties of perfection. There is a huge advantage to being a little imperfect.

   14. MHMorgan Housel31:08

       It's... I think it's always the case that people wanna squeeze as much opportunity as they can out of everything in life. Uh, whether it's your career, whatever it might be. And that invariably, well, is gonna eventually catch up to you. Like, room for error in what you're doing is a massively important thing to have. You saw this in 2021, where in manufacturing all over the world, the biggest trend over the last 20 years was efficient, efficient, efficient, just-in-time manufacturing. And then 2021 rolls around, and there's a little bit of, like, what is, was honestly like a hiccup in the global-

   15. CWChris Williamson31:38

       Mm-hmm-

   16. MHMorgan Housel31:38

       ... uh, i- in global supply chains.

   17. CWChris Williamson31:40

       Big tanker gets stuck in the fucking thingy canal-

   18. MHMorgan Housel31:43

       Everything collapsed.

   19. CWChris Williamson31:44

       ... and everything's- Yeah.

   20. MHMorgan Housel31:45

       E- E- Everything breaks. There was no leeway whatsoever for anything to go wrong in the system. And you can imagine a world in which those companies that were doing just-in-time manufacturing and then, like, collapsed in 2021, if they had actually held a little bit more inventory in their warehouses, their ROI would've been a little bit lower in 2019, but they would've actually been able to supply products in 2021. And so it's always a case that, like, having a little bit of room for error, having a little bit of leeway is great. And it's true in your personal life too. Most people these days have what I call thought jobs. Their job is to work with their head. It's not to dig a ditch or, like, pull a lever. Their job is to make a decision with something. And in that world, what you really need more than anything else is time to think, time to ponder, time to, like, figure out a problem in your head. And what does that look like? It looks like sitting on the couch. It looks like going for a walk. It doesn't look like work. But most bosses will not allow that. Most bosses, even if you have a thought job, is like, "I need you at your desk moving your fingers on the keyboard eight hours a day." And so they don't have any time in their day for something that looks inefficient but is actually gonna be, like, the thing that's actually critical to their job.

   21. CWChris Williamson32:53

       Yeah. Rory Sutherland has this idea about no one gets fired for hiring KPMG-

   22. MHMorgan Housel32:58

       Yeah.

   23. CWChris Williamson32:58

       ... which is the safe bet, following the blueprint, doing the thing that signals busyness to a lot of people. "Look at my average response time on Slack, that's really good." And it's like, "Yeah, but did we hire you as a Slack replier?"

   24. MHMorgan Housel33:11

       Yeah.

   25. CWChris Williamson33:11

       Is that your job?

   26. MHMorgan Housel33:12

       Right.

   27. CWChris Williamson33:12

       To be the Slack response guy? Or is your job to be... So George, one of my good friends, his first job, uh, at Social Chain, they literally created a role for him. They called him innovation lead. I was like, "That's, like, vague."

   28. MHMorgan Housel33:30

       Yeah.

   29. CWChris Williamson33:30

       "What's that mean? Dunno. Not sure what..." They just make a, make a role for him, put him in there, he'll do something cool.

   30. MHMorgan Housel33:35

       Yeah.
7. 35:30 – 41:58

   What Do You Think is Productive But Isn’t?

   1. CWChris Williamson35:30

      I release each year the same annual template that I've done to do my end-of-year review, and, uh, I have to admit that this year, even though I sent out the one that I've done for five years, I actually changed it. So I did a completely different process, and I love the new one that I did.

   2. MHMorgan Housel35:44

      Yeah.

   3. CWChris Williamson35:44

      So that'll be available next year for the people that are listening. And I asked myself a really interesting question, I thought it was fucking interesting, which was, uh, what do I think is productive but isn't?

   4. MHMorgan Housel35:55

      Mm.

   5. CWChris Williamson35:55

      What do I do that I think is productive but isn't? Uh, other stuff like, what would I do if I wanted to make 85-year-old me miserable? What are the things I would continue doing? What would I do if I wanted to make 85-year-old me... uh, what would 85-year-old me wish that I did more of? What do I think is productive that isn't? Calls.... Slack and WhatsApp.

   6. MHMorgan Housel36:14

      Yeah.

   7. CWChris Williamson36:14

      Staying in on weekends. Sitting at my desk when I'm not working. What is productive that I don't realize, dinners with new people, attending events, travel, reading.

   8. MHMorgan Housel36:26

      That's so good. Like, what you think is productive but isn't is, like, things that look like work. And what is productive are things that don't look like work. Like, most people would be like, "Oh, going out for dinner? That's just pleasure." That's just like, no.

   9. CWChris Williamson36:38

      L- last night, last night, two chapters probably from you for my new book and a couple of quotes from me for yours.

   10. MHMorgan Housel36:42

       That, that ... Uh, so Chris, y- you and I had dinner last night for two or three hours, and I think both of us got tons of idea for content.

   11. CWChris Williamson36:48

       Way more than I've done by sitting down at my desk-

   12. MHMorgan Housel36:50

       Yes.

   13. CWChris Williamson36:50

       ... trying to write something.

   14. MHMorgan Housel36:50

       If I had ... And if I had skipped dinner and just sat in my hotel trying to work, I would have come up with absolutely nothing.

   15. CWChris Williamson36:55

       Yeah.

   16. MHMorgan Housel36:56

       But it's so hard for people, particularly if they are employed by a company, to do that. 'Cause if you tell your boss, "Hey, I need a budget to go out with ... to go out to dinner with my smart friends three times a week, and I need to expense that, and that, and that's gonna pay off." Go fuck yourself. "Go fuck yourself. You need to sit at your desk and type."

   17. CWChris Williamson37:11

       (laughs)

   18. MHMorgan Housel37:11

       And every boss thinks that. That's what's so hard.

   19. CWChris Williamson37:13

       Yeah.

   20. MHMorgan Housel37:13

       And I think that's also why it's very difficult to innovate within a company. Like, what looks like productive work, uh, is not what's actua- what's actually productive work.

   21. CWChris Williamson37:22

       I wonder whether this is Goodhart's law again, uh, when a measure becomes an outcome, it ceases to be a good measure. If an organization that gets to a particular size starts to be broken down, anything that can ever be seen on a dashboard is dangerous, because it removes all of the things that can't be seen on a dashboard, which for the most part are the things that are the highest outliers in terms of your return, in any case.

   22. MHMorgan Housel37:42

       Yeah.

   23. CWChris Williamson37:43

       Now, we ... I was telling you this idea of hidden observable metrics last night, and a lot of the creativity and the biggest outlier, um, returns that you're going to get are going to come from hidden metrics. They're going to be driven by hidden metrics, not observable metrics. Like, yeah, sure, your, um, editor for your book probably needs to be observable metrics guy. Like, how many hours-

   24. MHMorgan Housel38:06

       How many changes did you make?

   25. CWChris Williamson38:07

       Yes, how many times did you look at this one sentence?

   26. MHMorgan Housel38:09

       How much red ink did you use on this manuscript?

   27. CWChris Williamson38:11

       Precisely. Yeah, yeah, yeah, yeah.

   28. MHMorgan Housel38:12

       Yeah.

   29. CWChris Williamson38:12

       Yeah, yeah.

   30. MHMorgan Housel38:12

       Jeff Bezos talked about this recently on, on, on a podcast, where he's like, a lot of metrics within businesses, maybe they made sense at one point, but then people just keep using them. And you're using the same metric and people don't ask, like, "Does this metric actually lead to success or is this just what we're been trained, what we've been told to do?" And that's, that's a lot of it, too. So, like, there might be some point in your career in which calls were productive. There might be, like very early in your career, like, your job is to cold call, like, the number of calls you did. But if you keep that for the rest of your career-
8. 41:58 – 51:56

   Good Things Are Supposed to Be Hard

   1. CWChris Williamson41:58

      "It's supposed to be hard. Everything worth pursuing comes with a little pain. The trick is not minding that it hurts."

   2. MHMorgan Housel42:05

      There's this great-... scene in Lawrence of Arabia, where a guy, uh, pulls out a- a- a match, lights it up, and puts it out with his fingers, doesn't even wince. This other guy watching him is like, "Oh, let me try that," pulls out the match, lights it up, puts his fingers on, he goes, "Ah, it hurts. What's the trick?" And Lawrence goes, "The trick is not minding that it hurts." And it's like, that is such- such a brilliant scene, and that applies to almost everything. Like, there is a cost to pay for almost anything, and a trick in almost any endeavor in life is figuring out what the cost is and just being willing to pay it. It's true in investing, of putting up with volatility. It's true in your career, where there's a Jeff Bezos quote where he says, like, "Look, if you can get to the point in your career where you enjoy half of it, where half of it is fun, that's, like, as good as it gets." Like, there's things in any job that just suck. It's like dumb, boring admin work, and if you can get to where half of it is fun, that's great. You and I were talking about this last night. In both of our careers, a lot of it is fun and very fulfilling. A lot of it is kind of just menial, just work. Uh, it's just capital W work. So I think in almost anything, like, figuring out the cost of it is- is the most vital part of- of being successful over time. And you see this a lot in people's careers. You and I were talking about this last night. Take someone who is uber successful, uh, Musk, Gates, Zuckerberg, those kind of people. If you actually drill into what it took for them to achieve that success, Michael Jordan, Kobe, LeBron, all those kind of people, the cost that they paid to get that success in their personal life-

   3. CWChris Williamson43:34

      Yeah.

   4. MHMorgan Housel43:34

      ... often for their health, for their mental well-being, is off the charts. But it's so common for us to look at them and be like, "I want that life. I could ha- That looks like an amazing life." But when you actually factor in the cost of what it took, you're like, "I don't know. I- I don't know."

   5. CWChris Williamson43:49

      It's- It's the thing that I've been the most obsessed by, I would say, from a- a other people psychology perspective over the last two years. Uh, Tiger Woods, perfect example of this. Uh, I had an entire bit in my live show about this. James Joyce, you know, masterful author, but posthumously, a long series of fart fetish love letters that he wro- wrote to his wife-

   6. MHMorgan Housel44:11

      Yeah.

   7. CWChris Williamson44:11

      ... were released on the internet. Like, uh, Salvador Dali, you know much about Dali?

   8. MHMorgan Housel44:15

      Complete maniac.

   9. CWChris Williamson44:17

      His parents gave birth to a child 10 months before him that they called Salvador, and then almost immediately got pregnant again. That one died. They were adamant that Dali was the reincarnation of his dead older brother. That's how you entered the world. Uh, when he was a child, Dali would-

   10. MHMorgan Housel44:33

       No pressure.

   11. CWChris Williamson44:34

       ... throw himself down the stairs. He found out that he was a masochist very early in life. He would throw himself down the stairs for fun. When he was giving a lecture, he was suffocating inside of a deep sea diving suit that he had to be wrenched out of mid-talk while he was giving a- a lecture. He married a woman who was married at the time, they were both married, they both separated from their current partners, got together, and then Dali immediately started to treat her as halfway between a god and royalty. So, he bought her a castle and then would send formal letters of request asking to visit her in the castle that he bought her, uh, and he would refer to her as his muse and all the rest of it. But all of those things contributed to-

   12. MHMorgan Housel45:18

       That's how you end up painting, like, melting clocks and- and stuff like that, yeah.

   13. CWChris Williamson45:21

       As brilliant as he was, da Vinci didn't do Dali and Michelangelo didn't do Dali.

   14. MHMorgan Housel45:25

       Yeah.

   15. CWChris Williamson45:26

       The only way we get Dali is by Dali being the, "Throw myself down the stairs-"

   16. MHMorgan Housel45:30

       Paying that price.

   17. CWChris Williamson45:30

       "... lock myself inside of the deep sea diving suit, buying my future wife a castle" person. That's the only way. There's a- a quote from Alex that I spoke to him about the start of last year, it's one of my favorite ones. "Whenever I get to a low point where I think, 'Why do I even bother?' I just try to remind myself, 'This is where most people stop, and this is why they don't win.' A reminder for the gladiators in the arena who feel beat up and scarred with no hope in sight. Building a business is hard. Hard feels shitty. This is what hard feels like, and this is why most people can't do it, but you can." "This is what hard feels like," was in my memo that I sent to the team this year. It's something... He told me this great story about when, uh, pledges, he was, uh, in a fraternity at- at college and he was, like, high up or whatever. Uh, the pledges were whining about what they were being made to do, and he said, "Right, uh, I know everyone's having a pity party here," so he calls them around and he says, "Look, who here thought that this was going to be easy?" No one puts their hands up. He's like, "Who here thought that this was going to be hard?" Like, everyone puts their hands up and he goes, "This is what hard feels like."

   18. MHMorgan Housel46:34

       Yeah. I think in most endeavors in life, people perfectly understand the relationship between price and quality. You want a nicer car? It costs more. A bigger house? It costs more. But that, like, understanding goes out the window when you're talking about career success, or career fulfillment, or personal health, things like that. Like, that- the- the relationship just kind of breaks down in their own mind. But it- it doesn't go away. Like, the higher s- the success, the higher the cost. I love reading biographies of entrepreneurs, of generals, whoever it might be. With very few exceptions do I finish the biography and think to myself, "I want that person's life." What I think is, "I'm glad they existed. I'm so glad the world had that person that we can all benefit from." But though- the crazy success comes with a cost that very few people, including most of the time myself, are not willing to pay.

   19. CWChris Williamson47:21

       How can people not mind that it hurts more?

   20. MHMorgan Housel47:25

       I think when you talk about someone like Dali, it's like, it's ingrai- it's ingrained in them. I think some- I think whenever you have somebody like Musk, Zuckerberg, Jordan, Tiger Woods, that was not a decision that they made. They had to- they had to pursue.

   21. CWChris Williamson47:40

       It's a compulsion.

   22. MHMorgan Housel47:40

       It's a compulsion. Um, several years ago, I heard Patrick O'Shaughnessy say that the single word that he would describe from most successful people was not driven, it's not motivated, it's tortured. That they wake up every morning just like, "I- I am tortured at the success that I have not achieved yet, and I have to d- I have to go do this. I have to go work 24 hours." So some people, I think, are born with it, and some people are not, which is why, like, the success is so stratified. Um, once in a while, I think you have someone who is, like...... a middling success and became a founder at age 50 and knocked it out of the park. But that's extremely rare. I think it's usually people who, for whom this is just in their blood. They have to do it.

   23. CWChris Williamson48:19

       Yeah. Yeah, again, from Alex last year he said, uh, "Champions are broken. People look at champions and try to find something that they have that everyone else doesn't have, but it's the wrong way around. Champions don't have something that everybody else does have, which is an ƒ1."

   24. MHMorgan Housel48:32

       Which is, like, a sense of, a sense of, uh, being fulfilled-

   25. CWChris Williamson48:34

       Correct.

   26. MHMorgan Housel48:35

       ... and saying, like-

   27. CWChris Williamson48:35

       It's an ƒ1.

   28. MHMorgan Housel48:35

       ... "That's enough."

   29. CWChris Williamson48:36

       What was the Donner Party?

   30. MHMorgan Housel48:39

       The Donner Party was just amazing. Now see, for you, you as, you as, as a Brit probably never heard of the Donner Party. Is that right?
9. 51:56 – 59:21

   Most Competitive Advantages Die Out

   1. MHMorgan Housel51:56

   2. CWChris Williamson51:56

      "Keep running. Most competitive advantages eventually die."

   3. MHMorgan Housel52:01

      I think the, I mean, there are so many examples of this. One of the most interesting is Sears, uh, which if you go back to the '70s and '80s no other company in America had the moat that Sears did. It was completely unstoppable.

   4. CWChris Williamson52:13

      What's Sears for the Brits listening?

   5. MHMorgan Housel52:14

      Oh, are you kidding me? Come on. Sears was kinda the, uh, it was, it was the most successful retailer. Mostly clothes and s- and things like that.

   6. CWChris Williamson52:22

      Department store type thing?

   7. MHMorgan Housel52:22

      Department store, but they also sold, um, you know, washing machines, that kinda thing.

   8. CWChris Williamson52:25

      Okay.

   9. MHMorgan Housel52:25

      They're actually still around kind of.

   10. CWChris Williamson52:26

       It's like the Walmart type thing.

   11. MHMorgan Housel52:27

       Yes, but less big than, uh, you know, less, uh, less all-encompassing than Walmart. But they were everywhere. They were so dominant back in the day. Nobody could touch them. And they got so big that they started bu- they bought Discover Card and, like, Dean Witter Stock. As th- they started, like, moving into all these other areas. No oth- it was truly the Walmart of its day, or even, like, the Apple of its day. It was just like nobody could compete with this. And then they lost everything and went bankrupt and then lost it. And if you dig back into what happened of, like, they became successful because they were so scrappy and so terrified of, of competitors. That's why they became successful. As soon as they got big it all went to their head and they were like, "We're Sears. Nobody can compete with us." They stopped innovating. They ignored this upcomer that was chasing them called Walmart, completely ignored it. And by the time that they realized what had happened, it was way too late. They were gone. And I think that's actually a very common story. That... It happens in individuals' lives as well, where the reason that you are working so hard is so that eventually one day you will achieve a level of success in which you don't have to work so hard anymore.

   12. CWChris Williamson53:28

       Mm.

   13. MHMorgan Housel53:29

       That's what's motivating you-

   14. CWChris Williamson53:30

       Mm.

   15. MHMorgan Housel53:30

       ... is the dream that you can one day relax. So when you become successful you justifiably think, "I can stop working so hard. I don't need to grind as hard anymore." And then the moment you think that, and it's justified, you think it's justified, you, you lose what actually made you successful t- to begin with. And then it's, that's the downfall. And you see, like, there was this amazing interview many years ago with Mike Moritz who is the head of, of Sequoia, the most successful venture capital firm that's ever s- existed. And Charlie Rose asked him, he said, "Why has Sequoia been so successful for 40 years? Not over one market cycle. You've dominated for 40 years." And Mike Moritz said, "We've always been scared of going out of business."And like, look, if there's anyone in Silicon Valley who has the right to say, "It's because we're smart. It's because we're so good at what we do," he has a right to say that, but he didn't say that. He said, "We're terrified of going out of business."

   16. CWChris Williamson54:24

       Isn't there a bus-

   17. MHMorgan Housel54:24

       And that's like the, like, like, you never let your guard down. What made you successful, you never let go of that.

   18. CWChris Williamson54:30

       Isn't there a business book, Only the Paranoid Survive?

   19. MHMorgan Housel54:31

       That's it. Exactly. And, uh, you know, there's, I think there's lots of different versions of this. I read recently that the unofficial motto of NVIDIA, their unofficial corporate motto is, "We are always 30 days from going out of business." That's what they tell themselves in their meetings, "We're always 30 days from going out of business."

   20. CWChris Williamson54:48

       The Sword of Damocles hand- hanging over their head.

   21. MHMorgan Housel54:50

       Yes. But I think that's why they're, that's at least one of the reasons why they're so successful.

   22. CWChris Williamson54:53

       Uh, well, me and you were talking about this last night, and I think it's a brilliant frame, and I want to spend more time building it out. Uh, serotonin Morgan versus dopamine Morgan.

   23. MHMorgan Housel55:02

       Mm-hmm.

   24. CWChris Williamson55:03

       And I think that the Only the Paranoid Survive business model is, uh, dopamine company, not serotonin company.

   25. MHMorgan Housel55:12

       Yeah.

   26. CWChris Williamson55:12

       Right? That is very vigilant, very anxious, very on edge, making sure that everything is scrutin- heavily scrutinizing all of the different options and, uh, you know, k- keeping abreast of, of competitors and, and, you know, having these sort of underlying resentments, but also knowing that I can't really bring them up, because that's also not gonna be good, but I'm gonna fucking hate them in any case.

   27. MHMorgan Housel55:30

       Yeah.

   28. CWChris Williamson55:31

       It's that energy. It's that lean in, it's that tentative, sort of very watchful energy. And I think that, especially if you are somebody that's close, not only close to the operating of a business, but also emotionally invested in the operating of a business, or if your professional life and your personal life have blended in a way, it can be very difficult to not have what is effective professionally curse you personally.

   29. MHMorgan Housel55:56

       Yeah.

   30. CWChris Williamson55:56

       Right? It is very, very good for you to be on edge in that manner. Very good. It is useful and effective as a business to be on edge in that manner.
10. 59:21 – 1:04:12

    Never Discount the Potential of New Technology

    1. CWChris Williamson59:21

       The wonders of the future. It always feels like we're falling behind, and it's always easy to discount the potential of new technology.

    2. MHMorgan Housel59:28

       It's so... Like, very rare is there a single new invention that is amazing in and of itself. It's usually that you have a small invention, and then, 10 years later, another small invention, 20 years later, another small invention, and those things come together, and that's what creates something amazing. Jeff Bezos talked about this recently, where he was like, when he launched Amazon in the 1990s, he did not need to build a payment system. It already existed. It was called Visa, Mastercard. He didn't need to create a shipping system. It already existed. It was UPS. But, like, he took all of those things and combined them and built on top of them. And it's true for a lot of innovations, of like... I mean, the, the most, like, stunning example is Thomas Edison did not invent the light bulb. It was first invented by a guy named...... uh, ho- named H- Humphrey Davis, wh- who was a Brit, who created something that looked exactly like the light bulb, I think 20 years before Thomas Edison. The difference was that light bulb that he built, it was impossibly bright. You would go blind by looking at it.

    3. CWChris Williamson1:00:27

       (laughs)

    4. MHMorgan Housel1:00:27

       And, and it would only stay lit-

    5. CWChris Williamson1:00:28

       We overperform. What can I say?

    6. MHMorgan Housel1:00:30

       ... and it would only stay lit for, like, five seconds. What Edison did is he moderated the intensity and he lengthened the endurance of the light bulb. That was in- incredible, but let's not pretend that he built that flaming bulb from scratch. He didn't. He took what other people had done and built on top of it. And it's true for almost any invention of, like, obviously, uh, obviously Henry Ford did not invent the engine, he didn't invent the wheel. He just, like, combined all of these things. So whenever a new invention comes out, I think it's very easy to be like, "What is this useful for?" And a lot of times, the answer is, like, "We don't know, but someone... Like, this is gonna be something that somebody combines with other things in the future that's gonna become something incredible."

    7. CWChris Williamson1:01:11

       "You've got a typical path of how people respond to what eventually becomes world te- changing, new technology. 'First, I've never heard of it. Then, I've heard of it, but I don't understand it. I understand it, but I don't see how it's useful. I see how it could be fun for rich people, but not me. I use it, but it's just a toy. It's becoming more useful to me. I use it all the time. I could not imagine life without it. Seriously, people lived without it? It's too powerful and needs to be regulated.'"

    8. MHMorgan Housel1:01:37

       And it's true for almost every, like, big invention. The two that are most interesting to me was the invention of the car and the airplane. Which, when both of those came out in the early 1900s, the first reaction to those was like, "I don't understand why anyone would want this." The first car was so inferior to the horse, and the first plane was so inferior to the train. So everyone looked at it and they're like, "Wha- what the hell is the use?" And then it was like, "Oh, I see. It's a rich person's toy. If you're a f- if you're a zillionaire, you're gonna have a car that you can putter around town with. I kinda get it." And then it becomes better and better. Both the car and the plane, the first uses that people saw for it was like, "Oh, we could strap a machine gun to this and use it in the army."

    9. CWChris Williamson1:02:18

       Mm-hmm.

    10. MHMorgan Housel1:02:18

        Virtually nobody saw, even the people who worked in those industries, what it would become, which was, like, good for transporting people. And, like, nobody saw with the car, they're like, "Oh, this is gonna open up a new form of living called the suburbs, and people can drive to the city now." Nobody saw those things coming. It was a very long path. It ta- usually it takes 10 to 20 years at least before people are like, "Oh, now I get it." You saw this too, there are so many classic examples of, in the 1990s, of articles written in Time Magazine about, like-

    11. CWChris Williamson1:02:46

        The internet.

    12. MHMorgan Housel1:02:47

        ... why would anyone wanna use the internet?

    13. CWChris Williamson1:02:48

        Yeah.

    14. MHMorgan Housel1:02:48

        How could anyone possibly, like, lug around this thing called a laptop? Nobody's ever gonna do that. And it's easy to poke fun at those, and you should poke fun at them, but it's actually common for virtually every new technology, that you cannot fathom what it's gonna eventually become.

    15. CWChris Williamson1:03:04

        How should we interpret this consistent trend? Should we be less quick to cynicism and skepticism around things?

    16. MHMorgan Housel1:03:13

        It's also very common historically that people say, "We haven't had a big invention in 30 years. We used to innovate, but over the last 30 years, what can you think of that we've actually created?" That's a very common view. And usually what's happening is that it's not that we haven't invented in 30 years, it's that it takes 30 years for us to recognize any invention. So we look back today and we're like, "Yes, the internet was big," but the internet came about 30 years ago. But if you go back to the 1990s, it was like, "No, we really haven't invented much in a long time." Like, it's always that lag in how long it takes you to understand how big something is gonna become.

    17. CWChris Williamson1:03:46

        Mm.

    18. MHMorgan Housel1:03:46

        And you can imagine that happening in 30 years from now, that in 30 years from now, we're like, "Oh, we haven't invented anything in a long time." But in 2024, we came up with the whatever it would be, uh, that, that is such an obvious new technology. 'Cause when we were inventing the car and the airplane or the transistor or the radio or the internet, very few people knew at the time what it was gonna become. It takes decades for you to understand what it's actually gonna be.

11. 1:04:12 – 1:10:57

    Why Success Looks Easier than it is

    1. MHMorgan Housel1:04:12

    2. CWChris Williamson1:04:12

       "Harder than it looks and not as fun as it seems. The grass is always greener on the side that's fertilized with bullshit."

    3. MHMorgan Housel1:04:17

       Which is a wonderful quote. I can never find who originally said it. I can't take credit for it, but it's such a great quote. I think it, there's a truth in life that everything is sales. Like, everything is sales. And it's done in an innocent way, but a big part of this is that people tend to exaggerate and advertise what they're good at and hide the hard parts, hide the flaws. And it creates this, in this view among virtually everybody that your success was much easier than it was. This business is better run than I think it is. I was talking to a friend a couple years ago who was like, "Oh, this rival company is so much better run than the company I work for. They're so much more efficient, so much or- more organized." And I'm like, "How do you, how do you know that?" And, and w- basically what it is is like from the outsider's perspective, everything looks like it's easier and, and better run than it actually is. But if you have the insider perspective of how the sausage is made, you realize, like, how inefficient virtually everything is. And so that's, I think that's, that's a big part of life is just, like, realizing that success is harder than it looks. We, we, we, we talked about this earlier with Tiger Woods, Kobe Bryant, Michael Jordan, all these people. Like, if you actually dig into what their life is, it's infinitely harder than it looks from the outside.

    4. CWChris Williamson1:05:31

       Did you see Elon on Lex where he said, "My mind is a storm."

    5. MHMorgan Housel1:05:35

       Yes.

    6. CWChris Williamson1:05:35

       "Most people would want, think that they want to be me, but they don't. They don't know, they don't understand."

    7. MHMorgan Housel1:05:39

       Because what people look at Elon and they're like, "Oh, richest man in the world. He's got a Gulf Stream. He's got big homes." I don't even think he actually does, but, like, he, he has, he's worth a quarter of a trillion dollars. He can do anything he wants. That seems like an amazing life.

    8. CWChris Williamson1:05:50

       Mm-hmm.

    9. MHMorgan Housel1:05:51

       Like, no, I think if you actually dug into it, I think Elon is in, like, probably the bottom, I'm making this up, 20% of, like, mental health in society.

    10. CWChris Williamson1:05:58

        Tortured.

    11. MHMorgan Housel1:05:59

        You know?

    12. CWChris Williamson1:05:59

        I had this, uh, idea called the cookie test that I did on stage during my live show, and it's kind of about this, but from, uh, the way that we perceive other people. So, imagine that there's a cookie here and I decide that I'm going to make the decision about whether or not to eat it.... when I do that, this unholy war begins inside of my mind between... you know, there's platoons, and one of them's got a dragon, and there's a trebuchet. And th- there's the, my old PT teacher, Mr. Henderson from year nine, saying, "You're a cookie eater, and you've always been a cookie eater, and you're always gonna be a cookie eater." And then after a little while, the better version of me succeeds, and I turn away. That's what I saw internally. What you saw was some bloke stare at a cookie for a while and then turn away, hungry and sad.

    13. MHMorgan Housel1:06:47

        Yeah.

    14. CWChris Williamson1:06:48

        From the outside, everybody else look like slick rational agents. And from the inside, we look like wavering idiots.

    15. MHMorgan Housel1:06:54

        Yeah.

    16. CWChris Williamson1:06:54

        Because the asymmetry in what we observe of our own uncertainty and what we perceive of someone else's uncertainty is so asymmetric. I also had this idea about how people going through breakups or people that feel like they've been, uh, hard done by, or maybe they're wist-ing after, um, a, uh, friend or a partner that they used to have. And we're able to romanticize, especially people that have scorned us or that have left us, w- there's something sort of, uh, uh, particularly alluring in their aloofness, right?

    17. MHMorgan Housel1:07:24

        Yeah.

    18. CWChris Williamson1:07:25

        Um, but I think it's something that we can all take. You can use this asymmetry to your advantage as well. Think about how much more deep and dextrous and nuanced and subtle and finessed your thoughts are than even the person you know the best on the planet's-

    19. MHMorgan Housel1:07:46

        Yeah.

    20. CWChris Williamson1:07:46

        ... your twin brother's thoughts are that you know of, right? It's a f- 1/10,000th, one, one, one millionth, right? Of what you have observed of yourself. So if you are someone that's struggling with the wistfulness, "And I'm never gonna be able to find anybody like them," there is also a very easy argument of, "They're never going to be able to find anybody like me-"

    21. MHMorgan Housel1:08:07

        Yeah.

    22. CWChris Williamson1:08:08

        ... because you only see this very rough-hewn version of them, whereas the depth that you get of yourself is so much greater.

    23. MHMorgan Housel1:08:14

        There's also almost the opposite of this, which is Daniel Kahneman's observation that it's much easier to spot other people's flaws than your own. Even though you're very aware of what's going on in your head and your thought process and whatnot, it's very easy for me to look at your decisions and say like, "Oh, you're, you're, you're missing this, and you're incomplete on this. You're making a bad decision here." But you can justify your own very, very easily because you know the internal dialogue in your head that's justifying your decisions. "I'm doing this because of this reason," and whatnot. "Here's why I'm doing it." But for... when I'm watching you, I only see the actions that you're taking-

    24. CWChris Williamson1:08:46

        Yeah.

    25. MHMorgan Housel1:08:46

        ... and I can just judge you much more objectively in that measure. But I think if you could see the thoughts going on inside of everyone else's head, you would see that the world is a thousand times crazier than you think it is. You'd see people are a thousand times more depressed than you think they are.

    26. CWChris Williamson1:09:03

        Mm-hmm.

    27. MHMorgan Housel1:09:04

        They're a thousand times more creative than you think they are. They're a thousand times more evil than you think they are. Because what they're actually putting forth and speaking and the actions that they're taking is such a tiny percentage of what's actually going on in their head.

    28. CWChris Williamson1:09:16

        We had movies a long time before Neuralink or Elon Musk were really even, even sort of, uh, objects in the pop culture. But like, Minority Report, you know, the ability to be able to see what someone is thinking or be able to... mi- might be prepared to do in future.

    29. MHMorgan Housel1:09:30

        Yeah.

    30. CWChris Williamson1:09:30

        To be able to predict that and then go after them. Was it Minority Report? No, it wasn't. What was the thing with Tom Cruise where they could see into the future and he had that big screen? There's people screaming into their AirPods at the moment.

Episode duration: 1:48:06