Naval Ravikant and Nick Kokonas — The Tim Ferriss Show

1. 0:00 – 4:50

   Start

   1. TFTim Ferriss0:00

      [upbeat music] This episode is brought to you by Eight Sleep. I have been using Eight Sleep Pod Cover for years now. Why? Well, by simply adding it to your existing mattress on top like a fitted sheet, you can automatically cool down or warm up each side of your bed. Eight Sleep recently launched their newest generation of the Pod, and I'm excited to test it out, Pod 4 Ultra. It cools, it heats, and now it elevates automatically. More on that in a second. First, Pod 4 Ultra can cool down each side of the bed as much as 20 degrees Fahrenheit below room temperature, keeping you and your partner cool even in a heat wave. Or you can switch it up depending on which of you is heat-sensitive. I am always more heat sensitive, pulling the sheets off, closing the windows, trying to crank the AC down. This solves all of that. Pod 4 Ultra also introduces an adjustable base that fits between your mattress and your bed frame and adds reading and sleeping positions for the best unwinding experience. And for those snore-heavy nights, the Pod can detect your snoring and automatically lift your head by a few degrees to improve airflow and stop you or your partner from snoring. Plus, with the Pod 4 Ultra, you can leave your wearables on the nightstand. You won't need them because these types of metrics are integrated into the Pod 4 Ultra itself. They have imperceptible sensors which track your sleep time, sleep phases, and HRV. Their heart rate tracking, as just one example, is at 99% accuracy. So get your best night's sleep. Head to eightsleep.com/tim and use code Tim to get $350 off of the Pod 4 Ultra. That's Eight Sleep all spelled out, eightsleep.com/tim, and code Tim, T-I-M, to get $350 off the Pod 4 Ultra. They currently ship to the United States, Canada, the United Kingdom, Europe, and Australia. [upbeat music] This episode is brought to you by Momentous. Momentous offers high-quality supplements and products across a broad spectrum of categories, including sports performance, sleep, cognitive health, hormone support, and more. I've been testing their products for months now, and I have a few that I use constantly. One of the things I love about Momentous is that they offer many single ingredient and third-party tested formulations. I'll come back to the latter part of that a little bit later. Personally, I've been using Momentous Mag3onate, L-theanine, and apigenin, all of which have helped me to improve the onset quality and duration of my sleep. Now, the Momentous Sleep Pack conveniently delivers single servings of all three of these ingredients. I've also been using Momentous creatine, which doesn't just help for physical performance, but also for cognitive performance. In fact, I've been taking it daily, typically before podcast recording, as there are various studies and reviews and meta-analyses pointing to improvements in short-term memory and performance under stress. So those are some of the products that I've been using very consistently, and to give you an idea, I'm packing right now for an international trip. I tend to be very minimalist, and I'm taking these with me nonetheless. Now back to the bigger picture. Olympians, Tour de France winners, Tour de France winners, the US military, and more than 175 college and professional sports teams rely on Momentous and their products. Momentous also partners with some of the best minds in human performance to bring world-class products to market, including a few you will recognize from this podcast, like Dr. Andrew Huberman and Dr. Kelly Starrett. They also work with Dr. Stacy Sims, who assists Momentous in developing products specifically for women. Their products contain high-quality ingredients that are third-party tested, which in this case means Informed Sport and/or NSF certified, so you can trust that what is on the label is in the bottle and nothing else. And trust me, as someone who knows the sports nutrition and supplement world very well, that is a differentiator that you want in anything that you consume in this entire sector. So good news. For my non-US listeners, more good news. Not to worry. Momentous ships internationally, so you have the same access that I do. So check it out. Visit livemomentous.com/tim and use code Tim at checkout for 20% off. That's livemomentous, L-I-V-E-M-O-M-E-N-T-O-U-S, .com/tim and code Tim for 20% off.

   2. SPSpeaker4:24

      Optimal minimal. At this altitude, I can run flat out for a half mile before my hands start shaking. Can I ask you a personal question? Now we see my perfect diamond. What if I give you alpha? I'm a cybernetic organism. Living tissue over metal endoskeleton. The Tim Ferriss Show.

   3. TFTim Ferriss4:48

      Hello, boys and girls, ladies

2. 4:50 – 6:09

   Notes about this supercombo format.

   1. TFTim Ferriss4:50

      and germs. This is Tim Ferriss. Welcome to another episode of The Tim Ferriss Show, where it is my job to sit down with world-class performers from every field imaginable to tease out the habits, routines, favorite books, and so on that you can apply and test in your own lives. This episode is a two-for-one, and that's because the podcast recently hit its 10th year anniversary, which is insane to think about, and passed one billion downloads. To celebrate, I've curated some of the best of the best, some of my favorites from more than 700 episodes over the last decade. I could not be more excited to give you these super combo episodes, and internally we've been calling these the super combo episodes because my goal is to encourage you to, yes, enjoy the household names, the super famous folks, but to also introduce you to lesser-known people I consider stars. These are people who have transformed my life, and I feel like they can do the same for many of you. Perhaps they got lost in a busy news cycle. Perhaps you missed an episode. Just trust me on this one. We went to great pains to put these pairings together. And for the bios of all guests, you can find that and more at tim.blog/combo. And now, without further ado, please enjoy, and thank you for listening First up, Naval

3. 6:09 – 6:21

   Enter Naval Ravikant.

   1. TFTim Ferriss6:09

      Ravikant, @naval on AirChat and Twitter, co-founder of AirChat and AngelList, and host of the Naval podcast

   2. NRNaval Ravikant6:20

      I have a couple of core

4. 6:21 – 8:21

   On uncompromising honesty.

   1. NRNaval Ravikant6:21

      foundational values. They're not things that I explicitly developed. They're just sort of you can look back after the fact and say, "Oh, yeah, I won't compromise on those things." But now I realize how important honesty is, and I learned that from a couple of different places. One is when I grew up, I wanted to be a physicist, and I idolized Richard Feynman. I read everything by him, technical and non-technical, that I could get my hands on, and he said, "You must never, ever fool yourself, and you are the easiest person to fool." The physics grounding is very important because physics, you have to speak truth. You don't compromise. You don't negotiate with people. You don't try and make them feel better because if your equation is wrong, it just won't work, whatever you're doing. So I think the science background is important in that. A second is growing up in New York, I grew up around some really rough and tumble kids, some of who were actually in the Russian mob, and I once had an encounter where I watched one of them threaten to kill the other, and the would-be victim went and hid, and then finally, he let the aggressor into his house after the aggressor promised him, "No, I'm not gonna kill you." Honesty was such a strong virtue between them that even when they were ready to kill each other, they would take each other's word for things. It sort of went above everything, and even though it was honesty in a mob context, I realized, like, how important that is in relationships. And then as I get older in life, I realize that a lot of happiness is just being present, and whether you get this out of Buddhism or cognitive therapy or drugs or wherever, you realize that to live in the present moment is the highest calling. It's the source of all happiness. And when you're not honest with somebody else or when you even withhold something in your mind, what you've done is you've created a second thought process. You've created a second thread in your head that then has to stay active, keeping track of what you've said versus what you're really thinking, and that takes you out of the moment, and it brings you unhappiness over time. You will not realize it at that moment itself, but it will create stress and distraction. So if you really want to be happy, you have to be present, and one of the core tenets of being present is to be completely honest at all times.

   2. TFTim Ferriss8:20

      There is

5. 8:21 – 11:19

   What Naval looks for when deciding to invest in a founder.

   1. TFTim Ferriss8:21

      a great short book that had a huge impact on me on this topic called Lying by Sam Harris, which was just-

   2. NRNaval Ravikant8:28

      Mm-hmm

   3. TFTim Ferriss8:28

      ... phenomenal because it explored the impact not just of lying in the way that most people think of it, but generalized deceit or even white lies that are intended to protect people. What are the things that you look for in founders or the red flags that disqualify an investment or a founder?

   4. NRNaval Ravikant8:46

      So number one, intelligence. You gotta be smart, which means you have to know what you're doing to some level, and that's a fuzzy thing, but you talk to people, and you kind of get a sense of do they know what they're doing or not? Do they have insight? Do they have specific knowledge? Have they thought about this problem deeply? It's not about the age. It's not how many years they've spent, but just how deep is their understanding of what they're about to do. So intelligence is key. Energy, because being a founder is brutally difficult. It takes a long time, and in the long run, the people who succeed are just the ones who persevere. So if someone runs out of energy or if they're doing this in some hesitating, preliminary way where they're looking for constant positive feedback, or if they're easily thrown off course, then they're not gonna make it to the end, especially in the highly competitive startup context. And then finally is integrity because if you have someone who has high intelligence and high energy but they're low integrity, what you've got is a hardworking, smart crook. And especially in the startup world, things are very dynamic. They're very fast-moving. People are very independent, so if somebody wants to screw you over, they will find a way to do it. And fundamentally, ethics and integrity are what you do despite the money. If being ethical was profitable, everybody would do it. So what you're looking for is a core sense of values that rises above and beyond the pure financial incentives. So for example, if I'm talking to a founder and they offer to do something that is slightly unfair to another shareholder or employee or founder in exchange for making me happy, that's a red flag because if they can do it to them, they can do it to me. And integrity is the hardest one to figure out because it requires longitudinal relationships, um, and-

   5. TFTim Ferriss10:20

      Meaning long-term.

   6. NRNaval Ravikant10:21

      Exactly, so I, I've just become more hyper-aware of that piece as time goes on, but those are kind of the three things that I look for. And then a thing that isn't really about success but is more just about personal time is when you invest in somebody or you work with somebody, you start a company with somebody, you're signing up to spend the next decade of your life having them in your life.

   7. TFTim Ferriss10:41

      Right.

   8. NRNaval Ravikant10:41

      And so you just have to make sure you actually genuinely like these people. You don't consider work to have to answer a phone call or take a meeting or spend time with them. If it's exhausting, if they're downers, if they're negative, if they're difficult, no amount of money is worth it. You and I will both die with money in the bank. It's not about money at this point. It's about do I wanna spend my scarce time, resources, mental energy, spirit interacting with these people? My favorite founders are actually the ones who I learn from. So every time they call me up 'cause they need help with something, I jump on it because I know that walking around the block with them for an hour, I'm gonna walk out much smarter.

   9. TFTim Ferriss11:18

      What books

6. 11:19 – 18:54

   Recommended reading from outside the startup world.

   1. TFTim Ferriss11:19

      or people outside of the startup world have most improved your ability to invest, maybe broadly speaking, just resource allocate?

   2. NRNaval Ravikant11:32

      That's a really good question, and so that's a very deep question that's gonna have lots of answers, but at the end of the day, I think you have to work on your internal state until you are free of as many biases and, and conditioned responses as you can be, and it will improve every aspect of your life, including investing. And I am a bookworm, so I read an enormous amount. I was raised essentially in a library as a daycare center, and so I've just read so much that I don't even know where to start. But if you work on your internal state, one of the things you start realizing is as an investor, emotions dominate. Investors are very emotional, even though we act We pretend to be very rational. For example, you'll decide in the first five minutes of a meeting usually whether you want to invest in a company or not, and if a company doesn't take your money in the first round, you get annoyed with them or you feel like they crossed you, then you have to undo that emotional state so when the second round comes along, you can still be a positive force and continue helping the company and maybe have a bite at the apple a second time. And these kinds of skills are extremely hard to build. They're not things you're gonna build by reading one book and then you're like, "Aha." So I don't believe in the epiphany theory of self-development, where you read some book, you have an incredible epi- epiphany, you read one phrase, you're like, "Okay, that's great. This changes my life," and then you scrawl it down on a piece of paper and you keep looking at it, or you put it as a backdrop to your computer screen. Life doesn't work that way. What you kind of have to do is you have to build skills, and I think happiness is a skill, nutrition is a skill, diet is a skill, investing is a skill, self-awareness is a skill. And skills get built up over decades with feedback loops, and you just have to constantly keep working at it, on it. So the books that have helped me a lot, I think there's a class of books that I would kind of put in the stoicism category, and I know you've been a big advocate of these in the past, and I sort of discovered them independently, but they were very influential. So Seneca and Marcus Aurelius both stand out. Meditations by Marcus Aurelius was absolutely life-changing for me because it's the personal diary of the Emperor of Rome, and here's a guy who was probably the most powerful human being on Earth at the time where, that he lived, and he was writing his own diary to himself, not expecting it to be published. And when you open this book, you realize he had all the same issues and all the same mental struggles, and he was trying to be a better person. And so right there, you figure out, okay, success and power don't improve your internal state. You still have to work on that. And so that class of books is very influential. I like to pay attention to what I consider the rational Buddhists, because a lot of Buddhism is drowned in mysticism and Hinduism and sort of worship this guru or do this ritual, so I, I don't pay any attention to that. But I pay a lot of attention to what I consider rational Buddhists, where they can make the case very intelligently with reasoning along the way as to how you should train your mind to work or how you should observe your mind. Sam Harris, who you mentioned earlier, is great. Jiddu Krishnamurti, who's a lesser well-known guy, but an Indian philosopher who lived turn of the last century, is extremely influential to me. He's an uncompromising, very direct person who basically tells you to look at your own mind at all times. And so I have been hugely influenced by him. Probably the best book of his, uh, that I like is one called The Book of Life, which is sort of excerpts from his various speeches and books that are stitched together. Oddly enough, Bruce Lee wrote some great philosophy, and, uh, Striking Thoughts is a book that is a good summary of some of his philosophy. But I could go on and on and on. I mean, there are... You have to read hundreds of these things, literally. Blogs, the blogs are, I feel, an underappreciated resource. We're now in a day and age of Twitter and Facebook. We're getting sort of bite-sized, pithy wisdom that's really hard to absorb, and books are very difficult to read as a modern person because we've been trained... Well, we've got two contradictory pieces of training. One is our attention span has gone through the floor because we're hit with so much information all the time that we want to skip, summarize, skip. We want to get to the TLDR, cut to the chase, too long, didn't read. You know, what's the 140 character version? What's the Instagram version? On the other hand, we're also taught from a young age that books are something you finish, books are something that are sacred, that you treat books as a... You know, when you go to school and you're assigned to read a book, you have to finish the book. So we forget how to read books or we get in this contradiction where everyone I know is stuck on some book. Everyone is stuck on some book.

   3. TFTim Ferriss15:47

      [laughs]

   4. NRNaval Ravikant15:47

      I'm, I'm sure you're stuck on some book right now. It's like page 332. You can't go on any further, but you know you should finish the book. So what do you do? You give up reading books for a while. Your Kindle or your iPad or whatever you use, or even your paper book, is in a stuck state. That for me was a tragedy because I grew up on books, and then I switched to blogs, and then I switched to Twitter and Facebook, and then I realized I wasn't actually learning anything. I was just taking in little dopamine snacks all day long. [laughs]

   5. TFTim Ferriss16:13

      [laughs]

   6. NRNaval Ravikant16:14

      Uh, I was getting my little 140 character burst of dopamine, and then I'd retweet, and then I'd see who retweeted my tweet, then I'd get into an argument on Twitter and, you know, it's a fun, wonderful thing, but it's a game that I was playing. I wasn't actually learning anything. So-

   7. TFTim Ferriss16:26

      Usually with, uh, Startup L. Jackson is, uh [laughs]

   8. NRNaval Ravikant16:29

      Yeah, Startup L. Jack, great character on Twitter. Uh, so I, I realized, like, I have to go back to reading books because when you're talking about solving old problems, the older the problem, the older the solution. So if you're trying to learn how to drive a car or fly a plane, absolutely, you should read something written in the modern age because this problem was created in the modern age. The solution is created in the modern age. But if you're talking about an old problem like how to generally keep your body healthy, how to stay calm and peaceful of mind, what kinds of value systems are good, how should you raise a family, these kinds of things, the older solutions are probably better, and they withstood the test of time. Any book that's survived for 2,000 years has been filtered through a lot of people. Now, it may have some stuff in it that we now know to be true, but the general principles are more likely to be correct. So if I want to learn the theory of evolution, which I kind of use as my binding principle whenever I'm trying to explain any human action, people read all kinds of blog posts and tweets on evolution. Everyone has a loose understanding how, of how evolution works, but how many have actually read The Origin of Species? I mean, you can get it for five bucks on Kindle, and it's a very easy read. It's not a difficult read, and you can read the actual source, and you can see the source of the brilliance, and you can see how Darwin came up with stuff back then that we're still trying to figure out or statements he made that we're still trying to prove out. But there's very little that's incorrect in that book, and it is a, a source book. So I wanted to get back into reading these source books, and I knew it was a very hard problem because my brain had now been trained to spend time on Facebook and Twitter and, and these other bite-sized pieces. So what I did was I came up with this hack where I started treating books as throwaway blog posts or as bite-sized tweets or Facebook posts, and I felt no obligation to finish any book. So now anytime someone mentions a book to me, I buy it. At any given time, I'm reading somewhere between 10 and 20 books. I'm flipping through them. If the book is getting a little boring, I'll skip ahead. Sometimes I'll start reading a book in the middle because some paragraph caught my eye, and I'll just continue from there, and I feel no obligation whatsoever to finish the book. If at some point I decide the book is boring, or if it's got pieces of it that are incorrect, so now I can't trust the rest of the information in there, I just delete it, and I don't remember them at all. So I treat books now as other people might treat throwaway light pieces of information on the web, and all of a sudden, books are back into my reading library.

   9. TFTim Ferriss18:49

      Right.

   10. NRNaval Ravikant18:49

       And that's great because there's a lot of ancient wisdom in there.

   11. TFTim Ferriss18:52

       When you think of the word, say, successful,

7. 18:54 – 21:18

   Who Naval considers successful.

   1. TFTim Ferriss18:54

      who's the first person or people who come to mind for you?

   2. NRNaval Ravikant18:57

      [laughs] Yeah, it's, it's an odd answer because, you know, most people think of someone as successful when they win the game, and it's whatever game they're playing, right? So if you're an athlete, you're gonna think of successful someone who is a top athlete and wins that game, or if you're in business, then you're gonna think Elon Musk or, you know, someone of that sort. Or in, in my mind, I would have answered that question a little differently a few years ago. I would've said Steve Jobs because he created something or he was a driving force, part of the driving force and the spearhead for creating something that has changed the lives for all of humanity, and that's the iPhone. You know, I think of Marc Andreessen as super successful, not because of his recent incarnation as a venture capitalist, which is an interesting one, but because of the incredible work that he did with Netscape. He commercialized the web browser. Satoshi Nakamoto is successful in the sense that he created Bitcoin, which is this incredible technological creation that will have repercussions for decades to come. So in the classic sense, I consider those creators and commercializers successful, and of course, Elon Musk, just because he changed everyone's viewpoint on what is possible with modern technology entrepreneurship. But that said, to me, the real winners are the ones who step out of the game entirely, who don't even play the game, who rise above it, and those are the people who have such internal mental and self-control and self-awareness that they need nothing from anybody else. So there are a couple of these characters that I know in my life, some older gentlemen that I like to kind of learn from, and we mentioned our Polish friend earlier. I would consider him successful because he doesn't need anything from anybody. He's at peace, he's at health, and whether he makes more money or less money, or whether the next person over from him does better or worse than him, has no effect on his mental state and bearing. And historically, I would say that the legendary Buddha or Krishnamurti, whose stuff that I like reading, they are successful, quote-unquote, in the sense that they step out of the game entirely. Winning or losing does not matter to them. There's some line that I read somewhere that all of man's troubles arise because he cannot sit in a room quietly by himself for half an hour. [laughs]

   3. TFTim Ferriss21:04

      [laughs] Right.

   4. NRNaval Ravikant21:05

      And if, if you could literally just sit, if you could just sit for 30 minutes and be happy, you are successful, and I think that that is a very powerful place to be, but very few of us get there.

   5. TFTim Ferriss21:16

      Do you have a current

8. 21:18 – 26:24

   Cultivating non-judgmental awareness.

   1. TFTim Ferriss21:18

      meditative practice?

   2. NRNaval Ravikant21:19

      I have a couple. Like most people, I talk about doing it, but don't really do it all that well.

   3. TFTim Ferriss21:24

      [laughs]

   4. NRNaval Ravikant21:25

      [laughs] I think meditation is like dieting or where everyone is supposed to be following a regimen. Everyone says they do it, but nobody actually does it. The real set of people who meditate on a regular basis I found are pretty rare, and I've identified and tried at least four different forms of meditation. The one that I found that works the best for me is something called choiceless awareness or non-judgmental awareness, where you essentially don't sit in a corner and don't stay quiet. You walk around, you're going about your daily business, but hopefully there's some nature around, you're not talking to somebody else, and what you practice is you just learn to accept that moment that you're in without making judgments. You don't say, "Oh, there's a homeless guy over there. I better cross the street." You don't look at two people running by and say, "Oh, he's, he's out of shape," or, "I'm in better shape than him," or, "That person's better than me," or, "This one's better," or, "I should get a coffee," or whatever. You just don't make any decisions. You don't judge anything. You just accept everything. If you do that, I find if I can do that even for 10 or 15 minutes walking around, I end up in a very peaceful, grateful state, and so that one works well for me.

   5. TFTim Ferriss22:28

      When those thoughts come up, right? When you see the guy with the bad hairdo and you're like, "That guy has no, no business having that unmanageable hairdo," or whatever ridiculous thought comes to mind-

   6. NRNaval Ravikant22:39

      Right

   7. TFTim Ferriss22:39

      ... what is the internal response to that?

   8. NRNaval Ravikant22:42

      What I do is, for those of you who programmed, I'm basically trying to run my brain in debugger mode. I'm trying to be very, very alert and watch my thoughts. You're not trying to judge anything, including your own thoughts. You know, there's a great definition that I read that says, "Enlightenment is a space between your thoughts," which means that enlightenment isn't this thing you achieve after 30 years sitting in a corner on a mountaintop. It's something you can achieve moment to moment, and you can be a certain percentage enlightened every single day. So you wanna create as much space between your thoughts as possible, and the way you do that is by being aware of what your thoughts are and why you're having them. So if I saw the guy with a bad hairdo or the toupee, I would look at that and I would... At first I'd be like, "Ha ha, he has a bad hairdo." And then I'd say, "Well, why am I laughing at him? Oh, to make me feel better about myself, and why am I trying to make me feel better about my own hairdo? Oh, 'cause I'm losing my hair and I'm afraid it's gonna go away." And what I find is that 90% of thoughts that I have are fear. 90% are fear-based. The other 10% are probably desire-based, and as any, um-

   9. TFTim Ferriss23:39

      That's a very tactful way to put it. [laughs]

   10. NRNaval Ravikant23:41

       Yeah, and as any, as any Buddhist will tell you, that desire is just fear by another name. It's the other coin. It's just the coin of fear.

   11. TFTim Ferriss23:47

       [laughs] I thought... Oh, I thought you were talking about something else entirely.

   12. NRNaval Ravikant23:49

       Ah. [laughs]

   13. TFTim Ferriss23:49

       The, uh-

   14. NRNaval Ravikant23:49

       No, for lust.

   15. TFTim Ferriss23:50

       There's this-

   16. NRNaval Ravikant23:50

       Lust? [laughs]

   17. TFTim Ferriss23:51

       Yeah. [laughs] There's this, there's this cartoon. I don't know if you know who Harry Crumb is. He has all of these very sort of profane comic strips and was very famous, and there's a great documentary about him as well. Wait, Harry Crumb, I think that's actually a comedy, but-

   18. NRNaval Ravikant24:04

       Mm-hmm

   19. TFTim Ferriss24:04

       ... R. Crumb. Maybe I'm, I'm mixing it up. In any case, somebody can correct me in the comments. But-

   20. NRNaval Ravikant24:08

       Yeah

   21. TFTim Ferriss24:08

       ... there was this one cartoon of his, I think it's a single cell, kinda like The Far Side in its format.

   22. NRNaval Ravikant24:13

       Yep.

   23. TFTim Ferriss24:13

       It's basically a drawing of people on the street in Manhattan, and every man has a thought bubble above his head with a vagina in it, and every woman-

   24. NRNaval Ravikant24:20

       [laughs]

   25. TFTim Ferriss24:21

       ... has a thought bubble above her head with a penis in it, [laughs] and there's everybody walking.

   26. NRNaval Ravikant24:24

       That's why the Adam and Eve story is there, right? Original sin is lust. It's a thing that makes you fall out of heaven. The same way, uh, maybe some of your readers have this... read this book called Siddhartha, but it's a beautiful parallel story to the making of The Buddha by Hermann Hesse. It's a great book. I highly recommend it. But even in that book, our protagonist is out there seeking enlightenment and gets really close, and the thing that drops him out of it is lust. He meets a woman that he falls a... He feels lustful towards, and that sort of slowly becomes his undoing into everything. But anyway, so to, to answer your original question, when I'm, when I'm doing the choiceless awareness form of meditation, which by the way isn't... As far as I can tell, it's not taught in any school. It's something that I discovered mostly by reading enough of Krishnamurti's book and piecing together what he meant because he's a very... He's not a very clear speaker at times, or he is clear, but in a very different kind of way. And then I realized that, okay, so the point of meditation is to clear your mind, and the way to clear your mind is, yes, you can sit in the corner and struggle with it, which doesn't really get you the outcome, or you can do transcendental meditation, which is where you're using this chanting to create a white noise in your head to bury your thoughts, or you can just very keenly and very alertly be aware of your thoughts as they happen. And as you watch them, you realize how many of them are just fear-based. And the moment you recognize it as fear, without even trying, it sort of goes away. And then after a while, your mind quietens. And when your mind quietens, you stop taking everything around you for granted. You start noticing the details of, oh my God, I live in such a beautiful place. It's so great that I have clothes on me. Yeah, I can go into a Starbucks and get a coffee anytime I want. How rich am I? Look at these people. They're... You know, each one has a perfectly valid and complete life of their own in their own heads that's going on. It pops us out of a story, the dream that we're always in, the story that we're constantly telling ourselves. And if you stop talking to yourself for even 10 minutes, or if you stop obsessing over your own story for even 10 minutes, you'll realize that we are really far up Maslow's hierarchy of needs and that life is pretty good.

   27. TFTim Ferriss26:23

       What is a bad

9. 26:24 – 29:47

   How to replace bad habits with good habits.

   1. TFTim Ferriss26:24

      habit that you're working to overcome right now?

   2. NRNaval Ravikant26:26

      So this is something that I learned through our Polish trainer friend, Wiktor.

   3. TFTim Ferriss26:33

      Hi, guys. Just a quick note from present-day Tim. The Polish friend and trainer in question is Jerzy Gregorek, and you can hear my conversation with Jerzy titled The Lion of Olympic Weightlifting: 62-Year-Old Jerzy Gregorek, which also features Naval. Naval and I were working with him at the time. We both co-interview him. I still work with Jerzy, and I just saw him just a few weeks ago. So to learn more about this amazing man, go to tim.blog/jerzy, J-E-R-Z-Y, to listen to that conversation one more time. tim.blog/jerzy, J-E-R-Z-Y. At the age of whatever he is now, 67, he can still do things that most 20-somethings cannot do. Now, back to the episode with Naval.

   4. NRNaval Ravikant27:19

      Habits are everything. Everything. I think that we are, we are trained in habits from when we were children, including potty training and when to cry and when not to and how to smile and when not to, and all of these things become habits. These are all behaviors that we learn and that we then integrate into ourselves. And then what ends up happening when we're older is that we're a collection of thousands, maybe tens of thousands of habits that are constantly running subconsciously, and they're internalized, and then we have a little bit of extra brain power in our neocortex for solving new problems. And so you become your habits. And what really brought this to light for me is our friend, our trainer gave me a routine to do every single day. And before that, I had never worked out every single day. And it's a light workout. It's not tough on your body. But I did this workout every single day, and I realized just the incredible, astonishing transformation that it had upon me, both physically and mentally, because I think to have peace of mind, you have to have peace of body first. So that taught me the power of habits, and after that, I started realizing that it's all about habits. So at any given time now, within a six-month period, I'm either trying to pick up a good habit or I'm discarding a previously bad habit. And it takes time. So for example, if someone says, "I wanna be fit, I wanna be healthy, but right now I'm out of shape and I'm fat," well, nothing is gonna work for you in three months that's gonna be sustainable. It's going to be a 10-year journey at least. And in the 10-year journey, what you're gonna do is every six months or every three months, depending on how, how fast you can do it, you're gonna break bad habits, and you're gonna replace them or you're gonna pick up good habits. So I think it is all about habits. There is nothing else. Examples of habits I've picked up in the last 12 months or I'm still working on, I'm one of these people who wants everything, [chuckles] right? So I don't wanna give up anything. So for example, if I want to stop eating bad foods, if I wanna lose weight by fixing my diet, I don't say, "These foods are bad. I'm not gonna eat them," and then suffer and then feel like I'm not eating tasty food. Instead, what I do is I do some combination of changing my taste buds to actually like the foods that are healthier for me and substituting unhealthy tasty foods with healthy tasty foods so that I can sustain it forever. I'm not interested in anything that is unsustainable or even hard to sustain. I want my life to be effortless. So once I've created a good habit, it has to be the kind of habit that I can sustain with no effort.

   5. TFTim Ferriss29:45

      You're about to graduate. If you had

10. 29:47 – 32:17

    Naval's advice for his younger self.

    1. TFTim Ferriss29:47

       to go back and give that Naval advice... You're already hooked on reading, so that seems to be covered. What advice would you give yourself?

    2. NRNaval Ravikant29:55

       Yeah, it's funny. I actually did this exercise recently [chuckles] where I sat down and I... I didn't write it because it was in my head, but I, I did spend some time thinking about what is the advice I would give my 30-year-old self, and the advice was along the lines of chill out, don't stress so much, not so much anxiety, everything will be fine, and be more yourself. Don't try and do what you think society wants or needs. Don't try and live up to other people's expectations. Self-actualize. Say no to more things. Protect your time because it's very precious. You know, on your dying day, you will give everything, everything you have for another day So the discount rate, the marginal value of that extra day just goes up as you get older. So the advice was all along those lines. It was basically be yourself, don't listen to other people, don't worry about what other people need or want or think or expect from you.

    3. TFTim Ferriss30:43

       Mm-hmm.

    4. NRNaval Ravikant30:43

       And then I said, "Well, what would my 30-year-old self have said to my 20-year-old self?" And it turned out to be pretty much the exact same thing.

    5. TFTim Ferriss30:49

       [laughs]

    6. NRNaval Ravikant30:50

       And what would my 20-year-old self have said to my 10-year-old self? Pretty much the exact same thing. So I think my 50-year-old self is gonna say, "Chill out, relax, don't stress so much, live in the moment, it'll all be all right."

    7. TFTim Ferriss31:00

       [laughs]

    8. NRNaval Ravikant31:00

       Less fear, more love. You know, and love people more. You know, love is one of those weird things. Like, everyone wants to be loved, everyone deeply needs to be loved. It's not something you can buy. No amount of money or power will bring you true, unconditional love, but it turns out you can give love. It's free to give. So you can't necessarily get it, but if you can get in the mindset of, "Well, I'm just gonna give it," eventually, in a long enough timescale, you get what you deserve. The universe kinda sends it back your way.

    9. TFTim Ferriss31:27

       Yeah. Well, not only that, it's like if, if you don't know how to make yourself happy, try to make someone else happy, and that is sort of a, as you said, kind of a recursive function. And now I'm getting... I'm using vocab I shouldn't, but [laughs]

    10. NRNaval Ravikant31:38

        [laughs]

    11. TFTim Ferriss31:39

        It's, uh, it's a virtuous cycle.

    12. NRNaval Ravikant31:40

        Charlie Munger, who is Warren Buffett's partner at Berkshire Hathaway, and just a brilliant older gentleman, his speeches are collected in Poor Charlie's Almanack, and they're worth reading, but he was asked at one of the Berkshire Hathaway annual meetings, someone a- basically asked him along the lines of, like, you know, "How do I find a worthy mate?" And he said, "Be worthy of a worthy mate." [laughs]

    13. TFTim Ferriss31:58

        Yeah.

    14. NRNaval Ravikant31:59

        And I think that's absolutely right. You just work on yourself until you no longer need them, and then they appear. I think that's what it... There's a Zen saying that says, you know, "When the student is ready, the master appears." What that basically means is you have to work on yourself and be ready, and then good things will happen to you.

    15. TFTim Ferriss32:15

        If you could have

11. 32:17 – 36:02

    Naval's billboard.

    1. TFTim Ferriss32:17

       one billboard anywhere with anything on it, what would it say? Where would you put it?

    2. NRNaval Ravikant32:21

       [laughs] Uh, I don't know if I have messages to send to the world, [laughs] but there are messages that I like to send to myself at all times. One message that really stuck with me when I figured this out was that, what is desire? And desire is a contract you make with yourself to be unhappy until you get what you want. I don't think most of us realize that's what it is. I think we go about desiring things all day long and then wondering why, why we're unhappy. So I like to stay aware of that, because then I can choose my desires very carefully. I try not to have more than one big desire in my life at any given time, and I also recognize that as the axis of my suffering. I realize that that's where I've chosen to be unhappy. So I think that, that is an important one. Or even a simpler one is, you know, in a lot of meditative... Like you said, you did a transcendental meditation course. They give you a mantra. The mantra's supposed to have actually no meaning. Maybe the universal mantra, you know, that's been derived through the ages is om, where you kind of just sit there and say om in your mind to yourself.

    3. TFTim Ferriss33:22

       Right.

    4. NRNaval Ravikant33:23

       It's strange. You can say it to yourself all day long in your mind, it'll make you happy and more peaceful. You start chanting it out loud, they'll lock you up.

    5. TFTim Ferriss33:29

       [laughs]

    6. NRNaval Ravikant33:30

       But om, om has no meaning, I think, but to me it has a meaning, and the meaning is just accept. Just accept. In any situation in life, you only have three options. You always have three options. You can change it, you can accept it, or you can leave it. Those are your three options. What is not a good option is to sit around wishing you would change it but not changing it, wishing you would leave it but not leaving it, and not accepting it. So it's that struggle, that aversion, that is responsible for most of our misery. So probably the phrase that I use the most to myself in my head is I just tell myself one word: accept. So any time I look at myself and I'm judging something, I just say accept. And it's only very, very, very few things that I will choose not to accept. And if I don't accept something, it's for one of two reasons: either I'm aware that this is something that I, it's just so important to me right now that I can't accept it, and now I'm gonna put up with a mental battle for it, or more likely, I've just lost control of my thoughts. I'm no longer present. I'm dreaming. I'm in a highly emotional state.

    7. TFTim Ferriss34:34

       Just a quick thanks to one of our sponsors, and we'll be right back to the show. This episode is brought to you by LinkedIn Jobs. When you're hiring for your small business, you want to find quality professionals that are right for the role as soon as possible. That's why you have to check out LinkedIn Jobs. LinkedIn Jobs has the tools to help find the right professionals for your team faster and for free. LinkedIn isn't just a job board. LinkedIn helps you hire professionals you can't find anywhere else, even those who aren't actively searching for a new job, but who might be open to the perfect role. In any given month, more than 70% of LinkedIn users don't visit other job sites, so if you're not looking on LinkedIn, if you're not using LinkedIn, you are in the wrong place. More than 2.5 million small businesses use LinkedIn for hiring, with 86% getting a qualified candidate within 24 hours. LinkedIn knows that small business owners, leaders, execs are wearing so many hats, they're stretched thin. They might not have the time or resources to hire in any drawn-out way, so LinkedIn is constantly finding ways to make the process easier. In fact, they just launched a feature that helps you write job descriptions, making the entire thing A to Z faster and much simpler. So hire professionals like a professional on LinkedIn. And now you can post your job for free at linkedin.com/tim. That's linkedin.com/tim to post your job for free. Terms and conditions apply.

    8. TFTim Ferriss36:01

       And now,

12. 36:02 – 36:21

    Enter Nick Kokonas.

    1. TFTim Ferriss36:02

       Nick Kokonas, Instagram @nkokonas, Twitter @nickkokonas. Nick is the co-owner and co-founder of the Alinea group of restaurants, which includes Alinea, one of only 13 restaurants in the US to earn the coveted Michelin three-star rating.

13. 36:21 – 37:11

    Is pressure Nick's default setting, or are perceived risks an illusion?

    1. TFTim Ferriss36:22

       Nick, welcome to the show.

    2. NKNick Kokonas36:24

       Thanks, Tim. Awesome to be here finally.

    3. TFTim Ferriss36:27

       Yeah. Yeah, we have the benefit of having spent some time together- And I have been fed a lot of caffeine by you, and you're also of great help with The 4-Hour Chef, so I wanted to right off the bat thank you for that.

    4. NKNick Kokonas36:41

       It was kind of a fun thing 'cause I remember when you, you sent me like a preview of the book, and then you called me to say like, "Hey," you know, "do you wanna say anything about it?" And I was like on a chairlift, and I was like, "By the time I get off this chairlift I will have a blurb for you." [laughs]

    5. TFTim Ferriss36:55

       [laughs] Uh, with-

    6. NKNick Kokonas36:57

       It was such pressure

    7. TFTim Ferriss36:58

       ... which meant a lot, and pressure I think is the word to describe so much about you and your life. I wanna say trajectory, but I'm not even sure that is the right

14. 37:11 – 41:54

    How do behavioral economics and Richard Thaler influence Nick's approach?

    1. TFTim Ferriss37:11

       word, and I thought a fun way to kick off the conversation would be to share [laughs] with people listening some of the back and forth that we had when we were brainstorming what a podcast might look like because certainly I don't think of you first and foremost as a food guy per se. And we were having this exchange via text and then via email, and I thought I'd just read one of your responses as we were swapping different ideas. I'll probably edit for space a little bit here, but not by much. And here we go. "I'm a huge believer in radical transparency in business. I give numbers and burn bridges with big companies because I think that a lot of times people don't ask the basic questions. In publishing, for instance, how much did that book cost to print? How many did it sell? Oddly, those numbers are very hard to come by. I dug for m- months, years ago to do the Alinea book the right way. For bars, why does a bartender wash dishes and talk to customers? We've redesigned the bar experience and won Best Bar in the World. For restaurants, why is it the only form of entertainment that has only a mutual promise to show up?" And then it goes into behavioral economics, and in parentheses, I don't even know how to pronounce this last name correctly, Richard Thaler or is it Taylor?

    2. NKNick Kokonas38:26

       Yeah, Thaler, Thaler.

    3. TFTim Ferriss38:26

       Thaler.

    4. NKNick Kokonas38:27

       Yeah.

    5. TFTim Ferriss38:27

       Who's a friend and investor, just won the Nobel Prize. Investing, been beating the market for nearly [laughs] 30 years. "Everything," in all caps, "is about asymmetric risk-taking and information, and yet people's perception of risk or of what I do is that it's risky. It is not." And, [laughs] uh, in a separate exchange when we were talking about many of the topics that you could talk about outside of, say, restaurants, bars, and so on, even though that's been a big part of your life in recent history, many of these different experiments, explorations, portions of your career, topics that you could talk about, and then going into what you said, they come down to a single thought really. Wherever there is opaque information that should be obvious, run to that gap. So I struggle with where to even begin with the 20 op-

    6. NKNick Kokonas39:15

       [laughs]

    7. TFTim Ferriss39:16

       ... the 20 options that we have here, but maybe you could explain to me how behavioral economics and Richard Thaler fit into this just for curiosity's sake.

    8. NKNick Kokonas39:29

       I'll go back to the word you used, options, because I started out back in 1992 or 3 studying options trading, derivatives trading, and I think there's a huge misconception about what that is because of movies, because of The Big Short, because of, you know, Wall Street and all of that. It's a bit like playing a game of chess for a living or being the house at a casino, that sort of thing. It's about taking, you know, hundreds and hundreds and hundreds of decisions per day and pretending it's like a big decision tree, and any given decision is, you know, if you're really good, 48% chance of being wrong. So you have to be really, really good at constantly being comfortable being wrong-

    9. TFTim Ferriss40:14

       Mm-hmm

    10. NKNick Kokonas40:14

        ... but knowing that your overall number of decisions, that you're gonna be right more than you're wrong. I know there's like a big theme, a, a lot of the folks that you have on, like they talk about success or failure or how to measure those things, and I kinda don't look at it as success or failure with anything. I look at it as just like, is my pattern of decisions correct? And then getting back to your actual question with Professor Thaler and behavioral economics and, I mean, essentially what they're looking at is decision-making, what drives people to make certain decisions, what's rational about those decisions, what is mostly irrational or emotional, or what decisions do we make that people don't even realize they're making a decision, which is often the case as well. And then if you think about it, every single form [laughs] of what we do, art, commerce, science, you know, um, picking a mate, like all those things, comes down to a whole bunch of decisions that you make without often really thinking about the decision itself. Not that you can go around walking around going, "Wow, I've just made another decision." But when you are doing, you know, business or starting a company or publishing a book or whatever it may be, you can be intentional about that and realize that it's gonna be an iterative process. And so I think that's been not only the case for me in learning how to filter things through that mindset, but, yeah, like when you said there isn't really a trajectory, I kinda look at everything I've done as the same in a way.

    11. TFTim Ferriss41:42

        Mm-hmm.

    12. NKNick Kokonas41:42

        Even though other people look at it and go like, "Wow, you went from being a derivatives trader to owning restaurants. Like, that's weird." And I studied philosophy in college, so [laughs] like people are like, "How do you go from philosophy to finance?" You know? And to me it was all

15. 41:54 – 42:59

    Nick's transition from philosophy to finance; was philosophy an asset?

    1. NKNick Kokonas41:54

       the same thing.

    2. TFTim Ferriss41:55

       That particular transition, or rather progression I suppose, from philosophy to finance is one that you and I haven't really talked about. That one is interesting. I'd love to explore for a second, and th- we're gonna go into a million different nooks and crannies here.

    3. NKNick Kokonas42:10

       Yeah, yeah, yeah.

    4. TFTim Ferriss42:10

       But do you feel like philosophy was, studying philosophy undergrad was an asset that then later helped you, or was it just an interest you explored en route to other things?

    5. NKNick Kokonas42:21

       I can't remotely imagine having not, not done that, and the way that actually I did it was really interesting. I had no intention of... When I got to college, I thought I'd study political science, economics, pre-law kind of thing, something like that. And my very, like, second week at Colgate University, a wonderful professor who just passed away last year at 94 years old, really great mentor to me, um, Professor Jerome Belmuth, was a tenured professor at Colgate for almost 60 years, pulled me aside, Introduction to Logic, you know, 101, and basically said, "What are you, what are you studying here?" I told him, and he said, "Nope, you're going to be a philosophy major."

    6. TFTim Ferriss42:57

       [laughs]

    7. NKNick Kokonas42:58

       "I'm going to tell you,

16. 42:59 – 45:13

    Why Nick's professor gave him shorter assignments than classmates.

    1. NKNick Kokonas42:59

       I'm going to teach you how to think." There's this great scene in A Riv- River Runs Through It where the dad, you know, every time the kid writes an essay, like the young fisherman kid writes an essay and he brings it to his father to be graded, he gives it back to him and says, "Half as long again." Long before that movie ever came out, Professor Belmuth would, would essentially assign a paper to the class and say, "It should be about 15 pages." And people would be like, "Well, how long?" And he'd always say, like, "You know, how long is a piece of string? Like, it's however long it needs to be." And then he would tell me, "Yours can't be longer than three pages." And people would be, like, jealous. Like, wow, you only have to write three pages. If you take it seriously, that is a much, much harder thing to do. So he really trained me, as well as a number of other professors there, to be clear in thinking, succinct, to, you know, understand what logic was, to process information, and really to look for parallels in different fields and different fields of thought. And so, man, like, when I got out of school, I, I went to law school for like a, a day and a half. [laughs]

    2. TFTim Ferriss43:58

       [laughs]

    3. NKNick Kokonas43:59

       I'd gotten into, I'd gotten into Penn, like a, a joint JD-PhD program at Penn, and as soon as I kind of knew who the other folks were and what their desires and trajectories were, I was like, "Well, this isn't actually a good fit for me." And I remember my future father-in-law told my now wife, then girlfriend, that I was in danger of becoming an intellectual bum-

    4. TFTim Ferriss44:18

       [laughs]

    5. NKNick Kokonas44:20

       ... because I, I, I dropped out of, I dropped out of law school before I really entered law school. And you know, I floundered around for a little while, but you know, if you grew up in Chicago, you end up meeting people who had this unusual lifestyle, and that was back in the days pre-internet, pre-electronic trading, pre-high frequency trading, where there was literally people on a giant trading floor thou- shouting at each other. And you either were attracted to the, I don't know, almost animalistic nature of that, and for me it was like a huge challenge because there were people down there that had, you know, PhDs from MIT, and then there was people who were like, you know, butchers that went down there with $100,000 and just kicked ass. And so it was, it wasn't about your level of education or any of the stuff I already talked about. It was about can you show up every day and every day is game day, and be really disciplined and very clear-headed

17. 45:13 – 46:58

    Nick's introduction to trading; dumbing down academics for clerk job.

    1. NKNick Kokonas45:13

       with chaos around you. And-

    2. TFTim Ferriss45:14

       How did you get introduced to that world?

    3. NKNick Kokonas45:17

       You know, if you grew up in Chicago, you know some of these guys, and some of them are flashy. And I can remember the exact moment, and I'm not going to name a name here, as you'll find out, uh, why in a second. But I-

    4. TFTim Ferriss45:27

       [laughs]

    5. NKNick Kokonas45:28

       ... I, I was walking down the street. I was like, you know, six months out of college, kind of didn't know what I was going to do, and I was walking down the street and I bumped into a guy I knew in high school. And you know, he wasn't the best student. He didn't try the hardest. And I was like, "Hey, what are you doing now?" And, and he was like, "Well, I'm just rehabbing these homes." And I, I thought literally like, oh, he's a construction worker. And I was like, "You know, what are you doing with them?" He's like, "Well, I just bought this block."

    6. TFTim Ferriss45:53

       [laughs]

    7. NKNick Kokonas45:54

       And I'm turning this all over. This is a true story. I mean, this is so not like, you know, a good reason to do something. But I looked at him and I was like, "What are you talking about?" And he's like, "Yeah, I skipped college and I, I started out as a runner on the floor of the Merc, and now I, I, you know, I own like 25 condos and three townhomes and, and I, I trade." And I kind of went like, wow, I don't know what... I knew a little bit about it. I'd been down on the floor before just visiting, but I was kind of like, that's fascinating. Like, that is a truly fascinating thing. And you know, I, I went down, visited the floor. I had to fake my resume in the wrong direction to get a job.

    8. TFTim Ferriss46:31

       [laughs]

    9. NKNick Kokonas46:33

       It's a true story. Like people lie on their resume all the time. I'm probably the only person that got rid of my degree and my academic awards and all that because to get a clerk job on the floor, the last thing they wanted was someone with a good degree, Phi Beta Kappa, you know, magna cum laude, all that stuff. So I faked my resume, got a $5 an hour job, and looked for a mentor. And I, I found a guy named Frank Zorino, who was at Chicago Research and Trading, who was, which also was founded

18. 46:58 – 47:35

    Why philosophy majors often become traders.

    1. NKNick Kokonas46:58

       by a philosophy major. It's actually very common.

    2. TFTim Ferriss47:01

       Why is that common?

    3. NKNick Kokonas47:02

       I wish I knew the answer. I, I don't know the answer. I, I do know that there's three or four of the largest trading firms in the world are run by philosophy majors. And if you look back at my class just of, you know, there's a few professors in there, but there are people who make movies. There's a guy who runs an ad agency, a large ad agency. It's a really interesting path. It's not dislike studying physics. Like I know some great physicists who are great in whatever they do.

    4. TFTim Ferriss47:32

       Right.

    5. NKNick Kokonas47:32

       And I think it's a similar discipline of abstract thought.

19. 47:35 – 48:57

    Why Nick is glad he didn't pursue an MBA in 1992.

    1. TFTim Ferriss47:35

       Mm-hmm.

    2. NKNick Kokonas47:36

       Like I can't think of anything worse than studying business. [laughs] Like it just seems like a terrible thing to study to me. You know?

    3. TFTim Ferriss47:45

       Is that, is that because it's like the surface of the waves in the ocean topically, it's just so non-transferable in a sense, and then-

    4. NKNick Kokonas47:53

       I-

    5. TFTim Ferriss47:53

       ... as you go lower and lower to the kind of slower moving layers, that's just more multidisciplinary in terms of studying like the basics of how things work or how people think?

    6. NKNick Kokonas48:04

       Yeah, I think it's, it's almost like it's how to do something or how to manage something but not why to do it. And so if you're taught in 1992, if I went and got an MBA, I would've been taught a certain kind of management that six years later with the internet would've gotten blown up.

    7. TFTim Ferriss48:20

       Mm-hmm.

    8. NKNick Kokonas48:21

       And so for me it's like I always ask the why question. You know, you were mentioning like the book publishing or, or a bar. You know, I just look at some things and it's like why is that? Why does it work that way?

    9. TFTim Ferriss48:33

       [laughs]

    10. NKNick Kokonas48:33

        And oftentimes the people most entrenched in a system have no idea why. They're like the third or fourth generation of person within that system. And they have no idea why a school bell rings in the morning, for example.

    11. TFTim Ferriss48:46

        Mm-hmm.

    12. NKNick Kokonas48:46

        Or why a bartender is washing the dishes. And often I don't know the real answer, but I come up with alternative ones at least that suit my narrative, I guess. [laughs]

20. 48:57 – 53:08

    Why Nick thinks his professor singled him out from his peers.

    1. TFTim Ferriss48:58

       Undervalued skill, by the way, in some cases, right? You gotta be careful, but very, very, very, very interesting. I wanna pause here partially because I'm over-caffeinated. I was in- inspired by my nostalgia related to your-

    2. NKNick Kokonas49:09

       [laughs]

    3. TFTim Ferriss49:09

       ... double espressos. But why did the professor pull you aside? What did that early undergrad professor in Logic 101 see in you, whether he explained it or not later, I don't know, that led him to take a special interest in you?

    4. NKNick Kokonas49:27

       I think I was prepared and earnest because I was mostly terrified. You know, he had a reputation of being kind of like a... He is a Socratic method teacher. He was pretty harsh. Colgate was very small classes, and there was a class of, you know, 80 people, and he kinda wanted to whittle it down to a more manageable number, and his method to do that was just to kick your ass.

    5. TFTim Ferriss49:48

       [laughs]

    6. NKNick Kokonas49:48

       And I, I remember, I mean, he, he probably, as great as he was, he... I doubt he would survive starting out at a college campus now. I literally saw him light fire to someone's notebook once when he was asking people, like, examples of how to put out a fire, and this one guy was just stuttering 'cause he was so in fear, and so he just lit his notebook on fire.

    7. TFTim Ferriss50:06

       [laughs]

    8. NKNick Kokonas50:06

       And he stamp- and he stamped it, and the kid, kid threw it on the ground, stamped on it. He's like, "You could smother it."

    9. TFTim Ferriss50:11

       [laughs]

    10. NKNick Kokonas50:12

        "Sure." And he called everyone. He memorized every person's last name, and it was Mr. and Ms. And, um, I remember the specific day.

    11. TFTim Ferriss50:19

        [laughs]

    12. NKNick Kokonas50:20

        He was literally back to the... It was, like, right out of a movie. He, his back to the class, writing on a chalkboard some logic problem, symbolic logic, and the guy next to me had no shot at getting it, right? No- none, right? He said his name, and I wrote on the paper on my desk so he could see it, like, what the answer was. And then without missing a beat or turning around, he was like, "Mr. Kokonas, please do not help him. There is no way in hell he could possibly have done that without your help."

    13. TFTim Ferriss50:48

        [laughs]

    14. NKNick Kokonas50:49

        And this is, like, two or three weeks in, right?

    15. TFTim Ferriss50:51

        [laughs]

    16. NKNick Kokonas50:51

        And he spun around, and he saw that I didn't have my book, and he said, "Mr. Kokonas, where is your book?" And I said, "It's at my... It's in my dorm room, you know, Professor." And he said, "Well, a lot of good it's doing you there." I said, "On the contrary, it must apparently be doing me a lot of good there." And he said, "I'll see you after class."

    17. TFTim Ferriss51:09

        [laughs]

    18. NKNick Kokonas51:09

        So I thought I was getting kicked out. And there was, like, a line forming to create office hours or to, like, ask to be transferred out or whatever. And when I got to the front, he said, "Follow me," and I followed him to his office. And I swear, I mean, he's running through the fall, New England fall, and I thought I was gonna get kicked out of the class. And when I closed the door, I turned around, he has feet up on the desk, and he said, "Where are you from? What do you wanna do here?" And that was it.

    19. TFTim Ferriss51:35

        [laughs]

    20. NKNick Kokonas51:35

        He took me under his wing. I was very fortunate. I, um... And you know, it's like I never knew... Here's the amazing part. I never knew the guy liked me until 10 years after I graduated, and then I was treated like a member of his family at his funeral 30 years later.

    21. TFTim Ferriss51:50

        Huh.

    22. NKNick Kokonas51:51

        Right? So really fascinating person, really fascinating moment in my life where, I don't know, someone saw something in me and kinda went like, "I'm gonna make an investment in this person," and never asked for anything back, you know, ever.

    23. TFTim Ferriss52:03

        How did you not know that he liked you? Did he withhold in some way so that you wouldn't get a big head or something along those lines? Did he not wanna get overly attached to you, so he wouldn't express it?

    24. NKNick Kokonas52:16

        No, no, no, no. I, I think I was 19 years old, and I didn't know that people you like you hold to a higher standard probably.

    25. TFTim Ferriss52:22

        Right.

    26. NKNick Kokonas52:23

        And so consequently, he beat the shit out of me in a good way, you know what I mean?

    27. TFTim Ferriss52:27

        [laughs]

    28. NKNick Kokonas52:27

        It's like if you have someone who's teaching you something and they invest their time in you and they think you have a chance of being good, they work you harder than the folks around you. So the people that I thought he liked, he was just being nice to because they didn't, he didn't think they had a chance.

    29. TFTim Ferriss52:42

        Right.

    30. NKNick Kokonas52:42

        You know?
21. 53:08 – 57:47

    Recommended books for aspiring entrepreneurs without philosophy background.

    1. TFTim Ferriss53:08

       So we're, we're gonna get back to the Merc, but before we do, philosophy, I'm endlessly fascinated by philosophy, but I'm also a nerd and kind of academic and pedantic and have spent a lot of time in school. For people who are listening to this who are, say, already in their careers, or maybe they're in their early 20s thinking of starting a company but are entrepreneurially either involved or inclined, would you suggest if they don't have any exposure to philosophy that they read any particular books or resources or explore it in any way? Or would you say, "Actually, you know what? That was an intermediate step to something else. You would probably be better off studying X, Y, and Z"? Is there, like, a starter kit or something you would recommend to folks who don't have the philosophy exposure?

    2. NKNick Kokonas53:54

       I think part of it is if you read a book in isolation, it's not as rich of an experience as discussing those ideas within that context. That said, if it's, if, if you're the kind of person that loves to read and explore ideas, I mean, there's hardly a better place. It's a matter of finding what you enjoy. I happen to love The Problems of Philosophy, which Bertrand Russell wrote sort of about Wittgenstein's ideas, but before Wittgenstein published. And it's written in plain language. It's not hard to understand. Certainly Nietzsche is more like philosophy with some weird sugarcoating of something on top of it. And man, like, as a young male, you know, reading Nietzsche for the first time, I was like, "Fuck yeah."

    3. TFTim Ferriss54:39

       [laughs]

    4. NKNick Kokonas54:40

       You know? Like, like it's not, like, it's not passive. Like, I think people think of philosophers as, like, Zen monks sitting there quietly contemplating the universe. I think what it is is it's people grappling with all the same questions and curiosity that, that we all have if you pause to think about it.

    5. TFTim Ferriss54:56

       Mm-hmm.

    6. NKNick Kokonas54:56

       And so it's so big, it's not just, you know, Descartes, you know, "I think therefore I am," it's kind of every little bit of that back to, like, you know, read Lucretius. He had the atomic theory of the universe-

    7. TFTim Ferriss55:07

       Could you spell that? I'm gonna be the first one to admit that I-

    8. NKNick Kokonas55:10

       Lu- Lucretius? Oh, I can't. I, I-

    9. TFTim Ferriss55:10

       Oh, Lucretius. Lucretius, yeah

    10. NKNick Kokonas55:12

        ... yeah, Lucretius. Yeah. I mean-

    11. TFTim Ferriss55:13

        L-U-C-R-I-T-I-U-S, I think it is

    12. NKNick Kokonas55:15

        ... yeah, I'm a terrible speller.

    13. TFTim Ferriss55:17

        Yeah.

    14. NKNick Kokonas55:17

        So I give it ... Never ask me to spell anything. [laughs]

    15. TFTim Ferriss55:19

        We'll, we'll, we'll put it in the show notes for people.

    16. NKNick Kokonas55:20

        Yeah, right, right. But like, you know, it's like you read, read that or read this great book called The Swerve, which is, uh, you know, about this, this monk ages ago that sort of found that book and then rewrote it and saved it for history. Like, that reads like a murder mystery. Like, you don't necessarily need to start with the philosophy, you can start with the things around it. I continue to find sort of the world i- of ideas endlessly inspirational, and then by the way, steal them and use them in whatever you're doing. They're there for you.

    17. TFTim Ferriss55:52

        Lucretius, L-U-C-R-E-T-I-U-S. Titus Lucretius Carus was a Roman poet and philosopher. We'll put that in the show notes. The ... I want to second Bertrand Russell also. I haven't read Bertrand Russell in so many ages, but it is very digestible. It is not dressed up in $10 words when 10 cent words would suffice. A lot of his writing is really powerful. I also just wanted to mention for folks that, and I just thought about this, ages and ages ago I felt like I had certain gaps in my education after college, and I ended up... I don't know why this didn't occur to me earlier, but somebody mentioned that Stanford, UC Berkeley, these top-tier universities all had extended or adult education classes taught by professors and junior professors. I mean, these, this is the same team [laughs] who's teaching you.

    18. NKNick Kokonas56:53

        Yeah, yeah, yeah.

    19. TFTim Ferriss56:54

        [laughs] And, uh, those are very readily accessible.

    20. NKNick Kokonas56:58

        Well, and even MIT OpenCourseWare.

    21. TFTim Ferriss57:00

        Yep.

    22. NKNick Kokonas57:00

        Like, so many colleges now have taken that model and put great, great, great classes online. Um, and, you know, I know that every now and then I'm surprised what I find on there, and get sucked into, like, an all-nighter of taking some college class, you know, that I know nothing about, and it's so far over my head, but it kind of refuels you again to go, like, oh, like, there are huge gaps where I know nothing. And the older you get, the harder it is to start into something new, I find at least, because it feels like the mountain's too big, you know?

    23. TFTim Ferriss57:37

        I would actually, uh, not to pull a Nick "Actually, sir" on the-

    24. NKNick Kokonas57:41

        Yeah, you disagree. That's great

    25. TFTim Ferriss57:41

        ... on the con- on the contrary-

    26. NKNick Kokonas57:43

        Yeah, you do

    27. TFTim Ferriss57:43

        ... on the contrary, sir-

    28. NKNick Kokonas57:44

        [laughs]

    29. TFTim Ferriss57:44

        ... my book is doing me a lot of good in my dorm room.

22. 57:47 – 1:00:18

    Did being a Merc clerk meet Nick's expectations?

    1. NKNick Kokonas57:47

       That's right.

    2. TFTim Ferriss57:47

       I, I think one of your superpowers is that you ask the fundamental why questions about longstanding assumptions or conventional wisdom in different fields, and the more you have done that, the more obvious it is to you to do it as a starting point in, in a way. Let's go back to the Merc. We can go in any direction, of course, but-

    3. NKNick Kokonas58:11

       Yeah, yeah

    4. TFTim Ferriss58:12

       ... you step into this Lord of the Flies/gladiatorial arena with butchers and PhDs and so on. Then what? Like, at what point ... Is there a point when you're like, "Okay, I actually do think I could be good at this"?

    5. NKNick Kokonas58:29

       No. [laughs]

    6. TFTim Ferriss58:30

       [laughs]

    7. NKNick Kokonas58:30

       Yeah, no. Uh, I, I... For real, no. I was down there and I, I had made a fatal error of leaving school. [laughs]

    8. TFTim Ferriss58:39

       [laughs]

    9. NKNick Kokonas58:39

       And everyone told me it was a fatal error. And-

    10. TFTim Ferriss58:42

        This is leaving, uh, the law school

    11. NKNick Kokonas58:43

        ... you know, but it... Yeah. And, and I, I remember being down there and, you know, what I was doing was so brainless. It was literally take this piece of paper over to that guy, and then that guy would yell at you, and he would rip the paper out of your hand, and then you'd go get another one.

    12. TFTim Ferriss58:56

        [laughs]

    13. NKNick Kokonas58:56

        It was literally that brain-dead. And I, I was desperately looking to learn what was going on around me. And of course, I bought books on finance and commodities and options and all that, and they were completely ridiculous and opaque and academic that... And they looked like they had no relationship to what was going on there at all. I started taking classes that were run at the Merc on mock trading and just learning the hand signals and things like that, which were fine, but didn't really teach you how to trade. And I spent, you know, time interviewing with big companies like Goldman Sachs and Societe Generale and whatnot because I did have the academic background where I would get the interview, I would be able to take the test, I would do well on their math and psychology tests. I would get offered a job as a trader, and then I would look at the contract. And this is a key thing. People get out of college, they get offered a job. I, I think I'm the only one who ever read the employment contract. And what it said in there was basically, like, they could do anything they want with me for three years. Like, I don't even necessarily need to be a trader. Like, I ... That's what I was interested in doing, but they could, they could ship me to France and have me do something totally different. I could be an analyst or, you know, God knows what. And so when I would question that, they'd be like, "Man, you should be really happy. Like, we had, you know, 300 applicants for this and we offered eight positions. Like, just take it."

    14. TFTim Ferriss1:00:15

        [laughs]

    15. NKNick Kokonas1:00:15

        And I was kind of like-

    16. TFTim Ferriss1:00:17

        Totally

23. 1:00:18 – 1:04:54

    How Nick followed his father's entrepreneurial model in trading.

    1. TFTim Ferriss1:00:18

       your style

    2. NKNick Kokonas1:00:18

       ... I, I'd be remiss not to say that, like, my dad modeled ... My dad was an entrepreneur by necessity because his dad died when he was really young. He fought both at the end of World War II, he was drafted into the Navy at the end of World War II, was dismissed honorably after 16, 18 months because they were downsizing the Navy, and then he was barely young enough to be drafted into the Army for the Korean War. And when he got out, like, you know, he had no usable skills, so he went to work at the grocery store that he started working at when he was 12 years old, saved up all of his money from the Army and the Navy and, and bought the store. So as I was growing up, you know, my hero was my dad, who was not an academic, who was not what people would think of as, like, an executive in a suit or whatever, but did really well. He had bought property and real estate, he owned a temporary labor office that supplied unskilled laborers to factories and conventions and whatnot. That was a really good business, you know? And he had a lot of common sense smarts. He was horrified that I didn't go to law school, [laughs] you know? But meanwhile, I was modeling what he did. And so when I got down there, I was like, "You gotta own... You have to own your own situation." And so when I was offered those jobs, I was like, "Well, I don't really see myself working for someone else." And I found a guy, um, who also felt that way, and he was working for a big company, and they didn't want to make him a trader because he was too much of a quant. Like, he was really well-educated, he was really mathematical. He wanted to prove them wrong, so he took a small amount of money and started trading currency options. And when I found him, I instantly knew that this was the right person, because I had talked to dozens of people and no one was like him. And then he said he doesn't, didn't want to hire me.

    3. TFTim Ferriss1:02:03

       [laughs]

    4. NKNick Kokonas1:02:03

       Like, he didn't want to hire anyone.

    5. TFTim Ferriss1:02:04

       How did you meet him? Do you remember how you guys met?

    6. NKNick Kokonas1:02:06

       I... Yeah, I was, I was just introduced to him through... He was, back then there were, there, you know, it's if you're a trader or even a trading company of a clearing firm, like Goldman Sachs, at the time there was a company called First Options, and he cleared First Options, and back then you would literally have to take the elevator up to key punch in all the cards into, like, a computer that was 17 floors away.

    7. TFTim Ferriss1:02:27

       Wow.

    8. NKNick Kokonas1:02:27

       Ancient times. I met him through, uh, being introduced to him there. After talking to him, I knew he was the sort of geeky intellectual that I, that I needed. And then when he told me, like, that he didn't want to hire me 'cause he just hired some clerk, I was like, "No, no, no, no. Like, I will pay you to work for you."

    9. TFTim Ferriss1:02:43

       [laughs]

    10. NKNick Kokonas1:02:44

        And, and he was, he was like, "This is really strange," you know?

    11. TFTim Ferriss1:02:48

        [laughs]

    12. NKNick Kokonas1:02:49

        And I, I explained to him what I just said. It's like, look, I've been here six months. I set a goal for myself of getting on a badge, it was called, like leasing a seat and actually trading within a year. And I was like, "I need to get going on this. Like, I need someone that's going to teach me options." And it's fascinating because he then hired me for, I mean, I want to say it was $400 a week or something like that. You know, I stood right next to him all day every day, and he taught me options theory from scratch better than any college ever could, to the point where you're looking, you know, three derivatives in, it's not just volatility curve, but the curve of the curve. And, um, you know, as soon as I started grasping this and going deeper down that rabbit hole, the more I liked it as, as a puzzle. It wasn't... Certainly the money had an appeal, but it was also, hey, here's this, this giant competition. It's like playing a huge multifaceted chess game that no one's going to get exactly right. But like I said earlier, it's about making hundreds of decisions a day, and even when you get 10 in a row that come up tails, you know that the next one's 50/50. You know? And, uh, that discipline was interesting. That was more about teaching yourself the psychology of standing there while everyone told you you were wrong or you were, like, physically small or you were too educated or too serious. I mean, you can't imagine how much of a fraternity house that place was. Everything in Wolf of Wall Street I have seen.

    13. TFTim Ferriss1:04:23

        [laughs]

    14. NKNick Kokonas1:04:24

        I haven't lived-

    15. TFTim Ferriss1:04:25

        Yeah

    16. NKNick Kokonas1:04:25

        ... but I've seen it all.

    17. TFTim Ferriss1:04:27

        Yeah.

    18. NKNick Kokonas1:04:27

        And I started hiring very shortly after. I started trading and about a year later I left and started my own company with almost nothing. And I hired my first employee, who became my business partner for the last 25 years. And I taught him what I, what I learned, and I hired people that I considered corporate refugees, people who worked for companies and decided that independence

24. 1:04:54 – 1:05:57

    Why Nick left his mentor after a year to start his own company.

    1. NKNick Kokonas1:04:54

       was better.

    2. TFTim Ferriss1:04:55

       Why did you leave after a year?

    3. NKNick Kokonas1:04:57

       He was moving over to the Chicago Board of Trade, and I had found a couple of awesome programmers to help build this options analysis software. And he sort of offered me up to run some of the operations at the Mercantile Exchange when he went over to trade the bonds at the Board of Trade. And you know, I mean, he was a really, really smart guy, and he, he made me a deal that when you analyzed it very carefully got worse over time.

    4. TFTim Ferriss1:05:23

       [laughs]

    5. NKNick Kokonas1:05:24

       And I just kind of went, "You know, I... It's been great and I've learned a ton, and we've made each other a bunch of money and it, it's a win-win," but I really wanted to do my own thing. Like, I wanted to be the captain of my own ship, I guess. And, uh, thankfully this guy Jim Hansen, who's still one of my dearest friends, sort of had an option to, to stay with that company or come at a completely underfunded company. [laughs] I mean, thinking back, it was so stupid, you know, from a risk perspective. But it was asymmetric, you know? Um, far more upside than downside. It

25. 1:05:57 – 1:08:33

    How Nick and employees trained to quicken mental agility for trading.

    1. NKNick Kokonas1:05:57

       worked out really well and, and we spent most of our time as we hired people and, and taught them how to do this, it was mostly psychology training. It was mostly standing around after hours and saying, "What's 7 times 28?" And screaming it at each other like a drill sergeant until the person couldn't remember what 9 times 3 was anymore. And-

    2. TFTim Ferriss1:06:20

       [laughs] Wait, why did you do that?

    3. NKNick Kokonas1:06:23

       Well, you had to be quick, you had to be quick on basic mental agility.

    4. TFTim Ferriss1:06:26

       I see.

    5. NKNick Kokonas1:06:26

       So if you bought, if you bought 450 contracts and it was a 20 delta, you needed to be able to do what's 20% of 450? It's 90. But you need to do that precisely with numbers that are not so round.

    6. TFTim Ferriss1:06:39

       Right.

    7. NKNick Kokonas1:06:39

       You need to be willing to not be perfect, and you need to make that decision instantaneously and realizing that it could cost you $50,000 to $100,000 if you get it right or wrong.

    8. TFTim Ferriss1:06:48

       [laughs]

    9. NKNick Kokonas1:06:49

       And you have to be really, really comfortable with that. And so what did we do? Well, we stood around and we turned people's brains into mush until like lit- I've had people punch me, cry, run out. No, I mean, it sounds awful, but it was, it's amazing training because the rest of the world moves much slower.

    10. TFTim Ferriss1:07:06

        Yeah.

    11. NKNick Kokonas1:07:06

        So any other decisions that, that I've made in business since then have felt glacial in pace.

    12. TFTim Ferriss1:07:13

        Yeah.

    13. NKNick Kokonas1:07:13

        And-

    14. TFTim Ferriss1:07:13

        There, there's also something to be said for making the trainer, the training in some or all respects harder than the competition, right? I mean, the adage of the more you sweat during peacetime, the less you bleed during wartime. I mean, the best competitors I've met in many, many fields often strive to make their training and the toil of their preparation harder than what they expect to face.

    15. NKNick Kokonas1:07:40

        It's why we love watching big time sports. When it matters, there are certain people that you know you can almost look at them and go, "Oh, that poor person's gonna fade." And then you, you hope they don't, right? You hope all that training pays off. When you see someone... I, I love golf for all the same reasons. It's like, you know, just a, a series of constant failures. [laughs] And then so when you look at someone who, who can pull that rabbit out of the hat, you know, at the exactly the right moment, it's pretty wonderful to see. And, and I... The thing I loved about my time down there, even though I burned out of it after 10 years, is that there were moments where I, I did absol- I mean, I have friends and they'll listen to this and they'll be like, "Oh yeah, I remember that time in the S&P pit. You really got this right," you know? But I, I made some completely stupid decisions. But mostly on, on the measure, when things got crazy, I was able to perform

26. 1:08:33 – 1:09:18

    The moment Nick realized he could thrive in trading.

    1. NKNick Kokonas1:08:33

       more than not. I remember like Greenspan's irrational exuberance speech was like a formative moment where I kinda went, "Wow, I can actually, I can not only hang in this environment, I can thrive in it." And you know, you'd get home soaking wet with sweat. It was a physical job, I guess with people. It was really blue collar in a lot of ways. And you know, it's like I got home that day and I was like, "That was what I prepped my last six years for." It was very satisfying. It, it sounds like an awful... It is an awful thing in a way, right? Like, it's, it's just about pure commerce. It serves a purpose of price discovery and, and all that, but any individual person isn't really the one doing that, you know? So I think that there are negatives to the whole system as well in hindsight, but man, at the time it just felt like great mental

27. 1:09:18 – 1:11:38

    Recommended resources for becoming a better investor.

    1. NKNick Kokonas1:09:18

       training.

    2. TFTim Ferriss1:09:19

       What would you recommend to people who are listening and are having this flashback to the introductory text exchange about beating the market over a long period of time who are hoping to become better investors? And you can take that anywhere you want, but are there any particular tools-

    3. NKNick Kokonas1:09:39

       It's really-

    4. TFTim Ferriss1:09:40

       ... tricks, mental models-

    5. NKNick Kokonas1:09:41

       Yeah

    6. TFTim Ferriss1:09:41

       ... any- anything that you would recommend?

    7. NKNick Kokonas1:09:42

       It's really, really hard. I think the mental model is asymmetric risk. I always look for something that the, the upside is, you know, three to four X the downside. Obviously quantifying those is very difficult, but that's the key. Everything I try to do is asymmetric. And then even though Nassim Taleb is a bit of a pedantic goofball on Twitter, his book Fooled by Randomness is awesome.

    8. TFTim Ferriss1:10:07

       Yeah.

    9. NKNick Kokonas1:10:07

       Um, that was the one that preceded Black Swan and, um, I think Black Swan's great, it's fine, but Fooled by Randomness is, I think, the better of, of all his books because it, it just encapsulates everything that people price things incorrectly.

    10. TFTim Ferriss1:10:21

        It's a, it's a great book.

    11. NKNick Kokonas1:10:21

        All you have to do is walk through a casino.

    12. TFTim Ferriss1:10:23

        Yeah.

    13. NKNick Kokonas1:10:23

        Yeah. You walk through a casino and you see everybody pricing their outcomes incorrectly. [laughs] The entire city is built on that. You know, if you could get in your head-

    14. TFTim Ferriss1:10:32

        [laughs] Literally. Literally.

    15. NKNick Kokonas1:10:33

        Literally. Yeah. Literally. And I, I don't take any pleasure, like people are like, "Oh, you must, you must love gambling," or whatever, and it's like I would never sit down to a blackjack table because I know that, you know, there's a 49 and a half percent chance that I'm gonna win and that's the wrong way. [laughs] You know?

    16. TFTim Ferriss1:10:48

        [laughs] Yeah. Yeah. The, the Fooled by Randomness has, has come up a number of times. I haven't read it in ages because it is one of his earlier books, but uh, you know, Howard Marks also brought this up recently when I was chatting with him, and it is an exceptional book, I think, for developing a new lens on life, not just investing. When you are investing for yourself now, how do you think about risk? Because this is a word that has popped up a few times. How do you personally think about risk in your life? Do you, for instance, like some startup founders look at the risk as the various early stage startups, restaurants, bars, and so on that you're involved with and then you play it safe in your other kinda asset allocation? How do you think about risk in, in your life or in investing?

    17. NKNick Kokonas1:11:37

        That's

28. 1:11:38 – 1:14:16

    Nick seeks out "high, small hoops" for investment risks.

    1. NKNick Kokonas1:11:38

       pretty difficult question. I, I think that-

    2. TFTim Ferriss1:11:40

       It is, yeah

    3. NKNick Kokonas1:11:40

       ... I, yeah, I, I think that if you look at everything that I've, I've done business-wise, everybody would say that the failure rate is super high in what we do. So trading, they used to say one out of 100 people that goes down there breaks even their first year, and fewer out of that one take another 100 of those ones, and less than one in 100 of those becomes a millionaire. And I went, "Great." [laughs] It's like the old Jim Carrey, "So you're saying there's a chance," you know?

    4. TFTim Ferriss1:12:12

       [laughs] Right. Right.

    5. NKNick Kokonas1:12:13

       Um, right. You know? And, and, and, uh, and then, uh, and then you go to the restaurant business and people go, "Oh yeah, 95% of all restaurants go out of business in their first two years." And I'm like going, "Great," you know? "That's, that's perfect." I mean-

    6. TFTim Ferriss1:12:27

       Why do you, why do you have that response? Is it because you-

    7. NKNick Kokonas1:12:29

       Well, so... I'm gonna-

    8. TFTim Ferriss1:12:30

       Yeah

    9. NKNick Kokonas1:12:30

       ... yeah. So and that, and then I'm gonna start, I'm doing a-

    10. TFTim Ferriss1:12:32

        Yeah

    11. NKNick Kokonas1:12:32

        ... a software startup now too.

    12. TFTim Ferriss1:12:33

        No, go for it.

    13. NKNick Kokonas1:12:33

        So the higher the smaller the hoop, the more interesting it is to figure it out, and once you're up there and you know how to jump up through that little hoop, there's fewer people playing that game, you know? And, and the other thing is, I remember right when I was gonna start building Alinea with Grant, I was talking to a restaurant owner, and by all accounts he was pretty successful. He had four or five restaurants, and one of them I really liked a lot and we'd go there a lot, and I kinda got to know him a little bit. And he said, "So, you know, what are you up to?" And I said, "Well, actually I'm building a restaurant now."

    14. TFTim Ferriss1:13:09

        And he looked at me, he said, "Ah, it's a terrible business. You don't wanna do it. Like, incredible failure rate, terrible." And I was like, "Why did you build the next four?" [laughs]

    15. NKNick Kokonas1:13:20

        So, so whenever-

    16. TFTim Ferriss1:13:21

        Yeah, what did he, how did he respond to that?

    17. NKNick Kokonas1:13:23

        You know, no one does. That's kind of like what, you know, we'll get to it, I'm sure, but that's like the way I was with the publishing thing. It's like, "Hey, man, people keep printing books, and yet I can't figure out any of the information, and yet they're gonna give me, like, three or $400,000 to write a book. Something's remiss here."

    18. TFTim Ferriss1:13:39

        [laughs]

    19. NKNick Kokonas1:13:40

        Like, you know what I mean? I've never written a book before, but yet someone's gonna write me a $400,000 check. There must be a lot of money on the other side of that bet. And so consequently, like, I always try to look for the high small hoops, and then I spend my time learning as much as I can, and then I jump through that hoop. It's both more interesting, I think, and I also think getting back to the asymmetry of risk, those are the ones that, yeah, you might have a... Well, first of all, do you really have a 95% failure rate if you put in all that effort?

    20. TFTim Ferriss1:14:07

        Yeah.

    21. NKNick Kokonas1:14:07

        I, I don't think so. You know, so I think they priced it wrong, so to speak. And then second of all, man, that's, that's where the fun is. That gets you up in the morning and, and

29. 1:14:16 – 1:14:35

    Do businesses fail due to difficult model or lack of due diligence?

    1. NKNick Kokonas1:14:16

       going to work.

    2. TFTim Ferriss1:14:17

       Yeah. Yeah, this is, this is where, among many, many other places, averages can be very, very misleading, right? And I always end up in public Q&As and, uh, things of this type, hearing various

30. 1:14:35 – 1:17:11

    Why Nick was "horrified" when Alinea won Best Restaurant in 2006.

    1. TFTim Ferriss1:14:35

       numbers and stats thrown around, many of which I ha- think have no basis on any data whatsoever, but there's the, "We only use 10% of our brains," not true. There is the, "Nine out of 10 startups fail within the first year," or whatever the s- stat-

    2. NKNick Kokonas1:14:48

       Yeah, yeah

    3. TFTim Ferriss1:14:49

       ... the stat is. And the first question that occurs to me with a number like the, uh, the latter or I guess a ratio is, well, is it because the model is difficult? Is it because startups are inherently that high risk, or are there other plausible explanations? Is it that nine out of 10 people who attempt to start a startup don't do any of the necessary due diligence?

    4. NKNick Kokonas1:15:14

       Correct. Yes.

    5. TFTim Ferriss1:15:14

       [laughs]

    6. NKNick Kokonas1:15:15

       Yeah. You know, I've been on a couple of, uh, like, graduate school, you know, entrepreneurship, you know, contests and whatnot, and one of the things that always happens there is what I call, like, the time machine. Someone comes up with a business plan that is like, you know, you know, "I'm gonna build a time machine." Now, of course, it's not really a time machine, but I have seen ones that defy the laws of physics, for example. Um, or, you know, new pipeline technology, but they have no idea, like it's just a pipe dream. They've done none of the engineering. So you, you kinda look at that and you go, "You haven't really done the homework yet at all." And then there's a lot of people that come to me, and they've spent, like, six months doing their logo-

    7. TFTim Ferriss1:15:54

       [laughs]

    8. NKNick Kokonas1:15:55

       ... and the, and the name of the company, but they don't actually have a piece of software yet.

    9. TFTim Ferriss1:16:00

       Right.

    10. NKNick Kokonas1:16:00

        "Oh, I'm just gonna hire someone to, to build that for me," or, "I'm... an app." Uh, you know, I get so many apps pitched to me, and, you know, they don't know how to build an app, but they've got a logo and an idea. And I was like, "That's a good way to blow a half million dollars on a consultant."

    11. TFTim Ferriss1:16:15

        [laughs] Oh, man, I, I... We're gonna-

    12. NKNick Kokonas1:16:19

        You must get all the, you must get that 50 times worse than I do, so.

    13. TFTim Ferriss1:16:23

        Yeah. I mean, what, what I tend to get, and this is part of the reason why I stopped all the startup stuff a couple of years ago, is it got to the point where 90% of the pitches I received, which were unsolicited, would be along the lines of, "Hi," comma, like not even a first name, or it'd be like, "Hi, Tim," or, "Hey, Tim," even better. "I'm the CEO or co-founder of X. We are raising this at this valuation. We are oversubscribed, but we could squeeze you in for 25K if you're really interested because we admire ABC. Here are the docs attached." [laughs]

    14. NKNick Kokonas1:16:56

        Yeah, right, right.

    15. TFTim Ferriss1:16:57

        Like, let us know if you're interested in the next 60 minutes. [laughs] Which my end up, my default response to anything like that where people are pressuring me for a fast decision is no. Like, it's just... [laughs]

    16. NKNick Kokonas1:17:07

        Yeah, correct.

    17. TFTim Ferriss1:17:07

        Uh, it's like I've, I've lost very little money, uh,

31. 1:17:11 – 1:18:42

    When and why Nick decided to enter the restaurant business.

    1. TFTim Ferriss1:17:11

       saying no to those things. But coming back to the, the examples that you were giving and what we were talking about, bridging over to restaurants and food, you're being told how restaurants are an awful business. Food is an awful business, and I remember someone told me long, long time ago, they're like, "Yeah, if you wanna lose money, go into magazines or restaurants." And at what point, I have a little bit of the backstory, but not all the details. Like at what point do you decide to go into or get involved with restaurants, and why?

    2. NKNick Kokonas1:17:43

       I left trading in about 2002. 2001, you know, was a, you know, tough year between 9/11, which was, my father had died in February of that year. I was burnt out after, you know, going really hard for so long. And, you know, we'd built up a pretty good size company, too, and I merged with a firm in New York, and I just, I kinda needed a break, but didn't know how to, how to really take one at the time. Um, and so I left, I left trading, and I immediately kinda panicked because here was something that I, I really genuinely enjoyed, but didn't kinda know what I wanted to do next, and started doing consulting for, you know, a small hedge fund and, and then just didn't know what to do, and I, I had, you know, an awesome wife and a young son and, and things were good, you know? But I was kinda panicked. I was, I was playing golf with like, you know, ex-athletes, 'cause who else is 34 years old and can play golf on a Wednesday afternoon? And so it was just a weird thing, and I kinda looked at them and I'm like, "Oh, they don't really seem all that happy even though

32. 1:18:42 – 1:28:08

    The dinner leading to Nick and Grant Achatz's partnership.

    1. NKNick Kokonas1:18:42

       they're, they've got this lifestyle." And so I met Grant Achatz, the chef at dual dining at Trio. Um, went to a, a lunch there one afternoon that some friends set up, and it was a transformative experience. It was artistic, it was intellectual, it was thought-provoking. Most of all, it was emotional, and those are all things that I would never have associated with eating a dinner, right? And so from- From a perspective of, like, great art experiences, like seeing a great movie or a great play or going to an amazing museum opening, we kept drawing back there. Like, we kept going back, and we would go back so frequently that it was absurd because, you know, it was a big meal, and it wasn't cheap. And every time we'd go somewhere else, we'd go like, "Wow, why are, why is no one else thinking this way?" And as I got to know Grant a little bit, I think, like, sometimes people bring, you know, the chef some wine or beer or whatever, and it's like, that's kind of sand at the beach, you know?

    2. TFTim Ferriss1:19:41

       [laughs]

    3. NKNick Kokonas1:19:42

       Um, I would, I would bring him books. And I didn't figure he had a lot of time to read, so I would put, like, a Post-It note on a page of an old book. So I remember, I, I brought him this book called The Peregrinations of an Epicure. Um-

    4. TFTim Ferriss1:19:55

       Ho- hold on a second. The Peregrinations, like a peregrine falcon? I don't even know what that word is.

    5. NKNick Kokonas1:19:59

       No, no, no. A peregrination is, like, a wondering about.

    6. TFTim Ferriss1:20:02

       Ah, okay.

    7. NKNick Kokonas1:20:03

       So it was written just after World War II by an ex-serviceman. He kind of goes around Paris, I wanna say maybe late '40s, early '50s. I can't recall exactly. And, uh, there was a chapter in there on La Pyramide, uh, which was a very classical restaurant, kind of the best in the world at the time, and he described a meal there in emotional terms that resonated with what Grant was doing, even though his technique, his cuisine, everything was completely different. And so I would literally just highlight, like, a couple lines in there and give him this book, which was out of print at the time. We kind of developed this email relationship back and forth where he would sort of try out some new food on us, and I would give direct, honest feedback, but not like, "Oh, it was delicious."

    8. TFTim Ferriss1:20:50

       [laughs]

    9. NKNick Kokonas1:20:50

       It was more like, it was more like the, you know, you're going for a provocation there, but if, you know... And we would go back and forth, and he wrote, uh, at the time on a, on a forum called eGullit, and I went on there, and his spelling and grammar notwithstanding, I mean, it was like reading someone who's just really thinking hard about what they were doing. Everything we just talked about, here was this young 28-year-old chef from Michigan who looked like Captain America, who would come out not ster- You know, he was like Hollywood in the sense of, like, he was good-looking and very driven and very clean-cut, but he didn't look like, you know, the stereotype central casting of a chef, right?

    10. TFTim Ferriss1:21:28

        Mm-hmm.

    11. NKNick Kokonas1:21:28

        You know, chubby, gregarious guy. He was really quiet, introspective, shy. But then you read, and, you know, these, which are still up, uh, you know, you could still Google it, and you'd go like, you know, he'd go on for like four pages about bread service.

    12. TFTim Ferriss1:21:40

        [laughs]

    13. NKNick Kokonas1:21:41

        Like, what's the point of bread, you know?

    14. TFTim Ferriss1:21:42

        [laughs]

    15. NKNick Kokonas1:21:43

        And this is a guy that I could wrap my, you know, wrap my head around. And so I remember on, on January 20th, 2004, uh, it was my, my wife's birthday, and she said, "Yeah, I, I wanna go back there." And we'd never been in the kitchen before, and they have a table there, but we, we'd never eaten in there. And I remember I emailed him and said, "She's ethnically Latvian, speaks Japanese, and loves Thai food. Good fucking luck."

    16. TFTim Ferriss1:22:08

        [laughs]

    17. NKNick Kokonas1:22:10

        And I knew exactly what that would do to him. That would put him into 10 days of pure hell.

    18. TFTim Ferriss1:22:15

        [laughs]

    19. NKNick Kokonas1:22:16

        Because he would research Latvian food. He would have to redo, like, he would redo a whole menu, 20 courses, right? And I didn't know they were gonna put us in the kitchen, and they put us in the kitchen. I mean, it sounds like a, a jerky thing to do now, but we, we did have a relationship a little bit at the time. And he served us, like, the most amazing meal of my life, you know? And it started out with Latvian sorrel soup with braised ham hocks. And, you know, it had flavors of the sea, which was a Japanese dish. It had, it had Thai dishes. It, but it was all in his style. And so it was his own, and yet it had elements of all these things. And at the end of that meal, he said to me, "Well, what do you think?" And I'd watched the kitchen, and it was like a watchmaker's shop. It was not screaming and yelling.

    20. TFTim Ferriss1:23:05

        It is, it is just as... Uh, sorry to interrupt. It is so unlike anything that the vast majority of people listening to this would possibly expect, right?

    21. NKNick Kokonas1:23:16

        Yeah.

    22. TFTim Ferriss1:23:16

        I have, I have-

    23. NKNick Kokonas1:23:16

        It's not Gordon Ramsay. It's not Gordon Ramsay.

    24. TFTim Ferriss1:23:18

        Yeah.

    25. NKNick Kokonas1:23:18

        Right.

    26. TFTim Ferriss1:23:18

        Yeah, it is just complete silence. It is like a watchmaking factory. It is, uh, it is really something else. Anyway, sorry to, to jump in, but-

    27. NKNick Kokonas1:23:27

        Yeah, no, no, no. It's, it's, that's totally fine. And so at the end I said, you know, "I doubt anybody anywhere in the world had a better meal tonight." And he was like, "Well, well, thank you." And I said, "What are you planning on doing with yourself?" [laughs] You know? I mean, I, I was, like, kind of... I had a lot of wine.

    28. TFTim Ferriss1:23:40

        [laughs]

    29. NKNick Kokonas1:23:40

        And I kind of looked, I kind of looked at him, you know, he sat down with us, and I said, "What are you, what are you gonna do?" And he goes, "Well, what do you mean?" I said, "Well, you're not gonna be here forever." And he said, "Well, I, I wanna build my own restaurant." I said, "I'd be happy to help you do that." And he said, "What kind of restaurant do you wanna build?" I said, "I don't know. I've never built a restaurant before." That was it. And then like a week later, I got an email with his business plan, and I invited him by my house, and a year to the day later of that, that was May 4th, we went back and forth on email. On May 4th, we held a dinner at my house for potential investors. And on May 4th, 2005, we opened Alinea. Um, you know.

    30. TFTim Ferriss1:24:15

        That is nuts in terms of-
33. 1:28:08 – 1:30:49

    Why Nick chose to open a restaurant out of many risky options.

    1. TFTim Ferriss1:28:08

       second.

    2. NKNick Kokonas1:28:08

       I mean, just-

    3. TFTim Ferriss1:28:08

       So the why question that comes to mind for me is after the finance, after battling it out on the front lines and going through 2001, why this as your next thing? Why, why was this the thing that captured your imagination? 'Cause you had to know on some level once you started getting into the details, like, "Fuck, I mean, this is gonna be-

    4. NKNick Kokonas1:28:31

       Yeah, it's all in. Yeah.

    5. TFTim Ferriss1:28:32

       This is gonna be a big-

    6. NKNick Kokonas1:28:33

       Right, yeah

    7. TFTim Ferriss1:28:33

       ... this is gonna be all my chips in-

    8. NKNick Kokonas1:28:35

       Yeah

    9. TFTim Ferriss1:28:35

       ... energetically. So why, why this?

    10. NKNick Kokonas1:28:38

        You know, there are occasional times when you wake up in the morning and that thought comes back to you that, "Hey, I'm really sucked into this," right? You know? And for about three or four months, without telling anybody, even, you know, Dagmara, like, even not telling her, like, telling no one, I kept going like, "I should build a restaurant with this guy. It would be the best restaurant in the world if it was done all the way." And I recognized my inner voice saying, "That's a really dumb idea," [laughs] you know, "And you don't know what you're doing." I'd never worked a day in my life in a restaurant. And, a- and I also recognized, and this is also critical, I recognized that so many people built their living room after they made some money. So they went like, "Oh, well, I know how to host a good dinner party. And I know good wine, so I'm gonna build me a restaurant."

    11. TFTim Ferriss1:29:30

        [laughs]

    12. NKNick Kokonas1:29:31

        And then they sit there like it's their living room. And that's not good. Like, I didn't wanna be that, that doozy guy that built a restaurant because my ego was, was needed to host a party. And so whenever I would kind of later on broach that subject and people would say like, "Well..." You know, I could almost hear their brain whispering, "Well, of course that's what he's gonna do." And so that was, again, not the best of motivations in the world perhaps, but the honest one. That was hugely motivating eventually. But when we first started, it was this nagging thing. Like, I'd wake up in the morning and I would go, "You know, I'm not really into what I'm doing right now, and I've just met somebody who's the best in the world at what they do, and no one knows it yet." That's probably happened to me, I'm really fortunate that that's probably happened to me seven or eight times in my life. And when it happens and I meet that person, whoever it may be, no matter what they're doing, I pause, I kind of acknowledge that directly, and then I just go like, "Can we grab a glass of wine or, or coffee or something?" And that's something worth marking and going like, "Wow, this person's really invested in something." And Grant had every aspect of being, being that at 28 years old. And in hindsight, like, it looks smart, but I gotta tell you, it was years before it

34. 1:30:49 – 1:34:23

    How Nick spots talent early that others notice late.

    1. NKNick Kokonas1:30:49

       felt smart.

    2. TFTim Ferriss1:30:50

       You, so you, you mentioned just now that you've met these people seven or eight times who are the best in the world, uh, or potentially the best in the world-

    3. NKNick Kokonas1:31:00

       Or among them. Yeah, yeah.

    4. TFTim Ferriss1:31:00

       Yeah, among, among them. But the key point that jumps out for me is, and the world didn't know it yet. So my question for you is, that sort of brings to the forefront, in my mind at least, the question of what is Nick seeing or feeling that other people are not? So could you talk to that? I mean, when... Like, w- is there a feeling or a particular type of observation, a particular type of detail that you notice in these people that allows you to scout the talent where other people might miss it or not pay enough attention to it?

    5. NKNick Kokonas1:31:35

       Yeah, I mean, I think you've written a couple books about [laughs]

    6. TFTim Ferriss1:31:38

       [laughs]

    7. NKNick Kokonas1:31:38

       About that. It's definitely intangible. I think it's different in every case. But it's interesting because you can tell when someone is fully committed, I guess, to their craft or their art or their business or whatever it is that they're doing, their sport. And it's not because they s- they talk it about it all the time, though, of course, if you push a little, they're happy to do so. But it's more that, like, if you look around, like the vast majority of people are not fully committed to whatever. And I think part of what you do is you try to steer people to find those things that they can commit to, or you can try to lower a barrier to show them, like, "Hey, the commitment's not as hard as you think in this particular area," right?

    8. TFTim Ferriss1:32:23

       Right.

    9. NKNick Kokonas1:32:23

       But these folks are like, they're all in, they're 99% in. That's what they do, often to the detriment, frankly, of other aspects of their lives. And I guess you get better at noticing them. And I mean, now, like that's, like, boy, I live for that. Like, I love meeting people that even if it's not something I'm interested in-

    10. TFTim Ferriss1:32:48

        Mm-hmm

    11. NKNick Kokonas1:32:48

        ... that are all in. That's an interesting... Weirdly, I've never really thought about it that way, but like it was just very clear to me that Grant was all in. If he wasn't gonna do it with me, he was still gonna do it.

    12. TFTim Ferriss1:32:59

        Yeah.

    13. NKNick Kokonas1:32:59

        I was a, a helper. I, you know, over time, I certainly contributed, you know, a great deal to it, not just... He contributed a great deal to business, and then I also contributed to the art, but that took time, you know? But I could tell that he was all in, and, and that was fun. I mean, it's fun to work with somebody who is basically like, "Okay, man, if you're not in, like get out of the way 'cause I'm still going."

    14. TFTim Ferriss1:33:22

        Mm-hmm. And for, for anyone who has the opportunity, I don't even know if they would have the opportunity, but to watch, observe Grant even for 60 seconds-

    15. NKNick Kokonas1:33:37

        Well, Chef's Table on Netflix is great

    16. TFTim Ferriss1:33:38

        Yeah, Chef's Table.

    17. NKNick Kokonas1:33:39

        Yeah.

    18. TFTim Ferriss1:33:39

        Great.

    19. NKNick Kokonas1:33:40

        Yeah.

    20. TFTim Ferriss1:33:40

        Great. Perfect.

    21. NKNick Kokonas1:33:40

        Yeah.

    22. TFTim Ferriss1:33:41

        So everybody should have the experience of observing Grant working and focusing. It is... I've s- I've met a lot of people who are good at focusing, who have abnormal focusing abilities. And spending the time that we did together in Chicago and the time that I, that had to observe Grant is, it is a next level of focus. It's r- it's really hard to encapsulate in words. So Chef's Table, fantastic. People should check it out and just watch the level of focus that is permeates the appearance, the air, the atmosphere. It's really something else.

35. 1:34:23 – 1:37:25

    Questioning restaurant conventions like candles and white tablecloths.

    1. TFTim Ferriss1:34:23

       To that point, focus. One of the my favorite aspects of, of speaking with you and having conversations is the questions that you raised. Candle, not just should we have candles, like that's maybe a good question, but it's probably not the right first question. Like, why do restaurants use candles in the first place? Furthermore, why are candles considered romantic, right? Like kind of stepping back-

    2. NKNick Kokonas1:34:46

       Yeah, basic-

    3. TFTim Ferriss1:34:46

       Yeah

    4. NKNick Kokonas1:34:46

       ... basic stuff. Yeah.

    5. TFTim Ferriss1:34:47

       What, what are other questions that you asked related to Alinea or you, you could certainly bridge to other... You know, I think it makes sense to, to chat about Aviary as well, but what are some other questions that you guys asked that people might, might not think to ask?

    6. NKNick Kokonas1:35:03

       Yeah, I mean, it, you know, Grant set the tone for that in our first meeting, not really knowing me, and we started talking, but we didn't even know where to start, right? [laughs] And he said, "Well, I, I know one thing. I, I wanna have wooden tables. Like, I wanna have bare wood tables." And I said, "Why?" He said, "Well, why do tables, why do fancy restaurants have white tablecloths? They literally call it a white tablecloth restaurant if it's fancy. Why?" And I couldn't really... I came up with dumb answers like, "Oh, it, it feels good," or "It absorbs like a spill or whatever it may be." And he said, "No, it's because the table underneath is a piece of shit." [laughs] He goes, "And you know that." Like as soon as you say it everyone goes, "Oh yeah, I knew that." [laughs]

    7. TFTim Ferriss1:35:46

       [laughs]

    8. NKNick Kokonas1:35:47

       And you've been at weddings and stuff where you feel under the table and you're like, "Oh, it's plywood."

    9. TFTim Ferriss1:35:51

       Right.

    10. NKNick Kokonas1:35:51

        But if you go to like a really fancy restaurant and you feel under the table, guess what? Also plywood, just a little thicker. And he's like, "You know, when you rest your arms on the table, even if it doesn't come forefront in your mind, you kind of subconsciously know that they're kinda fooling you." And he's like, "Why can't we just have like black, beautiful tables? It'll show the food great. It'll show the plateware great." And then I kinda went like, "Well, yeah, but the health department doesn't let you put, in Chicago, doesn't let you put silverware right on the table. And if you put a glass there, the condensation will form a little ring, and then you have a, a wear issue. But you'll save $70,000 a year in laundering linens." And so we started going like, "Well, how do we solve the water problem?" Well, you create a fridge that's just above the dew point, 44 degrees, you know, in the winter, maybe a little warmer in the summer because it's higher humidity in Chicago, and you just get rid of ice. So you have these cascading decisions that become part of the art of the place, that some of them start from like a really practical thing like, "Hey, we wanna have a quality table." And then all of a sudden you need a little pillow that the silverware goes on that Martin designed because you can't put... We didn't wanna have place mats. That's too cheap. So all of a sudden we had to design like a silverware holder. So it just became this cascade of like interesting little art projects that were there for good reasons and really created a unique atmosphere. And it was like one of those things, like we never tested it. Until the day we opened. Like,

36. 1:37:25 – 1:38:19

    A now-famous chef was Alinea's first customer.

    1. NKNick Kokonas1:37:25

       you couldn't test those things. And the very first guy through the door was- is now a famous chef, Chef Sean Brock of Husk. And-

    2. TFTim Ferriss1:37:32

       Oh, fantastic. Yeah. Excellent spot

    3. NKNick Kokonas1:37:34

       ... and he was not, he was not yet a chef then, 2005, and he was the first guy through the door, and he wrote this giant blog post on Eater with pictures and everything. You can go see it. And every single thing that we hoped would create an emotional trigger, an emotional reaction, it's almost all there. Like, I remember going home and seeing it the next day and going, "Wow, that shit actually worked." [laughs]

    4. TFTim Ferriss1:37:57

       [laughs]

    5. NKNick Kokonas1:37:58

       And, you know, and it's, like, right down to the front hallway that was, you know, a reverse perspective, you know, stolen from Chartres Cathedral and, and, and inverted, you know. Um, so all of my interests of architecture and art and science, and all of Grant's, you know, food and all that, like, all came together in, like, a year-long conversation on how to do something.

37. 1:38:19 – 1:39:03

    Nick and Grant wouldn't let designers override their ideas.

    1. NKNick Kokonas1:38:19

       And we really fought with the architect and designers and, and all that because people would tell us the practical reasons why you needed to do this or that, and we would just go, "Nope. No host stand." Like, you know? We wanted to greet people in a, in an open way. And so just little things like that. And then we've taken that on, you know, through everything that we've done where we took, you know, seven years, six years to, to build our next place because we didn't have that idea that kept us up at night again. And so, you know, when we did, then we did it. And I think editing yourself and each other is i- in an open way is really, really painful, but really, really important.

38. 1:39:03 – 1:44:06

    How Nick contributed effectively as a restaurant industry newcomer.

    1. TFTim Ferriss1:39:03

       And coming back to something you mentioned related to The Living Room, the-

    2. NKNick Kokonas1:39:09

       Yeah. [laughs]

    3. TFTim Ferriss1:39:09

       ... well off-

    4. NKNick Kokonas1:39:10

       Yes

    5. TFTim Ferriss1:39:11

       [laughs] who then create, say, an art project that is not-

    6. NKNick Kokonas1:39:15

       Yeah

    7. TFTim Ferriss1:39:16

       ... maybe beautiful, but is most often not a viable business. How did you apply those questions and rethink the business model to make any of this work financially?

    8. NKNick Kokonas1:39:31

       Yeah, well, I mean, you don't wanna be a dilettante, right? You know, my biggest fear is that it would work in an artistic way, but wouldn't work as a business. And so the answer is at the beginning I didn't do much. I handled all of our marketing and PR. Like, I wrote everything, you know, myself, really thought about open sourcing the building of the restaurant. You can still go online and, and see the, the original business plans and what logos we were considering using, and the, the test kitchen which was in my house. You know, we didn't tell anyone at the time, but that was my house at the time. And, and see the development of this restaurant. And I felt like the open source movement in that way was a good model for what we were trying to, to accomplish, and part of that was people would say, like, "A restaurant like this can't make money." And, you know, I, I wrote this little spreadsheet that I called the Universal Restaurant Calculator. And-

    9. TFTim Ferriss1:40:30

       Can people find that online? [laughs]

    10. NKNick Kokonas1:40:32

        No, no, no. But it's, but it would be very unimpressive if they could. But it was, it was basically like how many covers per night... I mean, this is back of the envelope stuff. How many covers per night can you do? What's the check average for food? Check average for beverage. What are your food costs, beverage costs, labor costs? What's insurance cost, you know, your lease, your rent? Like, all those things, right? And I had enough experience with most of those things to at least give good estimates to it, and so what I started doing is I started modeling other restaurants using the Universal Restaurant Calculator. And I had, again this goes to the transparency of data, I had real data for only two restaurants, and from those two I would then make assumptions about restaurants like The French Laundry where Grant used to work, one, one of the greatest restaurants in the history of America certainly. And, you know, I came up with a number that Grant went, "There's no way their revenue's that high or they make that much money. That's impossible." And it was really funny 'cause years later... You know, I now work with Chef Keller, and he's, he's a friend all these years later, and I, I literally pulled that out one day with Grant being there and went like, "How close am I on this back in 2005?" And he's like, "Oh, you're within, like, two or 3%," you know? [laughs] And it's, and we're talking about back of the envelope stuff. And so, you know, you asked, like, where can people start to start a business. Start on the back of an envelope. Like, one of my favorite exercises is to sit in a restaurant or a small business of some sort and just literally do the back of the envelope. The, it was the kind of calculation my dad called it the two shoebox method, put me through college, right? Like, money coming in in one shoebox, money going out in the other. Whatever's left is profit. You know, start that basic. And we did that, and I didn't really think about the... We did well, but we didn't make a ton of money. Alinea cost $2.2 million to build. I put up a little over a quarter of that myself and found investors for the rest, all of whom I knew. And, you know, in the first year we did... You know, we made about $450,000 to $500,000 on $4 or $5 million in sales. Not a great return. Not a terrible return. We then won, you know, Best Restaurant in America from Gourmet Magazine, and I was horrified that we won that, frankly. I remember Grant called me and said, "Yep, I just got a call from Ruth Reichl." And, like, we had some stated goals of, like, how would we know if this is a success? And one of the things we wrote down was Ruth Reichl declares it the best restaurant in America. And we wrote that because in 1997 she wrote, "The most exciting place to eat in America is The French Laundry." And Grant was there and cooked that meal and said that the energy of having someone that he respected so much, 'cause Ruth is just a great writer. She's one of the unimpeachable food critics in the history of America, and having her write that in New York Times propelled that restaurant to its permanent status. I think that can't happen nowadays, honestly, for other reasons, but this is kind of pre-internet, pre-Yelp, all that. And then all of a sudden we got that, and I was, like, horrified because, you know, one of the goals was completed so early. [laughs] We would have- we wouldn't have our, like, our lodestar, you know?

    11. TFTim Ferriss1:43:42

        Mm-hmm.

    12. NKNick Kokonas1:43:43

        And so he was like, "Dear God, can you let me enjoy it for like a minute?" You know?

    13. TFTim Ferriss1:43:47

        [laughs] To you.

    14. NKNick Kokonas1:43:49

        Yeah. Oh, yeah.

    15. TFTim Ferriss1:43:49

        [laughs]

    16. NKNick Kokonas1:43:49

        Yeah, he was getting really mad at me.

    17. TFTim Ferriss1:43:50

        [laughs]

    18. NKNick Kokonas1:43:51

        So I was like, "That's terrible." Like, you know? I mean, I was happy, but I was also like, "Oh, no. Now what do we do?"

    19. TFTim Ferriss1:43:56

        [laughs]

    20. NKNick Kokonas1:43:57

        We need to, we need to find another artificial construct here to, like, go after.

    21. TFTim Ferriss1:44:00

        [laughs]

    22. NKNick Kokonas1:44:01

        And-

    23. TFTim Ferriss1:44:01

        Enough of this ha- I need to find happiness, and get this other happiness o- out of my, out of my face. Let me

39. 1:44:06 – 1:45:44

    Grant's cancer diagnosis; writing a book and revolutionizing reservations.

    1. TFTim Ferriss1:44:06

       wake up.

    2. NKNick Kokonas1:44:06

       Yeah, for sure.

    3. TFTim Ferriss1:44:06

       [laughs]

    4. NKNick Kokonas1:44:07

       Yeah, no, it's about... I really do believe that, actually, that it's often the process is so rewarding that when you get something done, it, it can be a letdown. And, um, I wanted that process to go, and then unfortunately, six months later Grant was diagnosed with stage four cancer and given six months to live. And so weirdly, that was the moment where after he was going through treatment where I started going into the restaurant at night, 'cause remember, I'm not a service professional. I was running the business of the restaurant. I would start going in at night and asking really dumb questions again. And, you know, weirdly, our goal was to keep Alinea open for when he came back. And mind you, he only missed like, you know, 12 days, 14 days of service during really intense chemo and radiation, but he was given six months to live. And when people are in that situation and their livelihood is tied to this restaurant, even despite their loyalties, oftentimes they just need to find another job, 'cause they're like, "Hey, in four months this place is gonna be closed." And in the midst of that we decided to do our first book really to chronicle what he had accomplished, because for him, he felt like that would be his legacy. He thought he was going to die. He was told he was gonna die. So in the midst of managing a self-created, self-published book and trying to do that differently, and then keeping a dwindling staff motivated, trying to let him know that it would still be there when he got well, all of that, I started going, "This place is run in strange ways, man. This industry [laughs] is, is, is not

40. 1:45:44 – 1:57:33

    Traditional restaurant reservation systems and Nick's improvements.

    1. NKNick Kokonas1:45:44

       run right." And I started asking, like, basic questions. Like, if we have a wait list for 100 people on a Wednesday, why do we do 74 people on a Wednesday but 86 on a Saturday? And the answer was because our incentives were misaligned. You know, the service industry as a whole can't run at 100% every single day of the week unless they're incentivized to do so. And you could go like, "Well, yeah, but every server there will make an extra 100 bucks a night or whatever." But they're kind of going like, "Look, if every night was Saturday, I'd be dead." [laughs] It's really hard work, you know? So you need to figure out ways of load balancing that and making every day the same, and you end up way ahead. So from a business perspective, that's when my sort of self-education in this industry came forward, and it came forward in a way that I think I was less patient with everything because we were also going through this really difficult emotional time. And so consequently, when I didn't get answers that made any sense, instead of being diplomatic about it, I would just be like, "Well, that's stupid." [laughs]

    2. TFTim Ferriss1:46:49

       [laughs]

    3. NKNick Kokonas1:46:49

       You know, and it would, would cut some of the normal social filter off, and I'm sure it wasn't a pleasant time to, to be around anybody. But I also think it was accepted within that environment at that time because everyone knew what we were going through. And so when we... You know, years, years later when we finally, like, were kind of like, "Hey, we've got some ideas to build Next and The Aviary," that's when I kind of went like, "Well, we're gonna do things totally differently here. And anyone who's not on board, even though they work for us, like, if you're not on board all the way in, like, on getting rid of normal reservations and not using telephones, on doing all these things, I'm not... You know, we don't have a place for you here." And man, it really worked. [laughs] You know? That was the basis of... You know, I talked to every software company in the industry asking for their APIs, asking to build essentially what's options pricing software on top of reservation systems. And OpenTable told me no, and the POS systems told me no. I called theaters and went like, "What ticketing system do you use?" And, and all of those told me no. So I hired a single programmer, and he and I in six weeks built a really rudimentary booking system. But the first day we turned it on, we sold $562,000 of tickets to a restaurant.

    4. TFTim Ferriss1:48:01

       For the first time. [laughs]

    5. NKNick Kokonas1:48:02

       For the first time ever.

    6. TFTim Ferriss1:48:03

       Okay. So pause here for a second.

    7. NKNick Kokonas1:48:04

       I know we're way ahead. We're really-

    8. TFTim Ferriss1:48:06

       No, I know. No, this is great.

    9. NKNick Kokonas1:48:07

       Right?

    10. TFTim Ferriss1:48:07

        This is great. So a few, a few things for folks who are not familiar. API, app- application programming interface, it's how you can effectively link into someone else's software. POS, point of sale, not piece of shit. And-

    11. NKNick Kokonas1:48:19

        Oh, but it is a piece of shit. [laughs]

    12. TFTim Ferriss1:48:20

        Oh, it may also be a piece of shit.

    13. NKNick Kokonas1:48:21

        Yes.

    14. TFTim Ferriss1:48:22

        What were the design specs that you were looking for? In other words, before you get to the 500,000 plus-

    15. NKNick Kokonas1:48:31

        Yeah, yeah

    16. TFTim Ferriss1:48:31

        ... with the snap of the fingers, like, what were you trying to fix, or what were you trying to create?

    17. NKNick Kokonas1:48:37

        So I, I get a lot of grief for this, for saying this in the industry and in the press, but basically whenever you make a restaurant reservation, one of the two of you talking is lying to each other. If you think about it, no other industry form of entertainment, uh, which dining out is a form of entertainment. I know it's sustenance. I know there's so much culture embedded in it and all that, but you could eat at home, right? No other form of entertainment you just call them up and say, "Hey, hold a seat to the Bears game or the Cubs game or the opera, and I'll show up around 7:30."

    18. TFTim Ferriss1:49:13

        [laughs]

    19. NKNick Kokonas1:49:14

        And then they tell you, "Yeah, yeah, we'll have a seat ready for you at 7:30." And then when you get there, they go, "Oh, you know what? Go wait over there for 30 or 40 minutes 'cause we're running a little behind tonight." You know? The reason that they're running behind is because they overbooked because about 15 to 18% of the people just don't show up. So they overbook. They also know that if they tell you that they'll really seat you at 9:00 and you wanted an 8:15, you'll just go to the restaurant down the street from them that will lie to them.

    20. TFTim Ferriss1:49:39

        [laughs]

    21. NKNick Kokonas1:49:40

        Right?

    22. TFTim Ferriss1:49:40

        Right.

    23. NKNick Kokonas1:49:41

        So they do that, and ultimately it's just bad all around. It's bad for the restaurant, it's wasteful for food, and it's bad hospitality. There are so many pop culture references and, and entire sitcom, you know, episodes built around someone trying to get into a restaurant, right? It's absurd. It's completely absurd. And, you know, I looked at our no-show rate at Alinea, data-driven, tracked it. I looked at our, what we call short-seated tables, like the number of tables that were four people but only two showed up, and the dirty secret there is, like, people would go like, "Well, what do you have available?" "Uh, well, I have an 8:30 for four." "Okay, we'll take that." And they never intended to bring the other two people. Well, that's just as bad as a two-top no-showing. We only have 74 people in there, and so it's a yield manage- or 74 seats, so it's a yield management problem. And so we... 5 to 8% of our revenue every night was, was being lost to that transaction. That was a non-transaction. And so I wanted to figure out ways to do two things. One, I wanna figure out ways to make it transactional, because again, you asked about Professor Thaler. One of the key tenets is there's a little bit of skin in the game, right?

    24. TFTim Ferriss1:50:54

        Mm-hmm.

    25. NKNick Kokonas1:50:54

        Um, when, when people have small vested interest in something, in the outcome of something, or even if I gave you a pencil as a gift, and then 30 minutes later I wanna take it back, you will get so mad even though you didn't care about that pencil.

    26. TFTim Ferriss1:51:06

        [laughs] Right.

    27. NKNick Kokonas1:51:08

        Right? 'Cause you're like, "What was that?"

    28. TFTim Ferriss1:51:10

        Yeah.

    29. NKNick Kokonas1:51:10

        "Dude gave me a gift. Now he's pulling it back." You know?

    30. TFTim Ferriss1:51:12

        Yeah, it's like the expected... It's like the expected value of a mug if you, uh, ask them how much they would spend to buy the mug versus giving them the mug and saying, "How much will you accept to sell it?" [laughs] You know, the differential.
41. 1:57:33 – 2:02:30

    Bickering at press dinner; avoiding Next becoming "Disneyland of cuisine."

    1. TFTim Ferriss1:57:34

       When you then debuted the ticketing option-

    2. NKNick Kokonas1:57:38

       Yeah

    3. TFTim Ferriss1:57:38

       ... if I'm labeling it properly, how did you prime the pump for that? Was there anything... Did you need to prime the pump to have this what seems like certainly a windfall? Uh-

    4. NKNick Kokonas1:57:49

       Well, we did... Yeah, we did a, a video where, you know, Next Restaurant was about a restaurant that's always new, essentially. Like, what's, what's one of the big problems of the restaurant industry? Well, when you open a new restaurant, doesn't matter what it is, people are gonna show up for, like, five or six months. And then after that, you know, you gotta struggle to, like, get regulars and, and find new audiences, and all that. But people like the new, quote, unquote. The other problem is, is that our own staff and chefs were the kind of people who I said to Grant one time... He cooked this amazing French dish for me at Alinea right in the middle of his sickness because I had driven down from Michigan. I've never eaten before or after in the Alinea kitchen, but he whipped up this little French dish for me of duck, and I was like, "Man, let's open a French restaurant someday." And he went like, "Eh, we'll get bored after six months." Then I was at one of our chef's homes on a day off Tuesday, and he ma- he loves Thai food, and he made this amazing Thai meal. Amazing. And I was like, wow, I had no idea these guys were so versatile, you know? And then it made sense. Hey, these are passionate, amazingly talented people. And it kinda dawned on me, like, let's change the restaurant every four months. [laughs] Like, you know, let's, let's do... And then we dwelled on that for like a year thinking, like, it was kind of impossible to do. And then I said, "Well, like, let's start with a French menu." He's like, "Well, what does that mean?" Like, there's southern France. There's Loire Valley. There's France that's nouvelle cuisine. And then there's France from, like, you know, 100 years ago. Totally different. And I was like, yep, Paris 1906. I don't need to explain to you what that is. You'd wanna eat that. If I just said, like, if someone said, "Hey, new restaurant opening. What's the menu?" "It's Paris 1906," I'd go like, "Cool." Like, I wanna do a little time travel and see what that was like. And so as soon as we had, like, a city and a time, we instantly knew that was the idea that kept us up at night, you know, where we went like, "Wow, look at all these different places we can travel, and what does that restaurant look like? And how do you create a kitchen versatile enough to make all these different cuisines, and, and how do you make it f- not feel like Disneyland, where one time you have a theme of Paris and the next time you have a theme of Japan?" So you have to go with, like, an austere minimalism, you know?

    5. TFTim Ferriss1:59:59

       Is there-

    6. NKNick Kokonas1:59:59

       So we-

    7. TFTim Ferriss1:59:59

       ... a particular reason why you chose the year 1906?

    8. NKNick Kokonas2:00:03

       You know, um, doing some research, and I may get the exact date wrong 'cause this is eight years ago I did the research, but I believe the Seine flooded in 1908, somewhere around there. And so Escoffier, like the father of French cuisine, was at The Ritz then, and that was kind of like the height of that era of cuisine. And then after the Seine flooded, that's where you got sort of your brasseries and bistros because they had to kinda go to a more casual... It opened up for more people.

    9. TFTim Ferriss2:00:35

       Right.

    10. NKNick Kokonas2:00:35

        It, it took the price point down. It made it more approachable. And it wiped out dozens of these fancy restaurants. And so, like, rent got cheap, and all of a sudden, like, hey, like, we're gonna get this new style of restaurant. That's roughly as I recall it. Somebody's gonna listen to this and tell me I'm all wrong. But that's where we landed because we could do this Escoffier menu.

    11. TFTim Ferriss2:00:53

        Mm-hmm.

    12. NKNick Kokonas2:00:53

        And boy, we argued about that, too. Like, they didn't have blenders then. So, like electric blenders. So, I mean, we did like a-

    13. TFTim Ferriss2:01:00

        So, so you wanted to mimic the production-

    14. NKNick Kokonas2:01:03

        Well, I did

    15. TFTim Ferriss2:01:03

        ... style.

    16. NKNick Kokonas2:01:04

        Grant did not. We were, I remember we were at a... We invited the press to a practice dinner at-

    17. TFTim Ferriss2:01:09

        [laughs] Grant's like, "Hey, pal, you don't have to make the food." [laughs]

    18. NKNick Kokonas2:01:11

        Well, partly that, but partly he was like, "Should we make it intentionally worse than we can?"

    19. TFTim Ferriss2:01:15

        [laughs] Yeah, hey.

    20. NKNick Kokonas2:01:18

        Because the recipes were really vague.

    21. TFTim Ferriss2:01:20

        Yeah.

    22. NKNick Kokonas2:01:20

        They didn't even call for salt.

    23. TFTim Ferriss2:01:21

        Yeah.

    24. NKNick Kokonas2:01:21

        So in the middle of this press dinner where we had, like, The New York Times there. We had all sorts of these people there, which we- I'll never do again, right? That was just a, a genuine error. Like, and we were still arguing out conceptually what this thing would be, and then we served dinner, and, and we were, like, openly ar- Like, he'd come out of the kitchen, and we would openly argue about it, you know? And, and he doesn't remember this, but I-

    25. TFTim Ferriss2:01:45

        This is, this is, this is at the press dinner?

    26. NKNick Kokonas2:01:47

        Yeah, yeah, yeah.

    27. TFTim Ferriss2:01:48

        [laughs]

    28. NKNick Kokonas2:01:48

        I remember he brought the soup out, and it was like, I was like, "Oh, they, they must have used can-" The actual blenders, right? Like, modern blenders, 'cause it was like the mouth feel was, like, perfect. And so I was like, "Oh, you use the blenders," you know? And he's like, "The recipe didn't call for salt either, did it? But I- should I have not used that and had it taste like shit?"

    29. TFTim Ferriss2:02:05

        [laughs]

    30. NKNick Kokonas2:02:06

        So, you know. And, and then I was like, "Well, maybe you don't know that they didn't have refrigeration then either, and they packed the vegetables in salt as a desiccant, and so they were almost all pre-salted by the time they get to Paris." And that was it. Like, people were just like, "These guys don't like each other at all." [laughs]
42. 2:02:30 – 2:06:04

    Reservation software problems; variable pricing based on day of week.

    1. NKNick Kokonas2:02:30

       arguments. And then, you know, in terms of the software, like, man, like, I didn't sleep for a week. We set it up on Rackspace. It didn't work right. I'd never done anything like that before. It was like no one would help. I think, like, nobody would help. No one in my-

    2. TFTim Ferriss2:02:45

       When, when you say nobody would help, you mean competitors, potential, uh, I don't even know you'd call it-

    3. NKNick Kokonas2:02:50

       Potential allies

    4. TFTim Ferriss2:02:50

       ... allies

    5. NKNick Kokonas2:02:50

       ... potential, like, potential-

    6. TFTim Ferriss2:02:52

       These are people-

    7. NKNick Kokonas2:02:52

       ... software companies

    8. TFTim Ferriss2:02:53

       ... I got it. It's pe- why wouldn't they help?

    9. NKNick Kokonas2:02:56

       In the case of OpenTable, they had a monopoly.

    10. TFTim Ferriss2:02:58

        Right.

    11. NKNick Kokonas2:02:58

        So why-

    12. TFTim Ferriss2:02:59

        That, that, that makes sense to me. That makes sense.

    13. NKNick Kokonas2:03:00

        Yeah. Um, in terms of everyone else, I think they di- just didn't get it. But even people within my own company thought this was a fool's errand. Grant, for sure, like, he will fully admit this now, thought it was a terrible idea.

    14. TFTim Ferriss2:03:12

        Why did he think it was a terrible idea?

    15. NKNick Kokonas2:03:13

        'Cause it's not hospitable.

    16. TFTim Ferriss2:03:15

        Mm-hmm.

    17. NKNick Kokonas2:03:15

        It's not hospitality. You know? It's, it's not-

    18. TFTim Ferriss2:03:17

        It's not, it's not... It's low touch, not high touch.

    19. NKNick Kokonas2:03:20

        Correct. And hugely the case where all of a sudden the price is different every day. Like, are people gonna get that? And I just kept looking to other industries, and I'm like, "No one has a problem with it when they go to a baseball game." They're, they're not sitting on the, above the dugout, and then, like, the guy who's in the third deck back row looks down and go, "Oh, that guy, like, he totally stole that ticket from me." [laughs]

    20. TFTim Ferriss2:03:41

        [laughs]

    21. NKNick Kokonas2:03:41

        Like, they're, they're like two different price points, you know?

    22. TFTim Ferriss2:03:43

        Yeah, yeah.

    23. NKNick Kokonas2:03:43

        And I just feel like people inherently get that without having to explain it to them.

    24. TFTim Ferriss2:03:46

        If I may, how far in advance of the opening-

    25. NKNick Kokonas2:03:49

        [laughs]

    26. TFTim Ferriss2:03:50

        ... were you pl- were you hoping to launch the software, and when did you end up launching the software?

    27. NKNick Kokonas2:03:56

        I launched it about seven hours before the first dinner. [laughs]

    28. TFTim Ferriss2:03:59

        Holy shit. [laughs]

    29. NKNick Kokonas2:04:01

        I hoped to have done it four to five weeks ahead of that. It was literally a one-man operation plus me, like one programmer and me. When we launched it, Rackspace, this is 2010. I'm not saying anything bad about Rackspace. It was... I didn't... I probably set it up wrong. Uh, 2010, it did not, like it's supposed to auto load correct and self-propagate, and it neither happened. I was expecting... We had 17,000 people on our email list that had signed up on the website to, like, be notified when the bookings went on sale, and I was expecting maybe, you know, 700 show up, like, should be fine, and something like 8 or 9,000 showed up, and everyone just kept hitting the refresh key.

    30. TFTim Ferriss2:04:43

        Oh, gosh.
43. 2:06:04 – 2:07:57

    The moment Nick realized "This is the best thing I've ever built."

    1. TFTim Ferriss2:06:04

       ships. Yeah.

    2. NKNick Kokonas2:06:05

       I, yeah, I, I would, I just wanted to make sure it, I, I forced myself to work. So we had no phone line. And when it started working, I would double-click, you know, one of the functions was I could double-click on a table, and if it was yellow, it was held. The public couldn't see it. I could make it available d- by double-clicking it. It would turn green, and then when it was sold, it would turn red. But the first time I did that to let more inventory out, and clearly things were working, it turned red so fast I thought it was broken.

    3. TFTim Ferriss2:06:33

       [laughs]

    4. NKNick Kokonas2:06:35

       And so then I went into the credit card processing and saw, "Oh my gosh, someone bought that that fast." And I called Grant and I said, "Dude, you gotta come to my house." And he was like, "Uh, we're opening a restaurant in like six hours. What's going on?" I said, "As the guy who helped save your life, get in a fucking taxi and come over here, 'cause I need to show you something." And he looked at me and kinda went like, [laughs] "What is wrong with you, right?" And, and I took him upstairs to my office and I said... I explained what I just, to him what I just explained to you, and I said, "Click on one of those and make it available." And he said, "Which one?" I go, "Any one in the next month." And he clicked like three weeks out at 9:30, and it instantly turned red. And in another window I had the credit card thing up, and I go, "Look, Mr. Jones bought that." And he went, "Really?" And I'm like, "Yep, there are, you know, 4,000 people waiting for you to do that right now." And that was the moment at which I, I was basically like, "This is the best thing I've ever built."

    5. TFTim Ferriss2:07:33

       [laughs]

    6. NKNick Kokonas2:07:36

       Because b- because it was, it was tr- it was, it was functionally different than any way that anybody was doing this. It wasn't novel. It was just applied in a novel way. And so, you know, what was interesting is that, of course, the software itself sucked. But as a proof of concept,

44. 2:07:57 – 2:10:32

    Why the reservation system's rewards were worth the asymmetric risks.

    1. NKNick Kokonas2:07:57

       it was awesome.

    2. TFTim Ferriss2:07:58

       Yeah. Qui- quick question on that, if you're comfortable answering. How much-

    3. NKNick Kokonas2:08:00

       Yeah

    4. TFTim Ferriss2:08:00

       ... money had you put into developing the software at that point?

    5. NKNick Kokonas2:08:05

       Uh, uh, yeah, yeah.

    6. TFTim Ferriss2:08:05

       Rou- roughly.

    7. NKNick Kokonas2:08:07

       I'm gonna say $115,000.

    8. TFTim Ferriss2:08:09

       Yeah, okay.

    9. NKNick Kokonas2:08:10

       Roughly.

    10. TFTim Ferriss2:08:11

        So in your mind, were you completely confident it would work, or... And there's, it doesn't have to be A or B, there could be C, D, E, F. Or were you like, "You know what? For 115K," or whatever it might be, even if you budgeted for less and it overran, even if there's a 20% chance that this works, is, it is worth risking the-

    11. NKNick Kokonas2:08:32

        Yeah, yeah

    12. TFTim Ferriss2:08:32

        ... hours and time because it will so completely transform what we're doing, and if it fucking fails, who cares?

    13. NKNick Kokonas2:08:38

        Correct.

    14. TFTim Ferriss2:08:38

        Yeah.

    15. NKNick Kokonas2:08:38

        Yeah, the latter one. Yeah. A- again, it's about the asymmetric risk, right? It was also about this thing that as I dug into how Alinea ran, there's, like, things that you can fix and control, and there's things you can't, right? And this was the one that, you know, I would answer phones at Alinea, and I would... It was like being a therapist. People would go, like, "I would like to, you know, make a reservation on my anniversary, you know, seven weeks from now on a Thursday." And you're like, "I'm really sorry, sir, it's totally full." And 100% of the time they thought you were lying to them.

    16. TFTim Ferriss2:09:11

        [laughs] Right.

    17. NKNick Kokonas2:09:13

        And, and, and so consequently, like, I realized that we were saying no to people more than we were saying yes, and that even when we said no in a nice way and took 10 minutes to do so, people thought that we were lying or that they weren't important to us or any of those things. And so I felt that transparency was actually more important than the actual money and a- the actual yield management. I felt like, like allowing people to see the entirety of the inventory was the most important thing. And same thing with, you know, the trading markets. They've moved to more, and more, and more transparency, more and more speed. This is true across every industry, and I just felt like, "Wow, this industry I, I found myself in was so backwards." And so I just wanted to make the whole thing more transparent. And so even if it didn't go beyond my own restaurants, I was totally fine with that. In fact, I didn't do anything with it for four years, and I, I didn't really intend on making it, you know, like a software product. I intended on fixing my own problems. And I think often that's where, that's where good ideas come from.

    18. TFTim Ferriss2:10:25

        Oh, super often. Yeah, the scratching of your own itch. At least you know you have a market of one.

    19. NKNick Kokonas2:10:30

        Yes.

    20. TFTim Ferriss2:10:30

        Gu- guaranteed market of one. And I, I also

45. 2:10:32 – 2:17:13

    Using Marimekko charts to visualize restaurant and sponsorship data.

    1. TFTim Ferriss2:10:32

       wanna point out, when we were talking about asymmetric risk earlier, and you were like, "Well, I want to stand to make 3 to 4X what I stand to lose." And if you run the math, and I'm, I'm sure I'm missing a lot of subtleties here, but when you said, "We booked 500 and X thousand dollars and it cost 115," [laughs] like we're getting very much within the ballpark of that.

    2. NKNick Kokonas2:10:50

       Yeah, but I didn't even... Like, I mean, well, I mean, since then it's like we've taken our margins at our restaurants from 10 to 12% to, you know, at times in good months, 20 to 25%. In an industry that over the last five years, if you read... I give a talk called Tuesday is Not Saturday, and Seven Things You Already Know But Are Doing Nothing About. It's a talk that I give to the restaurant industry. And, you know, one of the things that, that I point out in there is that there's so many obvious things that you could be doing to improve your hospitality, to improve your booking process, to get rid of food waste, but people tend to just kinda move along because it's a really chaotic environment. It's hard to make change in it because every day is game day. Like, you wake up every day and 100 people are gonna come through the door, and if your fishmonger doesn't show up, all you, you need to figure out what to do with that, you know? And so it's, it's not really about the return on that one investment at that one moment. It's more like, you know, 1,000 small improvements over time. And, you know, the, what... If I look back at that system that I built then compared to what we have now, you know, it's a minuscule part of what it turned into, but it was the seed of an idea which is more important, which is, "Hey, let's, let's shake things up." And then I, I got a great CFO who was at Bain Consulting, and he, he came on to, like, help manage the building of the project of Next. And when he started wanting to build out a business team, I was like, "Great. Run with it." And so we've built out food cost analysis that uses Marimekko charts, and it's totally different 'cause it's visual, and you give that to the chefs. And-

    3. TFTim Ferriss2:12:32

       It uses what charts?

    4. NKNick Kokonas2:12:33

       Ah, Marimekko. Ah. If you ha- if you don't know Marimekko, if you get nothing out of this, one of the greatest visualizations in charts that you could, like, you know, do in Excel or whatever. Hard to do vocally, but imagine a square where each of your X axis is the percentage of, let's say, food costs, and then each square within there is, like, I don't know, meat or produce. But the whole of the square is 100%. The Y axis is 100% of one metric, and the X axis is 100% of another. So you could kinda look at any given square and see how much that impacts the whole. It becomes like a big Lego building with different colors. Um, if you give a busy chef 400 receipts and say, "Hey, every Friday look through all these, and, you know, figure out what we're spending too much on." Or worse, "Hey, your food costs last month were 36%. I need them at 32%." You can't take percentages to the bank. Let's talk about dollars. Let's see where we can save some dollars. Or the revenue could have just gone down that month for whatever reason. It's August in New York. And so it's, it's not really a good way to look at it. But you give this person this, this w- chart, this Marimekko, and they go-

    5. TFTim Ferriss2:13:46

       Now, Marimekko, I'm, I'm looking-

    6. NKNick Kokonas2:13:48

       This guy's name. Yeah.

    7. TFTim Ferriss2:13:49

       Yeah. It's M-A-R-I-M-E-K-K-O chart. Is that right?

    8. NKNick Kokonas2:13:53

       Again, not, not good at spelling-

    9. TFTim Ferriss2:13:54

       I think so

    10. NKNick Kokonas2:13:54

        ... but sure. Yeah

    11. TFTim Ferriss2:13:55

        I think so. There is a Google result which is how to make a Marimekko chart in Excel, so I'm guessing that's probably it. There's some YouTube-

    12. NKNick Kokonas2:14:00

        That is it

    13. TFTim Ferriss2:14:01

        ... YouTube videos as well. So I'll, I'll put those-

    14. NKNick Kokonas2:14:03

        Yes

    15. TFTim Ferriss2:14:03

        ... in the show notes for people

    16. NKNick Kokonas2:14:05

        Man, I gotta tell you, like from a utility perspective, you show that to a person, you explain it visually, like when you see it, it makes much more sense, and they instantly get it, and they look at it and they're like, "Oh, there's no way I spent that much on facial last month." You know?

    17. TFTim Ferriss2:14:20

        A- and this can be-

    18. NKNick Kokonas2:14:21

        Instantly

    19. TFTim Ferriss2:14:21

        ... this can be used for things outside-

    20. NKNick Kokonas2:14:23

        Everything.

    21. TFTim Ferriss2:14:24

        Okay.

    22. NKNick Kokonas2:14:24

        Everything, yeah. It's-

    23. TFTim Ferriss2:14:25

        Not just food, not just restaurants.

    24. NKNick Kokonas2:14:27

        Oh, no, no, no. It's, it's just a great visualization of utility, and like consultants love it. And I gotta tell you, I don't love consultants in general.

    25. TFTim Ferriss2:14:37

        [laughs]

    26. NKNick Kokonas2:14:37

        But, but, but, but if I've learned anything from, from the best consultant that I've ever hired, like, who, who is now my partner and CFO, he came up, up with this, and as soon as I saw it, I was like, "How did this not enter my life [laughs] until my 40th year? This makes no sense," you know? It's just incredibly useful. But I, uh, my point is, is that we, we kinda went through everything in the restaurant and went like, "Well, what are the biggest spending areas that we can, like, analyze?" And it's true in any endeavor that you're doing, you know, there's no point in looking at, at the dimes if, if you've got something that costs $1,000. Start there. And that's getting into, like, our thoughts on our publicity, our PR, like we don't have a professional PR person n- and haven't s- in 14 and a half years. We don't spend money on any promotions other than social media. And then with the social media, we track all of that. We can see what our ROI is on a boosted post. We can see what our ROI is if we advertise on your podcast. You know, those are... That's, that's why these mediums are, are working is because they're measurable.

    27. TFTim Ferriss2:15:41

        Mm-hmm. You know, I, I, I was looking up, just as you were chatting and as I was also looking for Marimekko [laughs] a quote that I think applies, and you may certainly feel free to disagree, but applies very well to a lot of the breakthroughs that, that you have experienced and also helped to catalyze in, uh, a lot of what you've done, and it's a quote from Charlie Munger, who for those who don't know, you should definitely take a look at Poor Charlie's Almanac. He's the right hand, or I shouldn't even say that, he is the investing partner of Warren Buffett, and fascinating, fascinating human being. But one of, one of the quotes of his that I really return to a lot when I think I might be outsmarting myself in some way, or in general as a reminder, is quote, "It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid instead of trying to be very intelligent." [laughs]

    28. NKNick Kokonas2:16:39

        [laughs] Yeah.

    29. TFTim Ferriss2:16:41

        Yeah, right?

    30. NKNick Kokonas2:16:41

        Yeah, I mean-
46. 2:17:13 – 2:19:11

    The next industry Nick wants to disrupt: truffles.

    1. TFTim Ferriss2:17:13

       in many other places.

    2. NKNick Kokonas2:17:14

       You know, once you start down that road of thinking that way, it will drive you a little nutty.

    3. TFTim Ferriss2:17:19

       [laughs]

    4. NKNick Kokonas2:17:21

       Because you, you start... Like, you can't do every business, you know? And, um, you know, there's a couple things that I've got in my back pocket that I'm kinda like, "You know, one day I'm gonna arbitrage truffles." [laughs]

    5. TFTim Ferriss2:17:32

       Mm-hmm. [laughs]

    6. NKNick Kokonas2:17:33

       Because it's like there's an opaque market that's absurd. Here's an example. I'm gonna give somebody out there, call me up because this is a real business idea, and I've been wanting to do it for years, but you know, black and white truffles, not the kind, not the chocolate ones, but the kind that the dogs dig up in France and Italy, are as expensive as the most expensive drugs in the world. You order them as if it were an illegal drug, and of course they're perfectly legal, but you call up a truffle dealer and you go like, you know, "What do they cost?" "Well, they're, you know, s- 650 a pound right now for black truffles, 1,600 for white." You try to talk them down a little bit. You make sure that you get the best quality, 'cause hey, we're Alinea and we've, we'll ship you back the stuff we don't like and all that. And then in an unmarked box stacked with newspaper will come $20,000 of truffles. Good for like a week, by the way. Like not, like this is not like a big supply. And it is completely opaque as a market. There's no mycologist touching these. There are knockoffs from... Well, not knockoffs. There's different species and quality from Australia, from Tennessee, from, from China, et cetera, et cetera, that they cut into it. Sound familiar?

    7. TFTim Ferriss2:18:45

       [laughs]

    8. NKNick Kokonas2:18:46

       And it was my... Like, we spend a lot of money on truffles every year, and try to figure out what the US market in the fall truffle season is worth. You can't. It's exactly like publishing. You can't find numbers, you know? And so whenever I s- whenever I see something like that, I'm like, "Someone's guarding their, their golden goose," you know? [laughs]

    9. TFTim Ferriss2:19:10

       Right.

47. 2:19:11 – 2:26:40

    Illuminating black boxes.

    1. TFTim Ferriss2:19:11

       Whenever-

    2. NKNick Kokonas2:19:11

       Yeah

    3. TFTim Ferriss2:19:11

       ... whenever it's a black box, you're like, "I feel like I am not on the best side of this trade." [laughs]

    4. NKNick Kokonas2:19:16

       That's right. That's right.

    5. TFTim Ferriss2:19:17

       [laughs]

    6. NKNick Kokonas2:19:18

       And, and that's, that's what I did. You know, I did a closed ancillary network between the Merc and the Amex to arbitrage ETFs to get rid of the phone brokers in the middle. That took me, like, a year and a half to get through the Merc and Amex powers that be. Read, like, most of the CFTC, so when they would tell me it's not, like, in the rules or not legal or whatever, it's like-

    7. TFTim Ferriss2:19:39

       What is the CFTC Chicago trade, uh, something commission?

    8. NKNick Kokonas2:19:42

       No, no, no. This is the, uh, the federal, um, Commodities Trading Commission.

    9. TFTim Ferriss2:19:46

       I see. Okay.

    10. NKNick Kokonas2:19:47

        It's like the SEC but for commodities.

    11. TFTim Ferriss2:19:49

        I gotcha.

    12. NKNick Kokonas2:19:49

        And yo, a- again, sit down and actually read that someday. Like, what's amazing is that the experts never... It's like, it's like the members of Congress who don't read the bill, and then if you ask them detailed instructions on it, they're like, "Oh yeah, I don't really know, but the general tenor is this or that." The people who were governing the exchanges had never read the rules. So they would just quote to me-

    13. TFTim Ferriss2:20:08

        [laughs]

    14. NKNick Kokonas2:20:08

        They would just quote to me like, "Oh, it's against the rules." I'd be like, "Well, here are the seven volumes. Please show me where. If not, I'm gonna do it," you know?

    15. TFTim Ferriss2:20:15

        [laughs]

    16. NKNick Kokonas2:20:16

        And so similarly, like- Like truffles, same thing. The booking for the restaurants, same thing. OpenTable had a monopoly. They wouldn't tell you who your customers were. They would sell your customers, they still do, to other restaurants. You know, if you're full one night, they'll just send you down the street to a Japanese restaurant down the street. They don't care. So I wanted to get rid of all that, so I built the software for that. Truffles, I will someday build a truffle exchange. [laughs]

    17. TFTim Ferriss2:20:38

        So you, question for you.

    18. NKNick Kokonas2:20:39

        Yeah.

    19. TFTim Ferriss2:20:40

        Th- this is, this is, uh, this is something also for, this is maybe just turning this into a therapy session/coaching session-

    20. NKNick Kokonas2:20:46

        [laughs]

    21. TFTim Ferriss2:20:46

        ... for, for myself. But I get attracted like a moth to the flame to puzzles. And, um-

    22. NKNick Kokonas2:20:55

        Oh, I've got a puzzle for you.

    23. TFTim Ferriss2:20:56

        Oh, no. Well, no, no. I don't need any more puzzles.

    24. NKNick Kokonas2:20:58

        [laughs]

    25. TFTim Ferriss2:20:58

        I need no more puzzles. But you, there are many, many black boxes out there, right? You ha- you have truffles, and like you said, it's like, all right, what's the market size of the truffle exchange at X point in time? Don't know, right? Although you guys, as one establishment or multiple establishments, buy a lot. There might be 100 different black boxes like that that you run into. How do you choose the black boxes worth trying to shine light on like a detective? Because the, it's gonna consume energy, it's gonna consume time. How do you pick and choose which to go after?

    26. NKNick Kokonas2:21:37

        That's like the manic test, right? Like, it's like the one that bothers me the most. [laughs]

    27. TFTim Ferriss2:21:43

        [laughs]

    28. NKNick Kokonas2:21:43

        Like, I kinda start doing, you know? And then, uh, you know, and then it's iterative from there. Like, sometimes you find yourself in a construction of your own doing that was accidental.

    29. TFTim Ferriss2:21:53

        Mm-hmm.

    30. NKNick Kokonas2:21:54

        Like, all of a sudden, you know, you kinda opened your mouth and, and said something like the truffle thing, and all of a sudden, like, "Well, okay, I guess we're building a truffle exchange," you know?
48. 2:26:40 – 2:32:17

    Self-selection of job roles; how Nick's hiring process has changed.

    1. NKNick Kokonas2:26:40

       on. And, um, you know, we, we also try not to have such harshly defined roles. Not within the restaurant. Like, look, if you're a server, if you're a captain, if you're a, a line cook, you're probably not working on my truffle project. [laughs]

    2. TFTim Ferriss2:26:53

       Yeah. [laughs]

    3. NKNick Kokonas2:26:54

       Uh, just 'cause like it's, we don't have ti- I mean, realistically, uh, you know, that's not, that's... But on the business side, we certainly have people who, who work in roles as like a lawyer or an analyst or something like that who wanna get involved with our publishing project or who wanna get involved with the truffle project or whatever it may be. And, you know, I'm happy to, to pull them in and try to include them

Episode duration: 3:16:54