I’m often asked about how I approach New Year’s resolutions. The truth is that I no longer approach them at all, even though I did for decades. Why the change? I have found “past year reviews” (PYR) more informed, valuable, and actionable than half-blindly looking forward with broad resolutions. I did my first PYR after a mentor’s young daughter died of cancer on December 31st, eight years ago, and I’ve done it every year since. Her passing was a somber reminder that our days here are too precious not to fill them with the people and activities that nourish us most. The PYR takes just 30–60 minutes and looks like this:

1. Grab a notepad and create two columns: POSITIVE and NEGATIVE.
2. Go through your calendar from the last year, looking at every week.
3. For each week, jot down on the pad any people or activities or commitments that triggered peak positive or negative emotions for that month. Put them in their respective columns.
4. Once you’ve gone through the past year, look at your notepad list and ask, “What 20% of each column produced the most reliable or powerful peaks?”
5. Based on the answers, take your “positive” leaders and schedule more of them in the new year. Get them on the calendar now! Book things with friends and prepay for activities/events/commitments that you know work. It’s not real until it’s in the calendar. That’s step one. Step two is to take your “negative” leaders, put “NOT-TO-DO LIST” at the top, and put them somewhere you can see them each morning for the first few weeks of 2022. These are the people and things you *know* make you miserable, so don’t put them on your calendar out of obligation, guilt, FOMO, or other nonsense.

That’s it! If you try it, let me know how it goes.

And just remember: it’s not enough to remove the negative. That simply creates a void. Get the positive things on the calendar ASAP, lest they get crowded out by the bullshit and noise that will otherwise fill your days.

Good luck and godspeed, everyone!

###

If you prefer to listen to the audio version of this blog post, you can find the audio on The Tim Ferriss Show podcast:

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The post Forget New Year’s Resolutions and Conduct a ‘Past Year Review’ Instead (#559) appeared first on The Blog of Author Tim Ferriss.

NOTE FROM THE EDITOR: The following is a guest post from Ryan Holiday (@RyanHoliday). Ryan is one of the world’s foremost thinkers and writers on ancient philosophy and its place in everyday life. He is a sought-after speaker and strategist and the author of many bestselling books, including The Obstacle Is the Way, Ego Is the Enemy, and The Daily Stoic. His books have been translated into more than 30 languages and have sold more than two million copies worldwide. He lives outside Austin, Texas, with his family. You can follow him @ryanholiday or subscribe to his writing at RyanHoliday.net and DailyStoic.com. Ryan was also the fourth guest on the podcast, and he has written multiple popular guest posts for this blog. His new book, Stillness Is the Key, is coming out October 1st.

Enter Ryan…

The Buddhist word for it was upekkha. The Muslims spoke of aslama. The Hebrews, hishtavut. The second book of the Bhagavad Gita, the epic poem of the warrior Arjuna, speaks of samatvam, an “evenness of mind—a peace that is ever the same.” The Greeks, euthymia and hesychia. The Epicureans, ataraxia. The Christians, aequanimitas.

In English: stillness. To be steady while the world spins around you. To act without frenzy. To hear only what needs to be heard. To possess quietude—exterior and interior—on command.

Stillness is that quiet moment when inspiration hits you. It’s that ability to step back and reflect. It’s what makes room for gratitude and happiness. It’s one of the most powerful forces on earth. We all need stillness, but those of us charging ahead with big plans and big dreams need it most of all.

Still, the word “stillness” can feel vague or ephemeral. It doesn’t need to be. There are, in fact, concrete and actionable ways to bring it into your life. It doesn’t just happen. You have to put in the work. You have to follow the guidance of the masters.

For many years, I have been a student of, and writer about, Stoicism, an ancient philosophy popular in the Roman Empire. Tim published my first two books about Stoicism as part of his Tim Ferriss Book Club (The Obstacle Is the Way and Ego Is the Enemy). For my latest book, Stillness Is the Key, I looked at not just Stoicism, but Buddhism, Confucianism, Epicureanism, Christianity, Hinduism, and countless other philosophical schools and religions, and I found that the one thing all these schools share is a pursuit of this inner peace—this stillness—and a belief that it’s the key to a happy and meaningful life. As a result, here are 28 proven exercises from across all the wisdom of the ancient world that will help you keep steady, disciplined, focused, at peace, and able to access your full capabilities at any time, in any place, despite any distraction and every difficulty. 

These steps will work… if you work them. 

***

Journal. Michel Foucault called the journal a “weapon for spiritual combat.” According to her father, Otto, Anne Frank didn’t write in her journal every day, but she always wrote when she was upset or dealing with a problem. One of her best and most insightful lines must have come on a particularly difficult day. “Paper,” she said, “has more patience than people.” I journal each morning as a way of starting the day off fresh—I put my baggage down on the page so that I don’t have to carry it to meetings or to breakfast with my family. I start the day with stillness by pouring out what is not still into my journal. But there’s no right way or wrong way to journal. The point is just to do it.

See The World Like An Artist. Marcus Aurelius, who is supposedly this dark, depressive Stoic, seems to have seen beauty everywhere. Why else would he write so vividly of the ordinary way that “baking bread splits in places and those cracks, while not intended in the baker’s art, catch our eye and serve to stir our appetite,” or of the “stalks of ripe grain bending low, the frowning brow of the lion, the foam dripping from the boar’s mouth”? While other people are oblivious to (or overwhelmed by) what surrounds them, we want to practice really seeing. Try to notice the little things. Look at that tree like you’re a painter and trying to understand its essence. Observe that interaction with your parents like you were a stand-up comedian looking for material. An artist must be present. An artist must notice. An artist is still. 

Manage Your Inputs. As a general, Napoleon instructed his secretary to wait three weeks before opening any mail or correspondence. He wanted to see what would handle itself. One way I do this is with email filters. If I see an email is not urgent or not from a trusted source, I put it in a folder and sit on it (I like to reply on airplanes, without Wi-Fi, weeks or months later). Another way to do this is through gatekeepers. Having an assistant or an agent or a chief of staff means that trivial things have a harder time getting to you. You’re the boss—and the boss’s time must be protected! So that with stillness, you can give what matters your full attention. 

Take Walks. Nietzsche said that the ideas in Thus Spoke Zarathustra came to him on a long walk. Nikola Tesla discovered the rotating magnetic field, one of the most important scientific discoveries of all time, on a walk through a city park in Budapest in 1882. When he lived in Paris, Ernest Hemingway would take long walks along the quais whenever he was stuck in his writing and needed to clarify his thinking. The cantankerous philosopher Søren Kierkegaard walked the streets of Copenhagen nearly every afternoon, as he wrote to his sister-in-law: “Every day I walk myself into a state of well-being.” I take a two-to-three mile walk each morning with my son—ideas for this very post came to me there.

Detach From Outcomes. Archery master Awa Kenzo spent little time teaching his students how to deliberately aim and shoot. What Kenzo wanted students to do was to put the thought of hitting the target out of their minds. He wanted them to detach even from the idea of an outcome. “The hits on the target,” he would say, “are only the outward proof and confirmation of your purposelessness at its highest, of your egolessness, your self-abandonment, or whatever you like to call this state.” This is something writers know well: You can’t think about the bestseller lists or awards or even the act of publishing. You must focus only on the page in front of you. You must learn how to let go and let the process take over. 

Stop Watching The News. The number one thing to filter out if you want more equanimity in your life? The news! “If you wish to improve,” Epictetus said, “be content to appear clueless or stupid in extraneous matters.” Not only does the news cost us our peace of mind, but it actually prevents us from creating real change, right now. Being informed is important… watching the news in real time is not how you get there.

Ask Questions. As in, do I need this? If I get what I want, what will actually change? Why do I care what they think? What am I working on in myself today? Will this matter in five years? What if I did nothing? Questions like these help us calm the anxieties in our head and help us slow down—allowing room for stillness. It’s important to question our beliefs and our instincts. Tim has some awesome “impossible questions” that will also lead to stillness: “What are the worst things that could happen?” “What’s the least crowded channel?” “Do I need to make it back the way I lost it?” “What if I could only subtract to solve problems?” “Could it be that everything is fine and complete as is?”

Read Books. “Turn off your radio,” Dorothy Day, the Catholic journalist and social activist, wrote in her diary in 1942, “put away your daily paper…and spend time reading.” She meant books. Big, smart, wonderful books. If you’re stressed, stop whatever you’re doing and sit down with a book. You’ll find yourself calming down. You’ll get absorbed into a different world. William Osler, the founder of Johns Hopkins University, told aspiring medical students that when chemistry or anatomy distressed their soul, to “seek peace in the great pacifier, Shakespeare.” It doesn’t have to be plays—any great literature will do. Books are a way to get stillness on demand.

Put Your Phone Away. Remember, your phone is designed for one thing: to make you want to use it. And the apps on your phone have the same motivation too. That’s two very motivated ecosystems that are not aligned with your stillness. My screen time reducing rules: I don’t sleep in the same room as my phone. I don’t check my phone for at least the first hour of the day. I turn off all alerts and notifications. And if there is something I can do with a device other than my phone, I use that (example: don’t journal on your phone—get a paper journal).

Get Rid Of Stuff. Xunzi said, “The gentleman makes things his servants. The petty man is servant to things.” Every month, we go through our house and fill up bags for Goodwill and the Salvation Army. If we aren’t using it, it doesn’t need to take up space in our house. If it is causing us anxiety or worry (“Be careful or you’ll break it!”), we get rid of it. The less you have, the less you have to be worked up about. The less you are precious about, the less that can be taken from you by swings of fate or bad luck. 

Seek Solitude. “If I was to sum up the single biggest problem of senior leadership in the Information Age,” four-star Marine Corps general and former secretary of defense James Mattis has said, “it’s lack of reflection. Solitude allows you to reflect while others are reacting.” Bill Gates schedules “think weeks” where he goes off by himself and just reads and thinks. I like to do my thinking while running and swimming and taking walks—and many of my book ideas have come from these activities. Randall Stutman, who for decades has been the behind-the-scenes advisor for many of the biggest CEOs and leaders on Wall Street, once studied how several hundred senior executives of major corporations recharged in their downtime. The answers were things like swimming, sailing, long-distance cycling, listening quietly to classical music, scuba diving, riding motorcycles, and fly fishing. All these activities, he noticed, had one thing in common: an absence of voices. If you’re surrounded by others constantly, you’re likely to think and act as they do. To be original, you have to spend time alone. To have peace, you need solitude too.

Slow Down — Look Deeper. Framed on the wall of Fred Rogers’s production studio was a snippet from one of his favorite quotes: L’essentiel est invisible pour les yeux. What’s essential is invisible to the eye. Appearances and first impressions are misleading—we are so often deceived by what’s on the surface. It is in Stoicism and Buddhism and countless other schools that we find the same analogy: The world is like muddy water. To see through it, we have to let things settle. We can’t be disturbed by initial appearances, and if we are patient and still, the truth will be revealed to us. 

Enjoy the Small Pleasures. You know, Epicurus was not a glutton or a depraved maniac. On the contrary, he advocated that we enjoy the simple pleasures. There is a letter from Epicurus asking one of his rich supporters and friends for a gift. He wasn’t asking for money or exotic goods. He asked for a small pot of cheese. That’s it! That’s all the famous epicurean wanted. If you can teach yourself to be grateful for and enjoy the ordinary pleasures, you will be happier than just about everyone. A bowl of cereal. A good sunset. A nice conversation with friends. These are the moments to treasure. Not far-flung vacations or fancy cars or prestigious honors.

Take Mindless Mental Wanderings. The choreographer Twyla Tharp gives us this exercise: “Sit alone in a room and let your thoughts go wherever they will. Do this for one minute. […] Work up to ten minutes a day of this mindless mental wandering. Then start paying attention to your thoughts to see if a word or goal materializes. If it doesn’t, extend the exercise to eleven minutes, then twelve, then thirteen…until you find the length of time you need to ensure that something interesting will come to mind. The Gaelic phrase for this state of mind is ‘quietness without loneliness.’” You have to let your mind explore if you want it to discover new things.

Empty Your Mind. The paradox of Zen is that they want you to think very deeply… and also clear your mind. But it’s not a paradox. Life requires both. Yogi Berra famously said that it’s impossible to think and hit at the same time. It’s true. A major league baseball player has only 400 milliseconds to swing at a pitch. There’s no room for thinking. Chances are whatever you do is only made harder by the whirling thoughts of your inner monologue. Emptying our minds is especially important when we are upset. Push those nasty thoughts out—or let them float by like a cloud. Don’t get attached to them. Don’t let them take root. 

Seek Wisdom. Did you know that Buddha had a mentor? Two actually. His first teacher was Alara Kalama. His second was Uddaka Ramaputta. Zeno, the founder of Stoicism, studied under a philosopher named Crates. Who do you turn to for wisdom? Who is teaching you how to be better, calmer, and more still? For me, it was the author Robert Greene. From him, I was able to learn what it takes to be a writer, and I was able to learn how long the path to wisdom is. Having a mentor lets you see a version of yourself in the future. It teaches you not to be in such a hurry to get there, to know that it will take time (and most of all, lots of hard work). As Xunzi said: “Learning must never cease. … The noble person who studies widely and examines himself each day will become clear in his knowing and faultless in his conduct.”

[NOTE FROM THE EDITOR: See Robert Greene’s guest post: “The Magic of Apprenticeship — A How-To Guide“]

Be Present. They call it “the present” for a reason. Because each moment is a gift. Just stop. Breathe this in. Forget the past. Ignore the future. Just be. We are human beings after all.

Cultivate Relationships. Life without relationships, focused solely on accomplishment and success, is empty and meaningless. Love, Freud said, is the great educator. I’ve never understood the idea that monks and priests should turn away from relationships. No, it’s through loving and being loved that we reach a higher plane of stillness and understanding. My wife hasn’t held me back from anything—on the contrary, she’s not only made me better, she’s made all the work worthwhile. “There is no enjoying the possession of anything valuable,” Seneca said, “unless one has someone to share it with.”

Develop Your Values — Memorialize Them. No one has less serenity than the person who does not know right from wrong. No one is more exhausted than the people who must belabor every decision and consider every temptation. Try sitting down and writing your own Ten Commandments—what you do and don’t do. Put it up somewhere in your house. Use it as a guide. Let it help you settle yourself down. Personally, I keep a list of what Marcus Aurelius called “epithets for the self” in a list on my desk. They are: “Honest. Calm. Fair. Father. Brave. Generous. Still.” Those are my priorities.

Beware Desire. John F. Kennedy stared down the Cuban Missile Crisis with incredible stillness. In those same 13 days, he also cheated on his wife with a college girl. That doesn’t sound like stillness (or strength)—the world was ending, and instead of being with the people he loved, he was chasing a thrill. Krishna in the Bhagavad Gita calls desire the “ever-present enemy of the wise…which like a fire cannot find satisfaction.” Think about when you feel your best. It’s not when you are pining away. It’s not when you get what you pined for either. Stillness is when you are in control of your urges.

Realize You Have Plenty. Kurt Vonegut was once at a party with Joseph Heller, the author of Catch 22. Vonegut was teasing him about how a billionaire they both knew made more money that week than Catch 22 would make in a lifetime. “I have something he’ll never have,” Heller replied. “Enough.” Accomplishment. Money. Fame. Respect. No amount of them will ever make a person feel content. “When you realize there is nothing lacking,” Lao Tzu says, “the whole world belongs to you.” It’s not that you shouldn’t have goals and that you shouldn’t strive for more; it’s that you have to learn how to appreciate what you have right now. Remind yourself each morning, as I try to do, that you have enough. 

Zoom Out. When astronaut Edgar Mitchell was launched into space in 1971, he stared down at the tiny blue marble and felt something wash over him: a sense of connectedness and compassion for everyone and everything, “an instant global consciousness.” With the realization that we are all one, that we are all in this together, and that this fact is the only thing that truly matters, we lose the selfishness and self-absorption at the root of much of the disturbance in our lives. Remind yourself of this each time you look down out of an airplane window or from a high floor in a tall building or each time you look up at the stars. You are small but also part of something big.

Stop, Wait, Say No? The great baseball hitter Sadaharu Oh learned from his Zen Master and hitting coach, Hiroshi Arakawa, the power of waiting, the power of precision, the power of the void, the power of wu wei, or nonaction. Think of Fabius, the Roman general who defeated Hannibal by not attacking, but letting him defeat himself, far from home. You must protect your time and hold something back. Do not swing at every opportunity. Do not rush into action without thinking. I have a picture in my office of Oliver Sacks and behind him is a large sign that says “NO!” It’s a reminder to me to consider each opportunity and each ask carefully. What’s at stake is my stillness and my finite resources. So are yours!

Build A Routine. It’s strange to us that successful people, who are more or less their own boss and are clearly so talented, seem prisoners to the regimentation of their routines. Think about Jocko waking up at 4:30 a.m. every morning. Isn’t the whole point of greatness that you’re freed from trivial rules and regulations? That you can do whatever you want? Ah, but the greats know that complete freedom is a nightmare. They know that order is a prerequisite of excellence and that in an unpredictable world, good habits are a safe haven of certainty. It was Eisenhower who defined freedom as the opportunity for self-discipline. Without it, chaos and complacency move in. 

Pace Yourself. The main cause of injury for elite athletes is not tripping and falling. It’s not collisions. It’s overuse. Pitchers and quarterbacks throw out their arms. Others just get tired of the grinding hours and the pressure. Michael Phelps prematurely ended his swimming career for this reason—despite all the gold medals, he never wanted to get in a pool again. Life is much more of a marathon than a sprint. Last year, I got mono because I wore my immune system down. Ironically, my fear of missing out on work caused me to miss a bunch of work! Don’t burn out. Relax. Be still, so you can be strong over the long term.

[NOTE FROM THE EDITOR: Listen to Ryan and Tim discuss workaholism in their conversation on the Tim Ferriss Show podcast.]

Sleep. The bloodshot engineer six Red Bulls deep has no chance of stillness. Nor does the recent grad—or not-so-recent grad—who still parties like she’s in college. Nor does the writer who plans poorly and promises himself he’ll finish his book in a sleepless three-day sprint. Think of Arianna Huffington, who passed out from lack of sleep and shattered her cheekbone as she hit the bathroom floor. Shudder when you think about that—because it’s a cautionary tale. Believe it or not, I’ve never pulled an all-nighter, despite writing 10 books in less than a decade. Abusing the body leads the mind to abuse itself. Sleep is the recharging of the internal batteries, whose energy stores we recruit in order to do our work. Guard it carefully.

Make Time For Hobbies. “If action tires your body but puts your heart at ease,” Xunzi said, “do it.” Winston Churchill loved to paint and lay bricks on his country estate; his predecessor William Gladstone loved to chop down trees by hand. Even Jesus liked to go fishing with his friends! Assembling a puzzle, struggling with a guitar lesson, sitting on a quiet morning in a hunting blind, steadying a rifle or a bow while we wait for a deer, ladling soup in a homeless shelter, a long swim, lifting heavy weights—these are all great hobbies. Mine are running and swimming and working on my farm. Engaged in these activities, my body is busy but my mind is open. My heart is too.

Do Good. Marcus Aurelius spoke of moving from one unselfish action to another—“Only there,” he said, can we find “delight and stillness.” If you see a fraud and do not say fraud, the philosopher Nassim Taleb has said, you are a fraud. If we want to be good and feel good, we have to do good. Remember the Boy Scout slogan: Do a good turn daily. It can be big, or it can be small. It can be picking up trash you find on the ground or rushing to the scene of an accident. Doing good creates spiritual stillness. It makes the world a better place.

***

Each of our paths to stillness will be unique, but the outcome will be the same: quiet, strength, insight, peace, happiness. Most of all, we will be surprised to learn that the stillness we sought is not found outside us but within us. It’s been ours all along.

We just needed to unlock it. To access it. And to hold it close. 

Stillness is the key. To everything we want in life.

Ryan Holiday (@RyanHoliday) is the the author of many bestselling books, including The Obstacle Is the Way, Ego Is the Enemy, and The Daily Stoic. His new book, Stillness Is the Key, is coming out October 1st.

The post 28 Ways to Find the Stillness You Need to Thrive appeared first on The Blog of Author Tim Ferriss.

– Actual patient featured in “Trip of Compassion”

This post is about the most compelling movie I’ve seen in the last year.

I first watched “Trip of Compassion” about six months ago, when I was sent a link to a private video. The film had been broadcast once on Israeli television, but it wasn’t distributed or available anywhere else. This documentary affected me so deeply (and immediately) that I flew to Tel Aviv, met the filmmakers, and offered to help launch the film digitally worldwide. Everything I am doing for this film is 100% pro bono, and all proceeds go to the filmmakers.

Why am I doing this, and why is this film so exciting to me?

Tens of millions of people worldwide suffer from post-traumatic stress disorder (PTSD). Millions more have suffered from emotional and physical abuse but never get diagnosed. I would put myself in the latter category for reasons I’ll explain another time.

“Trip of Compassion” documents one unusual approach to healing trauma that might astonish you, an innovative treatment involving the psychoactive drug MDMA (commonly known as “ecstasy”). As you will see firsthand, if the therapy is well designed, true rebirth and transformation can happen in a matter of weeks and not years.

If you’ve ever felt held back, felt defective in some way, or felt that you’re not living up to your full potential, this film will give you hope.

This is also the first feature documentary to show actual therapy session footage (to our knowledge), to which the patients consented because of the incredible results they experienced.

Filmed at the Beer Yaakov Mental Health Center in Israel, “Trip of Compassion” provides a rare glimpse into a treatment process that can restore optimism and even the will to live.

Thank you for watching this film (just click here to stream) and, if you find it as powerful as I did, thank you for sharing it or this post.

***

In addition to helping launch this movie, I am supporting broader access to MDMA-assisted therapy in the USA and elsewhere by donating to MAPS.org, a non-profit dedicated to making this treatment available to those who need it (e.g., phase 3 trials, regulatory work, scholarships for low-income patients).

If you also decide that this work is important, please consider visiting MAPS.org to donate. NOTE: Be sure to specify the following in the donation form (there is a field for this, as they have many initiatives): “Funds are restricted to MDMA phase 3 trials.”

***

Thank you so much for reading this far. I couldn’t be more excited to share this film.

And remember as you watch: this is possible now. To quote William Gibson, “The future is already here — it’s just not very evenly distributed.”

Let’s help make this treatment more evenly distributed.

More to come,

Tim

The post "Trip of Compassion" — The Most Compelling Movie I've Seen In The Last Year appeared first on The Blog of Author Tim Ferriss.

My team and I have been working on this for more than six months, and it’s finally finished!  

The Tao of Seneca: Letters from a Stoic Master is a small thank-you gesture to all of you — three volumes of Stoic writing starring Seneca, complete with original illustrations, profiles of modern Stoic figures, interviews, original Japanese and Chinese calligraphy to match themes, and much more. It’s totally free and you can download the PDFs below. Sharing is encouraged. Kindle versions are coming shortly, but it’s easy to get the PDFs on your Kindle now (instructions below).

I hope you find Seneca’s wisdom as life-changing as I have. I also owe a very special thanks to my entire team and all of the contributors who took part in the project. Thank you!

Tao of Seneca: Volume 1

Tao of Seneca: Volume 2

Tao of Seneca: Volume 3

If interested, I also turned Seneca’s letters into an audiobook series (paid). I often listen to one letter (5-15 minutes each) while walking to coffee in the morning. You can find it here: The Tao of Seneca.

For Those Interested: How to Put a PDF on Your Kindle

Below is a breakdown (directly copied from Amazon with my comments in [brackets]) on how you can easily email a PDF document and upload to your Kindle.

1. You and your approved contacts can send documents to your registered Kindle devices, free Kindle reading applications, and your Kindle Library in the Amazon Cloud by e-mailing them to your Send-to-Kindle e-mail address ([name]@kindle.com). Your Send-to-Kindle e-mail address is a unique e-mail address assigned to each of your Kindle devices and free Kindle reading applications upon registration.
2. How to send a document to your Kindle:

To find your Send-to-Kindle e-mail address, visit the Manage your Devices page at Manage Your Kindle. [TIM: To skip to the part you need, go to the “Settings” tab and then scroll down to “Personal Document Settings.” That will be true if you click on any of the links in these instructions.]

Documents can only be sent to your Kindle devices or apps from e-mail accounts that you added to your Approved Personal Document E-mail List. To add an e-mail account, visit the Personal Document Settings page.

To send a document to your Kindle device or app, simply attach it to an e-mail addressed to your Send-to-Kindle e-mail.

[TIM: Note that the above does NOT work for the Kindle app on Mac desktop. If you want to read a PDF in that app, go to “File” –> “Import PDF…” and you’re off to the races.]

The post Tao of Seneca – Free PDFs appeared first on The Blog of Author Tim Ferriss.

When Reid Hoffman — who is rightly called “the Oracle of Silicon Valley” by many tech giants — returned to the podcast, I figured it would be popular, but it exploded.

Many of you have asked for the transcript of our conversation, so you can find it below. More accurately, it’s a draft script, so all words from Reid and other CEOs are accurate, but mine were modified substantially in the audio version. I added a lot of stories on the spot (maybe 20 minutes) that are likewise omitted.

The new 6-10 questions from me to Reid (e.g. “What book have you have reread the most?”) are not included below, but you can find them here.

Enjoy the notes and links!

Commandment 1

TIM FERRISS: Expect rejection. But learn from every “No.” As a founder you have to be resilient, you have to learn to weather rejection. It is a universal experience.  And this clip, from the Masters of Scale episode “Beauty of A Bad Idea” brings that to life. It also gives you a taste for the show’s sense of humor.

KATHRYN MINSHEW: I had been turned down 148 times.

REID HOFFMAN: That’s Kathryn Minshew, co-founder and CEO of The Muse, a career development website that she pitched to investors 148 times—not that she was counting.

MINSHEW: There were literally days where I had a “no” over breakfast, and “no” over a 10:30 AM coffee, a “no” over lunch. Disinterest at 2:00 pm, somebody who left a meeting early at 4:00. And then I would go to drinks and feel like I was being laughed out of the room.

And when we finally raised our seed round, I went back and counted. It was both painful and gratifying at the same time, looking at all those names, and thinking, “I remember that ‘no,’ I remember that ‘no,’ I remember that ‘no’”—and they sting; every one stings.

HOFFMAN: Today, the Muse serves users in the millions. Kathryn raised $16 million last year—and her tale is the origin story of most great startups. So if you’re hearing a chorus of “no”s, you should look for other signs that you’re onto something. I believe the best ideas often appear laughable at first glance.

FERRISS: Most entrepreneurs hear a chorus of “Nos” as they get started.  You have to expect it. And Reid says it’s actually a good thing. You don’t WANT everyone to say yes. Here’s why:

HOFFMAN: The first truth of entrepreneurship and investing is that the very big ideas are contrarian because the contrarian is part of the reason why a bunch of large companies and competitors haven’t already done it, why a bunch of other entrepreneurs haven’t already succeeded at it. And so that leaves the space for the creation of something—and to create something big, you have to have that initial space.  For example, in the early stages of Google, search was a terrible way of making money in advertising, because advertising is time-on-site. And what does search do? It shuffles you off the site as fast as you can go. That’s not a good business model. So at Airbnb it’s like, “Someone’s going to rent a couch or a room from someone else? Who are the freaks on both sides of that transaction?” So all of these things have this kind of similar quality—very smart people will tell you, there’s no there, there.

FERRISS: So it’s actually a good thing to hear a lot of “Nos.” But how do you interpret them? Reid has a great way of describing the kind of “no” you want. Apparently, you want a “squirmy” no. He explains this with help from Tristan Walker. Tristan’s company produces the Bevel razor, which is designed for men with coarse and curly hair.

HOFFMAN: So how can you tell a truly bad idea from a bad-sounding idea? How can you be sure your ugly duckling could become a swan? This is the key: You have to pay attention to the quality, not the quantity of rejections. You want to see at least a teeny minority of investors squirm. You don’t have to get them to a “yes,” but you should detect some friction, as they reason their way to a “no.”

Tristan has a keen ear for this quality in his conversations. He can pinpoint, down to the PowerPoint slide number, the moment his audience stops paying attention.

WALKER: I had a slide in there—I think it was like slide 14—where I talked about Proactiv—the acne system—as a good analogy to what we’re trying to do. It’s the difference between Gillette and Bevel, as Neutrogena and ProActiv—it’s a system that solves a very important issue. And this VC looked at me—and I’ll never forget this—he said, “Tristan, I’m not sure issues related to razor bumps, shaving or irritation are as profound and big an issue for people as acne.”

At which point, I said, “I kind of understand what you’re saying, but all you had to do was get on the phone with 10 black men, and eight of them would have said, ‘This is a permanent thing I have to deal with.’ All you had to do is get on the phone with 10 white men, four of them would have said the same thing. Could have done it for women too, and you would get the same ratios.” So it wasn’t that it was a bad idea, or not as important—it’s just that that person was unwilling to acquire the context necessary to understand what we’re working on. That’s just laziness—and at that point, I can’t fix that. So I just move on until I find somebody who understood it.

HOFFMAN: Notice how quickly Tristan’s mind moves on to the next investor. When the quality of the questions drops, he knows, mid-pitch, that the conversation is over—the rest is noise. Those half-hearted questions are like the elevator music of the pitch process. It’s meant to pacify entrepreneurs. In fact, it grates at them. It also wastes their time. Tristan will tell you he prefers a hard “no” to a comforting “maybe.”

WALKER: Silicon Valley investors will tell you all the time, “We want to invest in people who can execute with some semblance of pedigree, chasing a significant white space and a big opportunity.” For us, it was like “Check, check, check, check”—and we heard 99 percent “no”s. How much is bullshit, right? And you’re just trying to say something that I want to hear, as opposed to telling the truth. And I wish that Silicon Valley would tell the truth a little bit more.

HOFFMAN: Tristan raises a really interesting question here. How much of this investor hemming and hawing is, well, bullshit? What’s really going through their heads?

As a partner at Greylock, I want to share what happens after an entrepreneur leaves the room, and an investor is left to mull over a crazy idea. It begins with the debrief of the investor’s partners.

If I’m presenting an idea to my partners at Greylock, and they all go, “That’s great! We should do that.” I’m like, “Shit. Here’s a bunch of hyper-smart people and no one’s saying, ‘Oh, watch out for this, or watch out for that.’” It’s too easy. The idea is so obviously good, I can already hear the stampede of competitors trampling over our hopeful little startup. On the other hand, you don’t want every person in the room to say, “Reid, you’re out of your fucking mind,” because then you’re wondering, “Hmmm, am I drinking the Kool-Aid in a very bad way?”

What you want is some people going, “You guys are out of your minds,” and some people going, “I see it.” You want a polarized reaction.

So take my decision to invest in Airbnb as an example. David Sze told me during the Airbnb de-brief:

Narrator: David Sze is a partner at Greylock Investment.

HOFFMAN: “Well, every venture capitalist has to have a deal that doesn’t work that they learn from. Airbnb can be yours.” And David Sze is a super smart VC; he invested in LinkedIn. He invested in Facebook. He invested in Pandora. He personally returned two-and-a-half billion dollars to Greylock’s funds. He’s as smart as smart money gets—and believe me, I weigh his objections carefully. If someone as smart as David disagrees with me, I worry.

But I also get excited—it’s an emotional roller coaster. And as this sort of emotional turmoil plays out in the background discussion, it’s hard to give an entrepreneur a hard “no.” The best ideas make you want to say “yes” and “no” in the same breath.

FERRISS: So you want to hear a “squirmy no.” Those are the kinds of “nos” that mean you’re on to something. But let’s be real: It’s never easy to hear “no”. In fact, it sucks. So Reid also asked a few entrepreneurs to talk about how they deal with rejection, and how they learn from rejection. This is from the Masters of Scale episode “Beauty of A Bad Idea.”

HOFFMAN: So you have to gird yourself for a string of rejections. Some entrepreneurs simply develop a thick skin. Others treat it like a normal part of their workday. You know, wake up, brush your teeth, listen to people crush your dreams. It’s a living.

But there’s another, more hopeful approach. Our producer, Dan Kedmey, talked with a number of entrepreneurs who pitched seemingly laughable ideas in all kinds of industries. Like Abby Falik, founder and CEO of Global Citizen Year. Her not-for-profit sends students abroad for a year of international service between high school and college. Back in 2008, she was struggling to get funding, and she turned to a leadership coach for advice. We asked her to share that advice.

ABBY FALIK: The “no”s are actually a gift.

HOFFMAN: You heard that right, a gift.   

FALIK: And he said between now and when we talk two weeks from now, I want you to go out into the world and gather as many “no”s as you possibly can. It is your homework to be rejected over and over and over and over, and come back and report on it. And it ended up being the most important thing I could have ever done, and the most important advice I could have been given at that point.

HOFFMAN: The most successful entrepreneurs listen closely to the “no”s. They mine their rejections for clues. Kathryn Minshew, the founder of The Muse, got her share of rejections over the course of 148 “no”s she shared at the top of this episode. We asked her for the reasons that investors turned her down.

MINSHEW: “It’s a bit too early for us, but keep in touch.” “Once you hit 100,000 monthly active users, give me a call.”  “This is a fool’s errand. It’s expensive. It doesn’t scale.” “That’s not very tech, that’s not a scalable platform.” “Aren’t you worried that you’re going to lose all your users once they turn 30 and have babies?” Or, “I get that women in New York and San Francisco love this product, but I think you’re going to really have a hard time finding women who care about their careers once you go outside of the coasts.” And I just remember looking at these people and thinking, “Do you know a lot of women?”

HOFFMAN: Kathryn is right to ask this question. She knows more about women than most investors, and she also knows more about her business. Entrepreneurs have to learn how to hold on to what they know through the arduous pitch process.

Commandment 2

FERRISS: Hire like your life depends on it. It does. Hiring the right people can make or break a company. And this is a theme that comes up again and again with the founders on Masters of Scale.

FERRISS: Airbnb’s Brian Chesky personally interviewed the company’s first 500 employees. It was time-consuming, painstaking work, but Brian wouldn’t have had it any other way. Patience, he says, pays dividends.

CHESKY: And one of the most important decisions a startup can make is who they hire. Because who they hire becomes them. And so we interviewed people for core values. What this ended up, and that meant we spent like four or five months to hire our first engineer. Back then a lot of people thought we were crazy because time is of the essence when you’re a startup. You’ve said it’s like jumping off a cliff and assembling the airplane on the way down. Imagine jumping off the cliff, trying to assemble the airplane on the way down, and someone’s there to help you with the airplane, and you spend five months debating whether they’ll fit the culture.

Meanwhile, the ground is coming. That takes like real patience and some courage. The reason we did that though was because we thought in the high-class event we are successful, do I want to work with 100 more people like this? Because if I hire someone, they are going to interview the new people. And so we thought of hiring as this mechanism where, do I want to, if I could hire anyone in the world, would I hire the person sitting across me, and do I want 10 or 100 more people like them?

FERRISS: But if you launch a truly successful company, eventually, the hiring process has to scale. Eric Schmidt had a lot to say about hiring quickly, but not hastily. When he was CEO of Google, the company quadrupled in size each year, while maintaining super-high standards. He told Reid how he did it:

SCHMIDT: So the company was getting very large, very quickly. And I had suggested to Larry and Sergey that there was a problem with what I called “glue people.” And glue people are very nice people who sit between functions, and help either side, but don’t themselves add a lot of value. And I thought, “These are nice people, but we don’t really need them. We can have these groups talking directly.” And Larry looked at me and says, “We could solve this problem, if you would just review all the hiring.” And I said, “Larry, we can’t look at all the hiring.” He said, “Sure we can.”

So the company, of course, invented a number of hiring algorithms, which are used throughout the industry today. Many of them include pretty aggressive hiring interviews from peers, asking people to do work, and so forth. Ultimately, the judgment has a lot to do with whether the person is interesting or not. And so we would, for example, take a position that we want to hire rocket scientists because rocket scientists are inherently interesting. And in sales, we love to hire Olympians. Or Super Bowl winners, or football players—because of the discipline that they had in their lives as young people—men and women—to get to that point indicated that an extra set of discipline.

HOFFMAN: I want to acknowledge that most companies don’t have the option of hiring rocket scientists, Olympic athletes, and Super Bowl winners. But Eric does have more pragmatic advice for companies that can’t set the bar at Himalayan heights.

SCHMIDT: So today I would suggest that—and this has since been confirmed by many studies—that persistence is the single biggest predictor of future success. And so we would look for persistence. And the second thing was curiosity. What do you care about? The combination of persistence and curiosity is a very good predictor of employee success in a knowledge economy.

FERRISS: So persistence plus curiosity is one formula for hiring success. Mark Zuckerberg, the CEO of Facebook has another. Here’s what he told Reid:

ZUCKERBERG: So the single most important thing is to get the best people you can around you. When I look at my friends who were running other good companies, the single biggest difference that I see in whether the companies end up becoming really great and reaching their potential, or just pretty good, is whether they’re comfortable and really self-confident enough to have people who are stronger than them around them. I’ve adopted this hiring rule, which is that you should never hire someone to work for you, unless you would work for them in an alternate universe.

Which doesn’t mean that you should give them your job, but just if the tables were turned and you were looking for a job, would you be comfortable working for this person? I basically think that if the answer to that is “no,” then you’re doing something expedient by hiring them, but you’re not doing as well as you can on that.

There are all these things that Sheryl, for example, is just much stronger than me and that makes me better and makes Facebook better. And I am not afraid or threatened by that—I value that. That’s what makes Facebook good.

FERRISS: Of course Mark is talking about Sheryl Sandberg, COO of Facebook. And she has her own take on this rule …

SANDBERG: The lesson everyone talks about, but I really mean, is you really do want to hire people who are better than you are, and who are different than you are. This is where we talk about diversity. I don’t just mean racial, national, age, gender. All of that diversity is super important. In addition to that cognitive diversity, which you get from all those backgrounds, but also just personality diversity.

If you are a white male who likes to code and sci-fi movies, you probably don’t want your whole team to be that. I think about David Fischer. David Fischer and I have worked together at Treasury, at Google, and at Facebook. Personality types were just very different. I’m much more up and down. I will get nervous something’s not moving fast enough. I will be exuberant, and I will be down. Not David. David is absolutely calm. Over decades of working together, that balance has really been important, because sometimes I’ll look at David and say, “This is an emergency.” He’ll say, “No it’s not Sheryl, calm down.”

And sometimes I’ll say, “David, you’re not moving fast enough,” and he’ll say, “You’re right.” I think Mark and I have that too. We are very different. We are separated by—obviously, gender, 15 years, he’s my boss, he’s 15 years younger. Completely different personalities, completely different working styles—and I think’s that served Facebook well.

Commandment 3

FERRISS: In order to scale, you have to do things that don’t scale. It may sound counter-intuitive. But in order to scale, you have to get your hands dirty. Hand-craft the core experience. Serve your customers one-by-one. And don’t stop until you know exactly what they want. That’s what Airbnb CEO Brian Chesky did.

On the first episode of Masters of Scale, Brian took Reid back to his lean years — when he went door-to-door, meeting Airbnb hosts in person. This clip we’re going to hear starts with Brian recalling a conversation he had in 2009 with Paul Graham, the founder of Y Combinator, who gave him some perplexing advice….

CHESKY: And he asked us, “Where’s your business?” And I go, “What do you mean?” “Where’s your traction?” And I go “We don’t have a lot of traction.” He goes, “People must be using it.” I said, “There are a few people in New York using it.” And he said something I’ll never forget.  He said, “So your users are in New York and you’re still in Mountain View.” I said, “Yeah.” And he said, “What are you still doing here?” And I go, “What do you mean?” He said, “Go to your users. Get to know them. Get your customers one by one.” And I said, “But that won’t scale. If we’re huge and we have millions of customers we can’t meet every customer.” And he said, “That’s exactly why you should do it now because this is the only time you’ll ever be small enough that you can meet all your customers, get to know them, and make something directly for them.”  

HOFFMAN: Brian and his co-founders followed his advice to the letter.

CHESKY: We literally commuted to New York from Mountain View. So we would be in Y Combinator for Tuesday night dinners and then Wednesday Joe and I would go to New York. We literally would knock on the doors of all of our hosts. We had their addresses and we say, “Knock knock. Hello. Hey, this is Brian, Joe, we’re founders and we just want to meet you.”

HOFFMAN: Now, it’s a little creepy to just knock on the door unannounced.

CHESKY: We needed an excuse to get into their home.

HOFFMAN: So they come up with an offer that hosts couldn’t refuse.

CHESKY: We’d send a professional photographer to your home and photograph your home. Of course, we didn’t have any money and we couldn’t employ photographers. So Joe and I, we’d show up at their door and they’re like “Wow. This company is pretty small.”

HOFFMAN: These home visits became Airbnb’s secret weapon. It’s how they learned what people loved.

CHESKY: It’s really hard to get even 10 people to love anything but it’s not hard if you spend a ton of time with them. If I want to make something amazing, I just spend time with you. And I’m like, “Well what if I did this, what if I did this, what if I did this?”

HOFFMAN: From those questions, a handcrafted experience is born.

CHESKY: We’d find out “Hey, I don’t feel comfortable with the guest. I don’t know who they are.” “Well what if we had profiles?” “Great!” “Well what do you want in your profile?” “Well I want a photo.”  “Great. What else?”  “I want to know where they work, where they went to school.” “OK.” So you add that stuff. And then you literally start designing touchpoint by touchpoint. The creation of the peer review system, customer support, all these things came from us literally—we didn’t just meet our users, we lived with them. And I used to joke that when you bought an iPhone Steve Jobs didn’t come sleep on your couch, but I did.

HOFFMAN: [laughs] Yes. Was there a particular experience that really stuck in your mind?

CHESKY: I remember we met with a couple hosts. It’s winter. It’s snowing outside and we’re in snow boots. We walk up to the apartment and we went there to photograph the home. And we’re like, “I’ll upload your photos to the website. Do you have any other feedback?” He comes back with a book, it’s a binder and he’s got dozens of pages of notes. He ends up creating a product roadmap for us, we should have this, this, this, this and this, and we’re like, “Oh my god this is our roadmap because he’s the customer.” I think that always stuck in our mind as, the roadmap often exists in the minds of the users you’re designing things for.

FERRISS: As Airbnb grew, Brian never stopped hand-crafting the user experience. At one point, to envision what Airbnb could become, he and his team imagined what he calls an “11-star check-in experience.” Only part of what follows was heard on Masters of Scale. For this show they gave us the complete, un-cut version of Brian’s thought experiment. 

CHESKY: The core thesis is if you want to build a massively successful company, you need to build something that people love so much they tell each other. Which means that you must build something worth talking about. If you want to build something we’re talking about, you have to go back to things that don’t scale, and imagine like what a five-star experience would be. And presumably if somebody likes it, they’ll leave five stars out of five stars in the app. They’re satisfied to tell other people. The problem is that today if you leave five stars in the app like for your food or something you might not tell everyone you know.

If you want to build something that’s truly viral you have to create a total mindfuck experience that you tell everyone about. We basically took one part of our product and we extrapolated what would a five star experience be. Then we went crazy. So a one, two, or three star experience is you get to your Airbnb and no one’s there. You knock on the door. They don’t open. That’s a one star. Maybe it’s a three star if they don’t open, you have to wait 20 minutes. If they never show up and you’re pissed and you need to get your money back, that’s a one-star experience. You’re never using us again.

So a five-star experience is you knock on the door, they open the door, they let you in. Great. That’s not a big deal. You’re not going tell every friend about it. You might say, “I used Airbnb. It worked.” So we thought, “What would a six-star experience be?” A six-star experience: You knock on the door, the host opens. “Hey, I’m Reid. Welcome to my house.” You’re the host in this case. You would show them around. On the table would be a welcome gift. It would be a bottle of wine, maybe some candy. You’d open the fridge. There’s water. You go to the bathroom, there are toiletries. The whole thing is great. That’s a six-star experience. You’d say, “Wow I love this more than a hotel. I’m definitely going to use Airbnb again. It worked. Better than I expected.”

What’s a seven-star experience? You knock on the door. Reid Hoffman opens. Get in. “Welcome. Here’s my full kitchen. I know you like surfing. There’s a surfboard waiting for you. I’ve booked lessons for you. It’s going to be an amazing experience. By the way here’s my car. You can use my car. And I also want to surprise you. There’s this best restaurant in the city of San Francisco. I got you a table there.” And you’re like, “Whoa. This is way beyond.”

So what would an eight-star start check in be? An eight-star check-in, I would land at the airport. I would show up and there would be a limousine waiting for me. The limousine would be like, know all my preferences. It would take me to the house and it would be like a total surprise. So would a nine-star check-in be? A nine star check in, I would show up to the airport and there’d be a parade in my honor. And I would probably have an elephant you know waiting for me as the traditional Indian ceremony. I would ride on the elephant and there’d be this parade taking me to the to the house.  

So what would a ten-star check in be? A ten-star check in would be The Beatles check in. In 1964. I’d get off the plane and there’d be 5,000 high school kids cheering my name with cars welcoming me to the country. I’d get to the front yard of your house and there’d be a press conference for me, and it would be just a mindfuck experience. So what would an 11 star experience be? I would show up at the airport and you’d be there with Elon Musk and you’re saying, “You’re going to space.”

The point of the process is that maybe 9, 10, 11 are not feasible. But if you go through the crazy exercise of keep going, there’s some sweet spot between they showed up and they opened the door and I went to space. That’s the sweet spot. You have to almost design the extreme to come backwards. Suddenly, doesn’t knowing my preferences and having a surfboard in the house seem not crazy and reasonable? It’s actually kind of crazy logistically, but this is the kind of stuff that creates great experience.

FERRISS: Sam Altman, President of Y Combinator, considers this so-called 11-star experience as a prerequisite to scale. Suppose you try to scale a sub-par experience — the sort of product that gets only lukewarm approval from users? He offers a cautionary tale in this never-before-heard clip .

SAM ALTMAN: The first thing you have to do is build a product that is so good, people spontaneously want to use it and tell their friends about it. And if you can do that you still have to blitz scale but it’s the easy kind it’s you have too much demand. The hard kind of blitz scaling is where you try to start scaling up before the product is really great. And then most of your effort in scaling is to generate demand. So I think the number one most important insight about how to Blitz scale is that the good kind of blitz scale is when you are not having to generate demand as you go but that you first got the product right.

And in many of these cases — Stripe, Dropbox, AirBnB — it took a long time to get the product right but they were obsessed with that. And then when they did all their effort is okay we have so much demand that without much more effort. We know this is going to keep growing 20, 30 percent a month for years. That’s a real problem. It’s a high-cost problem, but it’s still a real problem. How do we build that? So that is the kind of scaling that works and it has generated Facebook Google I mean a lot of it. It’s the same playbook. I think the kind of blitz scaling that we have seen go badly is.

We have a mediocre product. We have raised hundreds of millions of dollars and our VC is beating down our throats to hire more sales people to grow faster.

HOFFMAN: Any particular examples?

ALTMAN: I don’t want to name names. There’s so many to pick from. Thankfully most them are not YC. one thing that is pretty good. And again a few exceptions to this. We try to beat that idea out of people at YC and thus most of the mistakes in Silicon Valley of that sort in the last decade have not been ours. 

Commandment 4

FERRISS: Raise more money than you think you need — potentially a LOT more. Reid argues that entrepreneurs should always, always raise more money than they think they need because as an entrepreneur, you’ll run into a minefield of unexpected expenses. He explains this particular point with a story. One that involves Mariam Naficy, CEO of Minted and then the CEO of EVE.com …

[Phone rings]

YOUNG GIRL: Hello? Who is this?

NAFICY: It is a five-year-old girl, Eve Rogers.

YOUNG GIRL: This is Eve.

NAFICY: …who gets on the phone. And so I think, “What on earth am I going to say to this 5-year-old?” So I said, “Hello.”

YOUNG GIRL: Hi.

NAFICY: “Could I buy your domain name?” And she was just saying to me, “What? I don’t really understand.”

YOUNG GIRL: Um, what?

NAFICY: And I’m sure Eve’s mom, on the other line, was laughing her head off. I mean, “This is a great joke to play on this silly entrepreneur from California who’s calling. I’m just going to watch her be tortured by my five-year-old for a while.”

HOFFMAN: Mariam then turns this risky negotiation over to her lead investor, the legendary start-up whisperer, Bill Gross.

NAFICY: So he gets on the phone with her mom, and he negotiated the purchase. And it was equity in the company, a board seat for her daughter—an observer board seat—trips to Idealab to see Bill several times a year.

HOFFMAN: You had a five-year-old observer on your board? [Laughing]

NAFICY: Yes. She didn’t actually show up for the board meetings, but she did occasionally come by and visit. Disneyland, software, educational software—it was a very large package that was negotiated.

HOFFMAN: If you were going to call your younger self, how would you have handled this negotiation differently?

NAFICY: I would probably throw in the Disneyland almost immediately, because now I know what a five-year-old girl wants. I have a daughter. And I would have said, “How many times a year do you want to go to Disneyland?”

HOFFMAN: Once a year? Twice a year?

YOUNG GIRL: Maybe about 100 times a year.

NAFICY: Exactly.

HOFFMAN: [Amused] $50,000 plus Disneyland trips may seem like crazy expenses. But in my experience? Every successful founder has a story like that.

FERRISS: Reid is right. So you need enough capital to cover unexpected expenses, sure. But you also need to be ready for unexpected opportunities. We’ll fast forward here to Mariam Naficy’s new company, Minted, which she originally thought would be an online stationery store with cards from brand-name companies. But she also side experiment where unknown artists could submit designs to an online competition. She told Reid what happened next:

NAFICY: I open the doors. There’s not a sale for an entire month. Nobody wants the branded stationery products that we’d spent most of our two-and-a-half million launching—because again, being conservative, I’d said, “I know, I’ll do an Eve.com, I’ll put all these brands online, sign them up exclusively.” We had exclusive distribution rights. Nobody wanted to buy them at all.

Instead, the teeny-weeny assortment that I had sourced through this one competition I had run, one transaction a week. Then the next week, there were two. We had sourced 60 designs through our competition, and I’d saved a tiny bit of money to build what I really wanted to build.

Out of the two-and-a-half million, I probably spent like $100,000 on what really became Minted. It was like this little side thing, and there was a programmer up in Oregon, and he and I were working at night on building the first competition. And that is the only place where we saw any sales movement.

HOFFMAN: Mariam stumbled onto the power of crowdsourcing—the idea that ordinary people, when they come together in large numbers, can do work once reserved only for experts. Etsy is an example of this. Kickstarter as well. But at this point, in 2008, it wasn’t understood very well. It was something Silicon Valley was just getting its head around.

NAFICY: I realized that this crowdsourcing thing was way different, and I’d uncovered something that was more of a massive social, cultural change going on in the US—and maybe in the world—versus some small-business idea. Because what was happening, that I didn’t realize, was that who’s considered a creative out there is actually changing a lot right now, due to technology and exposure. And so people are emerging as creatives who haven’t gone to school. They haven’t gone to design school, they haven’t gone to art school, and they’re massively disrupting art and design right now. And there is a true meritocracy that you can actually build and unleash.

HOFFMAN: Here, Mariam runs into another reason you need to raise more money than you think you need: unexpected opportunities. Mariam’s plan to start a lifestyle business just didn’t pan out. She didn’t have enough funding to cover her Plan B—or her “Plans B” as I like to say. Opportunities may arise later than you hoped, and you want the capital to carry you in new directions. So she reluctantly pitched her idea and secured another round of funding. And if that weren’t risky enough, she’s about to encounter one more familiar source of uncertainty…a stock market crash.

NAFICY: And we raised our venture around two weeks before Lehman failed, because this investor of mine had said to me, “I feel something really bad is going to happen, you should go raise.” So we just went out in August—”Who’s in town? Anybody? Is anyone in town in August?” So we went and raised money, and closed it literally right before Lehman [Brothers] failed.

[Sounds of various news reports, chronicling the stock market crash]

HOFFMAN: Believe it or not, Mariam launched her wildly risky, experimental business idea into the heart of the worst economic crisis since the Great Depression: the collapse of the U.S. housing market in 2008. Suppose she had waited until, say, September to raise that money. Lehman collapses, panic grips investors and no one in their right mind gives cash to a bold little experiment in crowdsourcing. Like that, Minted closes for business. Which is another reason you should always take money whenever and wherever you can get it. You know never know when it will dry up. As it is, Mariam did raise the money.

Commandment 5

FERRISS: Release your products early enough that they can still embarrass you. Imperfect is perfect. The fifth commandment is actually one of Reid’s more famous recommendations. He believes that if you’re not embarrassed by your first product release, you’ve released too late. Imperfect IS perfect.

This is the classic Silicon Valley approach of pushing imperfect things out, testing them and improving them with user feedback — instead of waiting until you think you have something perfect. Mark Zuckerberg of Facebook is probably the Silicon Valley entrepreneur who most embodies this commandment. And Reid talked to him about it. They started way back in Mark’s college days. 

HOFFMAN: My friend Mark Zuckerberg is the perfect person to talk to about this. He has no qualms about rushing out an imperfect product. In fact, his famous mantra is “Move fast and break things”—and I’d argue that it’s the foundation of Facebook’s success. If Mark cares about anything, it’s making sure his team moves with the swiftness of a teen hacker, releasing products that are anything but perfect, so their audience can improve them.

ZUCKERBERG: I think the strategy of Facebook is to learn as quickly as possible what our community wants us to do—and that requires a culture that encourages people to try things and test things and fail.

HOFFMAN: But how did he get Facebook’s 17,000-plus employees to shed their perfectionist streaks? You’re about to find out. We’ll start Mark’s story when he was an undergraduate at Harvard. By this time, he was in the habit of slapping together programs on the fly. He couldn’t help himself.

ZUCKERBERG: I took this class, “Rome of Augustus.” And the final exam—they were going to show some piece of art from the Augustan period in Rome, and you had to write an essay on the historical significance. And I was actually coding the first version of Facebook when I should have been studying for that, so a couple of days before the exam, I was like, “Alright, I’m kind of screwed.” This isn’t something like math, where you could just show up, and figure out how to do the problem on the exam. You actually need to know the context of this, or else you can’t write these essays.

HOFFMAN: Wait a second, rewind.

ZUCKERBERG: This isn’t something like math, where you could just show up, and figure out how to do the problem on the exam.

HOFFMAN: Who does that? In any case, with the exam fast approaching, you might expect Mark to cut back on the coding. Instead, he doubled down on it.

ZUCKERBERG: I built this service where basically anyone in the class could go to it, and it showed you a random piece of art, and you could type in whatever context you thought was important. And then after that, it would show you everything that everyone else in the class had put in. So it was a study tool, but it kind of crowd-sourced exactly what people needed to know for each piece of art. And the professor ended up telling me after that, that the grades on the final were higher than they’d ever been before. And I ended up passing that class.

HOFFMAN: Imagine, for a moment, what would have happened if Mark was a little less hacker and a little more perfectionist. What if he took his time to get the “Random Piece of Art” program just-so? It might have looked nicer. It might have had more features. But he would have missed the opportunity to put it in front of his classmates when they needed it, and more importantly, would have missed the learning about how they used it.

But many of us—and I’m guessing most of Mark’s Harvard classmates—have a tough time rushing things out. High-achieving people have a tendency to be perfectionists. And the same instincts that make us good students, can make us lousy entrepreneurs.

FERRISS: So you have to un-learn how to be a perfectionist. And you also have to un-learn the habit of listening to everything your users tell you. Reid will tell you: You have to be selective in the user feedback you take…

HOFFMAN: Success has a funny way of sneaking up on the best entrepreneurs. They devote themselves to understanding and serving a teeny cohort of users. They don’t always recognize that this intimate link is precisely what enables their product to evolve for the mass market. That’s one reason I encourage entrepreneurs to release a product earlier than they’d like. Release, observe, react—over and over again.

It isn’t just about speed, and it certainly isn’t about sloppiness, but rather a precise dance between Facebook’s tiny team and its growing user base. The users normally take the lead—but not always. Sometimes Mark had to break the choreography and give the users a twirl.

That’s because you have to discern what users actually want. And Mark received an early education in the gap between what users say and what they do—particularly as he expanded the social network to new campuses.

ZUCKERBERG: We’d seen this funny dynamic where—we talked about how we started it at Harvard, and then we’d launch at Yale, and then all the people at Harvard would be like, “Oh, come on. Them?” And then it’s at every step along the way. You go from Yale, and you launch at Columbia, and the people at Yale are like, “Aw really? Those guys?” We’re at Indiana University, and Indiana State launches, and the people at Indiana University are like, “Come on.” So we were used to this dynamic of people assuming that a change is like, “Why are you doing this?” but then coming around pretty quickly.

HOFFMAN: Notice the lesson Mark is learning here—he’s learning how to listen. Each college said they didn’t want another college to join—and then, as each new college joined, the network got stronger, and people liked it more. This is a great example of how entrepreneurs need to both listen to what users say, and selectively ignore them. People can’t always accurately predict their own tastes or even their own interests.

For example, a baseline for Facebook is: other people are going to upload pictures about you, other people are going to tag them, and when those other people tag them, your friends are going to see them, possibly before you. Do you want that product, yes or no? Most people, described that way, would say “I don’t want that product! No, no, no! I don’t want that product.” And yet everyone’s super happy with that product. People systemically are very poor at predicting their own reactions to new things.  

FERRISS: The core idea here is that you have to experiment if you’re going to effectively innovate. And this gets harder and harder as you grow. Mark shared some details on Masters of Scale about exactly how Facebook succeeds in innovating on a massive scale, and how they’ve had to change their mantra a bit over time. Reid Explains:

HOFFMAN: For Mark and his growing team at Facebook, the mantra of “move fast and break things” served as a rallying cry, and the philosophy made a lot of sense when they were a fledgling startup. But when you have thousands of employees moving fast and breaking things, someone has to clean up their messes. As Facebook grew, Mark became aware of a growing tension between his hacker ethos—to move fast—and his responsibility as CEO to avoid breaking things on such a massive scale. Thus a new mantra was born: “Move fast…with stable infrastructure”

ZUCKERBERG: Well, it’s less catchy.

HOFFMAN: But the best mantras do more than just sound good. They give you the resolve to make tough decisions.

ZUCKERBERG: So “move fast,” I think, is interesting, because you actually have to be willing to give something up to get it. And the question is, “What are you willing to give up?” And early on, the trade was, “Move fast and break things.” The idea was, we will tolerate some amount of bugs and flaws in the service of moving faster and learning what our community wants faster. But we got to a point where it was taking us more time to go back and fix the bugs and issues that we were creating than the speed that we were gaining by going faster.

So we’re like, “OK, we need a new strategy to enable us to move fast.” And what we came up with was: we’re going to do this by building the best infrastructure. So an engineer who comes from any company is going to be able to ship their product faster here—and test it better, and move faster, and all these things—at Facebook, than anywhere else in the world. So that’s what we mean by “Move fast with stable infrastructure.” But again, we don’t get it for free—we invest a huge amount in building infrastructure. So I think these values always come down to, what are you willing to give up to get something? Because they’re not free—nothing is.

HOFFMAN: Mark concedes that “Move fast with stable infrastructure” is a clunky mantra. It doesn’t have the snappy appeal of “Move fast and break things,” but it adds guardrails to protect the company in its new phase. You can still release something bold and half-baked. You can still break things. Just don’t break the infrastructure. Because the infrastructure is too slow to repair, and if you break the infrastructure, it will ultimately slow you down.

And with that new rule in mind, Mark laid the groundwork for mass experimentation on Facebook. How does it work exactly? One thing you should know about Facebook: It has many faces.

ZUCKERBERG: At any given point in time, there isn’t just one version of Facebook running, there are probably 10,000. Any engineer at the company can basically decide that they want to test something. There are some rules on sensitive things, but in general, an engineer can test something, and they can launch a version of Facebook not to the whole community, but maybe to 10,000 people or 50,000 people—whatever is necessary to get a good test of an experience. And then, they get a readout of how that affected all of the different metrics and things that we care about. How were people connecting? How were people sharing? Do people have more friends in this version? Of course, business metrics, like how does this cost the efficiency of running the service, how much revenue are we making?

It can even kick off qualitative studies and ask people how happy they are with this version. And then at the end of that, the engineer can come to their manager, and say, “Hey, here’s what I built, these are the results. Do we want to explore this further and do this?” And giving people the tools to be able to go get that data without having to argue whether their idea’s good through layers of management before testing something, frees people up to move quicker. If the thing doesn’t work, then we add that to our documentation of all the lessons that we’ve learned over time. If it does work, then we can incorporate those small changes into the base of what Facebook is—that now everyone else who is trying to build an improvement, that’s the new baseline that they need to get against.

FERRISS: There are interesting questions for any CEO. When is it OK to experiment? And when is the cost too high? Mark sets a pretty high bar.

ZUCKERBERG: On a day-to-day basis, a lot of the decisions that I’m making are like, “OK, is this going to destroy the company?” Because if not, then let them test it. If the cost of the test isn’t going to be super high, then, in general, we’re going to learn a lot more by experimenting and by letting the teams go and explore the things that they think are worth exploring than by having a heavy hand in that.

FERRISS: And Reid holds — more or less — to his theory that you should be embarrassed by your first product release.

HOFFMAN: The word “embarrassment” plays a key role here. Over the years, some people have interpreted my theory as permission to cut corners, act recklessly, or proceed without a clear plan.

But notice: I said, “If you’re not embarrassed by your product.” I didn’t say “If you’re not indicted” or “If you’re not deeply ashamed by your product.” Indeed, if you launched so fast that your product generates lawsuits, alienates users, or burns through capital without any apparent gain, you did in fact launch too soon.

Commandment 6

FERRISS: Decide. Decide. Decide. Every founder has to learn how to make decisions. It’s better to make a wrong decision than no decision. And this is something Eric Schmidt, former CEO of Google, learned when he was taking flying lessons:

SCHMIDT: In aviation, they teach you to make rapid decisions, and they, over and over again: “Decide, decide, decide.” It’s better to make a decision and just accept the consequences. And that discipline helped me in the hard times when I was at Novell in a real hard core turnaround.

FERRISS: It’s also served him well in the free-wheeling, idea-generating climate he cultivated at Google. In fact, he might argue it was the secret to their success. With all those ideas brewing, you must have disciplined decision-making in order to thrive.

SCHMIDT: The most important thing to do is to have quick decisions—and you’ll make some mistakes, but you need decision-making. We ultimately adopted a model of a staff meeting on Monday, a business meeting on Wednesday, and a product meeting on Friday, and this was organized so that people could travel in the right ways. And the agenda was, everybody knew which meeting the decisions were made at—and so as long as you could wait a week, you knew you would get a hearing on your deal.

I cannot tell you how many people have told me that at Google, decisions are made today quickly, in almost every case, even at our current scale. And that’s a legacy of that decision. Most large corporations have too many lawyers, too many decision-makers, unclear owners, and things congeal—they occur very slowly. But some of the greatest things happen very quickly. We made the decision to purchase YouTube in about 10 days—incredibly historic decision—because we were ready, people were focused, we had a board meeting—we wanted to get it done.

HOFFMAN: We have a word for these kinds of evasive maneuvers here in Silicon Valley. We call it an OODA loop. That’s a fighter pilot term. It stands for observe, orient, decide, act. The fighter pilot who has the fastest OODA loop wins. The other one dies. If you’ve ever watched the movie Top Gun, you’ll have a basic understanding of how an OODA loop works.

Tom Cruise’s character, Maverick, has a few bad guys on his tail. In a split second, he orients himself to the enemy’s formation. Then he decides to perform a crazy aerial maneuver—he acts, and he confounds everyone. Score one for the free world. Now I’m not suggesting that tech executives secretly want to blast each other out of the sky. What they do want is to perform slightly crazy, super-fast maneuvers, again and again.         

You’ll often hear founders asking: What is the OODA loop of an organization or an individual? Because speed matters in combat, and also in fast-moving industries.

Commandment 7

FERRISS: Be prepared to both make and break plans. In a fast-growing organization, leaders have to be ready to pivot. Every day, there are new competitors, new threats, new opportunities. Everything has to be subject to change. In the episode Lead, Lead Again, Reid talks about this concept with Facebook’s Sheryl Sandberg.

HOFFMAN: The path to scale always, unfortunately, includes some broken promises, as Sheryl would soon find out. Everything—from interviews to office space—changes as you grow.  And even a small take-back can matter to a team.

SANDBERG: I’ll give you another silly example that I don’t think is silly—birthdays. We celebrated everyone’s birthday that day. Then it became that week. Eventually, we had a huge sheet cake with quarterly birthdays. My team was 4,000 when I left, and everyone’s name is on it. Now it sounds like that wouldn’t matter, but it did—because if you started out and we celebrated everyone’s birthday, and we took that away, that was a problem. Now I’m not saying, “Be mean and don’t celebrate birthdays.” I’m saying, “Figure out what your systems are going to look like later, and do it now.”

FERRISS: Sandberg’s ability to recognize when a once-functional system has stopped serving the team’s culture and productivity keeps Facebook on track. Founders have to be able to cut their losses when programs or projects no longer make sense. Zynga’s Founder Mark Pincus can also be a ruthless self-editor:

HOFFMAN: By the time Mark launched Zynga, he was acutely aware of the dangers of stubbornly sticking to his ideas. He started to draw the distinction between his usually-great instincts and his not-always-great ideas.

PINCUS: I’ll try anything, and I’ll kill anything, and I’ll kill it quickly. And I’m not going to let killing an idea kill a winning instinct. And so that was a really core idea that I’m still thinking about, and learning as an entrepreneur. And I can see it playing out so often in people’s companies.

HOFFMAN: Mark separates specific ideas—which must be killed when they don’t work—from underlying instincts. And this willingness to kill ideas is essential to making innovation work.

FERRISS: So you have to be willing to pivot, and you have to make firm decisions. But there’s one more thing: You have to keep your team together, through the twists and turns. Margaret Heffernan, former CEO of 5 tech companies, shared a story with Reid about a company that got this right.

HEFFERNAN: What I think is important is that when the decision is made, everybody gets behind it. And I think the most sensational example of this I’ve ever come across—I’ve spent a lot of time hanging out with and writing about Ocean Spray, the cranberry company. They’re one of the biggest cooperatives in the United States, an extraordinary business.

At one point, Pepsi tried very hard to buy them. And of course, the company is owned by the cranberry farmers. So this was a really passionate, passionate debate, you could never have resolved it by who cared most, because everybody cared totally. It ended up the vote was 49.9% in favor of selling, 50.1% in favor of staying an independent cooperative.

What made the company what it is today, which is very successful, global, multi-billion dollar business, is that after the vote, everybody got behind it. There was no question. That’s the vote. That’s the outcome. Now we all work together to make it successful.

Commandment 8

FERRISS: Don’t tell your employees how to innovate. Manage the chaos. Many creative people find that leading an innovative company actually means a lot less of producing your own great ideas, and a lot more of shepherding your employees’ great ideas to fruition. Eric Schmidt thought a lot about this when he was the CEO of Google.

SCHMIDT: I think a fair statement is that the founders built the company in the image of what they saw at Stanford graduate school. So the offices for example, if you had them, would have four people in them—which is the number of graduate students that are in an office. And of course, everyone’s very crowded, and it’s very casual. And of course there’s free food, and everyone is sort of hanging out all day. And that graduate student culture—that sense that somehow we’re about to discover something new—permeated the decision making. So the culture of food and benefits and being quirky came from the founders trying to recreate that feeling.

HOFFMAN: Amid this creative ferment, his job was simple. He just had to give employees a slight nudge to deliver on their promising ideas.

SCHMIDT: The first thing I did was I went to the staff meeting. And the staff meetings were long, and they were like being in graduate school. “What do you think of this? What do you think of that?” But a real lack of business procedures, and that kind of thing, which were easily remedied.

HOFFMAN: When you’re surrounded by bright young minds, you don’t have to push too hard for interesting ideas. They tend to tumble out of conversations or shared challenges, and take you in unpredictable directions. But not every manager is comfortable with this type of chaos. It requires a particular kind of leader who can embrace both humility—the uncomfortable notion that you don’t have all of the best ideas yourself—and uncertainty—because you can’t always schedule innovation on a predictable timeline.

FERRISS: Google’s certainly not the first organization to embrace the chaos, but they do lean into it in a way that’s rare – even for Silicon Valley.

HOFFMAN: Eric took some radical steps to keep ideas flowing in the organization. This meant empowering engineers, and keeping management in check. For instance, product leaders can draw in as many engineers as they’d like on any given project, so long as they can convince engineers to join their team.

SCHMIDT: I’ve talked to other managers at Google who are frustrated with this because they argue: “We agree that my project is strategic. Why don’t you just assign some engineers to me?” And the answer is “No, no you have to persuade the engineers that your project’s a good one to work on. And then, by the way, you can have all of the engineers that you can persuade to work on that project.” And that’s central to Google’s culture for making progress.

HOFFMAN: Eric took this idea one step further. He granted employees the freedom not only to choose their projects, but openly defy their managers along the way. Google famously instituted a rule that any employee could devote 20% of their work week to any project they’d like. The 20 percent time was in some ways a logical extension of Google’s graduate school culture. Managers, like research advisors, can set timetables and budgets for experimentation. But the staff, like the “students,” pick the research agenda.

SCHMIDT: Many, many initiatives in the company have come out of 20 percent time ideas. Much of the mapping work, many of the search ideas, many of the advertising, many of now the AI work, have come from people working and practicing in new areas.

HOFFMAN: As Eric says, many of the products people know best — Gmail, Google Earth, Google Maps — grew out of ideas generated by employees, during this 20% time. But WHY exactly, does it work?

SCHMIDT: And while the rule says you can do anything you want to with your 20 percent time, these people are computer scientists and engineers, they’re not going to veer too far away from their core business and that is the genius of 20 percent time.

HOFFMAN: The tendency of high-performing employees to use their 20% time productively is the well-documented genius of the program. But there’s also a hidden genius of 20 percent time. It allows reasonable employees to defy unreasonable managers. And this institutionalized defiance can help balance the power and keep high-performing employees engaged during challenging times.

SCHMIDT: So the interesting thing about 20 percent time is although it’s reported as you get to spend one day doing whatever you want, what it really served was a check and balance on the power of the engineering management over the subject. So if an employee is under pressure, the manager says you’ve got to work harder you’ve got to give me everything you have. That employee can legitimately look that boss in the eye and say I’ll give you 100 percent of my 80 percent time. And that simple principle, which never really happens in practice but it’s understood, empowers the employee with both dignity but also some choices.

Commandment 9

FERRISS: To create a winning company culture, make sure every employee owns it. This commandment is very often overlooked, especially at the startup stage. Many founders, especially inexperienced ones, downplay the role of culture in their success, or simply don’t know where to start.  

Reed Hastings, the founder & CEO of Netflix has strong feelings about company culture. His first startup, Pure Software, sold for $750 Million, so it was successful from an objective standpoint. But he shared with Reed Hoffman that it failed when it came to company culture.  And when he started NetFlix he wanted to correct that mistake. Here’s how Reed Hoffman would sum it up:

HOFFMAN: So Reed made a very typical mistake in his first company. He thought he could solve his company’s problems just by working harder. But hard work isn’t enough; and more work is never the real answer. To succeed as you scale, you have to leverage every person in the organization. And to do that, you have to be very intentional about how you craft the culture. This was exactly the lesson Reed took from Pure Software. Their management decisions had created a culture that rewarded the wrong behavior and retained the wrong employees.

HASTINGS: Well the mistakes in Pure was that every time we had a significant error, sales call didn’t go well, a bug in the code. We tried to think about in terms of what process could we put in place to ensure that this doesn’t happen again and thereby improving the company. And what we failed to understand is by dummy proofing all the systems that we would have a system where only dummies wanted to work there, which was exactly what happened. And so the average intellectual level fell and then the market changed as it inevitably does, in that case, it was C++ to Java but it could be anything. And we were unable to adapt to it because we had a bunch of people who valued following the process rather than the first principle thinking.

HOFFMAN: Notice Reed’s double insight here. Pure software couldn’t adapt because they had the wrong employees. And they had the wrong employees because of management decisions that explicitly selected for those employees. It was an insight that catapulted him.

FERRISS: What Reed Hastings learned from his first company was that culture directly impacted both who worked in a company, and how well they performed. At NetFlix, he knew he’d need people who could adapt with the times as technology changed, and they went from a company that mailed DVDs to a company with streaming video and original content. The whole story is worth hearing on an upcoming episode of Masters of Scale, but here we’ll stay focused on how this realization affected NetFlix culture and hiring practices. When Reed Hastings thought about growing the Netflix team, he already had a very clear idea of who he needed. Here’s Reid Hoffman to explain what Reed Hastings did next:

HOFFMAN: Reed’s knowledge of history, the changing nature of technology and the historical moment he was in, led to the understanding that he would need people to change with the times. People who can rip up a process and return to the first principles of delivering entertainment by any means necessary, whether it’s horseback, mail, fiberoptic cable — or maybe in the future Elon Musk’s neural lace. Regardless, you need people who can change the business model, fast.

So how did Reed identify those candidates? It started with a now legendary document at Netflix: a collection of more than 100 slides known as the “culture deck.” These slides defined exactly what the Netflix culture stands for, and who they’re trying to hire, and what they can expect.

HASTINGS : The culture deck started about 10 years ago. So first couple of years we were just focused on survival and then we got public in 2002. Cash flow positive and it was clear we were going to survive. So we then started really thinking about the culture, what we wanted to be, how we wanted to operate. And so over successive years, I improved this deck which I would go through with new employees. And sometimes those new employees would love it sometimes they were like oh my god why didn’t you tell me this before I started. That doesn’t make sense to me. And so we realized we should give it to every candidate. And so then about 2007, 2008 we did that by posting it on SlideShare    And that provided a great vehicle for sharing that but again it was really just to be able to send a link to the candidates and then you know and it’s not very pretty, it’s not very highly designed, doesn’t look like it’s a external marketing piece but that authenticity really people liked in the outside world and now it’s you know over you know 10 million views on SlideShare and continues to be studied around the world.

HOFFMAN: And what were the unexpected benefits of having published it?

HASTINGS: Well let’s see the core benefit which we did expect was that candidates were very aware of the culture. The unexpected benefit was many people became candidates for us because they loved that what we described in terms of freedom and responsibility that might not have otherwise thought about us.

FERRISS: Now when you read Netflix culture deck, which many people have, you’ll see they have a very specific way of describing themselves — as a “sports team”, not a “family.” They use internal collaboration to drive external competitiveness.

HASTINGS: Well in team sports that really succeed there often is a lot of warmth between the players. And so it’s emphasizing those aspects and demonstrating that when people come in everyone tries to help them but ultimately it is about performance. Unlike a family which is really about unconditional love you know even if your brother you know does something awful and goes to jail your love doesn’t stop ok and that’s it just a different and important part of society. But that’s not what we’re about. What we’re about is you know collectively changing the world in the areas of Internet television and that takes incredible performance at every level. We’re also about really honest feedback all the time. So you can learn and be the best that you can be.

FERRISS: Most CEOs would agree that a  successful company culture is one that that lets team members be the best that they can be.  And as you consider the best way to do that for your company and your team, you’ll want to pay particular attention to how people compete. This is where a lot of company cultures go wrong. Margaret Heffernan, former CEO of five tech companies, says this:

HEFFERNAN: There is often a belief among very successful, very competitive, people that the thing you want to do in a company is get everybody to compete with each other that if it’s everybody is racing against everybody you’ll have this kind of a white heat of brilliance and creativity. And I think pretty much everything about that’s wrong. And that’s not to say that I’m not competitive, I’m deeply competitive with myself in the sense that I really want to do a better job today than I did yesterday. But I don’t want you to fail.

And I have seen more companies and organizations go wrong. Because of what I think of as negative competitiveness. I do want you to fail or I want your department to fail or I want your product to fail because that will make me shine. I’ve seen more damage and destruction and waste from that mentality than probably from any other misunderstanding. If you can build an environment in which people really want to help each other, full of people who are generous you will do infinitely better than creating something kind of Olympic sport within the company.

But I see it especially I have to say among young men and this belief that at one level you know if everybody’s is competing everybody will get faster. I think it’s a catastrophe. And I see it bring down really tremendous companies that get so lost in the fight they forgot why they were there in the first place.

HOFFMAN: I totally agree and I actually think one of the key things that companies do at scale in order to try to set against this because there’s always that kind of the how do I win this kind of a culture is to say that part of the dialogue in performance reviews and culture and compensation is: How did you help other people and in particular how did you help other people outside of the specific team you’re in, right. And I think that’s actually I’m really glad to I asked you that question because I think that what you just said is really critical.

HEFFERNAN: Well it’s really interesting. I remember speaking at a conference and on this subject in the Q&A someone said well you know how would you find people like that when you’re interviewing them for jobs. And I said, well I’d ask them who helped them in their career because you know if they can’t remember anybody. That’s a pretty bad sign you know. Anyway, the next person speaking at this conference was the chief technology officer from somewhere. And in his Q&A somebody asked him who helped you in the course of your career. And he couldn’t think of anybody. And there was this sort of stunned horrified silence. You know and the truth is that all of us I’m sure this is true of you too,  all of us got help from so many people.  And you can’t remember one of them? And of course singing the praises of people who’ve helped you is absolutely joyous task.

COMMANDMENT 10

FERRISS: Stick with the hero’s journey. So the first nine commandments from Masters of Scale cover just about everything you need to succeed as a startup founder.  Hiring and funding, managing and innovating, making decisions fast and testing products early. The final commandment makes all the rest possible. To succeed, entrepreneurs need a good idea, sufficient resources, good timing, a certain amount of luck. But they also need to follow Commandment 10: have grit and stay on your hero’s journey.

REID: Some people mistake grit for sheer persistence. Charging up the same hill, again and again. But that’s not quite what I mean by the word “grit.” The sort of grit you need to scale a business is less reliant on brute force. It’s actually one part determination, one part ingenuity, and one part laziness. Yes, laziness.

You want to conserve your energy. You want to minimize friction and find the most effective, most efficient way forward. You might actually have more grit if you treat your energy as a precious commodity. So forget the tired cliche of running a marathon. You want to be more like Indiana Jones, somersaulting under blades, racing a few steps ahead of a rolling boulder and swinging your whip until you reach your holy grail.

FERRISS: Of course, the hardest time to show grit is when you need it the most. When the situation seems dire, when the odds are against you. Reid sees these life-and-death moments a lot in the companies he’s built and advised. Here’s how he thinks you should do when you find yourself in one.

HOFFMAN: These are the critical junctures that determine whether you fold or scale your business. You might win big, and you might lose big. And grit is the stick-to-it-ness that kicks in when you actually understand the risks — and know you might die — but move ahead anyway. In fact, I have a prepared speech for these pivotal moments.

I have a given a version of this speech at some point on every single board that I’ve been on, which is the heroic possibility. Which is that the road in front of you is super fucking hard, that is not a given that you’re going to win it. But if you win it you’re going to be a hero. And so the question for you is: Are you a hero? Right. And most people then they kind of hear that speech they go, “Yeah,” because that’s what they want to be. That’s why they’re doing this. They want to be a hero. So you’re giving them a frame to do it. And you might lose, right?. You might be dead on the battlefield. This is why it’s a hero’s journey. This is why you will be heroes if you do this, right. And by the way the people who don’t resonate with that?  You want them off the boat.

Bonus Commandment

FERRISS: Pay it Forward. The first nine commandments from Masters of Scale covered just about everything you need to succeed as a startup founder.  The final commandment kicks in after you succeed. Because Reid will tell you, the long-term success of any company, anywhere in the world — depends on the ecosystem around it. And to create an ecosystem like Silicon Valley — where startups thrive and scale-ups are possible — successful entrepreneurs have to follow Commandment 10 and pay it forward. They have to invest in the other companies around them.

In this next clip, Linda Rottenberg explains how she sees this. She’s the CEO of Endeavor and her passion is in supporting entrepreneurs around the world. She says the willingness of successful entrepreneurs to pay it forward is THE determining factor of whether a startup scene thrives or not.

ROTTENBERG: many cultures have one or two or three successful business people that create companies. But if they don’t pay it forward and if they don’t reinvest in the ecosystem becoming mentors becoming angel investors inspiring their employees to start companies then it stops. Right. And so what, what Endeavor tries to do is create that that ecosystem foundation where the successful entrepreneurs go on and pay it forward. And then that’s when you see a multiplier effect.  

FERRISS: Linda has a great story about this …

ROTTENBERG: But then it was really in 2000 when I got called into a room by Pedro Asprey the former finance minister of Mexico who was then leading the largest private equity firm. And he had gathered a group of about 12 individuals. And before I walked in the room someone said to me Linda, do you know what percentage of Mexico’s GDP is in this room? And I said no and I don’t think I want to. So I was asked by it was Lorenzo Zambrano of the Cemex, Carlos Slim of you know all the telecom, Emilio Azcarraga of the media, etc.

And one of the people in the room said well why are all these entrepreneurs coming out of Chile and Argentina and Brazil even Uruguay, like what’s wrong with Mexico. So in my oh politically astute way, Chica Loca says to this group of men, “well here in Mexico you’re the big fish. And think of entrepreneurs as the little fish. And here the big fish tend to eat the little fish. So if you want something like Endeavor. Think of us like an aquarium where you learn to feed the little fish.

And the fact that they actually didn’t throw me out of the room. My life is about not being thrown out of rooms I guess. And they all signed up. And in fact a decade later Emilio Azarraga’s, one of his magazines had a study on, survey on entrepreneurship in the country and the headline was big fish feeding the little fish.

FERRISS: If you follow these commandments you’ll be on your way to startup success, as well as your hero’s journey. But there’s always more to learn. If you liked the advice, you might want to subscribe to Masters of Scale.  And if you liked this remix, let me know and we’ll do another one next season.

The post Transcript: The 10 Commandments of Startup Success with Reid Hoffman appeared first on The Blog of Author Tim Ferriss.

I do an exercise called “fear-setting” at least once a quarter, often once a month. It is the most powerful exercise I do.  

Fear-setting has produced my biggest business and personal successes, as well as repeatedly helped me to avoid catastrophic mistakes.

The above TED talk gives you an overview, and the below text provides more detail, step-by-step instructions, and real-world examples. For the three exercise slides from the TED presentation, please click here.

Now, onward…

Enter Fear-Setting

“Many a false step was made by standing still.”
— Fortune Cookie

“Named must your fear be before banish it you can.”
— Yoda

Rio de Janeiro, Brazil

Twenty feet and closing.

“Run! Ruuuuuuuuuun!” Hans didn’t speak Portuguese, but the meaning was clear enough—haul ass. His sneakers gripped firmly on the jagged rock, and he drove his chest forward toward 3,000 feet of nothing.

He held his breath on the final step, and the panic drove him to near unconsciousness. His vision blurred at the edges, closing to a single pinpoint of light, and then . . . he floated. The all-consuming celestial blue of the horizon hit his visual field an instant after he realized that the thermal updraft had caught him and the wings of the paraglider. Fear was behind him on the mountaintop, and thousands of feet above the resplendent green rain forest and pristine white beaches of Copacabana, Hans Keeling had seen the light.

That was Sunday.

On Monday, Hans returned to his law office in Century City, Los Angeles’s posh corporate haven, and promptly handed in his three-week notice. For nearly five years, he had faced his alarm clock with the same dread: I have to do this for another 40–45 years?

He had once slept under his desk at the office after a punishing half-done project, only to wake up and continue on it the next morning.

That same morning, he had made himself a promise: two more times and I’m out of here. Strike number three came the day before he left for his Brazilian vacation.

We all make these promises to ourselves, and Hans had done it before as well, but things were now somehow different. He was different.

He had realized something while arcing in slow circles toward the earth—risks weren’t that scary once you took them. His colleagues told him what he expected to hear: He was throwing it all away. He was an attorney on his way to the top—what the hell did he want?

Hans didn’t know exactly what he wanted, but he had tasted it.

On the other hand, he did know what bored him to tears, and he was done with it. No more passing days as the living dead, no more dinners where his colleagues compared cars, riding on the sugar high of a new BMW purchase until someone bought a more expensive Mercedes. It was over.

Immediately, a strange shift began—Hans felt, for the first time in a long time, at peace with himself and what he was doing. He had always been terrified of plane turbulence as if he might die with the best inside of him, but now he could fly through a violent storm sleeping like a baby. Strange indeed.

More than a year later, he was still getting unsolicited job offers from law firms, but by then had started Nexus Surf,5 a premier surf adventure company based in the tropical paradise of Florianopolis, Brazil. He had met his dream girl, a Carioca with caramel-colored skin named Tatiana, and spent most of his time relaxing under palm trees or treating clients to the best times of their lives.

Is this what he had been so afraid of?

These days, he often sees his former self in the underjoyed and overworked professionals he takes out on the waves. Waiting for the swell, the true emotions come out: “God, I wish I could do what you do.” His reply is always the same: “You can.”

The setting sun reflects off the surface of the water, providing a Zen-like setting for a message he knows is true: It’s not giving up to put your current path on indefinite pause. He could pick up his law career exactly where he left off if he wanted to, but that is the furthest thing from his mind.

As they paddle back to shore after an awesome session, his clients get ahold of themselves and regain their composure. They set foot on shore, and reality sinks its fangs in: “I would, but I can’t really throw it all away.”

He has to laugh.

The Power of Pessimism: Defining the Nightmare

“Action may not always bring happiness, but there is no happiness without action.”
— Benjamin Disraeli, former British Prime Minister

To do or not to do? To try or not to try? Most people will vote no, whether they consider themselves brave or not. Uncertainty and the prospect of failure can be very scary noises in the shadows. Most people will choose unhappiness over uncertainty.

For years, I set goals, made resolutions to change direction, and nothing came of either. I was just as insecure and scared as the rest of the world.

The simple solution came to me accidentally four years ago. At that time, I had more money than I knew what to do with—I was making $70K or so per month—and I was completely miserable, worse than ever. I had no time and was working myself to death.

I had started my own company, only to realize it would be nearly impossible to sell. This turned out to be yet another self-imposed limitation and false construct. (BrainQUICKEN was acquired by a private equity firm in 2009.)

Oops. I felt trapped and stupid at the same time.

I should be able to figure this out, I thought. Why am I such an idiot?

Why can’t I make this work?! Buckle up and stop being such a (insert expletive)! What’s wrong with me? The truth was, nothing was wrong with me. I hadn’t reached my limit; I’d reached the limit of my business model at the time. It wasn’t the driver, it was the vehicle.

Critical mistakes in its infancy would never let me sell it. I could hire magic elves and connect my brain to a supercomputer—it didn’t matter. My little baby had some serious birth defects. The question then became, How do I free myself from this Frankenstein while making it self-sustaining? How do I pry myself from the tentacles of workaholism and the fear that it would fall to pieces without my 15-hour days? How do I escape this self-made prison? A trip, I decided.

A sabbatical year around the world.

So I took the trip, right? Well, I’ll get to that. First, I felt it prudent to dance around with my shame, embarrassment, and anger for six months, all the while playing an endless loop of reasons why my cop-out fantasy trip could never work. One of my more productive periods, for sure.

Then, one day, in my bliss of envisioning how bad my future suffering would be, I hit upon a gem of an idea. It was surely a highlight of my “don’t happy, be worry” phase: Why don’t I decide exactly what my nightmare would be—the worst thing that could possibly happen as a result of my trip?

Well, my business could fail while I’m overseas, for sure. Probably would. A legal warning letter would accidentally not get forwarded and I would get sued. My business would be shut down, and inventory would spoil on the shelves while I’m picking my toes in solitary misery on some cold shore in Ireland. Crying in the rain, I imagine. My bank account would crater by 80% and certainly my car and motorcycle in storage would be stolen. I suppose someone would probably spit on my head from a high-rise balcony while I’m feeding food scraps to a stray dog, which would then spook and bite me squarely on the face. God, life is a cruel, hard bitch.

Conquering Fear = Defining Fear

“Set aside a certain number of days, during which you shall be content with the scantiest and cheapest fare, with coarse and rough dress, saying to yourself the while: “Is this the condition that I feared?”
— Seneca

Then a funny thing happened. In my undying quest to make myself miserable, I accidentally began to backpedal. As soon as I cut through the vague unease and ambiguous anxiety by defining my nightmare, the worst-case scenario, I wasn’t as worried about taking a trip. Suddenly, I started thinking of simple steps I could take to salvage my remaining resources and get back on track if all hell struck at once. I could always take a temporary bartending job to pay the rent if I had to. I could sell some furniture and cut back on eating out. I could steal lunch money from the kindergarteners who passed by my apartment every morning. The options were many. I realized it wouldn’t be that hard to get back to where I was, let alone survive. None of these things would be fatal—not even close. Mere panty pinches on the journey of life.

I realized that on a scale of 1–10, 1 being nothing and 10 being permanently life-changing, my so-called worst-case scenario might have a temporary impact of 3 or 4. I believe this is true of most people and most would-be “holy sh*t, my life is over” disasters.

Keep in mind that this is the one-in-a-million disaster nightmare.

On the other hand, if I realized my best-case scenario, or even a probable-case scenario, it would easily have a permanent 9 or 10 positive life-changing effect.

In other words, I was risking an unlikely and temporary 3 or 4 for a probable and permanent 9 or 10, and I could easily recover my baseline workaholic prison with a bit of extra work if I wanted to.

This all equated to a significant realization: There was practically no risk, only huge life-changing upside potential, and I could resume my previous course without any more effort than I was already putting forth.

That is when I made the decision to take the trip and bought a one-way ticket to Europe. I started planning my adventures and eliminating my physical and psychological baggage. None of my disasters came to pass, and my life has been a near fairy tale since. The business did better than ever, and I practically forgot about it as it financed my travels around the world in style for 15 months.

Uncovering Fear Disguised as Optimism

“There’s no difference between a pessimist who says, ‘Oh, it’s hopeless, so don’t bother doing anything,’ and an optimist who says, ‘Don’t bother doing anything, it’s going to turn out fine any way.’ Either way, nothing happens.”
— Yvon Chouinard, founder of Patagonia

Fear comes in many forms, and we usually don’t call it by its four-letter name. Fear itself is quite fear-inducing. Most intelligent people in the world dress it up as something else: optimistic denial.

Most who avoid quitting their jobs entertain the thought that their course will improve with time or increases in income. This seems valid and is a tempting hallucination when a job is boring or uninspiring instead of pure hell. Pure hell forces action, but anything less can be endured with enough clever rationalization.

Do you really think it will improve or is it wishful thinking and an excuse for inaction? If you were confident in improvement, would you really be questioning things so? Generally not. This is fear of the unknown disguised as optimism.

Are you better off than you were one year ago, one month ago, or one week ago?

If not, things will not improve by themselves. If you are kidding yourself, it is time to stop and plan for a jump. Barring any James Dean ending, your life is going to be LONG. Nine to five for your working lifetime of 40–50 years is a long-ass time if the rescue doesn’t come. About 500 months of solid work.

How many do you have to go? It’s probably time to cut your losses.

””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””

Someone Call the Maître D’

“You have comfort. You don’t have luxury. And don’t tell me that money plays a part. The luxury I advocate has nothing to do with money. It cannot be bought. It is the reward of those who have no fear of discomfort.”
—JEAN COCTEAU, French poet, novelist, boxing manager, and filmmaker, whose collaborations were the inspiration for the term “surrealism ” 

Sometimes timing is perfect. There are hundreds of cars circling a parking lot, and someone pulls out of a spot 10 feet from the entrance just as you reach his or her bumper. Another Christmas miracle!

Other times, the timing could be better. The phone rings during sex and seems to ring for a half hour. The UPS guy shows up 10 minutes later. Bad timing can spoil the fun.

Jean-Marc Hachey landed in West Africa as a volunteer, with high hopes of lending a helping hand. In that sense, his timing was great.

He arrived in Ghana in the early 1980s, in the middle of a coup d’état, at the peak of hyperinflation, and just in time for the worst drought in a decade. For these same reasons, some people would consider his timing quite poor from a more selfish survival standpoint.

He had also missed the memo. The national menu had changed, and they were out of luxuries like bread and clean water. He would be surviving for four months on a slush-like concoction of corn meal and spinach. Not what most of us would order at the movie theater.

“WOW, ‘I’ CAN ‘SURVIVE.”

Jean-Marc had passed the point of no return, but it didn’t matter.

After two weeks of adjusting to the breakfast, lunch, and dinner (Mush à la Ghana), he had no desire to escape. The most basic of foods and good friends proved to be the only real necessities, and what would seem like a disaster from the outside was the most life – affirming epiphany he ’d ever experienced: The worst really wasn’t that bad. To enjoy life, you don’t need fancy nonsense, but you do need to control your time and realize that most things just aren’t as serious as you make them out to be.

Now 48, Jean – Marc lives in a nice home in Ontario, but could live without it. He has cash, but could fall into poverty tomorrow and it wouldn’t matter. Some of his fondest memories still include nothing but friends and gruel. He is dedicated to creating special moments for himself and his family and is utterly unconcerned with retirement. He’s already lived 20 years of partial retirement in perfect health.

Don’t save it all for the end. There is every reason not to.

””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””””

Q&A: QUESTIONS AND ACTIONS

“I am an old man and have known a great many troubles, but most of them never happened.”
—Mark Twain

If you are nervous about making the jump or simply putting it off out of fear of the unknown, here is your antidote. Write down your answers, and keep in mind that thinking a lot will not prove as fruitfulor as prolific as simply brain vomiting on the page. Write and do not edit—aim for volume. Spend a few minutes on each answer.

1. Define your nightmare, the absolute worst that could happen if you did what you are considering. What doubt, fears, and “what-ifs” pop up as you consider the big changes you can—or need—to make? Envision them in painstaking detail. Would it be the end of your life? What would be the permanent impact, if any, on a scale of 1–10? Are these things really permanent? How likely do you think it is that they would actually happen?
2. What steps could you take to repair the damage or get things back on the upswing, even if temporarily? Chances are, it’s easier than you imagine. How could you get things back under control?
3. What are the outcomes or benefits, both temporary and permanent, of more probable scenarios? Now that you’ve defined the nightmare, what are the more probable or definite positive outcomes, whether internal (confidence, self-esteem, etc.) or external? What would the impact of these more likely outcomes be on a scale of 1–10? How likely is it that you could produce at least a moderately good outcome? Have less intelligent people done this before and pulled it off?
4. If you were fired from your job today, what would you do to get things under financial control? Imagine this scenario and run through questions 1–3 above. If you quit your job to test other options, how could you later get back on the same career track if you absolutely had to?
5. What are you putting off out of fear? Usually, what we most fear doing is what we most need to do. That phone call, that conversation, whatever the action might be—it is fear of unknown outcomes that prevents us from doing what we need to do. Define the worst case, accept it, and do it. I’ll repeat something you might consider tattooing on your forehead: What we fear doing most is usually what we most need to do. As I have heard said, a person’s success in life can usually be measured by the number of uncomfortable conversations he or she is willing to have. Resolve to do one thing every day that you fear. I got into this habit by attempting to contact celebrities and famous business people for advice.
6. What is it costing you—financially, emotionally, and physically—to postpone action? Don’t only evaluate the potential downside of action. It is equally important to measure the atrocious cost of inaction. If you don’t pursue those things that excite you, where will you be in one year, five years, and ten years? How will you feel having allowed circumstance to impose itself upon you and having allowed ten more years of your finite life to pass doing what you know will not fulfill you? If you telescope out 10 years and know with 100% certainty that it is a path of disappointment and regret, and if we define risk as “the likelihood of an irreversible negative outcome,” inaction is the greatest risk of all.
7. What are you waiting for? If you cannot answer this without resorting to the previously rejected concept of good timing, the answer is simple: You’re afraid, just like the rest of the world. Measure the cost of inaction, realize the unlikelihood and repairability of most missteps, and develop the most important habit of those who excel and enjoy doing so: action.

###

The above has been adapted from chapters in The 4-Hour Workweek and Tools of Titans.

SUGGESTED READING:

• Tao of Seneca: Letters from a Stoic Master — Free PDFs of three volumes of Stoic writing and modern profiles.
• Some Practical Thoughts on Suicide
• The Tao of Seneca — On Groundless Fears

The post Fear-Setting: The Most Valuable Exercise I Do Every Month appeared first on The Blog of Author Tim Ferriss.

Whether you’d like to avoid unnecessary emotional suffering or unnecessary financial suffering, this post has something for you.

In my second podcast with Tony Robbins, he said that all fear comes from three triggers: loss, less, and never. He mentioned this in passing, and many of you asked for more details. This post will cover that and much more.

There are two parts:

1) Part 1 — Tony’s discussion of suffering and his framework of “loss, less, never.” This is a abridged excerpt from Tony’s newest book, Unshakeable: Your Financial Freedom Playbook.  It’s exactly what thousands of you requested.

2) Part 2 — Many of you ask about how I take notes, and what I record when I read 1-2 books (or more) per week.  This is an example. Specifically, my highlights and notes on Tony’s book and investing.  If you’re interested in investing, the mindsets of billionaires, asset allocation, or avoiding losses, you’ll enjoy this.

PART 1 — HOW TO SUFFER LESS (IN TONY’S WORDS, BOLDING HIS)

The human brain isn’t designed to make us happy and fulfilled. It’s designed to make us survive.

This two-million-year-old organ is always looking for what’s wrong, for whatever can hurt us, so that we can either fight it or take flight from it. If you and I leave this ancient survival software to run the show, what chance do we have of enjoying life? An undirected mind operates naturally in survival mode, constantly identifying and magnifying these potential threats to our well-being. The result: a life filled with stress and anxiety.

Most people live this way since it’s the path of least resistance. They make unconscious decisions, based on habit and conditioning, and are at the mercy of their own minds. They assume that it’s just an inevitable part of life to get frustrated, stressed, sad, and angry—in other words, to live in a suffering state. But I’m happy to tell you there’s another path: one that involves directing your thoughts so that your mind does your bidding, not the other way around.

…

Now, before we go any further, let’s just clarify the difference between these two emotional and mental states:

A Beautiful State

When you feel love, joy, gratitude, awe, playfulness, ease, creativity, drive, caring, growth, curiosity, or appreciation, you’re in a beautiful state. In this state, you know exactly what to do, and you do the right thing. In this state, your spirit and your heart are alive, and the best of you comes out. Nothing feels like a problem, and everything flows. You feel no fear or frustration. You’re in harmony with your true essence.

A Suffering State

When you’re feeling stressed out, worried, frustrated, angry, depressed, irritable, overwhelmed, resentful, or fearful, you’re in a suffering state. We’ve all experienced these and countless other “negative” emotions, even if we’re not always keen to admit it! Most achievers much prefer to think they’re stressed than fearful. But “stress” is just the achiever word for fear. If I follow the trail of your stress, it’ll take me to your deepest fear.

…

Everyone has his or her own flavor of suffering. So here’s my question for you: What’s your favorite flavor of suffering? Which energy-sapping emotion do you indulge in most? Is it sadness? Frustration? Anger? Despair? Self-pity? Jealousy? Worry? The specific details don’t really matter because they’re all states of suffering. And all this suffering is really just the result of an undirected mind that’s hell-bent on looking for problems.

Think for a moment about a recent situation that caused you pain or suffering—a time when you felt frustrated or angry or worried or overwhelmed. Whenever you feel emotions like these, your sense of suffering is caused by your undirected mind engaging in one or more of three particular patterns of perception.

Consciously or unconsciously, you’re focused on at least one of three triggers for suffering:

1. Suffering trigger is “Loss.”

When you focus on loss, you become convinced that a particular problem has caused or will cause you to lose something you value. For example, you have a conflict with your spouse, and it leaves you feeling that you’ve lost love or respect. But it doesn’t have to be something someone else did—or failed to do—that caused you to perceive the sense of loss. This sense of loss can also be triggered by something you did or failed to do. For example, you procrastinated, and now you’ve lost a business opportunity. Whenever we believe in the illusion of loss, we suffer.

2. Suffering Trigger is “Less.”

When you focus on the idea that you have less or will have less, you will suffer. For example, you might become convinced that because a situation has occurred or a person has acted a certain way, you will have less joy, less money, less success, or some other painful consequence. Once again, less can be triggered by what you, or others, do or fail to do.

3. Suffering trigger is “Never.”

When you focus on the idea or become consumed by a belief that you’ll never have something you value—such as love, joy, respect, wealth, opportunity—you’re doomed to suffer, you’ll never be happy, you’ll never become the person you want to be. This pattern of perception is a surefire route to pain. Remember: the mind is always trying to trick us into a survival mindset! So never say never! For example, because of an illness, an injury, or because of something your brother did or said, you might believe that you’ll never get over it.

These three patterns of focus account for most, if not all, of our suffering. And you know what’s crazy? It doesn’t even matter if the problem is real or not! Whatever we focus on, we feel—regardless of what actually happened. Have you ever had the experience of thinking that a friend did something horrible to you? You became tremendously angry and upset, only to discover that you were dead wrong and that the person didn’t deserve all that blame! In the midst of your suffering, when all those negative emotions were swirling inside your head, the reality didn’t matter. Your focus created your feelings, and your feelings created your experience. Notice too that most, if not all, of our suffering is caused by focusing or obsessing about ourselves and what we might lose, have less of, or never have.

But here’s the good news: once you’re aware of these patterns of focus, you can systematically change them, thereby freeing yourself from these habits of suffering. It all starts with the realization that this involves a conscious choice. Either you master your mind or it masters you. The secret of living an extraordinary life is to take control of the mind since this alone will determine whether you live in a suffering state or a beautiful state.

IN THE END, IT’S ALL ABOUT THE POWER OF DECISIONS

Our lives are shaped not by our conditions, but by our decisions. If you look back on the last 5 or 10 years I’d be willing to bet that you can recall a decision or two that has truly changed your life. Maybe it was a decision about where to go to school, what profession to pursue, or who you chose to love or marry. Looking back on it now, can you see how radically different your life would be today if you had made a different decision? These and so many other decisions determine the direction of your life and can change your destiny.

So what’s the biggest decision you can make in your life right now? In the past, I would have told you that what matters most is who you decide to spend your time with, who you decide to love. After all, the company you keep will powerfully shape who you become.

But over the last two years, my thinking has evolved. What I’ve come to realize is that the single most important decision in life is this: Are you committed to being happy, no matter what happens to you?

To put this another way, will you commit to enjoying life not only when everything goes your way but also when everything goes against you, when injustice happens, when someone screws you over, when you lose something or someone you love, or when nobody seems to understand or appreciate you? Unless we make this definitive decision to stop suffering and live in a beautiful state, our survival minds will create suffering whenever our desires, expectations, or preferences are not met. What a waste of so much of our lives!

This is a decision that can change everything in your life, starting today. But it’s not enough just to say that you’d like to make this change or that your preference is to be happy no matter what. You have to own this decision, do whatever it takes to make it happen, and cut off any possibility of turning back. If you want to take the island, you have to burn the boats. You have to decide that you’re 100% responsible for your state of mind and for your experience of this life.

What it really comes down to is drawing a line in the sand today and declaring, “I’m done with suffering. I’m going to live every day to the fullest and find juice in every moment, including the ones I don’t like, BECAUSE LIFE IS JUST TOO SHORT TO SUFFER.”

PART 2 — HOW TO INVEST MORE INTELLIGENTLY

[TIM: The below is a small sample of my notes from Tony’s newest book, Unshakeable: Your Financial Freedom Playbook.  I originally captured these notes in Evernote.]

Paul Tudor Jones questions:

“Is this truly the hard trade (something others can’t easily replicate)? Does it really have asymmetric risk/reward? Is it a five-to-one or a three-to-one? What’s the entry point? Where are your stops?”

Pg. 36, -38% year — TF: How long to recover to baseline if you entered that year?

The stock market is a device for transferring money from the impatient to the patient—WARREN BUFFETT

****TF:  If corrections of 10% come once per year, couldn’t I hold cash and simply have that trigger purchases 1x per year?  Or wait for 20% “bear market” drop, then invest?

“Buffett did just that in late 2008, investing in fallen giants such as Goldman Sachs and General Electric, which were selling at once-in-a-lifetime valuations. Better still, he structured these investments in ways that reduced his risk even further. For example, he invested $5 billion in a special class of “preferred” shares of Goldman Sachs, which guaranteed him a dividend of 10% a year while he waited for the stock price to recover.”

And/Or: Go with index fund

Showmethefees.com for 401(k) plan fees, etc. http://getasecondopinion.com/ for Tony’s Creative Planning

pg. 78

In the interests of cutting through the confusion, I’m going to make this as simple and straightforward as possible. In reality, all financial advisors fall into just one of three categories. What you really need to know is whether your advisor is:

• a broker,
• an independent advisor (RIA)***, or
• a dually registered advisor.

Now let’s break this down in more detail so you know exactly what you’re dealing with.

Question to ask: Do you act as a “fiduciary” [what you want] or a “broker” or both?

Wealth manager needs to understand taxes, insurance, etc.

7 QUESTIONS FOR WEALTH ADVISORS

1. Are You a Registered Investment Advisor? If the answer is no, this advisor is a broker. Smile sweetly and say good-bye. If the answer is yes, he or she is required by law to be a fiduciary. But you still need to figure out if this fiduciary is wearing one hat or two.

2. Are You (or Your Firm) Affiliated with a Broker-Dealer? If the answer is yes, you’re dealing with someone who can act as a broker and usually has an incentive to steer you to specific investments. One easy way to figure this out is to glance at the bottom of the advisor’s website or business card and see if there’s a sentence like this: “Securities offered through [advisor’s company name], member FINRA and SIPC.” This refers to the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation, respectively. If you see these words, it means he or she can act as a broker. If so, run! Run for your life!

3. Does Your Firm Offer Proprietary Mutual Funds or Separately Managed Accounts? You want the answer to be an emphatic no. If the answer is yes, then watch your wallet like a hawk! It probably means they’re looking to generate additional revenues by steering you into these products that are highly profitable for them (but probably not for you).

4. Do You or Your Firm Receive Any Third-Party Compensation for Recommending Particular Investments? This is the ultimate question you want answered. Why? Because you need to know that your advisor has no incentive to recommend products that will shower him or her with commissions, kickbacks, consulting fees, trips, or other goodies.

5. What’s Your Philosophy When It Comes to Investing? This will help you to understand whether or not the advisor believes that he or she can beat the market by picking individual stocks or actively managed funds. Over time, that’s a losing game unless the person is a total superstar like Ray Dalio or Warren Buffett. Between you and me, they’re probably not.

6. What Financial Planning Services Do You Offer Beyond Investment Strategy and Portfolio Management? Investment help may be all you need, depending on your stage of life. But as you grow older and/or you become more wealthy with various holdings to manage, things often become more complex financially: for example, you may need to deal with saving for a child’s college education, retirement planning, handling your vested stock options, or estate planning. Most advisors have limited capabilities once they venture beyond investing. As mentioned, most aren’t legally allowed to offer tax advice due to their broker status. Ideally, you want an advisor who can bring tools for tax efficiency in all aspects of your planning—from your investment planning to your business planning to your estate planning.

7. Where Will My Money Be Held? A fiduciary advisor should always use a third-party custodian to hold your funds. For example, Fidelity, Schwab, and TD Ameritrade all have custodial arms that will keep your money in a secure environment. You then sign a limited power of attorney that gives the advisor the right to manage the money but never to make withdrawals. The good news about this arrangement is that if you ever want to fire your advisor, you don’t have to move your accounts. You can simply hire a new advisor who can take over managing your accounts without missing a beat. This custodial system also protects you from the danger of getting fleeced by a con man like Bernie Madoff.

PAUL TUDOR JONES

“The most important thing for me is that defense is 10 times more important than offense. . . . You have to be very focused on protecting the downside at all times.”

Paul Tudor Jones, who uses a “five-to-one rule” to guide his investment decisions. “I’m risking one dollar in the expectation that I’ll make five,”

RAY DALIO

“What I realized is nobody knows and nobody ever will,” he says. “So I have to design an asset allocation that, even if I’m wrong, I’ll still be okay.”

TONY TO ADVISORS

“Don’t even bring me an investment idea unless you first tell me how we can protect against or minimize the downside.”

TAXES

Cap gains of 20% versus 50% for income. “Believe me, all the billionaires I’ve ever met have one attribute in common: they and their advisors are really smart about taxes! They know that it’s not what they earn that counts. It’s what they keep. That’s real money, which they can spend, reinvest, or give away to improve the lives of others.”

Tony: “Of course, I don’t start with taxes. That would be a severe mistake. I always start with a focus on not losing money and on getting asymmetric risk/reward. Then, before making any investment, I make a point of asking, “How tax efficient is this going to be? And is there any way we could make it more tax efficient?””  Focus on after-tax returns and consider MLPs (p. 108).

DIVERSIFICATION

1. Diversify Across Different Asset Classes. Avoid putting all your money in real estate, stocks, bonds, or any single investment class.
2. Diversify Within Asset Classes. Don’t put all your money in a favorite stock such as Apple, or a single MLP, or one piece of waterfront real estate that could be washed away in a storm.
3. ***Diversify Across Markets, Countries, and Currencies Around the World. We live in a global economy, so don’t make the mistake of investing solely in your own country.
4. Diversify Across Time. You’re never going to know the right time to buy anything. But if you keep adding to your investments systematically over months and years (in other words, dollar-cost averaging), you’ll reduce your risk and increase your returns over time.

David Swensen:

Of course, there are many different ways of diversifying. I discuss this in detail in Money: Master the Game, laying out the exact asset allocations recommended by Ray and other financial gurus, such as Jack Bogle and David Swensen. For example, David told me how individual investors can diversify by owning low-cost index funds that invest in six “really important” asset classes: US stocks, international stocks, emerging-market stocks, real estate investment trusts (REITs), long-term US Treasuries, and Treasury Inflation-Protected securities (TIPS). He even shared the precise percentages that he would recommend allocating to each.

Ray Dalio:

Aim for 15 uncorrelated bets. “The holy grail of investing is to have 15 or more good—they don’t have to be great—uncorrelated bets.” In other words, everything comes down to owning an array of attractive assets that don’t move in tandem. That’s how you ensure survival and success. In his case, this includes investments in stocks, bonds, gold, commodities, real estate, and other alternatives. Ray emphasized that, by owning 15 uncorrelated investments, you can reduce your overall risk “by about 80%,” and “you’ll increase the return-to-risk ratio by a factor of five. So, your return is five times greater by reducing that risk.”

SURVIVING/THRIVING IN BEAR MARKETS

Sir John Templeton’s famous remark: “The four most expensive words in investing are ‘This time it’s different.’

Tony co-author, Peter Mallouk: “Throughout the crash, we continued to invest heavily in the stock market on behalf of our clients. We took profits from strong asset classes such as bonds and invested the proceeds in weak asset classes such as US small-cap and large-cap stocks, international stocks, and emerging-market stocks. Instead of betting on individual companies, we bought index funds, which gave us instant diversification (at a low cost) across these massively undervalued markets”

On average, the market is down about one in every four years. You need to recognize this reality so you won’t be shocked when stocks tumble—and so you’ll avoid excessive risks. At the same time, it’s useful to recognize that the market has made money three out of every four years.

One reason why the best investors are so successful is that they override the natural tendency to be fearful during periods of market turmoil. Take Howard Marks. In the last 15 weeks of 2008, when financial markets were imploding, he told me that his team at Oaktree Capital Management invested about $500 million a week in distressed debt. That’s right! They invested half a billion dollars a week for 15 straight weeks during a time when many thought the end times had arrived! “It was obvious that everybody was suicidal,” Howard told me. “In general, that’s a good time to buy.”

ALTERNATIVE OPTIONS THAT CO-AUTHOR LIKES

Real Estate Investment Trusts (REITS). I’m sure you know people who’ve done well by investing directly in residential property. But most of us can’t afford to diversify by owning a slew of houses or apartments. That’s one reason why I like to invest in publicly traded real estate investment trusts (REITs).

Private Equity Funds

Master Limited Partnerships. I’m a big fan of MLPs, which are publicly traded partnerships that typically invest in energy infrastructure, including oil and gas pipelines. What’s the appeal? As Tony mentioned in the last chapter, we sometimes recommend MLPs because they pay out a lot of income in a tax-efficient way. They don’t make sense for many investors (especially if you’re young or have your money in an IRA), but they can be great for an investor who is over 50 and has a large, taxable account.

p. 132 — Doesn’t like gold or hedgefunds

REBALANCING

Burton Malkiel: Unsuccessful investors tend to “buy the thing that’s gone up and sell the thing that’s gone down.” One benefit of rebalancing, says Malkiel, is that it “makes you do the opposite,” forcing you to buy assets when they’re out of favor and undervalued. You’ll profit richly when they recover.

[Read more on investing from Tony here.]

The post Tony Robbins: How to Suffer Less (and Invest Intelligently) appeared first on The Blog of Author Tim Ferriss.

I’ve written about my morning journaling routine once before.

But my journaling–think of it as freezing thinking on paper–isn’t limited to mornings. I use it as a tool to clarify my thinking and goals, much as Kevin Kelly (one of my favorite humans) does. The paper is like a photography darkroom for my mind.

Below is a scan of a real page. Both entries are from October 2015.

The first entry (top half) is simply a list of “fun” things I felt compelled to schedule after the unexpected death of a close friend. Since I’ve ticked all of the bullets off. You’ll notice that I blurred out a few sensitive bits, and I won’t spend time on this entry in this post.

The second entry (bottom half) was written in Samovar Tea Lounge in San Francisco after a two-hour walk. The gestation period during walking and subsequent entry lead me to re-incorporate “deloading” phases in my life. “Deloading” is a term often used in strength and athletic training, but it’s a concept that can be applied to many areas. Let’s look at the sports definition, here from T Nation:

A back-off week, or deload, is a planned reduction in exercise volume or intensity. In collegiate strength-training circles, it’s referred to as the unloading week, and is often inserted between phases or periods. Quoting from Essentials of Strength Training and Conditioning: “The purpose of this unloading week is to prepare the body for the increased demand of the next phase or period,” and to mitigate the risk of overtraining.

So, how does this relate to creativity, productivity, or quality of life?

First, I’ll give a personal outcome — In the last 12 months, I’ve used “deloading” outside of sports to decrease my anxiety at least 50% while simultaneously doubling my income.

Deloading for business, in my case, consists of strategically taking my foot off the gas. I alternate intense periods of batching similar tasks (recording podcasts, clearing the inbox, writing blog posts, handling accounting, etc.) with extended periods of — for lack of poetic description — unplugging and fucking around.  Oddly enough, I find both the batching and unplugging to free up bandwidth and be restorative.

The unplug can still be intense (here’s a personal example in Bali), but you shouldn’t be working on “work.”

Let’s dig into the journal entry, as it provides much of the reasoning.

I’ve provided the scan (click to enlarge) and transcribed the entry below it, including many additional thoughts. The journal itself (Morning Pages Workbook) I explain here:

Now, the transcription with revisions and additional thoughts:

– TUES – SAMOVAR @ 5:40PM –

The great “deloading” phase.

This is what I’m experiencing this afternoon, and it makes a Tuesday feel like a lazy Sunday morning. This is when the muse is most likely to visit.

I need to get back to the slack.

To the pregnant void of infinite possibilities, only possible with a lack of obligation, or at least, no compulsive reactivity. Perhaps this is only possible with the negative space to–as Kurt Vonnegut put it–fart around? To do things for the hell of it? For no damn good reason at all?

I feel that the big ideas come from these periods. It’s the silence between the notes that makes the music.

If you want to create or be anything lateral, bigger, better, or truly different, you need room to ask “what if?” without a conference call in 15 minutes.  The aha moments rarely come from the incremental inbox-clearing mentality of, “Oh, fuck… I forgot to… Please remind me to… Shouldn’t I?…I must remember to…”

That is the land of the lost, and we all become lost.

My Tuesday experience reinforced, for me, the importance of creating large uninterrupted blocks of time (a la maker’s schedule versus manager’s schedule), in which your mind can wander, ponder, and find the signal amidst the noise. If you’re lucky, it might even create a signal, or connect two signals (core ideas) that have never shaken hands before.

For me, I’ve scheduled “deloading” phases in a few ways: roughly 8am-9am daily for journaling, tea routines, etc.; 9am-1pm every Wednesday for creative output (i.e. writing, interviewing for the podcast); and “screen-free Saturdays,” when I use no laptops and only use my phone for maps and coordinating with friends via text (no apps).  Of course, I also use mini-retirements a few time a year.

“Deloading” blocks must be scheduled and defended as strongly as–actually, more strongly than–your business commitments. The former can be a force multiplier for the latter, but not vice-versa.

So, how can one throttle back the reactive living that has them following everyone’s agenda except their own?

Create slack, as no one will give it to you. This is the only way to swim forward instead of treading water.

###

Did you enjoy this? Please let me know in the comments.  I’d also love to hear of how you “deload,” if you do.

If you’d like more on my morning routines, here are five habits that help me tremendously.

As always, thanks for reading.

The post Why You Need a "Deloading" Phase in Life appeared first on The Blog of Author Tim Ferriss.

The wisdom of life consists in the elimination of non-essentials.
— Lin Yutang

Discipline equals freedom.
— Jocko Willink

This post will attempt to teach you how to say “no” when it matters most.

At the very least, it will share my story of getting there. It’s a doozy.

Here’s the short version:

I’m taking a long break from investing in new startups. No more advising, either. Please don’t send me any pitches or introductions, as I sadly won’t be able to respond. Until further notice, I am done. I might do the same with interviews, conferences, and much more.

Now, the longer version for those interested:

This post will attempt to explain how I think about investing, overcoming “fear of missing out” (FOMO), and otherwise reducing anxiety.

It’s also about how to kill the golden goose, when the goose is no longer serving you.

I’ll dig into one specifically hard decision — to say “no” to startup investing, which is easily the most lucrative activity in my life. Even if you don’t view yourself as an “investor”—which you are, whether you realize it or not—the process I used to get to no should be useful…

[Warning: If you’re bored by investment stuff, skip the next two bulleted lists.]

Caveat for any investing pros reading this:

• I realize there are exceptions to every “rule” I use. Most of this post is as subjective as the fears I felt.
• My rules might be simplistic, but they’ve provided a good ROI and the ability to sleep. Every time I’ve tried to get “sophisticated,” the universe has kicked me in the nuts.
• Many startup investors use diametrically opposed approaches and do very well.
• There are later-stage investments I’ve made (2-4x return deals) that run counter to some of what’s below (e.g. aiming for 10x+), but those typically involve a discount to book value, due to distressed sellers or some atypical event.
• Many concepts are simplified to avoid confusing a lay audience.

Related announcements:

• I will continue working closely with my current portfolio of startups. I love them and believe in them.
• I will be returning all unallocated capital in my private Stealth Fund on AngelList. If you’re an investor in that fund, you’ll be getting your remaining money back. My public Syndicate will remain in place for later re-entry into the game.

So, why am I tapping out now and shifting gears?

Below are the key questions I asked to arrive at this cord-cutting conclusion.  I revisit these questions often, usually every month.

I hope they help you remove noise and internal conflict from your life.

The Road to No

ARE YOU DOING WHAT YOU’RE UNIQUELY CAPABLE OF, WHAT YOU FEEL PLACED HERE ON EARTH TO DO? CAN YOU BE REPLACED?

I remember a breakfast with Kamal Ravikant roughly one year ago.

Standing in a friend’s kitchen downing eggs, lox, and coffee, we spoke about our dreams, fears, obligations, and lives. Investing had become a big part of my net-worth and my identity. Listing out the options I saw for my next big moves, I asked him if I should raise a fund and become a full-time venture capitalist (VC), as I was already doing the work but trying to balance it with 5-10 other projects. He could sense my anxiety. It wasn’t a dream of mine; I simply felt I’d be stupid not to strike while the iron was hot.

He thought very carefully in silence and then said: “I’ve been at events where people come up to you crying because they’ve lost 100-plus pounds on the Slow-Carb Diet. You will never have that impact as a VC. If you don’t invest in a company, they’ll just find another VC. You’re totally replaceable.”

He paused again and ended with, “Please don’t stop writing.”

I’ve thought about that conversation every day since.

For some people, being a VC is their calling and they are the Michael Jordan-like MVPs of that world. They should cultivate that gift. But if I stop investing, no one will miss it. In 2015, that much is clear. There have never been more startup investors, and–right along with them–founders basing “fit” on highest valuation and previously unheard of terms. There are exceptions, of course, but it’s crowded. If I exit through the side door, the startup party will roll on uninterrupted.

Now, I’m certainly not the best writer in the world. I have no delusions otherwise. People like John McPhee and Michael Lewis make me want to cry into my pillow and brand “Poser” on my forehead.

BUT… if I stop writing, perhaps I’m squandering the biggest opportunity I have—created through much luck—to have a lasting impact on the greatest number of people. This feeling of urgency has been multiplied 100-fold in the last two months, as several close friends have died in accidents no one saw coming. Life is fucking short. Put another way: a long life is far from guaranteed. Nearly everyone dies before they’re ready.

I’m tired of being interchangeable, no matter how lucrative the game. Even if I’m wrong about the writing, I’d curse myself if I didn’t give it a shot.

Are you squandering your unique abilities? Or the chance to find them in the first place?

HOW OFTEN ARE YOU SAYING “HELL, YEAH!”? 

Philosopher-programmer Derek Sivers is one of my favorite people.

His incisive thinking has always impressed me, and his “hell, yeah!” or “no” essay has become one of my favorite rules of thumb. From his blog:

Those of you who often over-commit or feel too scattered may appreciate a new philosophy I’m trying: If I’m not saying “HELL YEAH!” about something, then I say no.

Meaning: When deciding whether to commit to something, if I feel anything less than, “Wow! That would be amazing! Absolutely! Hell yeah!” – then my answer is no. When you say no to most things, you leave room in your life to really throw yourself completely into that rare thing that makes you say “HELL YEAH!”

We’re all busy. We’ve all taken on too much. Saying yes to less is the way out.

To become “successful,” you have to say “yes” to a lot of experiments.  To learn what you’re best at, or what you’re most passionate about, you have to throw a lot against the wall.

Once your life shifts from pitching outbound to defending against inbound, however, you have to ruthlessly say “no” as your default. Instead of throwing spears, you’re holding the shield.

From 2007-2009 and again from 2012-2013, I said yes to way too many “cool” things. Would I like to go to a conference in South America? Write a time-consuming guest article for a well-known magazine? Invest in a start-up that five of my friends were in? “Sure, that sounds kinda cool,” I’d say, dropping it in the calendar. Later, I’d pay the price of massive distraction and overwhelm. My agenda became a list of everyone else’s agendas.

Saying yes to too much “cool” will bury you alive and render you a B-player, even if you have A-player skills. To develop your edge initially, you learn to set priorities; to maintain your edge, you need to defend against the priorities of others.

Once you reach a decent level of professional success, lack of opportunity won’t kill you. It’s drowning in 7-out-of-10 “cool” commitments that will sink the ship.

These days, I find myself saying “Hell, yes!” less and less with new startups. That’s my cue to exit stage left, especially when I can do work I love (e.g. writing) with 1/10th the energy expenditure.

I need to stop sowing the seeds of my own destruction.

HOW MUCH OF YOUR LIFE IS MAKING VERSUS MANAGING? HOW DO YOU FEEL ABOUT THE SPLIT?

One of my favorite time-management essays is “Maker’s Schedule, Manager’s Schedule” by Paul Graham of Y Combinator fame. Give it a read.

As Brad Feld and many others have observed, great creative work isn’t possible if you’re trying to piece together 30 minutes here and 45 minutes there. Large, uninterrupted block of time — 3-5 hours minimum — create the space needed to find and connect the dots. And one block per week isn’t enough.  There has to be enough slack in the system for multi-day CPU-intensive synthesis. For me, this means at least 3-4 mornings per week where I am in “maker” mode until at least 1pm.

If I’m in reactive mode, maker mode is all but impossible. Email and texts of “We’re overcommitted but might be able to squeeze you in for $25K. Closing tomorrow. Interested?” are creative kryptonite.

I miss writing, creating, and working on bigger projects. YES to that means NO to any games of whack-a-mole.

WHAT BLESSINGS IN EXCESS HAVE BECOME A CURSE? WHERE DO YOU HAVE TOO MUCH OF A GOOD THING?

In excess, most things take on the characteristics of their opposite. Thus:

Pacifists become militants.

Freedom fighters become tyrants.

Blessings become curses.

Help becomes hinderance.

More becomes less.

To explore this concept more, read up on Aristotle’s golden mean.

In my first 1-2 years of angel investing, 90%+ of my bets were in a tiny sub-set of startups. The criteria were simple:

• Consumer-facing products or services
• Products I could be a dedicated “power user” of, products that scratched a personal itch
• Initial target demographic of 25-40-year old tech-savvy males in big US cities like SF, NYC, Chicago, LA, etc. (allowed me to accelerate growth/scaling with my audience)
• <$10M pre-money valuation
• Demonstrated traction and consistent growth (not doctored with paid acquisition).
• No “party rounds”—crowded financing rounds with no clear lead investor. Party rounds often lead to poor due diligence and few people with enough skin in the game to really care.

Checking these boxes allowed me to add a lot of value quickly, even as relatively cheap labor (i.e. I took a tiny stake in the company). Shopify is a great example, which you can read about here (scroll down).

My ability to help spread via word of mouth, and I got what I wanted: great “deal flow.” Deals started flowing in en masse from other founders and investors.

Fast forward to 2015, and great deal flow is now paralyzing the rest of my life.  I’m drowning in inbound.

Instead of making great things possible in my life, it’s preventing great things from happening.

I’m excited to go back to basics, and this requires cauterizing blessings that have become burdens.

WHY ARE YOU INVESTING, ANYWAY?

For me, the goal of “investing” has always been simple: to allocate resources (e.g. money, time, energy) to improve quality of life. This is a personal definition, as yours likely will be.

Some words are so overused as to have become meaningless.  If you find yourself using nebulous terms like “success,” “happiness,” or “investing,” it pays to explicitly define them or stop using them. “What would it look like if I had (or won at) ___ ?” helps. Life favors the specific ask and punishes the vague wish.

So, here: to allocate resources (e.g. money, time, energy) to improve quality of life.

This applies to both the future and the present. I am willing to accept a mild and temporary 10% decrease in current quality of life (based on morale in journaling) for a high-probability 10x return, whether the ROI comes in the form of cash, time, energy, or otherwise. That could be a separate blog post, but conversely:

An investment that produces a massive financial ROI but makes me a complete nervous mess, or causes insomnia and temper tantrums for a long period of time, is NOT a good investment.

I don’t typically invest in public stocks for this reason, even when I know I’m leaving cash on the table. My stomach can’t take the ups and downs, but—like drivers rubbernecking to look at a wreck—I seem incapable of not looking. I will compulsively check Google News and Google Finance, despite knowing it’s self-sabotage. I become Benjamin Graham’s Mr. Market. As counter-examples, friends like Kevin Rose and Chris Sacca have different programming and are comfortable playing in that sandbox. They can be rational instead of reactive.

Suffice to say — For me, a large guaranteed decrease in present quality of life doesn’t justify a large speculative return.

One could argue that I should work on my reactivity instead of avoiding stocks. I’d agree on tempering reactivity, but I’d disagree on fixing weaknesses as a primary investment (or life) strategy.

All of my biggest wins have come from leveraging strengths instead of fixing weaknesses. Investing is hard enough without having to change your core behaviors. Don’t push a boulder up a hill just because you can.

Public market sharks will eat me alive in their world, but I’ll beat 99% of them in my little early-stage startup sandbox. I live in the middle of the informational switch box and know the operators.

From 2007 until recently, I paradoxically found start-up investing very low-stress. Ditto with some options trading. Though high-risk, I do well with binary decisions. In other words, I do a ton of homework and commit to an investment that I cannot reverse. That “what’s done is done” aspect allows me to sleep well at night, as there is no buy-sell choice for the foreseeable future. I’m protected from my lesser, flip-flopping self. That has produced more than a few 10-100x investments.

In the last two years, however, my quality of life has suffered.

As fair-weather investors and founders have flooded the “hot” tech scene, it’s become a deluge of noise. Where there were once a handful of micro VCs, for instance, there are now hundreds. Private equity firms and hedge funds are betting earlier and earlier. It’s become a crowded playing field. Here’s what that has meant for me personally:

• I get 50-100 pitches per week. This creates an inbox problem, but it gets worse, as…
• Many of these are unsolicited “cold intros,” where other investors will email me and CC 2-4 founders with “I’d love for you to meet A, B, and C” without asking if they can share my e-mail address
• Those founders then “loop in” other people, and it cascades horribly from there. Before I know it 20-50 people I don’t know are emailing me questions and requests.
• As a result, I’ve had to declare email bankruptcy twice in the last six months. It’s totally untenable.

Is there a tech bubble? That question is beyond my pay grade, and it’s also beside the point.

Even if I were guaranteed there would be no implosion for 3-5 years, I’d still exit now. Largely due to communication overload, I’ve lost my love for the game.  On top of that, the marginal minute now matters more to me than the marginal dollar.

But why not cut back 50%, or even 90%, and be more selective?  Good question. That’s next…

ARE YOU FOOLING YOURSELF WITH A PLAN FOR MODERATION?

The first principle is that you must not fool yourself and you are the easiest person to fool.

– Richard P. Feynman

Where in your life are you good at moderation? Where are you an all-or-nothing type? Where do you lack a shut-off switch? It pays to know thyself.

The Slow-Carb Diet succeeds where other diets fail for many reasons, but the biggest is this: It accepts default human behaviors versus trying to fix them. Rather than say “don’t cheat” or “you can no longer eat X,” we plan weekly “cheat days” (usually Saturdays) in advance. People on diets will cheat regardless, so we mitigate the damage by pre-scheduling it and limiting it to 24 hours.

Outside of cheat days, slow carbers keep “domino foods” out of their homes. What are domino foods? Foods that could be acceptable if humans had strict portion control, but that are disallowed because practically none of us do. Common domino foods include:

• Chickpeas
• Peanut butter
• Salted cashews
• Alcohol

Domino triggers aren’t limited to food. For some people, if they play 15 minutes of World of Warcraft, they’ll play 15 hours. It’s zero or 15 hours.

For me, startups are a domino food.

In theory, “I’ll only do one deal a month” or “I’ll only do two deals a quarter” sound great, but I’ve literally NEVER seen it work for myself or any of my VC or angel friends. Sure, there are ways to winnow down the pitches. Yes, you can ask “Is this one of the top 1-2 entrepreneurs you know?” to any VC who intro’s a deal and reject any “no”s. But what if you commit to two deals a quarter and see two great ones the first week? What then? If you invest in those two, will you be able to ignore every incoming pitch for the next 10 weeks?

Not likely.

For me, it’s all or nothing. I can’t be half pregnant with startup investing.  Whether choosing 2 or 20 startups per year, you have to filter them from the total incoming pool.

If I let even one startup through, another 50 seem to magically fill up my time (or at least my inbox). I don’t want to hire staff for vetting, so I’ve concluded I must ignore all new startup pitches and intros.

Know where you can moderate and where you can’t.

YOU SAY “HEALTH IS #1″…BUT IS IT REALLY?

After contracting Lyme disease and operating at ~10% capacity for nine months, I made health #1. Prior to Lyme, I’d worked out and eaten well, but when push came to shove, “health #1” was negotiable. Now, it’s literally #1. What does this mean?

If I sleep poorly and have an early morning meeting, I’ll cancel the meeting last-minute if needed and catch up on sleep. If I’ve missed a workout and have a con-call coming up in 30 minutes? Same. Late-night birthday party with a close friend? Not unless I can sleep in the next morning. In practice, strictly making health #1 has real social and business ramifications. That’s a price I’ve realized I MUST be fine paying, or I could lose weeks or months to sickness or fatigue.

Making health #1 50% of the time doesn’t work. It’s absolute — all or nothing. If it’s #1 50% of the time, you’ll compromise precisely when it’s most important.

The artificial urgency common to startups makes mental and physical health even more challenging. I’m tired of unwarranted last-minute “hurry up and sign” emergencies and related fire drills. It’s a culture of cortisol.

ARE YOU OVER-CORRELATED?

[NOTE: Two investors friends found this bullet slow, as they’re immersed in similar subjects. Feel free to skip if it drags on, but I think there are a few important novice concepts in here.]

“Correlated” means that investments tend to move up or down in value at the same time.

As legendary hedge fund manager Ray Dalio told Tony Robbins: “It’s almost certain that whatever you’re going to put your money in, there will come a day when you will lose 50 percent to 70 percent.” It pays to remember that if you lose 50%, you need a subsequent 100% return to get back to where you started. That math is tough.

So, how to de-risk your portfolio?

Many investors “rebalance” across asset classes to maintain certain ratios (e.g. X% in bonds, Y% in stocks, Z% in commodities, etc.). If one asset class jumps, they liquidate a part of it a buy more of lower performing classes. There are pros and cons to this, but it’s common practice.

From 2007-2009, during the “real-world MBA” that taught me to angel invest, <15% of my liquid assets were in startups. I was taking a barbell approach to investing. But most startups are illiquid. I commonly can’t sell shares until 7-12 years after I invest, at least for my big winners to date. What does that mean? In 2015, startups comprise more than 80% of my assets. Yikes!

Since I can’t sell, the simplest first step for lowering stress is to stop investing in illiquid assets.

I’ve sold large portions of liquid stocks—mostly early start-up investments in China–to help get me to “sleep at night” levels, even if they are lower than historical highs of the last 6-12 months. Beware of anchoring to former high prices (e.g. “I’ll sell when it gets back to X price per share…”). I only have 1-2 stock holdings remaining.

Some of you might suggest hedging with short positions, and I’d love to, but it’s not my forte. If you have ideas for doing so without huge exposure or getting into legal gray areas, please let me know in the comments.

In the meantime, the venture capital model is mostly a bull market business. Not much shorting opportunity. The best approximation I’ve seen is investing in businesses like Uber, which A) have a lot of international exposure (like US blue chips), and B) could be considered macro-economically counter-cyclical. For instance, it’s conceivable a stock market correction or crash could simultaneously lead fewer people to buy cars and/or more people to sign up as Uber drivers to supplement or replace their jobs. Ditto with Airbnb and others that have more variable than fixed costs compared to incumbents (e.g. Hilton).

WHAT’S THE RUSH? CAN YOU “RETIRE” AND COME BACK?

I’m in startups for the long game. In some capacity, I plan to be doing this 20+ years from now.

The reality: If you’re spending your own money, or otherwise not banking on management fees, you can wait for the perfect pitches, even if it takes years. It might not be the “best” approach, but it’s enough. To get rich beyond your wildest dreams in startup investing, it isn’t remotely necessary to bet on a Facebook or Airbnb every year. If you get a decent bet on ONE of those non-illusory, real-business unicorns every 10 years, or if you get 2-3 investments that turn $25K into $2.5M, you can retire and have a wonderful quality of life. Many would argue that you need to invest in 50-100 startups to find that one lottery ticket. Maybe. I think it’s possible to narrow the odds quite a bit more, and a lot of it is predicated on maintaining stringent criteria; ensuring you have an informational, analytical, or behavioral advantage; and TIMING.

Most of my best investments were made during the “Dot-com Depression” of 2008-2009 (e.g. Uber, Shopify, Twitter, etc.), when only the hardcore remained standing on a battlefield littered with startup bodies. In lean times, when startups no longer grace magazine covers, founders are those who cannot help but build a company. LinkedIn in 2002 is another example.

HOWEVER… This doesn’t mean there aren’t great deals out there.  There are. Great companies are still built during every “frothy” period.

The froth just makes my job and detective work 10x harder, and the margin of safety becomes much narrower.

[Tim: Skip this boxed text if the concept of “margin of safety” is old news to you.]

Think of the “margin of safety” as wiggle room.

Warren Buffett is one of the most successful investors of the 20th century and a self-described “value investor.” He aims to buy stocks at a discount (below intrinsic value) so that even with a worst-case scenario, he can do well. This discount is referred to as the “margin of safety,” and it’s the bedrock principle of some of the brightest minds in the investing world (e.g., Seth Klarman). It doesn’t guarantee a good investment, but it allows room for error.  Back in the startup world…

I want each of my investments, if successful, to have the ability to return my “entire fund,” which is how much capital I’ve earmarked for startups over two years, for instance. This usually means potential for a minimum 10X return. That 10X minimum is an important part of my recipe that allows margin for screw ups.

For the fund-justifying ROI to have a snowball’s chance in hell of happening, I must A) know basic algebra to ensure my investment amounts (check sizes) permit it, and B) avoid companies that seem overpriced, where the 10x price is something the world has never seen before (i.e. no even indirect comparables, or tenable extrapolations from even an expanded market size).

If you throw low-due-diligence Hail Mary’s everywhere and justify it with “they could be the next Uber!”, you will almost certainly be killed by 1,000 slow-bleeding $25K paper cuts. Despite current euphoria, applying something like Pascal’s Wager to startups is a great way to go broke.

Good startup investors who suggest being “promiscuous” are still methodical.

It’s popular in startup land to talk about “moonshots”—the impossibly ambitious startups that will either change the world or incinerate themselves into star dust.

I’m a fan of funding ballsy founders (which includes women), and I want many moonshots to be funded, but here’s the reality of my portfolio: as I’ve signed the investment docs for every big success I’ve had, I’ve always thought, “I will never lose money on this deal.”

The “this will be a home run or nothing” deals usually end up at nothing. I’m not saying such deals can’t work, but I try not to specialize in them.

These days, the real unicorns aren’t the media darlings with billion-dollar valuations. Those have become terrifyingly passé. The unicorns are the high-growth startups with a reasonable margin of safety.

Fortunately, I’m not in a rush, and I can wait for the tide to shift.

If you simply wait for blood in the streets, for when true believers are the only ones left, you can ensure come-hell-or-high-water founders are at least half of your meetings.

It might be morbid, but it’s practical.

My Last Deals For A While

It’s still a great time to invest in companies… but only if you’re able to A) filter the signal from the noise, B) say no to a lot of great companies whose investors are accepting insane terms, and C) follow your own rules. Doing all three of these requires a fuck-ton of effort, discipline, and systems. I prefer games with better odds.

There are a few deals you’ll see in the upcoming months, which I committed to long ago. These are not new deals.

They are current companies in which I’m filling my pro-rata, or companies postponing funding announcements until they’re most helpful (e.g. launching publicly). Separately, I work closely with the Expa startup lab and will continue to do so. They are largely able to insulate themselves from madness, while using and refining an excellent playbook.

Are You Having a Breakdown or a Breakthrough? A Short How-To Guide

“Make your peace with the fact that saying ‘no’ often requires trading popularity for respect.”
— Greg McKeown, Essentialism

If you’re suffering from a feeling of overwhelm, it might be useful to ask yourself two questions:

– In the midst of overwhelm, is life not showing me exactly what I should subtract?

– Am I having a breakdown or a breakthrough?

As Marcus Aurelius and Ryan Holiday would say, “The obstacle is the way.” This doesn’t mean seeing problems, accepting them, and leaving them to fester. Nor does it mean rationalizing problems into good things. To me, it means using pain to find clarity. Pain–if examined and not ignored–can show you what to excise from your life.

For me, step one is always the same: write down the 20% of activities and people causing 80% or more of your negative emotions.

My step two is doing a “fear-setting” exercise on paper, in which I ask and answer “What is really the worst that could happen if I did what I’m considering? And so what? How could I undo any damage?”

Below is a real-world example: the journal page that convinced me to write this post and kickstart an extended startup vacation.

The questions were “What is really the worst that could happen if I stopped angel investing for a minimum of 6-12 months? Do those worse-case scenarios really matter? How could I undo any potential damage? Could I do a two-week test?”

As you’ll notice, I made lists of the guaranteed upsides versus speculative downsides. If we define “risk” as I like to—the likelihood of an irreversible negative outcome—we can see how stupid (and unnecessarily painful) all my fretting and procrastination was. All I needed to do was put it on paper.

Below is a scan of the actual page.  Click here for an enlarged version.

Further below is a transcribed version (slightly shorter and edited). For a full explanation of how and why I use journaling, see this post.  In the meantime, this will get the point across:

Transcription:

“The anxiety is mostly related to email and startups: new pitches, new intros, etc.

Do a 2-week test where “no” to ALL cold intros and pitches?

Why am I hesitant? For saying “no” to all:

PROS:

– 100% guaranteed anxiety reduction

– Feeling of freedom

– Less indecision, less deliberation, so far more bandwidth for CREATING, for READING, for PHYSICAL [TRAINING], for EXPERIMENTS.

CONS (i.e. why not?):

– Might find the next Uber (<10% chance) — Who cares? Wouldn’t materialize for 7-9 years. If Uber pops (IPO), it won’t matter.

– Not get more deals. But who cares?

* Dinner with 5 friends fixes it.

* One blog post fixes it. [Here’s an example from 2013 that helped me find Shyp and co-lead their first round]

* NONE of my best deals (Shyp, Shopify, Uber, Twitter, Facebook, Evernote, Alibaba, etc.) came from cold intros from acquaintances.

If try 2 weeks, how to ensure successful:

– I don’t even see interview or [new] startup emails

– No con-calls. [Cite] “con call vacation” –> push to email or EOD [end-of-day review with assistant]

– Offer [additional] “office hours” on Fridays [for existing portfolio]?

I ultimately realized: If I set up policies to avoid new startups for two weeks, the systems will persist. I might as well make it semi-permanent and take a real “startup vacation.”

What do you need a vacation from?

My Challenge To You: Write Down The “What If”s

“I am an old man and I have known a great many troubles, but most of them never happened.”

– Mark Twain

“He who suffers before it is necessary suffers more than is necessary.”

– Seneca

Tonight or tomorrow morning, take a decision you’ve been putting off, and challenge the fuzzy “what if”s holding you hostage.

If not now, when? If left at the status quo, what will your life and stress look like in six months? In one year? In three years? Who around you will also suffer?

I hope you find the strength to say no when it matters most. I’m striving for the same, and only time will tell if I pull it off.

What will I spend my time on next? More crazy experiments and creative projects, of course.  To hear about them first, sign up for my infrequent newsletter. Things are going to get nuts.

But more important — how could you use a new lease on life?

To surf, like this attorney who quit the rat race? To travel with your family around the world for 1,000+ days, like this?  To learn languages or work remotely in 20+ countries while building a massive business? It’s all possible. The options are limitless…

So start by writing them down. Sometimes, it takes just a piece of paper and a few questions to create a breakthrough.

I look forward to hearing about your adventures.

The post How to Say No When It Matters Most (or “Why I’m Taking a Long ‘Startup Vacation'”) appeared first on The Blog of Author Tim Ferriss.

“It’s [about] getting closer to the source and not being distracted by any nonsense…” — Rick Rubin

Rick Rubin has been called “the most important [music] producer of the last 20 years” by MTV.

Rick is also revered as something of a Zen master, and he is as deep as he is soft-spoken. He rarely grants interviews, and one condition of doing this one was the setting: his hyper-heated barrel sauna at home.

In this episode, we delve into how Rick helps artists (e.g. Jay Z, Shakira, Johnny Cash, etc.) produce their best work. Not only that, we also discuss Rick’s step-by-step experience losing 135+ pounds. He describes underwater weightlifting stories, training with Laird Hamilton, testing different diets, and much more.

Rick’s resume includes everyone from Johnny Cash to Jay Z. His metal artists include groups like Black Sabbath, Slayer, System of a Down, Metallica, Rage Against the Machine, and Linkin Park. He’s worked with pop artists like Shakira, Adele, Sheryl Crow, Lana Del Rey, and Lady Gaga. He’s also been credited with helping to popularize hip hop with artists like LL Cool J, The Beastie Boys, Eminem, Jay Z, and Kanye West.  And that’s just a small sample.

This conversation teaches a cohesive lesson in breaking down complex skills with deep and subtle problem solving.

The sauna caused the microphones to burn our hands and us to nearly pass out. DON’T TRY THIS AT HOME, folks! I think it adds a hilarious element to the whole thing, but it’s not without risks.

[Last but not least, if you haven’t seen my new TV show, which is #1 on iTunes as I write this, please check out The Tim Ferriss Experiment! There are 13 episodes, including ones with surfer Laird Hamilton and “top 10 drummer of all-time” Stewart Copeland.]

Enjoy!

You can find the transcript of this episode here. Transcripts of all episodes can be found here.

• Listen to it on iTunes.
• Stream by clicking here.
• Download it as an MP3 by right-clicking here and choosing “save as”.

Interested in learning more about world-class musicians? — Check out my interview with Amanda Palmer who left her record label and raised more than $2 million via crowd funding. (stream episode below or right-click here to download):

Also, don’t miss Justin Boreta of The Glitch Mob, one of the biggest electronic groups on the planet. In my conversation with Justin, we play their never-before-heard draft versions of their songs and then explore what it takes for Justin to move that draft through 300+ versions to a final version which will knock your socks off (stream below or right-click here to download):

This episode is sponsored by Onnit. I have used Onnit products for years. If you look in my kitchen or in my garage you will find Alpha BRAIN, chewable melatonin (for resetting my clock while traveling), kettlebells, maces, battle ropes, and steel clubs. It sounds like a torture chamber, and it basically is. A torture chamber for self-improvement! Ah, the lovely pain. To see a list of my favorite pills, potions, and heavy tools, click here.

This podcast is also brought to you by 99Designs, the world’s largest marketplace of graphic designers. Did you know I used 99Designs to rapid prototype the cover for The 4-Hour Body? Here are some of the impressive results.  Click this link and get a free $99 upgrade.  Give it a test run…

QUESTION(S) OF THE DAY: Rick Rubin cites “heart work” as critical for creatives. What is the balance of heart work and head work in your creation process? 50/50? 70/30? How did you realize what works best for you? Please let me know in the comments.

Scroll below for links and show notes…

Selected Links from the Episode

• Slow Burn by Stu Mittleman
• Get the app that helped Rubin count calories, MyFitnessPal
• Explore world-class music lists like those Rolling Stone and/or Mojo
• Tao Te Ching translation by Stephen Mitchell
• Wherever You Go, There You Are by Jon Kabat-Zinn
• Learn more about the documentary 20,000 Days on Earth
• Learn more about the Wim Hof Breathing Technique

Show Notes

• The story of how Rick Rubin lost 135-145 pounds [7:50]
• Sleep Tools: A process for rebuilding your circadian rhythm for the first time [10:50]
• What does Rick Rubin “do”? [22:45]
• Transitioning into a career of record producing [23:35]
• On letting music be discovered vs. manufactured [24:30]
• What gets in the way of artists producing their best work [26:05]
• Recommendations for contemporary music [30:55]
• How Rick Rubin learned that music was something he could do as a career [34:00]
• Hip-hop to heavy metal and how to approach music with appreciation [38:05]
• Working with artists in different genres: LL Cool J to Slayer [40:15]
• Meditation and managing disruption [42:40]
• Who comes to mind when Rubin thinks of the word “successful” [46:50]
• Lessons learned from time spent with Don Wildman [49:45]
• Most gifted books and favorite documentaries [51:35]
• Managing the experience of overwhelm [54:30]
• About Rick Rubin’s cameo for 99 Problems and Jay Z’s creative process [56:50]
• On being introduced to the sauna/ice-bath combination [1:00:10]
• Underwater weight training and lessons from Laird Hamilton [1:02:15]
• Other exercises: Hyperbaric oxygen and the Wim Hof method  [1:08:35]
• How Rubin uses small tasks to help others [1:10:05]
• Advice for his 20-year old and 30-year old self [1:13:10]

People Mentioned

• Stu Mittleman
• Mo Ostin
• Dr. Heber at UCLA
• Black Sabbath
• Reign in Blood
• Slayer
• LL Cool J
• Don Wildman
• Laird Hamilton
• Jay Z
• Chris Chelios

The post Rick Rubin on Cultivating World-Class Artists (Jay Z, Johnny Cash, etc.), Losing 100+ Pounds, and Breaking Down The Complex (#76) appeared first on The Blog of Author Tim Ferriss.