#466: Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and The Art of Gambling

Hello, boys and girls. Ladies and germs, whether you're here across the pond, in the pond, or otherwise, this is Tim Ferris, and welcome to another episode of the Tim Ferris show, what I just said will make sense in a moment. It is my job on every episode to deconstruct world class performers to tease out the favorite books, the habits, routines. forms of journaling, whatever it might be, that you can test and apply in your own lives. My guest today, I've wanted to have on for a very long time.

His name is Richard Kosh. K O C H Richard is an entrepreneur, investor, Former strategy consultant and author of several books on business and ideas, including four books on how to apply the eighty twenty principle in all walks of life. He also has a wonderful British accent, which is why I talked about across the pond. His investments. Because he's not just a theoretician, he's a practitioner, his investments have grown at twenty two percent compounded annually over thirty seven years. That's a long time. Try that with a small number and see what happens. Richard's investments have included Philofax, Plymouth Gin,

Belgo. Bet fair. which is the world's largest betting exchange. We talk about this one quite a bit. FanDuel and Auto One. He has worked for the Boston Consulting Group and was a partner at Bain and Co, that's Bain and Company, before leaving to start L E K with Jim Lawrence and Ian Evans. Which expanded from three to three hundred and fifty professionals during the six years Richard was there. In nineteen ninety seven, the eighty twenty principle, the book, reinterpreted the Pareto rule, extending the observation that most results come from a small minority of causes.

Into personal life, happiness, success, and more. The book, substantially updated in 2017, has sold more than a million copies. I have bought many of those myself and given copies away. It's been translated into roughly forty languages and become a business classic. It was named by GQ magazine as one of the top twenty five business books of all time. His new book, published on august thirteenth, twenty twenty, is Unreasonable Success and How to Achieve It. In it, Richard charts a new map of success, which he says can propel anyone to new heights of accomplishment. High success, he says, does not require genius, consistency, all around ability, a safe pair of hands, or even basic competence, which is reassuring. But it does require the nine key attitudes and strategies he has identified. And we dig into all of this and more in this conversation. It's important to note, I had a great time doing this, that's not important, but the following is important. That we talk about a lot in the world of investing and consulting because I want to give you all a lens into his thinking.

So rather than listening to someone say negotiating is important. I would prefer to dig into real world examples of what they have done. So you can learn how to fish. Metaphorically speaking, as opposed to being given a fish in the form of some type of fortune cookie parable or something like that. So we get into a lot of concrete detain and consulting, and those are lenses through which you can look at many, many areas in your own life.

Whether it's personal or business. That and I think that's enough preamble. We get into a lot. We get into the art of gambling. Eighty twenty principle. Happiness islands, achieving unreasonable success, ball aching insights.

Journaling, Walt Disney, and lots more. You can find him on Twitter at Richard Cosh eighty twenty and online Richard Cosh. Dot. Yeah. This episode is brought to you by Viore Clothing, spelled V-U-O-R-I. Viore. I've been wearing

Vory. At least one. item per day for the last few months and You can use it for everything. It's performance apparel. But it can be used for working out. It can be used for going out to dinner, at least in my case, I feel very comfortable with it.

Super comfortable, super stylish, and uh I just want to read something that one of my employees said. She is an athlete. She is quite technical, although she would never say that. I asked her if she had ever used or heard of Viore, and this was her response. I do love their stuff. Been using them for about a year. I think I found them at REI, first for my partner, T-shirts that are super soft but somehow last as he's hard on stuff. And then I got into the super soft cotton yoga pants and jogger Sweatpants. I live in them and they too have lasted. They're stylish enough I can wear them out and about. The material is just super soft and durable. I just got their Clementine running shorts for summer and love them. The brand seems pretty popular, constantly sold out. In closing and I'm abbreviating here, but in closing

With the exception of when I need technical outdoor gear, they're the only brand I've bought in the last year or so for yoga running loungewear that lasts and that I think look good also. I like the discrete logo. So that gives you some idea. That was not intended for the sponsor read. Uh that was just her response via text. VURI, again spelled V-U-O-R-I, is designed for maximum comfort and versatility. you can wear it running, you can wear their stuff training, doing yoga, lounging, weekend errands, or in my case again, going out to dinner. It really doesn't matter what you're doing. Their clothing Is so comfortable.

And uh look so good and it's it's non offensive that you don't have a huge brand logo in your face. You'll just want to be in them all the time. And my girlfriend and I have been wearing them For the last few months, their men's core short, K-O-R-E. The most comfortable line athletic short is your one short for every sport. I've been using it for kettlebell swings, for runs, you name it, the Banks short. This is their go to land to see short. is the ultimate in versatility. It's made from recycled plastic bottles. And what I'm wearing right now Which I had to pick one to recommend to

folks out there, or at least to men out there, is the Ponto Performance Pant. And you'll find these at the link I'm gonna give you guys. You can check out what I'm talking about, but I'm wearing them right now. their thin performance sweatpants, but that doesn't do them justice. So you gotta check it out. PONTO Ponto Performance Pant. For you ladies, the women's performance jogger. is the softest jogger you'll ever own. Vieori. isn't just an investment in your clothing, it's an investment in your happiness. And for you, my dear listeners, they're offering 20% off your first purchase. So get yourself some of the most comfortable and versatile clothing on the planet.

It's super popular. A lot of my friends have now noticed are wearing this. And so am I. Voriclothing.com forward slash Tim. That's V U O R I clothing.com slash Tim. Not only will you receive 20% off your first purchase, but you'll also enjoy free shipping on any US orders over$75 and free returns. So check it out. Vore clothing.com slash Tim, that's V-U-O-R-I Clothing.com slash Tim, and discover the versatility. of Viore clothing.

This episode is brought to you by Athletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is inevitably Athletic Greens. I view it as my all in one nutritional insurance. I recommended it in 2010 in the four hour body, and I did not get paid to do so. I've used it ever since. Developed from a complex blend of seventy five vitamins, minerals, and whole food sourced ingredients. Athletic Greens is a greens powder engineered to help fill the nutritional gaps. So I always try to do things through Whole Foods, but this covers my bases. Right now, Athlet Greens is offering you their vitamin D3K2 liquid formula free with your first purchase. Two vital nutrients for a strong immune system and strong bones. So simply visit atleticgreens.com slash Tim to claim this special offer today and receive the free D three K2 bundle with your first purchase.

That's up to a one year supply of vitamin D as added value when you try their delicious and comprehensive all in one daily greens product. Again, that's athleticgreens.com slash. Tim. Optimal minimal. At this altitude, I can run flat out for a half mile before my hands start shaking. So then I'll do a personal question.

No se My cybernetic organism, living tissue over metal enough scale. Richard, welcome to the show. I'm so thrilled to have you. It is In some respects decades overdue. And we were just chatting before clicking record.

Could you please Get us started with wines and spirits. It's a great pleasure to be uh talking to you, Tim. Thank you very much for all your generosity in giving me quotes to put on books and things like that. That's very much appreciated. Um I'm not sure that this is a great place to start, but I was just thinking that you had reinvented the talk show. And when I was seventeen And I had the first job in Windsor, England.

As a van driver for a firm of wines and spirit merchants. They were called Loveybonds, and they were probably about the most old fashioned wine and spirit retailer you could possibly imagine. And one of the things which they did was deliver wine And spirits. To quite uh Distinguished bunch of people, actually. I used to drive into Windsor Castle and give the brigadier his gin and so on and so forth. But one of the other people that I used to visit was Michael Parkinson. And Michael Parkinson, as you know, was a very successful sports writer and broadcaster who then branched out into doing chat shows.

And some of the stuff which he did was marvelous. I saw a clip the other day of him talking to David Bowie, and it was fantastic. They were really enjoying themselves and they were moving very smartly from point to point. And that made me think about you, because I think you reinvented The chat show on podcasts. And it's just amazing. So anyway, that was that's my non-story to start with. Well Give me time to disappoint and I appreciate the kind words and I should also say for people listening Those people who perhaps

uh have have read the various policies on my website will will note or received one in my auto response via email will know that I say I don't give quotes for books, I don't do forwards, I don't do and I have a very long list of do not do's The reason that I've made an exception is that and and if anyone else fits this bill, feel free to reach out because I know it's gonna be approximately zero. If you if you've written a book Like uh several of your books that have traveled with me for more than 10 years from place to place that sit on my shelves face out as a reminder, feel free to reach out, but uh that is going to be a very small number indeed. And

Uh perhaps we could start This isn't exactly the beginning, so to speak, but with the Bodleian library. And if you could explain what that is and take us into Context from there. I think that would be helpful. The Bodleyan Library is a fantastically beautiful building in Oxford, very close to the college that I was at.

And I used to sit in there. In the stacks. Uh and look out of the window whenever I could. But the great thing about it was that it had almost any book that you could possibly imagine, and one day I decided that I wanted to read a book which I had read about

uh called The Course of Economic Theory in but it was in French, uh written by our old friend Vilfredo Pareto. And it was published in um Larne. In I think eighteen ninety six and and ninety seven. And

I have no idea at all, Tim, why I wanted to read this book because it wasn't part of my coursework or anything like that. But that was a book in which I discovered the eighty twenty principle. And Um, he didn't call it the eighty twenty principle, as you know, but nevertheless, he had the all these algebraic equations which showed the wealth distribution of In England in the seventeenth century, eighteenth century, nineteenth century, and also in Italy, France, Switzerland, other countries, over those periods of time. And what he found was that there was the same pattern of distribution.

Of um Wealth. Against the population. And A a remarkably similar chart could be drawn.

from the algebra for any of those countries or any time. Uh in order to show what proportion of wealth was owned. And of course it was a very small number of people or proportion of people. Who actually owned most of the wealth or earned most of the money. So you might say, Well

That's very arcane and it's not particularly interesting. But I instantly thought I can use this. I can use this to cheat. In my examinations.

Without actually cheating. And so what I did was to say, well I do know that I'm gonna have to write Eleven papers, three hours long each. uh at the end of my time in Oxford.

The Oxford degree is entirely determined by the final examinations. There's no uh assessment current or there are no previous examinations at all. So it's a very, very important thing. But I had noted that on sample papers So there were something like fifty questions or whatever.

And it's impossible to imagine that I could actually research or do work on fifty Questions times eleven. So I thought Well Maybe if this eighty twenty principle applies, there will be some questions which are asked much more frequently.

And lo and behold, I got the papers. for the history exams for the last twenty years. And it was absolutely true. There was always a question about the French Revolution. There was usually a question about the Russian Revolution. There was always a question about the origins of the causes of the First World War, and so on and so forth. So I said to myself well

Yeah, I don't need to study Very extensively. You could write the answers to three or four questions. It was your choice during three hours. So what I said was I will research six subjects.

No more. Uh For each paper. And uh I will be word perfect, I will have very obscure quotes. I will use foreign languages that I don't actually understand.

Absolutely word perfect. And if I do that I don't have to do much work. And I will get a top degree. And lo and behold, that is exactly what happened. And then I thought to myself afterwards Gosh, this man Perotto was quite onto something, wasn't he? So

That was my introduction to the eighty twenties principle. And uh yeah, perhaps I've never looked back in some senses. You know what is well to me So funny about that in part is that I did something very similar. I just was not aware of Pareto at this point, but when I was

Doing my undergrad. I about halfway through began asking teachers To give them some degree of sort of plausible deniability because I I was hesitant to ask outright what is going to be on the exam because they're not supposed to answer such a question. But I would ask teachers, or I would say rather

I know I need to study everything. that we've covered for the exam, but if there are any particular areas you think I should focus on, would you mind telling me? And they were very forthcoming. So it ended up having a very similar effect, although I definitely was pleased that in most cases not everything hinged on final exams. I think I probably would have been crushed under the sort of the psychological intimidation of that type of sinker swim setup. Yeah, I was quite nervous with my in my exams, but I I ha I found a solution to that, at least in the afternoons, was after the morning paper. I would go down the pub. And have

Couple of pints of beer. And I found that calm minds. And it was notable that I got better results in the afternoon than I did in the morning. Ha ha. Well, that that could be in one of your one of your next books if you haven't covered academic uh hygiene in preparation. Now if we're if we're

Looking at Formative periods. Лес сей шкул. college, university, however you want to label it. I'm looking at notes As I do.

in these types of conversations from an interview you did with Boing Boing a long time ago, an outlet that that I know very well. And One of the questions posed was what advice would you give to a smart kid who's now in high school? And you can feel free to fact check this and correct, but The answer I'm just gonna read. Briefly and then I have a follow up. Discover what you're best at doing and enjoy that is different from what all of your peers are doing and that requires relatively little effort from you, then put huge effort into honing that skill so that it becomes monstrously greater than anyone else's.

Keep demanding that each year you make your peculiar talent more peculiar and much more potent. Use the skill to make the world a more interesting place. Don't care about making money. If you have a fantastically different and useful skill, everything else you want will follow. So I have two questions. Accurate or not accurate quote. Secondly. What is your

Peculiar talent and how did you discover it? Well it's totally accurate and it's very easy to give advice and and perhaps less easy to uh originate the advice or at least to exemplify the the advice. I was always very, very interested in history because it enabled me to develop a certain skill in analysis w non quantitative analysis. I'm absolutely Mm.

But in terms of understanding structures, in terms of understanding trends In terms of really getting to grips with w what might have happened that other people Had not noticed. Then that's what I did. And you know, I came up with some

Pretty wacky ideas. Uh During Um during my time studying history, but I thought that they were plausible, and the examiners must have thought so too. I mean, for example, it seemed to me that Hitler had decopied

Pretty much what Lenin and Stalin had done. So of course Hitler was a great an anti communist, and they were great anti Nazis. But He actually had followed Lenin's policy, for example, of a one party state, which no one before Lenin had really done. And of death camps for dissidents. And enemies of the regime.

Again, no one had really done that, certainly not on such a ruthless scale. as uh Lenin and later Stalin did. So it was My theory that Hitler had based his policy on the Bolsheviks. And It's that's just a little example. I don't I'm not absolutely sure that that's true, but it's plausible. And it s sort of trying to winkle out.

Um things that might be true which are interesting and important. But which no one else has spotted. That's what I try and do. That's what I enjoy doing. So you Mentioned hopeless with numbers. Now

Or maybe I injected the hopeless, but you you uh were s very self deprecating with respect to Numbers and numeracy. And yet. People would look at your track record of investing as an example. And ask how can that possibly be the case. So

Yeah. Again in my notes. I have Betfair here, which I would love for you to explain. But it adds that you couldn't use their website. Now

Please explain. Okay. The the way of reconciling those two apparently different things. I do have a very good track record, thank God. I've been very lucky or Um

very fortunate, at least in my investments. But it's not based on being an analyst in the conventional sense. Um I got fired from the Boston Consulting Group because I was no good at doing financial and market analysis, despite the fact that I was quite good at doing some other things which they didn't value very much. It is true that I'm not particularly numerous. But I believe that's a skill which is You know, readily available from other people. And

As far as Betfer is concerned. I base my investment, as indeed all my investments are based, on the star principle. Which was something that the Boston Consulting Group themselves had invented. uh way back in the nineteen sixties. And this is the old chart of the dogs, stars, question marks, and cash cows. So I never make an investment unless the business is a is a star business or has the potential to be a star business. And BCG's definition, my definition of a star business is that market leader in a niche is

A defensible niche. Where you can protect it against other people. Other other competitors. And a high market growth rate. B C said more than ten percent. I've

really trying to aim at more than thirty percent. And The thing about Batfit was that a friend of mine In two thousand one

came along and said, We've started this betting company and I'm a gambler, I like gambling and We think it's completely different from anything else because it's not a bookmaker. And I said, Well, what do you mean? And he said, Well A bookmaker is someone who makes a book and basically offers odds To

punters, gamblers who might want to bet on it. But Betfair doesn't do that. What it does is it is it started an electronic market. which enables people Two Either

Act as the bookmaker. or to act as a punter. So you can go onto the the site. And you can see post it up there the odds other people will give. And the odds for the punters are vastly better because there's no bookmakers profit. No I said, it can't be true because

that fair has to make some money. How do they make money? What's their business model? He said, Well they have a very small commission, which they take, and they only take that On winning bet. And So I said, Well, that sounds like a fantastic idea. So what's the problem?

And he said, Well Do you want the real truth? And so I said, Yeah, of course I want Antony, of course I want the real truth. What What's the problem? He said, Well No venture capitalist, no professional

financial firm would invest in this company. Uh, when they first had their round, they started about six months previous to this. And uh And he said then there was you know, from their point of view a very good reason for that, which was None of the managers

in the business had had any experience I said, Oh, you mean they didn't have experience in the industry? He said, No No, they don't have experience in the industry. Well one of them used to be a professional gambler, but that's not experience which uh venture capitalists would recognize as being unhappable. Uh he said no. They've never run anything! And I said to me, So Anthony, you're telling me that I should put money into a business.

Uh that has people running it, but never run anything else. You say, Well one of them used to be a financial That person at Morgan Stanley. And he was making You know, he was trading loans and and and doing that sort of stuff. And he said, No, trading loans is not a million miles away from running a betting exchange. But

You know, if the the the truth was that they they really Were all sports enthusiasts or gambling enthusiasts. And none of them had had any experience in management, which explained why It was only friends and family who'd been able to invest in or been willing to invest in this particular company. So I said to Anthony, Well, what's the attraction? He said it's a star business, Richard. I'm not Antony had work for me in LEK and also in a company we set up after L called Strategy Ventures.

And So he knew that I knew that the way to make money in investing in small businesses was to actually invest in something which could be or was a star business. Well You know, even though it was tiny and even though it was losing money. It was clear that Betfair was indeed a star business. And why was it clear? Because no one else was doing what they were doing. Their business model was completely different. Their cost structure was completely different. Their customers were completely different. All of their customers were sophisticated and quite large. Well, n not all of them, but most of them were sophisticated and quite

Large gamblers. And so you know, the They didn't compete with Ladbrooks or the other um Corals, the Toads the other British bookmakers. And in fact they didn't compete with anybody because there was there was nobody. There's actually another firm uh set up originally in San Francisco called Flutter. it had a slightly different business model. So it had no competition.

Infinite Relative market share. So I said, Well that's fantastic. So he said well Let me give you the the website.

And uh you can go on and see how how it works. Well, unfortunately I couldn't because I didn't know how to W website. And I went along and talked to the people and just tried to make sure that It was indeed a star business. And that I thought that, you know, it could actually

Get some professional management later on. And so after an hour I decided to invest One point five million pounds in in that business. And They were quite shocked by that. They said well

Are you sure? And I explained to them what a star business was and how it was wonderful and how they should be very pleased to be having a star business and all the rest of it. But they were quite taken aback at that. And they had been trying to raise money again from institutions that all said no. And the mates that they had who put the money in originally You know, didn't want to put more money in.

particularly as it used that money much more quickly than expected. The reason that he used the money much more quickly than expected was that the growth was fantastic. It was a tiny, tiny, tiny business, but it was growing at forty percent, fifty percent, even sixty percent a month. Um and you know, I said, Well, you know, the other thing which I believe in apart from the star principle is compound growth rate. And so I yeah, I looked at their financial projections and I thought they're incredibly conservative considered considering the market growth rate. And so I invest it.

And I went onto the board and about four years later The chaps had A Um And away day.

at which I said how wonderful star businesses were and so on and so forth. And then I said and actually last week I decided it was time that I actually learnt how to use the website that you have. And they all fell about laughing. They thought I was joking.

And I said, No, I did. I think it's great. Great website. And they they said to me, Well How could you possibly have invested in the business without sort of going onto the website? And I said, Well, it's a star business and they said Sentiment I mean, I I think I went down in their estimation quite considerably as a result of that mission. And of course now I use the website. most days. But uh and I think it's I think it's a wonderful website. I've sold my shares, so I'm not advertising the company or anything like that. But I ended up making about a hundred million pounds profit out of out of that investment. So

That's the power of the star principle. So so how can someone who's not numerate Make money. out of what is generally a highly numerous industry? Well the answer to him is is very simple. I believe in principles and I believe in the star principle. And it works. I'm the only investor in the world that does this. And I think I'm the only investor of the world at my scale, but doesn't employ anyone.

And that does it on the basis of probably about a day a week of work. I do use my personal assistance to do some of the work. I do use contacts for special particular jobs. But you know, I don't have any staff. And you know, when I tell people this, they say, Well, you know, your your portfolio is X. That's unbeliev absolutely unbelievable.

I said, Well, you know, I've only got one question. Uh, when I invest in a business, is it a star business or could it be a star business? And once I've invested, I want to retain it as a star business or make it more dominant. And the the only question is how do you do that? And so life is very simple. Uh

Mm-hmm. I'm laughing because we could have five hours and I'm gonna run out of time before I run out of questions. So let's bookmark a few things. We're gonna come back to knowledge versus principles. Okay, so we'll bookmark that. I want to just Make it clear. At least from Wikipedia and Wikipedia, of course.

is subject to debate, but often unaccurate and Betfair is Is described as the world's largest online betting exchange, just for those who are looking for some type of perspective and are not familiar with the company. And You had mentioned gambling and liking gambling. I want to dig into that because

It strikes me That you may enjoy gambling, but you're also very good at placing That's And those are not necessarily the same thing. uh if if we think about the psychological dynamics

drivers and and criteria involved. And I want to explain also to people listening that investing is a Wonderful Metaphor. For and framework for exploring

principles that apply elsewhere. Thinking processes that apply. elsewhere or perhaps even everywhere. So my question for you is very specific. One point five million. How did you decide on that bet sizing?

Uh that was all the money I had. Holy shit. Wow. Okay. So you just pushed in all your chips? Yeah, I mean all my liquid assets, you know, and this is quite typical for me. I mean I I want to be fully something we'll talk about later, which is that I one of the things which is quite absurd about me is that I actually don't have very much money. to spend and I don't really mind that. I tend to, when I'm in London, for example, in normal circumstances, I would take public transport, I would go on a bus or the tube.

Uh, I would cycle if I possibly could, but I wouldn't take a taxi or an even an Uber unless It was absolutely, you know, I was I was desperately short of time. And I don't believe in being desperately short of time. I always make sure I have plenty of time. Because I don't want to be rushed and because I can always use the time to think or whatever. So How do I just decide on the bet size? You know, it's just a matter of what I have available if I think it's a good bet. I hasten to add I don't make money out of my horse racing gambling. That is purely an entertainment and I don't place particularly large bets relative to my net worth either. Um

And the Yeah, if I can go for eighteen months without having to put any more money in my account, I'm very happy. It's a different kind of bet. I mean, gambling I think is gambling conventional gambling, whether it's poker or it's at the root casino, or it's uh horse racing, or it's betting on tennis or Or baseball or football or anything like that. You know, I I think There are people who make money at it, but they usually either have some inside information or they are incredibly skilled.

at judging probabilities and they often have Yeah, even research. I know someone who had fifty employees tracking football. in order to see whether the odds on particular football matches were right or not. And he would take positions and he made a lot of money out of that. Consistently every year. But you know, someone like me who doesn't know a lot about football, knows nothing about football, not s doesn't know a great deal about horse racing Doesn't you know, is is it a certain disadvantage. I just I I I have a particular method which I use which is based on uh looking not where the horse came in the race, but on the time relative to other times. And all is calculated on the Racing Post website. It's called something called top speed.

And whenever I make a lot of money in in horse racing it's because Top speed has shown me a horse which is not far away from the favourite, but might be at odds of thirty to one, or in one case it was even three hundred and thirty to one. That's unusual. But Betting on Companies is fantastic.

Because if you understand how important relative market share is, and if you understand whether or not a company is able to segment itself and therefore have a defensible position in a particular segment like Betfair, then it's absolutely fantastic. Because you can you know, you can basically invest And no. that you might lose your money, but o overall you're going to do very well out of that. And

Yeah, I have very rarely lost money. on star businesses. The cases where I've lost money is where I thought something might become a star business and it wasn't. Does that answer your question? It does, and I have a whole handful more to follow up So you wrote an entire book on this, The Star Principle Two Thousand Eight. It that was published in two thousand eight, work and investing in star businesses. That was the focus When you

say segment itself businesses that can segment itself. And uh you mentioned Bedfair. What what does segmenting itself mean? It means that it it defines the market in a way that nobody else Has done.

Oh that very few people do and therefore that it's possible to become a market leader in it. So BetFair's a very good example of that. It's a betting exchange, which is an electronic market where people can post bets on either side, buy or sell. It doesn't take principal positions. As bookmakers do. So it's um once it's overheads of covered, it can't lose money.

And it competes against other betting exchanges, not against the big bookmakers. Because anyone who's a big gambler Isn't going to go to Ladbrooks or Corals or the Totes or Patty Power or any of those uh conventional bookmakers, because they know that the bookmaker typically takes out about ten percent on each event.

And BetFair takes out maybe two percent, but that's only half the time if you win half the time and lose half the time. So it's one percent play. Ten percent. And therefore it means that the customer profile is completely different and the way that the cost structure operates is completely different. So it's a separate business segment. Because it's not competing.

with conventional Betting firms. So it means that d a company has to do something differently. It either has to be have a price advantage And therefore a cost advantage in the way that Bethare. Does it be a little bit more.

Or it has to offer something which is so attractive. that people will Hi. Even if it's the same price, they will actually go to go there. So You know.

The three things that you want to do if you want to what I call proposition simplify. Uh you have to have something which is very useful. You have to have something Which is easy to use and

Preferably you want something which is aesthetically pleasing, which gratifies you as a joy, but to use and if you think about any of the Apple devices, then they created their own segments with the iPod and the iPad. And the iPhone. and other devices. Because it was different from

conventional competition. Even the Mac really didn't compete head to head. with IBM. And anything where you can get a big price premium, for example thirty percent plus. as Apple's been able to do on all of its devices, at least at the start. You have something which is a separate segment. Because it's not competing.

against a low cost competitor. And if you are going to be the low cost competitor, you want to be low cost in a segment Which is different from The other segments because otherwise the existing large companies will eat you for breakfast. You are unconventional in many different respects. And I'd like to ask you a personal question. You can feel free.

to decline to answer this question, but I'm very curious. as to what your investment portfolio looks like, what principles govern its composition, because you had mentioned that you're quite happy to have Small amounts of

Liquid assets, you know, cash available. So what does your portfolio look like to the extent that you're comfortable discussing it and what what are the principles that govern its composition? Well It's uh pretty much a an illustration of the eighty twenty principle, but more so, I suppose my most valuable single I've got about forty assets.

Companies in which I've invested. And the most valuable company in the portfolio constitutes about the half the total value. And another one constitutes about a quarter of the total value. And so in a way that also simplifies my life because if I if I take care of those two particular

assets and know that they're going to do well or think that they're going to do well. Then I can be relatively relaxed. I'm quite happy to increase my share in companies once I know or think I know, and I'm not infallible, that they are going to be successful. So for example the company

that I is my largest single investment. I started off with a relatively modest investment that might have had about two percent of the company, and I'm now up to sixty percent of the company. And basically what I'm doing is buying my shares from the existing shareholders. Whenever there is an opportunity to make an offer for shares, which is You know, when when I got some money.

The principle I don't have any rules on Industry. I don't care what industry it's in. I don't really care very much what the management is like because if management doesn't perform, management will eventually get replaced. I don't really care.

Where it is, as long as it's not Well, as long as it's in Europe, because I think I understand European markets. I won't invest in the US because competition is too great, and also because I don't like the IRS. And also I don't know anything about

American investment. So It's basically a European portfolio. Industry irrelevant. And I don't care about concentration. Um in fact

Uh. Rather light concentration. I Just a quick thanks to one of our sponsors and we'll be right back to the show. This episode is brought to you by Bowl and Branch. Longtime listeners will recognize the name Ball and Branch, B-O-L and Branch. I've been sleeping on them every night for the last six months, as one example. When I decided to overhaul my life for better sleep, to change all sorts of things, I landed on Bowl and Branch for linens.

They are incredible right out of the box, and you feel the difference immediately. They are the softest and most comfortable pure organic cotton sheets available. They are thousand dollar quality for a fraction of the price, starting at just$160. Bolin Branch helps my body sleep better at night, and I only learned recently. Many reasons for why they should also help my mind and conscience sleep better at night. In India, as an example, the average life expectancy of a cotton farmer is thirty five years old because of potent pesticides on one hand and supplier debt leading to preventable suicides on another. To mitigate all of this, Bowl and Branch have become the first fair trade certified manufacturer of linens, and they've committed to using one hundred percent organic cotton because it makes a better life for the people who grow it, in addition to a superior product. This also saves about 90% of the water used in conventional farming methods. So

Sleep better at night. Check out Bowl and Branch. You'll feel the quality and the craftsmanship the moment you open the box, and you can sleep on them for a month absolutely risk free. Right now, you can get fifty dollars off any sheet set at bowlandbranch.com with promo code. Tim Tim. That's one word. Tim Tim. And the URL is spelled Bolin Branch B-O-L N branch dot com.

Promo code TimTim for fifty dollars off. Bolenbranch.com promo code Tim Tim restrictions May apply. See Bowl and Branch. dot com for details. Remember, bullandbranch.com Promo code.

Tim Tim. Let's go back to getting fired. Just Just to warm up the conversation. So I

What happened after the You were fired. And could you actually tell us more about The The day That you were fired. What was the conversation

What what was that experience like and then what happened after you were fired? Well, it was a slow firing and in fact it was a very gentle firing. B C like McKinsey McKinsey invented the phrase up or out. And uh McKinsey they would say that after three years you would be assessed, and if you were really good at their business

You would get promoted. And if you weren't, you'd be asked to leave. But they will do it in a very, very nice way. Because they were sort of dividing the sheep and the goats. The the sheep were the people who were good enough for McKinsey, and the goats were people who were good enough to be McKinsey clients. So that was their their philosophy. And they were terribly nice to the people. But in fact it was kind of like It was a form of uh I don't know, it was a form of sort of Uh psychological one upmanship. Because the

Th the people who left generally Weren't as bright. As the other people. It wasn't that they could do things that the McKinsey people couldn't do. It's that it was that they weren't as bright in terms of the strategy of the business and analysis and so on and so forth. So that worked extremely well. Well BCG did not have quite as rigid A formula as

McKinsey. But they did have this policy that if after three or four years you had not been made from a consultant into a manager, the consultant was a typical entry level for someone who'd been to business school. Uh you would Um, you know, you'd be pretty much

An anomaly would be the way that they would probably put it. And and therefore You know, you might start thinking about what you wanted to do. And so I had a number of those conversations with people. Uh but I said to him, Look You're dead wrong. This was me, this is me in my arrogant youth, and maybe I haven't got rid of

The arrogance altogether. I said, look. I'm no good at analysis, but I can charm the clients. I can talk to the clients. Um I'm quite articulate. And I can understand what the issues are.

the strategic issues and I can relate those to the client. So You know, I might not be very good at being A consultant. I might not even be very good at being a manager, but why don't you make me a vice president? Because I could actually do rather well. And they would chortle. They would say, Richard, you know, we have to have a hierarchy. And I said what You know, X, Adrian, for example.

Adrian's now a vice president. We all know That he was a pretty good consultant. But he wasn't a terribly good manager because he w he he couldn't command the analysis and that's the heart of Yeah, what B CG does. And so he had to rely on other people to do it. But now he's a vice president. He's selling a lot of business

very successfully and helping clients. So, you know, I'm like Adrian, basically. And they would again s chortle a bit. But Eventually. A guy called very nice guy called Phil Hume, who's later started uh Computer Center and made quite a l lot of money out of Computer Center. Uh sat me down and said Richard, you know

You are running out of road a bit. And I said, Well look, I got a fantastic assessment from Roy Barbey the other day, you know, he said how much the clients love he said, Yes, Rich, we know that, but But basically you can't do what is really our power alley. So So um

You maybe you sort of think about looking around. And I came out from that meeting thinking Is he right? Is he right about this? Or am I right? And I thought to myself, well maybe he's right. So I actually then Very quickly.

Went to Other consulting firms to McKinsey and to Bain and Company to see whether that's May I say something, Richard, just for a second. That is for people who don't have any context on management consulting. When you say McKinsey, when you talk about Boston Consulting Group, when you talk about Bain and Company. Just as a point of reference for folks who may not be familiar with this industry, when uh when I was studying at Princeton, there were exactly two industries that recruit heavily. You had the investment banks. You'd Goldman Sachs and a handful like that. And then you had what were considered the elite of the elite of management consulting and that included

McKinsey. B CG In other words, Boston Consulting Group, Bannon Company, and so on. So these are the most prestigious names in the world of of management or strategy consulting. I just wanted to To add that. As a bit of background. Yeah, I'm sorry. When I was doing it, it was a very obscure industry.

Uh and now it's less obscure, but it's still it's still pretty Pretty obscure. Anyway I I went to McKinsey, they said no You're a bright guy, but we don't think you should be doing this management consoling stuff because you want to make decisions rather than Advise.

And I said, Yep, that's probably true. Bahn and Company, I'll come back to in a second. I then said, Well maybe I should be a headhunter and I was actually approached by th headhunters Some of whom knew me personally. And so I went off to see Egon Zender in Zurich. with a view to becoming and egonzender was the leading at that time, and probably still is the leading European headhunter.

Just a footnote there for people headhunting. means recruiting, right? Very high level and taking very large amounts of money from the club. So anyway. I talked to Egon Center and And he offered me a job on the spot and I very nearly accepted on the spot. But when I sort of examined my heart, I came back to the conclusion that I thought BCG was wrong. And that, you know

I might not suit BCG, but I thought, you know, maybe I can get the job in another consulting firm. There happened to be another individual who had left the Boston Consulting Group and joined Bain and Company, a guy who rejoiced in the name of Floyd Bradley the Third. And uh you might tell he was an American very, very nice guy. Quite a smart guy. Anyway, so he I arranged to have a drink with him and said, you know

I'm not too happy with B C G I don't think they're moving me on fast enough. Um How about Do you think that The they would. Uh, do you think that they would be interested in yes, they're always looking for people that that find it quite difficult to recruit people at this stage.

Um, and so I said, Fine, I'll go along and talk to them. So I went along and talked to the head of the London office and he said, We'll send you off So both. Now this was very interesting for me. Uh it was my one chance basically to stay in the industry that I wanted to stay in. The only problem with Bain and Company was that it had a reputation for being an extremely hierarchical, strict, controlled Almost um mystical. outfit where you had to do what you were told. Uh where b whereas BCG actually was a pretty

free willing entrepreneurial sort of firm, reflecting the difference in character between the guy who had started BCG, Bruce Henderson, and the guy who runs Or ran rather. Uh Bain and Company. I should say that he's dead now, so I can't be sued for libel or slander or whatever it is, and neither can you. Although I have the utmost respect for Bill Banners, I'll come on and say it in a second. So they sent me off To Boston.

So there I was. I s I I had a Yeah, a four o'clock appointment was to see Bill Bain. In the afternoon, so I got off the plane Got a cab to uh their off Bost Boston office. And um turned up at the desk and said, I'm here to see mister Bain. At four o'clock.

And the woman sort of Looked a bit confused. And basically What had happened was that the someone in the London office had not told the Boston people, although they'd given me a ticket to go and see him. Given me a an appointment time. Apparently it had not somehow not got into the agenda of Mr. Bain. So they said, Come back the following morning. So I went back the following morning. And um There I was. You know, I went through the offices. They were the offices were quite remarkable. Beautiful offices, but

The associates, the the consultants and the researchers were all hunched together. It was you know, it was not quite a sweatshop. It was a very nice sweatshop, but you could see that they were either expanding very fast or very tight on the rental cost. Um and then I went into m Bill Bones office and it was palatial. You know, it was stuffed full of basketball and baseball trophies and in insignia and paraphernalia of all sorts. And he was sitting behind this large desk. and got up very graciously to meet me and said, Do you want anything to drink? And I said, No, I don't want anything, thank you. And then he started talking to me. Well, it was very fortunate for me because I I didn't find out until afterwards.

But it turned out that Bill Bain was a historian. That was his undergraduate degree, and in fact he had Spent a year. doing postgraduate research, which he eventually gap because he thought it was terribly boring, and because he got offered a better job as the development director of Vanderbilt University. But during the course of that interview Bill Baines said something and I thought, Well, I want to ask him a question, but he was in full flood, so I let him carry on talking until probably about twenty minutes afterwards and then I went back to it and said, You know, if I got it right

Mr Biden. You said earlier. Such and such and such and such. And I want to ask you a question about that, blah, blah, blah. And he said, You're incredibly unusual. And I said, What? And he said well.

You're a very good listener, and not many people are good listeners. And I wasn't aware that I was a good listener and maybe it was just I was so desperate to get a job that actually I was actually listening. But I was also very curious about the business because right at the start when I had um joined BCG, I thought, what a wonderful industry this is. It requires no working capital. And uh basically they charge a

Yeah, huge fees. They don't pay people a hell of a lot of money. Eventually they give them bonuses, which is where the working capital comes from, the difference between the standard pay and the markup, which is some of which is eventuated to the professionals involved. Um And it's expanding very, very fast. And they've got this great model called the growth share matrix because it's got market growth on one axis and it's got the relative market share. on the other. So they call it the gross share matrix, but it's more popularly known as the Boston Box.

And it's this thing which has cash cows. Dogs, question marks, and stars. The the one thing I just wanted to say, also as an observation of friends who have come out of McKinsey, is that it seems that two by two matrices Are very popular. for organizing thought.

Yes, and in fact uh McKinsey went one better. They s they developed uh an imitation of the Boston box, which was a three by three matrix. But as always, economy is everything and it wasn't as good and it isn't as good uh in my I'm gonna anyway. But The end of the story is that Bill. was quite taken with me and I quite was quite surprised and he said, I want you to come and talk to Ralph Willard, one of the

Oh the Founders of uh Bain and Company. And Ralph was a very jolly chap and we got on very well and so on and so forth. So they they actually offered me a job. And Then I said to them, Well Ralph said, How much do you want to be paid?

And I said, Well I'm owning such and such a Boston Consulting Group, but obviously if I'm going to take a step like this, I want a fifty percent increase. Fifty percent That's ridiculous. And I said, Well, you know. Maybe you can just make me an advance for for joining and not consolidate it into the salary. But You know, I at that stage I was feeling confident that they wanted me.

So I sort of raised the stakes a little bit, despite the fact that At the beginning of the day I was totally desperate. And if they'd offer me a job. After an hour, I wouldn't have cared what they were gonna pay. But anyway They did eventually pay me quite a large amount of money.

uh to join and At the same time I then went back to B C G and said, you know, I think you're making a mistake. But if you want me to leave Yeah, I've got all this money which I'm due in a few months time as a bonus and the rest and please can I have that?

And to my surprise they said yes, okay. I mean they were so desperate to get rid of me. The they agree. So I made quite a bit of money from BCG and from Boning Cup. So it was quite apart from the fact that the previous two or three years have been very, very miserable. and I was I I I redoubled my efforts to succeed at B C I worked eighty hours a week

I got fat in the face from eating fast food at night. You know, I basically neglected my personal relationship. I stopped exercising. It was A complete Disaster and You know, if if I was to give advice to anybody who's in a similar situation or even a less desperate situation, I would see if say if you're not succeeding

In a job. Give out. And go somewhere else where, you know, your talents can be better appreciated or your your talents are more suited to what that firm does. So I just Tim, I just could not admit failure. This was the thing, you know.

A just To me, personal success was absolutely essential to my happiness. And it was affected my self image and all the rest. And I could not believe that these very intelligent people at B C couldn't see The things that I could do.

And You know, it would have been far better for me to say, Well, you know, they just have a different business model, you know, analysis quantitative Heavy duty stuff is their is their bag. And uh, you know, it's not something I can do particularly well. And so please

Give up and stop and and you know, decide whether you want to be in the industry or decide You know, if you if you do want to be in the industry, go to a a competitor. So Mm. The long and the short of that story is Is uh it worked out extremely well in the end, but it was absolutely

Balls aching. Very unpleasant. I wanted my pound of flesh at the end of all the suffering that we've gone through. What did Bain and Company appreciate about you or utilize In you. that was not utilized or appreciated it. PC G

Oh, it was it's very simple to answer that because I've always been interested in what I call the theology. Of Business.

And By that I mean the business model that a particular firm has. And BCG and Boning Company were very, very interesting to me. And this comes back to your first question about what am I good at doing. I actually Did analyze in my mind, not quantitatively, but The business model that BCG had and the business model that Own and Company had.

Yeah. And they used the same concepts. They were all all using both using the the gross share matrix, the Boston Box, etc, which incidentally Bill Bone had helped to originate. So it wasn't really plagiarism. And indeed BCG had put the stuff out there in the public domain. So it wasn't you know, they weren't doing anything underhand. But they were using all BCG's concepts. But the firms were completely different. And let me try and describe how they were very different.

B C, as I said before, was a very sort of decentralized Company. And the Vice presidents who are in charge of particular clients. were sort of almost autonomous profit centres.

Please map. Bruce absolutely believed in the market. He was a He was a red

capitalist. You know, he really read in tooth and claw. He really believed in competition And so on and so forth. So much so that But That he divided his firm. uh at one stage, and this is quite interesting, this was before my time, but he divided the firm into three different parts.

And his view was that If one of those firms had developed a slightly different way of doing things, it or if they were successful for any particular reason, then the other firms could learn from that. And the market would clear, as he was fond of saying. Um, and what happened was that he put Bill Bain, whom he had hired from Vanderbilt University, where he was the development director, and met Bill Bain because he was had the begging bowl out, uh to as an alumnus of of Vanderbilt.

Bruce's anomalous. And he asked Bruce Um, w will you give money to Vanderbilt University? And Bruce said, No, but come to Boston and we'll talk about giving you a job. So Yeah, that was kind of like the backstory from that point of view. But BCG was very, very decentralized. And

even each individual consultant Um was or all the professionals were actually profit centers. They were rewarded at the end of the year Not on how well they've done, not on their team performance. Not on um anything really.

But their what he called their billiability, which is a number of hours That they had actually build. And incidentally I was probably one of the most billable people because I I was willing to work very long hours. Um, and because initially at least anyway, people wanted me on their teams. And if they didn't want me. Um, I could even sell my own work, so

So I had to be included in the People who are w on on that. But it was very, very decentralized. Bain and Company, on the other hand was a very, very

Controlled. And I actually called it Stalinist later on. um organization. Well It radiated out from Bill. Bill did all the thinking initially.

And then the Trusted vice presidents who included Mitt Romney, who was a great guy. Guy I've got tremendous admiration for. Um And uh four or five other

Vice Presidents. And The the formula in Bone and Company was very Very Um

Tight. And I'm forgiving. Um, which was that they generated all of their business From a relationship with the chief executive. Or the head of the company sometimes.

President. or the chairman of the company, but usually the chief executive, or m maybe they have a president and chief executive. And they would not work For anybody who was not the top dog in the organization. So they wouldn't work for, you know, the head of Europe or they wouldn't work for the head of manufacturing or marketing. Uh or any other function.

Um But they had a spill which they gave to The Chief Executive of a Company, which was Mr Chief Executive.

We want you to be very successful. Because if you're very successful, we will be very successful. We've got this funny little stuff called strategy which really works and we can explain it to you. But basically you should think of it as a Wonderful formula. a kind of like a secret source for increasing the market value of your company, profits and the market value.

And If we do the work with your company, your share price will double within the first year or so. or the first two years anyway. And it will continue doubling every few years. Because we have got a way of making the firm much more valuable. And then we can describe that. But it relies upon

You Being willing. To Accept us as equal partners. And again this was very, very different from the whole of

The rest of the industry. Which was In a way. salesmen for hire or cabs for hire, that that, you know, consultants would do anything as long as they got their daily rate. and and so on and so forth. They didn't really care too much about which firm they're working for. They would work for competitors and so forth.

Bon and Company said we will only work for one company in in an industry or later they refined that to a competitive system, which was sort of slightly more sophisticated way. Of saying industry. And Therefore You know, we won't work for your competitors.

Uh you won't hire our competitors. And so therefore you'd be giving a monopoly on strategy consulting or any other form of consulting really to a Boning Company if you decided to hire them. And the way incredibly smart Yeah. It's very smart. And and the way in which they got clients, Tim, was that they w they had no website. But that wasn't unusual at the time. They had no business cards. So I had no um marketing

Let's chuck. You know, and the only way and they were very secretive. The only way in which they got business was by personal recommendation and of one chief executive to another chief executive. And then within that firm, once the uh the client had been signed on

you know, Guinness or Dunn and Brad Street or Baxter Travel or whoever it was. Uh would then have Almost a military Operation.

where within each client organization Someone from Boning Company would be assigned to work alongside or with Normally four. you know, the head of manufacturing or the head of a particular product area or however the firm organized itself.

And they would Make sure. that they understood what that person was thinking. They would help them by

gathering this very valuable information which Bone and the company did very, very well about competitors and customers. And costs of the competitors. And they would you know develop a relationship. I I couldn't believe it when I was told Bye. Bain and company when I joined.

You know take the head of manufacturing out to dinner. And discuss things with I thought Yeah, I said the last thing I want to do is have dinner with the head of manufacturing who's a very boring man. And uh you know it was it was all part of the job and it was incredibly effective. Because You know, whereas at BCG they they would go away for six months and they'd come back and give a presentation which was dazzling. But

then people in the audience that the managers might were free to disagree with what was recommended and and cast often did cast doubt on the credibility. of B C as a result of that, rightly or wrongly, usually wrongly. In Boning Company, everything had to be pre-wired. So all the work was specified from the top down. But it was validated from the bottom up.

So that once you've done a piece of work, you then had to show it to the relatively low level manager and make sure that they agreed with it. And if they disagreed. They could only disagree about data. They couldn't agree disagree about concepts because we were the kings of concepts. We knew relative market share was important and we could explain why. We weren't unreasonable. But nevertheless.

When it eventually got to the chief executive and then later to the board It had all been pre wired, which meant that Everyone had agreed to everything. And therefore there was no disagreement. And the only discussion which there'd be at the end of the presentation was about what Bain always used to call next steps.

Well Let me tell you what next steps were. Next steps were, this is how we're going to make our next million dollars by consulting to you on this issue. But of course it was justified because Baining Company was a fantastic machine for in getting consensus in organizations and getting consensus about some very radical strategies, which might include getting out of half the businesses that they were in selling them. Or in some way uh hiving them off. Or closing them down if they were cash negative and no one would buy them.

and then making acquisitions uh to to strengthen existing businesses or even to go into new areas where Bonin Company would do all the investigation because particularly if it was outside the industry that the that the company knew about, of course they hadn't they had no idea. So it was a wonderful machine. for getting growth from existing clients. And this was what Bill Baint always used to say. I have no idea why everyone's interested in new clients. We don't need new clients. We should have built in growth from existing clients if we're doing our job correctly, if their profits are going up and the market value is going up. And of course they didn't say no to new clients, and they use the existing clients who are satisfied, particularly those who sat as non executive directors, outside directors on the boards of other companies, to say, you know I'd like to show you some a a sample of the work which Bowen Company has done in our industry.

Uh and I participate in one of those events. In New York. Um Where

I was sort of you know, we were working for an information company and we went to Um present to a board of that information company, but one of the people on that board was the chief executive of A scientific company And subsequently they hired

Uh, Bowen and Company largely Because I think of the recommendation of the chief executive and to a small degree The quality of the dazzling quality of the presentation I made. Well You know.

As a result of that Boning Company made me A um a partner, nominally a partner, a vice president. Whereas I went in as a consultant. And that would normally take several years. Well that happened after eighteen months. And It was a very interesting conversation with Bill Bain when he told me that I was going to be a partner of the firm.

And what he said to me was Richard You know, I'm gonna say something which might surprise you, you know, we've had our eye on you. Ever since you came and talked to me, blah, blah, blah. And I want you to be one of my partners and I thought, you know, this is ridiculous. I

Yeah, I didn't expect this. And he said, but There is something which we're gonna do, and I don't think any other firm in the world has ever done this. Not to my knowledge. Maybe you can correct me. But What they said was We are going to promote you, but in only in nine months time. Yeah.

And It's a done deal. You know, there's no question that you'll be one of my partners. And I can even give you something to sign and sign something myself. But

You know, if we made your partner now, people might wonder what on earth we were doing. In that nine months, you've got to behave as though you're already a partner, without the authority of being a partner. But just through force of personality and through knowing that you are reflecting the Bayern way of doing things. You will When we actually make the announcement that you are gonna be a partner of the firm, uh, everyone will say, Well, of course.

Of course. Rather than say How come that cautious got promoted? That's unbelievable. So It is Bill was such a clever man at controlling his organization. And he didn't work very hard.

But he he didn't work very long anyway, but he gave a great deal of thought to the procedures. and to the management of his own company to make sure But everything that happened in Bain and Company had been initiated in one way or another. by Bill Bain and make sure that that was the thing which was going to make the most money

F The Bayonetta. for for Bain and Company and also I'm making it sound as though it's just incidental thing, but it was very important. It's the whole foundation of it for the client organisation. It was just a fantastically well run organization. And it grew at forty percent a year for

twenty or thirty years, whereas BCG had struggled. To grow. Um Uh twenty percent. Baining company. fell on hard times, I think, in the late nineteen eighties because they did a leverage buyout, but that's another story. I'm not going to say any more about Boning Company.

Ha well, I'm not gonna let you off the hook that easily. You said You explained rather than the What Bill Bain asked of you to behave like a partner, even though you won't have the official title and we can't make the announcement until nine months hence.

In practice. What did that look like? What changed? in your behavior or in what you did. Oh, it totally changed me.

It totally changed me. For one thing, it made me loyal. Uh and I was always someone who was on the verge of committing s you know self destruction, self destruction because Because you know, I'm a natural rebel. You know, I'm I'm not I'm a non nonconformist.

I'm very opinionated. And almost unemployable. And that was the conclusion that everyone eventually came to, but but you know, it I in B C G I was well known for going off script. And I remember one of my apprais was

You know, most of the time Richard he's like a volcano, this guy wrote, in a formal written. assessment and I've I've still got the assessment. That's lovely. Uh it said uh he's like a volcano, most of the time he's sort of, you know working away and there are no rumblings and it's all very Very smooth. But occasionally he

It runs. Well gone. And he says something to the client, which is not what we want the client to hear. And he basically goes off at a tangent or he you know, he has his own view about things. So when I'm with Richard

And talking to the chief executive of The a new, you know, big information company in Holland or whatever. I am very nervous. I never know what Richard's gonna say. In Bone and Company. That was you know, I'd have been fired if I'd Yeah, if I just if I'd have said

Yeah. My my Vice President said you know, something. And I said I agree with ninety nine point nine percent of that, but here's a slightly different view on the naught point one percent. I'd have been out the door straight away. So it was it was a complete contrast. So the first difference it made

was that I was I felt very loyal to Bill personally and to the organisation, which I'd never really done before. I didn't do loyalty. I didn't really do teamwork very well. So that was the first difference it made. The second difference it made was that I decided that I would become much more Direct with The people who were working with me, if we're at the same level

If they were below me in the organization, or even sometimes if they're slightly above me. But I did it very nicely. And so if I thought they were going in the wrong direction, I would say, Well, you know, I've been thinking about this Fred. And I think there's a better way of doing it than this, instead of interviewing the customers in This segment we should interview and in that segment we should ask these questions rather than those questions.

et cetera, et cetera. So it made me much more It paradoxically, Tim, it made me more diplomatic, but it also made me more assertive. And so You know, that was It was great. I mean I actually thought

Gosh, they're gonna make me a partner and I'm gonna be a very successful partner and that's fantastic. But it made me feel I was a little cautious because although Bill Bonus signed his bit of paper and all the rest of it, I knew that That was meant nothing, if he if he wanted to change his mind. So I thought well the prize is well within grasp. But I feel confident now.

that it gave me confidence and so I was able to do Yeah, was much more effective as a result of that. In fact, I was probably more effective when I wasn't a partner than I w when I was, because I was I wanted it so much. But at the same time I felt uh in some ways, although nobody knew that I had authority, in reality I did. And that was a tremendous thing. And I I don't understand why firms don't do this more broadly. It's a fantastic way. of encouraging personal development and also of keeping people who might otherwise decide to leave before they're given the nod that actually

They are really appreciated and they are gonna get promoted. I was going to ask you more about L E K, which was the consultancy you started, which experienced incredible growth, and we may get to that, but I want to Skip ahead. A little bit.

in a foreshadowing fashion by mentioning the eighty twenty principle, which we'll come back to. In an interview That I have in front of me a separate interview. The question is, what book has had the single biggest impact on your career? And you answer my own book, The Eighty Twenty Principle, because it sold more than a million copies and it's been translated into more than thirty five languages. And it goes on and on uh about that, which we're going to return to. And then you say at the end of the answer.

that many of your books and uh much of your investing are related to ideas on strategy consulting. And you learn those firsthand, not from books, but that you can recommend a book called Perspectives on Strategy, edited by Carl Stern and George Stock. Can you speak to what people might learn? in that book and why you have recommended it. It's a collection of the early perspectives of the Boston Consulting Group. And a perspective was what um evangelical group would call a tract, I suppose.

It would be something like five hundred words, maybe a thousand words. Pretty short. It would be Snazzly presented in the livery of B C, which was a very Quite a nice Dark green colour.

Yeah. Um, and it would be mailed to the senior directors of companies. in America and Britain and then and wherever BCG had offices And The very valuable thing about the book is that a lot of the stuff is by Bruce Henderson himself.

But there's also more modern stuff. And it outlines the theory that BCG had in the early days, which I think is still entirely valid. Of Competition.

The experience curve. The Boston box, the grocery matrix, et cetera. And it's just a very, very good primer.

And There are many, many books on business strategy, uh, including one which I've written. But Uh I think this is a very Very good thing. And it's very easy to read because it was deliberately designed. To do that.

Bruce laid out the principles for the perspectives very clearly, which was Anything that the chief executive would be likely to agree with was not argued, I mean it was stated. And anything that the chief executive would be likely to disagree with, which was quite a lot, um, because BCG was on the mission of saying companies should reduce their costs and reduce their prices steadily. Whereas the conventional wisdom in business at that time was if you get a higher price You know. Stick with it and don't worry too much about the costs. And uh Bruce had a whole theology around that.

And it was It's great because it's a collection of those different perspectives and it's over several years, so you get the more modern stuff as well. I think it was published in two thousand or something like that. So it is difficult to get good books on strategy. There's a there's a book. Bye.

Someone called Richard. God, I can't remember his name called Um good strategy, bad strategy. He'll come back to me. But anyway. Type it into Amazon if you want. Good strategy, bad strategy. That's actually a very good strategy book. Very not very nice short. Strategy book. And there's my Financial Times guide to Strategy. I mean, I'll give it a small plug, too. Out of print at the moment, but I'm producing the fifth fifth uh edition uh as we

Well not as we speak, but but at the same time in the same Period of time. Good strategy, bad strategy by Richard Rumelt. Does that sound correct? God, isn't the web amazing, aren't you amazing? It'd be far more impressive if I was actually pressing the keys and came up with that myself, but I don't do that. Well, I'll give away one of my tricks in and that is if I'm recording an interview like this, I don't use my keyboard. I have my phone on silent so that I can tap

the screen without making noise to find things like that. You're very clever. Well you do that you can have you can have a funky who did that for you, but it's very impressive that you do it yourself. That's true. Well it's just for on the spot tap dancing like that. Earlier in the conversation I I made a promise to the listeners and that was In the form of alluding to knowledge versus principles, which I think is perhaps a useful way to segue. to the eighty twenty principle. And from mergers and inquisitions dot com, which is a great website. The distinction that I've

red uh you drawing is the following. What I learned from consulting is exactly what I've been teaching. Knowledge is great, but principles are better. Principles are ideas that enable you to sort the knowledge, help you to analyze it and get to the essence of the matter as as simply and quickly as possible. Would you like to add anything to why principles are important and the second part of that is how did the eighty twenty principle Come to be. as a book because it it was a very much and sort of underground became an underground bestseller. So principles, anything more that you would like to add? And then where did this book come from? No, I think you put it very well. I just think, you know

There are certain meta principles, and I think there were probably only about half a dozen of them. for the benefit of myself and the people that I work with and um Invest with. Invest in, rather. It's basically the eighty twenty principle and the star principle.

So if you know what those are, then you can look at the business in a way that most people don't look at the business. very quickly and see whether there's potential for improvement. And we'll talk about that in in regard to the AD twenty principle in a second, no doubt. But um How did the book come about? Well

Again, that's quite interesting. At least interesting to me. Um which is uh I wrote something called the A to Z. of management. Because I had a an editor

who was currently working at Pearson and later left to start his own firm. With another Editor there. And the editor was called Mark Allen, the other editor was called Richard Burton. Very, very schooled guys, very nice guys. And they

We're looking To Sort of you know. Try and get Something by me published.

Yeah. And Mark Allen said to me. You've written this thing called the A to Z of Management, which is basically a paragraph about various different Concepts. And it covered all the principles I could think of. It also covered um important

Theorists in business. Mm. And it covered Anything which was of Of interest.

in business. And and it also covered jargon phrases like, you know, what did what did people mean by work in progress and s stuff like that. Anyway. I'd written half a page On the eighty twenty principle. And I went to see Mark Allen one day in his offices in Covent Garden and

He said to me, Richard, I've got a book for you to write. I said, Yeah. And he said What about writing a book about the eighty twenty principle? 'Cause you've got this half page on it here and it seems to be quite an important thing. You say it's very important. And I can understand it's very important. So why don't you write a book on that? I said, Mar, I couldn't possibly

I can possibly write a book about the AG twenty principle. Yeah. I've said it all. In a paragraph. And

You know, I could I could maybe pad it out. So A page. You know, if you really put a gun to my head, I could write a chapter.

But I'm not gonna write a whole bloody book about this because there isn't anything more to say. And he said, Well, I'm not so sure about that. Then he decided that they he would go off and start this other publishing company. So he wasn't interested in me doing it for them and they had not got themselves organised. So I went to see A guy called Nicholas Breerly, who was the publisher of the eponymous firm Nicholas Braley.

And Very, very, very nice man, but incredibly smart guy. And I'd written a book for him called Managing Without Management, which was a title which he suggested was very clever because it basically said managing and particularly mineral managing was a complete waste of of time. Uh, and so you could manage without it, managing without management. And the book.

Wasn't a huge success, but it sold, I don't know, twenty thousand copies, which was was good enough for for uh Nicholas brilliantly at that time. And I went to see him about uh another book shortly after I'd had the conversation with Mark Allen and he said Do you have another book in mind? I said, Well, not really. But this this sort of idea that someone's given me

And you know, they've got first dibs on there. On publishing it if if I could ever write a book about it, but I don't think I could write a book about it. And then I described him what the AG twenty principle was, and honestly I didn't take more than about sixty seconds, because I there wasn't much to say as far as I was concerned. And he said, The hairs on the back of my head are rising. And I said What do you mean? I thought I thought he lost his plot or something like that. And he said that can be a big successful book And I said no. I mean

Yeah, well maybe, but but you know. How do I pad it out to a Books length. He said, Go and do some research. You know, you've mentioned Vilfredo Pareta, you know, read the book again, read all the other stuff, read all the stuff on the web, you know and the truth was that there was a hell of a lot of stuff on the internet and this was back in nineteen ninety six, but was eventually published in nineteen ninety seven. You know, this was a

Golden the beginning of the golden period of the Internet. And I Yeah. And I hired a researcher and said find out everything that's going on on the Into that only. eighty twenty principal at that stage I I didn't know how to use the internet.

And um so she came back and gave me his whole wad whole file and I said, Diane Is that all about the eighty twenties principle? And she said yes. And I said, Well, maybe I could write a book. So So uh anyway I went through it all. And uh the more I went into it, the deeper it it actually and the more interesting it was.

And so that's how I ended up writing books. So I went back to my original guy, Mark Allen, said, Do you want to publish this book? He said, No, we can't. We've we've left Pearson at the time. And um We haven't started our firm yet. So I went back to Nicholas Brierly and he was very pleased and s and uh and that You know, the first draft I produced, he said

Sorry. Very politely said, I think you go need to go and do some more research and it was it was pretty hopeless, actually. Uh but the second draft I took back and he more or less published it as as it was, uh because by that stage I'd I've worked it through. And it was uh it was a great thinking exercise in the and it The The whole point

About making a book out of it. Was uh I extended the reach of the principle. So the princip the basic eighty twenty principles, I'm sure n nearly all your listeners know is that if you look at any particular relationship between

So and another variable or you look at time and another variable you might be interested in. Yeah. It's usually true. That there are very few

events or Taicha. which account for a large majority of the total. And so if you look at the profits of any company By customer.

number of customers, a very small proportion of the total who account for eighty percent of the sales and maybe more than a hundred percent of the profits of a company. And likewise, if you do the same thing, for products you're likely to find the same thing. And this this was a well known economic concept. Anyone had been to business school and heard it was generally called the Pareto rule at that time. But I wanted to call it the eighty twenty principle because it was more descriptive.

The rule. To me sounded too deterministic. Principle sounded to me exactly right. And so so I actually invented, I think, the eighty twenty prince, and I don't think anyone ever called it that beforehand. They would they would call it the eighteen twenty rule or the Pareto rule. Yeah.

And So It was The idea seemed to me to be applicable well beyond the the sphere that had been used before, which was for

Really. Analysing sales and profits. And I said, Well, why can't we use the eighty twenty principle in other areas, in people's personal lights, for example? And so I I became quite fascinated by the connection between time and And results.

And then It was a short hop from that to extend that. So so basically I would say to people, Well The hypothesis And the whole thing about the eighty twenty principle is not that it's a rule, but it's uh an observation. So you you come up with a hypothesis and then you test whether it's true, um, with data if you possibly can, but with um

You know, saying if you think it really is true. if it's s something much more subjective and squishy. So you you actually Could then say well It's probably true. It may be true.

That twenty percent of your time generates eighty percent of your useful output. So tell me what the most valuable things are that you do. And I would say that to people at work and they would have no difficulty at all in saying, Well, it was inventing this new product or it was selling a large job to this particular customer. Uh or it was writing some copy, which is, you know, very, very effective, or it was making a website or whatever it was.

And I would say to them, Well You know, you've got to do more of that and less of the other stuff. And I'd also say to people that if you manage to do something which is, you know, hugely more valuable than the other stuff, and you do that in half a day, take the rest of the day off. And if you do that for two days, take the rest of the week off. If you want to. You know, if you want to carry on working and do even more. That's right. But

You know, as Parkinson said, work expands to fill the time available, spending expands to fill the budget which you've got to spend it, whether it's inside a firm or it's your own money. I was quite interested, incidentally Uh in hearing an observation. Uh, which one of your other interviewees Said.

About the Wall Street of the uh well, I don't know, was it nineteen eighties or whatever. And The You know, basically people got very, very used to the money which they'd earned. They were hugely overpaid.

That Uh, nevertheless, they found ways to use that. And that was a big trap for them, not for him, but for for the others. Because what they did was that they got locked into working for Salmon Brothers or Goldman Sachs or whatever. And after a time they couldn't really leave. Because their wives over there. their own personal tastes had had developed to such an extent

Or the husbands. They needed the money. You know, they had to have half a million dollars a year. They couldn't live on this. So I was saying to people, Well Let's extend this. to your personal life as well. So if time is important at work, then maybe time is important elsewhere and maybe

you get most of your happiness from a relatively small proportion of your time. What are the periods of time where you actually feel That you are being fulfilled. But you feel you don't notice time escaping, you know, when when You you feel So this is great. And you wake up and you find you find that, you know, the night's gone. It might be playing poker, you know, it might be

Talking to friends. It might be reading something that's very exciting, might be going to see a movie or whatever. But what are the times that you are happiest? And then just try and multiply those times. And then I said, Well, you could apply that to friends. Let's take the eighty twenty hypothesis that you get eighty percent of your relationship satisfaction from twenty percent of people. I mean it's a bit gross in a way. But

It's very true. I mean I found when talking to people that very often they spent time with people they didn't really like very much. I mean obviously. Sometimes it was their boss, so You know, that was a disaster. And they Might be well better get a different boss or a different firm. But

Sometimes it was as simple as things like Well, but your spouse actually liked these people, but you didn't. So you ended up spending a lot of time with neighbors or with other People or members of his or her family. Uh that you didn't really want to spend. And What you really wanted to spend your time on was something different.

And so I said to people, Well You know, you might want to be a bit more ruthless about that. And so There's a chapter on happiness. in the book, which I was re reading recently. And I think it's actually rather good. I mean it's taking the sort of rather Arcane dusty economic principle.

And then seeing uh whether it could apply to other areas of life. And I invented the concept of happiness islands. Well happiness island is part of your life, which is sort of not the main part of the life, but when you get a huge amount of satisfaction from that. And I said, well live on those happiness islands and try if possible to make them happiness continents. So if there's a particular type of work which you like doing at work, then try and get yourself in a position where you're spending all your time doing that sort of work. And so on and so forth. And I see it in many ways. as a kind of amateur

version of the flow. Idea. Which is that you know that these times According to the guy with the unpronounceable name. Uhily

Mikael check set me eye, something like that. Yeah. And he's he's written a couple of books about this. It all boils down. I mean, I think that. I say eighty twenty principle could be written on one page. I think that could all be written on one page, but but it's a fantastic idea. It's a it's a it's a slightly more sophisticated way of saying what what I was trying to say. And there's stuff on there in money and and all the rest of it. So It was a reinterpretation. of the principle to apply it to

not just to business to but to people's personal lives and to try and say a few things which were really useful. Uh and which people could take away. Which is what you do, isn't it? It's what I try to do. It's what I certainly try to do. And uh For all the reasons you just mentioned and many more, this is why the eighty twenty principle, your book faces

Cover out on My bookshelf and has for a very, very long time as a constant reminder. Could you share just as examples, because it may help people listening, some examples of your own happiness islands or achievement islands. Yes, I can do that. The things that I really like doing are writing books. And making money.

And making money through investments, not through m not through gambling or anything like that. And talking to people. I really used to like Going to dinner parties in the days when we had dinner parties. I really like to uh go for long walks with people that uh not many people, but a few people that I know

We will discover something that we didn't know we knew beforehand. Um Those are the things that really are interesting Doing something like this podcast is a is a flow activity as far as I'm concerned, an eighty twenty activity. So it's that sort of stuff. It's it's books. It's writing books, and it's also reading books.

And it's It's talking to people. And it's also making money through investments. Do you have any regular or scheduled

Check-ins or calendared reviews where you assess your life to ensure that you're allocating your time and energy to match what you know to be happiness islands or achievement islands. In other words, how do you use If you do in any systematic way. The eighty twenty principle.

in your life. No, is the short answer, but let me qualify that a little bit. I do something which is very unsophisticated. Other people have therapists And other people have uh personal trainers. And other people have, you know, quite elaborate systems for

for keeping track of their objectives or their concerns, their worries and and so on and so forth. I have bike rides. Every day I go for a two hour bike ride in the countryside. It is every day unless I'm in a

Uh unless I'm away. Or unless I'm in Cape Town. I've got a home in Cape Town and it's too dangerous to ride a bicycle. Yeah. But Everywhere else I will ride a bicycle. And

I take pretty much the same route every day, very unadventurous. I got two alternative routes in in Portugal, for example. And During those bike rides. Something will come up sometimes. Not very often. But Something will always come up. Uh at the very least I will work out what I'm gonna do that day because that's what I that's one output from a bike ride and it just happens automatically. I don't even have to think about it.

When do you do the bike rides? I I presume in the morning. In the morning, yeah. Uh I don't I d I don't um answer emails, I don't look at my phone. I do have a cup of tea. And sometimes I take the dog for a walk, but apart from that, I it's a bike ride. And it's it's it's wonderful. I mean, you know, I couldn't do without it. I mean, in fact, when I'm away

And I can't Ride the bicycle. I'm talking to you from Gibraltar, for example, and I do spend a fair bit of time in Gibraltar where I have an apartment. But Yeah.

It's also too dangerous to ride because the the streets are too narrow and there I I have to substitute going for a walk. or going to the gym. But basically a form of exercise which is mindless, which is, you know, not not too difficult. But Enjoyable. Where I can just relax and let my unconscious mind do whatever it does.

That's how I do those sort of things. And occasionally I go and sit on my fish pond. With a notebook. And say it's time to think about some reflections. I make a point of only doing that. When I'm in a good mood.

I never do it when I'm actually feeling slightly down. I'm usually in a good mood. But It's something to do when you're being expensive rather than you're doubting yourself.

And you know, I keep those those notebooks and Very occasionally also I wake up in the middle of the night. And I have thought of something that I had not thought of before. And then I have a notebook by the bed, or it's if it if it's not by the bed, it's in my office, which is very close to my bedroom.

And so I will make a cup of tea, put the light on. Write my thoughts. Uh put the book down, put the lines out. Go to sleep.

And um And Those thoughts are usually quite seminal. I mean they're they're they're very, very helpful. But it all happens sort of automatically. I don't have any systems or anything like that. Do you? Ha well I would say I have acute hypergraphia and take copious notes, most of which end up

never being read, uh and certainly most of which end up being uh completely unimportant. But Amongst all the garbage, there are occasionally useful things. I find journaling very helpful for me, uh different forms. It's the writing which is important, isn't it? It's the writing. The writing somehow ingrains it on your mind when you when you do do you find that that that I do find that it's not a as you say, one may never review the notes. I do actually review my notebooks. when I'm on a plane and got nothing better to do and no book to read. But um

But it isn't that. It's actually The process of I think the process of writing journaling is very, very, very useful. But I don't do it every day and I don't do it systematically. I just do it when I feel the need to do it. I I would say I have two different types of journaling and then I'd like to ask you about your time at the pond in a moment and just h what that actually looks like and maybe some examples from what you've written down. I would say I have two types of journaling. The first is almost entirely like emptying the the garbage bin on a Mac.

to purge the system. It is simply to trap my monkey mind and all of the bullets ricocheting around inside my mind on paper so that I can get on with my day in in a better fashion. The second type is more deliberate and objective driven where I might sit down. And Very Explicitly do an eighty twenty analysis of the types that

that you've been describing, looking at how my time is being used, look at my calendar to see if if actually matches what I say is important to me, et cetera. So there are I'd say there's two Main categories. Morning pages. from uh Julia Cameron's template would be in the in the former as as an example. But When you go to the pond and you sit down and you're in an expansive mood and you journal

What does that look like? Is it stream of consciousness? Are there certain prompts that you might use? Could you give us any real world examples of what has come from those types of sessions? Yes. I mean what I do is I write reflections and I put the date and then I put numbers and then I just start writing. And You know, one one of the things that comes out from that, which ca we which came out from that

recently was thinking about my investments and Yeah, I was struck by the fact that I was average So something I was average timing each investment was would not be fair. But I was spending a lot of time on stuff that actually wasn't

At all. Important. And I was doing it partly through interest, partly because I perhaps felt some residual sense of obligation to the people who were managing the firm and other shareholders. So

You know, one of the things which I decided was I was not going to Worry about Any companies which were outside the first Yeah, half dozen in terms of the value of those companies, unless the value was increasing very fast or it had the potential to increase very fast. And the other thing which I realised because I'm always

you know, almost completely invested was that that was not actually a terribly sensible thing to do. And the next time I have a major realization. I should be prepared. And I should have two or three companies which are new companies. In other words, investments I have not yet made, where they do have the potential to be star businesses or they already are star businesses. where I like the people involved, and that's a sinequa known for me that

That I don't invest in things unless I actually like the people. And uh where you know, a relatively small amount of money might might conceivably be another bet fet or whatever. So it's it's quite easy for me because I've got a couple of companies that are increasing in value quite fast and I'm reasonably confident that they will continue to do so the next to be sort of, you know, rather complacent about that. But you know, to in order to maintain

the sort of rate of return that I've had historically and that I want I probably need to find a new Yeah, a new bet fair or two or three new bet fair over the next five years. And I should give a bit more attention to trawling for that and talking to my contacts. that might conceivably know of such companies. And actually, you know, I do get some leads and don't always follow them up very well. So so um yes.

So it can be useful from that point of view. And the other thing which I've realised As a result of journaling. in the last few months is that I am too socially isolated. I mean I've got some very good friends I don't see'em as often as I as I would like.

And because I have such a really nice life. Living places. and living in sunny places generally, which is very important for me to be outdoors. So that I can play tennis or ride the bicycle or sit on the fish pond or whatever. It's qu it I ought to pay more attention.

to social interaction. And to spending more time with the people that I had spent Enjoy spending time, but they're not Yeah, they're not close to where I am. So those are sort of conclusions which have come up in the last six months. And then there are the more philosophical conclusions which you sometimes come to.

And s which sometimes you write down. For example One of the things which I've learnt in the last few years is I have been Far too much of what I call a controller. and far too little of what I call an adventurer. And um

You know. My life has always run upon lines of saying, I must do this, I must achieve this, I must make this sort of amount of money, I must have this type of job, I must do this kind of thing, I must start a company, and so on and so forth. But Recently.

I I have realized that the people who have most fun in life are more the adventurer type than the controllers. In fact So come back to something that I hope we're gonna spend a little bit of time on later on, uh, which is my new book unreasonable success and how to achieve it. There are twenty people who changed the world, in in my opinion, in the in that book.

And Mm. It's not in the book at all, but it's something which I did after the event. I divided those very successful people into controllers and adventurers and I was quite surprised to find the

Fourteen of them were actually adventurers in one form or another, and And Only six of them were uh controllers. There were some who were both, but but you know, that was the count taking halves into account. And for example, one of the people who was a controller

In the book. was sort of my evil. evil successful person. uh which was Vladimir Lenin. And you know, his life was pretty unpleasant, uh, because he was always trying to control other people and it was a you know very outdoor struggle. Uh and he achieved a great deal in his terms. I mean not things that I would approve of, but he was the founder of practical communism, and he basically made

communism a success in very large parts of the world a success in the sense that they remained communist. And they did develop the countries were perhaps not as fast as they would have developed under a free market system. But you know From that point of view, he was he was very, very successful, but he didn't have much of a great time. Whereas some of the people who were much more freewheeling For example, the free wheeling. Bob Dylan or even uh also von Bismarck. They they had much more fun because they

Although they were determined to achieve things, they relied upon events flowing their way and they just bided their time until the right moment came along and then they Then they worked. Then they basically Um made a huge effort. to control or not not control events, but to

to actually steer them. I one of the great quotes which I like is from Bismarck, who said man cannot control the flow of events, all he can do is ride with them and steer. So I you know, y sometimes you get those sort of kind of philosophical reflections. uh coming up. More often though, probably on a bike ride, and then I might write it down afterwards.

But I actually find it quite difficult to be As radical as that. Um just sitting down and writing. I tend to write You know, things which are They're much

less important in a way, they're less distant. Let's uh this was on my my my next note. to segue into that is the new books. Let's let's talk about the The Genesis story. And uh

This is always interesting to me as someone who occasionally And that is the the sort of embarrassment of riches that you no doubt have in terms of possible subjects you could explore. So Unreasonable success and how to achieve it. You've written many books. Why

This book. I've always been fascinated by success, and I've always been fascinated by the discrepancy really. Between as I see it The arbitrary nature of success in many ways, which is that the people who are successful are not necessarily the people who are most intelligent or most expected to succeed. Or who

Um Deserve it. You know. Many of the people many of the twenty people that I highlight in the book weren't even competent.

Winston Churchill was prime example of someone who was complete failure through most of his career. got one thing right, which was that Hitler was a threat to the world and that he knew how to deal with Hitler. But but basically, uh the man was a disaster. And he Thought that oratory would propel him to become Prime Minister, but You know, as Herber Asquith said.

It does not matter if you speak with the tongues of men and angels, if nobody trusts you and there was a D was directed. Exactly. And Churchill. So I've always been fascinated by success, but the actual Genesis of the book, as you said, came on a a train journey. I was travelling from Paris with a friend of mine to Lyon.

And I always take a book with me and I didn't have a book a new book that I wanted to read so I took an old book. Which was Malcolm Gladwell's outliers. And you probably remember that in Outliers The whole thesis.

is that success derives from deep experience and long exposure to doing something in a very narrow field. Uh and he came up with the idea of the ten thousand hours, which is now a trope something which Everyone talks about it. And He gave a couple of examples very early on in the book which resonate very nicely, which is the Beetles, for example, in nineteen sixty they were just rather

Poor. High Street Band. And then something happened to them, which was that they went off to the strip clubs of Hamburg, and they had to play Seven days a week, eight hours a day.

And as John Lennon's quoted in the book as saying, we couldn't help improve with all of that extra experience. And then he quotes the example of Bill Gates Who because he went to a private school which unlike the vast majority of schools at the time in America or anywhere else had got computers You know, he was able to acquire expertise in coding and and uh how to use computers

And that was his sort of you know, he got his ten thousand hours in very very quickly. So the the problem with that thesis Is that it's not universally true. It certainly applies to Bill Gates, it certainly applies To the Beetles, and it applies to s some other people as well. But of the people that I looked at

That couldn't explain it. And what I did was I took twenty people whose life stories I knew well, some in some cases I knew them personally, such as Bruce Henderson and Bill Bain, whom I've talked about before, who were very important to me and hugely underrated in terms of the impact which they've had. on American and and world business in my in my opinion. But I took those people and then I said

Would it be possible? Yeah. To do what Malcolm Gladwell set out to do and in my opinion did not succeed in doing. Would it be possible to look at the causes of success? for those people and identify things which were common to all twenty people Which they all had or did

It might be an experience that they had, or it might be uh an attitude which they had, or it might be a way that they exploited particular opportunities. Would it be possible to look at that and say that there are things which are so universally present that if you want to be what I call unreasonably successful, which is more than you deserve, if you like, t terrifically successful in changing the world the way you want to work change it uh might be a small corner of the world or it might be a big corner of the world. Would it be possible to isolate the reasons for that?

And I looked at fifty possible reasons. For example, I looked at, you know, would you need to be a high risk taker? And the answer was, Of those twenty people, only nine of them actually took very high risk of the twenty people in my book. Um only nine of them actually took. uh very high risk. So that went went away. And then I narrowed it down to nine reasons. uh which were universally present in all of the cases. And I did not I did not throw people out if they didn't meet the nine requirements. I was quite rigorous with myself. I said no And the people that I the the the players that I took were besides Bill Burne and Bruce Henderson, there was Jeff Bezos, Otto Van Bismarck, Winston Churchill, Mary Curry

Uh Leonardo, Leonardo da Vinci. Walt Disney, Bob Dylan. Albert Einstein, Victor Frankel, the guy who was shoved into a concentration camp by Hitler, but came up with a third wave of psychology after Fra Freud and Adler, and was probably the first real existential philosopher. Bruce Henderson mentioned Steve Jobs John Maynard Keynes, who saved the world from fascism and communism, perhaps as a result of saying that you didn't have to have very high unemployment. Um and the state could step in and that would be fine. Um under

A liberal Templess. Regime. Lennon, I mentioned m Madonna, Nelson Mandela. Totally obscure guy who was imprisoned on Robin Island seventeen years.

But somehow managed To negotiate. uh a democracy in South Africa. JK Rowling, Helena Rubinstein formed the eponymous uh cosmetics company before anybody else had a cosmetics company. The person who I think was most successful of all of my twenty people

Paul of Tarsus. I don't like calling him Saint Paul because it makes him sound, you know, establishment figure. He was never an establishment figure. He had this vision of the living Christ. And he preached that throughout the the Roman world. But he did something that none of the other followers of Jesus did, which as you said

Yeah, following. A Jewish customer base, if you like, is not the way to make a new religion take off. We we don't want to be a very small sect within Judaism. I actually want to convert people In the whole world. And therefore what we need to do is to turn

You know, that sort of Jewish religion. That Jesus had uh had Yeah. And take away from that the things which actually were universally

applicable. So, you know, without Paul what eventually emerged as Christianity would never have either achieved lift off nor transcended its Jewish roots. S fantastically successful. You know, I mean who would have thought that Christianity could actually succeed? It was just a miracle. Margaret Thatcher was the other

was the other one of the twenty people. So I came up with these nine Things were Common to all of them. And I'll run I'll rattle through those if if if you're like, definitely. Feel free to list the nine, but before we do that, if you could just take a moment to define success since Many people

Define success differently. Uh, could you speak to what that means in the context of unreasonable success? Is it achieving what they set out to do? Or is it something else? And then would I would love to know what the The nine.

characteristics are. Yes, it is. I think success is very subjective and can only be The person's objectives. And you know, I But I mean people said to me, Why how how on earth can you put Lenin in the book? And in fact at one stage I had Hitler in the book and that

Publishers insisted on it being thrown out because they said the booksellers would never sell it. If it was in the book, I said, Well, we don't like Hitler in favour of Hitler. They said, No, Hitler's got to go. So it's it's value free in the sense that it is what they achieved which changed the world the way they wanted to change it. whether that was a good thing or a bad thing or or an indifferent thing. That's that's unreasonable success in one definition. Success is a is a whole continuum as far as I'm concerned. And You know, I'm not against minor successes at all. That's absolutely great. But what I was really interested in in order to establish the the most important causes of major success is what I called unreasonable success. And I had four criteria for that.

You could say that in a word it's undeserved success, but that's that's a little bit unfair. Firstly, it's such success in changing the world and it seems unreasonable for one individual to do that. I mean we're we live in a world which is quite collective and which is governed by culture. And constraints which are quite immovable. We think the world's changing very fast, but in many ways the world doesn't change very fast. And then suddenly it does. And what usually is behind that is not a huge number of people doing something, it's an i individual deciding

to do something and managing persuade other people to do that. So it's unreasonable in the sense that one person has all of that impact. Secondly, it's success that is unexpected. And was not predicted when the individual was young or early in their career. So it's kind of Yeah, it's success which comes from nowhere.

Yeah. Uh, thirdly, it's success that goes well beyond what the individual's skills and performance seem to warrant. And Winston Churchill's jolly good example of that. Some would say that the British Prime Minister Boris Johnson is an example of that. Completely disastrous uh foreign secretary. probably completely incompetent in his dealing with the coronavirus. But nevertheless, I think may well go down in history as a great prime minister, because he has certain objectives that he wants to achieve, like making sure Britain did leave the European Union and maybe doing something about Yeah.

excessive price of housing in Britain. fact that it's almost impossible for young people buy a house these days. And also, you know, Britain's a hugely overcentralised country. London centric country.

And there are left behind areas of Britain, which basically is most of the rest, but not in the south east of Britain. And I think Boris Johnson wants to do something about that. And if he's able to do that, that would be a fantastic Achievement. I know that you're interested in very practical things, so in the book I discuss what do you do if you don't have self belief? And for example, one of the things that you can do

is to realise it has to be in a specific domain or context. And so you've got to identify that context where you could really change things. Secondly Find a fantasy man mentor. Now this is quite an int I think it's quite an interesting and

perhaps original concept. I was driven to it by studying Bob Dylan. Because Here this guy arrived in New York, completely unknown. Nineteen years old. But with a fantastically high ambition.

And one of the things which he did was to seek out Woody Guthrie, who was Probably the template that he wanted. Which was Woody Guthrie had been not only a folk singer, but also a A protester, really. and also someone who wrote his own songs. And in fact that was very unusual at the time. And folk songs were meant to be sort of arose from the folk, not from individuals. And Guthrie actually

Change that. He wrote a lot of original songs. And Dylan did too. He started writing his own songs, one of which was called The Ode to Woody. And he went to the hospital in New Jersey where uh Woody Guthrie was suffering from a terrible, terrible disease called Huntington's syndrome. And Whether or not

Government's really aware that Dillum was there. Whether he actually thought Dillon was um Going to Um

You'd be the new Woody Guthrie. Is really uncle, but it's curiously irrelevant as well because Because uh Bob Dylan took from that template that's what he had to do. He had to write his own original songs. He had to claim the heritage of Gaffery as some something which would perhaps get him some publicity and attention. And somehow he managed to get a contract with the all of the folk labels rejected him. But Columbia Records, which was a blue chip.

Yeah, firm, obviously. Uh, signed him and then, you know, that gave him confidence and it gave him contact and it gave him gigs and goodness knows what else and he was able to produce albums and and You know. Then he was made and also, of course, he hijacked, in a sense, the the protest movement.

with songs like you know, blowing in the wind, et cetera, which made him according to certain people, the voice of the generation. So it's another way to find a fantasy mentor. Thirdly, to search for transforming experiences, and I'll say something about that in a minute. And fourthly to attract well deserved praise. And I'll say something about one breakthrough achievement also in a moment. And then narrow your focus until Your work is unique.

Some of those are landmarks as well. So the first one being self-belief. The second one is Olympian expectations that you expect A huge amount from yourself. And then from other people. And the high priest of high expectations is probably Jeff Bezos, who's always banging on about this. And, you know, really believes everyone in his senior management team has to be an absolute A

Player Class A player. And He says, you know, if you put someone who's not used to high expectations on a high expectations team, they will adapt. But

The reverse is also true. If you have people who are not high expectation people, then people's standards will slip. And one thing that basos has been incredibly good at doing is having the highest possible standards, you know, he's his mantra is customer service and unbeatable prices and he's totally inflexible on all that. So

The second thing is Olympian expectations. The third one, which is particularly interesting because it's really original, I think. And I was thrilled to discover this in my research is transforming experiences. Every single one of these people had actually a an experience which transformed them in the sense that they went into the experience as one sort of person, and they came out.

as another sort of person, or as someone who is a hundred times more powerful or more effective. Every single one of them had that experience. And again, to take Bezos as an example of that, before he founded Amazon He was a failed investment bank at age twenty six and a Headhunter decided to send him As a last resort to see a guy called David Shaw.

Who had founded a countercultural Quantitative investment hedge fund. And Shaw realized before anyone else did and by about nineteen ninety two that the internet was going to be huge.

And that it could be huge. not just for information and all other things, but for selling things, for retailing. And so his idea was that that his firm, which was called Desco, D Shaw and Company. Should

Develop a program. for selling over the internet and then it should start a company to do that. And he put Bezos as the project leader on that, and he and Basels gone on very well like House on Fire same extremely quantitative, extremely nerdy, extremely ambitious sort of people.

And between the two of them they developed the format for Amazon. And they decided that the first category that they would go into was books. And they decided that they would allow people to write reviews on the sites. Et cetera, et cetera, et cetera.

It was Amazon blueprint as it happened. And um Of course. David Shaw wanted that to happen within Desco.

But one day Bezos went to David and said, I really want to do it myself. And David Shaw took him for a look. two hour walk around Central Park, in which he tried to dissuade him, but incredibly generously. David Shaw allowed.

Blaze us to go off and and s and found Amazon. He didn't even ask for a share in the company. But then that was David Shaw, he was a very, very self competent guy, and his firm has been amazingly successful anyway. So That was a transforming experience for Bezos. F we talked earlier about Bill Bain. Transforming experience for him was getting hired by B C G by Bruce Henderson when he was the

completely unqualified. guy who'd never done any business, never done a business degree, didn't understand economics or whatever. manage a history researcher who managed to get a job as a development officer at Vanderbilt University where he met Bruce Henderson.

And Bruce Henderson who had a tremendous nose for talent, then decided to hire Bill Bain, and Bill Bain took to Boston Consulting Group B C like a duck to water. because he was a very, very smart guy. And because the power of the concepts, the concepts were so great, and Bill and Bruce developed them together, essentially. And then Bill decided to do the dirty on Bruce and leave and form his own.

Firm. We would never have heard of Bill Bain if it had not been for Bruce Henderson. this meeting him and deciding to hire him and the the formative experience of working within BCG. Let me ask you a question, if I could, Richard, and I I imagine you you might get to this, and I I'm sure you have an answer for it, but before we move ahead, if someone has not had a transforming experience, one might Wonder if they're listening to this

Is it possible to engineer a transforming experience or do I Sit on my hands and wait for Lady Luck to Smile upon it. Absolutely, that's the whole point. I mean, one of the things I say in the book is that the whole point of trying to identify these Nine landmarks. Is uh

The people who Actually visited them. Didn't intend to. I need a transforming experience, let's have one. They happen to them.

I mean for example the Transforming experience of Margaret Thatcher was having the Falkland Islands invaded by General Galtieri Of Argentina. And she said that was the worst moment of her life, but it was absolutely the making, as it happened, of her and the experience of living through that. and commanding the armed forces and doing what everyone said was impossible, which was recovering the

The islands. made it possible for her then to do what she really wanted to do, which was, in her opinion, reverse national decline of Britain. So Yes, the people who had these transforming experiences did not engineer them. But having seen how important it is, Understanding the That you cannot

In my opinion. Admittedly from a relatively small sample, but It's amazing that every single one of these people had a transforming experience which is just described in the book. And I did not fake it. I just, you know, I didn't throw anyone out because they hadn't had a transforming experience. And I stuck to the rules. You can then say, Well, I better have a transforming experience, haven't I? And then you come to the question, Well, what is the the most likely type of transforming experience which will put me in luck's path?

In order to then become much more powerful. So it could be going to a particular university and studying something which is very arcane and unusual. It could be finding a very high growth firm like B C G or Boston Consulting Group or D E Shore and Company, and then joining that firm when it's still very young. Because you won't

be on the forefront of developing you see think about companies in their early days is that they don't know what they're doing. And so if you don't know what you're doing, you can be very creative about it. And if you're involved in that process, you discover things that you never knew that you had. And not only that, you become identified with them and you become powerful and you become perhaps a large shareholder in the company. And And it's completely different from joining a company which is, you know the on tram lines which we're we're basically not going to do anything radical and anything new. It's so exciting. to actually be part of a company that's growing very fast, doesn't really know what it's doing, but has got something.

Some rare knowledge. which actually means that it can be very, very successful. And it doesn't have to be company, it could be a social organization, it could be a way of thinking, it could be anything that's growing very fast. And where it's unformed and where you think you've got some affinity with it and the ability to contribute and be creative. It's not easy. To specify what someone's transforming experience should be. But I've tried it on a few Friends and and and uh

good acquaintances. And it's amazing that actually we do in the end come up with something which might actually work, in some cases has. Before we get to the fourth, I just want to say a few things. The first is that my experience very well to a few of the things that you just described in the sense that when I was graduating from college and was suffering from all sorts of quarter life crisis existential angst about what to do with my life. And I asked a mentor at the time what I should do, what type of sector I should go into. And his answer was it doesn't matter as long as it's growing very quickly. You want to be in something that is

Growing quickly, not in a sector that is in decline or stagnant. And that ended up being exceptional advice. And I've found that it also applies to Where you place yourself. Uh, that is to say, one of the reasons by example that I left San Francisco after effectively decade was that I felt like it was a a a place experiencing some degree of stagnation or even in decline. And I moved to Austin, Texas, which was very much a startup of a city. It was rapidly growing, expanding where it was

still taking shape and still could be shaped. So I just wanted to reinforce what you said. And On that point, or I should say Moving on from that point.

What is the fourth of of the nine landmarks? Yes, I mean growth is Gross is everything. I mean uh it ties in with the stock principle. Uh yes. The fourth one is one breakthrough achievement. Now this is different, uh Tim, from the other Uh eight. landmarks in that it is not a how to do it, it's a what to do.

And in some ways it's a bit odd of me to put it forth because it's the culmination of everything else and all the others really lead to this, but I wanted to put it in the book fairly early. Because I wanted people to be thinking about this as they go through. Which is, you know, what on earth

Are you going to do to change the world? And You're not going to succeed unless it's something really dramatic, or he's not going to succeed in being being unreasonably successful. Okay.

So You need to start thinking about that. It might take you A decade. It might take you several decades to actually work out. What it is. But it's it has to be something that you believe needs to be done. It's not a way of making you successful.

It's a way of changing the world. And if you define it in those terms, it again it's surprising you can actually come to Some kind of resolution, some kind of opinion. And for example Once Uh Lenin had had his transforming experience, which was the hanging of his beloved elder brother that he i idolized and adored.

Because he was imp implicated in an assassination attempt of the Tsar. When he was sixteen years old, Lennon heard that his brother had been hanged. Instantly he decided that his whole purpose in life was to smash the bourgeoisie and to cause revolution in Russia. That was his and it was a ridiculous, you know, sixteen year old school boy. Ridiculous idea. And he wasn't political at all before. He wasn't he was a very nice sort of, you know, everyone liked him.

But he became very bitter. And twisted. So it's it's one breakthrough achievement, which and it's not Two and it's not three and it's not one every five years. It's something that you do. Which it actually is going to in some way change change the world. I mean my my breakthrough achievement was starting or co starting L E K.

It's not on the comparable scale with the people in the book. But nevertheless, it was a you know a very successful firm w which gave huge opportunity to Hundreds or thousands. Of young people really who were trained and developed in that way. And it also

Yeah, and made an impact on the corporate world as well. We we invented the idea of mergers and acquisition strategy consulting, which is completely different from anything that anyone else had done. So one breakthrough achievement is the fourth one. The fifth one is make your own trial, which is you know, basically become Bloody minded and work out a way of doing something that goes off path. from everyone else and I I describe how to do that. The Sixth one is to find and drive your personal vehicle. Again, one of the discoveries in the book

Is that every one of these twenty people had some kind of vehicle which in some ways was sometimes it was a concept More often it was an organization of some sort of company, if it's in the business theor. or an organisation more broadly defined if it isn't. The British state, for example, was the vehicle. For

Uh, Margaret Thatcher and for and for Winston Churchill, together with a particularly eclectic Yeah. you know, what they were trying to do. Um the whole point about a personal vehicle is that The paradox of the individual

who actually does manage to change the world, is that they can't do it on their own. But on the other hand It doesn't get average. It's not sort of a committee deciding what to do. So someone like Jeff By Zorse.

decides to Make internet retailing. The thing which he does and the thing that You know, the everything everything store was the name that they gave it originally. And no not just to be a successful internet retailer within books, but to be a successful retailer.

on the internet, everywhere. And to be totally dominant in doing it. You know, an incredibly ambitious thing. But in order to do that, he needed to have an organization which was totally under his control. Just the same way that Lennon needed to have

The Bolsheviks. You know, a group of people who were totally dedicated to Lenin, not very many of them, but a couple of thousand. And that is necessary so that you You overcome the inertia.

That society And culture has So that an i individual can change things by being very determined about it, but they don't have to do it all themselves. And The choice of the vehicle is is terribly important. May I ask just before we move on, is there are there any particular

unusual or unorthodox examples that come to mind for both Make your own trail and find and drive your personal vehicle. If you could give perhaps one for One for each. Yes. I mean your your own trail is is very much I think won't Disneyland

I don't mean I do actually mean Disneyland. The thing about Walt Disney. Is that he Couldn't decide what he wanted to do initially. He was a very good Actor.

When he was in high school. And they used to do double acts with a friend of his which were Yeah. Don't a huge man. And then he

decided that he actually wanted to be an artist, but then He narrowed that down to being a cartoonist. Thanks. His firm which he started, his studio which he started. Um in

I think nineteen twenty three in Los Angeles was not very successful for the first few years. The big breakthrough that they came up with was Mickey Mouse. Mickey Mouse made all the difference because they gave a ridiculous story about a a mouse who wanted to woo a lady mouse by flying a plane. It was a really silly story. But What Disney did was not only sort of this

film called Plain Crazy, which he turned into a very expensive film, which almost bankrupted him and his brother and various other people. But he decided to give voices. to the characters from the screen, which which people had done before, but never with cartoons. So that was a sort of you know That was his personal trial. In the

Nineteen forties he became disillusioned. With Disney as a corporation. It was a very successful corporation by that stage. But nevertheless, he was disillusioned with the fact that that uh They were trying to take him away from the studio. He didn't have the sort of excitement of doing that. He didn't really

feel that he was creating something new. And so he went into Yeah. To find his own personal.

Trial. He Actually spent quite a little bit of time with Salvador Dali and they created a A very surrealist

movie which then the board of Disney. Turn down. And Walt Disney was outraged by that.

He's and you had to tell some of the that you know, they they did not think that having a board approve it was anything other than a formality, but that the board said no, you're Lost your marbles. Yeah. as Peterson Waterman would say, later, stick to the knitting, except they didn't use those words, but that was the that was what they said. That's what they meant.

And so Walt doesn't he decide to go off and do something completely and utterly different. Which was Invent Disneyland. Until then, amusement parks had been the province as Disney called them of of uh hard faced Men.

who basically were thugs. But what he wanted to do was create something which would be a monument to the past, the present and the future of America. and all that was best in America. Now, you know, the first time I ever went to Disneyland, which was in nineteen sixty nine, I hated it. I thought it was too American and too plastic and all the rest of it. But it was a fantastic achievement in the early nineteen fifties and hugely successful commercially. Again He was making his own trail. The board again refused to invest in this. They refuse to put up the capital.

for all the um explorator work, for all the imagination that had to go into it, for building Main Street and the fire station and you know, Abraham Lincoln and all the rest of it. They said, No, we're not going to approve this. vote. And Waltz said, Well screw you.

In effect. I will fund it myself. And so he sold his houses. He sort of, you know, took second mortgages rather on on his houses. He sold one of them, took a second mortgage on the first house. He found investors Who would

Do this. And eventually at the last minute. the the Disney Corporation decided that they would come on board as well when they saw it was inevitable it was going to happen. They initially refused to let him use the characters Snow White and Donald Duck and all the rest of it.

If you do that we'll sue you. So you know. If Disneyland had failed. Which was eminently possible. Disney would have been ruined.

And indeed, uh the parent corporation might have been in s some trouble one way or the other, but but but you know That was finding his own trail because he had this vision and he wanted to pursue it and it was nuts, basically. So that's an example of Making your own trail. Finding and driving your own personal vehicle. Well, I think actually Lenin is jolly good example of that. It was the Bolsheviks.

You know, initially The Dissident. Revolutionaries. In exile.

Uh around about nineteen hundred, et cetera. were dominated by people he later called the Mensheviks, by social revolutioners who were not as extreme and uncompromising. as Linen. And there was a conference, I think in nineteen oh three or something like that. at which Lenin deliberately antagonized the other people.

and said, you know, I want to have my own party. I'm gonna split The revolutionaries. And they said, Don't do that. We've got you know, there aren't very many of us Yeah, please don't do that. But he said no. I can demonstrate that if I have

Yeah, a thousand people who are dedicated to me and to my way of doing things. We can have revolution in Russia. Now absurd because there are hundreds of millions of people in the Russian Empire. And how could it be that a thousand people could actually change that and ha make successful revolution.

But Lenin had an answer to that. And it was a very good answer, which was he said, Look Russia's a very backward country, it's an autocracy. It's not like Germany or France or Britain where, you know, there are lots and lots of different centres of power. All of the power is concentrated in the Tsarist army And the bureaucracy

And there are only about two thousand people in Russia who actually control things. There are no independent centers of of uh social Pluralism. I'm sure he didn't use that word, but but you know, basically it's a very Top down state.

And if two thousand people Can rule. Russia. Why not us? And that was his theory and actually proved to be it proved to be absolutely correct. So his vehicle was splitting the revolutionary movement, but having a group of people who were absolutely dedicated to him and got shot if they didn't if they weren't. So

The vehicles is very, very important. The vehicle doesn't necessarily have to be very large, but it hugely augments the power of the individual. But it's not a compromise, you know, the the vehicle must be totally the vehicle, in the same way that Bain and Company was Bill Bain's vehicle. You know, you stepped out of line with Bill Bain You didn't get shot, but you certainly got fired. And and so on and so forth. Boston Consulting Group was Bruce Henderson's vehicle. He did it a different way. It was you know more let a thousand flowers bloom, but nevertheless

unless you were interested in developing the concepts, which was Bruce's thing, then uh you weren't going to succeed. And he got people who were very good at doing it. Can I move on to the next three? I'm sorry, I'm probably taking Time. Oh no, that's that's totally fine. That's why this this conversation is long form. So let's move on to the next one. Okay, the seventh one is thrive on setbacks. And this doesn't sound terribly, but it is terribly important. You remember that Nicholas Nassim Tallard wrote a book called Anti Fragile, which I think is probably his best book. And the thesis

behind that, as you know, is is that resilience is not the point. You actually have to like setbacks. And the reason that setbacks can be very helpful is is two reasons. One is they give you feedback I might tell you that you're off you know, you're on the wrong path. And the other thing is that is that uh either you're on the wrong path or you've got the wrong tactics, and you it's quite important to distinguish between those two. Or That In fact.

The fact that you've been unsuccessful in a big way means that you're gonna be very successful in a big way. It's quite difficult to describe, and I I also s think about Winston Churchill and his Wonderful failures. He went away from those failures, obviously a bit depressed at times. He went and w did something completely different for a time, uh getting out of politics after he'd ruined the uh Gallipoli campaign, the Dardanelles campaign in nineteen fifteen and sent Yeah.

several thousand people to their deaths by from a hairbrained scheme that he'd invented. And he got out of politics for time. He joined the regular army and he went to the um He went to the Western Front in In nineteen twenty nine he was on the verge of bankruptcy as a result of having

invested heavily in stocks in nineteen twenty eight and when the crash came along Wall Street crash he was almost Bankrupt, he decided to And also he was very unpopular with his Fellow. conservative leaders.

at that time because he'd made a number of mistakes. in nineteen twenty five in going on to the gold standard for Britain and in antagonizing the miners leading to the general strike of nineteen twenty six and alienating the whole of the organized labor movement. So he was unpopular with his party, he was on the verge of bankruptcy. He went off and did a huge lecture tour of America, which was very successful. Okay. And And then he got run over on Fift Avenue by a car and suffered some quite serious injuries, but battered and bruised, he got up and did it again. And you can see from what he writes that he thinks what's happening to him is terribly important.

And most people would say, No, this is a semi comical drunk who's basically had a series of failures. But You know, Winston Churchill didn't see it that way. It's very very interesting. The psychology of not being resilient, but actually really liking failures because they They make you seem important in some ways. And then the last two are acquiring unique intuition, which requires deep knowledge, and here I think that I overlap a little bit with Malcolm Gladwell. You know, you really do the quality of intu intuition is a function of the degree of experience that you've had in a very narrow field.

But also your willingness to Take notice and intuition, which some people do and some people don't. And the last of them is distort reality, which is uh Steve Jobs' phrase, of course, based on Star Trek. But What? distort reality means is refusing to accept current reality and redefining a way of of making that different. And

convincing your followers in particular that you know how to get around or distort reality, convincing them that you have a reality distortion field. It works. It's just amazing. And and Bruce Henderson did that, Bill Bain does that, all the other people in the book had got a way of of uh overcoming what was the incredulity of other people that they could actually really change the world in a major way.

I would love to make a few observations based on a a number of things that you shared and also uh I'm gonna follow that by asking you for an example. of acquiring unique intuition because this is of of great interest to me, but I I wanna mention one, a piece of trivia for people that ties into a name that came up several times, Jeff Bezos. thriving on setbacks, although he didn't come up

in that uh particular Landmark. Description. If you go to relentless dot com It will forward to where to Amazon.com. So relentless.com is one of the first domain names. Uh

Pointed to that website. And what What strikes me Is that many of these landmarks

Or reinforcing for one another, right? So you have, let's just say self-belief, Olympian expectations, and I'm gonna group them in a very deliberate way. Self-belief Olympian expectations. one breakthrough achievement, make your own trail, find and drive a personal vehicle, thrive on setbacks. And let's take distort reality because I'm not yet

uh familiar enough with the acquire unique intuition, but all of those to some degree seem to be enormously enabled when you have a longer term vision and horizon in mind, then your possible competition. So you if you look at Jeff Bezos, right? He is

One of the few examples of chief executive officers who have been given a pass by Wall Street. I mean he's he's convinced his investors, if you go back and read his annual letters, which I encourage everyone to do, you can find a PDF of all past Amazon annual letters. There was always an emphasis on long Term. time horizon, longer term than a quarter, longer term than a year, always longer term. Bob Iger at Disney is another great example of this. Toby Lutke of of Shopify is another

incredible example of this and it it just Strikes me that that this this longer term vision and time horizon enables a lot of these and without that If you are in any sense feeling compelled to rush that you disable

Uh some of these landmarks. Uh so that that's just something that came to mind as you were describing this. I couldn't agree more. I mean that's absolutely true. You need a long time horizon. You need to expect that you're gonna have massive impact But it might take a very long time. But you need to be sure about what you're trying to do and you need to be sure that you'll get there. But you know.

Time is kind of you know, there's lots of time. Yeah. So acquiring unique intuition. Uh, could you perhaps give us an an example of that that you like and if if there's one outside of Steve Jobs, that'd be great, but you could use Steve Jobs if if you like. I I think Jobs is a great illustration of that, but but I'll I'll take Nelson Mandela as my example on this. Nelson Mandela was a

leading member of the ANC who got uh caught and convicted and sent off to prison Total of I think nineteen years in prison. A life sentence actually. Yeah. Uh he was quite lucky to escape the noose. And we were very lucky that he did.

He was Um Uh this island. called Robin Island, which I visited off Cape Town, it's you know, it's it's it's a short boat ride away from Cape Town, maybe half an hour at most, but it's a world away. And it's that nasty, horrible, stark

It's basically uh It's a scrapyard, essentially. I mean it's got rocks. A lot of rocks and that's it I visited the cell in which he'd he'd been um incarcerated and it's so small you wonder how he could possibly have kept his self respect. But

During that period of time something very interesting happened. The Leaders of South Africa. including PW Botha, who was reckoned to be the great crocodile sort of, you know, very, very hostile to change. Actually realised that they'd painted themselves into a corner.

And the They didn't want to have. the possibility of um bloody revolution and being driven into the sea as they as they saw it. Bye. So

population of South Africa. And the whites were Yeah, maybe five million people against fifty million plus who were blacks broadly defined. And The A and C were ratcheting up violence.

And the A and C were controlled by all of the Tambo in Lusaka. Some distance away. And he was just Nelson Mandela.

Gy. And he was When he was in prison on Robin Island. Some interesting things happened. One is that he acquired the charisma of the sort of, you know, prison hero. Uh so that

Within the ANC he was viewed as the natural leader. Another interesting thing which has happened was that there were various outside forces, including the British Commonwealth. that in the nineteen eighties sent people Two Robin Island.

To talk to Mandela. And try and see whether you know, there was any route forward there because they couldn't speak to the Guys in exile. In Lusaka or wherever they were.

Um And those guys were totally uncompromising and were trying to cause civil war. And they wouldn't have got anywhere. And so there were a group of people who who went, there was a group from the Commonwealth called the Eminent Persons Group, very self-deprecating. And these eminent people went and and of course they talked to Nelson Mandela because he was the you know, he was recognized to be almost the shop steward of the prisoners. Um, and he'd formed a sort of university there where they

you know, basically develop knowledge of this, that and the other. And Somehow. Nelson Got the intuition that these people actually wanted a deal.

Uh, they didn't want this to be continued forever. And they were willing to compromise in some way. Th the hard line nationalists who were nasty horrible races do apartheid and they shot people and they were extremely unpleasant, there's no doubt about it. These people actually wanted a solution. And he was the first person to realise that. The ANC had always said, and Nelson Mandela had always said, we will not compromise.

But when he met some of these people from the Commonwealth and when he met later some of the senior ministers from the government of the nationalist party, the ruling party. He suddenly realized That a deal was possible.

And Yeah. He said to them. You know.

If you really want to deal, you're gonna have to have one person, one vote. And they said, We couldn't possibly have that. Democracy. No, we don't want democracy. There are more blacks than whites. We can't possibly do that. Um, but you know, Nelson stuck to that. And eventually he formed personal relationships. With the head of the secret service, the secret police, as it were. Uh with the

uh minister who was responsible for um justice, with a minister who was responsible for state security, including the prisons. And eventually with PW both uh Himself. And It was all based on this intuition that perhaps They could reach a deal.

And nobody else had that intuition. Nobody but Nelson Mandela. Actually thought it was worthwhile. pursuing talks with those people and it took five years But in the end. His intuition won out, and the result was

That instead of having A war. And you know, bloody Bloodshed going on. and possible revolution.

And the only question for people Really was whether that'd be five years or fifty years before. Yeah, that whites would be thrown out and massacred. Instead of that, you might have a transition to black majority rule. And

So that could be done in a controlled way. where F W Declerc, who succeeded Bosa Uh would be the vice president and effectively the mentor. of um Nelson Mendel. I've I've talked personally to F W De Klerk about these days. For some reason I had an opportunity to do that. And

You know, he was quite clear about it. If it had not been for Mandela, and of course he said himself You know, the odds against this would be a thousand to one. It was just based on this intuition that there might be a solution where everyone else thought there wouldn't be a solution. And he would not have known that. But for being in prison. On Robin Ireland for seventeen years And meeting all these people

And gradually being able to size them up. including the heads of the uh prison who were varied in quality from unpleasant to brutal. But nevertheless, you know He knew he worked out but the way the wind was growing. And nobody else did. As I was working in South Africa at the time And we never thought that there was a possibility of any solution. Nobody that I talked to did.

But Nelson Mandela had a different intuition. I describe that in the book and it's very, very It's very heartwarming and some horrible stories in the book, but it's very heart warming. Yeah. Intuition is hugely important. Thank you for sharing that example. I think it's it's a

wonderful place to start to wrap up this round one. We may have to we may have to do a round two on the podcast if you have the endurance sometime. I would love I would love to But Richard, I want to Ensure that people know where they can find you. Of course on on Twitter they can find you at Richard Cosh eighty twenty eight zero two zero.

RichardCosh dot net. You've written many books. uh including many books that have influenced me, like the eighty twenty principle. You have the star principle, which we've we've mentioned a number of times in your newest book is Unreasonable Success and How to Achieve It. I have

Just one more question for you. And then certainly I'm open to any closing comments or anything else that you would like to share. If I've omitted anything, certainly, or if there's just anything in addition that you'd like to put forth. And I'll start this question with a A quote as prelude. And this is from a s an interview that I found.

With you. And it relates to New Year's resolutions. This is a quote Which you can of course feel free to correct. But this is attributed to you. Once a year, rather than doing New Year's resolutions, I ask the same question. What did I do that meant the most to me and my family and friends?

And sometimes strangers too. And what could I do in the next year? More of the same is not a bad answer, but something fresh. Two. So this really struck me as an impactful

question. And Good questions are impactful. And So

A, is this something that you Do And and might recommend. And number two, are there any You might

Suggest Listeners. Consider or ponder, let jest state on their minds. Yes, it is true. And I think it's right.

The question I would ask is one again from from the book which is In your whole life, what is your breakthrough achievement going to be? If you want to change the world, how do you want to change the world? And Ponder that maybe.

On New Year's Eve, maybe any other time. There's plenty of time to work it out. But do you really want to have a major impact on the world? If you do Note. That's really my question. It's a question I asked myself as well. I mean my own amb ambition is to

is to have many more creative completely unreasonably successful people. And the thing I'm toying with. Which I don't know if you think's a good idea or not, but But is

offering to work with a number of people who have already been reasonably successful, but have not been unreasonably successful. And take them through the process. And see whether we can generate Some unreasonable success from a lot of people. And to cascade that down and train other people to do that because I think this methodology is

robust and I think it could make a huge difference to the world. And I'd like to see whether I can demonstrate that in practice through a few pilot studies. So that's my personal ambition. I love that. I think you should definitely test it, and it could be a spectacular failure or a spectacular success, but nothing ventured, nothing gained, and you do like to bet. So I figure this is is one good opportunity to do that and having some experience with vetting. I'm not volunteering myself but I would say run a competition or or have applications that are vetted. uh and can be vetted in some very simple way so that you're not overwhelmed.

And pick a handful of finalists to take through that process. And what what I'll suggest just as a placeholder is that people follow you on Twitter, Richard. Cos. eighty twenty eight zero two zero. And if you decide to do this, you can uh you can share that on uh on Twitter and that can be So that's

People are are alert that this is a possibility. And What a pleasure. It's been Richard. I feel like I know you in the same way that perhaps some people I meet who listen to the podcast feel like they know me, but it's been through your written words that I have have come to admire And

Use. Quite frankly, with great effect. uh much of your thinking. So I I I thank you very much for taking the time today. This has been uh an incredible, incredible pleasure. And I hope it's not the last. Indeed. Tim, thank you very much indeed. I I I reciprocate much more much more pleasure for me, I'm sure. It really is great. Anyway, thank you very much indeed. And I look forward to talking to you again at some stage. Maybe maybe a bit a bit more frequently. That'd be wonderful.

Well the the feeling is is definitely mutual. And to those listening, I will have show notes for everything we've discussed, including All of the books. All of the resources uh including the Most recent.

work from Richard, which is Unreasonable Success and How to Achieve It at Tim.blog forward slash podcast. We'll have links to all the names, everything you can imagine. So please do. Check that out if you'd like to indulge in uh more exploration. And until next time, as always, thank you for tuning in. Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And Five Bullet Friday is a very short email where I share

the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up. in the uh the world of the esoteric as I do, it could include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short. It's just a little tiny bite of goodness before you head off. for the weekend. So if you want to receive that, check it out, just go to fourhourworkweek.com. That's fourourworkweek.com all spelled out and just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it. This episode is brought to you by Atletic Greens. I get asked all the time what I would take if I could only take one supplement. The answer is inevitably athletic greens. I view it as my all-in-one nutritional insurance. I recommended it in 2010 in the 4 Hour Body, and I did not get paid to do so, I've used it ever since. Developed from a complex blend of 75 vitamins, minerals, and whole food source ingredients.

Athletic Greens is a greens powder engineered to help fill the nutritional gaps in your diet. So I always try to do things through whole foods. but this covers my bases. Right now, Athlet Greens is offering you their vitamin D3K2 liquid formula, free with your first purchase. Two vital nutrients for a strong immune system and strong bones. So simply visit atleticgreens.com slash Tim to claim this special offer today and receive the free D3K2 bundle with your first purchase. That's up to a one year supply of vitamin D is added value when you try their delicious and comprehensive all-in-one daily greens product. Again, that's atleticgreens.com slash Tip. This episode is brought to you by Viore Clothing, spelled V-U-O-R-I. Biore. I've been wearing Yuri.

at least one item per day for the last few months and You can use it for everything. It's performance apparel. but it can be used for working out, it can be used for going out to dinner, at least in my case. I feel very comfortable with it. Super comfortable, super stylish, and uh. I just want to read something that one of my employees said. She is an athlete. She is quite technical, although she would never say that. I asked her if she had ever used or heard of Yore, and this was her response. I do love their stuff, been using them for about a year. I think I found them at REI, first for my partner, t-shirts that are super soft, but somehow last as he's hard on stuff and then I got into the super soft cotton yoga pants and jogger sweatpants. I live in them and they too have lasted. They're stylish enough I can wear them out and about. The material is just super soft and durable.

I just got their Clementine running short for summer and love them. The brand seems pretty popular, constantly sold out, in closing, and I'm abbreviating here, but in closing, with the exception of when I need technical outdoor gear, they're the only brand I bought in the last year or so for yoga running loungewear that lasts and that I think look good also. I like the discreet logo. So that gives you some idea. That was not intended for the sponsor read. That was just her response to a text. Fury, again spelled B-U-O-R-I, is design for maximum comfort and versatility. You can wear it running, you can wear their stuff training, doing yoga, lounging, weekend errands, or in my case again, going out. to dinner, it really doesn't matter what you're doing. Their clothing is so comfortable and uh looks so good and it's it's non-offensive. You don't have a huge brand logo in your face, you'll just want to be in them all the time. And my girlfriend and I have been wearing them for the last few months. They're men's core short K-O-R-E. The most comfortable line athletic short is your one short for every sport. I've been using it for kettlebell swings for runs, you name it, the Banks short. This is their go-to land to sea short is the ultimate versatility. It's made from recycled plastic bottles. And what I'm wearing right now, which I had to pick one to recommend to.

folks out there or at least men out there is the Ponto Performance Pant. And you'll find these at the link I'm gonna give you guys. You can check out what I'm talking about, but we're in them right now. They're thin performance sweat pants, but that doesn't do them justice. So you gotta check it out. PONTO PATO Performance Pant. For you ladies, the women's performance jogger is the softest jogger you'll ever own. Fiore isn't just an investment in your clothing, it's an investment in your happiness. And for you, my dear listeners, they're offering 20% off your first purchase. So get yourself some of the most comfortable and versatile clothing on the planet. It's super popular. A lot of my friends have now noticed are wearing this. And so am I. Beoreclothing.com forward slash Tim. That's B-U-O-R-I Clothing.com. slash Tim not only will you receive 20% off your first purchase, but you'll also enjoy free shipping on any US orders for over$75 and free returns. So check it out.

Viorieclothing.com slash Tim, that's V-U-O-R-I Clothing.com slash Tim, and discover the versatility of Viore Clothing.

What you see above is a preview of the first minutes. One unlock costs 3 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.