You'll rarely meet successful, people who are not insightful. I believe the inside is the smallest unit of truth. That is actionable and and therefore people who operate in the currency of insights tend to be generally more successful, at least, in business.
Welcome to the knowledge project podcast. I'm your host. Shane Parish the goal of this show is to master the best. What other people have already figured out to that end? I sit down with people at the top of their game to uncover. What they've learned along the way. Every episode is packed with Timeless ideas and insights that you can use in life and business,
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Fundamental data head to kennel, s.com knowledge to try them out, that's c-a-n-n-a ly st.com, knowledge and tell them Shane sent you. You grew up in a business family and I'm curious as to what lessons you learned through that.
So, in India, we have a deep-rooted COS system where we had forecasts and one of the
Cost of the forecast is the business cost and for multiple Generations, everybody in that has only done business, right? It's called the white, shh or the bunny accost. And for this group of people jobs is an unusual thing, I think first lesson was
They have much lower shame, then the other communities, they have very little Self Doubt. When it comes to being Shameless mean, they are very hard to offend. They are. Okay, even if you mark them, as long as you are giving them business, they're okay. With that, not many people would be okay with that treatment.
Ain't right and makes many business communities not respectable because they're okay to be mocked or have lower dignity or lower status. As long as they get the the financial upside of it. So I think that's where the status and wealth driven societies mindset comes in that they are absolutely okay to reduce their status as long as they win the commercial side of the deal. That's one big lesson. The second piece is just natural understanding of
Where is the value in everything? Why would somebody pay for? It is almost intuitively taught from childhood. You just know what are people really paying for, right? And a natural understanding of which products would have higher gross margins or lower gross margins. Right. It's a very interesting thing that when you grew up in a business family, they just naturally arrived at summarizing. What?
The value in everything and it's sometimes very uncomfortable. Because I remember going to an MBA school early days to speak and they invited me. And I was only interested in knowing the unit economics of the MBA school, and an understanding, how beautiful that businesses and they find that disturbing but for a business Community, they love to break things down to unit economics. Almost as if it's like a first, like the small talk is unit economics, which is, which is quite interesting, the third lesson.
Is a natural need for spotting Trends. So one of the things that is there I am part of the Gujarati Community which is the business community of India and they have this greeting. When the, to business people meet normally people say, hey, hello. How are you? What's up? They have one more thing, which is called shoe Nava Juni, which means, hey, what's trending, what's new? What are the new
New trends and they share that on a more regular basis, which makes them spot new trends and be in businesses that other people would take a long time to enter into because they love the new trends, because they believe that the value is going to be there. They are less likely to have competition and they're constantly finding themselves to be a different places. Gujaratis are also the people who have you will find them in every single country.
Having set up a business because they will keep finding ways to not compete so you will find them in a remotest African country. They'll be a vigilante family, running a business multiple Generations. You will see them across the planet because they will look for ways to not compete and have a zero-sum mindset. And the last thing is the community benefits. One of the things I have noticed in Gujarati Community, is that just like Jewish Community is that? They
First significantly lower interest rate to people in their Community because banks are less likely to underwrite. And obviously this is pre Venture Capital to give them loans to say it's okay. Try to make something out of it and try to return the capital when you can. But at a very low interest rate, just nominal because they love to see more people be successful.
And the last lesson was constantly having the need to make their Community Successful by giving them a soft Landing, if the business fails or it's okay, come start doing a job stabilize. And start again, my dad had a startup that failed. So I had to start working since I was 14 or 15. My first job was a data entry operator, which made like $30 a month, kind of a salary.
When I started, there is always this thing that. Okay, you can start do the job right now, stabilize the family and then then you can start some business. Like there is no shame that. Oh, you are just helping the family settle down from a financial setback. That the family went through and I have seen within the communities. People going all-in, getting wiped out becoming big in one lifetime again and again, and there is less shame attached to failure because oh, it's business.
And it's fascinating. Like I have seen so many stories. Like, I'll tell you about one particular individual, his name is Prince, John rochon, he's the founder of Bombay Stock Exchange, and very few people in India know about this guy. The reason people don't know about this guy because he once upon a time, was the richest guy in India? He still probably holds the Guinness Book of World Record for doing the largest ever trade single trade, adjusted for inflation. It's in his Wikipedia.
but he lost all his wealth in trying to do a real estate project that bombed
So, there is this guy who comes from nowhere, starts his business below a tree, becomes the wealthiest person.
And gets wiped out and literally like, hundred percent of Indians and Indian businessmen. Have no clue about this guy. I just researched because there's a huge Tower in Bombay, which is made like Big Ben and I was like, who the hell made this? Because it doesn't have a British name. It is rajabhai at our. So I researched and found out that rajabhai was preemption rajan's mom. And he made this clock for her because she could not see
For her to hear time. Like look at the flex of the guy that he builds a massive clock in British India, with a huge amount of spend by hiring British architects.
Just to flex to the community that I have built a clock because my mom can't see time.
Thus crazy. I want to go back to the same thing for a second here. The fear of failure, prevents us from trying. Do you feel like we developed this as an adult? Or do you feel like when you're involved in a business at a very young age, you get exposed to this because you're going to fail. If you're doing anything, you're going to fail and that's okay. And that's part of business and you just keep going and you keep
Rating and you keep trying, whereas when we become adults and we try something, we don't want to look like an idiot. We're scared to look like an idiot.
I think a lot of people who have been bullied, and shamed, and mock early in life. Develop an unusual superpower to not, give a damn about being mocked anymore, right? It's not surprising. If one would say that, hey, Ilan, The Way You Are For, You mocked a lot when you were younger, cause you were not a normal guy and, and
One would even say that you look like a guy on the Spectrum and the guy would probably say yeah. Probably true but he doesn't feel that anymore, right? So what I noticed is the training of kids in India, it's very common that people will say, oh, if you do not score, well, all your friends will make fun of you. All the relatives will make fun of you. Everybody is going to look down upon you, and they will say Shame, Shame, right? And when kids are trained through,
Gaming. It's an effective tool to make them better. The only problem is that it remains as a long-term bug in them, that they constantly think about other people's point of view about how they are. And they constantly think their social status cannot be taken risk, but according to me, you cannot develop substance, networks wealth experience, unless you're constantly willing to risk your reputation, people who can feel,
I'm Lee. Okay, to risk up to 30, 40 percent of the repetition, wealth, Health are the ones who Propel further. But a lot of people don't do that. Because in their head, they will say, I can't even risk 1% of my reputation. Again, going back to the Gujarati communities. I know so many families, go bankrupt all the time because going all-in is not scary for them.
in fact, I'll tell you an interesting, stat, India has ended a very large country by the total number of people who have invested in any kind of acid, stock, mutual funds, any of that is around 30 million 30, 35 million,
I would go to the extent of saying that 80-85 percent of people who are having more than two hundred dollars of investment in any of these assets are people from this community. That's how risk-averse the rest of the society is
Compared to these guys
as fascinating. I want to go back to something. You said earlier to about how business helped, you understand what the value of something is and more importantly what people were actually paying for? Are there any examples that come to mind when you think of that as a child?
So I'll talk about 34 businesses that I did as a kid and this is all before I had legal age to do anything at all.
I built mixed tapes which are downloaded music from the internet and made mixtapes for people on a CD and burnt it and give it to them. And I use somebody else's computer, somebody else's internet, they had no access to any of these things and I would give them take rate, but I realize that people love the idea of being making something personalized versus buying something from the store, which is mixtape of somebody else. And the idea of gifting they were okay to pay 3 to 4X more. Then the
Normal mix tape that you would get from the market because this is made by me, right? And I was very happy with this guy. So what I did is I started going to all the music stores and I said, I will make the mix tapes for your clients. This is my price to you. You can charge whatever you want and they would make 5x more profit selling my mixtapes, than the music labels in. I understand that business was not really legal, but as a fifteen-year-old, I did not know better. I had to survive, then I built another.
This, which was idolized that people put henna to really differentiate themselves in Indian weddings to really look better than I have the better design on my hands. Like it's almost like a temporary tattoo that people put. And I realize that the biggest need people had was designed was not enough the color of Hannah had to change. So I figured out a way to build black henna which I learned from some Arabic culture was possible and sold that in the retail stores under a brand. And I made when I was six
18:17 and that sold at 10x more price. Then the regular Hannah, because it allowed people to differentiate them since have a superior status. So, that's another thing I learned that people love to personalize and put a signature and get more value. People love to have higher status than others and pay more value and didn't even care about the price. Because what I did is I said this is short supply. So what I did I say that I can only Supply you to add a its complex process to make it.
It wasn't complex process. I just artificially create scarcity in the market and I had to learn all of this because I could really not make enough because I was having a full-time job and doing other things, right? I also started doing some private tuitions for kids to teach multiple subjects, whatever people would send. And I realized that people love teaching their kids exotic subjects, so I would like teach them Excel and and I would not know these subjects, I would ask them. What do you really want to learn? I would learn that.
This night and teach them because people love the idea of having special skills given to the kid which were not available easily in the market. So they were looking for tuition teacher. Who would say, oh, can you teach this particular skill? Can you teach that particular skin and I would learn that and I realize that I learned the best when I had to teach. So I started doing that a lot and it was a fastest way to make money. It was a - CAC way of learning in life, right? So I think,
A lot of these Concepts made me realize that the Indian Society was a lot different. And in my career, I did a lot of other businesses which was sold to the US and Western Market and Indian market. And I think most western companies do not understand agent Society. The mass laws hierarchy of Asian Society is completely different to the Western Society. But unfortunately, the all the marketing textbooks are made in the west and then they come to the Indian market and they get
shock on what people really pay for in these markets. And I think they're for a lot of Western companies struggle to make monetize from these markets they can get a lot of Da use in MA use from this Market. But rarely are poor from this Market because they don't understand what people pay for over here. So I think that was the big lesson, I learned. So one of the biggest shocking thing for me, when I'm doing my first trip to the US was I figured that almost everybody first job.
Paid them. An hourly salary in India. Nobody has ever earned an hourly salary in their entire life.
Now there is a dangerous thing that happens because of that nobody understands what's their value per hour. You ask any Indian if you ever come to India and go to any store any hotel, any restaurant asked the guy? What's your salary per hour? Cannot answer that question.
Because of that they take poor decisions with their time and they don't understand the value of time. So products that sell convenience and save you your time rarely monetize, which monetize a lot in the western Society because everybody understands the value of our because the first job was I don't know, 10 dollars an hour and then now they are doing well in life, but they can still do a math on a proximate basis. Now, my salary, see,
To be $500 an hour and they just get it in there for they take very interesting decision. They will not try to optimize for a fifty dollar discount on their flight tickets when they are making a $500 because they'll say that's not worth my time. No Indian will ever say it's not worth my time and that's true for many Asian societies because value of time, as a concept was never taught, efficiency is not a DNA. You see in Asia but a flip side. I
I've noticed is that everything that feels Soulful in life.
Is inefficient all the vacations that we file, very Soulful are inefficient places, the food that we really like and find Soulful are inefficient to cook, right? So I always find these interesting things that maybe soulfulness is a function of chaos and inefficiency, which Western societies figured out how to scale, and let's compare this to our religion. Now, Hinduism is a, I would say not as scalable as they say.
Many of the other religions because it's not standardized, there is no one book, no 10 rules, no one God. So what do you really scale? It's an open-source religion, which people make and built on some principles and tenets, which are constantly evolving and people are allowed to tweak it on their own terms. So it's like evolving very, very differently. And therefore Hinduism is mostly spread through birth, but not through scaling, to other societies,
It was not designed, but it is something that you feel more spiritual about and other things. And I think that's where the Nuance comes in that it is impossible to imagine scaling in life without standardizing. And standardizing is the enemy of soulfulness
G. Think standardization is also sort of the opposite of value Creation. In some ways from a consumer point of view,
I would disagree with that. Because once you have figured out what
It is called as pmf, you need to scale it by standardizing it to a great extent, right? And it happens all the time, however, standardized things are easier to disrupt the non-standardized things. Just a way a standardized religion is easier to disrupt the non-standardized religion. Right, one is hard to scale. One is hard to
destroy. I like that. Continue to go deeper on that the hardest scale versus hard to destroy.
So if you think about a hard to scale business,
Is let's say this great restaurant. You can't make a chain out of it. It's just impossible, right? Because the guy can't teach all the skills to build five chefs. Ten chefs, right. But they are also hard to describe because it really works. There are so many restaurant that works for hundreds of years because they have just perfected that but they can't build branches. They can't do, but but there is a McDonald's which has managed to scale the version right, which is very easy to attack and say, hey it's unhealthy.
E and guys, we need to move away from this and break the whole concept or or the sugary drinks, which have scaled so much and we can all agree and say that hate may not be healthy for you and we need to move away from that. But something that is built-in efficiently is harder to destroy. Because what do you destroy? And, and how do you destroy there is nothing to attack. There is no areas of attack that you can really say that. Okay, these are the three points on which we can attack. You can't
sort of slower to take hold
And then it's harder to get rid of.
Yep. And and I think of a lot of things that are non-scalable. Let's say movie making some directors who are really known to make successful movies back to back. Really don't care about timelines. You can't tell. I don't know. The best director said, oh we need to ship two movies every two years. They will not do that, right? And I'm not saying that the others who ship one movie a year. Do not create value. They
But they will never create something that is memorable and will create an experience that you will never forget. So I think that's where I would disagree with the idea of value creation happens in both. But the question is that, what do you enjoy and what creates a memorable experience? What creates an emotional arousal is rarely through efficient methods, for example, trips to inefficient places will be more memorable than efficient places by Design.
Do you think he you get rewarded for creating almost?
Like an asymmetry to creating an emotional connection, versus a different type of value
people pay, or people, give you time or money, where their core motivations, are mostly met, or there is a hope for their motivations to be met. Let's take this example of like just imagine this. Let's say all of us are on some level of social status in life. Let's, let's say, Sharon, you are at level 90. I'm at level 60, somebody is at level 200 and so on and so forth. Unless
I believe this is true. Now, product and services are also at some levels in life. For example, I would say, Louis Vuitton is at level 16 T HB s education is at level two hundred and let's just imagine these things and as a fuel in your car is at level 30 and so on and so forth by Design gross margins exist. When you allow human beings to jump their social status,
And gross margins disappear. When you do not help them increase their social status. For example, I will keep moving to a utility provider as long as they keep offering me lower price, as long as the time required and effort required as the same, the department of your brain that deals with that is the CFO of the brain was only looking for Cost Cuts.
But the CMO of your brain is saying that, oh my God, if I crack HBS and I am will be able to jump the social status and my income will multifold and therefore it is okay to spend years time money to get a chance to get into ivy league and therefore ivy league can keep increasing the gross margin with no trouble because they promised or even if they give you hope. Let's give example of Vegas right now. Vegas does not assure, you become rich but the hope.
Lottery which is up chance of being level, 30 jump into level 200. I'm okay to go all in once in a while. Especially poor people get sucked into that a lot more because imagine it's like being on a poker table, with the smallest crack. The best strategy, you feel to be on the table is to go all in all the time. So when we went through pandemic I believe that the whole world had this amygdala, hijack moment where they that own my God, I have to really survive.
Dive and I need to take more risky Behavior. Because I think the amygdala probably flared up during this time and therefore, risky Behavior seems to happen right after crisis because people just go all in nineteen ninety five percent of all coins that were traded on all crypto exchanges were not in the top five, not even the top ten because who wants the normal returns.
I just want a chance to just play the and therefore I think that the world is getting more risky and then obviously there's a huge correction that will happen, which will kind of flown in the next stage because like the Spanish Flu, we went through, Spanish, flu, and then the Roaring 20s and the Great Depression. We going to go through those Cycles faster now because we have fast, forwarding everything. In fact crisis is a almost like a fast forward button to Future in and accelerates eventuality is because we go through that. But coming back
back to what I was saying is that value therefore is utility and vanity and chance of increasing social status which is constantly sucking all the gross margins and world is seeing a very interesting pattern all the businesses that are providing utility.
Are losing gross. Margins to the point of becoming zero because many companies that offer vanity or social status or a chance of dealing. The CMO are making those businesses almost free because you get a chance to make a cross sell a high gross, margin Services, right? If you look at Amazon, a bulk of the revenues to be Marketplace. But if you see all the avatars of Amazon in different countries, the marketplace Revenue was made to be 0 Alibaba chose to not charge.
The merchants to sell, but they made money on advertising and fintech which are skin in the game businesses. But do not charge you rent per se because it was easier to disrupt eBay or Amazon and China, by saying, oh, it doesn't. You know, commissions if you have to sell in our store, right, and I think this is where I see a lot of the utility, providing businesses getting constantly disrupted by somebody at least in their technology businesses because you don't need any
Is to provide utility you can just offer it. It's not like electricity company that can keep charging you forever because nobody can compete with electricity companies for the networks that they buy. But the internet businesses can simply offer utility for free and and Google has mastered this. Many companies have mastered is I believe the future of SAS companies is going to be that where the next SAS company will just say, oh this user tool for free.
But by the way, will charge you and cross sell you some lending, some Lonesome, technology, some some value-added Services which could disrupt a lot of utility creating businesses by Design. So I think cost to provide utility is dropping and and therefore the revenue expectation from that is dropping and you're going through a very interesting cycle of how business models will evolve and they all will have to be more skin in the game in nature versus
Seeking that they used to be because nobody could easily compete because the world is getting more and more like apis. And and businesses when they become apis, it's much easier to plug them into larger. Ecosystems Shane, one of the interesting things are always wonder about is that it's very easy to find super apps in Asia, but rarely you find super apps in Western societies.
But it's also true for Superstars and, and super companies and conglomerates. So, every load trust society, which is usually non Western Society, a lot of them are low. Trust, there is always concentration of trust. Every Lotus Society will have concentration of trust and when that high trust entity, launches 25 things people just use it. For example, in India, Tata group is this concentration of trust and they can launch a car.
To a refrigerator to salt to furniture and people I caught a group will just buy it.
I would say, 80 85, %, bollywood's Revenue comes from like 10, 15 people again concentration of trust and and therefore, by the way, we walk even what their kids movie. So nepotism is very rampant in India because you're like oh is this guy's son? I trust them to do a good job. Well, I'm not risking my money on this new actor and therefore super apps also emerged. A lot more over here live like oh, crud is offering this or they're launching this new service. Boom, start using it and
But you might be doing completely different business in the past. But people just say, oh, I'll know this guy's the familiarity creates huge amount of trust over here. And therefore, you see concentration of market caps in fewer and fewer companies. And therefore, I believe Pareto might be extremely skewed in Asia versus West.
And nobody has obviously studied earlier. I would love to fund a research which shows this, but I do believe that market cap of top companies would be different than what you will observe at least in each category. Like Tech may be an exception but any other every other category will see huge concentration revenue from the Bollywood industry revenue from anything else. It just becomes more and more and more concentrated and I think that is a reason I think increasing trust in a society. And I've been obviously
Assessment, what creates trust? For example, the most simplest answer I have found is trust, is natural in societies that have very low diversity of ethnicity and that is a scary thought because all sorts of bad behavior have happened in human history because we try to attack the minority and always try to make Society one. But it's unfortunately seems to be true. That trust is biological.
And and we seem to trust people with common belief systems and and ethnicity plays a huge role. So you'll notice an interesting pattern that I think there's a study by some Stanford Professor which showed that almost an opposite connection of correlation to number of ethnicities and high trust our society, it's not surprising that anymore Society. We're not multi-ethnic as they're becoming more multi-ethnic that trust is declining and you see emergence of authoritarian leaders.
To be much more frequent because all low trust societies. Always want somebody who with strong backbone to create peace and that's also the concentration of trust point which seeps in from that which is constantly repeating itself in many many themes.
We trust people who are like ourselves and so the more diverse Society is the fewer people that are like us the more low trust we are in general that's that a good summary of sort of.
Paraphrasing of what you said.
I think it's a good. Somebody that is one more than once. If it becomes too similar Innovation dies.
If becomes too dissimilar, trust dies. So it seems to be an interesting spectrum that you can only have a certain mix that keeps driving things to move forward, versus become stagnant and boring, and too chaotic, I think there is this healthy mix that needs to keep happening, and I don't know what the number is, but it sounds like a scary concept because you're trying to say that, hey, you're to cleanse our society to reorganize itself to have a T20 on ethnicities, which is a problematic concept to start
with. And then one of
Interesting things that you said they're sort of in low, trust societies. You sort of have these big companies that get this, this almost like trust Grant, right? So, I can, I can create products in adjacent Market places that people will just naturally Trust on their own, because they don't know who to trust or what to trust, but if like, Facebook were to make a car, people would be pretty skeptical. The trust of the platform would not necessarily carry over. Yeah,
and it's such a fascinating concept.
kept in India, because
It just works. And my company I've seen that and we are in a fintech business. We launched an e-commerce platform and it just becomes so big in a month's time.
Much to most people's surprise including our investors were mostly from the Western Market there like focus. Focus is almost a curse in Asian markets. Okay go deeper on that. The market is not deep enough to focus on one market and create a large company. The per capita income, the total economy, and all of that. So you have to do cross sell more things to the same set of customers. I'll give you some interesting stats about India which should be
Mostly not known by most people are outside India. Less than 6 percent of urban Indian women have Financial income of their own. 94% of them are currently taking care of kids or taking care of the family and not contributing to the labor force, but they're all educated. They are probably undergrad or grad Czar or even higher but not contributing to the labor force.
Another interesting thing is 95% of all Financial products in India are both my men.
Credit cards car loans, Home Loans, all Investments, India has now nearly two thousand dollars per capita income annually. But if you remove the top, 30 million families or 30 million individuals, the per capita income would drop to maybe $600. And therefore, a lot of Western markets love to come to India. And so, India is the next China. It's not because the per capita income is never going to beat and grow like China. Because before
China started becoming affluent, 96% of Chinese urban women were working because of the one child policy, which forced it to become a gender-neutral society and got them all on the labor force, which never happened in India, internet is going down, that's a scary Trend across the region. India has a lowest female participation of labor. Now, the per capita income is not going to grow and therefore, a lot of foreign companies love to come to India because India is the da you
I'm of the world. All the big internet Giants will say oh I have 500 million billion users in India. Let's look at the arpu and peel the arpu. It'll be less than a dollar or two, but it's great. Like, for example, if you got a lot of Indian followers on Twitter, your Twitter account, follower count will go like crazy. Your monetization question, might go down. And I think many companies like Snapchat, Twitter have worked, very hard to grow user base in India. Facebook is the classic example.
YouTube, My bet would be that it would be probably making less than $2 arpu annually in India with probably more than 500, 600 million active users in India alone. But they don't mind that because the global arpu compensates for The Artful mix, but the user mix cannot come from anywhere else. And therefore, the market will reward like Netflix made the mistake of coming to India and they will charge you for it. Nobody is going to pay that and therefore the projections did not meet because India is a
a country where you give them freebies and and you get all your Dai use, you want you do not get your arpu. And I think that's the lesson they learned, and I think they are saying now we launched Market with advertising, India is perfect for that because value of time is not a concept for us, so we will watch it India when series plays on TV of 30 minutes, approximately nine minutes is
ADS my God,
by the way, it used to be more the government regulated and made in nine
minutes so people aren't paid hourly.
Lee. How are they? How are they compensated? How does that work?
So you have a concept of monthly salary. We're not even paid weekly. So we are paid every month and everybody thinks in month, right? It's a flawed concept because they never solve our think about being efficient in life. Unless you know, your salary, an hourly basis. You will never really know what the value of time is. One fascinating thing I've seen in India is that you fly in the US and many people are reading books or doing something else in India. Nobody's really reading books and
Many of them have seen a very peculiar behavior in India is they are going to what's happened, deleting old picture so that you can clear up the memory. Instead of buying a $1 pact, will give you a McLeod access. Like, that's the value of time. And these are by the more the most affluent people in India, fly. So, there is no way they can spend two hours deleting pictures and WhatsApp, but they do because the value of time is not understood intuitively. And I've seen this all the time,
People around me, are people who are multimillionaires, will work so hard to save $50, it's not even funny.
That's like my parents, they'll drive 45 minutes to save two cents a litre on gasoline.
Yeah but they never worked in a society. They did not grow up in a society where value of time was a concept, right? So I think it's a more phenomena coming from those will invest in society like oh we have to be efficient industrialization value per our productivity. If I ask 10 people in India, what product?
Cody means I don't think I'll get a good
answer but then then if you try to sell something based on sort of saving people time, it's not going to resonate because you have to not only convince them that this were doing. You're really trying to change something that's inherent in the culture right now, which I would imagine is slowly changing as wealth becomes more.
It's not, it's funny. You're saying that but India is after the u.s. baby in the top three markets of SAS provides
SAS business software providers right on Revenue.
But none of them have any revenue from the local market because nobuhle business pays for software. They don't they like oh I'm just going to have three more people and they'll just work because they don't understand the software could make them so much more efficient. And and I wouldn't be able to find one company that makes more than ten dollars and ten million dollars annual revenue by selling software to Indian businesses. That's crazy, which is scary. If you think about it, how large our economy is and how many businesses we have?
And how internet-savvy we are. We are probably most Savvy in using smartphones and digital payments. In fact, one of the things that is talked about as India's digital payments have overtaken China and we have, like, taken off. Most people don't tell you that it took off after government made it free, right? Money transfers instant but nobody makes any money that's when it took off.
When we had charged 1% 2% MDR for do that, it never took off. So the thing is that this value of time, understanding credit value of time, and this math of thinking of of time energy money in one equation, is extremely hard.
You're on your second, big startup. Now how do we get here? Walk me through your first and what you're doing right now and then we'll pick up where we left off here.
So my first started by built from 2010 to
15 probably the largest exit at that point of time in India and that startup that the following it, it allowed people to recharge their mobile phones in India 99% of connections are prepaid which means they are not on any plan, people refuel there is, again, Lotus Society, nobody giving credit to each other so people just stopped up money and use it and then top up again, but none of that was top up was done online. So I built that platform but I what I did is I allowed people to get
Some vouchers of retailers for recharging on our platform was called free charge, and it took off in a very big way. Because again, value of time or I'm getting some incentive people, actually chose our Platformers is going to somewhere else and because it was more efficient, people just shifted in that direction. But I realize that I was going for the mass Market through that, but it was impossible to monetize, they just do not have any money. So after I exited the first company, I spent a bunch of time. I was advising multiple companies joining The Advisory board or boards or one of
As a media company, one of them was Sequoia capital. I spent a bunch of time understanding Investments and I was also Angel Investing in left, right? And Center I was probably probably engine invested in maybe 200 plus companies. Now in India, what I learned was that everybody was building this business by copying Western models. Free charge was one of the few original ideas. The reason I built an original company because I had no engineering background, I had no friends who had built Tech startups. In fact, I didn't even think I was building.
A tech startup, I thought I was building a marketing company which turned out to be a one of the largest payments company in India because I had never read TechCrunch in my life. In fact, when Sequoia reached out to me, I'm like, who are these guys were asking wasting? My time, I had no clue who they were. I ignored their emails for months till somebody told me. Hey, they are really big deal in you to check them out. I'm the okay. I'll when there and I remember the asking the so Canal. What's your CAC?
And I had no clue what that word meant and I think it's a super power. I think vocabulary is a unique curse that we suffer every word. We know, if you don't know, these words will probably not suffer them. And I think what I learned from that experience, was that you need to focus on the right Market because you can be the greatest founder. If you meet the bad Market, you will die. But if you find a market that has used Tailwinds to it, even a mediocre founder will do really, really well, right? So I think
Marketers like laws of physics. And I saw a very interesting pattern in India, was that lot of smart. People were building great companies. That I wouldn't go nowhere and, and I saw some people were not so smart to do really well, consistently and serial entrepreneurs, right? And I found that as interesting pattern, that I, I refer to the analogy that I see a lot of dam Builders with no idea of where Rivers exist. So, I see them building dams in hope that River will show up, but River, never shows up River.
List. Every time they discover that hey, river is not coming to my damn, instead of moving the dam to River, they make the dams even more funkier and cooler and with AI and all of that stuff. But the water never comes. And I saw that some people were natural at finding where the rivers of motivation for flowing and even the mediocre dams were making profits over there versus these fancy dams which nobody ever
used as a very sort of like Western idea, right? Build.
And they will come. Yeah, it never happens. I think and it's a great idea to build in Western markets where there are so many rivers and there is such a big shock because you kaname that, even some accident durable flowing through. You will make a lot of money in India. There are no accidental, it's like you're building in desert, right? So, you have to make sure you're a desert, like, you to really build the rivers. The right time the right place, because there is no unlimited Rivers flowing.
Nobody was thinking about human motivation because all of our education system. In India was not teaching Humanities. I accidentally learned Humanities because of philosophy.
But every single Tech founder, India 100 unicorns I would go on to say that I am the only founder in the hundred unicorns, which has a Humanities background. Everybody else is stem. And another thing in India is that we never had dating culture, so we never learned human motivation through the game of dating as well.
So we have extraordinary Builders but we don't know what to build for in there for how many Indian products are used in the west right now, very few.
But how many products are built in India which are used in the u.s. made by us product managers, may be hundreds and hundreds of thousands of them. How many cofounders of many unicorns in the US are Indians probably, a lot of them. And this is where I found this to be thing in Indians were very good at cracking. An examiner existed versus creating an exam that does not exist like everybody knows. Indians spends a lot on weddings like it's a known thing. People love to go to the Indian weddings in there.
I keep hearing this, I'll give you an interesting data point, like I checked in my office, most people spent close to 6 times their annual salary for their wedding. Wow. But zero.
Unicorn startups solving wedding problems. But that's the scary thing about the market. I met a Founder, who runs us a luggage company or suitcases, the Build-A-Bear on the public listed companies and they wanted me to join their board and I'm like, okay I'm happy to meet but I'm not joining a traditional Business board but I'm happy to have a conversation and and I was just giving them. Some suggestion is to do something branding on the airport and they're like, Colonel. What are you talking about? Like yeah, you are suitcase company. You should be at the airports. Like what am I not saying?
Trivia is a canal. 82, 83 percent of all suitcases in, India are bought for weddings the bride takes new suitcases and goes to the new family that are 4.4 million. Weddings are happen every year and on average close to three to four suitcases move with her to the new house. I have no clue about these things. I met another founder who's building a interesting. Biohacking, kind of a start-up and this is non-treatment.
Which improves the mitochondria growth rate in your thing and said, expensive treatment, which is done usually for cancer patients, or somebody with diabetic situation or whatever. And this guy goes there that I want to try this for Bio bio hacking. And the guys like oh you're here for cancer is no. Are you here for diabetes? As I know the third question was are you here for? Because it's your wedding? And it's like why is wedding important over here? Because that treatment makes your skin lighter for six months. So a lot of people are doing that treatment.
Just so expensive. Usually done by cancer patient or severe diabetic patients to improve the skin tone for the wedding. And that is the fascinating thing about India, that so much of the economy is running through that. Because in India, we are saving every penny all the time. But will splurge on weddings? Will splurge on medical events, will splurge on education of our kids, every Indian family right now. Who
I have just got new kids are going to spend probably 100 to 200 times more than what their parents spend for their education because that's what we spend money on the consumption is just not there. So, I think when you study these patterns, what I realize that these patterns are not understood by Indian Founders, they were just building Western copies. And therefore, at one point of time, I saw there were 10 startups were funded for doing laundry startups.
Which was popular in New York but in India, we had Maids coming at home. Why do we need a laundry startup, but they were 10 companies that got funded. So there were so many investors who are clueless so many Founders, who are living in India, who are clueless. So during that period I started working on a framework, I call it the Delta for framework on predicting startup success. Because my curiosity was that how am I able to be successful more often?
When I'm not even one tenth, the academic smarts that some of these guys have demonstrated in the past, but why am I able to do it more successfully? So, I built a framework and and, and because I was between two startups. I had a time to read up on physics and biology and evolutionary biology and Trust. So I was going all over the place. Obviously I was on your blog and like I'm connecting all these dots in my head and I found that
The evolution of startups was very similar to biological evolution and nobody was thinking like that. So I'll give you a sneak preview of that, that framework. It's easy to understand. But I'll tell you, for example, if I asked you in that, which product or service,
Was more efficient, 20 years ago than it is today?
If you are, if I have asked you this question which product or service was more efficient, 20 years ago than it is today, it's really impossible to find an answer. All the efficiency exist in the future. So, humans are constantly moving from inefficiency to efficiency.
In One Direction and like almost like Arrow of time. And, and therefore, any product or service that changes you from State a, which is inefficient to State B, should unlock something that is called as wealth. So I built a simple framework, which is sound simple, but most people still don't use. It is, let's say I asked you that. What do you think is the efficiency score of booking a cap through Uber on 10 or versus the old method that existed?
Of mocking caps, whatever their method was. Most people would say maybe this is 78. 110, that is the movie to 110. 110 3110. So the framework is very simple. That every time, the Delta of efficiency score is greater than equal to 4/3 things happen.
It's an irreversible Behavior. Once you experience a Delta for product or service, you cannot go back. There is obviously very, very high tolerance. That's a second thing that you will hate Uber, but you're not gonna like damn it. I'm going to delete this happen. I'm going to move to a more inefficient Behavior. The third thing is what I call a ubp unique, Bragg worthy, proposition humans when they discover something Delta for, they can't stop.
Bragging about it everywhere, almost like a secret code or all humans have with each other that every time you discovered Delta, for brag about it. And tell everybody about it and move the entire Humanity from State. A to State B, which is more efficient, which reduces their local entropy and and moves them forward to a more efficient medium, which burns less energy than any form time, money, or wealth, to move forward to more efficient methods.
And I realize that most startups were not looking at this. I'll give you a simple framework to think where it doesn't work. Let's talk about buying shirts online versus offline. It's not Delta. For, if you have, let's say, odd sizes or, and you have the challenge and therefore, shirts have not moved completely online. Because just by adding Tech, it doesn't become Delta for right. It has to improve the efficiency score of the desired Behavior.
And I think that framework of I talked about in India. Funny enough, I was told by Sequoia in the US, they were actually introduced this framework in the onboarding of analysts in the Seeker us team, which was interesting because in India, even if I have spoken about this framework, still startups, don't apply that and I see 90% of them fail all the time, back to the analogy of building a dam where Rivers don't exist and and reverse the nothing but motivations, right? Like,
At the core of it, we all all humans have the same core motivations and then it's goes into streams and creates more rivers from that stream constantly, right? But at the core of it, it's the same thing. You want to increase your Social Status, you want to improve your mating success, you want to have success for your progeny and so on and so forth. It all, boils down to the same motivation things. And then, you can put them into so many different rivers that flow. So when I started building my second company, I realize
How to make things more successful. Also look at more High motivation categories. And so on and so forth, I had the luxury to take the continent. Betances are. I told my investor on building a startup that will only focus on the top 25 million customers of India because only they can value time or we'll buy and rather focus on them versus acquiring hundreds of millions of customers, which cannot be monetized because they can barely have money to even eat right now. We are a poor nation and it's a controversial idea because
'He is always this country, which sold this dream of hundreds, of millions of customers like China, but nothing between India and China is common except our population, that's where the similarity ends. But global companies love to win India because they lost on China. So public markets will bash them in the Lucinda again. So lot of them are in India.
To win the holy war. But the market is not big enough. I would say the total gmv that Amazon would make in India, would easily be done by a small European nation. After being here for, like, maybe seven eight years that they have spent over here because the people who can spend just do not exist and I think that was the Genesis of focusing on Startup to build for the top more thing. And what we said is that we will focus on those customers because nobody is really building for them together.
It is building for this lowest common denominator that does not exist and I will focus on this customers and we said that we will focus on more trustworthy individuals to increase the trust of the system. We said that for these group of people, I'll give you a small example, India, even if you are in the top, 0.01% of affluence, your passport is ranked, maybe 150 in the world and therefore every country is extremely hard for you to get a visa to
Because there's no way for you to differentiate yourself. It is very similar to a lot of stuff that is done digitally in India for any service you encounter. And we said, we will make their life better by allowing them to have an identity that at least makes their life, slightly more frictionless.
Now this sounds like a controversial idea. Hey, you're trying to kill a society which is like more friction but the thing is that it's that's what capitalism is. I'll give you a small example. India has this unique concept of MRP. I don't know if you know about this but this bottle over here it says that maximum retail price of this bottle is 10 Rupees.
And even if it's sold in extremely affluent neighborhood or the most poor neighborhood, the price is 10 Rupees because the government thought, this is the greatest idea ever that will have the same price for everybody but I could easily pay 30 weeks for that and somebody else could pay 50 rupees for that increase the market overall, but we enforce an artificial concept of MRT.
Which is stopping the the core tenets of free market and capitalism to grow. And this is very unique thing about India where you come with these things that, oh, I'm going to have this, the 7-Eleven will charge 30 rupees, and this one will charge five rupees, and the Costco will charge this. Guess what? All of them have to charge the same price
I think I realized that the only way you can differentiate Us by service and all of that is just create a separate layer to build for them in and that was the Genesis of the second startup. The reason I also did a start-up is also because I realized that I while I was doing well as an investor and I'm still doing decently well in my investments as a part-time gig. I love building way too much and I think I've been working since I was 14, 15, I do not know.
How to live a non intense life while I can predict patterns and see things and I could technically generate better Roi of my time through investing.
but,
The joy I unlocked by building is coming Much Higher by building my own companies versus just being predicting and being right. A lot in predicting future Trends which can generate the highest Roi of time. It doesn't generate any Joy. So I found no joy in investing. It's just like, oh, I Told You So I was right. And I was right. And guess what? It gets boring because you're right.
In the market like this when you can predict Delta for Frameworks and you can apply all the human inside. You've learned, it's not a big deal that you feel for you to be more, right? The problem is I felt really empty.
I want to go back to some of those human Frameworks and Delta for when you're making an investment decision, what are the top lenses that you're thinking that through? So one was sort of the Delta for framework which we talked about well what are the human Frameworks that you're thinking about that? What are the
Lenses that add the most value to your sort of filtering system.
Yeah, I mean it was more of a motivational length but applying human motivation as a core Loop, but there are other things that make it easy to detect, such startup success. For example, a lot of founders of pitch to me are usually well prepared and make it presentation and come to me. And so I tell them that hey, I don't understand English very well, can you explain this to me in Hindi?
What does it do?
Founders would really get what they are doing. Can switch language without a problem because they really get it, and language doesn't change anything for them. Many people who have just prepared the presentation and not really understand this very clearly. They struggle with the language change in. Their pitch, goes for a toss.
So hold on, one way that I just want to add P VAC on this because like one way that you can do this without switching languages is switch level of the conversation. So often people prepare at one level and
Like whoa can you go deeper or can you go higher level and keep that in context which is sort of like the same idea?
And I've seen that people are really good. You change language or change medium. You tell them you. I don't want to read your presentation. They'll still be okay. Some people tell them I can, I'm not gonna look at your PPT. And they'll be like, how do I explain this to you? The other framework that has worked for me? Is I tell them? I'm not understanding what you're saying. Imagine I'm a user of this product and I would tell a friend.
Over dinner to try this. What do I say? Only Rule, I cannot use any jargon because I don't speak to my friends and jargon. So tell me, what do I say? And I tell them to take 10 minutes break before telling me the answer, I would say 90% of Founders fail at this.
Because they can't really distill it to that. Simple transmissible message.
From a friend to friend.
If you cannot distill your idea to a transmissible conversation at dinner.
It's not going to spread.
And things that don't spread will have a huge kak because nobody really understands what the hell are you doing? That's one framework that has worked. The other one is asking them, what is the real motivation? People will use it. A lot of times the real motivation is different than what people say is the real motivation. For example, buying expensive headphones. They're not really to make you hear better. You want to signal to the world that you are affluent and you have good status and good taste. Most Founders cannot
So that that is the real reason people will buy it.
They'll keep going to the functional utility and not the emotional benefit of the product. And that's another framework have seen that good Founders always no functional and the emotional benefit of that product or service Market sizing. Most Founders cannot imagine. How will they start from here and go on to Big very large thing from here. They get stuck in.
This is what I do, but they can't imagine. How will this become a large company ever? They just don't think they don't even think they don't even, they cancel their own idea and they have seen the opposite type, which is I called the Swiss knife problem. They believe that they have to build a Swiss knife. When the consumer only one was looking for a knife because they love building. So a lot of them are usually with engineering background. They left the builds the right so much software that consumers are confused when they talk to them because they don't have a foot in the door strategy, that okay.
We sell a knife and then eventually become a Swiss knife in their life. They start with the idea of Swiss knife and you're like, hold on, I can't even process. What you guys are doing and Swiss knife becomes cool. Nobody uses it. Like everybody seems to have a Swiss knife at never being used. So I think that's the another pattern I've seen. I've never really thought about this from a human framework problem but
Another thing is that? Why would somebody pay for this? And it's surprising how most people do not understand that. Nobody's going to pay for that, like like, will your dad pay for this with your mom, pay for this with your CFO pay for this? Will your kid pay for this like, they are just off on that. The last one is. Do they have an inside that
Is not obvious. But when you see them talk about you like, aha, that makes sense.
Can you go deeper on that the smallest unit of insight that's actionable
smallest unit of truth that is actionable
truth truth that Sasha pain yeah go deeper on that for a second.
If you go to ancient Hindu mythology and you study the Sanskrit scripts and Sansa with a very condensed language, right? Because it was invented before paper was invented, so knowledge was transmitted from Human to human through memory. So they had to distill
The wisdom in the smallest unit possible that it could be memorized and transmitted from Human to human, and the earliest scriptures were also tight, like, you'll read and Sanskrit yoga line and neck in one line, they will condense like really a lot of wisdom in it.
So I think the concept of boiling something to the core units of it then you cannot divorce divided. Further becomes a powerful unit that is also the building blocks of what we call as first principles.
That can help build businesses, right? And I think a lot of times it's a painful process seeking truth is painful.
Shane, you've been doing this for a while, like how many more blocks will it take to get close to the truth? You will probably not find it but the joy of seeking Truth for the sake of it is not natural and therefore a lot of people do not appreciate it enough and but insights become this nice building block through, which you can create great businesses, unlock great success because that is something that is not commonly available. Everybody seems to be seeing some
But you see something else. For example, I had this view that oh, India cares about status so much more than the Western Society. Let me do one thought experiment. I reached out to my friend who is to be a buyer of a top retail chain in India. After to check, can you check if the gross margin on all products? Sold for living room, is lot more than the gross margin of all products, sold for the bedroom and nobody had ever analyzed data like that, in retail ever.
Because it's like kitchen and so far and furniture and all of that. Nobody thought living room and bedroom has two separate Concepts, but I said, can you please make somebody crunch it and turns out the gross margin was 3x more. The reason is in a society, we care more about showing to others. So all the products which are showing demonstrating status for put in the living room, our bedrooms are terrible in India because nobody comes to them and therefore it was not surprising that bed. Sheets were not bought it.
And seven India and bathroom products. Do not sell a lot. We don't have a lot of bathtubs in India because it's not about me. It's about showing social status to others who come to my living room, and therefore, you apply that in sight now, and I told this inside to home renovation company, I told them don't keep saying home renovation launch a product line, which is living room renovation.
And today, 70 80 percent of that revenue for them is living room renovation.
Because that's the insight and that's the motivation button that you can press in
people. Well, I think in the western world, it's about treating yourself. It's about your worth it. It's about we still have the status
thing, individualism versus collectivism, which is how Asian societies are. And therefore you don't deserve things to be special but you have to show it. And they for weddings are really big and very high gross margin. It's for others
Okay,
so let's go back to the the we talked about this a little bit earlier, but I want to go into more detail on. You mentioned some of the core human motivations that transcend culture.
The code human game is to constantly improve our social status so that we improve our mating success or our success of our progeny. The easiest way to answer this question is that if we could really create designer babies,
Would people spend most of their income on that or not, and unless not going to ethical debate of is that a baby is a good thing or not. If it was possible that you can tweak their IQ, the looks their health, their chances of terminal disease, has to be lower and all of that or let me put it this way. Let's say, I could really invent a pill that could make you younger or healthier, wouldn't you give me 50 percent of your net worth and I think that's where the
Core motivations are like, what would you give half of your network for those are the core human motivations and they don't change from society to society. They remain the same the Manifest differently.
For example, the Asian societies unlock that oh, education is everything. So they disproportionately optimized for that but they don't, they save pennies. Like you said, like your parents talked about traveling miles for saving sense. Maybe they were also, the parents would be okay to spend more on their education and if you're told them, I'm going to cost is going to cost 2x more, they would probably suffer and give you that money, but they would not buy an extra shirt for themselves. Those are the interesting motivation. So in Asian
Is we treat our kids like assets, so we are making Investments on them because a lot of times we expect the kids to take care of our family. So I don't know if you know about India, is the largest market with sends money back to India, amongst all markets at the remittance Indians remit, the highest amount of money back to their family. Then it comes to Mexico and others. And that's the sign that the kids were raised as assets. You invested in them in hopes that when you make it back big,
you will give it back to the family and take care of us in our later life. So kids in these societies are treated like assets versus or you're on your own now.
That's is not in our culture.
Because they will tell you that I invested so much money in hopes that you will take care of me later on. So there's this whole societal structure or social contract that exists in Asian societies of taking care of parents and taking care of them. Even after you don't have any obligation to do that, but people do it till they die and really take care of them.
Asians will not even Flinch. One bit to sometimes even wipe out 50% or 100% of the net worth to take care of their parents, which is hard to imagine concept for many people in the west.
Yeah, I think that is you mentioned Maslow's hierarchy of needs was different. Can you elaborate on that? A little bit between the u.s. and in India?
Yeah, so I actually, we will, I found there's a I thought there should be any separation mask
In fact, there is a concept, somebody's proposed an Asian masculine, they have drawn, a very different chart, but one of the interesting thing about the chart was it's all about status belonging respect and in the community it's not about self-actualization and having that kind of individual path to Enlightenment is all about affiliation respect status and that and therefore you see that a lot in India that people are constantly.
Craving status and appreciate that a lot more. And in these societies, have a like so many awards and so many of these things and face matters a lot and giving back and like being valued in the community and so on and so forth, you will not see and therefore, like a funny story, like I have a two wheeler scooter that I around with and, and people with some affluence doing this kind of behavior are mostly considered to be weird or eccentric.
I don't see any joy in having fancy things. I just managed to get a car for myself for long distances, but I still use my scooter all the time and for most people, this is absurd because I'm not falling the Asian Maslow that you have to get a luxury car and you can get so many more cars and why aren't you having this fancy house for yourself? And why are you staying in a rented apartment? Like
it's just absurd to the point that they want to believe that maybe I'm not really a fluent these choices, just don't make sense to them, right? So, and I'm not saying that the West does these differently, but it is lot more for the people. It's a lot more living room then bedroom, even in the affluent households, right? And I think therefore, you see, extraordinary effort and money spent on weddings. It doesn't make sense that you
I don't spend 5x or 10x of your annual salary on two days event.
And just splurged on people who you mostly don't even know.
and therefore, like it's not surprising when you go to weddings, are thousands of people who come for a wedding, how can, you know them
But it's all about demonstrating to them that I've made it in life.
And that's the Asian Master at there for the startups, the rivers are different.
Versus the rivers that exist and therefore very few SAS companies, making millions of dollars of Revenue but there are enough wedding photographers I know who make more than 10 million dollars of Revenue.
Wow, I want to switch gears a little bit to some of the stuff that you've said over the years and I want to get more of an elongated take on it. They're concentrated doses of insight and a wondering, maybe if you can just Riff on them a little bit. So one of the things
That you said recently is that your group affect your group of friends, impacts how fast you can pound?
So insights are usually connected from random dots. Getting connected, right? So, but the process of collecting dots
Has to be efficient for the process of connecting dots to be more efficient.
And and then collecting dots is easier, if your friends are also collecting dots to connect dots. So, what happens is that compounding, naturally works better when you have a lot of people from different domains of life who are constantly collecting dots. For example, I spend a lot of time with a lot of different people from different fields, to see how they say these words. Connect for example, I will sometimes speak to or influencer to a stand-up comedian to a music director.
Are to an entrepreneur in a completely different space. Because at when you distill Insight things connect,
On the surface level, they look like very very different businesses, right? For example, I can't tell you how similar education and gambling. Businesses are at the Crux of it.
And why people do what they do and why the gross margins seem to be high. When why luxury goods businesses is similar to education businesses because the Crux of it. The principles are remaining the same and only when you ask and go deeper into some of these things. They connect have seen a pattern where people from these industries don't talk to each other. Usually the luxury guys are talking to other luxury guys. Another luxury guys.
Like look at, I mean, the reason I am envious of you because you have like made the most efficient machine of connecting dots. Like you are talking to people from such diverse backgrounds. And the amount of things that are connecting in your head from different things, is like something I really Envy. I and I have been you ping me as a chef and I wish I had what you do in life. I am so envious of you because what you're able to do is
get such and I think that things connect when you go really deep or you go really wide,
And things just then start connecting with each other, right? And therefore, one of the things that I do a lot is constantly look for origin, stories of why certain things exist. I was curious about shampoo as a product, I'm like, who the hell came up with this name? And, and then I found that the origin story of shampoo is an Indian Trader who went to Europe to sell a Chicago, which is a different product in India and sold. As a jumpy jumpy is like head massage.
Which creates form. And that was called shampoo by European, guys, and it became the product. And, no, Indian who uses shampoo knows that the word shampoo comes from chumpy which we use as a word for head, massage. And then I see these things and I'm like, when you go to origin stories of many, many things, there are so many first principles that connect and then you say, oh, Indian Traders used to make these kind of trips and all of that, for example, our studying I'm
Let's start you all the history, the Supreme turn, right? And was a rich guy like, okay, what other rich people of India? And I found this guy called as Davidson who was an Afghan Trader, who made it big in Bombay and I'm like, how did he make it big? Then I found out that he was the largest opium Trader for the region and British made the entire rail network to support his opium business, which grew opium across the world India and shipped it through Bombay to guess, where China.
And Davidson had a huge role to play in the Opium War that happened, where British attack China because they stopped David's applied to go to China because of banning opium.
And Hong Kong was born out of the settlement of Opium War. And and many of the banks that we know today from Hong Kong are actually the banks made by the Opium Traders and I'm like, Blown Away by all of these things because nobody has any interest in going to the history and origin stories except things to be that way. But when you go to the first principle origin stories, building blocks things connect and they just seep you see patterns again and again repeating for example
The Boston Tea Party in the US, which triggered the Civil War of whatever was not just T, they were also taxing tobacco. They were also taxing stamp papers and you like realize that how the beautiful model of inventing stamp paper which is Justice API that if you use my stamp paper I will give you justice which is a great scalable way for governing people. When you say that I will only be helping you in court.
If you signed on my stamp paper or paid, my stamp duty to give you justice, so I think I find these things super fascinating and I am I sometimes I believe that I do businesses only to hunt more insights in life. Looks like my core purpose of life, is to hunt and sites. And sometimes I have to build things to find inside. Sometimes have to talk to people and find insights sometimes ever read people and find insights, but I am, I can do this all day long.
On stop. And I'm constantly trying to meet people. I write two professors all the time. I will write two authors all the time to get them to respond to me on some hypothesis. I have, or some question that I have, I think being Shameless is most important ingredient in ability to connect dots, go deeper on the Shameless people. Make more conjectures without any fear of
Judgment. What I do on my Twitter? Hypothetically is that I will make a conjecture randomly.
And right, as if it's some law of physics.
And people bash me and correct me and sharpen my insight or connect even further dots for me.
And then I'm like, wow I have a new insight on top of that because I just put a conductor out there without giving a damn of people thinking. That how the hell can you say like this? How can he? For example, I put a conductor out.
During covert that maybe the new variants are lighter in weight.
Therefore they can spread faster but they're less fatal because viruses seem to have a correlation of weight with how potent they can be left, for example, HIV the much heavier virus than common cold and therefore it spread through blood transfusion or sexual transmission, but his lot more potent versus common cold. It can spread through air.
And I just put that conjecture out there and people just bashed me saying that you are making a medical statement, whatever whatever. But I realize that after this is damn good, this applies to startups. That spread faster are usually have a very light Trojan that spreads versus are very heavy thing and therefore your if you really want to be on a high distribution startup, you have a build which is very light spread like a virus and therefore the word viral is born from virus.
Which talks about how a light Contender for Tick-Tock becoming what it is, is because it's a lightest possible virus that you can create that spreads like a wildfire. So I don't fear judgement of like, how you making a medical term. Connecting it to viral videos to this. And I think shame plays a huge role, I'll give another example, I made a comment once saying that in elementary table elements that have a lot of valencies, which is
There are more ways for them to bond with other elements are called reactive elements.
And maybe people who also have more violence. These are the ones who are more reactive in the form bonds easily and they are likely to be more thing. And therefore people have lesser valencies
Are noble and that's what also called noble gases in the elementary table and I will make this conjecture in public and people are like how can you connect human behavior to elements and I'm like, why not?
I'm not trying to write in a scientific journal. I'm just trying to make a conjecture and what if this leads to something else? And I think shame plays a huge role. In fact, double-click on shame, I found an interesting
hypothesis that the fastest way to make somebody feel okay about what they're ashamed of is to make them feel proud about it.
For example, the path to from shame to normalcy is through Pride, which has obviously used and misused in different ways, so gay pride. And it, you are a man if you have tobacco and you are a classy person, if you have this whiskey. So every Vice becomes normal, or every shameful Behavior becomes normal. When you convert this into pride and I think you can make human humans do.
Sing Bad by just making it a matter of Pride and it's an interesting hack. If you think about it on how you can make people not feel ashamed about certain things you can say, you have to be very proud of this, right? And I think, by the way, I also know that everything that we are proud of our the handles that we give to other humans, to manipulate us, so everything, everything that I write on Twitter as things that I'm proud of like peoples in
Intros and descriptions are they trigger points. Put in public, for example, if you write an a proud father proud American fastest way to manipulate, you is the things that I have shown in public. But I'm proud of because it am demonstrating my social identity in public, and I'm like, giving myself exposed, and I do believe that humans create these identities to belong and fit in because it's very uncomfortable to say, I have no identity.
So, I removed everything with my Twitter, I have no nothing written on my Twitter, as my identity. And I believe that one day we should give up your name, also and profile picture also and, and get into that zone. Because that's when you become impossible to manipulate or impossible to trigger because you are nothing nobody and you kiss exist in the background, right? And I think a lot of people when they are trying to say, I'm this proud, this proud Alum of this proud of this, or Manchester United.
Fan. In fact the word fan probably comes from the word, fanatic and Fanatics are the easiest to trigger. In fact, I believe that all the people who demonstrate the need to be fans are the people who are easiest to offend in life, I think being fan or having favorites is telling the world that you're extremely easy to offend
a couple points. Come here to this the there's I have a belief that there's so much advantage
Jin life that comes from being willing to look like an idiot in the short term and I think that goes to something you said earlier, and there's this quote by Lou, Brock that always stands out to me, which is show me a man. That's afraid to look like an idiot, and I'll show you a man. I could beat every
time love it.
Love it. And I think those are so insightful because were you have a huge Twitter following? And I mean, if you're willing to put yourself out there and be wrong, and hone and sharpen your insights, then I
think that speaks that everybody can sort of take a step in that direction. And I think to your, your second point about we show others what we're most proud of, I think we also show others what were most scared of and, and, I mean, that in the way of some, of the unhappiest couples that I know of, in real life are on social media. The happiest
couples, they have an acute need to show that they're happy and then they hope that
Doing that will make them really happy, but the real people do feel the need to show it to anybody else. I think that's that the locus of control matters, right? Is the locus of control external or internal right? Like, what controls your happiness and what controls your joy or pride. And a lot of times when people put it in other people's hands that if you like it, if you like, you appreciate it. I need your applause. They build less and less substance within themselves because they're optimizing for somebody else.
This metric not realizing that. Nobody gives a damn about anybody else except themselves.
So the request is sort of Buffett's idea of this error versus outer scorecard. Talk to me about
that. I think people genuinely our benchmarking externally because the scores are built externally. I think that academics for example,
I have a unique curse of not being able to memorize things and Indian education system. Expect you to memorize very long answers and say them as it is without understanding one bit of it. So as a kid, I always thought that I was a poor student because I would not be able to score marks compared to Indian students, who were able to remember more and therefore memory test is what Indian education is all about. What's understanding which I was doing well on, I would score very high.
Marks and practicals, projects presentations, but very Less in theoretical writing exams. So I always thought I was dumb compared to many students and it took me after my first exit of my startup. I started believing that. I'm not so dumb.
So I think when we create any mechanism of scoring people, outside IQ test, EQ, test, whatever that is, right? We are removing Dimensions that we could be better at and I think. But if you constantly think about am I better than what I was six months ago and constantly improving that it doesn't matter what you define as better than what you were at and
I think you can make wealth by being better on something, which is stress is solving problems, but you can be healthier or whatever, but not by comparing. But just looking at my better than the previous metric. And I think most people are not keen in looking at that because it feels boring. They want to compare. And and the need to compare is acute. And I think I've not seen people come out of that trap, for example, many people who are very smart in India,
Who are in the 40s are still comparing to other people in their college batch in the you reunions if they are better or not in their success in life, I'm like, but it was 20 years ago, like why are you still in this race to compare just with your batch? And I've seen that therefore Envy is hyperlocal. It's like Wi-Fi. It works only in a local radius, right? I don't feel envious with Elon Musk. It's not even in my network. So humans have this unique.
I of having Envy in a hyper local network, we don't feel envious of people who we don't belong in. And therefore, it's good to constantly change. Who your network is to really do well in life because we all are going to be driven by the Wi-Fi, network range of our Envy or our comparison and therefore you and people are like I think novel today today and I had also responded back to that that we outgrow the price of growth is out.
People is this because if you really change your Wi-Fi network, all the time, to people with better emissions better goals, you will not feel that need to win within that's that local League of yours.
So, hold on, I want to explore this a little bit more Envy being local, is it? You're not envious of Elon Musk because there's multiple status levels between you and him or perception of that. Whereas if if there's only one degree of status level then that creates sort of a situation where MV can take hold because it's like I could be that whereas like if I look at you on mosque I'm like I can't be Elon Musk. I don't want to be alone must but like I can't be that. The Gap is so large.
Charge and and that relates sort of to what we were talking about earlier where we're trying to elevate that status by like one level. And I'm wondering if that plays a role here with Envy.
So I think in the game of leaderboard and whatever the leaderboard is off, we are constantly playing in our local zone of people who are just below us and just above us. And we are transferring trying to beat that. And therefore, let's say, I have, I don't know, some hundred thousand followers on Twitter.
I will not compare myself to somebody was, I don't know, a hundred million followers, like, it seems unachievable or I'm not going to compare myself in a sport. Let's say, I am a decent as swimming. I'm not comparing myself to Phelps was one like you're not 25 gold medals hypothetically, right. I'm looking at within my group of people I might be eating them or not and I'm constantly moving up in the rank. So I think the need for this hyperlocal thing comes from that. I'm going to beat my batch of college mates, or my neighbors, or my
Family members. I'm the best cousin who did well and and and I think that's where we form some of these leagues and we're happy just beating those leagues versus saying that. Hey, I just need to keep moving up and maybe Benchmark myself to a slightly different level and I think a lot of people self limit themselves because you never ask the process that what is the process to beat Elon Musk? We may not beat it, but do you know the process of beating Elon Musk and therefore, nobody's interested in the Journey of Elon Musk?
Everybody's interested in the end state of Elan musk that I and there's a lot of people behave like him when they have achieved nothing in their life or block. People try to behave like Steve Jobs, when they have not been to the journey of being Steve Jobs or Elon Musk. And I think that's where the disconnect comes that we love to copy and states and never copy Journeys.
Well, it's so interesting because like if you want to improve you almost want to copy tactics.
And ignore results, right? Seeing you don't want to compare at a macro level. You want to compare it? A micro level and the micro level is what can I do better? What can I learn from you? That's going to make my process better. That's going to make what I'm doing better and I don't want to compare. The comparing outcomes is a recipe for unhappiness, but comparing a tactical because you're imitating, and then you create, right? So, we all copy things before we end up, creating on our own and imitation is the quickest way to get to sort of
Bridge in any domain or discipline, right? You join the workforce, you copy your boss, your boss is probably an average boss and you eventually become average. And if you imitate beyond that, now you can start to differentiate, you can go beyond it. But you can't really you can't really do that sort of innovation or you can do it blindly, I guess before you copy, but it helps to copy first but you need to copy at a micro level and then the other Nuance here that I think a lot of people Miss is you need to
Copy at the somebody who's at the next level, and a recent Next Level. So not like a distant. So we often go into these organizations and I did this, when I was 22, 23, 24, join this organization. I get this Mentor, my mentor is amazing, brilliant super-smart 25 years older than I am full of insight but they're not full of insight. A tactical micro-level. They're full of inside at a macro level at politics.
That life at because the skills that got them to where they are, are not the same skills necessarily that are going to help me in my job today because they might have done what I did. But they did a 25 years ago, the odds of those things being relevant and useful are are a lot less. So you want to find somebody who's done the same thing that you're doing and just did it. So next level success somebody who just did your job got promoted out of it?
I think the reason we don't do that is truth-seeking
Uh, is not something that is taught actively in our education system because we want people to accept what we teach them. So that they can crack the curriculum or the exams that we have created for them and we but we're not teaching truth-seeking. Truth-seeking for example I would say that philosophy should be mandatory in all school education because it teaches you how to seek truth and question everything that you even studied and
That's not actively encouraged. One experiment. I don't have kids but I love experimenting on other people's kids. It becomes a good testing thing. One of the things I've seen work really well in growing majority of kids, is what making them insightful is something I call it the Wi-Fi school, I like w Hy f, i which means what you do is at every day at dinner, tell them ask them a, why question, or they can propose a why question? And then
The next day they come up with the answer on why it is the case that way and like why is the sky blue or you can take anything they can take? Why is this team called this name? Why is it so expensive to advertise on Super Bowl? Whatever it is, you can just choose any why that they are interested in and you do this enough for one or two years, the compounding just goes like this because most people are stuck in what and when, and how, and all of that. But why?
It makes you more insightful and I think doing that early hack in kids. Just makes them very interested in saying that. Why is Elon Musk courage?
Why are some people able to be successful? Why is this athlete able to win consistently? Why is this director able to get more Revenue in movies versus just guy? Why is this guy artists all the singles? All the time hits wise, this artist, why did Michael Jackson work for two decades or whatever? Like I think moment you encourage that and it doesn't matter what the topic is if you get them home.
Early on, on why? First of all, they grow mature, much more mature than most of the kids, which is, which is a site price of it because you they don't get along with the kids in the school and people start calling them as nerds, or Geeks or whatever. But the thing is that they just compound Faster by one type of question versus other. So, I think the input Matrix or input levers of any Excellence or any growth seem to be consistently same, but most people are not
Interested in that, and therefore, looking for shortcuts, like, what can I buy this crypto? This in like, get to my Ferrari like and and, and therefore a lot of people get fooled because the analytical Behavior to understand that. How can you really become that? Like, what does, why, why does Bitcoin exist and why do we have so many coins? Like I often tell people a crypto is like a religion that there are multiple religions, but the true test of a religion that is there, is that, is it adding more D? I use everyday.
Look at Christianity or Islam or Hinduism, it's adding more D. I use every single day and it's market share. And therefore, they are much more robust compared to many other religions. When they, what if, like Snapchat header user growth declined? What if Christianity has a user declined on growth? Would it start giving power away to something else? And therefore, how about the organized religions figured out a Perpetual diu growth? With many ancient religions did not and they got replaced. So I think
These things are not something that people are curious about. The answers are usually, very simple, and basic. And that's another thing we don't like basic answers here. Like that seems super simplified. But the truth is that when you really go and distill that things will become simple and basic, but we don't, I think when you are in a high IQ Zone that it feels like cheating when you get simple answers and you're like and therefore, where I treat or you treat people like, oh, you're like oversimplify.
And grossly non nuanced, but it's not. Sometimes the truth is, as simple as it gets.
I always think of things as being, you know, that there's simple but not necessarily simplistic. And so when you're a novice and you look at a problem, it's simplistic. I can solve world hunger, I can do this. And then as you dive in its really freaking complicated, right? There's all these things you didn't think of and then on the other side of that computer.
Complexity is Simplicity and I think of that as Simplicity on the other side of complexity but it's not a simplistic. So simple doesn't mean simplistic in this case and then that is like true inside and Mastery and understanding. I want to go back to something you said earlier because I think this is a point where worth sort of maybe coming back to you or empathy emphasizing a little bit more, which is truth. Most people aren't in the truth business. They're in the story business.
Whether it's the story, they tell to themselves the story that they're telling to other people, that they don't want the truth. They want the story and I think that there's very few people entrepreneurs specifically are rewarded for being in the truth business. If you can't figure out the truth, you go out of business. And so it's a unique subset of people who are actually driven just sort of find the truth and if they're blind to it, it has huge consequences. Whereas, a lot of people can sort of be blind to reality and
Into the truth and and focus more on this story. Yeah I think
that's a very interesting point. You just made if you really spend time with entrepreneurs who are successful and let's say successful for consistently successful, you'll almost feel that they are philosophers.
And and what is philosophy. It means zero plus Sophie which is love for knowledge or love for truth, right? And and therefore the reason they are successful consistently because they are in the business of seeking truth sometimes they just find something and use it and apply it and build something out of it. But they are in the business of seeking truth and the frequency of how things are disrupting and getting quickly disrupted is the truth is constantly evolving
Being at a different level, right? And if you can't keep up to it, you will get irrelevant no matter who you are and I think surface-level truth seeking. Therefore does not create enduring businesses because you really don't know why the hell are people really using your product. What is the real problem? I you solving not what you are saying, what it is. Solving, there's an underlying three levels deeper thing which would give you a much larger market and Tam to operate in, but you don't really go seek that. And I think the reason to thinking
Not preferred because it truly burns more energy at an energy saving is a human trait, right? So I often make that comment that people are not more intolerant. They are just running out of processing power per day more than anybody else in the humanity ever did. So it's not unusual to like authoritarian leaders because I can't process all this information so we are not away.
The the super interesting there. Sorry I didn't mean to interrupt you there and but you you said something. I think I've never heard it put that way. We're not less intolerant than we were before. We're just running it a processing power and if we sort of overlay that to the media which is designed to hijack, our attention and manipulate our emotions, which would be taking away that processing power. The byproduct that would be that we appear less tolerance.
It all other aspects of our life because we're sort of like, getting all of this energy sucked out from social media and media, which designed to sort of hijack,
us and there is no time and energy to go to nuances.
It's not needed, it's not required. And therefore, everybody has an opinion and they are a lot more opinionated because the nuances lost right there is no need to go into no answers because there is no processing power. And therefore, we like authoritarian leaders, a lot more in these chaotic times. Because seems about right, right? And and, and therefore I remember hearing for some reason, nobody people don't back.
Right. And wrong people. Back people who seem to have a backbone because I can't process all this information and I think look at this, like the people like a lot of us who were born before internet and now like the younger generation like they just have so much coming to them right every day constantly that they are. Therefore just want to click and say yes and no and all the polls have become yes. And no versus
Has all the nuances and like nobody has time for nuances. So I think the world is going to come more and more intolerant, because the processing power of Hardware is not growing at all. But the amount of information that is coming. To us is growing disproportionately and I think the ability to of few people to go to nuances to basic principles will keep creating more and more wealth power, anything that you can imagine is important.
And as a metric of success because they are traders of nuances. And all the people who are not traders of nuances, are going to be this, transient a source of energy that money will flow through them away. In fact, I'll tell you an interesting thing, I've observed you will rarely meet
A wealthy person who cannot keep secrets.
So, I believe that wealth is like energy that stores itself in.
Entropic complexities that seemed to hold the information asymmetry in them versus be this transient sources and therefore, I believe that the world has become this superconductor where 1 Min goes to hundreds of millions of people quickly, information gossip, fake videos of content about Johnny Depp's divorce, like it's spreading so quickly and and all of that and there is no.
Eddie no interest in going to nuances and going into these things because you're to be connected to This Global thing of being connected to the narrative ever, go for dinner and people talk about is I need to not be look like an idiot who's not knowing the common topic and therefore things like Netflix or YouTube or just making the world one at levels. We cannot imagine because people are trying to be relevant in the context of like what percentage of human popular actually did an interesting study, you'll love it, by the way, you should look it up. When Will Smith's had that event at Oscars?
I looked at Google Trends and saw on the heat map of the world where did Will Smith as a keyword take off because Google Trends went like this like this. But on the global heat map, only a, some places went really dark. Most places had no search jump and I was like this is perfect. This is a final map of to knowing where the Western media has huge influence. You can predict accurately.
Italy in India and Africa and Morocco in Indonesia there, western media has important where do where do people care about Will Smith?
And and you can see this patterns emerge very clearly when you create these contrasts events, right? And I think the processing power and therefore reduced know, I read something interesting ones where it says that kids love watching watching animated movies again, and again, they watch it six. Times are still happy. They watch it 10 times. They still happy because their brain is not evolved to find patterns and they are constantly finding new things all the time. When they watched
I'm content but humans, like we don't like watching the content again, because you figure out all the pattern. So we like watching movies, which are unpredictable and we can't solve the patterns and therefore the Christopher, Nolan jandra like becomes very interesting because you're like, oh, I couldn't grasp at wash it one more time or whatever. But the Nuance of this is that we're also perpetually board because of that, right? Because nothing seems to be
Causing any unusual pattern and they will constantly looking for new pattern breaking things. And therefore Tick-Tock is no surprise because it's constantly breaking patterns on. And and one of the most interesting things I learned is that all things that are funny.
Are surprises.
All jokes are surprises. Could deeper on that. If you think about a joke, it's a building a pattern and then it switches to a pattern that you cannot anticipate, and therefore it creates an emotion in us and makes us laugh.
And now that I've said this, if you see every stand up joke, everything you will see, surprise, surprise, surprise, surprise, all the time. So, the brain is constantly looking for surprises versus going to know answers because we are like, it's giving us this dopamine shots of here and there and Tick Tock is surprise super machine. You can spend hours on it and your brain will not stop getting
surprised.
But in life, we tend not to like surprises, right? So I'm thinking specifically, you know, the word oil shoots up, we come up with this simple. That's a surprise it disrupts the way that we thought something was going to happen and our perception of the world and then we ignore it. We talk ourselves out of it, we dismiss it instead of exploring it,
interestingly the human brain which lights up in fear and humorous.
In the same region because it's a surprise that does not cause harm to us, but it causes emotional arousal in us, right? So, the thing is that, right? That's where we like surprises that don't harm us because it creates an emotional arousal and takes our dopamine, anticipation levels, very high, but we don't, like for example, feel of a gift that is wrapped and
We Know, by the way, will not love a gift that come randomly to our house with no name on it and we are like scared. But let's say your loved one, gets you a surprise which is act nicely. You are just excited because you do not feel the threat attached to. This is the same gift. Looks the same feels the same way as the same and causes different emotion. You are like, oh, has somebody sent me a bomb? You're not thinking that. Oh, I have a secret admirer. Who sent me this beautiful gift? Let me just open it. You're mostly a
Assuming that oh, I have somebody who's causing harm to me but the same thing which is given in familiar context where you have removed the fear. You are like I'm so excited to open this. It doesn't matter. We could be 60 year old. We are still happy to open the gift wrap.
I want to go back to something. You said earlier that it's sort of like lingering in my mind a little bit, which is you said, you've rarely met a wealthy person that can't keep a secret go deeper on
that. I do believe that and more and more.
Study about concept of wealth. We often say that wealth is not Zero Sum but it actually is because wealth is nothing but energy stored. So according to be wealth is nothing but batteries of energy, where energy stored temporarily and keeps increasing. Because we are humans are the only species that have figured out how to convert all forms of energy to our advantage, to reduce our local energy consumption or local entropy. So we are the only species that I figure out nuclear energy, solar energy,
Energy. Connecticut, every form of energy, we can work to our advantage and therefore, our wealth keeps growing. And if you look at since Industrial Revolution, invention of luxuries of wealth and GDP of the human population, went up like this, it did not go like this, it went up like this, right? And and if Ilan really cracks a way to get solar to come to our self, the world's wealth will go disproportionately as well. Because guess what? We figured out free energy, unlimited energy, right? So the thing is that, there's an interesting thing that was was called the
Maxwell's demon problem, which was the only thing that said approved that entropy is not increasing. It can be reversed because it was a concept which was basically Maxwell demon has this class box. Maxwell is a scientist who came up with this theory that entropy is not a law because it can be proven to not be true by Maxwell's demon experimented with a glass box with a door in Midland are two Chambers one, with cold molecules in one of heated molecules and this demon could open the windows.
Selectively based on when hot, one was trying to move in this direction and left code while moving it, and it just reverse it. So basically, it says that Maxwell demon is able to reverse entropy was all increasing the entropy of the system. And therefore entropy is not Allah. Then people after many years, figured out that the brain of the demon is part of the system and the overall entropy of the system is growing and therefore human brain and in there for the information Theory and all of that comes in saying that entropy is constantly increasing because of the information asymmetry in
The demons
head. Now if you extend this idea further, you will realize that all the tech companies that are disproportionately growing in wealth. And net, worth and revenues are also the ones which has more information asymmetry or they are more Maxwell demon like
Same for humans. People who have natural information, asymmetry are constantly creating more and more wealth, therefore they because you have to burn less energy compared to others in diverting the molecules here and there. And I think therefore, when you see a wealthy person, so a lot of people become rich, but not wealthy because they do not know how to manage the information asymmetry. So, a lot of athletes become very rich and very quickly become poor and you will
A pattern that they have very bad at holding information, asymmetry and ability to keep secrets is a good litmus test.
Of an information, asymmetry seeking brain. And this is where I'm making this leap saying that. How do I know? Somebody can keep information asymmetry. The first test is ability to keep secrets
/. Had, you know, somebody can keep a secret.
Well, we all somehow humans know, intuitively. If I asked you, Sharon think about ten of your friends. Can you think of what? Three of them who cannot keep a
secret? Totally, I'm not going to name them though, because they're probably listening to this.
You should not name them. But you can also
Name, the three people who will keep the secret also and sometimes they are trusted by wealthy people and therefore their wealth grows because wealthy people love to associate with people who can keep secrets and and Seekers, don't have to be nasty, it can be just about knowing something about the world. And, and, and all of that, for example, like if people really care about information asymmetry, they would have heard every podcast of yours and got there. It's just not natural for humans to do that seeking information.
Terry is not natural. I think humans have scaled as a society because we figured out that the way we grow our energy or our biomass is to constantly store information, asymmetry one form or the other and therefore I was reading an interesting thing that the biomass of ants and humans is the same in the world which is the number of kilograms of weight that we have on this planet because both of these pieces figure out how to cooperate.
And keep this information structure, growing?
Right, and and others don't. And there are constantly tracking the status society and not Cooperative societies. Because language is one way of thinking, keeping things, more efficient, and burning less energy compared to others and, and many species, don't do that. So the thing is that humans are the only species that are figure out how to increase the entropy of the system. Like, we are the best agents of entropy because we've heated up the entire ocean, thanks to our activity, right? And and and global warming, is a function of
Us creating more wealth through the process of inefficient thing. And therefore going after sustainable energy is a great way of being richer without causing the environmental damage that we can create with that because of the side effect of other methods of creating energy. And I think therefore this concept of wealth is rarely like generationally like you will see that a lot of time to three generation later. Wealth does not stay because you will always create somebody who's not very good at keeping secrets.
Secrets or holding the ground or keeping, and they'll be always people who like manipulate them into these schemes and all of that and they will lose it, right? And I think that's where information asymmetry is an entry interesting concept. If you see all the companies that are doing well, they are constantly increasing the information asymmetry about knowledge about their customer or knowledge, about their industry, or the flow of system, and so on and so forth. Because otherwise, it's energy just keeps moving.
Two places that can hold it and store it and it can keep getting destroyed. For example, a lot of social media stock market, tanked and revenue tank. When Apple announced the way to not be able to keep more information asymmetry and boom. You can't predict many things about people and therefore your Revenue will tank because you can't predict their behavior. And I think that's where the power of understanding. This simple concept can be
Be useful in understanding where the wealth is going to move constantly,
I like that. Well let's change gears a little bit here. Talk to me about decision making.
So I have seen that one. Good framework of decision-making is talking to champions of that field of decision-making. Somebody who has more choices, usually has ability to make better decisions and people who have less choices. Let me explain what I mean by that, a person who's less person who's, like, likely to be able to get
Anybody to marry them and they have the ability to do that are likely to be better at taking decisions on how to marry somebody. Right. And it sounds weird, but choices just make them better, right or an investor that can invest in any company is likely to become better on how to pick companies, right? So, I think the expertise of decision-making is usually in people who have more choices than others, in fact, according to me, the sea
simplest, definition of success is also about having more choices in other people in that respective field that you think about. And I think that usually does not fail, but I believe that a lot of people are taking decisions through emotion which is a hit-or-miss thing, but
Problems to solve our or to feel our through emotions, right? So for example a lot of times Founders are like parents who sometimes just know intuitively. Something is wrong with their kids or their startup or their company.
But emotions are not good enough to solve the problem but they have very good at knowing into really something is off. And you like even doctors will struggle when a mother feels something about the kid and they're like, we can't find something and then I want something is off, and they just feel it and it's a great place to find something. To be fixed, not a great tool to use, how to fix. Because emotions will make you do stupid decisions on how to solve the problem and you over correct, or over destruct in trying to solve that problem. If you use emotions to do that. So I think
Using emotions to diagnose, sorry, using emotions to detect symptoms is great using emotions to solve or make decisions this terrible. Everybody has different framework. I know about the Bezos framework of regret minimization framework and and you can talk about many of these things. I think a lot of times having just a long-term mindset around decisions, even if it's short-term decisions is useful. So I have seen that some people
are naturally good at long-term decisions than many people who are very good at short-term decisions, right? So I think using a lot of those people as apis in your life, for long-term decisions is a good framework. And we, all of us know some people who are very good at long-term decisions. And and they think 20 years, 40 years, 60 years, 80 years, hundred years on everything. Right? For example, I've always told people that all bad behavior,
Is rooted in short-term thinking every bad behavior in human beings comes from being short term about everything, right? And I think if you pair long enough game, it doesn't seem like a bad thing and I think therefore it's not natural for humans to think 30 years out.
And therefore, people do stupid things with the reputation or that trust with people or all of that because they don't think it matters 10 years later. And, but if you do grow your reputation, slowly, it gives you huge Powers later on because compounds quickly. In fact I remember this beautiful code, one of our investors told me that now Canal reputation is an
Bank account where you can only deposit a dollar a day, but every time the withdrawal is almost nearly complete. So if you make a mistake on a reputation that withdrawal will be complete, but in terms of deposit, you can only almost the positive Dollar a day you can't hack reputation. In fact, everybody who tries to hack a reputation is penalized badly by the society and they get corrected quickly, but slow repetition usually gives you more currency to outlast and I think,
When it comes to decision making like, thinking about what is the slow currency of Life, reputation, wealth, all of that, like don't try to hack it, anybody who's trying to hack, it will always lose it quickly because they will not have the muscle to retain it. For example, or people who get rich quickly without really building substance are exactly the people who get to play Advanced Port, without bending the muscle for it and they get injured because they have not built the muscle to handle that. So
So I do believe that some people are just naturally good at judgment and and the reason they are very good at that because they love to be right a lot.
And I think I'm sure you had talked about this concept of decision, journals, and all of that. But the thing is that intuitively people who are very good at decision-making are constantly journaling without even some time, not writing, but constantly evaluating everything that did in the past objectively without feeling emotional about it and constantly reflecting on it and improving their algorithm. Right. And I think in terms
Decision making.
You know, there is this thing that you say, what would Steve do and what would be those do, what would this do actually sounds stupid? But it's not or what would Jesus do, right? Is that good Frameworks to say that? Let me try to think like them and see if they would do it or not. And I think sometimes just creating this mimicry of sorts would be very powerful. That would, this person do this. What? This, and, and, and I think the only good use of reading a
Autobiography or biography is to be able to answer this question that would heal on do this. Would Steve do
this to comments on sort of what you just mentioned there. One is, when you think long-term, you eliminate a lot of poor Behavior.
If you think, like we're going to be in a relationship for 30 years, I don't want to take advantage of you, even if it means, I'm going to get paid more tomorrow or do anything. So it just eliminates all of those incentives. Even if you just think about all your relationships on this generational basis, you eliminate a lot of behavior that maybe you sort
of as a little funny thing, all the scammy businesses are all usually found around tourist
places. Oh dude. Yeah, I remember the
Then I went to this place in Vienna and we get the cake, the famous Vienna cake and the cake was like 3 euros and then the kids ordered water and the water was 18 euros and we had this amazing conversation around like how is it possible that they can charge 18 Euros for water and still have a thriving
business. It's very, it's very simple. All the places that are built around tourist places are designed to optimize for sure.
Shotgun because there is no repeat customer
Behavior. Exactly.
So all the scammy people will self-select themselves to be around tourist places because I do need to optimize for my long-term and PS. Yeah. So there is self select themselves in these one in many and then there's nothing that 0 by this Vienna kick. Nobody's Gonna Know, friend is saying that chain, when you go there by from here, like, nobody's saying that as well. So itself, selects itself into
Many
businesses to the other point about asking yourself, like what would Steve do, or what would Elon do? One of the reasons I find this so helpful is that it, the source of all of our biases are blind spots. You know, we can only see through our frame of reference, but the world exists outside of our frame of reference. And when you ask yourself, like, what would warn do or what would Steve Dewar, you know, what would can all do? What you're really doing is you're getting out of your own head and
You're seeing the world through a different lens and that in, and of itself starts to reveal blind spots. And the source of all bad decisions is blind spots. Because if you knew what was going to happen, you would obviously never make a poor choice, everything makes sense based on how you see the world and so what you're really doing is you're shifting your frame of reference which is the only thing that I've ever seen helpful at avoiding cognitive biases in the future. Because cognitive biases are so good at explaining. Why we made
Mistake. But retrospectively in the past. Here's why you screwed up. And it's like, well, that's great. How do I use this information to make better decisions in the future and it's like, actually that's really tricky. The smarter you are, the more likely you're not going to be able to do that checklist. Don't matter, you know, when I talked to Daniel Kahneman, he said the exact same thing. He's like, I've studied this for 60-some years and I'm no better at avoiding them and I'm like throwing my hands up going. Well, what the heck? But what I have seen being super useful at avoiding them is to think
Less of them as cognitive biases and think of it frames of reference. And I am, I do, I have the right frame of reference to see this problem and how can I shift my frame of reference to see it through a different lens through somebody else's eyes. And that comes down to curiosity to write and truth-seeking because I want to see the world through your eyes. I want to see what it looks like. See what you think. I don't have to agree with it and I think that's where people people instantly like tune out there. All, I don't agree with the way that, you know, I want to understand how you see the
What interconnections you see what variables? You see and it's through that reflection that I'm going to get more insight into the problem.
It's funny, you're saying this all the people who are seemingly very good at decisions, they tend to have multiple personalities in thinking about situations, they can almost think like, five different people at the same time and they can become different people and see blind spots
of that and explain
The problem exactly through the lens of a person
or instinctively this abou, reject things. For example, let's say we are trying to hire a senior person in our startup. And let's say we have read autobiography of five successful people in life and we can really live through that thing or less a movie characters that we have seen. And we have built that reference in our head on what they would do. And say, would this person hire this guy
It's weird. We'll be able to instantly see feel from there and say, no, there is no way. This guy would touch this guy. Why? Because is not smart enough to meet that level or is not creative enough? And and and and does not have the slope. Like the way this guy did it and we always can come up with that and therefore, thinking, being able to become multiple getting multiple perspectives. So, two things I have seen, right? People who are saying, well, the red well-traveled,
Is nothing but acquiring more lenses in life to see things. The word unusual starts dying as you travel more as you read, more.
You are less shocked. You're less surprised because nothing seems unusual. You've seen it all. And therefore, you have acquired different frames and therefore, most intolerant people who have not either read or travel because they don't know alternate realities. If you ask American, is this the best culture ever? They'll say, yes. But they have never traveled to know and test in other cultures are better. Most Indians would do the same thing. They're like, so proud of their religion, the culture, the sink. There is no framework to go to
I stood right? The other perspective is philosophy, right? Like when I studied philosophy, had to study Indian philosophy and Western philosophy together as 18 19, 20 year-old, and these are completely different things. Like, it's almost like trying to. I don't know, trying to mix Japanese Cuisine to like Italian cuisine to a British Cuisine and you like, it doesn't make sense. But the moment you acquire these lenses and they
All exists and you can see this from a perspective of that. Oh, let's see. You make a dish and have will Japanese people love. It, will British people. Love it will Indian people love it. And then you can come up with this ways, to adjust to that based on some of these nuances. And we have this amazing ability to come up with these answers again from our biases. But we have to be able to tap into multiple biases that coexist in Us, by creating all these multiple personalities in our
And, and saying that with this guy, like it would, this guy like it and I'm like, can see it. And, therefore, all the people who are really good at their craft can predict almost like Omakase of life. And like, they'll just know that you will love this and, and, and therefore, some people can get Applause every time they go on stage, some people can make music that can get Applause, every time, some people can just do this consistently because they can just figure out the constant shift and nuances, and they don't get stuck in a type. Do you?
Record anything. When you're making a decision, like do you keep a decision
Journal? I don't. But I have built a habit of tweeting my predictions and people do one funny thing. I don't know if you've seen this, remind me of this in 12 months that people tag. So I make a prediction that this is going to be this behavior in two years time and people respond to that tweet by sake. Remind me of this in 24 months and that tool reminds you to check this tweet in 24 months and do that. And I
That to be very useful because if you make a prediction in public and you say something in public, if you are right, people will find you until you can all you were right. This turned out to be true. For example, I wrote something about dating and how it's going to mess up things, and how things fast forward is another give rise to certain behavior. And there's an article that came yesterday which exactly talking about what I talked about in 2018, and somebody found that inside Kunal, you said this in 2018 and that's one thing that works for me.
And and it's awkward to make your prediction public and you move the conductor's public over. But when you're wrong with people to find and say Canal, you said this, but look at this is what happened and and it's a nice way of making the world, a crowdsource, my decision-making journaling and shaming because it reminds me more efficiently. I'm not a structured person. I can barely make a to-do list in life. I can. In fact, the day, I make a to-do list, I knew somehow lose that total is the
I just can't keep up to that and I think being more connected in the moment. Constantly connecting dots, the My Method and therefore I document them in public because I'll trust people to come and correct me on my decisions. How do you think about opportunity cost it comes to what metric you're optimizing for? If it's let's say wealth for the sake of making argument or opportunity cost, not all things create.
The long term Roi that you think it does, right? For example you will say I'm going to do a start-up or do this job in Consulting and I might just miss out the opportunity to make some money in Consulting and lose that early day in the startup. I think constantly thinking from a lens of value per hour and and cost per hour. So so one framework I uses every now and then we should figure out a way. What is our value per hour and we should figure out any mechanism DCF says
Three whatever. And then you say hey whatever work I'm doing is this generating more market cap per hour than I am doing right now. And doesn't matter what that work is. If it's causing that then you will do well because you are disproportionately beat the index of your salary per hour which can be predicted very quickly. Good thing about jobs is that you can make that
Clear prediction. And then, that's not bad. You can say that. Hey, this is going to create this, and people are very good at doing the, cackle TV matching that. If I do the same, be a unlock, a consulting job, and then I can get placed in dramas on and this with my career trajectory will look like at. This is what I can be in net worth or whatever basis. And that's a very safe path that many people. Take many people, take the unusual path and and tend to do better because they unlock more experiences in the feedback loops dramatically improve. So I believe that historically people were higher
Four years of experience, I think in the future people will be hired for experiences per year, right. And I think that is going to create this. That is your D X by Y is your slope, really, really high. And I think that's where if you look at when, does the startup become a big company? It's a good question to ask, like, when does the startup become a big company is Amazon or startup, or a big company, is over a start-up or a big company like, is 1 billion?
Evaluation makes you a big company. I think the answer is very simple when you reduce the concentration of people with very high slope in the
company. Yeah, trajectory matters.
More correct. So if you reduce the concentration of people who are not high slope constantly, then you become a big company because by Design preservation does not come for people with high slope. They will demand more from the company. They will push it, they will
not want things to be in a certain way and therefore, and by the keeping, the high slope people in a company is the hardest thing to do because
Every ambition of yours will look silly to most people.
And therefore sometimes I wonder if like Elon is going to probably have I don't know five five hundred billion dollar plus companies maybe six I think the biggest thing is done. He is just extraordinary at collecting strong slope people all the time and keeping them engaged.
To feel excited and ambitious about doing what they are doing because they just will push everything. And all you have to do is orchestrate those people to do great things.
Well, is so fascinating, right? Because there's attracting High slope individuals, there's retaining High slope individuals and then there's a sort of natural selection where if you allow a certain number of people who are average or low slope, if you will to
At the organization, it changes the environment in which people like hyper, basically. Another way of saying, High performers want to work with high performers and if people see if you're working with somebody who is a high performer, you are better, right? They the standards are raised even if you're an average, you're slightly above-average now because you want to work harder, you're learning more, you're excited to go to work, it becomes less of a job and you're more all in. But the minute a high performer
R is surrounded by people who are mediocre performers. They want to leave, they get frustrated, they get cynical, there's a clock on how long that they stay in that organization or a clock on how long they stay engaged.
Yeah. And therefore companies who obsess for Revenue per employee, naturally, retain Talent density. A lot more by Design, because they do not kind of regressed to mean, if
Well, in many, many ways, because mean is unfortunately, very, very boring for high performers because imagine you are in an all hands, Aurora's town hall, and the quality of questions have become so terrible. You like, whose company is this?
Yeah, exactly. Yeah, right.
And I think it sounds like almost like you're trying to build a, some kind of a divided Society, but
that's the truth. U.s. historically constantly brought a lot of the bright Minds to come to them and and honestly India has lost a lot of smart brains because we could not do a good job of retaining these people and still struggle to do that and and all us robe. And and brother you change a law and you stop the high slope. People to come to you, some other countries going to benefit from that and they will eventually in the long run fix that because the high slope people are constantly
Changing every environment they go to. And the funny thing about the high slope people is that they recognize other high slope people.
Almost in. Literally five minute conversations.
Yeah we're definitely going to need part to maybe part 3 but this is this is a great place to end this conversation canal and I really appreciate you taking the time and I'm already excited for next time. The knowledge project is produced by the team at Farnam Street I'd love to get your advice on how to make this the most valuable podcast. You listen to email me at Shane @f s dot blog
You can learn more about the show and find past episodes at f--. S dot blog. / podcast to get a transcript of this episode. Go to FS dot blog / tribe or check out the show notes.
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