What is an unusual habit or an absurd thing that you love?
I wear the SubPac Wearable Physical Sound System while I commute on the subway to my office, and sometimes while I work at my desk.
You strap the system to your back and chest and it lets you feel the vibration of music through your body.
Music producers, gamers, and deaf people are the primary users.
I find the full-body experience of music makes listening to music or even a podcast with a lot of bass more of an immersive somatic experience rather than just a conceptual head thing.
If you could have a gigantic billboard anywhere with anything on it, what would it say and why? Are there any quotes you think of often or live your life by?
I have two candidates:
First, “It’s not how well you play the game, it’s deciding what game you want to play.” — Kwame Appiah.
This quote by a philosophy professor separates striving from strategy and reminds me to take a macro view of what I’m doing, like in a video game where you can zoom out and you suddenly see you’ve been running around in one corner of the maze.
It loosens someone’s relationship to the game, too, it’s the game of the game, helping to separate having ambition from being ambitious, or accessing hustle without becoming a hustler.
Another quote that I really like is from the Buddhist novelist George Saunders who said in an interview that he has an image of people’s “nectar in decaying containers.”
Buddhists like Saunders think everyone has a Buddha nature, that good core of your being, people sometimes just lose track of it but it’s there, it’s such a good assumption to have about everyone if you’re wrong sometimes.
I really love that image, it helps me sometimes visualize the stream of Buddha nature flowing through all the lovely, flawed, living and slowly dying creatures that we all encounter every day.
I get this glimpse of how my three-year-old daughter’s three-year-old self is so temporary.
We’re all on fire. It’s so beautiful to sometimes tune in and see the flickering.
What are one to three books that have greatly influenced your life?
The psychiatrist Sam Barondes’ book Making Sense of People has had a big impact on my thinking, and I sometimes give a copy to people who are building a new team or even deciding whether to get engaged.
As part of my role as an investor, I interview 4 to 500 people a year to decide whether to hire them or invest in their various startups or investment funds, and the most useful mental model I have found to help understand what makes people tick is the one Barondes describes eloquently in his book.
The model is called the “Big Five” or OCEAN: open-minded, conscientious, extroverted, agreeable, neurotic.
The academics who developed the model clumped every English adjective that could be used to describe someone into categories and reduced them to as small a set of factors as they could.
So if lots of people agreed they could call someone both gregarious and outgoing, they decided that was the same thing, they kept reducing that down until they got extraversion as a primary factor.
The Big Five is considered the equivalent of gravity in the academic literature on personality.
There have been thousands of studies using it, and it’s considered much more statistically accurate than alternatives such as Myers-Briggs.
For high openminded picture Leonardo Da Vinci
For high conscientious picture Robo-cop
For high extraverted picture Bill Clinton and high introverted picture Obama
For low neuroticism picture the Dude from the Big Lebowski or the stereotypical Californian.
For high neuroticism picture Woody Allen or Kanye West or most New Yorkers.
I could free associate about the Big Five for hours but will leave it there, if you want more then check out Sam Barondes book and Scott Barry Kaufman also is obsessed with the Big 5 and writes a bunch of useful stuff about it.
There are two other mental models that greatly influence my thinking about people and teams.
The first is Harvard professor Robert Kegan’s model of adult development.
Kegan argues adults develop — and make sense of reality — in five discrete phases.
He lays out his theory in the 1994 book In Over Our Heads.
The title is a reference to how the vast majority of adult Americans are at the “socialized” stage of development — they have difficulty taking other people’s perspectives and tend to follow assumptions given to them by society (as opposed to assumptions they freely choose).
Many activities — such as parenting — benefit if you can set boundaries and not care what your kid thinks, and direct them in doing what you think they should do.
There’s something that can feel a little icy when you’re interacting with self-authored people because they aren’t sourcing approval from you.
To try to make this more concrete — there’s this amazing example in Chapter 9 of “In Over our Heads” where Kegan describes a couple who are both operating from a self-authored mindset, it’s a super distinctive description of the way they make sense of each other and being married that really reminds me of one of your podcasts with Laird Hamilton and Gabby Reece where Gabby is describing the way she relates to Laird and to their marriage in a way that to my ear is a really unusual self-authored way.
For people interested in learning more about the model, I recommend Kegan’s later book “Immunity to Change”, where he describes the model briefly at the beginning.
I’ll read a quick excerpt just so people have a feel:
Having a socialized mind dramatically influences the sending and receiving of information at work.
If this is the level of mental complexity through which I view the world, then what I send will be strongly influenced by what I believe others want to hear.
Let’s contrast all this with the self-authoring mind. If I view the world from this level of mental complexity, what I “send” is more likely to be a function of what I deem others need to hear to best further the agenda or mission of my design.
Consciously or unconsciously, I have a direction, an agenda, a stance, a strategy, an analysis of what is needed, a prior context from which my communication arises.
The self-authoring mind creates a filter for what it will allow to come through. It places a priority on receiving the information it has sought.
Information I haven’t asked for, and which does not have obvious relevance to my own design for action, has a much tougher time making it through my filter.
It is easy to see how all of this could describe an admirable capacity for focus, for distinguishing the important from the urgent, for making best use of one’s limited time by having a means to cut through the unending and ever-mounting claims on one’s attention.
This speaks to the way the self-authoring mind is an advance over the socialized mind.
But this same description may also be a recipe for disaster if one’s plan or stance is flawed in some way, if it leaves out some crucial element of the equation not appreciated by the filter, or if the world changes in such a way that a once-good frame becomes an antiquated one.
The self-transforming mind both values and is wary about any one stance, analysis, or agenda.
It is mindful that, powerful though a given design might be, this design almost inevitably leaves something out.
It is aware that it lives in time and that the world is in motion, and what might have made sense today may not make as much sense tomorrow.
Therefore, when communicating, people with self-transforming minds are not only advancing their agenda and design, they are also inquiring about the design itself.
Information sending is not just on behalf of driving; it is also to remake the map or reset the direction.
If someone wants to hear how a person sounds when they make sense of reality at the self-transforming stage, then I’d direct them to listen to your early podcast with Ed Catmull, the Pixar founder.
The loose but strong grip Catmull has on his own beliefs, his fluid and flexible relationship to time, the slightly ephemeral quality and comfort with paradox.
In your interview with him he’s actually a bit of a difficult interviewee and feels a little hard to pin down at times — for instance he refuses to answer your question about what he would tell his 20 year old self because he says he now has a way of understanding that his 20 year old self simply couldn’t understand.
This is all very consistent with a self-transforming mindset, which happens late in life for most people if it happens at all.
It would surprise me to hear Catmull say or think any version of “I’m just trying to stay relevant” as he gets older and from one perspective loses ground versus younger people in his industry or fails to get his phone calls returned, because part of his way of making sense is likely that he gets to define who or what is relevant, not his peers in Silicon Valley or the movie industry.
One last self transforming example I would give is the voice of the narrator of the poem Parable by Louise Gluck. She’s really amazing.
The third mental model I find myself recommending lately is found not in a book, but on a slightly obscure website:
This work is based on a European management consultant who studied hundreds of start- ups and realized that even when there are multiple “co-founders,” there is always a single “source”: the person who took the first risk on a new initiative, even if that was only the risk of picking up the phone and calling the other co-founder.
That source maintains a unique relationship with the gestalt of the original idea and has an intuitive knowledge of what the right next step for the initiative is, whereas others who join later to help with the execution often lack that intuitive connection to the founder’s original insight.
Many organizational tensions and power struggles often revolve around lack of explicit acknowledgment of who the source of the initiative is.
A prominent angel investor observed to me recently that many founders seem to hire friends as co-founders more to quell their own anxiety during the early, highly ambiguous days of a new company than to fulfill a specific role.
This can work fine as long as everyone is clear on who the source is. The responsibility to fully own the role of source rests in large part with the source themselves.
Handing off the source role of an initiative to another person is possible but extremely difficult, and is most often mishandled. One key to a successful transition is for the original source to actually move on and allow the new leader room to move.
One investment manager told me about a study he did of stock performance following founder CEOs departing their businesses: any subse- quent positive stock performance was correlated with the founder completely leaving the board rather than hanging around to mentor the next CEO.
Gates remaining on the Microsoft board during Ballmer’s tenure may have contributed to the subsequent lackluster stock performance, whereas Ballmer’s recent departure from the board allows Satya Nadella to fully assert his own creative vision.
I encounter this dynamic in my work managing the wealth of Forbes 500 families, where second and third generations sometimes struggle with how to relate to the original patriarch and “source” of their wealth.
Often the responsibility to make the room for a real transition is in the hands of the source.
It’s the profound lesson from the George Washington song in the Hamilton musical, as Washington declines Hamilton’s plea to run for a third term and sings, “We’re going to teach them how to say good-bye.”
What purchase of $100 or less has most positively impacted your life in the last six months (or in recent memory)?
I recently bought the FINIS swim paddles. They somewhat magically lengthen out my freestyle stroke, and combined with Cressi fin it feels like I’m flying through water.
For non-swimmers, I highly recommend the canned sardines from Matiz (M A T I Z), one of my proudest accomplishments as a dad is that my two younger kids eat sardines with me most mornings for breakfast.
Super high protein, high good fats, no need to supplement fish oil. Matiz sardines aren’t fishy and I add avocado with salt and lemon and the kids love them.
I often alternate the sardines with canned wild salmon belly — called Redtresca — from the company Vital Choice.
The bonus is that when the zombie apocalypse comes, you will have canned food ready to go.
How has a failure, or apparent failure, set you up for later success? Do you have a “favorite failure” of yours?
In my role investing in and seeding investment firms, I conduct extensive reference checks on people in order to try to accelerate the process of building trust.
I should say that I have a somewhat oddly specific aspiration to be the best in the world in terms of being able to really do a reference on someone, to gather private information in the form of multiple perspectives about how someone has played a repeat iteration game and more accurately project how they’ll play in the future.
I define success as gathering enough honest perspectives on someone to mimic how I would know someone if I had sat next to them at work for five years. I try to do references in person and it’s a huge time investment.
In late 2007, I was about to back a firm and conducted a final reference check with the investment manager’s former boss, who was quite negative and skeptical of his former analyst.
When I asked him what percentile the analyst was in terms of all analysts who had ever worked for him, he said, top 60%, which is response I’ve never gotten again in a reference, it surprised me given the analyst had proactively given me this guy’s name as a reference.
It was enough to make me pause on proceeding with the investment, which then proceeded to work out quite well as the financial crisis unfolded.
I had a lot of regret about the size of the profits I missed.
Later it emerged that the reference source may have had an agenda to sabotage his former protégé’s new firm.
Several years later, I was evaluating another investment manager to partner with, and toward the end of our diligence process I got a reference that was mixed.
By this point I was better able to hold multiple perspectives simultaneously without experiencing cognitive dissonance, the state of “negative capability” that Keats referred to as useful to writers.
This time, the mixed data points only made me do more work, and I gained even more conviction in the character and competence of the investment manager.
This investment has been very profitable, and absent my earlier failure, I suspect I would have not had the ability to see the reality of the situation.
Today when I speak with anyone about anything, I try to hold their perspective with a “light grip” — the knowledge that they, and I, have very incomplete maps of reality.
What are bad recommendations you hear in your profession or area of expertise?
I think people massively overuse the term “hedge fund”, they fetishize it a little too much.
Ray Dalio found that when he used the word depression in 2008, people had too much baggage with the word so he switched to D-Process.
Yuval Harari made a similar reframing move by referring to us as Sapiens.
In a similar way, I think people now have way too much baggage with the word hedge fund, the press and the managers themselves have made it jump the shark.
I think we should start using “H Structure” or something like that instead to capture the concept of incentive compensation.
I don’t think it’s useful to see a “hedge fund” or a “product” or even the “hedge fund industry”.
These are just temporary collections of flawed, brilliant people, who in any given year decide to make a sequel to the movie they made the prior year.
The only product is the set of future decisions the portfolio manager makes.
If they get divorced or depressed, if their second in command leaves, the “product” completely changes.
Thinking of it as a product ignores the reality that the only source of stability is whether the mindset of the team leader is resilient or even anti-fragile (Nassim Taleb’s notion of actually getting stronger with volatility).
When you feel overwhelmed or unfocused, what do you do? What questions do you ask yourself?
I ask myself “what would be the worst thing” about that outcome not going the way I want? I had started using it out loud with my kids, and recently my eight-year-old daughter started asking it back to me.
I really like to be punctual. We were late to drop her at school and I was impatiently hurrying her along, so she asked me, “Dad, what exactly would be the worst thing about being late?”
It completely shifted my mindset in the moment. I like the question because it often surfaces a hidden assumption, in this case some subconscious script of “”I am playing the role of father and our family meets our commitments” or something like that.
Another good one is Byron Katie’s question “could the opposite of your story be true?”
In the last five years, what new belief, behavior, or habit has most improved your life?
I’ve begun swimming most mornings, and I find it often shifts my mindset for the rest of the day.
Swimmers talk about the concept of “water feel,” which is getting a grip in the water and pulling your body past that point instead of ripping your hand through the water, which moves you forward but is much less efficient, much less graceful.
As David Foster Wallace points out in his speech, “This Is Water,” much of life is water to us — we are swimming in it and can’t see it because we’re either in a hurry or not awake to our context.
When I stop to really feel the water before I pull, it shifts my way of being from thrashing toward the other end of the pool to a more effortless flow of working with the reality of where I am.
What advice would you give to a smart, driven college student about to enter the “real world”?
So lately I’ve been thinking about careers through Dan Siegel’s model of mental health where he says picture a river flowing between two banks, where one side is chaos and the other side is rigidity.
Dan points out that all mental illnesses reside on one bank or the other: schizophrenia is chaos, OCD is rigidity, and healthy integration is swimming in the middle of the river.
Most college students have started life closer to the rigidity bank and over the course of their careers will experiment with swimming toward the middle.
I have come to think of the lane next to rigidity as an appropriately conventional one for your 20s that requires the skill of “refining reality,” a place to swim where it’s important to learn the jargon of an industry and apprentice under someone, to develop judgment and discover your zone of genius.
I think swimming in the middle lane happens most often in people’s 30s or 40s, a stage where you begin crafting your own language for what you do as an increasingly “strong poet” — you make your craft your own and view your life as more self-expression than simply playing out other people’s roles for you.
And then some small percentage of people will paddle over to the lane next to chaos, the place where you find novelists Robert Pirsig and David Foster Wallace, investors like Eddie Lampert, or entrepreneurs like Steve Jobs and Elon Musk.
I experience them as consistently “asserting reality” through their powerful storytelling, while always bearing the risk that their egos grow too big and their creative narcissism becomes too well defended and they lose situational awareness, they basically lose their feedback loop with reality and flop onto the bank of chaos.
Through this lens, Pirsig’s wrestling with his sanity toward the end of his life, Steve Jobs’ magical thinking about his illness, and Eddie Lampert’s Ayn Randian framing of his investment in Sears may all have been examples of strong poets losing their feel for where they can mythologize to the point of bending our collective reality and then they suddenly briefly appear crazy.
I think Musk drives hedge fund managers up the wall as half of them are short his shares because he exudes so much promotional hucksterism as he asserts reality, and half of them are long because he is actually thinking on a 100-year time scale. It’s very confusing.
At East Rock we always say that if you want to have variant perception it helps to be variant.
I remember interviewing Mike Burry, Steve Eisman, and all the other somewhat fringe, somewhat variant investors who were shorting subprime mortgages in 2006 and who Michael Lewis captured so accurately in the Big Short.
The housing bubble is obvious in retrospect but at the time almost everyone thought they were smoking dope.
The current crypto scene reminds me a lot of the subprime short scene…the opportunity has attracted the more variant players who have nothing to lose from disrupting the status quo, the libertarians and the unemployed macro hedge fund managers and the kids.
There’s a great quote by one of the characters in Tom Stoppard’s play Arcadia:
The future is disorder. A door like this has cracked open five or six times since we got up on our hind legs. It’s the best possible time to be alive, when almost everything you thought you knew is wrong.
I think that mentality of saying “bring it on” to chaos, that now is the best possible time to be alive, to “learn to love the rain” as Waitzkin says, is really hard for people who have succeeded in the status quo context.
Bitcoin could just be a bubble due to QE post the financial crisis, or it could be a change in how we organize human activity at the level of the internet itself or both — I’m trying to hold both perspectives without needing to decide yet, trying to stay in openture instead of striving for closure.
I’ll finish up the career question with one last quote from the very self-transforming Charlie Munger who at 93 has no filters left and more wisdom per sentence than almost anyone I read.
He says: “I’ve noticed in a long lifetime that the people who really love you are the people where you scramble together with difficulty and you’ve jointly gotten through.
And in the end, those people will love you more than somebody who just shared in an even prosperity through the whole thing.
So this adversity that seems so awful when you’re scrambling through, actually is the sinecure of your success, your affection, every other damn thing.
The idea that life is a series of adversities and each one is an opportunity to behave well instead of badly is a very, very, good idea.
And it works so well in old age because you get so many adversities you can’t fix.
So you better have some technique for welcoming those adversities.
Tim thanks for including me, it was an honor to be part of your project.
See full podcast interview here.