Author: MIKE

Note, there is a podcast version of this post. You can find it below, or in your podcast player of choice. Search, “Mike’s Notes.”

In his book The Hard Thing About Hard Things, Ben Horowitz notes that for hard problems there’s no prescription.

“The problem with these books (about business) is that they attempt to provide a recipe for challenges that have no recipes. There’s no recipe for really complicated, dynamic situations.”

To solve hard things you need to act and learn, get dirty, and take your lumps.

A lot of Horowitz’s book is about his own lumps, and advice for people in business. That’s not me.

It’s not that I disagree – or know enough to –  but that I’m on a different path. A lot of other people are too. Horowitz’s experiences are helpful, but, and this is his point, not prescriptive.

Like everyone else on this site, the specifics don’t matter. You can’t be the next Seth Godin or Mark Cuban or Robert Kurson. You have to be you. But that doesn’t mean you can’t learn from other people.

“Fools say that they learn by experience. I prefer to profit by others’ experiences.” – Bismarck

We want the big ideas that work most of the time. Then we can experiment on our own. We can twist and tweak from a place that worked once. That’s the systems for success here.

And Horowitz has an idea for us.

Silver bullet and lead bullet thinking.

Let’s set the scene. Ben and Mike (Homer) are working at Netscape trying to figure out a way to survive. Microsoft has just released a web server that’s better in every way. Horowitz writes:

I immediately went to work trying to pivot our server product line to something that we could sell for money. The late, great Mike Homer and I worked furiously on a set of partnerships and acquisitions that would broaden the product line and surround the Web server with enough functionality that we would be able to survive the attack.

Okay, that should work, right?

Enter Bill Turpin:

“Ben, those silver bullets that you and Mike are looking for are fine and good, but our Web server is five times slower. There is no silver bullet that’s going to fix that. No, we are going to have to use a lot of lead bullets.”

The lesson is this, there is no panacea, no cure all, no silver bullet. There is only a lot of hard work. 

We understand this, but why?

Silver bullets don’t exist because problems range from complicated to complex. Taylor Pearson explained this vis a vis jobs. We’ll look at it at the macro level.

A lot of problems exist on the complicated to complex spectrum (anything less complicated is an equation, 2+2).

The challenge for Horowitz was how to solve a complex business situation. It was closer to predicting the weather than the tides.

Horowitz’s business choices were a complex network, like an ecosystem. Pull on one string, and  another moves too. That stressed him out. Horowitz was sick and couldn’t sleep as he tried to solve these types of problems. Until he realized something, he was thinking about it all wrong.

“All the mental energy you use to elaborate on your misery would be far better used trying to find the one seemingly impossible way out of your current mess.”

Rather than worry about finding a silver bullet, Horowitz needed to spend his time firing lead ones.

It’s like untying a knot done by a 5-year-old. There’s no single tug to unravel it. You just need to start twisting and winding. That’s what Horowitz started to do.

How to solve complex problems.

Complex problems often require new questions. Ask new questions and you’ll start to get new answers.

Horowitz switched from, “what’s the worst that can happen,” to “if the worst happens what will I do?”

Like Newton under the apple tree or Archimedes in the bathtub – Horowitz got an idea.

Note, acting does imply accuracy. As Barry Ritholtz points out when he spoke with  Michael Mauboussin, Jason Zweig, and Ken Fisher – “don’t just do something, sit there” can be good advice.

When to act.

Act when you need to survive. Each big business decision in Horowitz’s book was when his company needed to just survive. That’s when you need to act, to not die.

Conclusion.

1. Complicated and complex problems have many connected nodes.
2. Those nodes tug on each other and create problems that live in an ecosystem.
3. There is no single solution to change a complex problem.
4. Change only happens through a lot of work on the different nodes.
5. To do this you need to forget about worrying and take the right action.

—

Thanks for reading, I’m @mikedariano on Twitter.

Ken Fisher joined Barry Ritholtz (@Ritholtz) to talk about process, redwood trees, and “the only three questions that count.” Fisher is an author of many books, Forbes articles, and CEO of Fisher Investments. Here’s our table of contents:

What Fisher talks about when he talks about writing — the only three questions that count — how to pick winning stocks — simple heuristics — and Fisher’s favorite books.

Ready?

About writing.

How to write well.

Ritholtz compliments Fisher’s work and says, “you’ve obviously inherited your dad’s writing skills.”

“Not true,” replies Fisher, “because if I had inherited them they would have come to me very naturally, but I worked hard to learn how to write.” Even though his dad was a great writer, Fisher needed help.

It’s easy to write words – even I do this. What’s difficult is to write well.

Garry Shandling explained this to Judd Apatow when the two wrote for the The Larry Sanders Show. “The struggle in the writing room,” Shandling said, “is getting people not to write just words.” 

Fisher saw this “more than words” idea with his own father. “He had an ability,” Fisher recalls, “for people to see themselves through things that he had interacted with them on.” It wasn’t the explicit things Fisher’s father spoke about, but the bigger ideas that people applied to their own lives.

That’s the secret sauce to write well. It has to connect with people. This is what Fisher needed to learn.

“I was a lousy writer,” he says, “until I hired someone to teach me how to write.” Only after he learned did he author bestsellers.

Writing as a form of thinking.

“I write to figure out what I think,” Ritholtz says.* Fisher says that he uses writing to clarify his thoughts too. They aren’t alone.

Michael Mauboussin said that he writes (and speaks) about his ideas to understand them.

“I write entirely to find out what I’m thinking, what I’m looking at, what I see and what it means,” said Joan Didion.

“Learning to read well and to write well is really learning to think well,” said Maria Popova.

Writing is a form of thinking much like swimming is a form of exercise.

The only 3 questions that count.

A lot of the interview circles around Ritholtz’s favorite book by Fisher, The Only Three Questions That Count. It’s a rich area and we’ll dive into it.

Question 1: What do you believe that’s false? It’s not an easy question to answer. Tren Griffin points to the Charlie Munger quote that it’s a wasted year if we don’t change our minds about something.

We should probably do this more. Ritholtz says we spend too much time rationalizing our beliefs and not examining them. We do this because it’s easy.

Ramit Sethi calls us “cognitive misers,” because we don’t do much heavy lifting with our brain. If there’s an easy way, we take it.

Fisher suggests these two steps:

First, identify what you believe. “What  do you think?” Fisher asks. Financial markets are an expensive way to find out if you don’t already know.

Second, ask, “is there a history that associates with that thing?” Fisher says to find the correlation coefficient and see if two things line up.

This isn’t as easy as it sounds. It’s hard to find good correlations because the data is cavernous. It makes “views wronger longer,” Fisher says.

One way to not be wrong is to use Twitter well.  Chris Dixon said that he uses Twitter to follow smart people who tell him what to read. That’s a good start. We also need to follow Jason Zweig’s advice, and feed ourselves oppositve views. 

If we combine these two things the worst ideas will be filtered out. 

Question 2: What can I fathom that other people can’t? From the start Fisher had an idea for something other people weren’t doing. He wanted Fisher Investments to be like IBM and Charles Schwab. “In both cases doing things that hadn’t been done yet,” Fisher explains.

This idea is similar to what Peter Thiel writes about in Zero to One. “What important truth do very few people agree with you on?” But it’s more than just that.

Thiel writes that the best companies are unions of fields rather than intersections. (I missed this on my first reading) Unions combine entire ideas to form a larger one – intersections take snippets to form a smaller one.

A successful union might be Slack. Mobile U Communication U Design. An unsuccessful intersection might be the movie Pan. Hugh Jackman ∩ Fairy Tale ∩ Movie.

Here’s where things get interesting, Thiel warns us against fooling ourselves. 

When you fathom something new, it has to be accurate. One way we mess this up is thinking in terms of intersections and not unions. Thinking with blinders. Thinking we know what we’re doing but, we’re being misled.

Question 3: What is my brain doing to mislead me?

“The first principle is that you must not fool yourself — and you are the easiest person to fool.” – Richard Feynman, Surely You’re Joking Mr. Feynman.

Fisher notes that our reptilian brains are not well adapted for our current environment.

In Mean Genes, Terry Burnham explains why.”Our ancestors got their chemical kicks the old-fashioned way: they earned them through good behavior.” Burnham explains how a plethora of today’s bad behaviors (too much weight, too little savings, risk seeking, etc.) were wonderfully helpful a long time ago. It feels good because it was good. That’s no longer the case.

“We will see that many judgement errors in human risk-taking stem from a common source:” Burnham writes, “we live in a very different world from that of our ancestors.”

The trouble is two fold- it’s hard to stop and we don’t realize when it starts. But it’s not impossible to combat.

First we play defense.

James Osborne commented about different checks we can install to slow down these kinds of actions. If you trade too much, said Osborne, give your login password to someone else. Burnham writes about the same thing. If we love eating tasty things, keep healthy tasting things on hand.

Fisher says that this sometimes happens accidentally. He mentions a study where people in funds with higher fees had greater returns. Not because of the intrinsic value or investing acumen. Rather, it cost those customers more to trade, so they traded less. It’s an example where activity does not ≠ gains.

After a good defense, comes a chance to play offense.

Fisher mentions this idea throughout the interview – watch out for your mistakes but also look for mistakes others make. It’s the business equivalent of going on vacation at during off season.

If we expect people to be greedy, take risks, or over-trade, we should incorporate that into our strategy.

How to pick winning stocks.

When Ritholtz asks how Fisher picks stocks, Fisher says, “I don’t look at stocks.”

What?! But before Fisher explains his method, we need to understand the game. It wouldn’t make sense to get basketball tips from LeBron James if we didn’t know what basketball was.

Fisher subscribes to the definition provided by Benjamin Graham:

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” ― Benjamin Graham

Markets factor both voting and weighing into price, and Fisher thinks about both these things.

Weighing, the intrinsic value. Fisher approaches stock picking from the macro end. He looks at the world -> countries -> sectors -> sub-sectors -> factors (value, growth) -> stocks. The company choice is the caboose in his decision train.

Fisher compares it to fishing in the right pond. Whether or not you catch any fish includes a bit of luck. Being in a place helps a lot.

That’s the things that you see in the market, but it’s also important to think about what others see. 

Voting, the perceived value. What do other people believe is true? A derivative of the “3 questions,” Fisher wants to know what other people think. He says current (3-30 months) beliefs are already priced. If you want to be different (unions not intersections), you need to zig when the others zag. This is second level thinking.

We’ve seen second level thinking elsewhere. Howard Marks said,  “If you think the same as everybody else, you’ll behave the same as everybody else, and you can’t expect to outperform them.” Ray Dalio writes about it in Principles.

Richard Thaler writes about the famous “beauty study” in his book Misbehaving. The aim was to make a guess that voted and weighed an idea. 

Simple heuristics.

When you don’t know a lot, simple heuristics work well.

Casey Neistat asks, “is this good for me and my technology company (Beme), and if the answer is no it gets a pass.”

Richard Feynman got so tired of choosing a dessert that he resolved to always order chocolate ice cream.

Barry Ritholtz said that he looks at the prices of classic cars as a signal for bull and bear markets, or if people say “ugh” to his trading ideas.

Ramit Sethi and Taylor Pearson both seed interviews with questions that have specific answers. 

Stephen Dubner called this, “teaching your garden to weed itself,” and wrote an entire book chapter about it.

Some banks figured out how to filter out dangerous marijuana growers.

Van Halen found out that if one thing on their rider was wrong, other things might be too.

Simple works well because we don’t have the time or resources to always make a choice, (remember, we’re cognitive misers) but a signal might nudge us one way or another.

Fisher uses this technique as well (quoting Franklin Templeton); “bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

It’s not always right, but it gets darn close.

Favorite books.

Fisher’s book list reflects his interests in the markets and outdoors. He suggests: Hunting with Bow and Arrow, Hunting American Lions, Where are the Customer’s Yachts, How to Lie with Statistics, Think and Grow Rich, and Humble Approach.

–

Thanks for reading, I’m @mikedariano on Twitter.

If you want more, become a member. 

*I couldn’t figure out who exactly Ritholtz was quoting when he said, “I write to figure out what I think.” If you know, please let me know.

Kevin O’Leary (@KevinOLearyTV) joined James Altucher (@JAltucher) to talk about money, relationships, and bass/base rates . O’Leary is one of the sharks on Shark Tank and author of The Cold Hard Truth and more recently, The Cold Hard Truth on Family, Kids, and Money. While the audio is not great, the ideas are.

Here are 6 business and life lessons from Mr. Wonderful.

Questions asked = problems people have.

O’Leary tells Altucher that this book, The Cold Hard Truth on Family, Kids, and Money came about because of the questions people asked him. “I’m going to take these hundred questions,” O’Leary says, “and put them in a book.”

A frequent piece of business advice is to find a problem which people will pay you to solve.  O’Leary was lucky, the problems came to him. Both Austin Kleon and Steven Kotler mentioned the same phenomenom. When they were on their respective book tours people in different places asked the same questions. Their next books answered those questions.

Part of the reason is money.

“Money is often a piece of that pie, but it’s not the entire pie,” said Altucher paraphrasing a section of O’Leary’s book. This single idea gets at two big pieces of life advice; the value of money and “part of the reason” thinking.

Money, Tim Ferriss reminded us, is something we exchange for something else. It’s not money we want, it’s the something else. Which means we don’t always need money. Sometime we can bypass it and go right to the thing. Look at podcasts. Both Ferriss and Altucher admit that part of the reason they podcast is as an excuse to talk to people they admire.

Stephen Dubner wanted to live in NYC more than he wanted more money. Mark Zuckerberg liked Facebook more than a billion dollars, an offer he got early in his career. Money is something, but not everything.

Part of the reason thinking was introduce by Sanjay Bakshi, and it’s a powerful idea. Bakshi noted that many things don’t have single explanations. Part of the reason O’Leary is happy is because he has a lot of money, but it’s not the only reason. O’Leary (I assume) is also happy because he’s on television, has a long-term marriage, has kids, has a boat, and gets attention. Those are all components of his life.

When we use part of the reason thinking we can get all the right answers. It also simplifies our work. In his book, Think like a Freak, Stephen Dubner explained why big problems are difficult to solve. Little problems are easier.

Anchors away.

Altucher includes a few questions from his daughters. One of which was how O’Leary anchors the negotiations by making early – hail mary – style of offers. While his response in the interview was brief, beneath it is a deep understanding of psychology.

Anchoring establishes a starting point that influences a person’s thoughts. A timely example – the holiday season 2015 – is Black Friday and Cyber Monday. Both of these days are full of deals, with huge markdowns. But markdowns from what? Why does 50% off seem like a great deal?

These steep discounts seem like a great deal because we don’t know the the intrinsic value. We don’t know what a thing is worth, so we answer a different question. How much did it originally cost?

As Ramit Sethi notes, “we are cognitive misers.” That means we like taking the mental shortcut. Rather than figure out how much we value a TV, or what a TV normally costs, we look at the original price and that’s our anchor.

Now half off seems like a great deal, but we don’t really know. What we’ve done is replaced one question with another. In Thinking Fast and Slow Daniel Kahneman explains this mental bait and switch.*

“In one of our studies, we asked participants to answer a simple question about work in a typical English text:

“Consider the letter K.

“Is K more likely to appear as the first letter in a word OR as the third letter?

“As any Scrabble player knows, it is much easier to come up with words that begin with a particular letter than to find words that have the same letter in the third position.”

K is not more common as the first letter. We answered the question, “can I think of words that begin with K more easily than words with K as the third letter?” When that answer was “yes” we switched the question at hand.

Anchoring has a similar effect. Entrepreneurs enter the Shark Tank and get an offer of X from O’Leary. If that’s not a great deal then each subsequent deal seems better than it might intrinsically be.

One meta point is to understand that we have biases in our understanding. Tren Griffin pointed out that at least knowing our biases can be helpful. One of which is how we view work.

Anchoring and jobs.

“Our economy,” O’Leary says, “provides all kinds of opportunities to make a basic living.” “There’s no shame in working hard at things and trying different ideas.”

His point was that if you want to work hard, you can find a job that pays you well.  Wayne Dyer also spoke to this in his conversation with Altucher. “I’ve never been unemployed a day in my life,” Dyer recalled. He was able and willing to work.

For them it was a matter of just working. Entrepreneurship looks great on TV whether it’s Shark Tank or The Profit with Marcus Lemonis. A lot of jobs aren’t like this.

O’Leary’s book has some ideas for this. Mr. Money Mustache does too. Taylor Pearson wrote The End of Jobs and the future he sees.

Anchor the idea of work that David Levien explained. Your early work will be “confused garbage,” and “it will be brutal toiling away in obscurity.” That’s what it takes.

3 things O’Leary looks for.

If you want to prepare for your Shark Tank meeting with O’Leary here are three things he’s looking for.

Articulate the pitch in 90 seconds or less. This shows you know your idea and inside and out. If you want to practice, make it funny.

From Judd Apatow to Phil Rosenthal to Judah Friedlander, comedians say that if you can make fun of something, you deeply understand it. You could also live it like Dick Yuengling or read about it like crazy like Mark Cuban.

What they all share is a deep knowledge which leads to clear understanding and concise articulation.

The right team. O’Leary also looks to see if the right team is in place. Brian Koppelman compliments his writing partner David Levien. Nicholas Megalis and Austin Kleon also suggest getting with other good people.

Know your numbers. Nothing crushes a Shark Tank pitch like not knowing your numbers. You need to know them cold. Jason Calacanis told James Altucher the same thing about his investment philosophy. And not only yours. You need to know the industry, everything.**

“Because you know I’m all about that bass (rate), ‘Bout that bass (rate), no treble.”

(Where else do you get Maghan Trainor and Michael Mauboussin in the same blog post?)

Altucher asks O’Leary about what multiple he looks to invest at and the magic number is 7 times earnings. That’s the going rate in the private markets O’Leary says. O’Leary expects to succeed in 4/10 investments from the show. The numbers here are key.

If initial numbers anchor our thoughts, base rates can bring us back.

O’Leary knows the private market base rate is 7X. He starts there. If he knows 4/10 Shark Tank deals succeed, he knows how to evaluate his winners and losers.

Michael Mauboussin ‘s post and writings are a good place to start if you want more about base rates.

I thought a lot about base rates during our 12 hour drive home after Thanksgiving. Our GPS said the trip would take 11 hours 30 minutes. It took more like 13 hours. At first I wondered why it took so long. Then I started thinking about accurate base rates.

I realized there’s almost no chance that two adults and two kids can make the drive in less than twelve hours. Someone always needs to pee or eat or we need to stop for gas or switch drivers. There’s too much that can go wrong.

Making it in less time is like shorting a stock. There’s a slim chance for little benefit.

What’s more likely is the drive takes longer than projected. In addition to any breaks there’s the chance of an accident, construction, or bad weather. Many things can go wrong.

The real base rate for a family of four to drive to Connecticut is 13 hours. When I realized that I felt happier, even though I was still in the car. This was the power of accurate base rates. When I switched my estimate to a more accurate one, I had a positive emotional reaction. The same is true for business.

In business we should expect turbulence. O’Leary sees this looking back. “Any business has huge volatility,” he says. “We were on the brink of bankruptcy multiple times. But that’s just the nature of what entrepreneurial business is.”

Chris Dixon said the same thing, “I’ve almost never been involved with a company that didn’t have moments of almost failure.”

If we know this going in, we’ll be more prepared emotionally. It’s Marcus Aurelius who explains this best; “How ridiculous and how strange to be surprised at anything which happens in life.”

Serendipity and luck.

“Life is very serendipitous,” O’Leary says. If we knew what worked, we would just do that. We don’t know though.

Add O’Leary’s name to the list of people who admit that luck played a roll; Jason Zweig, Kevin Kelly, Scott Adams, and Chris Dixon among others.

–

Thanks for reading, I’m @mikedariano on Twitter.

 

* “bait and switch” was termed by Philip Tetlock in his book, Superforecasting. I like it a lot more than Kahneman’s terminology.

** the second mistake after not knowing your numbers is to make what Altucher calls, “the refrigerators in China” mistake. It’s saying that with a market as big as X and if you capture %, then the result is Y. It’s never like this. Altucher comments that with a market that big you’ll be knocked off so fast. Just like hoverboards.

 

 

Why backup plans are a bad idea and what we should do instead.

“Burn the boats, we are here.”

When James Corden spoke with Marc Maron, he said the only thing he wanted to do was become an actor.  Maron said this was a good idea because, “if you have a plan B, you’re just a hobbyist.”

Other people have said this too. In Sick in the Head, Jordan Peele reflects:

“When I moved to Chicago, I was like, All right, I want to be a sketch comedian and my power is going to be in the fact that I’m going to dedicate myself completely. There’s not going to be a fallback, you know? I’m going to watch people give up and I’ll still be there, learning from it all, and if I stay with it, I’ll be successful.”

Jim Norton said this attitude forced him to focus on comedy. Casey Neistat said much the same. It was make it or bust – and this perspective was part of the reason for their success.*

Plan B is a bad idea because it distracts us from plan A.

Research now shows this too. A group of researchers gave students a series of difficult puzzles to solve. The reward for solving them was to leave early from class. Some students got the puzzle. Others got the puzzle but were also told to brainstorm other ways to get the reward if they didn’t finish the puzzles.  

NPR’s Hidden Brain podcast explains that the students’ with a plan B (other ways to save time) worked less on the puzzle than those that had no plan B. From the show:

“And what we found is that the group who had thought about a backup plan, about another way that they could save five minutes today, achieve significantly less success on the task we assign them. They worked less hard, they solved fewer puzzles, and this was significantly fewer than people in either of our control groups.”

That sounds a lot like what Peele, Corden, Maron, Neistat and others have guarded against.

Rather than plan B, there are two other things you can do.

Don’t develop plan B, enhance plan A.

Rather than spend time on plan B, spend time on thinking through plan A. Chris Dixon compared starting a company to completing a maze. The best founders, Dixon observed, were those that thought through what obstacles might be ahead.

Stanley McChrystal called this “red teaming.” Jason Zweig called it the planning fallacy.

No matter the name, successful people think through what might go wrong and plan accordingly.

And get ready for turbulence.

No matter how much you work on plan A things will go wrong. Chris Dixon said that nearly every company he’s been involved with has almost failed. Random stuff (like Google releases a similar product) comes up, Dixon says.

There’s too much randomness to plan for everything. Neil Strauss released a book when Hurrican Katrina hit shore. Trip Adler showed up at Y Combinator with a ride sharing app.Naval Ravikant says that part of his success is thanks to randomness.

Like the weather one month from now, we don’t know what’s in store. The best we can do is to understand that the rain won’t melt us.

The takeaways.

Having a plan B means you’ve doubted too much and planned too little. Think through plan A as thoroughly as you can and develop a mindset of creativity and resilience to solve new problems that will arise.

–

Thanks for reading, I’m @mikedariano on Twitter.

*See the notes for Tadas Viskanta for an explanation of part of the reason thinking.

If you missed part 1 – the big ideas from Dixon – you can find that here. This is part 2 and it’s all about venture capital.

These notes are from Shane Parrish’s conversation with Chris Dixon on the wonderful The Knowledge Project podcast.

Ready?

Why should companies stay private?

Parrish asks why companies – like Uber – stay private. There are two reasons Dixon says. First, there’s plenty of money in the private markets. Huge public companies like Fidelity, have access to the private markets and companies like Uber don’t need to go public to raise money. Second, companies can keep a long term vision. The technology sector, Dixon says, perceives markets as too short term oriented.

Seed, series A, series B explained.

Dixon defines the different types of funding.

Seed funding (aka Angel) is investing in 1-2 entrepreneurs with an idea. This round might be for 1-2M$.

Series A is investing in a small team with an initial product. This round might raise 10M$.

Series B is investing in a company with some traction that needs money to grow. This round might be 20M$.

It’s helpful to know the nomenclature, but the big idea here is when Dixon talks about prorata rights. It’s briefly covered in the interview and worth expanding on here. Prorata rights are the option for a company to maintain their same funding level. If you invest 1M$ for 40% in the seed round, having prorata rights means you get a chance to invest enough to keep your 40% position during the Series A round. Here’s the key part of this, you get to but you don’t have to. Prorata rights are optionality.

Don’t take my word for it. Mark Suster wrote, “this (the prorata right) is important for nearly every institutional investor because once you have 25-50 investments being able to “follow” the investments that are working well is critical to making money.” Suster is explaining that VC’s expect some companies to do better than others – and it’s those positions that should be held on to. 

Fred Wilson, another VC, wrote much the same thing. “I think this is the single most important term anyone can negotiate for in a venture capital investment….The meta point I have come to understand about early stage investing is that a small portion of your investments produce all of the returns. In those investments, you want to own as much as you can.”

An investor – like Dixon – will only invoke their rights for companies that are doing well. This post includes other examples of optionality. To think well, we need to think about having options. 

On a post at his site Dixon writes about the Babe Ruth Effect. “Great funds lose money more often than good funds do. The best VCs funds truly do exemplify the Babe Ruth effect: they swing hard, and either hit big or miss big.”

Dixon says that about half of all a16z investments will fail, some will have moderate success, and some will be huge hits. It reminded me of what Seth Godin wrote, “it’s not always easy to measure what matters.”

VC wants a high slugging percentage. Baseball wants a high on base percentage. Different domains want to measure different things. It’s valuable to figure out what matters most.

The people or the product, the lyrics or the music.

In high school my group of friends used to argue whether the lyrics or music were more important to a song. One friend was a huge Dylan fan so he clearly favored lyrics. Another was a guitar player, he preferred the music.

Startups have a similar paradigm, the person or the product. Dixon makes it’s clear – invest in the person.

“It’s 90% people and 10% product at this state (Series A),” Dixon says. “At this point we know that the idea will change.” 

Dixon explains that when Dropbox was founded in 2007, mobile wasn’t a thing. The company was founded to share documents between computers. Things changed. Dixon expects to pivot and looks for opportunities with good people. But sometimes things go bad. 

Identifying failures.

“Some reasonable percentage of time the entrepreneur does everything right and things happen,” Dixon says. Google releases a competing product. The FDA rejects an application. Stuff happens. The hard part is figuring out what was due to luck and what was skill.

Michael Mauboussin provides a good framework to dismantle skill and luck. The more purposefully you can lose, Mauboussin said, the more skill is involved.

Imagine a tennis match. I could easily return each serve out of bounds and lose. Tennis is heavily skill based.

Now imagine investments. I could pick stocks that I thought were bad and maybe win or maybe lose. There’s more luck in stock picking than tennis. Some stocks labelled “sell/bad” outperform those labeled “buy/good.”*

Finally, imagine a slot machine. I could pull on the lever all day, chanting mantras and burning incense and nothing would change the odds. That’s all luck.

To successfully identify an outcome as skill or luck one needs to figure out where on the spectrum they are.

Dixon cleans up the situation with what he calls “Founder-Market fit.” That’s too much jargon for this site. We’ll call it “The Nic Cage effect.”

The Nic Cage effect.

I always wondered how Nicolas Cage didn’t make good movies. He won an Academy Award early in his career! Doesn’t that mean he’s a good actor? No, it means he was a good actor in that roll.

There are great actors for sure – Meryl Streep we’re looking at you – but a lot of it is about matching the person and the roll. I disliked Amy Poehler on Saturday Night Live, but Leslie Knope on Parks and Rec is my favorite character of all time. 

That’s what Dixon look for. He says there are three ways founders fit well.

The technical founder. Dixon says that technical expertise (coding) is one way a founder can be good. The business aspects, Dixon says, someone can learn on the job, but not the other way around. Both Jimmy Wales and Mark Cuban are examples of this.

The domain expertise. Other founders can have a deep understanding of their industry. This is the case of Alex Blumberg of Gimlet Media and Dick Yuengling of Yuengling Beer. 

The cultural movement founder. The final type of successful founder is one who’s part of a movement. Dixon says that the Airbnb founders fit this mode. Matt Barrie fit the freelancing movement. 

If a founder fits, Dixon has another filter, the maze.

The question is, what do you do in the maze?

Dixon says successful entrepreneurship figure out the maze. In startups there will be moments of confusion, disorientation, and wanting to resign. Really obsessed founders, says Dixon, will have thought about these dead ends and considered options for what to do next. And there are always dead ends.

“I’ve almost never been involved with a company that didn’t have moments of almost failure,” says Dixon.

That Dixon uses the analogy of the maze is interesting. A lot of successful people reframe challenges into puzzles, situations into games. In Surely You’re Joking Mr. Feynman, Richard Feynman said he couldn’t “do” good physics. But when he decided to “play with physics,” “it was like uncorking a bottle.”

Ray Dalio writes about this in Principles:

“I learned that there is an incredible beauty to mistakes, because embedded in each mistake is a puzzle, and a gem that I could get if I solved it, i.e., a principle that I could use to reduce my mistakes in the future.”

Many people use games as a filter to make solving problems fun. If you want more on that try Jane McGonigal’s book; Reality is Broken.

–

Thanks for reading, I’m @mikedariano on Twitter.

*One year ago (September 2014), ⅓ of financial analysts had “Sell” ratings for Clorox (CLX) and Campbell Soup (CPB). If you wanted to sabotage a portfolio that seems like a good place to start. But you’d only sabotage your success, because those stock soared. Those stucks are up 26% and 18%.

Chris Dixon (@CDixon) joined Shane Parrish (@farnamstreet) on The Knowledge Project podcast to talk about venture capital, private companies, and how Silicon valley works. I found Dixon well spoken, warm, and a really smart guy. These notes will be in two parts. Part one – this part – is 5 things I learned from Dixon. Part two will be all about the weeds of venture capital.

Our table of contents looks like this; modes of work – mental models meets physical psyches – maybe a16z should be z16a – automation (explained by dinosaurs) – the 3rd good use of Twitter – a reading list.

Ready?

Modes of work.

Dixon, like others, defines his work in terms of modes. One mode is meeting with entrepreneurs that a16z might invest with, another is to work with entrepreneurs they’ve already invested in. “It’s a lot of meetings,” Dixon says.

He mentions the Paul Graham post, Maker’s Schedule, Manager’s Schedule as an example of how his career has changed. Dixon began as a coder and followed a maker schedule. Now he’s a manager. Graham writes that the manager schedule is what we tend to think of, one with hour sized blocks to be filled. Makers on the other hand, think in terms of half a day or full days for their work. This creates a problem Graham writes:

“I find one meeting can sometimes affect a whole day. A meeting commonly blows at least half a day, by breaking up a morning or afternoon. But in addition there’s sometimes a cascading effect. If I know the afternoon is going to be broken up, I’m slightly less likely to start something ambitious in the morning. I know this may sound oversensitive, but if you’re a maker, think of your own case. Don’t your spirits rise at the thought of having an entire day free to work, with no appointments at all?”

Creatives work around this using modes of work (h/t to @MikeVardy for sharing this term).

Adam McKay talked about this when he spoke on the Slate’s Working podcast. John August said the same thing about writing. Neil Gaiman trots off to the woods to write. Stephen King also outlines his modes of work. The book Daily Rituals has many examples of makers who carve out time for modes.

Each makers has found that their best work happens in large chunks, and they structure time for those as best they can. Graham notes – and Dixon lives – the challenges of a manager.

Mental models meets physical psyches.

Silicon Valley is great, says Dixon, but it’s not the only place you can make stuff. 

“What’s great about places like New York and Los Angeles is you’re surrounded with people in the arts and media and all kinds of different industries, and that creates a different creative dynamic,” says Dixon.

The value of mental models has been trumpeted by many. Tren Griffin and Michael Mauboussin speak about mental models quite a bit. So does Sanjay Bakshi and  Phil Rosenthal suggests there is value in different creative outlets. 

We can also hack our way to better models. Your models plus my models equal something great than the sum of its parts. Each set is a filter that further refines ideas. 

Dixon suggests another hack, a new place. A geographic change can help you think in new ways. Physically moving could be helpful as a change of addition or subtraction. Dixon speaks to the advantages of other points of view, Michael Mauboussin says that it might help to “quiet the cacophony of Wall Street.” Either way can work for a way to think different. About being different, how is a16z different?

Why a16z might be called z16a.

When asked why a16z has succeed Dixon says, “we flip the model and think of ourselves like a service firm.” They’re different.

Being different is paramount to success. Brett Steenbarger said, “you don’t find generic super-successful traders.” Naveen Jain advised people to ask themselves, “when everyone is thinking one way, how can you go about thinking in a slightly different way?” Casey Neistat said, “the biggest waste of energy and resources on YouTube is creators trying to copy and be exactly like someone else.” Gary Vaynerchuk says he likes to zig when everybody else will zag. 

Dixon says that a16z is different. Rather than simply invest money, they help companies along the way (hence so many meetings). They help hire people, recruit, and figure out market fits. All this has given them a competitive advantage.

When Parrish asks if they’ve seen other companies copy them, Dixon says older firms haven’t, but newer ones might. It wasn’t a significant part of the interview, but it caught my attention. Why newer but not older? 

(Begin speculation).

Dixon doesn’t get into the compensation structure (and I couldn’t find it online), but it sounds like the a16z team earns their money differently. I’m guessing they get more upside in the long run and fewer guarantees in the short. Here’s why that matters.

Existing firms that don’t have this model won’t copy it because it’ll mean a short-term dip in earnings. And people hate to lose things they already have. The psychological term for this is loss aversion and here’s how it works.

When people have something – or even imagine having it – they feel more strongly toward it. Richard Thaler did wonderful research on this. Thaler walked into his classroom and handed out coffee mugs to half the students. Then he asked the mug owners to write down what they would sell the mug for, and the non-owners to write down what they would buy the mug for. 

He collected the slips of paper and noted something interesting. They sellers wanted 2X what the buyers offered AND not a single buyer was more than a single seller. That is, no deals could have been made.

We don’t like to lose what we consider ours. Firms other than a16z face this challenge. Those employees don’t want to lose money they already have or expect to have. 

The second way that a16z successfully differentiated is that they are committed to the entrepreneurs. “Our interests are in line with entrepreneurs,” Dixon says.

It seems like a16z has “skin in the game,” which is a powerful force. Casey Neistat says that the best part of working for himself is to have ownership of the outcomes. Seth Godin commented on this as well saying, “change happens when people take the blame but giveaway the credit.” My guess is that a16z has applied this to advising entrepreneurs where others have not. It’s their competitive advantage.

(End speculation).

Automation as explained by dinosaurs.

Toward the middle of the interview Parrish asks Dixon what he thinks are some new ideas that will gain traction. (Steven Kotler and others have given their own predictions for the future.) Dixon says; virtual reality*, digital currencies, and automation are areas he thinks will be more popular.

“A lot of automation doesn’t look like automation,” Dixon says,  “it just looks like software.” Let’s pause that thought and watch this awesome video.

That video points out that we only notice bad computer graphics. Things that are awesome, that blend in naturally, we miss. It’s like when Judd Apatow and James Corden spoke about good and bad movies. If someone tries to do something unnatural it shows. That video demonstrates that the best CG, is CG we don’t even notice. It supplements the movie.

Self driving cars is a big automation goal, and we see its limits because it’s still unnatural. It’s like CG that’s trying to do too much. What we don’t remark on is checking accounts can make automatic payments. That’s good automation.

 

The 3rd way to use Twitter well.

Twitter can be a great tool if you use it well. Here’s what others have said:

The first way to use Twitter well is to be inspired and collaborate. Austin Kleon, John August, and Nicholas Megalis talked about the value of connnecting with other people.

The second way to use Twitter well is to check your conclusions. Jason Zweig, Tadas Viskanta, and Tren Griffin all suggested we generate conclusions from multiple perspectives, of which Twitter can be one.

The third way to use Twitter – courtesy of Dixon – is to have it work for you. “Essentially I have two thousand of the smartest people in the world finding information for me and telling me what to read,” Dixon says.

Dixon’s reading list.

Parrish ends the interview with common questions and Dixon gives a nice smattering of books to read. Dixon, like Michael Mauboussin and Malcolm Gladwell prefers physical books to digital ones. Some of his suggestions:

Godel, Escher, Bach is the one book Dixon has read that had the greatest influence in his life. “I was interested in computers since I was a kid,” Dixon says, “and this book tied together computers and philosophy and music and it really broadened my horizons.”

Anything by Daniel Dennett, Oliver Sacks, and Stephen Jay Gould is good too. “I used to read all of those popular science books,” Dixon says.

He also picked up The Martian by Andy Weir and recommends The Three-Body Problem, Elon Musk (“I thought was good,”), and Sapiens (“a really good book,”).

–

Thanks for reading, I’m @mikedariano on Twitter. Part 2 of the interview will be online Friday.

*One additional point that didn’t fit. When Dixon was talking about VR, he mentioned virtual tourism. My personal experiences differ from Dixon’s conclusion. Each trip leads me to a new thought, moment, or experience in a way that being online does not. The best example of this is boat captains.

I’ve been deep sea fishing (years ago) and snorkeling (2013), and both experiences included boat captains that made the trip so much more. The fisherman was gruff and funny and to my teenage self he seemed like he knew things about life I would never understand. The snorkeling crew had great British accents and told stories of the Cayman Islands we couldn’t get anywhere else. Neither of these was central to the experience, but each was a strand in the web of the experience. It seems like VR misses that. 

Traveling, as Tyler Cowen noted, is more than what you see. It’s how you feel, what you smell, and how you think. I don’t know how close VR will ever get to that.

James Corden (@JKCorden) joined Marc Maron (@MarcMaron) on the WTF podcast. I had never listened a WTF episode until this one. Why start now? Besides the numerous suggestions from people on Twitter, this episode also answered a question I had, how did Corden become the host of the Late Late Show? I saw his announcement for the CBS show right after I had seen Corden as a singing baker in Into The Woods. He was great in the movie, but how does he go from that, to a premier American talk show? Maron gets the answer.

Our table of contents looks like this: winning with religion — burn the boats — talent — non-edible organic movie posters – advice from Meryl Streep – when to do your best work — every job is a job.

Ready?

Winning with religion.

The start of their interview is all about Corden’s childhood in England. It’s interesting and includes his experience growing up in the church of the Salvation Army. As an adult, Corden’s religious beliefs have waned, but maybe for the wrong reason.

Corden tells Maron that he once asked his father about faith; “What if you die and wherever you’re going isn’t what you wanted?” Corden says, “what if it just wasn’t worth it?” 

“Well,” his father says (in the way all fathers talk to their sons) “I’ve had a great life. I’ve been able to love and do the things I wanted. But what if it all ends and I’m right, what then for you?”

What if that was the case? This gets into two big ideas.

Positive asymmetry is good.

Corden’s father has found a position with fantastic upside. A lot of people look for situations where winning is worth more than losing. Donald Trump writes about this in the terms of which buildings to buy. Nassim Taleb writes about this in terms of what dinner party to go to. Scott Adams speaks to this in terms of friends. Positive asymmetry is good.

When Corden’s dad dies, there are two options. Heaven or not heaven. The former is positive, the latter is not. That’s positive asymmetry – but it’s not the only big idea in what he said. He’s also winning now. 

Winning now.

Corden’s dad is happy now because he got to live the life he wanted. He’s not sacrificing the life now for a potential reward later. He’s living well now and living well later.

Chris Hadfield wrote about this in his book, An Astronaut’s Guide to Life on Earth. Hadfield pined to be an astronaut, but had a long road to get there. For starters, he was a Canadian and Canada didn’t have a space program. Then there was all the education, politics, training, travel, and other requirements. Hadfield considered these obstacles between him and space, and writes this:

“It’s probably not going to happen, but I should do things that keep me moving in the right direction just in case – and I should be sure those things interest me, so that whatever happens I’m happy.”

Much like Corden’s dad (I don’t know if this outcome will happen, but I should work toward it and not be miserable doing it) Hadfield created a win-win situation. Later in the book the theme continues.

“Taking the attitude that I might never get to space – and then, after I did get there, that I might never go back – helped me hold onto that feeling for more than two decades.”

It’s hard to get asymmetrical upsides and winning now at the same time – but if we can it’s beautiful.

At the end of the interview, Corden says about his contract with CBS, “they can sack me, but I can’t leave.” That’s winning now without the upside. How Corden got there is worth looking at.

Burn the boats, we are here.

The story goes that when Cortes landed in Mexico with his conquistadors he ordered the ships burned so that there was no other option. This is a powerful force, and one Corden used.

“There was nothing else,” Corden says, “I just wanted to perform.” To this Maron adds, “if you have a plan B, you’re just a hobbyist.” 

In Sick in the Head, Jordan Peele says this:

“When I moved to Chicago, I was like, All right, I want to be a sketch comedian and my power is going to be in the fact that I’m going to dedicate myself completely. There’s not going to be a fallback, you know? I’m going to watch people give up and I’ll still be there, learning from it all, and if I stay with it, I’ll be successful.”

Jim Norton attributed his success to having no other options. Casey Neistat didn’t have options either. It was make it or bust. And this might be good. NPR’s Hidden Brain podcast did an episode about backup plans. The conclusion? If you have a backup plan, “there’s a downside we might not be appreciating.”

There’s a silver lining, the bar to make it is low. If you want to be an actor, and you earn enough money to eat then you made it, says Corden. “You’re one of the lucky ones.” And we don’t need much.

Mark Cuban was willing to live like a college student to “make it.” Penn Jillette lived out of his car to “make it.” Kevin Kelly noted that we need little to “make it.” Jay Leno did stand-up at retirement homes and worked as a Mercedes Benz mechanic to “make it.”

Have the right mindset, a lower bar, and limited needs and you have the recipe to “make it” too. There’s just a pinch more of something you’ll need.

Talent.

You can’t just “make it.” You need talent too. “Raw talent will always get a shot,” Corden tells Maron. “You have to have an ability.” 

Adam Davidson and Taylor Pearson both spoke about the meritocracy we now live in. Tyler Cowen dedicated part of Average is Over to this idea. Now that gatekeepers are gone, if you have talent you’ll get a chance.

Today skill matters more than ever and it’s easy to see who has it. You need to figure out how this relates to you. “If you recognize your talent, that helps,” Maron says. You have to manage yourself.

Management of self.

Michael Lombardi said that the hardest form of management is self management. To know when, what, and how to change. The super successful people here are able to do that. 

Malcolm Gladwell manages his talent by waiting for something that strikes him as “novel and cool,” to write about.

Seth Rogen and Evan Goldberg manage their talent by remembering that their best skill is writing and to always return to that.

Rich Roll manages his talent by building a life that directs his addictive personality to healthy things.

Okay, that’s great that they can do that, but how do you and I do it?

How do you build talent through self management?

A – Create a volume of work under pressure. Casey Neistat, Malcolm Gladwell, and Amy Schumer all suggest to do a lot of work in a small period of time with immediate deadlines. This gets you in the groove of work and builds the important skills. 

B – Be you. You can imitate someone at first, even remix their work, but eventually you have to be you. In On Writing, Stephen King writes:

“Stylistic imitation is one thing, a perfectly honorable way to get started as a writer (and impossible to avoid, really; some sort of imitation marks each new stage of a writer’s development), but one cannot imitate a writer’s approach to a particular genre, no matter how simple what that writer is doing may seem. You can’t aim a book like a cruise missile, in other other words.”

C – Have a community. Each time Corden elaborates on part of his career, it involves other people. This is true for Jamacian sprinters and Russian tennis players and comedians – groups are better to grow in.

Those are things to do, but knowing what not to do is good too. Corden has one suggestion, don’t fake it.

Non-edible organic movie posters.

Corden and Maron talk about what makes a good movie. It needs to say something they conclude. Judd Apatow writes that good movies say something,  (from Sick in the Head):

“When you see a movie that Sean Penn directs, you realize he’s not fucking around. It’s like listening to a Nirvana record or something. This is not a job. They have something to say. And in comedy, the people that we like the most, when they score, they have something to say that’s important to them.”

Corden notes, “some movies just feel like posters.” That’s faking it.

When Gary Shandling spoke to Judd Apatow he said that this is the struggle. “That’s what the struggle was in the writer’s room, in a nutshell: Getting people not to write just words.” Writing is about more than words. That superficial, fake, phoning it in. Whatever expression you favor, it digs up the same underlying idea. 

Shandling wanted writers to write the characters and emotions. Authors speak about this all the time. Stephen King (also in On Writing) says that he’s ambivalent about profanity in his books. Unless it’s true to the character. If the characters is profane, then they need to swear in the book. That’s authentic and organic to the art.

If you want to create, create something real. If you want to work well, Meryl Streep has some advice.

Work advice from Meryl Streep.

“She takes her work unbelievable seriously and she doesn’t take herself seriously at all.” – James Corden

That’s why people love Meryl Streep.

When to do your best work.

Always.

This was my curiosity. How the singing baker became a late night host. It began, Corden says, when he did the play One Man Two Guvnors in New York, 2012. Corden was the star and won a Tony Award for his work. He didn’t know it, but two CBS executives were in the audience and decided that he should do a show for them.

Most people don’t do this. Penn Jillette said that most people don’t do a good job. If you do do a good job though, people will want to watch you. Jillette says that there’s only one magic trick he does. He works harder than the audience expects him to. That’s him doing a good job. 

Louis C.K. had a similar experience making his TV show. From Sick in the Head:

“This year (2014) was a totally different experience than last season. I didn’t do it like a job. I decided I don’t need to go and try to make movies or anything. This show was a good job. It’s a good thing to be doing creatively. I had this thing that I was going to make a movie. And I’d been saving it and I said, Fuck it. I’ll make an episode out of it. So cut it into two pieces and I made an episode and it’s a whole flashback thing.”

Rather than sit on his great idea, Louis did his best work.

“Every job is a job.”

That quote is from Austin Kleon, but others have said it too. Jon Acuff said the same thing about entrepreneurship. Maron adds to this.

He recalls going on Conan one night and coming off stage, looking for the party. That’s when you realize it, Maron says, “it’s just a bunch of fucking people at work.”

There’s no dream job. Every job has something that’s not wonderful. Even Seth Rogen and Evan Goldberg felt afflicted by this, and so they installed video games in their offices.

–

Thanks for reading, I’m @mikedariano on Twitter. If you want to connect for work, please get in touch. If you want to say thanks, here’s a place you can donate. 

One final note, I promise that not all posts will have so many references to Judd Apatow’s book, Sick in the Head. But I just finished it and it was great.

This is part two of 8 things I learned from Judd Apatow. All of the quotes are from Apatow’s book, Sick in the Head. If you want Part 1, it’s here.

Ready?

Lifestyle creep.

“I didn’t have a lifestyle to maintain.” – Jay Leno, 1984

Leno says that when he graduated college – with hardly any stand-up experience – he would work anywhere. That included retirement communities. “I would drive hundreds and hundreds of miles to work for free for four or five minutes,” Leno says. It didn’t matter, he made 30-40 bucks a week and that was enough. “I didn’t have a lifestyle to maintain.”

If you have the luxury of not needing luxuries, it lets you spend a lot more time creating something. Penn Jillette slept in his car while he worked the streets of Las Vegas. He didnt care. It was enough that he could perform.

Mark Cuban said the same thing. He lived  cheaply, and was willing to retire cheaply. “I was willing to live like a college student,” Cuban says about his mindset at the time. All Cuban wanted was an American Airlines lifetime pass and the time to use it.

Maintaining a lifestyle reduces optionality. Remember how Part 1 started? Jerry Seinfeld said, “Quality. That’s my only real consideration.”  If he needed to make money, he would have needed to take any job. Leno leveraged the same idea.

Diminishing returns.

“And the thing is, Are you willing to compromise quality to keep it going? Of course, the answer to that was no. And that’s why the show ended when it did.” – Jerry Seinfeld, 2014

The hardest part is starting. But it gets immediately easier. Going from one to two is easy, two to three a smaller challenge. And so on.

Seinfeld tells Apatow it was physically hard to make the show. Add in the challenge of making it better and you reach a certain point of resistance.

It’s true beyond television. People losing weight see this all the time. Starting is hard, but the easiest pounds are the first ones. It’s true for fat cats in the same way it’s true for belly fat. This is from When Genius Failed, the book about a hedge fund that failed because of diminishing returns (of good options to invest in):

“By now Long-Term was succumbing to the fatal temptation to put its money someplace. In a clear speculation, it bet on the U.S. stock market to decline, via options.”

The story of hedge fund Long Term Capital Management (LTCM) is one of diminishing returns. There were only so many great investments that could return 18% or 34% – and they found them. They succeeded brilliantly. Investors came with money. Then things got harder.

Process.

“Our morning meetings start at nine. We have to pitch out our ideas – and in some ways that is the challenge of a show. It’s to create a factory that doesn’t kill inspiration and imagination. You try to create a process that includes all the aspects of a mechanized process that we recognize as soul killing, while not actually killing souls.” – Jon Stewart, 2014

Apatow had asked Stewart how they were able to create The Daily Show everyday. A good process is key for creative people, a mold that allows wiggle room. It’s why so many creatives have daily rituals.

Mason Currey curated a delightful collection of these in the book, Daily Rituals. Two excerpts from there. First, George Orwell needed a job to supplement his writing income:

“The post at Booklovers’ Corner proved an ideal for for the thirty-one-year-old bachelor. Waking at 7:00, Orwell went to open the shop at 8:45 and stayed there for an hour. Then he had free time until 2:00, when he would return to the shop and work until 6:30. This left him almost four and a half hours of writing time in the morning and early afternoon, which conveniently, were the times that he was most mentally alert. And with his writing day behind him, he could happily yawn through the long afternoons in the shop and look forward to free time in the evening.”

And this from the routine of Ingmar Bergman.

“There (his home in Sweden) he followed essentially the same schedule for decades: up at 8:00, writing from 9:00 until noon, then an austere meal. ‘He constantly eats the same lunch,’ the actress Bibi Andersson remembered…After lunch, Bergman worked again from 1:00 to 3:00, then slept for an hour. In the later afternoon he went for a walk or took the ferry to a neighboring island to pick up the newspaper and the mail. In the evening he read, saw friends, screened movie from his large collection, or watched TV.”

If you want a modern version, listen to Adam McKay on Slate’s working podcast or read The Habitual Hustler.

When you start, your work sucks.

“I remember feeling like, Oh no, I can’t do that. I just watched some magic right there. It was a gut-wrenching feeling.” – Peele, 2014

That’s what happened when Peele showed up at Second City in Chicago. And, this was right after Amy Poehler, Steve Carell, and Stephen Colbert had left. Peele wanted to be in the major leagues, saw a AA fastball, and knew he couldn’t hit it.

At the start you should get comfortable with being bad.

Austin Kleon noted this too. “There’s a big gap when you’re starting out between what you love and what you’re producing.” The only thing to do is get better. Apatow’s interviews began this way. “I want to do that,” Apatow thought, “how do I do that?” He didn’t know, so he started asking. That was the premise of interviewing comedians as a high schooler. He wanted to know how to do their job.

What did Jordan do? He figured that if he couldn’t make the quality, he’d provide the quantity.

“When I moved to Chicago, I was like, alright, I want to be a sketch comedian and my power is going to be in the fact that I’m going to dedicate myself completely. There’s not going to be a fallback, you know? I’m going to watch people give up and I’ll still be there, learning from it all, and if I stay with it, I’ll be successful.”

The religion of work.

“I’d always wanted to be a person who worked so much that I wasn’t even available to go to dinner.” – Lena Dunham 2014

You can like work. It’s okay. Casey Neistat told Tim Ferriss, “I believe in the religion of work.” Tyler Cowen commented that maybe you don’t need happiness. Maybe you need work, to eat well, and have a stable home life. That can be a full life too.

Louis C.K. on a knife’s edge.

Louis C.K. was so close to being unknown. So, so close. He was a high school dropout. He worked at a fried chicken restaurant. He smoked dope and drank beer.

The comedian we see today, the guy who can do everything was nowhere to be seen when Louis was young. The guy who can release his own special and make so much money he gives most of it away was this close to being the guy who said, “Welcome to KFC.”

So what changed?

When Louis was in high school his mom went to a parent teacher meeting at school and was told that her son dropped out. When asked why, Louis said he just didn’t care about school. “So what will get you to care?” asked Louis’s homeroom teacher. “TV. Movies.” Louis said.

The next day Louis showed up and his teacher handed him a business card for the local TV station. “It won’t pay well,” the teacher said, “but they take kids your age.” “I had direction in my life,” Louis tells Apatow.

Louis fixed equipment. He learned to edit. How to shoot and write and do all the behind the scenes stuff. All the stuff that he does now is possible because he cut his teeth on it as a high school student. And it almost never happened.

What if Louis hadn’t shown up for that meeting, or if the teacher hadn’t? What if the teacher had a bad day and thought, this kid doesn’t care? If the TV station had enough interns? If Louis never showed up at the station? If someone there had a bad day and said ‘get the hell out’?

That’s how closely Louis came to not being Louis C.K.

Look for ‘organic’ as a signal in the noise.

“When you see a movie that Sean Penn directs, you realize he’s not fucking around. It’s like listening to a Nirvana record or something. This is not a job. They have something to say. And in comedy, the people that we like the most, when they score, they have something to say that’s important to them. And to me, that’s what I’m always looking for.” – Judd Apatow, 2010

That’s from Marc Maron’s interview with Apatow. It’s fantastic. I’m looking forward to more Maron interviews and this one is why. Maron and Apatow cover a lot of good ground. It’s emotional. It’s funny. It’s humanizing.

The lesson in this quote is to create something real. Not linkbait. Not slideshows. Something that speaks a truth.

One of the macro themes in the book is that the comedians don’t succeed until they find their true voice. That’s what Casey Neistat told Tim Ferriss about making YouTube videos. It’s what Arthur Samberg told Barry Ritholtz about investing. Brett Steenbarger said, “you don’t find generic super-successful traders.” It’s what Peter Thiel wrote about in Zero to One.

If you do something creative, it needs to be done by you and for you. Anything else won’t work.

Roseanne Barr and Jim Carrey.

This is personal. I remember flipping past Roseanne on TV in the early 1990’s and thought, how can anyone watch that. She’s a jerk, a diva, loud and obnoxious. (Carrey I thought was okay, though not that funny)

I was so wrong.

Roseanne Barr may have been those things, but not without reason. Of all the people in the book, it’s her interview with Apatow that left me with “the feelz.”

Jim Carrey too. Apatow recalls this story:

“Jim Carrey always used to say that when he saw homeless people he would have this image of the guy patting the ground going, “Here, this spots for you.” That gave me chills.

Carrey dropped out of high school because he had to help his dad clean buildings. To earn money for their family. It wasn’t enough, and they became homeless.

People are complex. They aren’t jerks or divas or loud and obnoxious without reasons. They may not have good reasons – though Roseanne had some good ones – but they are reasons. If I want to connect with a person, I need to understand that. People are always serving some interest or habit and there’s a sequence that led to that.

There’s humanity in everyone and the people who seem like they need it the most get it the least. Roseanne had a terrible childhood. A difficult adulthood. An uphill professional situation. None of it was good, and neither was Roseanne.

Roseanne got crapped on by a lot of people. She’s not blameless, but she almost certainly got more than she deserved. This chapter reminded me to be empathetic. To be kind. To love others.

Someone who I never thought about was someone who reminded me to think about others.

Thanks Roseanne.

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Thank you for reading, I’m @mikedariano on Twitter.

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Update: An earlier version of this post has “starting” misspelled as “staring.” Thank you Rhett for the heads up.

Judd Apatow is six shades of wonderful. His lovely conversation with Bill Simmons inspired me to get his book; Sick in the Head: Conversations About Life and Comedy. The book is funny and tender and full of life lessons.

Judd Apatow fascinates me. Whether it’s seeing his work (Girls, 40-Year-Old Virgin), hearing people (Seth Rogen and Evan Goldberg) talk about him, or reading his book (Sick in the Head) – I can’t get enough. Here are 8 things I learned from Judd Apatow. 

One note: This is Part 1 of 2, and the format of this post is inspired by the posts Tren Griffin does at 25IQ.

Optionality.

Optionality is a powerful force of life. Scott Adams compared it to playing slots, except the machine of life doesn’t require money. “I find it helpful to see the world as a slot machine that doesn’t ask you to put money in. All it asks is your time, focus, and energy to pull the handle over and over.”

In 1983, Apatow interviewed Jerry Seinfeld and asked what he was going to do next. “Quality. That’s my only real consideration. It could be anything as long as the people are trying to do something good. I don’t want to do a piece of junk. I’m not starving you know.”

Seinfeld was thinking about optionality, and a lot of other people do too:

A – Charlie Munger and Warren Buffett wait for investments with large upsides.

B – Nassim Taleb thinks about options for his investments, but also his dinner choices. “The most interesting options,” Taleb writes in Antifragile, “are free, or at worst, cheap.” p175

C – Donald Trump writes in The Art of The Deal that a good property has to be purchased for a good price. And then, “it takes almost the same amount of energy to manage 50 unites as it does 1200 – except that with 1200 you have a much bigger upside.” p57

D –  B.H. Liddell Hart wrote “The classic book on military strategy” and concluded that optionality was the main ingredient for victory.

Boot camp.

“(The Last Comic Standing Tour),was like boot camp.” – Amy Schumer, 2014

Apatow talks to Schumer about being a female comedian and she has a lot of good things to say. Not that things are good but good to know. I think Schumer is wonderful and I’m glad she’s in the book.

She also touches on something both Malcolm Gladwell and Casey Neistat suggest; volume under pressure. You need a certain volume of work under pressure to develop your skills. In the same way that carbon accumulates under pressure to form a diamond, valuable skills can be created the same way.

Boot camp isn’t glamorous. David Levien said, “it seems brutal when you’re toiling away in obscurity.” But it’s work that needs done. 

Stand still, walk, or run.

“It’s almost impossible to keep success going because you have to stop at some point to rest and learn something new.” – Chris Rock, 2014

One challenge of stand-up, said Rock, was filling up your tank. You need to have a life that you can talk about in your act, he tells Apatow. But if you constantly do your act, you don’t have a life.

Michael Lombardi told Shane Parrish that this is a huge challenge in the NFL too. Everyone there is running, and to get ahead you need to run faster. That’s tough, there’s no time to learn something new.

Casey Neistat made this video which explains this idea::

The spark.

“I just try to always remember where that initial spark came from. It’s like a pilot light, and you try to make sure it doesn’t go out.” – Eddie Vedder, 2013

Vedder tells Apatow how he tries to remember where his start. His muse. His catalyst. That was the energy state that started the ball rolling.

For a lot of comedians in the book it’s fear and pain. Seinfeld stands out as one of the few interviewees that doesn’t emotionally pull the reader. I felt like I wanted to hug everyone – including Rosanne. Even Apatow has these feelings. Jim Carrey has the strongest ones (that will be in part 2). If your spark is dark, it’s hard to get past it. 

Dayenu (it would have been enough).

“If it never happens again, I’m okay with that. At least it happened once.” – Apatow about Freaks and Geeks. 2013

This was a tender part of the book. If you have a kid, and they lose their favorite stuffed animal, you understand a sliver of Apatow’s Freaks and Geeks experience. Apatow was very open about it during his podcast with Bill Simmons. He loved those people. It’s why he kept working with so many of them. It was a family.

Now Apatow has the comfort of understanding that moment. He understands, as Phil Rosenthal noted, Dayenu. Rosenthal said that at any point in his career, “it would have been enough.” Rosenthal sounded at peace and only years (decades?) later, Apatow feels the same way.

Luck.

Garry Shandling hosted the Tonight Show for the first time thanks to luck. The first choice, Albert Brooks, got sick 24 hours before he was set to host.  

Jason Zweig said his writing opportunities were based on luck. It’s part of Scott Adams’s moist robot theory: “If you control the inputs, you can determine the outcomes, give or take some luck. Eat right, exercise, think positively, learn as much as possible, and stay out of jail, and good things can happen.”

Mark Cuban and Seth Godin both cashed out before the dot com crash and admit they got lucky. Trip Adler says that at Y-Combinator he was told his idea for a ride sharing app wouldn’t work. It was 3 years before Uber.

Luck matters. “I’ve thrown a lot of darts and I don’t necessarily take credit,” said Naval Ravikant “a lot of it was luck.”

My favorite day of the week.

“The good time movie for me has been every single one of them.” – Harold Ramis 2005

For a guy that worked with Bill Murray, Chevy Chase, and John Belushi, and with Second City, Ramis has so many great sources to pick from. But he appreciates the moment – something Naval Ravikant is trying to do more of. That’s all we have is the moments.

His comments about movies reminded me of this moment from Winnie the Pooh:

“What day is it,” asked Pooh.

“It’s today,” squeaked Piglet.

“My favorite day,” said Pooh.

Adversity

“I’m trying to fuck my kids up just enough so the’ll want to get a job.” – Judd Apatow 2014

Apatow talks with James L. Brooks about life and death and comedy. His comments come after telling Brooks about his life growing up and why he worked so hard when he was young. As a kid he saw his parents go through a nasty divorce (his mom charged 30K$ to his father’s credit card) and Apatow realized he had to earn money.

Apatow worked really hard. What’s noticeable about his early interviews was how young he was. From interviewing Seinfeld as a high schooler to being the youngest writer for Garry Shandling, Apatow was the youngest at everything. He worked hard because he had to.

This challenge is good. In The Obstacle is The Way, Ryan Holiday examines situations where different people succeed despite the challenges. Holiday writes this: Before he was an oilman, John D. Rockefeller was a bookkeeper and aspiring investor— a small-time financier in Cleveland, Ohio. The son of an alcoholic criminal who’d abandoned his family, the young Rockefeller took his first job in 1855 at the age of sixteen (a day he celebrated as “Job Day” for the rest of his life).”

Apatow wants some of this for his daughters. Some resistance, some obstacles.

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Part 2 will be out Friday.

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