Transcript

Steph:

I think some of the sessions that we’ve had in the past have been very tactical. How do I optimize my site for SEO? How do I grow my sales to X? I think what’s really important about the way that Shane actually operates or the insights that he provides is he tells us not what to think, but how to think.

If you learn how to think more effectively, you make better decisions, you lead a more productive life, you lead a more mindful life, and that permeates your business, your relationships and more. So, I couldn’t be more excited to be introducing Shane. Shane, thanks so much for joining us.

Shane:

Happy to be here. Thank you for that generous introduction. Normally, I’d rather be in California than Ottawa, although I don’t know about that right now.

Steph:

It’s a wild time. But yeah, I’d love to. We’ll go into audience questions. If you do have questions, please drop them in the Q&A section of Zoom, and also upvote questions so we get the best ones to the top. As we wait for some of the questions to come in, I’m just going to start off with a couple questions for Shane to get that conversation kicked off.

One of the things that I’d love to learn more about is I think a lot of people have this intellectual curiosity that you also share, and they’re reading books, they see these things that they find interesting. But I’d love to understand more about the origins of Farnam Street and what really made you take that intellectual curiosity and wanting to put that online and start wanting to share it with the wider world.

Shane :

Yes. If we go back to 2001, I started working at an intelligence agency on August 28, 2001, and two weeks later, the world changed forever. Fast forward, I got thrown into roles that I had no idea how to do as a kid right out of college, and that was necessity. That was life. Nobody planned for this. You just had to adapt and go with it, and you end up making decisions that are outside of your competence.

I felt like I got to a point where I just needed to make better decisions. I felt like I was obligated. When you’re affecting a few people on your team, it’s different. You normally, in an organization, you start out managing one person, or a team, or a coop student, or an intern, then you go to a team, and then you go to a team of teams.

I quickly went from a team to my country and my country to multiple countries and troops in theater. I felt like I had an obligation to get better at thinking through problems, and I didn’t quite have a framework for doing that.

The original website was 68131-1440.blogger.com. For those of you who are investors, 68131 is the zip code for Berkshire Hathaway, 1440 is the unit
number in Kiewit Plaza. It was an homage to sort of Charlie Munger and Warren Buffett who shaped how I saw the world. I think Munger’s approach that was multi-disciplinary helped me a lot. The blog was anonymous, because obviously, spies can’t have websites or their name out there. So, everything was anonymous at first, but I was trying to just share for myself. I was just making connections on what I was learning, how I was thinking about things, and how I could get better at what I was doing.

Then through that, we found an audience and it was really interesting because our initial audience was sort of Wall Street and finding an audience on Wall Street people just shared it like wildfire and then we grew from there. It was never intended for anybody but me. It was just intended to like think out loud.

Nobody makes a website called 68131-1440 and expects it to be popular. I just didn’t want to put a password on it because I found password is annoying, and it’s like one more password to remember, but I wanted to sort of like go back and start thinking about the world in a multidisciplinary way. That ended up helping me a lot at work in terms of the solutions we devised and sort of like the way that we attack problems. I think it was like a really crazy place to be at the time.

Steph:

I love that story, and I’m curious to know. It sounds like that started more as like your intellectual curiosity, your passion. Now, it’s this large business. You have employees. You have, again, more than just a blog.

Can you tell me a little bit more about how you think about prioritizing what you’re maybe passionate about? You have these other decisions that come into play like, “Oh, do I want to create something that makes money? Do I want to create something that fits my brand?” There’s all these other decisions that now have weight. How are you thinking about that? And maybe how that evolved over time?

Shane:

Well, it’s definitely a little more complicated in some ways, but let’s just say I’m super lucky. I was born in one of the best countries in the world. I had access to a great education system, great infrastructure, and health care. I didn’t deserve any of that. That was all luck.

The way that we structure Farnam Street is giving back to people, giving back to the world and sort of trying to equalize, just put a small dent. I mean, we’re obviously not going to solve the problem, but putting a small dent in equalizing opportunity for people.

Not a huge fan of equal outcomes, but I am a huge fan of equal opportunity. I think making a high quality and multidisciplinary education free and available to everybody in the world on the internet is sort of the guiding philosophy of what we’re doing in giving back and then as a private business. The only shareholder is me, so we can do things that other businesses won’t do like create books on mental models, which if you pitch that anywhere else, people would be like, “That’s crazy.” We want to do that.

Then we tell everybody who’s buying it that at some point in the future, it will be free and it will be online. By buying it, you’re supporting what we’re doing. We don’t try to hide anything that we’re doing, but it’s definitely different. We have a team of five people, and we have multiple different projects going on at the same time. We’re trying to sort of make sure that we can make payroll, but at the same time do good for the world and give back to people recognizing that we’ve come from a place of just profound luck and privilege. It’s a great place to be, and every day is fun and exciting.

Steph:

That kind of leads me to my next question. I guess it’s easier in the place of privilege that you’re coming from, but how have you managed to stay engaged throughout all of these years of doing something very, very consistently? Do you have any tactics? I know we have a lot of people in the audience who are building businesses and building businesses over a long period of time and it’s difficult. It’s difficult to want to keep going on. So, do you have any advice for staying engaged and how you’ve managed to really continue with this amazing product or piece of work over such a long period of time?

Shane:

Sometimes it’s a grind. Being an entrepreneur is like waking up, eating glass, going to bed. Waking up, eating glass, and just going. But for me, what drives me is learning. I have an amazing opportunity because of the size of our platform to engage with some of the brightest best people in the world and share their thinking with the world. I think that, that for me is just a phenomenal thing to be a part of.

If you think of work as things that you don’t want to do, I probably don’t work very many hours a week, even though my actual hour count is probably pretty high because most of what I do I actually enjoy and I love it. I could be in a lot worse positions than getting up and exploring my curiosity every day, but some days, it’s a grind.

I find it helpful to get perspective on what we’re doing. Step away for a few weeks a year at different times and think about where we want to go and what the next project is. We’re also in a business that’s sort of like, “What are we doing next year?” We’re starting to think about that now.

One of the projects that we’re starting this year that won’t be completed to next year. What are the bets we’re making? What are the investments we’re making now that nobody else will make that will pay off and hopefully pay off in five to 10 years? But the problem with that is you don’t know if you’re wrong until five or six years later.

So we do our best to figure out what that is. Then we map it to what gives back and what’s in line with what we’re trying to accomplish and try to find a way to monetize it so we can pay for the development of it. I love running a business. I love investing. I love that I get to talk to amazing people all day. There’s not a lot to hate about it, but it is a grind some days. You just got to plow through it. If it wasn’t a grind, everybody would be doing it at some point.

Steph:

Exactly. How do you think about amongst the different things that you work on, which is a lot and much more than I’d say many people? How do you actually balance like, “Okay, we’re going to invest in the blog versus the podcast versus something completely new that we think will have value in the next five to 10 years?”

Shane:

Well, at that core, I mean, all of our investments are in the same thing, what’s time wise and what’s not going to change. We’re not trying to be the most popular website in the world. We’re sort of like trying to give you things that are proven that if you learn them and you learn the nuances of them, you’ll actually learn something that doesn’t expire. So when we think about creating content or anything we try to create time like on the podcast, we try to create timeless conversations that are also timely, but they should be timely at any point in time if they’re timeless.

On the blog, we regularly sort of like go back and audit ourselves. What did I post in 2015? What does that look like today five years later? If we did it right and if I did it, it should look like it was published yesterday. It should be timeless content. I think that using that is what enables us to take this long view.

I run the company with 100 year view in mind. I want this to exist beyond me. I think we’re always going to have a quest to recontextualize knowledge that exists in the world that’s time tested, and how do we set it up for the future so that in 2120, somebody is writing on Farnam Street about something we wrote appeared in 2020, but they’re writing about the same topic. They’re just maybe using different context or examples or possibly a different language. Who knows what the future holds?

I think that helping people think at using timeless principles and models and sort of mental models to understand the world is a really good avenue for us to proceed. Mental models is a term that everybody sort of talks about. So, it might be worth defining, but mental models are sort of like how we understand the world. They shape what we think and how we understand things, but they also shape connections and opportunities that we see.

How we simplify sort of like complexity and why we consider some variables more relevant than others. If you want to conceptualize it in the simplest possible framework, a mental model is just a representation of how something works in our head. We can’t keep all the details of everything in our head, so we chunk things. You think of gravity, it’s like, “Well, most of us don’t actually know how to explain gravity, but we know that if we drop a pencil, it’s going to fall to the floor.”

And so we have this conceptualization in our mind about how gravity works, and then we apply that to our thinking. Since we’re so unconscious about how we think, how we can learn to think better by putting better models in our head.

Steph:

I think that’s great. I think I’m going to start dipping into some of these audience questions, because I think they’re relevant to what you’re talking about. So, Gary is asking kind of adjacent to what you’re talking about. How do we learn to think better?

Gary is asking, what’s the easiest way to really start challenging the way we think day-to-day? Is there’s some certain habits that you form or certain things where you almost are looking for a signal that maybe you’re you’re falling into these negative mental models? How do you basically improve the way you think over time?

Shane :

I think what we want to do is if you want to get better at thinking, hang around people who think better than you do, and that’s super uncomfortable. Most of us want to hang around people who think the same as us or won’t challenge us. You want to hear on people who challenge your thinking. You want to expose your thinking to them. You want to show your thought process, open it up to evaluation, and you want to get that feedback.

And that’s not comfortable. Often, those people, to be honest with you, they’re not popular, so you have to think about a whole bunch of different social dynamics with that crowd. Often, the best thinking is not popular thinking. Because ultimately, what you’re looking for to gain an edge or get leverage is advantageous divergence. So, you want to be right and against the crowd, and that’s where the payoffs and leverage comes from.

If you’re right with the crowd, well, you’re probably not going to win a very big payoff, but if you’re right and the crowd is wrong, there’s the moments where you can rapidly accelerate your business or you can sort of like rapidly scale your investments or anything like that. I think those are the situations you’re trying to find, but the best way to find those is not to hang around people who think like you. It’s to hang around people who think differently than you and think better than you and people who you respect. But often, they’re not popular. You know those opinions aren’t popular, and you have to subject yourself to be willing to not be popular.

If you think of so much what we do at organizations, we just go along to get along. I think that it’s important that we evaluate us and where we want to go with that. It’s not always the case that we actually want the best decision. Sometimes, we just want to go with the crowd. We don’t want to sort of like die on the sword or we want to go along to get along because we’re effectively unconsciously horse trading. There’s so much implicit things in organizations about the HiPPO and the room getting to make the decision.

The HiPPO is the highest paid person in the room. Their opinion carries the day because the implicit assumption and nod is like one day, if I follow the rules and I play by the rules, I’ll be the HiPPO too. I don’t want to rock the boat because I want to be that person. I aspire to be that person, and I think that you got to shake yourself off all of that. Often, that comes from social cohesion and group dynamics. Those are important things to consider, but you really need to deep dive on what it is you want.

If you want to think better, it’s probably not going to be super popular, and you’re going to want to hang out with people who challenge you, and you want to expose your thinking to them, and they’re probably not going to be the highest paid people in the room and they’re probably not going to be super popular, but you’ll get better quickly.

Steph:

Yeah, I know you’ve written about how you don’t advise people to read all the books that everyone is reading. You read what everyone else is reading. You think the way everyone else is thinking.

Shane:

Yeah. You got to bring an edge. You don’t want the common wisdom. You want to get into things that other people don’t see or don’t know, so you want to understand the common wisdom, but often, you can get that through conversations or meetings at work. If you think of how meetings are run at work, so often what happens at meetings is like everybody comes in and then they have the signal problem where they signal that they’ve read the briefing note or they signal that they’ve done the work for the meeting, but they’re all basically paraphrasing the exact same thing. They’re just saying it differently.

The meeting is really ineffective in the sense of surfacing new information. What’s happening is people are just signaling to other people that I did the work and I read it, so I’m going to chime in with my thoughts, but you’re not surfacing anything. One way to get out of that, if you’re looking for a very practical tip to avoid that is to ask people what they knew about the problem that nobody else knows about the problem, and that totally changes what people talk about in meetings and it changes the value of signaling from signaling what other people are talking about, or what other people already know to this signaling value comes from, I have more insight into this problem than other people.

Steph:

I think that’s great. I saw I see some questions coming through the chat and not the Q&A. Just make sure to put them in the Q&A so that we actually see them. But one of them in the chat that I am going to call out I think is really interesting. You mentioned in order to expand your mind, you need to be around people who think differently than you.

How do you actually recommend people access these individuals who think differently? So, Wade is asking, “How can someone like me meet someone who thinks differently? How do I find these other crowds or individuals who maybe are overlooked?” Because we tend to naturally surround ourselves with people that think and act like us.

Shane:

There’s never been a better time alive to do that then right now. Right? Because you have access to Twitter and other social media where you can follow, literally follow almost anybody in the world. And so what you’re looking for when you’re following people is people you tend to disagree with. But you respect, right? So, people who articulate how they’re thinking, why they’re thinking things, but offer an opinion that’s different than yours, and people that surprise you.

That ad surprises me. I don’t agree with that worldview, because it doesn’t compute with what I think the world looks like. And those are moments that most of us gloss over, but those are the moments you want to dive into if you’re trying to think better, and I think that it’s really important that you explore those and you can follow crazy.

I wouldn’t follow just if your left wing, follow right wing people. Or if you’re right wing, follow left wing people. That’s not enough. That’s not thoughtful, and that’s sort of like convincing yourself you’re doing the work without doing the work. You want to find somebody who thinks differently than you, but you respect the way they think, and they’re articulating the reasons they think, and they’re opening up their thought process to you, because that’s how you’re going to learn.

And at work, you want to do the same thing. It’s not enough to just find somebody above you in the organization. I mean, that’s a lazy approach to sort of like getting better. It might actually be effective for getting a promotion, but it’s a lazy approach to thinking better. You want to find the people closest to the problem, and you want to start developing your associative memory, and you don’t want to develop your direct memory.

And so if you think of computers, computers use direct memory, you need an exact match to see the problem. You, our brains use associative memory. We’re intuitive machines, we match imperfectly, and you want to start intelligently preparing to build up that intuitive memory. And one of the ways that you intelligently prepare your associative memory is you start going to the root of the problem. So, you start talking to the people closest to the problem.

And what you’re trying to do is you’re trying to vacuum up these details of the problem. So, you’re trying to vacuum up not what the person thinks you should do or what the solution is, but you’re trying to vacuum up their experience into your brain so you can start making connections that other people can’t pay. It’s a journey. There’s no end to it, there’s no destination, but that’s the slog of how we learn to think better.

Steph:

Completely. I have a great question from Calvin. What mental model do you find yourself recommending the most to other people? What is the mental model that you’ve personally found most transformative in improving quality of your own life

Shane:

I’ll give you two here. So, the one that I find recommending to other people a lot is like the map is not the territory. I can give you so many examples of this. It’s just basically the map of reality is not reality. A map of England does not represent the territory of England. It’s a distillation of it.

I think that we lose track of that. And one of the ways that I’ll give you as an example that we lose track of that is COVID. This is a great example, because what happens is I catch people saying this all the time. People come to me and they say, “There’s no new cases of COVID in Ottawa yesterday.” And that’s the map. That’s the map that the government is giving you and it may be accurate. The way that we frame it is that it is accurate, and that’s very different than there’s no new positive test results in Ottawa yesterday based on the people we tested.

That’s very different than there’s no new cases of COVID in Ottawa. Another example of the map is not the territory in case that didn’t hit home is like online dating. You get a profile of a person, and you think that they’re a great match for you, and everything looks great on paper, and then you show up and you try to have dinner with them. It’s like, “Whoa, this person is not the same.” So, the territory and the map don’t match.

And maps are everywhere in organizations from dashboards to financial statements, to even strategic plans and a lot of ways represent maps. And I think that it’s important that we have to operate with maps because we have so much going on in our head that we can’t not use maps and we need maps to be effective, but we have to understand the limitations of maps. You need to understand the edges and the boundaries of what you’re learning.

The way you do that is through reflection. If you think of how we consume information, it’s like so often we’re consuming other people’s abstractions that we’re missing the reflection part. And so there’s key areas of your life where you want to reflect and you want to deep dive into what’s happening.

The one that I use most often is sort of like second order thinking, which is like, “And then what?” So, I do this and then what happens? And what I’m really doing with second order of thinking, if you think about it, is I’m just playing something out over time. It’s like a thought experiment. And if you could do one, there’s two things I would recommend to make your decisions instantly better.

One, schedule a time to think about anything important, like block it off in your calendar, go for a walk, think about only that thing, sleep on it, make the decision the next day. So, schedule a time to think. None of us do that. It’s super important and it’s wildly helpful. And if you think you’re too busy to schedule a time to think, I would say you’re crazy, because what’s happening is most of your time is probably consumed by poor initial decisions.

And so what you want to do is deep dive into how do I avoid those decisions because I don’t want to spend my time cleaning up, I don’t want to be stressed out and have this anxiety running around fixing all these poor initial decisions. The way to make better initial decisions, there’s a lot of ways but two good ones is schedule a time to think, and the second one is just think out over time.

So often, we’re just trying to solve the problem, make it go away, address the symptom, to really get into what’s happening, you can address sort of the root problem, but you also want to dive into second order thinking or just thinking across time. “What does this look like?” If I do this in 10 weeks and 10 days and 10 months, 10 years. You can use whatever framework you want, but what you’re really trying to do is what solves this problem across time? How do I change the time frame?

And if you think about organizations, so often, the problems come from the fact that there’s time mismatches. There’s time mismatches between shareholders and the CEO. The average life expectancy of a CEO is three to five years, but shareholders might be on a 20 year time horizon. You can’t expect somebody with a three to five year time horizon to maximize 20 year framework, right?

And so you want to think about what you’re solving across time and where you’re going to be. So, when you do something, where am I now? If I eat a chocolate bar today, it’s going to have no impact on my life, but if I did chocolate bar every day, it’s going to have a huge impact on my life. You really want to just think further ahead. I think that those two things combined make a huge difference. They’re not the only things but they definitely get us to think about our actions and the consequences and the subsequent following effects to these consequences.

Steph:

Completely. I think there’s a great associated question here from Sam. He’s asking if you can speak a little more to this idea of building multi-generational company, and what you really think about building something that lasts 100 years or more. How are you thinking about that? How does it go into your decision making processes in how you’re actually building up Farnam Street and other products that you work on?

Shane:

Yeah. I mean, it’s a great filter, because we don’t do things that a lot of people do. I don’t do many of these interviews. I want us to grow slowly. I think growing quickly is actually a negative thing. Often in nature, what comes quick often goes away quickly. It’s not always the case online, and that there is a value to having a platform and an audience size, but we don’t engage in a typical sort of growth hacks that other people engage in. We’re super transparent with people right.

When you think about I want to build an audience for 100 years or 1,000 years, you just map that out in time. It eliminates a whole bunch of just shoddy behavior. You’re not tricking people, because that’s not going to work. You’re not sort of like gimmicking people, because that’s not going to work. There’s no fine print on your website.

If you look at our learning community, right below it, we have two prices. We have pay more and pay less. So, there’s 149 a year, 249 a year, but it’s the same membership. We tell people it’s the same, and we also tell people there’s no refunds, because we’re making a one year commitment to us, we’re making a one year commitment to you. But it’s not fine print, it’s right there. It’s super transparent.

We’re not trying to bait people into doing something they don’t want to do. I think that, that’s really important when you think about building a business and especially online. So often, we’re told, “Oh, you need to get everybody’s email address.” Well, I can tell you first hand, email addresses are not all equal. We ran this experiment a few years ago where we put a popup box on every page, and we measured the open rate from that cohort versus the open rate from people who had to find how to sign up from the newsletter.

And so right now, we have popups on six pages, I think. But other than that, we don’t have popups, because the open rate from popups, which makes it really easy for people to sign up is really low in general. Because we just want the highest quality audience, and the other thing we don’t do is we don’t waste their time, so we have nothing to say, we just don’t say anything.

We don’t air podcasts just to have space. We got to fill this weekly commitment. So, we’re not on that schedule, and we structure all of our partnerships to encourage good behavior. What does that mean? It means, well, they’re not page view driven. So, we have sponsors on the website, but they’re driven by a percent of traffic, so you buy a percentage of traffic. You don’t buy page views.

So, whether we have a million page heads or 10 million in the month, it doesn’t matter, it’s irrelevant to us. We’re compensated the same way by our sponsors. We don’t allow them to run code, because what would be a way to lose people’s trust is our sponsors are running code on our website or tracking Facebook tracking people.

We just think about all the things that we don’t like as consumers, and you probably have the same thing. What are things that you don’t like that you wouldn’t want to do? What has to be true to be around in 100 years? You can’t take advantage of people. You can’t do a whole bunch of different things. Most of us wouldn’t do that naturally, but it’s a great way to frame the problem. Is this a solution that will last 100 years?

I think that the way that we’ve gone about it, we’ve grown slower than others and that’s okay, because I think that we’re doing it the right way and the metrics we track internally, which is never sort of page view driven, but the metrics we track internally would validate that our approaches is working, and it’s okay to have other people grow faster than you.

So often, we just say, “Oh, I’ll trade right now for later. I’ll just do this once, and then I’ll make up for it later. I’ll take advantage of you once, but don’t worry, I’ll never do it again, because I want to make this sale. I want to bring in this revenue.” And that’s the slippery slope, right? Because that takes you off win-win. And so if we want to mental model this approach, what do we know from biology? Survival is everything.

And then if we want to think about, “Well, what do we have to do to survive? And what does that mean with our relationship with our audience?” It means everything has to be win-win, because if you think of four permutations of relationship, there’s win-win, win-lose, lose-win, and lose-lose. Only one of those will survive across time, which is win-win.

If I’m ever taking advantage of you, you want out of that relationship. And if you’re taking advantage of me, I don’t want to be in that relationship. And so when you start thinking and applying a mental models approach to it or just thinking about the problem through the lens of time, you start coming to different realizations that it’s like, “Oh, I don’t need to bring more revenue up and trick people. I don’t need to have people sign up when they don’t want to sign up. And it’s okay if they have to search for how to sign up for our newsletter.”

That’s not bad. It’s not a bad thing. But then you have a dramatically different approach, and we’re lucky and it seems to be working, but if it failed, people would be looking at me like I’m an idiot, so there’s multiple perspectives on this.

Steph:

Yeah. I hear people say that trust is really just like a representation of someone’s behavior over time. I think that’s completely true that if you want to build trust with your readership or your user base or subscribers, all it takes is one behavior that breaks that trust.

There’s a great question here, which is, again, from Calvin. You’ve talked to some of the most influential people on your podcast who have done amazing things felt in some of the biggest businesses. Is there a piece of advice that you have in terms of something that you believed was true about building a business before that you now think is bad advice, whether it’s through your own realization or through talking to some of these individuals?

Shane:

Yeah. Generally speaking, I think that other people can show you options, but you have to choose the path and I think that when I first started, I didn’t know anything about anything. I didn’t know SEO, I didn’t know headlines. I didn’t know why all this mattered and everybody is trying to tell you why these things matter and why that’s super important that you do these things.

When you first start, it all sounds really good and really interesting and why you have to grow really fast, otherwise you’re going to fail. I think that I just tried to keep up. I think it’s like 2014, I was trying to do all of these things. I saw me. That’s not the audience I want. People tell you a bigger list or a bigger audience is better. I think that, that’s completely wrong. We don’t have the biggest audience in the world, but I can assure you, we have one of the best audiences in the world.

I know that because I know that people who read it, I know the feedback we get, and that’s great. I don’t need a bigger audience. I like having the best audience in the world. I like having the smartest audience in the world. I don’t need to have a list of a million people. If there’s not a million people who have found us yet. That means there’s lots of people to find us. I don’t know if that’s a good answer to the question, but that’s sort of what comes to mind.

Steph:

No, I think it’s a good answer. I want to get your pulse on something. I think you were talking to, I think, it was Brian Koppelman, I think, on that podcast. Basically, he brought up this point, which is that there are certain lessons that you just need to learn yourself. In many cases, you just need to learn them many times throughout your life.

It seems like you have a lot of clarity around this concept of how you want to build your business over time. How did you get there? How did you find that clarity? Was it through stumbling through prior businesses? Where you learned that, or did you always just kind of have this approach to Farnam Street?

Shane:

Well, a couple of things. One is I just have really good friends. I have friends who are much better than I am, so that’s one way to get good perspective. But the second is I just remember doing something once and I don’t even remember who it was but I remember doing something that somebody advised me to do and it failed, and then I blamed them.

I just sort of walked away from that and I started reflecting on that a little bit. I thought it’s not them. Well, they told me it didn’t work, but that doesn’t mean it didn’t work for them. It didn’t mean that it doesn’t work in general, but it means I’m always just chasing what other people tell me. I think I just have to dive in, figure out what works for me, and what I want out of this.

I think so often in life, we’re just chasing them. We’re just focused on the next step. If you’re climbing a wall, you’re focused on the next grip. In some cases, that makes sense, but I don’t want to climb to the top of the mountain, look down and go like, “I’m on the wrong mountain.”

I think that so many of us do that. We become Ebenezer Scrooge in a way. Who do we know from history that wanted to be wealthy, respected, and powerful? Ebenezer Scrooge is the guy who wanted all those things, and he got them. Then what did he want at the end of his life? He wanted to do over.

I think we need to be conscious about not only the next step, but where is it going? Is that step getting us closer to the person that we want to become? Or is that step moving us away from the person we want to become? You need to think about that stuff. Nobody can do that thinking for you, because when somebody thinks for you on that stuff, you’re playing by somebody else’s scorecard. You’re letting somebody else control you. You’re letting somebody else dictate what you do.

And then if you fail, the cop out is like somebody else set the scoreboard for you. So, you don’t have to blame yourself. The problem is when you start thinking about this stuff, is like you have to take the responsibility. You could be wrong about what you’re doing, and then if you’re wrong, it’s you alone that’s wrong. And that’s why I think so often, other people easily let the crowd sort of like dictate what they do. Because you’re never wrong if you’re with the crowd.

Steph:

Yeah, this leads perfectly to the top of better question right now, which is, is there any other non-obvious or unpopular beliefs that you hold?

Shane:

Oh, man, that’s a good one. This comes from a friend of mine, so I don’t know how unpopular it is. We live in a world where we teach people to make decisions that are purely rational. I don’t believe that all decisions should be purely rational. I think you need to understand where you are on a continuum between emotional and rational and whether that’s serving you in the moment. You probably don’t want to be making emotional decisions about financial transactions.

But you also probably don’t want to be super rational about relationship decisions. I think both of those things can serve you. You don’t want to be a super rational parent. You want to empathize with your kids and be emotional and understanding with them. I think you just need to realize where you are on that spectrum.

I know like most of what’s taught in decision making is just you need to be more rational, and that’s the way to get what you want. Again, it comes down to like, “Are you climbing the right mountain? If you get to the top of that, is that the place that you want to be?”

Steph:

Yeah. I know in a lot of your work, you do talk about mental models and making better decisions. How do you actually think about that in making your decisions? When do you know when it’s more beneficial for you to be using more of that data driven brain? When do you kind of let it go and see it more to your intuition or your gut? Is there a way that you think about that?

Shane:

Yeah. I mean, there’s a couple of different frameworks for that. One is type one or type two decisions. Type one being irreversible high consequence decisions, type two being sort of like everything else. When you think of a four by four matrix and having reversible and irreversible and consequential and inconsequential, you want the most data and you want to be the most sure and have the most structure around sort of the type one decisions. But type two, if you’re making them, you sort of want to make them quickly and more intuitively, but follow up to hone your judgment and calibrate how good your judgment is, or delegate if you’re leading a team of people to build up high judgment, high performing team.

I think that, that’s a good way to conceptualize those type of decisions. I think, ultimately, I never try to predict the future or I rarely try to predict the future. I don’t understand that. The people that can predict the future, man, you’re amazing, but I am not one of you, and I wish I was. What I’m trying to do is just position for multiple possible futures.

And often, it just sort of turns out good. Think of a company that optimize their balance sheet in December of last year, like the airline stocks. They bought back tens of billions of dollars worth of their shares last year. They were optimizing and they were predicting the future. They were predicting that the future would look exactly like the past and that things would continue going as the status quo.

They’re predicting that and that makes sense given going back again to timelines, the average CEO tenure is sort of three to five years. They’re making that prediction because they want to get paid in those three to five years. But if you take that time horizon to 100 years, all of a sudden that prediction looks a lot less safe. And what you’re thinking about is like, “How do I preserve optionality? How do I prepare?”

You don’t know a pandemic is coming, but you’re thinking in your head like, “How do I just prepare for the widest possible ranges of future that are possible?” You stumble into good decisions. If you look what Buffett is doing today, I think that’s basically what he’s doing. The future is harder to predict than it was 12 months ago. I’m going to save cash because that’s going to give me the most options.

He might end up looking like an idiot, and that’s okay, because you’re never going to do anything great unless you’re willing to look like an idiot in the short term. But if we end up in a future where he can deploy that cash, he’s going to look like a genius. If nothing happens, he survived.

Either way, the outcome is he’s preparing for 100 years, and that looks vastly different than CEOs that are optimizing for the next five years, which are like, “Oh, we have cash on our balance sheet. Let’s buy back shares, because then it will drive up the shareholder return, and that’s what matter.” 10 times 10 times 10 times 10 times zero is zero. I think the airlines are in for a bit of a wake-up call, but that type of thinking is what gets you in trouble.

Steph:

Completely. I want to pivot a little bit just because I know we’re getting close to the hour. I’ve had a couple people ask questions about your podcast and many people have commented positively about it. In particular, your ability to interview people and pull out information. Pull out stories, pull out frameworks, pull out things that other people aren’t able to pull out throughout these interviews.

I’m going to combine a question from the transcript and one here. But do you have any advice in for methods and actually asking questions differently, whether that’s asking yourself questions more effectively, or asking other people questions and something like an interview form?

Shane:

Yeah. I think if you want to learn, the way to ask questions is not to ask what people would do, but to ask how people think. I think that once you show people that you care about how they think, and you’re not there to judge them, they start to open up about the nuances of how they think.

Our podcast, The Knowledge Project, is a long form conversation anywhere between 45 minutes. I think we had one go five hours before. There’s no real preset time limit other than bathroom breaks. The goal of that is I just want to go below the surface. I’ve listened usually to the participants, other interviews, and you can tell the interviewer hasn’t thought about the questions. Either they’re off the cuffing them in the interview themselves, or they haven’t done any research whatsoever.

And the interviewer knows that. If you listen to the same person do multiple interviews, it’s really fascinating because they often tell the same story for different questions. If you’ve written a book and you’re going on 50 podcasts, it’s really hard to come up with 50 different answers to a similar question. What you do is your mind unconsciously creates a cassette of what to say.

If you look at Buffett, he’s making the same jokes he made 20 years ago. You ask a question, he clicks play. That’s the end of it. But if you look at people who do a lot of interviews for a living, they do the same thing. So they sit down for their interview and you have to ask questions in a way that prompts them to think. One of the ways that you can do that and signal that you’ve researched and you’ve done your work is to summarize the common answer in your question.

Take what they’re about to say back to you and repeat it in the question and say something like, “Aside from blah, blah, blah, what do you think about that?” So, you’ve eliminated their click or response and now they have to think before they respond. If you give people space to think, that’s the other thing. Hosts always interrupt their guests from talking, because it’s about me.

When I’m listening to a podcast, I’m not listening for the host, I’m listening for the guest. I want the guest’s opinions. I want their nuance. We try to almost consciously have the lowest, like my ratio of words to their ratio of words, because it’s about them. It’s not about me. What the heck do I know? They’re the expert. If I was the expert, I just interview myself. That doesn’t make sense, and nobody wants to hear that. What they want to hear is what this person has to say and the skills they’ve developed.

My job as the host is then to bring that out. But if you approach life like that, you’re going to get much better answers always. Approaching life like that means I’m asking people at work not only what their experience is, what their source of information is, but I want them to reflect, think out loud, and show me how they think. By showing me how they think, I’m going to learn from them.

And you know what, it appears slower in the short term, and your conversation is going to go from five minutes at the water cooler to 15. But you’re going to walk away and you’ll have learned something. Whereas in that five minute conversation, you’re just sort of collecting an abstraction. I just wanted to be different. I don’t know if it’s better or worse or whatever. That’s for the audience to decide. We’re just sort of like, “Man, how do we put something in the world that gives people access to amazing people and how they think?” But not what they’re going to get out of their book. “How do things work? Where did you come at this? What drives you?”

It’s really easy to sit down. We do this sometimes, so I don’t want to dwell on it too much, but it’s really easy to sit down and ask personal stories about people and tell me about this and that. You get to know the person which is great, but I really want to focus on what they know, and how do we convey what they know to other people? How do we get that knowledge into the world? How do we put it out there?

And then I want to understand it, so I ask clarifying questions about like, “Oh, that doesn’t make sense to me. Can you explain that? Can you do this? Can you do that? How does that work?” It’s okay to say I don’t know. It’s okay to say like, “Explain that to me like I’m five.” Sometimes we edit out some of those comments, because it’s just me getting people to elaborate.

But giving people space at the end of questions is really good too. Asking people if they have anything else to add to that, that works great for eliciting more information from people. When you’re trying to get nuance, I mean, that’s what you’re trying to do. You’re trying to get people to talk.

Steph:

I think that’s great advice. I hear you all the time on your podcast say things like, “Tell me more. Just tell me a little bit more about that.” Which I think is, to your point, is just getting them to think past their pre-prepared answer. So, I’m going to try to use your tactic.

Shane:

Oh, I knew you were going to do this.

Steph:

One of the one of the pieces that I stumbled upon on your site is this letter from Hunter S. Thompson, and it’s about his friend is soliciting advice from him. Without getting into too much depth, the letter says, “Oh, what a concept. You’re looking for advice for me on your life.”

This is something that many people would love to, at least in theory, trade lives with Shane Parrish to be running Farnam Street, to have the accolades that you have, to be talking to the people that you’ve talked to. What do you say to people when they ask you for advice? Because it really is this complex question that as an individual, it’s not as straightforward as you would think. So, can you tell me a little bit more about how you approach that question given some of the things that you’ve learned like that Hunter Thompson letter?

Shane:

Yeah. I mean, my first thought is like, “Why are you asking me for advice? What the fuck do I know?” It’s difficult. Let’s just generalize for a second before we get into specifics. Why do we ask people for advice? We ask them for advice, because we want them to tell us what we already know, or they see something about the problem that we can’t see because we’re in the problem.

And if you think about the root of so many problems in the world is because we think what we see is all there is. This goes back to grade nine physics You’re standing on the train, you’re holding a ball, and the train is moving at 60 miles an hour. You look down at the ball, because you’re holding it, you’re sitting there, and how fast is the ball moving?

Well, relative to you, the ball is not moving at all. But somebody standing beside the train, the ball is moving at 60 miles an hour as it goes past. Your perspective matters. Getting out of your own perspective is the key to seeing things. One of the reasons we ask for advice is because, Steph, if I ask you for advice on my relationship, or you ask me for advice on your relationship, it’s a lot easier for me to pinpoint the real issue because I’m not you.

I don’t see all the details. I don’t see all the nuances that you get caught up in. Same for you. It’s a lot easier for you to see the thing that I’m missing, because you’re not in that system. I think it’s really important that we acknowledge that. Now, why do we ask for advice and not follow? That’s a difference.

The start of your question is sort of like people are jealous or they want to be me. I don’t know if that’s true. I think that you shouldn’t be jealous of anybody unless you want to trade your life for theirs. You see the best of other people in everything. We never used to see that, and you only see the best moments of people. You don’t see me crying on my couch because my relationship with my biological father is terrible.

You don’t see that side of things. You see Shane in an interview doing something. You don’t see that, “Oh, he’s divorced,” and dating is tough. We just pick these lenses in people and we’re like, “I want to be like this person in that way. I want to be like this person in that way and this person in that way.” Then we end up super unhappy with ourselves, because we’re not those things.

And often, the vast majority of the time, we would not trade our life completely for somebody else’s no matter what their perceived success is, no matter what kind of car they drive or their happiness. But Instagram has taught us that there’s always one of our friends on vacation. There’s always somebody buying a new car, there’s always somebody doing something that we’re not doing, and so we start to feel bad about ourselves.

Going back to the advice question, I just try to help people think through the problem. I try to very rarely offer advice on the actual problem because I think that by telling people what to do, it won’t help them and I think that if they don’t learn how to see it, they’re not going to actually act on it anyways.

So my goal, usually when people ask for advice, is just walk them through. Tell me what you see. It’s almost like a knowledge project interview to be honest with you. It’s just on a very specific topic. It’s like, “What do you see? What does the world look like to you? What would the world look like if you were me? How do you see your problem through my eyes? How do you take my perspective and look at it?”

And then ultimately, I’m not trying to solve people’s problem. I think I’m just trying to understand their problem. But if you really want to understand their problem, you have to have them walk through the thinking. As they walk through the thinking, they often see things that they’ve missed before. Or at the very worst case, they feel really good that you listened to what’s going on in their head and they feel understood because you’re not offering solutions.

There’s this viral video that went on the internet like a year ago, two years ago about this girl who had a nail in her head. I don’t know if you saw that. It’s a relationship video. She had this nail on her head and the guy is like, “You have this nail in your head.” She’s like, “I have this throbbing pain.” He’s like, “Well, I’ll just pull it out.” She’s like, “It’s not about the nail.” He’s trying to solve the problem and she’s trying to sort of like, “I just want to be understood.”

And I think often, we try to do that. We’re type A, high action people. One of the reasons that we’re successful in life is we dive into solving the problem, but we dive into it before we understand it, which creates problems when making decisions, or we try to solve it for other people, which creates a dependence and unhealthy dependence on you and something they don’t want to do. What you really want to do is understand it. They feel good about themselves. They feel understood, but through that understanding, they actually know what to do.

Steph:

That’s excellent advice. Do you have any advice as on when you can differentiate when someone is looking for concrete advice? I want to know how to get from A to B and when someone is really trying to be understood.

Shane:

Yeah, just ask them. Do you want me to solve this problem with you? Or do you want me to understand it? I mean, often people will just give you an answer to that question.

With kids, we often want to solve their problem. We view it as good parenting to solve our kids’ problems, but then we grew up with kids that can’t handle adversity or can’t do anything without us. So just map that over life. Most people don’t want their problems solved by somebody else. They want to feel understood and listened to, and they want to solve their own problems. Your role in that can be to give them the tools or help them see something that they haven’t seen before, but not give them the answer.

Steph:

Got it. I know we’re close the hour and you have a hard stop. Let’s just do one or two more, if you’re fine with that.

Shane:

Sure.

Steph:

Nashan is asking. You articulate your thoughts very well. I completely agree with that. Do you have any tips on how you actually go about dissecting complex thoughts and turning them into more simple statements?

Shane:

Yeah, I try to explain them to my kids and fail a million times. That’s basically what I do is like I learn something at work. Then I come home and try to talk to my 10 and 11 year old about it and try to get to a position where they can understand it. Often, what they reveal is that I don’t understand what the hell I’m talking about, so they just show me that I have no idea what I’m talking about. Because they’ll ask all these questions. I’ll be like, “I don’t know. I don’t know.”

Steph:

Is it a Feynman technique or something?

Shane:

Yeah, it’s pretty much that applied, right? That’s effectively what I do is I learn something, I translate it into language, my kids will understand. They point out my gaps. I go back and learn where I’m missing and try to do the whole thing over again the next night.

Steph:

Perfect. I’ll say one more question. I’d love to know. This is a personal question, but you’ve built up an amazing blog, amazing podcast. You talk to some of the most influential people in the world. What are some of the intangibles that you didn’t expect out of this success? What are some of the experiences, some of the responses that you’ve gotten that are actually, in your view, much more valuable and in the scope of everything that you’ve done that maybe people don’t actually know about?

Shane:

I’m super fortunate. Meeting Daniel Kahneman in person, going to his house, that is just an experience I never would have predicted. It was just phenomenal. I’ve gotten to meet so many incredible thoughtful people through this in sports and Wall Street and Silicon Valley.

I’m just honored to be able to share their wisdom with the world and help them whenever I can. It’s just amazing. I get to hang out with amazing people for a living. Effectively, when you look at my job, that’s the crux of what I do. Sometimes they’re dead, and sometimes they’re alive, but I’m generally just hanging out with awesome people. I never expected the response that we have. I mean, I never expected to have an audience at all. When it started, it was just for me. I also wanted to be in a position where if that goes away, I’m okay.

I don’t want to wrap myself for it in sort of how many newsletter subscribers we have, or how many hundreds of thousands of people listen to the podcast, or how many people are in the learning community. I think that, that’s a very dangerous slope going back to what we look at and how we make decisions.

I look at traffic twice a year to the website, every six months, because I don’t want to write about things that are popular. I don’t want to do more of what’s working. I want to sort of just follow my organic curiosity, but I want to be informed. I don’t know if that’s a good answer, but that’s sort of my answer.

Steph:

I think that’s an excellent way to end this and thanks so much, Shane, for spending the whole hour with us. There’s many comments in the chat. People are finding this or they found this extremely invaluable and I personally did as well, so thanks so much for taking the time.

Shane:

Thanks for the great questions, Steph.

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