The Exchanges

Q Are there other ways that we don't think of sunk costs that are non-intuitive?

A Well, Our ability to rationalize sunk costs is really spectacular, and one of the things that we do is we increase, we dramatize how expensive it will be to tell other people that we are ignoring sunk costs. It will break my parents' heart if I tell them that after 10 years I hate being a lawyer because they paid for me to go to law school. And so, therefore, I'm going to be unhappy for 10 more years, because I don't want my parents to be unhappy for an hour, right? That we really like being hooked on The effort and the feeling it took to get our neurons aligned around who we thought we were, the story we tell ourselves, and that is probably why sunk costs are so challenging. So what I encourage people to do, this is a hack in the good sense, is establish new sunk costs for yourself to keep you going. This is part of the practice. So I've written 7500 blog posts in a row. Haven't missed one. It's really emotionally expensive for me now to miss a blog post. My blog is a sunk cost in the sense that if it stops giving me joy for the long haul, I should stop writing it. It doesn't matter how hard it was to build the streak. Going forward, it's a gift from my former self. But I can tell you on a Thursday, if I just don't have anything to write, that sunk cost is enough to get me over the hump.

AI assessment note: “one of the things that we do is we increase, we dramatize”

Q Do you think we're naturally drawn to shortcuts?

A I think that we've been indoctrinated and brainwashed by an industrial system, and I wasn't alive before Frederick Taylor, but Frederick Taylor definitely changed the world. When you bring a stopwatch to a factory, suddenly you are taking capitalism and weaponizing it. You're saying, if I can figure out how to save 30 seconds for every single part, At the end of a year, we're going to have a million dollars. So there's a real incentive to turn that screw to get, quote, more efficient. And I was just reading about, um, a mochi shop in Kyoto, Japan. It's a thousand years old. And building a business to last a thousand years, you're not gonna be able to do that with shortcuts or hacks. You're gonna do it by focusing on something else. And the thing is, they bought a rice kneading machine, I don't know, 20 years ago. But that was the first major technological advance they'd had in a thousand years. Because the job of the mochi store is not to be the biggest or most profitable mochi store. It is to do their work the way they want to do it.

AI assessment note: “we've been indoctrinated and brainwashed by an industrial system”

Q I want to come back to sunk costs. What are those?

A Okay. So the first lesson of almost any business school is ignore sunk costs. And then people who are smart say, what are those? A sunk cost is a gift from your former self. Maybe it's a law degree. Maybe it's tickets to the movies. Maybe it's the deposit on a vacation that you had long planned. Maybe it's the emotional connection you have, uh, to a certain kind of thing happening in your future, like a big wedding. Um, it was hard for you to Earn that dream. And it was hard for you to get that degree. And now here we are. It's a gift from your former self. And the question is, do you have to accept that gift? So the story I tell is they were doing some construction work across the street from my house. And the guy put in a new flight of stone steps. And I waited till he was done. And then I went over and I said, you did nice work. He said, thanks a lot. And I said, I don't know if anyone mentioned to you, but you have these signs that say quality masonry with your phone number on them, and we live in a fairly literate town, and I was just letting you know you spelled the word masonry wrong, and he was like, yeah, I know it cost me a lot of business, but I already paid for 50 of these signs. And that's a sunk cost, because if he had found 50 signs lying by the side of the road with his name spelled wrong, he wouldn't have picked them up, because he would realize these signs are…

AI assessment note: “A sunk cost is a gift from your former self.”

Q What does it mean to be a professional? You said, um, doing what you love is for amateurs, and loving what you do is for professionals. Can you expand on that and then explore some other differences?

A Okay, so there are very few amateur surgeons, right? You want a professional surgeon, you want the surgeon to show up and do her work beautifully, even if she's in a bad mood, uh, and you want her to keep going to continuing education classes to be understanding the state of the art. Not because they are fascinated by how the knee works, but because they said to you, I'm really good at knee surgery, and I will take care of you. A professional makes a promise and then keeps the promise whether or not they feel like it. Amateurs get to be authentic, whatever that means. Amateurs show up when they want to and make what they want to make. I love being an amateur at some things. Don't sell your hobbies. Do your hobbies for you. But if you're going to be a pro, it means you need to understand the state of the art. It means you need to raise the bar. You need to understand who it's for and what's it for. What change do you seek to make? There's a whole bunch of obligations that go with being a professional that put you on the hook. And for years, I've had uniforms at work. I don't usually wear them in public. They change from time to time. The beginning was a lab coat. Lately, I've just been trying the Japanese volunteer fireman hoppy coat. Because when you put on the uniform, you've just sent yourself a message. Do your work at your workspace. Do it at the appointed hours. Never, eve…

AI assessment note: “A professional makes a promise and then keeps the promise whether or not they feel like it.”

Q Why is it that we can get a thousand compliments, and then one criticism, and we focus relentlessly on that one criticism, even if it's from somebody we don't know, don't like, don't respect, hasn't even read the book, perhaps, but that's what sticks in our mind. Why is that?

A Well, I don't think that's true for everybody, because narcissists and sociopaths don't have that problem. So if you do have that problem, uh, welcome to the client. Reassurance is futile. Reassurance that we seek is like a warm bath that feels great, and then you need more of it, because the future is unpredictable, and when the future doesn't match what you hoped for, the reassurance you used to have isn't enough. You need more reassurance. Reassurance is part of our armor against the criticism that helps us feel like a fraud, that amplifies our imposter syndrome, that, uh, makes us believe that for every person who had the guts to criticize us, there's 10,000 people who feel just as badly about the work we did but don't want to speak up. And I have a hunch it's because of high school. I think it's a combination of high school and mortality. I don't know about you, but most of the people in high school and me, that was brutal. The idea that there's kids at the other lunch table who are talking about you behind your back when the thing you most want from an evolutionary biology point of view is to procreate. And it's, you know, think about What happens if you're in a tiny village on the Savannah, and the chief kicks you out? You're gonna die. That we have deep, deep need to be in community and to be part of something in harmony, because it connects to our survival. And critici…

AI assessment note: “we have deep, deep need to be in community... criticism feels like an assault”

Q What are some of the hard earned lessons that you've paid for in business that we can benefit from?

A I would think, I think the biggest one is people don't want what you want. Employees don't want what you want. Customers don't want what you want. You know, one of the challenges of the whole stock option thing is entrepreneurs and founders think that other people will be as motivated by owning part of the company as they are. They're not, not even close. It's a sort of a prize pool at the end of the game show, and it ends up becoming a massive demotivator in almost every organization, because it hasn't cashed out yet, right? Like, you promised me, and in people's minds, 100 shares, without knowing any percentage numbers, they've just decided that that's whatever. So people don't want what you want, and that means we have to extend ourselves and go to where they are. Like, I already read the book, but everyone who's gonna read the book hasn't read it yet, so they need something I don't need, right? Or what fuels someone to go to work every day is different than what fuels me to go to work every day, so that was part of it. Number two is, if you play any game in which money is involved, the fact that people have a different story about money Will cause you, uh, to make mistakes. And they will either be mistakes because other people are better at piling up money than you are, which is extremely likely. And so if part of what you're seeking to do is play on that axis, They'll beat…

AI assessment note: “I think the biggest one is people don't want what you want.”

Q You give me a beautiful answer. I have three follow-ups to that that are sort of like different rabbit holes here. The first is, how do we learn?

A The only way to learn is by doing things. That we can read about how to swim, and we can read about how to make a vegetarian maki roll, but you will not learn how to do it until you do it. And the reading, the listening is important preparation, but learning is the act of failing on our way to mastery, and that is part of my beef with organized education, is that organized education has precious little learning in it. And you mentioned in your book that when you got your MBA, there was an open book test. And I thought that was a typo, because when I got my MBA, there wasn't one open book test. Every test was closed book. And when I thought about it, I realized that the only courses I learned anything in, in college and business school, were the ones that were essentially open book. Because what it means to have an open book educational interaction is that you have to do the work. You have to actually learn something, because it is not about, did you memorize things for 10 minutes and then write them down? It's, did you actually do the thing, and now you know

AI assessment note: “The only way to learn is by doing things.”

Q How do you, you get all these inbound requests, how do you decide what to do and what not to do?

A I don't get particularly hung up on no. That's one of my disciplines. It's one of my boundaries, is that I think people appreciate a thoughtful, quick, generous no more than no response, and more than a yes you don't follow up on. Your work is your work, and defending it is critical. Because otherwise, you are going to do nothing but be a cost-free, unprioritized contribution to other people's work that will never amount to what it needs to be, because your, your work will not be appropriately allocated. And so, you know, a long time ago, Tom Peters changed my life by blurbing one of my books, so I tried to do that. But I can't do it for every book because I read every word, and I write my own stuff. So more and more, several times a day, I write back saying, I didn't read what you wrote. I'm really sorry. I can't. No, I won't be able to do this. Good luck. Not having cognitive load associated with that is critical, because otherwise, there'd be no more work from me.

AI assessment note: “I don't get particularly hung up on no. That's one of my disciplines.”

Q You've said that creativity is a choice. It's not a bolt of lightning from somewhere else. Can you explore that for me?

A Yeah, this really rubs some people the wrong way, which makes me like it even more. Uh, what does it mean that creativity is a choice? Well, first thing, Have you ever been creative once in your life? Have you ever solved an interesting problem, told a funny joke, said something to somebody else that needed to be said? I've never met anyone who said no. Everyone has been creative at least once. So what does it mean to be creative more than once? It means that you have to extend yourself with empathy to the person you are seeking to serve, to the person who the work is for, And you have to extend yourself, not just through space, but through time into the future, announcing something that might or might not work. You don't know yet. That's what makes it creative. If you exert the emotional labor to do those two things, sometimes you will have a successful creative outcome. That's a choice. So the people who say, I don't have any questions. Well, no, it's impossible you don't have any questions. What you're actually saying is, I don't care enough to ask a question that might embarrass me. That's what you're actually saying. And That's a euphemism for, I don't want to make the choice to be creative.

AI assessment note: “If you exert the emotional labor to do those two things... That's a choice.”

Q Can we dive a little bit more into the hacks? I mean, we see them everywhere. Where does the, the term hack originate? And then, uh, maybe dive into why they're so prolific. Why are we so drawn to those?

A Well, by now the word means three or four things. So let's just isolate them because I'm, I tend to use it in two different ways. There is the cracking hack of illegally opening somebody's systems and messing with them. There is the esteemed hack of figuring out how to use code or other forms of technology to solve an intractable problem in an elegant shortcut way. But there's also the hack of, uh, Figuring out exactly what the audience wants and giving it to them. That is the original definition of a hack. The borough in London called Hackney, uh, used to be on the outskirts of London when London was smaller and they raised horses there, but they didn't raise great horses. They didn't raise expensive horses or thoroughbred horses or beautiful horses or trained horses, just ordinary cheap horses. And if you were a cab driver, That's the horse for you. And that's why London cab drivers are called hacks.

AI assessment note: “The borough in London called Hackney... And that's why London cab drivers are called hacks.”

Q I really appreciate that insight. It sort of makes me wonder now, what is the goal of a book and what is a good book?

A So a book, when we say book, we're not talking about, um, Shakespeare or Steve Martin. I think we're talking about, uh, this kind of advice, how to, and miscellaneous that you and I traffic in. I think, well, I know when I first started, I did a 120 books as a book packager. That was my job. And I woke up in the morning and I said, I need to invent a book today or I will not get paid. But after permission marketing, it wasn't my job anymore. And the last 19 books I've only written because I had no choice, because the idea would not let me just turn it into a blog post. Because I would argue of my 7000 blog posts, I could easily have turned 200 of them into books. They could have carried a book. But I did the blog post, and then it's off my chest. I'm done. A book is two things. First, it's a signal to the reader to say this person, who you know could have written a blog post, decided to devote a year of his or her life to handing it to you in this complete form that is timeless and shareable. And the second part is, and now you can share it. You can have a book group. You can hand it to somebody else and say, this, let's talk about this. And those two pieces together are what every one of the successful books I've ever done have in common. That permission marketing helped invent email marketing as an industry because you could hand it to people you hired and say, this, this is …

AI assessment note: “A book is two things. First, it's a signal... second part is, and now you can share it”

Q That's interesting. I have a friend who's writing a book and I said, who's the book for? And he said, it's for everybody. Why do you think that we default to this big everybody concept?

A Right. So that book is going to fail. I happily put that in writing right this minute. That book is going to fail. Uh, Harry Potter, the most successful book franchise in history. It made the author over a billion dollars. That book is for almost no one, right? That book is for precocious Twelve-year-olds, and people who like to remember what it was like to be a precocious twelve-year-old. That's not everyone. That's a very small group of people, and we say it's for everyone because it's fuel. It helps us be an evangelist. It says, uh, I am going to be so generous that I'm going to bring something to the world that everyone will benefit from, but we are not who we are because of, uh, Our atoms, our molecules, our DNA. We're who we are because of the stories we tell ourselves about the pain we're in, the hopes we have, the dreams we live with.

AI assessment note: “we say it's for everyone because it's fuel. It helps us be an evangelist.”

Q I think it's important, too. We do have some control over the things that we control, but you mentioned friction. Can you explore that a little bit?

A Yeah, so the, you know, we, the convenience-obsessed internet and the tech behind it, um, have made it so certain things have so much less friction than they used to. I mean, I'm talking about trivial things like how long it takes to reach somebody with a message, because back at Spinnaker, when I worked there in the early eighties, there were 30, 40 FedEx envelopes waiting every day just to leave the building. Um, to more difficult bits of friction, like, um, how do we end up finding the resources to get the next piece of the puzzle in place? You know, the shelf space still matters. Your product might be great, but how do you get it on the shelves of Walmart? Or how do you get it on the shelves of Google? Because if you're not on the shelves of Walmart and you're not on the shelves of Google, you might be invisible. And it's friction that kept you there, not some sort of merit contest, in that in order for something to go forward, something else is going to have to move out of your way. A lot of what happens in Silicon Valley is friction reducing activities, but these friction reducing activities create their own sort of friction. Because maybe you don't know Reed, and maybe you don't get introduced in that one setting where things would have been easier. I mean, I just, this completely irrelevant story, uh, It was 1997, and they were launching ZDNet, which was SoftBank's TV n…

AI assessment note: “certain things have so much less friction than they used to.”

Q In reality, how do you make decisions? How do you make important decisions?

A What I found when I was 12 is that my mild case of ADD, uh, was either a curse or an asset, and it certainly got me in trouble at school, and it certainly made my life a lot more interesting because I'm easily swayed by novelty and bright shiny objects and opportunity and possibility. But what I also discovered shortly thereafter is that I could develop the willpower to wall off certain areas of choice so that I wouldn't end up chasing those sorts of novelty. I just decided, and so I don't look back. So I haven't had meat since Yearnings, cravings, whatsoever. I'm just done. And, um, by walling off areas of what I do and don't do, and how I do it, I've narrowed the frame of the decisions that I need to consider. And then within that frame, I try to use this, this, this math of how do I, uh, build resilience into the process? How do I see the dip that lies ahead with any given path? Because if I'm not willing to commit to something, it's probably not worth starting doing it. Because again, the novelty will be satisfied, but then I might be stuck without the objective that I sought. To serve. I will tell you that certain things that are designed to be really difficult, but somewhat trivial decisions, like what kind of car to buy, they can really mess me up for weeks at a time because there's no dominant choice. But when it comes to something like, should I have a podcast? The way…

AI assessment note: “by walling off areas of what I do and don't do”

Q That's a great point. I'm going to listen to that after this. Um, talk to me a little bit about shame. We avoid shame by avoiding blame. Can you expand on that?

A Okay, so what has happened in my lifetime, and it happened hundreds of years ago in Salem, Massachusetts, and it has happened in many other places, is that shame has been sharpened into a tool for cultural coercion and compliance. That what people have figured out is that shame is a, is a soft spot on almost everybody, and if you press that spot, people will shrink. They will run away. It is particularly used against women, but it is used against large numbers of people to cause them to not take an action. It's a ridiculous Method, because it doesn't scale, it's not humane, it is not, um, kind, and it's unpredictable, and yet we use it all the time. How dare you is not said often enough to people who are seeking to shame us, that what we need to do is take shame off the table and Because it extinguishes part of our humanity when we shame people. And shaming yourself, there's that trust yourself thing. Shaming yourself is something we do all the time. There's a rant in my book called The World's Worst Boss, and I just gave away the punchline. But basically, if you had a boss who woke you up in the middle of the night, scolded you for not working hard enough, criticized all your work, and told you you were never going to amount to anything, you would not work for that person for very long. And yet most of us, that is our own boss. That's who we work for, that voice in our head. A…

AI assessment note: “shame has been sharpened into a tool for cultural coercion and compliance.”

Q Do you think that part of that is our need to contribute to something larger than ourselves?

A Now, that's a really good question, because that's what I grew up with. I had amazing parents. I won the birthday lottery. A lot of people didn't have that luxury, that privilege, and yet many of those people have grown up to make a contribution, but we're also surrounded by people, many of whom are in the media, who make no contribution at all, who are just taking all the time. And sometimes we lionize those people, and sometimes we call those people heroes of ours. I don't think that that makes sense. I think the Forbes, uh, is actually, uh, a toxic, uh, pox on our culture because that's no way to measure someone's contribution. But apparently some people in many pockets of our world Believe that their role is not to be a contribution, but to get rewarded for exerting their power.

AI assessment note: “that's what I grew up with. I had amazing parents.”