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Ari Paul is the co-founder and Chief Investment Officer of BlockTower Capital. He was previously a portfolio manager for the University of Chicago's $8 billion endowment. Ari earned a BA in political science from the University of Pennsylvania, and an MBA from the University of Chicago with concentrations in economics, entrepreneurship, strategic management, and econometrics & statistics. 

In this episode, we talk about Ari’s passion for poker, and what the game taught him about investing, risk, and table selection, a powerful concept that applies to just about every field. Ari recently identified what he calls “the opportunity of a lifetime” — cryptocurrency. It led him to start investing in cryptocurrencies, a decision that was guided by Ari’s commitment to stretching boundaries. Finally, Ari discusses his passions for backpacking and travel, and like so many guests, Japan was one of Ari’s favorites. 

Time Codes: 

2:30 - 6:20: Background and departure from science. 

6:20 - 9:35: Playing poker and complete information. Tilt. 

9:35 - 14:25: Table selection. Phil Ivey. Sharp Ratio. 

14:25 - 17:40: Childhood/youth. Building skills and transferring them to trading. 

17:40 - 20:30: Value investing vs. momentum investing. Path dependency for crypto. 

20:30 - 24:00: All heuristics are regime dependent. 

24:00 - 28:25: Shorter attention spans. Analogies. Changing minds. 

28:25 - 32:30: Backpacking. Consuming information vs. going off the grid. Stoicism.

32:30 - 35:40: Japan/Osaka/Kyoto. Accelerated living. 

35:40 - 40:00: Consciously stretching boundaries ("Life is lived at the margins"). Behavioral economics. Internalizing stereotypes. 

40:00 - 43:20: Stretching boundaries applied to cryptocurrencies. Principal component analysis. 

43:20 - 44:00: Specializing vs. building bridges in your career. 

44:00 - 45:30: Moving away from hard skills

45:30 - 49:20: Perspectives and trust building pre and post internet. Signaling. Psychological bias. Overconfidence vs. familiarity. 

49:20.- 50:10: We don't know people like we think we do. 

50:10 - 53:35: Blogging and personal brand. Blogging as a way to falsify ideas. Cunningham's law. 

53:35 - 57:45: Learning > Ego. Power laws. Combined talents out of necessity can create a combinatorial edge. 

57:45 - 59:50: The experience of starting a crypto fund. 

59:50 - 1:03:50: Agency when there's no roadmap. MBA students. 

1:03:50 - 1:08:45: Breaking through natural momentum. Anchoring. Status quo bias. Fat pitch. Crypto as the opportunity of a lifetime. Hard work, burnout, and compounding.

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Books Mentioned: 

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TRANSCRIPT

00:00:02hello and welcome to the North Star I'm your host David Pharrell and this is the North Star podcast this show is a deep. I've been at the stories habits ideas strategies and rituals that died for build people and create in Norma 6S for them and while they gas or diverse they share profound similarities there guided I purposely with intense Joy learn passionately and see the world with a unique plants with each episode we get to jump into their minds soak up their hard-earned wisdom and apply it to our lives re Paul is the co-founder and CEO of blocked our cap and he was previously a portfolio manager for the University of Chicago's 8 billion dollar endowment re-earn to ba in political science from the University of Pennsylvania an MBA from the University of Chicago with concentrations in economics entrepreneurship strategic management econometrics and statistics in this episode we talk
00:01:02Grace First Love poker and what did Todd and manifesting risk and table selection a powerful concept that applies to just about every field re recently identified what he calls the opportunity of a lifetime cryptocurrencies it let him to start investing in cryptocurrencies a decision that was Guided by Ari's commitment to stretching boundaries finally re shares his personal passions for backpacking and travel and like so many previous guests Japan was one of Ari's favorites are welcome to the North Star so tell me a little bit about your background where you grew up and how did you get to where you are now okay so it really quick bio I was born in Israel came over as an infant though so I feel so much more Americans really grew up in a fairly typical middle class household in New Jersey probably element of my upbringing was really interested in system
00:02:02growing up I was really interested biology a little later on if you can genetics and Neuroscience
00:02:09North Raleigh I think it was I was really enjoyed understanding system like around my head around that's College thought I was going to do genetics and turned it seller chance laboratory so you can an active that reveals the reality of modern science so my job there was just awful flies are fruit flies that have Geno's that are weirdly similar to humans and so I'm supposed to First dissolve their skeletons in solution and then pry open the skulls pull out the brains of Easter sawflies we've been stained them to study fragile X syndrome and a big part is 8 as a freshman undergrad a big part of my job is mechanical work of crying out these little fruit fly grants it was kind of realization of that point that biological sciences it's a lot of experimentation it's a lot of like ever do that for 6 months for the patrols team in Japan or Francisco. Kind of replicated most of that the head of the lab professor of the Pinnacle
00:03:09Alex Lab at UPenn and we spent half of this time writing grants and before you hire me you spending 3 hours a day doing that dissecting but yourself. So I realized a great line some told me was if you want to be a biologist study chemistry it's going to be kind of study Physics you want to be a physicist physicist study math and I was never going to bring that petition there's there's a certain kind of Genius possession then I heard that it's six grade algebra petitioner abstract thinker and Science and experimental side is is yelling Eureka with the bathtub that moment of Discovery and modern biological sciences, wasn't that so that kind of left me little drift College majoring in in first history and political science and was with his mindset okay to tackle understanding the system of the body or of genetics or Neuroscience well now I'm tackle the system of people
00:04:09and history book science major don't do a great job of that and it's a very stylized look at the world
00:04:18odd so
00:04:20U of A few models that are being talked down any Frameworks you history of Marcus history it can be really like their names but example of a class remember my freshman year at 10 was we are studying history of the slave trade in Latin America so it was roughly want to see maybe 1500 to 1700 and you just a very superficial look at memorizing dates and if and if the answers to why did the slave trade happen what were the major forces and I didn't feel like I was Learning System I felt like I was learning I was memorizing set of facts where is it's a little bit like you have for example Anatomy we are studying bones and your physiology which is the movement of different parts of the body I want to learn the movement I want to learn kind of it the force behind and not just the right answers right and also have the parts that are illegible that that I think make systems thinking really interesting in what what I guess would make learning the facts not quite as interesting as you learn all the legible things and then you in many ways to shorten
00:05:20missing the forest for the trees yeah absolutely City playing poker online it's an underground Philadelphia poker clubs get into that cuz that seems to be the foundation of who you are how you're thinking and I guess your own world yes or are we started playing I got to play pokers a kid but but I didn't really get into it until I got to college I'm competitive by Nature so I if I'm going to play a game I generally want to win in poker is really attractive cuz it was kind of a fairly simple system to try to masturbate but it was a game of incomplete information is it really important idea so you game like chess it's a soluble game both players have all the information in front of them hookers game of incomplete information meaning of probabilistic in nature you can't vote the right answer is is a probabilistic right answer so you might solutes right where you're going to win
00:06:20play perfectly your kind of night at the better hand at the end of the hand so it's it's a unsolvable game and that's all you can optimize it that's a really extreme Concepts really critical for the whole class in college to laugh on that though so it's one thing was I played against a lot of a lot of fireworks a lot of underfell of undergrads there's not around Club in Philly that theoretically need legal Club because underground Foxworthy old is actually very professional Iran News like very safe there was free food it was it didn't feel like a needle setting up maybe once every other week different settings online poker
00:07:11you learn a lot about human nature so you can see
00:07:16you're one example would be there are a lot of players who were gone tilt tilt is a turn the basically just brought it and has brought us it just means you're playing sub-optimally for your own billing for psychological reasons so that means is you're angry or upset or you're frustrated and so you just are playing terribly so extreme case might be you have a professional flyer who got so upset they start going all in every hand and it will go broke right and knows better but they're emotionally frustrated or angry or something you know they're off mentally all the time never ever totally agree what you do is you make it to the bar to go until it becomes increasingly high from eating some dinner or something to get some very emotionally stoic might go until at the drop of a hat they won that hand a bad luck to five minutes by the end of my career I probably wouldn't go and tell him I said I hadn't slept for two days and I get my Asus broken four times in a row and you everything else went wrong in life and then when I did go on till you'll be a pretty minor
00:08:16so for one person going until it means they're going all in every hand lose all their money for the other person going on Till May just need to fold a little bit more than it should be home a little bit too conservative so one lesson was at home and you can minimize it you try to identify it within yourself and others I think that's going to be a helpful life lesson
00:08:37I'll take it right there and you learn something really interesting about table selection and then and then what you learn swear I've been that to me how did you decide where to play who to compete against later you move down into risk and it seems like maybe there's some parallels there but I really want to focus on table selection cuz you just came out with an interesting blog post on this yes, lesson that I got was there were a few players at UPenn we're better than they were better poker players practicing or a club or a crew or what was it really a clubber crew there was a small group of very passionate Flyers out there a lot of you can on the grass this was during the poker room show 2006 2002 to 2006 they're playing online everything with each other is a tons of Penn students played in Twitches phone number episode play high stakes and who were both more passionate about it a little bit better and so does may be 15 undergrads
00:09:37can you play with each other constantly we could also trade no straight strategy would sound better than sitting together and we just talked about poker quite a bit let me play heads-up they would fit way more often than not in a fruit game they would have crushed me if they're playing way I would be. Wow that they would just do without claiming he broke like constantly broke and the reason for that was they would playing the same games I can play and it would been lying and I would generally when you in mind as well they might win Moreland saying then they were challenged the world's best players heads up so thankful I be over and take a shot and stay with elbows poker players make their money is it is it nice big poker tournaments or was it online it's just enough points
00:10:37first I need a name for themselves somehow and it tournament or writing books or being on TV and then they get invited to ultra rich people's home games and that's where they make their money because at the end of the tournament you're playing against other professionals that's usually not have I just got a key out of a driver how are you going to do so you actually can't really slept your table you start off randomly signed it at the end you're probably a pretty tough table table select a better tournament but mostly the roads are really really good tires and make their money and home games or or kind of Invitation Only games online poker is kind of died but there's a point where is very attractive and what happens people like my friends they would sit down with Phil Ivey because you sliding they would sit down but I knew that and then I would love to have a mattress or or
00:11:37Professionals for just nowhere near his caliber go Challenger I can play a pretty good game and put but it's like playing for 10 20 30 hours is going to be me eventually cuz he's better and he's better than my friends as well and the difference was I would play against IV you know I did it twice for an hour each since I probably lost like 5 grand for lighting and I knew I was paying for the lesson and they would win they probably $100 over the course of their college care and literally lost it all to feel like in a few people like I know where is what I would do is okay lots of fiber and ID when you go back and make 20 brand from the weaker players you know before I can try and sneak slightly better, could you almost always ensure that you were going to do well I mean if your if you were too poor for table table that you thought that you could when I can you still almost guarantee that you're going to win some money
00:12:37so yes it's all the time frame that's all. So it's kind of a they finance to turn a Sharpe ratio so it's not how many to get to make an hour at most stable Ritz horrible horrible tires whether I'm up or down in an hour is still mostly black after 10 hours I'm probably something like 75 80 per-cent to be up at that horrible table and after a hundred hours I'm almost certain to anyway so it's no longer needs to be so when he plays against the guy in the world I need a thousand hours to figure out who the better players so really close and there's so much luck at all so it was when I when I play against portable tires in might be 20 or 30 or 40 hours till I can sure I was going to explain a lot of hours of Poker so I might only be 2 or 3 days from high school to college a lot of us are just get so obsessed with something so for 4
00:13:37cast of the swimming swimming seems to be a really had a really high correlation I don't know if it's jumping in the pool for two three hours and I'm competing at yourself for me was golf I I play college golf and then and then try to get up today I just was always compete against myself in and began to accept and appreciate this you know self responsibility and and and all that for you it sounds like it was poker so what happens when you take those lessons the things you learn from poker and then begin to apply and other domains particularly professional one's personal ones whatever
00:14:09so I went from poker trading which was a very natural extension idroid Franco's financial group was founded by poker players part of the training for Traders was poker literally they had a hundred hours of Poker trading of a poker playing as preparation for the trailer so they gave you treat poker as a real a precursor to trading because it's a game of incomplete information so early example of some engineer's generally Mayport Raiders and the reason for that is in engineering is right answer for me like you're the right that inputs you expected to be right answer and trading almost never it's because it's game of incomplete information so I made you a calculate the odds that the best hand extremely hot you only had to be Smokin Aces so I say a prayer that almost certainly
00:14:59jobs might be less than 50 50 now it might be that I can identify that's a person who only do that faces are Kinks maybe I can be off that I was an hour 1 and 3 engineer is really have to think that way and treating address analogy so I was trading crude oil while playing there's a terrorist group in Nigeria that would buy crude oil Futures that flow Pipelines
00:15:19Chinese think that I have B-flat insider trading right that that's that's kind of Next Level so I may think that I have the right model for very confident with their finger depressive on the will the pipeline to send prices higher there's someone out in trading and investing there's always someone who knows more than you do
00:15:39call a podcast of people can't see how your drop your drop the job lot of that in financial loss of course extreme case for it sorry terrorism but insider-trading is ubiquitous and as a my joints does a 2022 year old girl kid you're never the most knowledgeable person in the game in a c i just trading $10 worth of bonds and and currency and then Commodities in a flexible so you can say okay I got my model I think I know what natural gas is worth the hey it's only been me a hundred million dollars I'm wrong maybe I got to take my estimate that that's like the person that's like in my pocket kings but there's raised me all and I got to rethink this so from Poconos Ray natural calm your console. You're constantly updating your opinion
00:16:39outside of my own Circle competence and then also the podcast releasing focused on finance but let's jump into value investing which I think is sort of it has that inherently conservative slant and you know if you could just give the high-level what is it about value investing that's appeal to you how women able to sort of find some links between poker and how is that shaped your strategy in terms of investing to work but also how you live your life
00:17:04gotcha it isn't even super clear what it means so so the father of Benjamin Graham and it started meaning you were buying things below liquidation. She was a very conservative accounting approach to investing we think of Warren Buffett as kind of the modern Coca-Cola is just a brand right it gets gets hurt like as I actually think myself more than I messed around and I I struggle sometimes the Buffett Investments with your brother I'm not this is not Chris and buff it is just bought it doesn't think like layers on top of that of this growth aspect which is the best that's what size were consumer brands with moats talked about and he's always said I would rather overpay for great company then try to under paper that one message me a lot of things generally just means you're looking for something that is cheap relative to a fundamental appreciation was Valley
00:18:03it is almost it's just the flip side of the call Momentum trading so and I invest in your saying I think there's a plan on the value of something people don't like it why would something to training lessons from about you there's some cycle of a reason people don't like it usually is so maybe it's a it's it's it's about a bunch of paper mills in did well with those because once they only gave her milk or or maybe it's something like Enron debt after and runs bankrupt after announcements Camp after default it and then a reason the number one way around that was just his career wrist a psychological thing and training you're basically saying people really do the gas Suzy asked about something about to hop on hop on that wagon so I'm just confirming by Nature it's really hard I've never been one for Brans I've never been kind of a puppy
00:19:03and some Chaser just hard for me psychologically which is kind of really interesting in my current, current line where I'm now investing in things there isn't it's very hard mode final evaluation and there is this their own network effects of dependency hop on the more valuable they actually are some really hard to be a value muster in cryptocurrency so there's no real concept
00:19:37all your receipts are version dependent I know that's a really important sentence that is his father that pretty speakers on on your podcast about mental Models Super valuable and people people who were leaders
00:20:03a challenge though is there's metal model that are on this time actually opposed in it for everything you've got a Frozen sings Like a Rolling Stone covers no Moss doubles go rangers Angels Fear To Tread for everything you post you can pick and choose what truism was saying even what what investing truism and you can you convince yourself to do anything so what does it mean to say for example cut your losers on your winners from is that a good strategy and answers no it's not a good strategy it in summer jeans under some circumstances it's the right move and so a challenge with Chi mental models is people who are successful problem with anyone who's cob in the CIA in the right now which is directly giving advice to someone who's done something right the challenges that would I did write worked for me under very specific set of circumstances some of those Maven time what works in from 1990 to 2017 one The Surly work so is an example Warren Buffett famously said never bet against America and buff it was basically a printable his entire invest in career
00:21:03great because from 1950 to 2006 that was a graceful Market the world is ever see what you know so he like old was so successful in every single day and it never ever existed and that may have been Buffett correctly calling every death but the point is the next 50 years of us equities don't necessarily look like the last 50 years maybe they look like Japan if they look like sweet and review Ka'Oir lipsticks and a really dangerous if you don't understand why they worked and the contacts for whatever it's so something we're seeing now with kind of look at guys like Gary vaynerchuk McGarry every every talking had five or ten years ago I would have said that he's being a complete idiot and how he's building his business. His approach to kind of being a very out-there media personality very
00:22:03static genuine constantly out there was actually a horrible plan 30 years ago know any business going to succeed at doing it today is working great Publix factors change another realm is maybe politics right so the success that that goes Trump and Sanders had using social media for 20 years ago it wouldn't have been no way they would have scored concept as we mean never again have a non released in imma Say Never Again in the next 15 years we may not have a non populist President we may not have someone who isn't campaigning like a Sanders ER and then also a lot of people may say that I like to hang out with my friends it's could somebody like the rock or Kanye West become president because now you know if you go back to Bill Clinton running for president or let's go back to JFK vs Knicks in the face
00:23:031960 debate okay so what happens is this transition from radio television and people who listened on the radio thought that Nixon one people that watch on TV thought that John Kennedy but both of them were dependent on mass media to be be the bottleneck between their voices and consumers where is now president Trump or or Senator Sanders can go when they reach their audiences directly and so they might have an audience of a couple million I think Trump now has 16 17 million followers on Twitter he certainly didn't have that 2 years ago
00:23:41Paris by Kanye West says that The Rock has that and so I'm taking politics aside but they do now have a platform in a command over attention that is very powerful and I think can't be understated because we've already seen some Black Swan some pretty unpredictable things happen and the internet's only going to in infiltrate Society more actually any guy I love the Phoenix example that's a great like early early example of this to me it's a little disturbing so I prefer kind of a long form I like the book I like the essay I like the Deep dive and but I've come to accept that Society removing too short and short attention spans and so I kind of I fully accept that and so something that's going to be some out of time thinking about is in some ways I strive to be as professional an allergist
00:24:32other line from Norm Chomsky is that is really really hard to it is you're trying to repeat Pap need ideas sentence or two so you can you can reference something like I believe in the right to bear arms I believe the Second Amendment ever gets me what you're talking about if there's a gigantic history and yeah that's great well that's a Neil deGrasse Tyson an allergy so he gets all the credit there to introduce a model of your earnings for an hour write a book or any music at a captive audience and people just generally won't give me that chance so maybe now turned on by you but if you're young person I went over some reason famous as well known it's really hard to get people to sit down with an open mind
00:25:32to an audience from this totally boring that's a real steel real scope to it's kind of analogize so how have you been cultivating that skill was there an example of a time that it worked well for you like I agree with you that is a skill that I don't have so how would I begin to cultivate something like that something that I've been doing so good this house please. Very much kind of my day today so until a few weeks ago I was in here in Chicago endowment I was trying to convince people from the financial world that cryptocurrency have value cryptocurrency is a weird for an idea with many many foreign Concepts and so how do I convince someone but mostly keep on talking to for example the CIO of a down and then I can give me an hour with no but they're mine shuts off
00:26:21everyone says you can't grab someone in the first few minutes however much credibility have with them they're not listening you're grabbing them and then connecting you know there's some negative truth here to some value but they ready you know accepted her for me so I tried a lot of different approaches a lot of different angles and
00:26:44cuz I play for me we should have seen what works with with an audience and and you get feedback from people watch ghost faces are watching you know Twitter reactions or but just into something else backpacking I know that you are a passionate Backpacker you've backpack all over the world and a backpack in Japan what is it about backpacking because it seems like Krypto what I struggle with encrypt always there so much information there's so much going on it's such a complex system what benefits do you get personally professionally whatever from backpacking and taking some time off the grid one angle of it is kind of the classic stoicism of it if you have any of Maryland can I should always whether to get natural oxygen or just take off Merrill risks risks eating at the right time it really helps to understand that you're downsize probably not as bad as you think it is so most of us fear
00:27:40use camera personality so there was a point maybe 6 or 7 years ago where I was just got really bad when I was doing Brazilian jiu-jitsu which is what I was doing and I got my nose shattered actually just like broken really badly and I went to the yard hopefully you wasn't serious I was freaking out that's like me and my nose is not like not in the right place and I'm in some pain and all that and I kind of realized and it was like a bad and I actually felt like better we just got a really weird okay to stop and happened and I'm really totally fine it's also a reminder of like life pretty darn good about that afraid of losing their job is a job it's way awesome fear the thing we have to fear the in the effect more than the effect of self and I think that's true kind of into show some ideas if you practice poverty you realize you can survive if you realize you can survive
00:28:40tumors make you turn around here is terrified of am not a bellini and if you remind yourself periodically that your needs are fewer when you can be happy for a little bit kind of roots after so long and it's just a reminder that I really don't need that much to be happy life is so much to offer there's so much so much richness insperience of interpersonal and things you can explore on basically no money that it really helps me to remind me that I shouldn't fear financial aid at least not not an existential sense you know it's not a real it's not on there people who are supporting the family paycheck-to-paycheck and I respect that and then as a real fear is very rational there's also a lot of people who are making you know quite a bit of money to have some savings and a really more afraid of the loss of prestige or the loss of
00:29:40there's a job it's almost ready just it's like I'm an investment banker that's what I am I don't know who I am if I don't have that job if I'm out of work for 3 months what do I do when I go back I can remove that another one is just it's an incredibly Rich way to experience life so a great line from a Rolf Potts wrote the book bag of bonding is really good it's great I love it when I read that book I think it's a really read that book about a year ago and I just moved to New York City and I was feeling very overwhelmed and that book so it's about the turn of the benefits of taking one year off to your topic just traveling sort of below your means it just sort of really experiencing a blow through travel it gets your mind going in a really wonderful what about if you travel Rich you're surrounded by a buzz at the service sector so you stay in a nice hotel you're you're taken care of by the hotel concierge by you made you whatever you're not really forced to
00:30:40to interact with with the locals we are the people around you in a couple more meaningful human way and you're not forced to explore the bomb software is it is entirely on your own you don't speak the language and you get like a minor Murray's I went I was in Japan backpacking I was in Osaka Osaka said frankly some kind of ugly City it's it's it's all concrete it's known for sumo wrestling bars and nightlife but is it is it's not a terribly beautiful city and I got there and it was just storming I got there maybe ATM trench downpour I spoke to Japanese I got dropped off my my taxi driver had no idea where I was going I didn't know you were I was going this was I guess things like Google Maps existed but forever I didn't have it or didn't work in Japan right now but I was trying I was in the pouring rain with you know 35 lb backpack exhausted
00:31:40that cold one around for like 2 hours trying to find this is hospital but I'm staying at finally got there at the recover a couple like lessons from that so one was when I got there in like put on a warm pair of dry socks ever been since this is a pair of warm dry socks it doesn't take that much the other being just getting there and had a meeting the other Travelers in the hospital hosts and connecting with them and talking and sitting up plans are the next 2 days I think you just it it's a lot of Life condensed see if your normal routine breaks for the year living in that in New York living wherever you do your day in day out I feel like I live as much in 2 weeks a backpacking as I do like a year ago in a life cuz you just give me so many people your 4th or Sony
00:32:23it's like only new experiences or experiences
00:32:27Sandoz make those are some of the more favorable memories or more interesting so I got another from the Japan trip I was in Kyoto just a week after Osaka and I didn't really care I say it's only $20 a night youth hostels there like $200 nitrile conster traditional Japanese in available but it was awesome viewing season in Kyoto Sakura are cherry blossoms and so literally every hotel is taken every hotel and so the only place that was open was a capsule hotel where there for drunk businessman fruit bars to go home to their families and they they sleep 3 vertically so there are these like they're not my pets they're like their castles they're literally castles you crawl in they have maybe a foot of cigarettes over your head and actually clean well pointed totally fine bros have an interesting like I probably never would have stayed in a hotel
00:33:27I stayed it you have on sandwich or the hot water Springs and a lot of them have it's funny I don't know if there laws against it or what but they they usually won't have actual like beds for sleeping arrangements with her example media viewing rooms you can rent for 8 hours and you'll see like for Backpackers huddle and sleeping bags and I needed you and groom so I'm not sure if they're like getting around relations or whatever but I'm booked because another kind of benign anecdotes but like you know things always go wrong you're backing and make it stories definitely I want to dive back into you and your worldview you have an idea of deliberately stretching boundaries and I know that that is going to be a fun Rabbit Hole so let's go down it yeah I think I'm a little bit more conservative and momentum gym in a little bit more of a creature of habit and I really don't like that I think it's a very
00:34:21I know how much life is left at the margin and and
00:34:27yeah I think it's so much value kind of pushing a comfort sensor I think as people as animals we almost all defaults to what's comfortable and you can usually fairly easily stretch your comfort zone but wasn't comfortable is no longer it sits the weather like at your body like you got stronger by yourself for a little bit of pain and as you know I'm the person who's the the Wallflower and is embarrassed to ask out some of the opposite sex you do it 10 times and then is no longer painful afraid of something unpleasant sing with you. Okay maybe running stinks you on a few jobs not that meeting start looking forward to it it's so clear like they would tell you I can stay in your comfort zone push your boundaries right it's such a truism did it and it is true and and so for me it's like there's some people from that comes really naturally I have to constantly force myself to do it
00:35:27but things like backpacking with things like it can be putting yourself in social situations that are Challenger operate it can be tackling like when nursing thing is is people tend to do what they're good as children so they actually really cool I'm not I'm not sure but children who are in the older 6 months of their grade year or more likely become professional athletes and children younger 6 months much more likely much more like them so why is that because if you're a little bit older if you're just four months older than your average classmate as a 4th grader you're probably a little bigger and you probably do a little better baseball or basketball football so crazy that that form of age difference seems to dramatically impact other someone becomes an athlete or not and I think let me see that like when you tell a girl about how powerful is he does to Prime someone so if you tell someone some of his work has been done in the context of stereotypes if you if you remind someone of your mind a woman that she's a woman before she takes a math test
00:36:27she seems to do worse if if she's Asian and remind her that she's Asian she seems to do better if you remind basically people have some internalized stereotypes and if you just Prime them immediately before there to remind someone of The Stereotype whether is positive or negative it seems that they are performance
00:36:49so I think your cut, costly pushing ourselves into the into the uncomfortable Zone into
00:36:58really stressing about these are mines just leave so much my future life and and Sharna capabilities and is that can be drinking some other examples
00:37:08some some some Conway Twitty I see the competition so we tend to do the things were good at we tend to never go to British for you're more likely to do it it's really freaking to to just be like you know what I think I'm going to do it I enjoy it as I can and it's okay though. I think that's really like when I was in high school that's right natural and I'm not saying you can kind of strange but I kind of realized how dumb that was to let that stress your life because whether you're good at something generally if you're not really judging on rightscale so it might make sense if your professional basketball player it make sense to ask can I write in my computer that level but it really shouldn't whether you spend time playing basketball as a hobby should really depend on where you are in the car you can find the right week for you and you can find you know what I intend to send that idea too kind of business or Finance or anything like that the fact that some things that some aspect of
00:38:08session is more of a struggle it's very likely that you can overcome that by being really good at other things the entire feel it's every for every two words I read there's three words that I just am not familiar with and then there's down a whole new rabbit hole so I'm wondering and I almost feel like you work in the domain where that is the norm so I'm wondering how is that affected your work how you're pursuing watching a fun and also exploring this extremely complex nuanced than just for the wide in a way that's hard to match no sort of that space
00:38:46so you can get before I got into crypto my rohlfing endowment I was kind of a Quant plopping short for quantitative analyst kind of it wasn't he was I had a lot of work to do but I really wasn't I wasn't fat by Nature that people hardly knew that they were basically just I hate like take as long as you need to figure it out kind of things to learn how to do like for me it was very very hard math for mathematicians trivial easy no it's not rocket science but for me it was right beside so I had to I spent saw them off to understand I was like I know there's 21 up loud and get this in an hour
00:39:35could Bridge different skills so you have the quants who were incredibly talented mathematical your creative programming and almost none of them could communicate complex ideas to an audience that wasn't so what I found it became a little bit I know I was good enough want to do that work at least understand the word Foster doing and I never really thought of myself as great communicators Communicator to communicate that to I've got a good enough in a bunch of these things and we're a few people who are confident at all that make sense like so a bit of a jack-of-all-trades the population but I cuss a thing but I was good enough to bridge those those those islands and end
00:40:23this is not a common, referring to your liking say now it's very true it's much easier to be valuable to society and to have a successful career as a bridge-builder or or as a bit of a jackal Trade Center lease specials optimal strategy for the first 5 years of your career so we find that long term that is without a doubt optimal we fight all the people that we respect generally bridge two or three different scales but at the beginning of your career that seems to be a huge limiting factor yeah yeah you can't start off trying to be a jack-of-all-trades or even multiple you had you have to you have to pursue Reality Part of any part of that is because we just graduated college of graduate school even it's hard for you to add value
00:41:22a great line I would like Mike was literally had my first day of pan where they brought out there trying to research program they brought a professor history and he said so if you're useless to me as researchers they need five years of History under their belt before they can do anything is helpful as a freshman how much was I going to really add to the genetic side of things right so I think when is it happening as you get higher to ask right and you you learned through that. That's how you justify your salary goes first couple years and you gradually learn that pen specialized skill set and then overtime maybe you add another second and the third skill-set often I think
00:42:11removing away from Hartsville set screen. Evil very very quickly so things like like I would advise people against to go to a ton of time to learn coding so special basically programming itself coating if them boots are if-then statements are for Loops for example it's going to be somewhere around things becoming much more valuable sauce girls 8 years ago I would have said like really respect for today but but less and less what's happening now is like the top one percent of those professions that it sounded like the very best programmers in the world are incredibly valuable to society into themselves out to be a good programmer
00:43:11so we're very quickly heading to a world where it's the sauce pills that have Value City bility to persuade to connect to manage and then also I would argue it's your perspective like I think that what what what is attractive about having conversation with you and why did white people following you on Twitter is it's the way that you're able to synthesize poker risk and cryptocurrencies in a way that quite literally nobody else in the world can and if there are others it's no more than 10 and so I think that that perspective is what makes people interesting valuable and and and now we have so much choice and tell me what it's like when I think of a branch right it's so often what happened to choosing a brand not because I need a t-shirt to keep you warm I mean there's t-shirts out there but it what kind of t-shirt will represent Who I Am the identity. I want you in body and what I want to say to the world and usually then what you swore to get into that there's only one or two of those
00:44:06so did the sneezes into a slight change to buy things interesting and hopefully you listen as well as well as investor this headphone manager for 10 years and often matters mental and credibility is meant to say you should be comfortable and guess who this person
00:44:26but that person would be a really really think such a manager who's been on the cover of magazines for 20 years and they be competing Ann Arbor Ann Arbor folio against someone who also has been on the cover of magazines for 20 years but who may be we that managing director just had to happen to me we just had to happen to me than 10 years ago that dinner was really weird to me like why does it matter if you happen to have a dinner with that person 10 years ago when they mean the first meeting and the answer is before the internet
00:44:58how to build trust is largely based on like a prisoner escaping prisoner's dilemma through repeated games so how do you build credibility in any business it's you show your trustworthy over and over and over and you will have a ton of reputation capital and then people hope you don't cheat because you're building false reputation. Right job for they go date change careers right so there's a signal marketing it's it's even less than 20 years in your own reputation within an industry or probably throw it away for a little bit of money free internet that meant for you personally knew someone or you knew someone who knew someone makes total sense to really emphasize that I don't think there's any more so I can bet you're pretty well I can I can figure out who I can find it I can figure out if I can trust them through there
00:45:58it's it's called a call it a overconfidence in familiarity
00:46:03so it's interesting fact of media so people who if you follow someone on Twitter or that you see son on TV you feel like you know you feel like your friends you feel like you're gone you know if someone's been on your television like it if you let me know the Seinfeld Jay Leno actually interesting so I just finished the book called attention Merchants by Tim woo hoo who is really good at going very in-depth and and writes with a ton of details and so when Oprah was coming up when she would work with her camera crew and what they did was they weren't super close ups and and and so when you see somebody on TV you actually feel like you know them because because you actually see them so much closer like right now we're about 4 or 5 feet away most of your friends are two three feet away put on TV and it actually YouTube the same way my favorite YouTuber caseinase that don't know so close out that the entire screen is from his nose to his forehead and so on TV you feel
00:46:58you want to get closer to people than you ever do in real life so that sort of communicates that sort of asymmetric feeling of closeness and familiarity and then what I find interesting about Twitter is you getting some you get inside somebody else's mind so often times I'll be tweeting and I'll send that we don't forget about it but my Twitter followers in some ways know me better than I know myself really think they do at least they think that it is anything but like I said I think of myself as being totally transparent and honest on Twitter but it's not like I shared Everything Is it supposed to rain
00:47:37there's an investment manager so I should I be worried about that for these letters he's written these long letter to shareholders for 15 years now and you really don't worry about this is incredibly complex man he is not the author of Sri rampai you think he is he's just he's a real human being with with all the multi facets you expect my brilliant names with incredibly rich life what we see as letters for shareholders is a 10% slice of who he is but he chooses to show us and that's not an attack on him that just kind of the reality so but but it's incredibly valuable to him as valuable to anyone who makes you sad that mentality which is even establish the strong bond of trust
00:48:20but then also I I am curious to hear how you start a blog and I know what 2008 you started your newsletter risk of reward and I'm wondering how that turned into an email list and then a pretty popular blog and then now you started a crypto find and you're very active on Twitter how do you think about transparency and how conscious or are you about your personal brand insertable you're putting out there I've always liked riding Android I needed to clarify my ideas I've always think except in written form or or really crystalize for me but I have to stop down and ask when I say for one I wanted I was training full time I was missed a little bit more academic intellectual trading is very focused on short-term it's I don't care where where it's actually in 6 months I can be there in 5 minutes we're 5 days at the most
00:49:20class but now I can't because there was a way for me to learn the media is also away from your false fun ideas so I almost never get things right on the first try there's some people a Great Liner. George Washington when he was going to take a really long time to deliver a time do decision if it was always the right one I'm kind of the opposite but often wrong and so what I do is I'll throw out the first idea to wear very smart very knowledgeable and safe tell me what's wrong you don't like explicitly saying is this right or wrong sometimes I'll just ate it I'll pretend it's a statement so one of the reasons I go back in March was to take to take advantage of the fast way to learn something on the Internet is not ask questions to say something incorrect so if you want to know the actual population of France don't say on Twitter what's the population of France people tell you Google a moron if you say the population of France is 40 million you're going to have a thousand people responding with a link to Wikipedia or a link to being like you're an idiot you know your number to prove you wrong
00:50:20so I joined Twitter to follow people in a lot more about cryptocurrency when I did and sometimes I ask specific questions and as you might guess when I was asking like the most knowledgeable people on the planet to explain basic things to me sounds like the only time I would tell these people like for example the Bitcoin core developers are Super Genius programmers who have no interest in explaining kind of like computer science 101 to make but I never lied I never if I if I knew the answer something I wouldn't like pretend I didn't but if I develop her if that person I know is the world around something they make a statement and it just sounds wrong to me I know I'm wrong I know they're right right but I still would answer I'm still argue I still answer with your wrong here's why and I would wait for them to correct me and was amazing was a Austin wood for you know hours of pick a part of my argument and go come back and forth to go deep and I always express my gratitude afterwards and then and develop friendships out of that
00:51:20the word for me I need to get up quickly come up with ideas first them and then challenge other people shooting down and Twitter's is remarkably efficient vehicle for that if I'm wrong if I search something was wrong from a kind of computer science perspective I've got you know 6,000 people with PhD in computer science following me we're going to immediately I'm wrong I don't know as soon as I can
00:51:47how do you close by that I mean I'm sensing what are you admiring about you that I didn't realize it about you was what before this conversation voice is is your ability to put you go down and to Value learning the truth oh for being right which of course to go back to Africa son's is is is something that we all strive to do but it's extremely difficult and I'm sensing it's a little bit like with the table selection right you your ego wants you to go to the top table and and play to win but the rational Part of Yourself says no it's a little worse and make some cash and some wondering how you been able to cultivate that cuz that's something I'd I'd like to close baby myself
00:52:31it was definitely trial and error or large should say maybe like learning through my understanding was very much the table and I actually think that's how the school system trains you to be a sand and take on me to take whatever cigarettes custom in Easton but it's you there people who are able to go their entire life always being smart person the room not many right by definition it gives it its a bad go to have Because unless you were the smartest person in the room forever rightly girls from this point there a couple people in the Hat's off to him like What U Sports is analogy so you a lot of kid I feel really bad for child athletes stars because let's say you were the king of PeeWee Tennessee of your soccer league when you were in 5th grade
00:53:31you might even the best of 20 kids and you felt really good in those were your self-esteem came from and then you went and then the best out of 20 kids eat showing the traveling soccer team and most of those kids were then disappointed they realize managers average in this new crap maybe one of that's why you so I can keep going up until eventually you get to the professionals and then you're left with you know whatever 50 world-class players in a sport out of you had probably 50 Thousand Trails right so for the 50 things work out pretty well or at least for the maybe even the three right away you'll get something like the Olympics that the fourth best swimmer in the world South lot of people are so competitive it's appointed the world they feel like losers huge power law yeah yeah I realized fairly early on that I just wasn't going to be the smartest guy in the room or the best really anything so I'm in poker Edge new like me better than fighting in science I'm not going to be one of the you know 30 mathematicians were really change
00:54:31the face of math even Eminem trading so all I got was a decent Raider but I do like I'm not one of the top hundred Traders on the planet and I'm not going to be there just certain raw talent that that that that you're not crazy how large is the same as realizing like okay like you're really good at basketball but I'm not going to be the king of the NBA it almost seems like they're being the most talented one domain you can be the only person who's talented and three or four yeah yes rats like well I can't be the best Trader in the world I can't beat those plants in the world what am I good at what can what can I how do I add value to the system so I plugged into a system where you have the system and it's like it was literally a surprise it was I was surprised at how few connectors there were how few people there were the bridge those gaps in that's true and almost everything I'm assuming you read about
00:55:31I'm just some of the people we have on you on on your show who were we're connecting different disciplines nectar from feels like I've literally just basically started this year was there just aren't that many people who is so my thinking was it's a year ago I had friends who said when he started my answer was I'm not a photographer I'm not an engineer like surely there people on the planet who are both confident Raiders ever fully managers and photographers in juniors and the reality is probably like zero or maybe there's one or two but they haven't met one yet so if there's some people who are so what I did was okay like I have a strong train background stopper Floyd on Rivers management I'm going to work my ass off and work really really hard to become a c-level student Photography in computer science and daddy now but I'm going to get to see and then and I don't put me
00:56:31what is like there aren't that many people who were on the road on the map on both of those things and I think that's why I like the Twitter Community to block it done while because I was one of the very few people that were trying to understand it was yesterday. Name at Robert Shiller guy called Bubble and he didn't even know some very basic terms around cryptocurrency was cleared yet and spent like if he had spent a good hour researching he would have no more than just a guy who was really tired of people who were clearly nothing but I wasn't bothered to learn it so
00:57:31I understand it has a lot of eye
00:57:34Joe how I'm a moderate biggest crypto is is it's just a great metaphor for so many things I don't want this to be crypto specific but but but what I find so interesting about crypto is you have to take control of your own learning there's there's there's no road map that says dishes the crypto Playbook because that road map would be out of date in the month and so I'm wondering how do you think about your own learning get all the things we all struggle between what podcasts to Listen to Who Do you interact with like how do you actually take agency of your own learning and become an expert in something when there is no road map to I Love It I think there's some people who really want to have a road map laid out in front of them they want to be told I miss is a lot of fun of the way schooling teachers of these days which is here is a D&C hear the Hoops to jump through if you jump through all the Hoops your orders Goldstar does a lot of people who go through life like that and it got really disappointed because they were climbing the wrong ladder they were claiming they were thought they were jumping through all the Hoops they were the right Hoops for 10 or 20 or 30 years ago
00:58:34so I see this all the time like Andy students so any students consistently Target the career that was the right career path 20 years ago so happens if you get a ton of people who were trying to go from Harvard MBA in an MBA program into like upper manufacturing management they want to become g e r g m managers you know 10 years ago after that after this worried I'm basically is a career path then you got a ton of people who wanted to get into tritional Finance to personal finances are shrinking industry algorithmic trading General insulation across the industry disambiguation to whole lot like the number of people who are needed at at big big Banks and it had fun and all that is shrinking progressively and you know that's how to really smart people were trying to get into it was that was felt way to get rich 10 years ago I never been like that we struggle with that I don't really like having the past clearly laid-out I've always much much more enjoyed it and I feel much more natural means try to piece things together and there's two really different skill sets so
00:59:34you people are really good at broadly speaking attention to detail so they're very good at following instructions I don't do matinee insulting way that's such a critical skill is incredibly valuable and many many things and then I definitely been a little bit weaker for me what would which Matters by the way so for example like my co-founder of this hedge fund is much better at that than I am and so he's our CEO and which leads me to be the CIO and and and he keeps the trains running on time because a lot of other things really well I don't even say that that's all but that's one thing where I probably couldn't put the pieces together myself it's fascinating at this point in this in in cryptocurrency that it's so nice and it's so early stage everyone's trying to figure it out so I'm having conversations with the other air quotes about leaders and who really just trying to struggling to create even the most supplemental models and simple framework through like a class
01:00:34really basic ideas of what I think about a lot of nose so
01:00:40but I kind of like I just put that attention if you don't think there's some professions where it's really about reducing her error rate for example if your surgeon is mostly about not making a mistake if you're so a really good investment back or maybe makes one air out of a million on a spreadsheet and a bad one makes 1 hour and a hundred it's really hard to be extraordinary like in a positive sense right where is there a lot of other professions if you're an Entertainer marketer in sometimes lunch membership where you can actually make up for a lot of mistakes with one stroke of Brilliance as it doesn't matter if we try to do that so as a investor in crypto Market Place you're trying to trade Commodities economedes not mistakes because it's so cut-throat it's so competitive it's so tight you make one error the cost you 3% there's a whole year like every year because we're fighting out before my two or three percent in cryptocurrency though single brilliant decision might give you a 10 x return that can make up for a lot of errors and end for me as long are fun
01:01:40I really enjoy spending my time trying to think creatively in a little bit outside the box and and look for those home runs but at least the whole thing to like let me make sure I I don't I don't make any errors ever
01:01:56definitely one thing I'm going to do what am I doing after this cuz I think I would like it I think our listeners would really like it I'm just going to ask you for some resources to sort of link to with crypto and Stella Link to all those in the show notes and the last thing that I want to talk I was just another Mantra of yours that I thought was really interesting and that is breaking through natural momentum can you talk about what that means and why and when supporting you yeah I hate applies you know if you come throughout life and all contacts and everything for my IC analogy of a great example of you know I asked me out a potential significant other it can be changing careers in be here it's just as soon as we lost many of those are anchoring in one form or another we are creatures of comfort psychologically physically mentally come in every way and we default to that
01:02:48and so most people should constantly fighting against that there are a few people who might be people on the other end of the string but most of us are creatures of comfort to a 2in access so we want to put that in your contacts gears my General Life View you generally want to spend most of your life most York really should frame it is a fairly conservative dilijan gaining skills keeping doors open kind of folks on opportunity broccoli and then once in a blue moon a massive opportunity comes across and that's when you take the job and sees it that's when you just when you go all into Zippo chronology so a good poker player one if this is another resume depending ristic being a good poker player but generally the Best Buy or spend most of their time folding mean fairly conservative in most hands are conservative but then every once in awhile there's a hand where there's an opportunity you go all-in anymore screen that you find yourself in a table
01:03:48incredibly saw table filled with fish where you have to you don't tell your normal Turtle game cuz you're going to leave money on the table that's when you just start getting much more aggressive you take advantage of every mistake they're making cuz you can't use that opportunity says they're so for me it was my ferret has someone been that with a few kind of oscillations so I left I just went to rational group a big profiting firm that was a relatively cushy conservative place to trade in the sense that I was treating the firm's money not my own was a great place to work there was there very supportive in the sense that if things were going great for you they would try to help you they would try to kind of move you to another see if they would he would like training zariski career and if you were good you would be out the door actually but it was a relatively safe place to trade I left to do to get rid of rust raiding my reminders if you lose not only you're out of a job or else I feel like saying it's kind of like dripping down on your skills
01:04:48opportunity and it was kind of I did okay so that was right when algorithmic trading was taking off that's kind of trading I was doing. Much much much harder so I made a living doing it but it wasn't quite frankly a little bit of disappointment he was very conscious risk of it I'm not really risking that much and kind of license is a fantastic job love my colleagues let me down and let it blow up at work but then cryptocurrency came along it was very good it was like this is the opportunity of a lifetime. And every regard to the afternoon flight time from an intellectual curiosity perspective so it's so exciting to me to hang out with the developers who like Steve Jobs and Bill Gates in the garage it's my raise people who are remaking the world around us and be part of that in any way this is an option of light time and a girl
01:05:48fund international finance if you really hard cuz I be competing against the giant big hedge funds I'll be competing against to Citadel renntech at their own game and had a really really hard Peter tlsbooks 0 to 100 the challenge of communicating how to take new complex leprechaun ideas and make them seem familiar
01:06:17here makes a point that you're trying to create something really really big you have to start you can't take on Amazon at their own game so like what an Amazon do they they were they did it antique books and nobles trying to sell spy novels rear playoffs opportunity because basically no one else is in there so few kind of establish ourselves as as leaders in space and that's how you make something big that's how it's so funny because as as I've been exploring more and more I find that there's like the very smartest people that I know they don't like burn themselves off out with working really hard and I was trying to figure out why because in my mental model the world that I actually think this is a very industrialist mindset it's to be successful you just have to work so hard to be so exhausted but then what I found was the really successful people
01:07:17totally violated that model and what they do is they found monopolies places where they have a perspective perspective Advantage a big comparative advantage and actually yesterday I forget how I got down this rabbit hole but I was cooking yesterday I was looking at the The Glassdoor reviews for palantir actually Peter kills company and it's like really positive we get lots of Freedom food I was like how does this like 20 30 billion dollar company in the private markets how was it like that and I think it goes back to that monopolies thing where if you have that mow it's like an intellectual know it's like some sort of Monopoly you can get away with that and I think over time then you can use the extra time to start a compound or knowledge which then leads to even more games over time nothing I work all I struggle to I was trouble putting like the eye banking hours generally at the moment it's definitely nice an hour days trying to get hey it's just like cryptocurrency itself is 24/7 the markets always open
01:08:17it was usually in a lot of time
01:08:20decision making offers right like there's a lot of research studies that like you know what you're not making good decisions if you haven't slept for example I think if your company has not been more by 5 p.m. if I want to actually think strategically and build out anything new and grow and hire new people and do all that. That's after 5 p.m. that that's when it starts researching you I mean to literally like getting the trades done with the operational stop the right Solutions all that stuff that takes up a full day and then it's killing me research new projects only stay abreast of of new studies let me so there is an element there I don't think you can be competitive in a fast-changing thing like this working 50 hours a week even I wouldn't tell anyone how are they should work like everyone has their own life I want size like their own happiness
01:09:19I do think there's an element just putting in time I will say though if you're putting in time and it filled and it's repetitive anyway or if it's not about putting the times on ours is not have your button seat out of work hard it's every hour to become something and if it's not letting people underestimate if you're in vicious you should not be you should not be wasting time and by that I mean doing work there's not a jerk so you should spend like let's hear making otter 50 Grand a year it may make sense to hire someone for your face 65 reindeer which may sound crazy about hiring someone they might make sense to pay two-thirds of your salary to someone else to do 90% of the grammar so that you can focus on the Strategic stuff see you for example mean you're trying to grow anything whether it's a business or your own brand or anything you should be hiring people with lazy cats do everything that you do so I'm trying
01:10:19everything there's literally nothing that I want to do and that I can find someone who can do something like you better than me and I'll look for the next think the next thing where I can add value nextag Explorer then strategic expansion the next working hard that usually means I should be Outsourcing something I should be better leverage myself with that said like there's a lottery I got to do is say I ain't going to fast changing space you know there's also I wanted to just having personal relationship like relationships with huge rights over for whatever you're down for what we're doing having relationships with developers with the engineers is critical and every conversation takes time
01:11:07definitely will all right thank you so much I will link to those cryptocurrency resources in the show notes and thank you so much for your time in the midst of starting starting your firm that I know this is really exciting time for you and congratulations and thank you so much thanks very much for having me again it's David here one more time please text a friend or family member or a co-worker who would enjoy all these ideas or you can share the podcast on Twitter or Facebook and to listen to other episodes or to learn more about the North Star you can connect with me directly at / l.com and you can always reach out on Twitter at David underscore perel and if you enjoyed this episode you like the episode with Josh Wolf the co-founder and managing partner at Lux Capital text to conduit for producing this episode and thanks so much for listening

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