99 Years of Charlie Munger Wisdom in 44 Minutes

Okay, I'll start with a very easy one. So one of his big ideas is to get what you want, you need to deserve what you want. And so he says the easiest way to get everything that you want is to deserve it. And it's so simple that it's almost like obnoxiously simple, this advice. If you want the partner you want, you should be deserving of that level of partner, right? Make yourself worthy of a partner like that. Uh, same thing with investments. He kind of calls out a few things that money can't buy. So he's like, um, trust in other people, uh, success and admiration. Those are things you cannot buy, you can only earn. And so if you want somebody's admiration, deserve it. If you want somebody's trust, deserve it. If you want success, deserve it. And I'll share like a very simple, more practical anecdote about this, because again, like his big ideas are amazing, but they just sort float in the clouds unless you bring it to earth with a real tactical example. So when we sold the Milk Road, I've said this before, but one of the reasons we sold to the guys we did was I really, really respected these guys. It was not the highest offer, but these were the highest quality people that we could sell to. And we just had a hunch that selling to the highest quality people will result in the best long-term outcome. For every dollar we're taking less today, we might create 3 more dollars in the future just by being around high-quality people. And I'll tell you a story that came out of the due diligence that like was like a nugget of gold that stuck with me. That was exactly this. So one of the guys that sold his businesses for about $90 to $100 million, and the other guy had sold his business for over $200 million. And both of them had built businesses that were SEO-based. And I know a lot of things about marketing and growth, but I know zero about SEO. I am an absolute beginner novice. I never touch SEO. I don't do businesses that are SEO-based. I literally know nothing. And so one of the ways I priced in the deal was Oh, I'm going to learn SEO from these guys who are frankly masters at SEO. And so we get to the point where we do the deal. We're not negotiating anymore. And I'm like, oh good, I'm going to start digging. I'm going to start picking these guys' brains for SEO shit. So I sat them down. I was like, you're going to teach me about SEO now. And they started to tell me something, but I was like, okay, okay, that's the general stuff. I've heard that stuff before. Like, what's the like real like master shit? What's the real like black belt shit that I don't know about that you can't just Google and read in, you know, some blog that like helped you guys create You know, one guy created the number one search result for if you say, I want to buy gold online. And that's the business that was, you know, sold for a few hundred million dollars that he bootstrapped that, you know, never raised any money. And he did it because he knew how to be the top result for buy gold online. I said, how'd you do it, bro? What'd you do? Was it some, some hack, some technique? And he's like, you know, we did all the normal things. And he's like, and I tried some of these hacks or techniques. It didn't really work. And he's like, so then he's like, you know what happened was one day I Googled how to buy gold online and we were the 5th result at the time. He's like, so then I printed out all 5 of the results, us being number 5, and I printed 1 through 4 also. And I sat down for an hour and I just looked at them and I read them. And he's like, I had an honest conversation with myself of why would I click on my page? What is better about my page than these other pages? And I was like, wait, so you didn't like do some like black hat SEO shit that was like this like advanced trick? And he was like, no. He's like, we didn't deserve the click. We weren't better pages. He's so, he's like, so all I did for the next year was every week I printed out all the pages and then I made my page like, you know, 10% better. Well, I figured out one way that we could be better as objectively better, even if we weren't moving up in the ranks yet. That I could look at it and say, this is a better page. We deserve to be higher ranked. And I had literally never heard this. And I was like, on one hand, in the moment, honestly, I was kind of disappointed. I was like, dude, I came to you for that secret juju about SEO. Like, I'm not trying to have this, like, you got to work hard and just actually make a better page. But it was also kind of like refreshing. It's like you go to the people who are masters of SEO and they're like, yeah, you could do all the tricks, but at the end of the day, you have to have the best result. Like, You have to have the best page and you have to have an honest conversation with yourself of is your page better than these other pages? He's like, if you really want to sustainably like climb the ranks and be the number one, that's it. And that was such a like tangible business example of like to get what you want, you have to deserve what you want. And, uh, I'll never forget that. That was like one of the biggest takeaways I had of the whole process.

Right. So that's number 2. I love that one. He says, I'm not entitled to an opinion. Like I can't have conviction until I can argue the other side better than someone who believes the other side. And he's like, he's like, people think this is some like crazy high bar. And those people haven't ever asked somebody who believes something why they believe it. Like, it's actually quite a low bar to surpass their own, like, their own understanding of something. And, you know, I think about this with like Bitcoin, for example. I'm a Bitcoin believer, and my approach to this was always to say, here's all the reasons why I believe in Bitcoin. It just makes sense for, you know, reason A, B, C, and D. But actually, the better way to do is to say, Smart people who don't believe in Bitcoin would say A, B, and C, and I understand that. And here's what I think about those and why I've landed on the side of conviction that I have. It's just a much better logical way to think than to just say, here's what I believe and I'm going to come up with all the evidence. I'm even going to make up some of it to justify my opinion, which is, I would say, how 9 out of 10 people— What do we call it?

There's this cool, uh, story from, I think it's called Making of an American Capitalist. And so they talk about how the— here, I'll read it, just the, this part from the book. They go, physically, Munger was unimpressive. He had an elf-like face, pasty skin, and glasses an inch thick. Though something of a snob and highly judgmental, he had a deep sense of ethics, and his smarts were matched by Churchillian self-assurance. Once he was asked if he could play the piano and Munger replied, I don't know, I've never tried. And I thought like, what a telling line. Like what a telling line. So most people, you say, no, I can't play the piano. This was, I probably could. It's, there's definitely a potential that I will be a great piano player. I just haven't tried. And when I read that line, I just thought, This man's beautiful. This man's one of a kind. And I love people like that because myself, you, most everyone, we default to, can you do this? It's like, of course not. I, I don't have the capabilities. I, I cannot do that. Where that little mind shift of like, well, not yet, dude.

Let's rewind the clock 15 years. I was living in Indonesia, and in Indonesia I lived in this building that had a ping pong table. And so I used to go down and just hang out by the ping pong table because I thought, well, that's maybe like, you know, my equivalent of like going, having a drink at the bar. Let's just go see if anybody's down here to play and maybe I can meet some people. And so sure enough, I would go down, me and my brother-in-law, we would go down and we would play. And my brother-in-law is better than me at ping pong. And he, the way he plays is what you imagine somebody who's good at ping pong. He's not just going to hit it fast. He's going to jump even though you don't need to jump. He's going to be like, woo! But he's going to just make you feel like he just smashed this shot. And like, I was so like, I was trying to get better than him. He was trying to get better than me. And I thought, okay, he's brilliant at this. Like he could just hit these amazing shots and I got to be able to hit amazing shots. So I'm practicing hitting amazing shots.. And so whoever used to come down, he would beat them. He was the best guy in the building until one day this 55, 60-year-old man came down named Poppy. And we're like, your name's Poppy? He's like, I'm Poppy. And we're like, okay, I don't know if he's flexing on us, if this is a real name. And he takes a paddle out of his case and we're like, oh dude, he's got his own paddle. Oh shit. It's like the guy who brings his own bowling ball to the bowling alley. You know this guy means business. So we're already on like A-game, basically. And so I play him and Poppy beats me, but he didn't do anything. He wasn't smashing the ball, he wasn't doing it. And I just thought, oh man, I was off today. All right, Aaron, you play him. And so I have my brother-in-law Aaron play him. I'm like, all right, Aaron's never lost to anybody in this building. Let's see what happens. And he starts playing Poppy and he's trying to do what he always does. He's trying to hit brilliant shots on the corner, down the line, cross-court, drop shot, and none of it's working. Poppy is destroying him. And the way that Poppy plays is like, this is for anybody who's like a real ping pong fan. I need like something to demonstrate. So use this pen. Pretend this is the paddle. Normally when you play ping pong, your arm is back, you're doing like a full stroke, like a tennis thing. Poppy used to just, he used to just hold it like this forward, like the paddle just facing you. And then he would just move left and right like a wall, and he would just, whatever you hit, he would just hit back. And the thing about Poppy is Poppy was never hitting brilliant shots, but he would also never hit it out and never hit the net. And so inevitably he would just keep hitting it back and you, one of your brilliant shots would go out of bounds. You would hit it too hard, too soft, you'd hit the net, like you would mess up. And he would always score based on your error. And he crushed us and he crushed us that day and he crushed us every day. And he would just chuckle and say, good game. And he would go upstairs and we'd be like, Fucking Poppy, man. I'm going to get this guy. And we never got him. The whole summer I was there, we never one time beat this guy. And then one day he invited us up to his house after his apartment in the building. He lived in the penthouse. Beautiful. He was so successful in business. We're like, Poppy, dude, you're balling out of control. He had like a secret poker room. He had a wall of just like super fancy liquor. People have a wine cellar. He had like a fancy liquor wall. It was crazy. He had a shower with like 6 shower heads. And we were like, dude, this guy Poppy. And we're like, what do you do? And he's like, I sell soap. And we're like, you make soap? He's like, no, no, I just import and export. And we're like, is it better soap? He's like, no, it's just soap. He's like, it's good soap. It's not the best. And we were like, well, how do you sell it? He's like, well, I just go to people that need soap. And we're like, this fucking poppy. This is how he lives his life too. He's just making no brilliant shots, but no unforced errors. And so this is a Charlie Mungerism, which is Avoiding stupidity is easier than seeking brilliance. And he says, other people spend their whole life trying to be so smart. All I'm trying to do is not be idiotic. It's harder than people think, but this is more important than trying to be brilliant. And so Charlie was basically like, how do I just avoid the great errors in life? Let's say it's investing. How do I avoid the great errors of investing? If it's health, how do I avoid the great errors of health? And that's basically what he oriented around. He wasn't perfect at it. But I thought, what a totally different, you know, a different strategy than you'll ever hear, which is about being the best and becoming more advanced and becoming, you know, being brilliant and talented. And his thing was just avoid stupidity and you'll outperform everybody.

Yeah, people would be driven crazy because that's what I would do. I would just look at the sheets. I'm like, yeah, that looks good, but hey, look, if you just delete that number and put it to that number, look how much better this looks. So let's just do that. And I've made that mistake so many times. I, um, I bought a property recently or a few years back and I remember like thinking like, okay, this is only an okay price property, but yeah, you know, I'm going to like take better pictures or I'm going to like do something when I sell it and I'm going to make— that's how I'm going to make all this money is I'm just going to increase revenue and I'm going to do this, this, this. And guess what? Just like years of failing at projecting, I totally effed it up. So now I try to be way more modest. With my financial projections, but I completely have always messed it up. And Munger's got a bunch of good quotes. He's like, it's dangerous to rely too much on models and formula. The reality is way more complex than that. We're very disciplined in our approach and we're not swayed by flimsy optimism. And then he goes on to say, he's like, it's pretty ridiculous that people are biased by both over-skepticism and over-optimism in the business world. If the micro reality is good, good decisions and good systems are what I look for, not predictions of macro environment changes. And so basically the point being is his whole philosophy was to buy businesses where if I bought a good business at a good price, I'm golden. And then if I ever want to sell it or if something crazy improves, that's icing on the cake. Whereas what I do, and I bet most people do, and I try my hardest to avoid this nowadays, is I say, I default to, no, the optimism is actually the truth. The truth is just, that's just what they did because they don't know what the hell they're talking about. You know what I mean? And that's been one of my biggest mistakes in business is overoptimism. And what it does is it crushes team morale and it gets you in a losing state of mind and it just sucks. What Munger said was, he goes, you make a lot of money when you buy a good company at a good price, but you make all of the money by letting it ride for 20 years. So the patience is where the big money is. And I struggle like crazy to do that. I have this, this year where I'm trying things a little bit differently, but I have never hit any of my projections because it's just too optimistic. And that is, it's basically just mental masturbation is what it is by, by making these projections. And it's harmful. It's a liability.

Well, there's like the thing you want to hit, you know, some people say you want to hit 70% of the goals. That you, that you set. And that's like the right balance between ambition and, you know, practicality. Hitting 0% of your goals is obviously means you're setting the wrong goals. And hitting 100% of your goals means you're, you know, obviously being, uh, playing it too safe and conservatively. And so there is some number in between. You could pick 70, 50, 60, whatever works for you. And, uh, yeah, I think most entrepreneurs and investors for that matter err on the side of optimism because boy, doesn't it feel better in the moment to, uh, you want to know something I'm trying to do?

It's like, uh, it's like the thing with money. Do you have like a, you have like a weird relationship with money that you need like money therapy? You have probably like a weird relationship with goals that like, uh, you just need to work out. Like, you know, these extremes, crazy goals that nobody can hit or no goals. I would just assume that the answer is actually somewhere in the middle, right? The Mungerism is probably somewhere, somewhere in the middle. Not, uh, not either extreme. Let's go to one of his other ones I think is kind of related, which is one of Munger's big ideas, the one, one that he is, is well known for that have taken into my life is this idea of inversion. So he says invert, always invert. And so what does this mean? It's basically a way to think through problems backwards. So let's say you wanted to solve a common thing that people ask, which is how do I be successful? Or how do I be happy in life? And there might be like 1,000 different answers to that question. But what Munger would do is in order to get to the answer faster, he would invert. Right? Why does Bill Gates say he goes from A to Z faster than anyone? He has the best 30-second brain of anyone. It's because Munger's default way of problem solving is to invert. And so he'll say, instead of figuring out how to be happy, let me just figure out what is the surefire path to misery. And he literally wrote it out. Like, I can read you the answer of what he said is the surefire path to misery.

It is. It's wonderful. And he says, number one, ingesting chemicals to alter your mood or perception. So if you rely on chemicals to change your mood, eventually this leads to misery. This is like alcoholism or sort of like overstimulation, whatnot. Number two is envy. He has this great quote, which is, people think the world is driven by greed. It's actually driven by envy. He goes, I am lucky that I'm an old man now and I've conquered my envy. I don't give a damn what anybody else has. I don't I don't want one anybody else has, and I don't care what they have. But most people are not like that. For most people, it drives them up the walls if they see that the neighbor has a nicer car or that their friend has a higher paying job or that their coworker gets promoted. They didn't even want it in the first place. But as soon as somebody else has it, envy kicks in and it drives them. It drives, you know, so much of their behavior. And so number 2 of the prescription for misery is envy. Third related is resentment. If, uh, if your joy goes down when other people's joy goes up, that is a surefire way to have a miserable life. So those are 3 that he stole from somebody else. And he says, I'd like to add my 4 on top of that. He says, number 4, be unreliable. If you are unreliable, you will be distrusted by all those who matter. And that you might be a mighty fine turtle, but you will be outrun by hordes of mediocre turtles if you are unreliable, and even some turtles that are on crutches. So it's like this idea that if you are unreliable, it sort of cancels out any talent that you have. That one hit home for me because, as you know, I am a bit of an unreliable person, and I've paid the price for that many, many times.

So I would say different. I think if I said this joke, it's gonna get me in trouble with at least 5 people at minimum in my life. So I'm just gonna not make this joke. All right, so I want to give you some examples of the invert principle because I think this is one of the most important ones. So when he was a military meteorologist, it's World War II. His job is to keep pilots safe. And he's like, okay, what's everything I need to know about pilot safety? And he's like, there's like 7 textbooks about everything a pilot needs to know. And then instead he's like, no, no, no. Okay, let's work backwards. What are the most likely causes of crashes or incidents for pilots? And he went and studied that. Way simpler answer. He's like, okay, I just need to be able to predict snow, ice, and fog really well as a military meteorologist. Those three, if I can avoid the— if I can get my pilots out of the way of those three, I can ignore everything else because those three are the real killers. And let me like— so he inverted it in order to like do his job. Let me tell you another example of this. When I was in college, I got picked as part of some like thing called Kairos that was like Uh, I love Kyros. Top college startups in the country. Honestly, it was like worse than Forbes 30 Under 30 in terms of like credibility. Literally, if you signed up, you won. And, um, even better, if you signed up, you won, and then you, you made friends with the person, they would take you on this all-expenses-paid trip to China for a week to go meet, uh, Jack Ma, the CEO of Alibaba, or the founder of Alibaba. And so we go, I get picked on this trip, I go fly to China. I don't even know what Alibaba is. We go to their headquarters. I'm like, holy shit, this is like eBay for China or something. This is crazy. And we get a sit-down meeting with the CEO. This guy's like one of the most powerful people in China. And we got to ask questions. And one of the kids asks the sort of simpleton question, like, what's your advice? I want to be successful. What's your advice? What are the keys to success from your experience? And he says, I was obsessed with this question also. What are the keys to success? What is the blueprint for success? And I I talked to 100 successful people and I got 100 different blueprints and I thought, well, that doesn't really help. And he goes, this was actually a guy named David Wei, I think is his name. He was the current CEO at the time. He was the one answering this part. And he goes, every success is different. It's its own little unique snowflake, but every failure is the same. And we were like, we lean in and he had his answer and his answer I don't think is actually the the right answer for this, but like he goes, um, it like tied into the Alibaba story and he goes, every, every, every big company that, that eventually fails. So his, his answer was like not how to be successful, but how do you not screw it up once you're a big company, which was the problem they were having. He goes, too much money, too much technology and too many people. And so he tells a story about like how they were going to compete with, um, with Google and with eBay when they were coming to China. And he's like, we needed to invent our version of Google AdWords. And he goes, Jack Ma said, cool, you get, um, I think it was like 12, 15 people. He's like, 12, 15 people? This is like going to be a huge part of the business. Google has 2,000 people working on this. He goes, did I stutter? You get 12 to 15 people. Uh, you're going to work. Um, he's like, we need some office space. Uh, you know, give us like a couple floors of the office or whatever. He's like, you're going to work out of my old apartment. He's like, your old apartment? We need a proper office. He goes, I started Alibaba in that apartment. I think it'll work. And he goes, technology is like, we're going to need this many servers. We should get the best stuff. And we need this much, but let's have double that for redundancy in case the servers go down. We don't want to lose anything. He goes, if I give you redundant servers, you're going to design a system that goes down. I'm going to give you only the servers you need. And in fact, go get used servers so it can run on even shitty servers. And he sort of David Goggins them. That was the story that he told about and they eventually did it. They pulled it off.

Yeah, it was definitely like a fuck you, man. Come on. But, uh, you know, when it all works out, then you can tell this great story. Um, Bezos has a simple inversion too. They were like, you know, Jeff, tech, you're, you're, you know, one of the like internet CEOs. Internet's evolving so fast. Technology is always changing. What technology innovations are you most excited for? What's going to change about Amazon in 10 years? And he goes, Oh, I don't think about that. Instead, I think about what's not going to change because customers are always going to want the most selection, the lowest prices, and the fastest delivery. And so everything else can change, but that's not going to change. And so we focus on what's not going to change because we have to change with the times in order to like constantly beat customers' expectations on delivery speeds, low prices, and vast selection. And so, you know, this idea of inversion. Is so powerful. Even in my own life, I was telling you, I'm having a bunch of progress right now with my diet, which is great because the scoreboard is currently 34 years of no progress and a month of great progress right now. What changed? Well, what changed? Well, I did a bunch of things, but I also actually just inverted. So instead of trying to figure out what's the best diet program, what's the best workout program, exactly how many grams of this, how many milligrams of creatine, how many grams of protein, how much of this, Instead of trying to go, is it the paleo diet, keto diet, Mediterranean diet, what should I be doing? It was just the inversion. What's a surefire way to be fat? And that answer was quite simple. I was like, I need to eat way more calories than I'm going to burn. Eating shitty foods that are fried and ultra-processed. Right now I eat late at night. Pretty sure that's a recipe to get fat. Sitting all day instead of walking for my meetings. Probably pretty good way to get fat is to sit all day. And I just inverted and I was like, okay, cool, I'm just going to walk more. I'm going to eat less calories than I consume and I'm going to not late night snack because I always eat crappy food when I do that. This is literally all I changed. And boom, started to get results finally after, instead of being like, let me go download 19 hours of Andrew Huberman and try to follow this protocol. It's like, that wasn't the problem, right? That was the complex solution rather than the, the easy inversion.

All right. So he's, uh, he's teaching a class at some college. He goes to like an economics class. So he has this general idea of you need to learn all the big ideas in a space. So he's like, I don't know anything about psychology, but I figured there's probably 20 big ideas in the world of psychology, and I should just read the books and try to figure out what are the 20 big ideas in your space? He's like, if I know those 20 big ideas, I'm going to be better than— I'll know more than 98% of people who spend their whole life, 90% of people, including some people who spend their whole life doing this because they're so lost in the weeds. And so one of the big ideas he had was like— so he goes into economics, same thing. What are the big ideas in economics? Everybody knows Economics 101 is the supply demand curve. And basically the idea is that as the supply of something goes down, the demand will go up or the price will go up. Similarly, if you drop the price of something, the demand should go up. So people know this generally about economics. But Charlie has a thing. He's like, you learn the big idea, but then you also, how do you make this useful is you need to understand the exceptions to those rules. So what is the I before E except after C? So he's like, He's like, how do you understand that? Okay, generally when prices go down, demand should go up for that. The demand for TVs is, let's say, X at $5,000. But if you drop the price of a TV down to $5, there's a lot of people that will buy it. And so he's like, but what are the exceptions? So he goes into this economics class and he goes, everybody understands when prices go down, demand goes, everyone says up. He says, okay, fantastic. What are the cases where that's not true?

Well, somebody said this. Well, Naval said this. He goes, Buffett and Munger, these guys are in their 90s and they famously eat McDonald's breakfast every day eat M&M's and drink Diet Cokes, maybe for show, but at least they at least do it. They're not sitting there taking metformin and cold plunging every morning. And he's like, it just goes to show how important not being stressed is actually to your health. Yeah. Because these guys actually were quite low stress in the way that they lived their life. They spent most of their days reading, playing bridge, talking, thinking, very few meetings. They didn't stress out about investments. They were buy and hold, long-term investor type of thing. Low stress compared to a lot of successful people. But on the longevity thing, I was like, all right, let me go learn what are the 10 big ideas in the longevity space. And I literally carved out 2 days and me and Ben, all we did was just deep dive into longevity. I read Power, skimmed through some books. I was like, who are the 5 thought leaders and then what are their most popular TED Talks? And let me go watch those. Let me go see what does Peter Attia say? What does Bryan Johnson say?

My takeaway was that the big ideas, and this is like, somebody who's a big longevity person will argue with me because I'm going to do the short version of this. But the big idea is essentially everybody's health declines. We are probably past the age of like the live forever. So there's like one big idea, which is that if we ever figure out a way to reverse aging or like minimize cell damage, it's not just going to be this gradual thing. Like, We used to live till 80, then 90, then 100, and then 110, 120, 130. There's going to be a stepful jump once we figure out how to stop cell damage. But if you've already had too much damage, they're not going to be able to get you back into your 20s. You're going to be past the point of no return. And so the big breakthrough is if you can figure out how to stop cell damage, we don't know how to do that yet. When that happens, there's going to be an age sort of point, a tipping point where people below that are going to live till like 300., and people above that are still going to live to like 110. And like, there's going to be this big, like, polarity between those two outcomes. That's interesting. The second interesting thing is like, in terms of the Peter Attia school of thought of longevity, which is not live forever, but it's like live a longer healthspan. So healthspan versus lifespan is one big idea. And the healthspan idea is at the end of your life, everybody's going to have a marginal decade, which is like your last 10 years of life. Your, your health is going to decline pretty dramatically. From being immobile and in pain to really not being able to wipe your butt by the end. So it's like that's typically the bad version of aging. What Peter Attia and these guys are trying to do is basically push that decade out. So if it was going to happen to you from 80 to 90, let's make it from 90 to 100. Or if it was going to happen from 90 to 100, let's 100 to 110. And the cost of your today lifestyle in order to affect that final marginal decade, I personally was like, Eh, not worth it. I'm going to find the 80/20 of healthy things to do that are not so costly, not so painful or hard to follow or regimented or whatever. I'm not going to forget to live today in order for my age 90 to 100 to be better. I was like, my takeaway was basically I don't care about the marginal decade. I'm not going to orient my life around that. There's an 80/20 of healthier stuff to do that's like, I don't mind switching to that lifestyle. I'll do those and then that's good enough for me. And if wonder drugs come out at some point in the future, hopefully I'm in time for that cutoff. That was my conclusion.