Welcome back, everybody. This is part two of an extraordinary conversation with an extraordinary individual. We are here with Shane Parrish, who is more devoted to bringing knowledge to others than perhaps anyone I know. I mean, certainly up there with the very top echelon of people who don’t just want to share insight and knowledge, but have built an institution, let’s say, in doing that.
Let’s get to it.
As we get into this conversation now, Shane, I want you to talk about, look, how did you get to the Knowledge Project to Farnam Street? And from there to Clear Thinking, this marvelous new book that you’ve published.
I started a blog, not a business, but a blog, I don’t know, 2008, 2009. While I was still working for the Intelligence Agency and I wasn’t allowed a public profile. You couldn’t Google me. I mean, that would’ve got me in so much trouble. So I created an anonymous website, and I didn’t want other people to read it. So I called it 68131-1440.blogger.com, which don’t go to that website today. Somebody stole it. I’ve like relinquished this, but I talk about it a lot.
That’s too bad. That’s a little sad.
And the reason is that’s the zip code for Berkshire Hathaway and the unit number at Q Plaza. And I thought nobody would type in a series of digits. And what I was really trying to do, going back to sort of the game, was how do I become the best in the world at what I do, or at least better than where I am, and how do I take outside ideas and apply them in the context of my environment? And so I was reading a lot about Daniel Kaman and decision-making. Because I ended up, you know, making decisions that affected my team and my country and other countries and troops in theater. And, so, I wanted to get better at these types of decisions and just better at decision making. But there’s no class called Decision Making 101. Nobody teaches you how to make decisions. And so I just started studying it on my own as a means to get better at it. And I was reflecting on what I was learning, and my reflections were sort of encapsulated in this blog, which has become FS.blog today. And I was reflecting on what I was learning. I was writing notes, I was erasing things. I was connecting different ideas. I was trying to learn why some people are consistently able to make better decisions than other people. And if it was controllable and if there was something I could learn from that. And those are a lot of ifs, right?
So some people are clearly better at making decisions than other people. Is that an IQ thing, or is there something that they inherently bring to the table? So I started with cognitive biases. I did all the MBA coursework. I, like, I dove into this like head first and, and sort of, started writing about it. And again, it was just for me. And then I sort of, two years later, I woke up and I’m like, oh, this RSS thing says like, there’s 10 or 12,000 people reading my blog, and then all of a sudden there’s 25,000. And then, you know, my boss walks into my office one day and he hands me an article, and he is like, “You should read this. It’s good.”
And I looked down and I’m like, oh, shit. I wrote that. And I’m like…
That’s a moment there. That’s a moment.
I’m like, oh my God, this is crazy. Like, he doesn’t know what is going on here,
But he doesn’t know it’s you, because of course it’s all anonymous, as you say, but something that’s a moment where the universe is connecting. I mean, that’s, that’s quite a moment.
And then on top of that, like, you know, this is like 2014ish. I’m starting to meet people who read the blog. And they’re asking me what I do for a living. And I’m like, …
What do I say? I don’t, I don’t wanna lie to people, but I clearly can’t tell them the truth. And, you know, all these worlds started colliding. And, you know, that was a big, big reason where I was like, oh, you know, I’m eventually gonna have to like, release my name here. I don’t like lying to people and I don’t like, sort of not telling people who become really good friends of mine. You know? I felt like I was keeping a big secret from ’em for sure. And I obviously had to, I had to.
You still had cognitive dissonance about it. Yeah. You know, and you are like, these paths are going to diverge more and more.
And so when I left, I was like, oh, I can change the name of the website. I can make it easier to read. I can do all these things. And, you know, the Knowledge project started in 2015. I think I did the first episode in 2015. And, you know, that was after I had dinner with a CEO, in New York of a public company. And, you know, we had a private dinner and it was just a chat between us. And I remember walking away from that feeling really guilty. And I was walking back to my hotel and I was like, why do I feel guilty? I started like probing my brain, which is what I tend to do. And I’m, you know, I felt guilty because I was getting benefits out of this platform that I couldn’t share with other people. And I didn’t feel like that was fair. So I wanted a way to give back to other people because I believe in equal opportunity, not necessarily equal outcome, but here I am gaining insight and this advantage that I really wanna share with other people. And I think that was the moment I was like, oh, why don’t I just, you know, for the most part, try to record these conversations and share them with other people because it’s so cool to be able to call up almost anybody in the world and say, “Hey, will you come talk to me?”
And they say, yes. And a lot of people can’t do that. And a lot of people don’t have the confidence to even ask. But I have, you know, the confidence to ask. And, you know, I get rejected all the time, but I, I keep asking, and sometimes it takes a few years, but I usually get the people that I want and I record them, and I like sharing them with people.
And I, really, you know, I feel like I’m, I’m contributing to making the world a better place. And I’m a huge proponent of trying to leave the world a better place and help other people become the best version of themselves. And then it all, you know, really blew up. And, I think it was 2017 or 2018 when the New York Times decided to out me as a, I don’t even know what you wanna call it. They used the word spy in their headline, but, you know they wanted to draw.
That’s a good headline. It’s a good headline for you.
It was the top, top article of the New York Times for like three days.
I think it was the highest-performing article that Landon Thomas, who was the author of that article who, had ever written, but I didn’t want the profile, which was also a bit antithesis to the New York Times. And they’re like, we’re, you know, when it came out that they were writing a profile on me, I was like, oh, I don’t want the attention. I don’t want anything about my career in the public or my past, or, you know, I don’t want my kids reading this.
And now it’s, and now it’s too late.
Well, you know, you journalistic integrity, they, you know, they’re like, you can’t really decide that. But if you want to talk to us, then, you know, that’ll give us some other stuff because they had, you know, he had done a, a lot of research, I’ll give him a lot of credit. He had talked to a lot of people and, you know, he had my old job titles and stuff like that in there. And I was like, yeah, can we just like keep that stuff out? Like, that serves no public good. And it only causes problems for us, right?
So, he agreed to, and I met with him and he’s like, I don’t know why everybody, you know, what did he say in the article? I look like a grad student. I don’t know why everybody on Wall Street wants to talk to this guy.
One of the headlines in that article is that there’s the 80% of the people that were reading your blog at the time were working on Wall Street. And the idea there, I mean, that was to your surprise, but the idea was, well, these people fit a certain archetype. They, they want that 1% edge that allow, because, there’s a certain point of life in, I think, in any industry actually, and in any sphere of life where you’ve done the basics, right? So you are working, of course, you are putting in effort. Okay? So that’s not the issue. Of course, you are motivated. That’s not the issue. So if you want to improve from there, you have to improve the way you think. And every, every percent of improvement in your thinking ability has this disproportionate impact for good. So it’s a few things that put you in a position where suddenly this is very relevant information. And that seemed to be what was happening with these Wall Street types.
Yeah. So high leveraged decision makers, right? Where 1% difference, 1% makes a difference. You know, in some cases, billions of dollars, you know, or three main audiences are all highly leveraged, people. So we have professional sports, we have Wall Street, and we have Silicon Valley. And, you know, those tend to be the three big buckets of Farnam Street readers and listeners. And increasingly it’s going a bit more mainstream, which I love to see.
But yeah, you know, the New York Times thing really blew us up. And that was the impetus for the book. But I never wanted the article. I never wanted the attention. And, you know, the office got it framed for me. This is indicative of who I am. The office got this article framed. They put it in this big, you know, really heavy frame and put it on the wall. And I remember, and I came in and I taped, I printed out a comment by JGB, I think it was from Portland, Oregon, who had commented on that New York Times article. And his comment said, “I am highly confident that Mr. Parrish is enjoying his 15 minutes of fame.”
And I taped that comment to the picture,
Is it still on there? Is the, is the comment still on the wall?
The picture came down, but the comment was on there for years. Yeah. But it’s no longer even on the wall.
So. Yeah. Yeah. No, I hear you. Yeah. Okay. So just the listeners right now who don’t know the connection to the term Farnam Street at all, like, why Farnam Street? Because this is like, this is such an important foundational piece for why someone should read your blog, why they should read this new book, right? Like it’s a certain challenge.
So remember going back the original website was 68131. That was the zip code for Berkshire Hathaway. And the street that Warren Buffett’s house and also Berkshire Hathaway headquarters is on, is Farnam Street. And so the name came from the street in Omaha, Nebraska, where Warren Buffett and Charlie Munger created Berkshire Hathaway, which is one of the entities that I spent a lot of time studying when I was trying to figure out how some people are just consistently better at making decisions than other people. And it was an homage to, to those two. And all that I’ve learned from them not only about business but also about life. And they indirectly, you know, they had a huge impact on intelligence agencies around the world. And they have no idea. But taking their lessons and applying them internally and sharing them.
This is where the idea of mastering the best of what other people have figured out comes in. I am not smart enough to sit down and have all these original ideas. Maybe other people are, and I applaud you. And if you are, email me. I’d love to chat with you. I’m not that person. And so, but what I can do is be like, oh, here’s an idea. I think that might work here. And what most people do, and this is because I’ve learned this over the years. Because people are like, how do you do that? Well, it’s incorrect for this reason and this reason, I’m like, oh, this is interesting. You are trying to figure out if the idea is a hundred percent correct, and the idea is 99% correct, but you can find the 1% that makes it incorrect. So you discount it and you don’t use it. And I’m asking myself a completely different question, which is not, is this correct, but is this useful?
And that changes how you look at it. And when you start asking yourself, it’s, if it’s useful, it’s like, in what cases is it useful? Can I use this? Can I apply this? Can I, does it work within a particular ecosystem, or can I pull it out of the ecosystem that it was created and apply it to my ecosystem and have similar results? Wow. This, this changes everything because we’re, we’re so caught up these days in being like, you are wrong for the following reasons, right? And it’s like, okay, those reasons might be right, they might be wrong. Does it matter in the context of is this useful? Can we use this? Is this a good starting point? Is this a good beachhead that we can launch off of?
And let’s just go back to this, to this Munger, right? Who’s, I mean, he’s obviously himself very well known. It’s not just Buffett now, right? For, and, and it’s happened over time. He is been such a successful investor in his own rights. And here he is what I think 99 years old now or something, right? I mean, you know, that, that’s rare too. And, and, and this idea that he shares that what we need to develop worldly wisdom is a lattice work of mental models.
The simple phrase has been really useful to me personally and also in teaching professionally. But I think more so in like my children and saying, look, there’s so many ways to see the world and the risk is whenever we take a single mental model, don’t even know we took it, breathe it in, see everything through that lens, which means that we are missing, you know, the vast majority of the world while we think we are seeing it correctly.
And so, you know, it’s like, how many mental models can you read? Can you understand? Can you add into that lattice work? And, and it seems to me Farnam Street has done, you know, I don’t know the the best of anybody at this, but like, of just selecting, identifying those different mindsets and writing them very clearly, smoothly, both you, and then of course your team that’s doing this. And at first you wrote these books. I still have them. I’m gonna get them off my shelf as to prove this moment. You sent them to me here. This was The Great Mental Models Volume One, I have Volume Two, and so on. And what I loved about these books is that this same as the blog, there’s a purity about it in your approach where it’s like, no, I’m going to do this. It’s a kind of less but better approach. We might say like, I’m going to do it right. The, the lure of the crowd, right? Which is always there. And we want things to be big, but sometimes people just want to be big, and that’s all that matters to them, not quality. And so, you know, you’ve done it. It’s just a terrific job. And I’ve loved being able to teach my children that idea of, I’ve shared these books with my children. So they’ve grown up. I remember having a long conversation with my son, maybe at the time, let’s say he’s, he was 14 maybe around that time. And I was going through, literally I’d collected, I shared these books with him. I, I identified a hundred mental models and I was just going through one by one with him. And I don’t know that he remembers all those mental models, but I know that he had exposure to them. And I know that it has taken the postage stamp version of the world that lives inside all of our heads and inside of his head. And it’s expanded it. So here he is, he is only 17 now, but his understanding and the complexity of the world is, is, is so impressive for a 17-year-old, much more than mine was. And so, anyway, I’m just sort of setting all of that up for this aspiration with Clear Thinking. You know, the book that you’ve written, as far as I can tell, this is sort of the aspiration. If you can help people improve incrementally the way that they’re seeing the world, the way that they’re seeing their decisions, then they can improve the output significantly in that way. Your thoughts?
I think you should be in charge of marketing. Greg. This is you, you know, I had read a lot of books on thinking, and none of them really made sense to me because most of them get border overly academic. They’re not practical, and they fail to address the biggest reason that we put ourselves in bad positions, which is circumstances or situations tend to think for us. And so we’re not thinking in those moments, like when you’re arguing with your partner about loading the dishwasher, whose correct way it is, or whatever silly domestic, you know, sort of disagreement or tiff that you’re having. If I tap you on the shoulder in that moment and say, “Hey Greg, do you wanna put water or gas on this?”
You’re gonna be like, “Water.”
But the problem is you don’t realize what’s happening in that moment. And so that moment, which is an ordinary moment, tends to move you away from where you want to go, whether it’s closer to your partner or closer to your goals. And you have to invest a lot of time and energy, and effort to make up for that. Right? To reinvest in the relationship, to repair the relationship, to bring yourself back, you know, from a little disagreement on a Friday night, can take all weekend to sort of bring it back to baseline. And so, how do we think about this and what can we do with this information?
And I think the, the biggest counterintuitive lesson that I learned through studying thousands of people make decisions is the best in the world aren’t necessarily smarter than we are. They just put themselves in a better position than we’re in. And the most brilliant person in the world looks like an idiot when they’re in a bad position. And an average person can look like a genius when they’re in a good position. And positioning is largely, not always, but largely within our control. And there’s always something that we can do today to improve our position tomorrow. And there’s a difference between positioning and predicting. Predicting is, I know I’m gonna apply for this job next week, or I know I’m gonna have a test next week. And, and predicting is like a subset of positioning when I actually know what the future looks like. I’m not guessing what the future looks like. I know what the future looks like.
Too often, we guess what the future looks like. We predict what the future looks like with uncertainty, and then we go all in on that path. Positioning is assuming that there’s lots of multiple paths in the future. And how do we handle ourselves so that we can handle almost all of those paths with ease. And that’s what the best in the world do. They’re always in a good position. They’re almost never forced by circumstances or situation into doing something they don’t wanna do.
Tell us more about that.
So let me give you an example to bring it home. So, I’ll use kids because a lot of people have kids. My son came home. He got a really bad mark on his exam. He’s 13, so he is like full on teenager. He, you know, chucks me his exam and, you know, he’s not proud of his mark. And he just looks at me shrugs his shoulders and he is like, “I did the best I could.”
And I was like, oh, pause here. And then I was like, okay, we’ll talk about this later. Like, let’s calm down. There’s too much emotion here right now to have a good conversation. And I remember from playing football, most of my teammates quit and they didn’t quit because of their on the field performance. No matter if it was great or poor, they always quit because of the car ride home with their parents. And I remembered that in that moment and I was like, I’m gonna wait. So he calms down and then we circle back and I’m like, “Let’s chat. You said you did your best. I’m not gonna argue with that, but I want you to explain what doing your best means.”
And he’s like, “Well, I sat down at 10 and, you know, I looked at all the questions and I looked at all the points and I allocated my time accordingly and answered the questions to the best of my ability.”
I’m like, “Oh, okay. You think about doing your best as that moment forward, but pause. Let’s rewind here. Let’s rewind 72 hours. Did you study for your test?”
“Did you stay up late?”
“Why’d you stay up late the night before your test?”
“I was cramming.”
“Why were you cramming?”
“Because I didn’t study the, the days before.”
“Okay. Did you have a healthy breakfast?”
“I didn’t get up in time to make a healthy breakfast.”
“Okay. Did you fight with your brother the morning of your test?”
“Why’d you fight with your brother?”
“Because I woke up late and I was in the bathroom at the same time as him, and I was grumpy because I didn’t get enough sleep.”
I’m like, “Okay. So the position that you were in when you sat down at 10:00 AM was that easy mode or was that hard mode?”
He’s like, “That was hard mode.”
“Did you control whether you were playing on easy mode or hard mode?”
“I controlled it.”
“So you chose to play on hard mode. And that doesn’t mean the test is is not gonna kick your butt. That’s a different sort of, but you can’t tell me you did your best when you showed up not doing the things within your control to put yourself in a good position to succeed.”
Now, let’s apply that to life, right? So like, you can think about investing in your relationship as a form of positioning, you know, back to the spark. And whether it lights the grass on fire or not, you are in control. And so often when we address these moments, we’re like, how do we have a better conversation with each other? And what we don’t think about is like, let’s go back to the lead domino here. What’s the first thing within our control that sets us up? It’s like we’re trying to intervene at the wrong points. And, you know, I just look at the world differently and I think about it differently and, I hope it’s useful to some people, but I think there’s a lot we can do to put ourselves in a really good position no matter what the future holds.
If you go back and you look at Carnegie and you look at Rockefeller and you look at them through this lens, or you look at Berkshire Hathaway and look at it through the lens of positioning, and most of their gains, almost all of them in fact, are moments where other people are forced by circumstance into doing something they don’t wanna do. And they can take advantage of the situation because they’re positioned in such a way that they can always play offense if they need to.
So that brings to my mind a piece of news, you know, like just right now. So a few days ago, at the time of this recording, we have Sam Altman fired from OpenAI, really unexpectedly. I mean, he, he doesn’t expect it, presumably because he’s still doing active CEO work up to the very moment. Now that doesn’t mean there’s no friction before that moment, but something has come to a head and suddenly, and he is ousted, and this is, I don’t recall, but maybe let’s say this is Friday and this morning at 2:00 AM, Satya Nadella at Microsoft announces that they’ve hired him and Greg to come and lead the AI research. So Sam is now the CEO of Microsoft’s AI research group. And it just reminds me of what you’re describing somehow here, that there’s something about the way the Satya thinks. And I, and, and I think he’s, he’s, you know, he’s well worth a deep dive as to how he does think and how different that is than other people and how different that was to Baumer before him and even Bill before him. But whatever he’s doing, it just reminds me of what you are describing with positioning, because he’s gone from what looked like a, a sort of a disaster. I mean, they own 50% of OpenAI. This is a very public firing. It’s very unexpected. It’s very uncertain to the marketplace. I mean it’s a strange decision executed in a strange way. And it just reminds me what you’re describing here about like being in a position where people felt, well this is the only thing we can do and, or this is the right thing to do and we just have to do this in this way. And somehow Satya has perspective where he’s like, yeah, I think I’ll just scoop that up. You know, I’ll just scoop up an enormous amount of the value of OpenAI almost free.
Yeah. I think Satya is a genius. If anybody can put me in touch with him, I’d love to talk to him. I do think he’s taken Microsoft and positioned it very well for the future, no matter which direction the future holds. And, you know, he is shown in this case that he was super adaptable. And I think the way that, I’m on the board of a public company, and I think the way the board handled this was, that’s not the way to do it. No matter, I don’t know behind the scenes what Sam had allegedly done or anything. But almost regardless of that, you know, that’s not the way to go about what they did. And I think it backfired on them. And I think it much to Microsoft’s benefit. And, you know, in some ways perhaps to the world’s benefit, we ended up in this situation, hopefully time will prove that correct. I’m a huge fan of Sam, and I have a lot of respect for what he’s done and, and the way that he’s accomplished it and the team that he’s built. And I suspect a large number of the OpenAI team will be joining him at Microsoft.
Yeah, I would think so because they’ve come out with an open letter asking for the board of OpenAI to resign. And, you know, that’s an unusual move too. You know, if management, if part of management is not surprising and shocking the people in your organization, you know, so that people can have a sense of continuity.
Well, it just goes to show you how unpredictable the world is to you. Right? On Thursday, you know, open AI was the clear leader and now all of a sudden we have an AI race. And I think, you know, that nobody would’ve predicted this series of events, and nobody would’ve gave it a likelihood. And these things happen. And if you’re in a position to take advantage of them, then you can gain a huge amount of points, if you will, to go back to the analogy of a game, in these situations.
And I think that so often we’re trying to predict the future, but nobody could have predicted this. Nobody, I mean, we can predict that this will happen. We can’t predict the timeline in which it will happen. Just as we can predict there will be financial crisis in the future. There will be panics, there will be manias, there will be, we just don’t know when they’re coming. And, and we, we often think the world’s gonna warn us and it’s gonna say, “Hey, you know, you got two weeks, Greg to go home and get prepared because in two weeks we’re gonna have a financial crisis.”
And it’s like we expect this little announcement to come across in, in our head or our phone to go off and one of those emergency warnings. Like in two weeks, there’ll be a financial crisis. Please shore up your, well, the world doesn’t work like that. And you always have to be in a strong position. And the people who operate from a strong position have nothing but good options to choose from. And the people who don’t operate from a strong position need a hail Mary to make everything work.
It’s a brilliant use of the term positioning, and it’s a brilliant insight into how to operate in a way that you gain predictable future advantage. Because as you already said, right, like, as soon as somebody understands enough, right, that the, the view of the world is complex enough, they know that the unpredictable will happen. That it’s so complex that you can expect unexpected things, and a lot of them, and pretty much in perpetuity. And so you stop trying to time the market, let’s say, right? You know, you stop trying to what, just guess exactly what happens tomorrow. And instead you say, look, I don’t know what’s gonna happen. I know it’s gonna be at random. I know it’s gonna be complex, therefore I will prepare. Therefore I will, you know, put myself as I think you are using the term positioning in this way to position myself in an optimal way for whatever happens, whatever is coming down there.
The thing about positioning is it’s always the suboptimal strategy in the moment, but it is always the optimal strategy long term. And we’re so focused as a society on winning the moment we lose the decade. And positioning guarantees you success in the decade, but it’s always suboptimal in the moment. And that’s a really interesting thing for me to think about. And hopefully for your listeners to think about.
This is a marvelous place to end our conversation. Shane Parrish, thanks for being on the podcast.
Greg, thank you so much.
Everybody who’s listening. Now, remember, the book is Clear Thinking. You’ve heard in the last two conversations why this matters. This is something you can take control of in your life. It’s not dependent on the circumstances around you. You can improve the way you think to position yourself to be in a higher leverage position. Whatever the future holds, what a tremendous advantage that is.
What is one thing that you took away from this conversation? What’s one thing you can do immediately? And who can you share it with so that this conversation about clear thinking, this conversation with Shane Parrish, can continue now that this conversation has come to a close?