Tren Griffin - Giving to Get

 

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Bill: Ladies and gentlemen, welcome to The Business Brew. I'm your host, Bill Brewster. This episode features Tren Griffin. Tren is a very unique thinker, a bit of a renaissance man, if you will. Many of you may know him from Twitter. You can find him @trengriffin. You may also know him from his writing at 25iq.com or you may have read one of his seven books, one of which is Charlie Munger: The Complete Investor. My biggest takeaway from this conversation is the idea of giving to get, the importance of bravery, and just listening to Tren's background, and how he used his good fortune, and where he grew up to leverage that in order to propel his own career, and now how interested he is in giving back to propel other people's careers and lives. I have a lot of respect for how Tren goes about what he does and I hope that you all enjoy it. This episode is brought to you by Stream by Mosaic. You can find them at streamrg.com. That's STREAMRG dotcom. Stream is an expert interview transcript library that's become integral to my research process. I first discovered them roughly a year and a half ago and I've watched them build out a very robust transcript library. Stream by Mosaic provides over 300 expert interviews per week. 70% of their experts are found exclusively on Stream and each interview goes through three layers of compliance screening. Recently, someone said, Stream is table stakes for good fundamental analysis. I couldn't agree more.

During this episode, we briefly discussed Costco. While it's a well-known company in the investment community, I found this anecdote on Stream interesting. It was a Sam's Club employee that was discussing Costco and he said, "I start these calls with one of the reasons of why Costco is Costco, is just the word consistency." They've had consistent leadership, consistent strategy, consistent real estate approach, and consistent messaging with their members. Everything I could speak to on what I think the reasons why Costco is successful. They've been very consistent with that since the Price Club days all the way back to the original Price Club in San Diego. Please see streamrg.com and use the promo code Brew, B-R-E-W to sign up for a 14-day trial and get a more robust understanding of Costco or any other company you're interested in. As always, none of this is financial advice. All of the information contained in this program is for entertainment purposes only. Please consult your financial advisor before making investment decisions and do your own due diligence. So, thrilled to be joined today by Tren Griffin. Tren is a well-known person and FinTwit, a well-known author wrote Charlie Munger: The Complete Investor, and author of the blog, 25iq, marries a combination of investing advice and hip hop in a unique way. I'm looking forward to hearing what he has to say today. How you doing, Tren?

Tren: I'm good. I'm looking forward to this, too.

Bill: Yeah, well, I appreciate you saying yes. For a long time, you would pop into my feed, and discuss wholesale transfer pricing, and discounted cash flow models, and I think, now, I'm finally smart enough to have the conversation with you. So, I look forward to it.

Tren: Yeah. Well, one of the things that's unique about me, there are many things because I'm a very strange person. But one of things unique about me is, I don't have the usual attributes of people on FinTwit. I thought I go through them because they're interesting. You get a Venn diagram and you figure it out but first of all, I'm not anonymous, right? I'm not exco or anything like that or have some secret avatar and nobody knows who I am. I'm me. You can get a hold of me somehow. You'd find someone who knows me and you can probably get an introduction and we'll chat. But so, I'm here.

And then, the other thing is, I write about investing and I write about business. And this is the Buffett thing about, "You're a better investor because you're a better business person, and you're a better business person because you're better investor." I sort of do both. The thing that I love the most is doing everything and I'm insanely curious about everything. So, it's fun but the thing that really excites me is sharing it with other people in networking. So, I like to say, "Well, I'm not selling anything because I'm not. I'm not trying to raise a wham. I don't whatever product I'm trying to sell and actually, I can't talk about what I do for a living," because I think about the history of Microsoft, but I can't talk about what's going on right now, because it's public information, right?

Actually, I can talk about Microsoft but only what is public but that's tricky. So, I don't talk about it at all mostly. But I talk about the history, 50 years Intel microprocessor today. So, there's that. And then, the other thing is, I've been around, I'm old enough that I've been around, so, I've watched a lot of history, and I like to say, sometimes, I'm like Forrest Gump in that. I've seen amazing shit happen in my life, because to be born in 1955 was nuts. I was like, "What a lucky thing to be born in--" Because the microchip came out 1971, I was like a sophomore in high school going to be a junior and I got this calculator and I could program it. It's like, "Whoa, I had no idea."

Bill: [laughs]

Tren: I wish I would have known what that meant fully, but I didn't know it was amazing and I didn't know that a year later it was $100 less and I thought I'd been tricked.

Bill: Yeah.

Tren: Like, holy, that's a lot of lawns mowed for hundred bucks off.

Bill: [laughs]

Tren: But anyway, but I was born at the right time and I've seen stuff. Then, the other thing that I'm fascinated in and by is the early luck and the feedback that comes from being lucky early in having the right mentors. I was born on third base and I was halfway to home, just luck.

Bill: Yeah.

Tren: And then, I say, "Okay, well, how do we scale that? How do we get other people so they're lucky too? How do we create mentoring situations?" The thing I love about what you're doing, because I'm watching what you're doing and your friends are doing, is you're learning in public.

Bill: Yeah.

Tren: And that's like super brave. It's super brave but it's also super necessary because that's the way the world works today. But it's also super-efficient in that you learn quickly, and you get feedback from people, and this whole idea of feedback is amazing in that it starts in biology, but goes everywhere in our lives, which are these viral loops in business and the loops in our lives that make us smarter or better and how you get taught involves the loops, you do something wrong, you get feedback. The reason why-- watching a YouTube video is fine, but you're not getting any feedback, right?

Bill: Yeah.

Tren: Having a tutor is amazing, right? Having a community online on Twitter is totally amazing because they can say, "Well, you're full of shit, or oh, that's great, or what a great idea?"

Bill: [laughs] Yeah.

Tren: And you get this feedback and you learn. Learning in public is great because you got to stay on your toes like in FinTwit. If you see something lame, you're going to get roasted, right?

Bill: Yeah.

Tren: So, you're on your toes. It's great. But watching you and your friends, I don't know how I got into your group, but watching you all is fun because I'm watching me when I was younger, and I got plenty of mistakes to make still, and I made plenty of mistakes. But it's fun to watch other people learn, and get feedback, and grow, and go into new channels. Anyway, that's sort of a long intro. But that's where I'm at, which is, this is like super fun, get this information graph. Liberty had this great podcast. I forgot who it was with, probably with Jim.

Bill: Yeah, I assume so.

Tren: Yeah. And it was marvelous because he's talking about how he learns, and the information graph, and what Twitter does and all that. When I exercise or walk, I like to listen that kind of thing because again, I'm listening to someone describe their learning process. And learning is fun and cool, and watching other people learn as they find success and grow, it's amazing.

Bill: Yeah. It's been super fun. It's funny, I look back at what I thought before I started this journey. I was convinced that I knew the right thing and now my interpretation of what I thought was so wrong and I was so convinced I was right, it's embarrassing. But I think, that's part of learning, right? If you're not looking back at what you said or thought five years ago and have a little bit of cringe, I think you're probably not doing your part of evolve.

Tren: Yeah. I like to say, if you're not getting more humble as you grow older, you're not paying attention.

Bill: [chuckles] Yeah.

Tren: The more you know, the more you know, you know, know very much, and you got a lot more to learn, and there's a lot more left to learn. The good news is that's the fun part.

Bill: Yeah.

Tren: For some people like, "Oh, what do you mean? There should be an end to it some places." Well, no, because to me business is the greatest game on earth. There's no better video game than you pull this lever, and you push this lever, you do this, and you watch how it changes, and it's nonlinear, and it's crazy, and it's great. And then, investing to me is on top of that which is, you can actually do it at a bigger scale with more things going on, you're not involved in it. I love most the hands-on process of a business.

Bill: Yeah.

Tren: But second best to me is investing in somebody else's business and watching them succeed. We'll be giving you a little advice but you know, investing in-- It's fun to go to Costco. It's fun to think about how they run their business, and then it's even more fun to think about, "Okay, well, how is it going to evolve and how is Amazon going to affect it? And that to me is a blast. Now, some people would rather play with their Corvette motor in the garage, and I think that's great. But for me given my curiosity, just getting excited about Costco when talking to--

Last time I saw him was in a restaurant, just asking him questions about, "How it got started, and what he did and, and then also just like learning from someone like that." He's an amazing guy. Totally amazing. But I can't go to Costco and not be thinking like, "Huh? Why do they do that?" Why are the TVs right there when you go in," and of course the $1.50 hot dog?" But the whole thing is, you're thinking, "Hmm, this is interesting."

Bill: Do you mind for people that don't know, you founded a company in the part that I know for sure is that you sold half in 1999 because you felt things got toppy, and went on this kind of mission to educate yourself as to how to go forward. But I'm unclear as to what your startup did. I know it took a ton of heavy, heavy lifting. What do you say 500,000 miles for five years or something like that? But I don't know how the idea come to fruition and what was that process like?

Tren: Well, the amazing thing about the era, the period, and people talk about it being similar today, but I don't quite see it, but it's close. Is it in 1991, 1992, there was this Information Highway thing, it was cable companies were going to control these information networks, and you're going to have 500 channels, and they will then be controlled on ramps and off ramps. I was looking at that from the standpoint of the companies that are trying to build it and went to Oman, I went to Orlando, and I talked to people, and I wrote a long paper for Bill Gates and I said, "This doesn't scale. This doesn't hunt. It costs too much. The equipment in the home on the whole it just doesn't scale." So, I knew that didn't work.

Then in 1993, I started to think, "Well, there's this internet thing and people are using it for academic purposes and all that, but they just made it legal to do commerce on the internet." I said, "This is interesting." It was that that year that Craig McCaw, my friend and former partner met with Steve Jay from Apple. Steve described the internet to Craig and Craig said, "Well, that sounds great." He goes, "Let's buy it."

Bill: [laughs] It's not Web 3.0, yet.

Tren: Yeah. And Steve Jobs said, "No, you really can't buy it." But we started to think about this Charlie Munger thing, which is you think derivative. You think, "Okay. Internet is going to be great. You can own TCP, IP, or anything like that." But they're going to need infrastructure to do it. You're going to need to connect everybody, and there's going to be value in connecting everybody. So, there are a lot of things that were done. The idea of connecting everybody, that wasn't going to be a great business." So, a lot of things, startups, XO, which was a [unintelligible [00:13:03] C-LAC and there was UU net, and we just said, "Well, why not have a network that connects everybody anywhere in the world?"

The only way to do that is with satellites. So, we said, "Okay, well, it's got to be low latency because fiber is going to set the standard, and it's got to be new, and it's got to be broadband because these Iridium and Globalstar which were being pros at that time, said, "Okay, it's got to be broadband." So, in Thanksgiving 1993, we went to a board and said, "Hey, we're going to create this new system. It's going to be called Teledesic," and it is the predecessor to what Starlink is today and what One Web is and all that. We said, "We're going to go build this thing," and we are going have 840 satellites," which the time was nuts, it's like 840 satellites.

Bill: [laughs]

Tren: We said, "Well, we make them smaller, and you do them differently, and you make them on a production line, and yeah, we can do that." So, we said, "Well, let's make it but we need $9 billion to do it."

Bill: [laughs]

Tren: Anyway, so, I set off to raise $9 billion.

Bill: It's [crosstalk] as a lot of money.

Tren: Yeah, it was a lot of money. Bill Gates owned half, and Craig McCaw owned half, and Windows was a year away from Windows 95. I said no to Bill. No, I'm not going to go to work for Microsoft. I know you want me to work at Microsoft, but I'm not going to do that. But I'm going to work for you on Teledesic.

Bill: How do you know, Bill? How are you writing memos for Mr. Gates and telling them that you're not going to come work for him?

Tren: Well, so, Bill and I are the same age. Actually, I'm a little bit older. So, I'm his senior. He has to give me a lot of respect for that.

Bill: I like that. That's got to feel good.

Tren: Yeah.

Bill: Do you make him call you, Mr. Griffin?

Tren: No. [laughs] But his dad and my dad were friends in college.

Bill: Okay.

Tren: And then, his mom and my mom were buddies in college, too. Then, they spent a lot of time raising money together.

Bill: Oh, cool.

Tren: My parents were my primary role models, but second were his parents.

Bill: Oh, wow.

Tren: And then, we probably met I think, I have a pretty abnormal memory. I think, we met at the 1962 World's Fair.

Bill: Oh, wow.

Tren: So, that was a while ago. Yeah.

Bill: His father's firm took over my wife's firm in Chicago.

Tren: Okay.

Bill: Yeah. So, she briefly worked for, I mean, not his dad to this point, but the name. But anyway, interesting.

Tren: Great. So, Bill and I knew each other and we hung out in the same places, and belonged to the same clubs, and moms know each other, and they work together. His mom was President of the Junior League. My mom was Vice President. Anyway, the families knew each other, and Bill senior is my primary role model. He has been the primary influence in my life. But anyway in 1980, IBM came to town and a couple offices away from mine, the contract for MS-DOS was drafted.

Bill: Oh, that's awesome.

Tren: Yeah. And Bill senior said to me, "People say Trey's company, they call him Trey. is going to be big someday." I said, "Yeah, it sounds pretty good." Software, you know, I did a little research and I said, "That sounds pretty good." But I went to school, they were still using punch cards and things like that. Anyway, so, I knew him and then his mom was a huge influence on me and his mother was big in US West. She moved from nonprofits to profits. She was a role model for women today, amazing quality on many boards including the word of the phone company. She said, "Well, the cellular thing's going to be big." And I knew the McCaw family sort of, so I got involved with Craig. Then, Bill and Craig are friends from high school, though, Craig's four years older I think, the families knew each other, too. So, anyway, it was an incestuous thing. Seattle was a little town at that point.

Bill: That's cool.

Tren: Yeah. So, I knew Bill and we were talking and got involved in the startup, we decided to build this system. We spent six years building it, we launched one satellite, test satellite, and all that. But we went through this whole period of-- it was intense. And then 1998 hit, and Craig had sold McCaw cellular to AT&T in 1995. And he had some billions to invest, so I went to work for him running part of the business was Teledesic, but also the other half of the time, I spent helping him doing venture. So, he sent me down to Silicon Valley and I did a lot of coinvesting activity with him with various firms and primarily with the partners of Benchmark. So, I got to know them.

But the fun thing is, or the weird thing, or the thing that makes me unique is, all these important people want to talk to them and oftentimes, I'm in the meeting. So, 1994, I'm meeting John Malone and Rupert Murdoch's on the phone, and you're young, and usually your eyes are like, " Rupert Murdoch's is on the phone."

Bill: Yeah, that's amazing. What an experience.

Tren: Yeah, and they were doing this thing called the Death Star, which is we could do a whole issue on what the Death Star was. But the important thing is, you get to watch these people negotiate and learn, and there's nothing like a real-life situation to get you charged up and say, "Holy--" You can see the fear in John Malone's eyes because Murdoch is the only person in the world who scares him. Craig would give me commentary and he was in the cable business, and his dad owned the first Rock 'n Roll Station, and there's all this stuff. Again, I felt like Forrest Gump in Beijing at the ping-pong match. You're there and you're going, "Wow, this is going on." I'm here like, "This is cool."

Bill: Yeah, that's amazing.

Tren: And so, you learn by watching. You can learn a lot just by watching. I forget what movie that's from but being there, I think--. But the important thing is, if you're paying attention, you can really learn a lot. The thing that's amazing about Twitter is you can watch a lot of people who you never would have had access before, and then, they'll DM you.

Bill: Yeah.

Tren: It's like, "This is great." It's like, this is DM. This is part of what I call give to get which is, if you give, and what you're doing on this podcast right now is you're giving someone your time and resources and all that. And by giving you get, because you get feedback, you get new friends, you get a broader network, you increase your brand. When I'm mentoring young people, I try to do this more and more is, I feel like I get more out of the mentoring than they get from me. Because I learned about young people and what they're thinking about, and what their issues are, and how they're different. But then also, I just get the satisfaction of saying, "Okay, well, I'm paying it forward. I'm doing something good for somebody else because the people who did for me like Bill Gates, and his wife, and my mom who's passed, they're gone, and I can no longer thank them, but at least I can help somebody else as payment for what I did before, which is the concepts of paying it forward. But anyway, you give to get and there's this huge--

One of the things I counsel people on is, there's this huge opportunity. Let's say you admire x. You know x a little bit enough. So, you can say, "Hey, I know you're working on this thing. I'd like to help you." You do the dirtiest, nastiest stuff that nobody else would want to do and pretty soon the person says, "Wow, they're really caring and you got reciprocity kicks in, you get a Lollapalooza." They start to think, "Okay, well, I'm going to like, "you're okay."

Bill: [laughs]

Tren: And then, they start to mentor you.

Bill: Yeah.

Tren: It's like people don't come to you on the street and say, "Oh, well, I'm looking for someone to mentor, you know, you look like a good person.

Bill: Yeah.

Tren: It's usually somebody who's diligent, who works hard, who gives to get, who gives first, and then they're saying, "Wow, they did this nice thing for me, and they're smart, and they're hardworking, and I think, they're going to go someplace." So, what I'm always telling my young people who I mentor is, find somebody, and do something for them, and you will get benefits. Sometimes, you'll find a jerk and you won't get anything from it. But the ones that you find who are willing to give back to you, you could never get that. You can buy that.

Bill: Yeah.

Tren: It cannot be purchased.

Bill: Yeah, and all it takes is one, right? Like, one really good mentor is really all you need.

Tren: Yeah. My friend, Josh Wolfe talks about a special person who helped Lux get started in-- Serendipity plays a part of it, but it's only that aspect of, well, there's hustle, and there's intelligence, and there's driving all that but you have to do things. There are ways to do it. One of the things that I'd talk about today was this whole concept of non-linearity and what Charlie Munger calls Lollapalooza and he spends a lot of his time looking for them. But basically, what we have in life is a fundamental attribute of human beings which is, we don't make decisions independently. We herd and we do it because you can't go through life and make every decision independently all day long without any input. You got to rely on things and then also from an evolutionary standpoint, if there was a rustling in the bush and everybody was running, you better run too, because it could be a lion and your genes is going to get eliminated from the pool. So, it's our natural tendency to herd.

And because people herd, you can get positive feedback and positive feedback creates this attribute, which is non-linearity, which is, if everybody suddenly likes Billie Eilish or whoever the star is, other people like it because as other people like it. They want to know what everybody--. It's like when you're a kid, you're going to a great school and everybody's talking about x. Is it right? I want to be a part of this conversation. I go learn about x, right? But anyway, we herd. There are talented people who hustle like you, like the people don't fit into it, who are able to basically induce herding, and it's really hard, and it's really tricky, and you do it at multiple scales. But in business, you're trying to basically get people to herd and think, "Well, my story is really great."

Bill: Yeah.

Tren: Or, your investment manager trying to think, "Oh, wow, Bill. I should give my money to him because other people give him, he's great. The more success he gets, the more success you get." A guy named Merton discovered this thing called the 'Matthew effect,' applied to academic citations at first, but it applies to everything, which is the rich get richer. Part of the Matthew effect applies in many, many areas. So, as a business person, you're trying to create hurting, you're trying to induce hurting at various scales and it's hard. You don't think of it that way, but really, that's what marketing is. Nothing like word of mouth. How to get good word of mouth? You have super high quality.

But there are other things you can do to create viral loops. As an investor, you're trying to find those people who can create viral loops, who can create herding. The thing that's so amazing about that is, it's nonlinear and because it's nonlinear you can have this phenomenon where Bill Gates talks about it, Jeff Bezos talks about it. It's in Tom Alberg, my friend's new book. He had no idea Amazon was going to be as big as it was. He thought it was going to be big that's why he named it Amazon. But he didn't think it was going to be this big.

Bill: Yeah.

Tren: There's a famous time when Bill and Kapoor were on stage, and Mitch turned to Bill and said, "Well, I think my company is fully valued." This is the time when 123 was still-- Before Excel really took off and crushed it like a bug, no, okay. . [laughter]

Tren: Anyway, when Excel and 123 were still big. Mitch said, "I think, my company's fully valued." Bill said, "Yeah, I think, ours is too," because you just don't understand the power of the nonlinear.

Bill: Yeah.

Tren: If you understand it, then you can look for situations that other people don't see it yet, right? It's even hard to see today like people say, "Oh, well, the chip shortage is caused by COVID." Well, chip shortage was going to exist anyway. People screwed up their chip forecasts and then a perfect storm yet, and COVID hit, and we had a geopolitical situation, which caused people to be very concerned about where things are made and restrictions were put on China, and they started to hoard, and you get this Lollapalooza, and pretty soon, we got a chip supply problem. I don't call it crisis. It's a chip supply problem. This was going to last a lot longer than most people think.

So, you can say, "All right, well, there's a thesis there." Market does not appreciate how long it's going to last, who are the companies that are going to benefit and are undervalued because this is going to happen. It is the investor job to spot these nonlinear phenomena because if you want to get your crew, so, I was talking about x baggers or x, y baggers, how big it is. But if you can spot something that is nonlinear, you're more likely to get these big returns as opposed to, "Oh, we did 6% this year, and we're going to do 7% next year, and maybe 5% the year after that." The big hits are when you spot something nonlinear.

The thing that's so amazing to live in this time is because everything is online now, because everything's digital, the number of things that are subject to nonlinear phenomenon is that our Black Swan is accelerated. There are more things that are that way. When people were using correcting tape on a typewriter, things didn't quite move as quickly. Today, though, things moving on linear. Now, the bad news is that, good things happen that are nonlinear, most things are positive. But some things happen that are negative nonlinear. You can get writing or whatever that is a terrible situation. We have to accept the good with the bad.

The other thing is, you can't put the genie back in the box. We can't say, "Oh, well, we're going to go back to a day when there isn't the internet, and Walter Cronkite tells us what to think, and there's only four or five news choices," and we can't go back to that, but we need to accept the good comes with a flip side. We need to learn how to manage that downside. So, I'm all over the place during the conversation. [crosstalk]

Bill: No, I like where it's going. I think, the thing that I have found interesting about the downside is, it's so easy to focus on. And sometimes, I get my brain to focus on the downside, and then I'll say, "Well, hang on a second. Look at how much Twitter has given me. Look at how much it's opened my mind." I came from this point of view, where value is defined by cheap optically on today's numbers. And I know I'm right if I'm fishing in this pond and thank God, Twitter, said to me, that is a stupid way to think and I started to actually listen. The ability to not identify with a concept and the ability to find people like you, and Liberty, and Jim has helped me think through things. If you're just open to the idea that maybe you're not the smartest human in the world, the amount of learning that can come from the social networks is incredible. So, to your point, it's somewhat what we focus on and how we use them.

Tren: But then, it's also the uniqueness of you. One of the things that people get hung up on is that, Charlie and Warren have done a great job teaching, but a lot of people don't go to the next step and say, "Yeah, but I'm not them.

Bill: [laughs]

Tren: "I'm never going to be them and don't have the same math mind. I can't do DCFs in my head."

Bill: Yeah.

Tren: The amazing thing was, Schroeder who wrote this book, The Snowball, and she went through Warren's office, she got access amazingly. She didn't find any calculations, or notes, or sheets, or anything like that. I don't think she really actually got it. But the point is, he's got a mind that other people don't have and he can do things in his head that we can only dream about, right?

Bill: Yeah.

Tren: But we can do them with a spreadsheet, right? The spreadsheet doesn't have to be complicated. But then the other thing is, they have weaknesses that we don't have, which is we were born later, we're digitally native, we dumped in. So, we have a circle of competence that's different. So, where we can find value is someplace completely different. So, you take someone like, Josh Wolfe was one of my favorites. He's always talking about, there's informational advantages or analytical advantages, all these different sources of advantage were different. They're nervous about a SaaS stock. But that's fine. SaaS stock can still be a great value because you're still trying to identify a gap between market perception and actual reality, and if you can find that gap, then, like the example I was talking about, which is people don't understand the chip crisis is worse than it is, okay, who benefits?

Bill: Yeah.

Tren: And then you find that company who do great anyway. It's a fabulous company and you have margin of safety, but also, they got this tailwind. This whole concept of tailwind is an amazing thing because life is so much easier if you got a tailwind. To get involved in tech, to be born in Seattle is a tailwind in 1955, to get involved with software in the 70s was a tailwind, to get involved in mobile in 1984 when the Seattle network was turned on December 1984, that was amazing. And then, you get this amazing tailwind, but then by, I'm going to say 1999, 1998, I realized that mobile kind of shot its amazing ability to create value. It became a commodity business, you grind it out, people like AT&T owned assets, and there wasn't this nonlinear tailwind. Then, it was time to get out and find an area that did and for me that was software.

The good news is, it's fun. Being happy is just underrated. It's just like totally underrated. So, finding work that you enjoy, and that you love, and that where the company is growing and people are growing, because if you're in some big company, and it's shrinking, headcount cuts, none of the old guys are retiring, and there's no opportunity, there are no battlefield promotions, elbows are sharp, it sucks.

Bill: Yeah.

Tren: Find a situation where there's growth. One day you're managing paper supplies, and the next minute, you're regional VP of sales or the things that are happening in a company that's growing. Then, the other thing about feedback going back to my point about herding, which is because I watch early Microsoft, watch early McCaw, I watch other companies early Amazon, is that smart people want to work with smart people, interesting people want to work with interesting people, hardworking people want to work with hardworking people. If you get a core of that going-- for seven employees are amazing, but if we get a core of that going, amazing things happen because I want to work at x because there's all these cool people that work at x.

Bill: Yeah.

Tren: And they work hard, and they're interesting, and they're fun, and when they're outside of work, they're fun, too. They're doing all these crazy things and its sort of super exciting. So, this is another sort of example of success creates success, it feeds back on itself, and pretty soon you have an organization where you have amazing talent and you're growing. Because you're growing, there's more opportunities, and pretty soon, you gone up the ladder because you've been pushed by this amazing tailwind. So, find a tailwind. Oftentimes, you think why? I'm not sure whether I'd really like software, I'm not sure I would really like whatever the thing is. Oftentimes, you get into it and you say, "Oh, this is interesting."

Bill: Yeah.

Tren: Give me a pot and a wooden spoon, I can be happy, right? So, I'm pretty unusual. But a lot of people like, "Well, this is intimidating, learning about fusion. It's like is this hard." But the more you learn, the more you know, the more you know, the more interesting it gets, and the easier it gets. I guess, the other thing I'd say is, again, I say to my people who I try and mentor, which is one of the things about life today. I used to go to the stacks even after I graduated at the university because that's where I get my deep papers, and deep learning, and go into sort of niches.

But once the internet arrived in 1993, it's all like there. You can educate yourself on anything. If you want to become an expert in fusion, or whatever, quantum mechanics, you can do it. Especially, if you're a self-learner, and learn how to network, and reach out to people, and get help and feedback, and all that. But you can be an expert at almost anything. That is an amazing way to be interesting, but also to make yourself unique because we all need a moat as individuals. We all need sustainable competitive advantage like, "What's your thing?"

Well, I do podcasts, I'm an investor, I network well, I call it information, all the things that you're trying to do are great, are fabulous. The important thing is, one of the things I enjoy is watching people like you and like Patrick O'Shaughnessy. Learning in public, but also growing as people, and it's fun to watch somebody grow like you.

Bill: Well, thank you. I am not at his level or close but maybe someday. I'm grateful that he's done what he's done and I hope that I can do something similar for some people.

Tren: Yeah. But the point though is that you'll never want to be Patrick because there's only one Patrick.

Bill: Yeah.

Tren: But you want to be like him. This is another thing I say to young people who I mentor is that life is like a grocery store. You're like a Trader Joe's and you have all these attributes of who you can be at any given time. And you're walking through the grocery store and you say, "Wow, I'd like to be like Jim," or, "I'd like all these people, I like this quality about this person, I like the way they deal with their romantic partner, I like the way they talk, I like the way they exercise, I like whatever." It's unlike high school, when people tend to or want to be different than the same way, you can be whoever you want to be now.

Bill: Yeah.

Tren: And the older you get, the more comfortable you get in your own skin. So, you can go to the Trader Joe's of life and say, "Well, I don't want to be that way anymore. I want to be like this. I want to be like that and it's good" because that's how you grow, and that's how you're interesting. So, for me, I got a lot of people who I super, super admire, but there're some things about them that I don't like but that's okay.

Bill: Yeah. [laughs]

Tren: Like I got a lot of things about me that you definitely wouldn't like if you got to know me, but maybe I'm okay on some things and you say, "Oh, well, Tren's interesting this way, this, and this way." I wouldn't want to be that way like, "Oh, man." But the good news is, you can be you. But you can also learn quickly. It's also this vicarious thing which is, you want to watch the other person pee on the electric fence, right? You don't want to do it yourself. So, you got to-- [crosstalk]

Bill: That would be painful. [laughs]

Tren: Yeah, it would be painful but it's usually figurative like, somebody doesn't know what they're doing, wants to make a career change, goes and gets involved in real estate and pretty soon they're bankrupt.

Bill: Yeah.

Tren: It's because they didn't have circle of competence, they didn't build up slowly, they didn't do x, y, or z. They've risked everything and you look that you say, "Okay, well, I'm going to be more thoughtful about what I'm going to do. May not be real estate," but maybe like, "Oh, I'm going to go open a-- I'm going to buy a ski resort, or mini warehouse, or whatever it is." You watch somebody else do that and you can say, "Okay, well, maybe I need to think carefully about it." It's not that you don't do it, but you learn from the experience of somebody who got their fingers burned.

Bill: Yeah.

Tren: Paying attention is a great thing.

Bill: Yeah. I know, I love how you're saying that. I think, two things remind me back to Berkshire when you're speaking but one, I never understand necessarily why people go and ask Charlie and Warren for life advice. Sometimes, I think, you're not going to the right person for the right thing which is not to say that they haven't learned. Sometimes, I think people worship all of the words. Maybe they don't have every single answer in the world, and then, the other thing shoot that you said, I don't know, I think that's so true that you can pick and choose who you want to get your mentorship from, oh, the part about we're not all Buffett.

When I started on the investment journey, I hear him say, I'd have 50% of my net worth and my best idea, but I'm not him to the extent that I speak to individual investors, I hope that I can help them understand how smart Charlie and Warren are and how potentially dangerous that kind of a concept applied to an immature understanding of how good they are can be, because you can sink yourself on that kind of stuff.

Tren: Yeah. The key thing about them is revealed in my feelings about The Snowball, which is I feel has severe problems as a book because it doesn't really paint an accurate picture about Warren and who he is. I think to understand Warren really well, you should watch Becoming Warren Buffett, which is a documentary, which came out after the book, which is Warren saying to the world, "Look, she portrayed me this way, but I'm really this way, here I am, here's me with my kids, and they're talking about the fact that I was there as a parent physically. but I wasn't there." You can tell it's painful to him, but he understands that he was not the most empathetic father that there was and he was not the most there parent. Even he was there, he wasn't really there. He was saying, "Look, that's the way I am," and to some extent, "That's the way I was wired. There are good things about the way I'm wired, but there are also bad things about the way I'm wired."

Bill: Yes.

Tren: And I'm not wired like he is. I can't do math like he is. I have some strange things about me like I have memory for words, and concepts, and ability to put things together that are unusual. But there are other aspects about me that you wouldn't necessarily want to be like. But the human side of what they do is unique, and then the other thing is, they started out a business and they made a lot of mistakes with the department stores and with Berkshire itself, and they learned from those mistakes, and that made them better investors.

Bill: Yeah.

Tren: And you probably have to go through some of that yourself. You have to go out and let's say, you want to do venture. You're going to make some boneheaded investments in the beginning, and you're going to learn a ton from those, and it's a numbers game, nobody bets a thousand particularly in venture. But you're going to learn a ton from those. Buffett says, "There's nothing like walking on land to teach you about what it's like to be a land creature." Being a business, having a lemonade stand, you realize like, "Wow, getting customers is hard."

Bill: Yep.

Tren: It's like really hard and also, "Cash, wow, there isn't like a supply of cash. Cash is important." You got a small business, they think about cash every day. They think about how to get more customers every day. If you only worked in big company, you think like, well, there's always cash and it's always tend to show up. It's like, "Yeah, okay, well, the train was already rolling. Your job is to make it rolling faster and better."

Bill: Yeah.

Tren: But getting that train started is hard. If your little business person, and so having some empathy there, I think, it's critical, which is the earlier you get involved kids in a business and it can be trading baseball cards, or there's some young people today trade shoes, but lemonade stand, whatever it is, just getting the sense of, "Okay, wow, this is hard, and this is interesting, and this is how capitalism works, and this is how business works, and I need to, maybe I better pay attention." But there are fundamental things that you don't have empathy for unless you've actually done them. It's like swimming or anything, skiing, doing it is just so much better than reading about it.

Bill: Yeah.

Tren: By the way, I'm not Warren Buffett, I'm not Charlie Munger, I never will be, but I can learn from them. And then also, I don't agree with everything he says. I don't agree with Munger about China and I don't agree with him in a lot of things. But I can learn about the way they think. When 25iq started out, this is sort of interesting story. I said, well, I work at a huge company, and I can't really talk about our business at all right now, and I'm sort of nervous, and it was early days of social media, sort of nervous how this is going to go, so I'm only going to talk about value investing, even though, I work in software in SaaS. I'd like to able to talk about SaaS everyday like, here's how you create a customer, this is what we did in Office 365, and this is how it evolved. It's like, can't talk about that. It's public information you just can't do it. But I can talk about old stuff. But then I can talk about-- Well, but this is what Bill Ackman did or this is how George Soros invested. So, I started writing about these people.

But then also, because of my background, I've written seven books. I know that people learn by stories, and you got to get them to read. You got to get readers to read your stuff, and to read your stuff, you got to tell stories because if you just give them facts, they'll just tune right out, most people. The nice thing about Morgan Housel's book is, he's got, I think, it's 19 stories in there. If you tell stories, you can sell a million books.

Bill: Yeah.

Tren: Most business books like people say, "I'm going to write a business book, Oh, that's great. "Maybe what are you expecting to sell?" "Oh, I could sell a lot, a lot." Business book selling 10,000 copies is a lot because there aren't many people who are interested in business. This is boring to most people. How do you make it more interesting? You tell great stories.

Bill: Yeah.

Tren: Becoming Warren Buffett sold a million copies is a good story. Housel's book is excellent, telling a good story. Michael Lewis, if he wrote a book about taking out the garbage, I'd read that.

Bill: [laughs]

Tren: He tells a great story.

Bill: Yeah, he does.

Tren: The point is I was trying to tell stories around people. Let's learn from Bill Gurley or let's learn from this person, let's learn from [unintelligible [00:41:55]. Go down the list of people. And I'm trying to make it more into a story because it's like, "Well, you don't want to hear what Tren has to say." So, I can have my analysis in there. But telling a story is good. It's sort of like the Munger book, which is he helped me in 1999 to take money off the table at the right time and to think better. So, I said, "Okay, well, I hope he writes a book." And then, he said, "Boy, I'm never going to write a book." The Poor Charlie's, which is compilation is writing, essays, and speeches, and all that but no one's going to write a book. I said, "Okay, well, it's my tribute to him.

I'm going to write a book about the way he thinks." Biography is damn right" Janet Lowe did that, and there's a compilation, which is Poor Charlie's, my thought was, "Okay, well, I'll write an analysis which is, I'll try and synthesize and make understandable a system of thinking, and how he thinks about things." And you can learn from it. And some parts you can say, "Well, I don't. It's Trader Joe's again. I don't like this."

Bill: Yeah.

Tren: I don't want to do that. My circle of competence is different or whatever. But that's what I decided to do. Munger book, which is my most successful book in terms of copies sold is successful, because he's interesting. He's not boring. There's sort of a story in there. But telling stories is the way you learn because it's just the way it was. Writings like 2,000 years old, we learned sitting around the campfire, talking about stories. We killed this mammoth, you look at your watch, and he was like, "Oh, killed a mammoth, that sounds cool."

[laughter]

Bill: That sounds awesome.

Tren: But the important thing is, we learn by story so much better and so much more interesting. So, I'm not a great storyteller but I try and tell stories in my own way.

Bill: I think you are quite good at telling stories.

Tren: I tell some jokes and stories, but there are some people who are amazing at telling stories.

Bill: Well, like Morgan, right? He's uniquely good at it. But I think, you are good at it.

Tren: I try and tell a story, too. But also, stories are better if you have a good story to tell, I know shit that'll curl your hair. I can't tell you about it, because people would kill me if I told you.

Bill: [laughs]

Tren: But that's life.

Bill: Maybe someday, I'll fly out and we can do it off the record. [laughs]

Tren: Yeah. We'll go fishing, we'll have some cocktails, and then, we'll discuss some of the-- [crosstalk]

Bill: That would be fun. Let me know what you'd like to drink and I'll make sure you have enough of it to spill the beans. [laughs]

Tren: But the key thing is, in life, first of all, being happy is underrated. But also living an interesting life is underrated. When you're faced with life choices-- again, going back to mentoring when I talk about young people, right? I say, when you're really young, there are all these doors that are open to you. You can become a jet pilot in the Navy, you can land on carriers, you can join the Peace Corps, you can join this company, you can move here, you can do all these sorts of things. Optionality is like amazing. But then as you get older, doors start to close. You reach a certain age they're not going to train you to be your carrier pilot anymore.

Bill: Yeah.

Tren: You can't do this now. You can re-change your career and say, well, I know one guy like, I don't like business, I want to go to medical school or the opposite. You can do things like that. But you have obligations, and houses, and kids, and you've made promises, and all that. It just becomes harder, and then, also, you become set in your ways, and you have less optionality. So, as you're making these choices early, do shit that's interesting. Don’t be boring. Boring sucks.

Bill: Yeah.

Tren: My test is will doing this lead to a great story. Are the people interesting? Are they doing interesting things? It's like my litmus test. So, someone says, "Well, I'd like to get you involved in helping University of Washington with research." Commercializing it, this was in 1990s. That sounded fun to me. Bill Gates Senior said, "You should work with me on this." I said, "That sounds great." It's fun. I'm going to learn about technology more, I'm going to help the institution that I care about, I'm going to do good things, and I'm going to have a good life experience, I'm going to meet interesting people, and I'll have stories to tell like closing the big donor or whatever it is. You learn so much if you're invigorated, if you're just excited about what you're doing. It's like you're in a meeting and like John Malone's in this meeting. He's talking to Murdoch. I was like, "This is cool."

Bill: Yeah, it's amazing.

Tren: But if you can put yourself in those situations, you should and there are sometimes you have to take a risk. Say, I'm going to do a Zero to One startup, we're going to have nothing. We're going to have not even have insurance, but we're going to get it and we're going to raise money, do these other things. Now, you can't do that at every phase in your life. Somebody other day said, "Well, you're dead to me if you're not working on Web 3.0 right now." Well, you can't go through your whole life doing Zero to One startups one after the other.

Bill: Yeah.

Tren: There are times in your life when you have to do some other things, there are times you got to give yourself a break, there are times you got to have a pause. This is a marathon but you do want to do interesting stuff. Web 3.0 is super interesting. You jump right into it and go down various rabbit holes. But who's involved with the project, are they interesting, do they do interesting things, do they hang glide? I used to do that for a while, do they scuba dive?

Bill: Did you, really?

Tren: [crosstalk] Oh, yeah.

Bill: Oh, wow.

Tren: Yeah. Well, the guy named, Jeff Joby, whose house was about a couple of miles from-- He was one of the first guys to make kites, and they were available, and there was a Budweiser commercial, and they filmed it, and they had the kite leftover with the label on it, and it was available for $200. So, some friends and I bought it, and we jumped in off mountains and we skied behind boats.

Bill: That's awesome.

Tren: But the important thing is-- [crosstalk] Yeah. But that's an example of, it was cool, it was interesting, it was dangerous. So, we didn't know what we were doing because kites were poorly built by today's standards and design. [crosstalk]

Bill: [laughs] So, why not throw yourself in one and jump off the mountain. [crosstalk] [laughs]

Tren: Why not throw yourself, yeah, exactly. But the point was, I sort of say, they have this thing where like, you have little tiny kids in the crib, and you clap your hands and some kids go-- and the kids go, "Wow, what was that? What's going on?" To be curious like that say, "Well, Web 3.0 is going on. I want to know what it's about." So, I'm spending a lot of time right now figuring out what's happening. It doesn't mean I jump in with my wallet. It doesn't necessarily mean I might. I don't talk about personal investments. But the important thing is, if something interesting is going on, it could be the next internet and the internet was huge. It could be mobile. Mobile was huge. So, just being curious, and open, and looking to get involved with people who are interesting, who might be in a situation where someday you could tell a great story.

Bill: Yeah.

Tren: You're going around the world for five years flying 500,000 miles a year, I [laughs] a lot of things and I did a lot of crazy things. But one of the interesting things for me, I was going to talk about this, turn the tables a little bit. So, in 2002, I thought about raising a fund. I said, maybe we find out, I had some guys and some women who would be a team and we're going to do it. We looked into it. We looked at Steve Rattner who's a friend of Craig McCaw's and he had just spent four years raising the money for quadrangle. He was on the road constantly and I just spent five years on the road constantly raising money. We raised a billion and six or something. I just didn't want to raise money. I didn't want Louisiana teachers and then Alabama firemen, and then, I'd be in Arizona, whatever police fund or whatever trying to raise a fund. But today, people are raising money for IPOs like roadshows are zoom.

Bill: Yeah.

Tren: And it's more scalable. The dose out there is amazing. So, what goes through the back of my mind is, if I was that age today, would I go out and raise a fund? If I was somebody like you, I'd be thinking, "Okay, I'll establish a brand, establish a network. You don't have to say, "I'm going to take four years out of my life and go on the road like in the old days, and hire consultants and do all those sorts of things." It's easier to raise money now. It's easier to establish a reputation. There are less gatekeepers. So, if I were you and it was back in 2002, I might have raised a fund because it was easier. My family had already paid a price for me being on the road for five years. Being on the road for another couple of years to raise a fund didn't sound good.

Bill: Yeah.

Tren: Being in a fund with only one LP who had billions of dollars, that's pretty good. That's actually great. But today, you get the best of both worlds because you can actually own more of the economics, raise the money with an online presentation. There's money sloshing around like never before.

Tren: It's a great time to be you.

Bill: [laughs] Well, in certain ways, yes. I'm not ready for that responsibility yet. But we'll see how that evolves. I got to make sure that the learning is full before I ask people for that kind of trust.

Tren: Yeah. But again, like what Patrick's doing is, if you learn in public, and people see you learning in public and learn to trust you and your learning skills, and your expertise, and your humility in the right situations, and your confidence in the right situations, they can see and they say, "Wow, well, I know him." There are people who say, I was in Hawaii once and somebody said, "You sound just like this guy. I read 25iq."

Bill: [laughs]

Tren: I said, "Yeah"

Bill: That's me.

Tren: "That's me." [laughs] That's me. He looked at me said, "I feel like I know you." I said, "Well, okay, well, I'm sorry."

Bill: I'm sorry.

[laughter]

Tren: But the point is with online Twitter and if you contribute, if you give, if you say this is the [unintelligible [00:51:30], one of the things I do on Twitter. I talk about my fishing a little bit, but one of the reasons I talk about it and how I'm enjoying my boat is, I want to say, I don't talk about business all the time. I'm a human being, I raise money for fish harvest every year. There are things that I want you to know about me saying, he's was not always thinking about customer acquisition cost, right? He's not always thinking about this. He's actually a human, and a person, and somebody who like, if you cut me I'll bleed, right?

Bill: Yeah.

Tren: I'm like a normal person. By being human and in a situation like this right now, where we are on a podcast, they're seeing you as a human. The questions you ask, the responses you give, all creates a level of trust every day.

Bill: Well, I'm going to ask you a human question here, okay? Because I've heard you say this now a number of times. You said, my kids will forgive me eventually is how you said it one way, and then, you just said that, my family paid a price. What was that like when you were going through it when you were doing your startup? Did you have to get to a point where you forgave yourself for doing that? Does that make sense?

Tren: So, early in my career, I was a grasshopper and I spent all my money going to Thailand, and China, and Burma, and crazy places, and living in those places and that was just focused on me. And then, I had my kids later in life, then I had a family but then I had to think, "Well, if these people ever were in trouble, I want to have enough cash that I can take care of them. I had to buckle down and create some wealth." I didn't create wealth to get wealthy. I created wealth to have choices. The reason I have money in the bank is, if somebody I care about is in trouble and I can't help them, they will kill me.

Bill: Yeah.

Tren: People who have no housing, they have terrible choices. The reason to have money isn't to have a Bugatti, it's to have money, so you can help people that you love and care about. So, I had to buckle down, but in order to buckle down and do a startup which is an experience I always wanted to have, because I'd seen Bill have it, Craig have it, and whatever is you got to give your all to it. So, you got life, family, health. Business in those years consumed me 500,000 miles a year is physically hard on the body.

Bill: Yeah.

Tren: I was on the United to Tokyo or the BA to London almost every Sunday, coming home on Friday, sometimes, gone for two weeks, but they paid a price for that and it bothers me still. They benefited from that in some ways, and they saw the benefit of hard work, and the benefit of having fun, and creating something meaningful, and growing as a person. But I wasn't always there. One thing, I did that was bad was, I cut the health out of my equation. When I started the startup, I could run a 320 marathon, when I ended, I couldn't and just too many cheese plates come around the business class and too much time in the air. There's radiation, there's move, there's exercise. So, I paid a physical price.

Bill: Yeah.

Tren: And so, would I do it over, again? Yeah. But I mixed it a little bit different? Yeah.

Bill: Do you think you could have though? [crosstalk]

Tren: I don't know.

Bill: I think it might be easy to say in hindsight but hard to execute.

Tren: It is hard to execute because you're all in. To raise $9 billion, we started with four people-- Now, the good news is, our shareholders were Bill Gates owned half and Craig McCaw owned half. At the time, they were the names. So, I could get any meeting I wanted with anybody in the world. I remember, I was in Tokyo once and I met with Mitsubishi. It was me. I was giving a presentation and there was 29 people around this huge conference table.

Bill: [laughs]

Tren: They weren't there because I was there. They were there because Bill Gates and Craig McCaw had reputations, had promotes that said, I'd better pay attention because I don't want to miss it this time.

Bill: Yeah.

Tren: Like I missed the last one. So, I could get in any meeting I wanted. We raised a billion and six, and I got to travel the world. But to some extent, I'll always regret not giving more to my family. I gave in different ways. You got to make choices. Everything's a tradeoff. I learned about working with engineers is, there're so many tradeoffs.

Bill: Yeah.

Tren: Let's say, you decided to raise the fund, and you go out, and you spend three or four years on the road. Not so necessary anymore but you did. They're going to be better off financially, they're going to maybe going to have less debt when they get out of college or none. But the important thing is, it's a tradeoff and you got to realize it. You can't be there for every Little League game during the week and be raising a fund.

Bill: Yeah.

Tren: There's a choice, right? It's hard.

Bill: Yeah.

Tren: It's hard.

Bill: My dad grew up quite wealthy and I think what I noticed from his experience is, I think, he would have benefited a lot from his parents being around a lot more. But they had a socialite life, and I think, I don't think it's a stretch to say they neglected the kids, which is a shame. Because why have it all if you're not going to spend your time with your kids, but that was like the next iteration of comfort, right?

Tren: I was always old when I was young. So, even when I was little like six years old and I was put with my grandfather on his boat, I was paying attention to what they were saying. They didn't think I was as they thought I was just a six-year-old kid, but I was listening to what they're saying, and they were talking about Seattle, was a wild town in those days. It was an open city and there was gambling, and prostitution, and numbers, and there was a lot of stuff going on till 1967 that wasn't aboveboard. They'd also mistresses and things like that and they also drink a ton in the afternoons, and they get habituated to it, so they could drink a lot. Like if I drank what they drink, I'd be asleep-

Bill: Yeah.

Tren: -in the afternoons, but it was wild. But it opened my eyes really early on to everybody has a secret, every family has secrets what may appear to be normal. They were telling each other things that other people didn't know about. My mistress, I got her living here. It's like, I won't say that a mistress.

Bill: [laughs]

Tren: And then, I go skiing. We go skiing and you'd be like up in this skiing place, and there'd be the pool, people will be swimming in the pool, and I'd see Mr. X, and he'd be swimming with this young girl, and then they start kissing. I'm going, "Mr. X is kissing this girl in the pool. Mrs. X wouldn't like that." My parents would go, "Oh, why don't you go play some-- sorry or something." You know, as I go, but I would pay attention and I realize it that people aren't perfect, that families have secrets, that I want to do better than that, that I want to be stronger than that, and I want to have things in my life that aren't that way. This is sort of the anti-role models.

Bill: Yeah.

Tren: Early on, I realized I don't want to be like that.

Bill: Yep.

Tren: I don't want to be the guy who everybody wants to play golf with that doesn't pay attention to their kids.

Bill: Yeah.

Tren: You know, the guy who does everything for the community, but nothing for their family. For the guy who's very liberal in his values about the community, but treats his own family as a tyrant.

Bill: Yeah.

Tren: And so, one of the things about my analogy about Trader Joe's is, as you go through Trader Joe's, they're all these things you don't want to be. I don't want to grab that, being abusive to my kids, or not giving attention to the kids, or giving them too much attention, or not letting them fail or whatever. We all do our best. But hopefully we're getting better over time, we're all humans. So, we got to forgive yourselves. So, I forgive myself, but I wish I could have had it all but I didn't. But I have had a great life. I'm reaching my poll date. It's on the back of my shirt.

Bill: Yeah, well, I think, you got a lot longer left which is good.

Tren: [laughs]

Bill: It's interesting, you're talking about health and stuff. I've found myself thinking a lot more about it lately. I was camping outside with my kids last night, and I looked down, and they're like sleeping head-to-head, and I just said to myself, "I got to make sure that I'm old enough to see them have kids and healthy when it happens, too." I don't want to be older and not healthy. I want to be the grandpa that can pick them up.

Tren: One of the things my dad's physician told me, which was keeping in mind, he said, "You'll have a bunch of friends in their late 40s and early 50s who will just break."

Bill: Yeah.

Tren: Our heart will explode or whatever it'll happen and they'll just die. That's just life. So, you got to prepare yourself, and you don't want to be one of those people. So, take care of yourself. Then there'll be a period where people don't die, but then, all of a sudden, they'll start to wear out. It isn't breaking. It's like all your systems just start to go. And you can't do this, or you can't do that, or you have your hips replaced, or cataracts, or whatever, but your body is basically falling apart. The process is nonlinear, unfortunately, the aging process.

Bill: Yeah.

Tren: And so, paying attention to that is wise because you should try to avoid it. But also, it should make you think, the Warren Zevon thing, which is enjoy every sandwich, because you never know if you're going to be dead tomorrow.

Bill: Yep.

Tren: Like, enjoy every single sandwich, enjoy this conversation with you, enjoy what I'm going to do later on in the day. Just enjoy that right now. It's easy to fall into a trap of not enjoying the present moment. But watch people who don't do it is a reminder, and then when you lose a friend, when suddenly-- I had a friend who had colon cancer in August and he was dead in September. Stage four and no it's just so fast. I didn't even get a chance to see him and say, goodbye.

Bill: Yeah.

Tren: And so, when that happens to you, you think. Then, the other thing is, I have a really close friend who was a mentor to me in terms of like being happy. He was the happiest guy I knew. I was always trying to be happy like him. I didn't realize it, his happiness was he had a cocaine problem and it killed him. Eventually, his heart blew up. But the important thing was, for me, he was like, we were really close, we were super close, and I didn't even know he's taking drugs.

Bill: Yeah.

Tren: I mean, maybe a little but-

Bill: Not like that.

Tren: -not like that, right? What if I paid attention and would have known that? I could have helped him. What of my other friends have that, too? What if my family has that, too? What if anybody, in my community, or whatever. So, one of the things I wanted to talk about today was my friend, Tom [unintelligible [01:02:17] book, which is a lot of things we've talked about today like feedback loops and all that, they apply to your community, too. His book is called Feedback. The important thing about life is these principles apply at every scale and applies to your city. If you make a difference like Bill Gates and Mary Gates, and my parents be like that. If you give, you get. And to have a good community, you have to do things, you have to support your university, you need to research your university. You have to support people who are in trouble and down. So, the big scale is, you want your city to be great like, support your university, give to organizations like United Way that support the broader community.

The other thing is on a micro level, you got some man, he gets fired or it could be woman. But I'm just picking a man. he gets fired, he starts drinking, because he feels bad. It was not his fault, company had trouble, and he got fired, he starts drinking, and then, they strike their spouse. Then, the family gets separated by the courts or whatever, and then depression kicks in, and then he goes into spiral down, pretty soon, he's homeless. The rest of the family is destitute, and they start to fall apart, and that is a feedback loop that it's negative. One thing feeds on another and you're going down. Occasionally, you have to step in a situation like that and say, "We're going to create a positive feedback loop for them." So, there's an organization called Ryther in this city, which takes foster kids who are so abused, they can't even put them in foster homes.

Bill: Oh, wow.

Tren: The worst of the worst. In this state 100,000 kids are taken away from their parents with foster homes. But there're some kids that are so abused that they can't even be placed. So, these kids, if you can turn their lives around with a positive feedback loop, give them some mentorship, give them some positive stimulus, make it so their lives can get normalized, you can create a positive feedback loop for them. And the city benefits because the more people who were recovering like that, the better the city gets and the more people say, "Wow." It makes me tear up a little bit because I think about real people. The city can get better if you help that individual like doing that individual thing. I have this one friend who I just love. They've taken in like three different kids in foster situations and they're like their own kids. And they took them on late in life in their early teens, and they treat them just like their own kids, and I'm like, "What a studly--?"

Bill: Yeah, it's an amazing. You're giving somebody, life.

Tren: It's an amazing thing.

Bill: Or shot at a life.

Tren: But those little things inspire other people. That other people say, "Wow. Carl and his wife, they're doing amazing things. I should do something like that, too." And the goodness spreads and the positive feedback loop spreads, and so, you can create a community where people care about creating good situations for others, and then, helping people who have gotten to that downward loop. You can do amazing things just by getting somebody a place warm to stay, and a little bit of confidence in that first job or whatever. That's not that difference. Then you got a small business, you're trying to sell falafels, you're trying to get your first customer, you're trying to get word of mouth, you're trying to get employees, you're trying to get a good rap, all these things. It's just applying it to a human being who's in trouble as opposed to creating your business or as an investor, as I said, trying to spot people who are going to create those amazing stories are often embryonic, you don't really know for sure, but you think this person's worth backing, this person's worth getting behind, this person's worth helping out.

As an investor, as a business person, as a community leader, as a parent, you've got a parent who's got a kid who's struggling, same thing. You want to create a positive feedback loop. They're getting bullied at school or whatever like, how to create confidence in them. How do you get them so they're thinking well about themselves, how to [unintelligible [01:06:21] them with some leadership skills? And then also, one of the key things is bravery. In order to do anything worthwhile in life, creative, but also business in life, you got to be brave. Learning in public is an example of bravery. Writing a book, here's my book, and someone's going to write some nasty review at or whatever.

Bill: [laughs] Yeah.

Tren: Like, it's bravery. Here's my art, here's my singing, here's what I do, whatever. And these things are acts of bravery and they're things that make you learn and grow. If you don't do that, you don't grow. So being brave at every scale in your community. So, anyway. [crosstalk]

Bill: No, I love it, man. That's more important than anything else that we were going to talk about today. I just tried to set my kid. I'm sure that my kids will end up on a couch and blaming me for something, but I'm just trying to minimize those amount of things and create the positive feedback loops in their life. And then, I have often thought down the road. There's a lot of things I want to do. In an interesting sort of series of events, I moved from Chicago to a smaller town where I'm at now. And it's really inspired me to get more involved. I think there's something about being in a large city that I felt disconnected from the community, and here I really feel like tangible sense of community. It's inspired me to give back more. It's nice.

Tren: Yeah, it's a personal thing. But I want to go back to the kids' thing. I don't know how old your kids are but I've been through the process.

Bill: Four, six, and seven.

Tren: Okay. So, if your approach is like, I think it is, and you will reach a stage around 12 or 13, will you transition from, they think, dad is amazing and perfect to dad's an idiot and doesn't know anything.

Bill: [laughs] Then hopefully, they'd find me at 30 and say you weren't so dumb.

Tren: It won't be 30. It'll be before that. But the important thing is, it doesn't have to be completely bad, if they know they can approach you and if you know, you're exposed enough to know that you're humble and you realize you have weaknesses. But the snap is sort of difficult. What you have to remind yourself of is that's normal. We are programmed as a species to move away from the parents and to try new things and to experiment and that's how evolution happens is, you go off and you move to the America from England or whatever, but that's normal. But then eventually, they're going to come back and they're going to say, "Well, dad, he was right about that, you know? He wouldn't have been perfect, but he was okay in these ways." They're going to love you throughout the whole process. But they're going to think sometimes that you're not completely with it or completely making the right choices.

But the important thing is, if you teach them to be independent beings, they will be okay in life. If you keel over at a heart attack when they're like 19, and you've taught them to be independent, they're going to be okay. If you've made every decision for them until they get into college or even some kids after, when you die, they're screwed. They never made any decisions, right? The important thing is that's a tradeoff though because they're not going to call you when they're 32 years old, if you've taught them to be independent and make their own decisions. They're not calling you and say, "Okay, I'm going to buy a car, what should I get?" They're going to just buy a car. It's going to hurt a little bit that they don't call you as much as they should but if you truly love them, if you truly care about them and not yourself, you'll be glad that they're independent in making those decisions.

Bill: Yeah.

Tren: You'll be confident that they're making those decisions and you won't feel like, "Well, if I die, they're screwed."

Bill: Yeah.

Tren: So, it's a very self-less thing to do. Some adults just love it like. My kids call me about everything. It's like ugh.

Bill: [laughs] Yeah.

Tren: Most people go to college with people like that. You get to college and there's somebody who's never had made a decision in their whole life. Their parents who had made every decision for them, then they have to make some decisions on their own. With drugs, with drunken driving, with all kinds of things, they make stupid decisions, and they either hurt themselves or are dead.

Bill: Yeah.

Tren: Because they never made a decision before. They were never allowed to make a decision.

Bill: Yeah.

Tren: It's like, I'm a big believer in sleepaway camp. One of the reasons I'm a big believer in sleepaway camp is, you need to learn how to make friends. You join a new company, go do that you need to-- Learning to even make friends is a skill, right?

Bill: Yeah.

Tren: It's totally a skill. A lot of kids have never made any friends. They had the same friends since kindergarten all the way through school, never been away all that, and they go to college, and they come back after a year and say, "I'm leaving, I'm quitting, I'm done. I didn't make a single friend." Well, the standard for friend is, somebody had known since kindergarten.

Bill: Yeah.

Tren: No. You got to learn how to make friends and you only known for a week like, find somebody.

Bill: That's right.

Tren: Find a [crosstalk] person. But that's a skill. And if you don't teach it to them, if you don't say, "Well, you're in a sleeping camp, you don't know anybody" The classic thing was, taking my daughter to a sleepaway camp and she cried like, "I don't want to go, I don't want to go, I don't want to go." I pick her up I don't know it was like a week, 10 days later, or something like that. "I don't want to leave, I don't want to leave, and so and so, so great."

Bill: [laughs] Yeah.

Tren: But there are those experiences that you have to go through yourself.

Bill: "Dad, they're torturing me here." And then it turns out, "No, please don't take me out of here."

Tren: Yeah, exactly. But a lot of it is, you're learning new skills. So, you segue that into business and investing, which is, there's no jump in the water.

Bill: Yeah.

Tren: That's the best way to learn. But also, you know, jump in the water with other people who are going to help you as you go through the process, and then, find great mentors, and read widely, and be curious, and be humble. This is strange. Munger has this thing where he says, "You want to be patient, but aggressive when it's time like it's a weird attribute," which is really, really patient but really, really aggressive at the right time like quickly jump in. But there's also in life, there's this thing of, you want to be brave and confident, but humble. You think, well, brave and confident and humility should be, but they're not. They're consistent. You can be brave and humble. Brave and non-humble people most of them are dead.

Bill: [laughs] Yeah.

Tren: You want to have people who are thoughtful about the ways-

Bill: When to be brave.

Tren: -when to be brave. So, you get involved in real estate, you don't know what you're doing. You're brave but you're bankrupt. You're starting over.

Bill: Yeah.

Tren: One of the things about life, too, is Munger talks about this, which is, you reached a certain stage, you don't want to go back to go. You want to have a grubstake, you don't want to you want to go back to zero. So, putting yourself in a situation where you're risking what you need for something that you only desire is insane.

Bill: Yeah.

Tren: It's like take some money off the table. So, early on in my career at a good time, someone took me aside and said, "Warren Buffett is doing this and this and this. But he's got a slug a treasury bills, too. He's in a good situation." Playing life with house money is so much more fun than thinking, "Well, if I screw up here, my family's not going to eat" or "We're going to be living in housing that I wouldn't be happy about." So, the reason to have money is not to have things. It's to be able to take care of the people you love, and to have choices, and having no choices sucks.

Bill: Yeah.

Tren: Having choices is underrated like happiness and they're related. Not having good choices makes you unhappy.

Bill: Yeah and I mean, on top of going back to go, going back to go at an age that is hard to restart, forget about the pain of losing whatever the freedom that you had was. That is my version of hell. That's why sometimes I get obsessed with this idea of, "Am I outperforming the S&P?" And then, I just say like, "This is creating flawed decision making in my head." I could always index. That's possible. I like active management. It keeps me engaged. It's led to talking to people on this podcast. Talking to you has been phenomenal. I don't want to stop this. So, I'm getting other benefits. Reframing what I'm actually trying to accomplish creates more happiness if that makes any sense. And fundamentally, my risk tolerance may not be as high as I used to think it was anymore.

Tren: Well, it changes because your opportunity cost is different, and you're impacting more people. Your optionality doors have changed. And so, for me, when I took enough money off the table, so I had no debt. I was going to be fine retirement, no one is going to have to worry about anything, and the rest of it was just like house money. Literally I'm playing with the house's money and let's have fun with it. Then, when you're doing that, you can concentrate in a way that other people don't think about. So, to me, I have a barbell, that's what a barbell is and I enjoy it. And so, I have a level of portfolio concentration. I never talk about the stocks I own, although, people kind of figure out that I owned a little Berkshire, a lot of Costco. I own a bunch of Microsoft, obviously. Those types have all done pretty good. I've done well. My level of concentration would make most people nervous, almost everyone nervous. But I've also got a slug of cash and stuff that's safe on the other end of my barbell, but I don't own a lot of GM in the middle.

Bill: Yeah. Well, why mess around with assets that don't inspire you? It doesn't make sense anymore at a certain point.

Tren: But it's also not interesting.

Bill: Yeah.

Tren: It's just not interesting.

Bill: And it can be for somebody else, right? Like, it doesn't matter. It's just not your thing.

Tren: If you love cars, and you love that, and you want to buy some Stellantis or however you pronounce that thing, cool. More power to you. And if you like finding cigar butts, businesses that are down run by nasty people, you're going to buy chewing tobacco company or whatever the hell cigar butt you can find, that just doesn't interest me. I'd rather be interested-- Jim Senegal in Costco early on to me was like, "This is a guy I admire. This is an interesting company." They're doing good for a lots of people. They've got a moat. Try and come after them with their growth margins and I just love the model. Is Amazon going to take them over? I don't think so. Is Amazon a great stock? Absolutely. Do I own them? Well, I don't want to talk about it.

Bill: [laughs]

Tren: But one of the hard thing is, what I'm trying to do is give back, and pay it forward, and I choose stocks, then I'm not talking about fishing, I'm talking about fish. If I just, "Oh, Tren gives great stock tips." I'm not teaching anything. I'm not a believer in stock. If I hear that shoeshine boy given a stock tip than I know, then maybe something about the broader market, but I don't give out stock tips just because I don't want people to think that way. I would rather have people be independent think for themselves. I could have made a big mistake. But also, I've been fortunate in ways than others have it in my situation isn't their situation. They could have a spouse that has trouble. You know, I've got parents, I've got to care for whatever. I shouldn't be assessing their risk, unless I'm in their well planner, and I know everything about their situation.

Now, occasionally, I'll have someone come to me and say, "Okay, what stocks I should buy?" Then, I dig into it a little bit because I care for the person and they're in trouble, and they've got like a ton of credit card debt. In that situation, I guide them toward, "This credit card debt is a real problem." Most people aren't interested enough in finance to be doing what you and I do. Most people should find a way to match the market in a low-cost situation. But other people like, it's fun. And then, also some people, even though, they should be buying into XO funds won't, and so, if I can help them be a little bit better, then that makes me feel good.

Bill: Yeah. Well, there is a chance, that's me.

Tren: And then, I can have work and have fun.

Bill: But so far, so good.

Tren: But the important thing is, it's a fun game. It's like video games. There's dopamine in finding the gold and learning new things, just like, there is in being a Master sergeant in a video game.

Bill: Yeah. I just like it. I guess, there's some endowment bias or whatever but I like the companies I own. It gives me purpose to get up and read about them and I enjoy it. So, I don't see a reason to stop. I'm not provably incompetent and I think the question remains whether or not I'm competent. We'll see over time.

Tren: One of the things about my personality has always been weird is in this little town that's near the building I'm in right now. There was like the first McDonald's, and then there was a Herfy's, and then there's a local chain called Dick's. But anyway, they were all head-to-head and hamburgers were big. But anyways, even as a youngster, my parents took me there. I was saying, "I wonder how much they make on this hamburger? I wonder how much this bun costs? I wonder how much people there are getting paid?" One place had sit down, one place had a different vibe to it. It was fascinating to see the differences. And it's just like, I don't know, I want to know how things work. People will sometimes turn to me and say, "Give it a rest. Stop asking these questions." I don't want to understand the history of this. It's like, "Yeah, I know. This building used to be this, and this is used to be this way." But "I don't care. Stop." But that's just me. I'm just terminally curious. I want to know. I want to know about the way things work. I want to know how it happened, why are things this way? And that is fun, but it's also just the way you're wired.

Bill: It's my oldest. He would watch stuff on TV like a train would bring letters past. He wouldn't learn the letters but then, we would notice, he was watching how the wheels would move, and he would always be like focused on how things are happening rather than the lesson that was being taught. It was weird, and then we realized he's just this kid that deconstructs how it works all the time. This is naturally that way.

Tren: One of the things about engineers is interesting because I work with some of the best ones in the world over the years is that, some people are just savant and truly are savant. So, there are some engineers who can type like software programmers, they can type twice as fast as a normal person, and they really like quite a lot of code, like twice as much code. Bad news is that they never document what they do and if they ask them to fix it, they'll start over. So, they're amazing minds, they're savants at writing code, but they got some problems. Then, some other people who are geniuses, they come up with this one iterative step that no one's ever thought about before like ReCalc or whatever in Excel. That person has this amazing ability to conceptualize something that is just fundamentally new.

Then, the other thing is, there are some people who are systems thinkers. So, I met with the head of Boeing Defense and Space once and he said, "Well, it's [unintelligible [01:21:05] well, I got 30,000 engineers, and he goes, I got seven." He goes, "I got seven that can design an airplane." He said, "I can tell you their names." One of them was a person you recognize his name, but important thing was, they were system thinkers. They could do everything. A lot of engineers can only design a tail assembly, or a wing flap, or whatever. But the mind that can put it all together, human resources, engineering supplies, supply chain, that whole thing, these people are special. As an investor, if you can find someone like that you bet on them. They're like unique but they're not very common. So, they're one in 5,000 minds where they can design a system, where they can put it all together. When you find someone like that back them.

But anyway, but some of that getting to this point you were talking about is nature and nurture. So, that wheel focus is telling him something about what makes him happy. You will find, I think, if your experience is like the ones' I've seen that you will be amazed at how different your kids are in fundamental ways. They'll have some similarities. but there'll be different. And then, you'll go to the kid's classroom and help out as you should as a parent, and you'll look around that classroom and you say, "My God, the diversity in this one classroom is amazing. How does this teacher keep a lid on this thing?" We get physical maturity, mental maturity, interests, you got attention span, all these variables. It's every child, they realize like, "Well, world's a pretty diverse place." We were designed that way, right?

Bill: Yeah.

Tren: So, how do we focus that, how do you create a team? I don't know if you do any coaching at all, but taking a bunch of really diverse people. And oftentimes great people like in the military get a stepbrother, who's a three star is you can take a lot of Cs and turn it into an A organization, that's leadership, right?

Bill: Yeah.

Tren: And these people are not rocket scientists, necessarily always. Some of them are. But you get a lot of diversity in melding that and doing that. Some people are just good at things. I've been around enough people like Bill Gates, Craig McCaw. You've seen people over the years and Bezos, they have an ability to do things that is almost savant like, and you can't pretend that you're them. You might be but you can't pretend that you are them. Even them, they're different as night and day. Like Bill Gates, Craig McCaw, one's analog, one's digital. Craig is a dyslexic, but he uses that to advantage. Their ability to do math in their heads, their ability to process information, how they do things. There's no one way to do things. But some people have this sense of, this is how I build something given my unique attributes and then the other thing I've noticed is, these people, they fill in around them what they're weak at.

So, if you look at early Microsoft or whatever, Bill hired people who taught him things that he didn't know yet, who complimented his own skills, and he became a whole by the process of aggregation, became better, became more fulsome. Craig McCaw was same way of McCaw. Hiring good finance people, you get on the list of, I could give you their actual names, but they all had different attributes. None of them were the same. But together, they were an amazing team.

Bill: Yeah.

Tren: Anyway, but you find that, when you see it in your real life as a business person, then you say, "Okay, well, I want to find a company like that too," which is one of the reasons I like Costco. I like their culture. Culture is hard. Culture is hard to turn around once it goes bad. Culture is hard when you merge with some company and they have a different culture, how do you get the two companies to come together and do things in the right way? Oftentimes, when McCaw bought companies in the early days of cellular, we stupidly sold off to US in piece and gave it away in auctions. Anyway, they had to be rolled up. When you bought these territories, oftentimes, they are owned by a person, you had to get rid of that person because without that person gone, you could meld them into one culture.

Bill: Hmm. Yeah, that makes sense.

Tren: You can't do a roll up and have 90 cultures.

Bill: Yeah.

Tren: And so, you find that no culture is perfect, but you need to have a culture, and it needs to keep improving. Diversity is good, but you're only going to have one. If you have 50 cultures within that culture, it's going to be bad. You want to have diversity within your culture.

Bill: Yeah. I have one overarching culture with diversity of opinion and people that is valued.

Tren: Right. But you have to have a sort of a guiding-

Bill: NorthStar for lack of a better term.

Tren: -the Costco has NorthStar's that everybody rallies around. They can't go out and buy Kroger or something like that and expect-

Bill: Yeah, wouldn't work out.

Tren: -wouldn't work.

Bill: Yeah. Cool. Well, I mean, I really appreciate your time. Thank you. Thank you for saying yes, thank you for spreading wisdom. And you've got a standing invite anytime you're not on Jim's podcast to come on this, if you got anything to say, I'd love to talk to you. Also, I do want to come out and have those drinks. So, watch out for me.

Tren: Okay.

Bill: It's a long flight.

Tren: But you come out here in August.

Bill: Yeah, there you go. You can come here in the winter.

Tren: Yeah, in August. If you leave Seattle on vacation in August, you're out of your damn mind. It is the month. It is warm, and not humid, and it's pleasant, and all that now. Today, a couple of times, I've thought the power is going to go out today like, today, it's nasty and stormy. I'm going out in my boat tomorrow, but it's supposed to be a little nicer. But it's going to be cold and the heater is going to be gone. So, anyway.

Bill: Well, I hope you enjoy.

Tren: You got to get out and be part of the environment year and that means, it's not always going to be like you have. Other day, I saw you in shorts and I missed that.

Bill: [laughs]

Tren: All right, you come and visit.

Bill: I would like to for real. I got a godchild out there that I needed to see it's been too long. So, when we do, I'll look you up.

Tren: Very good.

Bill: All right. Take care of Tren. Thank you so much.

Tren: All right. Bye- bye.

Bill: Bye.

[music]

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