#111: Should You Start a ’Startup’ or Build a Cash-Flow Business?

Hey folks, Tim here. My bestselling card game, Coyote, which I made with the amazing team at Exploding Kittens, just won the Pop Insider Best geeky game of 2025 and also best Stocking Filler in the Made for Moms Toy Awards 2025. It is on sale everywhere. It's cheap, it's fast to learn, has 4.8 stars out of five. People are loving it. CoyoteGame.com will take you to all the retailers, but you can find it everywhere. It is a game of thinking fast and laughing faster. Think char meets hot potato meets a bunch of brain fun. It's good for your head. It's perfect for families with kids age 10 plus or adults who are kids at heart or don't take themselves too seriously. A lot of adults love this game and as I said, it's available everywhere. Amazon, Walmart, Target 8,000 plus retail locations, you name it. So please check it out. I loved making it. People are really enjoying it. It has 300 or 400 million plus social views of gameplay online and try it. Enjoy it this holiday season. Check it out coyotegame.com one more time. That's coyotegame.com or anywhere you buy your games. Now back to the episode Optimal Minimal Minimum at this altitude I can run flat out for a half mile before my hands start shaking. Can I answer your personal question now it is even appropriate. What if I did the opposite? I'm a cybernetic organism, living tissue over a metal endoskeleton. Ferrous soul. Hello stoics and epicureans and everyone in between. This is Tim Ferriss and welcome to another episode of the Tim Ferriss show where I usually interview folks and deconstruct how they do what they do, whether they are chess prodigies, musicians, military strategists, Navy Seals, music producers, athletes, you name it. In this particular episode we have a change of pace and this is a recorded session from Learning with Expo. What is Expo? Expo e x p a dot com. You can check it out. Co founded by among other people the co founder of Uber is a startup studio and they have a very unique approach to building startups and I am involved as an investor and advisor. So every once in a blue moon they put together a night of education, a discussion of some type and I was invited to participate. I was interviewed by one of the partners of EXPA on startup design versus lifestyle design. So those of you who have perhaps some familiarity with my startup career have been involved with lots of startups ranging from Uber to Facebook to Twitter and many others Evernote Duolingo so lots of companies that have grown to 100 million plus users or customers simultaneously. Of course I have this other writing portion of my life which reflects a lot of principles I hold close to my heart, namely that lifestyle design should come before career planning. I think that reconciling those two that is should you focus on Muses which is described in the book and I describe it in this conversation, or cash flow driven businesses, business in the very traditional sense to fuel an ideal lifestyle and many other things? Or should you focus on swinging for the fences and betting it all on a startup that is really equity driven? This presents many many different topics and questions for conversation that I think are under examined that are really important to look at not only in Silicon Valley but well outside of that. I hope this applies to many you listening and certainly check out expa so expa.com and you can check out their Twitter handles and whatnot. It is a fascinating organization and if you haven't already signed up for five Bullet Friday, I implore you to do so. Every Friday I send out five Bullets super super short tidbits of hopefully awesomeness to send you on your way for the weekend. And it includes things like my favorite article of the week, my favorite purchase of the last week or two, someone new that I'm following on say Twitter that I'm finding very, very very very small actionable bites of information. So five Bullet Friday, you can sign up for that. It's free and will always be free. FourHourWorkWeek.com Friday all spelled out FourHourWorkWeek.com Friday Check it out, try it out for a week and I think you will then look forward to it every week. That's the idea anyway. And without further ado, please enjoy this conversation on lifestyle design versus startup design and all of the inherent conflicts and existential dilemmas that many entrepreneurs face. Thanks for listening.

All right, so let's get started here. So as you know, Tim has a really great background. He's participated in all parts of the ecosystem from building to giving tips to people who are builders. So he's a great perspective and we're going to go through a bunch of different things today. Hopefully we get off track because I think Tim's off track is actually the most interesting. So let's start with something. You know, you guys saw that he invested in a lot of great names. So you invest in Twitter, you invested in Uber. Can you tell us a little bit about how you pick these companies?

I can and I can also explain How I got started in angel investing, which I think is very much related. So I began angel investing in 2007. I was having breakfasts and lunches with Mike Maples Jr. And very successful angel investor, now very successful VC at Floodgate. And the four hour work week had just come out and was, as some people know, rejected 27 times or whatever it was by publishers, came out and then sat on the bestseller list for four and a half years straight. And his questions were related to his portfolio companies and marketing, pr, launch strategy, customer acquisition. My questions were about the deal structure of those angel investments, why he chose company A instead of company B. We'd known each other for quite some time separately on a sort of physical training level. And over time, as I became more and more fascinated by the startup world, which I was completely unfamiliar with, it was very alien to me, the venture backed world. I asked him if I could co invest alongside him in a few deals to test my risk tolerance and to see if I could actually add value to these companies. The decision was made because I'd fantasized about going to Stanford Business School for a very long time, went to school on the east coast, always felt like I sort of intended to go to Stanford, didn't make it, and realized after several attempts to go to Stanford Business School, got pretty far through the process and then got disillusioned after having very theoretical classes thrown at me during tours that I should create a real world MBA for myself instead, since I would have paid 120 grand for Stanford Business School over two years, which is a sunk cost and then you hope to make it back later given the things that you learn, the network that you build. I was like, well, what if I just created $120,000 Tim Ferriss fund over two years invested, assumed that I would lose it all, sunk cost, but that the network I built and the lessons I learned would be earned back many fold after that period of time. I co invested with Mike very early on. In the beginning I didn't really have a set of criteria. I think that's something you develop by practicing and figuring out what you're good at, what you're bad at, predicting what you can control and then what advantage you have. So we might come back to this. But I think that for any type of investing, whether that's in the public markets, bonds, startups, you name it, commodities or otherwise, art, you need to have an advantage and that can be an informational advantage, which a lot of people in Silicon Valley have related to startups. It can be A behavioral advantage. I think that for instance, Warren Buffett can emotionally detach himself in such a way that he is unmoved by massive market fluctuations or the acts of the masses. So that's a behavioral advantage. You could have an analytical advantage. So you might be, say a Renaissance Capital, very interesting hedge fund that just has massive computational and analytical ability. So that could be another one. Like people who focus on, say, technical analysis, looking at charts and whatnot. In my particular case, I realized after a few investments that what I enjoyed doing, and I've been ridiculed for this by some VCs, not recently, but when I was getting started was I'm only going to invest in products that help me scratch my own itch. So I don't understand many things, but I understand my own set of problems. And if I have a problem, at least that's a market, a guaranteed market of one. So I will invest in consumer facing products that I would use to solve my own problem, address my own needs. I think wants are more monetizable than needs oftentimes, but that's separate. Then as I started investing in more companies, I realized I want to invest in companies that are demonstrating traction. So they're not using me to create the fire, they're using me to pour gasoline on the fire. Usually that means going from say the 10,000 customer point to a million or 1,000 to 100,000, because that also overlaps with assets and skill sets that I already have, namely mass customer acquisition. A few other criteria for me would include thinking of my portfolio not themed along lines of say, Twitter related infrastructure plays or companies that depend on X, like the uberfication of blah. I'm not investing in 20 companies that are the uberfication of fill in the blank, but rather I'm investing in companies where every company I invest in can be helped by at least two companies already in my portfolio and they can help at least two companies in my portfolio. So I'm creating this overlap in a sense like a Mitsubishi in Japan might, where instead of being vertically integrated as it relates to manufacturing and distribution and whatnot, it's integrated from a playbook standpoint. So whether that's launching city by city, whether that's subscription models, whether that's hard goods at retail that are dealing with say home shopping network opportunities and direct marketing in channels that are not common to Silicon Valley companies, I want that type of knowledge transfer to exist. And that's something you can engineer within the portfolio because that means that even if a startup fails as an investment, you can still win by having invested in that company. So you put 25k in, it fails, but that $25k buys you a playbook that can then be transferred to a company that suddenly pulls one of these kind of hockey stick inflections. And then I would say other criteria would be listening to my audience. So if you look at I've trained my audience to know what I am looking for in many different ways and what I find attractive. So if you look at my portfolio and some of my most successful companies, Shopify. I was the first Advisor to Shopify 2009. They just IPO'd. That's been a massive win and I think it's just at the beginning stages. Found Shopify through my Twitter audience while I was revising the four hour workweek and polling for e commerce platforms. Then Evernote, same story. Found Evernote through Twitter by asking my fans what I should use for X, Y and Z and became an advisor in 2009. Duolingo found Duolingo for no other reason than five or six people happened to be on their beta. And Now Duolingo has 100 million plus users. So I find that my criteria are very simple. And when I deviate from that simple, I think simple is very undervalued because there are many people, whether those are VCs or otherwise, who have to justify their fees and so on by making things seem very complex. And I think the more variables you have, the more complex your model, the more likely you are to screw up. And in my case, I keep it extremely simple. And the challenge is not in coming up with a good thesis, it's in sticking to that thesis. Because you don't have to be right very often. I mean, let's just say that you. Let's just say people say, oh, there are 15 kind of unicorn potential companies a year out of Silicon Valley or the us. You don't even have to get one of those per year. You could get one every five to 10 years and still make $100 million if you play your cards right. You don't have to be right. Often you have to avoid fatal mistakes and bleeding chips. So it's a lot like poker in that sense. It's not just betting, but it's getting in, getting out, and then the bet size, among other things. So those are a few of the things that I think about when investing.

That was more than I thought.

Just thought I was like a monkey with a blindfold and a dart. There is some of that too.

He's good.

Whenever I do biotech I get kicked in the nuts by the universe. That's the other thing I've learned. Yeah, so it goes.

Tim doesn't do biotech unless I really.

Feel a hankering for.

Now that we know that you like investing and you have a point of view on it.

You seem so surprised.

That has to get asked. You brought this up on the phone. Are we in a bubble?

Are we in a bubble? So this, this is, this is a constant topic of conversation for good reason. And I think the implicit question is, is there going to be a correction? Are we going to have a crash? And the answer is always yes. I think that investors in particular have short memories and just having gone through two of these, the cycles always exist. Now the question then is, well, what will crash? How can you mitigate against the damage? The way I'm thinking about this myself, and I can only speak to my personal experience is number one, my job has become more difficult as an investor and advisor. There is a oversupply of capital which has brought in fair weather investors and fair weather entrepreneurs, both of which are very dangerous to each other, respectively, among others. When you invest in say a dot com depression like a 2001 or even 2009 where people are freaking out after a real estate crash that then has this contagion across asset classes, you are investing in entrepreneurs who are the hardcore, the true believers who cannot help but build whatever they're building. And I think that right now the noise to signal ratio is so unfavorable for someone like me, my job has just become more difficult. That doesn't mean there aren't good deals out there. I think there are some amazing companies, some amazing founders, but a great company with terrible deal structure can be a terrible investment. And I think I'm very good at a simple approach to early stage investing. And that approach has become very difficult to execute in the current environment. I do think that what's hard to grasp for me at least is identifying the tech companies that would suffer most or actually no, it's fascinating to look at countercyclical examples. What I mean by that is if you look at say an Uber, and of course I'm highly biased because I'm an advisor to Uber, but you could look at Airbnb same way. If there is a massive public stock market like a public equities correction, what could happen? Well, you might have publicly held tech companies that are in that so called tech basket that used to be isolated to like petfood.com or webvan or whatever, but now the technology is so ubiquitous and infuses so many sectors that if the stock market crashes, what might happen? One hypothesis could be that people who lose their jobs are going to need income and they will want the flexibility of working as an Uber driver. Right. People will not want to put down the down payments and so on for and monthly payments for a car. So if they live in a city, they might opt to use UberX for instance. Airbnb, same situation. So I think that there are some companies that you could argue would do even better in a down equity market.

Yeah, I mean there were companies. If you look at historically you have Google. Right. That was after the dot com crash. I mean while it was performing Groupon, a lot of these performance based businesses that do well that way. So I guess let's switch gears a little bit because clearly you've done a lot of investing.

So let me just add one more thing. So I think I always assume there's going to be a crash because that keeps me from losing my shirt. And I am in early stage investing for the long game. I'm going to do this for decades, so I'm in no rush. So that's the other thing. Coming back to the first question, what do I invest in? I invest in people who'd be happy to run their companies for 15 years because if they're looking for a two to three year flip, there are too many things in the macro environment completely out of anyone's control, or at least their control that could complete obliterate any type of acquisition or IPO plans that they have. That's fair.

So you started out obviously not just as an investor, that wasn't your first gig. Can you talk to us a little bit about your first businesses, I think called Brain Quicken.

Brain Quicken, yes. So Brain Quicken. I started out right out of college. My first job was, took 32, I still have them, 32 emails to get this job. But I was hoping for something that was not a sales position. But I ended up in technical sales for a storage area networking company. So selling mass data storage to movie studios, to National Geographic Survey, I think that's the name of the company, and so on. So at the time mass data storage meant like 10 terabytes, like whoa, 100 terabytes was just like winning the lottery. Now you can go to Fry's and buy that for $700, but coming up with Fibre channel and gigabit ethernet network attached storage, blah blah, blah. So we're competing against EMC and NetApp primarily that company I joined that company in 99, 2000. So the implosion came shortly thereafter, a year, year and a half later. And I saw the writing on the wall with the layers and waves of firing. So I was like, okay, if they just fired the entire inside sales team, chances are the outside sales team is not going to last very long. So I started this company and I remember specifically when it happened because there was a middle level sales manager who came in and he dropped this huge stack, like 100 pages just of names and phone numbers. And he said, start smiling and dialing. And I was like, that's not the smartest way to do this. I'm really getting tired of this job. So I started thinking about what I would start coming back to the simplicity of the investing model. I was like, well, what do you think need? What do I want and what do I spend a disproportionate amount of money on? In other words, what am I price insensitive to? And I looked at my credit card statements and bank account statements and it was sports nutrition, it was sports related supplements and pills and potions and powders. And I had enough background. I was in neuroscience initially at Princeton and kept studying that even though I transferred to more like language acquisition and whatnot. That I knew what I wanted, which was a sort of neural network focused pre workout supplement. So I just went out and tried to find biochemists and so on who would help me put that together. And guilted my all of my male co workers, male because women tend to be smart enough not to spend like a ludicrous amount of their income on pre workout supplements. So the guy is not true. They'll blow all their cash on it. So I guilted all of them into like buying the first manufacturing run. And that's how I, that's how I financed the first manufacturing run. And I also realized pretty quickly, being that young at the time, whatever I was early 20s, that I should not meet people in person. I should do it all by via phone. Because when they met me in person, they're like, I looked like the Tom Hanks kid in Big in the suit. They're like, who the hell are you? Why should I take you seriously? And served that company. I learned quite a few important lessons. Many of them were a direct result of not having any outside financing. It was all bootstrapped. And I learned about margins. Not only very literal margins where I'm looking for a 7 10x markup, but the importance of a margin of safety. There's actually an interesting book called margin of safety, which is about value investing for people who want to invest in other asset classes. I think it's Seth Klarman Bauhaus, very interesting hedge fund. The margin of safety would include things like buying media. So I was buying advertising. This was in the golden age of Google AdWords when I was just getting started. But also I was doing print advertising and the feedback cycle was so slow that I might expend a fifth of my entire bank account to buy one ad. And then I had to wait four months to get the results. So what might you do in such a scenario? Well, I would reach out to a retailer, let's just say Acme supplement retailer and I would negotiate. Negotiation is a lot about timing. So I'd wait until the inventory in a magazine was about to expire and I would hit five magazines and I'd say, what do you have left as remnant space? I will give you one fifth of rate card. Right. And so I would get say. Well, let's just say I get a $10,000 space for $1,000 hypothetically. Right. And then I would call Acme retailer and I'd say, hey, I have a great opportunity. I just wanted to let you guys know if you're interested, great. If not, that's fine. I'll call your competitor. I just bought this ad rate card, $10,000 and if you pre purchase $2,500 or $5,000 worth of product at wholesale, I will feature you as the exclusive retailer. So automatically I have guaranteed that I will not lose money on that trade per se. And then if I figure out that that works, that initial trade, then I can plow money in capping your downside. If you can cap your downside, you can afford to do many experiments and the upside will eventually take care of itself if you're formulating good experiments. So those were some of the things I learned. And I think the meta skill on top of that was negotiating. So whether it's. There are a couple of resources that really helped me. Secrets of Power Negotiating by Roger. I think it's Roger Dawson. Get the audio if you can. Secrets of Power Negotiating. Getting past no as opposed to getting to yes. Getting past no is sort of a more realistic take. Were both very, very helpful. But I learned how to negotiate and deal make and I think that those skills have translated to everything else.

So you brought up an interesting point. When you were going through your business, you said you learned a lot because you were not venture backed. You were bootstrapping that business. Can you talk a little bit about the advantages or thinking through bootstrap businesses versus VC backed businesses. Obviously being in Silicon Valley, we're all enamored with the VC backed system.

Yeah, I think that I'll make another book recommendation. Anything you want by Derek Sivers. So Derek Sivers is a really interesting sort of philosopher king, programmer, polymath who started CD Baby and then sold it. Worth checking out. But he views building a company as your opportunity to create a utopia. So your ideal version of the world. And he was bootstrapped until he sold the company. So I think that they are fundamentally quite different the way that you build, although the way you build them may be similar. The philosophy in mind if you commit to building a bootstrap company is different to that of venture backed. The similarity is if you want to build a highly scalable business that produces a lot of cash flow, you should build it so that you aren't a single point of failure. So in that sense, if you read a book like Built to Sell by John Warrilow or E. Myth Revisited, sort of assuming that you're going to be hundred x the size and putting systems in place will allow you the flexibility to have an ideal lifestyle business. It will also set you up to sell the company. Right. So there I think that the build process can be very similar. The difference is, and this has become very front of mind for me recently because I've had. I had a friend killed in a freak accident a week ago on Mount Kilimanjaro. Hit by a bunch of rocks, came tumbling down the mountain, dead on the spot much. I mean I think late 20s, early 30s. Another friend of a friend just died two days ago, freak bike accident. You are not guaranteed to have a lot of time on this planet. I mean there are probably more than a handful of people in this room who will die from like unnatural causes or early death. You're not all going to die from old age. I hate to say it, but I don't mean that to be a downer. I think this is a very important thing to keep in mind. And you know, a lot of artists, I think it was in the Renaissance period used what's called a memento mori. They would put a skull or a reminder in their pieces of art that took a long time to create to remind them of the fact that they would die and that they should make the most of every moment. And the reason I bring that up is that that I think lifestyle businesses or lifestyle design is very much present state focused or near term focused and that VC backed can be very Long term focused in a way that people focus on the, what I would call a deferred life plan. They're like, well, you know, like life sucks. It's going to suck for the next five to 10 years, but then I'll exit hopefully for fill in the blank number that they've kind of made up and then I will be happy and everything will be great. And I'm not saying that's wrong, but I think there are, you need to understand the risks in taking that approach.

Do you think that that's necessarily true? I mean it's a generalism, but I mean there's definitely people, for example, who have done VC backed businesses that seem ridiculously happy.

There are, I would say that they're in the minority and I would also say they're the same people that I would invest in during a dot com depression, not in a boom cycle. In a boom cycle you have a lot of folks who are looking at outliers that they see on the covers of magazines and they're not thinking of the survivorship bias. They're like, oh my God, that guy bet the farm and he did this and then he sold his company for $100 million. And they're like, well, it's kind of like looking at mutual funds that advertise in like Barron's. It's like you're only looking at the two that survived. So you're not reading about like the tragic stories of failure when people throw caution to the wind and don't mitigate risk in that way. So I think there are absolutely outliers. But I would just say that the pattern or the vast majority that I see are so fixated on the future that they don't pay attention to, for instance, and there are exceptions, we can talk about a couple of them taking care of their physical self. Right. And even if you're purely interested in cognitive performance, mind and body, same thing is the best way to think of it. There's no sort of Cartesian duality in that sense or separation. If you want to perform optimally from a mental standpoint, you need to take care of the entire system.

So that's a great segue into some of the things that I think you're more known for. The four hour series, you have a number of different approaches. You are known for life hacking or experimenting. What approaches have you seen that are successful and being successful in venture and all these other businesses? And then I have to ask you, do you actually work four hours a week?

I've never been asked that. Before I will answer that, I'll answer that first just to get it out of the way. So the four hour question. So the original title of the book was Drug Dealing for Fun and Profit. And my publisher, which was the tongue in cheek name of the lecture that I gave at Princeton in this high tech entrepreneurship class twice a year because I was the only bootstrapped founder, they were all venture backed and but lo and behold, no big surprise, my publisher Crown told me they're like, you know, Walmart, not big on the drug dealing for fun and profit title, so you need to change the title. I was like, all right, that's fine. So I did a bunch of Google AdWords testing and ended up with the four hour workweek. Originally it was the two hour workweek because that's how much time I was spending managing Brinquicken at the time. And they were like two hour workweek. That's completely unbelievable. I was like four hour work week. And they're like, there you go, now we're talking.

You guys heard it here.

Now we're on the same page. But the four hour work week does have a factual basis. I mean in like the two to four hours whatever that was spent managing Breakwick at the time. The objective with that book, and for those of you who read it, you know this, but the objective is to control your most valuable non renewable resource, which is time. So you can allocate it in the way that you would like to optimize for X, whatever you happen to be optimizing for. So if you are, but if you can, and put it another way, it's about optimizing or maximizing your per hour output. Once you maximize your per hour output, you can choose to work the same number of hours but get five to ten times more done. You can work less and spend more time on things that are more important to you, family, whatever it might be, or you can work more. And there are a lot of people I've connected with after four hour Work week and four hour body, particularly people say in like the highest levels of finance who are like awesome. Now I can work even more and crush my competition. Fantastic. And that's not a misapplication. So do I work four hours a week? I mean I'm in a very fortunate position. I don't have to, I mean I don't have to do anything. So I choose to spend time on creating cool things that I think can have an impact of some type. And that's why for instance, I feel like I can do that. More effectively investing and advising than I can in starting my own venture backed company, which I've never done, I have no plans to do because I'm a terrible. I just really shave against authority in any way. So just I don't think I would be good at it and I don't think I'm a particularly good manager for that matter either. But the in terms of commonalities across high performing CEOs and founders, not necessarily the same people, right? The CEOs are not necessarily the founders. But I would say number one, there are many ways to skin that cat, right? So you can have like a Herb Kelleher from Southwest who's like nice guy, give you a hug, like pat every employee on the head. Or you can have a Steve Jobs, not the nicest guy in the world. Very effective, but not very effective. And some people could argue not very happy either. Warren Buffett, same story. He does not have necessarily the best relationship with his kids. There's a great book called Making of an American Capitalist which is sort of unauthorized, which makes it slightly more interesting in my mind, which is very, very good about Buffett. But I think that what they have in common at the core, despite different behaviors, different way of implementing it, from my perspective is being effective instead of being efficient. And all I mean by that is they're very good at choosing the highest priority tasks that will render everything else easier or irrelevant as opposed to just doing a lot of things quickly. And whenever I find for instance, a big red flag for me, if you find a founder who has many, many, many side projects, I've never had one of those work out. If they have like 15 side projects they're passionate about, they don't know how to pick a lead domino that will help topple all of the others that will produce a good ROI for themselves, for their employees, for their shareholders, investors, etc. And I think that I'll give a non tech example. So I was just interviewing a few days ago, this guy named Jocko Willink. I imagine probably none of you have heard of him. J O C K O Willink. W I L L I N K One of the scariest human beings I've ever met in my life. He entered the Navy Seals at 170 pounds, now weighs 240, is a Brazilian Jiu jitsu black belt, trains top MMA fighters, but was also the commander of the most decorated special forces unit in Iraq. But if you look at what made him very good at what he does, among other things, it was being able to Take something seemingly complex to the people reporting to him, simplify it, and then he was able to detach himself in a way so that from his outside perspective, he could identify of these six emergencies, what the most critical emergency was and to tackle that first. And I think that good CEOs have that ability and it just takes practice. But I think oftentimes the most important thing is whatever makes everybody the most uncomfortable.

So you talked a little bit about CEOs and founders and you made a subtle distinction and said sometimes a good founder is different than a good CEO. Can you talk a little bit more about that, what the distinction would be?

Yeah, I think that quite frankly, you'd probably be better at answering this or many people in this room. But not every founding CEO makes a good growth stage CEO. There are some people who are just brilliant product developers. One of the green flags instead of a red flag for me is when I find a startup that's growing quickly without any type of paid acquisition or advertising. And I have, say, people from my network who reach out to me, since I'm public about these investments, to offer them an amazing business development opportunity or partnership or whatever. And they say that's great, not the best timing. We're just going to focus on product for now. Perfect. Those companies turn out best for me up to this point. A lot of CEOs get pulled from a tactical sort of technician level of crafting product, working on ui, working on A, B, C, D and E, and get put into a managerial role as the company expands. And they're just not good at it, or they don't like it, which often leads to them not being good at it because they don't want to dedicate their sort of mental resources to it. So that would be one example. There are many, though. I mean, you have that, then you have different stages, then you have pre ipo, ipo. All of those stages can require a different skill set. And it's rare, not impossible, but rare, that the founding CEO makes it all the way or wants to make it all the way to running a public company for X number of years.

So you brought up being happy at a point when you were talking about the habits, when you were talking about lifestyle design, Steve Jobs, how do you factor that in? How do you advise everyone here to think about that? Because I think a lot of people, the characterization of Silicon Valley is work really hard, kill it 100 hours a week grind kind of thing. How do you think about that yourself in your own life?

Well, I think that you can kill it and work 100 hours a week and feel a general sense of well being. Happiness is a troublesome word. So I actually try to avoid using or avoid using happiness and success because I think they're so overused that they tend to not have a clear definition. So you end up chasing the specter. And that's very dangerous because you realize five years later that you've been chasing your tail without a clear outcome in mind. What I would say is that I think the opposite of happiness isn't sadness, it's boredom for most people in this room. So if you kind of semantically continue that analogy, you'd say, well, if happiness isn't a good word, what's the opposite of boredom? I should chase that excitement. So I think if you chase what excites you, that's easier to grasp onto, easier to define. And the side effect of that is feeling what people would characterize as happy. So that's how I think about it. And whenever I founder, it's usually because I'm looking at it a different way. So I would say chase what excites you. And that tends to be the cure all for a lot of these other issues.

So you talked about good CEOs, good founders habits. Are there any folks that you look at and say, these guys are killing it, they're doing the right thing that people should look out for?

There are many, many people who impress me. And every person has their strengths and weaknesses. I'm very impressed by Marc Andreessen would be one. I think he's just very good at filtering opportunities and decisions based on his ability to project into the future and identify things that could be extremely large. I think he's very, very good at that and has a certain prescient ability. And as a result of that, he's good at ignoring a lot of noise. So thinking of sort of not just current market size, but eventual market size, right? I mean, not to beat a dead horse here, but I think Uber is another great example, right? Where it's like people are like, oh my God, the black car industry, that's only this big. X million people, X Y million number of rises. What if the technology significantly expands that market? I think that is lost on a lot of people. They look at current comparables without looking at how that technology can affect broadening the market or use cases. It's like, oh, we thought it was just black cars, but then there's UberX and then there's food delivery and now it's this sort of mesh logistics that can be laid on Top of anything other people who impress me. I mentioned Jocko because I don't want to limit it to tech. I think that unfortunately in every world, whether that's tech, military or otherwise, people develop a very narrow evaluation of leadership. And in fact, I think where you can differentiate yourself and establish those competitive advantages that I talked about earlier is by borrowing from worlds and industries that are completely outside of what is considered normal, like the echo chamber here. As an experiment, ignore tech for a week. Look for leaders who are effective outside of tech and what tactics and strategies you can borrow from them. Because I guarantee you 99% of the people you're surrounded by or competing against are not looking at any of those examples. So I think that you could look at someone like Rick Rubin, for instance, music producer. And I did a podcast with him, you guys can listen to it. But very, I mean he's worked with everyone you can imagine. I mean Johnny Cash, Eminem, Jay Z, Slipknot, I mean it's just like everybody, Metallica, it's an incredible roster. And he is very good at making sort of calm big picture decisions and guiding artists. So as an investor, I find that very interesting because investors are almost producers in a way. You're taking these raw materials and trying to mold it into something more effective, that can scale more rapidly, etc. It's not that dissimilar. So I think Rick Rubin is a very interesting example and he chooses for instance, to be relatively secluded. So what I've come to realize is you can say yes and in many ways you have to say yes to get to a first tier of success in any field. And at that point you have to take all these abilities that got you there, basically turn them on their head to say no to a thousand or a million things so that you can focus. And I find that very difficult. Still find it difficult. I'm not the worst person at it, but Neil Strauss, who's a seven time New York Times best selling author, like his systems that he's put in place to say no or completely ignore, so he doesn't even see 99% of the inbound while he's on book deadline is very impressive to me. And he was a, and is still a very effective journalist. And the fact that he can turn out high quality work and doesn't believe in the existence of writer's block effectively is impressive to me. And he does that through systems and habits and processes. It's not magic, it's not any type of God given talent. He's trained himself to do that. So those are a few people who come to mind.

All right, let's open up to some questions. Kaya can give you the mic. Just raise your hand. Ask Tim hard questions.

Yeah, yeah, hard's good.

Ready?

I'm ready. I'm warmed up with my gin tonic. How is your understanding of knowledge of neuroscience? So how is my understanding of neuroscience affected how I write? It hasn't much. I would say that the two, for me, are still pretty far apart. I think that they will be more directly connected at some point in time. But for now, I'm really just looking at millennia of human behavior and allowing that to inform how I write more than modern neuroscience, although I might write about that shortly. I'm working on some stuff related to some freakish experiments in neuroscience that I would not inflict on any of you, but I will inflict on myself. So, for instance, if you want people to use prescriptive information, how to information, you have to understand behavioral change. So I could actually. So let me take that back. I might not look at sort of anatomical neuroscience, but I might look at cognitive neuroscience. So work of, say, Danny Kahneman or others to identify how habits are developed and how I can avoid cognitive resistance to certain types of suggestions. But I think I look at behavioral change and the science related to that very closely. So if I want someone to, say, lose 100 pounds, trying to persuade them to do that with the threat of type 2 diabetes or cardiovascular disease, doesn't work. It very clearly does not work. But if you're trying to say, like, hey, six pack your ass, look better in jeans, or like, you'll have more sex, this, that, and the other thing that really works. And so you use, say, changing breakfast, right? You say, don't change anything. Don't start exercising. I just want you to change breakfast. And then they lose ten pounds in the first week or two, and that builds the credibility so that you can then sell them on the next step. And you never advertise the diabetes or whatnot, that is a side effect of you having used an effective Trojan horse in the first place. So I think of the sneaky Trojan horse that I can use to get people to do things they don't want to do when offered sort of conventional reasoning, if that makes sense. Right. And that can be used for just about anything. Language learning can be used for weight loss. It can be used for quitting smoking. You have to use the right incentives. I wouldn't say this is neuroscience per se, but if you look at this isn't thinking fast And Thinking Slow by Daniel Kahneman, which was recommended to me by Barack Obama. So I took that book recommendation seriously. Great book. But looking at loss aversion versus desire for gain, how hard will you work to make $100 versus losing $100? Or worse yet, getting robbed of $100? Well, it turns out that the like, if you were to the motivating magnitude of, say, losing $100 is only matched by gaining like $600, it's completely disproportionate. What does that mean? Use the stick. You know, in the US it's like pat on the head, gold ribbon for 13th place or whatever. But if you want to affect behavioral change in yourself, use punishment. It really works. Or humiliation or embarrassment. And those are like really dirty words in the US because, like, no Kumbaya. Happy, happy, we're all good. And that flies in face of the science. So it's like, oh, you want to lose weight? Like, take a photo of your fat ass from like six perspectives in underwear. Give it to your most merciless friend and be like, if I don't lose 30 pounds by this point in time, like, this is going on the Internet. You will figure it out.

I think we got her question.

Anyone else sugarcoating a tall gentleman over there with a beard? Earlier you said that you find it easier to contact wants, not needs, and you kind of pointed at it there. Can you go a little deeper? Sure. So wants not needs. And how do I think about that? Well, I think what I was just mentioning ties into it perfectly. People don't need to have their ass look good in jeans. But for whatever reason, for whatever human like foible and defect, they will work harder for that than dying 10 years earlier from heart disease. Humans are just not good at many, many things, including sort of exponential versus linear thinking, long term versus short term. So I think that selling the want is, when in doubt, sell the want, not the need. Because I think when you say you need this, people also, this is my subjective take on it, but they are sometimes offended or affronted because that seems very presumptuous. More so than if you're selling a want. So that's not hard data, but that's generally how I think about it. And also I think you can assign a higher value to wants in some cases than needs. I know that sounds funny, but it's more aspirational and more nebulous in a way. The market hasn't been set, the price has not been established for a lot of these wants as opposed to needs. So that would be my general take, Kaya.

Who's next?

You could just find the drunkest person and hand them the mic. Just wondering on your podcast who are top two favorite people you interviewed and watched? So this is a tricky question. So, favorite podcast guests and why? So I will say that as background, I started the podcast to be a break between book projects. It was not intended to be a thing for me or to be what it is now, which is 100 episodes in, ET cetera. Every guest is invited on the show out of first and foremost self interest for me. And that is the scratch your own itch ethos that I kind of apply to everything because at least I know I'll enjoy the conversation even if it falls flat everywhere else, which comes back to the real world MBA investing. Even if it fails, what do I gain? This seems like a dodge, but every guest has served a very specific purpose for me, like Brene brown. Vulnerability, shame, etc. Seems totally out of place, but I was dealing with some shit that I wanted to sort out. So Brene Brown it is. And Jocko, this amazing name, Jocko, was sort of brought on the podcast for many reasons, but also because I feel like I'm a manual illiterate. It's like I use my thumbs for the space bar and that's great, but it's like if I had to fix a car, build anything, I'm probably a hopeless cause. Or like stop someone who's hemorrhaging, like apply a basic tourniquet. I wouldn't know how to do it. And that's become an issue for me. So hence Jocko. I would say that some of my favorites are very close friends of mine. I'll just, I'll just put it that way. Josh Waitzkin, who was the basis for Searching for Bobby Fischer, considered a chess prodigy, but really has a learning framework that he can apply to anything. Very soulful guy I would characterize as extremely successful, but also very self actualized. And if we wanted to use happy, although I don't like to, I would describe him as a happy guy. I would say the people who are very, very highly successful and world class in their chosen field, but also who can time out and chill the fuck out and enjoy the small things. Those tend to be the people I gravitate to because I have trouble with the latter part of that. Rick Rubin would be another example of that. I think Jon Favreau is a good example of that. The director, Robert Rodriguez, very good at it. So those would be a few examples. But I get something out of all of them, otherwise I wouldn't have them on the show.

All right, this is about your experience.

As a solo kind of entrepreneur. It seems like a lot of the. It's also just straight up about my personal situation. So I'm working on a side project and I'm actually starting to really like it. But the conventional wisdom is that you.

Need a co founder, you need a team.

I'm sort of looking for you to talk me out of that because I'm sort of just enjoying what I'm doing and I don't want to start just looking around. Well, let me dig. So the question was I'm a solar founder, solo founder, I'm enjoying what I'm doing, but I'm getting a lot of pressure or advice to find a co founder and follow the Silicon Valley venture back script. I'd say that it depends entirely on what you want the outcome to be. I find one year is hard because it's so close. I like three year goals and then ratchet that back next steps within six months. That's how my mind operates. But and read a book called I think it's Small Giants or Little Giants by Bo Burlingham. And it's about companies that choose to be the best and not the biggest. I think that's a good counterexample to the sort of common recipe used in Silicon Valley. And again, they're not different. It's like you're baking or making different things. They're just recipes for different outcomes. But I think if you're enjoying it, if I were to project my experience, one way to very quickly not enjoy it is to have. If you say, well, I don't want to get into all this muck, but it's like if you have a board and then you raise a bunch of money and you lose control of the board or you fuck up your cap table, blah blah, blah, it just complicates the purity of that enjoyment tremendously. I would also say as a solo entrepreneur, without those shareholders and employees to which you do owe degree of loyalty and so on, you can opt out. You have the option to hit pause or stop or eject. And I enjoy personally that optionality. I will invest in venture backed businesses, but I am not suited to building one myself. I really don't think I'm in a good position. I don't have a good temperament for that. It's just like, hey, if you're going to be a chef, it's different. Like being a cook is different than being A baker, right? It's like if you like to fold your underwear and socks and, like, everything really orderly, kind of American Psycho style, you're probably a baker. Like, that's me, I'm a baker. And if you're a cook, it's like, well, like, let's try a dash of that and a dash of this and, like, taste as we go. And like, fuck it. Let's, like, throw caution to the wind and see what happens. That's just not my style. I get to. I get too stressed out. So you just have to figure out, you know, what the best match for your personality is and what version of utopia you want to create. Which comes back to the Derek Sivers example. And even if you don't want to read the book, a lot of his material is on sivers.org, which is fantastic. I really admire him tremendously for his willingness to not just talk about acting in a contrarian way that is true to himself, but actually implementing it and sort of shocking cases many, many times.

You're back there, hey, Tim, this is your database.

Question is, what have you changed your.

Mind about in the last year or two?

What have I changed my mind about in the last year or two? That's a great question. What have I changed my mind about? The first that comes to mind. And feel free to follow up if you'd like. But it's on a medical front. I was knocked out of commission for about nine months with Lyme disease and always really wrote it off because I grew up on Long island where everybody gets Lyme disease, but I was just destroyed and was operating at like 10% capacity for a very long time. And I always also distrusted the diagnosis of chronic Lyme, even though it persisted for that long. And what I've changed my mind about is antibiotics. Now, antibiotics are very important and have some really key applications. But what I've realized in discussion with people like Rob Wolf, for instance, some of you may know that name Robb, you can check him out. If not. Very, very smart guy who works a lot in sort of the CrossFit Paleo communities, but a very good understanding of biochemistry is that the treatment causes what you might call iatrogenic problems. So iatrogenic is a fancy way of saying you go into a hospital and the medicine or the treatment itself causes additional problems. So the antibiotics, like doxycycline can screw up mitochondrial function, and if you screw up your mitochondria, guess what? You start exhibiting symptoms that seem identical to Lyme disease. But I think that the Blame is placed on Lyme, whereas in fact I think many cases could be explained by the antibiotics. Now the way I've addressed that is by experimenting with diet, specifically ketogenic diet, like Atkins diet and fasting. And those were the keys. I don't yet know the exact mechanism that allowed me to return to my previous level of functioning after the antibiotics. So it wasn't just like probiotics, because that was the wrong target. It seems like the probiotics were the wrong target. It wasn't just destroying the gut biome, which is itself another problem, but it was the mitochondrial function and taking supplements, whether that's like berberine for instance, but really focusing on resurrecting that type of function. So that's something that was a big surprise to me that I've changed my mind on.

Yes, I have a question. So I started a B2B SaaS company about eight years ago and actually my company was featured on your blog actually as one of the muses that kind of did really well. I was able to automate the whole business. So I didn't have to work at all. Pretty much no time at all really. And I think one of the things I always had a lot of questions about what to do after you kind of got to that point, which I always felt like there should have been kind of like a follow up to.

The book before our work week of.

Like, you know, what people do after.

They get to that situation, what next?

And I think, I think one of the things that I've always wondered about is sort of some of the things that you may have experienced, say like loneliness working by yourself. But also you mentioned like you don't like the whole venture back, having a bunch of employees probably because it ties you down. I mean you have a lot more freedom when you're sort of by yourself. And I guess I'm curious how you thought about, I guess having one, let's say like Elon Musk of the world, you kind of focus on one big problem versus let's say if you're interested in a lot of different things, how does that kind of, how do you think about.

Yeah, so the, that's a multi pronged question, right? So there's the what next? If you create a lifestyle business, then there's the how do I view the more scattered has a negative connotation. Sort of the diversely interested entrepreneur versus the solely focused on one big problem entrepreneur. And just to address one thing you said the observation was that I might not like venture backed companies for myself because it ties me down, quite frankly. I just don't think I'd be good at it. So it's not my sport to operate in a managerial role in a company like that. I just don't think I'd be good at it. As a mercenary for growth. Yeah, I'm really good. That's my key. So it's like I should be used as a mercenary, not like a lifer. I'll shave. I won't work well in that environment. But to address the first so you create a successful muse business or what that means is automated cash flow business for me. And again, I come from a very risk averse family. In general I view myself as risk averse, which might come as funny to people, but I view my risk is an irreversible negative outcome. That's how I sort of think of risk. So I want to satisfy as many levels in Maslow's hierarchy of needs, first from a financial standpoint and then I can focus on big problems. So for me, the segue from cash flow and bootstrap businesses to venture backed was perfect because I could try to fuel and help people who do have the skill set and the drive to work for a decade or more to build a company worth 50 plus billion dollars that affects many, many, hopefully hundreds of millions of people. And that is sort of my Archimedes Lever is acting as an advisor and investor or using my audience to help the global literacy X prize, right? So I have developed these assets that allow me to effect change in these areas by assisting people who are leading that charge. So that's been my decision. Rather than starting one of those companies, I would rather use the tools and assets and megaphones that I have to try to amplify and accelerate 10, 20, 30 of those people. And oh, singular focus versus like diverse interests. Again, I think it comes down to personality type. I don't have the ability to focus on one thing for a very long period of time. So what I choose to do is to find a basket of activities that each tie into a meta skill. So in my particular case, whether I'm learning something really esoteric like Japanese horseback archery or looking at options derivatives training, the approach I take to trying to deconstruct that skill, identify top performers and codify sort of an algorithm or recipe that each of them are using and test assumptions, that process is the same across all the skill sets. So I guess my singular skill is this development of meta learning, the learning of how to learn faster. But I don't have the patience or wherewithal to focus on just one thing, and that's maybe a weakness, but I've turned it into a strength by approaching it in that systematic, cohesive way, if that makes sense. And then hopefully I can take that skill and transplant it to someone who's singularly focused on building a huge company that will hopefully, positively impact the world, and they can apply that within the company itself. So that's. That's how I've been thinking about it, at least.

All right, everyone, let's thank Tim. I think we're wrapping up here. Roberto, do you want to say a couple things real quick?

It's funny because I have a microphone, so I was going to ask one last question.

Oh, wrapping up. And that was. That's cheating. Yeah.

But you basically answered. I was about to ask you. You said, it's a green flag for me when an entrepreneur doesn't have 15 other side projects. Yeah, you have a lot of things. And that was basically the first question of saying, hey, you're an investor, you're a writer.

Podcast.

Will you do all these things? You have to choose one of those. Which one do you choose to focus on right now? You give this answer on how you'll go about that. I don't know if that seems a relevant question, but I'd love to hear that.

If I had to choose one, that is tough. If I had to choose one, I would. That's so tough. It would either be the podcast or writing. And the podcast is effectively my favorite part of writing. Without the writing, it's interviewing experts and getting their advice for whatever I want to ask them. That's fucking amazing. So that is hard to give up. I could cheat and say it'd be the writing, because that's already a component of it. Writing, though, in long form, I think holds a very peculiar and unique position in the mind space of humans. It still does, and I think it's because of the immersive experience. So rather than reading an article and having 15 notifications and 17 tabs vying for your attention, you can immerse yourself in this long form experience. And I think that's why books, when done properly, at least in nonfiction and prescriptive work, can have such tremendous impact. You can grab someone's attention in a world where that is the last thing they have to offer and it's the most fragmented. But I would say. I would say the interviewing. I love trying to identify the commonalities across seemingly separate worlds, because there are commonalities. There are always commonalities, like the. The best people in 10 fields that seem to have nothing to like competitive eating, like competitive wood chopping, like curling, poker playing. You take the top three performers in those worlds, they will have more in common with each other than the people who are like the 10 to 15th place players in each of those fields. So I would say that, and I would also say for those of you who haven't really dug into expa, you should chat with these guys. I mean, the reason I find EXPA so interesting, among very many others, this comes back to like side project, unpaid. Yeah, well, kind of is that. Well, when you look at a studio model, right, and you're not taking applications, you have less distraction. You don't fall prey to the fear of missing out the FOMO that drives such a spray and pray approach in the valley, which I think is extremely dangerous because it fragments your attention, it fragments your allocation of resources and whether that's people and sort of man hours or capital or otherwise, right? So you're really developing companies as opposed to trying to collect products. And those are two very different things, right, because you can have the best product in the world and it could change the world, but it doesn't because it never gets to scale. Because like the cap table was screwed up right from the get go, or the team wasn't put together properly or they brought in the wrong investors too early. And you can avoid all those problems with the playbook or avoid most of the fatal problems with a playbook that I think you guys have developed and are continually refining at Expo. So if you guys haven't talked to these guys, you should. It's very, very unique. I mean, I'm very protective of my time. This is one of the places I've chosen to spend it. So appreciate it.

Yeah, thanks everybody.

Thank you, Tim. Okay, thanks guys. Hey guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun before the weekend? And five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric as I do. It could include favorite articles that I've read and that I've shared with my close friends. For instance, and it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out, just go to fourhourworkweek.com that's fourhourworkweek.com all spelled out. And just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it.