The Road Less Stupid: A Conversation Between Keith Cunningham and Joe Polish On Thinking Better and Smarter - Part 1 - Genius Network Episode #133

The Achilles tendon of most entrepreneurs is structure. They hate it. That's why they started their own business is because they hate the idea of having structure. And yet structure is critical for scaling.

American entrepreneur, international speaker and acclaimed author Keith J. Cunningham is regarded as one of the foremost authorities and teachers on business mastery. With more than 45 years of business and investing experience, Keith has taught critical business skills to thousands of top executives, business owners and entrepreneurs around the world. In Keith's Keys to the Vault Business School, he has created a curriculum designed to accelerate the transition from operator to owner and drive sustainable financial performance and business success. Through his Board of Directors program, he serves as Chairman of the Board for businesses in a wide range of industries. Keith's latest book, the Road Less Stupid, is about adopting the discipline of thinking time, which will enable you to run your business more effectively, make more money, and dramatically increase the likelihood of keeping that money. Keith is also the author of Keys to the Lessons from the Pros on Raising Money and Igniting youg Business and the Ultimate Blueprint for Insanely Successful Business. This episode is a brilliant conversation with Keith Cunningham and Joe Polish. If you'd like to join Keith Cunningham, Joe Polish, and 400 more of the world's greatest entrepreneurs at this year's Genus Network annual event, then apply today for your invitation to attend. If you'd like to learn more about the Genius Network annual event or to apply, go to geniusnetwork.com joinkeith okay, by.

Show of hands, who has done anything stupid in their entire life? That's most people. Does anyone here actually believe they've never done anything stupid? Okay, that's pretty much everyone, including me. So yes, we've all done stupid things. It's part of growing up and it's part of life now. Of course, the goal is when we do stupid things to at least learn from our mistakes so we don't keep repeating them. However, that's not always possible. Sometimes we just don't know the right things to do and therefore we keep making stupid mistakes. This subject has become a passion for Keith Cunningham. As entrepreneurs and business owners, Keith's name should not be new to you at all, unless you've been living in a cave or a remote Amazon jungle. Because for the last 45 years, Keith has been a businessman, an investor, a teacher, a coach, a mentor, and a thought leader in the business arena. His previously two best selling books are titled Keys to the Lessons from the Pros on Raising Money and Igniting youg Business and the Ultimate Blueprint for Insanely Successful Businesses These are now followed by his third book, the Road Less Stupid, which is going to be the topic of our discussion for today. This is the book, and like I've mentioned before, this is the best business book that I've read in probably a decade. It's amazing. And that's why I'm so happy to have Keith Cunningham here. So give it up for Keith Cunningham. So here's one thing I actually want to start with. So me and you have had a lot of people that have taken our information and put it out into the world. And one of the things you said to me on the phone or when we were at dinner, we were at dinner in Austin a few weeks ago. You said, there's a. There's two types of hay. There's the hay before it goes into the horse, and then there's the hay after it comes out of the horse. And I love that because you've had a lot of people that have taken your hay and they've distributed it out into the world in their own version of it. One thing, like, years ago, Robert Kiyosaki was telling me, I was out to lunch with Robert. I said, who's Rich Dad? And he's like, there's two rich dads. One was like a booze runner in Hawaii that did all kinds of crazy things. He did a bunch of illegal stuff. And he's like, the other one is Keith Cunningham. That's who I learned. Rich dad. So this is literally the rich dad. Right? So. And there's been 29 million copies of the Rich dad series book sold. But I don't know if Robert presented it in quite the way you would, but there's a lot of people that you're the highest rated speaker. So I've never actually seen it. Business. Tony Robbins, Business Mastery. Him and Tony are the ones that do business mastery. And yeah, so you do a lot of stuff. You influence a lot of people. And most people would have no idea just how many millions of people have been influenced by your work and by your brain. And so super happy to have you here.

I'm very happy to be here. Thank you. Thank you.

The book, the Road Less Stupid. I love this book. There's a lot to it. I'm going to dig in deep to it. So what is the Road Less Stupid?

How would you describe it? If I gave you the opportunity to unwind any three financial decisions you've ever made in your whole life, how much money would you have? And there's not a person in this room that if I gave Them the ability to unwind. Any one of three financial decisions wouldn't have more money. It turns out that the key to making more money is to doing fewer stupid things. That's true. I don't need more good ideas. I need fewer ideas that I think are good that I've executed on. And so I've had the experience over the last 47, 48 years of being in business, of having done some smart things, where actually it wasn't that smart. But in reality, I was lucky. I happened to catch a big wave, and I mistook catching a big wave with being a good swimmer. And it's what Warren Buffett is very famous for saying. Most of you have heard it. You never know who's swimming naked until the tide goes out. And so the key is not can I make it? The key is can I make it and keep it? Those are two entirely different skill sets, and in fact, they are almost diametrically opposed. What it takes to make money is very different than what it takes to keep it. And most people are so obsessed with making it that as they become more successful, they do stupid things, which winds up sabotaging their overall success. And I know this story firsthand because this is one of the reasons I appreciated you so much, Paul, and your presentation is because I've had the experience of losing a lot of money, $100 million of my money that I made. I didn't inherit it, I made it. You were better off than me because you cut the bleeding at plus 600,000. I didn't cut the bleeding until I was minus 50 million. So I went from plus 100 million to minus 50 million in a matter of 24 months. And when you do that, it takes your breath away. I mean, that's a major, major event. Not only because of the size of the money, but also because the loss is so devastating. And I had so much of my net worth. I had my self worth entwined with my net worth, which is a deadly combination.

Yeah. How old were you during that time?

40. 40.

And that was during the. For real in real estate.

Real estate. And what led to the loss? Look at your losses. It's not necessarily pleasant to think back on, but everybody's had some kind of loss that they've sustained as a result of a bad decision or excessive optimism. Unexamined assumptions, faulty expectations, excessive optimism are killers. Arrogance is killers. Hubris is a killer for creating and sustaining wealth. So the goal to me is not to get it. The goal is to get it and keep it. You can get lucky and make it. And I know lots of people who got lucky, but the problem is they weren't able to keep it because they didn't have skills that would allow them to sustain. So the truth is, to me, sustainability of wealth is the holy grail. Making it, I can catch a big wave. I can get lucky. I can happen to hit a crease in the market at exactly the right point, and, you know, we can wind up being associated with you or Tony Robbins or any number of other people. And yeah, there's a degree of luck in all that and there's a skill set in all of that. And so I'm very much about, let's make sure that if we're going to all this effort in order to create the success, and people do stupid things in the creation mode as well. People oftentimes think that if I just improve my product, that that would somehow allow me to create business or financial success. And yet the truth is, it doesn't require a great product in order to make a lot of money. If I ask you to think about your favorite restaurant, the place you would go to have a huge celebration, you're thinking about it. You know where it would be. There's not one person in this room that's thinking about McDonald's. Not one. And yet nobody has made more money in the history of mankind in the restaurant business than McDonald's. How did it happen? Is it because their cheeseburgers are so good? No, their cheeseburgers are horrible. Right? They are. Their French fries, on the other hand, are really good, but the cheeseburgers are horrible. What allowed McDonald's to make a lot of money was not an obsession with the product. It's never, write this down. This will be a takeaway. It's never what you do. It's how you do it. It's never what you do. It's how you do it. Southwest Airlines, their whole business model is put butts in seats and fly those butts from point A to point B safely. No mention of your luggage, your luggage is immaterial to the airlines. Whether it makes it or not, we don't care. Let's just make sure the person gets from point A to point B doesn't even have to be on time. Southwest Airlines has made more money in the last 10 years in the airline business than the rest of the airline industry, cumulatively since Orville and Wilbur Wright. Now you think about that One airline has made more money than everybody else since Orville and Wilbur. How'd that happen? Is it because their Planes are so good. Is it because their first class section is so roomy? Is it because the food is so outstanding? Is it because the hostesses and stewards and stewardesses. Is it because they're so good looking? No. I can't tell which is older, the stewardesses or the airplanes. Right. Southwest Airlines success is not based on what they did, it's how they did it. You name me any product or service, I don't care what it is. Give me one week. You could say chewing gum, shoelaces, seminars, pins, socks. Name me any product or Service. Give me one week, and in one week I'll come back and name you one person who's made millions and 100 people that have gone broke with the exact same idea. The problem is, as entrepreneurs, we become obsessed with the product. We become obsessed with either the quality. And I'm not opposed to great products. That's not the message. The message is, what is it? As a business person, what is it that we're focused on? The artist side of me wants to focus on the product and making it better and longer lasting and prettier and more robust. And I'm good with that. We need artists. The operator side of me wants to get busy and get a bunch of stuff done. I just, I got so much to do and holy cow, if it's going to get done, I'm going to have to do it myself because I don't know how to hire a team or keep a team or have a players or create a culture or I don't know any of. I just got a lot to do. That's the operator side. The business person side says, wait a minute. The job is not to react to the problem du jour. What I need to do is leverage and structure. Write those two words down. That's the difference between a solopreneur and a business owner. A business owner has mastered two things, structure and leverage. And without structure and leverage, there is not a way to create a sustainably successful business. I'm going to say the structure part a different way before I talk about leverage. Opportunity without structure is chaos. The Achilles tendon of most entrepreneurs is structure. They hate it. That's why they started their own business, is because they hate the idea of having structure. And yet structure is critical for scaling. I hear a lot of people in here talking about scaling or scaling is just a Silicon Valley word for growth. That's all it is. How do I grow this thing? Okay, well, if I'm going to grow this thing, I need structure in order to be able to do it. Otherwise, I got kind of a fire drill working with a bunch of people doing a bunch of stuff, and it's not necessarily the most productive thing that needs to happen. Leverage. When I talk about leverage, most people think, oh, he's talking about debt. In reality, I'm not. I mean, debt is a financial instrument, it's leverage. But the more powerful form of leverage is who's on your team. So I'm going to ask you a question. If I gave you an opportunity to build a world class team of A players, and the only people on your team were a players, I mean, seven footers, these are the Kevin Durants, they can do it all. If you only had a team of A players, how many of your existing problems that you have right now would go away, disappear? It turns out the problems that most of us are dealing with are not even really the problem. Joe just handed you a piece of paper a second ago and said, write down one of your biggest problems. So I'm going to ask you right now to write down on your piece of paper one of your three biggest problems. Maybe you just did that. Maybe you can refer back to that piece of paper. Maybe you're not going to have to share this, we're not going to talk about it. So you may want to write really, really small so that nobody else can see. Write it really small and just write down or revisit one of your three biggest problems that you think you have with your business. Let me give you a thought. The exercise is over. You don't have to complete writing it down. The exercise is over. Every person here has an is line. This is reality. This is the way it looks. This is point A, point A. And the problem that most people have, in my experience, I know I have this problem, is that I'm not particularly honest with myself about the reality of my situation. I sugarcoated. When I was at the University of Texas, every day I'd walk past a little message etched in granite over the doors of a building. And the message was, you shall know the truth and the truth will set you free. So you know this, right? And every day for four or five years, I walked past this saying, and I went, I don't know what this means. What does that mean? You should know the truth and the truth will set you free. Well, the reality, it dawned on me later, is that as long as I'm lying to myself or not telling the truth, I have no opportunity to make a change. So it's why addicts don't Stop using is because they say, well, I don't really have a problem. I can stop anytime I want. Yeah, I know it's a little. I know it's a little bit. But, you know, the reality is it's. I'm functioning right. It's why alcoholics. Or pick a topic. People don't tend to tell themselves the truth. This is point A. We also have point B. Point B is ought. This is the way I'd like for it to look. This is point B. And it turns out that most of us are experts on point B. We have massive clarity on the way we would like for it to look because we've done all this visualization. We've done all this goal setting where you make a goal and then you make it vibrant, and then you turn it into black and white, then you bring it closer and farther away, and then you put music around. And so we're really good at visualizing what ought. We tend to suck at what is. And when asked what our problem is, we describe the gap. The gap between where you are and what you want is what you typically describe as the problem, when in reality, this gap is not the problem. This gap is the symptom. I just ask you. Joe just asked you the last exercise you did. Write down one of your three biggest problems, and everybody got busy real quick. We knew what the problem was because we were visualizing the gap between where we are and what we want, when in reality, that's not the problem. That's the symptom. The gap sits right here. This is. Sorry. The problem sits right here. This is the problem. This is the obstacle that I need to overcome in order to move the needle on my is line. In order to move the needle on my is line, I need to get clarity on what it is that's truly blocking my forward progress. What's blocking my forward progress has nothing to do with where I am versus what I want. What's blocking my forward progress is the obstacle that sits right here. And it turns out, Joe, that the hardest part of thinking time is getting clarity on the problem. That is, if you don't have clarity on the problem, that is, you'll be tactical instead of strategic. So I say I'm 10 pounds overweight. What do I want to do about it? Well, as long as I view the problem as being 10 pounds overweight, which is not the problem, that's the symptom. Hello. Hello. Are you with me that? Being 10 pounds overweight is not the problem, that's the symptom. But as long as I identify being 10 pounds overweight as being the problem, then what I will lurch to is, okay, should I buy a jump rope or should I join a gym? Should I buy Oprah's latest diet book? Or should I get a personal train? Oh, I know what I'll do. I'll get a piece of home exercise equipment. That's what I'll do. If I just had a peloton bike in my house, then I would get in shape, which is why most home exercise equipment and most diet books don't work. Because it's a tactical response to a tactical question. As long as I'm dealing with the symptom, I'm going to be dealing in tactical. And once I say it's not a tactical issue, I need to be strategic and think strategic and identify the problem that is. So here it is. If I don't have clarity on the problem that is, I'll build a machine for the problem that isn't, which is what we do 99% of the time. We identify the gap, call it the problem, when in reality it's a symptom. And we're highly tactical in our response because we have a tactical question that we've asked which winds up sabotaging our results. If you tell me your sales aren't high enough, I'm going to say that's a symptom, not a problem. If you tell me you don't have enough profits, if you tell me you have a crummy culture, if you tell me you have weak employees, if you tell me your balance sheet is screwed up, I'm going to look at you and say, all those are symptoms. What's the problem? So if I gave you an opportunity to rethink the problem that you identified a minute ago, is that really the problem? Really? Is that the problem? Is that the core root underlying problem that's blocking your forward progress? Or is there something below that, something buried where you got to get busy and figure out what in the world is going on? So business to me is an intellectual sport. It's chess. Money and business does not respond well to emotions. Warren Buffet said it. Optimism is the enemy of the rational investor. It turns out in business, optimism is your enemy, which is why one of the pieces of advice that you gave is so good, Paul, which was, we all need a board. We need advisors. We need people that we will listen to. The higher you go or the higher you want to go, the greater the requirement to have somebody around you who will tell you the truth. Because I can't smell my own breath. I can smell your breath, but I can't smell mine. I can't see my own swing. I can see the shot. I can't see the swing. I need people around me watching me swing who will give me advice. And then I gotta be willing to hear that advice. As long as I'm arrogant, right? Unwilling to listen, it does no good to ask. So business is an intellectual sport. And the people that win the game sustainably have got skills and tools. Which is why I wrote the Road Less Stupid.

I love how you refer to businesses and what you build as the machine, as simplistic as it may sound. What do you mean by that? A machine? Everyone here is building a machine. And your comment about building a machine for the problem that isn't. It seems to me that the vast majority of entrepreneurs, because of the failure rate and the stress level and just the really not getting ahead in any way financially, that they spend an enormous amount of activity accomplishing not much of anything except getting tired and worn out and frustrated. So if that's the case, you've developed a process which is thinking time, which we'll get into. Which is why I believe your book is so good. And it's so beyond just a book. It's a map, it's a plan and a path. What is this machine though, if we think of we're all building a business, it's a machine. It's an intellectual sport. It's a chess game. How should everyone here think about this machine that is their business?

There are two types of business models. There's the Michael Jordan model and the Michael Dell model. Both of them will work, and both of them you can get filthy stinking rich. One is not right, one is not wrong, one is not good, one is not bad. They're just different models. Michael Jordan, Tiger woods have a personal services model. It's all on them. There's very little leverage because Michael can't delegate the jump shot to win the game. Tiger can't delegate the two foot putt on 18. Tiger has to make the putt. You can make a lot of money in that kind of model, but there's nothing as much leverage as there is the Michael Dell model. The Michael Dell model is Michael hadn't put together a computer in 38 years. He put together a couple of them and then realized very quickly, unless he had some people on his team that he could leverage, that he wasn't going to get to the success that he was capable of or that was available to him. Depending upon which model you're talking about, the machine could look one of a couple ways. The Michael Dell model, where it's not a personal services type of model. Michael Dell model relies on three things. It relies on a strategy, a plan, not an idea. One of the fundamental mistakes we make as business owners is we wind up executing on ideas instead of plans. We have an idea of what we want, but there's no yellow brick road. This is Oz. We're in love with Oz. I've heard so many business owners tell me over the years, this is my dream. This is my vision. I go, I'm good. You're telling me about oz. Build me the yellow brick road. Show me how to get from where you are to Oz, and then I'm on board. But just because you become very adept at describing Oz doesn't give me the clarity that I need to be an investor or to support you if I don't have clarity on the plan. So the plan, the strategy is number one. What does strategy mean? Southwest Airlines, here's how they made all their money. Here's how they made more money. It's one sentence. This is one sentence. So it's going to tell you how Southwest Airlines made more money in the last 10 years than the rest of the airline industry. Cumulative. Southwest Airlines at the very beginning said this. A plane on the ground makes no money. How hard is that? What a brilliant insight. And so they built the entire organization around keeping planes in the air. And it turns out the key to keeping planes in the air is to become an expert at baggage handling. The core problem that Southwest Airlines had to figure out is how do you get the passengers and the baggage on and off the plane as quickly as possible? Because the faster we get them off the plane, faster we get the new ones on, faster the plane takes off, more money we make. One sentence. That's extraordinary. So plan and a strategy is number one on machine. Number two. You gotta have people. A, players. You take a great strategy and you have B, players, C, players. Anybody in here have an employee? Anybody in here ever been disappointed with the performance of an employee? I'm going to give you a hint, and we may talk about this more. You get what you tolerate. You get what you tolerate. In fact, I'll say this. I'll say this even louder. This could be the most important thing I say. Nothing can change until the unspoken is said. Nothing can change until the unspoken is said. And the truth. Here's the truth. For us as leaders, the greatest failure of leadership is a Lack of courage. A lack of courage to say what needs to be said. I tell my employees we own businesses and I tell my employees all the time, I refuse to lower my standards in order to accommodate your need for mediocrity. I will not do it. This is the standard that we have. And what we're going to do is we're going to help you build a yellow brick road so that you can be successful. Every employee you have for all of us has the exact same outcome. They're all optimizing for the same thing. Every one of our employees wakes up the morning and they want to be successful. There's not one person who wakes up in the morning and says, today I'm going to try to do the worst job that I possibly can. My job as the owner, as the leader, is to support my team in being successful. That's my number one job. And so I'm going to coach, I'm going to build a yellow brick road. I'm going to have performance standards, but I got to have a people. What's the definition of an A player? There's three or four things. Number one, they have a high internal emotional need to succeed. High internal emotional need to succeed. I'll say this a different way. Pros don't have to be motivated amateurs do. People ask me all the time, how do you motivate your employees? I say I hire them. I'm giving you an opportunity and I've built you a yellow brick road that if you stay on the yellow brick road and hit my standards, you and I are going to do well. If you can't hit my standards, I understand this is not a good fit. You're not gonna be able to stay here and be successful, which I know you don't wanna come to work for the next five years and be unsuccessful. So let me help you go find someplace else where you can be successful. Because it's not here. Because here, this is what we produce. If I don't have standards, which is all part of the people, if I don't have the standards, then I'm going to be promoting people or giving raises based on loyalty or longevity or likability. Oh, my God. This person has been here since day one. You know, in fact, the first month they were here, you know, they were here. We didn't even pay them. They've made it. And so I wind up creating this story that becomes a substitute for performance. At the end of the day, I don't want the story to get in the way of the facts. I tell you what sabotaged you. It sabotaged me. I substituted a story for the facts. I'm really good at spinning those stories. So are you. That's where those unexamined assumptions come from. So that's number two. Number one is I gotta have the plan in the process. Number two, I gotta have the people. Number three, I gotta have the structure. And part of the structure, probably the most important part of the structure is gonna be the culture. Culture is not perks. Those are two different things. Perks are how many jelly beans are in the kitchen and whether you do or don't get to bring your dog to work. Those are perks. Joe has heard this story. I was given a speech in Oslo and there were some very well known famous entrepreneurs who had done very well. And one woman came on stage who's very well known and started talking about how important culture was in her organization. And the example that she used is. And we just built our employees two nap rooms. I hadn't gone on stage yet. I'm sitting on the front row. And when she said this, I looked up and I said out loud. So I didn't mean to, but I'm sure she heard it. You must be kidding me. Nap rooms have nothing to do with culture. Nap rooms are a pert. Besides that, I'm not paying my people to come to work and sleep. That doesn't even make any sense to me, but apparently it did to her. So I look at culture as, how do we treat each other? How do we talk to each other? Culture is accountability. The Navy seals has got one hell of a culture because they're accountable. They get stuff done. They do what they say they're going to do. They're on time. That's a cultural issue. And so I would ask you, as you're thinking about a machine, what's your plan? What's your leverage? Tiger has leverage. He's got a plan, but he also has leverage. It's just not the same kind of leverage that Michael Dell has, but he has leverage. And they both have structure. Michael Dell and Michael Jordan, Tiger woods, they all have structure. There's a culture, there's a way we do things. The whole idea of the machine is that I pour gasoline in and it runs, which is not the kind of business that most of us have. Most of us have a business. Well, we're this. We're crankers, we're hand cranking. And then I hear people talking about, I want to scale my business. And if you scale a crank business, you wind up with More crankers. Because there is no machine. It turns out scaling a crank is a bad idea. But we're addicted to this idea of growth and getting big and scaling as if big was the same as rich. Big is not the same as rich. Those are two different words. And when I look into the cockpit of most businesses, there's one lever that the pilot has at his or her disposal. Who's running the business? The pilot. And that lever is the accelerator. Anything that goes wrong, okay, first thing let's do, let's mash down, let's get big, let's amp, let's scale, let's add more of this, let's do this, let's get a social media web. And pretty soon I got all this, all these tactics storming at me and I'm going, what is the real problem here? What is the real problem I've got? J.C. penney thought the idea was to get big. And you see where they ended up. And the list, Kodak, the list is long of businesses who somehow mistakenly believe that the most important thing is how do we grow it. I'll say it this way. Sometimes gains are a result of losses avoided. If you could rewind the clock and avoid 08, 09 and 10, had we just been able to dodge that bullet, we can't always. And so one of my jobs as a business owner is to think in terms of risk. So the machine is three things. I gotta have a strategy and a plan. I gotta have the people to execute and I gotta have some structure so that I pour in gas and this thing goes. It doesn't require me in order to double the size for me to spend two times faster. That's a crank business. And that's a business that if you try to scale it, you wind up tired. So that's a machine. Great. Love it.

Talk about risk. In the book you have three questions to evaluate. Like an investment risk. What's the downside? What's the upside? Can you live with the downside? How should everyone here think about stupid risk, intelligent risk, or however you would describe risk? Because I mean, we get paid, I think, relative to what we are willing to take on, relative to the risk, which could be misconstrued as let's make crazy ass judgments.

Risk doesn't cease to exist just because you ignore it. One of the smartest investors in the world today, who Warren Buffett, stops what he's doing to read what this man has to say. This is the only guy that Warren says, when Howard Marks talks, I listen. Howard Marks has Written a book. You should own this book, and you should read it soon. Probably after you read the Road Less Stupid. But then again, I'm biased. If my kids asked me which one they should read first, I'd point them to Howard Marks. So read Howard Marks first. Howard Marks runs a company called Oaktree, Oaktree Financial, and he's written a book called the Most Important Thing. The Most Important Thing. He says a lot of brilliant things. Three that I'm going to mention. Number one, the less risk you perceive, the more risk there is, which is completely counterintuitive to the way most of us think. If I perceive that there's no risk of having an automobile accident between my home and the grocery store, then I won't put on my seatbelt. I'll text while I'm driving. I'll be talking on the phone and watching a video. And as a result of perceiving, there's no risk, Risk skyrocketed. The way you lose money is by perceiving there's no risk. I'm a natural. I've got all this money. These are smart people. If it doesn't work out, I still got a lot more. I mean, what could go wrong? We say stupid stuff. Everybody in here has done it. I've done it. We say stupid stuff like, the greater the risk, the greater the reward. This is intergalactically stupid. This is unbelievably ignorant. The greater the risk, the greater the probability of a loss. But we say, oh, yeah. I mean, it's risky, but I mean, the reward, my God, the upside is so huge. We've done this. You and I were talking about this. Warren Buffett was playing golf. This is a true story. Warren Buffett and Bill Gates are playing golf. They're best friends, and there's with two other guys. They get to a par 3, which is the only kind of hole you can legitimately make a hole in one on. They get to a par three. And one of Warren's playing partners. Right as Warren was about to hit his tee shot, the playing partner said, warren, let's have a bet on this hole. Warren said, okay, what's the bet? The guy said, $2. I bet you $2 that you don't hit a hole in one. And Warren said, well, like, what if I. No, it's $20. I'll bet you $20. And Warren said, okay, $20. I got to give you $20 if I don't hit a hole in one. And Warren said, if I do hit a hole in one, how much will you give me guy said, I'll give you $20,000, which is 1,000 to 1 odds. That's what that is. So if Warren loses, if Warren doesn't hit a hole in one, he has to give his playing partner 20 bucks. But if he does hit a hole in one, then his playing partner's got to give him 20,000. And Warren looked at this and said, no bet. And the guy said, why? Warren said, well, I mean, the odds of me hitting a hole in one are not 1,100, it's 10,001. If I stood up here and hit 10,000 golf balls, there might be one that goes in the hole. But if I only hit 1,000 golf balls, the likelihood of one going in the hole never going to happen. So I'm not going to take the bet. And the guy looked at Warren and said, Warren, it's $20. Last year you made $5.6 billion. It's 20 bucks. And Warren said, I know. Stupid in small things, stupid in big things. Write that down. Write that down. Write that down. What's sabotaging us is the small things sometimes. So this idea of risk doesn't cease to exist, that the less risk we perceive, the more risk there is. Howard Marks in his book said a house that can withstand a hurricane is indistinguishable from a house that cannot withstand a hurricane until after the hurricane. And what we want to be doing is building houses, financial empires that can withstand a hurricane. I mean, for crying out loud, if you know that the economy does this and nobody can predict it. I mean, you know, there's the soothsayers out there, the economy. Somebody told me one time, the reason God made economists is to make astrologers look good, right? The whole idea that somebody can predict what's about to happen, I mean, they can smell, you know, but nobody knows how big or severe or anything like that. They just know it goes in cycles. And what I want to do as a business owner is build a world class defense to go with my world class offense. As CEOs, as leaders, as owners, what most of us have done is built world class offenses. And so we're always going long. We're always. I'm probably the only one here that did this. But when I was a kid, the guys would get in the front. I'm talking about a kid like 7, 8 years, 10 years old. And we'd be playing football in the front yard and there'd be a quarterback and he'd draw in his hand, he'd say, all right, now, you do this and you do that, and everybody look at me and say, keith, you go long, right? That means you just run. And we're just going to heave the ball down there. It's going to be a Hail Mary, and maybe we'll get lucky. And that's how oftentimes we run our businesses is relying on hope and luck. My dad told me years ago, keith, you can rely on the rabbit's foot if you want, but it didn't do much for the rabbit. And that's kind of true, right? You have to kind of think about, where am I relying on hope and luck? As opposed to being thoughtful. And being thoughtful would say, is there something that could go wrong? And asking that question and building a defense so that you can live to survive another day. Which I didn't do when I was 40, which is why I lost all that money, right? It was all offense, plus it was arrogant, plus it was hubris. I had an exhaust pipe in my mouth, and I was just inhaling my own fumes. I told somebody one time, I was 40 years. I was 38 years old. I told somebody one time I was being interviewed, and they said, keith, how would you describe yourself? And I said, that shows you how screwed up I was. Okay? I'm not proud to say this. I said, I'm a little bit like Haley's Comet. A guy like me only comes around about once every 70 or 80 years. That's how good I am at business. And that was right before nose down into the dirt. Right? All right, here's a final thought on risk. It's better to ensure survival under negative outcomes than it is to predict success under favorable ones.

Say that again.

It's better to ensure survival under negative outcomes than it is to predict success under favorable ones. And so this way of thinking. You mentioned it a second ago, the three questions. What's the upside? And we tend to be experts at the upside because we're optimistic and we can see the opportunity. What's the upside? What's the downside? Which we tend to not be that good at. We rarely ask that question. And if we do, we kind of minimize it. It's kind of like what most of us do with our competition. Most of us with our competition, minimize our. Yeah, I got some competition, but nobody's really doing. I mean, I'm different. I mean, I've got. That is about the craziest thing. Let me ask you a question again. I'm opening another tab. Let me ask you a question. Let me ask you a Question. How much money could you charge for your product or service if you had no competition? How many customers would you have if you had no competition? I already know your answers. If you had no competition, you could charge whatever you wanted and you'd have all the customers. So what dictates, what dictates your revenue is your competition, and how you position and message against your competition. I think that the same thing is true with risk. The downside. How do I need to think about the downside and be realistic with it? And if the downside happen, then can I live with it? And one of the most powerful tools I've found in this is called a pre. Mortem. A pre. Mortem. You know what a post mortem is? A post mortem is, you know, somebody dies, they crack them open, they look around, say, how'd they die? Well, their heart stopped, they stopped breathing, blah, blah, blah. That's how they died. A pre mortem says, I'm about to make a decision. I'm gonna project myself one year into the future by projecting myself one year in the future. I'm gonna look back over the course of the last year, and this decision I'm just about to make has turned into a dumpster fire. This thing is a train wreck. It is a mess. So one year into the future, I'm now thinking, as I'm looking back, it's a mess. A pre mortem says, what are all the things that went wrong that caused this thing to turn out to be screwed up? If you will exercise this muscle, which is defense on pre mortems, on identifying and evaluating, minimizing risk, it's questioning assumptions, losing some of the optimism. My God, we're optimistic. We're irrationally optimistic about the initiatives and ideas that we have. And I think one of the best ways to play defense, honestly, is with what you're doing with this and some of the work I'm doing with the boards that we have, which gives business owners an opportunity to have people around them that will give them advice and tell them no. Ask yourself the question, how many people do you have right now, right now, that can tell you no? That will question your assumptions, that will push you back on some of the ideas. Most of us don't have people around us that will do that. In fact, the vast majority of business owners don't have that. And so it's why they say leadership is so lonely. And it is, because we don't have people around us, it'll push you look at the most successful, most successful businesses on the Planet. Every one of them has a board, and every one of those boards meets once a quarter. There's a reason for that. That board is not there to inject the CEO with adrenaline. That board is there to say, whoa, cowboy, slow down just a little bit. Just a little bit. Let's think this thing through. What are the second order consequences? What could go wrong? Do we have a plan that ensures success or at the very least, ensures survival? Or are we going all in?

Yeah, I agree. I totally. I mean, that's one of the main reasons why having a sounding board, having a board of advisors is critical. I mean, in a lot of ways, that's how I look at Genius Network is the whole. You can't see the label. You can't read the label when you're inside the jar. And having other people that will be able to. Yeah, but they have to be smart. They have to be astute. They have to be well selected. You have a whole process in the book to think through. I mean, there's so much but thinking time. And I want to talk about thinking time. And have you described that process? Why is it so important? And it slows people down so that they can go faster and so that they can not build a machine for the problem that isn't right. And there's so much knowledge and skills, especially in this room. I mean, everyone here has had a certain level of accomplishment because they wouldn't even be in this room if they hadn't. And at the same time, taking this knowledge and wisdom that's within them and being able to flesh it out by simply asking themselves the right questions and giving themselves the time to come to that is your thinking time process. So I'd love to have you describe that.

Great. So this will have some amount of strategic and a greater amount of tactical, because the tactical is kind of important, because the tactical is what it allows it to become a ritual. So the key to thinking time is to start with a powerful question. The piece of paper that Joe passed out asked you to write down one of your problems, challenges, or opportunities. And what would have made that your response very successful would be if it was framed in the form of a question. So the instant a problem is framed as a statement, your brain will shut down because you just said it's true. Right. I'm poor, I'm single, I have. My sales are inadequate. That's a statement. And what I want is a question, because the question is gonna be the thing that opens everything up. And so the question might be, how might I. So That I can. How might I increase revenues by 20%? And maybe I want to insert a guardrail right there. How might I increase revenues by 20% and on less than $1,000 a month budget? So I just put in a guardrail so that I can drop an incremental ten grand in my bottom line every month. So the power is in the question. Albert Einstein was a professor at Princeton for 20 years. In his third semester of teaching, Albert's fellow professors came to him and said, dude, they're onto you. And Albert said, what do you mean? And his fellow professor said, the students have stopped studying because you keep giving the same final exam questions every single semester. They're on to you. These are smart kids. They said, you got to change it up. Otherwise they all have passed around the test. They know what's coming. Albert said, I'm not going to do it. And they said, you got to be kidding me, Albert, you got to change the questions. He said, not going to do it. And I said, why? And he said, because the answers keep on changing. I want you to think about that in the context of your business, in the context of your competition, in the context of the price of oil or who's in the White House, or interest rates or alliances or networks that you have available. The answers keep on changing. And so what I need to get good at is figuring out the question. The saying I have is this. Smart people have really good answers. Geniuses have really good questions. The key is, can I find the question that I need to ask before I start my thinking time? And the Road Less stupid has got 704 questions that I've used or variations on those themes. Out of the thousands more that I've created, these are some of the best. These are the best 704 questions I got. I've been doing thinking time for 25 years, 28 years, and I do it three times a week. It lasts for 45 minutes. I turn off my machines. I'm not in front of a computer. I have a kitchen clock, a timer that I set for 45 minutes. So I'm not constantly picking up my phone or glancing at the clocks in my office. And I got a chair that I sit in. And the only time I sit in this chair is when I'm going to think. I got a big chief tablet and I got a pen, and the only time I touch this pen, sit in this chair with this tablet is when I'm about to think. I've pre framed my thinking time with a question that I've developed that I need to ask myself that would I'm gonna think about. And the idea of thinking time is not to come up with the right answer. The idea of thinking time is to come up with a lot of answers. You know how to have a great idea? Do you know how to have a great idea? A lot of them. Have a lot of them and pick the best one. That's exactly what we want to do. We want to have a lot of ideas. And the thinking time process is all about can I generate more ideas, more possibilities, more choices than what I have today? So here's a discipline. That's what thinking time is. It's a discipline that says if I can sit quietly, if business is an intellectual sport, which it is in my opinion, and if I'm going to be successful in solving problems or taking advantage of opportunities or identifying risk or figuring out what the obstacle is as opposed to the symptoms, if I'm going to be successful in that, I need to stop reacting, I need to stop lurching. And what I need to start doing is thinking about here's possibilities. And when I'm done with thinking time, the alarm goes off. When I think it looks like this, I'm in my chair, I get all settled in, I gotta get my body really, really still, which my body is gonna interfere with my thinking. So I always clear my throat, I take a sip of water, I do whatever I need to do. Ooch, my butt. I get very, very still. I've got my question or questions on my piece of paper. I start my timer and I literally have my hand over my eyes so that I'm only looking down. If I look up, I get distracted. I go into 45 minutes and then the buzzer goes off. And then I look and say, okay, well which one of these answers or which ones do I need to think now? I've yet to have a thinking time in 28 years. I've yet to add a thinking time that didn't add massive value. I know several of you have taken a four day mba. You've heard me say this. Take away all my skills, take away all my money. Leave me only thinking time. I'll get it back. That's how powerful this tool is.

Make sure to tune back in for part two of Keith and Joe on Genius Network. Episode 134. Don't miss another episode of Genius Network. Subscribe today@genusnetwork.com subscribe if you'd like to access a video show, notes or exercise to help you take action on what was discussed please visit genusnetwork.com133.