How To Learn Faster, Think Better & Make Smarter Decisions

Foreign. Hey guys, Sabri Subhi here and welcome to this module of quantum growth called multi level mental models. And in today's training I'm going to be really diving in and deconstructing, you know, multi level mental models. And as I briefly touched on in the module, eudaimonic paradigm mental models are descriptions of reality that apply across every area of your life and they don't get outdated and provide immediate results by helping you make better decisions. And they are really the invisible links that connects disciplines together. But before we dive into the weeds and into the actual specifics of them, let me just cover what we'll be going over in today's training. We're going over multi level mental models, second order thinking, critical thinking, Q bono first principles, the 4% rules, and also model stacking. So let's start with multi level mental models. Look at its essence. A mental model is a simplified, scaled down version of some aspect of the world, a schematic of a particular piece of reality. They are deep principles that apply across every area of your life and are always relevant and do provide you those immediate results by helping you make better decisions. And once you reach an understanding of a mental model, you have a tool that you can then apply in many situations and in the future on any other things that are going to kind of pop up. And it really helps you just to be much more efficient, get more done, make way better decisions and have better relationships and become more focused and more successful overall. They really give you a wider aperture on life so you're able to see the connections more naturally between things. And using multi level mental models gives you a wider lens so you can see patterns. Here's a quote by Charlie Munger. You can't really know anything if you just remember isolated facts and try and bang them back. You've got to have models in your head. You may have noticed that students who just try to remember and pound back what is remembered, well, they fail in school and in life. You've got to hang experience on a lattice work of models in your head. Fortunately, it isn't that tough because 80 or 90 important models will carry about 90% of the freight in making you a worldly, wise person. And of those, only a mere handful really carry any heavy freight. Right? So in today's training I'm going to be walking you through a few of the mental models that I have personally found to carry the heaviest rate. And the objective of learning and applying these models to learn faster, think better and make smarter decisions. Now really what they allow you to do is create order from chaos. That is the way that I apply mental models and that's really how I look at, you know, what they're all about. And it's about being a systems thinker that is visualizing complex systems as machines and then figuring out the cause and effect relationships within them and then writing down the principles and then forming mental models. So in the future you can apply these mental models to just making much better decision, which is how you upgrade your brain and have the ability to think with second and third order thinking. Which brings us to our first mental model, which is second order thinking. And it is a powerful part of the cause and effect mental model. And it's incredibly powerful because things are not always as they appear. Often when we solve one problem, we end up unintentionally creating another one that's even worse. And the best way to examine the long term consequences of our decision is to use second order thinking. The ability to think through problems to the second, third, fourth, fifth order consequences is what we call second order thinking for short. And it is a powerful tool to really supercharge your way of thinking. And I look at my brain software as the most important thing in my life. And I have to police and control what this software is running and I need to make sure that I'm constantly upgrading it. And most people operate in level one, which is first order thinking or the realm I call chaos. Right? You see there is a blizzard that everyone is normally in and that's where they're caught with all of these things like just coming at them. And especially in business, right? It's just a chaotic blizzard of activity and problems that are coming your way. And this level of reality is essentially about just getting shit done, like creating a to do list of your most important to least important tasks and then just ripping all the way through them and being try to being as brutally effective as ripping through that to do list. And it's completely like a chaotic reality similar to like a violent blizzard because there's lots of things that are always coming at you and they're coming at you from all different directions. And it's hard to get clear like clarity on what really matters. Because often the things that are like urgent that come flying at you aren't the things that really matter. And first order thinking is simplistic and it's superficial and it's often the choice of a headedness where you're just looking at things on the very surface level. Right? And just about everyone can do it. And it's pretty much the realm that everyone operates in. And all first order thinker really needs is like an opinion about the future. Like as in the outlook for the company is favorable, meaning the stock will go up. And second order thinking is like deep and it's complex and convoluted. First order thinking is fast and easy. It doesn't take much brain power to do it. And it happens when we look for something that only only solves the immediate or surface level problem without considering the consequences where their second, third, fourth or fifth or whatever it might be. For example, right. You can think of this as like, I'm hungry and I would really love to eat like a piece of cake. And that's kind of the first order thinking, like I'm really hungry, I would love a piece of cake. And the second order thinking is more deliberate. It is thinking in terms of like the interactions and the interconnectedness, the time as well and layering that on there and understanding that despite our intentions, you know, our interventions often cause harm. So in that instance it's like you're looking at like cool, I just want to eat this piece of cake because it'd be delicious. But the second order thinking is like it's going to make your energy crash, you know, it's going to make you put on weight. And if you keep on relaying that down and then you start thinking about like, well, what are the repercussions? And then I fall them hammer habit where it's like it's okay, you know, just to eat delicious chocolate cake every day. And even though that like the intentions might be innocent, like it's really those second, third and fourth order consequences that really come back to bite us in the ass. Second order thinkers ask themselves the question and then what this means thinking about the consequences of repeatedly eating cake when you are hungry and then using that to inform your decision. And if you do this, then you're more likely to eat something healthy. If you ask yourself and then what like what is the second order consequences from this action? And you can also look at it as short term versus long term thinking. First order thinking is very simple. Everyone reaches the same conclusion. And this is where things get really interesting. The road to out thinking people, it can't come from first order thinking because that's the realm that everyone operates in. It must come from second order thinking. You know, extraordinary performance comes from seeing things that other people can't see. And what do I mean by this? Well, if you think about most people and the realm of activity that they operate in, they're moving at like a million miles an hour. You know, it's 10am, they're two coffees down there hammering out emails. They've got like multiple meetings and then at the end of the day or the end of the week that they don't really feel like that they've really made any progress, that there's been engaged in busy activities and they've just been busy dealing with their to do list and the surface level issues. And it doesn't matter how productive and effective you are in this realm because you're just spinning your wheels, hustling and grinding and you're not doing anything that's gaining leverage. And these things are great, right? You do definitely need them. You need to grind, you need a hustle to be successful, and you need to, you know, get stuff done, but only if applied to the right tasks. And you're not just constantly being like a firefighter and running from this area of your business to this area. And you're just kind of constantly dealing with the surface level issues and immediate bushfires that come up. Because if you want to take your business to the next level, you need to transcend your thinking and you need to operate on a new level. And this new level is really thinking about the long term. Because typically actions and activities that have a first order equaling negative, like it's some pain, it's some complexity that you need to work through, they have a positive second order consequence, right? And a lot of extraordinary things in life are a result of things that the first order is negative and the second order is positive. So just because things look like that they have no immediate payoff or like immediate pleasure, doesn't mean that that is the case. All it means is that you'll have less competition if the second and third order consequences are positive. Because everyone who thinks at the first order, they won't think things through, right? They're all about optimizing a situation where the first order consequences are positive. And typically if you go down that road, then the second and third order consequences are negative. So they get the short term satisfaction, but the long term detraction from what there is, what it is that they're trying to get to and where they're trying to go and the things that they're trying to achieve. So a case in point would be Jeff Bezos and like with his business Amazon not making a profit for the first several years, and it took Amazon more than 14 years, that's 58 quarters after. It's like public offering back in May 1997 to make cumulatively as much profit as it produced in the first quarter of 2018 alone. This is second order thinking. Operating from second order thinking generally means that you get less done in a day, but get drastically more done in a year or in your entire life. This happens because the value of operating on levels two and three, they compound over time, just like they have with Amazon. And at the time of recording this, Amazon is the most valuable company in the world with a market cap of over $315 billion. So let's look at this quote by Ray Dalio. Failing to consider second and third order consequences is the cause of a lot of painfully bad decisions. And it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you've asked the questions and have explored. And a visual way to represent, you know, your odds of success is really the extent to which you consider second and third order consequences. So, you know, if you're looking at, you know, operating in just that first realm, your odds of success are going to be very, very slim because you're just optimizing and you're working on the very surface level stuff and you're optimizing for the immediate benefit and you're not fast forwarding through time and having a look at what those second and third order consequences look like. And if you have two choices right to make in your business and they're relatively equal, like it's a 50, 50, take the path that is more difficult and more painful in the short term. And typically what you'll find that that's the thing that's going to get you the most success in the long term. And you do this by uncovering and using deep principles and multi level mental models to experience unparalleled growth. To illustrate this shift in thinking, it's the same you might experience experience. When looking at this picture you can see on the screen. At first you see one image, right? And then your eyes and your brain recognize the second one and store it in your memory forever. And the next time that you look at this picture, you will see both images much quicker. And this not only applies to these pictures, but it applies to our life and our life's experience in general when we have renewed our mind, okay, so you know, if you look at this image, you can see a duck and then you can see a rabbit, and it takes you longer to see the second image that you see. And it's the same when applying mental models to Your life. And that's really what you want to gain from this. That is that when you apply these mental models that you can quickly see the connections and see different vantage points a lot quicker and that results to you like upgrading your brain. And you know, as I said before, I look at my brain, software is the most important thing in my life and I have to be very careful in terms of that software and have to be, you know, put a lot of thought into the design of this software and I'm constantly upgrading it because as you become more successful in life, you have to do things differently in order to get to the next level. You can't just keep using like trial and error and building your knowledge on a potentially shaky foundation or using like an excessive amount of your brain CPU to make decisions every time. Because when you're in business and you're scaling up a business and you start to add levels of complexity, I. E. More humans into the system and then more layers of management and all, you know, multiple different services that you're selling on, multiple different products at different price points, in different geographies, in different currencies, and it starts to add like a lot of load on your brain cpu. And it becomes incredibly harder to make effective decisions if your brain is just overloaded, right? So instead of doing that and just like, you know, looking at each individual decision and problem that really comes to you in its own unique way, you need to instead apply mental models to better differentiate the signal from the noise and then move with speed and power and, and be more confident in your decision making. Because if you don't apply mental models as you scale your business up, you're going to very, very quickly start to get decision fatigue from constantly approaching each decision from a zero base. Meaning you're starting from scratch and you have to try and separate the signal from the noise and collect all the accurate data. And you're really approaching every single problem as just a brand new problem. So level two, and that is really creating order from chaos. And the value of an activity isn't just the immediate result that it provides, but also the underlying principles at play. So the principles that you learn in any situation are often more valuable than the immediate result because you can apply them to the rest of your life and all the other areas of your life and you can make better decisions as opposed to just being in that reactive, you know, state, that level one, state of just chaos, where you're simply engaging with tasks on their face value. Level two is really about synthesizing your learnings and then boiling them down into mental models. So let me explain this. For example, let's say that you're running ads, okay? And you're learning how to sell a specific surface on a specific channel. So you're just running it for one company, and that's kind of the level one that you're operating in, okay? And you're just applying just that skill on that specific surface, on that specific channel. So how to sell, you know, like financial planning services on Google, then a level down is you learning how to sell a specific service on any channel. So then you start running ads on, you know, Google and Facebook and YouTube and radio ads, all for financial planning, for instance. And then you go one level deeper and you learn how to sell ad any service on any channel, right? So you're learning, whatever it is, it doesn't matter. It could be financial planning, it can be weight loss, it can be property investment, digital marketing, Facebook ads, you know, how to sell any service on any channel. And then a level deeper than that is how to sell anything to anyone, regardless of the channel. And, you know, as you kind of move up, like, and you look going at the very, very top, these are more specific and really more contextual. And as you get down to the bottom, these are more timeless and universal because you can apply this to anything. If you know how to sell anything to anyone, you are much more dangerous. And at level two, you know, each campaign that you run is really an opportunity for you to learn about related principles on multiple levels. And as you move towards, like, the fundamental mental models of what selling is and how it works, you get closer to the principles that are more timeless and universal and don't change with the technology. And once you reach, like, the timeless and universal level, you can apply a principle or a mental model to exponentially more situations that you come across. And this is the key here, because once you reach an understanding of a mental model in this example, say, like, persuasion and how to get people's attention and then influence them to actually take action on what it is that you're wanting them to do, you now have a tool that you can apply on any ad platform, whether it's Facebook or Google or radio. And these mental models can be translated into other disciplines in many other different situations and in the future to help you be more efficient and just get more done and get better results, make better decisions, have better relationships, become more successful, and really have more impact because you're applying those learnings as a mental model to other areas and other disciplines. Here's A quote by billionaire Charles Koch. The quality of our mental models determines how well we function in the natural world. This brings us to Mental Model 2, which is critical thinking. Now, critical thinking is the objective analysis and evaluation of an issue in order to form a judgment and having the ability to engage in reflective and independent thinking. And it's incredibly powerful because it's what allows you to cut through the levels of illusion and noise that we normally see and get more, more of a direct view on the truth. Like it allows you just to cut through all of that noise and just try to find out what is objectively, you know, true, what is the facts of this situation, right? Not from an objective view of whoever is sharing that, I should say. And it's about being an active learner rather than a passive recipient of information. And our society is not taught to question things through this lens, right? Like, ie, if a doctor tells you something, you know, most people in society just think, well, it must be true, because the doctor's saying it and the doctor is an authority. Therefore there is no critical thinking or questioning to what that person is saying. However, my belief is to question everything and believe nothing until I examine it with critical thinking. And being a critical thinker also enables you just to engage in thoughtful disagreement rather than arguments, because it's not about disagreeing, it's about critically analyzing and thinking about it before accepting it as a reality. And you know, when you're thinking about things, it's really, really important to do this, whether it's, you know, your partner is bringing you something, or a member of your team, or a salesperson is telling you something, is actually analyzing it and applying critical thinking before accepting it as reality. To analyze the constituent parts and the facts and really make up your own decision from looking at it and stress testing it from multiple different vantage points. And it is the mark of an educated mind to be able to entertain a thought without, without accepting it. It's a brilliant quote by Aristotle and really stop to think about that for a moment, right? It is the mark of an educated mind to be able to entertain a thought without accepting it. So you don't want to just dispel something immediately, you want to entertain it. You want to look at it from a 360 degree angle and assess, you know, could this be true? Even if your immediate, your first immediate response is no, just entertain it, right? And it's typically those people that don't have educated minds that immediately dispel things without ever even entertaining the thought of it. And critical thinking and critical Thinkers in general identify, they analyze, and they solve problems systematically rather than by intuition or by instinct, with the goal of being able to arrive at the best possible solution in the circumstances that you are aware of. And the aware of is the key here. So let's look at how we get clear on what it is that we are aware of and expand our levels of awareness. And we do that by applying the five whys plus the how. And that is who, what, when, why, where, and how. And the five whys are questions whose answers are considered basic in information gathering or problem solving. And they're often mentioned in journalism and research and even police investigations. And they constitute a formula for getting the complete story on a subject and its origins line Aristotle's the Elements of Circumstances system. So let's dive in. So first of all, who said it? Someone you know, someone in a position of authority or power? Does it matter who told you this? Right in typically, it's that appeal to authority is kind of like a common type of fallacy or an argument based on unsound logic. When someone uses an appeal to authority, they are claiming that something must be true because it's. Because it's being delivered by someone who said it to be an authority on the subject, right? Like if it's a doctor or even a president or a prime minister, or even like a detective or a surgeon. Like people typically, they just. Just believe that as gospel, and they just look at that immediately, and they weigh that far too heavily in their investigative process. What did they say is the other one right? So did they give facts or opinions? Did they provide all of the facts? Did they leave anything out? What was their motive for providing those facts? Where did they say it? Was it in the public? Was it in private? Was it in front of someone? Did other people have a chance to respond and provide an alternative account of the situation or not? When did they say it? Was it before, during, or after an important event? Is timing important? Were they highly, like, emotional when they said it? The next one is why did they say it? Did they explain the reasoning behind their opinion? Were they trying to make someone look good or look bad? Was there any relationship to the person that they said it about? There's all things as you start to really dive in, to try and get an accurate picture. How did they say it? Were they happy? Were they sad, angry or indifferent? Did they write it or did they say it? Did they yell it? Did they scream it? Could you understand what was actually said? Was it translated? You know, these are the things you not need to start thinking about. And this brings us to the mathematical theory of communication. So the way that this works is you have an information source, for instance, that can be me, and then I am delivering a message and then there is a transmitter and from when you transmit that message from myself being the information source, and then I send that right as a signal, and then there is something that receives that signal, right? And then once it receives it, and just before it receives it, there is noise, right? There is noise that comes in between me sending it as a signal and then you also receiving that information. And then basically once you receive it, then what you want to do is you want to apply the five whys and the how to really decode that message as it gets to you. The mathematical theory of communication is the essence of communication. And it's really in the asking of the question like what is the identity of X that thinking takes place as it's in this process of grasping that identification, that is logic. And logic is the art of non contradictory identification. And this is the essence of human communication. In 1948, Claude Shannon, an American polymath, published his paper on the mathematical theory of communication. And this earned him a place in history as the father of information theory. And Shannon's work is how communication works. And this is really the foundation and the foundational principle for the electronic age. And it's used in computers and practically every kind of communication device or electric gadget that is out there. And it's really in recognizing the input and then processing it and then the output pattern that we can learn how our own process of communication is really undermined. And you have an idea, and then you express that idea. And if the person that you're speaking with looks as if your message has been lost in translation, if you agree on definitions, I.e. the coded language using to transmit that message, whether it's like English or Spanish or binary code. The next step would be to identify the source of noise in the message, specifically identifying that which is the message and that which is not. This is logical processing. Humans and computers differ as humans sometimes attempt to deceive each other and or communicate information which is not validated. And both instances create chaos. And they create noise. And this can dissolve the integrity of the message. This can be both be done intentionally and unintentionally. However, this is why you need to exercise critical thinking, is you need to have a look at what that noise is. Whether you know that has been done intentionally or unintentionally by a team member, by some vendor that you're doing business with. If you don't have the ability to really differentiate the signal between the noise, you're just going to be taken for a ride. And just like much like a computer, right, there are three basic steps to making this happen in your brain when communicating. You've got the input, that is the information that's coming in, then to the processing of that input, the processing of information, and then the output. Now, your mind, in its simplest terms, is the operating system of the brain, which is the most complex organism known to the physical universe, right? And it's absolutely priceless. Therefore, we must have the software on this operating system that is able to police fallacies and information that hasn't been validated. And as we do this, and we do this logical processing by using critical thinking and the tools contained within critical thinking, that is, by asking the five whys and the how, and then these contradictions can be identified, you know, and thus allowing you to identify the truth and the lies. And at this point, you might store like that validated information in memory where, where it can be recalled and you can revisit that and then output it by thinking, talking, or doing or taking some kind of action. If all the pieces work synergistically, the mind is useful and it generates satisfaction and serenity. And if not, it causes frustration and confusion because you basically getting these inputs and then you're processing them and you're not getting the output that you want, right? And that is going to be causing frustration and confusion because you haven't applied critical thinking. Because what happens, right, if we do not have like a firewall or like a virus scan or a spam filter on our brain running at all times, well, then you're making choices based off misinformation. And it's really in these three steps wherein we evaluate, like we evaluate that data that's coming in, that information, and then we assert our decisions based on that data. And the result is that you never really get the results that you're after if you're kind of processing that data in the wrong way. And I'm looking at this, you know, obviously in an esoteric way, so to speak, in the examples that I'm giving. But you need to think about how you apply that to your business, I. E. You know, you're getting information about different advertising channels that you're advertising on, and you're getting told that information by somebody, some person is giving you that information. And then, you know, you're processing your decisions whether or not to increase your advertising spend or to decrease it based on the processing of that information. And the output of that is going to be like the revenue that you create. And just imagine that the information that you're getting, right, there is noise in there and it's not accurate. Therefore you're processing the wrong information and you're going to be making the wrong decision based on that noise. And the results of that is that you just don't get the result that you want to. You can never ever grow your sales because you're making information based on inaccurate data. So let's break these down. First we look at the input like how to observe. This is simply defined knowledge resulting from answering the whole what, where, when, why, right? And this input or knowledge is referred to as the general grammar or a concept or idea. General grammar is the connecting of the human word, like the concepts to the objective reality, I. E. This advertising channel is really good because it gets us loss of sales. Then we've got to the processing how to think. This is simply the understanding which results from answering the why. It is the art of thinking critically without contradiction, right? Really looking at critically when you're processing that information. And then the output is how to communicate. This is simply the communication of the knowledge and understanding processing which results in the truth. And it is in taking the information and then directing it and using critical thinking. If you don't have this tool, then you're just going to lack the intellectual self defense and you're not going to be able to question the rhetoric that you're being fed and you'll soon be misled or you'll just be making poor decision and judgments based on really not processing and applying that critical thinking. Because I believe the key to scaling a business to eight figures and beyond lies in your ability to collect and process information using critical and second order thinking to make informed decisions. Because you're no longer just on the tools. You're a business builder. And to build a business you need to make decisions like lots and lots of them. And the fate of your company literally lies in your ability to be able to make sound decisions. And unless you apply these tools, you are just dead in the water. And that's what I see happen to so many businesses that struggle to scale is that they're simply making poor decisions because they don't have these mental models and these critical thinkings to be able to get to the truth. Which brings us to the next mental model which is mental model three and that is Kuberno. And it is another mental model to apply in any given situation when you are trying to decipher the truth and understand the powers at play. And it simply means to whom is it a benefit? It's a Latin phrase about identifying crime suspects. And it expresses the view that crimes are oftentimes committed to benefit their perpetrators, especially financially. Which party benefits may not be obvious and there may be scapegoats. And it can also be rendered as whom does it profit? Or for who's good? And it's a question that you should really ask in every and all situations to truly understand the powers at play. And if there could be something that is influencing the facts that have been presented to you, you know, we're trying to mitigate risk and downside and really engineer for upside by making the right decision and questioning those inputs. That is the information at hand. Qbono really is a way of acknowledging that incentive systems drive human behavior. And to understand the probable outcomes of a system, you must really look at the people to whom the benefits flow to. And the big questions that you need to ask or to answer, depending on your task, are, you know, who benefits, how do they benefit, and by what action do they benefit? Going around and asking yourself kubernetes can really help you to discover, like, hidden motives and create incentive systems for your business and understand that the way the world is interconnected and just so much more, and it's really, really profound. And you need to look at it not just in business, but in all areas of your life, right? So if you know the doctor is prescribing you some medicines, is asking yourself, Kim Bono, like, you know, who to benefit is from this? It's like, if is that doctor incentivized in any way to recommend, you know, this drug over another one? Like, do they have a relationship with that pharmaceutical company? Do they get a commission? Is it the best? And you can apply this to everything that you really, you know, whenever you're making decisions. Because when you boil it down, it's fundamentally understanding human psychology and the motives that drive people. And it's an incredibly useful mental model that can help revolutionize your life when you properly harness it and, you know, by really applying it into all different areas. You will see when you start to operate with this mental model, like, wow, this allows me to really see different vantage points and question things that I typically wouldn't question. And here is another view on it. It is important to view knowledge as a sort of a semantic tree and make sure that you understand the fundamental principles, that is the trunk and the big branches of before you get into the leaves and the details or there is nothing for them to hang on to. That's by Elon Musk. Now we're referring to them as mental models, right? But you know, there are other people like you know, self made billionaire Ray Dalio who uses the word principles instead of mental models, but he uses it to communicate the very same thing. Which brings us to Mental Model 5, which is first principle. Now first principles thinking is an incredibly powerful way to reverse engineer complicated problems and unleash creativity on them, right? So sometimes it's called reasoning from first principles. The idea is to break down complicated problems into basic elements and then reassemble them from the ground up like building blocks. And it's one of the best ways really to kind of think for yourself and unlock your own creative potential and move from linear to non linear results. And this approach was used by philosopher Aristotle and it's used by modern day billionaires like Elon Musk and Charlie Munger and allows you to cut through the fog of just like shoddy reasoning and inadequate analogies to see opportunities that others miss. And specifically you want to reason from first principles rather than by analogy. So reasoning by first principles removes the impurity of assumptions and conventions and what remains is the essentials. And it's one of the best mental models that you can use to improve your thinking because the essentials allow you to see where reasoning by analogy might lead you astray. And it's rare that people try to think from something on a first principles basis. They'll say, look, we do this because that's the way that it's always been done, or they'll not do it because, well, nobody's ever done it, so it must not be good. But that's just lunacy if you really stop and think about it. So instead you have to build up the reasoning from the ground up from first principles, as we say, right? So you look at the fundamentals and then you construct your reasoning from that, from the fundamentals. And then you see if you have a conclusion that works or that doesn't. And it may or may not be different from what people have done in the past. But you're not reasoning by analogy, you're reasoning from first principles. Here is a great example of Elon Musk explaining first rules and this mentor.

Reason from first principles. I think it's also important to reason from first principles rather than by analogy. So the normal way that we conduct our lives is we reason by analogy. We're doing this because it's like something else that was done or it's like what other people are doing.

Me too type ideas.

Yeah, Slight iterations on a theme.

And.

It's kind of mentally easier to reason by analogy rather than from first principles. But first principles is kind of a physics way of looking at the world. And what that really means is you kind of boil things down to the most fundamental truths and say, okay, what are we sure is true, or as sure as possible is true? And then reason up from there. That takes a lot more mental energy. Give me an example of that. What's one thing that you've done that on that you feel has worked for you? Sure. So somebody could say, in fact, people do that battery packs are really expensive and that's just the way they'll always be because that's the way they've been in the past. You're like, well, no, that's pretty dumb because if, if you applied that reasoning to anything new, then you wouldn't be able to ever get to that new thing. So it's like you can't say, oh, horses, nobody wants a car because horses are great and we're used to them. And they can eat grass. There's lots of grass all over the place. And there's not like there's no gasoline that people can buy. So people are never going to get cars.

Right.

People did say that. And for batteries, they would say, oh, it's going to cost. Historically it's cost $600. $600 per kilowatt hour. And so it's not going to be much better than that in the future. And you say, no, okay, what are the batteries made of? So first principles would be to say, okay, what are the material constituents of the batteries? What is the spot market value of the material constituents? So you can say, okay, it's got cobalt nickel, aluminum, carbon, and some polymers for separation. And a seal can so break that down on a material basis and say, okay, if we bought that in London Metal Exchange, what would each of those things cost? Like, oh, geez, it's like $80 per kilowatt hour. So clearly you just need to think of clever ways to take those materials and combine them into the shape of a battery cell. And you can have batteries that are much, much cheaper than anyone realizes.

So that is a clear example that if Elon Musk would have been reasoning by analogy, then Tesla would have never, ever taken off. It would have never, you know, really ever come to be, because he would have been just reasoning by analogy and not by establishing first principles. Now, this way of questioning can be used to Establish first principles through analysis. And it's a discipline questioning process used to establish truths, really reveal underlying assumptions, and separate knowledge from ignorance. It's also much like the five whys, but looked at from a different angle and a different vantage point. And the key distinction between first principle questioning and normal discussions is that the former seeks to draw out principles in a systematic manner. And it generally follows this process. First principles questioning clarify your thinking and explaining the origins of your ideas. Why do I think like this? What exactly do I think? And then challenging assumptions. How do I know this is true? What if I thought the opposite? And then looking at it from that point of view, looking for evidence. How can I back this up? What are the sources? Considering alternative perspectives? What might others think? How do I know I am correct? Examining consequences and implications. What if I am wrong? What are the consequences? If I am wrong? Then questioning the original question. Why did I think that? Was I correct? What conclusion can I draw from the reasoning process? Now, children instinctively think in first principles, just like us. They want to understand what's happening in the world. And to do so, they intuitively break through the fog with the same game that some parents have come to hate. Like, you know, it's something that I am open to with my daughter. Like, my daughter is always like, why? Why, why, why, Papa? Like, why does it work like that? And it's because they really want to understand what's happening in the world. And, you know, if you have children, this is something that you don't want to be like. That's just the way that it is. And that's typically what a lot of parents say. And, and what they're doing is they're really just shutting down that critical thinking from an early age. And it's really that, you know, that inquisitiveness of them that is reasoning and that is really kind of questioning from first principles. So employing first principles in your daily life. Right. Most of us have no problem thinking about, like, what it is that we want to achieve in life. At least when you're young, right, we're full of big dreams and big ideas and, like, boundless energy. But the problem is that we let others tell us what's possible, not only when it comes to our dreams, but also when it comes to how we go after them. Like something that you hear all the time. And whenever I'm speaking to people, they're like, you can't have it all. Like, you can't have the business, the kids, the holidays, the health and the vitality. And they try to, like, sell you out of it. You can't have that. And it's typically because they've given up on that themselves. And that's the reason that they're trying to tell you that. But when we let other people tell us what's possible and what the best way to do something is, we outsource our thinking to somebody else. And we get conditioned by society because we are outsourcing our thinking to somebody else who is conditioned by society. And because, you know, not many people have critical thinking or know about mental models. We're just getting conditioned by society as much as those people could be people that we love and that we appreciate with that just don't have this level of insight. So the real power of first principles thinking is moving away from the incremental improvement and into the possibilities of quantum growth. Letting you know, others think for us means that we're using their analogies and their conventions and their possibilities of what their reality is. And it means that we've inherited a world that conforms to what they think. And it's this incremental thinking that if you do what everyone else is doing, you will get what everybody else is getting. And that is mediocrity. Because if you're taking what already exists and then simply improving on it, you're always going to be in the shadow of others because you're just one step behind them. And the thoughts of others imprison us if we're not thinking for ourselves. And this is free will. Reasoning from first principles allows us to step outside of history and conventional wisdom and what society thinks and see what is possible from our own accord. And when you really understand the principles at work, you can decide if the existing methods make sense or if they don't. And sometimes they do, and sometimes they don't. All right onto the next one. So this brings us to mental model 4, which is the 4% rule. This really became clear to me when I learned about Wilfredo Pareto. And Pareto was an Italian economist who became famous for his 8020 rule. And this is commonly referred to as the Pareto principle. And he discovered this rule when he found that 80% of a nation's wealth was controlled by 20% of the population. And he studied this phenomenon more deeply. And he found, like, a disproportionate relationship between cause and effect in other areas of life. So he applied that as a mental model, including real estate and growing crops and all sorts of things. Like 20% of the input creates 80% of the result. 20% of the workers produce produce 80% of the result and 20% of the customers create 80% of the revenue. And 20% of the roads cause 80% of the crashes. And on and on and on. Now, in my deep dive of like marketing psychology, I found that, you know, his 8020 rule to hold true for almost all areas of business, including like the popularity of the products and services that you sell and the sources of your incoming leads, or the complaints and customer service problems or reasons customers buy or activities in your business that really produce revenue. And why. You've probably heard of the 8020 rule. Most people never truly apply it to their business, let alone other areas of their life. The 8020 rule really demonstrates that you should disregard 80% of your business activities and they should either be delegated or outsourced or automated so you can focus on the top 20% that really produce revenue and move the money needle for your business. And once you've done this in your business, you need to take it one step further and really become a high performance entrepreneur. You see, because what most people don't understand is that, that the 8020 rule is fractal, meaning that you can and you really should apply the 8020 rule to the 8020 rule itself. And that is to say that 80% of 80% of the revenue comes from 20% of the 20% of your revenue producing activities. And to put that more simply, right, you've got the 8020 rule which shows you that 20% of the inputs lead to 80% of the outputs. So if you apply the 8020 to the 80 20, what you find is that you're basically left with 4% of your activity or the inputs create 64% of the outputs and stop and think about that for a moment. 4% of your activities create 64% of the revenue in your business. And once you apply this in your business, this is how you start to get leverage. And it's how you hack the normal linear growth curve and you create exponential quantum growth. And that's really what we're all about. And that's what this whole program is about, is really just creating, you know, that leap in exponential quantum growth for your business. And that's exactly how you do it. Now let's look at something that I call model stacking. Now, mental models represent large chunks of reality, okay, that can be combined using what I call model stacking to create even more complex and useful models that I call multi level mental models. And this is similar to how letters can be combined in words, which can be combined into sentences. And the first rule with mental models is that you've got to have multiple models. Because if you've just got the one or two that you're using, you will distort reality so that it fits your models, or at least you'll think it does, right? And you become the equivalent of a doctor who prescribes antibiotics for every single patient that she sees. It's like the old saying, to the man with only a hammer, every problem looks like a nail. And that's a disastrous way to think about and really just to operate. So you, you've got to have multiple models that you can stack on, on top of each other. And the multi level mental models trigger higher order thinking. This is similar to how becoming, you know, literate triggers a whole slew of higher order thinking capabilities known as the Alphabet effect. People who are able to model how more complex problems work are far more successful in solving them and making the right decision. And entrepreneurs who are able to model how a complex business works in their minds are more likely to be successful business leaders because they must understand the complex subtleties of like finance and balance sheets and cash flow and return on capital. And they must also know about recruiting and managing a players. And they know about leading. They know about product development, marketing, sales, copywriting, media buying, and then how they all interact with their mental models and of their various stakeholders and customers and suppliers and investors. And as you progress in your life and in business, you must evolve the amount of diversity and the quality of your mental models if you really want to scale your business up and achieve higher and higher levels of success and impact. Because in business we all start off as the practitioner, that is the builder that builds homes or the property investor who has his own portfolio. However, as you scale, you must evolve from a business owner simply trading your time for money into a business builder, right? So you start off with like that basic trade skill and you become a master at that. And then you know that that's the next ascension point is really mastering that skill. Okay? And then from there it's like you're gonna tap out how many hours that you have in a day in terms of delivering that skill and the mastery of that skill. And then you're going to become a manager of humans, right, with one trade skill and that's typically like the next ascension point. And then from there you're going to be managing humans across departments. So as you start up and you get, you know, your first one where you're on the third ascension point of just managing humans with one trade skill that's like the person that's doing exactly what you're doing in the skill that you mastered in. But then as you scale your business up, you're going to need typically more people. And then as you get more people, then you begin to manage humans across multiple different departments. Sales and marketing and finance and all the different functions of your business. And then the next level up from there is you're going to go to the highest level which is managing the entire company and all the managers and sub managers that are under those and the cash flow and the total direction of where your company is really going and where it's heading. And as you do, you need to increase the amount of mental models that you have in your lattice work and that you can apply to your business and to your life. Because. Because relying on or over applying just one model is really no different than an army who tries to win every war with just one weapon. Right? All models, no matter how brilliant, are imperfect. And the beauty of model stacking and using multiple and diverse models is that many of the imperfections cancel out each other and they allow you to create new multi level models that transcend all the other models. And here is another point on this from Albert Einstein. Education is not the learning of facts, but training the mind to think. So through constant and diverse learning, you can build better multi level mental models of reality. And those models will help you navigate the world far more effectively. And just as a blueprint is necessary for constructing like a skyscraper, mental models of how the world works helps us construct a better and more stable life and a more stable business because we're not looking at each individual situation from just that one lens. And here is an example of model stacking that is combining second order thinking with the 4% rule. So by understanding second order thinking and cause and effect mental models, we can more effectively prioritize what's important for us to do now to cause something that we want in the future. Right? That's the second order thinking. And then we stack on the 4% rule that we know not only what the second order consequences will be from our actions today, but we'll also know what the 4% of activities will result in. 64% of the outputs of our future goal. So do you see how this becomes infinitely more powerful? Not only are we working on the right things, but then we're working on the right things brutally, more effectively we were than just focusing on all of the activities and not the 4% of activities that are going to result in 64% of the outputs. The larger our base of mental models, the more creative combinations that we can form, the more unique our mental models are compared to other people. And the more we can think in ways that they can't even fathom. And then we're just playing a game that they don't even know and let alone comparing us with people who were stuck in the chaotic blizzard of first order thinking and don't have any mental models at all. Right? Those guys are just toast. We're just going to eradicate them altogether because they just have not evolved their thinking. So model stacking is really about forming a lattice work where you have like first principles and then you stacked critical thinking on it, and then you stack second order thinking and then you stack the 4% rule and all of a sudden you starting build out what these models look like and these mental models and you're forming your own multi level mental models. And then this becomes the lattice work that you make all of your decisions through and that you run your life through and that you run your business through. And you become brutally effective at making decisions very quickly and moving faster. And it's like a flywheel. You just get more and more momentum and you become more, more and more lethal as an entrepreneur that people just can't compete with because there's all this stuff going on, you know, well, well, well below the surface of just what they can see on the exterior, whether it's your marketing or, you know, your products and services or your pricing. And they just, they can't get an insight into this and they just can't know that you're always moving to where the puck is going and not where it is right now. And you're always just one step ahead and you out think them and then you just crush them. Right. So in this training I've only, you know, just run you through a few of the mental models. But in the resource section from this I'm giving you a worksheet, which is the multi level mental models cheat sheet, I should say, and also a list, an extensive list of a whole bunch of different mental models that you can apply in your business and you can apply to your life and you can, you know, form your own lattice work of what's going to work for you. I've only highlighted, you know, just some of the models for the sake of just keeping this as brief as possible that I apply in my life that have really helped me. So this brings us to the action items. So you want to download the mental models cheat sheet you want to practice those mental models over and over until you have mastery. Then you want to learn to seamlessly stack models, you know, on top of each other until it's automatic. And you really want to think about these things. And you know, whenever you're looking at a problem that's in your life or that's in your business, is looking at how do you apply a mental model, and then having a look at how do you stack another model on top of it. And the more that you do this, the more that you train your brain to think in this systematic way. And then you want to learn to use these mental models in all of the areas of your life. And it does take a lot of work over a long period of time to master anything. And especially it's no different with mental models. If you look at any top performer in any field, you will see that they apply a set of models and principles in order to reach the summit of their chosen field. They are never operating in that chaotic blizzard of just first order thinking. So I encourage you to reflect over this module and this training and the worksheet often to really weave it like a fabric throughout all areas of your life, because this thing is going to serve you and it's going to compound over time, and the results that you're going to get from it are just going to compound over time and it's really, really going to have a dramatic and a profound impact to all areas of your life. So they're the action items. Get to work, think about this stuff and start to implement it. And I will see you in the next. Sam.