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June 5, 2024 • 59min
25 Years Of Founder WISDOM In 55 Minutes (ft. Jason Fried)
My First Million
In this episode, Sam Parr and Jason Fried engage in a wide-ranging discussion covering personal finance, risk-taking, work-life balance, and the role of luck in entrepreneurial success. They explore the mindsets and habits of the world's top investors, the emotional journey of founders, and the value of transparency around money - both in business partnerships and with one's family.
25 Years Of Founder WISDOM In 55 Minutes (ft. Jason Fried)
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Key Takeaways
- The world's best investors are obsessed with not losing money and looking for asymmetrical risk/reward opportunities where they can risk a little for potentially huge upside.
- Difficult but important decisions like leaving a successful career path often take years to finally act on, with a combination of relief and terror felt when taking the leap into the unknown.
- Founders have more latitude to take risks than hired executives, as their role allows them to "inject risk" into the business in ways others cannot.
- Creating "useful" side projects that are fun and solve problems can be incredibly rewarding, even if they don't generate massive revenue.
- Transparency around money and finances, even with business partners, can build trust and alignment despite differing goals.
- Acknowledging the role of luck in one's success, rather than attributing it solely to hard work, is an important perspective to share with one's family.
Introduction
In this episode, Sam Parr and Jason Fried engage in a wide-ranging discussion covering personal finance, risk-taking, work-life balance, and the role of luck in entrepreneurial success. They explore the mindsets and habits of the world's top investors, the emotional journey of founders, and the value of transparency around money - both in business partnerships and with one's family.
Topics Discussed
Investing Mindsets (1:19)
- Sam posed a hypothetical "would you rather" scenario: Guaranteed 7.5% annual returns for life, or the ability to actively invest with potential for higher but more volatile returns.
- Jason chose the guaranteed returns, noting that the compounding effect would be incredible over time. He was surprised that 40% of Sam's followers chose the riskier active investing option.
- They discussed how the best investors are obsessed with not losing money, using asymmetrical risk/reward strategies where they risk little for potentially huge upside.
- The average person often overestimates their ability to beat the market, not accounting for the resources and advantages of professional investors.
Loosening the Grip (5:15)
- Jason shared a lesson he learned from playing the drums - that gripping the drumstick too tightly leads to fatigue and lack of finesse.
- He sees this same dynamic play out in business, where founders often grip too tightly to control every aspect of the company.
- Letting go and "loosening the grip" allows the organization to expand and thrive in ways the founder couldn't on their own.
- This is also true in parenting - being less controlling and allowing kids to find their own way.
The Pale Blue Dot (12:35)
- Jason referenced the famous passage from Carl Sagan's "Pale Blue Dot", which provides a cosmic perspective on the insignificance of human conflicts and arguments.
- This "overview effect" that astronauts experience can help mellow one's outlook and put things in perspective.
- Sam shared how this type of big-picture thinking has helped him stay calmer and less reactive, even during the COVID-19 pandemic when he initially thought life would never return to normal.
The Business World's Deserved Lessons (14:03)
- Jason questioned why the business world seems to be the default recipient of lessons and wisdom from other domains like the military or sports.
- He suggested the business world is insecure and willing to pay for advice, rather than truly deserving the "best" lessons.
- Sam countered that business, and particularly entrepreneurship, is a practical way to manifest dreams and create real-world impact, making it a worthy recipient of such insights.
The Founder's Role (24:47)
- Jason explained that as a founder, his job is to "inject risk" into the business in ways that hired executives cannot.
- Founders have more latitude to take risks and try new things, which can energize the organization in a way that maintaining the status quo cannot.
- For Jason's company, this has meant rapidly launching multiple new products and business models, even if it creates some internal tension and uncertainty.
Useful vs. Cool (29:36)
- Jason shared his belief that "cool wears off but useful never does" - the idea that creating something genuinely helpful and solving real problems is more rewarding than just chasing what's trendy.
- He described a side project he created called Sam's List, which reviews accountants, as incredibly fulfilling despite its modest scale.
- The joy comes from taking a silly idea and turning it into something useful that solves a problem for people, even if it doesn't generate massive revenue.
Business Partnerships (31:07)
- Sam shared how he and his business partner Joe have built a very harmonious relationship by having upfront conversations about their values, goals, and boundaries.
- They were transparent about their personal finances and aligned on key metrics, which has helped prevent conflicts and resentment.
- This level of openness and mutual understanding is in contrast to Jason's own business partnerships, which have been more siloed and less communicative about money.
Transparency Around Money (34:14)
- Sam grew up in a family that was open about finances, which he found helpful in understanding what was possible.
- Jason, on the other hand, had little visibility into his parents' financial situation, which left him unsure of their class status growing up.
- They discussed how this Midwestern cultural tendency to avoid discussing money can be both beneficial (instilling values like hard work) and detrimental (leaving people uninformed).
Navigating Wealth with Kids (37:28)
- Jason shared how his business partner David would intentionally drive flashy cars to work, challenging the Midwestern instinct to hide wealth.
- Jason initially felt uncomfortable with this, worried it would send the wrong message, but David argued there was no need to hide their success.
- They discussed the balance of being transparent about one's means with kids, without flaunting it in a way that could be seen as boastful.
The Role of Luck (43:39)
- Sam emphasized the importance of acknowledging the significant role of luck in one's success, rather than attributing it solely to hard work.
- He plans to be very transparent with his own children about the role luck played, so they don't feel a false sense of exceptionalism.
- Jason agreed, recounting a regretful moment early in his career when he dismissed the idea of luck, only to later realize how much it had shaped his path.
Staying Up vs. Staying Off (46:55)
- Jason cautioned against the "trap of must know now" - the pressure to constantly stay on top of the latest trends and technologies.
- He finds value in revisiting old podcasts and news from a year prior to see how much uncertainty and false certainty existed, tempering the need to be on the bleeding edge.
- Sam shared his own practice of reading historical biographies and cross-referencing them with newspaper archives to gain perspective on how predictions and perceptions change over time.
Conclusion
This wide-ranging conversation between Sam Parr and Jason Fried provides a wealth of insights on personal finance, risk-taking, work-life balance, and the role of luck in entrepreneurial success.
Key takeaways include the importance of not losing money as a guiding principle for investors, the emotional journey founders face in loosening their grip on the business, and the value of transparency around money - both in business partnerships and with one's family. They also discussed the founder's unique ability to "inject risk" into an organization, the rewards of creating "useful" side projects, and the humbling perspective that luck plays a far greater role in success than is often acknowledged.
Throughout the discussion, Sam and Jason demonstrated a thoughtful, nuanced approach to navigating the challenges and opportunities of building businesses and living fulfilling lives. Their willingness to be vulnerable and share personal experiences makes this an engaging and insightful listen for entrepreneurs, investors, and anyone seeking to better understand the human side of high-stakes endeavors.