Please enjoy this transcript of my interview with Graham Duncan (@GrahamDuncanNYC), the co-founder of East Rock Capital, a multi-family office investment firm that manages $2 billion for a small number of families and their charitable foundations. Graham graduated from Yale with a B.A. in ethics, politics, and economics. He is a member of the Council on Foreign Relations and serves as co-chair of the SOHN Conference Foundation, which funds pediatric cancer research. Transcripts may contain a few typos—with some episodes lasting 2+ hours, it’s difficult to catch some minor errors. Enjoy!
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#362: Graham Duncan — Talent Is The Best Asset Class
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Tim Ferriss: Hello, boys and girls, ladies and germs. This is Tim Ferriss. And welcome to another episode of The Tim Ferriss Show, where it is my job to deconstruct world-class performers of all different types, whether they come from military, entertainment, sports, business. It’s a pretty wide spectrum. And today, my guest is Graham Duncan. You can find him at grahamduncan.blog, eastrockcap.com, and @GrahamDuncanNYC on Twitter. Graham is the co-founder of East Rock Capital, an investment firm that manages approximately $2 billion for a small number of families and their charitable foundations. Before starting East Rock 14 or so years ago, Graham worked at two other investment firms. He started his career by co-founding an independent Wall Street research firm. Graham graduated from Yale with a B.A. in ethics, politics, and economics.
That’s a lot of stuff. He is a member of the Council on Foreign Relations and serves as co-chair of the SOHN Conference Foundation, which funds pediatric cancer research. Josh Waitzkin, one of our very good mutual friends who will probably pop up here and there in this conversation – thought of most often as the basis for Searching for Bobby Fischer, although he would cringe to hear me limit it to that – calls Graham “the tip of the spear in the realms of talent tracking and judgment of human potential and high stakes mental arenas.” That is a very Josh sentence. And Graham, it is a real pleasure to be sitting here with you.
Graham Duncan: Thanks, man. Thanks for taking the time.
Tim Ferriss: And we’ve had many conversations. We haven’t caught up in a while. We’ve also had terrible food poisoning together, along with Josh. So I feel like we’ve seen each other in high stakes – maybe not mental – physical arenas. We, if I recall correctly, almost decapitated each other when learning to paddleboard with Josh at one point. And I am excited to chat for a lot of reasons. Number one, I always learn something when we sit down and talk.
And I don’t think of you first and foremost as an investor. You certainly do that very well. But I enjoy watching your thinking and listening to your thinking. So I think that for people who are in the audience and who might be wondering right off the bat, “How will this apply to me?” it is hopefully transferable to just about any domain. I think that clear thinking is really a lot of what we’ll be discussing. But for people who just heard this bio and are scratching their heads as to what you exactly do, how do you explain what you do?
Graham Duncan: Well, I try to find people who are better at doing a thing than I am at doing that thing. And I first came to this 20 years ago; I had just started a firm with a professor of mine at Yale, and we were running this independent research firm. And I’d hired a sales guy who – we’re two years in. And we’re in a group meeting. And he says to me at a certain point, “Graham, what the fuck do you do here?” And at that point, I had some real imposter syndrome going because I was hiring and firing 30 people much older, much more experienced than me. And so I sat there for 30 seconds because it’s like, “What the fuck do I do?” And I finally said to him, “Robert, when you first interviewed to come to our firm, you were applying to be an analyst, and I was interviewing you as an analyst. And I didn’t see your eyes light up when we talked about political analysis or economic analysis.
“But then you proceeded to stalk me for the following four weeks – you called me at home back then. You emailed me twice a day. And I had this moment of revelation: I was also interviewing salespeople. ‘Robert should be our salesperson.’ And you trusted me enough to come and try it. And now you’ve built our entire business. And I’m not a good analyst. I’m not a good salesperson.
“But I put you in that seat, and then we built this thing. I put you into this positive feedback loop that we are calling a business here. And that’s what I do.” And I feel like it’s – I wouldn’t pick that scale out of a lineup as my thing. It’s the cards I was dealt. It’s what I end up being compulsive about and interested in in this way. The world seems to like me doing it. But it’s an odd center of gravity. But today, I think about it as my mission in life is to get as many people as possible into positive feedback loops. And it’s a good skill to have because it’s right next to a weakness of mine, which is I’m kind of lazy.
Tim Ferriss: Maybe that’s why we get along so well.
Graham Duncan: So I like getting the design right up front so that I don’t have to – if I had to be talking to Robert once a week as a political analyst saying, “Look. Do this. Don’t do that,” that would have been – I don’t want to put something into somebody. I want to have them do the thing that they want to do anyway. And if you construct organizations and teams that way, you unlock a lot of stuff.
So today, I use that philosophy a lot because I act, in effect, as a general contractor for families to manage their wealth. In order to do that, my team and I meet over 1,000 teams a year to hire the best investment craftsmen of any given sub-strategy. And sometimes, those craftsmen, those investment managers who are trapped inside large organizations start their own firms on their own or with our help. And you unleash all this extra investment energy and genius that they weren’t accessing in their prior context. And we get to participate in that together with them. So it’s now been 20 years, but I feel like I’ve basically been playing different variations of the same game.
Tim Ferriss: And at that time, how old were you, roughly?
Graham Duncan: 24, call it.
Tim Ferriss: 24. So we’re going to talk, I’m sure, a lot about this. And I won’t make this just a list of Josh quotes, but I was texting with him. And he reiterated I think what you just said. And Josh, my apologies. I know we didn’t talk about me reading your texts upfront, but this is pretty safe. So “Core genius for Graham is talent hunting, finding funky A-plus –” so that funky word, at some point we’re going to talk about. “A-plus potential mental performers in the finance space.” And then he goes on. Now you have systems and frameworks that you use for this. At 24, though, I would be really curious to hear you try to describe what made you good at it then also if there’s anything that comes to mind. Are there things that you see that other people tend not to see? Or are there any types of questions that you ask yourself that even at that point, perhaps, you had picked up along the way? Is there anything that comes to mind?
Graham Duncan: Well, I think of it as having a certain taste in people. And I like taste because – and I think I had a certain taste back then. And it’s evolved, and I can articulate a little better than I could back then. But if you think of taste – I like taste over judgment because judgment implies there’s one answer, whereas taste is – you have a certain taste in podcast guests. There’s something similar to the group. And you could pick a Tim guest out of a lineup, in a way.
Tim Ferriss: Tall, dark, and handsome. Sorry.
Graham Duncan: Yeah. So taste. And so I’m trying to think. Back then, I think the imposter thing helped because I knew – I was trying to hire people who were better at doing a thing than I was at doing it. And I knew I couldn’t do it. And so I was forced to say, “Okay. What constitutes excellence in this thing?” And we had hired a bunch of – in that context, we’d hired a bunch of sales guys. And they actually didn’t like cold calling. And a lot of sales guys, understandably, don’t like the rejection of cold calling. And I’d found this one guy who, for whatever reason, thrives on it. A couple of years ago, I ran into somebody who was a prospective client of ours back then. And he said, “I still dream this guy Robert is trying to get me on the phone. And I wake up in cold sweats in the middle of the night.” We built our entire business on this guy. So I think it’s seeing – and I find myself curious about what makes people tick in this way that I don’t get tired of it.
Tim Ferriss: And how has that taste evolved to today? So if a component of that taste, or at least alerting your spider sense, is identifying certain outliers in preferences or behaviors back then, like Robert thriving on cold call rejection, what do your tastes look like today or more recently? Or what constitutes your taste when you are scouting for talent or evaluating talent in the world in which you now operate?
Graham Duncan: I read once that people are like musical instruments. And the range of notes they can play is dependent on the range of tensions that they’ve learned to hold. And I like that because it acknowledges that everybody – whatever they’re playing right now, there are actually other notes they can play in a different context. So as an example, the tension I’m focused on right now in the investment management world is I think there’s something really interesting about the tension between someone’s intensity and integrity. Or if you double-click on each of those, aggression and humility. And if you were to rank the – to try to use a concrete example, I’ve written an essay before about David Tepper. I don’t know David Tepper. He’s somewhat in the public domain. He’s on CNBC. He’s written some. And I think of David Tepper, in many ways, as the Platonic ideal of a good hedge fund manager and a good investor.
And one thing that he holds is – I think people who work for him – but I’ve interviewed people who worked for him. They experience him as that mix of super aggressive in taking a position in an equity or debt security from zero to 20 percent of the fund with no hesitation. If you were on the other side of a transaction with him, he’s not going to do something that you characterize – you would never say fraudulent. But he’s not going to be overly aggressive. He’s playing the game because he enjoys it. But he has an ethical core.
And I feel like that tension – at Goldman Sachs, they have this term, “Is someone commercial?” And I think of that – I love that word. And I think of commercial as people who give off this vibe of, “I’m going to create more value than I capture here,” versus somebody who’s more transactional is trying to capture all of the value. And people who are commercial, who balance that tension of aggression and integrity or aggression and humility, they tend to clump together. They like doing business with each other. And so you hit these pockets of people with that.
Tim Ferriss: How do you test for something like that or stress test it, in the sense that I would imagine many of the people, if not all of the people who make it to the point that they’re interacting with you or your team have already cleared a lot of hurdles? They’ve already checked a lot of boxes. And many of them will be good at selling themselves. And no one is going to volunteer that they lack integrity. “Well, there’s one thing. I’m very, very, very skilled and intelligent, deceptive artist!” Or whatever. So how do you try to evaluate that?
Graham Duncan: Well, one evolution of my process has been I just treat my interview as one perspective. And then people think of references as a thing you do after the fact. To me, it’s the whole thing, references and getting the sense of how someone’s interacting in a repeat iteration game in this thing we call financial markets. To me, there’s a – people generate trust. And it’s this intangible asset that’s around them. And the trust sits in the heads of everybody they’ve interacted with over time. And my job is to see how everybody else they’ve interacted with, their employees, their former bosses, their peers end up relating to them because of the body of work they’ve had in the past.
And so we did that dinner with Chris Fussell that time. I think Fussell and Stan McChrystal’s language around trying to assess someone’s credibility, and then based on that assessment, how much decision space to give them – to me, that’s so beautiful. And that’s exactly how I think about what I do. And they have this formula: credibility equals proven competence plus relationships plus integrity. And so what I’m trying to do when I’m trying to understand, for instance, someone’s integrity is understand how they behaved in prior moments of stress. So 2008 was an amazing – for anybody that’s still investing who was around in 2008, it’s a great moment to check in on how they behaved during that period because that was like an earthquake going off. And it tested every single possible human relationship. It tested when people were partners in investing, and they’re both portfolio managers.
A lot of people got divorced after that. Limited partners – the people who invest in hedge funds – and the general partners. It tested those relationships. It tested people’s relationships with the banks. So if they’ve been around a while, to me, an interesting question is, “What happened in ’08?” And I’m sure we’ll have additional crises soon that will, again, enable us to separate those who behave well from those who behave badly in those periods of stress. So it’s super reference focused. And then I have a series of questions I ask people that I feel like has high signal value. But again, I try to have a lot of humility and a light grip on my ability in a one-hour meeting to figure that out.
Tim Ferriss: What are some of the high-signal questions that you’ve filtered through over time and have found to be particularly useful? Do any come to mind? What types of questions come to mind?
Graham Duncan: Well, the main one that I think applies would be looking for an OB/GYN for your wife to have a kid or anything is you ask somebody, “If you were hiring somebody to do this, what criteria would you use to hire them?” because what it captures is their definition of success. And it also captures some nuance that you wouldn’t have even known to ask about. So when my wife and I were looking for an OB/GYN, this was my question. And one guy said, “Well, what you’re maximizing for is the downside. And if you have some sort of – if the baby is in distress, you need a good NICU. So my primary criteria –”
Tim Ferriss: Which is natal –
Graham Duncan: Intensive care unit. And the best NICUs are usually attached to teaching hospitals like Mount Sinai. So I would look for affiliation of that doctor with a good NICU. And then I would also – his second criteria was, “I would ask the nurses, because the nurses know who freaks out during tricky situations and who’s got ice in their veins and who makes good decisions, who treats people well in those settings.” And the good nurses want to work for the best doctors in that hospital setting. And I actually have this thought that the equivalent in financial markets is the traders. The traders are on the receiving end of a portfolio manager’s decisions. And they often have a very strong sense of who the good investors are. David Tepper’s trader I bet might – and again, I don’t know this.
But my hypothesis would be they’re in awe of David Tepper because they’re on the receiving end of when he’s buying when everybody else is freaking out. Now you have to be careful. And one of the arts of references I think is controlling for the context and the perspective of the reference giver. Traders like traders. So somebody who doesn’t trade a lot, they may not think as highly of this portfolio manager who’s really more of a buy and hold person and doesn’t give them any business and they think is kind of lazy. Well, okay. That could be true. But it also could be just they were on a super concentrated portfolio. They only buy one thing a year. So I really like, “What criteria would you use?” And the other great thing about the question is it improves your own criteria for the next interview.
Tim Ferriss: Yeah. That’s really, really fascinating. I was just chatting with a friend of mine, Tobi, who’s the CEO of Shopify. And the way he learned the business side is he went to Silicon Valley and met with – let’s just call it a dozen venture capitalists as an engineer. And each meeting, he would pick up new questions, new terminology, be able to answer one more question. And it just improved his ability to vet not only venture capitalists but also to learn the lingo and the terminology. Question related to the references themselves.
So, most folks out there, if they think of references, whether they have provided references, been references, or they’re trying to hire is you ask the person you are interviewing or will be interviewing for their references. They give references who they expect to give praise. And then you get in contact with those people. So there’s a piece of which questions to ask. And then there’s the piece – there are many others – of which people to talk to. What does your process look like for determining who to talk to as references?
Graham Duncan: So I actually think the candidate giving you references is – obviously, you want to find off-list references if you can. And one advantage of interviewing a ton of people in a given thing is, often you know people that they’ve worked with in other contexts that they didn’t give. But I actually find on-list references bizarrely high signal value because what happens is after 10 minutes on a reference, people run out of – nobody wants to lie.
Tim Ferriss: They run out of their script?
Graham Duncan: They run out of their script. And so one of my closest friendships in the business was when somebody who runs another family office was calling me on a reference on somebody. And my job – I went into that call thinking, “Okay. I like this guy. We don’t have money with him. I respect him. He stuck me on his reference list. Okay.” And the guy sat on me for an hour and would not allow me to basically give a positive endorsement without specifics, which I think of it as a net promoter score. So either at the beginning or the end of a reference, I’ll say, “Okay. What I hear you saying is you’re giving this guy a seven on the net promoter score. Is that right? Did I hear that correctly?” Or I’ll just ask it directly. “On one to 10, what’s your level of endorsement of this person?” If I was calling you on a reference on – let’s make up a fictional assistant that worked for you four years ago.
And I was debating hiring them. Well, first, we know each other. So I would do it in person. I would track you down and say, “Tim, so what’s the skinny?” But let’s say we don’t know each other that well, and I’m calling you on a phone. I would be trying to understand, “Okay. Are you still in touch with that assistant? What’s the social dynamic?” Or to make it safe for you, “Look, I’m calling 20 people. I am not passing any of that information back to the candidate unless you ask me to.” So you need to make it safe for them. But if at the end, I’ve got, in effect, an aggregate number of net promoter scores on a different person, you start to see patterns after reference number four. And then you know you can stop because you’re hearing the same thing over and over again.
Tim Ferriss: Yeah. I’m very primitive. Of course, you’ve done infinitely more hiring. But I remember this bit of advice that I was given by – I’m thinking about who it was. I’m blanking on who exactly it was. Kyle Maynard is who it was who’s a quadruple congenital amputee who’s climbed Kilimanjaro and was a star wrestler. Fascinating guy. He learned it I think from – it was from a very successful CEO. And it was, “Rank X – could be anything – from one to 10. But you can’t use a seven.” And I have used that in restaurants. I have used that for so many things. And it removes that safe, mild endorsement. When you are then speaking to these references who have been provided, are there any other approaches you use to ferret out weaknesses?
Graham Duncan: Well, one stance that I think is really important is that I’m not trying to catch somebody in any way. I’m just curious. And the references pick up on this vibe. And I want to help the candidate construct the best environment for them because there’s no “gotcha” to it. We’re all crazy. We all have lots of weaknesses. And so one thing I see other people in equivalent roles to me do is they have this “gotcha” –
Tim Ferriss: What was that?
Graham Duncan: One thing that I see other people who are in equivalent roles to me do is they have this “gotcha” thing, which I don’t agree with. So all I’m trying to do is help the person get in the best possible context for them. So I feel like that stance elicits a lot more because then you’re on the same side, particularly if you’re talking to a former boss. So I guess that’s how I think about it.
Tim Ferriss: Yeah. It’s the mindset with which you go into it and the tone that you transmit.
Graham Duncan: Yeah. One question I like to ask is, “If I were going to hire a partner for this person to complement their strengths and weaknesses, what would that person be good at?” because then, it’s like – and you gotta be careful. In the investment context, you want it to be another investing partner because – and then I actually use that. And then I can help – the extent it’s applicable, help that person try to make sure – because one misconception I feel like people have sometimes is that there are products. And in my opinion, in investment management, there are no products. There are only humans. And that’s why I’m so focused on the people side of it. And the only product is the mindset of the individual and the decisions they’re going to make prospectively from here.
So, if you were invested in a fund at Fidelity, and the portfolio manager leaves and there’s a new portfolio manager, from my perspective, that’s a completely new decision, whereas some people have a mentality of, “Oh, I’m looking to put out –” it starts with I think a dangerous mindset which is, “I need to put out some assets. And to do that, I’m going to invest in some products.” I think you don’t want to have the mindset of, “I need to put out assets.” You always want to feel comfortable holding cash. And there should be no pressure to put money to work. And then secondarily, to the extent you’re going – and in my world, we’re pretty indifferent on do we have people in-house or out in the field. Most of the time, external teams are the most commercial people want to run their own firms. And so we have a bias. We over time have constructed what I think of a team of teams. But it’s not a product of products. There is no –
Tim Ferriss: Yeah. That makes a lot of sense to me. And this may or may not be – I want to bring up a term that Josh suggested bringing up. And this may not be the right place. But that’s okay because this podcast is always all over the place, like Memento. He said, “Ask Graham about wild gardening.” Now, I’m going to laugh if this is actually, literally wild gardening, and it’s just a complete non-sequitur. But he put it in quotation marks.
Graham Duncan: So he calls me The Wild Gardener because I don’t like to force it. So there’s a great piece in The Atlantic Monthly from years ago where someone looking at the temperament of children divided them into orchids and dandelions. And it’s a little bit similar to the Susan Cain high sensitivity – there’s another thinker named Elaine Aron who has this concept of highly sensitive children, HSCs. And the idea is that if you get – orchids can be so beautiful. But they need just the right context. They need the right light, temperature.
And dandelions are just lower maintenance but maybe have less potenti – that’s not the right language. But the dandelions, you don’t have to worry about the context as much. And so I think of partly, what I do, back to the system design, is, “Okay. Let’s get everybody into a positive feedback loop doing what they’re actually – compulsive about – what they actually can have a chance of being world-class at.” And I don’t like trying to stick a dandelion where it doesn’t want to be or an orchid where it doesn’t want to be. And I –
Tim Ferriss: So we’re talking about – we’re covering a lot that relates to talent selection and asking the right questions. We’re definitely going to spend some time on questions that you ask yourself as well, since that’s, in large part, what thinking is day to day. But I want to talk a bit about ambiguity, or cases that are not exceptionally clear. So if you talk to 20 references, and all 20 come back and say, “This person’s fantastic. Let me list the ways,” then that’s one thing. Or if they’re all negative. But no doubt you’ve had instances where you get negative feedback, or perhaps you have a lot of positive, but then one on a scale of one to 10 in severity is like a nine or 10 in severity, negative, how do you handle cases like that? How do you think through something that is not, at least at first glance, extremely obvious? Because a lot of life is like this. Or if there are any cases, any examples, not naming names but –
Graham Duncan: Yeah. I think it’s a matter of holding those contradictory perspectives as long as you need to to make sense of them. And so for me, people, my wife, my business partner can experience me as indecisive at times because I’m so tolerant of holding the ambiguity on somebody being really good at something because everyone’s genius is right next to their dysfunction, I think. And so until you’re clear on it, it can feel – and sometimes, you just don’t get clear in which case, there’s no need to do anything. But one central strategy I have of dealing with that is just spending more time with them. We got to know each other well on these intense surfing trips where we almost drowned. I almost beheaded you. And then we got food poisoning. And I like, in general –
Tim Ferriss: Welcome to Club Paradise. Yeah.
Graham Duncan: I like getting out of the conference room and not being pitched something across the table. And I like creating other contexts to interact with people. And if there’s ambiguity or ambivalence, we’ll look at investment with them. If you look at something that’s live with somebody, you learn so much about how they’re actually underwriting the mental models they’re using.
Tim Ferriss: What do you mean by underwriting it in this case?
Graham Duncan: So underwriting is a term used in the context of making an investment decision and are first in the body of work that an individual or a deal team has done to get comfortable advocating for an investment at a particular price. And so people will say, “Based on my underwriting, returns are attractive relative to the risk, in this case.”
And by saying, “My underwriting,” they’re putting their personal reputation behind the projections, and they’re taking ownership of the outcome of that analysis. So if we were looking at a real estate investment in Washington, D.C. in a potential hotel, we would – rather than investing in a fund, we would – if we’re getting a new partner – spend a lot of time on that, literally looking at that hotel investment and understanding how the sponsor is looking at the investment. And in that way, you get to know, “Oh, this is what they’re really focused on. This is what their strengths are. And maybe we should keep an eye out for these weaknesses,” or, “If we make the investment in a fund of theirs, this is something we keep an eye on.”
Tim Ferriss: And just for people who may not have put the pieces together – I want you to correct me here. But in effect, you have as clients your limited partners’ family offices. So these are wealthy families who want your help in then choosing different investment teams. And you are, in a way, I suppose, the team coach who is selecting the players.
Graham Duncan: Yeah. So we work with a handful of families who get to know us well and trust us to be their outsourced chief investment officer. They basically give us full investment discretion over their wealth outside of their personal property. And we manage that as one pool for them and diversify it across asset class – so we invest that pool in, say, a commercial real estate project in Seattle that we make with our real estate partners that are local there or in hedge fund partnerships run by the best teams we can find all over the world.
So if somebody’s got a fund, we’ll look at their fund. If they have an SPV, a special purpose vehicle where they’re investing in a publicly traded security or a private investment, we’ll look at that. If they want to start a fund, we’ll help them start a fund. If they don’t need our capital in a seed context but they just are looking for arms’ length normal, limited partners, we’ll do that. So we try to be as opportunistic and open-minded as possible about it.
Tim Ferriss: Are there any other patterns that you’ve spotted in the talent you end up selecting that does well? And the reason I ask is that from what I’ve observed – and this is not my world. But just hanging out on the sidelines, every once in a while, glancing over at my perception of what you do is that you’re picking folks, meaning investors, who are – they’re not Tepper, necessarily. They are rookie MVPs. Or maybe that’s not the right description. But you may not have a ton of data on these folks. Feel free to fact-correct any of that. So are there any other characteristics that seem to pop up more often than not in the people who end up doing well that you select?
Graham Duncan: Yeah. I’d say in addition to that aggression/humility tension, a second one I think about is originality and triage are these two – so we notice that the people who do best tend to have lots of ideas. There’s an academic named Dean Simonton who studied genius across field. And he observed that whether it was Bach or any given scientist that the sheer number of compositions that Bach had were 100 times more than average composers. And some of his lousy pieces of music were inferior to his peers at the time. But then he also ended up with some great pieces. So there’s something around just sheer quantity of ideas and original thinking that characterizes a lot of them.
Specifically, you’ll notice that in the language that people use. So I feel like in any field, I think, when you start to achieve mastery, often, people start creating their own language to capture the nuance that they’re seeing that makes them good at their thing. In investment management, Buffett is the Shakespeare of the industry. And everybody is living in his language and in his mental models to the point where it’s limiting. So I feel like a 25-year-old sometimes will be saying, “I’m sitting on cash just waiting for the fat pitch.” And I can’t tell whether he knows he’s quoting Buffett or not. And even if he’s doing it consciously, he’s living in this construct, which is a super useful construct. But if he proceeds to become the Tepper of his generation, he will generate his own language over the course of the subsequent 20 years.
And so when people use a lot of jargon and clichés and language that, at times, doesn’t feel like their own, to me, that’s a sign that maybe they’re a little bit earlier, and they could use another stage of apprenticeship. Or just that we would probably wait until a later stage. And then that second component, when people have lots of ideas, they’re usually not that good at killing them. So it’s a tension with this triage mentality of, “Look, I’m here to make money. I’m going to force rank – somebody’s going to die here. And I’m going to choose these – I’m going to save these four people and let this guy die.” It’s that triage, high-situational awareness. “Okay. I’m making life trade-offs here.” I think that’s a quality that really good portfolio managers have where they can force rank their portfolio, and they can kill their own ideas. So you see that often. And then just back to aggressiveness.
I was interviewing a guy. And he was talking about when he’s looking for – one question I like to ask people is, “If you were hiring an analyst, what criteria are you looking for in the analyst?” And people who’ve been managing money and managing people before begin to look for things in their analysts that make those analysts most valuable to them. And so there’s often signal in the way they answer that. And this guy said, “What I’m looking for is a trace of fear in myself that this guy is coming for me, that he will replace me.” And I think what he’s capturing is that level of intensity, that obsessiveness that you see in a minority, probably, in any field because of just how – they’ve found the game they want to play, and they bring an intensity and an obsessiveness to it that, over time, they’re just working so much harder. It’s like Wayne Gretzky finding hockey at age five.
He’s obsessed. And he’s just going over and over and over again. And there are people in the finance industry who are like that. They’re just obsessed with investing in this really distinctive way. Warren Buffett is, from a young age, obsessed. John Arnold, obsessed.
Tim Ferriss: You mentioned something I want to come back to for a second, which I may admit – I don’t think I’ll misrepresent it. I think I’ll probably get it. But you mentioned Buffett and the terminology and the language, the phrasing that he originates then popularizes and how people can parrot that, leading you to wonder whether they really understand what they’re speaking about or simply repeating something from someone who’s well regarded. And this makes me think of Richard Feynman and how his dad used to tell him that there’s a big difference – and I’m paraphrasing here – but between knowing the label, the word, or the phrase, and understanding what that label is intended to represent. And you can learn so much about not only others but yourself and your own thinking by looking at the language that you use.
And one of the questions I’ve wanted to ask you because it came up when you were in Tribe of Mentors was how you improve your own thinking. And something that stuck out to me – and I’m going to track it down here. This was in response to, “What is one of the best or the most worthwhile investments you’ve ever made?” And I’ll skip around here.
But the first line was, “I invested disproportionate amount of my income in paying for an ever-growing collection of trainers and coaches.” And you mention a handful. And one of them you said is “the most gifted listener I’ve ever encountered. She surfaces my hidden assumptions, the ones that hold me rather than me holding them, and teaches me to ask better and better questions.” How does – whether it’s this person specifically or others – help you to surface your hidden assumptions? This strikes me as so, so key to just about everything. And investing just happens to magnify the consequences in a very often obvious way of assumptions and faulty assumptions. But how would a coach help you to surface your hidden assumptions? Or how might they?
Graham Duncan: Well, this woman, Carolyn Coughlin, in particular, is within this Bob Kegan school of – he’s a professor at Harvard. And he has a theory about adult development, which is that the process of moving to adulthood is one of increasing your mental complexity and increasing the number of things that you used to be subject to, assumptions you had you couldn’t see, and making them object over time. So an example for many people would be if they grew up in a religious context, are they actively choosing their religious beliefs?
Or did they arrive at them because their parents and community – everyone was swimming in those beliefs together? And so what I feel like a really good coach can do is by listening to the way I’m making sense of something, can observe, “Oh, you’re actually assuming X. Your grip –” I think of it as grip. “Your grip on certain things is really tight.” And if a coach can find what you’re gripping really tightly, and you’re actually not – you can’t articulate the opposite of this belief you have, that might be a sign that you have identity or ego caught up in that thing.
Tim Ferriss: Can you think of an example?
Graham Duncan: So one assumption my business partner pointed out to me recently that I seem to have that I might be holding a little bit strongly is what he was calling Futurism, that I’m ready for things to be disrupted and paranoid about disruption in this way that he observed – I’ve got a little bit too tight of a grip around things. So when we’re investing in a hotel where there might be risks around climate change, I’m extra focused on the climate change. Or if we’re investing in a value investor who’s often going long things that Silicon Valley’s trying to disrupt, my partner’s observation is I will be extra focused on risks around that. And I think he’s totally right. Once he said that, it clicked. And I realized, “Okay. Now that doesn’t mean I drop it. It just means when it comes up, it’s more object to me that –” so yeah. That’s –
Tim Ferriss: And in a case like that, would you practice articulating the opposite, as you mentioned earlier? And as my mind is digesting this right now, I’m thinking of – you have read so many books. It just boggles the mind. And so you may be familiar with – it wouldn’t surprise me if you’re familiar with Byron Katie. But she has something called The Work, which I think is – you have to be careful with using it as your only hammer, because then you just start looking for nails everywhere. But part of that practice is taking this belief that is causing you – and I’m not saying this is an example here – but causing you some amount of discomfort or stress or anxiety and then going through the exercise of stating the exact opposite. So “My dad should be –” this is not a real example. I’m making it up. But, “My dad should be more attentive to my mom.”
And then you state it in a number of different ways, like, “My dad should be less attentive to my mom.” “My mom should be more attentive to my dad,” etc. And you have to, as part of the exercise, look for data points or even the smallest shred of evidence that you could put down if you were trying to make those arguments. And it helps to disentangle emotion and detachment from your initial statement. When your partner brings to light something that you might be gripping tightly like this, what are the next steps after that? Or is just the pointing out enough? It’s like looking at an optical illusion, and you’re like, “Oh, you see how if you look at it this way, it’s actually an old woman’s face instead of an hourglass,” and you can never again look at that and not see the old woman’s face.
Graham Duncan: Yeah. The Byron Katie – I’ve been to multiple workshops of her. I think she’s amazing.
Tim Ferriss: I knew it.
Graham Duncan: So across the street here, there’s a salad place, sweetgreen. And I was in there maybe three months ago, listening to Byron Katie’s new book, A Mind at Home with Itself. And Byron Katie and her husband, Stephen Mitchell, walk into the restaurant, order salads, and then proceed to sit right next to me. And it was the most unbelievable – I took a picture because I thought I might be tripping.
Tim Ferriss: So then you looked at your computer later, and no one was there.
Graham Duncan: And I will tell you they proceeded to have the most mindful meal I think I may have ever witnessed. There are some gurus who, out of context, you think are not walking their talk. In this particular case, I can affirm that she is like her stage presence to – you’ve seen her on stage?
Tim Ferriss: Yeah.
Graham Duncan: All the time. And so I find her credibility on that extra high. I think her thing of, “What’s the belief? Is it true? What’s the opposite of that? Can you absolutely know it’s true? How do you feel when you think that thing?” – I think it’s –
Tim Ferriss: Yeah. “What would you be without this belief?”
Graham Duncan: “Who would you be without –” I think it’s so powerful.
Tim Ferriss: Sorry to interrupt. But one thing that really caught me because I spent a little bit of time with her a number of months ago, and I can confirm what you just said. She is exactly what you would expect and hope her to be based on the books. The metaphysics can get pretty mind-bendy if you go in that direction. But the framing of using the word – we were talking about labels – belief, like, “What would you be without this belief as opposed to thought?” is also really key. It’s something you take. It’s a statement you take to be true. And it’s just framing it that way puts it under a different lens.
Graham Duncan: So to your question, I think I may have a little bit of ego identity around being unconventional or being into technology disruption and not thinking that the status quo is going to continue. And so what my business partner is pointing out is just watch that. And now that we have it on the table, when we’re evaluating an investment, it’s, “Oh.” I don’t want to be self-conscious about bringing up the paranoia, because I think it’s a useful lens to have. But being aware that I’m just a tiny bit subject to that is really useful.
Tim Ferriss: And if you’re looking at a team, whether that’s within these offices – we’re sitting in your offices right now – or could be any team, really. But specifically – just to keep us in your power zone – investing, when do you choose to – let me think about how to best phrase this – teach each individual person to offset biases like this versus hiring another person to provide a counterpoint? And the reason I ask is – and I’m getting way above my paygrade here.
But if you look at Buffett and Munger, and Buffett’s searching for bargains and wants to buy at a discount, and then Munger is – I’m going to get slaughtered on the internet, I’m sure – but is teaching him over time that there are cases where you can buy at market value or a fair price if the growth trajectory is really high. And they seem to complement each other very, very well. How do you think about each person developing the counterpoint or ability to look at the opposite versus hiring to end up at that optimal mixture?
Graham Duncan: Yeah. It’s back to grip. So if I’m evaluating a team, I’m trying to figure out – so sometimes I’ll hook up someone who is long Tesla with someone who is short Tesla. And when you’re witnessing that exchange, you can see whether the person who’s long Tesla and the person who’s short Tesla – are they actively seeking disconfirming evidence? Or is it an ideological thing? And Tesla’s a little bit of an extreme example because it’s very ideological on both sides. It’s not really a great example for that reason.
But you can see it because it’s more extreme. But right now, on Twitter, the shorts and Musk and the people who are long, they’re going back and forth. The vast majority of them are not actually looking to hold the other person’s perspective. In a team context, you can witness whether there is somebody who’s already there. In the hedge fund industry and the private equity industry, what’s cool is that the boundary of the firm is pretty fluid. So sometimes, a portfolio manager of one firm will have a close relationship with one to five other portfolio managers.
Tim Ferriss: Can you define here, just for folks – so PM, portfolio manager. Who is that person?
Graham Duncan: Portfolio manager. That’s the person who’s running the investment firm and who’s making the investment decisions and sizing the investments in that portfolio. It’s the main role.
Tim Ferriss: And inside a large firm, you might have multiple PMs, depending on –
Graham Duncan: Yes. I’m using it in – that’s a good catch. I meant more CIO. But if you had a –
Tim Ferriss: Chief investment officer.
Graham Duncan: Chief investment officer. Exactly. But a portfolio manager within a large shop, like Citadel, will have external relationships sometimes. And sometimes, those buy-side relationships will be testing each other’s thinking. And the equivalent of that Buffett-Munger thing often exists across firm, is my – so they don’t have to be within the boundary of the firm.
Tim Ferriss: So the looking for disconfirming evidence I want to stick with for a second. So this is something you see certainly in any good scientist. They’re not setting out to prove X. They are coming up with a hypothesis. And then hopefully, in as unbiased and objective a way possible – arguably not possible to be fully, fully objective – trying to then assess and actively look for disconfirming evidence, if it exists or if they can isolate it. How do you train – how could one train oneself to get better at doing that?
And it could be as seemingly indirect as you like. It would seem like one step would be developing what we talked about earlier, this ability to take whatever assumption or bias you have and then view it as an object, so that you’re aware of it. And some meditation can help with that. Doing something like Byron Katie can help with that. Are there other things, whether they’re precursors to looking for disconfirming evidence or that have it itself that help to cultivate?
Graham Duncan: Well, I think an underlying paranoia that you’re missing something is really useful. And the best portfolio managers have that. And maybe you dial that up by regularly reviewing all the mistakes you’ve made and thinking, “Okay. Some percentage of the time, I see things clearly. And some percentage of the time, I miss it.” One thing about financial markets in the publicly traded side is your hit rate is – a really good portfolio manager’s hit rate is 65 percent. That’s off the charts. And 55 percent will do just fine in a lot of cases, depending, particularly, on their slugging percentage, what percentage of – how do they size the winners versus the losers? You want to size the winners obviously bigger than the losers.
So, there’s something around how do you maintain paranoia and humility? I think one tricky thing in the hedge fund space is being on the record in any way in the form of writing letters or being on CNBC or being in the public domain, probably on the margin, makes it harder to drop it like a hot potato and go short. And to me, the most skilled portfolio managers have an identity not as, “I am smart, and therefore, I make money,” or, “I am good at financial stocks.” But the meta-identity is, “I’m a moneymaker. And if that involves right now – if in this era, in this moment in history, that’s going long Tesla, I’ll go long Tesla. If it’ll go short Tesla, I’ll go short Tesla.” But there’s no baggage – I remember walking into a guy who we have a ton of money with who I really, really respect. And he was short SolarCity.
And it was on the morning that Musk announced that Tesla was buying SolarCity. So it was a very painful morning for people who were short this stock. And I expected this guy to be moping around and super pissed at Musk. And he was laughing. He was enjoying the audacity that Mu – “He feels like he’s in this game. And I didn’t even – I knew it was a possibility. I didn’t think he was going to have the chutzpah to do that.” That mentality, that humor, that lightness, that, “Oh, got this one wrong. Onto the next one –” if that particular portfolio manager ever wrote about something in a letter – he doesn’t happen to. But if he did, I would have no qualms that the following month, he could easily be short the position he just – and so one nice thing about financial markets is that long/short thing, the ability to make money by going up and make money by going down.
Tim Ferriss: And change your position. This reminds me of something Josh decided some time ago which was that he wouldn’t – maybe this has changed, but I doubt it has changed given his current circumstances, which we won’t get into. But very unlikely. He’s giving many keynotes right now. He stopped giving keynotes because he felt like it would entrench his thinking and calcify his positions because he would be repeating these statements and concepts that he would then be less likely subconsciously or consciously to modify. This is something I ask everyone. And you’ve heard this before. But are there any particular books that you have gifted the most to other people? They don’t have to relate to what we’ve been discussing at all. But you are so widely read. Do any stand out as books that you’ve gifted or recommended often to other people?
Graham Duncan: Yeah. So in financial markets, I really like this somewhat obscure book called The Aspirational Investor by this guy, Ashvin Chhabra, who runs Jim Simons’ family office. Jim Simons started Renaissance Technologies, which is the dominant quant fund.
Tim Ferriss: Amazing story. We’re not going to get into it. But Renaissance is really fascinating. So please continue.
Graham Duncan: And one thing I like about Renaissance and Jim Simons, he has this line in a New Yorker profile of him that he thinks what he has is really good taste in interesting problems. And he uses the word taste. And it’s a similar – and this guy runs his family office. Used to run the endowment at the Institute for Advanced Study. And in the book, he identifies what he sees as the flaws in modern portfolio theory, which have totally dominated prevailing beliefs about investing for decades. And Ashvin suggested a totally different approach to portfolio construction based on how people actually behave and what they actually care about.
And so that’s a book I give out a lot. On the culture side, of somebody starting a firm – I’m looking over your shoulder because I’ve got a bunch of them on the bookshelf here. Tribal Leadership by Dave Logan. Dave Logan has looked at thousands of organizations and puts them into categories. And Phil Jackson, the former coach of the Chicago Bulls has observed that that framework that Logan discusses in Tribal Leadership is the best framework for understanding world-class teams that he’s come across. We can go into it if it’s of interest. Culture Code by Daniel Coyle I give people.
Tim Ferriss: What do you find of value in that book? This book has come up a lot on the podcast. I still have not read it. It’s come up in many different contexts. What is that book about?
Graham Duncan: Which? Culture Code?
Tim Ferriss: Sorry. The last one. Yeah. Culture Code.
Graham Duncan: Culture Code. He’s looking at a bunch of different cultures. Pixar, Navy SEALs. He’s got three others or something. And he’s looking for patterns among what makes people disproportionately effective as a culture. And I think he captures some of the nuance that if you’re trying to set up teams, it exposes you to that. He’d be a good guest on the podcast.
Tim Ferriss: Another book on my homework list. Check.
Graham Duncan: I also like The Tools. I give that out sometimes. That’s by Phil Stutz and Barry Michels. Have you ever heard of them?
Tim Ferriss: I have. Are they screenwriters? Worked in entertainment? Am I –
Graham Duncan: Yeah. They’re psychologists. And they’re in Hollywood. And they treat a lot of screenwriters. And New Yorker reporter Dana Goodyear did a profile of them that highlighted them. And then they wrote a book called The Tools. And they have a bunch of good hacks in there that I like.
Tim Ferriss: Some of the most – I won’t mention them by name. But a few of the documentary filmmakers who are on a very short list of documentary filmmakers who create massively commercially successful documentaries have recommended this book to me. That’s how it first came up on my radar.
Graham Duncan: Just as an example, it’s very apropos of Wim Hof. They have this whole analogy of saying this model of, “To get to what you want, you have to go through some pain –”
Tim Ferriss: So just pause. Could you describe for people who Wim Hof is if they haven’t – oh, boy. So Wim Hof first – I think his first podcast interview was on this podcast. Interesting guy. But who’s Wim Hof?
Graham Duncan: Wim Hof has developed a way of exposing himself to the cold and a methodology around exposing himself to the cold that he now teaches to millions of people thanks to you and Laird Hamilton and others highlighting him.
Tim Ferriss: The Iceman. Yes. A dubious honor, in some cases, because you do need to watch your fingers and toes. But he has a number of training approaches – although one sometimes wonders how much of what he can do is attribute versus training – but for cold exposure and also for breath holding. I don’t want to take us off the rails. But quick note on breath holding. Our mutual friend Josh almost died from a shallow water blackout in a pool here doing breath hold training. Never do it in water. There’s really no good reason.
Graham Duncan: No. So these guys have this metaphor of – they’re basically coaching you on your self-talk. And they say you should rub your hands together and say, “Bring it on,” when you’re anticipating doing something that is going to be painful. And they use the metaphor of going into the cold water at the beach and that regular embracing of discomfort is a skill that Waitzkin is also into and a theme of learning to – Waitzkin calls it the other side of pain.
But it’s getting used to exposing yourself to pain on a regular basis to a point where you don’t bounce off of it. Stutz and Michels observe that in their work with producers, agents, screenwriters, and etc., in Hollywood, that people were avoiding doing the thing they needed to do. They were bouncing off of it. And so if you can create a skill and a mechanism to make yourself go into it and get in that habit – and they’ve got six of them. And so I do this with my kids. We’ll literally rub our hands together and be thinking, “Okay. Bring it on,” to X.
Tim Ferriss: So I wonder if Josh got this from you. It wouldn’t surprise me if you guys independently arrived at this. But with his son, he would take cold showers. And he would always say, “It’s so good.” And he taught his son to say, “It’s so good,” with these short, freezing cold showers. And I don’t know. His son’s probably – I’m making this up – four years old at the time. And also taught his son to enjoy going out in what other people would consider bad weather, the rain storms and so on.
Graham Duncan: Yeah. So that’s an example of just making the rain object. So I think what Josh is observing is that for most people, they are subject to the weather. And they’re experiencing the weather as acting on them. And a hack around that is to say basically, “No. I enjoy the rain. I’m going to find what I enjoy in it and make it not the world happening to me but bringing the locus of control internally,” is what I think he’s doing there. And it’s a good parenting hack.
Tim Ferriss: Are there any other – well, if there are more books behind me, then feel free to mention them.
Graham Duncan: I like Finite and Infinite Games which has been going around a lot. His other book, Breakfast at the Victory –
Tim Ferriss: This is James Carse.
Graham Duncan: James Carse is really good. I had him to an event, a hedge fund retreat we had a couple years ago and spent some time with him. And I think he’s a very profound guy. He was observing that – I asked him how he came up with the concept of finite versus infinite games, and he said he was watching his kids play. And he noticed that there were some games like card games or baseball, etc., where their whole motivation and intent was to have the game end and get the trophy. And then he noticed there were other games they were playing where they were more fantasy games, where their goal was to recruit other people to play in that game with them, such as him, as their dad. And the goal was to keep the game going as long as possible. And I think it’s a super profound insight of the different ways you can relate to games in your life if you can see the game you’re playing.
And I asked him for examples of infinite games which he doesn’t give in the book. He mentioned, as a religious studies scholar, he thinks Buddhism and Judaism are two infinite games. I guess in religious studies, neither of those has a central authority or a central army. So it’s unlike Catholicism. They have difficulty making sense of why it persists over time. And so the framework of, “It’s an infinite game,” Buddhists and Jews are recruiting, to various degrees, people into their game and wanting to just keep playing the game for its own sake. I thought that was an interesting framing.
Tim Ferriss: How does the distinction of finite and infinite games apply to finance, if it does?
Graham Duncan: No. I think it does. A finite player who’s an investment manager would be, for instance, trying to hit a certain number of net worth and then leave the game. And that’s okay. But it makes it less valuable of a partner, from my perspective. And the incentives can get weird once they achieve that net worth if they actually stick to it. Now, the reality is most people move the bar. There was a study recently that everybody wants to have – all along the income spectrum, everybody wants to have two times where they are right now.
But I think there are – in general, I seek out partners who I experience as infinite players who are enjoying the game for its own sake and are going to keep playing and want to recruit other people. And that’s back to the distinction between being commercial and transactional. There’s something about the abundance mentality behind somebody who’s commercial who’s trying to create more value than they capture that’s leaving room for other people in this way.
Tim Ferriss: How do you test for that? Or how do you – it might be lower on the hierarchy of needs in assessing talent. But if it is something that you try to assess, how do you assess it?
Graham Duncan: The big one is time horizon. Somebody who’s thinking, “Okay. I found this thing that I love to do. I’m going to do it for the next 20 years. And I’m not going to make short-term accommodations to what’s going on in the market or with my limited partners or with my team –” I experience it around time horizon, mainly.
Tim Ferriss: How do you ask around the question? Especially after this podcast comes out, they’re going to be like, “Okay. Graham wants a long time horizon.”
Graham Duncan: You can see it just in the way they’re setting up their business. I don’t know. There are indications of just subtle, mental framings on – some people start investment firms because it’s the time of their career where their friends have started investment firms, they can no longer stay at the container they’re in, and they need to start – but it’s not an approach goal. It’s almost an avoidant goal. It’s like, “Okay. This is the time where I’m supposed to do this, so I’m going to do this,” versus a different set that are like, “Okay. I found the thing I love. I found the ball I like to hit. And I’m going to do it in this new form because –” and that implies, to me, a longer time horizon and – it’s a cliché – but a love of the game, itself. If you took away David Tepper’s money and made him start at scratch right now, I think he’d enjoy it. He’s just found the thing he loves.
And who else has long-term – Jocko Willink. I would invest in something Jocko did. I think he has that exact – in fact, he has a mantra, right? It is default aggressive. He has that mix of aggressive and integrity or aggressive and humility. And you think of it. He’s coming back from Iraq. He does SEAL Team Three. And then he’s entering your world. “So, there’s a podcast thing.” And then, “Oh, coaching thing.” And from afar – and I don’t know him – I just really admire the way he’s doing his own thing. He has that mix of time horizon, having an idea, executing on it.
Tim Ferriss: You guys should know each other. I’ll introduce you guys. You would get along. I want to stay with this for a little bit more in terms of sniffing around the direct question. And it seems perhaps much like your – “Tell me about what happened in 2008.” You can maybe also – along the lines of looking at how politicians have voted on things as opposed to asking them what they will do. It just made me think that looking at time horizon and intrinsic versus extrinsic motivations and so on, you could also assess kind of along the same lines that Y Combinator has, at least historically, by asking a lot of questions around what people do, what they’ve built in their spare time, and things like that, which will not be a direct answer to the question, but could act as indicators that point to a general pattern of behavior and motivations.
Graham Duncan: Yeah. I find Y Combinator’s and Paul Graham’s and Sam Altman’s stuff high signal from my perspective. So they have this question they ask themselves. “Can you say this person is an animal and not smile, based on the references, based on your interactions with them?” I think they’re keying in on the same quality of aggression or intensity that I am. Buffett uses passion and common sense. Ray Dalio uses assertiveness and open-mindedness. But I think everybody’s homing in on this paradoxical tension that I was talking about earlier. Sorry. Tell me the question again.
Tim Ferriss: Oh, yeah. No. I’m not even sure I asked a question. I think it was more of an observation. And I’m wondering if there are other ways to ask around the direct question of time horizon, which you already gave a few examples of. So I think it’s been answered. So let’s pick up on one thing you also mentioned in passing, which I’ll refresh for people listening by reading a quote. And I’m going to get this name wrong, so maybe you can – this is a quote that you introduced me to. And it was one of two candidates for answering the question what you would put on a gigantic billboard anywhere. And you could put anything on it, metaphorically speaking, a message to get out to millions and billions of people. So could you read this? Because it is stuck in my mind. And I’ve revisited it so many times. But I don’t know the proper pronunciation.
Graham Duncan: Kwame Appiah, who’s a philosopher at NYU – actually, I think he used to be at Princeton – has this quote. “It’s not how well you play the game. It’s deciding what game you want to play.”
Tim Ferriss: Right. And so you had mentioned the game, if you are aware that you’re playing the game. So what is the relevance or importance of this quote for you? And I’ll read it one more time. So “It’s not how well you play the game. It’s deciding what game you want to play.”
Graham Duncan: So I think that’s a way of moving your game from being subject to it to object. So an example would be – I think a huge number of people are obviously playing the game of making money. And they’re keeping score in terms of how much money they make or how much fame they accumulate or how much power they accumulate. And making that game object to them and then just making sure that you still want to play that game is I think what his quote is about. I ended up writing an essay where I tried to capture the various stages of mastery in investment management. It’s a blog that’s on my site.
And to me, that quote allows you to zoom out and say, “Okay. At different stages of my life, I’m going to play different games. What game am I playing right now? And can I see it?” And in effect, that’s what the coaches – and the coach I’ve used in the past – help you do is say, “Okay. You’re clearly optimizing right now for this. Just make sure that that’s the game you want to play.”
Tim Ferriss: So that the ladder you’re climbing is leaning against the right wall. Let’s just make sure –
Graham Duncan: Yeah. Just check in every once in a while. So you can zoo – and it allows you to – it’s like in a video game. What do you call that?
Tim Ferriss: Zoom out?
Graham Duncan: God’s eye view? Yeah. God’s eye view of the game. You’re like, “Okay. I’m down here in this corner of the mountain range. Do I still want to climb this mountain? Or is that a local maximum, and I should actually zoom out and head a completely different direction?”
Tim Ferriss: I think you’ve mentioned this to me before. It may even be in Tribe of Mentors. But it makes me think of the David Foster Wallace commencement speech which has been turned into books and is online in various forms. But here it is right here. “This is Water.” And the story of the two young fish together swimming by the old fish. And the old fish says in passing, “How’s the water, boys?” or something like that. And they’re like, “What’s water?”
Graham Duncan: Yeah. Exactly. I think that’s what he’s capturing so beautifully in that commencement speech is that we all have water. There are things that are water to us in every stage of our life. And the fun project is to try to see it and see it at each stage. And when I think of even your development over the course of the last several years on your podcast, you’re able to see – you’re wrestling with different stuff. You’re able to see your own quirks in a different way than you were five years ago. And I think that’s the process of adult development. That’s what Kegan is pointing to as these different stages.
Tim Ferriss: I do the podcast in part because it helps me to see the water. It forces me to try to ask questions or make statements and articulate things that would otherwise just bounce out of my head consciously or subconsciously. So the podcast is actually a tool for me to try to discern which water I happen to be swimming in which makes it a lot of fun.
Graham Duncan: The Greg McKeown – is that how you say his name?
Tim Ferriss: I said it that way for a long time. McKeown. Greg McKeown.
Graham Duncan: McKeown. Greg McKeown’s podcast recently on Essentialism, when he tells that story of how he felt a ton of pressure to go on the work event on the project with his consulting partners rather than be at the hospital with his wife as she was having a baby, that’s a developmental – in Kegan language, that’s a developmental moment when you’re saying, basically – he’s moving from socialized to self-authoring.
He’s saying basically, “No. My partners don’t define the scorecard here. The scorecard is my scorecard. I decide what’s a priority to me. And I’m going to remind myself of this the rest of my life by embarrassing myself by telling this story over and over again so that I don’t do it again.” I feel like Essentialism is basically – that’s what he’s capturing. And I think in a lot of different moments on your podcast, people are wrestling with what can they see at that moment? What did they used to not be able to see? It’s kind of beautiful. It’s the unfolding that we’re all doing.
Tim Ferriss: And you’ve had an opportunity to observe dozens, hundreds, thousands of careers or at least examine, probably, thousands of careers. How do you think about careers or career advice? I know that we’ve had some exchanges using the metaphor of the river, which might be a good place to start. And then I have some other questions related to that. But maybe we could begin with that.
Graham Duncan: Yeah. I like the image of a river with two banks. One side is chaos, and the other side is order. It’s something Dan Siegel, who’s a neuroscientist, came up with to try to describe what mental health is because he argued that the bank of chaos is schizophrenia, and the bank of rigidity is OCD, and that you could basically put every mental illness on one bank or another and that healthy integration is swimming in the middle of the river in between those two. And I was thinking about how careers are like that.
But you start off along the rigidity bank, apprenticing for somebody. And you’re learning the jargon of that industry. And you’re trying to figure out how people define reality. But you’re in somebody else’s definition of reality. You’re refining reality. And you’re learning to be able to see, whereas the other bank, the chaos bank, is more asserting reality. That’s where people who are swimming right next to that bank are just making stuff up on this mass – I think of Musk as being right along that bank. And if Tesla goes bankrupt, that will mean he lost his feedback with reality and stepped onto the chaos bank. And if he pulls it off, he was swimming right next to it. Steve Jobs, the same way.
Tim Ferriss: Just threading the needle.
Graham Duncan: Right. And you see it in poets. You see it in writers. People who are right next to that bank are super original. They’re coming up with new stuff. We live in their paradigms to some degree. But you’re right on the – if you lose the feedback loop with the way the rest of the world is experiencing reality, all of the sudden, you can seem crazy. And the danger – from a career perspective – of starting your own thing a lot of the times is a project of asserting reality. And if you do it too early, it can be very disorienting. And so you want to just swim back and forth. It’s not to discourage people from starting their own things at a very young age. But just be aware that you’re going to – that’s the project. And you might want to come back and refine reality for a little bit and then go – just see it as fluid.
Tim Ferriss: Right. And it makes me think of – and I’m not saying it’s a direct mapping. But as Pablo Picasso said, “Learn the rules as an amateur so you can break the rules as a professional.” Something along those lines. And you mentioned this bank of chaos and how those who can swim right alongside it can harness this paradigm-shifting originality. But as you’ve also pointed out, that same originality can have unintended consequences if they flop onto the bank, like Steve Jobs and the magical thinking around –
Graham Duncan: Around his illness.
Tim Ferriss: – his illness. If one wants to be top one percent in a given field, just arbitrarily, to pull a number out of my ass, does that mean that they need to swim really, really closely alongside one bank or the other? And is that a mistake in thinking? Or be perceived as being a top performer. Do they swim in the middle? Or do they oscillate between the two? Are there different breeds, just in your experience?
Graham Duncan: I think to be a top one percent – depends maybe on the field.
Tim Ferriss: Let’s say your world.
Graham Duncan: Yeah. I think within financial markets, you need a continual level of innovation and adaptability to stay ahead because the games that were working five years ago no longer work. So for a while, there were a lot of event-driven strategies where people were investing in mergers and acquisitions and making a certain return percentage around that. That game has mainly gone away. And so I would say I think of infinite players as playing with the boundaries of the game. So when Mike Burry came up with the idea of shorting subprime –
Tim Ferriss: Right. Now, Mike Burry, famously played by Christian Bale –
Graham Duncan: Christian Bale in The Big Short. That was an example of innovation and playing with the boundary of the game at that time because he wanted to express a view that would short the housing market. And he found he had no – he didn’t want to short stocks. He wanted to get more leverage on it. And he came up with that. And then the banks offered that to everybody else. And everybody else ended up – everybody else who came into the trade ended up following the trail that he had blazed on that, from my perspective.
There may be other perspectives on that. But that’s my perspective. As Christian Bale portrayed him, he was wrestling with his sanity at various points, having that trade on. At various points, the fund was down a lot. His partners were abandoning him. So I do think there’s something around pushing the edge of your field because people are going to catch up with you that is required. I don’t know that – I’m trying to think of other examples outside of financial markets of being top one percent of something. But I –
Tim Ferriss: It’s less objective. But if we’re looking at successful authors, I think another example that I’ve seen you mention is Pirsig. He wrote Zen and the Art of Motorcycle Maintenance but certainly, towards the end got, one might argue, pretty loopy.
Graham Duncan: Yeah. It’s hard to think of top one percent in –
Graham Duncan: – context. But I think original – you look at Rachel Cusk and Karl Ove Knausgård. I don’t know how to say his name. But those two authors, I think they’re doing original things as novelists. And I don’t think they’re at risk of flopping onto the bank of chaos. But they’re doing original things. I don’t know how to take that.
Tim Ferriss: Yeah. This is more just because I think you’d enjoy it. And I can link to it for people who are interested. But there’s a model of cognitive function – yeah. I suppose we could put it cognitive function – and personality typing that has been just a theory and a model from Robin Carhart-Harris, who’s a scientist in the UK, called the entropic brain, which I think you’d enjoy. So for another time. I’m just looking at my notes here. And I have a short – I have two words based on conversations we’ve had leading up to this. But I don’t have any context here. So time billionaires. What does that refer to?
Graham Duncan: I was listening to a guy introduced a speaker a while ago. And he was saying people don’t really understand the difference between billionaires and millionaires. He said a million seconds is like 11 days. A billion seconds is 31 years. And I remember that –
Tim Ferriss: Oh, shit. That’s a hell of a way to think about it.
Graham Duncan: Right?
Tim Ferriss: Wait. Can you say that one more time?
Graham Duncan: A million seconds is 11 days. A billion seconds is slightly over 31 years. And I was thinking about – Tyler Cowen has a thing about cultural billionaires –
Tim Ferriss: Marginal Revolution?
Graham Duncan: Yeah. In one of his books, he talks about cultural billionaires. I feel like in our culture, we’re so obsessed, as a culture, with money. And we deify dollar billionaires in a way that – it’d be nice to co-opt that term the way Tyler Cowen did with cultural billionaires. And I was thinking of time billionaires that when I see, sometimes, 20-year-olds – the thought I had was they probably have two billion seconds left. But they aren’t relating to themselves as time billionaires. And I was thinking about how if you could – what would Rupert Murdoch, who’s worth $20 billion – he’s 87 years old. What would he pay if he could take the next five years of someone’s 20-year-old healthy body, mind, etc.? And for that 20-year-old, how would they price it? Because I was thinking at various points of my career, I might have sold the next five years for something.
And over time, my pricing has gone vertical because the next five years, if I were to lose – and the key to this question is that you can’t sell the five at the end of your life. You gotta sell them right now. I don’t know how I’d price it because my kids are of a certain age that they’ll never be again. But I don’t know that I live every day that way. But I aspire to. So I was trying to capture – I heard Tim Urban on your podcast. And I started reading his stuff. And I find his writing style and the topics he is interested in just amazing. He has this concept of life calendar. And I bought his life calendar. He sells it as a poster. And what he does is he puts a week – he does a circle for each week. So he has 52 circles on the horizontal and then 90 rows so that you can see a 90-year life in weeks. And what’s startling about the picture – again, to this question of how long is a billion seconds – is how short it actually is.
And so what I did is I went through, and I put where I am right now. And I started filling in the circles as I go. And I put where my eldest daughter goes to college. I put when my dad is going to be 90. And I was actually thinking a good product, if there are any graphic designers out there, would be to partner with Tim and allow you to create a huge poster and select a photo for each week and then – because it’s such a graphical representation of your life in a way that’s hard to convey in words sometimes. So I’ve just been thinking a lot about time and how you live. There’s a quote I like that we’re all very focused on the length of our life. How do you appreciate the width of it as you’re going along? And somehow, keeping that in your consciousness –
Tim Ferriss: Can you elaborate on that? The width?
Graham Duncan: The width, meaning this present moment. We’re sitting here, having –
Tim Ferriss: Stuff like the depth of attention.
Graham Duncan: Yeah. The breadth of sensory inputs. It’s another way of saying trying to stay more present versus being extremely goal-directed of whatever objective you have in your life right now.
Tim Ferriss: And how do you cultivate that in yourself?
Graham Duncan: So one thing is I have that life calendar literally sitting in my kitchen.
Tim Ferriss: Pause quickly. I’ll buy you some time also. So Tim Urban has a blog, Wait But Why. Calling it a blog is funny because some of his pieces are 70,000 words broken up into multiple parts. Also, just since you mentioned Musk, he was, I believe, the only person asked by Musk directly, who was a fan of the blog, to come in and have full access to Tesla. The life calendar is a fantastic place to start as is a piece called “The Tail End,” if you want a really acute sense of time, especially as it relates to how much time you might have left with parents. That is a fantastic piece. So you have the calendar.
Graham Duncan: So reading that piece made me try to engineer having my parents in New York much more frequently. And I tangibly did that –
Tim Ferriss: Oh, no kidding?
Graham Duncan: Yeah. So literally, reading that piece had that big an impact, where I was like, “Oh, my –” because he points out the percentages, how, if your parents don’t live in the same place you do, you will see them – by the time you’ve graduated from high school, you’ve spent 95 percent of the time you’ll ever spend with them –
Tim Ferriss: The total hours you will ever spend with your parents. And I didn’t know that about you and your family. After reading that piece, which was recommended to me by Matt Mullenweg, whose father passed away very unexpectedly – he recommended that piece to me. And that led me to really block out and make a priority a trip or a gathering with my family every six months. That piece, “The Tail End –”
Graham Duncan: It’s pretty profound stuff, I think. So your question is what do I do. So all the standard stuff. I meditate. I use 10% Happier app or Sam Harris’s app.
Tim Ferriss: The Harris brothers, even though they’re not brothers. Dan Harris and Sam Harris.
Graham Duncan: Dan Harris calls that whole crew the Jew Bus, the Jewish Buddhists which I think is a great –
Tim Ferriss: Well, just as a quick side note, I remember I was talking to Jack Kornfield, who’s an incredible teacher. Probably the most empathic human I’ve ever met. Truly walks the walk. And I asked him at one point – I said, “You’ve got Goldstein, Kornfield.” I can’t remember the names. Sharon Salzberg. I’m like, “Why are –” it seems like the entire crew who brought Buddhist mindfulness practices to the US in some – I’m getting the timeframe slightly off probably, but –
Graham Duncan: ‘80s?
Tim Ferriss: Yeah, the ‘70s-‘80s. They’re all Jewish. And he goes, “That is a good question.” This is just us having a private conversation. But he said, “Yeah. It sounds like a law firm.” And we went on to – we won’t get to. But the Jew Bus. Yes. So Dan Harris, Sam Harris. Both of those apps.
Graham Duncan: Yeah. I use both those apps. I try to be nostalgic for spending time with my kids in the present moment. So my youngest right now, I think I can probably carry around my shoulders probably a total of five more times. She’s getting too heavy. And I know because I have an older kid that that’s a distinct phase. Beyond those, keeping track of how much time.
Tim Ferriss: Those are good anchor points.
Graham Duncan: The Gretchen Rubin line about how “The days are long but the years are short,” I think about that a lot.
Tim Ferriss: There’s one that – oh, boy. I wish I could get the attribution right [Ed. Note: Muneeb Ali]. It was in Tribe of Mentors. It was an answer to one of my questions. It was in one of the other profiles, but for a technologist. I know that much. And it was in answer to the question, “What do you do when you feel overwhelmed or unfocused?” And this was a question that he asked himself which was, in effect, “How much would I pay – at age 80-90, looking back at my life, how much would I pay to relive this moment right now?” And I ask that a lot, whether it’s just sitting on the grass, watching my dog play with a stick, or any number of times. That’s a question that I ask myself a lot, like, “Forty years from now, how much would I pay?” And I think about –
Graham Duncan: Sam Harris on his app has a great three-minute gratitude talk. And he says, “Imagine you died yesterday evening. What you would give to be back in this moment of having a shitty dinner with your kids and wife where you’re all in a bad mood, and you’re all in this very contracted state?” And I think that’s such a – it borders on the cliché. But there’s something in just daily reminders of that. I think a lot about the Byron Katie thing of the past and the future are simulations in your head. And the only thing that’s actually real is this current, now moment that we’re in.
Tim Ferriss: So we talked about a little bit earlier – well, we’ll do a couple more questions. And then we can wrap for this round one on this podcast. We talked about your one option for the billboard which was the Kwame quote. Are there any other quotes, statements, questions, words, anything that you might put on a billboard besides that?
Graham Duncan: Yeah. Another candidate would be this quote, “We are not human beings having a spiritual experience. We are spiritual beings having a human experience. Welcome to the party.” And that’s a mashup of Pierre Chardin. He’s a French Jesuit priest and philosopher. And then there’s a meditation on the 10 percent Happier app called “Welcome to the Party” by Jeff Warren where you’re saying to every negative feeling, anything that comes up, “Welcome to the party.”
And he says, “Imagine you’re an affable host. And there was this great moment earlier this week where my son, the seven-year-old who’s still afraid of the dark in his room – and he was running back to get his clothes. And he yelled out, “Welcome to the party, Fear of the Dark,” which made me so proud because he’s able to – that fear is object to him. He can feel his feelings. He can feel his – but anyway, I like that quote because every time I read it, it shifts the, “Oh, this is what it’s like right now. This is a human experience. And somehow, this is our moment to have –” have you heard either of them before?
Tim Ferriss: I like that. No. I haven’t. I really like it. I’ve been reading a lot of writing from Jesuits recently for some reason. And I’m not sure if it’s a Jesuit thing or if it’s just coincidence that I happen to be picking these up. I really don’t know the first thing about the Jesuit Order. But the line, “Welcome to the party,” is so helpful because I’ve certainly read a thousand times in different forms making your emotions an object or not identifying, for instance, with, “I am angry,” but phrasing it in some fairly unnatural way like, “I am currently experiencing anger.” Okay. Fine. But this is much more memorable. And it’s being the affable host to your whole range of emotions, including when the grumpy, cantankerous uncle shows up. And you’re like, “Hey, buddy. Welcome to the party. Right. Look it. You had a hard day. Come over. Have some punch. Welcome to the party.” I love it. I love it. Any others?
Graham Duncan: I also love this quote from Mark Twain right before he died. He was looking back at his life. And he said something like, “There isn’t time, so brief is life, for bickerings, apologies, heartburnings, callings to account. There’s only time for loving and but an instant, so to speak, for that.” And I like that because I think the perspective of somebody who’s really old and dying I find somehow extra high signal because they’re trying to draw your attention to something while you’re still at an earlier place of your life. And somehow, I find myself thinking about that quote a lot that all this stuff that feels so high drama, once you’re – when you’re 90, looking at it, you’re just going to say it was all noise.
Tim Ferriss: Yeah. Or it’s all noise and/or the day after you die if you’re looking down, and you’re like, “God, what I would give to have that shitty meal that I thought was the last place I would want to be. What I would give to have that again.” Graham, I always love spending time together. And thank you for making the time.
Graham Duncan: Thank you for having me. It was fun.
Tim Ferriss: Yeah. This was a lot of fun. I have a ton of notes I’ve taken for myself already and books I want to pick up, “Welcome to the Party” that I want to listen to. People can find you in a number of different places. I’ll just repeat them. Grahamduncan.blog – where they can find that essay that you mentioned earlier – and eastrockcap.com, @GrahamDuncanNYC on Twitter, if they want to wave and say hello on the internet. Is there anything else you’d like to mention, things you’d like people to check out, requests you would have of the audience, suggestions, anything at all that you’d like to say before we wrap up?
Graham Duncan: Well, I’ll just note I help produce this conference call, the SOHN Conference. We do it in partnership with CNBC. And we raise money for pediatric cancer. And we do that by bringing 15 hedge fund managers and venture capitalists together at Lincoln Center. They each bring an actionable investment idea. And we’re doing it this year, May 6th, at Lincoln Center. So anybody listening, if you can afford to donate, come. If you can’t afford to donate, DM me on Twitter, and I’ll come up with some of our free tickets. But it’s a great gift exchange we have where basically, the hedge fund managers bring their ideas, people pay money to come hear them, and then we give that money to the leading pediatric cancer researchers. So that would be one.
Tim Ferriss: That’s the SOHN Conference foundation, S-O-H-N, which I’ve attended before and found endlessly fascinating. I mean endlessly fascinating.
Graham Duncan: Yeah. It’s a fun day.
Tim Ferriss: Yeah. It’s a really mind-stretching experience. Anything else that you’d like to say?
Graham Duncan: No. I think that’s it. No. I got it.
Tim Ferriss: All right. Full stop. Graham, until next time. And we have a lot to otherwise catch up on. But thank you again for being so generous with your time and you caffeinated beverages. And to everybody listening, I will have links to everything in the show notes. So the books, the essays, the various figures and people, thinkers we mentioned which you can find, as always, at tim.blog/podcast. And just search Graham or Duncan, and everything will pop right up. And until next time, pay attention to the present. It’s all you get. All right. Thanks, guys.
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