How to Get Lucky, Solved

00:00:00So a lot of people don't know this, but I co-authored Will Smith's memoir with him. And I spent roughly two or three years with Will, got to know him really well, got to know his family, learned all about his career, everything. And there was one story from his entire life that is my favorite story that I love. In fact, I loved it so much, it was actually the first thing I wrote for the book. It took place back when Independence Day came out. So you probably... Remember Independence Day? Oh, love that movie. It was a huge part of our childhood. Oh, yeah. So people who don't know, Independence Day came out, I believe, in 1996. At the time, it broke all sorts of box office records. It was by far the biggest huge action movie that had ever come out. Huge. And it was Will's second starring feature that he had ever done. So he was relatively new. So back then, movies used to come out on a Friday, they would make a bunch of money over the weekend, and then you would get the box office numbers in the newspaper on Monday morning. So there was like a three-day delay.

00:00:59And so the weekend after Independence Day came out, it was Sunday night, and Will got a phone call at about 3 o'clock in the morning. And he picked it up, and it was his dad. And the first thing his dad said was, You look at them numbers! And Will's like, what? It turned out that, you know, the box office numbers had come out on the East Coast. His dad was up at 6 a.m. He had just seen the newspaper. And so he was calling Will, waking him up in the middle of the night. He says, you see them damn numbers? You remember what I told you about luck? You remember when I told you there's no such thing as luck? That luck is when opportunity meets preparation. You remember that? Will's like, ugh. Yeah, dad. Yeah, I remember. Can I go back to bed? He's like, well, that was some fucking bullshit. You're the luckiest motherfucker I ever met in my life. And he hung up on him. Napoleon famously asked his generals whether they believe they were lucky or not, and he would promote them based on how they answered.

00:02:06So here's an honest question for you. How much of where you are in your life right now, your career, your relationships, everything that you've built, did you actually earn? Or how much of it was due to luck? Because whatever you answer, I'm willing to bet that you're wrong. And in this episode, you're going to understand why. Because people waste an absurd amount of energy arguing over whether someone's success came down to luck or skill. It's the wrong argument. Because luck comes in three different flavors, and they each work differently. In two of them, you can actually learn how to create more of it. And that's what this episode is all about. Accepting the luck that you can't control, and then maximizing the luck that you can control. Tilting the odds in your favor. In this episode of Solved, we're going to talk about how to tell which parts of your life you actually earned, and which parts... You just got lucky and why getting this wrong can keep you stuck. We're going to talk about the two types of luck that you can deliberately create more of and the specific habits that produce them. And one of these you can actually start doing today. We're going to talk about why luck both matters and also doesn't matter and why it's better to just assume that you're lucky no matter the situation. We'll talk about why your brain quietly deletes the luck out of your own life story and what that costs you every time you make a decision.

00:03:18We'll talk about the decades of research of what actually separates lucky people from unlucky people. We'll talk about how to stop wasting guilt and self-loathing on the stuff that was never in your control in the first place and how to put that energy into where it actually moves the needle. We'll talk about why some people's success explodes while equally talented and hardworking people plateau and how to position yourself in the right side of that gap. And we'll get into the ancient framework that splits luck into three forces, so you can finally know which lever to pull instead of guessing all the time. This and much, much more. So the question isn't whether you got lucky or not, because let's be honest, we've all gotten lucky and unlucky in all sorts of different ways. The question is what type of luck we have and what type we don't have, and how we should respond in each situation. Because once you can actually see the forces that are shaping your life, it stops feeling like a guilt trip and it starts feeling like something you can actually work with and improve. Because it turns out you can control your own luck and you can make yourself luckier, even if you've been dealt a bad hand or gone through a stretch of incredibly bad luck.

00:04:25Luck, in many ways, is the most under-discussed topic in personal growth, and I believe people don't understand what it really is and how it actually benefits them. So if you are assuming today's episode does not have any useful information for you, well, today's your lucky day, because you're going to discover how incredibly wrong you are. I'm New York Times bestselling author Mark Nansen, and this is Drew Burney, my intrepid co-host, producer, lead researcher, and a man who claims that he lost 37 straight rock-paper-scissor matches. That's pretty unlucky, Drew. And this is Solved, the most comprehensive podcast in the world where every episode we aim to solve one problem in your life once and for all. Today, we're tackling luck. And who knows, maybe this is your lucky podcast episode. Drew, how lucky are you? Hmm. I'm currently recruiting generals for my conquest of Europe and I'm... Napoleon. I'm wondering if you're qualified. I mean, I generally do think of myself as an incredibly lucky person, yes. Oh, really? I would say that if I'm applying for the job, yeah. Interesting. Why is that? I mean, I'm sitting here, aren't I? How much of that was due to my skill versus luck? If that's a question you're asking me, I don't really know, but I feel... Are you sure sitting here is a good thing? No, no.

00:05:42That's another question, too. That's true. That's true. That old parable. It's an interesting question. I do think about this a lot. I do a lot. Because there's just so many ways my life could have turned out different. You know, run it a thousand times over. I don't think I'd take another chance on it, honestly. Interesting. So, yeah, I think I'm lucky. Do you think you're lucky? I do think I'm lucky. Yeah. But I don't think about it very often. Interesting. Okay. And generally all those things lead to better outcomes, which is kind of fascinating. So you're saying it's a way you see it. If you think about it, luck really is largely perception, right? So there's always good and bad things happening in our lives, around the world, but a lot of it is how we choose to see it. There are ways to adopt perspectives to see the same thing in both a lucky or unlucky light. And what's interesting is that the ability to see things in a way that,

00:07:03gives you the perception that you're lucky. tends to enhance your outcomes okay so for example there was a couple really interesting studies that happened over in the uk researcher richard wiseman gave a bunch of people newspapers and told them to count how many photos were in the newspapers and beforehand he asked people to rate how lucky they believed that they were and in the newspaper as people are flipping through the pages counting the photos there was text that said stop counting there are 43 photos And then there was another piece of text, like buried in an article somewhere that said, if you are reading this, tell the researchers they will give you 100 pounds. Yeah.

00:07:44And what's fascinating is that people who rated themselves as luckier found those pieces of text far more often than the people who rated themselves as unlucky. There was another study that he did where he told people to go to a coffee shop. He put money on the ground and then he put a really successful business person basically at the bar next to the place where you order your coffee. And sure enough, people who were rated themselves as luckier found the money more often and struck up conversations with the successful businessman more often and came away seeing the whole experience is like a very positive thing. Whereas the unlucky people just kind of walked in, missed the money, sat by themselves. ignored everybody and everything and then nothing happened. Yeah. What's really interesting too is that these researchers who study all this stuff found that you actually could improve people's perception of their own luck, that you could actually train people to see themselves as being luckier and to behave in ways that generate more quote unquote lucky outcomes, which is really interesting. Like it's kind of a almost obscure story.

00:08:45piece of psychology that like luck could be a skill that you could learn. And then that by developing that skill, you could actually generate better outcomes in your life. I love this topic for a few reasons. One is I'm just a degenerate and I play a lot of poker, but part of it is because I do think it gets at the intersection of two very, very important things that I think people struggle to think about or struggle to talk about. One is that. How are they making decisions? How are they taking risk and assessing risk in their life? And then the second component is, how are they choosing to see the outcomes in their life? You know, you can easily describe yourself as sitting at this table as very fortunate or very unfortunate based on which perspective you decide to take. It's a very underrated topic today. And something that people don't think enough about. And to Napoleon's point, maybe it does matter if you see yourself lucky or not, because if you do see yourself lucky, you're likely to create more luckier outcomes, you're likely to spot more opportunities, and you're likely to act on them when you do spot them.

00:09:47Well, that's not to say, though, that there aren't random chance events that we can't control, too, and that are outside of our perception, right? And that are terrible, yes. And that are terrible or awesome or whatever. The point is that they are outside of our control and perception, our ability to change our perception around, too. Yeah. So, yeah. It's complicated. It's a little bit complicated. It is complicated, but I think it is worth diving into. By the end of this episode, I think people will see that they have been underwriting this topic and maybe... some of the perspectives that they've adopted in their lives have not been helpful and have been holding themselves back in many ways. First, a quick word from our sponsors. First, This episode is brought to you by Simple. Luck is a funny thing. We love handing it credit for the stuff that actually took years of quiet work. Think of the person who stays in shape without seeming to try. We file them under lucky, good genes, fast metabolism, some willpower the rest of us just weren't born with.

00:10:46But here's the thing, it isn't luck, it's consistency. And consistency doesn't come from just willpower, it comes from building habits you can actually stick to. Take Cheryl and Mark, simple help this couple build habits they could actually stick to, and together they've lost over 117 pounds. One thing Cheryl said really stuck with me. She said, if I blow it, it's no big deal. This is a lifestyle change. Try simple. You have nothing to lose but wait. I think that's the mindset most people are missing. The goal isn't perfection. It's finding something you can actually stick with. It's an approach that's already helped simple users lose over 20 million pounds and earn them recognition as the best virtual health coach. It starts with a quick quiz to understand your goals and lifestyle, then builds you a personalized plan. Instead of a restrictive diet that you have to white knuckle, it works on the small habits that hold up once the motivation is gone. Because the goal here is a healthier life that you can actually keep. Join the 21 million people who've started already. So go take the quiz at simple.life slash solved. That's simple.life slash solved. And use the code solved at checkout for 85% off your plan. And we're back. Welcome back to Solved.

00:11:55So first, before we dive into it, I do want to talk a little bit about the resistance that people have to thinking about luck. Like, you know, I asked you, do you consider yourself lucky? You pretty much immediately said yes. What's funny to me about that is that it's easy for you to look at your own life and say, I got lucky. But imagine if some random person or somebody you know looked you in the face and said, Yeah. You just got lucky. All this. No, I don't like that. Like all of it. Yeah. You don't like hearing that. Yeah. But when I reflected back to myself, I'm like, well, they're right. But yeah. Yeah. So there's a component of this that is that bleeds into like our feelings of justice, fairness, status. I think the first piece of resistance is around that. Like we have a there's it's very instinctual that we like to think that our effort should be proportional to our output. If we see an unequal outcome. We assume that whoever has more should have put in more effort than the person who has less. And if that's not true, or if that, if we don't perceive that to be true, we get really fucking upset. Yeah. The whole system crumbles really. Yeah. Yeah. And so you end up in a situation where people are like, well, that guy just got lucky and that's not fair. And so he should, uh, he or she should like give back to the others who are not as lucky as this person is.

00:13:10You get into a lot of kind of social justice topics around this as well, because you can very easily look at people who are born in different circumstances, born in different parts of the world, different ethnicities, genders, and statistically say this person is unluckier for being born in this country at this time, you know, as a woman or a non-heterosexual person. And yeah, factually, that is less lucky than, say, being born as a white straight male in a first world country. And I think that bothers a lot of people. And they don't. So there's a little bit of a resistance of like, well, I'm already privileged. So like, why should I try to maximize my luck even further? I've already gotten so lucky. So who am I to like try to maximize my luck even further? Is guilt the right response there even? That's a good question. We'll get Let's say you and I are both working towards some goal and I believe I'm putting in twice the amount of effort that you're putting in, yet you're achieving better outcomes. There's kind of two explanations for that. One is you're getting lucky and I'm getting unlucky. Or...

00:14:20shit, what's wrong with me? Because clearly something's like, why do bad things keep happening to me? Why do I seem uniquely unlucky in all these situations? That can start to bleed into your actual relationship with yourself. And so again, luck is ultimately a perspective. We all have... lots of opportunities throughout our lives. We also have lots of challenges that are handed to us throughout our lives. What shifts and changes and what we define as luck is often just the frame and the perspective which we choose to adopt around those opportunities and challenges. And there are better perspectives and frames to adopt than others, the research shows us. I think another problem, too, is what they call the just world hypothesis that is related to what you just said. But we just have this really, really deep need to believe that that the world is just or that there's some order or or some sort of sense that can be made out of it rather than just random chance. We just have this deep need to think that the world is a somewhat at least tilts in favor of fairness or at least makes sense. And when it's just random and chance, then that doesn't make any sense to us.

00:15:29And so if somebody is suffering disproportionately, either they deserve it because they fucked up or somebody else is screwing them over. And you could almost map those two assumptions onto the political right and the political left. Like the political right will look at an unlucky situation and be like, well, that person probably deserves it for some reason or another that we're not seeing. Whereas the political left will look at it and say, well, that person is probably getting screwed over. by the person who's not suffering as much. When in fact, it could just be random. Just be completely random. Yeah. Yeah. That's unsettling. Yes. You know, we like to start all of our solved episodes by going back in history and kind of looking at what the ancients thought about certain topics and what kind of what's the history of thought around a certain idea. And I think luck is interesting because it's probably the first topic that we're covering that the West has really struggled with. I can't help but think that maybe, maybe, and I don't know, this is just my harebrained theory, but like so much of Western culture really is luck.

00:16:36like there is a strong sense of fairness and desire towards equality is very much inherent in Western culture. And so I think that would maybe explain why the ancient Greeks and Romans didn't really have a good answer for this. Whereas I think other cultures have been a little bit more realistic of like, Yeah, sometimes life's unfair. Sometimes some people get screwed over. Sometimes some people are just better than you or take advantage of an opportunity you didn't. There's a little bit more realism, I think, in some of the Eastern cultures, which we'll get to in a second. But I just want to touch on the West's inadequate assessment of fortune and luck. So the Greeks personified luck as a goddess named Tyche. And She was fickle, impulsive. There was no rhyme or reason. She would just kind of screw people over randomly. And the Greeks used this as an explanation of why bad things happen to good people. The Romans carried this on with their version of the same goddess, which is where the word fortune comes from. Perhaps like this kind of ancient view of fortune

00:17:36of how chance operated in life was best exemplified by Bothius, who he was a bureaucrat and a philosopher towards the end of the Roman Empire, and he was actually sentenced to death by his political opponents. And he wrote while he was imprisoned, essentially life is just... It's a wheel of fortune that you spin and whatever the wheel lands on, that's what you're stuck with. There's nothing you can do about it. So you might as well not complain. You might as well just accept it, move on. And it was very fatalist and didn't really have much sense of agency or an ability to kind of change your fortune in life. Now, this kind of fatalistic approach continued throughout the Middle Ages. You know, medieval Christendom and the Catholic Church, they saw instead of Lady Fortune, they saw everything as just God's will. And so anything bad happened, they said, well, that's part of God's plan. Anything good happened and said, well, God is blessing you. And it was actually looked on as a bad thing. If you had any sort of agency or tried to kind of steer the outcome of your life in any meaningful way, it was seen as you revolting against God's will.

00:18:41And so it really isn't until you get to the Renaissance where Machiavelli compared fortune to a raging river. And he said that when the tide is high and the water is raging, there's nothing you can do. You just got to hope that you can ride it to someplace good. Whereas when the tide comes down and it calms, then you can build levees and canals and irrigation systems and kind of leverage the water and steer it where you want it to go. But then when the tide rises again, it's going to wash everything away and there's nothing you can really do about it. This is probably the closest thing that we get to like an accurate portrayal of how luck operates in our day-to-day lives and how we can leverage it. It's still not very satisfying though. And then you get into the Enlightenment and everybody kind of turns into a math nerd and figures out probability theory and starts analyzing and calculating all the percentage outcomes of different choices and assumptions and... there's a lot of value in this. It's still not totally satisfying. Like it is useful and important to understand the different probabilities of different outcomes in your life. It's important for risk assessment. And we're going to talk about making good decisions around Bayesian thinking in chapter four. We're going to have Annie Duke on as a guest to kind of talk us through how to

00:19:55thinking bets and thinking probabilities. But in terms of like assessing the fortune and luck in our own lives, like it's still not very satisfying. It doesn't solve the fairness issue. It doesn't solve the justice issue or the guilt issue. It doesn't help us assess what we can do broadly in our lives to increase our luck, to find more opportunities and to act on those opportunities when we do find them. So in Western thinking, you kind of have this ever-present tension between two forces. One is that luck is just something that happens to you. It's something that is inherently outside of your control. There's nothing you can do about it. It's pure fortune. You might as well just accept it and get used to it. But there's also this feeling of like, you can improve your life. You can put yourself in better situations. You can give yourself more opportunities. Luck is something that you can work on and improve and adopt into your life. But both of these things are simultaneously true. I think it's common sense that they both exist. And I think we have trouble resolving the tension between the two. So out of all the frameworks that I came across, I think the best one actually comes from ancient China.

00:21:05And it's this framework called Sansai. What's interesting is that in Chinese, there's more than one word for luck. The Chinese actually have different conceptions of luck and fortune in their lives. And I think as a result, they end up with a much more accurate assessment of what luck is, what is chance, what is opportunity. And we're going to use it as a framework for this episode. But I also think it's just something that is useful for people to think about in their day-to-day lives. So the three different types of luck are literally translated as heaven luck, earth luck, and human luck. Now, heaven luck is basically the birth lottery. Where were you born? What are the traits that you were born with? Were you born into a good family? Were you born into a family with money? Were you born into a country that's functional and has good infrastructure? Or were you born into somewhere that has war? It's basically all this stuff that's outside of your control that just happens. There's zero agency going on. And as we'll discover, the best way to approach heaven luck is through shifting and adopting your perspective to the different things that happen in your life.

00:22:13The second luck is earth luck. And earth luck is kind of the environment that you move through. I think it's probably the hardest one to understand of the three lucks, but it's also arguably the most important one. Once you do kind of figure it out, it can have the largest benefits and effects on your life. But basically, Earthluck is like the systems that you exist within. It is the environment that you live in. It's the people that you surround yourself with. A simple example is like living in New York City versus living in a tiny town in like South Dakota, right? If you live in New York City, you're going to be surrounded by so many people doing so many interesting things. There's going to be tons of jobs, tons of different careers and professions, tons of opportunities, tons of people you can meet and date. Whereas if you live in this tiny town in South Dakota, there's probably not a whole lot going on.

00:23:07It's probably very homogenous. There's probably very few opportunities or all those opportunities are probably in like the same line of work, the same career. Everybody you meet is probably going to be very similar. And so in this sense, putting yourself in a much more dynamic environment full of more opportunities, you could say, quote unquote, makes you luckier, right? Like it gives you more surface area to stumble into opportunities and chance situations that benefit you. And so this is earth luck. It's like major macro decisions that alter and affect hundreds and hundreds of micro decisions. And then there's human luck, which is simply, what are your decisions? How are you choosing to act based on the probabilities in front of you? Based on the situations that you find yourself in, how well are you able to adapt to the circumstances? Now, the way I like to think about this is that if life is a poker game, heaven luck is the cards you're dealt. You can't control whether you're dealt good hands or bad hands. If the cards are dead in that poker game for you...

00:24:17That just happens and it sucks, right? Earth luck is the table you choose to sit down at. Human luck is your ability to play those cards as well as you possibly can. So even if you get shitty cards, you can still play those cards well and you can still win a lot of hands and make a lot of money if you're a very good poker player. Now, one of the things that's really interesting about poker is that if you ever talk to a poker professional, they will tell you. that the single biggest decision you make is which table do you sit down at and where do you sit down at that table? Because there are certain players that you have to know you have an advantage or disadvantage against. And there's also certain placement at the table that can put you at an advantage or disadvantage relative to those players. And so if you sit at a table where you're at a disadvantage, then you're creating bad luck for yourself. Whereas if you wait and find a table where you have a lot of advantage, then you're creating a lot of luck for yourself. So you said earlier that you were lucky. I'm curious, which of these three lucks do you believe you have benefited from? I think the biggest one for me has probably been earth luck. I've had a lot of really good earth luck.

00:25:26Heaven luck was, I don't know, I can see it either way. My human luck. I've made some good decisions. I've made some pretty bad decisions. And I think it's all been mitigated by my earth luck. Okay. Yeah. How so? I grew up in one of those tiny towns you were talking about, right? In the Midwest where there wasn't a lot going on. And it seems like that's not a real good draw of the heaven luck. But when I look back on it, I actually see that that environment was, if I was going to be a pretty poor kid growing up in America in the 90s and 2000s, The school system I was in, it was a public school system. So you're thinking small town public school system, no big deal, but it was actually really good. Like the arts community there was insane for what we had. Like half the kids were in choir and band in the whole, whole school, you know, that's not, and that's not how it is today. Some of the teachers I had were just amazing. I had a lot of like, even from an early age, I had a lot of like male teachers who were role models for me that I just don't think happens anymore too. In high school, I had a teacher who was the, he was an English teacher. He was, uh, he'd be, teaching us about T.S. Eliot and Sylvia Plath during the day. And then he was a football coach, too. So he'd be screaming at you. I had this weird experience, I think is what I'm saying. I had a lot of people around me who, even though I wasn't born into, like, real fortunate circumstances, it seemed like there really was a village behind me. The weird thing, though, is, too, that I talked to people

00:26:45Other people around me, they didn't have the same experience, right? Like, I feel like I was lucky and I talked to them about that and they're like, I did not have that experience. For whatever reason, like my set of heaven luck and human luck matched that environment very, very well. And I benefited greatly from it. Not everybody did. So I just think I had, yeah, I think the terrain that I've traversed through has been very, very fortunate for me. Interesting. Yeah. Yeah. Which kind of luck do you think you've benefited from most so far? This is going to be a very obnoxious answer. Okay. I think I've been so lucky in all three. My family's relatively wealthy, born in the U.S., Born in literally the fastest growing city in America. Just had, I mean, every opportunity was kind of laid out in front of me. I've had great health. I've never had like any sort of catastrophic, you know, accident or thing happen. I think I've made excellent earth luck decisions. I think that's something that I've just kind of intuitively...

00:27:51Yeah, I've just intuitively been very good at, you know, like that macro decision that negates thousands of micro decisions. I seem to have a sense of like knowing where to put myself at the right time, different places to live, different groups of people to meet. Like you could look at my career and say I got I've become very lucky. I think some of the best earth luck decisions often look lucky on the outside, even though inside they just they're very smart because. Yeah. Generally speaking, the largest opportunities, the reason they're opportunities is because most people underestimate them. Right. So it's like when I started blogging in like 2008, 2009, very quickly, I was convinced I'm like, this is the future of media. If I throw myself into this and get really good at it before anybody else, I'm just going to have like such a ridiculous amount of. upside and advantage and i was right about that right and it's funny because for probably six seven years my bunch of friends and family back home were like dude when are you going to get a job like what's this internet thing you're doing like you're wasting your your life you'd like you need to start a real career all this stuff and then you fast forward 10 or 15 years and you're like wow yeah

00:29:05Mark was very fortunate. And then I think on the human luck side, that's just good micro-decision making, right? Like understanding in the moment what is a high ROI bet to take, whether it's with a person you're dating, a place that you're living, a work project that you're taking on. If you look at like... The range of outcomes my decisions could have produced. I think I'm definitely towards the high, the, like very much towards the higher band of like what, what potential outcomes could have happened. I think I've experienced luck across the board and all three. Yeah, sure. There was some heaven luck on a lot of that. Like you just, and I know you've acknowledged that, but like, uh, you know, the, the blogging and the internet thing, like we're the right age for that. Right. We're born at the right time and right place for that. In the right country. Now you see those levels, though, working, working, all working together. Yeah. And so on one level, it's like, yeah, I did get lucky on the other on the other level. It's like I also made really good decisions. But on another level, it's like those decisions also worked out almost as well as they could have, because there is a world where a lot of those same decisions didn't work out nearly as well. Coming back to the fairness piece, the justice piece, like this is what we struggle with so much is that.

00:30:21It is always both of these forces in tension. Like it is both a large amount of variables outside of our control and a large amount of variables inside of our control happening at all times. And so anytime you want to convince yourself that all of the outcome is due to stuff outside of your control, it's not hard to find a narrative or explanation that will justify that. And similarly, if you want to find a narrative that justifies your outcomes as only your decisions, it's not very hard to find that. narrative or justification as well. So like, I think people need to be very careful in how they explain their outcomes in life and explain the outcomes of other people in life as well, because it is always some mixture of fortune and skill operating at all times. Yeah. So Machiavelli was kind of right in that way, right? Luck is a raging river. Yes. And you can divert parts of it and make little dams and stuff like that. A lot of it, you can control a lot of it. You can't.

00:31:25And the rest of this episode is how to do that, I think. Yes. And so the goal here is, I think, all of the things that are outside of our control, there are better and worse perspectives to take on those things. Right, right. And we'll get into that in the next chapter. And then everything that's inside of our control There's a lot of skills and mindsets that help us make those decisions as well as possible. So in this episode of Solve, we're going to dive into all of these forms of luck and how we can best leverage each one to our advantage. In the next chapter, we're going to talk about heaven luck and talk about how in many ways life is like a lottery. And whether you win or lose, most of it comes down to how you see that lottery. We're going to talk about earth luck and how your environment and psychology are either expanding your luck surface area or shrinking your luck surface area every day of your life.

00:32:18We're going to talk about human luck, which is the probability game that we are always playing and affects all the decisions that we're making. And then in chapter five, we're going to turn everything on its head because even if you master all three forms of luck, the distribution of outcomes still is not fair. There is almost like... a certain amount of luck in how much luck benefits you and how much it doesn't. There's like a meta luck that goes on. And finally, we will close with all the takeaways, all the appropriate mindsets, all the exercises you can do to make sure that you are as lucky as possible in this life. even if you don't believe it yet. So what I'm really driving at with all this is that this question that we hear in different forms all the time of like, is this just luck or is it skill? Is it luck that Elon Musk is a trillionaire or is it skill?

00:33:09It's always both. It's always both, and it's always operating on different levels. There is heaven luck, there are things outside of our control, and then there is earth and human luck. The decisions we make, the environments we put ourselves in, the circumstances that we subject ourselves to. Just to close the loop on the Napoleon piece, the reason Napoleon asked his generals this, it was more of a proxy for... creative and opportune thinking. Because Napoleon understood extremely well that there are always going to be unexpected things that are happening and there's always going to be forces and variables that are outside of your control. And so he needed generals who understood what an opportunity when they saw it, right? When the plan goes to shit and a bunch of unexpected stuff starts happening and a situation presents itself where you could really take advantage of a situation, he wanted generals who he was confident were going to take advantage of that situation and change the plan and change their mind and move on it. People who saw themselves as unlucky would just see that circumstance and be like, oh, that's not part of the plan. I'm so screwed. This isn't going to work.

00:34:18So in the next chapter, we're actually going to start with probably the hardest form of luck to address, which is heaven luck. The things that happen outside of our control. The approach to this is almost entirely about our perspective and how we choose to frame the situations in our lives. And what's most interesting is that probably the healthiest and most beneficial way to look at this is, comes from two people who kind of had the same idea at the same time. One happens to be a billionaire who eats a lot of Big Macs. And then the other one is a famous philosopher who probably invented the most important theory about justice in modern history. But first, a word from our sponsor. This episode is brought to you by Factor. Earlier this summer, my whole routine got hijacked by the World Cup. Games at noon, games at bars, and enough travel that I was barely home. But even on a stretch like that, Factor is how I stayed on track. Chef crafted, dietician designed, meals ready in two minutes, no prep, no cleanup. So even when my schedule was completely out of control, eating well stayed on the table.

00:35:29actually pretty damn good. I keep eyeing the pumpkin cheesecake add-on too, purely for research, of course. I'm doing it for you guys. You don't have to choose between real food and convenience. I use Factor because it makes eating well the easiest option. And if your summer is as jam packed as mine was, you will too. So let's eat real. Head to factormeals.com slash solve202650off and use the code solve202650off to get 50% off and one free breakfast item per box for one year. While supplies last until 10-31-2026, that's code solve202650off at factormeals.com. Solve202650off, all one word, at factormeals.com. See website for details. All right, welcome back. This is Solved. There's a temptation to believe that the circumstances we're born with are our destiny. And it just turns out that that's not true at all. And I think the perfect example of this is an interview I saw of Warren Buffett maybe like 10 years ago.

00:36:34Buffett was asked, what is the number one factor to your success that has made you so successful over such a long period of time? And Buffett immediately answered luck. And the journalist was kind of like shocked. He was like, what are you talking about? You're the greatest investor of all time. You're worth like a hundred billion dollars. What do you mean luck? And Buffett had a really fascinating answer to this, which is he said that he won the ovarian lottery and that literally the best possible time to begin a career in financial investments. He came of age and started investing at the very bottom of the Great Depression. So immediately starting out, he had the largest financial tailwind in human history behind him. He points out that, you know, he was born in the 1920s in the United States. He was born a white male. If he was born a a female or some other ethnicity, he wouldn't have had the same opportunities. He has two sisters who he argued were smarter than he was and just as ambitious, but they were not afforded the same opportunities that he had.

00:37:40And I would even argue as well that he's had another kind of luck factor on his side, which doesn't get talked about a whole bunch, which is simply longevity. I believe he made his first investment when he was 11 years old and he just retired in a profession where everything compounds very slowly over a long period of time. Longevity may actually be. the greatest factor to his success. There was an interesting statistic in Morgan Housel's book where he pointed out that 99% of Warren Buffett's wealth he made after he turned 65 years old, which is... Yeah, he wasn't even a billionaire until his 60s, right? So, yeah. Mind-blowing. This concept that Warren is talking about, this is the heaven luck in the Sensai Chinese system. This is the luck that you're born with. This is the circumstances that you arrive with. And in many ways, it is like a lottery. There are objectively better and worse situations that you can be born into, objectively better and worse families that you can be born into, better and worse time periods that you can be born into. It's like the old saying, some people are born on third base. And...

00:38:45It's not fair. It's not just, but it is just life. Heaven luck encompasses pretty much everything that is outside of our control. Everything that we had no say in and simply happened to us. I think Warren Buffett points out that there's different kinds of heaven luck that can intersect and compound with each other as well, too, right? Like he talks about the different lotteries he won, not just those lotteries that you said, you know, he was born in the United States at the right time and all that. what he calls the talent match lottery. Like he's a very analytical person, very numerical minded, probably pretty emotionally steady. Yeah. So he doesn't, he doesn't make investments with emotions at the time and place where he was born. That was a very advantageous set of skills to have. He makes the joke though, that Bill Gates has always told him, you know, if you were born a hundred thousand years ago, you would have been some animal's lunch. Like those skills don't matter at all in that environment. Right. Yeah. So there's all these different kinds of layers that can go into this and all these different kinds of heaven luck that can come together or not and produce these wild outcomes or terrible outcomes too, right? We don't have any control over any of those. You're right. There's kind of a tension of like, it's important to understand the factors of heaven luck. And I think there is a temptation because heaven luck is the most measurable form of luck out of the three. There's a temptation, I think, to over-index on it and kind of assume that it accounts

00:40:07most if not all of our outcomes but as we'll find as we go through this episode like that's not the case and actually we would argue that heaven luck is not as simple as it initially appears like it seems simple to simply say like okay well i was born in a better place than this And my life's going to turn out better. It's not, it's not that clear. You're right. It is very measurable. Let me, let me paint a modern picture of how that might look. And then we can talk a little bit more about that. Okay. So let's take two different children, two different babies born on the same day today. Okay. In two different places though. One born in Norway, one born in Sierra Leone. Okay. Let me just give you some hard facts. Like you said, it's measurable. Let me give you some hard facts of like what that looks like at their starting points. The first one, let's say they're born in Oslo in Norway. Okay. She will statistically, she has a very high chance of living to about 83 years old. Okay. That's her life expectancy at birth. She'll have access to free healthcare, free university education, one of the strongest social safety nets that's ever been built by humanity. She has access to that from day one. Right. Okay.

00:41:16her country's gdp per capita is about eighty two thousand dollars per person childhood mortality risk which is like the likelihood that she'll die before the age of five is only two and one thousand the infrastructure she has access to to like the roads there and you know hospitals and education all of that is like top rate some of the best you can find in the world right obviously she didn't choose any of that yeah right Compare that to a child born the same day in Freetown, Sierra Leone. Okay. Life expectancy there at birth is 62. So full 21 years shorter than Norway. Country's GDP is about $800 per person per year. So about a hundred times, more than a hundred times less than in Norway. Childhood mortality risk is 94 in 1,000 compared to 2 in 1,000. Okay, so 47 times worse. The infrastructure, there's really education is lacking access to healthcare, roads, recent civil war, lots of violence, no guarantees of safety. All of that is very, very present. Okay.

00:42:17When we say, oh, this heaven luck, like, obviously, if you're going to choose, you'd want to be born in Norway. Right. Over Sierra Leone. Yes, those are stark differences. But what do we do with that information, Mark? Like, how are we supposed to think about that? You can look at that and you say, well, we're shit out of luck, right? There's a fatalism to it that's very easy to go to. But is that the right reaction? Yeah. And like we talked about in chapter one, our natural inclination is... the just world hypothesis, which is that whenever we see a large disparity between people, we assume that something unfair is happening or that it is inherently unfair. Maybe it is, but to your question of like, what do we do with that? I think it's ultimately, as with anything outside of our control, the best we can do is find a way to accept it and leverage it. I want to come back to this comparison because this idea of luck and who is lucky is, So there's a philosopher named John Rawls, and he has this amazing concept that he called the veil of ignorance. And basically what Rawls argued was that the only way to tell how just a society was was by doing a thought experiment. And that thought experiment was assume that you're not born yet and you get to choose which society you're going to be born into, not knowing what individuals you're going to be born as. So you don't know.

00:43:36Your gender, race, ethnicity, what your family situation is going to be like, what your talent is going to be like, what your IQ is going to be. The simple question is, is when presented with a society, would you choose to be born into that society or not? Now, from a veil of ignorance perspective, obviously, if offered the chance to be born into Norway or be born into Sierra Leone, I think pretty much everybody would choose to be born into Norway. But that doesn't mean that every single person in Norway is luckier than every single person in Sierra Leone, right? So you could be born into Norway and, I don't know, be born with some chronic disease or get cancer at the age of five or something and die when you're seven. Whereas in Sierra Leone, you know, there's plenty of stories of people who have overcome incredible hardship and actually become very fortunate. was digging through a local riverbed looking for essentially gold dust and happened to stumble across the second largest diamond ever found. It was worth close to $10 million. And then this pasture ended up netting about two and a half million dollars for his trouble. Keep in mind, this isn't a country that they make less than a thousand dollars a year and he just landed two and

00:44:54Right. And he did all sorts of amazing things. He built schools, community centers, built roads, infrastructure for the community, gave a bunch of money away to friends and family and local children. Would you say he's lucky? Right. He's actually luckier than most other people on the planet, even though he was born into an extremely unlucky circumstance. And the reason I bring this up is that luck is ultimately simply a comparison between people. Reality and potential alternatives. And so by definition, luck is always relative. Like if you're saying that he's unlucky or he's lucky, it's lucky compared to what unlucky compared to what? Yes, it's unlucky to be born in Sierra Leone today versus being born into Norway today. But it's also lucky to be born in Sierra Leone today versus born there when there was a civil war raging or a hundred years ago when there was zero infrastructure and rampant colonialism. Or a thousand years ago where, like, you had...

00:45:58absolutely no basic services and the life expectancy was probably like 25 years old, right? So it's like lucky compared to what? The most important takeaway of heaven luck is that luck is ultimately a perspective. It's a frame of reference that you choose to adopt. It's a yardstick that you use to measure the, your life versus whatever else. You know, there's this old Chinese fable about the farmer and the horse, which I think illustrates this perfectly. So basically there was a poor farmer in ancient China and all he had was a single horse. And one day that horse runs away and his son comes running in, says, dad, dad, our horse is gone. This is terrible. We're so unlucky. And the farmer looks at his son and he says, good luck, bad luck. Who knows? And so the son goes looking for the horse and he like wanders out into the wilderness and he comes back the next day with five horses. Turns out that the horse that ran away went and found a bunch of horsey friends and they hung out and had a little party and then they came back together. So the son comes back and he's got five. He's like, dad, oh my God, I can't believe it. We have five horses now. We're rich. We're so lucky. And the farmer looks at him and says, good luck, bad luck. Who knows? Who knows?

00:47:16So then the son starts spending the next couple of weeks trying to train these wild horses, trying to tame them and get them to do farm work. And one day one of the horses rears up and kicks him off the back and the son falls and breaks his leg and the farmer's poor. So he has no, no other workers. It's just him and his son. And so the son is like, oh my God, dad, this is terrible. This is, we're so unlucky. I can't believe this happened to us. The farmer says, good luck, bad luck. Who knows? And then a week later, the local militia comes through. There's a war has started, and the local lord or king of the local fiefdom is, like, recruiting, drafting young men into his army. They see the farmer's son sitting there with a broken leg, and they're like, well, we can't draft him into the war, so, you know, we'll leave him here. And the son looks up at his dad, and he's like, oh, my God, we're so lucky, Dad. This is, thank God this happened. And his dad says, good luck, bad luck, who knows? And the story goes on and on and on, and it just keeps shifting back and forth, right? And it's like the same exact occurrence is both lucky and unlucky, depending on the frame of reference, depending on the potential alternative reality that you can imagine that has not happened. And so in this sense, both feeling lucky and feeling unlucky is available to us in every moment, depending on simply what alternative reality.

00:48:41realities we choose to imagine for ourselves. And as we'll see, this has very significant consequences. This is definitely something I've seen in my own life. Like when I was younger, I thought I was so unlucky to be born in the middle of nowhere, you know, the small town, the parents didn't have a lot of money and they were young and they, you know, not a lot of access to resources, no outside connections, anything like that. And the older I got, the more I realized like, oh, if I was, if you were going to grow up like that, the time and place where I grew up actually turned out to be, a very good time and place to grow up like that. The 90s and early 2000s in the Midwest and in the middle of America. And I was a free range kid. We had that advantage. You know, it was a small enough place where you could just let your kids go. Had dial up internet, you know, as a teenager. Also to this, like there was this community aspect that I realized later on that all those big city kids didn't have that I had growing up. The community actually looked after children like it was really a village raising the kids around there. And that frame of reference of mine kind of changed over time. And now I talk to people who I grew up with who don't see it that way still, too. So you're right. It absolutely is like compared to what? Right. And they keep comparing it to all these other things. But when I see it, I see like the good fortune that I had to have the people around me where I was who who helped me.

00:49:56really grow as, as you know, as a young person, but it was a general shift. I mean, good luck, bad luck, who knows, you know, totally. I had that. Yeah. The frame of reference piece here is, is so important, right? Because it used to be, you know, if you grew up in a small podome town, you had no frame of reference. You didn't know what you were missing out on. You didn't know how other people were potentially growing up. Same thing if you were born in Sierra Leone 100 years ago. You had no conception that anywhere else in the world was any different than where you were, right? And so a hidden side effect of, quote-unquote, connecting the world through the internet is that we all become suddenly aware of hundreds or thousands of reference points that make our current situation seem less fortunate. We are hyper-aware of all of the things that we lack and that we don't have access to and that we, advantages we didn't get, situations we haven't experienced. And I think that puts a downward pressure on our perception of our own fortune. The effect of that is that you actually get people who have grown up in extremely fortunate circumstances or had very fortunate lives

00:51:08feeling unbelievably oppressed and disadvantaged for like the tiniest things. My grandmother talks about this a lot. She was a child of the depression. You know, she was young when the depression was going on. And she said, we were poor, but we didn't know it because everybody was poor around us. They made dresses out of flower sacks and they, you know, they had, they would just organize dances amongst the kids on the weekends because they didn't have any money to do anything else. And she's like, we had a great time and we didn't know we were poor. The takeaway from all that for me anyway, is that, Yeah, you can't control heaven luck, but you also really can't interpret it correctly either. Like, you know, you can say that, oh, this is a terrible way. Like we just said with the Sierra Leone versus Norway or my situation or whatever. It's really hard to interpret it correctly. Good luck, bad luck. Who knows? One of the reasons... For that, though, is some of the biases that are constantly working in the background for us. Just a couple of those I want to point out. One of the big ones is the actor-observer bias. In that, when we observe other people's behavior, we usually attribute that to their character. And then when we observe our own behavior, we usually attribute a lot of it to circumstances. So, like, classic examples, getting cut off in traffic versus being cut off in traffic. Right.

00:52:18If you cut someone else off, I was like, well, I'm in a hurry and, you know, my grandma's sick or, you know, this is like I've had a bad day, whatever. When they cut you off, though, they're just an asshole. They're a horrible person. Yeah. And so and so instead of just like seeing that, like, a lot of things are just random and there's chance and there's luck involved to it, we just have this real, like, deep desire to attribute actions to some sort of meaning. Right. And usually that meaning is someone's character or the their who they are. Right. Rather than just this just happened. Right. Right. So it's like, if I'm struggling, it's because all these horrible things have happened to me. But if you're struggling, it's because you are, there's some failure of character. You're irresponsible. You make terrible decisions. You don't know what you're doing, et cetera, et cetera. Someone's rude to you and they're an asshole or something like that. Maybe they've been up since 4 a.m. and they've been taking care of a sick parent or child. You don't see all of those things, right? It's almost impossible for us to interpret any kind of luck, but especially heaven luck too, right? There's so many complicated factors that go into it. The other one is hindsight bias.

00:53:20The farmer and the horse story, you know, there's hindsight bias all the time. Like the sun keeps coming up. Oh, this is good luck. This is bad luck after the fact. Right. We can look back and say this was good luck because of how it turned out. But you really don't know whether that is good luck or bad luck. So the point is, is that we're just very, very biased not to see luck and fortune in a very accurate way. Like all of our perspectives. Yes. Ultimately, they are self-serving to our own interests. Yes, all biases pretty much end up there. That's true. Here's the thing about these biases is that you're not necessarily stuck with them, too. You can kind of train yourself to see luck, maybe not in an accurate way, but a more beneficial way, at least. One of those ways is through gratitude. Okay. What gratitude is, is like an expansion of your frame of reference. For example, like you could sit here and say, well, the sun rising in the morning, that's not lucky. That's just, that's what happens. It just, what's, it's what happens on earth, right? There's nothing lucky about that. But if you broaden your frame of reference a little bit and you think about, well, you're floating on a rock and an infinite nothingness hurtling through space, why we're here, we don't know. Yeah.

00:54:26I mean, there's millions of other planets that probably- Billions, trillions maybe of other planet planets. And as far as we know, none of them have a sun that can support life, that has a regular rotation and all these things. That seems incredibly lucky, right? You and I and everybody else listening to this, you are the product of literally billions of years of literally perfect evolution. Not a single thing went wrong in that cosmically impossible chain of events. Not one single thing went wrong. That's like the widest frame that I usually get to. I mean, that is incredible, right? And we'd like go all the way back to the beginning of time. Not a single thing went wrong to produce this moment right now. That's insane. Yeah. It's an expansion of your reference point, though, too. And this is what happens, I think, with people when you don't see the luck around you is that you get so narrowly focused on something like, oh, this bad thing happened and it's bad for me right now. But if you step back and widen that frame of reference a little bit.

00:55:29And if you can do that through gratitude, you know, I've kind of poo-pooed on gratitude before, like, it's kind of a hokey practice or whatever. But I am a pretty just grateful person in general. And so I don't I don't feel like I have to practice it. But if you aren't a grateful person, you can practice it and you can widen your references away. I've always been kind of lukewarm on the gratitude thing, but I think prepping this episode and thinking of it in this way really explained it to me. Gratitude really is the mental exercise of just imagining all of the potential worse realities that you could exist in. And by doing that mental exercise, it generates a sense of a positive feeling and optimism and hope for the future that... that really came from nothing. Like you really, it allows you to kind of conjure those feelings out of nothing, um, to help you move forward. And I think that's, it's an incredibly powerful thing and it's an incredible mental tool that you can use to, uh, to propel yourself forward.

00:56:29Yeah, I think that's why I feel like I haven't had a lot of bad luck or I think I've seen all the alternatives because of the way I grew up and where I grew up. There were a lot of examples around me that didn't turn out as well. And I was like, I easily could have been one of them and I'm not. And that's an expansion of your frame of reference, too. Right. Like, just like you're saying all the things that could have gone wrong and that didn't go wrong. There's kind of a geographic lottery, a demographic lottery. There's a talent matching lottery. There's a time horizon lottery. You can expand your frame of reference in all those different ways to generate a sense of gratitude as well. Right. Like, so if you feel bad about where you live, well, you can easily imagine a worse place to live. If you feel bad about the time you live in, well, it's not very hard to reach back and find a much worse time to live. If you feel bad about your particular talent or aptitudes for certain things, it's not hard to think of things that you'd be even worse at than whatever you're doing. It's funny. I had a viral tweet a couple years ago that I love name checking myself on my own podcast here, but this, this was a banger. So I'm, I'm proud of it. So I said, uh, your ancestors survived centuries of floods, wars, famine, slavery, and plagues for you to sit on the toilet and compare your life to people on the internet.

00:57:39It's a vivid image. Yeah. The point isn't necessarily to make you feel guilty about it, though, right? The point is just that, like, you can widen your frame of reference. You can, there's a different way to look at this, right? We talk a lot about, you know, cognitive reframing and all that in a lot of different ways. And this is just another form of that. Expanding your frame of reference, though, is the way to do this. And there's real tangible benefits to this, too. Right. So the research they've done, like positive emotions in general, gratitude especially, though, they literally do broaden your attentional scope. When you broaden your scope, those positive emotions kind of have a positive feedback loop where you broaden your attentional scope and you start to see things. more things, more opportunities in your environment. So it's like luck begets luck. There's like an upward spiral that kind of happens from this. Because you expand your frame of reference, you say, okay, well, this didn't happen. That didn't happen. I'm here. Now you see all these other possibilities. You're going to see more chance opportunities

00:58:37in your environment just by broadening your frame of reference. Yeah, it makes sense. If you broaden that aperture of how you see yourself, you open yourself up to way more connections and possibilities than you would have had otherwise. And I think this kind of explains that research that I talked about at the top of the episode, right? Where it's like the lucky people... were the ones who spotted the money sitting on the ground. They're the ones who spotted the really interesting person sitting in the coffee shop and started a conversation with them, which then just makes them feel luckier, which then just makes it easier to imagine a world where they didn't, see those things or take that action, which it's so yeah, it kind of becomes like a flywheel of good fortune. This is also going to be really important as we get into the next chapters, because as we get into earth luck and human luck, so much of maximizing earth luck and human luck, like those are the two forms of luck that you actually can actively increase in your life.

00:59:30And so much of that we're going to find is simply either A, seeing a wider range of possibilities than you see now, and then seeing the situation clearly, like being able to be realistic and rational about like a decision in front of you. And so if you are very kind of narrow minded and closed off and how you see yourself and you just see yourself living a very unfortunate existence, you see yourself as very uniquely victimized or screwed over in some way. A, you're not going to have that wider horizon to see future possibilities. And then B, you're also probably not going to be objective about the decisions that you're doing. immediately in front of you because you're going to be so invested in that one frame of reference of yourself that you're not going to be willing to challenge it or question it in any way. Also, I think there are interestingly kind of two ways to really screw this up with your own heaven luck. I think one is to preface.

01:00:29properly assess all of the unfortunate things that you've had to deal with in your life without seeing the fortunate things that you've had in your life. So like just really narrowly focusing on all the bad shit that's happened to you and like not widening your perspective to include some of the better stuff. Conversely, You can also screw this up by taking credit for all of the good things that have happened to you and not acknowledging that a significant amount of it was due to luck. So it's like one version of this is, say, the unfortunate person who just feels zero agency and that the world has just screwed them over time and time again. But the other version of this is somebody who was born on third base and thinks they hit a triple. acknowledging your own fortune requires you to expand in both directions, if that makes sense. There's research on this gratitude stuff, too, that says this has to be grounded in some sort of reality. Right. And you're right. There's two ways that that can go get out of reality. You can you can you can assess it outside the bounds of reality. If you're going to be grateful about something, it does have to be grounded in some sort of fact of your life.

01:01:41Accurately, yes. But also, too, like, yeah, you have to have a bias of, like, expanding that reference like we're talking about, that frame of reference. One thing that Buffett said, too, that I really like, and I've definitely felt this in my own life, is that he was giving a talk to MBA students about this topic, about the Ovarian lottery, and he was explaining that, like... Because he feels so fortunate to be who he is, he feels that gives him a sense of moral duty to give back and help others. It's not like, oh, I'm so fortunate. Let me just like party like a rock star and... think I'm better than everybody. It's actually quite the opposite. It's when you are aware of all the ways things could be worse. I think it makes you more compassionate and you feel more of a sense of duty to help those around you. And like I realize I'm in such an insanely

01:02:34privileged position. Some of it I've earned. Some of it is just by pure chance and happenstance. But because I'm here, I do feel some sort of obligation to do something with it. If I just sat around spending all my money, like watching football games and going to the pool, like I would, I would feel fucking terrible about myself. It would feel like squandering such a blessed and incredible opportunity that I've been given. And so in a sense, I do think this widening of your aperture, expanding your frame of reference, considering all the possible alternatives that are worse than your current situation, not only does it make you more grateful for what you have, it makes you a more compassionate and giving person in general to the other people around you. There's another side to it too that some people will go to, which is extreme guilt around this. And that can also lead to like an action where it's like, well, I have all this, I'm not going to do anything with it because I have all this. I'm not going to, you know, go out and make more money that you could give away or, you know, something like that. So I think that's the right balance to strike is finding...

01:03:43You know, not partying your ass off versus, you know, being extremely guilty and not doing anything either. I start from a sense of guilt a lot of times, too. Like, oh, God, I got lucky here. A lot of people don't want to act on opportunities because they feel guilt. Well, it's not fair I have this opportunity. So I'm not going to take it. Right. Whereas I'm like, no, it's not fair for you to not take it. So to kind of bring this home, you know, people... who perceive themselves as lucky as we we've already discussed, they tend to report higher life satisfaction. They tend to be happier people. They tend to be more successful, see more opportunities. They just report better outcomes kind of across the board. There does seem to be a little bit of a self-fulfilling prophecy aspect of this, which is that the more fortunate you feel, the more aware you are of alternative realities or alternative versions of your life, the, which then opens you up to seeing future opportunities. It makes you kind of more open-minded and more flexible in your thinking, which then allows you to take advantage of those future opportunities and excel even more and live an even better life. So heaven luck, even though we can't control it, even though it is all of the stuff that happens to us, what we can control is our perspective on it.

01:04:57how we view our circumstances and what are the alternative circumstances that we can imagine for ourselves that we don't have. So while we can't change our heaven luck, we can change how we feel about our heaven luck. And it turns out that that actually matters as much, if not more, than what heaven luck we have in the first place. But the next two lucks we're going to talk about are actually the forms of luck that we can alter in our lives, that we can improve, that we can get better at through different skills and practice. So in the next chapter, we're going to talk about earth luck, which is the luck that is generated by our environment. And to explain that, we're going to go back to Napoleon. Except we're going to visit him as a teenager when he was a lonely foreign bullied student at an academy in France and seemed to have nothing going for him. Yet he still managed to turn into the most powerful man in the world. But first, a word from our sponsor.

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01:07:16Everybody talks about hard work. Everybody talks about discipline. Everybody talks about productivity. nobody talks about luck and definitely nobody talks about how you can improve your own luck to achieve incredible things so i want to start with a story it's 1778 it's a small military academy in france it's full of young boys from french nobility bunch of rich spoiled brats and there is this one nine-year-old there he's the youngest he's the smallest he's definitely the He's from an obscure island in the Mediterranean called Corsica. He's only technically French by pure happenstance. The French happened to invade Corsica and conquer it, I believe, the year before he was born. Otherwise, he would have been born Italian. He spoke with a thick Italian accent actually his entire life.

01:08:13He was ruthlessly bullied, ostracized, kind of seen as a joke in the academy. But his name was Napoleon. And ironically, he would go on to become the emperor of France, one of the most powerful men in world history. And also, one of the most incredible... historical figures. There's a kind of a definitive biography on him by a historian named Andrew Roberts. I read that at the beginning of this year. And at this point, I've read quite a few biographies of major historical figures. If you told me to pick one historical figure that you any country, any time period, and he would have become extraordinary, I think I would pick Napoleon. By the time he's 14, it is so clear that this person is exceptional at almost everything he does. Yes, he was hardworking. He was very disciplined. He was very intelligent.

01:09:14But one of the things that was notable about Napoleon was his situational awareness. Like he had a very strong understanding of his position in the world and where the opportunities were in the world. And so in this military academy, He was a bit of an academic prodigy, and he understood relatively early that, you know, at the time, artillery was kind of the new thing. They had just invented various types of cannons and whatnot. But to operate the artillery at the time, you had to be extremely good at math, and you needed to be able to calculate very quickly in your head. And he was very good at that. And so he understood that... Artillery was the highest leverage point within the military. And so he studied and went into the artillery with kind of an intuitive understanding of like, this is going to be extremely important. So if I can get really good at this before most other people, this is going to give me more opportunities. He was a lonely kid. He was on his own. He was bullied. He was picked on.

01:10:20But he also seemed to have this intuitive sense that if he could just accumulate as much knowledge as possible, as early as possible, this would give him a compounded advantage throughout the rest of life. And so you see very early on that there's just this voracious appetite for knowledge. He was always in the library. He always had a massive stack of books on his bedside. He was reading constantly, 10 hours a day, trying to understand everything, reading. And he wasn't just reading about anything. He was reading about his history, politics, warfare, economics, trying to understand all of the broad systems of society. Because again, I think he understood... the context in which he lived, that he was in a very turbulent period in maybe the most powerful country in the world at the time, France, right before the revolution. And so with this expertise and this incredible understanding, when the revolution eventually did happen...

01:11:29Napoleon found himself in a very unique position because most of his peers that he had come up through the academy with, they were children of the aristocrats. They were terrified of the revolution. They were incredibly risk averse. They were not forward thinking. They were not innovative in the way they saw politics or government. or society in general. Whereas Napoleon, not only had he spent all of his teenage years studying historical situations like this, but he himself had come from a revolutionary family in Corsica from a country that had been conquered by an empire and was rebelling against that empire. And so he had a very intuitive understanding of both sides of the coin. Kind of the old aristocratic and royalty on the one side, but also the people of France who were rising up and demanding their own rights and their own political freedoms. What's really notable when you read Napoleon's story is that...

01:12:32He was extremely good at spotting high leverage opportunities, and then he would act ferociously on those opportunities. Like he would see an opening that was maybe a little bit risky, but he could see that the upside was massive and he would go all in on it very, very quickly. And so in this sense, from the outside, he looks very lucky. It's like his entire life is kind of this endless series of things working out for him one after another after another. But when you really get in and analyze very deeply his thought process, it's clear that these were calculated decisions where he had a very strong understanding of the upside. I'll give you a really simple example. So. Early on when he was in power, all the other European powers were trying to get rid of him. Everybody was like terrified of him and terrified of what had happened in France. And so the other European powers were declaring war on him constantly and attacking him and fighting him.

01:13:32he received some intelligence that the Austrian army was moving across northern Italy and was getting in position to invade the south of France. And for the French army to move to the south of France, they're going to be behind the eight ball. They were going to be behind schedule. It was going to be very difficult for them to get there in time. They were going to be very disadvantaged once the Austrian invasion started. At the time, it was assumed that crossing the Alps was impossible, especially in winter. And so no army had even attempted it in centuries. Napoleon looked at it and he was like, well, we've got some pretty good engineers. I bet they could figure it out. And if they could figure it out, we can actually attack the Austrian army from behind without them even knowing that we're there. And so he said, fuck it, let's do it. Right. This thing that nobody had ever done before that all the military strategists of the time thought was literally impossible. Within a day, he was like, no, I think we can figure it out.

01:14:36Let's go for it. Because he understood that, like, the upside was that he would basically win the war before it even began. All he had to do was just, you know, figure out a little bit of the logistics of getting over the mountain. And sure enough, his army figured it out. They, like, devised all these new methods of, you know, they, like, built sleds for their cannons and shit and, like, dragged it up... the mountaintops and, um, they somehow, they somehow managed it in, in an insane, insanely short period of time. And then he ended up just wiping out the Austrian army like days. His whole story is just filled with moments like this. I'm just like him noticing the thing that nobody else's was noticing and him having the courage and, and wisdom to act aggressively on that opportunity that nobody else was witnessing and, And I love Napoleon's story because he is somebody who was born with a relatively low amount of heaven luck in one sense. But his earth luck, the environment and the context that he was placed in...

01:15:46there were always very large openings with large upside. And his genius, he was brilliant at a lot of things, but his genius was really maximizing his earth luck, understanding the situation he was in and understanding sometimes intuitively, sometimes very intellectually, that there was extremely high upside to some decisions over others and that if he could just continually place himself in the right context over and over again, good things were going to happen. Another example of Napoleon kind of inventing his own luck, so to speak, is that he very famously would go eat and sleep with his soldiers, right? So at the time, generals of most European armies, they were like quasi-royalties. Some of them were princes. Some of them were, they were all aristocrats. And it was a very stratified military, right? It's like the generals, you wouldn't catch them dead near their soldiers. Napoleon very regularly would leave his own tent, go down into the ranks, sit around campfires, share stories, talk to his men, joke around with them.

01:16:57His men had nicknames for him. They used to tease him. He would very honestly go up to random foot soldiers and ask for feedback on how things were being run. Did they need anything? How were they feeling? And so he generated this immense amount of respect and loyalty among his men. And as a result, what you noticed is that his army's, Most of the battles that he fought, his army was outnumbered, yet they would still win. There were often situations that most generals or military leaders would look at the map and say, that's impossible. But Napoleon would know that it was possible just because of the morale and the intensity that his men were willing to fight for him. And so from the outside, you could look at it and say, like, wow, he got lucky over and over again. But actually, there was an element that was happening behind the scenes that other military leaders just weren't aware of. That there was, like, kind of this intangible emotional side that Napoleon had mastered and understood that gave him the appearance of being lucky to others. Right.

01:18:09It's funny, there was a thing that I saw when I was reading the Napoleon book. I was Googling around and finding a bunch of stuff on them, and there was a historical researcher who went and found all the most famous and prominent... military commanders throughout history. So he took all of their major battles. He took the size of the armies. He took the terrain and resources and circumstances into account and developed like a statistical model that predicted how likely it was that each general would win or lose each battle. He compared that statistical prediction of how many battles each general should win versus how many battles they actually won. And then he ranked them So the best generals were the ones who won the most over their expected victories based on troop counts and resources and technology. And obviously the worst generals were the ones who actually lost more battles than they were statistically expected to win. The chart is like...

01:19:12almost hilarious because it's like a pretty clean curve, right? You've got all the bad generals here at the bottom, and then it like slowly rises up, and you've got some generals who are like modestly outperform expectation. And then you've got this like very small handful of outliers. Like I think Julius Caesar was one. I think there was like an English general who was one, or English admiral who was one, a couple others. And then there's Napoleon and he's like so far off the chart that it looks like it's just broken. Like somebody put in the wrong number on an Excel spreadsheet because he's like such an absurd outlier that it's like statistically impossible. Like it shouldn't even happen. Okay, I'm done nerding now. To bring this back to luck and bring it back to Napoleon's question to his generals. Are you lucky? I think what is encapsulated in that question for Napoleon, probably why he asked it, you know, we talked in the last chapter about that broadening the aperture of your frame of reference. I think what he was asking other generals is how wide is your aperture? How wide is your frame of reference? How broadly do you see yourself, your situation in history, your relationship with your men,

01:20:33So that is ultimately upstream of all sorts of decisions that you're going to make, especially in the heat of battle. Are you able to spot opportunities that other people are not going to be able to spot? Are you going to be able to act on those opportunities when most people are not going to be able to act? Are you going to pay attention to the small details that most people ignore? Are you going to go talk to your men? Are you going to, you know, spend extra time scouting terrain? Are you going to find new innovative ways to like use your resources that other people wouldn't consider, wouldn't think about? All of these things are ultimately variations of earth luck, right? It's finding high leverage decisions that make dozens and dozens, if not hundreds of other decisions skew in your favor.

01:21:23When we get the human luck, we're going to talk about actually playing the probabilities of certain situations. Earth luck is like finding ways to skew those probabilities to your advantage. When Napoleon had dinner with his soldiers and hung and slept around the same campfire as them... On the surface, that's a very low leverage behavior. It feels like he's wasting time. But he knows those men are going to talk to other men. He's going to develop a reputation. People are going to really admire him. That's going to have an outsized effect on the next battle. By spending that time with his men, it's going to skew dozens of them slightly in his favor. And then all of those variables that skew in his favor, they compound when added together. Now I want to bring this back to Richard Wiseman, who was the researcher who did the newspaper study and the CAFE study that we talked about at the top of this podcast episode. Wiseman spent a decade studying luck and chance and people who perceive themselves as lucky. And he was the one to find that people who perceive themselves as lucky tend to score higher on various measures of well-being. They tend to have better outcomes. And really what he was measuring was

01:22:38was earth luck. He wasn't measuring heaven luck. He wasn't looking at, you know, how wealthy were people's families that they were born into or what country did they grow up in or whatever. He also wasn't looking at human luck, which is taking calculated risk and decision-making. He looked at earth luck, which was, what are these people's mindsets? How do they see the world How do they spot opportunities? How often do they see opportunities? How often do they see opportunities that other people don't see? And how willing are they to act on those opportunities? And he broke down earth luck into four principles. And these four principles are principles that we can all adopt to make us quote unquote luckier, but really to maximize that ability to spot connections and opportunities in our environment. So the first principle is... people with a lot of earth luck, they maximize the opportunities when presented to them. This is the piece of advice that Will Smith's dad gave him, right? Luck is just when opportunity meets preparation. It's like an opportunity presents itself, you go all in, you put in all your effort to make that opportunity work for you. That's quote unquote luck. There's no such thing as luck. It's just opportunity and preparation.

01:23:57What's interesting is that Wiseman found that people who... tended to be luckier, they were better at acting on the opportunities in their environment, even like opportunities that maybe appeared small or insignificant at first. So he found that lucky people tended to have lots and lots of loose social ties. They had much wider social networks. They were good at when they met somebody new, they were good at following up. They were good at checking in. They were good at introducing people to each other. Similarly, he found that lucky people were open-minded about things that they could do or things that they could try. Like if an opportunity to go to a new sort of event or try a new activity came along, the lucky people were more likely to say, eh, fuck it, let me give it a shot. Let's see what happens, right? You have nothing to lose. The second principle he found was that lucky people tended to listen to their intuition more often.

01:24:57This one is interesting because as we're going to find in the next chapter, so much of human luck is kind of rational decision-making and understanding the risk or the probability of like what's in front of you. Earth luck seems to be much more because it is much broader in terms of like what you're assessing and what opportunities you're considering. It seems that people who rely on their gut instinct tend to do better. We don't need to go down the rabbit hole too much of like what gut instinct is or like Daniel Kahneman's work or like type one thinking versus type two thinking. But basically what your gut instinct is, is it is all of the connections that your unconscious is drawing between your experiences and your knowledge without your full conscious awareness. And generally what you see among the research is that making decisions based on gut instinct is better if you are well-informed or have a broad set of experience around a decision. And it performs poorly if you are in a completely new environment. You have no fucking idea what you're doing. You have no knowledge whatsoever.

01:26:14I think when you look at Napoleon's case, all of that reading that he did when he was young, it built this like foundational layer of context and understanding of the world. That when he was in those heated situations later on, and he had to make really critical decisions in the spur of the moment, he was able to. And they were able, generally he was able to make good decisions. Yeah. And I think generally people who are quote unquote lucky are, there's probably a little bit of a self-fulfilling prophecy here because they are, they have a wider aperture. They, they're just better at that lateral thinking to begin with. And so their intuition probably is a little more informed, you know what I mean? Just like you're saying. So yeah, that's a little tidbit I would throw in there too. Principle number three is lucky people expect good things to happen to them. There's just an optimism to it. This is nothing groundbreaking, but generally optimists are happier, better things happen to them, they're healthier. There is a self-fulfilling prophecy to this as well in that when you expect good things to happen, you are more open to finding the good silver linings of whatever does come and then focusing on those and then acting on those.

01:27:27And then principle number four is that lucky people tend to transform bad luck into good luck, which is this is the turning lemons in the lemonade. So if something does go against them, they're good at using it as a learning experience or taking a lesson from it or adjusting their behavior going forward. So you and I, we've both described ourselves as lucky people. Um, I'm curious, which of the four principles do you think you embody the most? Yeah. That like drives a lot of your luck. I mean, a couple of them lately I've went back and forth through, through this one throughout my life though, but the chance opportunities one I've seen it more and more. Sometimes I pull back and I kind of withdraw and I get real into ruts and routines and stuff like that. And then I kind of do feel myself being like, Oh, nothing good ever happens. But lately I've been like kind of trying to get out a little bit more. I used to work in coffee shops a lot, you know, as I work remotely and working coffee shops a lot. And I stopped doing that for a while. Now I'm going back to doing that. And I bump into just random people all the time now, which is kind of, kind of cool.

01:28:30And I saw this, you know, in our line of work too. So Steph, who works with us now, right? This was a chance opportunity that you kind of forced me into. I remember you got invited to this podcast networking thing and you were being all grumpy pants about it. Like networking and meh. And I was like, Drew, just shut up and go. Yeah, yeah. You'll be glad you did. I was like, you go, Mark. I was like, you go, Mark. Why don't you go? I'd be glad you did. It turns out. Yeah, we ended up hiring. We got a great team member out of it. Steph, yeah. And not only that, she kind of made her own luck there too, though. She was one of the organizers of that dinner. She was kind of putting herself out there, and she organized this dinner, and a whole bunch of podcasters showed up. And just so it turned out, I was like, Mark, we need to hire somebody who knows what the hell they're doing here. And she was a perfect fit for it. So that happened. And so ever since then, I was like, oh, I used to do this a lot. I used to just throw myself into these situations that were, you know, high variance and a lot of contact, a lot of surface area with luck. And I think that that I think is the best one out of all of them. Anyway, it's just putting yourself in those in in high variance situations where there's more opportunity.

01:29:38Several of the last few people I've dated, I've just met through something I wasn't going to go to, but ended up going. Yeah. And some social event or something like that. I'm tired, but I'm going to go anyway. I end up meeting somebody that, you know, I develop a relationship or those sorts of things happen to me all the time, I think, too. Yeah. A little bit the intuition side, too. I've noticed that a little bit as I get older. If I'm listening to that part of myself where it's like. you know, you probably really should do this and instead of ignoring it, I go go do it. And I think there is, again, it's that those connections I've made from all my experience in the past. Yeah. That one you got to be careful with, I think. But yeah. Yeah. What about you? What do you think? I think I'm pretty good at maximizing opportunities. Yeah. Yeah. You are. You put yourself into a lot of situations too. You are. You're very open to experience. You're more open to experience than I am. So you just naturally put yourself into a lot more situations than I do. I would say I'm extremely good at principle four to transforming bad luck in the good luck. Like I almost have, it's almost actually a problem. Yeah. How, how well I can polish a turd. I know. In my life. Yeah. It takes me a little while to get there. I noticed you just go straight there. Yeah. I'm like, this is, this is great. Yeah. It takes me like, I learned something, but it's after the fact and it takes me a little while. You go straight there.

01:30:54I feel very blessed. So I feel like I have a lot of human luck in that I think I am naturally very good at the earth luck side of this. I think I'm good at understanding context and situations that are likely to have a lot of upside. I think I generally spot it earlier than most, and I'm very tolerant of setbacks, challenges, failures. You know, so my whole career started because my roommates had blogs on Blogspot in 2007, and they were like, hey, Mark, you've got some fun stories. You should start a blog. And I was like, what's the point? Nobody's going to read it. Ha ha. I started writing and I remember, you know, I got like a few months in and people started showing up on my blog that I'd never met before. You know, initially it was like my roommates and a couple of friends and then like a couple of friends of friends. And then six months in, there's like random people from like.

01:31:55California, Germany, the UK showing up and leaving comments and stuff. And I remember at that point, I had a moment where I was like, oh, there's something here. Like if, if, if I just go all in on this, like something good's going to happen. I remember I quit my day job. I quit my day job spring of 2008 and I was burning through savings. Ironically, I had made a bunch of money playing poker the year before and I was burning through all my poker winnings. And I remember talking to my friend and I remember saying like, I don't know if it's going to be this year or next year or the year after. I just know that if I keep doing this. big things are going to happen. Like I just, I could tell like, this is, this is the future of media. It's the future of creativity. Um,

01:32:48cutting out all the middlemen and gatekeepers between content creator and content consumer, like, it just seemed inevitable. And I had an implicit understanding that, like, I'm here very early and I have a knack for this. So if I just keep going, it's going to work out. Yeah. And that was some intuition then, you think? I think there was. I mean, coupled with, you know, some data too, but yeah. Absolutely. Yeah, yeah. But to come back to, like, the surface area piece... I think that that might be the one, you know, throwing, throwing yourself into, into situations. Like I do think that's, that's, that's been the hardest one to learn. I I've always been a bit of a loner and just wanted to do things myself. And I'll also had like a delusional level of optimism of my own capacity to do things. Um, You know, I would say for me, the big aha moment around maximizing opportunities, expanding surface area. You know, I lived as a nomad, digital nomad from 2009 to 2009.

01:33:502014 and my career was doing really well, but I remember right around the time I got my first book deal, which eventually became Subtle Art, there was kind of this, I started to have this awareness that like by not being in the US, there was just something about not being in the room when a lot of things were happening, not being able to meet people face to face who were doing the same thing I was doing. Yeah. And in 2015, after getting my book deal, I decided to move to New York initially as an experiment. Um, but that six months, I met more people who were impactful on my career in that six months than I had like the five years prior combined. And so many opportunities opened up so many people doing like interesting business stuff that, you know, I, Like I was learning so much so fast that it was moving to New York is in hindsight, like one of the best decisions I ever made just because it like exposed me to so many chance encounters that I wouldn't have been exposed to otherwise.

01:34:57It's funny because I notice as we're going through this episode or this chapter, I still feel awkward just calling it luck. I keep finding these other words to replace it like chance encounters, maximizing opportunity, expanding surface area. This kind of comes back to the Western culture point. I think it's so ingrained in us in Western culture that luck is something that happens to you. It's not... It's not something you can control. It's not something you can leverage or build. Yeah, it's funny. Even though we've been studying this for the past month, and I'm like, I still feel awkward saying I've gotten luckier or I've had more luck as my life has gone on. Yeah, yeah. We should take that some time. I don't know, man. It's just like, it is very deep. It just feels like as soon as I call it luck, I'm like removing my own agency. But it's like, I don't know what else to call it, right? Like you can call it boldness. You can call it foresight. You can call it. They're inextricable. The skills and the effort and everything you put in is you can't extricate that from chance encounters, the surface area. You're talking about the luck around you. You just can't separate that. I don't know what to make of it necessarily either.

01:36:13I mean, you can talk about people have different beliefs about luck. Right. There's actually, it's kind of interesting. There's these two main beliefs that psychologists have identified and they sound kind of the same on the surface, but when you dig into them, they're very different, they have very different outcomes around it. Okay. So the first is like this, the belief in luck, like, do you believe in luck? Right? People ask, do you believe in luck? You believe in fate? You believe in chance? Whatever. Do you believe in luck? That's a different question than, are you lucky? Like the Napoleon question, which is what they call personal belief and personal luck. So people usually have these two different, either have one of, one of these two different frame of minds around this. Okay. These two different beliefs. If you believe in luck. Because luck is just this force and it's almost like fatalism. Like luck is just a force acting on us and there is nothing we can do about it. Right? If that's what you believe, there's usually worse outcomes. Less well-being. You're less happy. You don't have as much luck in your life too. You just think luck is like kind of a cruel force that's out of your control.

01:37:15Um, it's linked to neuroticism to some degree, even to, again, essentially it's just fatalism. And we saw that throughout the Western, uh, Western mind, the, the history of the Western mind, there's a strong kind of strain of fatalism that, that runs through that. The other belief though, the belief in personal luck, like, are you personally lucky people who believe that like you and I do? actually tend to be happier people. They have more luck in their life. It's more happiness, more life satisfaction. And it's independent of any other personality traits as well. Okay. Okay. It's Wiseman's that positive expectation. It's that principle number three, he says, right? It operates more as a stable self-concept rather than just the situational thing that happens to you again. And so I think if you can adopt that or, you know, use that gratitude to widen your frame of reference and start seeing yourself as someone who is lucky, personally lucky.

01:38:13You can actually reap the benefits of this. It transforms into more of that, what you're talking about, where we just have this idea that luck is just something that happens to you versus something that luck is actually something that's a little bit within your control. Something you can influence, at least. I mean, you don't have a whole lot of control on the outcome of it, but you can at least influence the odds, like you're saying. So, yeah, I guess one way to think about it, this is kind of a variation of Raul's bail of ignorance, is that if you think you were to live your life a thousand times, where on the continuum of outcomes do you think your current timeline is on? Right. Mine is like 994. Eight. I'm going to say. Do you really think so? I think it's up there. I mean, just given the starting point that I had and, again, the people I saw around me who have very similar starting points who didn't wind up, who went the other way, I'm up there. I like 90th percentile for sure of where I could have ended up, I think. I really do think that. Me too. So that's why I wouldn't draw that ball again. I wouldn't. Oh, definitely not put a ball. Would not pull that lever again. No, no, no, no. Yeah. If I had the chance. But it's interesting because instead of like,

01:39:24trading it for somebody else's life, a random person's life. This is like having a redo on your own life. Right, right. Given the exact same circumstances, anything like that, right? Yeah. I still don't think it would. No, I'm definitely up in the 99th percentile. Yeah. It's like there's some stupidly outsized returns on some of my decisions. But then it's like, is that just because we can't imagine things better? Like, it's easier to imagine things worse. Yeah, yeah, yeah. Sure. I can think about how I could do a lot of things better on the margins, but there's like, when I think about like, okay, what's the version of my life that's like 10x this life? It's extremely hard for me to think about that. Yeah. Yeah, I don't know. I guess I go there too. Like, if there was a decision somewhere along the line that could have 10x'd my current result... Where would it have been? I can't think of anything. That's a hard one to come up with. Yeah. I mean, I don't know. I just see all the things that had to like, you know, like this job, for instance, Mark, like I applied twice to work with you. Actually, the first time I got an interview with you, but I wasn't a right fit for the job. You got unlucky. Thought that was unlucky at the time. Right.

01:40:32I like how we both made the same good luck bad luck who knows it turned out to be a great luck actually because then two years later like this job came up a version of this job came up I was way better suited for it as well in way better position for it and like I was in the middle of a PhD program and you're like I need a researcher that who knows psychology and neuroscience all this kind of stuff that turned out to be lucky and then when you made the decision and you could have been on a day you just, you had a good lunch and you're like, I like this guy. Like, there's so many things that go into this that I'm just like, no, I wouldn't roll that dice again. Yeah. Yeah. I just wouldn't. Yeah. So I don't know. Yeah. I, I see myself as a personally lucky person, I guess is what I'm saying. And I, yeah, luck is a force in the, in the grand scheme of things, but when it comes down to it. I wonder what the proportion of people who see themselves as lucky to unlucky is. Yeah. I didn't like, I didn't see that, I guess. Yeah. I didn't see that in the research. Yeah. Yeah. If you're listening to this and you, Explain in the comments why. Please. Yeah. Yeah. Because I don't meet a whole lot of people like that, I guess. Yeah. And is it heaven luck? Is it earth luck? Or is it human luck? Because it's one thing to just make like some rational decisions and they kind of go against you. You know, it's like you go to school to be a software engineer and then the next year ChatGPT comes out. Like it's like that was a rational decision and just went against you. That is unlucky in a lot of ways.

01:41:53Actually, I think there probably are a fair amount of people who do see themselves as unlucky because something I dug up as well is this connection between luck and anxiety. We talked about that widening the aperture, widening your frame of reference. Anxiety does the opposite, and a lot of people are pretty anxious, right? Um, what anxiety does is it really narrows your focus on something. Obviously like you're more vigilant when you're anxious, you're more, you're more focused on the bad things when you're anxious. Right. And this has the effect of you ending up, like you end up missing a lot of those opportunities that you would otherwise see if you had that wider frame of reference. Right. And so I think there's a fair amount of people who probably do walk around thinking they're quite unlucky because of that. If you're anxious about your life in general or something, and I notice this when I go through periods of anxiety too, I miss all sorts of things around me. I miss all sorts of opportunities. I don't engage with the world as much.

01:42:52It's interesting because if you think about anxiety, it is quite literally an expectation of misfortune. Yeah. Right? So it's like when you're anxious, let's say you have to go on stage and publicly speak in front of hundreds of people and you're absolutely mortified beforehand. The thing you're mortified about is the absolute worst case scenario that is a one in a 10,000 chance of happening is that you go out there and you just bomb so hard. You have a panic attack or you puke in front of everybody. It is so unlikely, yet in your mind, that is probably what you're expecting that to happen. Yeah, this is explained actually in attentional control theory. This was a theory back from the 2000s, but there's these two systems kind of operating in your mind. You have a goal-directed system, and then you have a stimulus-driven system, okay? When you're less anxious, you have a goal-directed orientation, right? You're like, what am I trying to accomplish here? You're, again, wider aperture. You can see the goal. You can see the forest for the trees. When you're anxious, though, it's that stimulus-driven system, right?

01:43:57you're thinking about the individual stimuli that you're talking about puking and being embarrassed in front of everyone. So there's kind of a neurological level of that. And there's two executive functions that go along with that too, like inhibition, the ability to filter out irrelevant information in your environment. That's decreased under anxiety. And during anxiety, again, you're vigilant and you're looking for all those stimuli in your environment. I just, I just had another, made another connection, which is that, you know, there, there's kind of a conventional wisdom of like, don't make choices out of fear. Right. It's like, especially major life decisions, right. You shouldn't make a major decision because you're avoiding something you're afraid of. You should be making a major decision because you're excited about what you're stepping into. I think the reason that's really good advice is that when you're afraid of something, you're very myopic and you're only focused on that one single variable. Yet when you are excited about something, your view of the future and what's possible is probably very expansive. And you've probably drawn a lot of different connections or seen a lot of different opportunities. And you probably make a luckier decision.

01:45:08Yes. Yes. Because when you're avoiding the single thing out of fear, you're only accounting for that single variable. You're not accounting for the dozens and hundreds and millions of other variables. Right. Right. Yeah. So, um, yeah, there's that inhibition side. There's a shifting side to, um, to this where it's your ability to direct attention flexibility between stimuli and tasks. So again, that's like, if you have that wider aperture, you can do that. You know, anxious, anxious people do measurably have a reduced ability to notice things in their environment that again, they get that myopic. So it's so crazy, isn't it? Yeah. Dude, my wife is like, it's a, it happened. Think about it when you're anxious, you get fixated. Yeah. Right. And you do, you just get this tunnel vision and you can't see anything else around. Dude, my wife. So my wife is very anxious person. We were walking down the street, I think just a week ago and we were on the other side of the street. There was like this, it was like a man in like a ballerina tutu with like a bright red wig, but like.

01:46:12full hairy chest going on carrying like a handbag a really expensive handbag and on roller skates and i'm like gawking at this person being like holy shit look at that and my wife is just like dude to do completely walks by it and i like leaned over i'm like did you see that and she's like what literally this happens with your with your your vision yeah right when you are when you are anxious or you're stressed in any way your vision literally narrows like you your peripheral vision kind of uh it gets quieted down in your brain it literally narrows like this so there's a there's a physiological side to this too That explains a lot about my marriage. Yeah, right? Right? She fixates on a few things about you too, huh? Yeah. Yeah. So another thing I found in the research, and it's not...

01:47:08It's not super great research, I'll say that, but there's some things that are kind of pointing towards this, is just how much the environment actually matters versus things like personality, okay? In kind of some of these preliminary studies, what they found is your personality traits, like we talked about in the change episode, all of those traits, they don't matter nearly as much as the environment that you put yourself in when it comes to opportunities in your life and luck in your life, right? Yeah. So like one study, this was the digital environments, but you talked about this a little bit with your blogging and stuff like that. There's this digital environment that you got into and it was novel and there was a lot of variation, a lot of serendipity involved with it, right? They did this where, and it's self-report stuff. So again, this is preliminary. But people who engaged in more high variance digital environments met more people online. They found more interesting content online. They learned more online. Then people kind of just went to the same ones that were lower variance environments. Yep.

01:48:13I think this could easily translate into the real world, too. I mean, there's obviously an application for this in digital environments and online, even social media. But the point was, like, what they did is they measured all these people's personality traits, you know, gave them a personality test, measured all of them. Almost none of that. uh predicted whether or not they found her like got lucky had a serendipitous encounter met new people found interesting content any of that it was strictly almost the environment that they put themselves into it's interesting because i do think this is important because i know one of the criticisms richard wiseman's work has gotten his people have said like oh you're just describing extroversion and openness to new experiences okay like that's not luck that's just personality you know so like And I do think this finding is very relevant to that because it's not, it's, it's behavior based. It's not necessarily personality. Sure. An extrovert is probably going to be better at having a large social network than a introverted person, but ultimately it's the behavior that drives opportunities. Right. Right. And that behavior is choosing high variance environments. Yes. So again, go back to like my coffee shop example. Instead of me sitting at home all day, every day and working from my laptop, I'll, I'll,

01:49:27I'll go out and, you know, bump into people and sometimes it works and sometimes it doesn't. Or I'll go to that party that I decided not to go to. Or there's a bigger thing you can think about though here too. Like you talked about moving to New York. That's a high variance environment versus if you're living out in rural Idaho or whatever. Right? I think there's a lot of people too. You could be the hardest working, most creative, talented person, and maybe you want to go be an actor. But if you're not going to move out here to LA and you insist on living in rural Montana or whatever it is, I'm sorry, but that's just not going to be. gonna happen dude i just had this conversation with a guy i know who's a youtube consultant oh yeah um he was a big youtuber a number of years ago kind of pivoted into consultancy seemed to be doing great for a couple years but he lives on the other side of the world yeah and he was here for vidcon yeah a couple weeks ago and i had a whole conversation with him like i was like dude if you want to take the because he's it seems like he he's kind of in a rough

01:50:31And I was like, how often do you come out to LA? And he's like, wow, it's the first time I've been here in three years, and I'm like, bro, like you gotta fish where the fish are. Like you can't just expect everybody to come to you. Even though that's a digital environment that he's operating in, so it seems like you could do everything remote? Nope. No, you can't, and it was funny because we were at a local event here in Venice. And just in the hour that he and I were there together, we bumped into like three different people who knew us online and like had really interesting conversations with them. It's a very real thing. And I think especially for young people, this is such an important piece of advice. Yes. Like if you, whatever industry you want to go into. you should strongly consider physically moving yourself to the epicenter of that industry. Right? So if you want to be in finance, like you should go to London, New York. If you want to be in tech, like go to the Bay area, especially if you're young, especially if you don't have other obligations or, uh,

01:51:35responsibilities to balance putting yourself in that high variance high relevance environment to your goals it's just going to open up so many random opportunities it's funny i i invested in a company here um and i was talking to the co-founders and i asked them how they met each other and they were like oh we were roommates in palo alto when we both moved there and it was funny because they both moved there to work at other companies and then they were roommates and then after like a year they're like oh we should just start our own company together and it's like That never happens unless you move to Palo Alto. That's a high variance environment there too. Yeah. Yeah. Your business partner Raj. Yes. Can you talk about how you met him? Meadow Meta Poker Game. Which is meta right there. Very super meta. Very, very meta. It's funny. He and I joke because that night I won a bunch of money and he lost a bunch of money. But we joke that it was actually the highest ROI poker game he'd ever played in his life. Yeah. Yeah. But yeah, just sat down next to him. I was looking to get into AI for personal growth and development and had already been talking to a number of startups about partnering with them or doing something with them. Sat down next to Raj, start chatting very casually.

01:52:53Um, and one of the first things he says to me, he's like, oh, I've been building AI products for 10 years. I've sold my first two companies. I'm thinking about getting into mental health. What are you working on? And I was like, oh my God. Okay. I don't, I'm not like a fate person. I don't really believe in that sort of thing, but wow. Yeah. Yeah. But it's like, sometimes it just slaps you in the face and it's like, Hey moron, here it is. Here's your opportunity. Take it. Yeah. Okay. And there's, I think you can bring it down to earth too. If you're not one of those people who is going to move to New York or London or LA or whatever it is, just like I was saying, go to the, go to the coffee shop or whatever. Just like last week, I went, was watching one of the world cup games with some friends and some of my friends were like, ah, we're going to go grab a drink. And I was like, ah, can I tag along? You know? So it went. And we ran into this guy I met 10 years ago. I haven't talked to him since or whatever and got caught up with him. He's running and like a, he's importing teak wood now, like as a business that, which he wasn't doing at the time. And he's like, now I got a source of teak wood. I have, right? Which I'm a woodworker. So it's actually a fortunate thing for me. I wouldn't have done that if I wouldn't have just decided, yeah, I'll go grab a drink with you guys, you know? So stuff like that, just like increasing your surface area. If you're like, oh, my life is boring. And you know, all of this, just stuff like that, just simple stuff like that.

01:54:11What's interesting is that this is something that companies have understood for a long time. So if you look at corporate floor plans, where they put different... There's all sorts of stories about Pixar and Apple and how they lay out their floor plans and how they put the engineers next to the artists and make sure that they have to talk to each other. And it just... they measure this and they see real out like increased outputs in terms of creativity and innovative ideas google did something super cool in their early days which is they uh i'm trying to remember what they called it but um in their early days um their entire engineering team had one day a week to work on whatever they had yeah and 20 percent of our time yeah it was it was you you had to come in, you had to work on something, but it was, it could be any project you wanted. And some of Google's most valuable assets came out of like Google maps came out of that. And Gmail, Gmail came out of that, like a bunch of kind of the early infrastructure of the internet came out of just Google engineers screwing around on a Friday afternoon. Um,

01:55:18Because Google understood these are brilliant, creative people, if we give them opportunity to explore their interests, they're going to find so many things that we would never think of. And they did. Okay, yeah. So I mean, I think the point, you know, like I said, I've kind of had a lot of like really good earth luck just in general, like the people around me and everything. I felt like I didn't do a whole lot to influence that. Later on in my life I did, but early on I had just good earth luck. But the whole point of this is that Like you can't design the city that you live in or whatever, but you can choose the city that you live in, right? There is some influence to this. Whereas heaven luck, we don't have any control over it. Correct. Earth luck, we can influence it to some degree. The way I think about it is earth luck is, you know, heaven luck is the super macro stuff that we have zero control over. Human luck is like the micro stuff, the day-to-day decisions, the calculations, you know, it's like, should I buy a house or not? Should I get a new car or not? Like all of these things that you can kind of sit down and calculate the expected value of.

01:56:27Earthluck to me is like the periodic high leverage decisions that alter thousands of other decisions. So it's where you decide to live, what city you decide to live, what industry you decide to go into, what partner you choose to marry. Like this is something that you don't think of as luck, right? But it's like if you choose to marry a partner who is very emotionally unstable and is like constantly in crises, makes lots of bad decisions. Terrible with their money. Terrible with their money. You know, it's like unpredictable, volatile. guess what? Look at the odds. You're probably going to create a lot of bad luck for yourself because you are choosing to share a life with a person who creates all sorts of downside opportunities. Whereas if you marry somebody who's extremely reliable, makes really good decisions, is a great communicator, has a great social network, is very good at making new friends and finding new opportunities, you are increasing your earth luck by being with that person and

01:57:36create all sorts of downstream effects in other areas of your life and it it can be easy to look at a situation and be like well that guy just got lucky because his wife's super smart and it's like no he's not lucky he fucking chose her right like it's there's a certain understanding that like a good partner is going to make all the other areas of your life better Out of the three lucks, I think Earth's luck is the hardest to kind of conceptualize, but I also think it's the most important. I think it is what creates the greatest outcomes for us in our lives. Heaven luck, you're really just trying to make peace with it, find a way to feel good about it. Human luck, you're just trying to make rational decisions and kind of be objective about the situation you're in. But earth luck is... It feels like earth luck is where the biggest gains come from, the biggest wins come from. And to kind of come back to the poker analogy, if heaven luck is the cards you're dealt and human luck is the way you choose to play those cards...

01:58:41Earthluck is the table that you choose to play at, or it's the game you choose to enter. And some games have far more players and far more cards being dealt than others. Some games have more opportunities and more variants than others. And, you know, there's that old saying, it's like, play stupid games, win stupid prizes, right? Like play good games, win good prizes. Like game selection is such a huge part of life and finding the right game to situate yourself in that matches your talents, that fits your goals, that gives you more surface area for good things to happen is, is just so key. Yeah, I think what you're kind of getting at is about power laws, what we call power laws. Yes. Okay. And power laws, they determine basically the ceiling of your outcome, right? So yeah, you pick the right table, you pick the right game. Some tables have bigger pots. Yes. Whether you win that or not is kind of how you play the game and the human luck, right? But which tables you sit down at really do matter, right? And we've kind of alluded to this already, the career you pick and all of that, right? Yeah.

01:59:47There are the what I would call power law environments, right? So let's just take an example. Let's say you want to be a dentist. Okay. And let's say you want to be the best dentist in the world. How much more are you earning as the best dentist in the world compared to the 20th best dentist in the world? Or the second best dentist in the world. Or even the average dentist, right? The average dentist, yeah. Maybe twice as much. I don't know, three times as much. Maybe, right? So my point though, like dentistry, accounting, manual labor, construction jobs, whatever, those have a ceiling. Those are the tables where you sit down and like the pot is only so big, right? And it's not going to get any bigger than that. Yeah, the success curve is pretty flat. pretty flat there, right? So these are the industries where like effort and skill actually do compound pretty reliably. It just limits out pretty early, right? There's no real single event in any one of these industries or tables that you sit at that could wildly cause, give you wild success in any one of these, right? Compare that to something like entrepreneurship or the publishing world,

02:00:55or technology one of these where it's like there are wild wild gains to be had from very very minor differences in really quality or yeah results yeah and result you can be one percent better at like product design and probably make a hundred times more money right if you're a software company right Let's just, I don't know, randomly pick the publishing industry. Why would you pick that one, Drew? Why would I pick that, right? So I'm sitting across from someone who's sold millions and millions of books, right? How would you characterize that in terms of your earth luck that you've had? See, it's funny because the success, the outcome has been so disproportionate, it's actually fucked with my head. Yeah. Right. Sure. Like, the subtle art of not giving a fuck, I think if you look at kind of like the median self-help book, the subtle art of not giving a fuck has probably produced 20,000 times the result. Yeah. Right? Of the median result, yeah. A two, what is that? Two million percent? Yeah.

02:01:59increased result it's not 20,000 times better than the median so it's probably it's maybe twice as good as the median self-help book so that curve that success curve is just insanely steep and it is and you see this in the publishing industry you see this in media in general and entertainment in general that it's like the point oh one percent generates like 90% of the money and coming back to the game analogy again it's like being aware of the game that you're signing up to play right like i originally wanted to be a musician one of the things that you have to be very sober about if you want to pursue music is that you are signing up for a game that out of a thousand people 999 of them are not really going to make much money at all and then that one person out of a thousand is going to be incredibly successful and have a like a hell of a Right. So that's the game you're signing up for. And it's important to know and understand that curve because any sort of luck that you stumble into in a game like that, you're going to have like a massively outsized upside. Then again, say like if you go into accounting or dentistry or whatever.

02:03:14Like a lucky dentist is probably not that much better off than an unlucky dentist, whereas a lucky musician is much better off than an unlucky musician. Right, right. And we look at people in those industries, in those like asymmetric industries where it's not a bell curve. It's like a lot of, a few people make... all of the returns in it or get all the success in whatever way that's measured, right? Yeah. We look, a lot of us from the outside look it in and say, oh, they got lucky. And yes, they did. They got lucky. But they also were playing a game in which the luck had outsized effects that had outsized returns on it. Yeah. And so that's the earth luck aspect of this, right? Choosing that game and choosing that realm to play in, I guess, like that can make all the difference. Yeah. Yeah. Yeah, it's interesting not to keep coming back to Napoleon. I can't agree to pull you back. Okay. All right. I'm keeping you on a short leash on this one, all right? Napoleon, he's my man. I'm a little obsessed with the guy right now. The interesting thing about Napoleon that's very related to this, he didn't become emperor with some elaborate coup attempt. He didn't have thousands of armed forces lined up, and he didn't mastermind and plan this massive thing.

02:04:26It was relatively spontaneous. What he did is he put himself continually put himself in a political position where he was always there as an appealing alternative to whatever kind of political upheaval the French Revolution was going through. And sure enough, eventually an opportunity arose, like a window opened and he was there ready to take it. But he wasn't sitting there trying to pry a window open with like storming Paris with thousands of troops. power law situation. Yeah. Upside is emperor of France. All right, I'm done. Okay. I'll leave it to rest now. Well, no, okay. So there are these power laws and environments, but there's also like power law moments throughout history too, right? And this is where heaven luck and earth luck kind of meet each other a little bit.

02:05:19So, you know, for example, like everybody says, you know, if you wanted to be Bill Gates or Steve Jobs or whatever, then be born when Bill Gates and Steve Jobs were born. Mid 50s was like the time. If you wanted to hit the computing revolution, that was the perfect time to be born. Malcolm Gladwell talks about this in his books, right? There's like a heaven luck aspect to that. But then they were they played the game. They they caught that revolution at the right time and they were in that arena. Yeah. So you can take that, you know, from like 75 to 1975 to 1985. That was about like, if you were in the peak of your career, prime beginning of your career, that was a great time to be. And that's exactly where they were. Yeah. Right. Another one would have been like social networking, roughly 2004 to 2010 is something like that. That's when you and I were coming. That's when you and I were coming up. You like built your whole career really on social media. Yeah. Right. So like you hit the perfect time for that. And really it was Facebook. Try to build anything on Facebook now. Good luck, right? Yeah. What's fascinating too is, so if you look at Mark Zuckerberg, it's,

02:06:22The stuff he was building right before he built Facebook, it's actually pretty crazy. So like the project he built in high school with one of his friends, it was essentially Spotify. Oh yeah. It was just too early. Like the computing power hadn't caught up yet and it wasn't really scalable across the internet. And then he built something else even before that, that was like, that was also like has gone on to become like a multi-billion dollar company. And he was like building this stuff for fun as a teenager and, And it just so happened that like he was too early on a lot of these concepts and ideas. And then Facebook was the one that he like hit perfectly, hit the right moment perfectly. So on the one hand, you could look at somebody like Zuckerberg and be like, that dude got really lucky, built the right thing at the right time. And yeah, sure he did. But he was also putting himself in those positions repeatedly, knowing and understanding that like, okay, if I keep building these amazing software products, eventually one's going to catch at the right moment. and and it you know it'll take off from there i i think of it as like and maybe this is because i like surfing but like i think of it as like waves waves come and even if you miss one there's going to be another one um so in one sense it is heaven luck and that like sure there's only one computing revolution or there's only one social media revolution but

02:07:44there's always another wave coming you know on the horizon and if you just wait and put yourself try to put yourself in the right position you can catch it and write it right such as like right now with ai right yeah here's the next wave totally and and i mean you've you jumped on that too pretty early on and um i think that'll be we'll see how that plays out but i mean i don't think there's anybody right now who denies that that's this is the wave now For sure. And the thing about trying to catch waves like this is that there's very little downside to trying. Yes. Yeah. Right. Oh, yeah. Worst case scenario, you try to build Facebook before the world's ready for Facebook. And so you just, you know, you wasted a year of your life or something working on something. That's like not compared to the upside of building Facebook. That's a very small downside. So you lose very little, but you stand to gain just an absurd amount. And again, this is, it's game selection. You know, it's like knowing which game to insert yourself into.

02:08:48Yeah. I want to point out just a little bit of the heaven luck involved in this, though, too. So Zuckerberg, born in 1984, same as us. He's like a month older than I am, I think. I'm like that. Let's see, Sam Altman, CEO of OpenAI. I think he was born in 85 or 86. Dario Amadei, head of Anthropic. He was born in 1983. So we're in one of those windows again, I think. We're going to see that again. Yeah. Yeah. Which is pretty interesting. I don't know. And there'll be another one after us. 10 years from now, there'll be another one. There absolutely will be. Yeah. So I'm not trying to say like, oh, if you weren't born in one of these years, then you're screwed. No, not at all. The next wave will come. If only they were as lucky as us. I know, right? I mean, think about it though too. Yeah. Born in the, born in the mid eighties. Like we grew up without the internet. Yeah. It came at the right time. We're kind of like adolescence. I was in like, it was even later for me. Cause I was in a pod up nowhere town that didn't get the internet for a while, you know? So I got delayed by a couple of years, even more, which was probably a good thing. I just think our generation was incredibly lucky because we got all the best music.

02:09:50You think so? 90s, man. Oh, the 90s. Okay. The 90s. I don't know if you're going to say like screamo punk or something. I don't know. It was the best music. It was. Absolutely was. There was. There's a lot of other ways we were lucky though too. Just not growing up with devices glued to our face. Being free range kids and all that. Every generation has their good luck. I think that was ours. And yeah, we'll see how that plays out. Okay. Yeah. heaven luck sets the context in the container i guess in which we live our life and make our decisions earth luck is the way we position ourselves in our life and there are certain advantageous places to position yourself versus others heaven luck we don't control earth luck we have some control but it's it's like periodic, large scale decision-making in the next chapter, we're going to get into human luck, which is the day-to-day probabilistic understanding of like, is this going to work? Is this a good decision? How do I set myself up to make sure I'm making a good decision and not screwing myself over?

02:11:04This is when we get into actually understanding how much failure is to be expected, how much is normal, and how to best proceed in situations that are largely ambiguous and unclear. And so we'll be coming back with special guest, Annie Duke, who's a former professional poker player and a PhD in cognitive science and decision-making. And she's going to help us understand all of the amazing ways that we can help maximize our luck in our day-to-day decision-making. First, a quick word from our sponsors. This episode is brought to you by Shopify. You know the friend who's been about to launch something for like three years? Yeah, don't be that guy. The whole lesson of human luck is that it doesn't reward the best idea. It rewards the person who actually started. And what stops people is never the idea. It's the logistics picture behind it.

02:12:02How do I actually build a store? How do I take payments? How do I look legit? Like I know what I'm doing. Good news is Shopify has already solved all that. And it's all waiting for you at shopify.com slash solved. When a customer is ready to pay, Shopify checkout is built to close the sale. And when they come back, their details are saved. One tap and they're done. Setup and checkout handles themselves, so you get to the fun part, growing the actual business. The luck was never in having the idea, it's in the starting, and Shopify removed every excuse not to. With Shopify, nothing stands between your idea and a real business, so go make it one. Start your free trial at shopify.com slash solved. Start your free trial at shopify.com slash solved. And we're back. Welcome back to Solved. For this next chapter, I am joined by a special guest. Annie Duke is here. Annie Duke is a former professional poker player, an author, a business consultant, an educator, and a mother of four. Annie Duke has won multiple World Series of Poker bracelets and over $4 million worth of winnings throughout her career. More importantly, Annie Duke is an academic and an educator. She has a PhD in cognitive psychology from UPenn.

02:13:15where she specializes in decision science. She is a three-time author of Thinking in Bets, How to Decide and Quit, When to Know When to Walk Away. And today, she is here with me to help break down how to think about luck in our day-to-day lives and make better decisions in the face of it. So, Annie, welcome to the show. It's great to have you here. And my first question for you is what Napoleon asked all of his generals, which is, how lucky are you? Oh, how lucky am I? Yes. I'm going to give you a slightly unexpected answer. Okay. I assume when you're asking me how lucky I am, you're asking me if on average I've had good luck or bad luck. Okay. But I actually think of luck as a relatively neutral term. Luck is just a force that happens upon you, basically. Do I have a better than average outcome than expectation given what my possible outcomes were when I was born? I would guess yes. Okay. Right? Yeah. I would say yeah. I do. You're in. You're a general of the army. Welcome aboard. Thank you.

02:14:24Let me set some context here. So this episode, we're talking about luck, and we're actually talking about it through, there's an ancient Chinese framework called Sansai, and the Chinese believe that there are three types of luck. They called it heaven luck, earth luck, and human luck. Okay. So heaven luck is the luck that you're born into, right? It's the country you're born in, it's the year you're born, it's who your parents are, all those things. It's the luck that's completely outside of your control. Yeah. The earth luck is the environment that you place yourself in. So some environments are luckier than others, right? Like you can... The poker analogy is table selection, right? Like there are better and worse tables to play at in terms of like increasing your chances of winning. Okay. Right? So like the city you live in is a way to increase your earth luck. You can put yourself in an environment where good things are more likely to happen. And then human luck, which is what... we're going to talk about today is about navigating the probabilities of decision making, right? It's like, there's always uncertainty around anything you choose to do. So how do you develop an awareness and a consciousness of that uncertainty? And then how do you make good decisions in spite of it?

02:15:31Okay, so can I just take a second to unpack those three things? Yes, I would love that. Okay, so I love that. That's a great sort of three buckets to put things in. So heaven luck, no quibble with, agree. And actually, I was going to say... And there's sort of two ways that I would think about in the sort of colloquial sense, am I lucky? It's not just am I sort of at the right tail of my possible outcomes, right, that were available to me. But it's also I was lucky with all sorts of circumstances of my birth. Right. So I always think about like, what if I had been born in 1600? Yes. Right. I would have been property. Yes. So that would have been bad. And your talents would have been wasted. Right. Exactly. Okay. So that's the heaven luck. So agree completely. I think that we really need to focus on that in terms of how we understand how people's lives turns out. Right. What environment you put yourself in.

02:16:33means that you're changing the distribution of outcomes that that actually doesn't have to do with luck, right? So any environment that you choose has different, a different distribution of outcomes that are associated with it. That's true of like what city you choose to live in or what career you choose, what mate you choose or partner. That's going to all have like a different distribution of outcomes that are associated with that. That's actually under the skill category that, So when we think about it, there's only two things that are going to determine how your life turns out. One is luck. We can't control that. But that's like the heaven luck. But we can think about heaven luck in the same way. Heaven is like you're put on earth, which is like this environment. And you're born into a certain environment, right? But that's true of any environment that you end up with. That's really like heaven luck. The environments you end up with, though, that's the quality of the decisions you make. And the quality of the decisions you make is the other thing that determines how your life turns out because those decisions change the distribution of possible outcomes that are available to you. If you make bad decisions, they're going to make it more likely that you end up with bad outcomes. If you make good decisions, it's going to be more likely that you end up with good outcomes. But none of that is a guarantee because we can go through a green light and get in an accident. I've run some red lights accidentally, of course.

02:17:56I've run the red lights and gotten through just fine. The way I think about it is there's kind of these macro decisions that once made, they kind of determine the context of hundreds or thousands of other micro decisions, right? So it's like who you marry, right? Like that is kind of a macro level decision that is going to set up the context for progress. hundreds, thousands of other decisions that happen throughout your life. Yeah. So now we can take that concept of heaven luck and say, well, that's really what earth luck is, right? It's just that we're aware that we hopefully are aware that we're making the choice about what environment that we want to be in. And depending on the environment we're in, there's going to be a different probability that sort of good things happen to us and bad things happen to us. And what we're trying to do with our decisions is improve that distribution in our favor, Right. So speaking of which, let's get into thinking in bets. So why should people think about their choices in terms of bets? Because they are. Explain that. Okay. So whether you know it or not, every decision that you've ever made has been a bet.

02:19:07So we can take this like into a simple like poker example, right? Here I'm going to use money or chips because that's what you bet in poker. If I have a hand, I could choose to play that hand or not, right? If I fold, I'm making a bet that that would have not been a good choice for me, that I would have moved away from my goals. But maybe that's not true. Maybe it's not, right? But I have to make my best guess of that. It's called a forecast. And if I play the hand, I'm making a bet that this is going to be what we call positive expected value. In other words, this is going to have a positive return on the money that I'm going to put into the pot. And I'm saying, I think this is a better way for me to invest my money than other choices that I could make, which includes choices that I might make in the future. So if I invest in this hand, that may take money away from my ability to invest in hands in the future. Right. Right. Which kind of gets at the point you were making before of like when you choose to marry someone, then there's all sorts of things that happen after that. Right. So there's some path dependency to how that's going to affect your future as well. So when I make a choice, like I choose to raise.

02:20:15What I'm saying is that my forecast is that this is going to increase the chances that I make money on this hand, that I have good things happen to me. Now we can take that into who do I marry, right? This is a bet as well. I have a set of values and people have different things that they want to get out of marriage. So whatever your values are. You've sampled the world, right? So you have some sort of model of what you think is going to be a good partner for you. You know what your values are. And at some point, you're going to have to make a choice, and that's going to be a bet. I'm going to bet that this person is going to help me to achieve the things that I want out of this marriage more than other options that I might have available to me now or in the future. Because if I marry this person, that stops me from marrying somebody else later. And so it's always a sort of comparison between options and which thing is the best thing for me to invest in. But there's a hitch. And this is the hitch that's the big problem.

02:21:16is that when we're making those bets, it's under the influence of uncertainty. Like it's highly uncertain for two reasons. One is we're not omniscient. Yeah. Bummer. And then the second thing is just luck. So I could be all-knowing. Yes. Right? So imagine I'm omniscient now. I'm an all-knowing being. And I do know that this is the best option in terms of the chances that I'm going to have a good outcome. I still have the word chance in there because all that means is that that outcome is associated with a set of options. Those options are going to occur at some probability. And when I sort of calculate the payoff across that set of possibilities, that has the highest return than other options I might choose. But it doesn't guarantee I'm not going to get a bad outcome. That's the influence of luck. And that's why these decisions are really bad. Yeah. Kind of in sum, it's no decision in life is ever a hundred percent. It's also never zero percent. It's always some probability in the middle. And that probability is often opaque to us due to lack of information and also just chance. Right. Like it's right. And so our decision making is very much determined by, um,

02:22:33Accumulating as much information as possible and like, and also, I guess, rationally interpreting that information when making a decision, but also understanding that like nothing is a sure thing. There's always a chance something could go wrong. I think there's kind of two ways that sort of that last bit can go wrong. There's two directions that can go. If you acknowledge that the world is probabilistic, right, that whatever you choose, there's going to be some distribution of outcomes. They're going to occur, you know, with some probability. And you sort of, you know, you understand that you can't. No, like, first of all, that that distribution is there and you can't control which outcome you actually observe. Like, if I'm 95% to win a hand of poker, that means 5% of the time I'm going to lose, like by definition. And the problem is, I don't know which that 5% is. Could it be this time that I'm playing? Or is it going to be the next time or the time after that? I just know that if I play that hand 100 times, 95% of the time I'll win and five times lose.

02:23:38You know, five times I'm gonna lose, and I just don't know. So that's like a very, unsettling fact, I think, for people in general, like cognitively for us to sort of wrap our heads around this idea that like, we can't, we can't know what's going to occur on the next time. On top of that, what we sort of realize is because we don't have a lot of information, we don't even know what the probability distribution looks like. We're making some sort of forecast of that. We're making a guess at that. I sort of see that there's two reactions that happen to that. Reaction number one is actually being way overconfident, like thinking that you know a lot more about what could happen in the future than you actually do, right? Like, and you see this all the time with people where they're just so sure that if they,

02:24:28you know, make a certain decision that it's going to work out well, that they're almost, they're constantly surprised by these bad outcomes, right? So something bad happens and they're just like so surprised by it. And then they say, oh, so unlucky. It's like, not really, like 5% is going to happen 5% of the time. Like the problem is that they just way overestimated. Right. Like they had way too much certainty about the way that the world was going to work. So that's one reaction to it is basically to turn away from the uncertainty and, And say, I know. And I think that's a very common thing that you see in people, right? So the other thing that happens is people are like, well, I can't know. So I'm just going to go with my gut. Yeah, yeah. Right? Like, there's no way to know. So whatever. I'm just going to wing it. And that one... is an equally bad mistake. Like overselling and then just going, well, whatever, I'm just going to go with my gut. Those are both going to get you into a very bad place because you want to land somewhere in the middle, which is acknowledging the uncertainty, but being very careful to at least try to make your best guess about what the outcomes are that might be associated with a choice that you might make and what the probability of those things occurring is. Because here's the thing, and this kind of goes back to decisions are just bets.

02:25:44you're doing it anyway. Somewhere in your mind, you have to be making these types of calculations, whether it's explicit or not, whether you realize it's happening or not. Because when you choose to get married to somebody, somewhere in there, you're saying, I think this is the best match for me compared to other people that I might be seeing. And I can imagine the different outcomes that might come from this. And I think I'm more likely to be happy with them. Or like in the simplest sense, right? When you're trying to decide when you're supposed to leave the house You have to be making an estimate of how long it's going to take you to get there, number one. Number two, how bad it is if you're late. So it's funny because I was actually going to use this example because this morning I came here late. Oh, okay, let's talk about it. Yeah, and it's funny because I was thinking about it this morning in terms of bets, right? Yeah, yeah. So I had a lot of work to catch up on this morning. Yeah, yeah. And I kind of sat there and I was like, okay, I could leave 10, 15 minutes late. Probably nothing bad is going to happen. Maybe I raise my chance of getting a ticket or getting in an accident by like 1%. Yeah. But I also get that extra 15 minutes to prep and to get some work done and everything. And so there's like this cost-benefit analysis that kind of goes on your head. But our minds don't seem like very defaulted to think in this manner. No. Right? Because in my head, it's immediately like...

02:27:07Well, I leave late all the time and I drive fast all the time. So I'll be fine. I was fine every other time. So I'll be fine this time too, right? Which is probabilistically not true. Like it's, if I'm going to, if I'm going to drive recklessly every time I leave the house, statistically at some point, I'm going to get in that accident. Yes, the risk accrue. Yeah. That is true. Yes. The traffic example is such a good example. So this is what I would ask you. This is what I'm saying. Like how much risk can you afford? Like imagine... that you were making that same decision this morning. And what you were talking about, by the way, is an opportunity cost problem, right? So if you choose to leave where you're gonna get here on time, you lose the opportunity and the gains that might come from the work that you wanted to catch up on, right? So this is like, these are the types of trade-offs that we have to make all the time. Imagine you were in a situation though where the thing you were going to, like if you were late, it was the end of the world. Yeah. When would you have left? Like hours earlier. Right. So this is kind of what I'm saying about like we don't realize that this is the way that all decisions work. But I think this traffic example is a good way to get people to think that under the hood, this is what's happening is you're saying, look, in my experience, this is how long it takes me to get there.

02:28:25And there's some sort of average and a distribution around that average, right? So there's like your fastest day and your slowest day when there's an accident on the 10. Right. Super annoying, but whatever. So to tie this back to luck. I think what a lot of people experience as bad luck is, say, they overestimate their ability to get to LAX and get through TSA. It's all backed up. There's something going on. That flight that is actually super important, they do miss. And they say, ah, this was such bad luck. Without realizing that there actually was a probability distribution of all of their behaviors that they chose up until that point that they just weren't consciously thinking through. This is where we just need to sort of separate out, like sort of colloquially how we think about luck versus the way that, say, in an academic sense, you might think about this idea of luck. So two things could be true. One is you would treat something to bad luck that was actually bad decision-making. That's what you just described. Yeah. Right, so if you really can't miss,

02:29:36and you leave at the average time, right, for travel, hey, if you miss your flight, that's not really bad luck in that sense. Like you made a decision that where, you know, some percentage of the time that was actually a percentage that you couldn't tolerate, you were actually gonna miss that flight, right? So I would call that bad decision-making that you're actually attributing to luck, right? But you could leave lots and lots of time. And some crazy thing could happen. Like, I think I remember one time, like, I left a ton of time to get somewhere because I was getting my son to a football game. This was in L.A. And the presidential motorcade. I mean, it would have been faster to walk. Yeah, yeah. Right? And so, obviously, like, we didn't, we were late and whatever. Right? So, I made a reasonable decision in this thing that was, like, completely unknowable to me. Right? Like, at that time, there was no way for me to know that, that this was going to occur and it was going to be, like, right in my way. And then it didn't matter what date I had in terms of how long it took me to get there. Like, I just wasn't going to get there. Right? Colloquially speaking, we would call that bad luck.

02:30:49Because I made a good decision. I left enough time. I thought about the distribution. And I was at a good end of the scale for what my values were that day and how much risk I could tolerate. And then the president decided to, I think this was like in 2009 or something like that. Like the president just decided to screw me up. Thanks, Obama. Thanks, Obama. Right. So let's call that in the colloquial sense, bad luck. But if we step away from like, well, what really is luck? Remember, it's just a force that acts upon you. I would just call that luck. Like there's volatility around anything that you do. And sometimes you might be at the very, very far left tail of bad outcomes, right? That's just like way, way, way, way out at the tail. And it's just in the mix. And here's the thing is that I think, I really truly believe this, that you live a happier life if you stop putting the word bad and good on the word luck. It's just variance. It's just variance. And not only do I think you're happier because you're not sitting there thinking like, whoa, is me. Like, look at this bad luck. Like, da, da, da. You know, I think that when you sort of get caught up in this sort of bad luck thing.

02:32:02You know, you ruminate, you sort of, you know, you're like droopy drawers. You're like, why me? Why me? Like, what did I do to deserve this? What did I do to deserve this? And I don't think that's a particularly happy way to live. And if you start thinking that you're good, that the good luck is gonna continue to come, that's gonna cause you to make some pretty bad decisions going forward. So there's kind of two reasons that I think that it's really way better for your life to get out of this sort of good and bad thing when it comes to luck. Reason number one is that I actually don't think it's possible, even if you accepted the idea of good and bad luck, to know in the moment whether that was good or bad luck. Because I think that you need that to develop over time because there's this path issue, right, as to whether that was good or bad luck. I'll give you an example actually from my own life of this problem. So at the end of my first time in graduate school, because my first time in graduate school, I did not actually get my Ph.D., I had done five years. So when when people leave graduate school, it's usually around their qualifying exams. Otherwise, they're called like major area exams. Right. So this is when you're showing enough expertise that they say to you, OK, we're going to allow you to know now go and pursue your doctorate. It usually occurs like three year, two and a half, three years in.

02:33:15It's a really big hurdle. And a lot of people leave at that point. I did not. I stayed. And I actually did the full five years. And I had my dissertation research done. And I was on the job market. I already had job talks lined up. Right. So like I'm really far down the road, but I've been suffering for about the last year of graduate school with a chronic illness that then became really, really acute. And I landed in the hospital actually for a couple of weeks. So I had to cancel all my job talks and pull myself off the job market. Now you can imagine at the time, I was like, felt like this was really bad luck. I was very like, woe is me. This is so terrible. Why does this happen to me? Why is this happening to me? Right? Like, you know, honestly, like in retrospect, I don't think was particularly helpful. But also, I don't think it was bad luck in retrospect.

02:34:12So I then leave graduate school. I take time off. So I'm going to now take a year off and go back out on the job market the next year. And I had been there on a fellowship. And as I told you before, my dad was a school teacher and my mom didn't work. So as you can imagine, nobody was like, here's a bunch of money while you recuperate. And when you leave graduate school, NSF says, oh, by the way, your stipend's gone. Okay. So now I have no money. So that's actually why I started playing poker because I wanted to do something that was like, okay, it's not restarting a new career. At least I didn't think so at the time. It's very flexible hours because I didn't feel very well. Yeah. So committing to a nine to five would have been really hard. Right. Right. And so it kind of like ticked the boxes and then like, OK, I'll just do this for a while and then I can leave and I'll go back to graduate school and I'll go back out on the job market next year. And obviously I started playing poker and I kept playing poker and I didn't go back to graduate school for quite a while, actually, for a couple of decades. Yeah. To go finish my Ph.D., right?

02:35:16But like, in retrospect, if we're going to use the word good or bad, wasn't that good luck? Because look what happened, right? Like, I became a professional poker player before it was ever on television. You know, by 1999, I was the winningest woman in the game. I won World Series of Poker bracelets and the Tournament of Champions. And like, then all of a sudden in 2002, I was on TV. And then we can even take it further, which is... Ending up on TV is what got businesses to pay attention to me. And then they asked me to get in touch with them and come speak to them. And they didn't know necessarily I had the background in cognitive psychology. So I started merging that together. And then I started building this business of going giving talks at the intersection of poker and cognitive psychology. And then that allowed me to develop a consulting business where now I consult mainly in finance, but also for startups in those two worlds, because the finance people I work with are in venture. So that obviously... is a reasonable crossover. I got back to teaching, which I absolutely love. I would have never had the audience for the books that I wrote had I not been on television. I would have just been another academic writing a book, right? But now I'm like a poker player writing a book. So look what that did and so on and so forth, right? So the thing is this thing that I was wallowing in, wallowing in it at the time about my bad luck and why does this happen to me and so on and so forth.

02:36:38You know, with the passage of time, I would completely re-judge that. So why not just not judge it at all? Wouldn't that be happier? Yeah. So you have this concept of resulting, right? It makes sense that if everything is kind of a probabilistic distribution, then... you can't really judge the quality of a decision based on the quality of the result. Right. But the point that you raise with that story is that, like, what is the result, right? You can go and redraw the goalposts 20 different times over 20 years and... define a different result as the result of that decision and you know one of the things i've written before is that um is the concept of deserve is like itself often just counter counterproductive yeah for almost any kind of conversation um and i think it's for a similar reason like it's just you don't know do you deserve good things to happen to you like

02:37:39Do I deserve good or bad things to happen? I don't know. I don't know. You know what? So that's interesting. So two things there is that now I have to go off and think more deeply about what is the result. Yeah. Not something I have written about. And now you have my mind turning. So now I'm going to be distracted. because that's such a good point. So I'm gonna go mull that over now. But I think you're so like right in the zone there with that idea of deserve because when you're judging something as bad luck, what are you saying? I didn't deserve that. Exactly. Right? Yes. So I think that's like such a deep point is that when we get into that idea of like, what do we deserve to have happen to us? Right? Like, I just think it's like a very unhappy way to live. It is. And it's unhappy regardless of which direction you go. So if you are a person who believes everything good should happen to you, you deserve everything good in the world, that's not going to lead you to a good place. No, you're going to be sad a lot. You should be very disappointed. But also if you're a person who believes you don't deserve any good things to happen to you, that's also going to take you to a very dark place. So it's almost like the only safe place to be is to just be like, I don't know what I deserve.

02:38:53I think that's exactly right. And obviously if you feel like only bad things are gonna happen to you, it will be a self-fulfilling prophecy anyway. That gets you into the, why should I try? Here's one of the problems is that if you sort of automatically say, oh, that was such bad luck, you're not gonna go back and look at what the quality of your decision was. If you say that was good luck, you're also not going to go back and look at what the quality of your decision was. Both of those are true. So once we start to sort of make this judgment, right? And instead we should be asking, well, what was the influence of luck? Neutral. What was the influence of luck? And what was the quality of the decision that I made? And sort of look at that as a question, right? Because here's the problem. Just saying I got bad luck isn't going to make your life better in the future, right? Because if you just say bad luck, then there's no examination. There's no looking back and saying- You're removing agency from yourself. Yeah, and you're going to lose an opportunity to learn what was the decision that I made? Did I choose something that had a probability distribution that actually-

02:40:04wasn't very good for me compared to other options I could have chosen. Because if I can figure that out, then the next time I make the same decision, my forecast will be better. And again, going back to that idea of like, there's only two things that determine how your life turns out luck and the quality of your decisions. What we really want to focus on is decision quality. Yeah. And say, look, luck, luck is there in the background. It's going to happen anyway. And once we start getting caught up in this, like, well, I just got so unlucky, we lose sight of, well, what was the quality of the decision in the first place? And I think part of the reason is because in the moment, cognitively, it feels better to say it was bad luck than to say it was a bad decision. Right? Of course. It's, yeah, it's a natural human decision.

02:40:56bias, right? It's actually called self-serving bias. There's a name for it. Yes. If something great happens, it's because I'm a genius. And if something bad happens, it's because the world's awful and I'm so unlucky. So this is what we can think about, right? It's like, you know, you can go search Wikipedia for a list of cognitive biases, right? And you're going to see like this ginormous list, right? Because there's a lot of dissertations that people have to write. So there's a lot of individual biases resulting among them, right? And self-serving bias. But the thing is that I think that for like the most parsimonious way to look at it actually comes from Daniel Kahneman, which is that... What we're really all sort of cognitively trying to accomplish is to advance our self-narrative in a positive way. Right? Like, we want to feel good about ourselves. And every time we're interpreting things that are happening in the world, we want to feel a little better about ourselves at all times, which is fine. And I wouldn't ask anybody not to do that, right? Because otherwise you get sad and depressed. And I don't want anybody depressed. I want people to be happy. So, of course, we want to feel good about ourselves. But the question is...

02:42:07Like, which self? Which I know sounds weird, right? Like, what do you mean, which self? Me, myself, right? Oh, but there's different versions of yourself. There's the version of you now, and then there's all the versions of you in the future. And this is the real cognitive problem, is that we have this constant street fight happening between us in the now, present us, and future us. And that is like the jets and the sharks, man. This is like a battle. And what's happening when you say, oh, that was bad luck, is that you're protecting present you, right? Because if present you has to say, well, maybe it wasn't bad luck, like maybe I made a bad decision. Now you have to actually be open to going and checking. And you know what you might find out? You might find out that you made a bad decision. Does that advance your self narrative? Well, not right then. Right? So now your self-narrative is going to take a hit. You have to take a step backwards. And we don't like that very much. Right? But if you can spot that error in your decision making, guess what happens to all the future versions of you? They do better. Because going back to that idea of earth luck, right? I now get to make decisions that are going to put me in better neighborhoods.

02:43:31You just triggered a kind of an epiphany in me, which is there's all these platitudes that you hear all the time. It's like everything happens for a reason or like the universe has a plan for me. No, it doesn't. Right. It's just all this like kind of gobbledygook, but like it's designed to make people feel better in the moment, right? When there's either a bad outcome or they made a bad decision. Yeah. That differentiation between present self and the future self, right? And it's like, The epiphany I had is that a lot of these kind of colloquial platitudes, I think they kind of evolved as mental tools to allow people who don't understand any of this stuff to be more adaptive when something doesn't go their way, right? Because it's like if something bad happens or you screw up or you make a poor decision or whatever— And you're not a probabilistic thinker. You're not a Bayesian thinker. Like you don't, you don't reason in these ways. It makes sense though, like telling yourself something like, you know, God has a plan and it's, this happened for a good reason. Everything happens for a reason that like mentally primes you to look for those lessons and be aware of maybe the positive result that has not yet occurred.

02:44:47And whereas if you did not believe in that, you would just be kind of wallow away and be like, why me? Poor me. I would say, so I'm going to agree with you partially. Yeah, so I can understand what you're saying about, it gets you to maybe think maybe some positive things will happen in the future. But what it doesn't do is get you to look at your decision. No, it doesn't. Right, so that's the thing I want you to do. Yes. So going back to this idea, of course I want you to feel good about yourself. I want to feel good about myself. I want to feel awesome at all times, right? I'm like everybody else. If you can shift your mindset to say, Like, okay, I'm really going to take care of future me. Yeah. I want future me to create better earth luck.

02:45:30And the only way I can do that is by choosing better environments to be in. And I can only do that if I examine the decisions that I'm making and try to figure out when I've made an error or when I've made a really good one. Because if I've made a really good one, I wanna repeat that. If I made a really bad one, I don't wanna repeat it. I wanna get the lessons from that. So I always have to be going back to that, right? And instead of just saying, oh, this is bad luck, which makes me feel better now, I can say, I'm one of those people who's willing to go look and find mistakes because I'm taking care of future me. And then you get to still feel good about yourself, right? So you get the benefits of all those versions of yourself that are gonna benefit from the examination that you're doing. And you don't have to feel bad about yourself because you know you're taking care of future me. So you can kind of think about it as like, you know, do I want to like hang out and like scroll and whatever? Or do I want to go to the gym? And I really don't want to go to the gym today. But why do you go to the gym? Because you're taking care of future you. And then you feel pretty good about that choice, right? So do that with your decisions too. If you can get yourself to feel good about your choice to go to the gym when you don't want to.

02:46:38Because you know you're taking care of all the future versions of you, particularly 80-year-old you who wants to be able to go up the stairs and carry groceries, right? Then think about that with your decision-making also, right? Like shift that and then we don't get in that quandary of, wait, do I have to be depressed in order to become a better decision-making? No, you get to still feel good about yourself. There's actually for people a great book that I would recommend from Hal Hirschfeld. It's called Future You. He's just done a whole bunch of work in this space and it's really leveraging this concept of mental time travel. And here's the thing, we don't have an actual time machine, which is a bummer, but we can imagine the future. And that is actually a big distinction between us and a pigeon. So we are, as far as we know, the only species that can imagine beyond our own death, as a matter of fact, right? So like we have this really powerful tool available to us. And so just constantly ask yourself, which self, right? And start saying all those selves that are going to be in the future are the things that I want to take care of. And I'm going to get in my mental time machine and I'm going to travel over there. I'm going to look at how do I think their life is going to turn out? Yeah. Yeah.

02:47:52given the choice that I'm thinking about making this minute. It's interesting because this kind of, this brings a lot of themes of this episode full circle in that I think of what we experience as luck is very perceptually based, right? So it's, if you think about heaven luck, it is imagining all of the alternative contexts and situations you could have been born into and then the one you were born into. And then depending on your ability to imagine better or worse situations, you are going to to define yourself as having good or bad luck. Yeah. I think it's similar in our decision-making as well. In some ways, it's kind of having a lack of an imagination of just not being able to imagine the alternative futures or the alternative past, right, to orient yourself towards, you know, what actually happened. And so if your imagination is kind of biased in one direction or the other, right, you're only thinking about the worst futures that you could potentially have, or you're only thinking about the worst past that you could potentially have, right, You're not going to have clarity around, you know, making these decisions, making these choices moving forward. So there's actually, so that actually gets into like, if you're only imagining like sort of these worst versions of the future, that now you're getting like really deeply into the work of Daniel Kahneman and Amos Tversky.

02:49:11So Daniel Kahneman won a Nobel Prize actually for work on just that problem. Not from like a clinical psychology perspective, but from a behavioral economics perspective. So for those people who've heard of prospect theory, which is what he won the Nobel Prize for, Tversky would have won it as well, but he had passed by then. When we think about prospect theory, what it shows is that we experience losses. much more keenly than we experience identical gains, right? So you can think about it this way. You know, there's arguments about whether it's like two to one or 1.5 to one, but we can think about it this way, that if you lose $50 at Blackjack, it's going to feel about as bad to you as winning $100 at Blackjack feels good. But then why is blackjack so fun? Why do I like it so much? Well, is it though when you lose, though? That's the question. Why do I like it so much? Is it when you lose? So that gets into that, like, why are we thinking, oh, it's bad luck, it's bad luck, right? So now we can sort of take that into the future. Yeah. And we can talk about what's called loss aversion. And this kind of follows from this central insight of prospect theory that when we're

02:50:23Making choices, right? We know that there's a distribution of outcomes that could occur at some probability, right? And what we're really supposed to be doing is what we would call taking a weighted average of those things. So any of the outcomes have some payoff associated with them and some probability, and we can multiply those things together and we can come up with what we would call an expected value, right? Like, so what would, you could think about that as a return on investment, but what we know is that for any prospective return on investment, we could end up getting a lot more or a lot less, we're gonna end up in there, that's just what's gonna happen on average in the same way that if you flip a coin, Yeah, you could get three heads in a row on a fair coin, but like after 10,000 flips, you're going to end up with 50-50. So this is kind of like an abstract concept, but this idea of expected value is really important. And it's particularly important sort of to the resulting concept because on one flip of the coin, I can't get 50% heads, right? So we misinterpret those outcomes a lot.

02:51:24But what this insight about loss aversion is, is that when we're sort of on the go forward and we're thinking about, do I want to choose option A or option B, is that sort of independent of what the expected value is, independent of how much that on average is going to get us to either move toward our goals or away from our goals, we'll tend to choose the option that has a, the lowest sort of absolute loss associated with us. So in other words, we're living in kind of those, the possibility of those bad universes, and we'll pick options that has sort of have maybe a less bad universe associated with them, even if the gains must be a lot greater. Someone who's really loss averse, for example, would never start a company. Right. Right. They're less likely to quit the job that they hate, even though they hate their job, because they're so focused on this. What if I take the new job and I hate that, too? Right. Even though the chances of a better future version of themselves are greater if they were to take that risk and quit.

02:52:33Right. So it's not just like, oh, no, like it's really, you know, it's sort of bad psychologically speaking, like in a clinical sense, like for your mental health to be living in those bad, you know, universes that might occur in the future. But it also makes you make bad choices. Right. Like it makes you choose things that are going to make your your life worse on average because you're not quitting the job you hate because you're so afraid that the new job might turn out poorly also. So how do we counteract that? You said before something about, you know, if you don't think probabilistically or like a Bayesian. Right. So let me just add some nuance to that. Sure. Everybody thinks probabilistically and like a Bayesian because it's happening under the hood. So the question is if you don't think explicitly. Right. So I want to just sort of think about what's implicit and what's explicit because part of the way that you solve a lot of these problems is to make that explicit.

02:53:34Explicit. Explicit, yeah. Right? And this is something really important. It's something I teach in my classes that you have to not allow these things to just run under the hood. And the reason is that those forecasts that you're coming up with, the way that you're sort of like forecasting what you think the probability is of things occurring in the future, what you think the outcomes might be associated with those, and so on and so forth, is... Sometimes it's right, but sometimes it's wrong. And if you leave it implicit, you can never figure out which, right? So making it explicit actually is going to help you to spot errors. You yourself spot errors. It's also going to help other people to see what your thinking is, and they may have really good input, right? So you can get other minds in there. So when we think about that kind of hidden information problem, right? Like we're not omniscient. Well, if we make it explicit and we get other people to sort of look at our thinking, we get closer to omniscience. Right. it also kind of solves the self-serving bias a little bit. So my wife loves to make predictions and whenever she's right, she always remembers. And she's like, I knew it. I told you this was gonna happen. And I always tell her, I'm like, it's funny. You never remember the predictions you made that never happened. And she's like, oh, I didn't make those predictions. So making it explicit is important because it documents your predictions in a way that you can actually objectively go back and be like, okay, why did I think this was gonna happen? And why was I wrong?

02:54:54Yeah, so that's actually an incredibly important point because making it explicit improves you in a variety of ways. One is the act of making it explicit has been shown to make your decisions more accurate. It reduces error. Just the act of doing that, right? Interesting. Number two is it allows other people to examine... what you're looking at. So they're more likely to help you and sort of fill in the gaps and give you different ways to think about it, spot errors in your thinking. And so that's all kind of in the moment. So we've got, you're more likely to be more accurate, but then also other people, you can bring other people into the equation and you can, you know, inch closer to omniscience, like inch closer to omniscience, unfortunately, because they're not omniscient either, but it helps you to get different perspectives on things. But then the accountability thing is really important. Yeah. Right. Because now it actually gives us a way to go and say, here's what I was thinking. Here's how these things turned out. Let me go back and look. Right. Let me think, like, was I anticipating this? How was I thinking about this? Did I actually foresee what happened? The things that I learned after the fact, could I have known them?

02:56:04If I could have known them, why didn't I include it in the first place? So maybe I should include that going forward, right? It's such an important point, this sort of accountability piece, because not only does knowing you're going to be accountable improve the quality of the decision that you make, because just the knowledge that someone might look at it in the future makes you less biased. It's a really good de-biasing tool, but then you also get to close the feedback loops, which actually does make you more accurate as well. Do you recommend keeping like a decision journal? Like, is this something, is this some sort of regular practice that normal people can do on a day-to-day, week-to-week basis? So I love that question. I don't think you need a decision journal because I think if you make a good decision, you'll create a record of it anyway. So journaling sort of feels like I make a decision and then I journal about it. Yeah. So I just like have an aversion to that term for that reason. Because I think any good decision process is going to produce a record. Yeah. How much, how deep, how big the record is, is going to depend on how much time the decision deserves.

02:57:10And different decisions deserve different amounts of thought that are put into them. Right. And the way that we think about how much time and effort and attention am I supposed to put into this thought, we want to think about, again, going back to tradeoffs. The more effort or time that I put into a decision, I should be increasing the accuracy of the decision, right? So what this brings us to is like, well, how tolerant am I of error? Because obviously every decision that I ever make, I can't put like full process into. I shouldn't make every single thing explicit. I shouldn't be making probabilistic distributions about whether to brush my teeth in the morning. I hope you're not doing that. Yeah. Okay. So because if we did that, we'd never get down the stairs. Right, right. Right. Like you'd have to be like creating these distributions for like what shirt you want to wear. Like that would be nuts. So how do we actually figure this out? Well, again, through this frame of how much error can I tolerate? And that gets you to two really big ideas. Long-term impact, not short-term impact, long-term impact of the decision and how easy it is to reverse the decision.

02:58:16Because being able to reverse the decision or quit what you're doing reduces impact. So they're actually sort of the same thing. We're just sort of putting it into two buckets. So I just think about this as like the intern versus CEO problem or the dating versus marrying problem. Right. So if you're hiring an intern and they don't work out, it's probably not going to have a really big impact on your business in the long run. It might feel bad in the short run, but we don't care about short term us. Right. We care about long term us because that creates a lot better short term us in the future. You know, it's not gonna be a big deal if it doesn't work out. So how much effort should you put into that? Probably not very much, right? You should have a couple of boxes that you tick, you know, reasonable references, you know, whatever, and go ahead and hire them. You might end up with like 20 people that are perfectly good. But CEO, better put a lot of time into that. Dating, if you have a bad date, whatever.

02:59:10Right. Marrying. All right. So we can sort of think about those things in those categories. Right. So so basically what you want to ask yourself is two questions. Right. The first one is just if I you know, if I sort of imagine this not turning out well in the future, how big of a deal is that? And if it's a small deal, don't spend a lot of time. If it's a big deal, you should be creating a pretty strong record of why you're deciding what you're doing, right? You should be doing these forecasts. You should be thinking about the outcomes. You should be comparing options. You should be getting other people's input, like all of these things. With my clients, we create decision rubrics, right? And then we're creating a record and we're quantifying their qualitative opinions. We're doing a whole bunch of stuff. But these are for really big decisions where they're slinging millions of dollars into companies. For little decisions, I would tell them not to do that. Like, please don't do that for small decisions. And then the other one is, you know, sort of how quittable is it? So I'm going to urge people to sort of lose that one-way door, two-way door analogy. The reason why I don't like it is it suggests that it's binary. You can either quit or you can't. It's not true. You can quit anything. Just some things are a higher cost to quit than others.

03:00:21So it's a very low cost to let go of an intern because letting go of someone is quitting. Right. So a very low cost to let go of an intern. It's very low cost to not go on another date with a person or even walk out in the middle of it. Not a big deal. But it's very high cost to lose a CEO. it's a very high cost to end a marriage, right? We can sort of think about it along that range. Okay, so now that kind of brings us back to this problem of like, so how do we get someone to actually quit their job, right? Like instead of being loss averse. And it goes into this zone, right? So what we want to start doing is notice that what I'm asking you to do in that situation is, is to say, what does the future look like for this decision? Is it going to be a big deal? Is it going to be a big cost to reverse the decision? You want to step back and start being explicitly probabilistic in your thinking when you're thinking about, should I stay in this job or go to a new one as well? Like it's sort of a very similar idea of how do we actually make these things probabilistic and how do we get into the future? So you want to combine those two things and basically all sort of good decision hygiene.

03:01:33I actually did this with someone who really hated their job. And they had a new job and they were talking to me for advice about whether they should go to the new job. They were an ER doctor and there was a whole bunch of things that were going on where they were just had been unhappy for many years. And they now had an opportunity to go work for an insurance company, help them evaluate claims. Right. So they described to me what was going on in the job that they were in. And honestly, I was super confused. Because I was like, you've hated it for years. Like, why aren't you? I don't get it. So I said to them, well, what's the issue? Like, why don't you want to go take this new job? And they said that sentence. What if I hate that one too? I wanted to take this person who obviously, under the hood, the probability is occurring. Under the hood, they're a Bayesian, right? So let's make it explicit. And I said, OK, well, let's imagine it's a year from now. And you're in the job you're in. What are the chances that you're happy? Right? So I'm just moving them into that kind of think about future you and let's think about that probabilistically. And they said zero.

03:02:35They had like years worth of evidence, right? I said, all right, so imagine you take the new job. And I understand that you're worried it might not work out. Okay. But imagine you take the new job and it's a year from now. And what are the chances that you're happy? And they said, that's hard for me to guess because I haven't taken it before. I go, just give me your best guess. They said, 50-50? You know, which is an answer you often get, right? And I said, oh, is 50% greater than zero? And she said yes. And she actually literally quit the next day. She had been agonizing over this decision for really years. This was a new job offer, but she had been thinking about leaving for a very long time. And when I just put it in those terms, it was like it just... It really is funny how the loss aversion and the emotions that are wrapped up in it. And of course, you get stuff like identity and fear of change and all this stuff. It all gets wrapped up in it and it muddies that under the hood kind of unconscious Bayesian thinking. It's funny. I remember back when I was thinking about trying to start my first business. Yeah.

03:03:43It was middle of the 2008 crisis. Job market was in the total gutter. It was like total, total dog shit job market. Fun times. And I was struggling. I was getting by with like some odd jobs here and there. I just finally landed like the first real job of my life and I hated it. And, and I remember sitting there and, and I struggled with it for weeks. I remember, you know, sitting down and kind of writing out best case scenario, worst case scenario, you know, if I do it, if I don't, all that, all those sorts of things. And, I remember coming to the realization that the worst case scenario, if I quit, if I quit this, try to start my own business, it doesn't work. And I go broke. And then I got to go get, go, go back and get another job in two years. I realized that in terms of the job market, An unemployed 23-year-old and an unemployed 24-year-old are both with zero job experience. There's no difference between the two. I'm literally losing nothing by taking another year and trying to do this thing. And not only that, but the job market will likely be better when I come back in a year.

03:04:45And, and I remember as soon as I realized that I felt so stupid because I was like, I'm actually in a better position if I try this and it fails, you know, for a year because then it's, um, I'm probably going to come back to a better situation and I will have learned all sorts of things in the process. So here's the interesting thing about loss aversion. Um, and this is what you were sort of feeling in there is that it's, it's asymmetric. When we're thinking about starting something, we're very loss averse. We're thinking about the bad things that could happen. We sort of we want we kind of want like a guarantee that it's going to work out well. Otherwise, we don't want to do it. Right. But we're not loss averse to the option that we're already exercising. So like you weren't really thinking about like, well, what if the thing I'm doing right now turns out really badly? You're worried about what if the thing that I'm doing in the future works out badly? So what that means is that we're not thinking about the status quo as an option.

03:05:43Right. So when I'm saying like, think about the option that you're considering and like, what are the possible outcomes? What are the probabilities of those occurring? And then to your point, what would I do if I saw those? Like, what would I do in reaction to that? What would the world look like? What would if I did that thing? What do I think would occur after that? Right. Like, so we're, we're thinking about, you know, I'm asking you to think about this, but you have to do that for the status quo too, because you have to have a comparison. Right. Because what you're trying to decide is, should I stay in the job I'm in or should I switch? And what happened with my doctor friend is that she was only thinking about the switch. And she was only worried about the bad outcomes that were associated with it. And she wasn't even thinking about the option that she was currently exercising, the job that she was already in. as something where she should apply the exact same thinking in the same process. So that's kind of number one is that we have to realize that we always have to be comparing to something. And when you're thinking about doing something new, you have to remember to include the status quo in that process. Because the question is, is the thing I'm doing good for me and helping to advance me to my goals in comparison to the new thing that I'm thinking about?

03:06:57Then to get out of the loss aversion problem, you have to think about the whole probability distribution and the whole outcome distribution together. And then you have to think, well, OK, but like, what's the cost to quit? Meaning if I do this thing and it doesn't work out, like, what's the cost for me to stop doing it? And then. How bad is that anyway? Like, what are the other things that I could do in response? So the decision no longer becomes like last and final, which is the way that we sort of think about things, which is really funny, because like, if you look backwards, you know that decisions aren't last and final, but we think about forward decisions as last and final. You aren't as worried about a bad outcome because you've already planned for it. And if you get an outcome that you don't like, you're less likely to think about it as a failure because it was already included in the mix and you already had a plan for it.

03:07:50So this kind of goes back to this core idea of luck, right? Which is when you're thinking about an option and should I do this thing? Should I go start my own company? What you're thinking about is there's some distribution of things that could occur. I could end up on sort of like luck could influence me toward outcomes that are undesirable. It could give me outcomes that are desirable. If I get those undesirable outcomes, which is what makes us afraid to start things, Let me kind of live in that and imagine what that looks like. And then I can do two things. I can think, well, okay, if I end up there, can I come back, right? Can I come back to where I am now? Or is there something better that I could go to or whatever, like sort of plan for that. And then you can go beyond that and say, well, let's imagine that I sort of ended up in that world looking back on. What would be the signals that that was how things were unfolding? What would I do if I see those signals? Right? And now you've sort of metabolized the possibility of those things occurring in advance. And you sort of get out of this resulting problem because it's just in there. It's funny because hearing you describe that, there's a concept in Stoicism called negative visualization. It comes from Seneca University.

03:09:04And the way he wrote about it, it was very much just kind of, I think, undercut people's loss aversion, right? It's like to help people realize that, hey, worst case scenario is actually not as bad as it feels like it's going to be. Having this conversation about it, I realize now that it actually ties in very well to decision making because it kind of corrects that loss aversion and those negative sentiments that we have, those irrational negative sentiments that we have about potential bad outcomes. So actually, interestingly enough, with my clients... We include this. It's called a premortem. Right. So we want to think about the bad thing happening before it happens instead of after. It's a lot better. You're going to think about it more clearly. I want to throw another kind of strategy or tactic at you. OK, I'm ready. And it actually it ties into something that is common in the poker world. Right. Which is that you combat volatility with volume. I've started seeing this show up in the productivity world. Alex Hormozy has this concept that he, he started saying that he says volume negates luck, which is basically that like, if you take a thousand shots on goal at some point, you know, at some point it's not luck anymore. Like you're,

03:10:11Yeah, yeah, yeah. Then you get into the all skill part. Yeah. So I'm curious, like, what's your reaction to that? I realize that this isn't some things, some decisions in life are not volume based decisions. Like you can't marry a thousand times and you can't fire a thousand CEOs, but but you can go on a thousand dates and you and you can, you know, send a thousand people. job resumes to job positions, right? There is something here that I think is useful and it's, um, and I'm, I'm wondering how, how you would orient that in your decision-making. Okay. So let me just, can I just rephrase? Sure. Volume reduces the influence of luck on the outcome. I agree. It doesn't negate. Nothing negates luck, sadly. It just is. There's skill and luck. So there's a couple of ways that you can reduce the influence of luck on the outcome, right? So volume is one. That's true whether it's a high volatility world or a low volatility world, right? This is a fun one. So if you're like the Boston Red Sox and you're playing a Little League team, there's going to be zero influence of luck on the outcome, right? Like that's going to only be determined by skill.

03:11:20But as you match the skill of two great teams like the Red Sox versus the Yankees, although to be fair, I don't know if they're equally matched this year, but let's pretend they are. We'll pretend they are. We'll pretend they are. Then the influence of luck becomes much greater. So when we have very big skill gaps, we can also reduce the influence of luck on the outcome just because the skill is going to dominate there. So like in poker, if we're equally matched, it's gonna be like the deal of the cards in the short run, right? Like just what happens. Like in the long run, we'll end up with equal amounts of money. But in the short run, who wins in that given game, if we're equally matched in skill, right? Is it gonna be determined by like, do you win the races, right? Like when we're 50-50, do you come out on top? And there's a lot of like short-term ball there. So it's a question of like, how much is luck influencing the outcome? You can't, you can neither negate it or not. Like it, it just is. It's just there. So I, I would just like to say that. Okay. So now on the volume issue, there are,

03:12:19Definitely a lot of types of decisions where you can get volume, right? So this is just portfolio theory, right? Like if you're in venture, it's a lot better to have invested in 70 companies than it is to have in five. In five, you're going to have a much greater influence of luck on the outcome in terms of what we would call realizing your edge, right? So let's assume that you're investing at an edge where in poker, right? You might, let's say you have a 5% edge, which would be a really nice edge to have in poker, by the way. So you're making 5 cents on every dollar that you invest. You might lose a lot of money or win a lot of money as opposed to specifically 5 cents on your dollar. But if you play 1500 hours of poker, you'll end up with 5% more than you churned through the game. Right. So that's generally portfolio theory. If I can play for 1500 hours, which is like thousands and thousands and thousands and thousands of hands, I'm better off than if I play one in terms of reducing that sort of appearance of luck in what's going on. OK, so that's one thing that's true. And that's true, like of a lot of different stuff. But your instinct of like it's not true of everything is is right.

03:13:30Unless you think about your life, how your life turns out as a portfolio of all the decisions that you've made. So are each of those decisions isomorphs to each other? Are they identical to each other? Not in the way that investing in a startup is. But generally, they're going to be relatively similar to each other. So we can really understand this idea of create a portfolio of decisions when the decisions are looking similar to each other. our minds have trouble when they look very different. Except for, I'm going to go back to this idea of earth luck. Like I'm going to pull that term in again. It's just earth luck. I like that earth luck is winning you over, over the course of this conversation. With... I like it as a category, right? But like I'm using it as, but going back to what I said about, yes, I'm just going to say yes. I'm going to stop and I'm just going to say yes. I like it as a term because I think that it creates a great distinction. Yeah. Well, it's funny because when we were prepping this episode, we really struggled with earth luck. Like,

03:14:30we probably spent as much time on the earth luck section as all the other sections. And I had the same issue. I was like, how is this any different than the other types of luck? But as we worked through it, we're like, okay, yeah, there is kind of a category. A category, right? Of decisions that are much more impactful than, yeah. I agree. So now let's think about all the decisions that you make, whether it's who do you invest in if you're investing in a company or a stock or whatever, right? Like what house you buy, who you marry, but then like, what am I eating for lunch? Yeah. Okay, right? Like, you know... At the end, how your life turns out is going to be kind of the total of luck plus the quality of all the decisions that you ever made. So I don't really think of decisions as one-offs because it's in the portfolio of decisions that you've made in your life.

03:15:33And when we get down to decision quality, the principles that we're talking about apply to any type of decision that you make. So if you can improve your decision quality, if you can improve your process, it's going to improve the outcome of decisions that are like feel like they're one offs as well as decisions that are obviously repeating. And so that's why I sort of say like, okay, yeah, like it feels like the marriage decision is a one-off, but it's not really. It's in the portfolio of decisions that you make in your life. And at the end of your life, as you look back and you say, was it a good life? It's going to be the result of luck plus the quality of your decisions. And so it's just a portfolio. I like that. I like that a lot. Last question for you. Okay. What is an example of, either a terrible decision you've made that turned out great or a great decision that went really poorly. How much time do you have? When poker exploded all over television, I happened to have just had my fourth child. So I missed out on the first six months of this whole situation.

03:16:46And the thing is that the way people played, you know, and I had been playing professionally for about eight years at that point. The way that people played before that, you know, it's kind of like that Boston Red Sox versus Little League versus Boston Red Sox versus Boston Red Sox. If you could put the identical teams together. It was a little more like that second thing in the sense that if you were actually playing in high stakes poker, high stakes tournaments, mostly you knew what you were doing. Okay, so now I come in and Chris Moneymaker, best name ever, has now won the World Series of Poker in my absence. And in fact, when he won that, I came in 10th that year and I was two weeks from, I mean, I was so pregnant during that. It was like crazy. I come back from my first tournament. First of all, it's like, there's like 10 times as many people to win a tournament like that. And the players are really different, right? Like they don't play like the players that I'm used to. So anyway, it's a situation where I raise with a hand, I have king, queen, what's called on the button, I'm last to act and everybody is folded before me. And this player who I've never laid eyes on calls in the big blind. And the board comes ace, 10, 10.

03:18:05blank. So for those who don't know poker, that means I have ace, king, queen, blank, 10. So if I can get a jack, then obviously I would have the very best hand possible. The problem is that there's only four jacks in the deck. And so like the chances that I get a jack on the very next card are 8%. Just so we're clear, I am not playing this hand to try to get a jack. I just want to make that really clear. If I were, that would be a really bad decision. It wasn't as bad a decision as that. But this guy bets. And that usually signals that the person doesn't, that the person's hand is like somewhat weak. So I call because I'm like, ha ha ha. I know that he doesn't have a good hand. I'm just going to call him. I could hit a jack, but I'm doing this to set up a bluff on the next card. So the next card comes. It's nothing. I still have nothing. I have King High. He bets again and now I raise him. And oh, he called really fast.

03:19:12So then the final card was a jack. Of course. Right. Of course. Suck out. Exactly. And he checked and I moved all in and he called. Right. So anyway, I turned my hand over and then he very angrily turned over an ace and a nine. So like here was the problem. This is why this was a bad decision. I kind of had him in the right zone. Like I kind of knew he had a bad ace. But what I got wrong was that like he wasn't the Red Sox. Yes. Do you know what I mean? Yes. Yes. He wasn't calling me because he thought he was catching me in a bluff. He was calling me because he thought his hand was pretty good. Right. So that was a pretty bad play that turned out really, really, really well because I hit that 8 percenter. Like, I kind of liked my logic, but here's why I think it was a really bad decision. Because there were 10 times as many people in the tournament. Like, it's not like it was unknowable to me that the people were probably not experts. Yes, I kind of had him in the right zone. I don't fault myself for that. I fault myself for just being on autopilot, right? And like not thinking about like, well, wait, is he going to play like the people that I'm used to playing against? And when I went and told, like I think I told Eric Seidel the hand and he started laughing at me. He was just like...

03:20:22What is wrong with you? It's one of those, you didn't deserve that jack, right? No, I definitely, I did not deserve to what we call suck out there. Like, it was just like, but it was like, it was so obvious. It was such an obvious error to make. Like, how could there be 10 times as many people in this tournament and they all play like the experts that I'm used to playing against? Like, I mean, that was idiotic. And obviously I changed my model after that. But so that's like a really bad decision that worked out really well because that was really early in the tournament. I ended up making the final table. I made a lot of money in that tournament because I got really lucky in that one strike. Because I would have had like no chips after that. So that was pretty bad. You know what the interesting thing is? Like, I don't really think about those hands too much because I don't think there's a lot to be learned from them. It's like, all right, I put all my money in with aces and you called me with fives really bad and you got a five. Like, what am I supposed to learn about it? That happens all the time. And here's the thing. And I think this is actually really important for people to recognize in life. The better you are at poker, the more likely you're going to make a good decision that doesn't turn out well.

03:21:28Because the majority of your decisions are going to be better than average. And you're going to be getting these situations where the person against you has a very low probability of winning or at minimum, they're losing to the amount of money that they put in the pot. And honestly, what are you hoping for? Right. Like you're hoping. that somebody's going to hit a five on you because it means they're putting their money in with fives against you. Like if you linger on that and you start thinking about how unlucky you are and so on and so forth, it's going to make you play bad going forward instead of just saying like, well, what am I hoping for? Right. Like this is just going to happen to me because I'm on average making better decisions than most. Right. So the worst of decisions you make, the less likely you're getting bad luck. The better decisions you make, the more likely you're getting bad luck. So like, why are you like, why are you lingering on them except just to go back and check the decision? So I just don't think there's like a lot of use in that because that was kind of the point of playing. Right. Is to get people to make bad decisions about you. And that's where you're going to get what looks like bad luck.

03:22:28I think in poker, it's very explicit that there's not a whole lot of value in thinking through like counterfactuals like, like, oh, what if that five didn't come? Like, it doesn't matter what came on the flop. If you have aces versus fives, like it's a good decision, no matter what comes on the flop. Um, whereas, you know, I think in life people get tripped up a lot more of thinking like, you know, like, well, what if that, what if that red light had not, had changed a little bit quicker or like, what if, you know, and we kind of convince ourselves that that matters. It doesn't. Yeah. I went to graduate school because that's what I was supposed to do. Parents were both educators. They had both gone to graduate school. Education was a really big thing in my family. And I'm not saying, like, if I had thought it through, I might not have ended up at graduate school. And this is an important thing to understand is that you can end up with the right outcome or even the best option for you. and still have not made a great decision. It was more just like I was at college and then I was taking the GRE and then I was applying to graduate school. I don't really think I thought very much about like, well, what do I really wanna do? Is this the best choice for me? Is this gonna get me the outcomes that I want in my life? It was just like, no, this is what,

03:23:36My maiden name is letterer. This is what a letterer is supposed to do. So I went and did that. I don't think that's a good choice. My decision to leave and not come back and get my PhD, I also think was pretty bad for a very similar reason. I was sick. I went off and played poker. But I don't remember ever explicitly sitting down and saying, should I have gone back? I didn't compare what does it look like if I stay playing poker versus what does it look like if I go back and I complete my PhD, even if I don't go out on the job market. I didn't think through any of that stuff. It was a little bit like I'm doing this. I'm making money. I guess I'll just keep doing it. Right. Right. Worked out fabulously. But I don't really consider either of those things particularly good decisions because I don't think that I was super thoughtful about them. And I think that I actually took a really big lesson from that later on, because when I was thinking, as I started getting asked to give these talks, I actually did think more deliberately about it. Like, how much time do I want to be spending on this? What do I want to talk about? What am I getting out of it? Is this bringing me joy? And then I started comparing that to poker in a really deliberate way. You know, how do I feel when I'm doing this versus how do I feel when I'm doing poker as I was balancing out how I wanted to allocate my time?

03:24:52You know, I feel like it's like you're sort of caught in a tide type of decisions. Like this is just sort of how things are going. So I will just keep going that way. And those can work out really well. They did for me. But I don't think that it was because I made a good decision. I think it was because it just turned out well. Yeah. I never thought of Chris Moneymaker as earth luck, but maybe he was your earth luck. Chris Moneymaker was definitely my Ursula. Yes. Right, like for sure, for sure. That put me in a very different world because without that, I am very sure, that I would not have ended up finishing my PhD, which I did with Phil Tetlock and Barb Miller's, which was amazing. Everybody should go get the book Super Forecasting, by the way. Like it will change the way you think about decision-making. It's an incredible book. Getting asked to come talk to people did was...

03:25:44It brought me back to the cognitive science because I started thinking about the way that those two disciplines could inform each other. That was just so exciting to me to think about like the intersection of the two things that I had the only two things really that I had done in my life professionally. That wouldn't have happened without that event occurring. I had no control over that. Yeah, I'm very grateful for that moment of luck having happened because then that opens this whole other thing that I end up doing. And I end up starting off giving these talks. That suite of talks actually ended up as Thinking in Bets. Then I'm writing two books after that. I'm now finishing up my next one. I end up consulting. I love my clients so much. I go very deep with a very small group of clients. So I get to know them very well over very, very long periods of time. It's really exciting for me. It's fulfilling. I really, really enjoy the work that I do. And that all can be traced back to that moment because without that sort of developing that brand, which I can't do unless that moment happens, you know.

03:26:48none of those opportunities would have been available to me. So I'm just like, I'm so grateful for that. And then I co-founded a nonprofit, which is the Alliance for Decision Education. And we're saying, hey, let's bring all of this decision stuff that we're doing for adults and bring it into K through 12. Because if we go back to the beginning, the total of your life is luck and the quality of your decisions. Why aren't we teaching kindergartners how to make better decisions? Why aren't we starting earlier? We do it like maybe in college if you take an elective. Like you can teach a lot of things to a kindergartner about decision education. Obviously you can get really deep on probability and things like that as kids get older. But how about just teaching a kid that they're an agent of their own decisions? Like just things like that, right? So I don't get to do that and have the impact that that nonprofit has on the world without 2002 happening. Annie Duke, thank you very much. First, a quick word from our sponsors. This episode is brought to you by Purpose, the app that I actually co-founded and built. Purpose is a coach in your pocket. It's an AI that you can actually talk to about your life and all of the issues that you're struggling with. But here's what makes it different. Every other app on your phone is engineered to keep you hooked, to make you feel good. They have feeds that pull you in, notifications that drag you back, and the hours disappear without your life getting any better for it.

03:28:12Purpose actually does the opposite. You tell it what's going on, it gives you honest, no bullshit answers, and then it hands your time back to you. And in fact, if you try to use it too much, it will just tell you to go touch grass. We recently rebuilt it. There's a fresh design, new tools, and some new quests made specifically to help you break your worst habits, and a voice mode that is now available to everybody on iOS and Android. So you can just talk it out instead of typing. So if you want an AI mentor that gives it to you straight and then lets you get on with your life instead of an app built to keep you scrolling, get started for free at solved.deals slash purpose. That's solved.deals slash purpose. And we're back. Welcome back to Solved. It's funny doing these solved episodes because there is a consistent pattern that has begun to emerge, which is that whichever episode we're doing, the experience of doing it seems to take on the character of that episode's theme. So, for example, when we did an episode on procrastination, it took us like an extra three months of preparation to actually shoot that episode. When we did the episode on shame...

03:29:19Drew and I screwed that episode up so much that we actually felt very ashamed of how much we screwed it up beforehand and how much stuff we had to reshoot. When we did the happiness episode, we felt very light and easy and fulfilled because it was a very easy episode to shoot and a ton of fun. When we did confidence, I felt very confident about it. When we did change, we completely changed the set and the format. And this episode is about luck. And since we began taping this episode... everything unlucky seems to have been happening. Drew was having health issues, sleep issues. We had production issues. We had a hard drive failure. And now I have an empty chair across from me because Drew's flight got delayed and he was not able to get here for the last day of recording. So... I carry on to the end of the luck episode. I stumble through the finish line of this luck episode all alone. But let's go back to the top. Why is luck so underrated as a factor? Why don't we think about it more? And why do we tend to think about it the wrong ways?

03:30:26Because as Annie Duke said, everything in life either is skill or luck. It's either a decision you made or it is chance. And we spend so much time thinking about our decisions, we rarely think about the chance element. And when we do, it's usually to preserve our good feelings about ourselves. It's a self-serving bias. We tell ourselves like, oh, there's nothing I could do that was just bad luck, even though it likely was a bad decision. We tell ourselves... That we're brilliant and we're so smart, even though maybe we benefited from good luck. Why do we seem to have such a hard time thinking about luck and fortune? And why do we avoid doing so? Well, I think there's a few reasons. For one, there's a legibility issue. It's unclear how much of what happens in our lives is ultimately within our control and how much is just a factor of circumstance. Yeah. Like that's a blurry line that we often don't have a clear sense of what is what. And to get clarity around that line, we have to ask honest questions of ourselves, which are quite uncomfortable, which is how much control do we have over our own lives? How much can we affect in our own lives? And that doesn't feel very good. We don't like to admit a lot of those things. On top of that.

03:31:38Our brain's natural tendency is to ascribe meaning and value to good fortune or bad. We operate based on the just world hypothesis that if something good happens to us, it must be because there's something great about us. Or if something bad happens to us, it must be because we did something wrong. And ultimately, this can lead us into one of two traps. There's the fatalism trap, which is everything is luck. I have control over nothing. So why even bother and try? Or you have the self-serving delusion, which is I earned everything. There is no luck in my life. I'm pretty awesome. Don't even bother me with this bullshit. The fatalism trap removes our responsibility to improve our own lives, and the delusion trap protects our ego and prevents us from learning from our failures. We briefly covered some of the Western thought around luck, and we landed on the ancient Chinese framework of Sansai, which is heaven luck. It's the genetic lottery, the ovarian lottery, what you're born into.

03:32:37The earth luck, which is the broader environmental context that you put yourself in, which is generally determined by a handful of very high leveraged decisions you make throughout your life. And then there's the human luck, which is your ability to navigate each choice, each decision on a day to day basis to maximize your probability of achieving your goals. If life is a game of poker, then heaven luck is the cards that we get dealt. Earth luck is the table we choose to sit down and play at. And human luck is the choices that we make as we play. All three have a very profound effect on our outcomes. Heaven luck we have zero control over. Earth luck we have some control over, but on a very macro broad level. And in human luck, we have full control over our decisions. When it comes to heaven luck, there's generally a temptation to ascribe some sort of inherent value based on where we were born, the circumstances we were born into, how we grew up. And the funny thing is, is that it works against us in both cases, whether we were born into really good circumstances or we were born into really bad circumstances.

03:33:48So if we're born in the really great circumstances, there's a tendency to experience some sense of guilt of like, what did I do to deserve this? Why was I blessed with all of these privileges and benefits when I didn't earn anything that the other people around me had to work really hard for? Now, while it's useful to see the discrepancies and the benefits that maybe we were born into, kind of just an ever-present sense of guilt is not very useful or productive. Ultimately, we should take all of the things that we've been blessed with and try to leverage them to help others. If you were born with a particularly large amount of heaven luck, then I would say you have a moral duty or responsibility to leverage that heaven luck to distribute some of the benefits that you've received to as many people as possible. now on the flip side if you were born into a situation with very little heaven luck then that doesn't really change the fact that you are responsible for the outcomes in your life it may not be fair that you were born into west africa instead of norway but even if you were born there it is still your responsibility to make the most of that situation that you possibly can

03:34:56So heaven luck tells us a lot about the circumstances from which we came, but they don't really tell us about what we should do. And because ultimately the longer we're alive, the more our individual decisions play into our long-term results, it is hard to say that heaven luck... should necessarily matter a whole lot to us at all. Our takeaway in this episode is that the goal with heaven luck is simply to become aware of it and to develop some sense of gratitude around it. And the way we develop that sense of gratitude is to remind ourselves and take perspectives of all of the potential realities that we could have been born into, but we were not. So while there may be things about our lives that we feel bad about today, but we're not Surely you can imagine an infinite amount of worse possible lives that you could have lived, but you're not living. And because of that, gratitude is accessible in any moment, at any time, to any person. Now this brings us to earth luck.

03:35:54which is a set of broad environmentally-based decisions that we each have to make throughout our lives. And the result of those decisions is that it either increases or decreases the surface area for good things to happen to us. For example, if I aspire to be a famous television actor and I'm trying to start my acting career in Boise, Idaho, I'm probably going to run into a lot of bad luck, or at least I'm going to have very little good luck. But if I move to Los Angeles and I surround myself with Hollywood and hundreds of other aspiring actors and producers and screenwriters, I am increasing my surface area for something serendipitous to happen to me that I can leverage and take advantage of and benefit from. So there is a class of decisions throughout our lives that greatly influence the probabilistic outcomes of hundreds, if not thousands of other decisions that happen down the road. The job or career you decide to pursue, the city that you decide to live in, the partner that you decide to marry and spend a life with. All of these things are one-time decisions that not only will greatly influence thousands of other decisions, but in many cases, they will set the context and basis of all of those thousands of decisions.

03:37:10And so maximizing earth luck is really just about understanding yourself, your goals, and what is the best environment to place yourself into that is going to maximize the opportunity of achieving those goals. This happens with... The relationships you choose to build, the networks you choose to enmesh yourself into, the environment that you choose to live in, all of these things have outsized impacts on all of the other decisions that you make, but also the decisions that are foisted upon you in the first place. Now, what's interesting is that earth luck is kind of the first luck that there is some research on how you can develop skills to expand it. So, for example, developing good social skills can expand your earth luck. If you are better able to meet and talk to and connect with new people, it's going to open doors for you wherever you go.

03:38:04in situations that doors might have otherwise been closed. Another skill that we talked about is simply having an open mind. Being open to more consequences or more experiences seems to allow people to draw connections and find opportunities and environments that people who are a little bit more closed-minded literally don't even see in front of them. In fact, some researchers have even gone as far as measuring luck in people based on how much they're aware of in their environment. how much they pay attention to, and how quickly they act on opportunities once they spot them. And then once you spot those opportunities, this is when human luck comes into play. Because even the best opportunities in life, there's always going to be a chance of failure. Nothing is ever 100% and nothing is ever 0%. There is always some probabilistic distribution of outcomes that you are setting up bets on. when you decide to pursue them. And because every decision you make has a probabilistic outcome, it means that you can't necessarily judge the quality of your decisions based on the quality of your results. You can move to LA to try to make something happen, but even if nothing happens, it doesn't mean that moving to LA was a bad decision.

03:39:17You can marry the partner you're in love with and be extremely happy with them for many years, but that doesn't necessarily mean it's a good decision depending on their traits and qualities and personality and the situations that they place you into over the coming years. Now, we have to be careful around this because we have all sorts of cognitive biases that prevent us from judging our decisions objectively and accurately. We have a self-serving bias, so we like to take credit for all the good things that happen and blame bad luck for all the bad things that happen. We have loss aversion, which causes us to overestimate the negative impact of failure and therefore not take a chance even when the odds are in our favor. Andy Duke and I talked about all sorts of different factors. methods and ways that you can kind of counteract these biases and try to make better decisions consistently. And she raised a great point that it's, we're always doing kind of this probabilistic thinking underneath the hood. It's just what we experience as intuition is our subconscious

03:40:18doing some of the statistical analysis and placing bets accordingly. But the problem is, is that our intuitions under the hood are not super accurate. So the best way to make these decisions accurate is to take the implicit intuitive decision making and make it explicit to actually write it out, try to forecast the results of a major life decision, try to see all of the contingencies and path dependencies and what the actual cost of failure Because once you do that, not only do you get more objectivity and more clarity around the decision itself, but it creates a form of accountability. You can go back and look at old decisions that you made and spot blind spots, spot biases, spot things that you didn't consider that you didn't look for. Find patterns of mistakes that you consistently make when you try to make decisions. This is very similar to the stoic practice of negative visualization where you intentionally imagine the worst case scenario and ask yourself, what factors led to this worst case scenario? What are the warning signs that this thing is not going to go well? How are we going to define and measure success and define and measure failure in the context of this decision? Developing a sense of what all these things are going to look like before you make the decision is going to help you make a much better decision and then ironically, you're

03:41:45make failure much less likely because you're going to know what to look out for and you're going to know what to prevent before it happens. And then finally, there's a volume approach to a lot of these decisions because the fact of the matter is, is that anytime you were doing something with a probabilistic outcome, many, many times in sequence, there's going to be a lot of volatility. You're going to go through periods where you do have a lot of negative outcomes, even though you make good decisions. You're going to go through periods where you have a lot of positive outcomes, even though maybe you made bad decisions. There's always going to be a little bit of variance. And the best way to negate the impact of that variance is to increase volume. Because the more you increase volume, the more you weight everything towards skill and the less you weight things towards luck. On top of that, as you increase volume, you give yourself more opportunities and reps to learn from your failures. And because you're moving quicker, you will find out if something is not the right path quicker as well.

03:42:43So how should we really approach luck and consider luck in our lives? I think there's a general rule of thumb that is probably useful to follow, which is that anything from the present moment forward, you should act as though you have full control over everything, even though you don't. You should make decisions as if everything is up to you, even though there's going to be things that you can't predict that are going to happen. Then when you're looking in hindsight, that's when you should try to be honest about what was you and what was the environment. What was heaven luck? What was earth luck? And what was human luck? So while that's how we should approach our decisions, there's still a few other levers that we can pull to help us gain more perspective, more clarity, and a little bit more luck in our lives. So one is kind of like a gratitude journal, but with a twist. Sit down every night or every week or whatever it is

03:43:39Write down some good things that happened to you, some things that you're grateful for, but also be very explicit on why you're grateful for them. What are the worst possible outcomes that could have happened but didn't happen? But next, I want you to go a step further, which is to write out... What are some potential things that you could be lucky about in the near future that could break your way, that could go well, could happen? This is a simple exercise in drawing connections in your environment so that you are more well equipped to spot them when they do emerge, right? When you tell yourself like, hey, I could actually meet somebody really cool at this event I'm going to this weekend. Instead of dreading it, you help prime your mind to see the opportunities in it. The second easy thing you can do to increase your luck today is just show up. Just do more things. Be in more rooms. Accept more invitations. Introduce yourself to more people. Again, the more surface area you create for yourself for serendipity, the more likely that serendipity is to happen. Now, a lot of people don't do this because they feel like it's a waste of time or, you know, if 9 out of 10 people they meet, nothing's going to come of it. It's like, well, why waste all that effort? Why?

03:44:51But if you think of it the other way, that one out of 10 people you meet could have a pretty significant impact on your life, then it makes sense to work through those other nine people as quickly as you possibly can. There's also something to be said about making asymmetric bets. Annie talked a lot about how emotionally our approach to betting is asymmetric to the downside, which is that we tend to overestimate the cost of failing and underestimate the benefits of success. You can look for situations where there is an outsized benefit with very little cost. Again, walking into a room and introducing yourself to someone is a perfect example of that. I mean, when I met my wife, I was... In a loud nightclub and she was just like the first girl that walked in the door that I saw that I was attracted to. I lost nothing by going over and talking to her. But what I gained was a partner for the rest of my life. And then finally, the last lever is how you choose to respond when things go wrong.

03:45:53There's a lot of research showing that people who experience more luck in their lives, they tend to bounce back faster. They don't dwell on the failures as long as others. They don't get mired in like the why me? What did I do to deserve this? This isn't fair. The world's unfair. They just try to learn something and move on as quickly as possible. And so ultimately, we imagine luck as being kind of this cosmic force that is thrust upon each of us in different ways. Some of us are just seem to be born extremely lucky and others seem to be born extremely unlucky. But like Annie said, luck is actually just kind of this ever present roulette wheel to everything we do. And over a long enough period of time, all of us are going to experience good luck and bad luck in different proportions. And we're actually going to be very poor at identifying. what the good luck is and what the bad luck is and where it begins and ends. Instead, it's simply more useful to acknowledge that everything we do in our lives has some element of chance to it. But we can manipulate our circumstances and our situations and our decisions to leverage our chances more optimally. We can put ourselves in situations that...

03:47:06increase the odds of positive outcomes based on our goals. We can develop habits and skills that allow us to have more opportunities and to gain that volume that minimizes volatility. And then we can implement some basic decision-making practices and some basic mental practices that help us notice opportunities and make high conviction decisions on them sooner than we otherwise would. In sum, this is what luck actually is. It's developing a series of perspectives towards chance and probability that benefit ourselves in developing habits and behaviors that leverage the randomness in the world better than others. And so at the end of the day, Will's father was correct. Maybe there isn't such a thing as luck. There's just when opportunity meets preparation. Thank you all. I will see you next month with another great episode. And just a reminder, we do have a free PDF guide for this full episode. If you go to solvepodcast.com slash luck.

03:48:08You can download it for free, get all of our resources, citations, references. Big thank you to Annie Duke for coming out and helping us out with this one. And as always, please follow, subscribe, support the show any way you can. We really appreciate it. My name is Mark Manson. I have no co-host. I'm terribly unlucky. Or am I lucky? Stay tuned. We'll find out next month.