Maximize Your Leverage with Eric Jorgenson

 

Eric Jorgenson is the author of The Almanack of Naval Ravikant and an early-stage investor as a GP in Rolling Fun. Currently, Eric teaches the Life of Leverage course, hosts his podcast, Jorgenson's Soundbox, and is writing his second book, The Almanack of Balaji Srinivasan.

Eric Jorgenson and Chris Sparks share how to recognize and amplify leverage points in your life and career. You’ll learn how to set your aspirational hourly rate, discover previously underutilized assets, and start reclaiming your time by doing the work only you can do.

See above for video, and below for audio, resources mentioned, topics, and transcript.

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Topics:

  • (01:38) The art of leverage over time

  • (11:46) A mountain of levers and aspirational hourly rates

  • (20:25) Buy your time back, and then buy others' time

  • (25:22) Top and infinite values

  • (36:19) The four types of leverage and the wild-card fifth

  • (41:57) Leverage-type blindness

  • (48:50) The divine simplicity of a few long levers

  • (55:33) Something that only you can do, that you love to do

  • (01:04:05) Installing the Naval firmware

  • (01:09:56) If your sandwich is not a spiritual experience, you're doing it wrong

Podcast Transcript:

Note: transcript slightly edited for clarity.

Chris (00:05): Welcome to Forcing Function Hour, a conversation series exploring the boundaries of peak performance. Join me, Chris Sparks, as I interview elite performers to reveal principles, systems, and strategies for achieving a competitive edge in business. If you are an executive or investor ready to take yourself to the next level, download my workbook at experimentwithoutlimits.com. For all episodes and show notes go to forcingfunctionhour.com.

I'm honored to introduce today's guest, Eric Jorgenson. Eric is the author of The Almanack Of Naval Ravikant: A Guide to Wealth and Happiness built from the best of Naval's interviews, tweets, and podcasts. He is also an investor in early-stage startups as a GP in Rolling Fun. Currently, Eric teaches the Life of Leverage course, hosts his podcast, Jorgenson's Soundbox, and writes at ejorgenson.com. Eric is about to release his second book in the next six months called The Almanac of Balaji Srinivasan. The Balmanac will be a guide to thinking for yourself, seeing possible futures, and learning how to build a piece of that future.

Today we are gonna break down the concept of leverage. How do you reclaim your time and reinvest that time in the right areas? How do you identify the work that only you can do? Let's help you recognize and amplify the points of leverage in your life and in your career.

Thanks for joining me, Eric. Very excited to have you on the show today.

Eric (01:35): I'm very excited to be here. Thank you for the intro.

Chris (01:38): So, let's jump into leverage. Why is leverage such an important concept for you?

Eric (01:44): I think it's one of the most overlooked mental models. Like, I think it is on the same level of importance as compounding, and grasping it sort of early in your career, reframing your work around it, and sort of using it to guide your decision-making and your efforts can totally change your life, and I think most people don't think about it or don't see it, and it sort of leads to these like confused dead ends or treadmill moments, and it's just wrapping my head around it has changed my life, and I've started writing and exploring more about it to hopefully help others sort of see the light that I've seen.

Chris (02:19): What was the "aha" moment for you?

Eric (02:22): Well, I'd been working on the Almanac of Naval for a few years, and leverage is one of the, like, big concepts in his epic tweet storm that became sort of the first half of the book, which is about how to get rich without getting lucky, and leverage is one of the key components in there. He talked about, you know, the Archimedes quote about, "Give me a lever long enough and a place to stand," the obligatory component of every leverage talk ever. And I sort of understood it as a mental model, because I had worked on the book, but it wasn't until I had this sort of family crisis that I actually started practicing it.

So, we had a death in my family, and it just took me from my normal state of like one and a half jobs to like five jobs. And most of my life has been, "I can work harder, I can figure it out, I can get through this," and this was really the first moment in my life where I had to recognize that I had to change how I worked if I was going to keep my head above water and make it through this kind of challenging period in life. And you just can't do five jobs well, especially when a bunch of them are a surprise. So I started to kind of think differently. I started to think in terms of where can I find the right resource to do this, how do I prioritize the work that gets more work done, how do I use sort of the tools and the capital and the products and the people available to me to accomplish this task or this set of tasks that is so much bigger than my personal output could ever be? And I started to really like developing tools and frameworks to take this sort of abstract mental model that I learned from writing the book into. How do I actually use these ideas to organize my work and get my work done and have this sort of outsized impact?

And a bunch of slightly more refined sort of frameworks or tactics or heuristics sort of came out of that over the next couple years, and that's really what turned into, you know, the blog post and the course and some of the conversations on the podcast. It's like exploring and deconstructing sort of what other people have done who have built high-leverage businesses and how different people think about it, sort of combining all those things into a new world view.

Chris (04:34): What would you say was your first big win when it came to applying leverage?

Eric (04:39): The first big win was actually probably the book. Something really clicks when you ignore something for an entire week. I mean like, I don't think about the book, I didn't make efforts to sell it, I didn't go on a podcast, I didn't get on a sales call. But I just checked a week later and it sold a thousand books, whether I was sleeping or at the gym or working on something entirely different. And that was a level of sort of autonomousness of leverage that, like, seeing that product just sell and sell and sell, and then recognizing that there's a landing page that was doing that, Amazon was taking the money and then printing the book for me on demand and shipping it out, and people were recommending it, and podcasts that I had recorded months ago were sort of helping people understand what the book would give them and why they should order it, and like all of this was just happening because I had spent the previous two or three years writing that book and setting that up and doing that work.

And I recognized then that all of that had sort of set up this system that was now working for me, and I could spend my time working on building the next system and building the next system. And so you're almost never working on today's results today. You're, like, you're looking, you know, a month or a year or ten years ahead, seeing what kind of work can have an impact, a bigger impact then, and doing that work today. So I think of it, like, what is the work that helps you accomplish more tomorrow? Not work harder tomorrow. What is the work that increases your impact? It's one of the short heuristics that helps you triage like whether a particular task or a particular effort is going to add to your leverage or not.

Chris (06:27): I think this is a great time to share a quote that you shared in a presentation that you gave from Andrew Finn. He's the co-founder of Wait But Why. I love this quote. "The job of an entrepreneur is to consciously identify and resolve the highest points of leverage in a business situation. There is one clear point of leverage which is always shifting depending on the context. The person who resolves these points of leverage in sequence creates and extracts a huge amount of value." So this constraint that you've faced, all of a sudden your workload massively expanded and you had no choice but to change the way you did things. You weren't able to do all the things you did before. So it seems like it required a longer-term view. Rather than, "How do I continue to tread water here," "How do I set up these systems that are gonna continue to pay off over time, or to raise the level of my floor, that I can go after larger and larger opportunities?"

Talk to me about this reframing of your mindset as an entrepreneur, that you're thinking out in longer time scales, you're looking at, "Hey, most of these things aren't things that need to be done. What are the few things that matter?" What was that shift like for you?

Eric (07:40): It is a little bit of—Which I know is another kind of big mental model people think about, it's a little bit learning to look at opportunity cost. And so as you sort of level up, especially in this situation, when you've got five jobs and a much bigger opportunity set, a much bigger—which you could see as a burden but is also a huge benefit—there's a different sort of triage process that you go through. And you need to change, almost redial your settings as to like, what is a good opportunity, what is worth your time to work on? And one of the first things we do in the course, is give people sort of a worksheet to go through and say, like, "What is your time worth? What is the—" 'Cause fundamentally, at the end of the day, like, this is all the most core denominator, the main constraint on all of us is your time. So you can see sort of the art of leverage over time as making your time worth as much as possible, which, said the same way, is increasing your opportunity cost as much as possible over time.

And it's sort of this feedback loop between skilling up, acquiring more resources, increasing your opportunity cost, focusing on the next biggest priority, and it's scary, 'cause you're sort of always at the frontier of your competence, you're sort of always like taking a leap that is a little bit uncomfortable. Usually, it involves reinvesting capital that is almost constantly more than you have ever reinvested before. It involves giving up or passing on opportunities that might have previously been life-changing opportunities. All of those are, like, uncomfortable things. But if you don't sort of continue to push that, you will find yourself a little bit stagnant, or, like, playing the same level for a long time, or getting your ass kicked because you're trying to level up but you're using the same tactics as before, and you go into, like, you know, a level five dungeon with a level one sword, and like, that's just a recipe for disaster, right?

So it is really like sort of looking at a broad set of things and trying to keep everything in balance. Your resources, your tools, who is sort of on your team and in your corner, the opportunities that you're tackling, you want to try to level all of those up iteratively, roughly at the same pace.

Chris (09:50): Yeah. I think we have this notion sometimes that eventually we're gonna overcome our challenges and be able to just ride off into the sunset, and a lot of what success looks like from the inside is just encountering more and more interesting problems.

And I like that you said around opportunity cost, that our opportunity cost gets larger over time as our opportunity set expands, and the average opportunity we have access to is higher value. So that this concept of leverage not only starts to expand this opportunity set, raise this bar of our opportunities, but allows us to reinvest that output in better and better ways, creating that positive feedback loop.

I was listening to a podcast about the Rothschilds. So, building a banking empire. And the big thing that I took away from that is they had a lot of peers who were doing the same thing, but their bet sizing was fixed. They would have a really big investment, and then they would just make the same bet again. It's like they're writing the same check size every time. But what the Rothschilds were able to do is, because they were vertically integrated, they had so much information across countries, it allowed them to place much larger bets and to have a really tight cycle time, where they were taking in new cash flow and reinvesting that. And that allowed them to start to build up the space.

And you mentioned compounding at the beginning. So it's not only the start of the pile that you're investing, but what's the compounding period? And how frequently is that compounding happening? So that is the game of constantly looking for places to uncover assets, receive some return for them, and then reinvest that in higher and higher leverage ways.

Eric (11:46): Yeah. If it's helpful to kind of set the rest of this, the mental picture that I use, which is why I usually like kind of a core piece in the course, is the "mountain of levers." And so I think of my work on a daily or monthly basis as sort of inventorying the levers that I have around me, and then working to make those levers longer, usually. Or sometimes adding new levers. But what I want it to feel like, the basic physics of it, is the longer the lever the more you can lift. Right? So, like, I can't deadlift two thousand pounds, but with a fifteen-foot lever, I can lift that pretty easily. So the more leverage you have, and the longer they are, the more you can sort of accomplish.

And so I wanna be able to reach out to my left and push a very long lever, make a decent-sized investment. I want to reach out to the right, push another lever, publish a podcast, reach a hundred thousand people. Like, publish a book, reach a million people. I want those levers to continuously get longer, and I want a relatively simple, powerful like elegant set of levers around me. And that is like how I have come to think about my work on a daily basis.

An early mistake was trying to add a bunch of levers, then—It is just so much more powerful to have a few long levers that complement each other. But how that fits into the opportunity cost piece is like those decisions that you make to go move those levers change constantly based on the length of your lever. Right? And so the earning decision that you said, like, the Rothschild example? I think capital's a massively important lever, and the longer you can get that, the sooner, the more of every other opportunity unlocks.

So that was a hundred percent. I, like, I made the mistake that you said the Rothschild's competitors were making, of like keeping bet size constant in light of a changing context. So as your bankroll goes up, as I'm sure—Like, you know way better than I do, from the poker world, like, you have to increase the bet size. So shifting that from a fixed number of, "Oh, when I invest in a stock or a company I invest X amount," to, "What is the number of the outcome that would have to matter to me at each sort of stage of net worth for it to be worth my attention?" So, thinking about opportunity cost. And the rough rule of thumb I have is like, a one percent impact in net worth.

So this is a combination of, like, Nathan Berry's blog post and Nick Maduli's blog post. He focused on expense attentions, or expense thresholds. And I tried to sort of parry that over. So like, if you pay attention to individual expenses at a hundredth of a percent of your net worth, you pay attention to earnings thresholds at one percent of your net worth, like, don't make an investment in a company that's gonna earn you ten thousand dollars if you have ten million dollars in the bank, because it's not even worth your time to think about it. You're off by an order of magnitude. Like, if you're a millionaire, you wanna make decisions that can earn you at least ten thousand dollars per decision, or your bet sizing is off or you're, you know, trying to do too many things. So I think that's just a rough rule of thumb, starting to think in percentages and outcomes instead of inputs. You're more likely to be outdated if you think in inputs.

Chris (14:44): Yeah. I think this is a good time to unpack some of these core principles. So, starting with opportunity cost, one of the key mental models that that tweet storm from Naval popularized was this idea of the aspirational hourly rate. That you have an hourly rate that, "Hey, this is how much I expect to make, this is how much I've made in the past. Anything above this I'm gonna pursue, anything below this number I'm not gonna do." So these are candidates to delegate, to turn into a process, to automate, or to just stop doing. Talk to me about this concept of the aspirational hourly rate and, you know, how that typically has an impact on people.

Eric (15:24): Yeah. That's one of the early exercises in the course, is like determining this aspirational hourly rate, which is a tricky thing. Like I bet you have moments where you can say, "In these ten hours I earned thousands or tens of thousands of dollars an hour." Right? Whether that was a game or an investment or something. And you kinda have these moments of peak earning. You're like, "Well, shit. If I can do that even twice a year, right, like that is everything handled." And then you have to kind of work backwards a bit, like, all right. Well, how often can you do that? What are actually all the hours that went into that high-earning period, and then what is the opportunity cost to that? What is that time worth to you to have back? Does doing this task make you happy or not?

So we walk through a ton of things. Like, you know, what would somebody else pay you for your time? What would you buy your own time back at? Some of these things are just sort of triage.

For reference, Naval's is insanely high. I think he says it's like—He used to say it was like ten thousand dollars an hour. I think he now says it's like a thousand dollars a minute, or something like that. So it just keeps going up all the time. And that kinda breaks people's brains. And he took the initial step of saying it was worth that even when it demonstrably wasn't. So he put a really high opportunity cost on his time sort of famously, like, early in his career, and said, "My time is worth a thousand dollars an hour, even if nobody in the world believes that but me, but I have to protect that time to invest in myself in order to ever reach that time." You are the first person who has to believe that your time is worth that much, and can create that much value.

And you know, we both have had life experiences that are kind of like, "Well, that legitimately was a-thousand-dollar-an-hour work, or five-thousand-dollar-an-hour work, or ten-thousand-dollar-an-hour work." Investing in the right company might turn out to be a million-dollar-an-hour work. So those are visceral—Like, you can't help but see the leverage in the world when you have a few of those experiences sort of under your belt, and it really sets you chasing for more. But most people are not in a place where they even can recognize their own leverage. Like, they're selling all of the upside of their leverage to someone else, and they're just in a perverse sort of incentive situation. Like, that is the role of most jobs. Like, most jobs, especially if they're not commissioned or equity-based in some way are very, very flat, predictable rewards. Your time is worth exactly what your employer is paying for it, and any upside to that they keep, and any downside, like, anything you can like "steal," quote/unquote, back from like what you, the amount of effort they are paying you for is like sort of a benefit to you but not to you in the long-term sense.

So, some of the first—Like, if you find it impossible to wrap your head around this mental model, like, first just get yourself into a place where you are the recipient of the benefits of your own leverage. Like you get your own time, even if it's part-time, you want the upside of your own wins to accrue to you, and you wanna be in a place where that feedback loop you feel viscerally and you want to invest more, you want to continue to make your time more valuable, you want to upscale, you wanna build more leverage for yourself, not just for whoever's paying you for your time.

Chris (18:37): Yeah. To oversimplify, it feels like getting away from a linear mindset of increasing by a fixed amount or a fixed percentage, and moreover, how can I turn what I do into an exponential, that I am growing at an accelerating rate? And like you said, the returns from upside are unpredictable but potentially infinite, and generally to sell that upside or to trade it away is a bad trade, if you can avoid it, because that's where all the interesting things happen.

I think this leads to an interesting question for me. You know, coming back to opportunity cost, right? Or, opportunity cost that, the cost is all the things that I could be doing but am not able to do. Right? That what we're doing at this moment comes at the expense of everything else. That this hidden cost is so—

Eric (19:30): I'm so honored by your presence here in that context.

Chris (19:32): Likewise. I mean I could do anything else in the world, and I chose to be talking to you, and I'm very happy I am. This always brings to mind for me that we don't give enough attention to what are the things we need to be saying "no" to? I like this frame that early in your career, success comes from saying "yes" to a lot of things, getting involved, figuring out what your points of leverage are, starting to build your network, starting to get a reputation, build a portfolio, this type of stuff. But at a certain point in your career, you hit an inflection point where success comes from saying "no."

So, you mentioned a couple rules of thumb before. Don't look at an investment if it's not going to increase your net worth by at least one percent. Don't do something if it's not above your aspirational hourly rate. Are there any other rules of thumb that you use to determine, "Hey, this is a great opportunity, but it's not for me"?

Eric (20:25): Yeah. Increasingly, the first thing is, like, "Will I enjoy the process of doing it?" Like, that actually happened sort of earlier in my career or life than I thought it would. It's one of those things like—You see plenty of, like, people who no longer have to make economic decisions. They're still doing shit that makes them miserable because they just don't know any other way. So the first filter now for me is, like, this is all very clean and easy when you go at it with the attitude of, like, "How can I make as much money as possible per hour?" And it gets really hard and fuzzy and just less quantifiable when you're, like, "How do I use this mindset to just have a great life?" Because you have to start making trade-offs of, like, "Yeah, I could do thousand-dollar-an hour work indefinitely twelve, fourteen hours a day, but also, like, there's a declining margin of utility to money when you're working that much, so how do you decide when to stop working, when to enjoy your time? How do you enjoy leisure time when you're thinking of the opportunity cost of a thousand dollars an hour?"

Like, that's a little bit of a mindfuck at first. And so I think finding work or things to do with your life and time that make you happy is the first filter that I use now.

When you go back to the fact that time is the fundamental constraint, the mindset of leverage here is, like, exactly what you said. The first step is just like reclaiming time by eliminating stuff that is either irrelevant or unnecessary or just doesn't have to be done. Like, eighty/twenty it, and like peel away the things—You're always thinking of stuff that like, "Maybe that will help, maybe that's a good idea, oh we could do that, we should do that," or someone else is doing it in your organization, and it's really, it's hard to say no, it's hard to shut other people's ideas down, it's hard to shut your own ideas down. It's hard not to go down that new rabbit hole of that new idea and just kind of like see what's there. 'Cause to your point, that's oftentimes what got you that first kind of breakout success or two.

And this idea of exploring mode and exploit mode has been a really helpful one. So like, you kinda go through the arrows of your career by looking broadly, taking it all in, saying "yes" to everything, experimenting, and then like, "Ooh, I found a thing that works. I'm gonna narrow down my focus massively and just like to exploit and execute on this opportunity, and sort of get the benefits of all of my somewhat inefficient undirected exploration time." When you're in exploit mode, that's when you're kind of—you're really focused on the other pieces of what I think of as how to use leverage to get more time, which is buying back your time. So, outsourcing all the stuff that you can. All the stuff that has to be done, can't be avoided, but doesn't have to be done by you. So you can buy your time back, and then you can buy others' time.

And so that's, like, one of my favorite things in the course is to show people that, like, "We all have the same amount of time, but you can buy others' time. You can get more than twenty-four hours in a day if you can spend some time earning enough money to trade that money for more time, more expertise." People are delighted to sell you some of their time and their expertise and their service, and you can get fifty hours a day of human capital working on your behalf if you have the earnings power in other places to start creating it or to use it well or to compound it and know that it's gonna be a good investment.

And when you see the people who are achieving extreme things—Even when they look like one person, right, like Ray Dalio looks like he's a superhuman, like, creating all of the—You know, he's writing books, he's running a fund, he's doing all this stuff. And like, there's one name on the front of that book, "Principles," but if you look in the back that is like a four-page acknowledgement section of, like, he's got two personal assistants. He's got people who work for him that are literally called "Ray's leveragers." I don't know what they do, I would love to find out, but like—And then there's the editors, and then there's the publ—And then there's everybody who works at Bridgewater, and then there's his family, and like there's his driver, and it just—Like, he probably has hundreds of man hours working under his direction or for his benefit every single day. So like, he only exists twenty-four hours but he owns this whole branching tree of support that goes to creating like some of his life outcomes.

And that's just like a broken frame, again, where you can't think of, "I have twenty-four hours, how am I gonna accomplish the most possible?" Like that's where the productivity movement to me just gets it all wrong. That's like this sort of weird self-flagellating, like, self-abuse, just squeezing yourself like a fruit to get all the juice out and all your time, and it's just like a very bizarre relationship to have with yourself. I find leverage to be a much more positive-sum, open-ended sort of relaxing win-win arrangement with the world and yourself than trying to reach some sort of peak productivity.

Chris (25:22): So much gold. I wanna just highlight and underline a few things that you said. The first I think is a really important one around value trade-offs. And recognizing, particularly as you reach the point of abundance, that you can live life however you want, and the importance of understanding what is important to you, what does a sense of balance look like for you, what are you willing to work for or to give up? When I teach my class, Team Performance Training, that's the first exercise that I have everyone do, is to uncover their Top Values. And particularly their number one top value. "This is what comes first." Because without making that decision up front, you find that you're living a life of at least external success, but internally you feel very conflicted.

You know, this is a really successful businessman but, you know, "I really wish I would have written that play or directed that film at one point." Or, "Man, I would love to spend more time with my friends and family but I have this business and all these things I need to do." That's why you can't judge success from the outside.

And Naval said this very eloquently, that life is a single-player game. All that matters is this inner scorecard. So understanding what is important to you and leading from that.

Eric (26:44): Dude, your Top Values Worksheet, I've used it myself, it is so good but it's so brutal. You're like, you get to start with like, select all these values from a list of, I don't know, a hundred, or fifty, or something. It's a very long list, and you can choose as many as you want. And you like to pick these twenty that are all really important to you and you're like, "Yeah, these are my values, I feel good about this." And then you keep iterating through, like, making us pare down and remove stuff that is just as agonizingly important to you, and you're like, "I can't sacrifice this one, but this one is just slightly more important, I think, but it hurts!" It is a really, really good exercise.

Chris (27:21): There's this author I love, Venkatesh Rao, from Ribbonfarm, and he has this concept of infinite value. So there's all these things that are worth infinite, that yes, we want those. But the way we act is, we're all the time making these trade-offs without acknowledging it. So it's important to make these trade-offs ahead of time, it's like, this is a little bit more infinite than the other.

Or you mentioned Ray Dalio. I love the way he puts it, as life is one giant buffet, you have to give up some things you want at the buffet in order to have a chance of getting the things you want most.

Eric (27:55): Are you comfortable sharing your top three values?

Chris (27:57): Absolutely, yeah. So this, the top values exercise is something that I do every quarter, 'cause I think it's important to recognize that just as priorities shift, values shift, so it's really good to have this check-in with yourself and seeing, hey, where am I optimizing for the wrong things, or at least not the top things? So, my top three in order are wisdom, integrity, and adventure.

So, very, very quickly, you know, wisdom for me is how does one live a good life in a Platonian sense, and practically how do I live that good life? Integrity is being true to myself, so staying away from mimetics, staying in my lane, doing the things that I know I love that I do best, and being true to that. And then finally adventure is just approaching everything with a sense of fun. Or, it's really hard to beat someone who's having the most fun, so not only, you know, having adventure but living life with a sense of adventure.

Eric (28:56): Yeah, man. You crush that adventure one. I look up to you in that sense. That's one that was probably on my list that quickly got pared away, or like, "That sounds good to me but I can't claim that it's a top value for me based on how I live." So yeah, that's, mine in order are self-respect, having a family, and meaningful work. But I think actually it would've really helped to go into it—I think I did that maybe six months or a year ago. I think it would've really helped to know that I got to redo that every quarter, 'cause that's part of what was really agonizing, is kind of like feeling like I was picking permanent things when actually, like, you can pick a new priority value or whatever every quarter, or every so often.

Chris (29:38): Yeah, I love this concept of resonance, it's almost just like you have to try things on and see how they feel. So I find that this takes away a lot of the pressure, whether it's choosing a goal or choosing, "Hey, here's what I'm gonna work on today," if you approach it experimentally, and let's try this and see how it feels. I'm committing to it for a certain point of time. For me, I'm committing to try to embody this value for three months, and then I can decide, "Hey, I'm never gonna think about this value again." And for me that feels a little bit more gentle and playful, and gives me permission to be curious about that, rather than, "Is this really what I think and believe?" Because a lot of times we are—The world acts as a mirror for us, and it reflects back when we are acting in alignment with our values. So that's when I say resonance is being attuned to that frequency when things are happening naturally. A sense of moving downhill.

Eric (30:38): Yeah. I like that a lot. Sorry, I took us on a real rabbit hole there in the middle of your very helpful recap, but.

Chris (30:44): All rabbit holes are good. I don't think there's been a bad divergence yet. So I'm gonna continue to test that theory.

It made me think of one other exercise. You were talking about reclaiming time, and it feels like all improvements are seeded with awareness. So the first step to reclaiming your time is knowing where your time is going. So, another very painful but useful exercise that I assign in my class Team Performance Training is to track your time. Ideally for a week. It's hard to get people to do it for a week, but at least for a couple days, because where your time is going is not where you think it's going. And I say, like, if you show me your schedule, show me your calendar, I know what your priorities are. And there's this dissonance, as you say this thing is important to you, but I look at where your time is going, and those aren't aligned. There's a difference between those two pictures. And the shift to reclaiming time is that the way that you spend it is more of a reflection of where it's going.

So as part of this exercise, we use this aspirational hourly rate idea and say, "Hey, everything that you did, afterwards, not while you're doing it, afterwards, go and put how much per hour do you think that was worth to you?" And I always get the questions, well like, "How do I put a time on spending time with my wife or with my kids or exercising?" It's like, well, you're putting a value on it all the time. It's not, maybe, you know, capitalism, et cetera, it's not necessarily monetarily, but with the way you choose to spend that time, you're making those decisions all the time. So if you make that up front, "Hey, this is really valuable," then treat it like it's valuable. If it's ten-dollar-an-hour, you know, reading Twitter, watching Netflix—sorry, you know, Netflix gets a bad rap on this show—and you're putting it at ten dollars an hour, great. Nothing wrong with that, but recognizing it's coming at the things you might value at ten thousand dollars an hour, which is spending time with your family, doing things that you love, or building that next lever in your business.

And so making those trade-offs explicit makes it much easier to stick to the plan.

Eric (32:48): Are they all numeric values that you use?

Chris (32:51): I reduce it down to numeric values just to make the trade-offs explicit. Again, because thinking about math, "Hey, you say this thing is worth a thousand dollars an hour. Well, the real cost of doing this thing for ten dollars an hour is you get one of those thousand dollars an hour, you make nine hundred ninety in expected value, but technically you could have a hundred ten dollar hours and it would equal one thousand dollar an hour—" It really makes the power law distribution of time that much more resonant.

Eric (33:22): Yeah. I think addressing some of the maintenance things are some of the hardest. Because some of them feel low-leverage, by the same token. Like, going to the gym doesn't seem high-leverage by any mathematical sense, but then I really like the Ed Thorp perspective on it, just like, "Every day that I work out is one less week I'll spend at the hospital at the end of my life." And like, when you are ninety and in a hospital bed with you know, probably if you're listening to this show a very healthy retirement account, like how much would you pay to have that week back or that youthful hour back? The fullness of time and thinking long-term, like, those things start to really matter a lot. But it is tough, 'cause it's apples and oranges, or qualitative and quantitative. But you have to make some allowance for some of those things that are just qualitatively critical.

Chris (34:10): Almost always, the decision that optimizes for the long-term is going to be the better one in the short-term. You mentioned health being the clearest one, where paths really start to diverge once you hit middle age. The study that I love is looking at the brains of seventy-year-olds who are active, either they run or do some form of crossfit-type training, or seventy-year-olds who are sedentary. And you really see the difference, where the seventy-year-old brain is undifferentiated from a twenty-year-old brain, but only if they're active.

So, when you think about, "Hey, I am putting a little bit of time and effort now to extend my quality of life, particularly my cognitive life," it becomes really clear now, you know, what the best thing to invest in. And you take the inverse approach that when you don't work out in this case, there's a technical debt that's building up that will need to be paid someday. So essentially you're—Instead of creating leverage, you're creating negative leverage. That you're trading your future for the present.

Eric (35:21): Yeah. And especially if you are under-optimized in the present, that is an extremely bad trade. Like, people feel like there's something noble about it. Like there's something awry in the values system, I feel like, if that's what you think needs to be done.

Chris (35:36): And the power of reflection is that we do this subconsciously all the time, we get over-indexed in one area of our life, and that reflection is this wonderful opportunity to check in, to rebalance our values, our sources of leverage, to look for new opportunities to pursue, and to reallocate our limited time, attention, and energy towards the highest-value places.

I think this is a good time to introduce leverage as you talk about it. Let's talk about the four types of leverage. So we have tools, products, people, and capital. Do you mind just giving a quick rundown of these four types and some common examples that people might see in their own lives?

Eric (36:19): Yeah. We'll just do 'em in order. So, tools are probably the simplest and the cleanest. It's maybe the least exciting, but it's the right place to start. A tool is like anything from an ax to a hammer to a spreadsheet or SaaS app, something like that. A product—And it's distinct from a product because a product is like a product of your mind. It's maybe a written checklist, maybe it's, like, this podcast is a product. It's something where you preserve your judgment in a form where it scales infinitely through sort of horizontally. Like, tens or hundreds of people can access it, but also scales through time. So someone will follow the same checklist a year from now.

Things that are also products are songs, books, courses, podcasts, algorithms, software programs. So that is like where the judgment is preserved, as distinct from the tool, which is like the thing you might use to preserve it.

People, the third bucket, the first example everyone's gonna think of is kind of just an employee, but it's way more nuanced than that, and that's a very long list, actually. So yes, it includes people you sort of compensate or buy time from. It also includes followers, fans, supporters, even haters. Like, haters are fans too. And the gradient on the people's leverage side is much more nuanced than people tend to think, too, and we can get into that if you want.

But the fourth bucket is capital, which is also—The first thing you think of is money, investable capital, but it's also much more nuanced than that. That could be physical capital, like you know, you've got a car or a house or something that has value that could be unlocked. There's gonna be some social capital. Then there's also the point where what you're earning with the other forms of leverage you can reinvest into the others.

And I like to use also like a sort of wild card fifth, which is bundles of leverage. And so a lot of times there's vendors that you can use, like, by Amazon, an example sort of earlier in the book. Like when I use Amazon, they are a bundle of tools and people and products and capital that executes an entire function on my behalf. And some of those, like, my podcast producer—I actually would include—is also like a bundle of leverage. He comes with his own tools, he comes with his own skills, and there's a bunch of those that are sort of vendors that you can—Some of the highest-leverage things that you've ever seen rely on having a very powerful or new or unique or exclusive sort of vendor or bundle of levers.

So that's like a quick overview of, like, all the buckets.

Chris (38:50): For me, one of the first red pills, when I encountered your model of the mountain of levers, is that we already have levers. We're already sitting on assets that we just aren't fully utilizing. So how do we just generate, "Here are all the things that I already have available to me to leverage?"

Eric (39:15): Yeah, that's one of the core sort of framework of the course is what I call the leverage map, and it uses—We have like a column for each of those types of leverage, and then I split horizontally by like active, available, and future. And so what you have now, regardless of whether you're using it or not, sort of all goes in that available thing. And just have people make a list of like, who are all the people you know who are available, what skills do they have, who are you friends with, you know, who owes you a favor? Like, what are all the tools that you're already paying for, what do you already know how to use, what's laying around in your garage? For products, like, what have you written but not shared, what have you recorded in your life, what are the checklists, what are the processes that you may be—what are the skills that you know but that haven't yet been captured in a scalable product? What are all the sort of places where your capital is and is locked up, whether that's you know, liquid cash, assets, all these things?

One of the most interesting versions I've heard is actually I did a podcast episode with Nick Hubert who now owns a massive self-storage business. And the way he started his business is recognizing that he had signed a twelve-month lease for a college dorm room that he only needed nine months of. And he's like, "Shit, I've got three months of like sunk cost in this lease that's actually a form of capital. How can I monetize that?" And then he went and put up flyers using print credits for his college that he hadn't used before, and made a three-month summer storage business out of his dorm room. And that is an amazing example of just recognizing a form of capital that most people wouldn't appreciate as actually like a huge opportunity, and made his first you know, eight or ten grand on that, and then reinvested that into building like another business and another business and another business.

So that list can really be much more extensive than people think, which is why we have to sit down, write it down, what's working for you, what could be working for you, and where are you trying to get in the future? How long can you imagine some of these levers getting?

And that's really the art of, like, knowing what business you're in or what business you wanna be in, which of these sorts of types of leverage comes naturally to you, what are you interested in doing? 'Cause some businesses are just gonna guide you or force you really into scaling one (or one or two) of those types of levers, 'cause they all sort of have their own unique dynamics. As we all do, right? We're all sort of inclined towards one or two of those probably more than the other two. So recognizing that and planning accordingly I think is a good place to start, and helps to sort of see that map all in one place.

Chris (41:57): Yeah. You mentioned this phenomenon to me of leverage type blindness, that we're very aware of one type of leverage that we have access to. Say you know, we have a technical background and we really know, hey, building code, and how do I—Instead of doing this thing, how do I create something that does it for me, or we're more managerial in mind and, "Oh, I know how to work with people," but the whole concept of creating artifacts is a little bit foreign. And this leverage map seems like a really good way to see the full landscape of assets and opportunities available, rather than getting tunnel-visioned on the thing that we already know how to do well.

Eric (42:40): A hundred percent. Everyone I talk to about this is kind of, like, usually comes into it with, "Oh, no, I understand leverage. I know how to code." Like, to your exact example. And it's like, "For sure, that's a really important lever, but what do you know about reinvesting the capital that you earned through that code?" Just like, "Oh, that's just like sitting in a savings account." It's like, okay. That is a missed opportunity, I'm gonna say. Like let's see where we can reinvest that.

And another example that will sound intuitive, but I've seen it all the time, I've spent a lot of time working in the world of home services, my last company, and so I would see companies all the time where the founder, let's say he was a plumber, and didn't like managing people, and so he could never scale that business, because the only way to scale a service business is additional people, and if you don't like managing people then you have yourself a job. And that's wonderful, being a plumber is a great job. These guys are making a ton of money, they had flexibility, they loved it.

But then there was another crew of people who sort of loved to scale people, didn't mind that at all, and they thought in terms of hiring additional people and adding trucks to the business. They're like, "We're a Ford truck business. We've got six guys on staff. That's our business." But they were totally blind to the tools and the products, the process, that they could run to sort of make that business much more profitable, much more scalable, set them up for future growth. They were just so focused on the people that they were blind to the products and the tools. Which, when you see somebody—I mean, these are orders of magnitude difference. Like, a good plumber on his own is gonna make a hundred grand a year. A great plumber with a team of you know, four or five is gonna make half a million, a million a year. A plumber who runs one of the biggest plumbing companies in a city, because he can combine, you know, proper use of capital to reinvest into tools and processes and people and recruiting and managing all the overhead, like, that guy's making ten million dollars a year.

It's orders of magnitude for each type of leverage that you can add and manage and create this sort of—the whole mountain has to be supporting itself. If you get too far out of whack or if you're totally blind to one type of leverage you're gonna hit these growth constraints and just not be able to break through and not be quite sure why, and then you find yourself telling yourself a story of why you don't want to break through, and then you just stay there and think you want to. Which is—If that's true, that's great, but we all know how the narrative can get in the way of the true desire or what the true values might be.

Chris (45:09): That's so apt. A friend of the podcast, guest Taylor Pearson, has this wonderful framework applying this theory of constraints, limits, and bottlenecks to a business. That there are four primary areas of a business. You have personal operations, so your own productivity, you have business operations, processes, systems, that type of thing, sales and marketing, as well as hiring and managing. And that the scale of a business is limited by the weakest of these four, the weakest link. So if you aren't good at hiring or managing, that is going to be the ceiling for how much your business can grow. Or if you don't learn how to manage others, how to create systems, that will be the ceiling. So not only determining, hey, here's where you direct all your focus, how can you raise the ceiling of this one area a little bit, to raise the ceiling of your entire business, but also all of the areas that you can ignore?

You mentioned the technical founder who loves to code but is sitting there coding while the rest of the team is like, "Hey, what should I be doing? Like, what's the vision? What are we working on next?" And you see these examples all the time of, "I don't really like doing this thing, I'm not very good at it." Well you either need to hire it out or get good at it, because that's the thing that's holding you back.

And man, I really like what you said there at the end, which I think you kind of snuck in, but I think is worth amplifying. In Buddhism, they call it a spiritual bypass. If you're like, "Well, I actually didn't want that thing anyway, so it's okay. Like life's actually easier if I'm not rich and owning my own business. Like you know, that must not be what I want. I want a nice, like, easy, low-stress life." That we see with psychology that we find ways to justify our own behavior. I think this is the biggest thing that I have to overcome, is this status quo bias. You know, what I'm doing is great, I don't need to change anything, because we determine our beliefs by our behavior. So as we do something, we'll find ways to justify what we're doing.

And this can work for good, we mentioned working out before. If you go to the gym every day, you start to build an identity as someone who goes to the gym. "Well, I guess I must like working out. Maybe living a long time is important to me." And you're like, "Well, I watch Netflix all day." "Well, culture and, you know, becoming informed, and these things, and relaxation, and recharging, all of these things are really important to me." That we can operate at this meta-level and get ourselves to want to want to do anything if we can create behavioral habits around it. So, yeah, being careful about these narratives means that we have to justify our own behavior. And that's why this thing of separation of identity is so important, because otherwise, we can find ourselves justifying what we're doing and justifying our stuckness in that way.

Something you said early that I really wanna come back to is that it's not the number of levers you have, but the length. And you gave those wonderful examples of physics, and that when you extend your lever by 10x, it's not that your ability to lift goes up 10x, it goes up 100x. So identifying those right levers to extend.

Maybe giving some examples from your life, seeing an existing lever and not making the same mistake you did early on of how do I just keep adding more levers, but identifying, "This is the right lever to extend." What do you think about that?

Eric (48:50): Yeah. That's something I've thought a lot about, and I'm valuing more and more of the divine simplicity of a few long levers in life. And one of those that is front and center for me right now is in the tech world you have friends who are all the time starting these new amazing companies, and earlier in my career I started sort of scratching together some cash and investing in some of those friends who I knew to be particularly smart and hardworking and high-integrity who were working on cool problems. And over the last five years or so I've sort of—I've seen the benefits of those investments come back. I'm like, man. These are some amazing investments. Like, we knocked some of these out of the park, which is amazing. And then, you know, at the time I was twenty-four, twenty-five, I only had five thousand dollars to spare. Like, these are tiny investments, in the scheme of things. And it's one of those things where it's the right move, but it's not any harder to invest fifty thousand dollars than five thousand dollars. I just didn't have the capital.

It still would be very difficult to invest fifty thousand dollars in the number of companies that you need for an angel investment, but AngelList has started creating—Has a new type of fund structure that actually makes it way easier for somebody like me to let investors come alongside and join my investments. Again, on a very predictable, rolling basis. So, they're called Rolling Funs. And it's different from a traditional fund structure. So I don't have to go be a full-time VC and raise a ton of money and spend two years sort of building these new sets of relationships and reach fund scale. I can just say, "Hey, I'm gonna invest my money here. If you wanna come with me, you can join as well."

And so that has gone from writing ten-thousand-dollar personal checks now to forty, fifty and more checks alongside all of these limited partners and investors. And it's largely the same motion. We write a few more checks. We've got partners that we share deals with now. And that foundation is set for continued scale, right? Like, if we're investing a million bucks a year now, we can do three million bucks a year with largely the same motion, the same infrastructure, we're just investing larger and larger amounts. As long as we don't go so big so fast that we fundamentally overshoot our deal flow or the allocation size that we can get in these companies, then we're doing mostly the same amount of work, but we're including others, we're benefiting LPs, we're saving founders' time because we're writing bigger checks, and we're adding leverage to our own efforts.

And it is such a clean sort of example of like, "Hey, if you're gonna be doing this work anyway." I'm gonna always see ten to twenty great deals, great investments every year for the rest of my life, 'cause I love reading about tech and meeting founders and going to dinners, going to conferences, and writing these books about the future of technology and how to think about it. And I'm just like, all of the things that I'm doing sort of naturally synergize with investing in early-stage tech companies, and I can do that with higher leverage through this Rolling Fun model. And so we're, you know, sort of continuing to process that and open that up and it's been amazing to see. That is a lever that is definitely—Built it over the last year and now we're very much in the mode of extending that lever. And it's been a big focus recently and will continue to be.

It's a really—I think it's a clean example of sort of what we're talking about, like, find motions that you're already doing that you've proven at with your own efforts, figure out how to make that lever longer, figure out how to increase the impact very specifically in sort of like win/win ways, and find a few of those that you really love. Back to how we spend our time, that we love the process of. I love learning about new industries, learning about new technologies, meeting new founders, and talking to investors. Those are all really fun things for me to do on a daily basis, and you can do it with higher and higher impact with more leverage.

Chris (52:40): It makes me think of this very, very important question of identifying our greatest points of leverage. Coming back to that quote from Andrew Finn that we started the beginning, that our job is to consciously identify and resolve the highest points of leverage, and that this highest point of leverage is always shifting, so building this meta-skill of being able to identify what is our highest source of leverage given the context that we're in. And I think you shared a very good framework for that, which is identifying where you are resource-constrained. That you had all these systems in place with angel investing, and that it was no harder to write a 50k check, which is 10x leverage than a 5k check. And so the only thing that was missing was the actual capital to invest. So if you could acquire access to that capital, you could leverage your efforts by 10x.

So seeing, hey, like, where you are resource-constrained, that, hey, if I had a little bit more of this I could immediately redeploy that. That's a really good indication of hey, this could be a point of leverage. There's some unlocked potential here.

Another question that I like, and I would love to hear if you have any similar questions, is let's say that you were able to just pause time for one hour a day. You have this magical Harry Potter device that you just hit your watch and the world stops for one hour and you can do whatever you want. So what do you do with that hour?

And the responses that I get to this can be all over the place. It'd be, okay, I'd be doing more outreach, I would be exercising more. I would be sleeping another hour. I would spend that hour with my partner. There's a multitude of answers to this, there's no right answer. But it adds to a very interesting follow-up question, which is, you know, hey. If this is the best use of an extra hour, well, what's the lowest value of an hour that you're currently doing? How can you move it from one bucket to the next? How can you take this extra hypothetical hour and make it a reality?

For me, one thing that I recently realized, that my hypothetical, you know, magical, marginal hour would be just texting friends. That's always something that, oh, I just—I'm too busy, I don't have time, I see it as a distraction sometimes. Like, well, if I had an extra hour, that's I think the best thing to be doing. Well, maybe I should be doing that now.

So I think that's a really cool way to get around this status quo bias, to take the outside view on our life, of this existing point of leverage, and just giving yourself permission to lengthen it.

I would love to know, you know, what this brings up for you, if you have any similar questions you like to ask in your course of ways to uncover what someone's greatest point of leverage might be.

Eric (55:33): One that comes to mind I like to ask is, "What are the things that only you can do? What percentage of your time are spent on the things that only you can do?" And a lot of times, especially with solopreneurs or founders, that is way lower than it should be.

In theory, most peoples' answer to the things that only they can do are the skills that are very high-leverage and they're unique to them, and especially if they're trying to build an organization or build a business, they're sort of falling on the sword way more often than they should, especially after they have—Sometimes they've even done the work to marshal the resources to get other people set up and ready to go do that work for them, and then they think they need to be working harder, or don't want to inconvenience them, or feel like it's easier to just do it themselves, and going back to sort of our, your observation, really, that like the longer-term time horizon you see in the better decisions you're going to make.

It's like remembering that you're about to do this task a hundred times over the next five years, let's say, and the sooner you can delegate that to other people, not just the task but all the judgment around the task and double-checking the task and the process of, you know, following up and like all of those things you want to actually hand off as quickly as you can, and being really honest with yourself about what are the things that only you can do, who out there might be better than you at doing it, if you don't already have them can you go get them, and if you're not that good at something, like if the core of your business and your life isn't around a task that you are uniquely good at and that you uniquely love, maybe how can you create that situation for yourself, either by building a skill or productizing it or starting to experiment with it at the very least. So I think that's a really good test. Also because you tend to love something that you are that good at, even if it's just for competence reasons. Where those come together, something that only you can do that you love to do. And try to get as much time there as possible. Like, that's a good life.

Chris (57:37): How about Eric Jorgenson, 2022, what do you think is the work that only you can do?

Eric (57:43): Currently most of my time goes into either writing or investing. And it's probably two-thirds/one-third. It doesn't seem to me to be this magical skill, but other people tell me that it is, which sounds egotistical, but also by Naval's test that's actually a good sign, that something that feels like play to you and seems like impossible work to others. I enjoy building these almanacs and doing this work to collect a huge body of work and distill it and distill it and simplify it down to these really punchy, clear, core ideas that someone else has spent their life studying and synthesizing and living that I can convey to you in a few hours of reading if I really, like, sculpt and chisel and you know, arrange it all just right, then it becomes a really valuable and fun experience to read.

So, I love doing that work, and it was not obvious to me that it was a really unique skill until I did it a lot and people told me that this, you know, that this seems impossible to them to do or that it was a uniquely good version of it or something like that. Part of that is just patience and spending two years doing it, but yeah, I love working on these books, and swimming around in these ideas is like fun and healthy for me, and turns out to be, you know, value-producing for myself and others. So I'm really trying to spend as much time as possible doing that kind of work and the work that supports it, and I made some investments like in the EA and tools and systems that help me put more and more of my time towards that effort, you know, doing work that I love that produces value for myself and others.

Chris (59:30): I love the way that you put it, that it feels like play to you but it looks impossible to others. That a lot of times we can be blind to our own hidden superpowers, and I think this really illuminates the importance of outside feedback. Having peers, mentors, those we respect to not only point out our blind spots but to amplify our strengths. And I'm always looking for pieces of feedback. Again, trying to be open to this, create opportunities for this whenever possible to hear things like, "Wow, like, you're really good at," or, "That was surprisingly strong," or, "How do you do that, you make it look so easy." These types of things. And my natural impulse would be, like, "Oh, well, actually it was a lot of work," or, "Oh, actually I think I have a long way to go," and to kinda, you know, deflect it. But to really take it in, it's like, "Oh, this person is saying that this thing I'm doing is really valuable. Perhaps there's a way to double down on that."

I really find value in oversimplifying next steps. So whenever I'm reflecting on things I'm doing, I take a full inventory of every area of my life, and every single thing reduces down to a double-down or a stop. Because if it's not something that's worth doubling down on, like, why am I doing it? That resource, my time, energy, attention will be best deployed versus somewhere that I can continue to get those returns. So it really magnifies this idea of length, not number of levers, is that we're constantly trying to strip away the things that don't matter as much or aren't having the same amount of impact so we can go deeper on the things that do.

And I see this apply all the time, particularly when it comes to systems. You mentioned necessary maintenance before. Something that I see when I work with people who tend to be a little bit more of an optimizer-type, maybe some perfectionistic tendencies, is they want to create this perfect system or this perfect habit and routine, and it just becomes more complex over time. Right? You've never seen a company in history that didn't get more complex. It just continues to accumulate surface area of entropy, and there's just more and more fronts that have to be maintained. So the problem with creating this Moloch of systems is that it becomes harder and harder to maintain, and thus becomes lower and lower leverage over time. Right? You're putting more effort into it, and you're getting less out. So it seems like the power is just stripping away all of the unnecessary and continuing to lengthen in the parts that you're getting the most return from.

Eric (01:02:18): A hundred percent. I'm recognizing that more and more locally and the big picture. And I think some of the—That's why I've been carefully reciting to myself, like, "divine simplicity" over and over again. Like, looking for elegant systems. The people that you see who are truly like I think the legends of leverage, that are like extremely-long levers, they are very careful to keep that complexity low as they build. The most obvious example is Warren Buffett, who's like, "I don't run any companies, I don't manage the things, I want the CEOs in place. I just sit here and read, and all I do is allocate the capital. I've got a very small sort of head count at headquarters." Like, comparing the scope of Warren Buffett's responsibility as CEO to any other Fortune 500 CEO, and I bet the list is one-tenth or one-hundredth as long as the number of things that they are responsible for. I think that's really interesting.

And Joe Rogan, to abuse that example also, is very—He runs a really simple show. There's not a lot of editing, there is a few staff, but like, he still books all his guests with text messages and has a really simple intro/outro and the format has stayed the same way a long time.

Chris (01:03:30): And the shows are posted the next day versus three to six months.

Eric (01:03:34): Yeah. Shows are posted right away, they're always topical, they're like across the platforms. And it's so clean. It's so simple. And that lets the other—That lets the lever get really, really, really long because he's not worried about all of this other stuff and all this other overhead. So, and you could say, like, you could argue that there's missed opportunities all around them, and you'd probably be right, but that has been true forever, and it's what let that one lever get really, really, really, really long and let them have that crazy out-sized impact.

Chris (01:04:05): I wanna dig in on this concept of having a permission list apprentice. So, as you said you spent a couple years of your life going deep on the ideas of just one person, Naval Ravikant. And I know you're in the middle of the process of writing your second book for Balaji. And reading not only all the things that he's said and written, which—It seems to me the average podcast he's been on is three hours. I know he was on for four hours with you. He has a lot to say about a lot of things. But also reading all of the things that influenced him and going deeper into the—As a band, "Hey, who are you influenced by?" Then you listen to all their music. You read an amazing scientific paper and then you go and you read all of the citations, and then you go and read those citations. This level of depth that you're going into. What do you see as the benefits, the hidden payoffs of going so deep on the ideas, the viewpoints of just two people? Right?

I imagine that creating The Naval—The Almanac of Naval Ravikant, creating The Balmanac, that it's probably 10x the effort to create that artifact than to just learn those concepts and start to apply for yourself. Like, why has that been worth it? What were some of the surprising payoffs you found as you've had some time to see that compounding take place?

Eric (01:05:34): Yeah. It's a little bit like explore/exploit, like we talked about before. Right? Like you read very broadly, you read a ton of people, you sort of encounter a lot of humans. And Naval originally really spoke to me because I've always tried to pick heroes who I thought were kind of like, well-balanced heroes. You know, people who were successful in business but not so much that they lost their ideology, not so much that they lost the respect of their community, not so much that they lost track of the fact that like, you know, family and honor and things are all incredibly important. And so I had followed Naval for maybe ten years, eight years or so before I dove in and said, like, "No, I'm going all in on this guy, I'm gonna study him." And at first it really was like, "I'm gonna do a little mini deep dive." And then sort of somewhat accidentally, like, it turned into a book project. And then as soon as, like you said, as soon as there was an artifact my standards for my own understanding and the depth and the number of sources that I wanted to include all went way, way, way up.

And so I almost forced myself into this position where it's like, I had to understand him better than anybody, I had to spend so much time with this material in order to produce something great. And in doing so, like by the time I was done I found that I was able to have conversations with like my mental model of Naval in my head. Like, I had a little Naval sitting on my shoulder, right? It was like, I mean, he was on my board of directors, I had like a Hogwarts portrait of Naval that I could have conversations with, because I knew his takes on such a broad set of things and so many different times, and it was just like reps, reps, reps, reps, reps of getting these ideas, his frameworks into my head.

And that became really valuable. That kind of installed a new, you know, not just an idea or two but like a new firmware into my brain, and so it changed how I thought. And I think it's made me a better investor, I think it's made me a better writer, I think it's helped me understand more of the world. And doing that same thing with Balaji over the last two years has been sort of equally interesting, and certainly picking these people is very, like, we already share a lot in common, or I couldn't bring passion to the project. So it's not, you know, I wouldn't say there's like a radical transformation, but definitely, like, take some core ideas. Like one of Balaji's core ideas is like the importance of technology and how it's upstream of so many different things in our life, and sort of this technologically determinist point of view that almost all good things for humanity and our lifestyles and our, you know, the current era of peace like is all a result of the technological progress, and that we should invest in that as much as possible.

And I had an inkling of that, but he really helped me flesh out that idea. Believe it more, kind of hang more meat on that skeleton, to use a gross analogy. But all of those things are just like—They're powerful ways to sort of expand and reinforce ideas, the notions that you may have, or become more of who you wanna be, to be honest. Right? Like we all have heroes. And it's a fine balance between finding heroes and I think you said earlier, avoiding mimesis and getting caught in mimetic traps. But yeah, for me, you know, Charlie Munger and Naval have kind of always been heroes, and the chance to like to read a lot of them and their influences was really helpful to me in sort of like continuing to reinforce some of my most core values and beliefs.

Chris (01:09:02): I always repeat this quote from my improv teacher, "Repetition is not redundancy." And oftentimes going deep, going back to the things we know work for us, rereading that book that had a big impact on us, that there's a lot of value in returning to the well. And that's a lot of what leverage is. If you're getting high returns, see if you can continue to double down.

As we start to bring this to a close today, maybe one more question that, a bit different but no less important. I know when you came down to Austin to visit, I felt a little bit of pressure, is that, "Oh, well I really gotta find the right food truck." I know you're a big sandwich guy. I would love to, you know, lean on your expertise here as a sandwich connoisseur, what do you see as the key elements of a well-made sandwich?

Eric (01:09:56): I'm so glad you asked. We're about to go another hour. I think it comes down to one thing, which is contrast. Like, you need to have complementary contrasting things. You need a crunch and a chew. You need something fatty and acidic, or a sweet and an acidic, and a fatty and a crispy. Like all of these elements really give, like, depth. And then when you get to repetition it is not redundant, like, bite number ten is just as exciting as bite number one because there's a different mix of these contrasting things in each bite.

Like, some of the most famous sandwiches—Like, to me, cheesesteaks don't really have as much contrast, but like I think the, an Italian beef strictly dominant to a cheesesteak, 'cause it's got like some spicy from the peppers, it's got some sweet, it's got some crunch, it's got like the juicy meat but the crunchy bread outside. Oh, I love Italian beef.

So yeah, I think this extends to many like—I think like a lot of chefs would say the same thing about any dish, or life in general, but yeah. Productive contrast. What it's all about. A healthy tension between two opposites. Yin and Yang, fire and water, sun and moon.

Chris (01:11:12): If your sandwich is not a spiritual experience, you're doing it wrong. It should be an opportunity to delve into the subconscious and explore the dualities lying within all of us.

Eric (01:11:24): I love just, yeah, bringing reverence and craftsmanship to something as mundane as lunch. And you know, when you're doing it every day you can really experiment and push your limits and get outside your comfort zone, try new things. That's how I adventure. You know. Sandwiches.

Chris (01:11:45): Sensory adventures.

Eric (01:11:46): Yes.

Chris (01:11:47): I'm all in favor. And yeah, this concept of depth and expiration and curiosity, that this mindset can be brought to everything that you do, and how you do one thing extends to all things. Eric, like you said, I know we can continue for hours on sandwiches and a number of other amazing topics. If you have any advice maybe for a younger version of yourself or for someone listening who wants to create more leverage in their life and career, what advice would you have for them?

Eric (01:12:21): Andrew Finn talked about this really well. So, he's got that great quote that we've been talking about. He came on my podcast and said it more eloquently than I'll be able to paraphrase, but it's something like, "Get yourself into a place where you are feeling the power of feedback loops of your own performance as quickly as possible in your career." It's scary, but your rate of learning and experience of reality and speed with which you sort of get your shit together is extremely high when you're in the right context and when you're feeling the wins and losses of your own behavior very viscerally. So I think that's, you know, it could be a very long list of specific tactics, but if you take one thing away, I think that's a good one. It can mean a lot of different things for you depending on who you are and where you are, but as a general rule I think that's a really good one, and it'll make you a stronger, better, smarter, sharper, faster, more resilient, wiser person. There's a very big difference.

You can feel an ever-widening gap between someone who feels the impacts of their own behavior, and people who don't and are insulated from it. And you meet some people in bizarre cocoons of unreality that have never sort of experienced that feedback loop, but have very strong opinions about how the world works all the same, and what other people should be doing but don't feel the effects of their own behavior. And you can't really do anything but pity 'em after that cycle's gone on for too long, 'cause it's a very weird, twisty path to a total detachment with reality.

Chris (01:14:02): Yeah. In the poker world, we think of this as decomposing bets. How can you be just having as many opportunities to calibrate your beliefs based on feedback from reality? That I almost think about it as I'm, you know, blindly stumbling around and boom, I bump into reality. "Oh, okay, that's where reality is. All right, I'm not gonna bump into that again." But you need to have these encounters to update yourself. This is a continual process of iteration and updating. And you know, that means raising the stakes. More and more interesting problems over time. As Taleb would say, you always have skin in the game or else you're not really going to learn.

And I actually made this connection to something you said earlier that I'm gonna test here, is that not only are we trying to increase our opportunity cost over time, we're probably trying to increase our sense of Impostor Syndrome as well. That we're never gonna quite feel like we're qualified to be doing what we're doing, and in fact, that's probably a negative signal. That like, hey, if you're doing something that you feel extremely qualified to do, you're probably operating in a very low-leverage area. So increasing this sense of growth and using Impostor Syndrome almost as a compass.

Eric (01:15:18): Yeah. Impostor Syndrome means a lot of things to a lot of different people. I think there's probably a, like, the last half of the last third of a good healthy exploit cycle should probably feel light on Impostor Syndrome, and then you sort of complete that cycle and move on and then start something new and feel totally fresh and wandering and curious and fragile again. So I do think that sort of ebbs and flows over time, but yeah, if you spend your whole life avoiding that feeling of being in over your head, you're certainly not growing at the pace that you could be, at the very least. And being willing to leap into that is where a lot of good things have come from in my life. I cannot tell you how underqualified I was to write that first book. But you just kind of figure it out as you go.

Chris (01:16:02): Well, speaking of good things, there were so many good things shared today. I'm so appreciative of you coming on, sharing your learnings, your experience, your expertise, the wonderful work that you're doing on leverage. I think it's incredibly impactful and important. If someone wanted to get in touch with you, if something you said today resonated, they're interested in Life of Leverage, perhaps in Rolling Fun, what's the best way to get in touch with you?

Eric (01:16:28): I'm relatively easy to find. I'm on Twitter all the time, and email. My email is just erjorgenson@gmail.com. Please use it responsibly. But if something here resonated with you, I'd love to chat with you. Getting asked hard questions is how all of these ideas sort of evolve and continue to flesh out, so I'd love to talk to you about it. Bring it on, we'll see what we can do.

Chris (01:16:48): Thank you so much for joining us, Eric. See you all again soon.

Tasha (01:16:51): Thank you for listening to the Forcing Function Hour. At Forcing Function, we teach performance architecture. We work with a select group of twelve executives and investors to teach them how to multiply their output, perform at their peak, and design a life of freedom and purpose. Make sure to subscribe to Forcing Function Hour for more great episodes, or go to forcingfunctionhour.com to sign up for our newsletter so you can join us live.

EPISODE CREDITS

Host: Chris Sparks
Managing Producer: Natasha Conti
Marketing: Melanie Crawford
Design: Marianna Phillips
Editor: The Podcast Consultant

 
Chris Sparks