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How I Invest with David Weisburd
E400: Anthony Pompliano on Power Laws, Conviction, and Compounding
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- [00:00]
Anthony Pompliano
If you go back to 1925, 46 companies have delivered 50% of the $90 trillion of value created in the stock market. When you find one, hold on. What separates the top three investors in the world? They press their winners harder than everybody else. The reason why you diversify is because you don't have conviction.
- [00:19]
Host / Interviewer
The challenge isn't working hard. It's identifying the rare opportunities that could compound for decades. In this conversation, we explore why life is governed by power laws, how to identify asymmetric opportunities, what separates extraordinary outcomes from average ones, and the principles that compound into wealth, businesses and relationships over the long term. Joining me is Anthony Pompliano, entrepreneur, investor, and one of the most widely followed voices in business and finance. Why do 95% of outcomes come from 5% of inputs?
- [00:48]
Anthony Pompliano
I think that there's a lot of bad ideas, there's a lot of wasted effort. And so if you look at almost anything, whether it's in biology, whether it's in philosophy, whether it's, whether it's in economics, usually what you get is a very rare, very small number of good ideas or good things to work on. And so whenever you have that outsized impact, you should go spend all your time and effort trying to concentrate in those areas. And frankly, this has been a timeless principle across human history.
- [01:16]
Host / Interviewer
And if you wanted to break down these 5%, what are some consistent patterns among the 5% of things that really drive the largest outcomes?
- [01:24]
Anthony Pompliano
Durability is one, I think asymmetry is another. And then I think volatility is a third. And usually people don't think of those three things together. If something is durable, it's likely not volatile, Right? But actually that is what makes a good idea or value creating idea. And so what I've learned throughout my life is you need something to have asymmetry and volatility. And the reason why you need that is because people actually don't want volatility if they are trying to drive safety. What they want is they want volatility if they're trying to drive returns. And so what you look for is anytime that you have asymmetry or that volatility it usually may be in venture capital, stock market, et cetera, is something that doesn't exist or isn't believed in. And then it becomes consensus and it becomes large. And so what you're looking for is that non consensus, small thing to become consensus and large over time. Well, in order for it to make that transition, inherently it has to become durable. As an investor, there's two types of People, there are some people who are looking for, I want to simply get beta exposure or maybe slightly beat the market. And then there are people who are looking for massive asymmetry.
- [02:34]
Host / Interviewer
When I think about asymmetry and volatility, I love both of those aspects. But I think the most under appreciated aspect of that is professional investment managers call it portfolio construction, which is how do we put together these different assets in a way that as a whole we get that asymmetry, but we lower that volatility. There's a famous investor, Scott Wilson, he was at University of Washu St Louis and he would go to each one of his fund managers and he would say, which part of your portfolio are you at your concentration limit? In other words, what's your best idea in your portfolio? And then he would set up investments with those managers and he would just go from manager to manager all across the country and he would put in their very best investments from their portfolio. And then when he was finished with that, he had this portfolio of uncorrelated assets, all which had some non0 chance to be a 10x100x and together the portfolio would never return 10x or 100x but would consistently perform much better than his peers.
- [03:35]
Anthony Pompliano
Howard Marks, you know, put it best, right? If you are ever the best investor in a single year, that means you took so much risk that you had to be willing to be the worst investor in that given year. And so what you actually want to be is you want to be above average consistently for decades. And naturally everyone else will churn out because they took too much risk. And neither it worked or it didn't in the short term, but over a long period of time they blow themselves up. And so I think that if you look at the best investors, that's what they've continued to do. You don't see many investors throw up 70, 80% years and end up being the best investors in the world, right? Usually the top end is maybe 25, 30% and they've been able to do that for long periods of time, but really it's like 17 to 20% for like public hedge fund managers. Every once in a while you get like a rentech or something. That is I think why people are quantra, wow, this is insane. You know, the return profile that they've been able to deliver. But even in venture, if you go and you look at, you know, over time, these funds, there are very few fund managers who have delivered, you know, 80, 90, 100% IRRs year after year after year across vintages and so naturally, what they're doing, going to do is they're going to try to be above average and they're going to do it for a long period of time. And it goes back to, you want the asymmetry and volatility, but also you want the durability. And so anyone can be the best investor in a given year, a given vintage, but can you do it consistently over time? And I think that that both from the institutional world, but also from, you know, the, the capital allocator seat is what people are ultimately looking for is I don't want to build a relationship with someone. I don't want to, you know, kind of have a shooting star. I want something that I can count on over and over and over again. And I think that whether you're an individual investor or an institutional investor, the reason why that is coveted is because it's scarce, right? It's very hard to find people who can do that.
- [05:18]
Host / Interviewer
Reminds me of what I think is one of the most underrated quotes from Warren Buffett. Warren Buffett was asked, how is he able to become so fabulously wealthy? And his answer was, I started early, I started in my teenage years, and I. I'm now in my 90s. So I just compounded year over year. And people kind of threw that away as almost this, like, false humility. But if you look at his numbers, you could chatgpt and you could look up Warren Buffett's net worth over his age, you'll see that it really is just compounding 25% year over year. It's almost like he's lived this thought experiment. What would happen if you compounded 25% over 40 years? He's actually done it. And it goes from 10 million to 30 million to 50 million now to a hundred billion. Compounding is this undefeated thing that everybody always underprices, even though everybody talks about.
- [06:07]
Anthony Pompliano
Look, it is really hard to do the simple things right. Human nature is a lot of investors want to be the hero. And what we find is the reason why the index works is because the index is constructed in a way where it is going to continue to feed the winners. If you look even just the last six months, the MAG7 is down to start the year, and the 493 other stocks are up 13, 14%. And so the index is up 9%. And I was laughing with a friend recently. He was like, he's a financial advisor. And he was like, dude, two years ago, everyone was just asking, why don't I just invest in these seven stocks?
- [06:39]
Host / Interviewer
Right.
- [06:39]
Anthony Pompliano
And so you look at that and you say to yourself, well, that's why an index is valuable. And so an index is just a team sport. All of the stocks working together to deliver a return for you. Right. No different than what are you as an investor supposed to do? Buy low, sell high. Right. Allow compounding to continue to work for you. Like, these are not groundbreaking ideas. They are timeless for a reason. It's just actually the discipline to execute on them and to not allow yourself to override simple rules. It's much easier said than done. But if you just follow maybe five or six different classic rules, that's what delivers these outside returns over a long period of time. And so maybe we are all too excited about short term kind of asymmetry and not enough focus on the durability of an advantage.
- [07:25]
Host / Interviewer
We had a fabulous dinner with you and your wife, Paulina, me and my wife Jessica. And you told your story about how you got into bitcoin and how you haven't sold any bitcoin. And it really left a big impression on me, which is not selling through all this volatility. Seems simple, but extremely difficult. How have you built the mental discipline to be able to do that?
- [07:44]
Anthony Pompliano
There's a couple of things, right? The first is I've made plenty of mistakes in selling. If you go back before I ever really went very hard into bitcoin from an investment standpoint, I actually started out mining Ethereum or Ether. I was mining ether when it was like $5, and it ran at the beginning of 2017 from, you know, eight, $10 to 150 bucks. And it did that in a couple of months. And I sold all of it. I thought I was a genius. And then I watched it run the rest of that year to $1,400. And I felt like an idiot. And so I said, you know, this thing that I was so happy about at the beginning of the year, I now feel really stupid about and feel like I'm a horrible investor. And so one of the things that I've become convinced of is when you start investing, you're very worried about what assets to buy. How do I buy them, how do I size them? It's all about the entry or the portfolio construction. But I am now convinced that actually selling is the much harder exercise. When do you sell? What do you sell? How? How do you sell? How much do you sell? Right. All of those things are much, much more difficult. And so if you go and you look at some of the best investors in the world, they just never Sell, they just take off the table the potential mistakes that they could make there. If you look at somebody like a Ken Langone, you know, I think that he's somebody who's actually under discussed as an investor, but his average holding period in his portfolio is 42 years. He is, you know, one of the earliest investors in Eli Lilly. What's Eli Lilly? A trillion dollar company, growing revenues at 50 plus percent year over year. Now, how many times along the way could Ken have said, I'm out, right? Like, this was a good ride, I had made a bunch of money, I'm out. I believe that he holds, if not all, most of the original investment in Eli Lilly 40 something years later. So you look at that and you say, actually the single most important decision that Ken made may not have been buying Eli Lilly. It may have been refusing to sell year after year after year for four or five decades. That's a really hard thing for people to do, especially in a world where information and capital moves at the speed of light and it feels like there's a new idea every single day and something is tempting you to rotate capital or chase the latest trend or follow headlines, maybe the most important thing you can do again is understand the durable advantage and then simply say to yourself, I'm going to buy assets and I'm going to not sell them for a really long period of time.
- [10:05]
Host / Interviewer
I've dramatically changed my opinion on this, even the last 18 months. So I would have a lot of crypto funds on podcasts and they would talk about their narratives and how they capture alpha. And then one way or another, whether at dinner or after the podcast, they would tell me the story about how a lot of their returns came from this one investment that was illiquid, they couldn't get out of it. So they were forced into this hold. And that was up 100x and it drove their entire portfolio. And I kept on seeing this over and over. And then I was listening to Stanley Drunkenmiller and he said, nothing looks as cheap as after it has gone up 40%. I had a realization there. If Stanley Drunkenmiller, arguably one of the best traders of all time, has issues with these behavioral finance questions of when to buy and when to sell, I started to reorganize my thinking to thinking that actually liquidity on net is a negative thing and as much as possible, you should try to make your investments as illiquid as possible. I've had this thought experiment. If I could create a fund where people would have to invest into Bitcoin and Then they would give me the keys or they would give some third party the keys so that they couldn't sell for 10 years. When I tell people about this thought experiment, which is purely a thought experiment, people have very polar responses to it. Either they think it's brilliant or they think it's like the dumbest idea ever.
- [11:18]
Anthony Pompliano
Both are right. Right. You actually want to have access to liquidity when and if you need it. But you want to have the discipline to not tap the liquidity if you're able to hold the asset. It goes back to. There's history is littered with stories of duration, mismatches and illiquidity. You know, issues that have really caused problems. Obviously, debt has been a huge issue throughout the years. But I do think that there's this element of take a venture fund and take Nasdaq as maybe an example. Historically people have looked at the Nasdaq and said it's going to deliver 12, 13%. Let's just use 13% as a number. And then they've looked at venture funds and the official numbers are the average venture fund will deliver like 17, 18%, the mean. Right? Yeah. So let's just use 13 and 17% for easy numbers. That means you're going to get paid 400 basis points of outperformance for locking yourself up for 10 or 12 years. That's a great trade that a lot of people are willing to take. What has happened though is the Nasdaq has done much better than what people expected. And so if you go to shorter timeframes, maybe the Nasdaq is doing like 17, 18%. But let's again, let's just say maybe it's 15, 16%. And then the venture funds, there's a lot of questions as to like, well, how much of that is paper marks versus actual DPI that I'm going to get. So that gap now goes from 400 basis points to maybe it's a hundred basis point, maybe it's equal. Well, now people say to themselves, do I need to lock myself up with the illiquidity? But I could get the same return without that illiquidity. But also, you know, when was the best time to buy Nvidia stock? Pretty much any time in the history of Nvidia. Right. Like every time you thought it was overvalued, it went up more. And so there's this element of what is the time horizon that you're looking at if you're trying to buy a stock today and wonder what it's going to be in Six months, like I have no clue. I don't know what to tell you. But what I can tell you is that there are certain companies both in the public and private market that if you allocate to, they have a structural advantage, there's some sort of moat, they have momentum, all these things that are working to their advantage and therefore it is likely to deliver the outsized return. And you see this in the stock market, right? What's the best day to buy stocks in the stock market at all time highs? If you look out over three, six months, a year and five years, buying at the day of an all time high delivers outsized performance against any other day of the stock market. Why is that? Well, momentum begets momentum, right? Returns beget returns. And so you get this kind of power law. Go back to where we started the conversation. 5% of the ideas delivered 95% of the value. The same idea of momentum begets momentum in investing. Sounds a heck of a lot like in science, right? Things in motion stay in motion. How is it that science and investing, it's the same theme, right? So again, it's these things that you can go and you can find and say to yourself, wait a second, if it cuts across industries or disciplines, that's more likely to be in the 5% bucket. And I should spend more time on that.
- [14:07]
Host / Interviewer
What's your organizing principle for looking for those asymmetric bets?
- [14:11]
Anthony Pompliano
I want things that people don't like right.
- [14:14]
Host / Interviewer
Either. Because what's an example of that?
- [14:16]
Anthony Pompliano
Right now I've got a lot of exposure to physical AI and robotics, but I have it in both public and private markets. And I think that if you look at that space, there is still a lot of questions about the ability to combine these different fields together. And so if you go and you look at maybe something like OpenAI anthropic, you know, go through all the model companies. I'm an investorian, Repl it Micro one lovable. Like all these software companies in the AI space, they've done a fantastic job. I think they will continue to do a great job, but they're all pretty much consensus at this point. People realize these companies are going to be very valuable and so that's why you see so much capital chasing them. What I don't see a lot of people chasing is the physical AI and robotics space. And so some of it is just they haven't spent the time yet. Some of it is the teams that are evaluating these are not suited to actually underwrite. Does the technology work? What is the market opportunity I don't have anyone in my network who would be a potential buyer of this. Right. It's always harder when there's hardware involved. But if you look at something like Tesla, in my mind Tesla is actually a software company.
- [15:22]
Host / Interviewer
Right.
- [15:22]
Anthony Pompliano
The thing that is valuable there is the machine learning models, the AI, the computer vision, it's all the like ip, they just are simply putting that into the hardware and the hardware can think and see now. And that is their monetization method. No different than the model companies creating the model. But the model is actually not valuable unless they create a consumer enterprise interface where people can then use the model. Right. Same thing at Tesla is you need to have some sort of interface that the world can interact with, so they do it. But then if you go look like one of the things that I'm very excited about and I think it's going to be a huge opportunity is there's a publicly traded closed end fund called Robo strategy, so trades under the ticker bot. We've got a position there. And it basically gives anyone with a brokerage account exposure to the top physical AI and robotics companies in the private market. So again, you have an access and structural advantage. But the reason why I find it so interesting is not just that anyone off the street can go and buy exposure to, you know, figure AI or Apptronic or you know, standard bots or any of these kind of physical AI companies. More importantly is because of the structural advantage, these things tend to trade at a premium. When they trade at a premium, that premium can be monetized. And the way that that ends up getting monetized is accretive to current shareholders. And so what you find is you find a capital markets innovation or advantage, you find a sector that either has not yet become consensus or is not liked by by investors and then you find a very long durability. So if you go and you look. Jensen Huang, Masayoshi sun all of these people are talking about physical AI and robotics are going to be a really big industry. Well, a key piece of this has been allocating to it before everyone starts talking about it. So I think that we're just on the precipice of this now becoming a really big theme. But I want exposure to it in the public market and in the private market. I want exposure in companies like a Tesla where there's very concentrated effort to take artificial intelligence put into these physical devices and have self driving cars and humanoid robots. But I also want it in the private sector where you're going to get much More kind of specialized workflows. So you're going to get companies that are just humanoids, you're going to get companies that are just warehouse type automation, et cetera. So when you put that all together, you have exposure to a theme that to me feels a lot like going in, you know, into GPUs in 2017, 2018, going into Bitcoin before that. Right. It's like the thing that is not yet popular and people are heavily allocated to. But it's very obvious over the next 10 years this is going to become a major theme.
- [18:02]
Host / Interviewer
For many decades, AI was an obvious bet by VCs. Everybody had different timetable on it, but almost everybody agreed that it was coming at some point. You have the same thing with physical AI you mentioned, Jensen Wang calls it a $50 trillion industry. It's consensus. You just don't know the winners. So a lot of people want to back it when it's an obvious trend and they know the winners. Which today is like OpenAI anthropic in, in the AI space. But you're going before that.
- [18:29]
Anthony Pompliano
It goes back to what, what is the game that you want to play? I helped raise an SPV to invest in SpaceX. I think SpaceX thing like, you know, maybe a 30 billion valuation. So somewhere around that timeframe. So this is probably like 2017ish, you know, timeframe. And at the time it was kind of like, hey, we're going to do this deal. And we moved on and we went and did a bunch of other stuff. Well, in hindsight, we should have just spent 100% of our time focused on how do we get as much money into this company as possible. Right. Like this was the structural winner in a market that was not very popular, but was going to become popular. But 2017 is 16, 17 years after they started the company. And so you look at that and you say to yourself, now nobody knew it was going to become a one and a half, $2 trillion company. But there was this entire viewpoint of rather than go try to find what is the percentage return, if you're just looking for total dollar return, actually just pouring capital into the thing that is most likely to win, durability, right, is going to drive that return. And so go look today, like, why are a lot of investors waiting? Maybe on the physical AI side, there's like, hey, we have a lot of capital. We don't need to be the first. We can just simply wait till we have high certainty. That certainty will lead to a lower return profile because we're not getting paid for taking massive risk, but it doesn't matter. If I put a billion dollars in and it's only a 3x and I don't get a 10x, that's okay. I still, you know, made $3 billion. And so I think that is the trade off that, you know, especially between institutions and individuals, people are trying to figure out is what game do I want to play? Do I want to play an asymmetry game where I'm trying to take, you know, these bets and drive a high percentage return? Or do I want to play a game where I'm coming at it, where I'll make a small number of investments, but I'll do it when I have high certainty and I'm just looking for outsized returns compared to something like the stock market?
- [20:19]
Sponsor / Narrator
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- [22:06]
Host / Interviewer
a good example of asymmetric outcomes and I think Part of this is meta Elon Musk inspires so much first principles thinking, so much conviction around the people around him, that he had this cottage industry of people that had gone so long in SpaceX. A couple examples of that. One is Antonio Gracias. When the S1 came out, it was revealed that he had invested 30 times into SpaceX. I used to think I had high conviction when I would invest three, four times into a startup. He was literally 30 times or 10 times more convicted in that one startup. Luke Nosek from Gigafund started an entire fund originally just to invest in SpaceX. When I met him at Founders Fund, I thought this was like one of the most bullish and one of the craziest ideas I'd ever heard. And it was also reported that Justin Fishner Wolfson from 137 Ventures had invested in SpaceX, never sold, which itself is heroic, and now had a $20 billion position, this one company. And some of these things don't sound as dramatic as when you think about the machinations you think about Antonio Gracias. You invest at $500 million valuation, now it's at 5 billion. So then you decide not to sell any of that. You make another investment, now it's at 10 billion. You decide not to sell the first two SPVs. Now you're investing just doing this over and over. The level of conviction that that takes is just so underrated.
- [23:19]
Anthony Pompliano
It goes back to, if you find a business that has a durable advantage, what else are you going to invest in? I think that's one of the other pieces, right?
- [23:26]
Host / Interviewer
It's not that many great ideas.
- [23:27]
Anthony Pompliano
It's not 5% delivered 5% of the value, right? One of the most interesting statistics, if you go back to 1925, 46 companies have delivered 50% of the $90 trillion of value created in the stock market. 46 companies, that's it, right? There used to be 8,000 public companies, now there's like 4,000 something public companies. 46 companies over the last hundred years are responsible for half the returns, essentially. When you find one, hold on. And maybe not only hold on, but press the advantage. When I first started working with Mark Yusko, you know, now almost 10 years ago, I asked him, I said, look, you were an LP and all these, you know, great funds and all this stuff. And I said, I just have one question. What separates the top three investors in the world from the top 1% of investors? And without hesitation he said to me, they press their winners harder than everybody else and they cut their losers faster than everyone else. It just seared it in my brain. I said, you know how many? Antonio pressed the advantage. He knew SpaceX was a winner and he poured as much money into the company as he possibly could. And so it goes back to when you have a good idea, why spend time investing in 10 other ideas? The reason why you diversify is because you don't have conviction. Right? And people will say, oh, no, it's risk management. Well, I don't know, go look at the best investors in the world. Stanley Druckenmiller isn't exactly the most diversified investor in the world. And so again, it goes back to, you know, people like, oh, well, Rentech's got X number of positions. Like, no, rentech has one strategy and they're all in on it. And that strategy is really good because they're great at the quant investing. They don't have tons of other things that they're running around doing. And so you just start to realize, like, the concentration is a sign of conviction. And therefore conviction means that you've done the work. Now, are there people who get blown up doing that? Sure. But usually what ends up happening is the only people who are willing to concentrate are the people who end up being right over and over again. Which feeds back into, why do they do that? It's because they've built the human intuition. Their human algorithm has been trained over time to find these opportunities. And so if you've got that skill set, if you've got the capital and conviction to go and do this, then concentrate. And that's ultimately how you drive these immense winning trades.
- [25:46]
Host / Interviewer
It's an important distinction there. When I asked one of Antonio's closest friends, Ron Descardi, mutual friend of ours, how he was able to invest three times in SpaceX, he said something that surprised me, which is he understood the business technically better than anybody else on the cap table. He was in the weeds. He was at the company, he was. Wasn't selling it to the outside world. He was making his own conviction.
- [26:07]
Anthony Pompliano
I remember having a conversation with some of the guys at 137. This is maybe four or five years ago at this point. And I think Justin was there, Christian Garrett, a couple of these guys. One of the things that he said to me was, SpaceX has a free walk to a trillion dollar valuation. The company was maybe like a hundred billion, maybe 150. And I remember having two reactions. The first was, I don't know many people who know this company better than them, so they've done the work. So like, the second you hear something like that, you're like, I better pay attention. At the same time, what a bold statement to say free walk to a trillion. Well, in hindsight, why were they so bearish, right? Like, this thing ended up being 2 trillion, and it happened in a very short period of time. And I remember asking them, why do you think that? And they had very specific answers that were rooted in a model that they built that had very conservative assumptions that, you know, they thought could be much higher than a trillion. But that was kind of the thought process of the free block. And so when you hear that, you say to yourself, man, the only way you build the conviction that those guys had that they don't sell they own 1% at the IPO is they had done the work. And so I think that there's an entire generation of investors, especially young investors, that it's kind of like, you know, making an investment is almost like a lottery ticket. Maybe it works, maybe it doesn't. I don't know anybody that I respect in the investing game. That's how they treat it. They have very specific reasons for why they make the investment. They have very specific, you know, kind of thoughts about the industry or, you know, what. What their specific kind of thought process is, and they invest accordingly. Doesn't mean they're always right, but they can sit and debate with you the nuances in a way that I think most people would. Would not really understand.
- [27:52]
Host / Interviewer
It reminds me of old school venture. Used to be the scientific method. You would put in the seed investment, wanting to prove out these three to five things, and then they would come in, and then you would prove that out. Now you would have Series A, and then you would prove out more Series B. Now you have people coming in Sequoias, comes in at series A. So now somebody comes in three months later and marks them up at 2x with no traction other than just basically making a bet on Sequoia.
- [28:15]
Anthony Pompliano
And the reason why people do it is because it's worked right? And so it goes back to, it's great to do that in 2021, but were you able to do it in 22 and 23? What do your vintages look like year over year? What do your returns look like over longer periods of time? And I think that's one of the key pieces to this is, you know, at least for me, whenever I'm evaluating a fund manager. Show me what you're able to do over time. Doesn't mean that I won't invest in a first fund. Doesn't mean that I won't back an individual, but ultimately, like, that is the durability. Can you continue to do this? Maybe. I'll give it a good example. I'm a LP in a, like a pre Seed seed fund. There's a gentleman named Adam Bezvanik. He's looking Glass Capital, and I recently introduced him to somebody who is a very successful entrepreneur, somebody who already has been able to build a fairly large business that people would have heard of. And this guy was raising a seed round, raising a very large seed round. And Adam basically responded and said, hey, this is outside of my model. I have a very specific ownership target, a very specific check size, have a very specific valuation range that I'm looking for. I think he even says something like, I'll get on the call with you and, you know, would love to be helpful, introduce you to people, you know, et cetera, but just. It doesn't fit my model. That's a lot of discipline right now. We'll see if he, you know, if he's right. But I've been very pleased, I think, with somebody like Adam who's able to use that discipline and say to himself, I know what game I'm playing. I will still be a great participant in the venture ecosystem and help founders and do all this stuff. But my strike box is very specific. How many investors are willing to do that?
- [29:58]
Host / Interviewer
Right.
- [29:59]
Anthony Pompliano
Not that many. And so I think that that's really goes back to this game of, you know, do you understand not only what you're investing in, but do you understand what the math needs to be for it to work for you?
- [30:09]
Host / Interviewer
Do you believe you own a model?
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Anthony Pompliano
But also, are you willing to turn down things that are attractive that are outside of the model?
- [30:16]
Sponsor / Narrator
Right.
- [30:17]
Anthony Pompliano
I think that's usually the hardest thing is, you know, how many times does somebody invest in something because they could. Could make money, but it's a lack of discipline?
- [30:25]
Host / Interviewer
So you spoke a little bit about durability, asymmetry, and volatility. Let's talk about luck. You don't think luck is a real thing? Why is that?
- [30:33]
Anthony Pompliano
Well, because that doesn't exist. Luck's not real.
- [30:35]
Sponsor / Narrator
Right.
- [30:36]
Anthony Pompliano
And I can prove it. If you and I go outside, walk across the street, we both get hit by a bus. Let's say we both lose our right leg and we're sitting in the hospital. Somebody comes and shows up and says, what happened? Say, man, I was really unlucky. I was walking across the street, I got hit by a bus, and I lost my leg. And Then they walk over to my bed and they say, hey, what happened? I said, man, I am so lucky. So walking across the street, I got hit by a bus, I lost my leg, but I'm alive. Exact same situation, exact same outcome. Two completely different views on were we lucky or unlucky. And so what you find is that luck is actually a psychological concept. And there's a lot of academic research that shows that you become, quote, unquote luckier by telling yourself you're lucky. What most people ascribe to luck is simply probability. And people don't like to talk about it from a probability standpoint because it's outside their control. Right. It's something that they don't really understand as much. It requires them to have the self awareness that this luck thing is more in their mind. But once you understand that, you say the things I can control is I can increase the probabilities of accomplishing the things I want or having certain situations occur. So increase the probability surface. But also luck is just in my brain, it's between my two ears. And so I can make myself, quote, unquote, luckier. I can make myself view things from an optimist, positive lens. That's a whole different ballgame. And so I think that people generally like to think of I'm either a lucky person or I'm unlucky, or this thing happened because I got lucky or I didn't get lucky. But no, it's just the way you think about it. And so luck is literally not a real thing. It's just a psychological concept that we use as a crutch. If you can get to the point where you understand that now it's a weapon to be used rather than something that happens to you. So it returns the agency to you as an individual. And I think that, you know, we live in a society where there's a lot of people walking around both saying I got lucky and a lot of people saying they got unlucky. Well, both of them are wrong.
- [32:35]
Host / Interviewer
What's an example in your own life where you've weaponized luck and you've made it self fulfilling?
- [32:41]
Anthony Pompliano
I wake up every single day and say to myself, I am the luckiest dude in the world. Given what I did in my life, some of the experiences I had, some of the opportunities and challenges, et cetera, to end up where I am. There's no way in hell that's supposed to happen. But I wake up every single day, I say to my wife, I say it's incredible that not only I married Her, I have amazing children. I get to do what I like to do every single day for work. I not somebody who ends up spending a bunch of time doing a bunch of, like, nonsense stuff. It's pretty much, I like work, I like my family. I do those two things makes me happy. I have a million friends who, from the outside, everything looks, like, amazing, and I talk to them. And I think my relationship with a lot of friends that I have is kind of just like a no bullshit person, right? It's like, look, you can sit here and post whatever photos you want on Instagram, but dude, what's going on?
- [33:40]
Sponsor / Narrator
Right?
- [33:41]
Anthony Pompliano
And a lot of them will just tell you, I'm stressed out, I'm unlucky, you know, I don't like what I'm doing, you know, whatever. And so I've been in those positions before, right? It's not like I'm immune to it. I'm human just like everybody else. But I've been able to get myself to the things I wanted to be doing, you know, that I'm energized by. It's a pretty fortunate position to be in. And so I think that just literally every single day, you can wake up and say to yourself, man, this is awesome. I'm kind of living the dream life that I wanted to. What else do you need, right? I don't care where you're waking up or what you're doing. If you can say that you're in the top.01% of people in the world,
- [34:18]
Host / Interviewer
and I get as a philosophy, that's a feel good strategy. But how does that make you more productive and how does that increase your success in your life?
- [34:28]
Anthony Pompliano
If you're working on things that give you energy, you're spending time with people that give you energy, you're playing to
- [34:32]
Host / Interviewer
your strengths, of course.
- [34:33]
Anthony Pompliano
And also I think on top of that, though, is people. I think drastically underestimate this concept of everyone focuses on what you want, but no one focuses on what can you attract. And that's a subtle but very important difference. So maybe a great example of this is take, you know, somebody who's in their 20s, living in New York and said, I want to get married. Okay, well, what are you doing to achieve that goal? Most people will immediately start talking about, I go to the bars every Friday and Saturday night, I get on the dating apps, I talk to my friend, and it's all about the things that they are doing. Outwardly, chasing something, trying to get lucky, trying to figure out, I think this one I'm supposed to do. Almost never do I hear somebody say, I am working on myself to make myself the type of person that would attract the person I'm looking for, right? And so we have a lot of young people that work for us across all of our different businesses. And that's usually the thing I spend the most time talking to them about. Whenever it comes to anything in their personal life, whether it is how they deal with their family, how they deal with their relationships, how they deal with their careers, et cetera, is I just say to them, I say, if you spent half the time that you're spending on the external or the mental worrying, on just putting yourself in a position to be the type of person that gets the thing that you want, it'll happen, it'll come to you. And so I'm just a huge believer on you have to focus on how do you attract things rather than simply chase them. And so again, it goes back to whether it's your personal life, your professional life or whatever. If you are doing the things that you enjoy, you're going to attract certain things. People can tell, right? You interact with somebody. And there's a coffee shop down the street that I go to during the day and I walk in, every single person that works, there's four people, they are having the time of their life. They're playing music, they're celebrating, they're smiling, they know all the customers names, they're fist bumping people, right? You walk in, you feel good about yourself being around them. Do you think they're enjoying working there? 100%. It makes you want to go there more. It makes you feel good while you're in their presence, right? They are attracting people. The line is out the door. There's a coffee shop next door. The line's not out the door. I don't think the coffee's that different, right? It is simply that people want to be around folks who are enjoying what they're doing, have high energy, you know, are attracting that. And so I think the same thing is true in business. You know, name a great entrepreneur. People want to work for them, customers want to do deals with them, investors want to back them, right? They're attracting this stuff to them. And a huge piece of it usually is they're enjoying what they're doing.
- [37:21]
Sponsor / Narrator
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- [38:36]
Host / Interviewer
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- [38:38]
Sponsor / Narrator
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- [39:06]
Anthony Pompliano
They're energized by it. They have a certain aura about them and people think that it's kind of like this woo woo stuff, but when you're around it, look, I. I just say, look, what I'm looking for in my life is I want to be surrounded by winners. And we kind of have gotten away in conversation from just talking about there's winners and there's losers. Yeah, and the winners, they win at everything they do. And it's not because they are smarter than people or whatever. There's some combination of intelligence, hard work, charisma, you know, personal energy, whatever. The thing is that they have put together and they would be successful running a small business, running a technology company, being an investor, working on a construction site or whatever. And some of it is they have certain leadership qualities. Some of it is that they understand certain interpersonal communication. Some of it is that they have a certain propensity from an intelligence and personal curiosity Et cetera. But they put this stuff together and they're a winner. And so when you're evaluating talent, you just want to find winners because the winner will win whatever role you put them in. They'll figure it out. So if you're an investor that bets on people, find winners. If you're somebody who is backing managers, find winners. If you are hiring people, find winners, right? And if you go back and look, PayPal maybe is a great example of this, right? What are they talking about? We just found great people, put em in a room and then we figured out the problems, right. A lot of companies, they seem to be doing the same thing. So I think that's ultimately, you know, kind of again, somehow became taboo to just talk about. Like we're looking for winners. I want winners working at our companies, I want winners running our companies, I want winners managing our money. I want winners around me all the time. And if you do that, it becomes contagious. It, it kind of builds us like a momentum snowball. And ultimately I think that's where returns come from, happiness comes from, et cetera.
- [40:52]
Host / Interviewer
I have a second master's in psychology and I like to look at everything through the psychology lens. And I think about when you say be a winner, of course the question becomes who doesn't want to be a winner? And then you start thinking, what is that other thing? Why aren't more people winners?
- [41:08]
Anthony Pompliano
Because they're scared.
- [41:08]
Host / Interviewer
I think they're getting benefits from the loser mindset or the victim mindset. In many ways. Winning or even sales, if you call it from that. Sales and leadership, I think oftentimes are interchangeable. It's what Shelby Sapp, a friend of mine, calls emotional leadership. You need to first be happy. Just to take the coffee shop example, you wake up, you decide to be happy, you serve coffee, and then good things happen from that you build relationships. But if you don't first make that decision, in other words, you have to realize at some point, if I'm not gonna be happy, it's nobody's job to come and make me happy. So I first activate myself, be happy, and then you see the second order effects. And I think the tragedy is a lot of people are still waiting in this victim mindset, waiting for somebody else to be happy, not realizing that it's this self fulfilling prophecy.
- [41:59]
Anthony Pompliano
You know the secret? You can make a loser a winner, but you can't make a winner a loser. It's one of the hard truths of life, right? You can take someone who shows up to a business to A fund to a sports team, to anything in life. And they can never have been exposed to a winning culture, to winning energy, to leadership, all that stuff. And you can take them and you can teach them how to be a winner.
- [42:23]
Host / Interviewer
How do you do that one?
- [42:25]
Anthony Pompliano
Is it through exposure they see the
- [42:27]
Host / Interviewer
benefits of the winning philosophy?
- [42:29]
Anthony Pompliano
Of course they're around it, right? How many times in sports has somebody been on a losing team? They go to a winning team and they're like, oh, we do things differently here. And all of a sudden they become this great player.
- [42:38]
Host / Interviewer
That's why I have in sports these coaching trees. You have the Bill Walsh coaching tree, the Bill Belichick. You start to see winning and you kind of internalize it very quickly.
- [42:46]
Anthony Pompliano
Doubt. So exposure is 1, 2 is setting a standard that demands winning, demands excellence. And again, that feeds into the culture. But that is a second component of it. And then the third thing is there's very specific things that you can teach someone. You can show them how to do this. And so once somebody has become a winner, has the winning mindset, has the winning culture, has the winning kind of standard of excellence, they never go back. Once you see it, you can't unsee it. And I think that's one of the key pieces, is that people kind of think of these two groups as they're dried concrete. They're not. It's a one way door. But how many times in history has somebody said, I went to work somewhere or I was on the sports team or whatever, I got exposed to this person, this culture, this team, this leadership style, whatever, it changed my life. I don't think that we've ever heard, at least I haven't heard somebody who says I was a winner, I got exposed to all that stuff and now I'm here in the situation now the exceptions are drugs and alcohol, gambling, right, whatever. But if you take that same person and you cure that problem and then put them back on their two feet, then it'd be winners again. And so it just comes back to the exposure, the expectation setting, the leadership. You can take a loser and make them a winner, but you can never take a winner and make them a loser. And I think that once people start to understand that component, you can literally accomplish anything.
- [44:14]
Host / Interviewer
How do you build that within a company?
- [44:16]
Anthony Pompliano
Culturally, you're maniacally micromanaging every aspect of
- [44:19]
Host / Interviewer
the business, sound or mount.
- [44:22]
Anthony Pompliano
So you can call founder mode, you can call whatever you want, right? But I think ultimately what you end up finding is this great idea of the source. And I think of the sources, this idea. There's a gentleman, Graham, who sees a lot of seed investor, I'm forgetting his last name, but he has this idea that when you go and you talk to a founder, you basically ask, there could be two founders. Who was the source of the idea? He says one founder had to call the other founder and say, I've been thinking about this thing. Do you want to do it with me? Do you want to spend some time trying to figure it out? When you find the source, you then have to say to that person, where did the idea come from? What motivated you to dedicate your time, your memory, your resources, your energy towards this thing? And that ultimately is the essence of the company. That's why founder led companies do so much better than corporate management companies, right? All this stuff. But once you understand the source, you understand so much more about that company. Well, the same thing is true of almost everything in life. When you look at a company, let's say you don't have the opportunity to go and talk to the founder. But if you go and you look at who the founder is, that will tell you a lot about the business. If you go look at sports organizations, who is the source of the culture? Usually the coach, right? And so you go and you look at it. Why is it that LeBron James can win championships and then not make the playoffs? A lot of people will point and they'll say, oh, it's because of the other players. The New York Knicks just won with a team that most people would say, it's not like they had some huge superstar, wasn't a super team, right? So again, it goes back to so much of it. Is the source of that culture, the source of that organization, the source of this. That is ultimately what drives, I think, a lot of the winning. And if you think of a business, how do you instill that? When Bill Walsh took over the 49ers, the first thing he did is he called the front desk and he said, you're answering the phone wrong. Why would Bill Walsh, the head coach of the San Francisco 49ers, or the two and, you know, 16 team or whatever it was, why would he be focused on how they're answering the front door, answering the phones? He said, because this is the first interaction that outsiders have with our organization. How you answer the phone sets the tone for how these people are going to interact with us. And then he would, throughout his tenure there, call down to the front desk randomly, unannounced, and see, are you answering the phone the way that I told you to answer the phone. And he had instructions. How many people care about doing that? How many people think that they have the time to do that? How many people think that's important? So you just go through over and over and over again, every single little detail. It's hard, it's really, really time consuming. But it's also mentally exhausting to be the person who constantly is trying to figure out what is every single detail that I need to maniacally manage. So what a lot of people do is they hire great people and they say, go. And that solves a lot of the problems because you have a great person, and that great person should have some component of this. But I do not know a highly successful entrepreneur who does not say, you know what? Hiring a great person is not enough. I have to hire a great person. And then on top of that, instill the culture and make sure that we're doing things a certain way and constantly stay on top of this. And so to me, actually, a huge part of how do you get a winning culture is the durability. Do you personally have the durability and the energy to persist over a long period of time when all of these people who work with you do not have the same source of that energy or vision? It's very difficult. It's why, again, 5% of the companies or less deliver so much of the value. It's just that you're stacking these things on top of each other.
- [48:27]
Host / Interviewer
Then once you have that, then it's about having the patience to execute it.
- [48:30]
Anthony Pompliano
Over decades, how many people get bored, right?
- [48:34]
Host / Interviewer
They seek novelty.
- [48:36]
Anthony Pompliano
Yeah, you get bored, right?
- [48:37]
Host / Interviewer
Peter Drucker used to say that CEOs make acquisitions once they get bored of their core business. And that is one of the most destructive things.
- [48:45]
Anthony Pompliano
If I want to be healthy, I know exactly what to do. I'll eat the same thing every single day for a year, right? I design it, need it. It's really boring way to live. So guess what? Ah, you know, let me put a little of this, you know, condiment on it. Oh, you know, it's Saturday. Let me get an ice cream, right? Next thing, you know, no discipline. And so it just goes back to, how do you build systems? How do you build a life? How do you build a routine that allows you to accomplish the goal, but also understand yourself?
- [49:17]
Host / Interviewer
For those who want to build this winning culture and maybe are even committed to doing it over many decades, where do you get some leverage? What are some tools, Whether literally tools or some framing in order to encourage people to seek excellence.
- [49:34]
Anthony Pompliano
To be clear, I'm still learning how to do all of this, right? So I kind of look at this as I figured some stuff out that worked for me and our organizations. But also there's a lot of stuff that I talk to my friends, colleagues, peers about on a daily basis. I'm like, I can't figure this out. What do you guys do? Right? And I borrow, what are they saying all the time? Depends on what the problem is, right? You know, a really important one was when everyone wanted to work remote all the time. And it was like, well, what are you guys doing? How are you getting people to come back to the office? Are you dangling a bunch of treats in front of them like, you know, everyone is got to have some sort of carrot to come back to the office, or are you managing with a stick and saying, you know, you're not going to be here? And part of the problem was like, nobody had a good answer. Everyone was doing different things and it was really customized to what their organization was. And some weren't going back to the office five days a week, and they were doing three days a week. And there's all this stuff, right? So you have to sometimes take these other data points and customize them to you. But if you go and you look at like, what are the things? The first thing is, if I go and I ask everyone in your organization, what's the goal? Do they even know? Could they actually tell you?
- [50:44]
Host / Interviewer
Right?
- [50:45]
Anthony Pompliano
And some organizations, without a doubt, other organizations, there's no way. So that's the first thing is everyone even know what the goal is and then what is needed to fulfill that goal? What are the inputs that we can control? How are we going to work? All of these things are intentional design of an organization. And it's not like they're taking the sat. They don't need to sit down and take a written test. But it sure is helpful if they know what the goal is, if they understand some of the core principles that you have as an organization. And you know, I think that if you go and you look at a lot of great organizations throughout history and people always, I think, are scared to kind of talk about some of this stuff. But if you look at maybe take two extremes. Let's look at the, the military, let's look at the Mafia, and let's maybe look at Nvidia, most people wouldn't think that there's any sort of correlation between those three organizations. I bet you those three organizations are way more comparable than people think. So let's Unpack it. Okay. Do they have a clear goal set in mind? Yes. Do they have clear guidance on their principles? Yes. The military has certain things you should do and shouldn't do. The Mafia has things you should do and shouldn't do.
- [52:02]
Host / Interviewer
Certain values, omerta.
- [52:05]
Anthony Pompliano
Right. And so you look through these things, but then you say, okay, well, what about the structure of the organization? Let's take the military. How big is a company? 200ish people.
- [52:22]
Host / Interviewer
Right.
- [52:23]
Anthony Pompliano
How big was a crime family? 200ish people. How big is a division inside of Nvidia? 200ish people. Right. Why is it that the same organizational structure exists along these things? The person at the top, how many direct reports do they have? Well, Nvidia, I think he says he has 60. You look through some of these organizations like it's a bigger number than you would think it is. It's not as hierarchical as you would think it is. Right. I think at Nvidia, from Jensen down to the low level employee, it's like there's only like four, you know, layers or something. Mafia is almost the exact same, right? You look at, you know, a company or battalion commander, depends on exact thing, right? But like, you start to realize, like, wait a minute, how is it that people in completely different sectors, in completely different organizations with completely different approaches to the world, how do they all end up around the same things at different time periods in history? Well, maybe it's because what people start to learn over time is there are certain things that work, certain principles, certain ways of operating. And so again now your responsibilities, if you understand how to use these things, use it for good, do the right thing. It's a tool, correct? But there's a reason why organizational structures, leadership, all this stuff, the principles become timeless, right? And so if you read, you know, only the paranoid survive. Was that book written in the 90s? How is it that's still one of the most recommended books for business? It's written before the iPhone existed. But just like the principles, right, are timeless, there's an entire philosophy. How is it Bill Walsh's book score takes care of itself? How is it that the principles in that book are still applicable today? They're timeless. And so it doesn't matter what the technologies are. It doesn't matter who the people are. It doesn't matter all the. It's just like this is how humans communicate and operate. And if you can learn that way of managing, leading, et cetera, you could apply to anything.
- [54:21]
Host / Interviewer
You look at those three organizations, they all have very specific reasons to exist. The military is obviously to protect the United States. Nvidia is to pursue an AI future. The Mafia is to grow and protect the family and the community. A fourth example, I oftentimes think about SpaceX going back to this. I've also been his private investor for quite a while. And one of the idiosyncratic things about SpaceX is its mission. Said another way, it's very hard to execute the level of intensity that SpaceX has executed without that mission. Elon has created such a mission, which is to make humans interplanetary so that we don't end up all dying in a nuclear holocaust on planet Earth, is one of the forcing functions behind their culture. So they have this culture of the responsible engineer. And three things end up happening to people that join SpaceX. One is a lot of people, even the smartest people in the world. A lot of them, six months in, they burn out. They just can't take the intensity. They believe in the mission, but they just can't take it. Their brains literally just fry. Then there's a second group, group of people, people that are there anywhere from one to 10 years. So they see it as a tour of duty. Elon, I think, uses the same analogy of this military tour of duty. You work there for four years, it's extremely difficult to do. But you look back at it as the most formative part of your life, and it teaches you all these lessons. And then there's actually an elite group. And this is a lot of the people around Elon, is they're there for several decades. And the reason that they're able to deal with the culture is because they believe so much in the mission that they're willing to, in many ways, sacrifice their lives, their livelihood, and some ways their mental health in order to achieve that mission. They're. They're these lifers. And when I've talked to them, they characterize it as. It's hard after you go from SpaceX to another organization, to find meaning, the same meaning that they had at SpaceX. So I think oftentimes these people think of the MBA, and this is my other master's is the MBA. They oftentimes think about almost businesses as these soulless entities where you can just like take a managerial style and plug it into a business and it's going to work the same way. But I think there's a mission aspect to it. And it starts from the founder and the founder's own belief and how congruent the founder is with that mission that you can't take away from the entire organization winning, right?
- [56:52]
Anthony Pompliano
What is the purpose?
- [56:53]
Host / Interviewer
It's not passion, it's winning.
- [56:55]
Anthony Pompliano
Well, passion feeds into winning, right? If anyone hasn't seen it yet, they should go listen to. James Dolan gave a speech to the New York Knicks as the playoffs were starting. And James Dolan previously was not exactly known as the most popular sports owner. It wasn't really known as. Or the most winning or the most winning. Right. But he very much, I think, was criticized for the fact that the Knicks hadn't won. B1 divested the team, all this stuff. And you watch this video of him giving this speech, and I don't know if there's an official title for the speech, but basically he's like, for 10 weeks, I need you guys to lock in. And he even jokes at one point. He goes, I need you to go home and tell your wives, right? We're not having sex for 10 weeks, right? He's just like, is that true?
- [57:36]
Host / Interviewer
I've seen that on.
- [57:37]
Anthony Pompliano
Well, he jokingly says it to the team. I don't know if anyone went home and did that. Right? But he basically is like, I need your utmost attention and focus for 10 weeks. And what you do in these next 10 weeks is going to, if we are successful, stick with you for the rest of your life. Look what they went and they did, right? So you look at that and you say, okay, that's 10 weeks. That is a microcosm of what Elon is saying. Elon is saying, I need you for four years, right? Elon is saying, but I'm going to dedicate 30 years of my life to this. He's already been at it for 25 years. And so you look at this and you say to yourself, wait a second. Again, it doesn't matter if we're talking about sports, if we're talking about business, if we're talking about your personal life, whatever. The same things apply. That idea of having a specific mission you are very passionate about, that gives energy that leads to that aura that creates winning is a 5% idea that delivers 95% of value because it is applicable across disciplines. And so as you find these things, you just collect them and you say to yourself, that's a 5% idea.
- [58:41]
Host / Interviewer
What percentage of attrition do you expect for people that could never be winners or choose not to make the sacrifices?
- [58:47]
Anthony Pompliano
If you're losing people who can't be winners, it's probably because you're not teaching them how to do it. You shouldn't be washing people out if you're focused on how do we create this culture. So I think of a sports team. Sports team cuts people in the beginning of the season, but they're usually not washing people out in the middle of the season. Right? They're creating that culture. And if you go and you look at, you know, some of these teams, they won with the same people that they started with. And so they're transforming the team in the organization again, you can take losers and make them winners. You can't make winners losers. And so now if you in practice, of course you're going to lose people. Of course some people aren't going to be able to make it, especially in intense cultures like SpaceX, et cetera. Right? Like you can't go 100%. But again, it goes back to the approach of are you trying to wash everybody out or are you trying to find the people and make them join you for the ride? Some people you just can't convince to do anything. You can tell people to you, they're blue in their face, it's going to be good for you. They don't want to do it. They don't want to do it right now. The beauty I think of great organizations, though, is they put it up front. I don't think there's anybody in the world who applies to SpaceX who doesn't think that the culture is intense.
- [59:56]
Host / Interviewer
They know what they sent up.
- [59:58]
Anthony Pompliano
It's a forcing function, right?
- [59:59]
Host / Interviewer
It's like a filter is part of that. As a manager is almost like a parent, you care more about the development than the rapport.
- [60:09]
Anthony Pompliano
I think I'm a better parent than I'm a manager. And the reason is because, you know, when you have a child, you have a monopoly on everything, right? You have monopoly on the information that they get, you have monopoly on the actions they take, you have a monopoly on the discipline, you have a monopoly on every aspect of their life. When you're dealing with peers, you don't have a monopoly on anything, right? Because they can leave, they can go, do other things, whatever. So in the military, there is a hierarchical leadership where it comes from. I have a rank on my chest. You have a rank on your chest. If I outrank you, you listen to me. You may not like me, you may have a problem with me, but it doesn't matter. If I tell you to do something, you go and respect the rank and you're going to do this because that's how the military is set up. It's very similar to a parent and a child. How many people say you're going to do it because I say you're going to do it.
- [60:59]
Host / Interviewer
It's not democracy.
- [61:01]
Anthony Pompliano
Try to do that in a workplace. It doesn't work. So you can't use hierarchical leadership. Many times in a workplace, especially with people who are experienced, who are successful, who have self respect, right? All this stuff, the people you want, you can't do that. You have to have influential leadership. So you have to explain to them what is the mission? Why is it a worthy mission? What is your role in doing this? What are you going to get out of this? How is your contribution going to help us achieve the mission? All of that influential leadership is way harder. It is so much easier just to
- [61:32]
Host / Interviewer
say it's like a minority deal versus a control deal.
- [61:35]
Anthony Pompliano
Of course.
- [61:36]
Host / Interviewer
Are you selling your employees on that before you hire them or once you hire them? And is there a way to suss that out before you bring somebody home?
- [61:45]
Anthony Pompliano
I think that is different for each company. Right. Take for example, the people who work very, very closely with me, people I've been working with for a long time. Each one of them did not come in, in the roles that they're in. They have risen up over time and they've been, I got a little bit of exposure to him or the people around him. Okay, a little bit more, A little more. And then eventually it's like a double opt in. This person is good. We've kept giving them more responsibility. They've now risen to the level where we want them to run something or you know, be in charge of a large portion of something. At the same time. They would have left by now if being exposed to me a little at a time, they were like, I don't enjoy this. So it's a double opt in. We have some people though that join our businesses that they may not interact with me at all on a day to day basis, but that's actually part of the challenge. How do we communicate what the culture, what the standard is, what we want to occur inside these businesses. So over time, as everything has gotten bigger in terms of the number of companies that we own, the operations, all this stuff, they have to be more intentional about it. And so that person that you know now works at one of our businesses, well, do they know what the mission is? Do they know what their contribution should be? Are they going to see someone maybe not upholding the standard and say something? Do they feel like they're empowered to do that? Well, the only way that they're going to do this, they feel like this is part of Their company too. Because if they feel like they're just being rented as a unit of labor inside of an organization, but it's not really theirs, they leave the trash on the ground and somebody else pick it up. But if it's their, you know, component, if they're part of it, they push the chairs underneath.
- [63:30]
Host / Interviewer
When it succeeded, how has it succeeded for you to gain scale and how you apply the culture?
- [63:37]
Anthony Pompliano
I want very, very small teams. Most of the companies that we own and operate are not, not large headcount wise, but they serve a lot of customers. You know, we have a public company, I think there's 11 people that work at the company. But it has 50 billion in assets on the software platform, serves, you know, tens of thousands of users. And if you think about from a scale perspective, 50 billion in assets would make it like the fifth largest fee taking RIA in the country. 11 people work there, including myself, and that's Sylvia.
- [64:11]
Host / Interviewer
Tell me about it.
- [64:11]
Anthony Pompliano
Yeah, this is a software product that we just believe, you know, personalized insights is coming to every industry. And so if you had a young kid, you wanted them to learn, what do you do? You give them a private one on one tutor for education. If you need someone to be healthy, what do you do? You give them private one on one healthcare. In finance, how do you get someone to accelerate their net worth or grow their assets? Private one on one personalized insights. And so the reason why we think that's interesting is almost all of the personal finance space is focused on saving money. But there's a growing cohort of what I call independent investors, kind of the upper middle class of the finance world. There's big institutions at the top. There's the people with $5 that are on Robinhood or the mean stock traders or whatever at the bottom. But this upper middle class are usually wealthy multimillionaires that are digital natives. They don't really consume the mainstream media. They're getting their information online from podcasts and newsletters and Twitter, et cetera. They don't really work with RIAs or financial advisors. Maybe they have one. But they like to be in control and make the decisions and kind of live or die with, you know, success or failure. And then they've convinced themselves that their W2 is not going to help them achieve their financial goal. And so they now are going to use their personal assets, they are going to invest to be able to achieve that financial goal. So they think independently, act independently, and they're chasing independence. Put that together. That cohort of people is Very underserved. And I know because I am one of those people. And so we started to build a product for me where I was taking screenshots of different accounts, and I was uploading it in chatgpt and I was asking questions, and it was so annoying to have to then go screenshot again the next day and do this. And it didn't have memory and all this kind of stuff. And so we had an engineer that worked at one of our companies, and I said to him, I said, can you just build? At first, it was just a dynamic dashboard that tracks my net worth. That's all I want. And he's like, well, that thing you were doing with the AI, I can actually build that too. So that led to Sylvia. And today the average user asks Sylvia 15 questions per week. Do you sort of think about that? We were processing at one point over a hundred billion tokens per month. So the scale of this thing was, you know, exploding.
- [66:21]
Host / Interviewer
One of the things that I've loved getting to know you is you take these very sophisticated concepts and you're able to package them in such a mainstream way.
- [66:30]
Anthony Pompliano
If you understand humans and you interact with them, then you actually work the other way. So I don't start with this, like, big idea. I actually start with just like, what's the thing? So the doublecheckyourdoc.com was literally, my wife and I went to the doctor when she was pregnant. The doctor screwed something up. Scared the hell out of my wife. My wife took a scan, uploaded it to one of the AI models and asked it, and it came back and was like, basically, the doctor completely messed this up. Here's the truth. My wife took it, put it back into the doctor's system. It was like, just out of personal curiosity, like, what's this? And the doctor called and apologized. And so you look at that and you say, well, if that's valuable for us, you know what else people do? If you go to the doctor, what do you do? You text your significant other, your friend, whatever. You're like, yeah, the doctor told me,
- [67:17]
Host / Interviewer
my foot's not broke.
- [67:18]
Anthony Pompliano
It's just a sprain, whatever. And your friend, you know, pontificates as a armchair doctor, says, like, I don't know, man, look pretty purple to me, you know, or whatever. Well, like, people want to have a conversation there. So it's like personal experience plus understanding. You're like, well, can't the AI just do this? Oh. And then you start to realize, like, it's actually applicable across every single aspect of your life. It's true about finance, health. And so you kind of form this worldview, but it's very bottoms up, I think, is a much more accurate way to do it than a lot of academics. They kind of come top down. I'm not the biggest fan of the academics usually because I tend to think that the theory, when it meets the real world, you know, lacks a little bit of effectiveness.
- [67:58]
Host / Interviewer
If you could go back and you could only give yourself one piece of timeless advice when you had just finished your six year tour of duty at the military, what would that be?
- [68:07]
Anthony Pompliano
Go bigger and take bigger risk. Right.
- [68:10]
Host / Interviewer
What do you mean by that?
- [68:12]
Anthony Pompliano
Well, it's just as hard to build something big as it is small. You get paid way more for taking big risk than small risk. And most of the things that you're worried about when you take those big risks are completely not worth worrying about.
- [68:24]
Host / Interviewer
There's almost an argument that doing something bigger could be easier than doing something smaller.
- [68:29]
Anthony Pompliano
Of course, again, it goes back to what do people want to be associated with or surrounded by winning? Well, what do winners do? They go big. And so people, why do they like Elon Musk? He goes big, right? Why do people like certain types of individuals, whether they're investors or founders or whatever? It's big. And so there's a significant advantage to scale. I just think that when you're starting out, you're much more worried about your batting average than your slugging percentage. And I think what you learn over time is the slugging percentage matters way more. Stanley Druckenmiller it's not how many times you're right or wrong, it's how much you make when you're right. That's all that matters, right? Same thing is true in business. You know, I always laugh. Mark Cuban, I think is famous for saying, like, you only gotta be right once. If you're right one time. People, when they write your bio, they don't write the 20 startup ideas you had that didn't work. They write the one company you sold for a billion dollars. Everything else kind of gets washed away.
- [69:24]
Host / Interviewer
Goes back to that asymmetry. You find a great deal, you make it worthwhile. Because it might be once a decade.
- [69:30]
Anthony Pompliano
If I had to sum up my entire investing philosophy, it is that scarcity is value. And what are you looking for with scarcity? You're looking for public companies that have durability and asymmetry and all these things, right? They're scarce. There's not that many of them. Find them, hold them and don't let go. I Think something like bitcoin, very scarce, right? Both in terms of the number of bitcoin, but also the idea of bitcoin, the network, et cetera. Hold it, don't let it go, right? Ideas in life. 5% of the ideas deliver 95% of the value, right? When you find one of these ideas, they're scarce. Hold them, don't let them go. Sear it into your brain, et cetera. And so it's the same idea of applying scarcity, and it's looking at the world as when you find something that is valuable, it is unlikely that that is plentiful, and you never know when you're gonna find the next one.
- [70:13]
Host / Interviewer
Do you apply that to people as well in organizations? Of course.
- [70:17]
Anthony Pompliano
How many people in your life do you think deliver you 95% of your happiness or 95% of your returns, or 95% of whatever the thing is that you measure, right? You could be somebody who says, I actually don't care about my professional accomplishments. I live for Friday night. But just how many of those people in their life deliver 95% of the fun on Friday night? It's probably 5% of the people, right? So, like, this idea of a power law exists all across the world in all these different disciplines and all these different facets of your life. If I could tell people, especially in the investment world, one thing, that they should go spend more time learning about this idea of lattice work. And Bill Miller, famous investor, is really the one who popularized it. And Bill's entire thought process around lattice work is you can take things from biology or, you know, geopolitics or finance, where you can weave it together into this worldview and understanding. And as I've done that and taken things from all these different disciplines and tried to put it together into the worldview, scarcity and power law, if you put those two things together, to me, that's where all the value lies. And so, you know, you can look at it as durability, volatility, asymmetry, all that, but, like, end of the day, you're looking for scarcity, and you're looking for things that are going to continue to persist for a very long period of time and just kind of get yourself in the way of them, right? You don't even have to be that smart. Just get in the way of them, and they'll do all the work.
- [71:41]
Host / Interviewer
Anthony, this is an absolute masterclass. Thanks so much for sitting down.
- [71:44]
Anthony Pompliano
Yeah, thanks for.