#680: Richard Koch — Revisiting the 80/20 Principle, The Power of Optimistic Journaling, Studying History to Improve Investing, and The Grand Beliefs of Winners (Plus: The Toxic Beliefs of Losers)

Run flat out for a half mile.

Before my hands start shaking.

Can I ask you a personal question.

Now with a student at first time, what if I did the opposite?

I'm a cybernetic organism, living tissue over.

Metal endoskeleton.

Ferris.

Hello boys and girls, ladies and germs, this is Tim Ferriss. Welcome to another episode of the Tim Ferriss show, where it is my job to interview and deconstruct world class performers to tease out the stories, the routines, the habits, the beliefs that you can emulate to improve your own lives. My guest today is a fan favorite. He's been on once before. He always delivers a lot of actionable advice and learnings. His name is Richard Kosh Koch. Richard is an entrepreneur, investor, former strategy consultant, and the author of several books on business and ideas, including four on how to apply the 80 20 principle in all walks of life. His investments have grown at an average of 22%, compounded annually over 37 years, and have included Filofax, Plymouth, Gin, Belgo, Betfair, Fanduel, and Auto one. For those who don't have any reference for that, that is absurdly, absurdly good. He has worked for Boston Consulting Group and was a partner at Bain and Co. Before joining Jim Lawrence and Ian Evans to start Lek, which expanded from three to 350 professionals during the six years Richard was there. In 1997, Richard's book, the 80 20 principle reinterpreted the Pareto rule, which states that most results come from a small minority of causes and extended it beyond its wellknown applications in business into personal life, happiness, and success. The book, rewritten in 2022, has sold more than a million copies, been translated into roughly 40 languages, and has become a business classic. It was named by GQ as one of the top 25 business books of all time and it is a book that has had a huge impact on my life and one that I have recommended for at least a decade. At this point, Richard's latest book is unreasonable success and how to achieve it. He has two upcoming books, 80 20 beliefs, which identifies the very few beliefs in our lives that strongly influence what we do and therefore the results we get. And we talk about some of these 80 20 beliefs in this conversation, as well as 80 20 daily, a collection of 365 short daily readings using the 80 20 philosophy to achieve the good life. You can find him online@richardkosh.net. Again, that's Richard Koch net and on Twitter at richardkosh 80 20. And now, without further ado, please enjoy a wide ranging, I think very fun, certainly very actionable conversation with Richard Kosh. Richard, it is so nice to see you in person and sitting across from you.

It's so wonderful to see you sitting across from me as well, in my kitchen table as well, which is fantastic. Thank you very much for coming.

Absolutely. At your kitchen table in this beautiful house, which is full of natural light, looking out at all sorts of greenery, the birds in the background couldn't be more pleasant. And before we started recording, I took a bathroom break, as I often do, part of my pregame ritual. And I walked past a fireplace, and there was a small square piece of wood with three words on it, Gambit's payout. So Gambit's payout. And I thought I should ask about that first because I'm sure there's a story behind it. What is the story behind this?

Well, I'm an investor in a company called what three words? I don't know if you've heard of what three words, but the basic idea is that there are trillions of squares on earth, and each square is about the size of just outside my front door. And it's a method of trying to identify where people are in order to have deliveries happen, where the address system is not particularly good. So I'm an investor in this company. It's a wonderful, wonderful british company.

Could you explain just maybe by way of example, what that means? So they're satellite identified squares?

Yes. And you don't even need to be online, but it's basically mapped, and therefore, anyone that's got the key to it can deliver to where someone is. It was originally designed by a guy who was in the music business, and he and his band would arrange to meet at Glastonbury or somewhere. But of course, Glastonbury is vast. There's a huge field there and they would always miss each other. So he reckoned that if you could find a way of describing something which was not a whole series of alpha numeric things, a huge, long, meaningless thing, but was three english words, it could be in any foreign language as well, then you would be able to find exactly where the person was and exactly where they get the stuff delivered. So they might want it in the garage, for example, they might want it in a different joining part of the house. And so they basically spent a huge amount of money mapping the whole world into trillions of these little squares. And the system now works and car manufacturers can use it in order to provide directions and mapping. And it's a wonderful system and it's very, very economical. There is a unique three words for everyone. If you're involved in a car crash or accident of any kind, you can identify where you are to the emergency services or to anyone else in order to be found as quickly as possible without any mistake, without the ambulance or the police going here and there, basically trying to find where you are.

So I didn't anticipate going down this side avenue, but it's interesting. So I'll pursue it and then we'll come back to these particular three words, which hopefully are not like doxxing you and exposing you in some strange public way. But if, for instance, I have something delivered to my front porch and it's banana, eggplant, Susan, whatever it might be, if I then travel and have a car accident, how does that series of three words get mapped or associated with the new location, which I couldn't have predicted the system would be able to.

Find