Full transcript
0:00every one sim ovens here and in today's
0:02video I want to talk to you about
0:05long-term thinking second-order
0:08consequences and time-based decisions
0:12and basically you know I want to have a
0:14conversation with you about time because
0:17you know the thing about money is time
0:19and in business the one variable no one
0:23seems to account for and the one
0:25variable that has the most profound
0:27effect on your success your company's
0:30success and in everything it's time yet
0:34nobody seems to pay any attention to
0:36time and the number one cause of
0:39business failure this time and like you
0:42know pretty much everything to do with
0:43business in life is to do with time and
0:46human beings are just they just
0:48naturally suck at dealing with the
0:50concept of time and playing with and
0:53optimizing and making decisions when it
0:56comes to any equation which includes the
0:59time variable and so in today's video I
1:03want to show you how I think about time
1:06and how I use time not as an enemy but
1:10as a friend as a friend to help me make
1:14money as a friend to help me take out
1:17competition and as a friend to help me
1:21build competitive advantage wealth and a
1:25company that that lasts over the long
1:27term so probably the biggest mistake I
1:30see entrepreneurs and business people
1:33make is it's just short term thinking
1:36and short term thinking is basically
1:40that it's instant gratification you know
1:43short-term thinking is well I want to
1:46have a better today at the cost of
1:48tomorrow you know it's it's basically
1:51you know pretty much everything bad for
1:54you is short-term thinking so let's take
1:57a look at debt so debt is basically
2:02enjoying a better today at the cost of
2:05tomorrow so you can live better today
2:07you can buy light that 42 inch TV today
2:09then you can start watching it or you
2:11can buy that Xbox today you can start
2:13playing
2:13but you'll pay for it
2:16tomorrow and later on down the path you
2:20know that's gonna whip back around and
2:21bite you in the face
2:22and hard and most of the time it's not
2:26worth it
2:26but what people do is they just kind of
2:28brush it under the rug and they just
2:29forget about it and same thing with like
2:33fast food it's like I want to have a
2:35burger that tastes real good right now
2:36but at the cost of you know my health
2:40and potentially shaving years off my
2:42life tomorrow or exercise I don't want
2:46to sweat and work hard now I just want
2:49to lie and lay down on the couch and be
2:51lazy now at the cost of heart disease
2:54tomorrow alright and you know no matter
2:57we look the the relationship between
3:00time and decision making and benefit and
3:04all of that is generally things that are
3:08good for you they kind of suck right now
3:11and the good for you in the long term
3:14and the things that are bad for you is
3:16they're kind of awesome right now but
3:19they're really bad for you in the long
3:20term so it's kind of like an inverse
3:22relationship you know and you have to
3:24learn in life in a business to choose
3:26between these two things like what
3:29people don't understand is that you know
3:31their business and their life and
3:32everything is made up it's the sum total
3:35of all the decisions that they make and
3:36you make hundreds thousands of decisions
3:38every single day and whenever you're
3:40making these decisions you you always
3:42have the option between short term or
3:45long term alright and what I see more
3:49and more often is people taking the
3:52short-term path and we see this this is
3:58prevalent right now in 2018 with social
4:01media and things you know if you post on
4:04Instagram or whatever then you get a
4:06bunch of likes you know then that's kind
4:09there's a dopamine spike and so you're
4:11training your brain to appreciate that
4:13loop do the section get this instant
4:16reward slash chemical in my brain that
4:18feels good do it again and it's
4:20reinforcing right that's a instant
4:23gratification feedback loop and
4:26it's to do with dopamine is very
4:28addictive the same way slot machines and
4:30everything are addictive and you know
4:31once you get hooked on that now you need
4:34to find that everywhere in life and so
4:36you know you'll want fast food you'll
4:39want instant business results which
4:41basically don't exist and you'll want
4:43everything instant now and you'll become
4:45an impatient person and you'll basically
4:48end up suffering horribly in every way
4:51shape and form in every different facet
4:53of your entire existence however on the
4:57inverse of that is long term
4:59gratification and so you know if we go
5:02to the gym now it's kind of sucks now we
5:05got to sweat and work hard but in the
5:06future is great if we eat healthy now
5:09it's not they're tasty right now but in
5:10the future it's great if we read books
5:12now instead of playing xbox it's awesome
5:15right it's not that awesome right now
5:16but in the future it's great if we save
5:18money not that awesome right now a
5:20future great so you get you get my point
5:22yet like things that are good for you
5:24things that are good for you immediately
5:27be careful of them but things that kind
5:29of suck a little bit in the beginning
5:30but a good for you later on those are
5:33the things that you should be doing the
5:35more of them you do the better and you
5:37have to train yourself to become this
5:40way and you have to always think to
5:43yourself like am I going to take the
5:46electric wheelchair path which is what I
5:48call the easy way or the hell and the
5:52hill is the big gnarly thing you don't
5:55really want to do and there is an easier
5:58path the wheelchair part but if we take
6:01the hill then if we keep taking hills
6:04before we know it
6:05we're winning and we've got competitive
6:08advantage and we've taken over our
6:09market and we're making a killing and
6:11also if you take the hill
6:13psychologically and biologically - then
6:17you're going to be fitter healthier
6:19happier and all of that so always think
6:22to yourself you know am I going to take
6:24the wheelchair path or the hill take the
6:26hill and am I going to take the
6:28short-term payoff or the instant
6:31gratification or am I going to take the
6:32long-term payoff and take the long-term
6:35now that's basically long-term thinking
6:38and
6:40if you do that it'll change your life
6:41completely it's a very simple thing to
6:43do and it's it's payback as a mince and
6:47you know it'll help you in every way
6:49shape and form there's no real argument
6:50against it so that's a good tip but now
6:53let's talk about some more advanced
6:55stuff to do with time especially time in
6:57the context of business strategy and in
7:00making decisions within your business so
7:04one thing I see with business owners and
7:07entrepreneurs and CEOs is they are very
7:11bad from number one is that they don't
7:13understand like the long term thing
7:17right which is so simple it's like
7:19elementary stuff and to drive that point
7:23home even more there's actually this
7:24psychological experiment that's well
7:27documented you can look it up and it's
7:30called the marshmallow experiment and
7:31basically what they did is they got a
7:35group of children together young
7:36children like four or five years old or
7:38something and they presented them with
7:40two options option one was to have one
7:43marshmallow and you could eat it right
7:46now an option number two was you could
7:50get two marshmallows if you waited for a
7:54period of time and what happened is you
7:58know a lot of kids most kids they just
8:00chose the one marshmallow right now in a
8:02real small group of kids they chose to
8:06delay that and they chose to get two
8:09marshmallows after a period of time now
8:11what's fascinating here is two things
8:14first thing is that most people chose
8:17the instant gratification which I'm
8:19totally not surprised at I mean just go
8:21look outside your front door and you'll
8:23see this it's privileged everywhere and
8:26but the second thing is is the more
8:28interesting thing and that is that they
8:32tracked these children over the course
8:35of their life and they measured them in
8:38terms of success not just financially
8:41but in the light their health their
8:46income their happiness their like family
8:50their family life and
8:53their fitness and their everything so
8:56they tracked them on a basket of metrics
8:58which together represents like success
9:01which i think is quite accurate you know
9:03they weren't just measuring them on
9:04wealth because obviously there's more
9:06things to success than just wealth right
9:08so if you're thinking that they had a
9:11basket of things and that P the children
9:14that the children that delayed the
9:17gratification and chose to wait some
9:19time before getting to marshmallows they
9:21did better in life way better and the
9:25kids that went for the instant
9:26gratification and then one marshmallow
9:27now they didn't do so well and so this
9:31is this thing is true and it's true for
9:35everything it's one of those universal
9:36laws you know like it's it's not just
9:39something that applies to business it's
9:40not just something that applies to how
9:42for your apply it applies to everything
9:44literally everything and so if you just
9:46build this one thing into your into your
9:49worldview and your you know your
9:52heuristics of making decisions then it
9:55can't like you're going to have a bit of
9:57life so make it a priority and do it but
10:01like I said earlier the the second thing
10:03I wanted to talk to you about was time
10:06in the context of business and really
10:11the thing that I see people that are
10:13terrible at like CEOs entrepreneurs
10:15business owners and I'm gonna draw this
10:18on the whiteboard is it's something
10:23called second just make sure you can see
10:27this second-order consequences all right
10:39so you can see there so this is
10:41something that nobody understands in
10:44actually I shouldn't say nobody because
10:45obviously some people understand this
10:47thing but almost nobody by 99.9 percent
10:50right they do not understand this even
10:52business owners who are making money
10:54they don't understand this and if you
10:57don't know what a second-order
10:57consequences then you obviously don't
10:59know what it is right so you should pay
11:01attention right now if that's you and
11:04what seeking order consequences are
11:06is you know when we make a choice or a
11:09decision there is you know the things
11:14happen things change right and so there
11:18but those decisions like those you know
11:22those actions they create reactions and
11:25then those reactions create actions
11:28which create reactions and it keeps
11:31going
11:31all right keeps going overtime and it
11:35feeds back on itself and it goes
11:36exponential all right
11:38and so this not only not only is this
11:41second-order consequences but there is
11:43third order consequences for thought of
11:46consequences for thought of consequences
11:48all the way like to infinity basically
11:50but most people and especially actually
11:56it's it's most people in everything if
11:58there are human they're doing this and
12:01well if they're human they don't know
12:02what this is and they're making this
12:03mistake and so most people they only
12:07think about the first-order consequence
12:09because they're it's just the easy thing
12:10to see all right and so what this is is
12:15they may give you an example let's say
12:18you know I want to buy a 42 inch TV and
12:22I don't have enough money for it and so
12:25I buy it using debt at a high interest
12:28rate because my credit rating sucks
12:29because I've been doing this sort of
12:32dumb for four years and I haven't
12:34learned my lesson right and so let's say
12:38buy this TV and you think oh it's not
12:40that bad I just got some interest
12:41payments like that's all you can see as
12:43the as the first-order consequence but
12:46that comes and creates something else so
12:50now that you've got this TV in your
12:51house
12:52it's not only is it bad that you've
12:54spent money you didn't have and that
12:57you're now in debt and you're going to
12:58have to face that debt in the future but
13:01now you have this TV in your house and
13:04in order to get any sort of satisfaction
13:07from this TV you just pour you just
13:09purchased you're gonna have to watch
13:10this TV and so now you're watching this
13:13TV and now you're wasting your time and
13:15first of all you already wasted your
13:18money that you didn't have
13:20that you're paying ridiculous amounts of
13:22interest on but now you're wasting your
13:25time watching this damn thing right so
13:27let's say first decision here at this
13:31block in the chain let's say here we buy
13:36TV with debt right now the second order
13:43consequence is that I'm going to be
13:46watching TV and here I'm wasting time
13:52now what's going to happen is now that
14:01I'm watching TV wasting time and I'm in
14:03debt which already is bad now what I've
14:06done is I've trained myself
14:07psychologically to be lazy and now
14:12what's going to happen is whenever I
14:14come face to face with some hard work or
14:17some challenges or something I'm going
14:19to be more disposed to to taking the
14:23lazy path and just forgetting about it
14:25all right and so now the third order
14:28consequence is that pattern of lazy
14:33behavior repeats over time right and so
14:45already you can see that a small
14:48decision that we thought wasn't that bad
14:50because we're just gonna have to pay a
14:52bit of interest right and we might think
14:53oh well it doesn't matter because I
14:55might be getting a pay rise next year or
14:57something like that right so most people
14:59they just look at this they just look at
15:01the first-order consequence but they
15:05just they can't even see the second one
15:07which is sorry it's a bit wonky here
15:09they can't even see the second one which
15:12is that they're gonna have to watch the
15:13TV and waste time and they can't see the
15:14third one that this pattern of behavior
15:16is going to become their new mode of
15:17operation and it's going to ruin them
15:20and also it's going to become their new
15:22mode of operation when faced with the
15:25decision where it looks like this where
15:27if we can have a better today at the
15:30cost of tomorrow then we should go with
15:32the better today at the cost of
15:33tomorrow's
15:34so you know in so many different ways
15:36this one thing that looks trivial and
15:38small screws us royally and you know I
15:42see people do this all the time I see
15:45people do it with like fancy cars I see
15:48people do it to themselves with like
15:51choosing to fly on private jets and you
15:54know if you if you choose to fly on
15:55private jets and you've got more than
15:58100 million dollars in your bank account
15:59sure go go for it right but you know if
16:02you if you have less than like a hundred
16:05million dollars in your bank account and
16:06you're constantly flying on private jets
16:09you're you're an idiot because not only
16:13is that a waste of money is a poor use
16:15of money but second of all you're now
16:17training yourself to what to like expect
16:21this level of luxury and if you expect
16:25this level of luxury it's very hard to
16:26go back all right it's hard now to go
16:28back to it so you're probably going to
16:29continue this habit of behavior even
16:31when it's probably not the best best
16:33thing for you to be doing even if your
16:35company starts making less and you start
16:37having less money you're still going to
16:39keep up this pattern of behavior and you
16:42see people get into these vicious loops
16:43all the time like you know they keep
16:45buying cars and they keep upgrading
16:47their cars or they keep buying clothes
16:49and they have to keep buying more
16:51clothes and you see it with you know
16:54it's you see it with addictions to like
16:56people who drink alcohol there has to be
16:58stronger alcohol more often more
17:00frequent and you see it with social
17:03media you see it with everything right
17:05and it's it has a really harsh
17:09consequence and most people can't see
17:12past to just the first thing and in
17:15business you need to get real good at
17:16spotting this and to really drive this
17:19point home you know I guess that the
17:22example there about the 42 inch TV
17:23there's more of a personal thing than a
17:25business things let me give you a
17:27business example and if you want to see
17:30like stupidity on a mass scale and not
17:35understanding second-order consequences
17:36in short-term versus long-term thinking
17:38on a mass scale then you need to look at
17:41the story of Valiant VA l IA NT it was a
17:45public company
17:47and it was like the hottest company in
17:49the world until it wasn't in a failed
17:52like in a big blowup kind of explosion
17:57way and the story is real fascinating
17:59and so what I'll tell you what real
18:01quick I will just synthesize it and give
18:03it to you and in like his shorter amount
18:06of time as I possibly can but the sky
18:10like informed this company called
18:12valiant it was a public company on the
18:13stock market and what his strategy was
18:17was to buy up pharmaceutical companies
18:21so like companies that were making drugs
18:23and what he noticed is that
18:26pharmaceutical companies like they were
18:29huge most of their expense goes into R&D
18:31research and development and what is R&D
18:33well it's basically just like a bunch of
18:35scientists in a laboratory experimenting
18:38and looking at new possible
18:41you know mutations of their existing
18:44drugs improvements to them or
18:46potentially completely new lines of
18:49drugs right and a lot of R&D is
18:52unsuccessful like a lot of R&D funds in
18:55as Andy's very expensive a lot of it
18:56goes to waste because you know
18:59experimentation is is like an
19:03inseparable twin from failure and so you
19:06know if you're going to invent something
19:07you're going to fail a lot those two
19:08come together but it's worth it in the
19:11long term and so what this to did is he
19:15looked at these pharmaceutical companies
19:17and he thought well if I buy these
19:18pharmaceutical companies and I just cut
19:21off the R&D department I'll save like 40
19:25percent on expenses their forty percent
19:28i save will go straight to the bottom
19:30line in terms of net profit and then
19:33I'll be making way more money and I'll
19:36just roll all of these different
19:38pharmaceutical companies into my
19:40investment vehicle core Valiant and cut
19:43off R&D and all of them and then I'll
19:45have spectacular earnings and net
19:47profits that investors will love because
19:49you know investors are like drug addicts
19:51they they love net profits and they love
19:54growth and they love earnings and so if
19:57you keep showing them that like the
20:00keep showing you love in the form of a
20:02highest higher stock price and so that
20:05was a strategy and so he did that he
20:08started buying up all of these
20:10pharmaceutical companies rolling them
20:12into valiant his vehicle and then
20:14cutting off R&D departments saving huge
20:16amounts of money in terms of cutting
20:19expenses net profits went through the
20:22roof and then and like his his his
20:26financial statements in his his earnings
20:28reports they looked spectacular and so
20:32this guy became like that God of of
20:34business and he got a private jet and
20:36then he started sitting front side and
20:39basketball games and he basically became
20:42a celebrity and he became famous not for
20:46really inventing drugs but for basically
20:49just having a fancy private jet and
20:53knowing a lot of celebrities and sitting
20:55courtside at all sorts of basketball
20:57games which is kind of funny
20:59whenever CEO is known for that you know
21:01they're about to fail and so he
21:05continued to do this and it worked for a
21:07few years I think it worked for like
21:09three or four years right and then what
21:11happens so then all of a sudden it just
21:16collapsed the whole thing blew up
21:18spectacularly and just went bankrupt and
21:22investors lost everything all right
21:24why so just think to yourself for a
21:28moment like why would that have happened
21:29where did this dude go wrong and this is
21:34short-term thinking and not
21:35understanding second order third order
21:38consequences right like and it's not
21:41that hard
21:41to think about this so if you cut off
21:45the R&D departments it is obvious that
21:48today you're going to make more money
21:50that how could you die oh that's obvious
21:54you know if we cut 40% of our expenses
21:57and our income remains the same we are
21:59going to make a lot more profit then
22:02investors are going to see that and
22:03think we're doing something right
22:05and we're going to make a lot of money
22:07but what's going to happen with time you
22:10know time is the thing people don't
22:12understand they don't account for is the
22:13variable that
22:14blows people's minds but like does R&D
22:17not have a purpose why why would all of
22:20these pharmaceutical companies have an
22:22R&D department if it was if it was not
22:25necessary like why do they have
22:28scientists and so R&D typically costs a
22:33lot of money for a long period of time
22:34and most of it goes to waste but every
22:38now and then generally after a few years
22:39or whatever there's one there's a
22:41breakthrough and that breakthrough is
22:43typically a new drug a new like
22:45revolution and that then is like the new
22:50product that the pharmaceutical company
22:51is able to release and they make a
22:53spectacular amounts of money from it and
22:55they're able to beat their competition
22:58and just just dominate that is the
23:01purpose of R&D and the short term R&D
23:03looks like a waste and the long term R&D
23:05is is the smartest thing in the world
23:07and so what happened with time is this
23:11like they had no new products and with
23:15this time when they had new product when
23:19they had no new products then it's
23:22pretty obvious what's going to happen
23:23here and so sorry I've just had to let
23:29that cat out this is the sort of
23:32professional production value you get
23:35when you watch my youtube channel just
23:38might get up in the middle of it and let
23:40out a cat and so back to where we were
23:45was you know what happened with Valiant
23:48is they didn't come up with new products
23:52obviously because they spent no money in
23:53R&D they had no scientists then the
23:56competitors were spending money on R&D
23:57and they had scientists they came up
23:59with time with new drugs better drugs
24:03then what valiant head in its companies
24:05and so the invariant couldn't keep up
24:08all the customers were buying other
24:09stuff they stopped buying valiant stuff
24:11and then valiant collapsed and the
24:15competitors dominated them and so this
24:19is just a really good case study in a
24:21really good lesson in long-term thinking
24:23and second
24:23consequences because that dude who
24:26purchased Valiant well sorry the dude
24:28who ran valiant and purchased all of
24:30these different companies and cut off
24:31their own D departments
24:32he was only thinking about the
24:34short-term and he wasn't thinking about
24:37second order third order consequences
24:39he was only thinking about first order
24:41first order he makes more money he looks
24:43like a god second order he fails and
24:47looks like an idiot and you know he
24:50didn't see that one and it got him it
24:53flew back around and bit him in the face
24:55and I see this happen to people and
24:57business all the time and I know because
25:00I have overtaken many of them and what I
25:03see that's common among all of these
25:06people which generally fall behind is
25:08bad decision-making when it comes to
25:12time and second order consequences and
25:14what these people do is they typically
25:16once they get good and they're winning
25:18they start spending a lot of money and
25:21when they start spending a lot of money
25:23they now have all of these toys and now
25:26they've got these toys they need to use
25:28these toys and now that they're rich
25:30they're famous and or semi famous and
25:34now they want to hang out and talk about
25:37how cool and famous and rich they're and
25:39how many new toys they've got right and
25:41then very quickly this person has
25:44forgotten what actually created all of
25:47the stuff right they forget that the
25:49hard work and the frugality and working
25:52on their craft is the original like
25:54source thing that created the wealth
25:57that created the things they could buy
26:00that created the fame that created the
26:02ability to talk about how cool they were
26:03they forget about what created it and
26:05now they spend all of your time screwing
26:08around with all of these things that are
26:10just a like fifth order consequence
26:12byproduct of this original thing and so
26:15now the original thing goes away and now
26:19they're busy like neglecting the
26:21original thing focusing on talking about
26:24how cool their and then it disappears
26:26and then they can no longer talk about
26:27how cool their because it's gone and
26:29this happens all the time like this is a
26:32pattern that exists through history
26:33since the beginning of time it's how
26:36like
26:38Empires and civilizations fall
26:41it's how like great companies fall it's
26:45basically how everyone makes a
26:49spectacular mistake and blows stuff up
26:51and so you can never forget this you can
26:54never forget like what the main thing is
26:56you must keep the main thing the main
26:58thing and the main thing is always going
27:00to be in business the product or the
27:04service that you're delivering to your
27:06customers or if you're an athlete the
27:08main things going to be playing
27:09basketball and being the best winning
27:10right and so this happened to Michael
27:13Jordan - I've watched pretty much all of
27:17his documentaries they're great the one
27:19I'm going to reference right now is
27:20called Michael Jordan to the max it's
27:24really good you should watch it and he
27:28said that like in one point of his
27:30career he got really who's the best in
27:32the world right and he had all of these
27:34sponsorships so he was doing all of
27:36these ads getting all of these photos
27:37with all of these products going out and
27:39doing all of this cool stuff because
27:40everyone who was famous in the world
27:42wanted to hang out with them and very
27:46quickly he just got overloaded he it
27:49just became too chaotic and he started
27:52making errors in his game and he sat
27:55down and he thought to himself like you
27:58know all of these things they're
27:59byproducts of being the best and if I
28:03let these byproducts distract me from
28:04the thing that created these byproducts
28:06they're not only am I going to lose and
28:08not be the best but then everything that
28:11I'm distracted by is going to evaporate
28:13and disappear - so he was like this is a
28:15really dangerous trap and so he decided
28:18at that moment to just black out like
28:22completely shut everything off he can't
28:24solve all of his sponsorships he stopped
28:26doing media interviews everything he
28:29just said no - everyone told his agent I
28:31don't want to talk to anyone about
28:32anything I don't want to do any
28:33sponsorships I don't care how much money
28:34they're paying no and then he just shut
28:38off everything and then just focused on
28:41the game and then he climbed back up to
28:43be the bass player of all time and you
28:45know he was one of the smart ones he was
28:47able to see the second-order
28:49consequences and
28:50he was able to analyze the time variable
28:53and his decisions and you know he was
28:56he's an example of doing it right right
28:59there's more examples of people doing it
29:00wrong like the Valiants example or that
29:03dude I was talking about before who
29:04bought a 42 inch TV was dead alright and
29:08I'll tell you a funny story about this
29:10too when ever I move into a new place I
29:14just moved into this place here in LA it
29:17happened when I was in New York - I get
29:19like a new internet connection right and
29:21I typically get like the fastest best
29:24one I can because engineers pretty
29:25important ingredient for what I do and
29:28then pretty much all the time what comes
29:31with that fast internet connection is
29:33free cable connection to TV right with
29:37like a whole bunch of channels and the
29:39landline and all of this crap and
29:41whenever I talked to the person on the
29:43phone that works at the company like
29:45what is it like Verizon or whatever this
29:49lady's like sir you know that if you get
29:53cable it's free you get like 250
29:56channels or whatever maybe it's two and
29:57a half thousand channels I don't know
29:59and you know what you get it for free
30:01sir and also you get a landline for free
30:03she was like it would be stupid not to
30:06get this free cable connection and this
30:09free landline and I'm like look lady you
30:12don't understand it's not free I don't
30:14want this do not put this thing in my
30:16house and you know what in fact you
30:18couldn't pay me to hook that cable up to
30:20my TV I was like you couldn't pay me to
30:23talk it in and she was like sue I don't
30:26think you understand it's free like why
30:29would you not get it and this is I was
30:31playing with her just to see because
30:32there's no way in hell I'm hooking their
30:34cable up to my TV even if you paid me to
30:37do it not doing it why because I don't
30:41want to create any sort of thing in my
30:43house that is going to distract me and
30:45suck my time into something that isn't
30:47going to have like positive benefits
30:50it's thinking about the second third
30:52order consequences you know sure it's
30:55free to hook up this TV in my house to
30:56cable but what isn't free is wasting
31:00finite hours of my life in my existence
31:03watching TV right that is a cost and so
31:07the lady couldn't see that and so this
31:10thing is everywhere once you learn to
31:11see it it'll change your life
31:13and you'll get way better at everything
31:14seriously there's not even an
31:17exaggeration it's when you get good at
31:20this stuff you get good at life and so
31:23that's why I don't even have a TV in my
31:25house when I move to this place in LA I
31:27went there was all of these TVs every I
31:29think there was five you know Americans
31:31are crazy and it also had cable hooked
31:34up to all five and so what I did on like
31:36the second day we were here I got a
31:38socket set and went around the house and
31:39I took all of them down I'm not kidding
31:41you I took all the TVs off the wall with
31:43like a ratchet and then I win and put
31:45them all in a closet and just close the
31:50door and I was like good riddance to
31:51these things and then I disconnected the
31:53cable and then I got the landlines that
31:55were plugged in and I just unplugged the
31:57landline phones and just put them on the
31:58closet as well I just got rid of it
32:00eliminated it because the last thing I
32:02wanted to do was get distracted even for
32:04a minute and spend ten minutes or an
32:06hour watching a stupid TV or like having
32:11the cable hooked up it's temptations
32:12that are going to lead you to dumb stuff
32:14so get rid of them right and so that's
32:18like thinking of the second third or the
32:20consequences and I challenge you to do
32:23this for yourself right now like think
32:24about not just what will happen if you
32:27make this decision and take the section
32:29but if you take the section what is that
32:33going to automatically create and then
32:35what's that automatically going to
32:37create and what's this chain what is the
32:39chain of events that's going to unfold
32:40and start like developing and a lot of
32:45people don't understand this one like it
32:47you I see it all the time with books too
32:49and online courses and trying to do
32:51anything meaningful but if you read a
32:53book today you're not gonna see money
32:56appear in your bank account tomorrow and
32:58so people can't get the hit around there
33:00they're like why would I pay money to do
33:03a course why would I buy a book and then
33:06read it if I'm not going to make any
33:08money and they just don't understand
33:12like they're like why would I pay money
33:14and then have to spend
33:16I'm doing something that isn't really
33:18fun to then not even make any money
33:22immediately and it's because you know
33:24these people have been conditioned to
33:26doing work by the hour or whatever and
33:29then getting paid so it's the instant
33:31feedback interesting gratification and
33:33when work presents itself and they have
33:36to pay to do work they're like well this
33:37looks weird scam you know like if I'm
33:40gonna have to pay to do work scam
33:42because I know what happens in life is I
33:45do work to get paid so if they see the
33:48inverse of that it's obvious why blows
33:51the little mind and then when they see
33:55to that they're gonna have to pay to do
33:57work that then they don't get paid for
33:59immediately they're like this an
34:01ultimate scam right but these people
34:03can't think properly and so sure that is
34:06true in the short term but what happens
34:08in the long term well you get smart what
34:11happens when you smile well then you
34:13make better decisions what happens when
34:14you make better decisions well you have
34:16a bit of life and you have more fun and
34:19you make more money because all you need
34:22to do to make more money than the
34:23average person is be smarter than the
34:25average person and therefore make better
34:27decisions than the average person so in
34:29order to achieve all of these things all
34:31we have to do is have something on the
34:35positive side that the average person
34:37does not have and one of the easiest
34:40ones of those to obtain is the
34:42perception and an understanding of time
34:46and decision-making right so long-term
34:51thinking second-order consequences this
34:55is how you do really good and I'll give
35:00you something that's helped me a lot
35:03I'll destroy him
35:09it's whenever I'm thinking about a
35:11decision right I will think of like its
35:15effect horizon and like an effect
35:23horizon is basically you know let's say
35:26we have this this chart here and across
35:29here we have time on the x-axis and then
35:33let's say here we have like upside and
35:42what I mean by up sight is it's
35:45basically like positive results so that
35:48could be how Fitness relationships it
35:50could be financial it could be improved
35:53product it could be anything right
35:54anything positive and then down here the
35:58inverse of this we have downside and so
36:04like an example of down so I could be
36:05dead an example of upside could be
36:07profit right in time well that could be
36:11like down here it could be like you know
36:15today this hour this minute the shorter
36:18we get and the longer we get along this
36:20axis we're gonna have like a month a
36:23year five years whatever right so you
36:26understand this simple model now
36:28whenever you're making a decision you
36:30want to just mentally map this and well
36:32this is what I do in my mind whenever I
36:34think about a decision it just happens
36:37automatically because this has been
36:38practiced and trained but I'm looking at
36:42a decision and I want to look at what
36:43happens if I make this if I choose this
36:46option or that option right and if
36:48there's a decision with more than one
36:49option you want to really boil it down
36:51to its core options like which should
36:56you know most of the time is like two
36:57and you know if you've got more than
37:01five options then you haven't broken the
37:03decision down into a small enough piece
37:05and you've got you're looking at a macro
37:08problem and you need to break the macro
37:10one into a micro piece and work on all
37:12the micros and in the some of the micro
37:14uses the macro which will give you your
37:15decision for that and so that's what
37:18happens if you can't partition the the
37:20thing the
37:21session into something that has less
37:23than or equal to five options right and
37:25so when you're looking at this what you
37:29want to do is let's say you've got
37:31option a and it has immediate upside and
37:36then with in the short term and then
37:39with time it has like catastrophic
37:42downside like for for a long time right
37:46net1 got pretty long so doesn't do that
37:50and then this is option a by the way and
37:55this one looks like a typical instant
37:58gratification debt stupid decision right
38:02have you been it today get the 24 let me
38:04get the 42 inch LCD TV and the xbox
38:07complete with lots of games start
38:10playing it today satisfaction is big
38:13immediately about what happens with time
38:15as I get really screwed and fail with
38:17everything and then option B is to would
38:22look like this they'd say it has
38:24immediate downside but then it has
38:29long-term upside alright we'll call this
38:32one option B now typically two options
38:36that are going to be the inverse of each
38:37other are going to look like this
38:39they're basically going to be mirror
38:40reflections of each other so if one has
38:42this sort of what do we call this
38:45pattern if this one is this sort of
38:47pattern then it's obvious that the
38:49inverse of this is going to have the
38:50inverse pattern which is going to look
38:52like a mirror reflection on the other
38:54side and so what is the opposite of
38:57buying a 42 inch TV on dear today well
38:59it would probably be not buying that TV
39:02and instead starting to read some books
39:07right and this one has immediate
39:11downside in the in the perspective of
39:15the person making the decision because
39:17it's not very fun you know I'd admit it
39:20would be more fun for me to not to read
39:24a book and to just play xbox with my
39:27friends all day like today that would be
39:30more fun and that I don't think that
39:34ever changes like I think
39:35some people think that people who are
39:37successful they're in business and they
39:39seem to have more discipline that
39:41they're just weird people that don't
39:42enjoy the same things that other people
39:44enjoy it's not true like you know I I
39:47prefer to eat if we're talking strictly
39:50in the short term I'd prefer to eat a
39:51burger and drink a full sugar rear D
39:55coke and a chocolate bar in some ice
39:57cream and just play xbox all day like
40:00this sounds like a pretty fun day in the
40:02short term but what gets the people who
40:05don't make those decisions is the
40:07longer-term thinking didn't they think
40:09about it in terms of the long term and
40:10they're like I can't do that I cannot do
40:14that why because I'll get fat I'll get
40:16lazy and I will become broke and then I
40:20won't be able to do anything because I
40:22psychologically ruined myself and hooked
40:24myself on to instant gratification and I
40:27just can't do it all right and so that's
40:31why some people choose the other things
40:33it's not that they don't enjoy it they
40:37do but they are more long-term thinkers
40:42and second-order consequence thinkers
40:44than the people who choose to do that
40:46thing in so let's say you choose not to
40:49buy the 42 inch TV on date and you
40:51instead use money that you do have so
40:53you don't go into any did to buy some
40:56books and you start reading them so it's
40:57not as fun today so there's some
40:58downside but with time you get smaller
41:01you start making better decisions you
41:03might start a business you might start
41:05buying some courses you might start you
41:07know creating a really good product or
41:09service helping customers adding value
41:11to your market and then making money
41:13making more money and all of the stuff
41:15starts exponentially compounding on
41:17itself because as the chain of events
41:20like fires down like this right so let's
41:26say these are chains of events and we've
41:29got first second third fourth six order
41:32consequences right it's not linear so
41:36you might think that oh if you just if
41:40you just do the dumb stuff up until this
41:42point of time then you're only they're
41:44far behind it doesn't work like that
41:48at each node in this chain down here
41:50there is feedback right and it looks
41:53like this it comes back and it feeds
41:55back round on itself and it has an
41:57amplifier of like let's say this is
42:00going to you know B ^ - alright and so
42:03it's got a feedback mechanism with an
42:05amplification and that's going to come
42:07back round and boost that and so you
42:10know let's say you have a a one here and
42:12then as soon as you make that decision
42:14you get out of two and then you know
42:19let's say you get another one here
42:20that's not now three that's not how it
42:23works this thing now is going to start
42:26blowing up now you're going to get to
42:27like a six and then this is going to
42:29feed back round again and it's going to
42:32keep feeding back around and keep
42:33feeding back around and keep feeding
42:35back around and now it's going to go
42:37like 18 and it's say now it's going to
42:40go over 36 and then they say now it's
42:43going to go 78 and then 116 and then 3
42:4734 right it's now going exponential and
42:51that's why if you look at successful
42:53people there it's never linear you know
42:57it's always exponential and what I mean
42:59by that is your C born just like that
43:02and if you don't believe me just Google
43:05Warren Buffett's Warren Buffett's net
43:09worth over time all right google that
43:12and I'll tell you what I'll actually
43:13include the image the PDF beneath this
43:16video in the resources section for
43:18download just so that you you know if
43:21you're a lazy person you can just click
43:23the link and have a look but you'll see
43:25that his Warren Buffett most of his net
43:28worth and most of his wealth was
43:29accumulated exponentially rapidly as a
43:33later point in time because of the way
43:36time works and so once you understand
43:39this like a small decision today by
43:42reading a book it's going to not be as
43:45fun as getting into debt and buying 42
43:48inch TV and playing xbox right
43:50you're also not gonna make any money
43:52today but with time it's gonna grow
43:55exponentially and before you know it
43:56you're rich and you're making a lot of
43:58money and having a lot of fun in your
43:59waste matter right that's how it
44:01happened
44:02and once you learn to understand this
44:04and see it this way you'll make better
44:06decisions and so you've just got to
44:08practice it you know like I wasn't born
44:10doing this like no one is and I was
44:15actually I made the the dumb mistakes
44:18and that's actually how I learned I
44:21would do things I didn't think about a
44:2442-inch tv but I definitely did some
44:26dumb stuff like it's been a lot of money
44:28on alcohol and I would buy fast food and
44:33you know I would buy like a fancy car
44:37like a Ferrari instead of like I'd look
44:40at money and I'd be like well I could
44:41buy a fancy car and look real cool like
44:43a Ferrari or I could invest that money
44:48back in my business hire some talented
44:49people if I do that then we're gonna do
44:51better make more money and then I could
44:53buy more cars if I wanted but why would
44:54I do that I would just put it back in
44:56and do it again and keep getting bit a
44:57bit a bit a bit better and then you
44:59don't even care about cars anymore
45:00because you can buy like a car like a
45:02Ferrari in a day and so it's no longer
45:03cool alright and so that's what happens
45:07when you think about how this thing
45:08works but I wasn't that smart
45:11I bought the Ferrari and so and I didn't
45:14invest it my business and then I had to
45:16pay taxes and then drive this stupid
45:18thing and don't get me wrong it was fun
45:21but thinking about it now if I didn't do
45:24that no he took the smiler path I'd be
45:25way further ahead and as soon as I
45:27learned not to take that Dumber path and
45:29take this motor path I started getting
45:31way further ahead right so I wasn't born
45:34like this
45:34nobody is I actually learned by making
45:38the wrong by doing the wrong thing and
45:40then learning what was right later
45:42but by watching this video and listening
45:44to this today then you'll be able to do
45:46the right thing and understand how time
45:49works how affect horizons work how time
45:53has like a logarithmic exponential
45:56function it's not linear and how there's
45:59generally two options a and B they're
46:02the end they're typically the inverse of
46:04each other one will have immediate
46:06upside terrible shocking long-term
46:09downside the other will have the inverse
46:10which is which will have short-term
46:14downside in long
46:15awesome upside which is the good
46:17decision and option a is what we call
46:20the motorized wheelchair path this makes
46:27it simple and then option B is the the
46:33hill and you generally always come into
46:37these two you always face these
46:38decisions all the time and you always
46:40just got access to yourself to make it
46:41simple forget about this logarithmic
46:42exponential stuff because this might
46:45blow some people's minds if they haven't
46:46looked at these sorts of things before
46:48so just think it think about it like
46:50this we all share path or the hill take
46:53the hill and if you keep taking hills
46:56then you'll learn to like the hills and
46:58when you learn to like the hills then
47:00you'll kick everyone's ass because
47:01they're all afraid of the hill in doing
47:03whatever they can to avoid it and you
47:05just want to eat the hill and when you
47:07start doing this you'll start winning
47:09big time and your life will be better
47:11and you'll be having wet much more fun
47:12so that's pretty much today's lesson
47:14think about the long term think about
47:18how time works and how its exponential
47:20and take the hill not the wheelchair
47:24path and think of the second third
47:26fourth order consequences and don't be
47:28stupid like the guy who bought the
47:2942-inch tv on debt or the person who
47:33started valiant and cut off the R&D
47:36department and then blew up all right
47:38don't do those things do the other thing
47:40instead and if you liked this video then
47:43just click that like button also let me
47:47know what you thought what you think in
47:48the comment section below leave me
47:50something neat give me some feedback and
47:51click that subscribe button
47:53I release low-production videos like
47:57this but with high quality content once
48:00per week and you won't see fancy edits
48:02and you won't see you know like any real
48:06high production stuff you won't see
48:08actors or anything or really anything
48:10fancy at all it's just hot I'm holding
48:13my iPhone and I stopped in the middle of
48:15this video to let my cat out so won't be
48:18high production but I promise I'll teach
48:21you stuff that will actually make your
48:22life better so if you like this video
48:24click that subscribe button and thanks
48:26for watching and I'll see you in
48:28the next one next week