#141 Kunal Shah: Core Human Motivations
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You'll rarely meet successful people who are not insightful. I believe that insight is the smallest unit of truth that is actionable. And therefore, people who operate in the currency of insights tend to be generally more successful, at least in business. Welcome to the Knowledge Project Podcast. I'm your host, Shane Parrish.

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Today I'm speaking with Kunal Shah. This is one of the most fascinating conversations I've ever had. We talk about the lessons he's learned growing up in a family business and how that helps him today, why he dropped out of an MBA, decision making, the differences between American and Indian culture, including the living room effect, and so, so much more. While the conversation seems long, the wisdom per word ratio is off the charts.

It's time to listen and learn.

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You grew up in a business family, and I'm curious as to what lessons you learned through that. So in India, we have a deep-rooted caste system where we had four castes. And one of the castes of the four castes is the business caste. And for multiple generations,

Everybody in that has only done business, right? It's called the Vaisya or the Baniya caste. And for this group of people, jobs is an unusual thing. I think first lesson was they have much lower shame than the other communities. They have very little self-doubt when it comes to being shameless.

I mean, they're very hard to offend. They are okay. And even if you mock them, as long as you are giving them business, they're okay with that.

not many people would be okay with that treatment, right? And makes many business communities not respectable because they're okay to be mocked or have lower dignity or lower status as long as they get the financial upside of it. So I think that's where the status and wealth-driven society's mindset comes in that they are absolutely okay to reduce their status as long as they win the commercial side of the deal. That's one big lesson.

The second piece is just natural understanding of where is the value in everything? Why would somebody pay for it is almost intuitively taught from childhood. You just know what are people really paying for, right? And a natural understanding of which products would have higher gross margins or lower gross margins, right? It's a very...

interesting thing that when you grew up in a business family, they just naturally arrive at summarizing what's the value in everything. And it's sometimes very uncomfortable because I remember going to an MBA school early days to speak and they invited me and I was only interested in knowing the economics of the MBA school and understanding how beautiful that business is. And they find that

but for a business community, they love to break things down to unit economics almost as if it's like a first, like the small talk is unit economics, which is quite interesting. The third lesson is natural need for spotting trends.

So one of the things that is there, I am part of the Gujarati community, which is the business community of India. And they have this greeting when the two business people meet. Normally people say, hey, hello, how are you? What's up? They have one more thing, which is called Shu Nava Juni, which means, hey, what's trending? What's new? What are the new trends? And they share that.

on a more regular basis, which makes them spot new trends and be in businesses that other people would take a long time to enter into because they love the new, new trends, because they believe that the value is going to be where they are less likely to have competition. And they're constantly finding themselves to be at different places. Gujaratis are also the people who have, you will find them in every single country,

Having set up a business because they will keep finding ways to not compete. So you will find them in a remotest African country. There'll be a Gujarati family running a business, multiple generations. You will see them across the planet because they will look for ways to not compete and have a zero-sum mindset. And the last thing is the community benefits.

One of the things I have noticed in Gujarati community is that just like Jewish community is that they offer significantly lower interest rate to people in their community because banks are less likely to underwrite. And obviously this is pre-venture capital to give them loans to say, it's okay. Try to make something out of it and try to return the capital when you can, but at a very low interest rate, just nominal because they love to see more people be successful. And the last lesson was, uh,

constantly having the need to make their community successful by giving them a soft landing if their business fails. Oh, it's okay. Come start doing a job, stabilize and start again.

My dad had a startup that failed. So I had to start working since I was 14 or 15. My first job was a data entry operator, which made like $30 a month kind of a salary when I started. There's always this thing that, okay, you can start do the job right now, stabilize the family and then you can start some business. Like there is no shame that, oh, you are just helping the family settle down from a financial setback that the family went through.

And I have seen within the communities, people going all in, getting wiped out, becoming big in one lifetime again and again. And there is less shame attached to failure because, oh, it's business. And it's fascinating. Like I have seen so many stories. Like I'll tell you about one particular individual. His name is Pranchan Roychan. He's the founder of Bombay Stock Exchange. And very few people in India know about this guy.

The reason people don't know about this guy because he once upon a time was the richest guy in India. He still probably holds the Guinness Book of World Records for doing the largest ever trade, single trade adjusted to inflation. It's in his Wikipedia. But he lost all his wealth in trying to do a real estate project that bombed. So there is this guy who comes from nowhere, starts his business below a tree, becomes the wealthiest person.

and gets wiped out and literally like 100% of Indians and Indian businessmen have no clue about this guy. I just researched because there's a huge tower in Bombay, which is made like Big Ben. And I was like, who the hell made this? Because it doesn't have a British name. It is Rajabai tower. So I researched and found out that Rajabai was Premchand Roychand's mom

And he made this clock for her because she could not see for her to hear time. Like look at the flex of the guy that he builds a massive clock in British India with a huge amount of spends by hiring British architects just to flex time.

to the community that I have built a clock because my mom can't see time. That's crazy. I want to go back to the shame thing for a second here. The fear of failure prevents us from trying. Do you feel like we develop this as an adult? Or do you feel like when you're involved in a business at a very young age,

you get exposed to this because you're going to fail. If you're doing anything, you're going to fail and that's okay. And that's part of business. And you just keep going and you keep iterating and you keep trying. Whereas when we become adults and we try something, we don't want to look like an idiot. We're scared to look like an idiot. I think a lot of people who have been bullied and shamed and mocked early in life

develop an unusual superpower to not give a damn about being mocked anymore. Right? It's not surprising if one would say that, hey, Elon, the way you are, were you mocked a lot when you were younger because you were not a normal guy? And one would even say that you look like a guy on the spectrum. And the guy would probably say, yeah, probably true. But he doesn't feel that anymore. Right? So what I noticed is the training of kids, right?

In India, it's very common that people will say, oh, if you do not score well, all your friends will make fun of you. All the relatives will make fun of you. Everybody is going to look down upon you and they will say, shame, shame, right?

And when kids are trained through shaming, it's an effective tool to make them better. The only problem is that it remains as a long-term bug in them that they constantly think about other people's point of view, about how they are, and they constantly think their social status cannot be taken risk. But according to me, you cannot develop substance, net worth, wealth, experience unless you're constantly willing to risk your reputation.

People who can feel extremely okay to risk up to 30-40% of their reputation, wealth, health are the ones who propel further. But a lot of people don't do that because in their head, they will say, I can't even risk 1% of my reputation. Again, going back to the Gujarati communities, I know so many families go bankrupt all the time because going all in is not scary for them.

In fact, I'll tell you an interesting stat. India is a very large country, but the total number of people who have invested in any kind of asset, stock, mutual funds, any of that, is around 30 million, 30-35 million. I would go to the extent of saying that 80-85% of people who are having more than $200 of investment in any of these assets are people from this community. That's how risk-averse the rest of the society is.

compared to these guys. That's fascinating. I want to go back to something you said earlier too, about how business helped you understand what the value of something is, and more importantly, what people were actually paying for. Are there any examples that come to mind when you think of that as a child? So I'll talk about three, four businesses that I did as a kid. And this is all before I had legal age to do anything at all. One was a

I built mixtapes which are downloaded music from the internet and made mixtapes for people on a CD and burnt it and gave it to them. And I used somebody else's computer, somebody else's internet because I had no access to any of these things and I would give them take rate. But I realized that people love the idea of making something personalized.

versus buying something from the store, which is mixtape of somebody else. And the idea of gifting, they were okay to pay three to four X more than the normal mixtape that you would get from the market, because this is made by me. Right. And I was very happily this guy. So what I did is I started going to all the music stores and I said, I will make the mixtapes for your clients. This is my price to you. You can charge whatever you want. And they would make

5x more profit selling my mixtapes than the music label singer. I understand that business was not really legal. But as a 15-year-old, I did not know better. I had to survive. Then I built another business which was, I realized that people put henna to really differentiate themselves in Indian weddings. To really look better than I have the better design on my hands. It's almost like a temporary tattoo that people put.

And I realized that the biggest need people had was design was not enough. The color of henna had to change. So I figured out a way to build black henna, which I learned from some Arabic culture was possible and sold that in the retail stores under a brand that I made when I was 16, 17. And that sold at 10x more price.

than the regular henna because it allowed people to differentiate themselves and have a superior status. So that's another thing I learned that people love to personalize and put a signature and get more value. People love to have higher status than others and pay more value. And they didn't even care about the price because what I did is I said, this is short supply. So

So what I did, I said that I can only supply you two a day. It's a complex process to make it. It wasn't a complex process. I just artificially create scarcity in the market. And I had to learn all of this because I could really not make enough because I was having a full-time job and doing other things. I also started doing some private tuitions for kids to teach multiple subjects, whatever people would send.

And I realized that people love teaching their kids exotic subjects. So I would like teach them Excel and I would not know these subjects. I would ask them, what do you really want to learn? I would learn that previous night and teach them.

Because people love the idea of having special skills given to their kids, which are not available easily in the market. So they were looking for tuition teacher who would say, Oh, can you teach this particular skill? Can you teach that particular skill? And I would learn that. And I realized that I learned the best when I had to teach. So I started doing that a lot. And it was the fastest way to make money. It was a negative cack way of learning in life, right? So I think

A lot of these concepts made me realize that the Indian society was a lot different. And in my career, I did a lot of other businesses which were sold to the US and Western market and Indian market. And I think most Western companies do not understand Asian society. The Maslow's hierarchy of Asian society is completely different to the Western society. But unfortunately, all the marketing textbooks are made in the West and

And then they come to the Indian market and they get shocked on what people really pay for in these markets. And I think, therefore, a lot of Western companies struggle to make monetize from these markets. They can get a lot of DAUs and MAUs from this market, but rarely ARPU from this market because they don't understand what people pay for over here.

So I think that was the big lesson I learned. So one of the biggest shocking thing for me when I'm doing my first trip to the US was I figured that almost everybody's first job paid them an hourly salary. In India, nobody has ever earned an hourly salary in their entire life.

Now, there's a dangerous thing that happens because of that. Nobody understands what's their value per hour. You ask any Indian, if you ever come to India and go to any store, any hotel, any restaurant, ask the guy, what's your salary per hour? Cannot answer that question. Because of that, they take poor decisions with their time and they don't understand the value of time. So products that sell convenience and save you your time are

rarely monetize which monetize a lot in the western society because everybody understands the value of hour because their first job was i don't know ten dollars an hour and then now they are doing well in life but they can still do a math

On approximate basis, now my salary seems to be $500 an hour. And they just get it. And therefore, they take very interesting decisions. They will not try to optimize for a $50 discount on their flight tickets when they are making $500 because they'll say that's not worth my time. No Indian will ever say it's not worth my time. And that's true for many Asian societies. Because value of time as a concept was never taught.

Efficiency is not a DNA you see in Asia. But a flip side I have noticed is that everything that feels soulful in life is inefficient. All the vacations that we find very soulful are inefficient places. The food that we really, really like and find soulful are inefficient to cook.

So I always find these interesting things that maybe soulfulness is a function of chaos and inefficiency, which Western society has figured out how to scale. And let's compare this to our religion now. Hinduism is, I would say, not as scalable as many of the other religions because it's not standardized. There is no one book, no ten rules, no one god, no...

So what do you really scale? It's an open source religion, which people make and built on some principles and tenets, which are constantly evolving and people allowed to tweak it on their own terms. So it's like evolving very, very differently. And therefore, Hinduism is mostly spread through birth, but not through scaling to other societies, because it was not designed, but it is something that you feel more spiritual about and other things. And I think

That's where the nuance comes in that it is impossible to imagine scaling in life without standardizing.

And standardizing is the enemy of soulfulness. Do you think standardization is also sort of the opposite of value creation in some ways from a consumer point of view? I would disagree with that because once you have figured out what is called as PMF, you need to scale it by standardizing it to a great extent, right? And that happens all the time. However,

standardized things are easier to disrupt than non-standardized things. Just the way a standardized religion is easier to disrupt than a non-standardized religion, right? One is hard to scale, one is hard to destroy. Oh, I like that continuum. Go deeper on that, the hard to scale versus hard to destroy. So if you think about hard to scale businesses, let's say this business,

great restaurant. You can't make a chain out of it. It's just impossible, right? Because the guy can't teach all the skills to build five chefs, 10 chefs, right? But they're also hard to destroy because if it really works, there are so many restaurants that works for hundreds of years because they're

They have just perfected that, but they can't build branches. They can't do, but there is a McDonald's which has managed to scale the version, right? Which is very easy to attack and say, hey, it's unhealthy. And guys, we need to move away from this and break the whole concept or the sugary drinks, which have scaled so much. And we can all agree and say that, hey, it may not be healthy for you. And we need to move away from that. But something that is built inefficiently is harder to destroy because what do you destroy?

And how do you destroy it? There is nothing to attack. There is no areas of attack that you can really say that, okay, these are the three points on which we can attack. You can't. So it's slower to take hold and then it's harder to get rid of. Yep. And I think a lot of things that are non-scalable, let's say movie making. Some directors who are really known to make successful movies back to back,

really don't care about timelines. You can't tell, I don't know, the best directors that, oh, we need to ship two movies every two years. They will not do that, right? And I'm not saying that the others who ship one movie a year do not create value, they do.

but they will never create something that is memorable and will create an experience that you will never forget. So I think that's where I would disagree with the idea of value creation happens in both. But the question is that what do you enjoy and what creates a memorable experience? What creates an emotional arousal is rarely through efficient communication.

methods. For example, trips to inefficient places will be more memorable than efficient places by design. Do you think you get rewarded for creating almost like an asymmetry to creating an emotional connection versus a different type of value? People pay or people give you time or money where their core motivations are mostly met or there is a hope for their motivations to be met.

Let's take this example of like, just imagine this. Let's say all of us are on some level of social status in life. Let's say, Shen, you are at level 90, I'm at level 60, somebody is at level 200 and so on and so forth. And let's believe this is true.

Now, products and services are also at some levels in life. For example, I would say Louis Vuitton is at level 160. HBS education is at level 200. Let's imagine these things and let's say fueling your car is at level 30 and so on and so forth. By design, gross margins exist when you allow human beings to jump their social status.

And gross margins disappear when you do not help them increase their social status. For example, I will keep moving to a utility provider as long as they keep offering me lower price as long as the time required and the effort required is the same. The department of your brain that deals with that is the CFO of the brain who's only looking for cost cuts.

But the CMO of your brain is saying that, oh my God, if I crack HBS and I will be able to jump the social status and my income will multifold and therefore it is okay to spend years, time, money to get a chance to get into Ivy League. And therefore Ivy League can keep increasing the gross margin with no trouble because they promise everything.

Or even if they give you hope, let's give example of Vegas right now. Vegas does not assure you that you'll become rich. But the hope lottery, which is a chance of being level 30 jumping to level 200, I'm okay to go all in.

once in a while. Especially poor people get sucked into that a lot more because imagine it's like being on a poker table with a smaller stack. The best strategy you feel to be on the table is to go all in all the time. So when we went through pandemic, I believe that the whole strategy

world had this amygdala hijack moment where they said, oh my God, I have to really survive and I need to take more risky behavior because I think the amygdala probably flared up during this time and therefore risky behavior seems to happen right after crisis because people just go all in.

90-95% of all coins that were traded on all crypto exchanges were not in the top 5, not even the top 10. Because who wants the normal returns?

I just want a chance to just play. And therefore, I think the world is getting more risky. And then obviously, there's a huge correction that will happen, which will kind of flow in the next stage. Because like the Spanish flu, we went through Spanish flu and then the roaring 20s and the Great Depression. We're going to go through those cycles faster now because we are fast forwarding everything. In fact, crisis is almost like a fast forward button to everything.

future and accelerates eventualities because we go through that. But coming back to what I was saying is that value therefore is utility and vanity and chance of increasing social status, which is constantly sucking all the gross margins. And world is seeing a very interesting pattern. All the businesses that are providing utility are losing gross margins to the point of becoming zero and

Because many companies that offer vanity or social status or a chance of dealing with the CMO are making those businesses almost free because you get a chance to make across sell a high gross margin services, right? If you look at Amazon, a bulk of the revenues to be marketplace. But if you see all the avatars of Amazon in different countries, the marketplace revenue was made to be zero. Alibaba chose to not charge the merchants to sell, but they made money on advertising and

and fintech, which are skin in the game businesses, but do not charge you rent per se, because it was easier to disrupt eBay and Amazon in China by saying, oh, it doesn't, you know, commissions if you have to sell on our store. Right. And I think this is where I see a lot of the utility providing businesses,

getting constantly disrupted by somebody, at least in their technology businesses, because you don't need a license to provide utility. You can just offer it. It's not like electricity company that can keep charging you forever because nobody can compete with electricity companies for the networks that they buy. But internet businesses can simply offer utility for free. And Google has mastered this. Many companies have mastered this. I believe the future of SaaS companies is going to be that where the next SaaS company will just say, oh, just use our tool for free.

But by the way, we'll charge you and cross-sell you some lending, some loans, some technology, some value-added services, which could disrupt a lot of utility-creating businesses by design. So I think

Cost to provide utility is dropping and therefore the revenue expectation from that is dropping. And we're going through a very interesting cycle of how business models will evolve. And they all will have to be more skin in the game in nature versus rent seeking that they used to be because nobody could easily compete because the world is getting more and more like APIs now.

And businesses, when they become APIs, it's much easier to plug them into larger ecosystems. Shane, one of the interesting things I always wonder about is that it's very easy to find super apps in Asia, but rarely you find super apps in Western societies. But it's also true for superstars and super companies and conglomerates. So every low-trust society, which is usually non-Western society, a lot of them are low-trust, there is always concentration of trust.

Every low-trust society will have concentration of trust. And when that high-trust entity launches 25 things, people just use it. For example, in India, Tata Group is this concentration of trust. And they can launch a car to a refrigerator to salt to furniture. And people are like, oh, Tata Group, we'll just buy it. I would say 80-85% of Bollywood's revenue comes from 10-15 people.

Again, concentration of trust. And therefore, by the way, we even watch their kids' movies. So nepotism is very rampant in India because you're like, oh, is this guy's son? I trust him to do a good job. I'm not risking my money on this new actor. And therefore, super apps also emerge a lot more over here. I'm like, oh,

CRED is offering this, or they're launching this new service, boom, start using it. But you might be doing completely different business in the past, but people just say, oh, I know these guys. The familiarity creates huge amount of trust over here. And therefore, you see concentration of market cap in fewer and fewer companies. And therefore, I believe Pareto might be extremely skewed in Asia versus West.

and nobody has obviously studied that. I would love to fund a research that shows this, but I do believe that market cap of top companies would be different than what you would observe, at least in each category. Like tech may be an exception, but any other, every other category you'll see huge concentration, revenue from the Bollywood industry, revenue from anything else. It just becomes more and more and more concentrated. And I think that is a,

The reason I think increasing trust in a society, and I've been obviously obsessed with what creates trust. For example, the most simplest answer I've found is trust is natural in societies that have very low diversity of ethnicity. And that is a scary thought because all sorts of

bad behavior have happened in human history because we tried to attack the minority and always try to make society one. But it's unfortunately seems to be true that trust is biological.

And we seem to trust people with common belief systems and ethnicity plays a huge role. So you'll notice an interesting pattern that I think there's a study by some Stanford professor which showed that almost an opposite connection or correlation to number of ethnicities and high trust of a society.

It's not surprising that most societies are not multi-ethnic. As they're becoming more multi-ethnic, the trust is declining. And you see emergence of authoritarian leaders to be much more frequent because all low-trust societies always want somebody with strong backbone to create peace. And that's also the concentration of trust point which seeps in from that, which is important.

constantly repeating itself in many, many themes. We trust people who are like ourselves. And so the more diverse society is, the fewer people that are like us, the more low trust we are in general. Is that a good summary of sort of paraphrasing of what you said? I mean, I think it's a good summary. There's one more nuance. If it becomes too similar, innovation dies.

If it becomes too dissimilar, trust dies. So it seems to be in an interesting spectrum that you can only have a certain mix that keeps driving things to move forward versus become stagnant and boring and too chaotic. I think there is this healthy mix that needs to keep happening. And I don't know what the number is, but it sounds like a scary concept because you're trying to say that, hey, you have to cleanse the society to reorganize itself to have 80-20 on ethnicities, which is a problematic concept to start with.

And then one of the interesting things that you said there is sort of in low trust societies, you sort of have these big companies that get this, this,

almost like trust grant, right? So I can create products in adjacent marketplaces that people will just naturally trust on their own because they don't know who to trust or what to trust. But if like Facebook were to make a car, people would be pretty skeptical. The trust of the platform would not necessarily carry over. Yeah. And it's such a fascinating concept in India because

It just works. And my company, I've seen that. And we are in a fintech business. We launched an e-commerce platform and it just becomes so big in a month's time, much to most people's surprise, including our investors who are mostly from the Western market. They're like focus. Focus is almost a curse in Asian markets.

Oh, go deeper on that. The market is not deep enough to focus on one market and create a large company. The per capita income, the total economy and all of that. So you have to do cross sell more things to the same set of customers. I'll give you some interesting stats about India, which should

mostly not known by most people outside India, less than 6% of urban Indian women have financial income of their own. 94% of them are currently taking care of kids or taking care of the family and not contributing to the labor force, but they're all educated. They are probably undergrad or grads or even higher, but not contributing to the labor force.

Another interesting thing is 95% of all financial products in India are bought by men. Credit cards, car loans, home loans, all investments. India has now nearly $2,000 per capita income annually. But if you remove the top $30 million

families or 30 million individuals, the per capita income would drop to maybe $600. And therefore, a lot of Western markets love to come to India and say, oh, India is the next China. It's not because our per capita income is never going to beat and grow like China. Because before China started becoming affluent, 96% of Chinese urban women were working because of the one child policy, which forced it to become a gender neutral society.

and got them all on the labor force, which never happened in India. Internet is going down. That's a scary trend. Across the region, India has the lowest female participation of labor. Now, the per capita income is not going to grow. And therefore, a lot of foreign companies love to come to India because India is the DAU farm of the world.

All the big internet giants will say, oh, I have 500 million, billion users in India. But if you look at the ARPU and peel the ARPU, it'll be less than a dollar or two. But it's great. Like, for example, if you've got a lot of Indian followers on Twitter, your Twitter follower count will go like crazy. Your monetization quotient might go down.

And I think many companies like Snapchat, Twitter have worked very hard to grow user base in India. Facebook is a classic example. YouTube, my bet would be that it would be probably making less than $2 ARPU annually in India with probably more than 500, 600 million active users in India alone. But they don't mind that because

the global ARPU compensates for the ARPU mix, but the user mix cannot come from anywhere else. And therefore the market will reward, like Netflix made the mistake of coming to India and say, we'll charge you for it.

Nobody is going to pay that. And therefore the projections did not meet because India is a country where you give them freebies and you get all your DAUs you want, you do not get your ARPU. And I think that's the lesson they learned. And I think they are saying now we launch market with advertising. India is perfect for that because value of time is not a concept for us. So we'll watch in India when a series plays on TV of 30 minutes, approximately nine minutes is ads. Oh my gosh. Yeah.

By the way, it used to be more. The government regulated and made it nine minutes. So if people aren't paid hourly, how are they compensated? How does that work? So we have a concept of monthly salary. We're not even paid weekly. So we are paid every month. And everybody thinks in month. Right. It's a flawed concept because they never think about being efficient in life.

Unless you know your salary and hourly basis, you will never really know what the value of time is. One fascinating thing I've seen in India is that you fly in the US and many people are reading books or doing something else. In India, nobody's really reading books. And many of them I've seen a very peculiar behavior in India is they are going to WhatsApp and deleting old pictures so that it can clear up the memory instead of buying a $1 pack that will give them a cloud access.

Like that's the value of time. And these are by the most affluent people in India fly. So there is no way they can spend two hours deleting pictures on WhatsApp, but they do because the value of time is not understood intuitively. And I've seen this all the time in people around me. People who are multimillionaires will work so hard to save $50. It's not even funny.

That's like my parents. They'll drive 45 minutes to save two cents a liter on gasoline. Yeah, but they never worked in a society. They did not grow up in a society where value of time was a concept, right? So I think it's a more phenomena coming from those world and Western society like, oh, we have to be efficient, industrialization, value per hour, productivity, uh,

If I ask 10 people in India what productivity means, I don't think I'll get a good answer. But then if you try to sell something based on sort of saving people time, it's not going to resonate because you have to not only convince them that this is worth doing, you're really trying to change something that's inherent in the culture right now, which I would imagine is slowly changing as wealth becomes more. It's not. It's funny you're saying that, but

India is after the US maybe in the top three markets of SaaS providers, SaaS business software providers, right? On revenue. But none of them have any revenue from the local market because no business pays for software. They're like, oh, I'm just going to hire three more people and they'll just work because they don't understand that software could make them so much more efficient. And, and,

I wouldn't be able to find one company that makes more than $10 million annual revenue by selling software to Indian businesses. That's crazy. Which is scary if you think about it, how large our economy is and how many businesses we have and how internet savvy we are. We are probably most savvy in using smartphones and digital payments. In fact, we...

One of the things that is talked about is India's digital payments have overtaken China and we have like taken off. Most people don't tell you that it took off after government made it free. Money transfer is instant, but nobody makes any money. That's when it took off. When we had charged 1%, 2% MDR for do that, it never took off.

So the thing is that this value of time, understanding credit value of time, and this math of thinking of time, energy, money in one equation is extremely hard. You're on your second big startup now. How did we get here? Walk me through your first and what you're doing right now, and then we'll pick up where we left off here. So my first startup I built from 2010 to 2015, probably the largest exit at that point of time in India. And that startup

Did the following it, it,

It allowed people to recharge their mobile phones. In India, 99% of connections are prepaid, which means they are not on any plan. People refuel their... This is again a low-trust society. Nobody giving credit to each other. So people just top up money and use it and then top up again. But none of that was top up was done online. So I built that platform. But what I did is I allowed people to get some vouchers of retailers for recharging on our platform. It was called FreeCharge.

And it took off in a very big way because again, value of time or I'm getting some incentive. People actually chose our platform versus going to somewhere else. And because it was more efficient, people just shifted in that direction.

What I realized that I was going for the mass market through that, but it was impossible to monetize. They just did not have any money. So after I exited the first company, I spent a bunch of time. I was advising multiple companies, joining the advisory board or board. So one of them was a media company. One of them was Sequoia Capital. I spent a bunch of time understanding investments. And I was also angel investing in left, right, and center. I'm probably an angel investor in maybe 200 plus companies now in India.

What I learned was that everybody was building these businesses by copying Western models.

Free Charge was one of the few original ideas. The reason I built an original company because I had no engineering background. I had no friends who had built tech startups. In fact, I didn't even think I was building a tech startup. I thought I was building a marketing company, which turned out to be one of the largest payments company in India because I had never read TechCrunch in my life. In fact, when Sequoia reached out to me, I'm like, who are these guys? Why are they wasting my time? I had no clue who they were. I ignored their emails for months.

Till somebody told me, hey, they're a really big deal. You need to check them out. I'm like, okay, I went there. And I remember they asking them, so Kunal, what's your CAC? And I had no clue what that word meant. And I think it's a superpower. I think vocabulary is a unique curse that we suffer every word we know. If you don't know these words, we'll probably not suffer them.

And I think what I learned from that experience was that you need to focus on the right market because you can be the greatest founder. If you meet the bad market, you will die. But if you find a market that has huge tailwinds to it, even a mediocre founder will do really, really well. Right. So I think market is like laws of physics. And I saw a very interesting pattern in India was that a lot of smart people were building great companies that wouldn't go nowhere, right?

And I saw some people who are not so smart who do really well consistently and serial entrepreneurs. And I found that as an interesting pattern that I referred to the analogy that I see a lot of dam builders with no idea where rivers exist. So I see them building dams in hope that river will show up, but river never shows up, river exists. Every time they discover that, hey, river is not coming to my dam, instead of moving the dam to river,

They make the dams even more funkier and cooler and with AI and all of that stuff, but the water never comes. And I saw that some people were natural at finding where the rivers of motivation were flowing. And even the mediocre dams were making profits over there versus these fancy dams

which nobody ever used. That's a very sort of like Western idea, right? Build it and they will come. Yeah. It never happens, I think. And it's a great idea to build in Western markets where there are so many rivers and there is such a big economy that even...

Some accidental river flowing through you will make a lot of money. In India, there are no accidental. It's like you're building in desert, right? So you have to make sure you have a desert, like you have to really build the rivers to the right place because there is no unlimited rivers flowing. Nobody was thinking about human motivation because all of our education system in India was not teaching humanities. I accidentally learned humanities because of philosophy, but every single tech founder, India has 100 unicorns,

I would go on to say that I'm the only founder in the 100 Unicorns which has a humanities background. Everybody else is STEM. And another thing in India is that we never had dating culture. So we never learned human motivation through the game of dating as well. So we have extraordinary builders, but we don't know what to build for. And therefore, how many Indian products are used in the West right now? Very few.

But how many products are built in India, which are used in the US, made by US product managers, maybe hundreds and hundreds of thousands of them. How many co-founders of many unicorns in the US are Indians? Probably a lot of them. And this is where I found this to be thinking Indians were very good at cracking unicorns.

an exam that existed versus creating an exam that does not exist. Like everybody knows Indian spends a lot on weddings. Like it's a known thing. People love to go to the Indian weddings and they, they keep hearing this. I'll give you an interesting data point. Like I checked in my office. Most people spent close to six times their annual salary for their wedding. Wow. But zero, zero,

unicorn startups solving wedding problems but that's the scary thing about the market i met a founder who runs us a luggage company a suitcases they built it on the public listed companies and they wanted me to join their board and i'm like okay i'm happy to meet but i'm not joining a traditional business board but i'm happy to have a conversation and and i was just giving them some suggestion they should do something branding on the airport and they're like kunal what are you talking about i'm like yeah you are a suitcase company you should be at the airports like what am i not

saying correct over here he's like Kunal 80 to 83 percent of all suitcases in India are bought for weddings the bride takes new suitcases and goes to the new family there are 4.4 million weddings that happen every year and on average close to three to four suitcases move with her to the new house I have no clue about these things

I met another founder who's building a interesting biohacking kind of a startup. And there's a non-treatment which improves the mitochondria growth rate in your thing. And it's an expensive treatment, which is done usually for cancer patients or somebody with diabetic situation or whatever. And this guy goes there that I want to try this for biohacking. And the guy's like,

oh you're here for cancer he says no are you here for diabetes i said no the third question was are you here for because it's your wedding and he's like why is wedding important over here because that treatment makes your skin lighter for six months so a lot of people are doing that treatment which is so expensive usually done by cancer patient or severe diabetic patients to improve their skin tone for their wedding and that is the fascinating thing about india that

So much of the economy is running through that because in India, we are saving every penny all the time, but we'll splurge on weddings, we'll splurge on medical events, we'll splurge on education of our kids.

Every Indian family right now who have just got new kids are going to spend probably 100 to 200 times more than what their parents spent for their education. Because that's what we spend money on. The consumption is just not there. So I think when you study these patterns, what I realized that these patterns are not understood by Indian founders. They were just building Western copies. And therefore, at one point of time, I saw there were 10 startups that were funded for doing laundry startups.

which were popular in New York. But in India, we had maids coming at home. Why do we need a laundry startup? But there were 10 companies that got funded. So there were so many investors who were clueless, so many founders who were living in India who are clueless,

So during that period, I started working on a framework. I call it the Delta 4 framework on predicting startup success because my curiosity was that how am I able to be successful more often when I'm not even one-tenth the academic smarts that some of these guys have demonstrated in the past, but why am I able to do it more successfully? So I built a framework and

And because I was between two startups, I had a time to read up on physics and biology and evolutionary biology and trust. So I was going all over the place. Obviously, I was on your blog and I'm connecting all these dots in my head. And I found that the evolution of startups was very similar to biological evolution and nobody was thinking like that. So I'll give you a sneak preview of that framework. It's easier to understand, but I'll tell you. For example, if I asked you, Fran, that...

Which product or service was more efficient 20 years ago than it is today? If I have asked you this question, which product or service was more efficient 20 years ago than it is today? It's really impossible to find an answer. All the efficiency exists in the future. So humans are constantly moving from inefficiency to efficiency in one direction and like almost like arrow of time. And, and,

Therefore, any product or service that changes you from state A, which is inefficient to state B should unlock something that is called as wealth. So I built a simple framework, which is sounds simple, but most people still don't use it is let's say I asked you that, what do you think is the efficiency score of booking a cab through Uber on 10 or versus the old method that existed of booking cabs, whatever that method was?

Most people would say, maybe this is 7, 8 on 10, that is maybe 2 on 10, 1 on 10, 3 on 10. So the framework is very simple that every time the delta of efficiency score is greater than equal to 4, three things happen. It's an irreversible behavior. Once you experience a delta for product or service, you cannot go back.

There is obviously very, very high tolerance. That's the second thing that you will hate Uber, but you're not going to like, damn it, I'm going to delete this app and I'm going to move to a more inefficient behavior. The third thing is what I call the UBP, unique brag worthy proposition. Humans, when they discover something Delta 4, they can't stop bragging about it everywhere.

Almost like a secret code that all humans have with each other that every time you discover Delta 4, brag about it and tell everybody about it. And move the entire humanity from state A to state B, which is more efficient, which reduces their local entropy and moves them forward to a more efficient medium, which burns less energy than in any form, time, money or wealth to move forward to more efficient methods.

And I realized that most startups were not looking at this. I'll give you a simple framework to think where it doesn't work. Let's talk about buying shirts online versus offline. It's not Delta 4 if you have, let's say, odd sizes and you have the challenge. And therefore, shirts have not moved completely online because just by adding tech, it doesn't become Delta 4. It has to improve the efficiency score of the desired behavior.

And I think that framework, I talked about it in India. Funny enough, I was told by Sequoia in the US, they've actually introduced this framework in the onboarding of analysts in the Sequoia US team, which was interesting because in India, even if I've spoken about this framework, still startups don't apply that. And I see 90% of them fail all the time. Back to the analogy of building a dam where rivers don't exist.

And rivers are nothing but motivations, right? Like at the core of it, all humans have the same core motivations. And then it goes into streams and creates more rivers from that stream constantly, right? But at the core of it, it's the same thing. You want to increase your social status. You want to improve your mating success. You want to have success for your progeny and so on and so forth. It all boils down to the same motivation things. And then you can put them into so many different rivers that flow, right?

So when I started building my second company, I realized how to make things more successful, also look at more high motivation categories and so on and so forth. I had the luxury to take the contention and say that I told my investors that I'm building a startup that will only focus on the top 25 million customers of India because I

Only they can value time or will buy and rather focus on them versus acquiring hundreds of millions of customers which cannot be monetized because they can barely have money to even eat. Right now, we are a poor nation. And it's a controversial idea because India is always this country which sold this dream of hundreds of millions of customers like China.

But nothing between India and China is common except our population. That's where the similarity ends. But global companies love to win India because they lost on China. So public markets will bash them if they lose India again. So a lot of them are in India to win the holy war, but the market is not big enough. I would say the total GMV that Amazon would make in India would easily be done by a small European nation.

after being here for like maybe seven, eight years that they have spent over here because the people who can spend just do not exist. And I think that was the genesis of focusing on startups to build for the top more thing. And what we said is that we'll focus on those customers because nobody's really building for them because everybody's building for this

lowest common denominator that does not exist. And I will focus on this customers. And we said that we will focus on more trustworthy individuals to increase the trust of the system. We said that for these group of people, I'll give you a small example. India, even if you are in the top 0.01% of affluence, your passport is ranked maybe 150 in the world. And therefore every country is extremely hard for you to get a visa to.

Because there's no way for you to differentiate yourself. It is very similar to a lot of stuff that is done digitally in India for any service you encounter. And we said, we will make their life better by allowing them to have an identity that at least makes their life slightly more frictionless. Now, this sounds like a controversial idea that, hey, you're trying to kill the society, which is like more friction. But the thing is that that's what capitalism is.

I'll give you a small example. India has this unique concept called MRP. I don't know if you know about this, but this bottle over here, it says that maximum retail price of this bottle is 10 rupees. And even if it's sold in extremely affluent neighborhood or the most poor neighborhood, the price is 10 rupees because the government thought this is the greatest idea ever that we'd have the same price for everybody. But I could easily pay 30 rupees for that and somebody else could pay five rupees for that and increase the market overall.

But we enforced an artificial concept of MRP, which is stopping the core tenets of free market and capitalism to grow. And it's a very unique thing about India where you come with these things that, oh, I'm going to have this. The 7-Eleven will charge 30 rupees and this one will charge 5 rupees and the Costco will charge this. Guess what? All of them have to charge the same price. And I think I realized that

The only way you can differentiate is by service and all of that is just create a separate layer to build for them. And that was the genesis of the second startup. The reason I also did a startup is also because I realized that while I was doing well as an investor, and I'm still doing decently well in my investments as a part-time gig, I love building way too much. And I think...

I have been working since I was 14, 15. I do not know how to live a non-intense life while I can predict patterns and see things and I could technically generate better ROI of my time through investing. But the joy I unlock by building...

It's coming much higher by building my own companies versus just being predicting and being right a lot in predicting future trends, which can generate the highest ROI of time. It doesn't generate any joy. So I found no joy in investing. It's just like, oh, I told you so. I was right. And I was right. And guess what? It gets boring because you're right.

In the market like this, when you can predict Delta 4 frameworks and you can apply all the human insights you've learned, it's not a big deal that you've wanted to be more right. The problem is I felt really empty. I want to go back to some of those human frameworks in Delta 4. When you're making an investment decision, what are the top lenses that you're thinking that through? So one was sort of the Delta 4 framework, which we talked about.

What are the human frameworks that you're, you're thinking about that? What are the lenses that add the most value to your sort of filtering system? Yeah. I mean, it was more of a motivational, uh, lens, uh, but, uh,

applying human motivation as a core loop. But there are other things that make it easy to detect startup success. For example, a lot of founders who pitch to me are usually well-prepared and make a presentation and come to me. And so I tell them that, hey, I don't understand English very well. Can you explain this to me in Hindi? What does it do? Founders who really get what they're doing can switch language without a problem because they really get it.

And language doesn't change anything for them. Many people who have just prepared their presentation and not really understand this very clearly, they struggle with the language change and their pitch goes for a toss. So hold on. I just want to add piggyback on this because one way that you can do this without switching languages is switch level of the conversation. Yeah.

So often people prepare at one level and it's like, oh, can you go deeper or can you go higher level and keep that in context, which is sort of like the same idea. And I've seen that people who are really good, you change language, you change medium, you tell them, I don't want to read your presentation, they'll still be okay. Some people tell them, I'm not going to look at your PPT and they'll be like, how do I explain this to you? The other framework that has worked for me is I tell them, I don't understand anything what you're saying.

Imagine I'm a user of this product and I have to tell a friend over dinner to try this. What do I say? Only rule, I cannot use any jargon because I don't speak to my friends in jargon. So tell me what do I say? And I tell them to take 10 minutes break before telling me the answer. I would say 90% of founders fail at this because they can't really distill it to that simple transmissible message from a friend to friend.

If you cannot distill your idea to a transmissible conversation at dinner, it's not going to spread. And things that don't spread will have a huge cack because nobody really understands what the hell are you doing. That's one framework that has worked. The other one is asking them what is the real motivation people will use it. A lot of times the real motivation is different than what people say is the real motivation. For example, buying expensive headphones.

They are not really to make you hear better. You want to signal to the world that you are affluent and you have good status and good taste. Most founders cannot distill that that is the real reason people will buy it. They'll keep going to the functional utility and not the emotional benefit of the product. And that's another framework I've seen that good founders always know functional and the emotional benefit of their product or service.

Market sizing. Most founders cannot imagine how will they start from here and go on to build a very large thing from here. They get stuck in, this is what I do, but they can't imagine how will this become a large company ever. They just don't think, they don't even think, they cancel their own idea. And I've seen the opposite type, which is, I call it the Swiss knife problem. They believe that they have to build a Swiss knife when the consumer only is looking for a knife.

because they love building. So a lot of them are usually with engineering background. They love to build. They write so much software that consumers are confused when they talk to them because they don't have a foot in the door strategy that, okay, let me sell a knife and then eventually become a Swiss knife in their life. They start with the idea of Swiss knife and you're like, hold on, I can't even process what you guys are doing. And Swiss knife becomes cool. Nobody uses it.

Like everybody seems to have a Swiss knife but never being used. So I think that's another pattern I've seen. I've never really thought about this from a human framework problem. But another thing is that why would somebody pay for this? And it's surprising how most people do not understand that nobody's going to pay for that. Like, will your dad pay for this? Will your mom pay for this? Will your CFO pay for this? Will your kid pay for this? Like,

They are just off on that. The last one is, do they have an insight that is not obvious, but when you see them talk about it, you're like, uh-huh, that makes sense. Can you go deeper on that? The smallest unit of insight that's actionable. Smallest unit of truth that is actionable. Truth. Truth that's actionable. Yeah, go deeper on that for a second.

If you go to ancient Hindu mythology and you study the Sanskrit scripts and Sanskrit was a very condensed language, right? Because it was invented before paper was invented. So knowledge was transmitted from human to human through memory. So they had to distill knowledge

the wisdom in the smallest unit possible that could be memorized and transmitted from human to human. And the earliest scriptures were also tight. Like you'll read a Sanskrit yoga line and like in one line, they'll condense like really a lot of wisdom in it. So I think the concept of boiling something to the core units of it, then you cannot divide it further.

becomes a powerful unit that is also the building blocks or what we call as first principles that can help build businesses right and i think a lot of times uh then it's a painful process seeking truth is painful uh shane you've been doing this for a while like how many more blogs will it take to get close to the truth you will probably not find it but the joy of seeking truth for the sake of it uh

is not natural and therefore a lot of people do not appreciate it enough. But insights become this nice building blocks through which you can create great businesses, unlock great success because that is something that is not commonly available. Everybody seems to be seeing some pattern, but you see something else. For example, I had this view that, oh, India cares about status so much more than the Western society.

Let me do one thought experiment. I reached out to my friend who is to be a buyer of a top retail chain in India. I asked her to check, can you check if the gross margin on all products sold for living room is lot more than the gross margin of all products sold for the bedroom? And nobody had ever analyzed data like that in retail ever. Because it's like kitchen and sofa and furniture and all of that. Nobody thought living room and bedroom as two separate concepts.

But I said, can you please make somebody crunch it? And turns out the gross margin was 3x more.

The reason is in a society, we care more about showing to others. So all the products which are showing demonstrating status were put in the living room. Our bedrooms are terrible in India because nobody comes to them. And therefore, it was not surprising that bedsheets were not bought expensive in India and bathroom products did not sell a lot. We don't have a lot of bathtubs in India because it's not about me. It's about showing social status to others who come to my living room and

And therefore, you apply that insight now. And I told this insight to a home renovation company. I told them, don't keep saying home renovation. Launch a product line which is living room renovation. And today, 70-80% of that revenue for them is living room renovation. Because that's the insight.

And that's the motivation button that you can press in people. Well, I think in the Western world, it's about treating yourself. It's about you're worth it. It's about we still have the status thing. Individualism versus collectivism, which is how Asian societies are. And therefore, you don't deserve things to be special, but you have to show it. And therefore, weddings...

are really big and very high gross margin. It's for others. So let's go back to the, we talked about this a little bit earlier, but I want to go into more detail on, you mentioned some of the core human motivations that transcend culture. The core human game is to constantly improve our social status so that we improve our mating success.

or our success of our progeny, the easiest way to answer this question is that if we could really create designer babies, would people spend most of their income on that or not? And let's not go into the ethical debate of is designer babies a good thing or not. If it was possible that you can tweak their IQ, their looks, their health, their chances of terminal diseases to be lower and all of that, or let me put it this way, let's say

I could really invent a pill that could make you younger or healthier. Wouldn't you give me 50% of your net worth? And I think that's where the core motivations are. Like, what would you give half of your net worth for? Those are the core human motivations. And they don't change from society to society. They remain the same. They manifest differently.

For example, the Asian societies unlock that, oh, education is everything. So they're disproportionately optimized for that. But they don't, they save pennies. Like you said, like your parents talked about traveling miles for saving cents. Maybe they were also the parents who would be okay to spend more on your education. And if you told them I'm going to cost, it's going to cost 2x more, they would probably suffer and give you that money. But they would not buy an extra shirt for themselves.

Those are the interesting motivations. So in Asian societies, we treat our kids like assets. So we are making investments on them because a lot of times we expect the kids to take care of our family. So I don't know if you know about it, but India is the largest market which sends money back to India amongst all markets that does remittance.

Indians remit the highest amount of money back to their family when it comes to Mexico and others. And that's the sign that the kids were raised as assets. You invested in them in hopes that when you make it back big, you will give it back to the family and take care of us in our later life. So kids in these societies are treated like assets versus, oh, you're on your own now. That is not in our culture.

Because they will tell you that I invested so much money in hopes that you will take care of me later on. So there's a whole societal structure or social contract that exists in Asian societies of taking care of parents and taking care of them. Even after you don't have any obligation to do that, but people do it till they die and really take care of them.

Asians will not even flinch one bit to sometimes even wipe out 50% or 100% of the network to take care of their parents, which is hard to imagine concept for many people in the West. Yeah, I think that is. You mentioned Maslow's hierarchy of needs was different. Can you elaborate on that a little bit between the US and India? Yeah.

Yeah, so I actually Googled and I found there's an, I thought there should be a separate Asian Maslow, but in fact, there is a concept. Somebody has proposed an Asian Maslow and they have drawn a very different chart. But one of the interesting thing about the chart was it's all about status, belonging, respect, and in the community. It's not about self-actualization and having that kind of individual path to enlightenment. It's all about affiliation, respect, engagement.

uh status and that and therefore you see that a lot in india that uh people are constantly craving status and appreciate that a lot more and and this society have like so many awards and so many of these things and face matters a lot and uh uh giving back and like being valued in the community and so on and so forth you will not uh see and therefore like a funny story like i i i

I have a two-wheeler scooter that I move around with. And people with some affluence doing this kind of behavior are mostly considered to be weird or eccentric. I don't see any joy in having fancy things. I just managed to get a car for myself for long distances, but I still use my scooter all the time. And for most people, this is absurd because I'm not following the Asian Maslow.

that you have to get a luxury car and you can get so many more cars and why aren't you having this fancy house for yourself and why are you staying in a rented apartment? It's just absurd to the point that they want to believe that maybe I'm not really affluent. These choices just don't make sense to them. And I'm not saying that the West does these differently, but it is a lot more for the people. It's a lot more living room than bedroom, even in the affluent households. And I think...

Uh, therefore you see extraordinary effort and money spent on weddings. It doesn't make sense that you, I don't know, spend five X or 10 X of your annual salary on two days event and just splurge on people who you mostly don't even know. And therefore, like, it's not surprising when you go to weddings, there are thousands of people who come for a wedding. How can you know them? But it's all about demonstrating to them that I've made it in life. And that's the Asian mass flow. And therefore, uh,

The startups, the rivers are different versus the rivers that exist. And therefore, very few SaaS companies making millions of dollars of revenue. But there are enough wedding photographers I know who make more than $10 million of revenue. Oh, wow. I want to switch gears a little bit to some of the stuff that you've said over the years. And I want to get more of an elongated take on it. They're concentrated doses of insight. And I'm wondering maybe if you can just riff on them a little bit.

So one of the things that you've said recently is that your group of friends impacts how fast you can pound. So insights are usually connected from random dots getting connected, right? But the process of collecting dots has to be efficient for the process of connecting dots to be more efficient, right?

And collecting dots is easier if your friends are also collecting dots to connect dots. So what happens is that compounding naturally works better when you have a lot of people from different domains of life who are constantly collecting dots. For example, I spend a lot of time with a lot of different people from different fields and

to see how these worlds connect. For example, I will sometimes speak to an influencer, to a stand-up comedian, to a music director, to an entrepreneur in a completely different space because when you distill insight, things connect. On the surface level, they look like very, very different businesses, right? For example, I can't tell you how similar education and gambling businesses are at the crux of it.

and why people do what they do and why the gross margins seem to be high, why luxury goods businesses is similar to education businesses because the crux of it, the principles are remaining the same. And only when you ask and go deeper into some of these things, they connect. I've seen a pattern where people from these industries don't talk to each other. Usually the luxury guys are talking to other luxury guys and other luxury guys.

Like look at, I mean, the reason I'm envious of you because you have like made the most efficient machine of connecting dots. Like you are talking to people from such diverse backgrounds and the amount of things that are connecting in your head from different things is like something I really envy. And I, when you ping me, I said, Shane, I wish I had what you do in life. I'm so envious of you.

Because what you're able to do is get such, and I've seen that things connect when you go really deep or you go really wide and things just then start connecting with each other. And therefore, one of the things that I do a lot is constantly look for origin stories of why certain things exist.

I was curious about shampoo as a product. I'm like, who the hell came up with this name? And then I found that the origin story of shampoo is an Indian trader who went to Europe to sell a shikakai, which is a different product in India, and sold it as a chumpy, chumpy is like head massage shampoo.

which creates foam. And that was called shampoo by European guys. And it became the product. And no Indian who uses shampoo knows that the word shampoo comes from chumpy, which we use as a word for head massage. And then I see these things and I'm like, when you go to origin stories of many, many things, there are so many first principles that connect. And then you say, oh, Indian traders used to make these kinds of trips and all of that. For example, I was studying

I'm like, let's study all the history. So Premchand Roychan was a rich guy. I was like, okay, who are the other rich people of India? And I found this guy called David Sasson, who was an Afghan trader who made it big in Bombay. And I'm like, how did he make it big? Then I found out that he was the largest opium trader for the region. And British made the entire rail network to support his opium business, which grew opium across the world, India, and shipped it through Bombay to guess where? China. China.

And David Sasson had a huge role to play in the opium war that happened where British attacked China because they stopped David's supply to go to China because of banning opium. And Hong Kong was born out of the settlement of opium war. And many of the banks that we know today from Hong Kong are actually the banks made by the opium traders.

And I'm like blown away by all of these things because nobody has any interest in going to the history and origin stories except things to be that way. But when you go to the first principle origin stories, building blocks, things connect and they just see, you see patterns again and again, repeating. For example, the Boston Tea Party in the US which triggered the civil war or whatever,

was not just tea, they were also taxing tobacco. They were also taxing stamp papers. And you realize that how it was a beautiful model of inventing stamp paper, which is Justice API. That if you use my stamp paper, I will give you justice, which was a great scalable way for

governing people when you say that I will only be helping you in courts if you signed on my stamp paper or paid my stamp duty to give you justice. So I think I find these things super fascinating. And I sometimes I believe that I do businesses only to hunt more insights in life. It looks like my core purpose of life is to hunt insights.

And sometimes I have to build things to find insights. Sometimes I have to talk to people and find insights. Sometimes I have to read people and find insights. But I can do this all day long, nonstop. And I'm constantly trying to meet people. I write to professors all the time. I will write to authors all the time to get them to respond to me on some hypothesis I have or some question that I have. I think being shameless...

is most important ingredient in ability to connect dots. Go deeper on that. Shameless people make more conjectures without any fear of judgment. What I do on my Twitter, hypothetically, is that I will make a conjecture randomly and write as if it's some law of physics. And people bash me and correct me and sharpen my insight or connect even further dots for me. And then I'm like, wow, that's...

I have a new insight on top of that. Because I just put a conjecture out there without giving a damn of people thinking that how the hell can he say like this? How can he? For example, I put a conjecture out during COVID that maybe the new variants are lighter in weight. Therefore, they can spread faster, but they're less fatal because viruses seem to have a correlation of weight with how potent they can be. Like for example, HIV is a much heavier virus than common cold.

And therefore it spreads through blood transfusion or sexual transmission. But it is a lot more potent versus common cold, which can spread through air. And I just put that conjecture out there and people just bashed me saying that you are making a medical statement, whatever, whatever. But I realized that actually this is damn good. This applies to startups that spread faster, usually have a very light trojan that spreads faster.

versus a very heavy thing. And therefore, if you really want to be a high distribution startup, you have to build which is very light, spreads like a virus. And therefore, the word viral is born from virus, which talks about how a light content, therefore TikTok becoming what it is, is because it's the lightest possible virus that you can create that spreads like a wildfire. So I don't fear judgment of like, how are you making a medical term connecting into viral videos to this?

And I think shame plays a huge role. I'll give you another example. I made a comment once saying that in elementary table, elements that have a lot of valencies, which is there are more ways for them to bond with other elements, are called reactive elements. And maybe people who also have more valencies are the ones who are more reactive. And they form bonds easily. And they are likely to be more .. And therefore, people who have lesser valencies

are noble and that's what also called noble gases in the elementary table and I will make this conjecture in public and people are like how can you connect human behavior to elements and I'm like why not I'm not trying to write in a scientific journal I'm just trying to make a conjecture and what if this leads to something else and I think shame plays a huge role in fact double click on shame I found an interesting

hypothesis is that the fastest way to make somebody feel okay about what they're ashamed of is to make them feel proud about it for example the path to from shame to normalcy is through pride which has obviously used and misused in different ways so gay pride and it you are a man if you have tobacco and you are a classy person if you have this whiskey so every vice

becomes normal or every shameful behavior becomes normal when you convert this into pride. And I think you can make humans do anything bad by just making it a matter of pride.

And it's an interesting hack if you think about it on how you can make people not feel ashamed about certain things. You can say, you have to be very proud of this, right? And I think, by the way, I also know that everything that we are proud of are the handles that we give to other humans to manipulate us. So everything that I write on Twitter as things that I'm proud of, like people's intros and descriptions are...

The trigger points put in public. For example, if you write, I don't know, proud father, proud American fastest way to manipulate you is the things that I have shown in public what I'm proud of.

because I'm demonstrating my social identity in public and I'm like giving myself exposed. And I do believe that humans create these identities to belong and fit in because it's very uncomfortable to say I have no identity. So I removed everything from my Twitter. I have no nothing written on my Twitter as my identity. And I believe that one day we should give up your name also and profile picture also and get into that zone because I

that's when you become impossible to manipulate or impossible to trigger because you are nothing, nobody, and you just exist in the background, right? And I think a lot of people, when they are trying to say, I'm this proud, this proud alum of this, proud of this,

or Manchester United fan. In fact, the word fan probably comes from the word fanatic and fanatics are the easiest to trigger. In fact, I believe that all the people who demonstrate the need to be fans are the people who are

easiest to offend in life. I think being fan or having favorites is telling the world that you're extremely easy to offend. A couple of points coming out of this. I have a belief that there's so much advantage in life that comes from being willing to look like an idiot in the short term.

And I think that goes to something you said earlier. And there's this quote by Lou Brock that always stands out to me, which is, show me a man that's afraid to look like an idiot and I'll show you a man I can beat every time. Love it.

And I think those are so insightful because you have a huge Twitter following. And I mean, if you're willing to put yourself out there and be wrong and hone and sharpen your insights, then I think that speaks that everybody can sort of take a step in that direction. And I think to your second point about we show others what we're most proud of. I think we also show others what we're most scared of.

And I mean that in the way of some of the unhappiest couples that I know of in real life are on social media, the happiest couples. They have an acute need to show that they're happy and then they hope that showing that will make them really happy. But the real people don't feel the need to show it to anybody else.

I think that's where the locus of control matters, right? Is the locus of control external or internal, right? Like what controls your happiness and what controls your joy or pride? And a lot of times when people put it in other people's hands, that if you like it, if you like, you appreciate it, I need your applause. They build less and less substance within themselves because it's,

They're optimizing for somebody else's metric, not realizing that nobody gives a damn about anybody else except themselves. So that goes to sort of Buffett's idea of this inner versus outer scorecard. Talk to me about that. I think people genuinely are benchmarking externally because the scores are built externally. I think that academics, for example, are

I have a unique curse of not being able to memorize things. An Indian education system expects you to memorize very long answers and say them as it is without understanding one bit of it. So as a kid, I always thought that...

I was a poor student because I would not be able to score marks compared to Indian students who were able to remember more. And therefore, memory tests is what Indian education is all about versus understanding, which I was doing well on. So I would score very high marks in practicals, projects, presentations, but very less in theoretical writing exams. So I always thought I was dumb compared to many students. And it took me...

After my first exit of my startup, I started believing that I'm not so dumb. So I think when we create any mechanism of scoring people outside IQ test, EQ test, whatever that is, right? We are removing dimensions that we could be better at. And I think, but if you constantly think about, am I better than what I was six months ago and constantly improving that?

It doesn't matter what you define as better than what you were at. And I think you can make wealth by being better on something which is solving problems, but you can be healthier or whatever, but not by comparing, but by looking at, am I better than the previous metric? And I think most people are not keen in looking at that because it feels boring. They want to compare and the need to compare is acute.

And I think I've not seen people come out of that trap. For example, many people who are very smart in India, who are in their 40s are still comparing to

other people in their college batch in the reunion if they are better or not in their success in life. I'm like, but that was 20 years ago. Like, why are you still in this race to compare just with your batch? And I've seen that. Therefore, envy is hyperlocal. It's like Wi-Fi. It works only in a local radius, right? I don't feel envious with Elon Musk. It's not even in my network. So humans have this unique thing of having envy in a hyperlocal network.

We don't feel envious of people who we don't believe in. And therefore, it's good to constantly change who your network is to really do well in life because we're all going to be driven by the Wi-Fi network range of our envy or our comparison. And therefore, people like, I think Naval tweeted today and I had

also responded back to that, that we outgrow, uh, the price of growth is outgrowing people is, is this because if you really change your wifi network all the time to people with better ambitions, better goals, uh, you will not feel that need, uh, to win within that, that local league, uh, of yours. So hold on. I want to explore this a little bit more. Envy being local. Is it, you're not envious of Elon Musk because, uh,

There's multiple status levels between you and him or perception of that. Whereas if there's only one degree of status level, then that creates sort of a situation where envy can take hold because it's like, I could be that. Whereas like, if I look at Elon Musk, I'm like, I can't be Elon Musk. I don't want to be Elon Musk, but like, I can't be that the gap is so large. And that relates sort of to what we were talking about earlier, where we're trying to elevate that status by like one level.

And I'm wondering if that plays a role here with Envy. So I think in the game of leaderboard and whatever the leaderboard is of, we are constantly playing in our local zone of people who are just below us and just above us. And we are constantly trying to beat that. And therefore, let's say I have, I don't know, some 100,000 followers on Twitter, you

I will not compare myself to somebody who has, I don't know, 100 million followers. Like, it seems unachievable. Or I'm not going to compare myself in a sport. Let's say I'm decent at swimming. I'm not comparing myself to Phelps, who's won like, I don't know, 25 gold medals, hypothetically, right? I'm looking at within my group of people, am I beating them or not? And I'm constantly moving up in the rank. So I think the need for this hyperlocal thing comes from that, oh, I'm going to beat my batch of college mates.

or my neighbors or my family members. I'm the best cousin who did well. And I think that's where we form some of these leagues. And we are happy just beating those leagues versus saying that, hey, I just need to keep moving up and maybe benchmark myself to a slightly different level. And I think a lot of people self-limit themselves because they never ask the process that what is the process to beat Elon Musk? You may not beat it, but you know the process of beating Elon Musk.

And therefore, nobody's interested in the journey of Elon Musk. Everybody's interested in the end state of Elon Musk. And therefore, a lot of people behave like him when they have achieved nothing in their life. Or a lot of people try to behave like Steve Jobs when they have not been through the journey of being Steve Jobs or Elon Musk.

And I think that's where the disconnect comes, that we love to copy end states and never copy journeys. Well, it's so interesting because if you want to improve, you almost want to copy tactics.

and ignore results, right? So you don't want to compare at a macro level. You want to compare at a micro level. And the micro level is what can I do better? What can I learn from you that's going to make my process better, that's going to make what I'm doing better? And I don't want to compare the comparing outcomes as a recipe for unhappiness, but comparing a tactical because you're imitating and then you create, right? So we all copy things before we end up creating on our own.

And imitation is the quickest way to get to sort of average in any domain or discipline, right? You join the workforce, you copy your boss, your boss is probably an average boss, and you eventually become average. And if you imitate beyond that, now you can start to differentiate and you can go beyond it. But you can't really, you can't really do that sort of

innovation, well, you can do it blindly, I guess, before you copy, but it helps to copy first, but you need to copy at a micro level. And then the other nuance here that I think a lot of people miss is you need to copy at the somebody who's

at the next level and a recent next level. So not like a distant. So we often go into these organizations and I did this when I was 20, 23, 24, joined this organization. I get this mentor. My mentor is amazing, brilliant, super smart,

They're 25 years older than I am, full of insight, but they're not full of insight at a tactical micro level. They're full of insight at a macro level, at politics, at life, because the skills that got them to where they are are not the same skills necessarily that are going to help me in my job today because they might have done what I did, but they did it 25 years ago.

the odds of those things being relevant and useful are a lot less. So you want to find somebody who's done the same thing that you're doing and just did it. So next level success, somebody who just did your job, got promoted out of it. I think the reason we don't do that is truth seeking is not something that is taught actively.

In our education system, because we want people to accept what we teach them so that they can crack the curriculum or the exams that we've created for them. But we're not teaching truth-seeking. Truth-seeking, for example, I would say that philosophy should be a mandatory institution.

in all school education because it teaches you how to seek truth and question everything that you even studied. And I think that's not actively encouraged. One experiment, I don't have kids, but I love experimenting on other people's kids. It becomes a good testing thing. One of the things I've seen work really well in growing maturity of kids is, or making them insightful, is something I call as the Wi-Fi school. Like,

W-H-Y-F-I, which means what you do is every day at dinner,

ask them a why question or they can propose a why question. And the next day they come up with the answer on why it is the case that way. And like, why is the sky blue? Or you can take anything. They can take why is this team called this name? Why is it so expensive to advertise on Super Bowl? Whatever it is, you can just choose any why that they are interested in. And you do this enough for one or two years

The compounding just goes like this because most people are stuck in what and when and how and all of that, but why it makes you more insightful. And I think doing that early hack in kids just makes them very interested in saying that why is Elon Musk rich?

why are some people able to be successful? Why is this athlete able to win consistently? Why is this director able to get more revenue in movies versus this guy? Why is this guy artist, all the singles, all the time hits? Why is this artist, why did Michael Jackson work for two decades or whatever? Like, I think the moment you encourage that, and it doesn't matter what the topic is,

If you get them hooked early on, on why, first of all, they grow much more mature than most of the kids, which is a side price of it because they don't get along with their kids in their school and people start calling them as nerds or geeks or whatever. But the thing is that they just compound faster by one type of question versus others. So I think

The input metrics or input levers of any excellence or any growth seem to be consistently the same, but most people are not interested in that. And therefore, they're looking for shortcuts, like, what can I buy this crypto, this and like, get to my Ferrari, like, and therefore, a lot of people get fooled.

because the analytical behavior to understand that, how can you really become that? Like, what is, why does Bitcoin exist? And why do we have so many coins? Like, I often tell people that crypto is like religion, that there are multiple religions, but the true test of religion that is there is that

Is it adding more DAUs every day? Like, look at Christianity or Islam or Hinduism. It's adding more DAUs every single day on its market share. And therefore, they're much more robust compared to many other religions. What if, like Snapchat had a user growth decline? What if Christianity has a user decline on growth? Would it start growing?

giving power away to something else and therefore how about the organized religions figured out a perpetual DAU growth many ancient religions did not and they got replaced so I think these things are not something that people are curious about the answers are usually very simple and basic and that's another thing we don't like basic answers

We're like, oh, that seems super simplified. But the truth is that when you really go and distill that things will become simple and basic. But we don't, I think when you're in a high IQ zone that it feels like cheating when you get simple answers. And you're like, and therefore when I tweet or you tweet people like, oh, you're like oversimplifying and grossly non-nuanced, but it's not.

sometimes the truth is as simple as it gets. I always think of things as being, you know, there's simple but not necessarily simplistic. And so when you're a novice and you look at a problem,

It's simplistic. I can solve world hunger. I can do this. And then as you dive in, it's really freaking complicated, right? There's all these things you didn't think of. And then on the other side of that complexity is simplicity. And I think of that as simplicity on the other side of complexity, but it's not a simplistic. So simple doesn't mean simplistic in this case. And then that is like true insight and mastery and understanding, right?

I want to go back to something you said earlier, because I think this is a point worth sort of maybe coming back to or emphasizing a little bit more, which is truth. Most people aren't in truth.

the truth business. They're in the story business. Whether it's the story they tell to themselves, the story that they're telling to other people, they don't want the truth. They want the story. And I think that there's very few people, entrepreneurs specifically, are rewarded for being in the truth business. If you can't figure out the truth, you go out of business.

And so it's a unique subset of people who are actually driven to sort of find the truth. And if they're blind to it, it has huge consequences. Whereas a lot of people can sort of be blind to reality and blind to the truth and focus more on the story. Yeah, I think that's a very interesting point you just made. If you really spend time with entrepreneurs who are successful and let's say successful for consistently successful, you'll almost feel that they are philosophers, right?

And what is philosophy? It means philo plus sophie, which is love for knowledge or love for truth.

Right. And therefore, the reason they are successful consistently because they are in the business of seeking truth. Sometimes they just find something and use it and apply it and build something out of it. But they are in the business of seeking truth. And the frequency of how things are disrupting and getting quickly disrupted is the truth is constantly evolving at a different level. Right. And if you can't keep up to it, you will get irrelevant no matter who you are.

And I think surface level truth seeking, therefore, does not create enduring businesses, because you really don't know why the hell are people really using your product? What is the real problem are you solving? Not what you're saying what it is solving, there's an underlying three levels deeper thing, which should give you a much larger market and time to operate in, but you don't really go seek that. And I think the reason truth seeking is not

because it truly burns more energy and energy saving is a human trait, right? So I often make the comment that people are not more intolerant. They are just running out of processing power per day more than anybody else in the humanity ever did. So it's not unusual to like authoritarian leaders because I can't process all this information. So we are not away from

That's super interesting. Sorry, I didn't mean to interrupt you there. But you...

You said something I think I've never heard it put that way. We're not less intolerant than we were before. We're just running at a processing power. And if we sort of overlay that to the media, which is designed to hijack our attention and manipulate our emotions, which would be taking away that processing power, the byproduct of that would be that we appear less tolerant.

in all other aspects of our life because we're sort of like getting all of this energy sucked out from social media and media, which is designed to sort of hijack us. Yeah. And there is no time and energy to go to nuances. It's not needed. It's not required. And therefore, everybody has an opinion about

And they are a lot more opinionated because the nuance is lost, right? There is no need to go into nuances because there is no processing power. And therefore, we like authoritarian leaders a lot more in these chaotic times because it seems about right, right? And therefore, I remember hearing from somebody that nobody, people don't,

back people who are right and wrong people back people who seem to have a backbone because I can't process all this information and I think look at this like the people like a lot of us who were born before internet and now like the younger generation like they just have so much coming to them right every day constantly that they are

therefore just want to click and say yes and no and all the polls have become yes and no versus all the nuances and like nobody has time for nuances so i think the world is going to become more and more intolerant because the processing power of hardware is not growing at all

But the amount of information that is coming to us is growing disproportionately. And I think the ability of few people to go to nuances, to basic principles will keep creating more and more wealth, power, anything that you can imagine as important and as a metric of success because they are traders of nuances. And all the people who are not traders of nuances are going to be this transient trader

a source of energy that money will flow through them away. In fact, I'll tell you an interesting thing I've observed. You will rarely meet a wealthy person who cannot keep secrets. So I believe that wealth is like energy that stores itself in entropic complexities that seem to hold the information asymmetry in them versus be these transient sources. And therefore, I believe that the world has become this

superconductor where one meme goes to hundreds of millions of people quickly information gossip uh

Fake videos, content about Johnny Depp's divorce. It's spreading so quickly and all of that. And there is no interest in going to nuances and going into these things because you have to be connected to this global thing of being connected to the narrative. I go for dinner and people talk about this. I need to not look like an idiot who's not knowing the common topic. And therefore, things like Netflix or YouTube are just making the world one.

at levels we cannot imagine because people are trying to be relevant in the context of like what percentage of human population actually I did an interesting study you'll love it by the way you should look it up when Will Smith had that event at Oscars I looked at Google Trends and saw on the heat map of the world where did Will Smith as a keyword take off because Google Trends went like this like this but on the global heat map only a

Some places went really dark. Most places had no such jump. And I was like, this is perfect. This is a final map of to knowing where the Western media has huge influence. You can predict accurately in India, in Africa, in Morocco, in Indonesia, where Western media has importance. Where do people care about Will Smith?

and you can see this patterns emerge very clearly when you create these contrast events, right? And I think, uh, the processing power is therefore reduced, uh,

I read something interesting once where it says that kids love watching animated movies again and again. They watch it six times, they're still happy. They watch it 10 times, they're still happy because their brain has not evolved to find patterns and they're constantly finding new things all the time when they watch the same content.

but humans like we don't like watching the content again because you figured out all the patterns so we like watching movies which are unpredictable and we can't solve the patterns and therefore the the christopher nolan genre like becomes very interesting because you're like oh i couldn't grasp i have to watch it one more time or whatever but the nuance of this is that uh we are also perpetually bored because of that right because nothing seems to be

causing any unusual pattern and they were constantly looking for new pattern breaking things. And therefore TikTok is no surprise because it's constantly breaking patterns. And one of the most interesting things I learned is that all things that are funny are surprises. All jokes are surprises. Go deeper on that.

If you think about a joke, it's building a pattern and then it switches to a pattern that you cannot anticipate and therefore it creates an emotion in us and makes us laugh. And now that I've said this, if you see every stand-up joke, you'll see surprise, surprise, surprise, surprise all the time.

So the brain is constantly looking for surprises versus going to nuances because we are like, it's giving us this dopamine shots of here and there. And TikTok is surprise super machine. You can spend hours on it and your brain will not stop getting surprised.

But in life, we tend not to like surprises, right? So I'm thinking specifically, you know, the oil shoots up. We come up with this simple, that's a surprise. It disrupts the way that we thought something was going to happen and our perception onto the world changes.

And then we ignore it. We talk ourselves out of it. We dismiss it instead of exploring it. Interestingly, the human brain, which lights up in fear and humor is in the same region because it's a surprise that does not cause harm to us.

But it causes emotional arousal in us. Right? So the thing is that that's where we like surprises that don't harm us because it creates an emotional arousal and takes our dopamine anticipation levels very high. But we don't like, for example, we love a gift that is wrapped and we know, by the way, we'll not love a gift that's come randomly to our house with no name on it. And we are like scared.

But let's say your loved one gets you a surprise, which is packed nicely. You are just excited because you do not feel the threat attached to this. It's the same gift, looks the same, feels the same, weighs the same and causes different emotion. You're like, oh, has somebody sent me a bomb?

You're not thinking that, oh, I have a secret admirer who sent me this beautiful gift. Let me just open it. You're mostly assuming that, oh, I have somebody who's causing harm to me. But the same thing, it's given in familiar context where you've removed the fear. You're like, I'm so excited to open this. It doesn't matter. We could be 60 years old. We are still happy to open a gift wrap. I want to go back to something you said earlier that's like logic.

lingering in my mind a little bit, which is you said you've rarely met a wealthy person that can't keep a secret. Go deeper on that. I do believe that and more and more you study about concept of wealth, we often say that wealth is not zero sum, but it actually is.

Because wealth is nothing but energy stored. So according to me, wealth is nothing but batteries of energy where energy is stored temporarily and keeps increasing because humans are the only species that have figured out how to convert all forms of energy to our advantage to reduce our local energy consumption or local entropy.

So we are the only species that have figured out nuclear energy, solar energy, kinetic energy, every form of energy we convert to our advantage. And therefore, our wealth keeps growing. And if you look at since industrial revolution and invention of electricity, the wealth and GDP of the human population went up like this. It did not go like this. It went up.

like this, right? And if Elon really cracks away to get solar to come to our cell, the world's wealth will go disproportionately as well because guess what? We figured out free energy, unlimited energy, right? So the thing is that there's an interesting thing that was called the Maxwell's demon problem, which was the only thing that said, proved that entropy is not increasing. It can be reversed because it was a

which was basically Maxwell demon has this glass box. Maxwell is a scientist who came up with this

theory that entropy is not a law because it can be proven to not be true by Maxwell's demon experiment. It was a glass box with a door in the middle and there are two chambers, one with cold molecules and one with heated molecules. And this demon could open the window selectively based on when hot one was trying to move in this direction and cold one was moving and it just reversed it. So basically it says that Maxwell's demon is able to reverse entropy versus all or increasing the entropy of the system and therefore entropy is not a law.

Then people, after many years, figured out that the brain of the demon is part of the system and the oral entropy of the system is growing. And therefore, human brain and therefore the information theory and all of that comes in saying that entropy is constantly increasing because of the information asymmetry in the demon's head. Now...

If you extend this idea further, you'll realize that all the tech companies that are disproportionately growing in wealth and net worth and revenues are also the ones which have more information asymmetry or they are more Maxwell demon-like. Same for humans. People who have natural information asymmetry are constantly creating more and more wealth. Therefore, because you have to burn less energy compared to others in diverting the molecules here and there.

And I think, therefore, when you see a wealthy person, so a lot of people become rich but not wealthy because they do not know how to manage the information asymmetry. So a lot of athletes become very rich and very quickly become poor. And you will see a pattern that they are very bad at holding information asymmetry. And ability to keep secrets is a good litmus test of an information asymmetry-seeking brain.

And this is where I'm making these leaps, saying that how do I know somebody can keep information in symmetry? The first test is ability to keep secrets. But how do you know somebody can keep a secret? Well, we all somehow humans know intuitively. If I asked you, Shane, think about 10 of your friends.

Can you think of what three of them who cannot keep a secret? Totally. I'm not going to name them though, because they're probably listening to this. You should not name them, but you can also name the three people who will keep the secrets also. And sometimes they are trusted by wealthy people and therefore their wealth grows because wealthy people love to associate with people who can keep secrets. And secrets doesn't have to be nasty. It can be just about

knowing something about the world and all of that. For example, like if people really cared about information asymmetry, they would have heard every podcast of yours and got there. It's just not natural for humans to do that. Seeking information asymmetry is not natural.

I think humans have scaled as a society because we figured out that the way we grow our energy or our biomass is to constantly store information asymmetry one form or the other. And therefore, I was reading an interesting thing that the biomass of ants and humans is the same in the world, which is the number of kilograms of weight that we have on this planet, because both of these species figured out how to cooperate and keep this information structure growing.

Right. And others don't. And they are constantly stuck in the status society and not cooperative societies, because language is one way of thinking, keeping things more efficient and burning less energy compared to others. And many species don't do that. So the thing is that humans are the only species that have figured out how to increase the entropy of the system. Like we are the best agents of entropy because we've heated up the entire ocean.

thanks to our activity, right? And global warming is a function of us creating more wealth through the process of inefficiency and therefore...

Going after sustainable energy is a great way of being richer without causing the environmental damage that we can create with that because of the side effect of other methods of creating energy. And I think, therefore, this concept of wealth is rarely... Generationally, you will see that a lot of times, two, three generations later, wealth does not stay because you will always create somebody who's not very good at keeping secrets or holding...

their ground or keeping and there'll be always people who like manipulate them into these schemes and all of that and they will lose it right and i think that's where um

Information asymmetry is an interesting concept. If you see all the companies that are doing well, they are constantly increasing their information asymmetry about knowledge about their customer or knowledge about their industry or the flow of system and so on and so forth. Because otherwise, this energy just keeps moving to places that can hold it and store it.

And it can keep getting destroyed. For example, a lot of social media stock market tanked and revenue tanked when Apple announced a way to not be able to keep more information asymmetry. And boom, you can't predict many things about people and therefore your revenue will tank because you can't predict their behavior.

And I think that's where the power of understanding this simple concept can be very useful in understanding where the wealth is going to move constantly. I like that. Let's change gears a little bit here. Talk to me about decision making. So I have seen that one good framework of decision making is decision.

talking to champions of that field of decision making. Somebody who has more choices usually has ability to make better decisions than people who have lesser choices. Let me explain what I mean by that. A person who's less, person who's likely to be able to get anybody to marry them and they have the ability to do that are likely to be better at taking decisions on how to marry somebody right.

And it sounds weird, but choices just make them better, right? Or an investor that can invest in any company is likely to become better on how to pick companies, right? So I think the expertise of decision-making is usually in people who have more choices than others. In fact, according to me, the simplest definition of success is also about having more choices than other people in that respective field that you think about. And I think that...

Usually does not fail. But I believe that a lot of people are taking decisions through emotion, which is a hit or miss thing. But problems to solve or to feel are through emotions. Right. So, for example, a lot of times founders are like parents who sometimes just know intuitively something is wrong with their kid or their startup or their company.

But emotions are not good enough to solve the problem, but they are very good at knowing intuitively something is off.

And you like, even doctors will struggle when a mother feels something about the kid and they're like, we can't find something. And then something is off and they just feel it. And it's a great place to find something to be fixed, not a great tool to use how to fix because emotions will make you do stupid decisions on how to solve that problem. And you'll overcorrect or overdestruct in trying to solve that problem if you use emotions to do that. So I think using emotions to diagnose, sorry, using emotions to detect symptoms

is great. You think emotions to solve or make decisions is terrible. Everybody has different framework. I know about the Bezos framework of regret minimization framework. And, and you can talk about many of these things. I think a lot of times having just a long-term mindset around decisions, even if it's short-term decisions is useful. So I've seen that some people are naturally good at long-term decisions than others.

many people who are very good at short-term decisions, right? So I think using a lot of those people as APIs in your life for long-term decisions is a good framework. And we all of us know some people who are very good at long-term decisions and they think 20 years, 40 years, 60 years, 80 years, 100 years on everything, right? For example, I've always told people that all bad behavior is rooted in short-term thinking, right?

every bad behavior in human beings comes from being short term about everything. Right. And I think if you play a long enough game, it doesn't seem like a bad thing. And I think therefore it's not natural for humans to think 30 years out. And therefore people do stupid things with their reputation or their trust with people or all of that, because they don't think it matters 10 years later. And, but if you do,

grow your reputation slowly. It gives you huge powers later on because it compounds quickly. In fact, I remember this beautiful quote one of our investors told me that now Kunal's reputation is an

bank account where you can only deposit a dollar a day but every time the withdrawal is almost nearly complete so if you make a mistake on your reputation the withdrawal will be complete but in terms of deposit you can only almost deposit a dollar a day you can't hack reputation in fact everybody who tries to hack a reputation is penalized badly by the society and they get corrected quickly but slow reputation usually gives you more currency to outlast and i think uh

When it comes to decision making, thinking about what is the slow currency of life, reputation, wealth, all of that, don't try to hack it. Anybody who's trying to hack it will always lose it quickly because they'll not have the muscle to retain it. For example, a lot of people who get rich quickly without really building substance are exactly the people who get rich

to play advanced sport without building the muscle for it and they get injured because they have not built the muscle to handle that so uh i i do believe that some people are just naturally good at judgment uh and and the the reason they are very good at that because they love to be right a lot and i think uh

I'm sure you had talked about this concept of decision journals and all of that. But the thing is that intuitively, people who are very good at decision making, constantly journaling without even sometimes not writing, but constantly evaluating everything that did in the past, objectively, without feeling emotional about it, and constantly reflecting on it and improving their algorithm. And I think in terms of decision making,

You know, there is this thing that you say, what would Steve do? And what would Bezos do? What would this do? Actually sounds stupid, but it's not. Or what would Jesus do? Right. These are good frameworks to say that. Let me try to think like them and see if they would do it or not. And I think sometimes just creating this mimicry of sorts.

would be very powerful that would this person do this? And I think the only good use of reading an autobiography or biography is to be able to answer this question that would Elon do this? Would Steve do this? Two comments on sort of what you just mentioned there. One is when you think long-term, you eliminate a lot of poor behavior.

If you think like we're going to be in a relationship for 30 years, I don't want to take advantage of you, even if it means I'm going to get paid more tomorrow or do anything. So it just eliminates all of those incentives. Even if you just think about all your relationships on this generational basis, you eliminate a lot of behavior that may be.

I'll tell you a funny thing. All the scammy businesses are usually found around tourist places. Oh, dude. Yeah. I remember the kids and I went to this place in Vienna and we got the cake, the famous Vienna cake. And the cake was like three euros. And then the kids ordered water.

And the water was 18 euros. And we had this amazing conversation around like, how is it possible that they can charge 18 euros for water and still have a thriving business? It's very simple. All the places that are built around tourist places are designed to optimize for short-term behavior because there is no repeat customer behavior. Exactly. So all the scammy people will self-select themselves to be around tourist places.

Because I don't need to optimize for my long-term NPS. So they self-select themselves in these one in many. And then there is no thing that, oh, buy this Vienna cake. Nobody's going to know friend is saying that.

Shane, when you go there, buy from here. Nobody's saying that as well. So it self-selects itself into scammy businesses. To the other point about asking yourself, what would Steve do or what would Elon do? One of the reasons I find this so helpful is that the source of all of our biases are blind spots. We can only see through our frame of reference, but the world exists outside of our frame of reference. And

And when you ask yourself, like, what would Warren do? Or what would Steve do? Or, you know, what would Kanaal do? What you're really doing is you're getting out of your own head and you're seeing the world through a different lens. And that in and of itself starts to reveal blind spots. And the source of all bad decisions is blind spots. Because if you knew what was going to happen, you would obviously never make a poor choice. Right.

everything makes sense based on how you see the world. And so what you're really doing is you're shifting your frame of reference, which is the only thing that I've ever seen helpful at avoiding cognitive biases in the future. Cause cognitive biases are so good at explaining why we made a mistake, but retrospectively in the past, here's why you screwed up. And it's like, well, that's great. How do I use this information to make better decisions in the future? And it's like, actually, that's really tricky. The smarter you are, uh,

the more likely you're not going to be able to do that. Checklists don't matter. You know, when I talked to Daniel Kahneman, he said the exact same thing. He's like, I've studied this for 60 some years and I'm no better at avoiding them. And I'm like throwing my hands up going, well, what the heck?

But what I have seen being super useful at avoiding them is to think less of them as cognitive biases and think about frames of reference. And do I have the right frame of reference to see this problem? And how can I shift my frame of reference to see it through a different lens, through somebody else's eyes? And that comes down to curiosity too, right? And truth seeking, because I want to see the world through your eyes. I want to see what it looks like, see what you think. I don't have to agree with it.

And I think that's where people instantly tune out. They're like, oh, I don't agree with the way that you... No, I want to understand how you see the problem, what interconnections you see, what variables you see. And it's through that reflection that I'm going to get more insight into the problem. It's funny you're saying this. All the people who are seemingly very good at decisions, they tend to have multiple personalities in thinking about situations. Right.

They can almost think like five different people at the same time. And they can become different people and see blind spots of that. And explain the problem exactly through the lens of that person. Or instinctively just able to reject things. For example, let's say we are trying to hire a senior person in our startup. And let's say we have read autobiography of five successful people in life. And we can really live through that thing. Or let's say movie characters.

that we have seen and we have built that reference in our head on what they would do and say, would this person hire this guy? And it's weird. We'll be able to instinctively see, feel from there and say, no, there is no way this guy would touch this guy. Why? Because he's not smart enough to meet that level or he's not creative enough and, and, and, and does not have the slope, like the way this guy did it. And we always can come up with that. And therefore, uh,

Thinking, being able to become multiple, getting multiple perspectives. So two things I have seen, right? People who are saying well-read, well-traveled is nothing but acquiring more lenses in life to see things. The word unusual starts dying as you travel more, as you read more. You are less shocked. You're less surprised because nothing seems unusual, right?

You've seen it all. And therefore, you have acquired different frames. And therefore, most intolerant people who have not either read or traveled because they don't know alternate realities. If you ask Americans, is this the best culture ever? They'll say yes, but they have never traveled to know and test if other cultures are better. Most Indians would do the same thing. They're like so proud of their religion, their culture. They're saying there is no...

to go test it, right? The other perspective is philosophy, right? Like when I studied philosophy, I had to study Indian philosophy and Western philosophy together as 18, 19, 20 year old. And these are completely different things. Like it's almost like trying to, I don't know, trying to mix a Japanese cuisine to like Italian cuisine to a British cuisine. And you're like, it doesn't make sense. But the moment you acquire these,

lenses and say they all exist and you can see this from a perspective of that oh let's say you make a decision will Japanese people love it will British people love it will Indian people love it and you can come up with this ways to adjust to that based on some of these nuances and we have this amazing ability to come up with these answers again from our biases but we have to be able to tap into multiple biases that coexist in us

by creating all these multiple personalities in our head and saying that would this guy like it, would this guy like it, and I'm like, can see it. And therefore, all the people who are really good at their craft can predict almost like omakase of life and they'll just know that you will love this. And therefore, some people can get applause every time they go on stage. Some people can make music that can get applause every time. Some people can just do this consistently.

Because they can just figure out the constant shift and nuances and they don't get stuck in a type. Do you record anything when you're making a decision? Like, do you keep a decision journal? I don't, but I have built a habit of tweeting my predictions.

And people do one funny thing. I don't know if you've seen this. Remind me of this in 12 months that people tag. So I make a prediction that this is going to be this behavior in two years time. And people respond to that tweet by saying, remind me of this in 24 months. And that tool reminds you to check this tweet in 24 months and do that. And I found that to be very useful because if you make a prediction in public,

And you say something in public, if you are right, people will find you and tell you Kunal, you were right. This turned out to be true. For example, I wrote something about dating and how it's going to mess up things and how things fast forward is going to give rise to certain behavior. And there's an article that came yesterday, which exactly talked about what I talked about in 2018. And somebody found that and said, Kunal, you said this in 2018. And that's one thing that works for me. Uh,

And it's awkward to make your predictions public and you make your predictions public or whatever. But when you're wrong, also people will find and say, Kunal, you said this, but look at this is what happened.

And it's a nice way of making the world... I crowdsource my decision-making, journaling, and shaming because it reminds me more efficiently. I'm not a structured person. I can barely make a to-do list in life. In fact, the day I make a to-do list, I somehow lose that to-do list because I just can't keep up to that. And I think...

Being more connected in the moment, constantly connecting dots is my method. And therefore, I document them in public because I'll trust people to come and correct me on my decisions. How do you think about opportunity cost? It comes to what metric you're optimizing for. If it's, let's say, wealth for the sake of making argument or opportunity cost, opportunity

not all things create the long-term ROI that you think it does, right? For example, you'll say, I'm going to do a startup or do this job in consulting and I might just miss out the opportunity to make some money in consulting and lose that early day in the startup. I think constantly thinking from a lens of value per hour and cost per hour. So one framework I use is

every now and then we should figure out a way, what is our value per hour? And we should figure out any mechanism, DCF, salary, whatever. And then you say, hey, whatever work I'm doing, is this generating more market cap per hour than I am doing right now? And it doesn't matter what that work is. If it's causing that, then you will do well because you would disproportionately beat the index of your salary per hour, which can be predicted very quickly. Good thing about jobs is that you can make that

Clear prediction. And that's not bad. You can say that, hey, this is going to create this. And people are very good at doing the CAC LTV math saying that if I do this MBA, I'll unlock a consulting job and then I can get placed into Amazon. And this is what my career trajectory will look like. And this is what I can be in net worth or whatever basis. And that's a very safe path that many people take.

many people take the unusual path and tend to do better because they unlock more experiences and the feedback loops dramatically improve. So I believe that historically people who were hired for years of experience, I think in future people will be hired for experiences per year, right? And I think that is going to create this, that is your DX by Y, is your slope really, really high. And I think that's where...

If you look at when does a startup become a big company? It's a good question to ask. Like when does a startup become a big company? Is Amazon a startup or a big company? Is Uber a startup or a big company? Like is $1 billion valuation makes you a big company? I think the answer is very simple. When you reduce the concentration of people with very high slope in the company. Yeah, trajectory matters more. Correct. So if you reduce the concentration of people,

who are not high slope constantly, then you become a big company because by design preservation does not come for people with high slope. They will demand more from the company. They will push it. They will not want things to be in a certain way. And by keeping the high slope people in a company is the hardest thing to do because every ambition of yours will look silly to most people.

And therefore, sometimes I wonder like Elon is going to probably have, I don't know, five, $500 billion plus companies, maybe six. I think the biggest thing he's done, he's just extraordinary at collecting strong slope people all the time and keeping them engaged and

to feel excited and ambitious about doing what they are doing because they just will push everything. And all you have to do is orchestrate those people to do great things. Well, it's so fascinating, right? Because there's attracting high-slope individuals, there's retaining high-slope individuals, and then there's a sort of natural selection where if you allow a certain number of people who are average or low-slope, if you will,

to permeate the organization, it changes the environment in which people, like basically another way of saying high performers want to work with high performers. And if people see, if you're working with somebody who is a high performer, you are better, right? The standards are raised. Even if you're an average, you're slightly above average now because you want to work harder. You're learning more. You're excited to go to work. It becomes less of a job and you're more all in, right?

But the minute a high performer is surrounded by people who are mediocre performers, they want to leave. They get frustrated. They get cynical. There's a clock on how long that they stay in that organization or a clock on how long they stay engaged. Yeah. And therefore, companies who obsess for revenue per employee naturally retain talent density a lot more.

by design because they do not kind of regress to mean if you will uh in many many ways because mean is unfortunately very very boring for high performers because imagine you are in all hands or a town hall and the quality of questions have become so terrible you're like whose company is this yeah exactly yeah right and i think uh it sounds like almost like

you're trying to build some kind of a divide in society but that's the truth US historically constantly brought a lot of the bright minds to come to them and honestly India has lost a lot of

smart brains because we could not do a good job of retaining these people and still struggle to do that and all US but you change a law and you stop the high slope people to come to you some other country is going to benefit from that and they will eventually in the long run fix that because the high slope people are constantly changing every environment they go to and the funny thing about the high slope people is that they recognize other high slope people

almost in literally five minute conversations. Yeah, we're definitely going to need part two, maybe part three. But this is a great place to end this conversation, Kanel. And I really appreciate you taking the time. And I'm already excited for next time. The Knowledge Project is produced by the team at Farnham Street.

I'd love to get your advice on how to make this the most valuable podcast you listen to. Email me at shane at fs.blog. You can learn more about the show and find past episodes at fs.blog slash podcast. To get a transcript of this episode, go to fs.blog slash tribe or check out the show notes. Can you do me a small favor? Go online right now and share this episode with one friend who you think would love it. Thanks for listening and learning with us. Till next time.