March 3, 2022
What is a mental model? What are "the three buckets"? How can Galilean relativity and alloying apply to non-science parts of life? What is the goal-gradient hypothesis? Why is it useful to know about signalling, especially in a social context? How can the concept of marginal safety apply outside of investing? More generally, why should people learn about mental models?
JOSH: Hello, and welcome to Clearer Thinking with Spencer Greenberg, the podcast about ideas that. I'm Josh Castle, the producer of the podcast, and I'm so glad you've joined us today. In this episode, Spencer speaks with Blas Moros about mental models for skill, efficiency, and effective collaboration. On a somber note, our thoughts go out to the people of Ukraine who are in the midst of an invasion. In the show notes, we've included links to some charities that are providing support to Ukrainians, so please be sure to take a look at those. And now, here's the conversation between Spencer and Blas.
SPENCER: Blas, welcome, thank you for coming on.
BLAS: It's a pleasure, Spencer. Thanks for having me.
SPENCER: So you do a lot of writing and thinking about mental models. So I want to today discuss a bunch of these mental models with you, especially the ones you find particularly useful.
BLAS: Fantastic. Yeah, I think these are shortcuts to life in a big way. And rather than having to make our own mistakes, we can learn from others, rather than through reading, writing, interviews, and podcasts, and I'm really interested in diving into these mental models with you.
SPENCER: Great. So to start us up, why don't you tell us what a mental model is.
BLAS: To me, a mental model is a tool that we can use to effectively navigate the world. And I think that, in my experience, it can become a little bit over-complicated and complex. But if we distill it down to its essence, an accurate mental model is something that helps you effectively and efficiently navigate the world.
SPENCER: Great. And so this is some kind of idea that captures some pattern in the world. And then you spot that pattern and know something about it through the mental model. Is that accurate?
**BLAS:**I think that's a great way of putting it.
SPENCER: Awesome. So to start, let's talk about the three buckets. What are the three buckets?
BLAS: So this idea, Spencer, of the three buckets has, I think, profound implications. And the idea is that the first bucket is physical sciences, it's chemistry, physics, it's math. The second bucket is the biological bucket. And the third is a human systems bucket. And what this idea proposes is that if an idea passes these three buckets, if it aligns with what physics math, chemistry tells us, if it aligns with what biology tells us, and if it aligns with like human history, human systems tells us, it's an idea that we can bank on. And one of the key examples of this is reciprocation. So Newton's third law of motion states that if I press on something, it'll press back with the same exact force. If I press on it twice as hard, I'll get pushed back twice as hard. In biology, it says the same thing. If I mess with a cat, a dog, any animal, I can expect them to reciprocate in an equal manner. And in human systems, it's very much the same thing, right? It's tit for tat. If I just disrespect you, Spencer, and treat you poorly, you'll have an inclination to do the same. But if I treat you well, that most likely will be reciprocated. So that's one of these ideas that I think passes the three buckets in a big way. And in my life, it's something I try to rely on and an idea that I think I can bank on.
SPENCER: So are you saying that as a heuristic, if there's a mental model that can be applied in these three different buckets, then it's probably a very powerful, very general mental model? Is that what you're getting at?
BLAS: Absolutely, yeah. So I think the way to think about it is, the first bucket physical systems has been around for 13.7 billion years or so. The second bucket with biology has been around for a little bit over 3 billion years. And then human history, let's just call it 20,000 years. But if time discovers truth, and something passes muster through each of these three buckets, I think it's a pretty strong signal that this idea has been true for a really long time. And kind of like the Lindy effect, that it will likely be true for a long time to come.
SPENCER: I don't know if I buy this kind of truth way of looking at this, because it seems to me that what we're describing here is a pattern, right? So this reciprocity pattern that you put in a certain amount and you get that amount back is going to model some things like it might model the way humans usually behave towards each other, but it's not going to model other things. There are going to be many, many, many things in the world that don't have that pattern. So it seems to me that, like the way I would think about this is not so much that this is a true thing. But rather, it's kind of a useful, general pattern that you can find in a bunch of places. I'm curious to hear your response to that.
BLAS: I think that's right, and seeking truth is this ever changing target, right? I don't know if you can ever really reach truth. But, I think this is something that can help you effectively navigate the world kind of getting back to what we think about as a mental model. So yes, the reciprocation, it sometimes might be equivalent and might be more, it might be less, but I think that in general, if you can kind of go positive, go first, if you can expect people and things to reciprocate in a way that you put out into the world, it's an effective way to try to interact and deal with other people.
SPENCER: Alright, cool. So let's jump on to our first mental model here. Galilean relativity. What does that? How do you think about it? How do you use that idea?
BLAS: So Galilean relativity, in a physics context, is an inertial framework. And if you imagine yourself on a plane, or in the hull of the ship, it might feel like you're not moving at all. But to an outside observer, it's obvious that you're moving at hundreds of miles an hour if you're on the plane, or that you're at least cruising along if you're in the hull of the ship. So if you're in the system, you might be a little bit blind, or at least, it's a little bit more difficult to see that you're moving. Whereas if you're outside of it, it's a little bit clearer.
SPENCER: And my understanding is physics is that we can say something even more extreme like, if you were in deep space, and you were moving at a constant velocity, there's no way to tell that you're moving as opposed to everything else moving. And even the question whether one of them actually is moving, the other isn't, is sort of not well defined. You're moving relative to the other objects. Is that right?
BLAS: Yeah, that's right. And even putting ourselves in just our everyday lives, right, we're spinning at 10s of 1000s of miles per hour being on Earth. But we can't feel that in any noticeable way in our day to day lives. One way that this could apply to our lives is thinking about a system as different ages. So I just turned 30, if I think back to 20 year old Blas, I can see some of the obvious mistakes in hindsight. But at the time at 20 years old, it wasn't obvious. I thought I was doing the right thing, at least trying to do the right thing. And without a doubt, 40 year-old me will look at 30 year-old me and say, "you idiot, how could you make those mistakes?" Yeah, it's an idea from physics. And it states that you can never truly grasp, understand, or define a system that you're a part of. And we can take this a couple of different ways, but a fun way that I've tried to apply it on my own life is, I just turned 30. And one way to think about it is that I'm in a 30 year-old system. And if I look back at myself, when I'm 20, I see all the stupid mistakes that I made. And it's so clear to me now, because I'm not part of that system anymore. But 20 year-old Blas at the same time, it was not clear to me. I thought I was doing the right thing, and I wasn't being an idiot. But in hindsight, I clearly was. And without a doubt, 40 year-old me will look at 30 year-old me and say, "You idiot, how can you make those mistakes?" So the idea is to try to find systems, find mentors, find other processes that help you at least mitigate, and help you step outside the system that you're currently a part of. And that's where I think reading mental models, having a mentor, learning from other people and your own successes and mistakes can help you mitigate those blind spots that form from being part of a system. So I think it's a really interesting way to try to understand how blind spots occur in your life, and maybe ways to mitigate them.
SPENCER: So if I understand this properly, the way you're kind of using Galilean relativity as a mental model, or you might say a metaphor, is that often when we're inside a system, we don't even realize that we're in the system in some sense. Like, I think of this with regard to filter bubbles. Like, if everyone you know has a college degree, you kind of assume that college degrees are much more common than they really are. And there's kind of many examples of that. Or if you're a fish, you're always swimming in water, you don't even realize that water is a thing. You just think that's what there is, is that right?
BLAS: Yeah, that's exactly right, Spencer, and David Foster Wallace kind of made that fish analogy and his now famous commencement speech “This is Water”. And that's exactly right. Sometimes the things that we're immersed in are the hardest things to see. And it takes a little bit of a break from that system in order to see it a little bit more clearly, and to maybe get rid of some of those blind spots, or at least mitigate them.
SPENCER: So what's another application of this Galilean relativity mental model, or metaphor?
BLAS: I think that it's a great way to look at your decisions, your life, the mistakes you've made, and understanding where you are, and what systems you're a part of. Not only is it your age, but your geography, your language, the industry that you're in. And I think it comes back to trying to see things from other people's points of view, seeing through other's eyes. And that's incredibly difficult because it's comfortable to see things through your own perspective that it's easier in a big way. But I think by becoming aware, not only of other people's perspectives, but the systems that you're a part of and that they're a part of, it could help open up different tactics, different ways to, again, mitigate these blind spots, and blind spots usually cause mistakes.
SPENCER: The next thing I want to ask you about is the mental model of alloying. So what is that in a kind of precise context? And then how can we use as a more general mental model?
BLAS: Sure. So in chemistry Spencer, creating an alloy is when you combine two different elements. And sometimes it's stronger, and sometimes it's weaker. But this is done a lot with steel, and you combine a bunch of different elements, and you create something stronger than the pure material on its own. And the idea here is, you can take a couple of different personality aspects, something that's natural to you, you can combine it with something that is unnatural to you. So, I was a former athlete and sales, and being gregarious tends to be a trait that is a little bit more common in athletes. But the other side of the spectrum, listening, and kind of the technical skills is a little bit less common. So one way that we can think about this idea of alloying, as it comes to our day-to-day lives, is what two skills can we take that are not commonly found together, which, when combined, create something stronger than the pure version of yourself. And in me, I know that I'm pretty outgoing, and what I could work into myself, what I could alloy with my personality is patience, and that is way more effective in my life than trying to become an absolute pure version of my natural state. And, again, it's easy to refer back to what's natural to you, whether you're technical, or you're more sales-oriented, or introverted, or extroverted. But usually, the most effective thing you can do is blend in another personality trait that is uncommon in your natural personality. And I think this ties into what Scott Adams calls the talent stack. And it's kind of gives you a multiplicative effect, rather than just an additive effect.
SPENCER: So is the idea here, when it comes to personality, that for traits that we have very little of, there might be a big bang for the buck to add just a little bit of one of these traits to what we already have?
BLAS: I think that's right, Spencer, and it kind of gets that maybe an 80-20 type mindset where it takes a huge amount of work to go from 95th percentile to 99th percentile. But if you're in the 10th percentile in something, you can pretty quickly move up to at least the 50th. And from what I've seen and kind of learned and experience from others is a lot of the time, unless you're really trying to be the best in that part of the world, whatever that whatever that skill might be, it's usually more effective to blend in something that you don't have naturally.
SPENCER: Yeah, it's interesting to think about this with regard to skills, too, it's just really not that hard to develop a skill to the point where you're at something like 95th percentile or 97th percentile, because if you just practice the skill of one hour a week for, you know, five years, you're probably going to get there. Just because you know, for any given skill, very few people really practices systematically.
BLAS: That's right, Spencer, and I think that's what Scott Adams is trying to get across with his talent stack is, it's maybe hard to be the absolute best in any one thing. But I think he references himself where he says, I understand business and economics fairly well. I'm pretty funny. I'm a pretty good writer. And in any one of those things alone, I wouldn't be world class. But I can combine them in such a way to make myself pretty unique. And that's where I see his idea of this idea of alloying kind of coming together.
SPENCER: What you said before also reminds me of a technique that you can use to generate new, like startup ideas or product ideas or other ideas as well, where you think about what are two areas I know really well that are completely unrelated to each other. Right? So suppose someone, for example, is really knowledgeable about accounting, because maybe they used to work in accounting, and they're also really knowledgeable in, let's say, natural language processing because maybe that's a hobby of theirs that they've been learning a lot about. It's like, the idea is at the intersection of accounting and natural language processing is probably really not that well-explored because so few people have knowledge for those things. And so you can use this kind of intersection of different unrelated things as a way of finding ideas that maybe others haven't thought of.
BLAS: I love that. I think that's exactly right. And as all these fields grow, and as we make progress, I think that's why a lot of these things are tractable. It's not a zero-sum game where the fields get exploited, then there's nothing to do. There's always something being new, some new frontier to explore. And if you look back in history, the major innovations came from people outside a given field. So it wasn't really someone immersed. And maybe it gets back to Galilean relativity in a big way. But they're not people who are, quote-unquote, experts in that field, at least for the really revolutionary steps. There are people from outside to give them a feel to kind of have a different view, or able to combine different ideas in a unique way, or just see the potential is something that people immersed in that field aren't able to see.
SPENCER: Hmm, yeah, well, it certainly seems like a lot of people have taken ideas from one field, apply them successfully to another field where they've been really fruitful. I don't know what percentage of great discoveries come from within a field versus someone like across applying, I think it's probably hard to count. But certainly, both seem to happen.
BLAS: Absolutely. And there's a paper out of Stanford that I'll share with you after Spencer that kind of talks about why a lot of these ideas tend to come from outside of a given field rather than from inside of it.
SPENCER: One thing I think about is just how reality doesn't care at all about the way academics divvy up disciplines, right? Like, if you're trying to actually solve a problem in the world, you might think, Oh, this is a computer science problem, but then find yourself doing math, or find yourself doing psychology, or whatever. I mean, because the problem doesn't care that there's a discipline called Computer Science, another one called math, etc. There's one philosopher who I really respect his method a lot where he wanted to deeply understand Occam's razor. And as he got more and more into it, he realized there were computer science elements to it. So he had to teach himself computer science. And then he realized there were mathematical elements, he started teaching him some math, and the papers he ended up publishing about, I think, probably almost totally unreadable to most philosophers, because they involve elements from computer science, and math, and so on, that most philosophers probably have never seen. But it's just was his quest to actually figure out what's true about Occam's razor that sort of led him going from discipline to discipline.
BLAS: I love that. And yes, you go outside in nature, there are no clean lines anywhere, right? It's all unified. It's all whole. And it's just our human frailties that get us to divide the world, and those who can sort of blend different disciplines, and not silo things are usually the most creative people.
SPENCER: So the next mental model is the goal gradient hypothesis. What is that? How can we use that?
BLAS: So within biology, Spencer, is this idea that it's an incredible boost of energy when you have a finish line within sight. So you go to a marathon or you've ran in a marathon, you're dying by the 24th mile, and you turn the corner, and you happen to see the end of the race, and you get this incredible boost of energy. And the idea there is that you have to balance long-term thinking with short-term goals. And that's one way that we can take advantage of this biological principle is, by not having such long-term goals where you don't really see the feedback loop between what you do today, and the outcome of it, you might be able to give people a little bit of a burst of energy, and the tension there is not becoming short-term focused on tying everything to short-term goals, but marrying the two where you have a long-term vision that you're all working towards, with shorter feedback loops that keep people energized.
SPENCER: Right, I wonder if this is purely a sunk-cost fallacy thing that's coming into play, but in maybe a helpful way, where, imagine that you've completed sort of 90% of a project, I think a lot of people are gonna feel really motivated to go finish that last 10%. And they might get a boost of energy to do so. Whereas if they're only halfway done, maybe they feel less like, Oh, I definitely want to finish this want to make sure I get it done. But you could ask the question, is that rational? Well, maybe it is rational, if the value of the project is only unlocked at the very end. So if you only have 10% left, you only have to do 10% incremental work to unlock all that value. Whereas if you have 50% less, you have to figure some work on like that. So maybe it's rational, or maybe it's kind of leaning on the sunk-cost fallacy a little bit where we're like, Oh, I've already put in 90%, I don't want to wasted all that effort. So I want to get the last bit done.
BLAS: Yeah, I think that's a great way of looking at it. And what are the sunk-costs of that, right? Can you glean some rewards from the effort you've put in already? Or is it kind of an all-or-nothing binary situation.
SPENCER: So you mentioned how we can kind of use the goal gradient hypothesis, I guess, by setting smaller goals. So a higher percentage of the time were close to finishing them and we get this extra boosts, is that right?
BLAS: So one way that I tie this into my day to day work is through tying it with the Pomodoro Technique. So in that sense, the cadence might be an hour of nondistracted really deep work coupled with 5 to 15 minutes of a break, right, check email, and do a couple other things that give me a little bit more energy. So that way, there's a longer term vision, and shorter term goals that kind of give me the energy, and the the time to keep working on what I most enjoy.
SPENCER: Alright, the next mental model I want to ask you about is signaling what is signaling? And then how can we apply it.
BLAS: So signaling is an idea mainly found in the biological world and the human systems world. So if we go back to the three buckets, this is bucket number two and bucket number three. In the human world, we see this all over the place, where status seeking animals were hierarchical. And whether it's the car we drive, or the clothes we wear, but there's some sort of signaling almost at all times. And what's interesting in the biological world is this appears, too. And it could be through the colors that an animal has to show that it's poisonous. But one example I love is called studying. So when a lion finds a gazelle in the savanna, and it's a healthy gazelle, you think that it just start running as fast as it could because its endurance and its speed is just slightly greater than the lions. But what happens a lot of the time is that the gazelle actually just starts jumping up and down right where it is. And this might seem absurd at first rush, but what the gazelle is getting across the lion is, hey, I'm healthy, I'm faster than you. We're both just going to waste energy if you chase me, so why don't you just move on, and try to find a less healthy gazelle? So that's a pretty extreme form of signaling that's to me interesting to think about.
BLAS: Yeah, so the general idea of signaling, is it basically taking an action in order to transmit information?
BLAS: Yeah, I think in an energy saving way, at least in the biological realm, right? So, calories are precious out on the savanna, both the lion and the gazelle win by not having to expend all their energy on running or chasing each other. And in the human realm is to convey something usually non-verbally, right. So again, we go back to status signaling things like watches, and cars, and showing others that you have some sort of disposable income, which puts you higher up in this type of social status hierarchy.
SPENCER: If we think about this in the animal kingdom, you mentioned the kind of a poisonous animal, like, take a poison dart frog, they have these really kind of interesting, almost electric looking patterns that we tend to associate with being poisonous. And you might wonder, Well, why do they look so bright. And by extending this idea is, if you're poisonous, you really want to communicate that to other animals, right? You want them to know, so they don't try to eat you. And if they do try to eat you, they're going to be in for an unpleasant surprise. But then, of course, if this is actually true, then now there's an incentive for other animals to have a look that makes them look poisonous, even though they're not because it might be sort of cheaper evolutionarily to like get the same patterns as the poisonous animal than to actually be become poisonous. So now you get to this funny game of an animal might look poisonous, and then another animal that wants to eat it sure has to make a judgement. Is it actually poisonous? Or is it just trying to trick me? Is it just signaling that it's poisonous?
BLAS: That's exactly right, Spencer, and you see that all the time, whether it's frogs, or snakes, or even butterflies, who get the design of too large eyes on their wings to kind of show birds who are above them that, hey, take a second thought before you attack me because I might look like a butterfly, but I could be something different. So yeah, like you said, it's a brilliant evolutionarily efficient move to try to become a mimic, a copy of the poisonous animal if you're not the poisonous animal.
SPENCER: Right. And of course, this applies to a great deal in human culture, where you might have kind of the cool kids who are trying to wear the cool clothing, listen to the cool music, etc. And then you have the less cool people who want to be cool. And so what they're trying to do is they're trying to figure out what the cool music is, and what the cool clothes to wear are, etc., so that they seem cool. And so there's this endless game of, you might wonder, why is style changed so much? Why don't people just decide the certain clothes look nice and then just wear them forever? Why is it that you know, one season this clothing is cool, and then a different season different clothes is cool and hemline length keeps changing, and so on so forth. And it's sort of this never ending grace to sort of stay above the people trying to mimic, so the cool people staying in the know, and then being mimicked, and then changing again, so they can be mimicked, and so on.
BLAS: Exactly, exactly. And it ties in, I think what you mentioned there brilliantly this idea of the Red Queen effect, right? Where if everybody else around you is adopting, and evolving, and always getting better a little bit faster for you just to keep up, you have to move at least as fast. And if you want to get ahead you have to sprint. And I think that, again, whether we're talking in the biological world, or investing, or starting a company, or even self-improvement, that's a really important principle to keep in mind that if you're standing still, you're actually moving backwards, because everybody else around you is, at least on average, getting ahead, taking one step forward.
SPENCER: There, you think about someone who, maybe they were cool in the 80s, and they just kept wearing cool 80s stuff, and then they're gonna seem really out of date, and kind of old fashioned. And then every once in a while, 80s will come back in a fashion, they'll be cool seemingly for a brief period.
BLAS: Yeah, a broken clock is right at least twice a day, right. But that's why I think this taking this principle into our own lives of always adopting, and trying to improve even just 1% a day compounds on itself. And it's such a rich way to live. But it is difficult, and you can never stand still, you can never rest on your laurels. It takes this open, dynamic, curious mindset to keep growing.
SPENCER: One aspect of signaling that I find really interesting is if you think about sort of like lower class, middle class, upper class, and how signaling can work differently. For example, you might have the upper class doing this incredibly subtle signaling where they might view it as really ghost to like drive a really fancy looking flashy car. Or they might view it as very ghosts to have a handbag with a giant Prada logo, showing that it was incredibly expensive. Instead, they'll do these things that are sort of very "tasteful", where you actually have to kind of have a bunch of knowledge to realize just how expensive the thing is, but because it's not just kind of advertising on its face, whereas maybe people who are middle class who were trying to show-off their wealth will do it in a kind of a more bold way, where it's kind of more obvious.
SPENCER: Yeah, and I think it's something I'm really excited about, and curious to see how it moves forward over time. But it used to be that there kind of used to be a limited number of hierarchies you could climb. It was geographically bounded, there weren't that many different types of jobs, there weren't that many different types of way to make money. But today, with internet scale connectivity, I think there's kind of unlimited numbers of hierarchies you could climb. And if you don't like one aspect of it, there's a pretty good case to be made that you can switch hierarchies pretty quickly. And whether it's geographically bounded, and you're in a smaller city, and nobody likes the things that you're into. There's niches online where you can get to meet other people who have similar interests, or again, whether it's geography, or skills, or interests, whatever it might be, there's always kind of a group of people that you can compete with and collaborate with. And that was really different than it was 50 years ago. And I think, in a big way, hugely exciting.
SPENCER: Yeah, I think that's really great point. And one thing I think made my childhood significantly happier is that I was always part of multiple social groups in high school. I had a social group in my school, and then I had social groups outside of my school, and it gets really powerful, because if you're only part of one social hierarchy, then you'd kind of think of yourself as however that social hierarchy views you, you're the sports kid, or you're the nerdy kid, or you're the goth kid, or whatever. But if you're part of, let's say, three social hierarchies simultaneously, in one of them, you might be cool. In another one, you might be nerdy. And another one, you might be the person who's in the skateboard, or whatever it is, and they all can kind of view you differently. It can make you realize, oh, I'm not kind of bounded by the way I'm viewing this hierarchy. I can kind of define my characteristics. And also, how one hierarchy views me isn't the sort of end of the world, right? Because I think for a lot of kids in high school, the idea that they kind of get rejected by their social hierarchy is sort of like devastating. It's sort of like the worst thing that could happen to them. Whereas if you've got three of them, that sort of takes all of the pressure off.
BLAS: It's a great point, Spencer, and maybe it ties into our idea of alloying that we talked about a little bit earlier. But it's really a lot of pressure if you're going for broke, and being trying to be world class in that one thing, because it takes a huge amount of time. And like you said, your ego, your identity is tied to that one thing. And again, I play tennis in college, and I can definitely relate to this. And it had a huge impact on me if I won or lost. And if I had a good day training, or a bad day training that impacted sort of everything else. And I think one thing that could have made my life at that point a little bit healthier was different ecosystems, like you said, different social systems to be a part of. So okay, I lost but I still have this group of friends, or I still have good grades, or whatever it is. And if you want to go for broke, and be world class, that's kind of the trade-off you have to make. But it's also fragile in the sense, and difficult once you move on from whatever that pursuit is, where everything you've done, who you are is tied with that identity. And developing those different skill sets is probably a robust way to try to think about things.
SPENCER: So let's jump into the next mental model. What is margin of safety and how can we use this idea?
BLAS: So it's originally an idea from engineering, but Buffett and Munger sort of in the investing world have taken it. And in a big way, it's become a fundamental piece of the value investing world. And the idea is that, at least from an investing mindset, you're trying to find an investment that has margin of safety. And what that means is it's cheap enough, and valued enough, or at the right price, so that even if you're not totally right, there's enough room for error, where you're not going to get totally burned. And it's this idea that if you avoid the losers, the winners will take care of themselves. And that's kind of fed this Berkshire mentality across the value investing world of finding investments that are cheap to the point that they offer a margin of safety. And in the engineering world, a margin of safety gets you to design things in such a way so that there's enough room for error. So if you expect 1000 tons to drive across your bridge at any given time, you might design it in such a way so that it actually can actually hold 5000 tons, and you never want to be so close to the edge, that you're worried about the system failing in any catastrophic way.
BLAS: Right. So 5000 minus 1000, which is 4000 would be your margin of safety. It's how much extra you have beyond what you technically need. Right?
SPENCER: Awesome. And so how can we use this in other contexts.
BLAS: So again, going back to Buffett and Munger, they talk about it also outside of an investing mindset, but also in just relationships, right? So they kind of have this newspaper test. And for me, that's a margin of safety. And the idea is, you never want to do something that you'd even be remotely ashamed of, or nervous if it showed up on the front page of your local newspaper. And that's the way that they've conducted their lives. And I think it's a great litmus test for us. And you imagine yourself, nobody's watching, nobody will ever find out. Well, would you still do that, if it were to show up on the front page of your local newspaper? And I think that's a great application of this idea of margin of safety.
SPENCER: Yes, it's a heuristic say, in business dealings, don't do a deal anything that you wouldn't want written about in the newspaper, it's a kind of quick principle that adds a lot of constraints. But it probably, the vast majority of time, kind of gives you a pretty good decision rule.
BLAS: Exactly. And in a big way, Buffett and Munger are aiming for no brainer decisions. And another line that they have is they never want to operate so that they're even close to the out of balance lines, right? They want to be right in the center of the field. And like you said, that eliminates a lot of things. But when something appears that seems to check all those boxes, you can lean into it, and lean into it in a big way.
SPENCER: So how does it connect to margin of safety? Is the idea that by using such a stringent rule for which kind of business dealings you'll do, you're so far from the kind of doing stuff are shady that you have that margin of safety there?
BLAS: That's the way that I think about it, Spencer. Yeah. And it gives you a lot of flexibility because if you're doing something, again, whether it's investing, or relationships, or something where you're requiring seven things to go exactly right for it to work out, the odds of that are actually pretty low, depending on the probability of each of those things. But even a 90% probability to the seventh power gets you a pretty low chance of all those things happening at the same time. But if you have two or three things, and each of those are no brainer decisions with really high probabilities, it gives you a tremendous amount of margin of safety.
SPENCER: Because I just checked 0.9 to seventh power is about 47%. So yeah, if you stack up enough high probability things, you'll actually get a really low probability of failure to occur.
BLAS: Yeah. I really liked the idea. And the tension there is which systems are mathematical, where you can actually multiply those probabilities, and which aren't. I think it's a really fun way to think about things. But also be careful that you can't tie everything back to mathematics.
SPENCER: So let's go meta for a little while. Why mental models? How did you become so obsessed with this? And why do you think everyone should learn these?
BLAS: I think mental models are really helpful mental tools. And if you think about a mental model as something that helps you effectively navigate the world, why wouldn't you want a multitude of these things, and, again, going back to Munger, but he has this idea that you don't want to have just one mental tool in your mental toolbox. So learn the best ideas from all these fields. And it's not impossible, it takes time, and it takes curiosity. But that's what this project with the Latticework is trying to get across. We can define and curate, organize, and interconnect some of these key ideas from all these different fields. And if you do it long enough, and you understand them deeply enough, it gives you a roadmap in a big way of how to navigate life, and through different scenarios, and different contexts, how do you take these? What I think are really important and valuable ideas, and apply them in your life in your context to give you the outcome that you're looking for whatever you're optimizing for.
SPENCER: So can you tell us a bit more about what is the Latticework?
BLAS: So when I finished reading Poor Charlie's Almanack, I was looking for a community of people where I can really go deep on these ideas. And Shane Parrish at Farnam Street has done a really good job of this. And what I'm trying to do with the Latticework is go even deeper. So we've defined what we think are some of these key ideas. And the idea is that this is an open, and dynamic system where we can add ideas over time, we can iterate, we can refine, and improve. But what we're looking to do is really curate, organize, interconnect these big ideas so that we can become a one stop shop, a trusted resource with people who have shared values who have this deep hunger for lifelong learning, and curiosity. And it's early days, we've been kind of alive for six months now. But it's growing nicely. And we have some really amazing people part of our community.
SPENCER: So how many of these mental models do you kind of have in your system?
BLAS: So it's a little less than 200 right now, Spencer. We're calling them disciplines. And those are things like worldly wisdom, physics, chemistry, and then there are ideas that fall into each of those disciplines.
SPENCER: Awesome. So the idea is that people can go to your website, they can learn about these different mental models. And then there's a kind of community you can join, where they will work with others to kind of go deeper on this.
BLAS: Yeah, exactly. So we, I think of it as two different ways. There's synchronous learning, and asynchronous learning with the community. So synchronous is things like community calls that we host just about every week, and those are either around a specific idea like mental models, or the three buckets, like we've talked about today. Or it's a question that one of the partners wants to discuss in a deeper way. And then we can get a community, a smallish community of people around that. And it's really exciting. We get people together who are thoughtful, kind, caring, and kind of have this multidisciplinary streak within them to get together. The asynchronous side is we've developed a tool that's embedded into our website that lets our community take notes, and take highlights. So you can see the main content on the website. And you might say, "Blas, I totally disagree with what you've written here, or have you thought about it from this perspective?". And then I can reply to that, and other partners can reply to that. And it really helps make this an active learning experience, rather than just a static page that you've read once, and sort of forget about. It's something that hopefully can be iterated, and improve over time.
SPENCER: That sounds really cool. If you'd reflect on your own life, what is one of the mental models that you've just find yourself going to again and again.
BLAS: This idea from Game Theory of Win-Wins, Spencer, has had a really deep impact on my life. And I think it ties in with this idea of reciprocation from the three buckets that we talked about early on. And it's just this deep thread in my life that I found that the more I give, the more I actually get. And it takes kind of a long term perspective. And it's not something that you might get rewarded for right away, or sometimes even ever. But for me, that mindset of trying to find a situation and people who think in these terms, and I think Naval Ravikant had this idea of playing long-term games with long-term people. And I think that the only way to sustainably do that is through this Win-Win mindset. By default, anything that has lose in it is fragile, and sort of short-term. And I love this idea. I love this idea of trying to always find the win in the situation. And if it's not a win for me, I feel good about walking away from it. But in any structure, and any dealing in any work, trying to find a situation where the overlap is net positive for everyone involved.
SPENCER: It reminds me of something that's really useful in negotiations, where I think often people think of negotiations as sort of competitive, like you're trying to get the best price the other person trying to get the best price. But I think as people get better at negotiating, they realize that very rarely do negotiations just involve a single thing, like, very rarely is it you know, just dollars. And that's the only thing that matters in negotiation. And so as soon as you start bringing other things in the negotiation, sure to realize there's a lot of wins that can occur where, maybe you care about x more, and I care about y more, so I can give you some more x and you can give me some more y and suddenly now we're both better off, and sort of this reframe, where you take negotiation from kind of purely competitive, over one variable to a collaboration where we're working together to figure out how to optimize both of our value in the situation.
BLAS: I love that. And it ties into this idea of Galilean relativity again, where if you do that properly, you really have to understand what is a win for the other person, right? You have to be able to see through their eyes, and understand the system that they're a part of. The lateral networks that put pressure on them, what they're really optimizing for. And if you're only trying to get a win for yourself, you're going to miss all of them and I think In the end, everybody will be worse off. And I think that's a great example of concern.
SPENCER: Right. Because if you're kind of stuck in your own frame, you might think that they want the same things you do, or they care about them as equally to them that you care about them. And often, that's not the case. I think when negotiating with companies, this happens even worse, where people kind of model the company as a kind of monolith, where in practice in real life, you want to do your negotiation with a company in such a way that the company as a whole benefits, like, makes more profit or, reduces risk or whatever. But also that the individual person you're negotiating with gets what they want to, and chances are, there might be another kind of decision-maker above them that also has to get what they want. So there might actually be like, at least three different parties, maybe more, that you're kind of having to think about the needs of, and you can just think of it as like, oh, well, this is what the company wants. It just kind of wants to maximize profit, or something like that.
BLAS: Yeah, it's a great point. And I think it's why try to deal with the ultimate decision-maker as often as you can. And if we go back to a multiplicative series, if you have to please five people, and they all want different things, that's pretty difficult to do. But if you can end up deciding, or dealing with the person who will ultimately decide, see what's a win for them, look through their eyes, that becomes a whole lot simpler.
JOSH: A listener asks a sort of funny question, they say, let's imagine that a person has the objective of doing the opposite of thinking clearly, however you define that, what are five actionable steps they could take to achieve that goal?
SPENCER: That's a great question. So I'd say step one, believe what the people around you, believe no matter what it is. Step two, instead of trying to find evidence against your beliefs, always search for evidence that your beliefs are already correct, sets, you know, essentially confirmation bias. Step three, surround yourself only with people that think like you, and avoid people that have opposite opinions. Step four, assume that people that disagree with you have bad intentions, and are ignorant, stupid, or evil, rather than assuming that they're just people who came to different conclusions because they have different information. Step five, think of everything in binary. It's, you know, it's true or it's false. It's good or it's bad. It is that or it isn't that instead of thinking in terms of shades of gray, and probabilities and nuance.
Click here to return to the list of all episodes.
Sign up to receive one helpful idea and one brand-new podcast episode each week!
Subscribe via RSS or through one of these platforms: