#209 Yen Liow – Episode Notes

Key Takeaways

Game Selection- Where do you focus all your energy? This could be the most important question. You need a deep understanding of your authentic self and match that with a game of where you can have high performance
All of excellence comes back to decoding then decoupling, breaking down each element. Decoding. Simplifying. Executing. Refining.
The truth will set you free but first it will piss you off. “There are lots of times when you’re gonna be incredibly disappointed about what you find about yourself, right. And then you are faced with a decision of what are you going to do about it? Life’s gonna ask really, really tough questions, and I think your life will be defined, I think my life will be defined, by the way that I answer those questions”
Energy x Technique x Focus = metaframe of life and essential for self improvement
“You only have one life, live an epic one“
“Go sample a lot in the 20s, tool up in your 30s, go for it in your 40s, do everything faster, and then one last thing I’ll say to everybody, it doesn’t matter of your stage, you’ll be okay, bring it down a notch. You’ll be okay. It will work itself out. You will find a way, it’s not always pleasant, but you’ve gotta quiet it down so that you can give yourself a balance and a chance to work it out and enjoy that journey because it doesn’t last very long.”

Top Quotes

“Kid, bigger, faster… Everything in life, the risks are not as bad, if you can work them out, no one ever knows before they start, you can work it out, and you’ve proven you can work it out.”
“All of mastery requires philosophy and deconstruction. And so decoding is a very, very important part of what I do because I’m trying to work out persistent patterns of excellence, but one of the most important parts of it in game selection is where do you focus all that energy, right? People can spend hundreds and hundreds of thousands of hours plowing away at stuff and they haven’t asked the first order question, where do you focus it?”
“to live a great life, you have to define a perfect day, and you have to play offense with your day and you have to design your surroundings and your day in order to optimize it. Otherwise, you’re always playing defense.”
“So if you’ve done your best and you’ve given your all, you’re fully prepared and you are already broadly world class, you can’t fail. You may not win, but you can’t fail, and that is just such a different mindset to go through life with.”

3:27 The Mongolian General Subotai

· Subotai was Genghis Khan’s right hand man & most accomplished general

· What attracted Yen to him was that Genghis and Subotai led an army that conquered so many countries – he is amazed that a team of people can accomplish so much together

· Read Jack Weatherford’s book Genghis Khan and the Making of the Modern World Inspired him to decode what Genghis Khan and Subotai did to achieve greatness

· “To do extraordinary things, you can’t do normal things”

6:22 Yen’s origin

· Son of a dentist and teacher who moved from Malaysia to Australia when he was 5

· Grew up in Australia in an environment where many people had never seen Asian people before, they thought he was Greek

· Went to college in Australia and studied commerce and law

· “For those, your listeners who are immigrants in any shape or form, there’s a resilience that comes with that existence that drives them for a very long time, frankly never leaves them and that is one of my fuel sources”

9:56 Peter Gunn was his mentor

· Peter was his best friend’s dad. They worked in Peter’s facilities, physically laboring for Peter’s company PGA. Peter was one of the most successful self made transport magnate in Australia

· “I think hard work is such an important part early in someone’s life, it grounds you forever”

· You’re above no one, and it teaches you relatability

· The first thing peter taught them was that “life doesn’t owe you anything”

Life changing lesson of capitalism vs. Labor

“If you want to create a fortune you’ll never do it on an hourly basis.”
At the end of the summer Peter would have Yen sit down and ask him the following questions and force him to think. This process gave Yen clarity for his 25 year vision.
- What did you learn?
- What did you observe?
- How would you do it better?

Lasting quotes from Peter

“And he simply said to me, in your 20s, go go go, try a lot of things in your 30s, go skill up and your 40s go for it and do everything if you can, quicker.”
Advice Peter gave Yen within the past few years -“Kid, bigger, faster… Everything in life, the risks are not as bad, if you can work them out, no one ever knows before they start, you can work it out, and you’ve proven you can work it out.”

16:08 His Competitiveness

· Started by appreciating that life is finite

· “Each chapter of your life is very finite, and you should try to enjoy as much as you can of each part of it and do your best”

· “I wish I’d known that I was one day closer to death everyday and I would have lived differently.” by Michael Landon.

· Great appreciation for the sacrifice and luck

20:30 Investing

Yen has been investing stocks since he was 14 years old, so he always knew he would do something business related.
Yen explains that if anybody wants to be significant in the amount of wealth they create in their lifetime, the number one most simple part of it is value creation and then character, the two have to go in together.
Working at Bain and Company after college gave Yen an immense amount of confidence. After Bain and Company, Yen worked at Ziff Brothers Investments and credits those 13 years as the best of his life.
“You can’t save to a substantial life-changing level of wealth, and so I started fixating on understanding patterns of value creation”

24:18 Importance of Game Selection

Game Selection is focusing on the question of “Where do you focus all your energy?” “Game selection is just set yourself up in a game that you can win”
Yen explains that he is looking for “persistent patterns of excellence and for the right side in terms of just pure excellence.”
In order for Game Selection to work you need to understand how it meshes with who you are.
The second component of game selection, is making sure you understand your authentic self. You need a deep understanding of your authentic self and match that with a game of where you can have high performance
“Know thyself could be the most important set of words in investing”

36:16 Case Study Methodology

Aravt uses a method called case study methodology Yen learned from Eddie Lampert.
“We’ve literally done thousands and thousands of hours on this, generated hundreds of cases internally. What that is, is literally taking clusters of the best investments in history and trying to learn patterns from them. And it’s very, very detailed work, it takes a lot of work per case, in fact, it’s best done as clusters because you’re trying to look for patterns. You’re not trying to look for just idiosyncratic outcomes, and what we end up doing is it… All of excellence, in my view, comes back to decoding and then decoupling, breaking down each element of it.”

38:36 Focus and Fortitude

Investing is the most extreme version of competitive learning and there’s an enormous amount at stake in high stress environments. Yen views training as an investment in the long term.
Training and mastery require ‘Controlled’ and ‘Uncontrolled’ leaps.

An uncontrolled one is the a-ha moment… A controlled one is done through intense training, focused training.
“Decoding, simplifying, executing and refining”

40:46 Mental Plateaus

“Plateaus are where the masters live”
Most people drop off during the plateaus of learning because it’s where you hit a mental block. “And so what I’ve discovered is the masters love the grind of training, they absolutely love the training and they fully embrace that they’re not going to be 5-10% better every day. Even one, two, three basis points each day is better, or if it drills in muscle memory, even better.”

42:31 Being True to Yourself

Stress cycles are wonderful ways of discovering who you are and mistakes are great teachers because it’s where everything is revealed. This is how Yen operates Aravt.
“You observe everything about a person, a business under stress. You can observe nothing when things are going well.”
Introspection has to become a core part of what you do.
“The truth will set you free but first it will piss you off”

46:53 Facing Tough Questions

Aravt launched in February of 2014 with an incredible base of investors and then Yen had the 3 worst years he’s has in 20 years.
Yen and his team were embarrassed and upset but they asked “What is going wrong?” They started a process of deep introspective work over the summer of 2016.
“And so one of the things that we found in a deep introspective work, we looked at all the data sets, right, and this is, by the way, as a leader, it’s a hard thing to do. You have to put the ego aside and go, what am I screwing up here? What are all the mistakes?”
“Life’s gonna ask really, really tough questions, and I think your life will be defined, I think my life will be defined, by the way that I answer those questions”

49:34 Self Reflection

It requires a team, it requires tremendous introspection and requires vulnerability to expose yourself to truth, and then enough truth tellers to actually tell you what they’re seeing and your ability to accept, and then adapt from it.

Self-reflection requires a data set and Yen journals and writes down each time they’re making a decision.
You have to put the ego aside. You have to accept whatever the data is about to tell you.It’s going to be very painful but the more you can put the ego aside the more you’ll be able to absorb the truth.
You need people around, “truth tellers” who you trust and can tease out your ideas and ask the hard questions to you.
Patterns, looks for persistent patterns… Don’t look for one offs

“You learn very little from success, you learn a tremendous amount from failure.”

52:20 Type Two Learning

It’s very difficult to see change or the strength of something when you compare it to itself. It’s really powerful when you contrast it to something else.
Studying failure has allowed Aravt to identify points of failure earlier. Aravt highlights in their notes with different colors everything that is disconfirming so they can scan their notes very quickly for what’s disconfirming. “There’s a very big danger when you only study success because it blinds you to all the counterfactual and seeking dis-confirming evidence is actually one of the most important parts of what we do”
“So we’re studying success and failures, so in the same economic cycles, the flip side of what succeeded and what failed”

54:09 What Makes Aravt Unique

Aravt’s better investments

“There’s an ecosystem effect when you study and invest in quality, which I don’t believe you can get in other forms of investing”

3 ways to gain and edge

Strategy– Is game selection. Did you choose a good game that’s inefficient?
Skill– Are we skillful at executing on this? “Temperament, by the way, is a huge one. In our game, can you be patient and can you wait”
Structure – You must create a system because when systems are built a structure is built. When it’s built elegantly it allows for imperfect inputs to generate world class outcomes.

59:20 Team Member Qualities

After Yen finds someone with talent and character, he looks at three questions:

Can you operate well together? Can you make money together and in all businesses?
Does this person make us better, can we learn together?
Does this person give us energy?

“It’s those last three filters, and when you get them right, incredible things happen, and then when you go through stress cycles, you really see it. I’m very proud and very blessed to have a great team around me.”

Skill development = Energy x Technique x Focus

First you have to break down the whole process and then isolate the process you want to improve on. It’s a game inside of a game.

Then breakdown the key elements of that process.
Then you must spend months isolating on key elements
“if you make people 1% better on each of these dimensions collectively, it becomes an incredibly potent lift. And that’s another thing, don’t always just look for the big lift, even the one percent is enough for me. Making it a tiny bit better, tiny bit better and this evolves and something very, very potent”

1:04:05 Have a HUGE tank

You only have one life, live an epic one

Living an epic life requires an epic version of you and that requires a huge tank. It’s why Yen thinks of our business as corporate athletes. Having a huge tank, physically, mentally, spiritually, all three components are required to this.
“Because it’s like we are required to make decisions under stress constantly, and you can’t do that if you’re poorly fueled and you’re unfit and you’re tired.”
Physical: Yen went to the Human Performance Institute in Orlando and learned from Jim Loehr
- They train focused on stress and recovery. Energetic signatures in almost everybody is a wave not a constant and if you work in constant you break. So Yen works in bursts and his physical training is done in High Intensity Interval Training

Fuel: You have to know how to fuel your body and understand each person is chemically different so study what works for you.

Mental: Respect your psychology. There’s another gear in each one of us. Understand that mindset requires work and you must seek our people wiser than you.
Spiritual: Philosophy is the love of wisdom and pursue it, and for me, the spiritual journey is an unleashing factor.
- The Surrender Experiment and The Untethered Soul by Michael Singer
- John Wooden “Wooden unleashed me spiritually and mentally”

1:07:19 Yen’s Typical Day

Yen is most creative in the morning and protects that time
Does transcendental meditation for 20 minutes as soon as he gets up and then journals for 20 minutes
Afternoons are when Yen does meetings, takes calls and works out. In the afternoon he experiences a circadian dip and so he will do a transcendental meditation and he feels that’s been one of the greatest gifts he’s ever given himself.
Chunking and then structuring is very important. Block of times to execute on certain tasks and create a structure that allows for that.
The grind of training is what defines you. Excellence is doing the same thing everyday until it’s second nature.

1:11:04 Journaling

Whatever Yen finds himself wrestling with, he writes it down, goes to sleep, and then the next morning whatever comes to him he writes down. He lets his subconscious mind do the work.

By addressing two key questions at night his subconscious doesn’t go idle and it sparks a creativity inside of him.
“I believe the brain is a very sophisticated problem-solving device, but it’s only as good as the questions you ask it”

1:18:15 Hardest Skill to Transfer

Self awareness and patience are the hardest to skills to transfer. .
“Now, I’m not a naturally patient person, let’s be honest. It doesn’t mean that we’re not aggressive in a way that we reach and pursue excellence, in fact, we’re very aggressive. It’s just we know how to separate out risk and actions like hyperactivity and research is very different than hyperactivity and training.”

1:20:00 Developing Your Mindset

“Mindset is interpreting all of these stimuli and what is the response in your mind and how do you make that effective for yourself? It’s part of how do I learn this? You gotta find people that you really respect and really trust and then be vulnerable and open-minded to learn. And then you’re gonna go through some real tests, and frankly, those tests, if you’re quiet enough, are gifts.”

1:22:48 Yen’s love for Biographies

“The thing that we study, and you see it in every one of these is it’s not a straight line. They all have to deal with some very major set backs, and there’s a lot of luck involved in life, and they’re highly persistent and grinding away what they do. Deeply principled people who made decisions and consequence, they’re all the same. That’s the reason why I love biographies so much is everybody sort of idolizes the outcome. What I find most interesting is how do they deal with the adversity, and every single one of them has dealt with tremendous adversity.”

1:24:16 Don’t live one life, live three.

20s is just gonna do a lot of stuff, go enjoy it, go try a lot of things, you can’t work out who you are, where you belong. You know what to fall in love by sitting and idly. Don’t worry about failing just try a lot of different things.
30s once you’ve found one thing go deep and go fast.
40s you need the courage to take the bet and have the fortitude just to know you can work it out.
“Go sample a lot in the 20s, tool up in your 30s, go for it in your 40s, do everything faster, and then one last thing I’ll say to everybody, it doesn’t matter of your stage, you’ll be okay, right, bring it down a notch. You’ll be okay. It will work itself out. You will find a way, it’s not always pleasant, but you’ve gotta quiet it down so that you can give yourself a balance and a chance to work it out and enjoy that journey because it doesn’t last very long.”

1:26:14 Slowing down

Yen credits much of his current mindset to maturing and learning to simplify

“And this is a real struggle for high performers. We all understand the last 1% is where the action is, but your most is not your best. And what I mean by that is,if you don’t know how to channel that preparation, you’re too exhausted, you’re not balanced when decisions of a consequence matter. And so you’ve got to dial it back a tiny bit, and that mantra for me changed everything. It was like you actually have to contain it, your energy, put yourself in a position to make great decisions, surround yourself with people you deeply love and trust, and then you can fully embrace whatever comes,comes and be at peace with that. Peace of mind”

1:30:03 Principles

Yen has written his life principles for his children and this is an evolving process that has taken years. They must evolve and you have to test them. If you’re not aware of them “it’s not really about your thoughts and your words, it’s all about your actions, right. So if you can’t live up to your own principles, they’re not your principles.”
Codify. Distil. Simplify. Execute. Refine

1:34:00 Who would Yen love spending an evening with interviewing and just getting to have a great conversation with?

Genghis Khan and Subotai are easily two of the people that I would have killed to have an opportunity to sit and learn.

Books Mentioned

Genghis Khan and the Making of the Modern World by Jack Weatherford

The Art of Learning by Josh Waitzkin

The Surrender Experiment by Michael Singer

Wooden on Leadership by John Wooden

Destructive Emotions by Dalai Lama and Daniel Goleman

Emotional Intelligence by Daniel Goleman

Kochland by Charles Leonard

Titan by Ron Chernow

Invested by Charles Schwab

Shoe Dog by Phil Knight

Onward by Howard Schultz