The Distillery · Volume V

The Distillation of Yen Liow

Managing Partner of Aravt Global, voracious learner, and one of the most impactful forces in my life. A complete operating system for excellence.

Sean DeLaney

Executive Performance Coach

45 min read

Yen Liow is the Managing Partner at Aravt Global LLC and a voracious learner, but most importantly Yen has been a guiding force in my life. There are few people in this world who have had such a tidal wave of positive impact on my life like Yen Liow and I wanted to share some of the incredible wisdom he has taught me.

To be a great investor starts with a great mind or IQ with great taste. Second is a great temperament or an emotional quotient. Lastly, a huge work ethic.

To be a skillful investor, there is a lifetime of skills you need to acquire. You have to learn in dog years in order to compete at a high level early in your career. If you do not train and refine your learning style, you can’t see great investments if they were literally in front of your face.

Key Themes

01

You, Inc.

To play this game, you have to become a highly functional, committed learning machine.

Ea. It’s a Polynesian word for personal sovereignty. The point is, you must own your journey. You are accountable for the entire ride.

02

Life is Finite

You may feel like this is going on forever, but this is very finite. You don’t have a lot of time to waste so get on with it quickly.

I’m just trying to live the best version of me, but it’s finite and you have to enjoy those chapters that Peter described. Because 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, but the fire’s in me.

You need an internal fire in you. Yen’s is his pursuit of being the best version of himself. Great appreciation for the sacrifice, luck and responsibility that comes on this journey. The internal game is just as important as the external game of how you evolve and meet the world. The fuel source has to change. Yen’s fuel source went from just trying to survive early on to now trying to find his edges.

03

Pain, Discomfort & Struggle

Everything that you seek or want from your life, is just outside of your comfort zone. Otherwise, you are likely to already have it.

Struggle will be your companion for your entire life, if your journey is based on excellence. The easy decisions will always be passed to others.

The difference between struggle and suffering is context. Specifically, struggling with meaning, it’s just pain with meaning. Suffering is pain without meaning.

Being able to understand the context of your pain is extremely important. It can become motivating or destroying. Struggling is actually the neurological precursor to insight. If you are struggling, it means you are learning and you are growing. Don’t fight it. You have to learn to embrace it. The aha moment is literally your brain struggling to a point where it’s preparing itself to rewire with insight.

To excel, challenges will increase. As Billie Jean King said, “Pressure is a privilege and it only comes to those who earn it.”

As you ascend into higher levels of responsibility, the easy decisions should be handed to others. And henceforth, the struggle will only increase, as you become more privileged in the decisions you are empowered to make. It becomes a lot more fun when you understand that struggle is your journey, your partner in this journey, and you don’t want to be fighting it.

04

Find Your Why

If you find your WHY, you will always find your HOW.

Ubuntu, is your reason for being. The bigger the WHY, the more powerful the HOW. If there is no consequence to your WHY, you will not have good solutions. If your WHY is extraordinarily large, you will be more creative than any problem can overwhelm.

Decisions of Consequence

I call these decisions of consequence, when you have no one really backing you up as a family, you have to scrap and you have to fight. And you have to fight to survive. So you have to be financially independent, which is the first step of this. As a parent, and I have two children, I love them very much. It’s like, my dream is to help them find their dreams and live their dreams, not live my dreams, that’s a great fortune that any parent should have the privilege of doing.

05

Game Selection

The most important question I implore you to ask is: What game will you choose?

Where should you spend your time? Spend real time and resources working out this question. Most people follow a path because it creates momentum and it’s too difficult for them to change path. The point is, try to pick unfair fights, games that are valuable and that you can win.

In order for Game Selection to work you need to understand how it meshes with who you are. You need a deep understanding of your authentic self and match that with a game of where you can have high performance.

How Yen Started Investing

I’ve been investing in stocks since I was about 14. I was just curious about the investment world and how it worked. If you want to learn fast, you have to be accountable for your decisions, and as soon as possible there needs to be feedback loops to it. So I started fixating on understanding patterns of value creation. If anybody wants to be significant in the amount of wealth creation in their lifetime, the number one most simple part of it is value creation and then character, the two have to go in together. It’s capability and character combined.

06

Compound Math

Compound math is by far the most important force in the universe. And you have to get on the right side of it as early as you possibly can. And this applies to literally everything in your life, whether it’s capital, ability, insights, contacts.

07

Controlled & Uncontrolled Learning Leaps

Learning leaps are step function increases in ability.

Uncontrolled Leaps are where you have aha moments. Your brain has a piece of insight that solves complex problems that you are literally rewiring your brain. You are different once you’ve solved that equation or you have that insight than you were before.

Controlled Leaps are where you create environments that create that leap in capability. You must compress your learning and increase the number of controlled leaps. The more time and money you invest in these step function growth opportunities is what will determine your outcomes and quality of life.

08

Plateaus

Masters live in the learning plateaus. Mastery and the whole pursuit of mastery is the journey. There is no end point. Masters don’t get bored. They recognize the plateaus are part of the journey. 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.

09

Deconstruction & Deliberate Practice

Deconstruction

Start with knowing your goal and then breaking down the skill, and then training it very rigorously. Tiger Woods reverse engineers every single hole. He starts from the green back to the tee.

Every master I have ever studied, there is a game within the game and they deconstruct the core elements of the game, to give them advantage, and then they mold the game to their strengths.

Deliberate Practice

It starts with a mental model of perfect execution. If you don’t know what to practice, you can’t become great at it. No amount of effort will solve this. You need to know what really good looks and feels like. Break down the components into its technical components, and if you can do it very, very slowly, then you really understand it. Don’t allow speed to hide poor technique.

You need to practice a lot. This means pushing it to the absolute edge of your abilities. It’s hard, but it’s really fun. Deep practice is built on this paradox of struggle. All growth comes at the point of resistance. This is both physical and mental. If it’s not hard, you already know how to do it. Henceforth, you will not become stronger, you will not become wiser.

10

Mistakes & Learning from Pain

Mistakes are another partner on this journey to excellence. All the greats have stumbled and you can’t get there without making lots of mistakes.

If you’re not making lots of mistakes while you’re being watched over and risk being managed by others, you’re not doing your job because you haven’t made the mistakes to learn from, by the time you’ve become a senior leader. You’re too fragile.

All of mastery comes from depth. Excellence always comes on the basis of strength.

Study Success and Failure

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.

Learning From Pain

In the long run, your most painful losses proved to be far more valuable than your wins. Our greatest insights by far have come from mistakes, not victories. If mistakes for you only appear at an intellectual layer, you won’t actually learn them. It needs to go one layer deeper. Your emotions are far, far more important.

11

Upgrade Your Operating Software

Learning is hyper-personalized. The first part of upgrading your OS is learning how you learn. Know yourself, work yourself out. This is effectively the user’s guide to you.

Roger Federer doesn’t hit a forehand any differently than anyone else. He hits it perfectly. You have a few select skills that absolutely matter.

I like to condense information into pictorial form. As I type, I need to get very active and translate what I’m hearing, what I’m seeing, what I’m thinking into word form and pictures and then I need to talk it through with my team. It needs to be very active and not at all passive.

Signal to Noise

Find the highest quality resources that distill down the keys. You want to learn in clusters. Individual signals are prone to tremendous amounts of noise. Look for clusters of patterns in the way that you’re evolving your insights.

The Power of Questions

All problem solving comes down to the quality of your question. We can gauge intelligence far more from the quality of the question than the quality of the answer. The litmus test: is there a so what? If there is no so what, move on.

Pareto Principle

80% of the effect comes from 20% of the action.

We have to focus on the important and the knowable. What is not knowable and not important, irrelevant. What is not important and knowable? It’s just busy work. And then the really hard part of this, is really important and not knowable and that requires inference and deduction.

12

Feedback Loops & Frameworks

You can’t refine your skills without a feedback loop, and it’s not about hitting a thousand balls each day. It’s about going out there and hitting a hundred absolutely perfectly. This is not about speed. This is about purposefulness which is the fastest path to mastery.

It’s anything that can add reps, that will accelerate your learning curve. There should be sub-parts of the decisions or your actions where you can tune to work out of it. That’s a feedback loop.

Control of Your Schedule

Early in your career, you should say yes to most things, late in your career you should say no to most things. One of the most powerful habits of great investors and great leaders in general is offensive control of their schedules. If you aren’t in control, you’re always reacting.

For me, the optimal zone is mornings. So from 8:00 AM till 1:00 PM or 2:00 PM in the afternoon is absolutely the highest flow zone. I have to protect that at all costs.

13

Using Your Subconscious Mind

To handle incredibly complex problems and learn deeply you need your entire mind and that means your subconscious mind. The subconscious works when you quiet your mind. Meditation is really important.

Exercise is not optional. In order to be a peak performer, your body needs to be fueled in an incredible way. The journey for excellence is exhausting.

Focus overnight on one to maximum three questions. Commit them into a journal, literally write them down for that last half hour before you go to bed. When you get up, before you check your email, before you flood yourself with all of the useless stuff that comes in, journal like crazy on what the answers to those questions are, don’t question it. Just go. I can tell you the stuff that comes in there, if you don’t question it and you flow it and you keep letting it through, you will see deep patterns of problem solving that are truly extraordinary.

I believe the brain is a very sophisticated problem-solving device, but it’s only as good as the questions you ask it.

14

Flow State

The mental state in which a person performing some activity is fully immersed in a feeling of energized focus, full involvement, and enjoyment in the process. The sweet spot where optimal learning takes off.

It only lasts three hours a day max. Your brain doesn’t have enough brain sugar to do any more than this. The fortunate part is it’s all you need.

Flow state sits just outside of your existing capability. It’s incredibly fun when it’s just a little bit too hard, but if it’s too easy, it’s boring and if it’s way too hard, you get super anxious. There is a fine line in there and that is the flow state.

15

Decision Making & Mental Models

If you want to understand how people think and act, you need to understand their mental model of the world. Frameworks are a critical part of refining great judgment. 80% of decisions are generic, so use your energy resources on the most important stuff.

If you want to become something special quickly in your life, you need to put yourself in a position to be accountable for your decisions as early as possible. To learn rapidly, you have to own your outcomes. You will eventually become the product of your decisions.

Case Study Methodology

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. All of excellence, in my view, comes back to decoding and then decoupling, breaking down each element of it.

Energy × Technique × Focus

All of mastery requires philosophy and deconstruction. 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? People can spend hundreds of thousands of hours plowing away at stuff and they haven’t asked the first order question, where do you focus it?

If you make people 1% better on each of these dimensions collectively, it becomes an incredibly potent lift. Don’t always just look for the big lift, even the one percent is enough.

16

Live an Epic Life

Living an epic life requires an epic version of you and that requires a huge tank. Physically, mentally, spiritually, all three components are required.

Because 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.

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.

Don’t Live One Life, Live Three

In your 20s: do a lot of stuff, go enjoy it, try a lot of things. Don’t worry about failing.

In your 30s: once you’ve found one thing, go deep and go fast.

In your 40s: you need the courage to take the bet and have the fortitude to know you can work it out.

Mentors and Peers

Mentors will help you navigate the path. They’ll open your eyes, they’ll open doors, they’ll help you avoid landmines. Peers will elevate your standards and help you redefine the possible.

That means being a good person and paying it forward. It’s a very unusual relationship mentor, mentee. It’s the only relationship that isn’t truly bi-directional. We’re aligned in the same direction. What that means is a mentor wants a mentee just to pay it forward, amplify their good will into this world.

17

Lessons from Peter Gunn

The first thing he taught me was “Life doesn’t give you anything. It owes you nothing. You have to go after it yourself and you have to earn it, and it takes a lot of hard work.”

At the end of each summer Peter would sit him down and ask: What did you learn? What did you observe? How would you do it better? Then for a week would have Yen “draw it all out” which forced him to think. This gave Yen a clarity of vision he used to map out his next 25 years.

Listen, if you want to create a fortune, you’ll never do it by working on an hourly basis. So he said, go pick up that box. I picked up that box and he goes, “Two cents to me.” Pick it up again. Two cents to me. When you create systems and you work really, really hard, now you can create compounding effects on return on capital, and that’s the only way if you want to create a vast fortune or achieve something great, it needs to be beyond the individual effort. It needs to have compound elements to this, and it blew my mind.

18

Lessons from Genghis Khan

Genghis Khan was a Learning Machine up until the day he died. He learned from everything he encountered and experienced. He learned from his enemies and incorporated the most intelligent enemies into his empire.

Speed & Adaptability – Khan and his army traveled light so they were incredibly fast and had the ability to adapt. He did not impose his culture on theirs but deeply respected their customs and religion.

Extreme Organization and Scalability. His warriors were organized into squads or Arban of ten. They became like brothers. None of them could ever leave the other behind in battle as a captive.

Fight Unfair Fights. He never fought a battle he didn’t think the odds were stacked in his favor. Khan hated to put his warriors at risk and they won many wars without a single fight.

Innovation. He evolved everything he did and had a passion for putting to use everything he encountered.

To do extraordinary things, you can’t do normal things, you have to pick very clean strategies, and indeed, my firm is actually named after Genghis Khan and Subotai. We call it Aravt.

19

The Truth Will Set You Free, But First It Will Piss You Off

The truth will set you free, but first it will piss you off. And I firmly believe it. The truth will set you free, if you can face it, and it takes a lot of work in introspection to find what those truths are.

There are no shortcuts to this! Insights aren’t very useful in changing lives if they’re not coupled with disciplined execution, and it’s the boring stuff that actually makes the difference.

Stress cycles are a wonderful way of discovering who you are, and mistakes are the greatest teachers of who you are, because the tells are where everything is revealed. You observe everything about a person, a business under stress. You can observe nothing when things are going well.

And you have to live enough life, experience enough things in order to get enough data points to look for directionality, and then you have to decide. Is that who I still am, or who I want to become?

Go full tilt and find out as much as you can, surrender and accept who you are and then evolve. Who you were yesterday is not who you’re going to be in a year. The only thing in our control is how we spend and marshal our resources and time.

Finally, here’s my wish for you. You find your why, you work out your how. You choose a game wisely that you find fulfilling. Don’t just choose success, seek fulfillment. Learn to lead yourself and then others. Surround yourself with peers you admire and respect. Acquire mentors who show you the path, and then learn like crazy, work like crazy, and win like crazy. I hope you embrace and enjoy the struggle that is the journey of excellence.

20

Aravt’s Edge

3 ways to gain an edge: Strategy (game selection), Skill (temperament and execution), Structure (systems that allow imperfect inputs to generate world class outcomes).

It’s not enough to put a bunch of very smart people, throw them into the ring and go just generate alpha. This game is too hard for that to be true. You have to build systems that allow people to be built for human-scale. Your system is built so that it already tolerates that and can still generate very high through-put returns.

Hiring Great People

Talent is table stakes. Character is what matters. People that are self aware, have a training mindset, they always want to improve, they’re open to feedback and they’re a team player.

Three things Yen solved for: Can you operate well together? Does this person make us better, can we learn together? Does this person give us energy?