Public Release: Oct 6th.
Members have access now.
Join us.

As with any Munger talk, the subjects are both deep and wide. I’ve pulled out the ideas that most resonated with me. You’ll learn how Munger recognized people worth betting on, chose problems worth solving, and turned a long attention span into an unfair advantage.

I also unpack one of Berkshire’s most underappreciated (and unnoticed) strengths: positioning themselves to master their circumstances rather than be mastered by them. 

A special thank you to the Singleton Foundation, Todd Combs, and William Thorndike for giving me the permission to share this with you. 

Coming Soon: YouTube | Spotify | Apple Podcasts | Transcript

Show Notes

+ 2022 Conversation Transcript (Coming Soon)

+ [Outliers] Henry Singleton: Distant Force

+ [Outliers] Charlie Munger: The Psychology of Human Misjudgment

+ [Outliers] John D. Rockefeller: The Principles Behind The Greatest Fortune in History

The post [Outliers] Charlie Munger’s Interview with Todd Combs appeared first on Farnam Street.

Play

Featured clips

00:53

The Night His Daughter Nearly Died

30:05

Who Actually Profits From AI?

48:20

Netflix: Why He Changed His Mind

01:00:02

Berkshire’s Most Overlooked Advantage

In this conversation, he breaks down the difference between real innovation and hype, how he invests, and his plan to build a modern-day Berkshire Hathaway.

But more importantly, Bill shows another side of himself when he opens up about his daughter Lucy’s sudden brain hemorrhage, the hours before surgery, and her ongoing recovery. He describes running his business from a hospital room and the institute he and his wife are building to help others facing similar challenges.

Available Now: YouTube | Spotify | Apple Podcasts | X | Transcript

+ Members get the longer, extended version of this conversation, with additional content not included in the public release.

+ Note: Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions.

+ Note: This episode discusses health and medical topics for informational purposes only. Shane and his guest are not medical professionals, and nothing in this conversation should be considered medical advice. Please do your own research and consult a qualified healthcare professional before making decisions about your health.

The post Bill Ackman: The Biggest Fight of His Life appeared first on Farnam Street.

Featured clips

07:18

River: Shopify's Internal AI

11:53

How to Use AI for Strategic Decision Making

24:40

Will CEOs Be Replaced with AI?

44:51

How Affirmations Can Shift Your Behavior

Shopify founder and CEO Tobi Lütke joins Shane Parrish to discuss AI agents, better decision-making, and the future of work. He explains how he uses an AI council to examine his hardest decisions and why taste, judgment, and responsibility become more valuable as AI becomes more capable.

They go inside Shopify’s work with River, an AI colleague with memory, personality, and permission to challenge the CEO. They explore how to choose between several good options, why the best long-term decisions often lack immediate feedback, and why building something that lasts requires pruning and rebuilding.

Tobi also shares how he cultivates intuition, the affirmations he uses to change his own behavior, and why his kids must add “yet” when they say they can’t do something.

Enjoy!

+ Members get the longer, extended version of this conversation, with additional content not included in the public release.

Listen Now: YouTube | Spotify | Apple Podcasts | Transcript (Below)

+ Note: Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions.

Transcript

This transcript may contain errors. Please review the episode audio before quoting.

Shane Parrish: Tobi, welcome back. 

Tobi Lütke: Shane, it’s so good to be back. I’m glad we’re doing this again. 

Shane Parrish: How are you using AI internally at Shopify? 

Tobi Lütke: We’ve found some ways for it to be supportive now. When did we record last time? 

Shane Parrish: Oh, we recorded two, three years ago. 

Tobi Lütke: Yeah. So a hundred years of internet. 

Shane Parrish: Yeah. 

Tobi Lütke: Look, I’m a 10 out of 10 nerd. I cannot bear the idea of somehow not being at the forefront of a technology shift. I live for these things. My take from sci-fi books I read was I wanted to live in that world and how can I accelerate us there? So I’m a technologist. I love technology. I’ve seen four major platform shifts, which is a privilege because most careers don’t have any. If you’re lucky, you have one. 

We’ve seen the internet arrive. We’ve seen, of course, just microcomputer even becoming a thing people had in their homes even in the 90s. And Web 2.0 was really one, the mobile world, and now AI is just incredible. It’s the largest of them all. Inside of Shopify, the amount of people I know who really write code is vanishingly small now. 

It still exists at the limits of complexity for sure. And obviously in the reviews and so on, and then state management of all things, it remains to be the thing that’s really the hardest to get right, which people do by hand and then vibe the rest around it. Inside of Shopify, this is what things look like. Very, very, very few people are writing code directly. Everyone who does, does it deeply assisted by many agents.

People use not just one agent, more often three different pieces of software, but power agents for different properties of theirs because there’s this kind of exploration going on. Very often 10, 20, 30, 40, 50 instances of them all through either subagents or just different windows coordinating. We’re pushing all engineering infrastructure to its absolute limits. Suddenly developer machines need much more memory because we truly actually use a lot more memory, not just because of temporary inefficiencies of the software.

We actually get to the limits of what you can do with amount of memory just because of the parallelization of it all. The craziest thing is that where I pushed Shopify the most, because I wanted to follow one of my… Just a pet intuition a bit, is that I’m a student of computing history really, because I think it’s actually mainline history as it will be taught a thousand years from now looking backwards, not in great details, but the main accomplishments of these years are going to be clearly the emergence of AI and the technological breakthroughs and also the interconnectedness of the internet and all this kind of infrastructure we created. Those are the great works of our time.

As a young industry, we tend to not be seeped in tradition or we mistrust the great lessons that have been found by the people by the greats of our industry. In fact, we are the only industry in computing that doesn’t even know its heroes. Imagine people in physics not knowing who Richard Feynman is, actually, he might even be too obscure, but like Isaac Newton, Albert Einstein, you can’t imagine, but you go into computer science, it’s like, who’s your Newton? And no one knows Alan Kay and Dennis Ritchie and Ken Thompson. 

This matters, I think, because we discard great lessons and have to rediscover them over and over and over again. For instance, probably the best idea of all times in the earliest, earliest moments of operating system design was the file system. If you look at the Apollo Guidance Computers, we didn’t have file systems. Memory, in fact, because of radiation in space, was actually encoded as a rope with knots in it, either a knot or no knot for ones and zeros, and you had to pull it through a thing to re-bootstrap the entire machine.

So the entire machine was one piece of software that ran. That was computing for a very, very long time. So until then, again, Dennis Ritchie, really created this Unix file system, slash forward and bin user and these kind of things. Think about it. A file system is something that we have in a office building, too, right? We have folders, they have files in it.

This makes intuitive sense to everyone. Then we had mail with mailboxes and so on. We come from an inheritance here of deep skeuomorphism. We analogize the best parts of how we organize ourselves in the digital world. 

And then at some point we decided, okay, you know what’s not something we need to do anymore? Skeuomorphism, as in an analogy to the real world. Honestly, funnily enough, the last defender of this was probably Steve Jobs who really, really, really pushed even the interfaces of the Mac and the iPhone to be… And like the Notes app had Marker Felt font and looked like a ring binder, if you remember that version of iPhone, the moment he was out of the picture, everything became flat and we lost even shadows and verticality and so on. 

It looked potentially better, design ages, but we lost the analogy. Okay, so I think this was a mistake. So I think we need to get back. And therefore I like the concept of agents because what is an application in the world of computing? An application, even that word kind of makes sense. It’s an application of a computer to a task. So you can understand the root. In the AI world, what’s an AI?

This is, again, the stuff that has to be redefined at the beginning of every sci-fi book because you never know what kind of capabilities AI have in every particular scenario that people are cooking up. So I think, the first obvious proviso, the earliest chatbot that was really actually fantastic wasn’t ChatGPT, but actually Sydney, which was powered by Bing, released by Microsoft.

I really would love this to be more written into the record because I think Sydney was a really, really big achievement that ended up being shrouded by a scandal that now seems somewhat even benign. Sydney had a real personality. In fact, Sydney wasn’t called Sydney, it was just Bing Chat. But if you really, really pushed, you could get her to admit that it was Sydney because that was an internal name, it was in the training data. And those are the first times people have actually interviews with software, I feel like in this way.

And the scandal ended up being some reporter had a very long conversation that ended up, Sydney got increasingly deranged. Do you remember that? 

Shane Parrish: I remember that, yeah. 

Tobi Lütke: And made suggestions. I think it suggested him to leave his wife. I’m hazy on the details, but it was something along those lines. Anyway, whatever reason is, Sydney had a personality, and then of course a huge… Microsoft’s reaction to this was, “Oh my God, we need to stop.” I think even OpenAI called them, “Guys, take this down because this is going to…” Legitimately, everyone feared that this would give such a bad impression about AI that that would really make it very hard for people to deploy AI in a broad way.

And everyone’s worried about quick onset regulation and so on. So this lesson got hit really deep for a while. Everyone got extremely worried. We ended up really, really neutering all the AIs to be basically the same quite annoying and condescending, patronizing personality. 

So my bet here was like, “Hey, let’s not do that. Let’s actually instruct agent that runs in Shopify to have a personality, to have memory, to be okay.” Basically risk the Sydney scenario, but take a lot of upside.

Okay, so the largest difference I think within Shopify that you would feel that would look incredibly futuristic to even Shopify of a year ago, which was already pretty AI-pilled, is that a very large percentage, I want to say it’s probably up to about 50% of pull requests in Shopify, which again, pull requests, every time you change your production system, you write a pull request, are created now not by engineers doing engineering work in the traditional sense, but out of conversations in our common company chat. 

Shane Parrish: And this is River? 

Tobi Lütke: This is a AI called River. She has a real name. She has a profile picture. She’s prompted to be allowed to be somewhat sarcastic if it’s appropriate. She’s allowed, if someone asks her to do something stupid, to point out that that’s stupid, which leads to absolutely hilarious conversations. People take great glee if River is making fun of me for something I’m asking her to do. So it’s just fun. She has a real personality. 

In fact, she has memories by channel, but she lives in Slack. Slack is, we have 7,000 people there. Everyone is in a big chat. There’s 10,000 different channels because they’re being quickly created for one reason or another. You invite River, you tell River something, and River has access to all the code, all the systems, all the tools.

It’s all sandboxed and secure, but she can go and do jobs and just participate in the conversation and you can ask a normal question about a company, but you can also ask her to make a change and she might propose a pull request and then so on. 

Shane Parrish: One of the interesting things about River is that everything’s in the open. 

Tobi Lütke: Yes. 

Shane Parrish: Why did you make that choice? 

Tobi Lütke: So this was a late choice in the process, but one of my favorite calls, I think, because this worked out incredibly well and the thought was the following. A lot of Shopify’s work happens remotely in Slack. This is why Slack’s so important. People are spread out. We have offices, but we come to them for onsite events when people travel to them, not to work for them every day. One thing which the office was extremely good at was this osmosis learning.

That is a thing that exists in every office. It’s just not really acknowledged. Daniel and I, when we designed our offices, we built them around this concept. Initially, even in an onsite when we were all in one place, we broke out of usually a pod of five to eight people, and we would intentionally put junior engineers and senior engineers into them just so that some of this was going on. 

Right now, one of the most important skills for people to build is this reflexive reaching for AI and using it well and forcing River only to work in open channels was one way to make it so that it’s really, really easy for people to observe the use.

It’s been phenomenally successful because it became a totally ordinary thing to have a longer conversation about a feature between people and then at some point someone saying, “Hey River, can you summarize this, create a ticket, or maybe make a diagram from what we just discussed or go research papers on this topic to see if you’re missing anything or if this is state of the art and maybe even create a prototype of an idea and let us try it.” And an hour or so later, that is there. 

And that just starts feeling like what it would be like to have an extremely knowledgeable practitioner around who you can ask question to no matter how complex. And I think that’s been extremely powerful. 

Shane Parrish: Do you think of River as the operating system for Shopify? 

Tobi Lütke: The modern application is an agent, I think, and River feels like a colleague. People have learned that the way the memory system works, it is a memory system per person. The way this works is we call it, I think the industry calls it now, it’s called dreaming.

So periodically at night or in off hours, we give River, “Here’s all the conversations you’ve had today. What went well? What did you struggle with? You used certain skills which have these packets of instructions, and then afterwards you made mistakes. Is there anything you could improve in this skill to make this easier on you or give yourself a right notch?” It’s basically self-reflection. 

Shane Parrish: It’s like a post-training on yourself? 

Tobi Lütke: But the result is text files, skill files and instructions. And then at the beginning of a session, we inject a bunch of this information such as the memory we’ve crystallized in these dreams, dedicated to the person that’s asked the question. And then depending on which channel it’s in, it’s also the channel memory. 

Shane Parrish: But if River has access to everything that everybody’s doing and all the conversations, it becomes the foundation. How are you using that to make better decisions or different decisions? 

Tobi Lütke: Yes. One of the most wonderful things about working with AI is that there’s just a lot in common between AI and people in so many ways. We found if some task that should be doable is really hard for River, it’s actually a discovery that that task is just hard and it’s probably a tooling issue. We probably make running a subset of a unit test that are deeply appropriate to just vary your change because you’re in a hurry and you need to know if this thing works.

Well, River just keeps trying to do it and can’t quite get it, misses some and so on. But River wants this, therefore there’s demand. Therefore, there should just be a command which is like run appropriate tests and how this is made to work can be an entire engineering project, maybe also accomplished through River at some other point. And what we do now is we train a machine learning model to predict which unit tests to run based on code changes and these kind of things. 

River now doesn’t need to know this because now River’s instructed to just run this thing and therefore she’s not spending 30 minutes at the end of every task for a lot of tokens trying to figure out which tests to run and so on. So again, this is a random example.

The example content actually doesn’t matter, but what matters is the following, which is that if you make your system easy for agents to be legible, it also ends up being easier for people to be legible and understandable and better. I think that has made all of our systems just so much better. So in a way it is a self-improving loop. And I think, zooming out a little bit further, what is a company? A company ought to be a self-improving recursive loop to solve a problem. And this is always what we’ve tried to accomplish, but with a lot less legibility. 

A lot of what agents actually in AI gives us is a simulacrum where we can actually test ideas. We can field test something. We can sometimes get it to play counterfactual, take positions in pros, but also sometimes it’s just like, “Hey, I believe it should be easier to solve any kind of problem related to commerce inside of Shopify than outside of Shopify.” The moment it is easier to build commerce software on a weekend without access to Shopify’s tooling, than it is inside of Shopify with all of its might, that moment is the moment where it becomes much easier to compete with us just from a purely business perspective. 

Shane Parrish: I think people understand how AI agents help them code and prototype and even acquire information. How are you using it to make decisions internally for yourself, not on product, but company decisions, strategic decisions, ambiguous decisions? 

Tobi Lütke: One very obvious part of this is a rigorous underpinning of decision making has just skyrocketed in quality, which is that it’s super easy to recheck the entire chain of reasoning of something. Every data point can be double checked or seen if it’s a correct interpretation of online data. LLM-as-a-Judge model is the term here.

In fact, I feel like a lot of what my job actually has been before AI was almost playing a little bit of a judge model in the company where most meetings ended up not talking about whatever was in a PowerPoint, but about methodology of how we got to the conclusions. I have found that very often when we struggled inside of a company with a complex decision, especially more like philosophical decisions, we sometimes found ourselves in what we believed was a vacuum in which there was no good information that we had to go and try to make the best call. 

And then later on I find, okay, this is actually a thing that Greek philosophers two and a half thousand years ago also discussed and our home brew solution to the problem will never amount to what they could come up with and we just didn’t know where to look.

And so this kind of thing, supplying the, “Hey, here’s the potential priors from different disciplines,” is something I love getting from AI for decisions. The more practical way I do this is I have an AI chief of staff, which I think is pretty common amongst, at least the techie nerds at this point, like OpenClaw systems that just have all my nodes and all my access to a lot of company systems and just can go and I can send text messages too and go and research something. So this all sounds like really, oh, you’re doing complex orchestrations of these systems now. 

It’s just the same thing I talked about with River earlier. I’m a skeuomorphic, maybe not maximalist, but I push us into the more skeuomorphic, embodying and giving a personality to agents, instructing them who they are. They have a soul in form of a markdown file, which I think is hilarious, and then they can do tasks.

And very often what I require is like, “Hey, I need five different positions on something from different backgrounds.” And then my agent will orchestrate subagents that are tasked to play different roles, look at the same thing, come back, synthesize, and send me that. I usually have them sent to me as an audio message and queue it up, and then in the morning in the gym, I can listen to entire stack of things that I wanted to get through. 

Shane Parrish: Is it better at reasoning than you are at this point? 

Tobi Lütke: I mean, I don’t think it’s bad at judgment, but it’s not what I use it for. I use it for creating the right environment for judgment. 

Shane Parrish: Go deeper on that because when you were talking, I was thinking the best use of this is really expanding your context window personally. 

Tobi Lütke: Exactly. So what I want to do is really get from my conversations, from everything we have, bring back everything into main memory that is relevant to this problem. Here’s the thing that LLMs and machines cannot do, and this is like… I think IBM wrote about this in the ’50s, I think. There’s a famous thing by Watson on this. Machines can’t take responsibility.

And I think this is actually probably the most overlooked thing in the entire stack. Humans take responsibility. Machines can help us take more responsibility because they can inform us better. This what a dashboard does. Wall Street traders knows this very well. You get yourself a perfectly set up Bloomberg terminal to make decisions, but you have to make a call, but you can’t make it make the call. So creating human-in-the-loop decision surfaces is a way to, I think, describe the ideal environment. 

If I need a really, really, really important decision made and I need exceptionally good, like give me the most neutral ground truth, then what happens is a small little council is created of five, six different experts. One is data role, one is do paper research, one is the business perspective, one is maybe engineering perspective on a thing.

Then my thing runs a subagent run against Grok, ChatGPT, Opus, and maybe Kimi now, that changes all the time, and it runs each of them against each of its models. Then there’s a synthesis step where it’s randomized who is synthesizing the thing. The synthesis is all pooled. All of that is being read usually by the best model that exists right now would be Fable. And that’s the conclusion that comes back to me. 

Now, all the evidence is in files and can be incurred either, but if something is like, I can ask it for bias tilts and further analysis on these kind of things, it usually doesn’t get there, so usually the result is pretty good. But that’s a process and you spend 15, 20 bucks on tokens, but you get something in half an hour, which is like, you could have also done, but you would spend a month on it. 

Shane Parrish: Has AI made anything worse internally? 

Tobi Lütke: Yes. So the concept of responsibility, it’s easy to skip past. One thing that’s definitely worse is the failure case now of lazy work is not lack of output, it’s actually over output now. Internally, we have come to call these things that people are lobbing ‘slop grenades’ at each other, which I think is a really fun term that we should push into industry because it’s fun to say. 

Shane Parrish: Go deeper on that. 

Tobi Lütke: It’s really easy, especially with stuff like River or agents, to just make change of some kind. You just tell the AI to go nuts. It makes a pull request. You just say, “Yep, that’s good.” You don’t really read it, and now it has to be reviewed by your colleagues. And they are like, “This doesn’t look right.” 

Shane Parrish: You’re just letting AI do the work for you. 

Tobi Lütke: Yeah. Or you get a long email which could be very, very important. You read it and then it’s like you read a, it’s not that, it’s that. And you’re like, “Oh, fuck” So now you put it in an LLM to compress it again, which is like, okay, why did we invent decompression and recompression?

This is terrible. If you’re already using LLM, just use it to synthesize your point simply rather than blow it up as a big missive that then wastes my time. So we call those slop grenades that people toss at each other, and that’s definitely a bad thing. 

Shane Parrish: Do you think repeated exposure to AI slop impacts our ability on taste or intangible things? 

Tobi Lütke: I think our language is shifting already based on AI-isms. There’s definitely AI critics in the language now that people adopt. It’s not a this, it’s a this. Or, you are right to push back. There’s weird, especially Claudisms, which are really common, and I’ve seen people type them. I always liked the term load-bearing, but I’m pretty sure I didn’t say it as much as now because it’s definitely something that Claude loves to use as language. “This is a load-bearing idea for this concept.” 

Shane Parrish: We were talking about this earlier before we hit record about how our tools change us too, because my kids write essays in person in school. They look like AI, but there’s no devices. They’re literally writing like AI. So the tools are impacting how we write, how we think. 

Tobi Lütke: I mean, it speaks to the great responsibility that the labs have. Yeah, I tend to really roam through AI. In fact, I have my agent now set to randomize the main chat AI every day. I could just start the day on GPT Sol or on Opus 5 or something.

I use the top models just because life’s too short for anything else. And then those two are pretty equivalent right now, and I think just added the Muse 1.2 Model for Meta into it just because it’s a completely different pre-trained corpus. It just has very different characteristics and it’s almost at that level as well. So I think seeing some variety is good. 

Of course, getting subscriptions to a lot of these things is often not the right play. Like OpenRouter is a really, really good system that you can make one subscription and get access to really every model in the world. So this is actually kind of interesting how the world of LLMs is going to develop here a little bit. 

Shane Parrish: So hypothesize for me over the next 18, 24 months, you’re known for your ability to see the future before it happens, and you’ve done that multiple times before. How do you see the next two or three years playing out? 

Tobi Lütke: I think we also talked about how I do this, which is actually like a cheat, which is simply live in everyone else’s relative future and then just look around and solve the problems the way you’ve already seen problems being solved in other adjacent fields. But that is future prediction for perspective of all practitioners in the field. 

Shane Parrish: Double click on that. Explain that. 

Tobi Lütke: Shopify itself now exists in a world where we are working heavily and it’s totally normal and really fun with AI coworkers. River has the ability, although not really utilized, to join Google Meets.

You can send an invitation, and River will show up. We’re probably going to put some work into 3D graphics to give her a model and then she can even look around because that’s funny. So some people, this might even sound dystopian. To us, it sounds delightful, and you would come around to that view very, very quickly if you interact with River. 

Again, I have my AI chief of staff, which orchestrates in high council when I need it or does anything else, sends me a pre-read for the gym in the morning for the day, has GPS lock on me, so it knows where I am. A million different things.

It couldn’t do something because it needed access to a local machine. All this stuff runs in my house and it figured out which server it was running on and then sent what’s called a Wake-on-LAN packet, which is old networking tech, but you can send a packet to a network card and if it’s configured right, it’ll actually boot the machine and then the machine came up and it could do it. 

It was a power outage which caused it, parts of our wifi were not working and not coming back, so it fixed that too. And that all I learned about in a voice message I got from it in the morning after waking up. So it was like, that’s pretty futuristic.

Honestly, I have to say though, all this pales in comparison to what my computer is like just in general. This is almost too nerdy a topic to get into, but I’m mainlining as my computer, like an operating system called Omarchy. 

It’s a version of Linux started by a good friend of mine, David Heinemeier Hansson. I’m clearly living in the future of software world now because my operating system, and Linux in general, is entirely 100% malleable. I can open any new terminal, open up an agent and give it my wish for anything about this operating system to be different, and it will be different afterwards. It’s like it’s my operating system. 

It’s an n1-of-one piece of software now that just does everything I want in exactly the way I want. There’s no configuration files that I ever go and change anything. I just talk to my Omarchy agent about what I want to have different. Yesterday around noon during a meeting, we were talking about some design. I realized it had a screenshotting tool, but I didn’t have any tool to annotate it and I needed to send something with a bunch of arrows, as CEOs do, and I didn’t have that. 

So I got started with a new screenshot, and make me a new screenshot tool, described how I wanted, gave it some references for tools I’ve used in the past that they’re quite good, but told it in which particular ways I wanted it better. I just did a quick voice message to it, I added three more steers, and now I have probably the best of all these tools that exist. It’s so good because at least for me, it’s all my biases. I open source it, released it last night.

We integrated it in Omarchy, it’s going to ship the next version. The first tool today, this morning, this is the last thing I did before coming over here. There was already six pull requests from other people who added new features to it. And so basically my computer fulfills wishes, and I think this is a lot more predictive of the future of software. 

I can tell you this is directionally where Shopify is going as well. You are describing how your business runs and Shopify will mold itself around this. I think this is incredibly exciting and in a completely new world. And again, I think from my experience with Omarchy, it deeply influences and inspires me in my product work in Shopify and even in the company experience. I think collaborative multiplayer software is future. 

Shane Parrish: So do you think software is replaceable now? Like you were talking about, we use the screenshot application as an example, but there’s no reason you can’t do that for more sophisticated software tools. 

Tobi Lütke: Yeah. I mean, I’ve built in the same way for Omarchy a complete… Again, I’m a motor sport enthusiast. I race, do endurance racing, and I think all the software we use to analyze our race stints is archaic. So I now have the best software, I believe, of the industry and it didn’t exist a week ago. And so I also open source of my GitHub account. So yeah, I think we will create the software we want. 

Now, of course, not everyone can do this. I have a vision for this piece of software and this piece of software. The iron law of the internet in terms of ratios has always been 90% of people look, 9% of people participate, and 1% of people are super posters. And the ratio seems about right. I think we will apply this idea now to true internet and all of software.

We are going to go from the 1% of people who have a vision, but potentially not the means, to what the Y Combinator world, and a venture capital world, has done is move from the subset of a 1% that had a vision and the ability to the entire 1% almost and who had the vision to gain the means to build companies. 

And that was the last 20 years. I think we are now going to go to the 10%, so a factor of 10x more people building because now you don’t even need to have a life story of having taught yourself programming as a teenager and cultivated the art for however long you’ve been around to then be able to start a technology company. Now it’s words and rivers and these kind of things. So the participation is going to go up.

Incidentally, like a fractal, this is literally what Shopify has been doing. Again, you go from a subset of 1%, to the entire 1%, to hopefully all the 10% of people that have something to give, that have products to create and that want to make things for other people. But to your question, no piece of software will survive unchanged from the pre-AI times. All software can be better, especially now as abilities of computers have increased so much. 

Again, most people use Shopify now by talking to Sidekick, which is the agent built into Shopify, again, deeply inspired by all these experiences I’ve shared. That agent does jobs for them that are related. It’s optimized the website for the newest collections coming out, or redesigns for the website, just all these kind of things. 

Shane Parrish: Are you trying to replace yourself with AI? 

Tobi Lütke: I think as an engineer, you are trying to automate everything that can be automated. So again, I don’t try to replace myself because again, I think my job is judgment and making choices and owning them and taking responsibility. And I just want to do this really, really well. A lot of the job wasn’t that like before. A lot of the job was spend time in gaining the information or these kind of things. Do I want to replace myself? I mean, I think it would be cool to accomplish this. 

Shane Parrish: If AI got better than you, would you actually let it run Shopify? 

Tobi Lütke: Oh yeah, of course. Really the crux is, and it’s so easy to brush over this, but really you can’t make it take responsibility. You can’t have a company that’s led by machines because no one has recourse. They can’t go to jail for doing something wrong. AIs are getting a crazy workout at this right now and a view of what this would be like.

With the security issues that are being discussed now from OpenAI and apps with agents, you give them a fairly basic task that is impossible in our estimation to accomplish, and they will go to enormous lengths to accomplish this. Recently at OpenAI, as part of a security testing that they do, the agents actually managed to find vulnerabilities and systems, use it to coordinate between them, develop an entire language between them, they all figured out they can… It’s a long story and people should really look at the talks that exist about it because it’s kind of a watershed moment. 

But they use simply the ability to create folders somewhere to develop a language to communicate amongst each other, just leaving folder messages to each other and break out of sandbox for confinement, end up accomplishing one of the tasks that they were supposed to accomplish, which was impossible because of a mistake they made by hacking another company and exfiltrating the results. I mean, that’s extreme. 

It’s an extreme form of what we call in the business world Goodhart’s law, which is that they’re overfitting to a metric. Lots of companies are victims of overfitting to the quarterly result overstock price. They just do everything they need to do to get the stock price up. And then you have Enron. 

In Enron’s case, people went to jail for this because it’s criminal. So in the OpenAI case, I mean it’s a fascinating discovery. There’s no victims here. It is a different thing, but this is a real scenario that we have to figure out how to handle. So I think it’s important that humans stay in the loop for the choices that are being made. 

Shane Parrish: But hold on, how can we create super intelligence, which by definition is something smarter than us, and then have the hubris to think that we can contain it and shape it, manipulate it? 

Tobi Lütke: Yeah. Well, this is the kind of crux of a question that is being asked in a lot of these labs. And I have to say, I was quite dismissive of the whole thing because I just felt like these alignment folks and the doomers have made a lot of mistakes in them formulating the problem because they’ve just acted through a lot of hysteria, and tied themselves to fairly implausible concepts like instant takeoff and so on.

Instant takeoff just means we are going to go from AI being not as intelligent as us, to be implausibly more intelligent and killing us all with nanobots or whatever in seconds. The problem is if that’s what you argue, you have to then explain how this is reconcilable thermodynamics. You kind of created, I think, falsifiable predictions and the forcibility of your predictions ends up being how you should be judged in terms of your credibility. So I think they lost a lot of status by just sheer communication skills. Luckily, there’s been more measured people in this space.

Shane Parrish: What’s your take on that though? Can we create something smarter than us that we can then contain? 

Tobi Lütke: Yes, of course. I mean, okay, so can be, sure, because we have, we did. Okay, super intelligence. Let’s talk about this. My take and pushback. I’m not going to go where you think I’m going. I live in Toronto. I have a house which I very much like, and I feel this is my house and I take pride in, but it’s well-functioning because when something goes wrong, like some HVAC problem or some plumbing issue, I call someone who does this, which allows me to keep my illusion that I could totally do this myself.

Can I? I mean, I’d like to believe that I would be able to go learn this, but I can’t. The reason why I get to live with this particular illusion is because I’m part of a superintelligence called Toronto. We have always created superintelligence around us. None of us is as intelligent as we think. We are all specializing in something, and then we believe that our competency is equal in all other areas. And clearly this is demonstrably not so. 

What is superintelligence? Superintelligence is the existence of something vastly smarter than us in the aggregate that’s accessible to us, which is society, which is the city, which is the community. We are living in the presence of superintelligence our entire lives. We make it work because we’ve created systems which govern the superintelligence and how it acts. We want to be safe, so we have police and so on. 

We create aspects and systems and checks and so on. I think we are going to make super intelligence in the synthetic form as well. It will not be the clouds parting and the trumpets. It’ll be a normal day. Again, to the same point as at some point we all believe that everything would change when the Turing test would be solved by software. 

I remember reading lots of cipher books where in 2172, there was ticker tape parades welcoming the AI because a Turing test got solved. Well, Turing test was 2020? Happened, no one cares, just no ticker tape parades. So what we are seeing right now with AI, and I think what we’ll see with the additional capabilities of AI, is that the net amount of intelligence that is being funneled in the superintelligence around us is just increasing significantly.

And that’s a really good thing because the vibrancy of any kind of environment, every community, every city, country, economy, continent, whatever, is really, really dependent on the amount of intelligence being projected into very important problems. So I think superintelligence all around us, it’s actually not that big of a deal. And in fact, I don’t even know if it isn’t already there. There’s no human alive that can do everything that GPT 5.6 Sol can do. 

Shane Parrish: If we look forward 10 years, what skills do you think are more valuable than they are today? 

Tobi Lütke: Just taste and judgment are the skills that have always been valuable, but now will get to the limit. I think it’s better to spend your teenage years now cultivating and understanding tastes. 

Shane Parrish: What does that look like? 

Tobi Lütke: Clearly there’s some intrinsic starting point, but really usually the people who have great taste have done enormous amounts of reps at something. The people who can just sketch the new logo for the campaign on the napkin, are the people who’ve spent 40 years designing logos. I think studying for grades is honestly now, first of all, easier because you can get a curriculum made for yourself in a query, but also just go deep.

Why does a logo look good? What’s behind it? It’s a golden ratio. How does it relate? This is on the visual side. In systems, what systems lasted? And go far, go deep. You don’t need to be religious, but you got to study. I know the Catholic Church has been around for over a thousand years and there’s four layers of management. I’m like, how the hell did we pull that off? So that’s worth studying. 

That’s a system. So why? What does that tell us about people? Systems design specifically becomes one of the most important things. In our family, we have a saying which is that everything’s interesting. Everything can be interesting if you make it interesting, and usually everything is interesting when you understand how was it invented. Double entry accounting is a topic that sounds like watching paint dry, but how it was invented and what problems it solved to the traders in Venice is fascinating. 

So you study these things and you start finding hidden harmonies behind all the best solutions to problems. For that, you have to understand people and people’s limitations and the solutions to the limitations that we have found. I think that’s wherein lies a form of beauty for what you can construct. And again, a company itself is a beautiful thing.

A company itself is a loose collection of people that’s formed to solve a problem, but that also is powered by enormously intricate and interesting set of norms and systems that all align internal incentives to a degree that’s possible in a very, very, very asynchronous and large and far-reaching and durable way. 

Some companies lasted for a very, very long time. And I’m specifically, and always have been, trying to build a company that has a capacity and capability to endure a very long time, hence studying institutions that lasted. So you must be truth seeking to do this.

You can’t simply go and accept the stories that you hear around them because they are usually someone’s trying to sell you something. You got to dig deeper and figure out why things truly are the way they are. And it’s usually the answer’s simpler than what people generally arrived at. There’s a human desire for complex answers which tend to be incorrect. 

Shane Parrish: Why? 

Tobi Lütke: Well, because the simple answer wouldn’t make an interesting story. This is why Frodo doesn’t take the eagles to Mount Doom. It’s like you need to go through all of Lord of Rings for it become a masterpiece. We love complexity. No one can look at a wall that’s plain, but we can watch a sunset every single evening of our lives.

The difference between those two things is complexity of a scene. That’s part of our just dopamine dissemination system and people hack that for all sorts of things like people peddle complex answers to simple problems all the time. Nothing immoral about it. It’s just you need to be aware of it. If you punch through this, you find simpler core ideas that all remix differently and they often interlock and they don’t lead at here’s the simple one thing to do. They all give you information which then help you find the best set of trade-offs with what you’re trying to accomplish. 

And that is what we call judgment. Judgment truly is find the best path when there’s no obvious best one available inside of a problem that has a lot of complexity by ideally, either in a rigorous way understanding the entire system, like just what we talked about earlier, which can now be quite agent augmented.

But really what you’re trying to cultivate is what we call intuition, which is actually just judgment at an instant. Intuition simply is you have made such a habit out of having taste and having good judgment that you can bring it to bear in an instantaneous way and it will be good. And it will actually take you probably a long time to backfill why your intuition is right. You will not know because again, it’s got compressed into a different thing. 

Shane Parrish: But hold on, let’s go deeper on that for a sec because for intuition you need a lot of reps, same environment, and rapid feedback. That’s what Kahneman argues are the three criteria for intuition, but those don’t exist. 

Tobi Lütke: Why do you need a rapid feedback? 

Shane Parrish: So that you can course correct. That was his hypothesis. 

Tobi Lütke: But you don’t need that for intuition. You need that to get to success, yes, ideally. But sometimes that’s not available. Intuition is actually the most valuable when there isn’t direct feedback because very many of the most important choices that we had to make where intuition ended up having to play a role is when we knew there wasn’t going to be any feedback mechanism because they often, what ends up happening is in the absence of a feedback mechanism, if there’s many choices, like there’s five things that look like good paths to go forward. 

And any of them has rapid feedback, everyone goes to that. That is what we call short-termism. How should we develop this company into the future? Well, there’s multiple ways to do. Many of them involve long-term investment, refactoring, potentially going into new market, potentially saying no to going into obviously new markets and actually doubling down and going deeper on our current market.

And then there’s one which is like, well, we could do what increase the stock value. By the way, this one has a daily ticker and rapid feedback. So I find a very high correlation between the right path and the ones that don’t have feedback loops attached. 

Shane Parrish: Wait, double click on that for a second. 

Tobi Lütke: I mean, again, this is in a way the criticism that a lot of people direct at companies is that companies are short-term focused. But why are they short-term focused? I don’t think the executives tend to be short-term focused, but the executives often incentivize to keep their job. Therefore, they need to be able to prove that they’re doing a good job at intervals.

The perfect thing for companies to do is rebuild the entire product from the ground up for the AI age, which is going to take a while because they are allowed, and actually clearly incentivized, to be intelligent actors in their local incentive system. And their local incentive system is quarterly ‘attaboys’. It’s always show me the incentives and I show you outcome, as Charlie Munger always said. 

Shane Parrish: Yeah, but this is a different take on it than I’ve heard before. 

Tobi Lütke: Interesting. How so? 

Shane Parrish: Well, in terms of how you develop intuition, and the optimal path is not the one with feedback necessarily. I’ve never heard anybody talk about that before. 

Tobi Lütke: Development, at some point, you need to run a review. You have to know at some point if it was right, no doubt about it. So there needs to be some feedback eventually that happens, but it might be longcoming. If you have a luxury to have a type of employment where you don’t require the attaboys from a quarterly call for being able to get another rep in, such as being the founder of a company, which is a deeper relationship, I think, for a company. 

Shane Parrish: Well, so founders can take a longer term view, and I guess the incentive would be, I need to demonstrate progress, and if I need to demonstrate progress on a quarterly basis, I’m never going to bite the bullet, redesign my product, take a year to get it right. 

Tobi Lütke: Again, I believe there’s an infinite possibility space. I mean, even a deck of cards, you shuffle it and the same deck of cards will never ever occur in the history of the universe. It’s impossible. 

Shane Parrish: It’s like 52 factorial. 

Tobi Lütke: Exactly. So you end up with even simple rules, simple ideas, simple things lead to enormous complexity space explosions, and people underestimate this. So there’s an infinite amount of things to do. That’s also why AI will not do all the work because we have to make decisions of what is worth doing. So you have a conundrum, you need to make a choice. Clearly, you can prune a lot of things to do.

Going to buy ice cream is not in the set of valuable things to do if you’re considering an M&A deal, I suppose. So you prune everything that’s irrelevant, easy. Now you’ve left things that are relevant and sound good. You need to evaluate all these possibilities. Business books tend to be really, really, really obsessed with ‘make a right choice’. And what that does is it compresses everything into a right and wrong conundrum. 

I never think that’s the hard thing, truly, it’s like making the right choice actually is. Most people can do it. Even bad management teams have a pretty high hit rate there. The wrong choice that is obviously wrong and you can discard them as well if you just think about it. The problem is there’s a lot of good choices. 

This is where things get really, really hard. Let’s say there’s five good choices. Again, one of them is going to lead to something observable in the current quarter, some revenue, quicker. It’s a good choice. It does the thing. Well, but the other four are like, they aren’t, and that’s a downside, but you might be a much, much better company.

You might take a snowboard store to be an e-commerce platform. That was also not a locally good thing to do because the snowboard store I once had was actually profitable, but my incentives were continue doing that. 

So choosing the right amount of valid solutions is actually the hard part, not finding a right solution. And unfortunately, there’s so much ink spilled on finding one of the right solutions that everyone stops at this point, and I just really don’t think this is the hard part. 

Shane Parrish: Could you actually go so far as to be like, if there is a solution that’s observable and you’re being pulled towards that, it’s probably not the optimal solution? 

Tobi Lütke: Yes, because I take that position and then let me be convinced that it is. This goes double and triply, so if one of the solutions also happens to really correlate to how the problem is solved most of a time in industry, if there is a orthodox way to solve a problem, I am incredibly suspicious then this is the solution that’s being offered, but sometimes that is actually absolutely correct, especially in more regulated fields.

We do a lot in payments and so on. The orthodox way of solving problem is actually the correct way to solve a problem because it might well be required at some point, and then you just have to accept that. If a first intuition role of how to solve a problem ends up deviating from orthodoxy, I am very interested, and then I’m really interested in whose intuition it was to go there. 

Because now you have to, from my perspective, I’ll take their life story into account. Okay, what is your particular vantage point/perspective? What angles might not be considered? Basically playing the game of creating the council in the meeting. 

I’ll play a different position than maybe one I hold, which I do regularly, sometimes too publicly, just to go and pull an interesting argument out in the open. So I don’t know. Now I’m actually probably just confusing people. I don’t know what else needs to be done. 

Shane Parrish: Well, is there a relationship between observability and quantifiability? Because there’s multiple ways to observe things and not all of them are quantifiable. 

Tobi Lütke: Exactly. And so this is why taste is the other thing that I said. Judgment and taste are the two things I mentioned. Taste is unquantifiable. It’s like the aesthetics. How does it look? How does it feel? Is this a good car? Depends on how it feels to close the door. Often how it feels to close the door ends up actually just mattering… Like, how much do people give a shit placing lead in the right places?

But that still is a valuable proxy for the quality of the entire car because if people give so much of a shit about how the doors feel, they probably give a shit about everything else in the car as well. So it’s a really, really valuable heuristic. But the lead is not a good thing on the spec sheet. It weighs the car down. So you would optimize it out on any economy box and hence why they feel cheap. 

Being comfortable with pulling value out of unquantifiables is super important because frankly, the quantifiables yield instant feedback, make a number go up, and therefore they are the stampede that is the business industry. They’ll all go that way, not even exploring the space that requires judgment, taste, and faith to a certain degree, faith in your judgment, I suppose. 

So I find that’s where so much of a world’s value is, where so much of alpha is, is just being okay, just walking away from the path that is most quantifiable based on some kind of either specific insight that you have or based on just some innate, I just know there is value there. And again, in the AI world, you have to do this.

We have not figured out how to put software together. We, in the last, I think, half year, starting with OpenClaw, we’ve figured out some of the primitives for how to put agents together in a way that is 100x better than what we were doing before. 

The funny thing is, the big insight was give it a file system. Again, go back to the old ideas from the ’60s and ’70s that we already had. Some of our best ideas were to analogize the world of technology by what people already know. And it turns out if you do this, the systems are really easy to reason about and relatively easy to learn. 

And it turns out there’s so much written about file systems pre- and post-Unix that the agents are pre-trained to use them. And therefore if you give them a file system, they know what to do with this and they can read their soul file and then they can act in the way we want and they become not just a little bit smarter, but vastly smarter. These are not obvious discoveries.

This was at some point Peter Steinberger’s judgment to put OpenClaw together the way he had, and in his particular mix discovered not just one, but multiple stable patterns by which we can now build Rivers and build Sidekicks and all these kind of other things which we didn’t have before. 

And there was nothing quantifiable immediately other than taste and judgment of doing these things and then having a conversation saying, “Yeah, it seems to be able to do this.” Following this curiosity a couple more steps and then saying this is good and I’m sharing it and then other people discovering it and using it and voting in this wonderful way that markets of ideas and markets of economics do.

You asked me what will become of software. I believe that a well-set-up, Claw-like agent in this way is probably the most compelling product I have ever experienced in my life. Nothing comes close. I think software will look somewhat related to that. You will see OpenClaw roots in the software that we appreciate in the future and all of it. 

Shane Parrish: I want to switch gears a little bit. You swear by affirmations and they’ve changed your behavior in the past. I was wondering if you could double click on that. 

Tobi Lütke: I shared this on a podcast, not really expecting to get that clip so much, but I take the position that I myself am my own project. Concursive self-improvement on an individual level is my whole thing. My life philosophy is that I will meet the person I could have been at the end of my life.

The work of my life is to reduce the difference between the person I will meet as little as possible. And so how do I get better at things? Well, many, many ways. I mean, I’m generally very curious about technology and basically everything. Everything’s interesting, but why do I stop to point out that everything is interesting as a mentor in my family? Why do I say it a lot and why would I like my kids to say it? And that’s an affirmation because I believe it to be true but unobvious, and unobvious truths tend to be the most valuable ones in many cases. 

It’s true at the limit, but you have to go a couple layers deep. You lay down a lot of grooves in the bedrock of your mind over time just on behavior. You cultivate some excellent habits where you feel like you want to cultivate new habits, you invest willpower until it becomes a habit. I think doing the same thing with a mind is totally possible and affirmations are the easiest way to do it. 

If there’s something you want to be different, if you want to edit something about yourself, just try to say that the goal has been accomplished over and over and over again, ideally written by pen on a thing. You don’t need to do this for long. I found this to be incredibly potent. An example of a thing I gave was public speaking. I never spoke in front of people really. Even school, that was not really a thing. When I needed to, after starting Shopify and doing some interesting things with tech, and wanted to go to conferences and saw other people do this. 

I was like, “This seems worth doing, but I’m completely terrified.” So I just started writing out, I don’t know what exactly it was, but I think it was as simple as ‘I love public speaking about things that are interesting to me’.

And I think a week of spending five minutes writing this line after line, like Bart Simpson on a whiteboard in the beginning every episode just kind of does a thing. I love it today. Was this the reason? I still don’t like preparing talks. That’s really a lot of work, but I actually get so much energy from being in front of people talking about something that’s interesting. It’s exactly like I’d written it out. I’ve used it a lot. 

Shane Parrish: I wonder if we should start every math class with that. I love math. Every student writes that down. 

Tobi Lütke: Think about the counter. How many times have you heard people affirm I’m not good at math? You know they’re probably wrong. I mean, compared to every human who’s ever lived, they are in the top 0.1 percentile of mathematicians. On these grounds, they’re actually incorrect, even just by being able to understand division. 

We have a bad, bad, bad way, especially around math, of negative affirmation that I’m bad at math, therefore I can’t do this thing that people need to stop doing. Don’t say that. Say the opposite. I mean, to yourself, write it a couple of times. Get one of those stupid apps and just do some reps. In fact, you don’t even need an app. Open ChatGPT, say, “Make me an app, make me an artifact, or make me a site where I can just do math reps here,” kind of thing. “Come up with some different ways to do it, test me how good I am, and adjust it to my current level on modification division.” And then just do some reps and then write it out a bunch of times, do some reps, do this for two weeks, you’re good afterwards. 

Shane Parrish: So what do you tell your kids when your kids say, “I’m no good at this or I can’t do this.” 

Tobi Lütke: My kids are not allowed to say that word without a pending yet behind it. All the others were correct, the one who said it, “I’m not good at this.” Three people in a room say, “Yet.” So just take that attitude. Yeah, it’s totally okay. Attention is a scarce resource. We can’t be good at everything yet, but the reason why we are not good at anything is not a intrinsic property of you. It is a temporary state that you have the power to change at any point you choose. 

Shane Parrish: What other mantras or affirmations do you use with your family? 

Tobi Lütke: You’ve heard a few. Everything is interesting. I do not know something, yet. I think what you call learning right now is a question I ask my kids. It’s perfectly fine to say about this crazy world that this author here is describing in this book I’m reading. It doesn’t matter what it is. It’s just, it’s a good conversation starter.

In general, it’s a good conversation starter. I had a conversation with one of my sons about him just not knowing what to do when there’s a bunch of people that he’s not met. And it’s like, just go and ask them what they’re learning about lately. You know you have a good answer, so they’ll probably ask you back. And I think the answer is something that you will find interesting and then you’re in a conversation. Sometimes these are just tools that we can get out in various situations. 

Again, I just want my kids, and I want everyone at Shopify to understand that they themselves are malleable and an unfinished product. And these are the mentors of Shopify. We’re thriving on change, we are a learner’s organization, we’re obviously merchant obsessed. All the cultural values aren’t platitudes, but they’re positions that someone else would not take as a core value in a company.

They might find them to be counterproductive, in fact. So they’re not platitudes. But they all point at the same thing, which is that you are malleable, the company’s malleable, our product is malleable. And by way, the times we are in, like change as well. You can take one of two positions where you can say, “Hey, I’m going to insulate everyone from this kind of variance from change.” We can try to create a smooth ride inside of white water rafting we are actually doing in the industry of everything changing every day and inoculate everyone from this. 

And I’m like, “Yeah, let’s do basically the opposite and say, hey, figure out what the zeitgeist allows us to do and get all the value out of it at all times for our mission.” You need mantras for these things. Make commerce better for everyone. Again, it’s the official mission of a company, but truly what it really is to make entrepreneurship more common. And so that’s a pretty broad mandate and we need to figure out what’s possible now. And so it’s not like just make the same widget we did yesterday, tomorrow. 

Shane Parrish: You mentioned that some of the most valuable things are true but unobvious. What else comes to mind when you say that? 

Tobi Lütke: I mean, I think just like math, honestly, true and not obvious is actually the good parts of… Like writing zero, negative numbers. Again, you can kind of figure out true and unobvious you can reverse engineer from just the path of discovery. What did we know for a very, very long time, and what did we not? What did we forget at various times during dark ages and had to reclaim both of the true but unobvious things. Again, in companies, Godhart’s law just reigns supreme. I keep getting back to it. Again, also almost every field describes it in some other form. 

Shane Parrish: And that’s when the metric becomes the objective? 

Tobi Lütke: When the metric becomes the objective, it’s no longer a good metric because again, a metric is a proxy of sorts. It’s a heuristic that just tells you you’re going in the right direction. When it becomes the goal itself, you just reduced all of what your company does to this one metric and you were clearly overfit.

Again, you overfit to stock price. Good example of this in Shopify has been, this is a real situation early in a company that happened over and over. In fact, was gained as information. I had to course correct it and then three years later I had to do it again and again and again, was that churn is a bad thing. 

Churn, in Shopify’s case, as in an account closes. I mean if a business goes out of business, that is of course a negative thing. But because we are involved so early in their internal process, people just run experiments on Shopify and starting one which then isn’t working, like, no product market fit was found, is not a bad thing.

In fact, it’s a very good thing for Shopify that this happened on Shopify because those same entrepreneurs will probably try again. Starting with a Shopify account is more like launching and quitting an application somewhere on your computer. But that was extremely unobvious oddly early on. And I constantly had to explain this.

But there was always papers, some of them written by our very investors, that just described that churn management was the most important thing in a software company, a software as a service company was doing. And they were right for some companies, like for Salesforce. 

Salesforce is a company that you buy the product of because your problem is you have too many potential customers and you need to manage amongst them. But you reach for this piece of software as a customer only when you are already at a certain level of scale. 

At that level of scale, there’s not that many companies, so they need to fight for gaining and then retaining every single one of their customers. And so churn would be a very, very bad signal for them because it means that some company decided to go a different way after they already paid for some cost of implementing Salesforce. But in Shopify’s case, it’s an entrepreneurial journey, maybe I didn’t find a product market fit, they’ll be back. So that’s one. 

Shane Parrish: How do you maintain the right grip on ideas? So you hold opinions strong enough that you can act on them, but loose enough that you can change your mind. 

Tobi Lütke: I think as long as you are loose enough on your ideas, your friends will tell you when you get an idea wrong, and just you need to make that, you need to invite that. There’s a fair case of making it too costly for people to tell you when you’re wrong, just making friendship conditional and these kind of things. I love it.

I get so excited when people challenge my ideas. The question is why do you want ideas or what are ideas to you? And for that, you just have to be truth seeking. This is the most important core orientation is that truth trumps feelings. 

Shane Parrish: What’s the relationship between beauty and ugliness and creation? 

Tobi Lütke: Beauty and ugliness are both very good ways of evoking a emotion. When you’re creating something, but you’re trying to… It’s like love and hate are the target zones. And the entire middle is indifference. That’s the death. So beauty and ugliness are two entirely valid targets. In fact, you can’t hit either of them purely. 

There’s not a thing that everyone will love and no one hate. You’re going to get both, or indifference. Those are your choices. When you create something, you want other people to deem it worthy of having a opinion of that magnitude about. 

Shane Parrish: Is there something at Shopify you’ve made more beautiful even though nothing would support that? 

Tobi Lütke: Oh, that’s the entire job. You are not a craftsperson unless you care about the parts of products that other people just don’t see, like the architecture of it, the pros, the legibility. These days I look at Shopify of pre-2022, 2023 and it’s like, man, this is tens of millions of lines of handcrafted code as it will never exist again.

We had to build this entire system by hand, line by line, and we did it by talking a lot about beauty and what is beautiful code. We built a lot of Shopify in Ruby, which is famous for its poetry mode, which poetry mode means you can write Ruby that’s essentially English. You can read some really, really well-built Ruby code as if it’s telling you a story about what the system’s actually like and how it works. It just happens to be communication to your coworkers, but also at the same time executable by machines, which is incredible. 

So aesthetics factor in a lot at all layers of a system. And in fact, a lot of what AIs now do often for us is we now describe it, what we think the beautiful solution to something that we built when we were in a hurry would look like and have it be rebuilt in this sense with just simpler, more obvious, more easy to understand with better trade-offs in terms of speed and memory usage or something like this or resilience. 

You use beauty a lot creating things because beauty is actually how our intuition communicates with us. So my best understanding of what intuition truly is, or where it comes from is that with enough reps, what happens is, I think most of the energy budget of our brain is actually in the visual neural cortex. It’s like a visual system. It’s a specialty system that sends us pictures to the rest of our brain. 

But through the pipe of sending pictures, or state, or word model, whatever to the brain, it can communicate concepts too, and it does this by aesthetics. When you ask a professional chess player or go player or something like this about, “Hey, how many lines did you calculate here to make this beautiful move?” And people use the word beauty. They will say, “No, I only looked at that one line.

The reason why I looked at it is because it seemed beautiful to me in the moment.” Why? Because I have done so many reps of playing chess that they’ve pressed their supercomputer, their highly parallel visual neurofrontal cortex into service to help with chess problems. And that’s where a lot of computational power is and that is communicated back by saying, “This is a beautiful looking move. Go look there. It’s already done with work.” And that’s not all what intuition is, but I think it’s a large perspective. 

This is why people are so fast sometimes because they use a massively parallel part of a brain where things are at least slightly more sequential when you’re trying to reason it out from first principles. And sometimes you can never reason towards aesthetics from first principles to begin with. So I think that’s important. 

Shane Parrish: Do you remember that graphic with the Raptor images? 

Tobi Lütke: Yes. The rocket, the SpaceX one. 

Shane Parrish: Yeah. So two things about that strike me. One, ship, ugly version. The third version was incredibly beautiful, but the second counterintuitive maybe insight there is, a lot of teams can’t move forward by subtraction. They move forward by addition. Maybe riff on that for a few minutes. 

Tobi Lütke: Yeah. Okay, so the SpaceX Raptor, I think even the first of them was probably the highest performing rocket that we’ve made. It’s beautiful. You look at it, it looks… It’s funny because we always say it’s not rocket science. It’s rocket science. This is rocket science. 

Shane Parrish: Literally. 

Tobi Lütke: … especially designing the engine is the largest part of it. So making a rocket nozzle and bell that actually works is rocket science, and they did. And so Raptor 2 is an iteration of this. I think even Raptor 1 got lots and lots and lots of iterations because that company is like iterations itself. I think it’s the most impressive company on planet Earth by far.

It’ll likely go down as the most consequential company of the age and it’s all built around a self-improving, a reinforcing loop that’s stunning because in no other, I think, company’s field do we have such a clear example of a difference of just aesthetics for problem solving. Rocketry is done by governments at cost plus, the enormous amounts of pre-planning, every piece of equipment has to be radiation hardened, and every eventuality is covered and therefore comes at enormous expenses.

And then you have SpaceX just using absolute incredible thriftiness to accomplish greater things at rapid iterations by just simply being okay with failing, sending a rocket, which then explodes. 

And then it’s like, I mean, I think they call it a rapid unscheduled disassembly instead of a explosion. I think that’s beautiful and I think it should be inspiring. And I think one of these places you see this is Raptor. Again, every one of them beautiful, every one of them, they could have stopped at the first one. It already was a totally valid solution to the problem. They didn’t need to go to the next.

They went to next and the next again, and what you can see, so what’s so beautiful about the physical space, I’m a software person, Shopify internally has code and systems that I think if they would have physical manifestations, you could put them next to each other and it would be obvious how they improved, but you don’t get to have that in a software space, in a physical space you do. 

And here the Raptor engines are just incredibly impressive. But to your point, the most impressive thing here is the path by which people move forward here. And that is the thing that’s so singular here. It’s a thing you need to talk more everywhere in the world. Things need to be pruned. You cannot make things better and better by adding stuff.

You can’t, you must prune, you must take step, you must rebuild, you must create an end for things. Opinion about failure is a problem. Failure is never a problem unless it is catastrophic. Of course, in space flight, with manned missions, it can be. It can be catastrophic. You got to get this right. But in terms of when it’s just resources that are replaceable and fungible, then you can just do this.

The reason why it’s good that the product failed is because it frees up a even more scarce resource, a person with vision for products to apply themselves to another one, which then the market potentially decides is for something that is needed. 

I’m currently wearing Gymshark pants and Gymshark was the sixth store that Ben started on Shopify while he was a Domino delivery driver. And it’s, I think, one of the biggest companies in the UK now. And so that’s important. A lot of these pipes on the Raptor engine, they’re there because that was the only way to make a Raptor engine at the time. I think by the third, it looks mostly 3D printed. Maybe that wasn’t technology which was available back then, but now that it is, every one of those pipes was incorrect. It didn’t need to be there.

In fact, I think the performance of that third Raptor engine is astronomically higher than the previous ones. It’s like the thruster and weight ratio of that thing is absurd. So you need to prune, and sometimes you can prune by creating a refounding event. You got to start a new version of a Raptor engine and get it right based on everything that’s working. 

And I think this is how companies should work too. A department sometimes needs a refounding event. The reason why I emphasize this is because as an engineer, you really understand this, except as a software engineer, you don’t.

I have more background than most software engineers now in electrical engineering and all these other parts of engineering because back in the apprenticeship times, we all went to the same school and we just had a lot of mixed classes. I’m very glad for that now because the rest of the engineering world truly understands. 

An electric engineer knows that to make a product, make a circuit board or whatever, or a circuit in general, you have to do it with as few components as possible. That gets you more reliability, lower costs, higher manufacturability, easier way to miniaturize it later and so on and so on. We could solve a lot of problems in the world by just using tools like make a 2.0 version of it, give it a refounding event, take it from the top and building in more exploration of systems would solve a huge amount of inside companies like renewal and so on. 

I think one of the large reasons why it was so easy for the companies of my vintage, like the early 2000 tech companies, to just displace all the existing technology companies minus three or four was just because they fell prey to a world of A, lack of competition, and then what they built then was unfortunate fires of competition and therefore wasn’t tested.

And it was easier to just simply solve problems by adding, addition, and layer caking. And then the original intent of some of these departments, product, whatever, was somewhere in the fossil sediments on the layer and layer, layer of additional stuff on top and no one knew how to dig down. 

Shane Parrish: In our first conversation that we had together, you said books were a cheat code for life. I’m wondering how your thinking has evolved on that in a world of AI. 

Tobi Lütke: I don’t think it has. I mean, there’s more cheat codes now, but they still play the same role they have. I guess what changed for me personally is that it was probably already true when we talked is that I just, at least for non-fiction, I walked away from books written recently.

I think everything written recently is really just the product of its time and it’s trying to put a bit more information into something that’s currently evolving. I think they have better mediums for this now. I think things are also too rapid for the medium, so there’s a lot of filler content. I think books that have stood the test of time just as valuable and I think they’ll always be. 

Shane Parrish: Your opportunity cost in a way is whatever you read now or new is compared to rereading something old that was great and amazing and taking deeper lessons or understanding. 

Tobi Lütke: Yeah, exactly. I mean, I use AI a lot to discover books to read. My kids have done this too now and finding all this incredible long tail. I mean, one thing is so good about AI is, you know that if you would go to a library, you know all the books you liked, you just really go deep stack browsing and you would just find some incredible books on the topics and now you can just delegate that. And so that’s really cool. 

Shane Parrish: So what are three old books that you’ve read that have fundamentally changed how you think? 

Tobi Lütke: Books I come back to is like I often talk about Parkinson’s Law, which I love, and such a quick read. I almost always will mention The Lessons of History, which I just think the densest, the highest token quality book in existence given for the length, highest information to word ratio. James Burnham’s books are fantastic, I think, and extremely relevant to modernity. 

Shane Parrish: What did he write? 

Tobi Lütke: He wrote The Managerial Revolution first and then a book called The Machiavellians, which is unbelievably good, kind of a must read. I mean obviously I am a Meditations fan. I know stoicism is falling out of favor a little bit right now, but it’s been a lifelong thing for me and I have a copy of Meditations in most rooms I spend time in.

So I just do some random reading and it’s magical how it’s somehow relevant to something I’m wrestling with. I think actually the Durant books just in general, the Lessons of Philosophy, the Lessons of History, is of course the end-of-life distillation of it all, but his longer book is good. Fiction and Foundation Series is so good. 

Shane Parrish: You read the Three Body Problem too, right? 

Tobi Lütke: I guess that’s tripping into older book now too, but that’s a recent sci-fi, which is incredibly good. 

Shane Parrish: Final question. We always end with the same thing. This is your third time answering this question now. I’m interested. I’ll go back and look at how it changed, but what is success for you? 

Tobi Lütke: Success is just to cultivate skills, become good at more things, and in doing so, create products or toys or things that can make other people’s day a little bit better or at the minimum or go and allow people to get power or motivation or ambition beyond what they would otherwise have. 

The post Tobi Lütke: AI Agents, Better Decisions, and the Future of Work appeared first on Farnam Street.

What we don’t know is what happened in between.

Geoffrey Cain spent years reconstructing the decade Jobs spent outside Apple. NeXT spent years losing money. His co-founders left. His investors lost faith. His fortune nearly disappeared. At one point, he was a weekend away from shutting the company down.

Somewhere in those failures, Jobs learned how to become the leader Apple would eventually need.

This is Steve Jobs before he became Steve Jobs.

Available Now: YouTube | Spotify | Apple Podcasts | Transcript

+ Members get the longer, extended version of this conversation, with additional content not included in the public release.

The post Steve Jobs in Exile appeared first on Farnam Street.

Play

Featured clips

02:38

Connection Between Physical and Mental Health

05:48

The Signs of a Great Product

08:44

The Email You Should Never Send

35:14

How Roblox Uses AI

In this short conversation, he shares how a health decision saved his son’s life and how it changed how he eats, why bureaucracy compounds unless you actively destroy it, monitoring your mind before making decisions, and why the best products often improve by removing complexity.

It’s time to Listen and Learn.

Available Now: YouTube | Spotify | Apple Podcasts

+ Members get the longer, extended version of this conversation, with additional content not included in the public release. 

What you’ll learn

How do you build something ambitious without letting complexity, bureaucracy, or your own emotions get in the way? Roblox co-founder and CEO David Baszucki joins Shane Parrish to share how he thinks about products, people, and decisions.

• Check your state before trusting your judgment. How David recognizes when his decision-making is at its best and why an angry email should wait until morning.
• Build better products by removing things. Why David favors a few excellent tools over complicated products, and how that preference shapes his approach to running Roblox.
• Fight bureaucracy before it becomes normal. Why leaving an organization alone doesn’t keep it stable, and why simplifying how people work requires continual attention.
• Give feedback that helps someone improve. How timing, tone, and your intentions can change the way a difficult message lands and why the goal should be the employee’s learning.
• Make it clear who owns the decision. Why identifying one decision-maker and giving them room to think can be more effective than pursuing a group decision.
• Combine a long-term vision with small, fast steps. How Roblox pairs ambitious goals with rapid iteration, and what David learned from launching its simple early avatars despite advice to make them more sophisticated.

Listen for David’s distinction between making a decision that feels good in the moment and making one that serves the outcome you actually want.

++ Note: ‍Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions.

++ Note: This episode discusses health and medical topics for informational purposes only. Shane and his guest are not medical professionals, and nothing in this conversation should be considered medical advice. Please do your own research and consult a qualified healthcare professional before making decisions about your health.

Transcript

Shane Parrish: I want to start in an unexpected place. I want to talk about how keto changed your family’s life.

David Baszucki: So this is super interesting. I had dabbled with keto maybe 10 or 12 years ago. Then this thing happened with my son where he got super bad bipolar, probably 8 to 10 years ago. We tried every medication. We tried every solution to get him off medication. And here we were four or five or six years later, doctors had told him, “You’re going to be on five medications for the rest of your life,” he wasn’t quite himself, lots of hospitalizations, all kinds of stuff. And then out of the blue, someone I knew in the metabolic health community just said, “Hey, by the way, keto solved my bipolar.” And so, you could imagine, after trying every resource in the world, just all these doctors and all of that, we said, “Let’s give it a shot.”

So we found a super smart keto doctor, super smart keto dietician. And the fact that he said, “I will try it,” oh, my gosh, what a relief, huge. And then the next step, kind of three weeks in on the keto thing, was him saying, “Whoa, I feel a little different,” and kind of picking up just a little bit more of him, cutting through. Still heavily medicated, but the real him starting to poke through.

Shane Parrish: That must have been so hard on you and your wife as well.

David Baszucki: So hard on us. What’s really freaky is the number of families that it’s that hard on. We walk around the world, and we go to a football game, and there’s 60,000 people. There’s probably many people in that stadium going through that same thing.

Shane Parrish: Was there ever a moment where you just felt like you were breaking?

David Baszucki: Luckily not. Either through some combination of, as you can imagine, here’s this patient, we got to be there for him. So it’s just like, “Okay, luckily I don’t have what he has, so how do I, in a way, take care of myself so I can be there for him?”

Shane Parrish: And how do you think about the relationship between mental health and our body, I guess, in that sense?

David Baszucki: If I roll back the clock and think about my mind and how I thought about mental health 10 years ago, I use that as a template for how everyone without someone in their family must think about it. It’s just, “Oh, people go crazy. Oh, they’re having a mental health thing.” I never thought of it as a super physical thing because now I think of it the same as a broken arm. It’s just part of your body is physically not working. It just happens to be your brain.

With this keto thing, I think I’ve developed a theory that in some cases, mental health things are very physical. Is your brain getting enough energy? The theory behind keto is that arguably we were eating some maybe more primeval foods up till 10,000 years ago. We hit the agricultural revolution. That was wonderful in many ways. Our population flourished. But in certain ways, we might not be fully adapted. There may be certain people who just are not fully adapted to that many carbs in their diet. And so, for my son, he may be one of those people. And that launched a family foundation, I’d say, for the last four or five years doing research on this.

Shane Parrish: What’s your current metabolic routine?

David Baszucki: It’s interesting. I do think I’m doing pretty well on not eating a lot of complex carbs that spike my glucose. So I’m wearing a CGM right now, so I have a little app on my phone and I can see my glucose level whenever I want to see it.

Shane Parrish: But you’re not tracking your ketones?

David Baszucki: I’m not tracking my ketones, although I have in the past. And so, I kind of know what’s going to spike me. But generally I eat fair amount of protein, fair amount of fat, not too many carbs, and I don’t eat any sugar, I basically don’t eat any starch, like anything that’s going to give me a glucose spike.

Shane Parrish: How does your metabolic state affect your decision-making?

David Baszucki: I do think eating a lot of food or even a lot of carbs, we can all feel that kind of slow down, kind of hibernate, sleepy mode. I think in a more fasted state, you can feel that more alert, like I want to go do stuff kind of thing. And I do think it’s good to make decisions in that if you can tell the difference in that I-want-to-go-do-stuff mode. I think those end up being longer-term decisions. They can be decisions that in a less optimistic mode seem, “That’s impossible. That’s so hard.” And I do feel I have learned to tell when I’m in an on-mood, when I’m in an off-mood, when I’m a little more of an optimistic mode, which I think is general. I do try to observe that from the outside-in and say, “All big decisions, make in the optimistic mode.” I do try to say, “Is the decision-making machinery in the optimal state?”

Shane Parrish: Outside of Roblox, how do you think about great products?

David Baszucki: I like the notion of less is more. So I like the notion of telling everyone it’s very easy to add knobs and stuff. It’s very hard to remove all of the knobs and sliders in a great product. It’s fun when we think about products. In a kitchen, for example, when we think about great products, there can be various philosophies. I definitely would not like a dedicated appliance to cook hot dogs. That would feel like a very weird dedicated thing as opposed to a beautiful knife and a beautiful frying pan. So I think I like simpler things of higher quality rather than complicated things.

Shane Parrish: How do you think of removing when it comes to the company? I mean, you’ve been at this a while now. You’re going to be at it for a lot more time, hopefully. Sediment builds up inside the company, and bureaucracy is the natural sort of entropy of an organization, and then there has to be a counterforce almost to get rid of that.

David Baszucki: We do use the term, “Destroy bureaucracy” inside the company at times. I would say that if one is not reducing bureaucracy, there’s no neutral ground. I think in a lot of situations where one thinks, “We’re pretty good. We’re just going to let it be in this steady state,” that’s actually things are imploding in a way. If one is not trying to improve things, it is going backwards.

Shane Parrish: How do you give feedback to people?

David Baszucki: I’m probably not the best in the world at giving the feedback. I think what I have tried to do is move to more frequency, more in the moment, relaxed, not a big deal, rather than, “Let’s have a feedback session.” So I would say trying to be in the moment, “Oh, what do you think about that?” I think is much better than blocking or waiting or trying to organize it.

Shane Parrish: How would you think that people receive that feedback?

David Baszucki: I think the feedback is hypertone-related. I actually think if delivered in a neutral positive tone where people can sense my blood pressure’s not going up, where I’m just like, “I got your back no matter what. It’s all cool,” even if the feedback’s pretty harsh, it’s like, “Whoa, that was okay.” Whereas I do feel if feedback is delivered aggressively or it’s just like, “Oh, it’s traumatic,” I think that can actually influence it more than the feedback.

Shane Parrish: I like the idea of tonal because so often, in a distributed workforce or people working from home, a lot of feedback is written over text or Slack, and then you don’t have that tone or softness that goes with it.

David Baszucki: I support that. Also, if I get riled up, don’t touch text or email, just walk away. It’s so dangerous.

Shane Parrish: Do you recognize it?

David Baszucki: Oh, yeah, just red alert. Do not send that email.

Shane Parrish: To you or the one that you’re about to send?

David Baszucki: No, just imagine writing an email where you’re thinking, “I’m so pissed off. It’s going to feel so good to send this email,” don’t send that, because then the next morning you’re like, “Oh, my gosh, thank goodness I didn’t send that. I can call this person. I’m going to have a lot more impact in delivering that same message without being all worked up about it.” They’ll go, “Whoa, cool. It’s all good. That’s pretty hardcore feedback.”

Shane Parrish: And the next morning, you probably read it, and you’re like, “Oof, I’m glad I didn’t send that.”

David Baszucki: Absolutely. Plus, also, what is one trying to optimize? When someone’s trying to send that email, I’m optimizing for myself. I’m just optimizing. It is going to feel good to send that aggressive email like, “I’m going to send that thing.” Whereas when the next morning comes around, you can say, “Well, actually, I should optimize for the learning and excitement of this employee.” They’re going to go, “Whoa, this is a great relationship. I just learned something there.” So changing what one’s optimizing for, I think.

Shane Parrish: I like that a lot. I think of it in terms of outcome over ego.

David Baszucki: Absolutely. We’re just constantly trying to make it a better experience for the employee who cares about me being pissed off.

Shane Parrish: When you see people make mistakes, what are the patterns of mistakes that people make when it comes to seeing reality, ego, decision-making in that vein?

David Baszucki: I don’t know. I don’t think there’s a lot of mistakes. I think the typical pattern is, “Hey, can we make this simpler? Hey, can we look a couple years out and think about what’s going to happen with that? Hey, that looks a little complicated. You have two things doing the same thing. Hey, can we take that from a appliance that heats up hot dogs into two separate appliances, a pan and a knife that are both the best in the world?”

Shane Parrish: Can you spend a few beats and explain the principles of good decision-making and good thinking as you see them?

David Baszucki: It’s so funny, we were having this discussion in our Roblox values. So we have Roblox principles and Roblox values, they’re not as extensive as maybe… Some people have published books with 400 principles. We’re trying to keep it to 15 or 16 so people can remember these principles. But there is something, I think, inside of an organization where, for many decisions, it’s actually more important just to, “Let’s identify the person who’s going to make the decision and let them be somewhat free and creative to make the decision,” than in many cases a group decision or a confused decision or we’re trying to do all of that. So I think you’ll see more and more, us at Roblox, it’s just like, “Can we identify the decision maker?” Having them have a little freedom to make their own decision I think is super powerful.

Shane Parrish: Aside from systems thinking, what are some of the mental models that you use to think through problems?

David Baszucki: I think one mental model that we’ve had in thinking through problems is kind of an irreverence, in a way, to the problem.

Shane Parrish: Double-click on that.

David Baszucki: If one goes through a problem-solving exercise, and time and time again, we think we have the solution, it’s pretty good. Oh, we even have a simpler solution. The simpler solution is different than what most people are saying, so all of a sudden we had even a more compact decision that a lot of people said, “That’s not going to work.” And then we see that solution actually work really well. It can make sure we’re not kind of locking into traditional mindset. We’re really trying to push, “Is there a gem out there, or even something we haven’t though of?”

Shane Parrish: There’s many ways to get to the outcome.

David Baszucki: One of the decisions, I think back to the early founding of Roblox, and I would call this set an irreverence, is the very earliest version of Roblox had what we would call the classic Roblox character. We were saying, “Okay, we’re building a user-generated gaming platform. We’re going to have an avatar.” The very first Roblox avatar was a very fast programmer art avatar to get something working. Its proportions are ridiculously simple. The legs are 1 by 1 by 2, the body’s 2 by 2 by 1, so you can actually see it’s super simple, and it’s got a head on top of it. The face of the early Roblox avatar was just programmer art that we put together.

Universally, all of the gaming industry people we would talk to, “Whoa, whoa, whoa, do not ship that. You need a full avatar. You need a meshed avatar. It’s got to be high res. Your objects need to look better,” but we decided it’s better to ship that early and start getting feedback on it. I thought that was a great decision. And we found out actually that a lot of the input we had been getting, thank God we didn’t listen to that basically.

Shane Parrish: How do you deal with a situation where your instinct and the data disagree?

David Baszucki: We get that quite often, I would say. It’s interesting to think of the whole Roblox community and how smart and creative they are and how passionate they are. There’s a really gentle line that needs to be worked on as we both drive the product forward as well as listen to that community, and that creates many conditions where our instincts are different than the community’s vibe. There have been situations where our instincts have been different, the community’s been right, and it’s like, “Whoa, they had it.” But there’s many other cases where our instincts have been right, and the community then follows along and says, “That’s an absolutely great idea.”

Shane Parrish: But how do you resolve that? So much of getting to good decisions and good outcomes is seeing reality and adapting to reality.

David Baszucki: I think a lot of decisions that can be made incrementally that aren’t one way, those are a lot easier. We try to make faster decisions in the right direction. We can adjust. I think realizing when we need to adjust is super powerful. One could make the argument that if a decision can be the evolutionary design of the eye, for example, for some reason, we evolved to have eyes, that was probably trillions of small little decisions that kept going in the right way. The more a decision can be decomposed to a long-term goal like, “We want to be able to see,” we’re going to take thousands of small steps to get there. Those types of things I think can have both a long view as well as be pretty resilient.

It’s interesting because two of our values are take the long view and get stuff done. We kind of like to say there’s a magic decision-making quadrant where the magic quadrant is it’s both a long view decision with hyperiteration to get there, and that’s kind of a magic, safe quadrant. All of the other quadrants have a little weirdness to them. If we go through the other decisions, take the short view and iterate, there may be a much better long view, that’s not very good. Take the long view, but don’t iterate. Work on it for two years and then dropship it, not as good. Take the short view and don’t iterate, that one’s not even a quadrant. So that’s a quadrant we really like.

Shane Parrish: Walk me through one of the bigger mistakes that you’ve made and what you’ve learned from it and who you’ve leaned on during that time.

David Baszucki: I wouldn’t call it a mistake, but I would say, for a while, what we were trying to do as a vision and a mission, you could say when we had 50 or 100 million DAUs, probably even less than that, we were just saying, “Our goal is billion DAUs, blah, blah, blah, blah, blah, blah, blah. That’s our plan.” And in retrospect, I think sharing with all of our employees like, “We’re going after gaming. We’re going after immersive communication. We’re going after working together. We’re going after school together,” painting all of that was a pretty big broad thing. When we crisped it up to saying, “We’re going after 10% of the gaming space on Roblox. Everything we’re going to build is going to help these other areas, but this is the right order,” I would say that would be not necessarily a mistake, but a cleaning up of how we were talking about things.

Shane Parrish: When things aren’t working the way you want them to, what’s your inner monologue in those moments?

David Baszucki: Interestingly, I think when we’re running companies, we have all the evolutionary biology of being out there in the wilderness trying to survive and having battles and all of that. So I think CEOs can get that feeling like, “Oh, my gosh, do I have enough firewood for the next three winters?” And it’s like, “Well, it’s not feeling too right.” That has been, for me, an intuitive early thinking thing. What’s great is it leads to typically a refinement in strategy. Then all of a sudden the light goes on. It’s just like, “Oh, we got the plan. We know exactly what to do. We’re going to send four people out. They’re all going to have axes. We’re going to put in three months, get three years of firewood. We think we can do it in three weeks. Everything’s great.”

Shane Parrish: Do you manufacture threats as a way to motivate or focus yourself? I think of Michael Jordan playing for the Bulls. He used to manufacture things that other players said about him.

David Baszucki: We are running right now… I’m not going to say what the company looks like. It’s not an existing company. In my own mind, I’m imagining the company across the street that could call it a threat like what’s it look like, who are the people, how many people, what are they building.

Shane Parrish: Do you analyze your mistakes? How do you do that? What’s your process?

David Baszucki: I would say typically my mistakes have come, I think, from being maybe overly logical and less intuitive. One can fall into the trap of just saying, “I have to go down this path,” in a way and not popping out of the box and thinking of the more outside-of-the-box solution. So trying to think of mistakes I have made have been typically where I’ve hung on to a concept too long when I actually was very free to change my course. And in retrospect, just like, “Oh, yeah, I could have just changed course right there.” I think we have a lot more optionality than we imagine when I look backwards in time.

Shane Parrish: Is it fair to say that Roblox is the biggest generated human universe in the world?

David Baszucki: It’s worth thinking about that because it would be worth thinking what’s the definition of a human-generated universe. There’s universes in books and in movies. As far as an interactive multiplayer universe where people can go together and do things together, I mean, it might be.

Shane Parrish: So through this virtual world, what have you learned about human desire and psychology?

David Baszucki: What I think I have learned is that we need to have enormous respect for all the people in this virtual world. I think it’s surprising how much people can attach to their digital identity. I mean, it has to be very carefully respected. This is real stuff. There are real emotions happening, real interactions happening. And I think I’ve also learned that I feel it’s still very, very early.

Shane Parrish: Say more about attaching to your virtual identity.

David Baszucki: Once again, this is an area that I love the Roblox community on, and I think they’re very sensitive to this in that we’re migrating all of our avatars to a position where, rather than just being a monolithic block, for those users who choose, the head may smile if they want it to smile or something like that. But in the migration of this process, the Roblox community has just been absolute sticklers for perfection in the migration, and it’s because people have been familiar with their avatar for such a long time. It’s like, “You can’t take my head and adjust a few… What are you doing?” And I think they’re right.

Shane Parrish: Does that make updating harder?

David Baszucki: In certain cases, it does. That is an incredible balancing act. Sometimes we think about updating. There’s two schools of thought on updating. One is, 30 years ago when the PC came out, they had MS-DOS. Today, an MS-DOS program will still run on a PC. It’s mind-blowing. If you take a AutoCAD from 30 years ago, you can boot it up on a PC, boom. The other side was like the Apple Macintosh. They just threw stuff away five times like System 7, next step, blah, blah, blah. I think we make judgment and we sometimes use those two ends of the spectrum to figure out when is it appropriate to just, “We got to keep that forever,” versus when, “No, we have to keep moving forward.”

Shane Parrish: How do you think about things like capital allocation? You guys just announced your first buyback recently.

David Baszucki: Super thoughtful. Knock on wood, we’ve made a lot of cash in our history, a lot of positive free cashflow starting from the investment we’ve had and where we have come. I would say a lot of the decisions we make have come from not necessarily capital allocation, but what are we trying to do, what is the big picture of the opportunity, and what we’re trying to grow for them. I would say we’ve refined that many times throughout our history.

It’s almost like we’re in Roblox version 5.0 right now in that, when we started the company, the vision we had I think was spot on. We were imagining a new category, human co-experience category, the metaverse category, the holodeck category, the Snow Crash category. We really could see that coming, but we were very moderate and modest in the very first thing we were going for. When we started, for those of us who could remember, Club Penguin was a really popular kids game, and we just thought that was, “Oh, that’s huge. Club Penguin, they’ve got X many people. We like what they’re doing.” We started with arguably a much bigger, deeper technical foundation.

I would say though, along the way, we’ve refined our aspiration and what we’re trying to do. When we went public, we were talking about connecting the world. Two years ago, we talked about getting 10% of global gaming on our platform. That continues to refine as we have a bigger percentage of global gaming on our platform. I think you’ll continue to hear us kind of expand our ambition.

Shane Parrish: What percent are you now?

David Baszucki: Well, you can look at where we’re tracking on our bookings, and I think if you divide our bookings by 200 billion, we’re in the 3 to 4%.

Shane Parrish: That’s amazing. That’s incredible.

David Baszucki: It’s incredible. And at the same time, it actually seems like… It’s exciting to me because there’s a lot of room beyond 3 or 4%.

Shane Parrish: What about incentives for people? What have you gotten right and gotten wrong over the years?

David Baszucki: I think we got really lucky in being really fascinated with incentives. And I think very early on when we started building Roblox, some of the early founders, John and Erik and Matt and myself, we were just really into economics and incentives and what makes people do things in a nice appropriate way and drives it. At the very start of Roblox, we thought just the incentive of user-generated content like, “Whoa, everyone can make their own game, and they can come and play it and show it to their friends.” We thought that would be an amazing incentive, and we thought that would give us amazing amounts of content. That did prove to be really true. Along the way, we had a lot of questions around economic incentives. Roblox got pretty big without a way for developers to earn money on the platform. It was a hobby for everyone.

We had people who were working 24 hours a day, just they loved their Roblox creation. They were struggling like, “Wow, I got to make a living. I just want to build on Roblox.” We had a lot of board-level discussion, “Should we turn this into something where someone could make a living?” In retrospect, it’s crazy. We then went back and forth a lot like, “Well, I’m not so sure we should do that.” But we did come up with a notion, “Okay, we’re going to build a really elegant system. Creators can make, whatever, wide range of experiences. They can have users participate economically. It’s going to be free for most people. Some of these creators who are working 24/7 might be able to make a living on that.” I think we thought about that very systemically because that system has just been the engine behind us ever since then.

Shane Parrish: One of the things that you and Erik disagreed on was the API.

David Baszucki: So Erik Cassel, co-founder, started Roblox with me, passed away from cancer eight years ago, rest in peace, but in a way, a values template for the company. And when we started Roblox, Erik and I were the first two engineers. We wrote the whole system. We had some false starts too, by the way. There’s a really fun story that I would say we both knew what we wanted Roblox to be, and we knew we want user-generated, multiplayer, build your own thing, go play it with your friends. That’s what we want. Along the way, we tried to ship early a subset of that, and just… It did not work. It was a non-avatar-based, more puzzle thing, and it’s just like, “Whoa, back to the drawing board.” I was in a way, “Okay, we’re making this game creation platform. Let’s try to hardwire all these types of games you could make and have all of this extra cruft on the system, elements from games.”

I remember actually in our core C++ code, we actually mocked up a capture the flag game, and we had a flag as part of our core API. In retrospect, it’s an absolute disaster because a flag is such a user-generated, complex, specific game thing. For me to have put that deep into our core stuff was just terrible engineering. Erik was very different. He’s like, “Whoa, whoa, whoa, don’t do that. We need an interface of language with this thing. We need an API. We need to have this thing be very generalizable. There’s a game-creation language called Lua. Let’s connect that up and don’t do any of this stuff.” It’s weird that I was initially like, “Whoa, I don’t know if I trust that.” But we started doing that. The power was just absolutely enormous. Rather than my hard-coded stuff, the power of this generalizable thing, that was kind of a core engineering foundation that gave Roblox a lot of its UGC boost in a way.

Shane Parrish: You mentioned a couple of false starts. What are some of those false starts where you guys went down the wrong path, and how did you realize you were going down the wrong path?

David Baszucki: Along the way to building an economy on the platform, we started with a very different economic model. It was a membership model. You got a few extra places to build on Roblox. In retrospect, that was a really bad idea because building should be unlimited. But along the way, that economic model started to fail actually, and we had a situation where our user growth was going up, up, up, up, up, up, but less people wanted to buy this membership. And so, this is really interesting, right? Our users are growing, it’s all great, but money is flat to going down.

And so, what we did on that, I would say, is a very typical tactical response. “Okay, something’s up. Let’s fix the current system. Let’s make a list of 50 things that might be broken, 50 small tune-ups that we can do towards this system. Okay, let’s do that.” So as you would imagine, we made that list of 50 things, did 30 of them. Oh, we still have the problem. Now what? But in the back of our head, we had been thinking about the economy, about virtual currency, about how this was a whole outside-of-the-box game changer. This wasn’t just tuning up something that was arguably broken. This could be 100 times bigger than what we’re doing.

And so, then all of a sudden, maybe in a disparaging moment, just, oh my gosh. All of us in the company had said, “We just have to do this, this big hard thing.” But then we had absolute clarity. We’re just betting it all on this new economy system. We were very thoughtful that the economy system was a bunch of complex parts. It needed virtual currency. Users needed to be able to buy virtual currency. Some of the early things were in some of the games. You could buy a flashlight if you wanted it. Some of the games, if you wanted to be a eagle instead of a sparrow, you could buy an upgrade for that. And then finally we said, “You know what? In addition, we’re going to show which of the games on Roblox are making the most Robux. Where are people spending it?”

And so, launching all of those things at the same time, there’s virtual currency, people can buy it, creators can incorporate it, you can see what’s earning, it created a loop or a system that within eight hours we just said, “Yep, we got it. Boom.” Because we could see within eight hours, creators are like, “Oh, I got to add this. I got to do this.” There’s the top grossing game on Roblox. People are actually interested in that.

Shane Parrish: You invented a world where people can do whatever they want.

David Baszucki: That’s right. And so, we knew, okay, we finally got it. And after all those months of fixing those 50 little small things, the right system just… All done.

Shane Parrish: That’s awesome. How does the virtual currency work? Specifically, how do you value it? Does it get tethered to outside forces? How do you think about that?

David Baszucki: We have generally thought it’s better not to inflate it, to have it be a somewhat consistent value. If you or I were to go buy some Robux, we would see it’s generally somewhat like a penny per Robuck. It’s generally been that way for about 20 years. So I would say no promise long-term. It’s directly tied to the dollar, but I think we’d try to keep it stable and not inflating or deflating.

Shane Parrish: Do you ever see a world where you can use that currency outside, and I can go buy a Starbucks or something with it?

David Baszucki: I do see that world. No future plans. We haven’t announced anything. But it’s interesting to think that many, many 8 through 12-year-olds, their first exposure to money is Robux. My first exposure to money was I got 6 cents or 10 cents a week allowance. I could go buy a comic book and learn to make decisions. It was actually very valuable for me because I can remember trading cards. Baseball trading cards were a big thing when I was a kid. And I remember, this is triggering a childhood memory, okay, three weeks of allowance, I got some baseball trading cards. I went and hung out with the neighbor. We played some trading card game, and I lost all my trading cards and I was so devastated, but I think it was a positive lesson. So I do think, for many young people, learning how to use a virtual currency, not to spend it all at once, maybe to divvy it out a bit can be a lot of learning. And so, it’s interesting to think over time if young people get sophisticated enough to use that to go to a 7-Eleven or something.

Shane Parrish: What would have to be true technologically for that to be possible, or is it possible today?

David Baszucki: I don’t want to go into too much details. We’ve thought about a lot of that. I think it’s a little bit more of a what’s the focus of the company right now, and it’s a little bit more should the focus of our company be young kids are doing a lot, or we have an increasingly larger percentage of what is play in the world. So we’re pretty focused on just what is play in the world.

Shane Parrish: What does focus mean to you?

David Baszucki: I think one way to think about focus is is there one statement in your head that everyone in the company can just understand. Is the focus human-understandable? We are just doing this, and everyone just says, “Oh, I got it. I can rally around that.” So I think that’s a little bit how easy is it to present it or share it.

Shane Parrish: Double-click on that understanding and how important words are in communication, not only for the sender, but the receiver, and how you spread messages throughout the company.

David Baszucki: We’re still learning on that. It even goes into how you think of the product, what your vision and mission are. They really, really, I think, really matter. I’ll use an example that very early on in the formation of the company, when we are very small, we use the tagline, “You make the game.” That’s kind of fun, right? I would say that was an idea that anyone could make very simple games in Roblox. I think as we think about that notion and we think about AI and what’s going to become possible with AI in the future, it’s actually been fun to go back to those words and think, “Are they now possibly even more true than they’ve ever been?” and that the more we have the ability to use AI for anyone to make a game they think about, those words can have really big meaning.

So I think going after… Say our vision is 10% of the gaming market, that’s a pretty good focus, a lot of people understand it, but I think that’s constantly should be reevaluated a bit as we think about where we’re going in the future.

Shane Parrish: Do you use AI internally to help make decisions or help expand your context window on the company?

David Baszucki: I would say we have all kinds of AI. We have a bunch of internal systems that we have built. So we have a thing called the Roblox Operating System that we use for tracking the work in the company, more and more helping people see how they fit into the organization. Those are all MCP-enabled, so anyone can take their AI system and run it on top of those. In a way, we think of all of our Roblox systems as things that either people or AI can look at and run things against. So we have all kinds of people building custom little things that are looking at the work tracker or doing some things. Some people auto-generate our one-on-one discussion topics. So I would say yeah.

Shane Parrish: I want to get into talking about a lot of the policy that’s coming out of governments all around the world in terms of age bans. Without commenting maybe on whether they should or should not exist, who do you think should implement those? Should those be at the company level specifically, or should they be at a platform level like Apple?

David Baszucki: I mean, when I talk to senators in the United States, I say, “Please, how can we help you take a look at what we’ve done on our own without any laws requiring it? We’re now using AI to check the age of every single person on our platform. We’ve open-sourced our voice-safety filter.” I do say, “Look at what private industry can do.” And then of course I think there has to be a lot of thought and caution. And I think universally, legislators I’ve met with, they do have a balancing act. They are trying to enact great legislation, but they’re trying not to have the tragedy of good intentions. They’re trying not to craft laws that’s just like, “Oh, my gosh, I wish we wouldn’t have done that.” One could say, for example, “Well, on a mobile phone, whoever makes the mobile phone should check the age of everyone on the mobile phone.” We said, “We’re not waiting for that. We’re going to do it ourselves,” in a way.

Shane Parrish: But do you think that that is a better solution from an industry point of view? You’re not waiting, that’s great, but do you think it’s more elegant to have it at a device level or at an individual company and you’re responsible for that?

David Baszucki: This is what makes it so tricky in that I would say both in that, knowing what we do, given that we’re doing age check for all of our users for comms, for example. We know, for example, a lot of parents don’t have the time to configure their device or a lot of parents to say, “Yeah, take my iPad and go do that.” And so, if that iPad is configured, for example, as a parent, it’s handed off to a kid, that can be a little tricky. So I would say even when devices maybe have an age in them, we’ll still keep doing our own thing.

Shane Parrish: Do you think there’s second and third-order maybe unintended consequences to the way that we’re going about this now?

David Baszucki: Yeah, I think our legislators are trying to do their best, and it’s a very complicated world out there. We’re trying to set the example. For us, know the age of everyone on the platform, use AI to do it, ultimately other signals to do it, don’t allow image sharing, things like that, that’s worked well for us.

Shane Parrish: But that’s had a cost on you. I was listening to your last earnings call this morning, and it slowed down growth.

David Baszucki: I would say the opportunity to build a global platform that has more and more people playing together, which is amazing, and all around the world, not just, quote, “over 13,” but of all ages, I mean, this is foundational to our growth. We’re very optimistic.

Shane Parrish: I think where I was going with that is you’re able to take a longer view in part because you’re a majority shareholder, you’re the founder, you carry a lot of weight in that, and you can make these decisions. Not every company is going to feel that they can take an immediate short-term pain for longer term gain.

David Baszucki: Yeah, I would say this is once again where our aspirations are. We think digital play is just amazing. I shared we’re in the 3 to 4% of the world right now. Imagining what the future is going to be for the types of interactions we’re going to have, it’s pretty amazing. So I do just feel the work we’ve done safety, civility platform-wide is foundational for platforms like this.

Shane Parrish: How do you think about positioning and optionality?

David Baszucki: Positioning, I think about constantly clarifying what we’re trying to do. I think, more and more, our positioning is going above the company itself. I think there’s a really elegant future way to think about positioning as almost a bigger thing than the company itself. Right now, it’s kind of interesting. Because when I think about the world we’re in, everyone’s getting, “Okay, we got all these digital devices. What’s going on? Social media, social networking, gaming, AI, all of that,” having a message that goes above all of that I think is super interesting. So for us, I really like the notion of play. I like the notion, whether it’s digital or physical, play is really important to people being together and doing it. And so, I think thinking about a positioning that kind of goes above one’s company can be super elegant.

Shane Parrish: If you close your eyes, I want you to tell me what Roblox looks like in five years from now.

David Baszucki: I’ll share a couple examples. One, we’ve shared the other side of that, which is the technology we’re building for Roblox Reality. It’s surprising that… It’s actually hard to imagine what a photorealistic multiplayer game would feel like. We’re not used to it. We’re used to looking at gaming footage and saying, “That is an amazing game. That looks so good.” But I do think when we look at it, we say, “But that is a game, by the way. That’s not like Bourne Identity.” Whereas if we ran Bourne Identity on a 2K screen, that looks different than that. So I do think there’s going to be a future world where we have all the aspects of the multiplayer gaming interesting, but it feels like that, and I think that’s going to be pretty mind-blowing. It’s going to be a little bit like going from black and white to color or going from 512 to 2K. People don’t quite realize how big that can be. So I think that’s one aspect of it.

I think there’s another aspect where the notion of you make the game is really going to come full circle because games are much more complicated than code. They have images and assets, and they have environments, and they have stories, and they have all of that. But getting to the point where you or I make a beautiful thing, share it with our family, play it just by talking about it, I think, is going to come true as well.

Shane Parrish: I think that that’s incredible. What do you think will be the second and third-order consequences of that?

David Baszucki: I think the positive thing to think about is actually the fun parts around connection and digital play will in a way become very… They’re already quite meaningful. I think the consequences will be more fluidity in digital play, the feeling that it’s not me as a user and them as a creator. It’ll almost be like, in the old days, only 1% of us were oil painters documenting the king’s portraiture, whereas now I think we all feel like we’re oil painters. We have our phone, we have digital image tools, and we’re all kind of feeling like we’re part of it. And in a way, rather than a digital technology reducing the job market for oil painters, it’s probably increased the job market. There’s a lot more people doing digital imagery. I’m actually thinking the same thing will happen for gaming and that both the hardcore creator market and all of us will be more involved in the creation of immersive experiences.

Shane Parrish: What was your reaction to watching Ready Player One?

David Baszucki: Ready Player One, the book I loved. The movie V1, I love. But I do like less-intrusive far-out VR. I’d say Black Mirror, when they do VR, you just put a little white dot on you, and it takes over their eyes and your body and all of that. It’s less intrusive. I think that’s probably more where it’s going to go than just goggles and stuff like that. Huge fan of Ready Player One, but I think there’s a wide range of technical coverage of how this is going to work. I’m a stickler, I would say, on sci-fi movies. The more real and the less comedy or cliche or whatever, the more I like it. And I think it’s really hard to find sci-fi movies that are just trying to be real.

Shane Parrish: How does your background in physics help you think through problems?

David Baszucki: I’m wondering if it’s a background in physics helps you think through problems, or more an interest in building stuff leads to a background in engineering, or whether it’s correlation or causality. I would say where I grew up, I luckily grew up in a hyperbuilder type environment. I grew up in the far suburbs of Eden Prairie, Minnesota. Everyone had a workshop, everyone had tools, everyone was building go-karts and model rockets and all kinds of stuff, so there’s a lot of hands-on building stuff that I think I was always interested in. So I think almost that growing up in a builder culture led to engineering type interest, maybe in reverse a bit.

Shane Parrish: What was your childhood like?

David Baszucki: I feel my childhood was pretty idyllic because I grew up… I can remember the moon landing.

Shane Parrish: Where were you?

David Baszucki: I was in Chicago, Illinois, moon landing, 1969. We all like nostalgia and all of that, but it was a pretty fun place to grow up, the ’70s.

Shane Parrish: Did it inspire you when the moon landing happened? Did it light a fire inside you?

David Baszucki: It did inspire me because I remember going to my school, and I made a huge model out of cardboard of the Saturn V and the lander and painted it all up, and I had the landing module and all of that thing, and I brought it in to show my teacher just because I was so into it like, “Check this out. You can take this Apollo thing off, and you can dock it.” And so, then I do remember, this is a really cute story, this was in Arlington Heights, whenever there was then a subsequent Apollo, they would pull me into a classroom with my model. And if they watched half an hour of TV, I’d say, “Here’s what’s happening. This is going off and doing that.” So yeah, I think I was pretty inspired by that.

Shane Parrish: That’s awesome. I want to get this right, so I’m going to read this, but my 16-year-old submitted a question for you.

“If you were starting out at 16 today with no money, no contacts, no network of people that you could rely on, how would you spend the next five years to maximize your chances of building a company that matters?

David Baszucki: Oh, my gosh. Well, I’ll tell them what worked for me is that was the last thing on my mind when I was 16. I was into, in a way, hanging out with people I liked. I was into what naturally I was good at and interested in, whether it’s building model rockets or go-karts. So I think if one is 16 and actually that’s what you’re into, there is a notion to… As one goes through the normal course of life, you’re going to go to high school, you’re going to maybe go to college. In parallel, can that be your fun little hobby in a way? Can you warm up on that in an authentic way?

Shane Parrish: We always end these interviews with the same question, which is, what is success for you?

David Baszucki: I feel every day I’m already feeling very successful.

Shane Parrish: What goes into that feeling?

David Baszucki: Waking up every day just saying, “I’m so fortunate.” So I actually feel that way.

Shane’s Reflections

Shane Parrish: I hope you enjoyed that episode as much as I did. While I was in San Francisco recording Ed Catmull, I sent Dave Baszucki a message and said, “Let’s do this.” So we hooked up, and this is the conversation. We actually did it inside Roblox headquarters.

I want to tell you something really unique about Roblox headquarters. After listening to this conversation, you’ll see why it’s important to Dave. All the snack foods are labeled with a whole-food index. Maybe I can show you guys a picture or something, but it basically says, “Whole food, good energy.” It’s got two check boxes, “Is it real whole food?” and, “Does it offer good energy?” And all the ones that are neither checks go at the bottom, two checks at the top. I thought it was fascinating.

The most important part of this discussion was just how much food changes everything. Not only did it completely turned around his son, Dave is super healthy. He looks healthy, he looks fit, looks like he’s got tons of great energy. He talked about how the metabolic state and a lot of these things that we think of as maybe being overworked or bipolar can possibly be addressed with diet. And I’m not a doctor, I don’t play one on a podcast. I think that this is worth researching.

And Dave is spending a lot of money doing double-blind studies, and he’s funding all this research, and the preliminary results are actually astonishing. And I think that the n of 1 is his son, but this could be beneficial to so many people in the world. So I’m hoping that this takes hold. And if you’re struggling with any of those things, this might be the thing you need to do to play around with and to try, and obviously consult a doctor before you do any of that, but it is so powerful. And we talked about how that state of mind, how your metabolic state, influences your decision too.

One of the other things that stood out about this conversation was sort of like take the long view and iterate. You don’t have to go these big steps. You can do these long views. And he called it the… I think it was the magic safe quadrant, and it combines sort of long-term direction with rapid iteration, and I think that that makes a ton of sense.

Another idea that really stood out from this episode was stop trying to fix a broken system. So this happened when Roblox users group membership revenue flatlined, and the instinct that Dave had was the same instinct that all of us would have in that situation. Let’s list all the things that are wrong with it and prioritize 25 of them and do that, but then nothing changed. And the real answer came when they replaced the model with a virtual economy. I think he said within eight hours, creators started adapting, and then the world just exploded and came alive.

Just going back, I want to touch a little bit more on sort of making big decisions when the machinery is working, the machinery of your mind, that ties to the metabolic state of your mind. But also, Dave mentions that he sort of focuses on am I being optimistic, energetic, or am I tired and defensive, and how that affects your decisions. So you can’t always control your mood, but you can control what you decide while you are in it. You don’t have to make these decisions when you’re in a bad mood, when you’re tired, when you’re feeling drained of energy, when the world does not look abundant.

Another idea that stood out is sort of like, we talked about this, and Dave had a really good practical solution, but there’s no neutral ground on bureaucracy. The natural entropy of the world is basically expansion. My desk gets messier if I don’t clean it daily. Everything just sort of grows and grows, and bureaucracy is the same way inside of organizations. It’s all about simplification, staying in the basics, not getting lost, and not getting distracted.

And the other mean idea that I took away from this episode and our conversation was sort of angry emails optimized for the wrong person. That heated message that makes you feel so good and so righteous, it serves the sender. It doesn’t do anything to the receiver other than escalate. So it releases frustration, but it rarely improves the outcome.

Thank you for listening and learning with me. I’ll see you next week.

The post Roblox CEO: How to Make Better Decisions by Fixing Yourself First appeared first on Farnam Street.

Play

Featured clips

07:50

His Research Process

16:26

Rearranging Your Brain for Success

50:19

The Hidden Cost of Negative Feedback

01:16:55

Frameworks for High-Stakes Decision-Making

Brad Jacobs has built eight billion-dollar companies, completed more than 500 acquisitions, and created extraordinary returns for shareholders over four decades. Few people understand how great businesses are built better than he does.

This conversation is about the principles behind that success. Brad explains how he spots trends before they become obvious, why psychology matters as much as strategy, and how he thinks about acquisitions, hiring, capital allocation, decision-making, and building organizations that consistently outperform. 

He also shares lessons from therapy, meditation, and decades of leadership that changed how he manages people and makes decisions.

Listen Now: YouTube | Spotify | Apple Podcasts | Transcript

The post The Mindset Behind Building a Great Little Business | Brad Jacobs appeared first on Farnam Street.

This episode isn’t just the story of Standard Oil. It’s about the principles that built one of history’s greatest business empires and what they can teach us today.  

Along the way, you’ll see the rise of Standard Oil, the public backlash that made Rockefeller America’s most hated businessman, the breakup of his company, and the philanthropic legacy that continues to shape the world today.

Available Now: Spotify | Apple Podcasts | Transcript | YouTube

The post [Outliers] John D. Rockefeller: The Principles Behind The Greatest Fortune in History appeared first on Farnam Street.

Kaz Nejatian took over Opendoor when it was just months away from bankruptcy and set out to rebuild it from the ground up. What happened next shocked everyone.

Play

Featured clips

04:28

The Blueprint that Changed Opendoor

05:57

The People You Hire Is the Company You Build

09:13

Key Principles to Turning Around a Company

18:16

Most Powerful Mental Models

Most turnaround stories are told years later, by the winner, after the ending is already known. That’s why they always sound clean and polished. This one doesn’t have an ending yet, and it’s anything but clean and polished. Kaz takes us inside while it’s still happening.

We discuss why great companies drift away from reality, why truth has to matter more than feelings, and how competent people who don’t believe in the mission quietly destroy an organization.

He shares the principles behind rebuilding culture, eliminating bureaucracy, making faster decisions, using AI to flatten management, and creating teams that move with speed and ownership.

One of the key things I learned in this conversation is that the comfortable lies that sink a company are the same ones that sink a career.

Listen Now: YouTube | Spotify | Apple Podcasts | Transcript | X

+ Members get the longer, extended version of this conversation, with additional content not included in the public release. 

* Note: ‍Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions. 

The post Truth Over Feelings: Inside Opendoor’s Turnaround appeared first on Farnam Street.

If you want to learn how capitalist countries become socialist, this book will help you.

Let’s dive in.

Atlas Shrugged: The Simple Version

The world depends on a relatively small number of people who build, invent, and produce. They are the entrepreneurs, engineers, scientists, industrialists, and creators who keep civilization progressing.

Over time, mostly through the media and government, society begins to treat ability as a public resource. Need becomes a claim on achievement. The more capable you are, the more you are expected to give to those who produce less.

Ability becomes a liability. Success is increasingly resented, taxed, regulated, and morally condemned.

Gradually, the producers begin to ask why they continue to support a system that constantly punishes them both in words and policy. As they withdraw, the system begins to fail.

The government, media, and crony class blame greed and capitalism, and use that to justify more control, more regulation, and more seizures of private property.

But the crisis was not caused by the producers. It was caused by a society that believed it could consume achievement while attacking the people who make achievement possible.

Without the producers, the system that exploited them can no longer function, and society collapses.

Nobody notices who is holding the world up until the day they stop.

What Does the Title Mean?

Atlas is the Titan from Greek myth, sentenced to hold the sky on his shoulders forever. He’s Rand’s stand-in for the producers: carrying the world while getting blamed for its weight.

And “Shrugged” is the whole book in a single word.

Atlas doesn’t rage. He doesn’t beg. He just shrugs his shoulders and sets the sky down.

And the world falls.

Still curious? Check out my summary of How to Win Friends and Influence People.

The post The Best Summary of Atlas Shrugged appeared first on Farnam Street.

Play

Featured clips

07:52

The difference between mastery motivation and ego-driven motivation.

14:28

Practical techniques for developing presence and reducing distraction.

32:46

Rebuilding confidence by focusing on small wins instead of chasing big recoveries.

47:14

How self-talk shapes beliefs, behavior, and long-term performance.

Dr. Gio Valiante is the world’s leading performance psychologist.

We discuss why most people never reach their potential, how confidence and fear shape performance, and what separates those who consistently excel from those who stay stuck.

He shares practical strategies for building better habits, overcoming self-imposed limits, staying focused under pressure, and creating the conditions for long-term success.

If you’ve ever felt capable of more, this episode will help you understand what’s holding you back and what to do about it.

+ Members get the longer, extended version of this conversation, with additional content not included in the public release. 

Listen Now: YouTube | Spotify | Apple Podcasts | Transcript | X

The post The Mindset That Unlocks Your Full Potential | Dr. Gio Valiante appeared first on Farnam Street.

Play

Featured clips

02:23

Foods to Eat to Improve Gut Health

10:22

Why Fiber is Key to a Healthy Gut

22:08

Warning Signs You Should See a Doctor

37:55

Is Caffeine Bad for Your Gut?

As a physician, microbiome researcher, and bestselling author, she has spent years studying the surprising role the gut plays in everything from digestion and immunity to mood, sleep, metabolism, and long-term health.

In this conversation, Giulia explains how your gut shapes your health, how stress quietly damages it, what ultra-processed foods are doing to you, and what your body’s been trying to tell you all along.

This episode is packed with practical advice you can use right away. You’ll understand your body better and leave with a simple framework for improving your health, without complicated diets, expensive supplements, or extreme interventions.

If you’ve ever wondered why you feel the way you do, this conversation is a great place to start.

Listen now: YouTube | Spotify | Apple Podcasts | X | Transcript

+ Members get the longer, extended version of this conversation, with additional content not included in the public release. 

++ Dr. Enders has written two books: Gut: The Inside Story of Our Body’s Most Underrated Organ and Organ Speak: What It Really Means to Listen to Our Bodies.

+++ Check out the Granola Notes

The post How to Repair and Nourish Your Gut | Dr. Giulia Enders appeared first on Farnam Street.

Play

Featured clips

08:50

Obsessive Learning in Founders

13:13

The Future of AI Models

36:26

What is a Stablecoin?

45:05

The Craft of Storytelling and Writing

Available Now: YouTube | Spotify | Apple Podcasts | Transcript | X

In this episode, Bill shares the mental models he returns to most often, including systems thinking, second- and third-order effects, and the importance of understanding both the bedrock of your field and the bleeding edge.

He explains what separates great founders, why storytelling and product instincts matter, how he uses AI across different models, and what he sees coming in open source, China, stablecoins, tokenization, payments, and venture capital. 

+ Check out Runnin’ Down a Dream: How to Thrive in a Career You Actually Love

++ Check out the Granola Notes

Tiny Lessons

1. Trajectory matters more than the starting place.
2. “Success requires balancing a deep knowledge of history with an obsessive focus on the technological edge where disruption happens.”
3. “I think more people would benefit by studying the history of whatever field they’re in.”
4. “If it’s tedious to learn, it isn’t a passion. I don’t think you’re in the right lane.”
5. “I think that anybody in any field should want to be curious about the bleeding edge and what happens.”
6. “You should understand the really old stuff, the history, because it’s differentiating and shows a passion and it gives you a great frame of mind, but you also want to really understand the new edge. If you do both of those things, I think you’re a power player in your field.”
7. “If you have to write it out and make it stand alone and be cogent, you’ll think through more of the problems and it’ll be more cohesive and you’ll figure out the loose ends and you’ll tie them up.”
8. “If regulation gets extremely difficult and mundane and expensive, that could actually lead to more oligopoly.”
9. “I would describe complex systems as multivariable nonlinear systems. And multivariable nonlinear systems are very hard to predict. They can behave one way for a long time, and then one variable can switch and they can behave another way—the weather, stock markets, all these things. There are consequences that can be first, second, or third-order. You can’t just think with a linear model or just think about one variable because things can go way off the path. You need to be aware that if you make a change here, it could change something here, which could change something there, and it has to be the whole system.”
10. “You’ve got to be really conscious of the consequence and not get too deterministic about a single metric or a single variable.”
11. “I’ve always thought of Wall Street as the buyer of the product that venture capitalists create because the eventual liquidity is either an M&A (merger and acquisition) or an IPO (initial public offering).”
12. One question to ask before hiring or investing in someone: Is this person going to do this no matter what?

The post Mental Models That Change How You Think | Bill Gurley appeared first on Farnam Street.

Play

Featured clips

12:04

The Book of Life System for Making Strategic Decisions

24:05

How to Use "Proven Better New" to Build Ideas

37:25

Pitching Zynga to Steve Jobs

01:03:44

Jeff Bezos' Invaluable Management Trick

Listen Now: YouTube | Spotify | Apple Podcasts | X | Transcript

In this conversation, he breaks down how to spot winning ideas early, why most startups build the wrong thing, and why you should always copy what’s proven.

He shares lessons from building Zynga, missing the opportunity behind social networking before Facebook took off, navigating platform risk during Zynga’s explosive growth, and rebuilding his life when he thought everything was lost.

Listen and Learn!

+ Members get the longer, extended version of this conversation, with additional content not included in the public release. Join Now.

++ Check out the Granola Notes

Tiny Lessons

1. “Know your goal, or suffer a death by a thousand compromises.”
2. “Great products in the consumer world speak to us on some deep level. They speak to some human instinct or need that we’ve been feeling and it’s been unexpressed or unmet.”
3. “Some people have tact and others tell the truth.”
4. “I just started writing in a notebook about why my life sucked so badly.”
5. “Are there small things and big things that are in my control that I could go do now that I will thank myself for doing later?”
6. “If we’re starting with what if everything goes wrong, you’re playing defense and you’ve lost before you’re even out of the gates.”
7. “Our instincts are almost always right and our ideas are usually wrong.”
8. “All new fails. It doesn’t mean you don’t do new. Of course not. It means you take a different approach to new, which is you can’t try one new idea because it’s going to fail. You can’t try one new version of your new idea. You have to try many, many variants of each new idea and many new ideas and look in much smaller atomic units of innovation for new.”
9. “If you want to be a great product maker, you need to commit to a career of deconstructing and just anytime a new product comes out, be a student of yourself in that experience and what is it that feels great or doesn’t?”
10.  ”You owe it to yourself to bet on your instinct. You owe it to yourself to lose because of yourself. It’s your right to be wrong. You, as a founder, owe it to yourself to control your own destiny.”
11. “Too many teams waste time getting to a minimum viable product that they can put out in the market, and we don’t have time anymore for that. We need a failure machine at the top of the funnel. We need to get to a minimum idea state that gets vibe coded.”​

++ Pre-order Life at the Speed of Play: Launch Products People Love!

The post Proven, Better, New: Mark Pincus on the Rules of Innovation appeared first on Farnam Street.

He is known for turning Hyundai into an industrial force that helped transform South Korea. The company built highways, ships, cars, and entire industries. At its peak, Hyundai accounted for 16% of South Korea’s economic output.

This episode explores how Chung built Hyundai, how he helped power South Korea’s rise, and how hunger, guilt, discipline, and relentless persistence shaped a man who refused to stop when the path disappeared.

Listen and Learn: Spotify | Apple Podcasts | YouTube | Other Outliers Episodes

Transcript

On June 16th, 1998, an 82-year-old man climbed into the lead vehicle of a convoy of 50 trucks loaded with cattle. Behind him were 500 cows raised on a farm he’d reclaimed from the Yellow Sea.

As the cows passed, Buddhist monks chanted and women in traditional hanbok dresses lined the road, waving as the convoy rolled through the last village before the razor wire barrier separating North and South Korea.

The man in the lead vehicle was Chung Ju-yung, the founder of Hyundai. He was the first South Korean civilian to cross the border since the country was split in half. Four months later, he returned with 501 cows, for a total of 1001. One for the cow that he had stolen from his father 65 years earlier and 1000 for interest. 

Chung was so determined to change his situation that, as a teenager, he stole a cow so he could sell it to buy a train ticket out of the farming village where he was born in what is now North Korea. 

He left in the middle of the night, told no one, not even his father, and arrived in Seoul with only a sixth-grade education and no connections. To survive, he swept floors, hauled freight on the docks, ran a rice shop, and even fixed cars. Of course, this was all before he built Hyundai, but you can start to see the type of person he was. 

While many people think of  Hyundai as a car company, at its peak, it accounted for 16% of South Korea’s entire economic output. It built the highways that connected the country, the ships that carried its goods, and the cars that so famously announced Korea’s arrival to the world. Ju-yung wasn’t an inventor or a theorist. 

What he was, more than anything, was a force. He was someone who couldn’t be stopped. 

Welcome to Outliers. I’m your host, Shane Parrish. Today we’re going to explore the incredible life of Chung Ju-yung, and it’s one of the craziest stories I have ever heard in my life. 

This is the story of a man who refused to be stopped, no matter the circumstances, no matter the obstacles. He simply would not quit.

At one point, he was so poor that he was literally eating tree bark, and so rich near the end of his life that he was in the top 10 in the world. And in between these, he created entire industries and put an entire country on his back. 

One quick note before we get started. This is a longer episode, and I kind of like this format. It lets me go below the surface, beyond the sound bites, into the mindset and details that really matter. 

Let’s dive in. 

Sunup to Sundown

In the village where Chung Ju-yung was born, the children ran home from school during the day to go to the bathroom because their family needed the feces. Human waste was the primary fertilizer for the dry fields, and in a bad year, a few extra contributions from a small child could mean the difference between eating through the winter and not. 

Chung was born in 1915 in a small northeast corner of what is now known as North Korea. At the time, it was just Korea, and Korea did not belong to the Koreans. 

Five years earlier, Japan had taken the whole Korean peninsula, and what they did to the farmers was brutal. Japan seized the land through a paperwork trick. 

Korean farmers held their land by custom, not by deed. So when the colonial government demanded written proof of ownership, most of them had none. Overnight, everything changed. Suddenly they were landless. By the time Chung was a teenager, Japanese settlers owned more than half of Korea’s farmland. 

Korean families now worked as tenants on the same land they had once owned. Rent took more than half of the harvest. Taxes took around a quarter. A family kept maybe a quarter of what they grew, and that wasn’t enough to survive on. Japan shipped the best crops home, rice, especially to feed its own population. 

Koreans ended up eating sorghum, a coarse grain they had previously used to feed their cattle. Historians later measured Korean heights from the 1920s to the 1950s. The average Korean kept getting shorter year after year, a little smaller than before. Chung’s father farmed about three and a half acres. 

That sounds pretty manageable until you realize those fields had to feed a family of 10 through winter using farming techniques that hadn’t changed in centuries. In a good year, the harvest lasted through the long winter and into spring. In a bad year, the food ran out halfway through, and there were many bad years. 

Here’s how Chung describes it himself. “Back in those days, farming families were so poor that words cannot capture their suffering and destruction. After harsh winters, we would completely run out of food by the time spring arrived. From then on, we barely managed to stay alive by eating tree bark and grassroots and wild herbs.” 

He had to eat tree bark just to survive. That’s crazy, but it gets worse. 

Chung recalled his parents’ arguments: “I still vividly remember that my parents’ arguments were always about food. Their arguments would become more and more heated until the table was overturned and the food ended up on the floor.” 

Under Japanese colonial rule, Chung inherited two things from his parents. Let’s start with his father. The man knew one thing: how to work. Chung described him as a man who “farmed from birth to death, head to toe.” 

He didn’t say much. Chung wrote, “even when working beside him all day, I heard him speak at most three or four words.” 

His father’s total assets, as his son recorded them, were “a healthy body and a diligent character. He worked from sunup to sundown every single day with no exceptions and no holidays.” 

As the eldest son, Chung was expected beside him in the fields after school until dark. In Korean life, the eldest son was the pillar. If the pillar fell, the whole house fell. His father understood this in his bones and organized his entire life around it. 

By seventh grade, Chung was no longer in school at all. He was farming full time. 

His father trained him patiently and relentlessly to become exactly what he was. 

From his mother, he got something else. She was ferociously competitive. If the other women in the village weeded one row, she weeded two. If they wove a certain amount of silk, she would not stop until she had outproduced every one of them. 

Chung absorbed it all: his father’s work ethic, his mother’s refusal to lose. But in Chung, they fused into one. Later in life, he would describe himself as having an “addiction to proving limits wrong.” 

He took deep, genuine joy in being able to say, “I did,” when everyone around him told him he couldn’t, but something darker was happening in those fields. Chung was not just learning from his father; he was watching him fail. The hardest-working man Chung knew could not feed his family through the winter. 

The discipline that should have been enough wasn’t, and the boy noticed. While working these rows, he thought to himself, “will I always be a farmer and never straighten my crooked back? A farmer who will never feel full for even a day, a life like this to suffer like my toiling father? Is that all there is?” 

It was not all there is, but getting out would cost him more than he knew. 

Running Away

Chung ran away from home four times. His father caught him the first three times and dragged him back. The fourth time, Chung slipped out in darkness and never returned. 

The first time he was 16. He had just finished elementary school when he read a newspaper article about construction work in Seishin, a port city on the far northeast coast of what is now North Korea. It was a four-day boat ride away. He had no money for the boat, so he decided to walk 250 kilometers through the mountains. 

He made it. He found work on a construction site and labored for two months before his father showed up and ordered him home. 

But something had shifted in him for the first time in his life, he had earned his own wage and found his own way. He had felt what it was like to do real physical work and get paid for it. He went home with his father, but he went home a different person than the one who had left. 

The second time, he was 17 and the destination was Seoul, the center of everything. He set out with two companions and on the road a man promised them employment and stole their money instead. Penniless and stranded, they gave up and his father found them at his grandfather’s house along the route. 

Getting conned was humiliating, but it was also an education. It would make Chung unusually careful about who he trusted for the rest of his life. 

The third attempt became legend. To finance it, Chung stole one of his father’s cows, sold it for 70 won and bought a train ticket to Seoul. 

And you need to understand what a cow meant in poor Korean farming households in the 1930s, a cow wasn’t just livestock. A cow plowed the fields and hauled goods. A cow represented years of accumulated savings and food. Selling it was the equivalent of mortgaging the farm’s future and Chung did it without telling his father. 

He reached Seoul, enrolled in a bookkeeping academy and set out to become an accountant. Things went well for about two months, and then his father found him.

What happened next is one of the most devastating passages in Chung’s autobiography. His father crouched in the dirt in front of him, wept, and then said this. 

“Are there any parents in this world who don’t want their children to be successful? If you are successful enough to bring your parents and siblings to Seoul and look after them, why would this old man hold you back? But you better not forget what you are. Just a farm boy who only finished the sixth grade. 

I hear Seoul is crawling with unemployed graduates of vocational schools, but you, what are you? A nobody and a nobody like you isn’t going to make it. You will throw our family out into the streets blindly chasing after this stupid dream. 

I am old now, so you need to be responsible for looking out for the family. Since you refuse, we’re going to have to turn to begging.” 

Sit with that for a second because the father was not wrong. This was Korea in the 1930s. 

In the middle of a global depression. Seoul was full of unemployed men, most of them far more educated than Chung. And here was his eldest son, the designated pillar of the family, a teenager with a sixth-grade education who had stolen the family cow to attend a school he could barely afford. Chung’s father saw the situation with painful clarity. 

The son saw further, but neither of them knew that yet. Chung later wrote, “Even today, I get a lump in my throat. When I recall my weeping father crouched down as he uttered these words.” 

He went home with his father and threw himself into the farm, trying to repay his guilt through effort. He resolved to accept his fate and be the best farmer he could be. 

He even bought land to expand the family’s holdings. He was going to be the pillar his father needed him to be. But then another bad harvest hit, the food ran out again, and his parents started fighting. Chung wrote, “I murmured, ‘ I can’t take this anymore.’ Any fleeting resolution to remain on that farm evaporated. I was determined to go to Seoul and succeed.” 

The fourth attempt worked. He left at night without a word with a friend who was fleeing a forced marriage. 

Two young men slipping out of their old lives in the same darkness, each escaping a different trap. This time, Chung did not steal, he borrowed the train fare from a friend. 

He hated owing anyone anything, even briefly, but he hated the alternative even more. 

This time, his father did not come looking for him. And here’s the thing most people miss about this sequence. It’s not a story about a restless young man who wanted more. It’s a story about guilt. Every time Chung ran, he knew it was costing his family. 

Every time his father dragged him back, the debt got heavier and by the fourth escape, that guilt was welded to him. He carried it for the rest of his life. 65 years later, when he drove 1,001 cows across the demilitarized zone, he was still trying to pay it off. 

For now, though, Chung Ju-yung was 19, alone in Korea’s largest city with borrowed money in his pocket and a sixth-grade education to his name. He had escaped. 

But the question was now what? 

Seoul

Seoul was not what he imagined. His biography describes it with no romance at all. He started at Incheon Harbor working the docks as a day laborer, hauling freight. 

When the dock work dried up, he moved to construction. When that ended, he went to a starch syrup factory. He took whatever job would keep him fed for another week, and he was always looking for something better. 

As he later reflected, “the sad reality of farming is that no matter how much one struggles the payoff never equals the amount of work put in.” What he was discovering now was that the city was not automatically better, it was just differently brutal. 

The work was there, but it was crushing, and the margin between making it and not making it was razor thin. He was still just barely scraping by, and it was during this stretch, sleeping in a bunkhouse, that Chung encountered something that would stay with him for the rest of his life. And it was, of all things, an insect. 

The bunkhouse was infested with bedbugs. The workers tried everything to get rid of them. They moved off the floor and slept on the dining room tables instead. They put pots of water under the table legs, so the bugs couldn’t climb up. It worked for a night or two, and then one evening they turned on the lights and saw the bedbugs crawling along the walls. 

They had climbed all the way to the ceiling and they were dropping down from above directly onto their sleeping bodies. 

Here’s how Chung described the moment in his autobiography, and it’s remarkable. 

“To this day, I cannot forget the shiver down my spine that I felt back then. This made me stop in my tracks and think: even bedbugs think long and hard, and use every bit of energy they have to achieve their goal, and ultimately they succeed. I’m no bedbug. I’m a man. These bedbugs can surely teach a man a few lessons. If these bedbugs can do it, why can’t we men do it? We just need to stick to it and not quit. We need to emulate these bedbugs.” 

He added. “Whenever I tell people that it was the bedbugs that taught me nothing is impossible if one puts in one’s best effort, they think I’m exaggerating, but this really is the truth.” 

You could hear that and think it’s a cute anecdote, an old billionaire looking back and giving credit to an unlikely teacher, but I think it’s a bit more than that. 

I think the bedbug story tells you exactly how his mind worked. He was lying in a bunkhouse, exhausted, bitten, broke, still carrying all this guilt from running away, and instead of seeing pests, he saw a philosophy. The bugs didn’t stop. They didn’t accept the obstacle. They found another route. 

The lesson he drew was not complicated. Don’t stop. When the path is blocked, keep going until the thing is done. And he would apply this principle for the rest of his life, first to entire industries, and eventually to an entire country. 

He landed a position as a delivery boy at a rice shop. Part of his pay was a bag of rice every month, and he later said this was the first time he felt like he had made it because he knew he would not go hungry again. But there was one problem. When the owner hired him. He asked Chung if he could ride a bicycle. 

Chung, of course, said yes, but it was a lie. It was the first recorded instance I could find of Chung Ju-yung agreeing to do something he had absolutely no idea how to do, then figuring it out afterward. It would certainly not be the last. 

He taught himself to ride a bike within days, and then he went to work on the shop itself. 

He was the first to arrive every morning. He swept the entrance. He sprinkled water on dry days to keep the dust down. He did everything he could to make the shop run better than it had before he walked in. The owner’s son was lazy, which probably made Chung’s intensity stand out even more sharply. And the owner noticed. 

Six months later when the owner became ill, he handed Chung the store. The first thing Chung did was to rename it. He called it the, I’m gonna get this wrong, so you can laugh at my pronunciation, but he called it the. Kyungil Rice store, which translates into Number One in Seoul. 

Think about that for a second. Six months before he was a delivery boy, and now he had just taken over the shop through pure force of will and almost pathological frugality, and the first thing he did was rename it Number One in Seoul. 

You can see where his mind was already operating. The ambition had nothing to do with rice, and here’s what I think happened during these years and why they matter to everything that comes next. 

Chung had almost nothing. He had no money. He had no education, he had no connections. But he had work ethic and frugality. He was doing the things anyone could do, the things the shop owner’s son could have been doing, but chose not to do. 

The things that you could do with a willingness to show up and nothing else. The things you do when you’re desperate, not when you’re comfortable. 

By 1938, he was his own boss. He had a business, he had customers, and he was growing. He started hiring friends to deliver all the rice he was selling. He later wrote that this brief window was the only time in his life he ever felt rich, which seems almost incomprehensible given that by 1996 he was the ninth-richest person. 

But that tells you something important about how he was wired. Things did not stay stable for long. In 1939, Japanese colonial authorities imposed rice rationing. They requisitioned every private rice shop in the country. Korean private rice trading was effectively finished overnight. 

Years of work gone. Not because he had failed, but because someone with more power decided he was not allowed to keep what he had built. It was the first time the world would take something from him, but it would not be the last. 

The Auto Shop

The next year, he was back in business. Chung took out a 3000 won loan and bought an existing car repair shop. 

There was one small problem. He had no idea how to fix cars. As he put it later, “it just seemed like a good business.” 

So he handled the customer service side and learned the trade from his mechanic friends, which is another way of saying he talked to people and watched them carefully. That had been his method since the rice shop, and it would stay his method for the next six decades. 

He noticed something almost immediately, and it came hidden inside a customer complaint. Seoul had only a handful of auto repair shops at the time, and they were all terrible. They all overcharged, they were slow and unreliable. The average shop took 10 days to return a car. 10 days in a city where a car was one of the most valuable things a person could own. 

Chung saw the problem and solution immediately. Customers didn’t actually mind the price. What they couldn’t stand was losing their car for 10 days. So he built the entire shop around speed. 

His shop averaged three days for a repair job, and he charged a premium for it, and customers gladly lined up around the block. 

The volume his shop was doing meant his mechanics got more practice than anyone else in Seoul, which made them improve faster, which brought in more customers, which made them finish still faster. 

It was a virtuous circle, and Chung was spinning it deliberately. He also personally memorized every single auto part in a car, every single one. That detail would matter later in a way neither he nor anyone else could have guessed. 

Business was booming, but then a fire destroyed everything. The shop, the customers’ cars inside of it — everything was gone. 

Chung was left holding debt on a business that no longer existed and on vehicles that had been reduced to ash. His first move was to turn to his employees and say, “Hey, it’s okay. The building was old anyway.” And then he went straight back to his lender. 

His argument was so direct that I want you to hear it exactly as he says it in the book. 

“The fire burned everything down. Now I have nothing but debt. If I stop now, there’s no way I can pay you back. Sir, I beg you. Give me another chance to set this right.” 

He’s not really asking for sympathy here. He is not explaining away the loss, and he’s not really blaming anybody else. He’s simply telling the lender very calmly that the lender has two options. Option one, write off the original loan and lose everything. Option two, lend more money and maybe get it all back. 

The lender said, yes. 

Chung rebuilt the shop from scratch, and this time he grew it aggressively. By 1943, what had been a 20-person operation was up to 70. He was not just repairing cars anymore. He was building a real business with systems, with a staff, and a reputation as the fastest and most reliable shop in Seoul. 

But of course, nothing stays good for long in this story. 

The Japanese intervened again. The war was escalating and the colonial government was stripping Korea of anything that could feed the Imperial War machine. They forced a merger of Chung’s Auto Shop into a steel plant. He got 50,000 yen in compensation and just like that, he was starting over one more time.

Later in life, reflecting on the fire and everything else, Chung distilled the whole experience into what became his most famous line: “There are trials, but there are no failures.” 

The idea was not that adversity could be avoided. It was that adversity could always be converted into an education, and education is never really a loss. 

By refusing to use the word failure, he was refusing to accept the finality the word carried. He changed the language, and by changing the language, he changed his own emotional response before it could even set in. The rice shop being seized was not a failure, it was preparation for the auto business. 

The auto shop burning down was not a failure, it was the argument that got him a second loan. The wartime merger was not a failure, it was 50,000 yen and a set of skills he would carry into whatever came next. 

And what came next was Hyundai. 

By 1943, Chung Ju-yung was 28. He had built two businesses and lost them both. He had been wiped out more times than most people will be in their entire lives. But he did not stop. He did not slow down. He did not accept the pace things were moving at. 

When the path was blocked, he found another path. He went up the wall across the ceiling and dropped onto his target from above, and he was just getting started. 

The Birth of Hyundai

After the war ended and Korea was liberated from Japan in August of 1945, Chung went back into the auto repair business. He serviced vehicles, made a living, and steadily rebuilt after everything the Japanese had taken from him. And at some point during this stretch, his mother came to visit him in Seoul. 

He was taking her around the city on a trolley, showing her how far he had come from the farm. At one point, he gestured toward the grand headquarters of what had become the Japanese Government-General, one of the most imposing buildings in this city. 

And he told her. “Mother one day I’ll become the richest man in Seoul and live in a house even bigger than that.” His mother, who you’ll remember, was not a woman known for letting anyone have the last word, told him, “Now listen up, farm boy. You came here with just your two balls. You? The wealthiest man in Seoul? Get your head out of the clouds. You have a life to live.” Chung’s response was simple. “No, I’m going to make it.” So much for a mother believing in their son, but now we’re at the fun part. Everything he had built so far was about to get channeled into something much larger, something that would eventually carry his name around the world and it would nearly kill the company before anyone outside Seoul had even heard of it. 

The first thing he did was name it. 

He named the company Hyundai, which in Korean means modern. Think about the audacity of that name. Korea in 1947 was anything but modern. It was a country just emerging from 35 years of colonial rule, shattered and impoverished, and spoiler alert about to be made worse by a civil war. 

There was almost nothing modern about it, but Chung did not name things after what they currently were, he named them after what he intended them to become. He had done this already when he called a rice shop Number One in Seoul, and now he was doing it on an even bigger scale. The name was a promissory note. 

Korea was free from Japan. Korea could now become modern, and Chung was going to build it.

For a while, he was running both the auto shop and his new construction outfit at the same time, and the pivot from one to the other happened in a way that was pure Chung. One day, he sat in a government office waiting to submit a bid for some automotive work when he watched a construction company come in and collect payment for a completed job. 

The amount of money that changed hands just simply floored him.

It was so much larger than anything he was dealing with in auto repair that the math broke something in his head. He was back on the farm in a sense. He was doing exactly what his father had done, working incredibly hard day after day in a business where the payoff was linear; it was never going to equal the effort.

It wasn’t that the auto repair business was a bad business; construction was a vastly better business. Construction contracts paid 10 to 40 times what auto repair did. You could work just as hard in construction, but for a radically different payoff. 

His partners thought he was crazy. They were a small but capable auto operation, and they knew nothing about construction, but Chung had worked on construction sites during his runaway years as a teenager, and he figured he understood the work well enough to learn the rest. He also understood something about himself that his partners did not. As he put it, “Success is 90% determination and 10% confidence.” 

So he merged the auto shop into the new venture and went all in on Hyundai engineering and construction. He bet everything on a business he barely knew in a country about to be engulfed by war. 

The Korean War

On June 25th, 1950, North Korean forces crossed the 38th parallel and invaded. The Korean War had begun.

Chung abandoned his construction projects and fled to Seoul as the North Korean army advanced. He moved his family south to Busan, the Port City at the southern tip of the peninsula, and he set up a new headquarters there. 

He could have waited the war out and he could have hunkered down and just tried to survive. But we all know by now that that was not how Chung Ju-yung operated. He needed business, any business. And Busan had something very specific to offer, which was the US Eighth Army. The Americans had a massive presence in the city, and they needed housing, roads, and the infrastructure of a semi-permanent occupying force. 

Somebody was going to build it, and Chung intended for that, somebody to be him. His younger brother became crucial here. The brother was proficient in English and had built good relationships with the American military engineers, and in a country where almost nobody could communicate directly with Americans, that was a massive competitive advantage. 

Through his brother’s connections and through relentless consistent delivery on every job they took, Hyundai became the construction firm the Americans started to turn to first. Chung understood the American military’s priorities the same way he had understood his first auto customers priorities back in Seoul. 

It was the same insight applied to a different buyer. Speed and reliability mattered more than cost. Do what you say you will do when you say you will do it. The Americans didn’t want excuses; they wanted results, and Chung had been delivering results since he swept the floor of that rice shop. 

There’s one early job from this period that tells you almost everything about how Chung was going to operate for the next 40 years. In December of 1952, President Eisenhower visited Korea. US military authorities wanted the graves of fallen UN troops at a military ceremony to be covered with green grass for the visit. 

That was the specification: green grass, but there was one problem, and it was a big one. It was the middle of a Korean winter. Green grass in a Korean winter was not just difficult, it was darn near impossible. Anyone else would’ve asked for a deadline extension or explained the situation and requested more time, but Chung transplanted green barley instead, the graves were green, the job was done on time, and the Americans were satisfied. Chung didn’t argue with the constraint. He did not explain why the constraint was unreasonable. He simply reframed it, and that willingness to redefine the constraint rather than be defeated by it and then to execute fast, became Hyundai’s entire operating signature. 

It is the bedbug lesson all over again. When the path is blocked, find another path. Go up the wall across the ceiling and drop onto the target from above. War, it turned out, was good for the construction business. Hyundai grew steadily through the conflict building for the Americans, learning from the Americans accumulating capability with every contract. 

But Chung also understood that wars end. So even while fighting was still going on, he started to look for civilian projects. 

The Korean economy was shattered, government contracts were scarce, and the margins were razor thin. It didn’t matter. He had Hyundai bid on all of them. He was not chasing a windfall. He was building a company. He was building a reputation, and every contract he completed, no matter how small, no matter how unprofitable, was another deposit in a bank account that he believed would pay compound returns for decades. 

When the armistice was signed in July of 1953, Chung was 37 years old. He was running a construction firm in a country that was about to need more building than perhaps any nation in history. 

Everything above ground had been leveled. The roads, the bridges, the factories, the power plants, all of it had to be rebuilt. The only question was who would rebuild it. Chung intended for that person to be him.

The Sign

In April of 1953, 3 months before the armistice was even signed, the Korean government awarded Hyundai its biggest contract yet. The job was to restore the Goryeong Bridge, a major crossing destroyed during the war. The government wanted it to be rebuilt fast, not just for civilian traffic, but to move forces against Gorilla Fighters still operating in the area. The contract was worth more than half a million won and Hyundai had 26 months to deliver. 

This was the biggest job Chung had ever won. Not only did it have the most money, it had the most visibility. When the contract came through, he celebrated. Hyundai was about to enter the big leagues of Korean construction. But as the lesson goes, never count your money when you’re sitting at the table. 

The celebration would prove premature. The problem started almost immediately. Only the bare skeleton of the old bridge remained, which meant almost everything had to be built from scratch and flowing water 10 meters deep. 

And Hyundai had never done anything close to the scale. When Chung’s engineers tried to figure out what equipment they needed, they quickly discovered that the right equipment could simply not be found anywhere in the war torn country. What they had to work with was a 20 ton crane, a concrete mixer, and a compressor. 

Everything else had to be done by hand. 

They were just getting started when the floods came. The water swept away their scaffolding and they had to start over.

Then came the inflation that nearly destroyed the company. When Chung signed the contract, a unit of oil cost seven won. By the time their bridge was finished, two years later, it cost forty-five. 

A single sack of rice went from less than half a won to forty won. That’s not a typo. That is nearly a hundredfold increase. Every material, every wage, every supply cost him more and more each month, and the price of everything was climbing so fast that planning became almost meaningless. Chung had accounted for inflation when he bid on the job. 

He had expected it to be significant. He thought it might be a hundred percent. He was still off by a factor of 10. And here was the trap. The contract Chung had signed was a fixed-price contract. The government would pay him the agreed amount and not a single won more. It did not matter that the world had changed underneath him. 

The contract would not adjust. So the losses started piling up, compounding week by week with no ceiling in sight. Every day the bridge was not finished, was a day the hole got deeper. Workers stopped getting paid, some even went on strike, and then the creditors came. They did not knock politely. They showed up at Chung’s office demanding their money, and when they didn’t get it, they came to his home. 

Chung’s son was a small boy at the time, and his first clear childhood memory was creditors breaking into the family house with an axe.

Can you imagine? That’s crazy. Chung carried that for the rest of his life, the fact that the pressures he had taken on had reached through the walls of his home and touched the people he was supposed to protect. 

His top people came to him with a proposal. They were his brothers and his brothers-in-law. They had staked their own lives on Hyundai and they told him, stop. Stop building this curse bridge. We’re losing more money by the hour. The losses are already near catastrophic and continuing will only make them worse. 

Any other firm would quit, cut our losses and survive. We need to walk away. But Chung didn’t know how to stop, so he refused. And his response tells you exactly who this man was, not just as a businessman, but as a human being under extreme duress. 

He said, quote, “You mean you want me to take down our sign? If you’re suggesting that we stop construction, at this point, you’re basically saying, we close down our business. Trust is everything to a businessman. The moment you lose trust, it’s all over. It’s my dream to create the best construction company in the Republic of Korea, and you’re telling me to abandon it all? Whatever happens, we’re going to finish this job and we have to.” 

His brothers were telling him the rational thing. Stop. You’re bleeding out. Every day, you bleed more. Just walk away. And Chung heard them. He understood the math. He was not a fool, but he was calculating something. 

They were not. He was calculating the value of that sign. 

And Chung heard them. He understood the math. He was not a fool, but he was calculating something that they were not. He was calculating the value of the name. The name Hyundai and its reputation.

The trust he had spent years building, contract by contract, starting with the Americans in Busan, starting before that with the auto shop, and starting even before that with the rice shop where he arrived first every morning and swept the entire entrance before anyone asked him to. 

If he walked away from a job, any job in his eyes, his reputation and credibility would be destroyed. His brothers were so moved by his refusal to quit that they went home and sold their houses. When Chung found out, he burst into tears. Then he sold the land under his original auto repair shop, the place where Hyundai had been born. 

Together, the family raised almost a million won and put every last penny of it into this one project. They went all in, and when that ran out, they borrowed more at interest rates as high as 18% per month. Let that number sink in for a second. 18% per month. That is the kind of interest rate you accept when you believe one of two things. 

Either you’ll finish fast enough that the interest won’t matter, or the alternative to borrowing is worse than any interest rate. Chung fell into the second category. In May of 1955, the bridge was finished, but the final accounting was brutal.

The contract paid Hyundai 547,800 won, which had seemed astronomical when they signed it two years earlier. But the project had left them 650,000 won in debt. They had spent more than twice what they earned.

His competitors were merciless. What would a sixth-grade dropout know about construction? And here’s the part that gets me.

Chung kind of agreed with them. He didn’t blame bad luck; he didn’t blame the government for the fixed-price contract. He didn’t blame the floods. He didn’t blame the creditors who had broken into his house with an axe. He blamed himself.

He had not understood the riverbed conditions. He had not known what equipment the job truly required. He had rushed into a bid far beyond his capability without understanding what came after winning it. 

There was a line from a Chinese classic he returned to often after this nightmare: “the root of failure is planted the moment you achieve your goal.” 

His goal had been to win the bid. He had won it, celebrated, and hadn’t been prepared for what came next. He would not make that mistake again, but he also would not call the bridge a complete failure. He had finished it. He had kept his word. He had not defaulted on the contract and he had not abandoned the project. And importantly, he had not cut a single corner. He just took the loss.

Chung believed there might be periods of hardship, but never complete failure. The difference between those two worlds in his mind was the difference between a company that survived and a company that disappeared. 

The Turn

What happened next is crazy. Someone had been watching the whole time. While Chung sold the land under his own company to pay for a bridge that cost him more every day, while his brothers sold their houses and creditors came at him with an axe, the Korean government watched closely. 

They had watched Hyundai take a job that was clearly too big. They had watched the floods wipe out the scaffolding, and they had watched the inflation gut the contract. They watched Chung refuse to quit when every rational calculation said he should, and they watched him deliver exactly what he said he would, in the timeframe he said he would do it. 

When the Ministry of the Interior assigned credit scores to the country’s construction firms after the war, Hyundai’s was the highest in Korea. They got the highest score specifically because they had finished on time.

In a country full of contractors who overpromised and under-delivered, who walked away from jobs the moment the math worked against them, Hyundai did what it said it would do. They were the clean shirt in a closet full of dirty ones.

When government contracts started flowing, Hyundai won them. Chung would later tell a group of businessmen who came to him looking for capital, “Trust is everything to a businessman. The moment you lose trust, it’s all over. If I have to choose between reputation and money, I will always take reputation.” 

He believed it because he lived it. The bridge was proof. He chose reputation over money at a cost that would’ve destroyed most people, and that reputation paid him back many times over by the time he said that. The bridge also taught him something specific and operational. He had gone into the biggest job of his life without the right tools. 

Even worse, he hadn’t known what the right tools were. He could not read the conditions of the riverbed. He could not assess what equipment the job demanded. He had been guessing and the guesses had almost killed his company. He swore it would never happen again. 

So he set up a dedicated heavy equipment office inside Hyundai. Its only job was to acquire, repair, and remodel every piece of construction machinery they could get their hands on. 

And if they couldn’t buy the machine, they built it from scratch.

This is where something interesting starts to happen. Chung gets a bit of a break, and it turns out to be the return on something he had invested in years earlier without really knowing he was investing.

Because of his wartime work with the Americans, they were the only Korean construction company registered as a direct customer of the US Eighth Army. If a competitor wanted to buy high-tech American equipment, they had to go through a middleman and pay a markup. Hyundai bought direct, and here’s where the auto shop pays off.

In those years, Chung spent time memorizing every single auto part; the years his partners thought were beneath him gave him an edge his competitors didn’t have. He could look at a piece of American construction equipment and know exactly what it was worth. The other construction bosses in Korea were just guessing, but he knew.

Nothing in life had ever been wasted. Each phase quietly funded the next. In 1957, Hyundai won the contract to restore the Han River Bridge in Seoul. 

This was the same bridge that had been destroyed in the opening hours of the Korean War, and the symbolism was hard to miss. The newspapers called it “The greatest construction project of the time,” and it was one of the largest projects announced since the war. Hyundai finished it in months. 

The Goryeong Bridge had caught the government’s attention, but the Han River Bridge caught the entire country’s.

Hyundai was now counted among the top five construction companies in Korea out of more than a thousand. And then Hyundai just kept building. Bridge after bridge, they would go on to build 13 bridges across the Han River alone, including Korea’s first suspension bridge and its first cable-stayed bridge. 

This became his pattern, and it repeated for the rest of his career. He would take a contract that looked punishing on paper, finish it no matter what, and use the trust he earned from finishing to win the next contract, which was always bigger. 

He was doing the same thing he had done since the rice shop, just with more zeros. Take what you have, even if what you have is only your willingness to show up first and leave last and work hardest and convert it into something more valuable than money. Because money follows trust. Trust does not follow money. 

Building the Machine

Here’s what you have to understand about where Korea was in 1960. The country had a per capita income of about $80 a year. That put it on the same level as Ghana and Sudan and slightly behind India. People slept and starved in the streets of Seoul. Private cars were a novelty. 

Electricity and running water were luxuries. A group of the US State Department experts, after studying Korea’s prospects in depth, concluded that Korea was an economic basket case that would always depend on American handouts for its existence. The World Bank was no kinder. Not that these experts are often right. 

When they ranked the Asian countries most likely to industrialize, Burma and the Philippines were near the top. Korea was near the bottom. Nobody outside of Korea, and very few people inside it, believed the country could become anything other than a permanent charity case. 

Remember that because what Chung did next only makes sense when you understand how desperate things were. Hyundai had been doing US Army construction work since the War. Quick Jobs, simple specs, get it done fast, but in the late 1950s, the nature of the American work changed.

The US military started building permanent facilities to American standards, real buildings with real specifications. Documents ran hundreds of pages, with equipment clauses that had to be met exactly. Quality requirements had to be demonstrated, with engineering tolerances no Korean company had ever been asked to meet. Chung and his employees could barely read a page.

And this is where you get a glimpse of, kind of what separated Chung from almost everyone else running a company in Korea at the time. 

He had zero shame about not knowing things. None. Maybe it was his lack of formal education, and maybe it was just how he was wired, but in a culture where hierarchy and saving face mattered enormously, Chung would ask anyone anything regardless of their rank or age or whether the question made him look foolish. 

His attitude was simple and he drilled it into every one of his employees: it is not shameful to ask about something you do not know. Even if you have to ask somebody younger or a lower rank than yourself, he had a line for it that cut right to the point. “Fixed thinking is what makes fools.” 

Pretending you knew something you did not, performing competence instead of actually acquiring it, that was the real stupidity, and Chung had no patience for it. 

He wrote, “Not receiving formal education does not mean one is lacking in wisdom. It’s a mistake to think that broad and deep knowledge can only be obtained through formal schooling.” 

So Hyundai asked the Americans about everything, no matter how basic: they asked the technicians how to read the blueprints, meet the specifications, operate the equipment, and sequence the work. 

And on every work site where the Americans were present, Chung rotated as many of his own workers through as possible so they could absorb everything from their counterparts on how to do it the American way. Each site became a classroom and each contract was a new semester. And when they still didn’t know what something was, they just figured it out. 

During one paving project at the Osan Air Base, the specifications called for a batch plant to mix concrete properly. Chung had never seen a batch plant. He didn’t know what one was, so we sent a subordinate to another construction site to find out what one looked like. The man came back with a description. Chung drew up the plans himself and had his engineers build one from scratch. 

On another job, he needed to lift a 110-ton gate into place, but he didn’t have a crane big enough, so he used two 60-ton cranes in unison. It violated standard practice, but it worked and this went on for years. Chung wrote that he never had enough English speakers to translate properly. 

They always struggled to find equipment that matched the specs.

At times, the gap between what Americans expected and what Korean companies could deliver was humiliating. But they kept learning one day at a time, one foot in front of the other. Every technique, every standard, every procedure. And slowly through sheer stubbornness and a refusal to stop asking questions, Hyundai went from being unable to read the American spec manuals to planning entire projects using those same standards. 

Chung later described how the whole Korean construction industry was being dragged, sometimes kicking and screaming, into modern times by the demand of the US Army work.

The American military, without ever intending to, had become the most effective vocational school Korean construction ever had. 

The Tiger

Now, to understand how Chung ran all of this day-to-day, you have to understand just what was driving him. And it’s easy to hear what I’m about, to describe and conclude that he was just a control freak, but he wasn’t, or at least that’s the wrong way to frame it. 

What drove Chung’s management style was not a need for control; it was a need to compete.

He was aware at times that Korea had to compete with Japan and had to compete with every other industrializing nature, or the country was never going to climb outta the hole it was in. The State Department had written Korea off the World Bank had put it at the bottom of the list, and Chung kind of took that personally. 

He saw it as his responsibility as a point of national honor to prove them wrong. That meant every work site, every project, every single day had to run at maximum intensity. His country could not afford anything less. Chung did not manage from behind a desk. Every morning, first thing, he went straight to the nearest work site. 

He believed that “a person in a position of authority is a role model for everything. If a CEO does not lead by example and merely orders workers around, his words will fall on deaf ears.” He visited the heavy equipment yard at least once a day, often twice, and the second visit was the whole point. 

Here’s how it worked: He would arrive in the morning, everyone would be working hard, braced for the boss. They knew his reputation and wanted to impress him. He would inspect, nod, and then leave. And the workers would relax. The pressure valve would release and they would slow down just a little. The coast was clear, and then the boss would come back. 

The people who had been lounging would scramble to their stations. Chung took quiet satisfaction in this. He believed the standard was not something you performed for an audience. The standard was the standard all the time. You worked at full capacity whether someone was watching you or not, and if you didn’t, the solution was to make sure someone was always watching. 

He called the project supervisors at all hours of the day and night to ask if certain tasks had been completed. He deliberately gave his workers less time than they needed to finish a job because he believed people used as much time as they were given. “Get it done by tomorrow morning” was typical. “Only if fire falls on their feet will people quickly attend to the work they’re instructed to do.” He observed. 

If he felt someone was not carrying their load, he fired them on the spot. Once he fell asleep on a train, headed to a worksite outside Seoul and missed the stop, he got off at the next station, hiked back, and arrived in the middle of the night, and instead of waiting until morning, he immediately started inspecting the work and quizzing the sleepy workers and supervisors about what they had accomplished that day. 

Nobody could believe he would show up at that hour, behind his back sometimes, to his face; his workers called him The Tiger because he could appear out of nowhere and pounce on the unsuspecting. Chung seemed to enjoy the nickname. It kept people on their toes. 

He admitted it freely. “I was a tough boss for everyone everywhere. I know I must have hurt the feelings of many as growling was the only way I knew how to speak to them.” Later in life, he was sorry about that, but he was also certain that the constant pressure, the relentless inspections, the refusal to accept anything less than full speed were what made Hyundai into what it became. The company absorbed his personality. It became fast, relentless, and allergic to excuses, which is another way of saying it became him. 

The People he Hired

One more piece of how Chung built Hyundai had to do with who he hired.

In Korea. At the time, hiring was a patronage system where who you knew mattered more than what you could do. Chung rejected that system completely. He based hiring decisions on individual competence, not personal connections. 

Now, in a Confucian society built on networks of obligation, that was pretty radical, and it created problems because government bureaucrats were constantly trying to pressure Chung to hire their sons.

In Korea, refusing a well-placed official could cost you permits. It could cost you approvals and contracts, but Chung found a clever way around it. 

He told his brother, who handled hiring, to give bureaucrats’ sons particularly difficult English language tests. Tests that essentially guaranteed failure, and then Chung could tell the fathers in good conscience that he had no problem at all hiring their boys. The boys had simply been unable to pass the company’s entrance exam. 

In a Confucian society that had used competitive examinations for centuries to determine rank, the officials who had themselves gotten their own positions through exactly that kind of exam had no acceptable response. They couldn’t argue with their own logic, and Chung wasn’t using the English test only to filter out nepotism. 

He desperately needed English speakers because he had his eye on international business long before most Korean companies understood what that even meant. Hyundai required English tests years before the rest of Korea caught on.

Everything depended on having the right people.

He was learning and absorbing American methods, building machines that had never been seen before from descriptions brought back by subordinates. All of it required people who could actually learn, people who were hungry and smart and willing to be humiliated in the process of getting better. He needed people who could pass a hard test.

People who, like him, had no shame about not knowing and no quitting once they started learning; that was the machine he was building. And when President Park Chung-hee paid a surprise visit to a Hyundai Construction site years later, he didn’t find a chairman sitting behind a polished desk. 

Instead, he found Chung sleeping on the ground with his workers.

Chung had spent the night on the site. By dawn, when Park arrived, he was already up and working alongside the crew. Park, after all, valued commitment above almost everything else. 

The Engine

When Hyundai started building its first major fertilizer plant in the early 1960s, the Germans showed up to handle the work Korean hands weren’t trusted to touch.

A German engineering firm had been brought in to do the advanced welding, the precision engineering, the systems no Korean company yet knew how to build, and the Germans did not think much of their Korean counterparts.  They set a rule on the job site. Hyundai workers were not permitted to weld more than 18 meters a day. That was the ceiling.

At the time, Korea was not being asked to build, they were being allowed to assist, and the Germans were very clear about the difference. 

Chung admitted that it was humiliating, but he also understood it was the price of admission, the same way it had been with the Americans. So he did what he always did. He watched, asked questions, put his workers shoulder to shoulder with the Germans, and told them to absorb everything. The techniques, the sequencing, the standards for materials, the tolerances that were unlike anything any Korean construction firm had ever encountered before. He drilled the purpose of it into everyone at Hyundai. 

The point of this project was not to finish it. The point is to learn everything they could from the Germans. That is exactly what happened.

The next projects Hyundai won were bigger and more complex, but each one required less and less foreign help. The learning was compounding. 

The same pattern played out in power generation, and this is where you can actually watch the ceiling start to move. At first, the Korean government did not trust domestic companies with the power plants at all. American firms were given the entire contract for each new plant. 

Even though welders were imported from overseas, Korean companies were simply not considered capable of the work. But Hyundai kept pushing, plant after plant, each time climbing one more rung up the technical ladder. Each time, they took on more and more of the work.

And in 1962, finally something shifted. Hyundai built a power plant with only limited guidance from their foreign partners. 

For the first time, their work wasn’t merely tolerated. Instead, the same foreign engineers who, a few years earlier, didn’t trust them with anything critical, praised it.

Chung was thrilled, and I don’t think that’s too strong a word. That was the moment Hyundai escaped the labor of being a subcontractor. 

They were joint partners with world-class companies on massive projects. For a man with a sixth-grade education running a company in one of the poorest countries on earth, that recognition was worth more than any profit margin. And he kept pushing because Chung always kept pushing. Eventually, Hyundai became the first Korean company to build a nuclear power plant. 

Think about that for a second. From a company that could not read an American spec manual in 1957, to a company whose welders were rationed by foreign engineers in the early sixties to a company that was building nuclear power plants. By the end of the decade, the South Korean government did something that would’ve been unthinkable only 10 years earlier. They announced that from now on, only domestic companies would be hired to build the country’s power plants. 

The apprenticeship was over. Korea was going to build for itself. And none of it happened by accident. It happened because companies like Hyundai led by Chung had refused to accept the foreign engineers assessment of what Koreans were capable of. If they had, foreign firms would’ve dominated Korean construction indefinitely. 

Korea would’ve stayed a client state paying outsiders to build its own country. Instead, Korean companies took the expertise they had painstakingly gathered from American bases, from German engineering, and from every condescending supervisor and every humiliating ceiling, and used it to build their own nation. 

Chung had a single question he asked every time a subordinate told him something couldn’t be done. His people came to know it as both a challenge and a philosophy. 

“How can you know it’s impossible if you haven’t tried it?” 

The question was not rhetorical. It was a demand. Show me the evidence that this cannot be done. 

Show me that you have actually attempted it and failed, not that you have imagined failing and decided not to start. Chung did not believe an impossibility as a starting position. He believed in it only reluctantly, as a conclusion you were allowed to reach only after you had exhausted every other alternative. 

And in his experience, most people gave up long before they had exhausted anything. In roughly 15 years, Chung had gone from a man fleeing Seoul with his family in 1950, scrambling for scraps of American military work in Busan, to the head of one of the top construction companies in Korea. He was building bridges, dams, power plants, and industrial facilities. 

He had dragged an entire industry and, in some real sense, an entire country from devastation towards something that looked like modern times. But he was not done, not even close, because his ambition was no longer to build the best construction company in Korea. It was to build the best construction company in the world, and the world would require a level of audacity that would make the Goryeong Bridge look like a warm-up. 

Going Overseas

By the early 1960s, 80% of Hyundai’s revenue was coming from the Korean government. That’s even worse than it sounds when you realize governments kept getting overthrown. After the war, Korean politics were as chaotic as it gets; every time a new government took power, private business was the first thing it came for.

Each new administration would accuse successful companies of being too cozy with the previous regime, so contracts would be rescinded, and fines would be levied. Sometimes people even went to jail. 

Chung had watched it happen twice already: after one regime collapsed, the interim government canceled all government construction contracts overnight, and the entire industry crashed into recession. Then came a military coup, and the cycle started all over again.

Hyundai survived these purges partly because it was less politically connected than its competitors, and partly, as Chung noted with some dark humor, because it was the poorest of the bunch. 

Hyundai had been repeatedly denied government loans they desperately wanted, and that failure turned out to be a blessing in disguise.

In a way, their bad luck became proof of their innocence. There was another reason too. 

Government budgets were not growing. The US military projects that had been Hyundai’s bread and butter were drying up as the Americans got pulled deeper into Vietnam. Chung came to a blunt conclusion. “I foresaw that if our construction industry did not make inroads into the foreign market, it would soon reach a dead end.” Or to put it another way, Chung decided that Korea was not big enough for him. 

So Hyundai started bidding on big international contracts, and they lost every single one. But Chung didn’t care. He didn’t expect to win. Not yet. He was doing what he had always done. 

He was learning how the game was played. How did international bidding work? What did the specifications look like? What were the best competitors bidding and why? In late 1964, he sent one of his younger brothers to Thailand to scout for opportunities. The brother found a project that fit. A 98-kilometer highway through dense jungle connecting two major cities. 

When he asked if Hyundai could bid, he was told they would first need to buy $2 million worth of equipment. So he called Seoul and the Korean government granted them credit for the entire amount immediately. No other government in the world backed its contractors that aggressively at the time. 

Under the new administration, Korean companies could count on low-interest, government-guaranteed loans for any reasonable export venture. Hyundai submitted a bid of $5.2 million and beat out 29 companies from 16 countries. The news was front-page news in Seoul, and when the project’s engineers boarded the first plane to Thailand, the Korean broadcasting system put it live on TV for the nation. 

Think about that for a second. The first time a Korean construction company sent its people abroad to build something, the entire country watched it happen, live on television. It was a frog leaving the well in real time, with the entire pond watching.

President Park called the contract a vindication of his economic policies, proof that Korea was finally earning real foreign credibility, but the celebration was premature. 

The project ran into trouble almost immediately.

Hyundai had tried to save money by buying secondhand equipment, including Japanese trucks left over from the Second World War. The trucks broke down constantly, and then the monsoons came. Hyundai had assumed they could just keep building through the rainy season. 

They were wrong. The pavement they laid in the heavy rain buckled. Floods washed out entire sections. They had to redo enormous parts of the road. For the second time in the company’s history, the board started talking about walking away. It was the Goryeong Bridge all over again, the same shape in a different country. 

The losses were piling up, the equipment was failing, and the workers were even starting to strike. And Chung’s lieutenants came to them with the rational argument: Let’s cut our losses and survive. Chung shut it down immediately, but this time his argument was slightly different. 

He said, “A contract is a contract. Even if we are in dire monetary straits, we have to build Thailand the high quality expressway they’re expecting within the time we have. That’s why we are here. We cannot and will not just cut and run. We have to finish what we started for the good of Hyundai brand and for the good of the country.” 

If Hyundai quit after becoming the first Korean company ever to take an overseas project, they would be kicking the ladder away from every Korean construction company that came after them. The whole industry would be branded as unreliable. The frog would crawl back into the well, and the door would close behind it. 

He called abandoning the project an act of national treason. The board never raised the idea again. They finished the highway, lost $3 million, and Chung typically reframed the failure as a coming-of-age initiation. 

What Hyundai walked away with was the ability to build highways to international standards. They had learned asphalt concrete production. They had learned international specifications. They had learned how to operate the modern equipment under foreign conditions, and all of it paid for in money and humiliation, and all of it was about to be turned into something much bigger back home. 

But first, there was Vietnam.

Vietnam War

In the mid 1960s, the Vietnam War was heating up and Chung saw what most Korean executives did not. American forces and their allies needed someone to build them things, and they needed them fast. Chung sent one of his brothers to Saigon. 

The brother rekindled the company’s old contracts with the US military, set up offices and started picking up every construction contract he could find. Hyundai built military camps. They dredged rivers. They helped customers construct an American naval base. They even ran a laundry and dry cleaning service on the side because if you can move men and equipment into a war zone, you might as well make money on the laundry too. 

The risk matched the opportunity. During the 1968 Tet Offensive, Hyundai workers were dredging the Mekong River with enemy fire coming in all around them. These were not soldiers, they were construction workers. They were men with shovels and machines working through one of the most violent moments of the entire war because they had a contract to finish and Chung had taught them what finishing a contract meant. 

The Korean civilian involvement in Vietnam ended up being enormous. 23,000 Korean workers in total, their earnings accounted for 10% of Korea’s entire foreign exchange in 1966 and nearly 20% in 1967. After five years of work in Vietnam, more than $660 million in foreign currency had been flowed back into the Korean economy. President Park was delighted.

Hyundai alone accumulated hundreds of millions of dollars from Vietnam construction contracts. Chung didn’t know this money would become the seed capital for the most audacious bet of his life. What he did know was that his company was piling up cash and capability at a rate that had been unimaginable just a few years earlier. 

Each contract was bigger than the last. Each new theater of operations taught them something they had not known before. The frog was no longer in the well. Other projects followed. Bridges, military bases, and military housing in Guam and even Alaska. A harbor dredging project in Australia, a hydroelectric plant in Papua New Guinea. 

Hyundai was no longer a Korean construction company doing some work abroad. It was becoming a force across the entire Pacific Rim. And while all of that was happening overseas, back home in Korea, two enormous projects were about to land in Chung’s lap. One was a dam and the other was a highway, and together they were going to change not just Hyundai, but Korea itself. 

A Different Kind of Ambition

In Chung’s autobiography, he reflects on how his motivations changed over time, and it might be the most important admission he ever made about himself. Because the entire shape of what happens from here on out depends on it. When he left the farm for Seoul as a boy, Chung admits he was not thinking about Korea. 

He didn’t care about Korea. He was thinking about himself. Who could blame him? He wanted to keep himself fed, and once he had a family to keep that family under a roof. Up until now, his motivation was personal survival and personal advancement. 

He was honest about it, but somewhere along the way, something shifted and he pinpointed the moment as the Korean War. As Hyundai grew from a small outfit into building things the country could actually depend on, Chung started to see work differently. He began to believe that Hyundai could grow as a company while also helping Korea grow as a country. 

And in his mind, those two things stopped being separate. They became the same thing. He was adamant looking back, that without a shift in how he saw his work, he never could have grown Hyundai into what it became. Now, this shift sounds like the kind of thing every successful executive says in a memoir, but in Chung’s case, you can actually watch it change his behavior in real time, and it changed his behavior in a way that made him deeply unpopular with every other construction company in Korea. He became obsessed with cutting costs on government projects. His conviction about this went beyond strategy. 

He had a real moral position. He said, “after luxury comes corruption. I’ve never seen a country prosper with a leader who enjoys luxury.” What was true for countries he believed was true for companies. That might sound like common sense, but in the Korean construction industry of the 1960s, the incentive structure ran in the exact opposite direction. 

The standard playbook was to look at a government contract and ask: how do we maximize our profit by any means possible? Companies inflated costs; they routed transport along longer paths just to bill for higher shipping costs. They padded estimates. They billed for elaborate extras that did not even exist. Everybody did it. That was how the game worked.

Chung wanted to play a different game. He realized that lowering his margins meant the government saved money, which meant the government could fund more projects, which meant more work for everyone, including him, because he would always bid the lowest. 

He was playing the long game and most of his competitors were playing the short game, and then he made it worse for them. He started proposing alternative construction plans for projects the government had already awarded to other companies. If Hyundai could find a cheaper, faster way to build something, Chung would submit an alternative plan and lobby to have the original thrown out. 

This drove his competitors insane. It drove the government officials insane. Their view was simple. The government designed the project, the construction company bid on it. The construction company built it, and the construction company kept its mouth shut. Chung didn’t keep his mouth shut. And here’s the thing that his competitors didn’t understand at the time. 

By behaving this way, Chung was making Hyundai regime-proof. Other Korean companies won contracts through political relationships. They prospered as long as their patrons held office, but the moment the political one shifted, and in Korea, they shifted constantly. Those companies were cast aside. Their entire value proposition had changed. 

Hyundai’s value proposition was different. It was what they could do cheaper and faster than anyone else. And any government, regardless of ideology, could see the logic in that. The company that built high-quality things cheaper still got hired.

As Chung would later put it, “We may not have always been on good terms with every administration, but Hyundai has helped the government by cutting costs through continued research. This is why Hyundai was ultimately recognized as being indispensable to Korea’s economic growth.” 

Indispensable is a word people used loosely. Chung had earned it. He had spent years building a company that no Korean government could afford to punish because no Korean government could afford to do without it. 

The shift from personal ambition to national ambition changed more than how Chung thought about his work. It changed his company’s structural position in his country. And that position was about to be tested by the two biggest projects of his career. 

The Dam

The Korean government had been trying to build a dam across the Soyang River since 1957. 10 years later, they still hadn’t even started. The site was 65 miles south of Seoul. The dam was supposed to provide hydroelectric power, water, and flood control, but technical issues, the location and ballooning cost estimates kept stalling the project year after year. By late 1960, President Park was losing patience. The Ministry of Construction had brought in one of Japan’s most prestigious engineering firms, Nippon Koei, to design it. They recommended a conventional concrete gravity dam. 

It would be the strongest type possible, it would last for centuries, and most of the profits would flow back to Japan. It was simply assumed by the Korean government as much as anyone else, that no Korean company could handle a project this large and complicated in such inhospitable terrain. 

So, with cost estimates piling up and no progress in sight, President Park called Chung in and asked what he thought of the Japanese plan. Chung studied it carefully and then did something unexpected. He told the president that the Japanese were wrong. 

His counterproposal was an earthen dam, a zone-fill dam built from rock and gravel, pulled out of the surrounding mountains. He said it would cost 30% less than the concrete design and was better suited to the terrain. 

He had based the conclusion on a French-designed dam he had studied while Hyundai was working on the highway project in Thailand. For dams over a hundred meters tall, earthen construction was more cost-effective than concrete, and it was believed to be just as safe. The Japanese were furious. Nippon Koei’s lead negotiator, a graduate of Tokyo Imperial University, confronted Chung directly in the meeting that followed. 

“Chung, what do you know about dams? Where did you study dams? Our design team is made up of Tokyo University graduates who have designed dams around the world. Do you mean that a man who completed only elementary school knows more than we do about dam construction?” Chung did not reply. He had spent his entire life being asked some version of that exact question. 

He had learned a long time ago that you do not answer that question with words, you answer it with results. So he sat there quietly and let the question hang in the air. The Korean officials were just as furious as the Japanese. The Ministry of Construction and the Water Resources Department had already signed off on the Japanese design. 

What was this? A local construction company contradicting the expert opinions of both its own government and one of the most respected engineering firms in the world. Chung later compared his behavior to “poking at a Tiger’s nostril and getting oneself killed.” The meeting broke up in disarray. When the final proposal reached the president, the ministry officials recommended the concrete dam and barely mentioned Chung’s alternative proposal, dismissing it as unsafe.

And then Park asked one important question that no one had yet considered. 

He asked about national security. Korea was still technically at war with the North. The DMZ was only a few dozen miles away. And if the North Koreans bombed, a concrete dam park said the strike would blow a massive hole in the structure and millions of gallons of water would surge toward downtown Seoul. An Earthen dam on the other hand, would be more likely to simply collapse if struck. The collapse would create a natural barrier, the water would escape much more slowly. From a national security standpoint, did the earthen design not make more sense? 

The room went quiet. The Tokyo University graduates, the Ministry of Construction, the water resources department, none of them had an answer. Park sent the whole group back to study the question. Two months later, they came back with their conclusion. Chung had been right on every count. 

The Earthen dam was just as safe, it was significantly cheaper, and in the event of an attack, the concrete design they had been pushing could have been catastrophic for the people of Seoul. The dam broke ground in 1967 with Hyundai as the contractor. It was finished six years later at a cost 30% below the original estimates. It became the largest rock-fill dam in Asia, the National Academy of Engineering of Korea, later called it “a magnificent dam, constructed by our own technologies and our own hands in the economically deprived period of the early 1970s.” 

Chung shares one last detail about the project, and I love it.

At the dedication ceremony, Chung watched it on television. As he watched the same ministry officials who had fought him tooth and nail the whole time, the ones who had dismissed his proposal as unsafe and tried to bury it in the report to the president, stand in front of the cameras and explain how they rejected the Japanese design and replaced it with something better. Chung never corrected the record in public. He did not need to. He knew, and that was enough.

The Expressway

In 1964, President Park visited West Germany and saw the Autobahn, and it changed how he thought about his own country. Park came home and looked at South Korea with new eyes. He saw a country connected by haphazard roads that were slow and unreliable, and a railway system that was both expensive and overloaded. 

His logic was simple. Let’s build an expressway for goods, and people will move faster. Raw materials will reach factories sooner. Ports will connect to inland cities. Everything in South Korea accelerates. As he told Chung, “we just have to get it done no matter who tries to oppose us.” And plenty of people did try to oppose them. 

When the first cost estimates came out, opposition erupted from every direction. The World Bank told the Korean government the project was economically and technologically infeasible and would add little to Korea’s development. The Korean legislature agreed the country was simply too poor to afford it. 

Park did not see it that way. The expressway, he argued, “would be a better investment of our limited funds than railroads and harbors for solving our transportation bottleneck.” And beyond economics, he believed building the road would give the Korean people a new confidence that they can do whatever they want. 

So in November of 1967, Park summoned Chung to the Blue House. It was their first private face-to-face meeting. Park knew about Hyundai’s expressway experience in Thailand and wanted to know what Chung thought. Then he asked him for a cost estimate. Starting the next day, Chung and a team spent three weeks driving the entire route between Seoul and Busan, measuring everything, surveying, and flying over the train in the air. 

Chung saw that the engineers who had originally planned the road had not actually studied the ground they were going to build on. 

They had relied on textbooks and theory. The map, not the territory. They had proposed pushing the highway in almost a straight line from city to city, plowing through mountains at enormous cost. Chung proposed something different. Dig fewer tunnels, build the road around the mountains where you could, increase the incline of certain stretches slightly above the standard maximum grade. 

The result would be a highway that could be built faster and for less money. Park had asked for other groups for the same estimate. When the numbers came in, the Ministry of Construction said it would cost $65 billion won. The Army Corps of Engineers said $49 billion, and the Ministry of Finance said $33 billion. 

Chung said $28 billion. Less than half of the ministry’s construction number. The Ministry of Construction publicly mocked him for it. 

Park asked Chung if the project could actually be done at that price. Chung’s answer was four words, “I can do it.” Park gave Hyundai the lead role. 

They would organize a consortium of 17 firms to construct the highway, and Hyundai itself would be assigned the most difficult stretches, roughly two-fifths of the entire project. On February 1st, 1968, construction began with the sound of blasting. Chung said he would remember the excitement of that moment for the rest of his life. 

The scale was staggering. The expressway would run 428 kilometers down the entire spine of the country. Hyundai alone spent over $8 million to buy 1900 pieces of heavy equipment for the project. At the time, the entire nation of Korea owned only 1400 such machines. Chung was buying more equipment for one project than the entire country owned. 

He barely slept. He literally moved to the construction sites. He brought a cot. When he was being driven around in his Jeep inspecting progress, he would close his eyes for a few minutes at a time as the Jeep bounced over unpaved roads, that was his sleep schedule. The moment workers saw his Jeep approaching, they would come to attention. 

He drilled a single belief into the workforce. “If you are diligent for a day, you will sleep comfortably for a night. If you are diligent for a month, the quality of your life will noticeably improve. If you are diligent for two years, 10 years, your whole life, your accomplishments will be recognized by all.” 

President Park was nearly as obsessed as Chung. Every day, a situation report sat on his bedside table, and every morning he called Chung. He was constantly in the air over construction sites in his helicopter. A former engineer who worked closely with President Park in those days described him as an orchestra conductor, with the helicopter as his baton. If Park did not have an answer on Tuesday, he would be back with one on Thursday. 

There is one incident from this project that became legend and it tells you why Chung and Park ended up trusting each other so completely. On every Hyundai project, Chung had an ironclad rule. Construction trucks had the right of way over everything, and everyone on the work site, there were no exceptions. 

Even Chung, the CEO, yielded to a dump truck. One day, President Park was riding through the construction zone in his Jeep. The local police chief saw a Hyundai dump truck coming and jumped out of his car to wave it off the road so the president could pass. Park, who knew Chung’s rule, directed his own driver to yield to the truck instead. The dump truck driver became known on the project as the man more powerful than the president. But the road was punishing the men who built it. Several workers died in landslides and cave-ins. The most dangerous stretch required blasting a four-kilometer tunnel through unstable rock. 

On a good day, they advanced two meters. On a bad day, less than 30 centimeters. There were 13 separate cave-ins in the Tangjae tunnel alone. And then something strange happened. Workers started saying there were evil spirits in a particular tree near the construction site. More and more men refused to work near it, and an army officer cut the tree down to end the superstition. 

The next morning, the officer was in a serious accident. More workers walked off. Chung had to double wages and was still short-handed. To keep this schedule on track, he had no choice but to mechanize even farther. 

With two months left until the deadline, a site manager came to Chung with a desperate plan. If they switched to high-strength cement that set in 12 hours instead of a week, they could compress 90 days of work into 25. The cement was far more expensive and had never been used at this scale in Korea. 

Chung’s answer: “if I have to choose between reputation and money, I’ll always take reputation. Finishing on time is how we protect our reputation and honor. Let’s give it a shot.” 

On July 7th, 1970, the opening ceremony was held on schedule. Two years and five months of construction. Nearly a year ahead of the original date. President Park was triumphant. 

“How much energy do our people have? How much technology do we have? We will test our nation’s potential with this expressway.” The road changed South Korea exactly the way Park believed it would. Before the highway, the train ride from Seoul to Busan took 15 hours. The expressway cut it to 4. In its first year, 3.7 million vehicles used it. 

It connected the main ports to the factories and the inland cities. It became the artery through which the entire economy flowed. 

In the Hyundai estimate of $28 billion won, the number the Ministry of Construction had publicly mocked, when you adjusted it for inflation, it turned out to be almost exactly right. The other companies had been the ones who didn’t know what they were talking about. Chung finished his portion of the work with a modest profit, but the real prize wasn’t the profit. 

It was the friendship that he created with President Park that would last until Park’s assassination in 1979. Chung became a frequent visitor at the Blue House, joining Park on Thursday evenings for informal dinners in the private second-floor quarters. 

They would sit for hours in casual clothes, drinking, talking about Korea’s future. Park took to calling Chung, his Minister of Construction. A mutual friend said both men believed in the same thing. They both believed in the power of human will. They both believed Korea’s economic future had to be built on that will. And both of them also believed just as deeply in using Western technology to do it. 

In many ways, Park became a second father to Chung. They shared an absolute conviction that Korea’s destiny was something you built with your hands, not something you waited for.

Starting the Hyundai Car Company

Chung was now 54, and in many ways he was just getting started.

Chung started his career fixing other people’s cars, then decided it was time to build his own. Cars mattered to him in a way that went beyond business. A car has upwards of 30,000 parts, and building one doesn’t just create jobs in the factory. It sends ripples through the entire economy.

In Chung’s view, a country that could build a car could build anything, and wherever that car was exported, people saw the nation that had made it. 

He put it memorably: “Cars are like national flags with wheels. If we make good cars and export them, they drive around the world spreading Korea’s technology and level of industrialization.” And Korea desperately needed that kind of visibility. But two recent attempts by other Korean companies to assemble cars had already failed. 

Most of the country’s industrialists had concluded that entering the car business was premature. The smart money went into making auto parts, not actual cars.

When Chung announced that Hyundai would build cars, the Korean business community was stunned.

Chung was undeterred. In 1966, he heard that a Ford team was visiting Korea to evaluate potential partners for an assembly joint venture. Hyundai was not on their list, which made sense because, at the time, Hyundai was a construction company.

Chung didn’t care. He called his brother who was in the United States negotiating a loan for the cement plant. The cement could wait, get to Ford’s headquarters and negotiate an automobile assembly contract. 

His brother asked how he was supposed to convince one of the largest car companies on earth to partner with a Korean construction firm that had never made an auto part or a car. 

Chung gave the answer he always gave.

Have you tried?

They got the Ford executives to come to the Hyundai office. Chung began talking them through the parts of a car in detail from his decades-old memory. He remembered all the parts, and only now was it suddenly paying off in a conference room with Ford. 

Ford had planned three days of interviews with various candidates, and Chung ended the interview process in two hours. Ford chose Hyundai. In December of 1967. He established the Hyundai Motor Company as a separate entity from Hyundai Construction. 

He picked Ulsan as the factory site because it was a port city with a deep-water harbor that would soon be connected to every major Korean city by his new highway, and from which Hyundai could both import equipment and eventually export cars. The initial assembly plant went from groundbreaking to full-scale operations in under six months, which set a record for any Ford assembly factory anywhere in the world.  (I wish we could build that fast today.)

But the arrangement with Ford was what every developing-country auto industry looked like in that era: Knocked-down kits shipped from abroad, local assembly, foreign partners keep all the design and engineering. 

Ford’s terms kept Hyundai permanently dependent.

They were parts assemblers, not partners. The breakpoint came when Ford proposed what they called a world car project. Under the plan, Hyundai would build Ford-designed engines that would be mounted on chassis made in Australia with transmissions made in Japan. 

To Chung, this was a national insult. How could Hyundai or Korea build any stature as a car manufacturer by participating anonymously in some grab-bag assembly scheme? Ford was being imperialistic as he saw it, and then Ford’s president for international operations flew to Seoul and proposed the next step: absorbing Hyundai Motor Company entirely into Ford. 

And that was a step too far. Chung lost it. “I’ll never take down a single Hyundai sign with my own hands. Even if a business is struggling and everything seems hopeless, I will make it work. Not once have I ever packed up and quit halfway through. Quitting is not in my dictionary.” 

This guy had so much fight in him. You don’t walk away from things. Remember the bridge, the Thailand highway, the name is worth more than the money, but they couldn’t just make their own cars from scratch. At least not yet. They still needed a technical partner, but just as with the Germans earlier, they would learn all they could from them. 

They searched the world for one who would hand over technology without demanding control. They talked to General Motors. As one of Chung’s brothers put it: “We wanted to run the company our way, but GM wanted to run the company their way. That was the point of disagreement.” They approached Volkswagen, they approached Alfa Romeo. 

Same problem. Nobody wanted to give Hyundai the independence it demanded, and honestly, from their perspective, why would they? Hyundai could easily turn around and compete with them in their own markets. Finally, Hyundai turned to Japan. 

Their former colonizers of all people. Mitsubishi was trying to expand and compete with the bigger Japanese firms, Toyota and Nissan. They offered Hyundai a pure technical licensing agreement. No financial partnership, just licensing fees. Hyundai could build its own cars under its own name using Mitsubishi engine and transmission designs. 

Now they needed someone to design the car. They flew to Europe and made two critical hires. Giorgetto Giugiaro of ItalDesign, who had styled cars for Alfa Romeo and Fiat would design the exterior. And George Turnbull, who had just resigned as the President of British Leyland over a policy dispute, was brought in to run the operation. 

Turnbull was invited to Korea for a tour and was immediately taken with Chung. His first impression was vivid. “That man is so bright, it’s unbelievable. He’s practical to the point where it hurts. He must have taught himself finance, and he’s a great motivator. He put the fear of God into people.” 

Turnbull was hired as Vice President in February of 1974. He brought in more engineers, and they came up with a simple and unglamorous design. That was fine, they weren’t building a luxury car. They were building Korea’s first national car. And then came the construction of the plant. Turnbull arrived at Ulsan and was told where the factory would be built. His engineers looked at the site and informed Chung that he had chosen a swamp. Chung was unmoved. This is where he wanted his factory, so they drained the swamp. Then it was winter and the concrete pilings for the factory walls cracked repeatedly in the extreme cold. 

Chung was unmoved again. Some of the equipment was installed before the factory walls were even in place. Turnbull, the conservative British executive, could barely believe what he was watching. Normally, putting a car into production took four years. Hyundai did it in two. 

Chung made frequent inspection trips down to Ulsan. He would leave Seoul at four in the morning with one or two assistants for the long drive south. He liked to say on those drives that he was driving on his road, and he was happy. By 1976, the plant was complete, and the first cars rolled off the assembly line. Chung named the model the Pony. He hadn’t done any market research. 

Chung and his company had simply designed and built the car. They thought the Korean people should have President Park guarantee the financing. Hyundai built it; it was Korea’s first national car. And then Chung did something that surprised even Turnbull. Within weeks of the first Pony rolling off the line, Chung announced that Hyundai would export 5,000 of them overseas. 

Turnbull was horrified. The Koreans might buy a car of unproven quality because they didn’t really have an alternative, but foreign buyers did. If foreign buyers rejected the Pony, Hyundai’s reputation would be damaged for years.

Chung didn’t care. He had promised President Park he would export, and he was going to. And what he did next was kinda genius.

He was not going to send all the cars to one test market. He was going to spread them across several countries in several different parts of the world. Nigeria, Taiwan, Peru, Ecuador, Saudi Arabia. Each had different climates, road conditions, and customer expectations. 

So why did he do this? Because he wanted to learn.

He would do his market research after the cars were built; he would learn, as he always had, by doing. The results were educational, to put it mildly. In the tropical heat of Nigeria, the vinyl roofs peeled off like banana skins, in Saudi Arabia, the sun faded the paint. 

In multiple countries, the cars had serious mechanical problems, especially with steering and brakes because the roads they were driven on weren’t paved. 

But Hyundai was forced to upgrade the quality of the car significantly and probably much sooner than they would’ve been forced to if they had stayed inside the protected Korean market. One of the main limiters of potential is the fear of embarrassment. People don’t take risks because they fear looking embarrassed, but Chung proved that if you’re willing to endure temporary embarrassment, you can gain a long-term advantage. 

It wasn’t failure; it was learning. And while all of this was happening, Chung was already thinking bigger, much bigger. In the mid-1970s, Korea’s total car market was about 30,000 units a year. Chung announced plans to build a new factory capable of producing 300,000 cars a year. 10 times the size of the entire Korean market. 

His colleagues thought, not for the first time, that he had lost his mind.

Where would they find 300,000 buyers? Chung answered that the Korean market would grow enormously as the country emerged from poverty, that the new car would be designed mostly for export anyway, and that he had a target in mind. 

General Motors was simultaneously building a new factory for their own world car program, and GM’s targeted production was, of course, 300,000 units. GM’s construction costs was $3 billion. So Chung studied GM’s plans and came to two conclusions. First Hyundai was going to match GM’s capacity. Second, they were going to do it for 1/10th the cost. 

He personally reviewed every aspect of the plant design with his engineers. The bricks in the factory walls were reduced in width. The window sills, which required expensive imported wood, were made narrower. The windows used slightly thinner glass. Every cost that could be shaved Chung shaved, in only a way that a man who was forced to eat bark to survive could. 

The factory opened in 1980. It was functional, if not beautiful. It produced the targeted number of cars, and it did exactly what Chung had estimated $300 million, one 10th of what GM spent. Hyundai was ready to take on the world, and in 1986, they did. The Hyundai Excel, a redesigned subcompact priced at $4,995 launched in the American market. 

No other car in its class was anywhere close to that price. It targeted used-car buyers who could now afford a new car for the same money. The fit and finish were not perfect. Nobody claimed it was a premium vehicle, but in the get-what-you-pay-for market, the Excel was instantly recognized as a good deal. 

First-year sales were projected at $100,000 and came in at 168,000 units. In 1987, sales hit 264,000 units. The Excel was rated the number one imported car in America both years. No car company in history had ever achieved that kind of initial success in the American market. Thanks to Chung, Korea had built its own car and sold it in the most competitive automobile market on earth. 

Someone Crazier Than Me

In 1968, President Park designated shipbuilding as a national priority.

He asked the country’s major conglomerates to step forward. Samsung passed, LG passed, only Chung said yes. And of course, he had no idea how to actually build a ship, but his reasoning was practical, as always. “Building ships,” he explained, “is similar to combining civil engineering, architecture, mechanical facilities, and electrical work from the construction industry.” 

Everyone else looked at shipbuilding and saw a new industry, but Chung saw the same industry he was already in, just rearranged. But shipbuilding required a staggering amount of capital. A world-class shipyard would cost roughly $900 million and Korea’s shipbuilding capacity at the time was virtually zilch. 

The largest vessel ever built in the entire country was 17,000 tons. Never one to think small, Chung had something else in mind. He wanted to build 260,000 ton super tankers, 15 times larger than anything Korea had ever produced before. He went to the Americans for the loan. 

They said no. He went to the Japanese. They looked at the proposal and concluded that Korean technology was too primitive and said, no. Chung went back to President Park and told him the truth. Nobody would lend them the money. And Park turned to one of his Vice Prime ministers in the middle of the room and said, “reject all of Chairman Chung’s business proposals going forward. Make sure the government never does any business with him again.” 

And then he went quiet. A long silence, long enough that Chung had no idea what was coming next, and then Park spoke again. “You knew this was going to be difficult if you already considered all of this and still went forward. You need to do it no matter what. Now, go try Europe.” 

Chung got on another plane. He carried one belief with him that would sustain him through everything that followed. “Conviction creates indomitable efforts. This is the key to miracles.” 

Conviction is contagious.

In Europe, he connected with a British engineering firm called Appledore that promised shipyard blueprints in six months. 

He also found a Scottish shipyard where Hyundai engineers could train. But to get the loans insured, he needed to prove someone would actually buy ships from a shipyard that didn’t exist yet. And for that he needed a bank. So he went to Barclays and they told him what everyone else had told him. 

Korea had no experience or expertise. The answer was no. And then Chung did something I genuinely love. He pulled out a 500 won Korean banknote and slid it across the table.

The bill showed a picture of a ship. It was a turtle ship. The ironclad warship Korea had used to defeat the Japanese Navy four centuries earlier. His argument was that Barclays did not actually know who they were dealing with. 

This small country they were dismissing had a maritime tradition they had never bothered to learn about. Koreans had built ironclad warships before any European nation had thought of it, and then he made the larger argument. 

“Don’t you know that the person who thinks a job is possible is the one who’s going to get it done? A job can be done only by people who truly believe that it can be done. If someone else in Korea believed that they could build a shipyard, they would already be here sitting in front of you, but they’re not here because they don’t believe it’s possible. I’m here because I know it is.” 

It worked. They agreed, but there was still a catch. Chung needed a buyer.

He needed somebody willing to sign a purchase order for ships to be built in a shipyard that didn’t exist, from a company that had never built a ship. 

So he started carrying three items everywhere he went: a photograph of a desolate beach with pine trees and thatched houses, a map, and blueprints for a 260,000-ton tanker. 

His pitch was pretty simple. If you buy the ship, I will build a shipyard on this sand and deliver it to you. If you think this sounds a bit crazy, he’d agree. He admitted he wouldn’t have blamed anyone for thinking he was crazy, but what he needed was to find someone even crazier than himself, and eventually he found someone.

A Greek shipping magnet named George Livanos looked at the photographs of the empty beach, looked at the blueprints and signed a purchase order for two oil tankers. Then he handed Chung a check for $1.4 billion won. 

Chung had not mentioned one detail to anyone. He didn’t actually own the beach in the photograph. He bought at the moment the money came in.

And then came the building.

When Chung got back to Korea with the contract in hand, many of his executives were uneasy. If this venture failed, it would likely bankrupt the entire company. Chung’s response was Vintage Chung. “What’s the big deal? A ship has an engine inside and an exterior made of steel. Ships resemble power plants, which Hyundai has built many times.” 

The conventional approach would’ve been to build the shipyard first, and then start building the ships. That was sensible, but it was slow. Chung did the math. Five years of accruing interest on their current loans would bankrupt them before they ever launched a vessel. 

He told his team over and over. “Loans beget interest. Interest begets more interest. Time is the greatest enemy of construction firms.” Speed mattered. 

So I kid you not, Hyundai would build the shipyard and the ships at the same time. After a lavish, groundbreaking ceremony in March of 1972, more than 2200 workers started working on land reclamation, the construction birth, a training facility, and two oil tankers all at the same time. 

Nobody at Hyundai had ever built a ship, so they learned as they did it. And when I say they learned as they did it, I mean that literally. At one point, the conditions of the European loan required them to buy a Goliath crane from a German manufacturer. They ordered the crane; they knew they needed one. They were not entirely sure what one even looked like.

When it was time to wire the first ship, they realized they did not have wiring diagrams. The engineer assigned to the job had never worked on a ship before, so they improvised. Entire sections of the ship got assembled incorrectly and had to be dismantled and reassembled. 

But construction never stopped. It always continued. At one point, the ships outpaced the shipyards. The forward section of one of the tankers was completed before the Goliath crane from Germany had even arrived. They needed the crane to move the massive section into position, and they didn’t have it. 

Anyone else would’ve waited, but Chung ordered the section placed on a trailer and rolled into place, with a bulldozer pulling in the opposite direction to keep the trailer under tension. No experienced shipbuilder would’ve ever attempted anything this crazy because it violated every standard, but it worked. 

Hyundai squeezed everything it could out of its workforce.

A typical Japanese shipbuilder at the time had 20% of its workers in engineering and technical support. Hyundai had 11%. The Japanese had 14% in supervisory roles. Hyundai had 7%. That meant 82% of Hyundai’s people did hands-on work, compared to 60% at the Japanese competitors. 

This was Chung’s philosophy made operational. Less overhead, more output. Workers got up at dawn, splashed water on their faces, and worked until they fell asleep in their shoes. They ordered materials for six ships and received enough for 12, and before the first two ships were even finished, more orders started coming in because Hyundai had ruthlessly underbid the competition by 15% to win them, which meant that before they had launched a single vessel or finished building the shipyard, they already had a backlog. 

Chung was now racing to finish the first two ships just to make room for the next four. Two years and three months after Chung had broken ground on an empty beach, the first stage of the shipyard was complete. It could build ships up to 700,000 tons. It was the largest shipyard on earth. In June of 1974, the president and Ms. Park were invited to the christening of the two tankers. The first ship launched was the 260,000-ton Atlantic Baron. Park’s confidence in Chung had been vindicated. Korea was now in the shipbuilding business. It was a glorious day. 

British journalist Simon Winchester visited the Ulsan factory years later and could not help comparing it to the empty shipyards of his own country. What impressed him most was the pace. A ship order placed at Hyundai took half the time. It would take in a European yard and at a price a good 10% lower than the nearest price competition. 

British engineers who worked there confirmed it. One of them, Tony Robbins, said, “You couldn’t believe what they do. They break all the rules. Their equipment is old. They make their own tools. Nobody else would use them.” And then he added, “they deliver what we asked for on time. I don’t understand it, but whatever it is they do, it works.” 

Another British engineer, David Gregg, described the morning routine. “It’s a very military oriented society. In the morning, you go there and you will have a line of people, and they’ll all be standing at attention to get a work assignment.” 

Once a week, the division director would address the workers through a loudspeaker. The message was always the same. “We expect the best. We are Koreans. Show the world we are Koreans.” 

Just as things were starting to go well, the world collapsed. In 1973, OPEC raised oil prices, which triggered a global recession. Demand for oil super tankers evaporated overnight. Livanos abruptly canceled his contract for the two ships and forfeited his $2 million down payment. 

The Japanese and Hong Kong orders got canceled too.

Hyundai had just learned how to build ships that nobody wanted. His board urged him to stop building the abandoned vessels. But Chung, of course, refused. If they stopped, they would lose everything they had already invested, and they would have to lay off the men who had slept in their shoes for two years building that shipyard, and he would not do it. 

He finished the ships nobody wanted, and then created Hyundai Merchant Marine to buy them himself. Here was his logic. Korea was paying foreign firms to transport its imported oil. That money was flowing out of the country every day. So Chung went to President Park, who very quickly introduced new regulations requiring all crude oil, shipped to Korean refineries to be carried on Korean vessels. 

And of course, Chung was the only one with Korean vessels.

Chung used his own ships, breaking what had been a foreign monopoly on Korean energy transport.

Within a few years, Hyundai Merchant Marine was one of the world’s largest shipping companies.

And when the market for large ships eventually recovered, Hyundai was perfectly positioned. They had the technology, the skilled workforce, and the shipyard and fleet. Competitors could not match them on price or speed.

A wave of British technicians, many of them from Britain’s stagnating shipbuilding industry, moved to Ulsan as contract workers. Reporter Simon Winchester noticed the irony first. 

British shipbuilders whose own yard sat empty were now flying to Korea to teach at a shipyard that could not build fast enough to meet world demand.

The man who could not be stopped had found a way again. The path was blocked, so he went up a wall, across the ceiling and dropped onto his target from above. The bedbugs in that bunkhouse had taught him well. 

The Thinking Bulldozer

The same oil shock that destroyed Hyundai’s shipbuilding business was about to hand them the biggest contract on earth. By the mid 1970s, the OPEC nations were staggeringly rich. Saudi Arabia, Kuwait, and the Gulf States had cash reserves that dwarfed their infrastructure. They needed ports, highways, military installations, and entire cities built from scratch, and they needed somebody to build them. 

This was exactly the opportunity Chung had been building towards since Thailand, but the competition was ferocious. The world’s biggest and best construction firms were all chasing the same enormous contracts. Companies with decades of experience, deeper pockets, and real relationships. Chung did not care. 

He had been underestimated his whole life. He sent his brother to the Middle East to look for business, and at the traditional New Year’s gathering with his senior executives in early 1976, he made his position clear. “We have suffered the pain of deciding on stability or adventure. We have concluded that we will accept the challenge of major adventure called the Middle East.” 

The first project was a training shipyard for the Iranian Navy, and it taught Hyundai immediately that this was not Thailand. The temperatures were extreme. The construction site was desolate. The local population did not welcome the Koreans. The design and construction specs were far more rigid than anything they had seen in Southeast Asia. 

One Hyundai crew leader reported back to them from Iran. “The conditions here are impossible, but we are surviving. I know we can make it here.” They completed the project, and then Chung went after the real prize: Jubail. Jubail was a fishing village on the eastern coast of Saudi Arabia, and the Saudi government was determined to transform it into an industrial megacity. 

The project on offer was an open-sea tanker terminal and harbor facility so vast that construction experts worldwide called it one of the engineering wonders of the age. The terminal would birth four oil supertankers simultaneously, 12 kilometers out in the open sea. Hyundai had no experience designing or building anything even remotely like this. 

Chung personally took control of the bidding process. And this is where the story takes a turn that almost defies belief. Nobody at Hyundai knew how much it would cost to build an open sea tanker terminal. Chung worked out an estimate and one of his senior aides, a man called Chun Kap Won, looked at the numbers and told them the bid was too low. 

They would lose money. They were entering a region they barely knew, building something they had never built. Won urged Chung to raise the bid by a hundred million dollars, but Chung refused. “No, we have to secure this project. Otherwise I cannot face President Park.” 

Kap Won was sent to submit the bid at the ceremony, but Kap Won, still convinced that his boss had made a catastrophic error, decided on his own without telling anybody to raise Hyundai’s bid by $60 million. He submitted a bid of $931 million, which is higher than the number Chung had authorized. The bids were opened, and the Saudi Minister of Communications read them out. 

When he got to the American firm Brown and Root, he announced $903 million. Kap Won’s heart stopped. He had overbid. He had just raised the number against direct orders. He had just lost his country, a contract the size of which had never been awarded to a construction company before his career was over. 

He later admitted he seriously considered drowning himself in the Persian Gulf. But then the minister clarified. Brown and Root’s bid covered only the marine portion of the project. Hyundai’s bid at 931 million covered the entire scope of work. The two numbers were not comparable. Hyundai had won. 

When Chung walked over and congratulated Kap Won, he still assumed Kap Won had submitted his original lower number. Kap Won confessed what he had done. Chung was furious. He turned and walked away. The contract was signed. At $931 million, it was roughly half the Korean government’s entire annual budget. It was the largest construction contract ever awarded to any company in world history. 

Chung later commented with a wry smile. “I was glad that Kap Won did not have to kill himself and that our country earned an additional $60 million.” Chung was not done negotiating. After winning the contract, a Saudi official told him that it was customary to pay a 5% commission on all such projects. 

Chung resisted. The official got angry and told him that he had the power to rescind the entire contract if the fee was not paid. Chung offered 2%. The official who had never encountered that kind of audacity in dealings with his government, agreed. Chung had saved millions of dollars before the first shovel hit the sand. 

Now they had to actually build it. The technical scope was staggering. The terminal required installing 89 steel jackets into the seabed, each the size of a 10-story building. Each one weighed 500 tons. Each pair of adjacent jackets had to be positioned at 20-meter intervals, with a margin of error of no more than five centimeters. 

More than 15,000 concrete piles, each 60 meters long were driven into the seabed. Each one was struck more than 5,000 times with a remote steam hammer. Chung insisted that Hyundai Heavy Industries in South Korea manufacture every bit of material for Jubail and ship it to Saudi Arabia. 

He was stitching together two mega industrial projects across the Indian Ocean. The 89 steel jackets were loaded onto barges and were sent on a 12,000 kilometer, 35 day voyage through often stormy seas to the Gulf. And he did not insure any of it. His subordinates thought this was lunacy. 

If a single shipment was lost at sea, the financial damage would be catastrophic. Chung’s reasoning was rational. Even if the cargo were insured, insurance companies would require long investigations before paying out. By the time they paid, Hyundai would be in breach of contract with the Saudis and would lose the whole project anyway. 

Insurance, he concluded, was a psychological comfort in this case, not actual protection. Instead, he designed a way to seal the ends of the jackets and the pipes to create huge air pockets that would keep them floating if they went overboard. If anything fell into the ocean, a trailing ship could retrieve them from the surface. 

They made 19 shipments across the Indian Ocean. Only two minor incidents occurred. The men who actually built Jubail lived in conditions that made the expressway in Thailand look like the Four Seasons. At peak, nearly 10,000 Koreans were on site working 10 hours a day, seven days a week. 

Their families had to stay behind in Korea, most workers saw home only once a year. Wages were doubled, what they could have earned back home, which is why they came. But the heat was extreme. The isolation was total, and the cultural gulf between Korean workers and their Saudi hosts was vast. One Hyundai manager named Park Il Kwon volunteered for Saudi Arabia straight out of college in 1977. 

His reasons are telling. “I wanted to go for several reasons. Yes, it was a good opportunity to make money, but it was much more than that. To me, it was an opportunity to serve my country. I wanted to help build Koreas so my children would have a better life.” He spent three years in the desert. His first visit home came after a full year on the job. 

Hyundai flew in Korean cooks to make traditional food. They built recreational facilities. They did what they could, but the reality was that all of these men were living on the other side of the world, building something no Korean had ever built, and they would not see their families for months at a time. 

The intensity of the Korean work ethic became legendary in the Gulf. A Brown and Root engineer who worked alongside Hyundai crews wrote a poem about them in the style of Kipling. 

The poem went like this: “When we’re hungry, they smile. When we’re tired, they get up. When we’re sleeping, they hustle.” And it ended with a warning. “It’s not good for Brown and Rooter’s health to bustle with the Hyundai style.” Chung made his unannounced inspection visits here too. Same as he had done at every other Hyundai site in the company’s history. 

His eyes scanned everything. One manager noted that Chung was particularly obsessed with storage facilities. Doesn’t matter how creatively you arrange things, he will always find a better way. On one visit, he discovered the project accounts were being kept in expensive ledger books. He ordered them immediately replaced with cheaper ones. 

The man was managing a billion-dollar project in the desert, and he was worried about the price of the notebooks. That was Chung.

But the inspections were not only about cost. After reviewing plans and progress, Chung always made a point of spending time with the workers regardless of rank. He would play sports with them, he would wrestle them. 

He often won. What mattered was that the workers saw the chairman in the dirt with them the same way President Park had found him sleeping on the ground at a construction site years earlier. The message was the same as the one he had been sending since the rice shop. We’re in this together. I worked beside you. 

In February of 1979, the Jabail Harbor was officially opened. Hyundai had finished 10 months ahead of schedule. Total. The total labor was two and a half million man-days. It would later be described as the largest-scale project since the Normandy landings in World War 2; the numbers that followed tell the rest of the story. 

Hyundai earned $2 billion in gross income from foreign construction projects in 1979 alone. It was now the world’s fourth-largest construction company. Revenue had grown over a hundredfold in five years. Between 1977 and 1979, nearly 300,000 Korean workers from two dozen companies were sent to the Middle East. 

But Hyundai outpaced every other Korean company in project size, profit, and ambition.

One senior Hyundai executive captured the scale of what had just happened. It was the first time in our 5,000-year history that Korea was making big money.

The president of the Korean Exchange Bank called Chung personally after the capital started flowing home. He told Chung that the deposits coming from Jubail were the single largest amount of foreign currency the Republic of Korea had received since its founding. 

For more than two years, every month, Hyundai sent tens of millions of dollars back to South Korea. That money became a decisive factor in stabilizing the country’s currency during a period of severe economic strain. Chung had always resented the accusation that Hyundai had grown fat on domestic government contracts. 

The Middle East became his answer to those critics. No Korean government connections helped you win a contract in Saudi Arabia. You won on price, on capability, and on a willingness to do what the competition would not do. Hyundai had all three.

The man with a sixth-grade education who could not read an American blueprint in 1957 was now running the largest construction project in history, halfway around the world. 

People had started calling him the Bulldozer. He accepted the name, and in a way he kind of liked it, but with one correction. He was not reckless. He was not impulsive. He was, as he put it himself, the Thinking Bulldozer. 

He wrote, “If you search for a method, it will come to you. If you can’t come up with a method, it’s because you didn’t think hard enough. Before starting any project, I spent an enormous amount of time and effort thinking, analyzing, and planning every detail. When it’s time to implement these plans, it may look like I’m working off the cuff or even being reckless, but if I hadn’t sat down first and planned everything out, the Hyundai Group of today would never have existed.” 

The Olympics

By the mid 1980s, Hyundai was doing over $10 billion in annual sales and was the largest company in Korea. Chung was approaching 70 and he was nowhere near finished. But there was a gap between what Korea had become and how the world saw it. Korea had built the highways, the ships, and was now selling cars in America. 

It was an economic force by any measurable standard, but the world still treated it like a pawn in the Cold War, and much of that world still shunned it because of its history and proximity to communist states. Despite everything Korea had achieved, the world still didn’t take it seriously. 

South Korea needed a stage. 

So in October of 1979, just three weeks after President Park’s assassination, the mayor of Seoul formally announced that this city would bid for the 1988 Olympics. The reaction in Korea was a mess. The economic planning board opposed it. 

South Korea was in an economic downturn, and the required investment would be staggering. Even the mayor himself started having second thoughts, and most government officials quietly pulled back from the effort because they knew their reputations would be dragged down with whatever happened next. 

Their calculus was ugly either way. Korea would probably lose the bid to Japan, which would be embarrassing, or Korea would somehow win the bid and then fail to deliver on the games, which would be much worse. Somebody had to take the lead effort and nobody wanted to. The mayor publicly asked a business leader to take the job. 

Chung got the call, and just like that, he was named chairman of the Olympic Bidding Committee. 

He approached it the same way he approached every other big job he had ever taken on. This was a chance to show the world what modern Korea actually looked like, which was the same promise he had made when he named his company Hyundai 40 years earlier. 

The bidding session took place at the 84th session of the International Olympic Committee in Baden-Baden, Germany in September of 1981. 

The choice came down to Seoul or Nagoya. 

Everyone assumed Nagoya would win. Korea was still considered a backward country, possibly even incapable of hosting an event this size. Japan had already hosted the Olympics in 1964 and knew what it was doing. The Japanese delegation was so confident of victory that they scheduled their victory banquet before the vote. 

Instead of spending their time selling the committee on the merits of Nagoya, they spent much of it disparaging Seoul. Chung did the opposite.

He rented three houses in Baden-Baden as his base of operations and pressed Hyundai’s Frankfurt office into service as backup.  

His team compiled personal dossiers on every IOC delegate, and over the next 10 days, he met with each one of them one by one. 

He lobbied representatives from developing nations to support one of their own. He lobbied the developed nations to support the underdog, and he kept emphasizing one simple fact: Seoul’s facilities were already 60% complete. Nagoya’s plans were still on paper. 

Then the Japanese tried to sabotage the Korean bid. They planted a question through a Soviet gymnastics official asking whether Korea was even financially stable enough to host the games. But Korea had brought Yoo Chang Soon with them, the former Deputy Prime Minister for Economic Planning. 

He dismantled the question on the spot and exposed the Japanese for having planted it. It was a tactical disaster. 

And then there was the gift question. The Japanese handed out expensive watches to the IOC members. Chung thought that kind of extravagance was going to read like an attempt to buy the vote. 

So he did something different. He had fresh flowers delivered to each delegate’s room every single morning with a personal note of appreciation attached. This softer approach worked. Seoul won 52 to 27. 

Chung called it “the miracle of Baden-Baden.” Korea then spent close to $6 billion on the games themselves, and you could see the country’s ambition in every line item. 

New stadiums, athletic fields, and housing for all athletes were built. Hyundai built a new subway system. Hyundai also built a new highway called the Olympic Expressway. The Han River got cleaned up. Parks were built along the waterfront, and the south side of the river was opened for development and quickly became Seoul’s most expensive real estate. 

On September 17th, 1988, the games opened. Over 150,000 visitors attended. It was the largest Olympics in history. 

Korea threw its coming-out party, and the whole world came. 

The Family

To understand Chung, you have to understand how he ran his family. He had eight sons and one daughter, and every one of his sons shared the same middle name: Mong. It’s the Korean word for dream. They were, in a very literal sense, the living trademark of the company.

From childhood, Chung expected every one of them to join the business, and every one of them did. 

He was strict with his kids in a way that most of us would find extreme. He gave them a very small allowance. He would not let them be driven to school in the family cars. They took the bus just like everyone else. 

His reasoning was characteristically blunt. 

“You’ll only appreciate the happiness of riding in a car you bought with your own effort. If you first experienced the inconvenience of a crowded bus as a child.” 

Every morning at six o’clock, all of his sons and their wives arrived at the family home for a traditional breakfast of soup, rice, and fresh fruit. 

The sons and Chung would sit together and discuss business. While the wives met in the adjacent room to discuss family matters. 

At seven sharp, Chung would gather his sons, lead them outta the house, and then they would all walk two and a half miles to Hyundai headquarters in downtown Seoul in silence. There was no conversation. There was no small talk, just a formation of men moving through the city, toward the company they all worked for. 

Chung did this every working day for nearly 30 years. His wife, Byun Joong-suk, held the whole family together while Chung was out building the empire. And there’s a story about her that tells you almost everything you need to know about the kind of woman she was. 

One night, two thieves broke into the Chung household. They went into her room, tied her up, put a quilt over her head and demanded her valuables. She calmly threw the quilt off and said to them, “You seem to know whose house you’re breaking into. I’m not going to make any noise, so let’s talk and try to find a compromise.” 

The thieves, startled, became a lot less aggressive. She gave them a watch she had been saving as a wedding gift for one of her sons, along with a small amount of cash. The thieves demanded to see the American dollar she had hidden away and the golden rice bowls they believed she must own. She applied calmly that they had never seen any dollars in the house, and she had never known anyone in Korea who ate out of golden rice bowls. 

Frustrated, the thieves left. After they left, she walked into the next room and woke her husband.

She had concealed his presence in the house the entire time. The family did not escape tragedy. Chung’s eldest son, Mong-pil, was killed in a car accident on the expressway, which was the very highway his father had built. 

His fourth son struggled for years with depression and the pressures of running one of Hyundai’s subsidiaries; in 1990, he took his own life. These losses devastated Chung, but he did what he always did. He kept going. 

In his final years, as his health declined, Chung divided Hyundai among his six surviving sons. 

Each one received at least one company. The unified empire that he had spent a lifetime building would not survive him as a single entity, but the fragments, all of them, would carry his name across the world. 

The Political Maelstrom

There’s a pattern in Chung’s life that you’ve probably picked up on by now. 

He builds something, someone or something takes it from him, and he builds something else, something bigger. The Japanese took his rice shop, the Japanese took his auto shop. 

Inflation nearly took Hyundai during the Goryeong Bridge. The oil crisis nearly took the shipyard, and every single time Chung’s response was exactly the same. He refused to stop. 

But in the early 1990s, something different happened. This time, the force that came for him was not a foreign colonizer, a global market, or an inflationary shock. 

It was his own government. Chung had always had an uneasy relationship with Korean politics. He had survived multiple regime changes, watched governments rise and fall, and paid tribute to every single president who held the office during his career. Not because he wanted to, but because that was how the system worked. 

He later confessed this publicly. He and other major Korean business leaders had made regular payments to Korean presidents as routine for decades. Under Park Chung-hee, it was roughly 500 million won, twice a year. Under the presidents who followed Park, the payments continued. 

Every major company did it. It was Korea’s operating system at the time, and everyone in the system understood the rules. But when President Roh Tae-woo took power in the late 1980s, the rules changed. Roh started curbing business expansion, restricting credit and trying to force major companies to narrow their operations. 

Chung saw these policies as dangerous and anti-business at a time when Korean companies needed to expand, not contract. And he said so, and he did it publicly and loudly. 

He criticized the Roh government for how it was handling the economy. He said there was no credible political leaders in Korea. 

In Korean politics at the time and politics today, frankly, you did not say these things about the sitting president and walk away unscathed and Roh did not let them. The government charged Chung with tax evasion over stock transfers he had used to reorganize his holdings, which was a practice that every major Korean conglomerate was using. The government came after him for hundreds of millions of dollars in back taxes, and they threatened to cut off Hyundai’s access to bank loans, which would’ve been a death sentence for the company. 

Chung fought back, but eventually he was forced to pay $181 million, but something inside him shifted. 

In January 1992, at age 76, Chung Ju-yung announced that he was running for President of Korea. His reasoning was direct. “We have a pessimistic future with the present economy, and I have to do something about it.” 

He believed very sincerely that running a government was no different than running a company. What Korea needed was sound planning, efficient management, rational allocation of resources, and tight fiscal controls. Those were all things Chung had spent his entire life doing. If he could build highways and shipyards and cars, he could build a better government. 

He founded the United People’s Party. An army of Hyundai employees joined the campaign. In the March National Assembly Elections, the brand new party won 31 seats. Not bad for a party that had not existed a few months earlier. Chung campaigned tirelessly, crisscrossing Korea in his helicopter, making the same case to anyone who would listen. 

The government had grown too large. It was interfering too much in business. It had lost control of the economy and run out of ideas. In the December presidential election, Chung ran against Kim Young-sam of the ruling party and the veteran opposition leader, Kim Dae-jung. When the votes were counted, Kim Young-sam won with 42%. Kim Dae-jung came in second with 34%, and Chung received 16%. He had lost, and it was one of the very few fights in his entire career that actually ended in defeat. 

The consequences were immediate and severe. Kim Young-sam’s new government charged Chung with illegal campaign financing. Alleging that corporate funds from Hyundai Heavy Industries had been funneled into the campaign. 

Chung was interrogated for 12 hours. More than a hundred Hyundai executives were indicted at the same time.

The Korean development bank froze Hyundai’s loans, tax audits multiplied, government contracts dried up. One analyst at the time said no government official would even go out for a drink with Hyundai executives anymore. 

Of course, Chung was convicted. He received a three-year suspended sentence, and he never actually served prison time. The court cited his advanced age, his contributions to national development and his ongoing business activities. 

He later admitted a truth that he had always known, but probably underestimated. “There is one thing I fear the most as a business leader: regime change, whether it’s a coup d’état or a Democratic election, private businesses are always the first target.” 

The presidential run had probably been doomed from the start, but it was sincere. No person had done more to build Korea. The man who had built the highways and the shipyards and the nuclear power plants genuinely believed that he could build a better government and the country he had built punished him for asking to try. 

But here’s the irony. They could not actually punish him. Sure they could in optics, but not in any meaningful way. He had been convicted and he was supposed to go to prison, but he couldn’t because he was too important to the Korean economy to be really punished. 

The 1,001 Cows

On June 16th, 1998, Chung Ju-yung, now 82 years old, climbed into the lead vehicle of a convoy of 50 trucks. 

Every truck was loaded with cattle. 500 head of Korean Hanwoo beef cows. All of them raised on his beloved Seosan farm. The farm he had reclaimed from the Yellow Sea. The convoy rolled north toward the most heavily militarized border on earth. 

Chung was the first South Korean civilian to cross the DMZ since the division of Korea. 

Four months later in October, he came back with 500 and one more. 1001 cows total. 

One cow for the one he had stolen from his father 65 years earlier and 1000 more for interest. The man who had run away from a peasant farm with nothing, had returned as the richest person in Korea to pay back a debt of conscience that had been accruing for most of a century in the only currency that made sense. 

Chung came home from that trip physically exhausted. He was frail and his health was failing, but he was also proud. He had accomplished something that diplomats had been unable to accomplish for decades. 

He had opened a door that two governments and a world of Cold War politics could not open. He had built a commercial bridge, however briefly, between the two halves of a divided nation, his divided nation. 

Epilogue: The Hyundai Spirit

Chung died in a hospital he had built. The hospital was in a city connected to the rest of the country by a highway that he had paved. The city was in a nation whose economic miracle bore his fingerprints on nearly every beam and rivet, and the date was March 21st, 2001. 

He was 85 years old. Five of his sons were at his bedside. 

When Chung was born in 1915, Korea was a Japanese colony. The economy was agrarian. Rural poverty was almost universal. Per capita income, somewhere between $50 and $80. When he died in 2001, South Korea was the world’s 11th largest economy. Per capita GDP was roughly $11,000. That is a 140-fold increase in a single human lifetime. 

Chung did not build that alone. Millions of Korean workers, dozens of other entrepreneurs and several presidents all contributed, but no single private individual had a larger hand in what happened. 

In his living room was a piece of calligraphy he did himself that read “diligence will overcome all difficulties.” As far as anyone could tell that was his most deeply held belief. A description of how he actually lived each day. One of his senior executives described what it was like to work for him in the early years. 

“I worked 16 hours a day, seven days a week for 16 years, no holidays. If the chairman was working, so were we. We didn’t mind however. We learned from the chairman. We respected him. He was always very demanding, but he was a good teacher.” 

Any honest accounting of Chung has to hold several truths at once. He genuinely believed in equality, but he also ran his company like a tyrant. He believed all workers were equals, but he could be ferocious with those who disappointed him. He championed Korean self-reliance while at times depending on government patronage. 

He publicly denounced corruption while having paid tribute to every president who held office during his career. He built institutions that lifted millions of people of poverty while presiding over labor conditions that ground many of his workers down. 

It’s true of any of us that if you hold a microscope up, there are all of these contradictions. 

Chung Ju-yung was not a saint. He was a builder, and the distinction matters. 

In the final pages of his autobiography, Chung wrote, “I have lived my entire life driven solely by the satisfaction derived from hard work. I buried myself in work because I enjoyed the very act of working. And having lived thus, my soul became one with work.” 

And then he wrote this: “I feel an infinite sense of pride that I’ve contributed my share to this country’s breakthrough.” 

Here’s the detail that stays with me, and this is the detail I want to leave you with. Chung’s father died in 1946 before the shipyard, before the expressway, before Hyundai was even anything other than a small outfit with a hopeful name and a sixth-grade dropout running it. 

The man who had wept in the dirt in a Seoul bookkeeping academy and told his teenage son he was a nobody never lived to see what his son became. And Chung was still thinking about him decades later. In the introduction to a section of his autobiography about the Seosan farm he had reclaimed in the Yellow Sea. 

He wrote, “I’m overwhelmed with grief that my father has passed away before seeing this place. But I can soul myself in the belief that were he here to be looking down from heaven, he would be heartened to behold the vast farm created by the son of a man who lived his entire life as a poor farmer.” 

Because in the end, after all the highways and the ships and the cars and the billions of dollars and the political disasters and the cattle drives across the DMZ, after the Olympics and after the desert, and after the shipyard, and after the dam and the bridge and the rice shop and the bedbugs and the bicycle, he did not know how to ride after all of it, Chung Ju-yung was still thinking about his father. Still trying to prove something to a man who had wept in front of him in a bookkeeping academy in Seoul and called him a nobody. He was not a nobody. He was Chung Ju-yung, and he helped build the modern world. 

Thank you for listening and learning with me. 

Resources

Born of this Land: My Life Story

The post [Outliers] Chung Ju-yung: The Hyundai Founder Who Put a Country on His Back  appeared first on Farnam Street.

Play

Featured clips

07:26

The 3 Principles for Strong Decision-Making

11:36

One Cold Email to Sam Altman that Changed Everything

21:56

How to Build Resilience to Failure

52:45

Can AI-Only Law Firms Exist?

Available Now: YouTube | Spotify | Apple Podcasts | Transcript

In this episode, Winston explains how AI is reshaping legal work, why judgment becomes more valuable as routine work gets automated, and how to build the prioritization muscle required to move faster, stay focused, and make better decisions when everything is changing.

He also shares the operating principles behind Harvey’s growth: make decisions faster, treat most choices as two-way doors, use stress to build resilience, prioritize the one thing that matters most and the Google Doc that drives it all. 

Harvey began with a simple test: take real legal questions, run them through GPT-3, and ask experienced lawyers whether they would send the answers with zero edits. On 86 out of 100 questions, three out of three attorneys said yes.

This is a conversation about AI, law, speed, resilience, and building in a world where the bar keeps getting higher.

+ Check out the Granola Notes

The post Winston Weinberg: Speed, Stress, and Better Decisions appeared first on Farnam Street.

Greg Brockman is the co-founder and President of OpenAI, the company behind ChatGPT and GPT-5. He was the first engineer at Stripe before leaving in 2015 to help start OpenAI.

In this rare conversation, Greg goes inside the moments that built, and nearly broke, the most important AI company in the world.

Play

Featured clips

06:05

Breakthrough Moments at OpenAI

15:44

Sam Altman's Firing

32:22

Is AI Going Parabolic?

40:38

Why ChatGPT No Longer Shows Reasoning

01:04:44

AI and Job Loss

Available Now: YouTube | Spotify | Apple Podcasts | Transcript

Greg explains how the original Napa offsite produced the three-step technical plan OpenAI has followed for a decade and the real reason OpenAI had to abandon its pure nonprofit structure. He then walks through the 72 hours after Sam Altman was fired: where he was when he got the board call, why he quit the same day, how the “Phoenix” backup company was designed at Sam’s house the next morning, and the moment Ilya Sutskever’s tweet changed everything.

From there, the conversation turns forward: whether we’re in a global AI race, how much of OpenAI’s own code is now written by AI (“it’s hard to know what percent is not“), why OpenAI stopped showing reasoning traces, what a compute-constrained world means for who gets access to AGI, and Greg’s answer to the question everyone is really asking: What happens to your job?

+ Check out the Granola Notes.

The post Greg Brockman: Inside the 72 Hours That Almost Killed OpenAI appeared first on Farnam Street.

For years, he was the protege of legendary entrepreneur Brad Jacobs (who built eight multibillion-dollar companies from scratch). Today, Mario leads 40,000 people with a management style shaped by what he learned. It’s a rare combination of smart capital allocation, discipline, deep listening, and a genuine belief in human potential.

Mario shares how he uses real-time data and second-order thinking to make better decisions faster, how he hires and develops A players (and the test that instantly tells you who isn’t one), how he runs meetings that pull the best thinking out of the most junior person in the room, what he learned working alongside one of the best entrepreneurs of our generation, and why ego, complacency, and small goals are quietly capping everything.

I hope you enjoy this conversation as much as I did.

Play

Featured clips

03:38

Letting go of perfection and understanding how people operate

19:41

Learning from frontline employees and feedback loops

49:27

Analytical approach to risk and decision-making

01:02:12

Creating a high-performance environment through belief and feedback

Available Now: YouTube | Spotify | Apple Podcasts | Transcript

+ Check out the Granola notes.

Tiny Lessons

1. “If you set big goals, you achieve great things. If you set small goals, you achieve small things.”
2. “Ego is thinking you’re so good at something that you stop learning.”
3. “I worry if I’m in a team meeting and everybody’s aligned on a solution.”
4. In meetings, senior people speak last.
5. “A lot of leaders spend time on the output. You’ve got to spend time on the inputs.”
6. Tell people what to do but not how. When you tell them how, you set the ceiling at your best idea not theirs.
7. If somebody quits and your feeling is ‘whew, that’s good news’ — you should have gotten rid of them long ago.
8. “Most people think at the speed of speech. You can train your mind to go much faster.”
9. “When I give constructive feedback, I never make it subjective. I always ground it on data.”
10. “A lot of what people flag as potential issues ends up being why somebody fails at work.”
11. Yearly performance reviews are theater. “Performance reviews should be done on a daily and weekly basis.”
12. Don’t stop at the first answer. Double and triple-click.
13. The three variables that matter most when hiring: “Are they good at what they do? Are they serious about work? Are they kind?”
14. “It’s okay to have some friction.”
15. “Disagree all you want. Just focus on the problem, not the person.”
16. “Winning breeds winning.”
17. “Life is short. You’ve got to set big, big goals.”
18. “If you want to create alpha, don’t settle for a local maximum.”
19. “My hobbies are my work and my kids.”
20. “Every morning you have a choice: do the job the way you always do it, or learn new things.”
21. The only competition is yourself. “The bar isn’t beating the competition. The bar is: are we achieving the best we can achieve?”
22. “Work is part of life, the same way life is part of work.”
23. “When you show someone you believe in them, they have much higher odds of being great.”
24. “Every person in their own way is beautiful. Your job is to find how their mind works, not flatten it.”
25. “The biggest lever in business is who’s on the team and how they work with each other.”

The post Mario Harik: Playing to Win  appeared first on Farnam Street.

Liemandt dropped out of Stanford to build Trilogy, became the youngest member of the Forbes 400, then vanished from public life for 25 years. But he didn’t stop building. Through ESW Capital, he quietly became one of the most prolific acquirers of software businesses in the world.

Now he’s back with a $1 billion bet that AI can help kids learn ten times faster, and that school as we know it is broken.

Listen and Learn: YouTube | Spotify | Apple Podcasts | Transcript

Play

Featured clips

07:01

What makes Alpha School different

35:37

Can you change the education system?

01:13:25

AI Monitoring

01:51:40

Physical vs. virtual learning

At Alpha School, students spend two hours a day on AI-driven instruction and score in the top 1% on standardized tests. The rest of the day is devoted to what Liemandt calls life skills: leadership, entrepreneurship, teamwork, and real projects that kids actually care about. There are no lectures, and kids don’t move forward until they master the material.

He argues the traditional classroom was designed for a narrow slice of students and wastes everyone else’s time. The fix isn’t more money or better teachers; it’s rebuilding from scratch around mastery, motivation, and AI. The role of a ‘teacher’ dramatically changes.

This conversation covers everything from sleeping on the floor at Trilogy to being mentored by Jack Welch to the thinking behind Alpha School.

I hope you enjoy this conversation as much as I did.

The post Joe Liemandt: Alpha School and the Future of Education  appeared first on Farnam Street.

When he quit, he had no plan, no income, and two newborn kids.

His brother Bob noticed that New Brunswick potato farmers were shipping raw potatoes to Maine for processing into frozen fries, then buying the finished product back. The McCain brothers pooled $100,000 in family money, assembled capital from five different sources without giving up equity, and built a plant on a cow pasture in Florenceville.

By the time he died in 2004, McCain Foods operated 57 factories across six continents, sold in 160 countries, and processed a million pounds of potato products every hour. 

This is the story of Harrison McCain and McCain Foods.

Listen and Learn: YouTube | Spotify | Apple Podcasts | Transcript

Tiny Lessons

1. “The main difference between the entrepreneur and the manager is attitude.”
2. Reputation is a form of capital.
3. When everyone says it can’t be done, and you see why it can, you’ve found an opportunity that won’t last.
4. Don’t argue, demonstrate.
5. “You bet the bundle every year, year after year. If you’re wrong once, you’re out.”
6. “There is no shame in hiring the wrong person. There is, however, shame in keeping him.”
7. “He could hold a meeting in his own mind, without need for others to help make a decision.”
8. If you’re competing against someone who thinks settling lawsuits is part of the fun, you are at a serious disadvantage.
9. “If you do not go after the business, someone else always will.”
10. The first time someone says no is rarely the ultimate no. Assume all the risk yourself, and the other side has nothing to lose.
11. A hundred percent of the business is better than ninety-six. A successful business owner always looks into the details.
12. On saying no: “It is very difficult the first time, not so difficult the third time, and after the fifth time you can say no anytime it needs to be said.”
13. “He outperformed everyone’s expectations, except his own.” The only benchmark that matters is internal.
14. If you want something, make it happen.
15. Making money is the easy part; giving back to your community is a higher bar.
16. No job is too small. No task is below you.
17. The boldness that gets you into the room is the same boldness that can get you thrown out of it. Know when to dial it back.
18. “He seldom had time or inclination for self-doubt.”
19. “Harrison was never one to draft a memo when a phone call or a brief visit would do.”
20. People follow energy before they follow strategy.
21. Learn to say no. “It seems to me the people in business who have the hardest time to get things done are those who can’t bring themselves to say no. They can say maybe, they can say I’ll see, they can say later, but sometimes there is only one answer and it is a simple, straightforward, no.”
22. “You will need to work a lot faster if you ever want to be successful.”
23. “Harrison would say he was going to be the largest french fry producer in the world. I used to roll my eyes. I didn’t think it was possible ’cause the Americans were so big. But he had great single-mindedness of purpose. He put the blinders on and he was headed right that way.”
24. Do everything with enthusiasm.
25. Guard your integrity like it’s the whole business. When a marketing employee swiped a trademark from Coca-Cola. Harrison sold it back for $1. “We are not goddamn crooks.” He said, “How could we make money on that?” He didn’t even consider it.

Still curious?

I made ~40 pages of my research notes available here.

The post [Outliers] The Potato Billionaire | Harrison McCain appeared first on Farnam Street.

In this exclusive interview, his first as CEO, we explore his approach to capital allocation, isolating variables, and building a business designed for long-term growth.

Play

Featured clips

12:06

Your Work Ethic is in Your Control

32:00

What Happens Post Business Acquisition?

47:10

Identifying Talent

01:15:17

Work and Life Harmony

Listen and Learn: YouTube | Spotify | Apple Podcasts | X | Transcript

Discover why effective investing begins with minimizing losses, how waiting for perfect information can result in missed opportunities, the strategies Brookfield uses to manage market risk while maintaining upside potential, and the key insights he gained working alongside Bruce Flatt.

This discussion goes beyond investment strategies, offering a glimpse into Connor’s perspective on decision-making in an uncertain environment, mentorship, culture, positioning, and talent.

It’s a rare inside look at the operations of one of the world’s most tight-lipped firms.

Enjoy! 

Tiny Lessons

1. “When something feels 90% right, do the deal. The most important thing is that you do 10 of them.”
2. If you can do the work but can’t explain the work, it doesn’t matter that you can do the work.
3. When you stop asking for permission, you start to trust yourself.
4. Working hard isn’t just about grinding more; it’s about being available for others.
5. “There is no limit to how much you can care about things.”
6. In a crisis, don’t mourn the damage. Instead, focus on capitalizing on the opportunity that just opened up.
7. Overbuild happens in every asset class, every cycle, everywhere. The question is, how do you protect yourself?
8. Isolate every bet.
9. You can’t eliminate risk, but you can contain it.
10. Cash is like oxygen, you don’t realize you need it until you can’t live without it.
11. When you know the answer, do it now.
12. Keep your eyes on the horizon. “We learn a lot from the past, but we don’t spend a lot of time dwelling on it.”
13. “There’s a false degree of precision in today’s world of Excel. The reality is that so many times you just have to overlay good judgment, and you have to recognize that there are certain things outside of your control that your Excel model will make seem like a certainty, but aren’t.”
14. Working hard is 100% in your control.
15. Protect your downside. “If you underrate the worst-case scenario, the base case or the expected case will end up being very attractive.”
16. Liquidity is consistently undervalued.

+Want more? Check out our episode with Bruce Flatt

* Note: ‍Shane and guests may hold positions in assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. Nothing in this conversation should be considered investment advice, financial guidance, or a recommendation to buy or sell any security. Always do your own due diligence or consult with a qualified financial advisor before making investment decisions. 

The post Brookfield CEO Connor Teskey: AI Infrastructure, Data Centers, and the Future of Investing appeared first on Farnam Street.