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Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and the Art of Gambling (#466)

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“If you don’t know what you’re doing, you can be very creative about it.”

— Richard Koch

Richard Koch (@RichardKoch8020) is an entrepreneur, investor, former strategy consultant, and author of several books on business and ideas, including four on how to apply the 80/20 principle in all walks of life.

His investments have grown at 22 percent compounded annually over 37 years and have included Filofax, Plymouth Gin, Belgo, Betfair (the world’s largest betting exchange), FanDuel, and Auto1. He has worked for Boston Consulting Group and was a partner at Bain & Co. before joining Jim Lawrence and Iain Evans to start LEK, which expanded from three to 350 professionals during the six years Richard was there.

In 1997, Richard’s book The 80/20 Principle reinterpreted the Pareto Rule, which states that most results come from a small minority of causes, and extended it beyond its well-known application in business into personal life, happiness, and success. The book, substantially updated in 2017, has sold more than a million copies, been translated into roughly 40 languages, and become a business classic. It was named by GQ magazine as one of the top 25 business books of all time.

His new book, published on August 13, 2020, and available in the US in December, is Unreasonable Success and How to Achieve it. In it, Richard charts a new map of success, which he says can propel anyone to new heights of accomplishment. High success, he says, does not require genius, consistency, all-round ability, a safe pair of hands, or even basic competence—but it does require the nine key attitudes and strategies he has identified.

Please enjoy!

Listen to the episode on Apple Podcasts, Spotify, Overcast, Stitcher, Castbox, Google Podcasts, or on your favorite podcast platform.

Brought to you by Boll & Branch, Vuori Clothing, and Athletic Greens. More on all three below. 

The transcript of this episode can be found here. Transcripts of all episodes can be found here.

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#466: Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and The Art of Gambling

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What was your favorite quote or lesson from this episode? Please let me know in the comments.

SCROLL BELOW FOR LINKS AND SHOW NOTES…

Want to hear another episode with an investor who has a unique perspective on the world? Listen to my conversation with Howard Marks, in which we discuss unintended consequences, the state of the COVID-19 economy, higher-signal sources of information, crowded versus uncrowded opportunities, and much more.

#431: Howard Marks on the US Dollar, Three Ways to Add Defense, and Good Questions

SELECTED LINKS FROM THE EPISODE

  • Connect with Richard Koch:

Website | Twitter

SHOW NOTES

  • Richard begins with a non-story story involving wines and spirits, chat show reinvention, Michael Parkinson, Windsor Castle, and David Bowie. [08:33]
  • Why I’ve made the rare exception for Richard with my “I don’t give quotes for books” policy. [10:10]
  • What secrets were revealed to Richard in Oxford’s Bodleian Libraries? [11:02]
  • What’s Richard’s own peculiar talent, and how did he discover it? [16:35]
  • How is it possible for Richard to be somewhat hopeless with numbers, yet have such a good investing track record? Here’s where the star principle comes into play. [19:34]
  • How did Richard decide on a bet size of $1.5 million in a certain investment? [29:02]
  • In his book The Star Principle, what does it mean when a business can “segment itself?” [33:42]
  • What are the principles that govern the constitution of Richard’s own portfolio? [36:42]
  • Richard fills us on the circumstances surrounding his firing from BCG and what happened afterward when he met Bill Bain. [41:10]
  • What is the growth share matrix (aka the Boston box)? [51:46]
  • What did Bain and Company appreciate about Richard that was not appreciated at BCG? [55:44]
  • What was the result of being asked to behave like a partner at Bain and Company nine months before Richard could officially be announced as one? [1:09:32]
  • What has Richard picked up from the book Perspectives on Strategy by BCG that makes it a recommended read? What are some additional titles that make the cut? [1:13:42]
  • Why does Richard consider principles better than knowledge, and how did his book The 80/20 Principle come to be? [1:17:57]
  • What makes Richard most happy? How does he ensure he’s allocating his time and energy appropriately to optimize that happiness? [1:32:21]
  • The two types of journaling I enjoy compared to Richard’s journaling style. [1:38:05]
  • Who has more fun in life: adventurers or controllers? [1:43:12]
  • What was the spark that prompted Richard to write his new book, Unreasonable Success and How to Achieve It? [1:45:58]
  • How does Richard define success, and what are the nine landmarks he’s found present in 20 people he considers successful? [1:53:37]
  • Landmark one: self-belief (and what you might do if you lack it). [1:56:50]
  • Landmark two: Olympian expectations. [1:59:45]
  • Landmark three: transforming experiences. (And if someone hasn’t had a transforming experience, is it possible to engineer one?) [2:00:42]
  • Landmark four: one breakthrough achievement (and how this differs from the other landmarks). [2:09:09]
  • Landmark five: make your own trail. [2:14:15]
  • Landmark six: find and drive your personal vehicle. [2:19:13]
  • Landmark seven: thrive on setbacks. [2:22:14]
  • Landmark eight: acquire unique intuition. [2:24:50]
  • Landmark nine: distort reality. [2:25:13]
  • How do these landmarks often reinforce one another? [2:25:56]
  • What Nelson Mandela did to acquire unique intuition during what could have been the bleakest time in his life. [2:28:34]
  • The annual question Richard asks himself in lieu of committing to new year’s resolutions. [2:36:09]
  • Parting thoughts. [2:38:43]

PEOPLE MENTIONED

The Tim Ferriss Show is one of the most popular podcasts in the world with more than one billion downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.

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Rick Griggs
Rick Griggs
3 years ago

Truly one of the books that’s had a huge impact on my success. My copy has over 20 index tags, 10 Post-It pages of notes, and LOTS of highlighting.

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Troy
Troy
3 years ago

This is one of my favorite books. So crazy the great Tim Ferriss covered this obscure book right now….. I actually just covered this on my podcast as well, a few days before Tim without knowing it.

Just like dingos and dogs have 4 legs but are unrelated, great minds think alike. Really liked this episode sir.

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Nora K
Nora K
3 years ago

Really interesting podcast episode!
Just a little fact checking note: Nelson Mandela was actually imprisoned for 27 years, not just 17, which makes his resilience all the more remarkable.
In any case, it doesn’t really matter for the flow of this conversation.
I loved how long and detailed this episode was, and how eloquently Richard Koch speaks about his own path.

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Gareth
Gareth
3 years ago

Gotta be honest here, I felt like this was more 2 hour commercial for his new book. Also can’t get behind his assumption based research regarding successful figures in history. One of the very few misses for the podcast.

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Kevin Brennan
Kevin Brennan
3 years ago

Thoroughly relaxing to listen to, and thoroughly relaxing life principles!

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tk3
tk3
3 years ago
Reply to  Kevin Brennan

Agree!! however not so obvious at first

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Phil Brown
Phil Brown
3 years ago

A Shakespeare quote comes to mind during part of this podcast: “They say, best men are moulded out of faults, And, for the most, become much more the better For being a little bad”.

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Anne James
Anne James
3 years ago

What a productive interview, Tim Ferris! Richard Koch is undoubtedly a genius with all the factors in his new book to have made him successful but he also made it clear any of us can get there via a mentor or 10,000 hours at our craft or business venture. His journaling and inventory of his own 20 percent of time spent on most productive time was a reminder to practice taking our own inventory and refining our road to meeting our goals. Can’t wait for his new book.

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Pascal
Pascal
3 years ago

Really good and inspiring podcast. Any chance you could cover “the benefits of journaling“ in more depth in another podcast”? Liked the part where you and Richard described how you integrate it in your life.
Thanks,
Pascal

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Claudine Chicheportiche
Claudine Chicheportiche
3 years ago

Ok this conversation was BRILLIANT, just like the two minds of Tim & Richard.

Richard is the perfect example of having an upper right brained thinking preference i.e. using abstract concepts, big visions, connecting disparate concepts, etc. as a means to perform logical analysis. Frequently, logical analysis is a numerical and qualitative thinking style, and I LOST IT when Richard explained he wasn’t good with numbers and then dug into this topic.

This type of conceptual logical analysis is rarely discussed and I’m pretty obsessed with this theme– I love it. It’s deep, inspiring, and fascinating!

Thank you Richard for your insights & vision!
Thank you Tim for drawing them out in your most excellent long form!

About 3/4 way through, I pulled over in my car, called my nearest bookstores to check stock, then went straight to buy Richard’s new book.

En route I decided that I will start a revolution using Richard’s 9 key principles. [Yes, very ridiculous, I agree]

THEN I got to the part where Tim suggested Richard run the competition to see if others could implement the 9 themes to achieve unreasonable success. Don’t worry, I don’t need a competition. I’m just going to do it!

Time will reveal all! What an episode.

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Samantha
Samantha
3 years ago

Hi Tim, just wanted to say that I “re-discovered” your content again recently (I’ve been following your content on-and-off since 2007 when the 4-hour work week came out) and thoroughly enjoyed this interview with Richard Koch. I’ve always been more qualitative rather than quantitative and felt “handicapped” that I wasn’t good with numbers even though I really enjoyed learning about businesses, investments and strategy. I also recently questioned whether I had the aptitude for investments, businesses and strategy because I wasn’t too good with numbers. Am very heartened and encouraged by this and feel like I can too carve out a niche for myself.

Have gone down the rabbit hole of reading Richard’s books and have replayed this podcast one too many times.

Thanks for this!!

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Usman Gondal
Usman Gondal
2 years ago

Hi Tim,

“I just think there are certain meta principles. And I think there are probably only about half a dozen of them.”—Richard Koch

how can I know what these half a dozen meta principles are?

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Mike Johnson
Mike Johnson
1 year ago

Hey Tim. I would love to hear an interview with Richard Rumelt if you can swing it. I believe he’s BY FAR the best strategic thinker out there today, and the interviewers I’ve heard him speak with haven’t been able to mine the depths of his knowledge quite like you’d be able to 🙂

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