“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.
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What was your favorite quote or lesson from this episode? Please let me know in the comments.
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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.
SELECTED LINKS FROM THE EPISODE
- Connect with Richard Koch:
- Unreasonable Success and How to Achieve It by Richard Koch
- The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch
- Windsor Castle
- David Bowie 2002 Interview with Michael Parkinson | YouTube
- Bodleian Libraries | University of Oxford
- Cours d’Économie Politique. Professé a l’Université de Lausanne. by Vilfredo Pareto | AbeBooks
- Pareto Principle | Investopedia
- Interview: Richard Koch, Author of The 80/20 Principle | Boing Boing
- Lenin, Stalin, and Hitler: The Age of Social Catastrophe by Robert Gellately
- Boston Consulting Group (BCG)
- The Star Principle: How It Can Make You Rich by Richard Koch
- CVC May Bid for Gambling Firm Betfair | The Guardian
- L.E.K. Consulting
- Horse Racing Cards, Results & Betting | Racing Post
- Apple’s Segmentation Strategy, and the Folly of Conventional Wisdom | O’Reilly Radar
- Price Simplifying Vs. Proposition Simplifying: Understanding Your Options by Richard Koch | Entrepreneur
- “Up or Out” Policy: What It’s Like to be Pushed Out Of McKinsey, BCG, or Bain | CaseCoach
- Bain & Company
- Goldman Sachs
- Headhunter | Investopedia
- What Is the Growth Share Matrix? | BCG
- Comparison and Usage of the Boston Consulting Portfolio and the McKinsey-Portfolio | Hochschule Aalen
- Vanderbilt University
- The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives Edited by Carl W. Stern, George Stalk, Jr., and Michael S. Deimler
- Good Strategy, Bad Strategy: The Difference and Why It Matters by Richard Rumelt
- Financial Times Guide to Strategy: How to Create, Pursue and Deliver a Winning Strategy by Richard Koch
- Richard Koch: $100 Million Net Worth Without 80-Hour Workweeks | Mergers and Inquisitions
- The Financial Times Guide to Management and Finance: An A-Z of Tools, Terms and Techniques by Richard Koch
- Managing Without Management : A Post-Management Manifesto for Business Simplicity by Richard Koch
- The ‘Law’ That Explains Why You Can’t Get Anything Done | BBC Worklife
- David Yarrow on Art, Markets, Business, and Combining It All | The Tim Ferriss Show #443
- Flow: The Psychology of Optimal Experience by Mihaly Csikszentmihalyi
- What My Morning Journal Looks Like | tim.blog
- The Artist’s Way Morning Pages Journal: A Companion Volume to the Artist’s Way by Julia Cameron
- Outliers: The Story of Success by Malcolm Gladwell
- Forget Liverpool. Hamburg, Germany, Made the Beatles into the Band They Became | Los Angeles Times
- Boris Johnson’s Plan to Get Brexit Done and ‘Hang the Consequences’ | Foreign Policy
- Bob Dylan Meets Woody Guthrie, January 29, 1961 | Music History Calendar
- Song to Woody by Bob Dylan
- Blowin’ in the Wind by Bob Dylan
- Jeff Bezos In 1999 on Amazon’s Plans Before the Dotcom Crash | CNBC
- A Short History of the Falklands War | Imperial War Museums
- Lenin’s Brother: The Origins of the October Revolution | Foreign Affairs
- How Walt Disney Funded His Dream by Richard Koch | HuffPost
- Plane Crazy 1928 Sound Cartoon | Walt Disney Animation Studios
- 5 Facts You May Not Know About Disney and Dali’s Lost Project ‘Destino’ | Park West Gallery
- In Search of Excellence: Lessons from America’s Best-Run Companies by Tom Peters and Robert H. Waterman, Jr.
- Who Were the Mensheviks and Bolsheviks? | ThoughtCo.
- Antifragile: Things That Gain from Disorder by Nassim Nicholas Taleb
- Churchill the Failure: The Paradoxical Truth About the Best and Worst Leaders | Forbes
- Reality Distortion Field | Wikipedia
- A Visit to Robben Island, the Brutal Prison that Held Mandela, Is Haunting and Inspiring | Smithsonian Magazine
- Guidance from the Father of Living an 80/20 Life: An Interview with Richard Koch | Live Your Legend
- 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]
- Michael Parkinson
- David Bowie
- Vilfredo Pareto
- Adolf Hitler
- Vladimir Lenin
- Joseph Stalin
- Antony Ball
- Adrian Mitchell
- Phil Hulme
- Roy Barber
- Egon Zehnder
- Bruce Henderson
- Bill Bain
- Ralph Willard
- Mitt Romney
- Fred Reichheld
- Mark Allen
- Richard Burton
- Nicholas Brealey
- Northcote Parkinson
- Mihaly Csikszentmihalyi
- Bob Dylan
- Otto von Bismarck
- Winston Churchill
- Herb Asquith
- Malcolm Gladwell
- John Lennon
- Bill Gates
- Jeff Bezos
- Marie Curie
- Leonardo da Vinci
- Walt Disney
- Albert Einstein
- Viktor Frankl
- Sigmund Freud
- Alfred Adler
- John Maynard Keynes
- Nelson Mandela
- J.K. Rowling
- Helena Rubinstein
- Paul of Tarsus
- Margaret Thatcher
- Boris Johnson
- Harry Potter
- Woody Guthrie
- David Shaw
- Leopoldo Galtieri
- Aleksandr Ulyanov
- Mickey Mouse
- Salvador Dali
- Tom Peters
- Robert H. Waterman, Jr.
- Snow White
- Donald Duck
- Nassim Nicholas Taleb
- Steve Jobs
- Bob Iger
- Tobi Lütke
- P.W. Botha
- F.W. de Klerk
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13 Replies to “Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and the Art of Gambling (#466)”
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.
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.
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.
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.
Thoroughly relaxing to listen to, and thoroughly relaxing life principles!
Agree!! however not so obvious at first
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”.
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.
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.
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.
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!!
“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?
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 🙂