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Tim Ferriss

Richard Koch — Revisiting the 80/20 Principle, The Power of Optimistic Journaling, Studying History to Improve Investing, and The Grand Beliefs of Winners (Plus: The Toxic Beliefs of Losers) (#680)

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Artist's rendering of Richard Koch.
Illustration via 99designs

“M. Scott Peck wrote a book which starts, ‘Life is difficult.’ This is one of the great things about life. If you understand this, you can transcend it, because you anticipate that things are going to be difficult, and you can take pride in overcoming difficulties. But if you expect there are going to be no difficulties, obviously you are going to be disillusioned.”

— 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, 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, rewritten in 2022, has sold more than a million copies, been translated into roughly 40 languages, and has become a business classic. It was named by GQ as one of the top 25 business books of all time. Richard’s latest book is Unreasonable Success and How to Achieve It. 

He has two upcoming books: 80/20 Beliefs, which identifies the very few beliefs in our lives that strongly influence what we do, and, therefore, the results we get, and 80/20 Daily, a collection of 365 short daily readings using the 80/20 philosophy to achieve the good life.

Please enjoy!

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

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

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#680: Richard Koch — Revisiting the 80/20 Principle, The Power of Optimistic Journaling, Studying History to Improve Investing, and The Grand Beliefs of Winners (Plus: The Toxic Beliefs of Losers)

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This episode is brought to you by Eight Sleep. Temperature is one of the main causes of poor sleep, and heat is my personal nemesis. But a few years ago, I started using the Pod Cover, and it has transformed my sleep. Eight Sleep has launched their newest generation of the Pod: Pod 5. It cools, it heats, and now it elevates, automatically. With the best temperature performance to date, the Pod 5 ensures you and your partner stay cool in the heat and cozy warm in the cold. And now, listeners of The Tim Ferriss Show can get $250 off the Pod 5 plus an additional $200 off Pod 5 accessories for a limited time! Click here to claim this deal and unlock your full potential through optimal sleep.

Want to hear the last time Richard Koch was on the show? Listen here to our conversation in which we discussed investing for the mathematically challenged, Oxford Bodleian Library secrets, writing The 80/20 Principle, optimizing happiness, different journaling styles, nine landmarks of successful people, Nelson Mandela’s unique intuition, and much more.

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

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

SCROLL BELOW FOR LINKS AND SHOW NOTES…

SELECTED LINKS FROM THE EPISODE

  • Connect with Richard Koch:

Website | Twitter

SHOW NOTES

  • [06:18] What3Words.
  • [12:59] Upbeat fish pond reflections.
  • [15:04] Journaling toward optimistic investment.
  • [17:14] Betfair vs. bookmakers.
  • [27:42] How history ties in with investment strategy.
  • [33:47] Assigning probabilities.
  • [36:56] The cows, the stars, and the question marks.
  • [45:41] 80/20 happiness.
  • [57:36] A qué será, será quandary.
  • [1:06:48] Toxic beliefs and terrible templates.
  • [1:11:24] A meeting with Bill Bain.
  • [1:14:41] Charm school.
  • [1:15:08] Why Bain & Company was a better fit than BCG had been.
  • [1:17:34] The formula.
  • [1:25:04] Identifying one’s own toxic beliefs.
  • [1:35:04] Opposites to toxic beliefs.
  • [1:41:53] Churchill’s helpful delusion.
  • [1:47:46] The formation of grand beliefs.
  • [1:51:06] How grand beliefs can become toxic.
  • [1:53:37] Pattern interruption.
  • [1:56:08] The Oxford Experience for 99/1 people.
  • [2:09:04] A bespoke request for hands-on art.
  • [2:11:33] Useful beauty.
  • [2:18:55] Parting thoughts.

MORE RICHARD KOCH QUOTES FROM THE INTERVIEW

“The 80/20 principle runs … through the whole of my thinking. So, in terms of my own success or money but also things like happiness, I’m trying to think, ‘What are the few things that I need to do in order to attain what I want?’”
— Richard Koch

“I go around asking people, ‘Who are your best five friends in the world?’ And people come up with a list. And then I say, ‘Who are the five people that you spend the most time with?’ And very often, the lists are completely different. And that tells you that that person, they might be happy, but they’re certainly going against the grain.”
— Richard Koch

“M. Scott Peck wrote a book which starts, ‘Life is difficult.’ This is one of the great things about life. If you understand this, you can transcend it, because you anticipate that things are going to be difficult and you can take pride in overcoming difficulties. But if you expect there are going to be no difficulties, obviously you are going to be disillusioned.”
— Richard Koch

“Delusions can be very helpful sometimes.”
— Richard Koch

“Happiness is probably the least selfish thing that you can pursue, because if you’re happy, you’re going to make a lot of other people happy as well. If you’re miserable, you’re going to make other people miserable.”
— Richard Koch

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