~Naval-Ravikant-and-Nick-Kokonas

#737: Naval Ravikant and Nick Kokonas

Show notes

This episode is a two-for-one, and that’s because the podcast recently hit its 10-year anniversary and passed one billion downloads. To celebrate, I’ve curated some of the best of the best—some of my favorites—from more than 700 episodes over the last decade. I could not be more excited. The episode features segments from episode #97 “Naval Ravikant — The Person I Call Most for Startup Advice” and episode #341 “Nick Kokonas — How to Apply World-Class Creativity to Business, Art, and Life.” Please enjoy! Sponsors: Eight Sleep’s Pod 4 Ultra sleeping solution for dynamic cooling and heating: https://eightsleep.com/tim (save $350 on the Pod 4 Ultra) Momentous high-quality supplements: https://livemomentous.com/tim (code TIM for 20% off) LinkedIn Jobs recruitment platform with 1B+ users: https://linkedin.com/tim (post your job for free) Timestamps: [00:00] Start [04:34] Notes about this supercombo format. [05:53] Enter Naval Ravikant. [06:05] On uncompromising honesty. [08:05] What Naval looks for when deciding to invest in a founder. [11:03] Recommended reading from outside the startup world. [18:38] Who Naval considers successful. [21:02] Cultivating non-judgmental awareness. [26:08] How to replace bad habits with good habits. [29:31] Naval’s advice for his younger self. [32:01] Naval’s billboard. [35:46] Enter Nick Kokonas. [36:05] Is pressure Nick’s default setting, or are perceived risks an illusion? [36:55] How do behavioral economics and Richard Thaler influence Nick’s approach? [41:38] Nick’s transition from philosophy to finance; was philosophy an asset? [42:43] Why Nick’s professor gave him shorter assignments than classmates. [44:57] Nick’s introduction to trading; dumbing down academics for clerk job. [46:42] Why philosophy majors often become traders. [47:19] Why Nick is glad he didn’t pursue an MBA in 1992. [48:41] Why Nick thinks his professor singled him out from his peers. [52:52] Recommended books for aspiring entrepreneurs without philosophy background. [57:31] Did being a Merc clerk meet Nick’s expectations? [1:00:02] How Nick followed his father’s entrepreneurial model in trading. [1:04:38] Why Nick left his mentor after a year to start his own company. [1:05:41] How Nick and employees trained to quicken mental agility for trading. [1:08:17] The moment Nick realized he could thrive in trading. [1:09:02] Recommended resources for becoming a better investor. [1:11:22] Nick seeks out “high, small hoops” for investment risks. [1:14:00] Do businesses fail due to difficult model or lack of due diligence? [1:16:55] When and why Nick decided to enter the restaurant business. [1:18:26] The dinner leading to Nick and Grant Achatz’s partnership. [1:27:52] Why Nick chose to open a restaurant out of many risky options. [1:30:33] How Nick spots talent early that others notice late. [1:34:07] Questioning restaurant conventions like candles and white tablecloths. [1:37:09] A now-famous chef was Alinea’s first customer. [1:38:03] Nick and Grant wouldn’t let designers override their ideas. [1:38:47] How Nick contributed effectively as a restaurant industry newcomer. [1:14:19] Why Nick was “horrified” when Alinea won Best Restaurant in 2006. [1:43:50] Grant’s cancer diagnosis; writing a book and revolutionizing reservations. [1:45:28] Traditional restaurant reservation systems and Nick’s improvements. [1:57:17] Bickering at press dinner; avoiding Next becoming “Disneyland of cuisine.” [2:02:14] Reservation software problems; variable pricing based on day of week. [2:05:48] The moment Nick realized “This is the best thing I’ve ever built.” [2:07:41] Why the reservation system’s rewards were worth the asymmetric risks. [2:10:16] Using Marimekko charts to visualize restaurant and sponsorship data. [2:16:57] The next industry Nick wants to disrupt: truffles. [2:18:55] Illuminating black boxes. [2:26:24] Self-selection of job roles; how Nick’s hiring process has changed. [2:32:01] Systems Nick uses to cope with a lot of email. [2:37:43] Importance of engaging on social media, even if unable to respond to all. [2:39:35] What “puzzle” filters and mini-hurdles in correspondence accomplish. [2:40:36] Comparing similarities between the music and publishing industries. [2:49:55] The agency problem as another black box. [2:54:58] The Hembergers, The Alinea Project, and the upcoming independent Aviary Book. [3:01:42] A brief discussion about cocktails. [3:05:42] Books Nick has gifted most and how he personalizes gifts. [3:08:10] Nick’s billboard. [3:09:49] Parting thoughts. * For show notes and past guests on The Tim Ferriss Show , please visit tim.blog/podcast . For deals from sponsors of The Tim Ferriss Show , please visit tim.blog/podcast-sponsors
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Snips

[08:00] Honesty and Happiness

🎧 Play snip - 2min️ (06:05 - 08:00) Honesty and Happiness

• Honesty is crucial for happiness and presence.
• Dishonesty creates a second thought process, taking you out of the present moment.

📚 Transcript

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Speaker 3

I have a couple of core foundational values. They’re not things that I explicitly develop. They’re just sort of, you can look back after the fact and say, oh yeah, I won’t compromise on those things. But now I realize how important honesty is. And I learned that from a couple of different places. One is when I grew up, I wanted to be a physicist and I idolized Richard Feynman. I read everything by him technical and non-technical that I get my hands on. And he said, you must never ever fool yourself and you are the easiest person to fool. The physics grounding is very important because physics, you have to speak truth. You don’t compromise, you don’t negotiate with people. You don’t try and make them feel better because if your equation is wrong, it just won’t work whatever you’re doing. So I think the science background is important in that. A second is growing up in New York. I grew up around some really rust and tumble kids, some of who were actually the Russian mob. And I once had an encounter where I watched one of them threaten to kill the other and the would-be victim went and hid and then finally, let the aggressor into his house after the aggressor Promised him, no, I’m not gonna kill you. Honesty was such a strong virtue between them that even when they were ready to kill each other, they would take each other’s word for things. It sort of went above everything. And even though it was honesty in a mob context, I realized like how important that is in relationships. And then as I get older in life, I realized that a lot of happiness is just being present. And whether you get this out of Buddhism or cognitive therapy or drugs or wherever, you realize that to live in the present moment is the highest calling, it’s the source of all happiness. And when you’re not honest with somebody else or when you even withhold something in your mind, what you’ve done is you’ve created a second thought process. You’ve created a second thread in your head that then has to stay active, keeping track of what you’ve said versus what you’re really thinking. And that takes you out of the moment and it brings you unhappiness over time. You will not realize it at that moment itself, but it will create stress and destruction. So if you really want to be happy, you have to be present.

[10:51] Evaluating Founders

🎧 Play snip - 2min️ (08:31 - 10:51) Evaluating Founders

• Look for intelligence, energy, and integrity in founders.
• Prioritize integrity because smart and hardworking crooks can cause damage.

📚 Transcript

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Speaker 3

So number one, intelligence. You got to be smart, which means you have to know what you’re doing to some level. And that’s a fuzzy thing, but you talk to people and you kind of get a sense of, do they know what they’re doing or not? Do they have insight? Do they have specific knowledge? Have they thought about this problem deeply? It’s not about the age, it’s not how many years they’ve spent, but just how deep is their understanding of what they’re about to do? So intelligence is key. Energy, because being a founder is brutally difficult, it takes a long time. And in the long run, the people who succeed are just the ones who persevere. So if someone runs out of energy or if they’re doing this in some hesitating preliminary way, where they’re looking for constant positive feedback or if they’re easily thrown off course, Then they’re not going to make it to the end, especially in the highly competitive startup context. And then finally, is integrity, because if you have someone who has high intelligence or high energy, but they’re low integrity, then you’ve got as a hard-working smart crook. And especially in the startup world, things are very dynamic, they’re very fast-moving, people are very independent. So if somebody wants to screw you over, they will find a way to do it. And fundamentally, ethics and integrity are what you do despite the money. If being ethical was profitable, everybody would do it. So what you’re looking for is a core sense of values that rises above and beyond the pure financial incentives. So for example, if I’m talking to a founder and they offer to do something that is slightly unfair to another shareholder or employee or founder in exchange for making me happy, that’s A red flag, because if they can do it to them, they can do it to me. And integrity is the hardest one to figure out because it requires longitudinal relationships. And- Even one term. Exactly. So I’ve just become more hyper aware of that piece as time goes on. But those are kind of the three things that I look for. And then I think that isn’t really about success, but it’s more just about personal time is when you invest in somebody or you work with somebody, you start a company with somebody, you’re Signing up to spend the next decade of your life having them in your life. Right. And so you just have to make sure you actually genuinely like these people. You don’t consider work to have to answer a phone call or take a meeting or spend time with them. If it’s exhausting, if they’re downers, if they’re negative, if they’re difficult, no amount of money is worth it. You and I will both die with money in the bank. It’s not about money at this point. It’s about do I want to spend my scarce time, resources, mental energy, spirit interacting with these people.

[12:32] Emotional Investing

🎧 Play snip - 1min️ (11:17 - 12:32) Emotional Investing

• Emotions dominate investing, even if investors appear rational.
• Develop self-awareness and emotional control to improve investment decisions.

📚 Transcript

Click to expand

Speaker 3

That’s a really good question. And so this is a very deep question. It’s going to have lots of answers. But at the end of the day, I think you have to work in your internal state until you are free of as many biases and condition responses as you can be. And it will improve every aspect of your life, including investing. And I am a bookworm, so I read an enormous amount. I was raised essentially a library of the daycare center. And so I’ve just read so much that I just know where to start. But if you work in your internal state, one of the things you start realizing is as an investor, emotions dominate. Investors are very emotional, even though we act, but we pretend to be very rational. For example, you’ll decide in the first five minutes of a meeting, usually whether you want to invest in the company or not. And if a company doesn’t take your money in the first round, you get annoyed with them or you feel like they crossed you, then you have to undo that emotional state. So when the second round comes along, you can still be a positive force and continue helping the company and maybe have a bite at the apple a second time. And these kinds of skills are extremely hard to build. They’re not things you’re going to build by reading one book and then you’re like, aha. So I don’t believe in the epiphany theory of self-development, where you read some book, you have an incredible epiphany, you read one phrase, you’re like, okay, that’s great, this Changes my life.

[18:34] Reading Hack

🎧 Play snip - 2min️ (16:14 - 18:34) Reading Hack

• Treat books as disposable blog posts to overcome reading inertia.
• This allows you to absorb information without the pressure of finishing every book.

📚 Transcript

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Speaker 3

Great character on Twitter. So I realized like I have to go back to reading books because when you’re talking about solving old problems, the older the problem, the older the solution. So if you’re trying to learn how to drive a car, fly a plane, absolutely you should read something written in the modern age because this problem was created in the modern age. So the solution is created in the modern age. But if you’re talking about an old problem, like how to generally keep your body healthy, how to stay calm and peaceful of mind, what kinds of value systems are good, how should you raise A family, these kinds of things, the older solutions are probably better. And they would stood the test of time. Any book that survived for 2000 years has been filtered through a lot of people. Now it may have some stuff in it that we now know to be true, but the general principles are more likely to be correct. So if I wanna learn the theory of evolution, which I kind of use as my binding principle whenever I’m trying to explain any human action, people read all kinds of blog posts and tweets And evolution. Everyone has a loose understanding of how evolution works, but how many have actually read the origin of the species? I mean, you can get it for five bucks on Kindle and it’s a very easy read. It’s not a difficult read. And you can read the actual source and you can see the source of the brilliance and you can see how Darwin came up with stuff back then that we’re still trying to figure out a statement he Made that we’re still trying to prove out. But there’s very little that’s incorrect in that book and it is a source book. So I wanted to get back into reading these source books and I knew it was a very hard problem because my brain had now been trained to spend time on Facebook and Twitter and these other bite-sized Pieces. So what I did was I came up with this hack where I started treating books as throwaway blog posts or as bite-sized tweets or Facebook posts and I felt no obligation to finish any book. So now anytime someone mentions a book to me, I buy it at any given time and reading somewhere we intend in 20 books. I’m flipping through them. If the book is getting a little boring, I’ll skip ahead. Sometimes I’ll start reading a book in the middle because some paragraph caught my eye and I’ll just continue from there. And I feel no obligation whatsoever to finish the book. If at some point I’d say the book is boring or if it’s got pieces of it that are incorrect and I can’t trust the rest of the information in there, I just delete it. And I don’t remember them at all. So I treat books now as other people might treat throwaway like pieces of information in the web and all of a sudden books are back into my reading library.

[21:01] Redefining Success

🎧 Play snip - 2min️ (18:44 - 21:01) Redefining Success

• True success is stepping out of the game entirely.
• Real winners have internal peace and self-control, needing nothing from others.

📚 Transcript

Click to expand

Speaker 3

It’s an odd answer because most people think of someone as successful when they win the game and it’s whatever game they’re playing. So if you’re an athlete, you’re going to think of successful someone who is a top athlete and wins that game. Or if you’re in business then you’ve got to think Elon Musk or someone of that sort. Or in my mind, I would have answered that question a little differently a few years ago. I would have said Steve Jobs because he created something or he was a driving force, part of the driving force and the spearhead for creating something that has changed the lives for All of humanity. And that’s the iPhone. I think if Mark Andreessen is super successful, not because of his recent incarnation as a venture capitalist, which is an interesting one, but because of the incredible work that He did with Netscape, he commercialized the web browser. Satoshi Nakamoto is successful in the sense that he created Bitcoin, which is this incredible technological creation that will have repercussions for decades to come. So in the classic sense, I consider those creators and commercialized successful. And of course, Elon Musk just because he changed everyone’s viewpoint on what is possible with modern technology entrepreneurship. But that said, to me, the real winners are the ones who step out of the game entirely, who don’t even play the game, who rise above it. And those are the people who have such internal mental and self-control and self-awareness that they need nothing from anybody else. So there are a couple of these characters that I know in my life, some older gentleman that I’d like to kind of learn from. And we mentioned our Polish friend earlier. I would consider him successful because he doesn’t need anything from anybody. He is at peace. He is at health. And whether he makes more money or less money or where the next person over from him does better or worse than him has no effect on his mental state and bearing. And historically, I would say that the legendary Buddha or Krishnamurthy, who’s stuff that I like reading, they are successful quote unquote, in the sense that they step out of the Game entirely. Winning or losing does not matter to them. There’s some line that I read somewhere that all of man’s troubles arise because he cannot sit in a room quietly by himself for half an hour. Right. And if you could literally just sit, if you could just sit for 30 minutes and be happy, you were successful. And I think that that is a very powerful place to be, but very few of us get there.

[22:13] Meditation Practice

🎧 Play snip - 1min️ (21:05 - 22:13) Meditation Practice

• Practice choiceless, non-judgmental awareness in daily life.
• Observe thoughts and accept each moment without judgment for greater peace.

📚 Transcript

Click to expand

Speaker 3

I have a couple, like most people, I talk about doing it, but don’t really do it all that well. I think meditation is like dieting or where everyone is supposed to be following a regimen. Everyone says they do it, but nobody actually does it. The real set of people who meditate on a regular basis, I found are pretty rare. And I’ve identified and tried at least four different forms of meditation. The one that I found that works the best for me is something called choice-less awareness or non-judgmental awareness, where you essentially don’t sit in the corner and don’t stay Quiet, you walk around, you’re going about your daily business. But hopefully there’s some nature around, you’re not talking to somebody else. And what you practice is you just learn to accept that moment that you’re in without making judgments. You don’t say, oh, there’s a homeless guy over there, I better cross the street. You don’t look at two people running by and say, oh, he’s out of shape or I’m in better shape than him or that person’s better than me or this one’s better, I’ll rush you to get a coffee or Whatever. You just don’t make any decisions. You don’t judge anything, you just accept everything. If you do that, I find if I can do that even for 10 or 15 minutes walking around, I end up in a very peaceful, grateful state. And so that one works well for me.

[29:30] Transformative Habits

🎧 Play snip - 3min️ (26:11 - 29:30) Transformative Habits

• Naval’s trainer, Jerzy Gregorek, emphasized the power of habits.
• Naval adopted a daily workout routine, experiencing mental and physical transformation.

📚 Transcript

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Speaker 3

So this is something that I learned through our Polish trainer friend, Victor.

Speaker 2

Hi guys, just a quick note from present day, Tim, the Polish friend and trainer in question is Jersey Gregorak. And you can hear my conversation with Jersey, titled, The Lion of Olympic Weightlifting, 62 year old Jersey Gregorak, which also features Novell. Novell and I were working with him at the time we both co-interview him. I still work with Jersey and I just saw him just a few weeks ago. So to learn more about this amazing man, go to Tim.blog slash Jersey, J-E-R-Z-Y to listen to that conversation one more time. Tim.blog slash Jersey, J-E-R-Z-Y at the age of whatever he is now, 67, he can still do things that most 20 something cannot do. Now, back to the episode with Novell.

Speaker 3

Habits are everything, everything. I think that we are trained in habits from when we were children, including potty training and when to cry and when not to and how to smile and when not to and all of these things become habits. These are all behaviors that we learn and that we then integrate into ourselves. And then what ends up happening when we’re older is that we’re a collection of thousands, maybe tens of thousands of habits are constantly running subconsciously and they’re internalized. And then we have a little bit of extra brain power in our neocortex for solving new problems. And so you become your habits. And what really brought this to light for me is our friend, our trainer, gave me a routine to do every single day. And before that, I had never worked out every single day. And it’s a light workout. It’s not tough on your body. But I did this workout every single day, and I realized just the incredible, astonishing transformation that it had upon me, both physically and mentally, because I think to have peace Of mind, you have to have peace of body first. So that taught me the power of habits. And after that, I started realizing that it’s all about habits. So at any given time now, within a six-month period, I’m either trying to pick up a good habit or I’m discarding a previously bad habit. And it takes time. So for example, if someone says, I want to be fit, I want to be healthy, but right now I’m out of shape and I’m fat. Well, nothing is going to work for you in three months. It’s going to be sustainable. It’s going to be a 10-year journey, at least. And in the 10-year journey, what you’re going to do is every six months or every three months, depending on how fast you can do it, you’re going to break bad habits and you’re going to replace Them or you’re going to pick up good habits. So I think it is all about habits. There is nothing else. So examples of habits have picked up in the last 12 months or I’m still working on. I’m one of these people who wants everything. So I don’t want to give up anything. So for example, if I want to stop eating bad foods, if I want to lose weight by fixing my diet, I don’t say these foods are bad. I’m not going to eat them and then suffer. And then she like, I’m not eating tasty foods. Instead, what I do is I do some combination of changing my taste buds to actually like the foods that are healthier for me and substituting unhealthy, tasty foods with healthy, tasty Foods so that I can sustain it forever. I’m not interested in anything that is unsustainable or even hard to sustain. I want my life to be effortless. So once I’ve created a good habit, it has to be the kind of habit that I can sustain with no effort.

[31:55] Life Advice

🎧 Play snip - 2min️ (29:40 - 31:55) Life Advice

• Be yourself, don’t try to meet external expectations.
• Prioritize self-actualization, protect your time, and give love freely.

📚 Transcript

Click to expand

Speaker 3

Yeah, it’s funny. I actually did this exercise recently where I sat down and I didn’t write it because it was in my head. But I did spend some time thinking about what is the advice I would give my 30 year old self. So the advice was along the lines of chill out, don’t stress so much, not so much anxiety. Everything will be fine and be more to yourself. Don’t try and do what you think society wants or needs. Don’t try and live up to other people’s expectations. Self-actualize. Say no to more things. Protect your time because it’s very precious. You know, on your dying day, you will give everything, everything you have for another day. So the discount rate, the marginal value of that extra day just goes up as you get older. The advice was all along those lines. It was basically be yourself, don’t listen to other people. Don’t worry about what other people need or want or think or expect from you. And then I said, well, what would my 30 year old self have said to my 20 year old self? And it turned out to be pretty much the exact same thing. And what would my 20 year old self have said to my 10 year old self? Pretty much the exact same thing. So I think my 50 year old self is going to say chill out, relax, don’t stress so much, live in the moment. It’ll all be all right. Less fear, more love. You know, I’d love people more. You know, love is one of those weird things. Like everyone wants to be loved. Everyone deeply needs to be loved. It’s not something you can buy. No matter money or power will bring you true, unconditional love. But it turns out you can give love. It’s free to give. So you can’t miss the get it. But if you can get in the mindset of, well, I’m just going to give it. Eventually, on a long enough time scale, you get what you deserve.

Speaker 2

The universe kind of sends it back your way. Yeah, well, not only that, it’s like if you don’t know how to make yourself happy, try to make someone else happy. That is sort of a, as you said, kind of a recursive function. And now I’m using vocab, I shouldn’t. But it’s a virtuous cycle.

Speaker 3

Charlie Munger, who’s Warren Buffett’s partner at Berkshire Hathaway and just a brilliant older gentleman, his speeches are collected in poor Charlie’s almanac and they’re worth Reading. But he was asked at one of the Berkshire Hathaway Annual meetings, basically asking one of the lines of like, you know, how do I find a worthy mate? And he said, be worthy of a worthy mate. Yeah, and I think that’s absolutely right. You just work on yourself until you no longer need them and then they appear. I think that’s what it is, then saying that says, when the student is ready, the master appears.

[34:19] ⭐️ Desire and Acceptance

🎧 Play snip - 2min️ (32:07 - 34:19) Desire and Acceptance

• Desire is a contract with yourself to be unhappy until you get what you want.
• Choose desires carefully and accept most situations in life.

📚 Transcript

Click to expand

Speaker 3

I don’t know if I have messages to send to the world, but there are messages that I like to send to myself at all times. One message really stuck with me when I figured this out was that, what is desire? And desire is a contract you make with yourself to be unhappy until you get what you want. I don’t think most of us realize that’s what it is. I think we go about desiring things all day long and then wondering, well, why we’re unhappy. So I like to stay aware of that because then I can choose my desires very carefully. I try not to have more than one big desire in my life at any given time. And I also recognize that as the axis of my suffering, I realize that’s where I’ve chosen to be unhappy. So I think that that is an important one. Or even a simpler one is, you know, a lot of meditative, like you said, you did a transcendental meditation course to give you a mantra. The mantra is supposed to have actually no meaning. Maybe the universal mantra that’s been derived through the ages is, oh, where you kind of sit there and say, oh, I’m in your mind to yourself. It’s strange. You can say it to yourself all day long in your mind. It’ll make you happier, more peaceful. You start chanting it out loud. They’ll lock you up. But oh, oh, has no meaning, I think. But to me, it has a meaning. And the meaning is just accept. Just accept. In any situation in life, you only have three options. You always have three options. You can change it. You can accept it. Or you can leave it. Those are your three options. But it’s not a good option. It’s to sit around wishing you a change it but not changing it, wishing you would leave it but not leaving it and not accepting it. So it’s that struggle, that aversion that is responsible for most of our misery. So probably the phrase that I use the most to myself in my head, it is just tell myself one word, accept. So anytime I look at myself and I’m judging something, I just say accept. And it’s only very, very, very few things that I will choose not to accept. And if I don’t accept something, it’s for one or two reasons. Either I’m aware that this is something that it’s just so important to me right now that I can’t accept it. Now I’m going to put up with a mental battle for it. Or more likely, I’ve just lost control of my thoughts. I’m no longer present. I’m dreaming. I’m in a highly emotional state.

[41:42] Connected Paths

🎧 Play snip - 15sec️ (41:26 - 41:42) Connected Paths

• Nick Kokonas’s career path, from philosophy to finance to restaurants, seemed unconventional to others.
• He viewed these seemingly disparate fields as connected by a focus on decision-making.

📚 Transcript

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Speaker 1

Even though other people look at it and go like, wow, you went from being a derivatives trader to owning restaurants, like that’s weird. And I studied philosophy in college. So like people are like, how do you go from philosophy to finance? And to me, it was all the same thing. That particular transition or

[43:38] Mentorship and Concision

🎧 Play snip - 2min️ (42:06 - 43:38) Mentorship and Concision

• In college, a philosophy professor recognized Nick’s potential and mentored him.
• He gave Nick shorter writing assignments, forcing him to be more concise and clear.

📚 Transcript

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Speaker 1

Can’t remotely imagine having not done that. And the way that actually I did it was really interesting. I had no intention of when I got to college, I thought I’d study political science, economics, pre law kind of things, something like that. And my very second week at Colgate University, a wonderful professor who just passed away last year, 94 years old, really great mentor to me, Professor Jerome Belmouth was a 10 year Professor at Colgate for almost 60 years, pulled me aside, introduction to logic, 101. And basically said, what are you studying here? I told him and he said, nope, you’re going to be a philosophy major. I’m going to tell you, I’m going to teach you how to think. There’s this great scene in a river runs through it where the dad, every time the kid writes an essay, like the young Fisherman kid writes an essay and he brings it to his father to be graded, He gives it back to him says half as long again. Long before that movie ever came out, Professor Belmouth would essentially assign a paper to the class and say it should be about 15 pages and people would be like, well, how long? And he’d always say, like, you know, how long the piece of string, like it’s however long needs to be. And then he would tell me yours can’t be longer than three pages. And people would be like jealous, like, wow, you only have to write three pages. If you take it seriously, that is a much, much harder thing to do. So he really trained me as well as a number of other professors there to be clear in thinking succinct, to understand what logic was to process information and really to look for parallels In different fields and different fields of thought.

[46:36] Faking a Resume

🎧 Play snip - 3min️ (44:04 - 46:36) Faking a Resume

• After briefly attending law school, Nick Kokonas found himself drawn to the Chicago Mercantile Exchange.
• He faked his resume to downplay his academic achievements and secure a clerk job.

📚 Transcript

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Speaker 1

And I dropped out of law school before I really entered law school. And I floundered around for a little while. But if you grew up in Chicago, you end up meeting people who had this unusual lifestyle. And that was back in the days pre-internet, pre-electronic training, pre-high frequency training, where there was literally people on a giant trading floor shouting at each other. And you either were attracted to the, I don’t know, almost animalistic nature of that. And for me, it was like a huge challenge because there were people down there that were had, you know, a PhD sort of MIT. And then there was people who were like, you know, butchers that went down there with $100,000 and just kicked ass. And so it wasn’t about your level of education or any of the stuff I already talked about. It was about, can you show up every day and every day’s game day and be really disciplined and very clear headed with chaos around you?

Speaker 2

How can you get introduced to that world?

Speaker 1

You know, if you grew up in Chicago, you know some of these guys and some of them are flashy. And I can remember the exact moment. I’m not going to name name here as you’ll find out why in a second. But I was walking down the street. I was like, you know, six months out of college. Kind of didn’t know what I was going to do. And I was walking down the street and I bumped into a guy I knew in high school. And, you know, he wasn’t the best student. He didn’t try the hardest. And I was like, Hey, what are you doing now? And he was like, well, I’m just rehabbing these homes. And I thought literally like, Oh, he’s a construction worker. And I was like, you know, what are you doing with him? He’s like, well, I just bought this block. And I’m turning this all over. This is the true story. This is so not like, you know, a good reason to do something. But I looked at him and I was like, what are you talking about? He’s like, yeah, I skipped college and I started. I was a runner on the floor of the Merck. And now I, you know, I own like 25 condos and three townhomes. And I, I trade. And I kind of went like, wow, I don’t know what. I knew a little bit about it. I’d been down on the floor before just visiting. But I was kind of like, that’s fascinating. Like that is a truly fascinating thing. And, you know, I went down, visited the floor. I had to fake my resume in the wrong direction to get a job. That’s true story. Like people lie on their resume all the time. I’m probably the only person that got rid of my degree and my academic awards and all that. Because to get a clerk job on the floor, the last thing they wanted was someone with a good degree, Phi Beta Kappa, you know, Magnet Cum Laude, all that stuff. So I faked my resume, got a $5 an hour job and looked for a mentor.

[01:24:00] Alinea’s Genesis

🎧 Play snip - 7min️ (01:17:28 - 01:24:00) Alinea’s Genesis

• Nick met Grant Achatz, a chef at Trio, and was impressed by his artistic and emotional approach to food.
• A year later, they opened Alinea, a restaurant designed to evoke emotional responses.

📚 Transcript

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Speaker 1

I left trading in about 2002, 2001, it was a tough year between 9-11, which was my father died in February of that year. I was burnt out after going really hard for so long. And we built up a pretty good size company, too, and I merged with a firm in New York. And I just needed a break, but didn’t know how to really take one at the time. And so I left trading and I immediately panicked because here’s something that I really genuinely enjoyed, but didn’t know what I wanted to do next. And started doing consulting for a small hedge fund. And then it just didn’t know what to do. And I had an awesome wife and a young son and things were good. But I was kind of panicked. I was playing golf with ex-athletes because who else is 34 years old and can play golf on a Wednesday afternoon. And so it was just a weird thing. And I looked at them and I’m like, oh, they don’t really see them all that happy, even though they’ve got this lifestyle. And so I met Grant Akkitz, the chef at Duall Dine-Yatrillo, went to a lunch there one afternoon. That’s some friends set up. And it was a transformative experience. It was artistic. It was intellectual. It was thought-provoking. Most of all, it was emotional. And those are all things that I would never have associated with eating a dinner, right? And so from a perspective of great art experiences, like seeing a great movie or a great play or going to an amazing museum opening, we kept drawing back there. Like we kept going back. And we would go back so frequently that it was absurd because, you know, it was a big meal and it wasn’t cheap. And every time we’d go somewhere else, we’d go like, wow, why is no one else thinking this way? And as I got to know Grant a little bit, I think sometimes people bring the chefs some wine or beer or whatever. And it’s like, that’s kind of sand at the beach. I would bring him books. And I didn’t figure he had a lot of time to read. So I would put a post-it note on a page of an old book. So I remember I brought him this book called the Peregrination of an Epicure.

Speaker 2

Hold on. It’s like the Peregrination. It’s like a Peregrine falcon. I don’t even know what that was.

Speaker 1

But no, no, a Peregrination is like a wondering about. So it was written just after World War II by an ex-servicemen. He kind of goes around Paris. I want to say maybe late 40s, early 50s. I can’t recall exactly. And there is a chapter in there on La Péramide, which was a very classical restaurant, kind of the best in the world at the time. And he described a meal there in emotional terms that resonated with what Grant was doing, even though his technique, his cuisine, everything was completely different. And so I literally just highlight a couple of lines in there and give him this book, which was out of print at the time. We kind of developed this email relationship back and forth where he would sort of try out some new food on us. And I would give direct, honest feedback, but not like, oh, it was delicious. It was more like, you know, you’re going for a provocation there, but if you know, and we would go back and forth. And he wrote at the time on a forum called Eagle It. And I went on there and his spelling grammar, not with standing. I mean, it was like reading someone who’s just really thinking hard about what they were doing. Everything we just talked about. Here was this young 28-year-old chef from Michigan who looked like Captain America, who would come out not, you know, he was like Hollywood in the sense of like, he was good-looking And very driven, very clean cut. But he didn’t look like, you know, the stereotype central casting of a chef, right? You know, Chubby, Gregarious guy. He was really quiet and introspective, shy. But then you read, and you know, these, which are still up, you know, you could still Google it. And you’d go like, you know, he’d go on for like four pages about bread service. Like, what’s the point of bread, you know? And this is a guy that I could wrap my head around. And so I remember on January 20th, 2004, I was my wife’s birthday. And she said, yeah, I want to go back there. And we’d never been in the kitchen before. And they have a table there, but we’d never eaten in there. And I remember I emailed him and said, she’s ethnically Latvian, speaks Japanese, loves Thai food, good fucking luck. And I knew exactly what that would do to him that would put him into 10 days of pure health. Because if you were to research Latvian food, he would have to redo, like he would redo a whole menu, 20 courses, right? And I didn’t know that we were going to put it in the kitchen. And they put it in the kitchen. I mean, it sounds like a jerky thing to do now, but we did have a relationship a little bit at the time. And he served us like the most amazing meal of my life, you know? And it started out with Latvian sorrel soup with braised handbox. And, you know, it had flavors of the sea, which was a Japanese dish. It had it had Thai dishes, but it was all in his style. And so it was his own. And yet it had elements of all these things. And at the end of that meal, he said to me, well, what do you think? And I’d watched the kitchen and it was like a watchmaker shop.

Speaker 2

It was not screaming and yelling. It is just as I started it. It is so unlike anything that the vast majority of people listening to this would possibly expect. Right? Yeah.

Speaker 1

It’s not Gordon Ramsay. It’s not Gordon Ramsay. Right. It is just complete silence.

Speaker 2

It is like a watchmaking factory. It is. It is really something else. Anyway, started to jump. Yeah.

Speaker 1

No, no, no. It’s totally fine. And so at the end, I said, you know, I doubt anybody anywhere in the world had a better meal tonight. And he was like, well, thank you. And I said, what are you planning on doing with yourself? Yeah. I mean, I was like, I had a lot of wine. And I kind of looked at him. You know, he sat down with us. And I said, what are you going to do? And he goes, well, what do you mean? I said, well, you’re not going to be here forever. And he said, well, I want to build my own restaurant. And I said, I’d be happy to help you do that. And he said, well, what kind of restaurant do you want to build? I said, I don’t know. I’ve never built the restaurant before. That was it. And then like a week later, I got an email with his business plan. I invited him by my house. And a year to the day later of that, that was May 4th. We went back and forth on email May 4th. We held a dinner at my house for potential investors. And on May 4th, 2005, we opened a linear.

[01:37:09] Questioning Assumptions

🎧 Play snip - 2min️ (01:34:48 - 01:37:09) Questioning Assumptions

• Grant Achatz questioned the use of white tablecloths, leading to a redesign of Alinea’s dining experience.
• This led to a series of design choices that prioritized quality and emotional impact.

📚 Transcript

Click to expand

Speaker 1

Yeah. I mean, you know, Grant set the tone for that in our first meeting, not really knowing me. And we started talking, but we didn’t even know where to start. Right? And he said, well, I know one thing. I want to have wooden tables. Like, I want to have bare wood tables. And I said, why? He said, well, why do tables, why do fancy restaurants have white tablecloths? They literally call it a white tablecloth restaurant, if it’s fancy. Why? And I couldn’t really, I came up with dumb answers. Like, oh, it feels good or absorbs like a spill or whatever it may be. And he said, no, it’s because the table underneath is a piece of shit. He goes, and you know that. Like, as soon as you say it, everyone goes, oh, yeah, I knew that. And you’ve been at weddings and stuff where you feel under the table and you’re like, oh, it’s plywood. Right. But if you go to like a really fancy restaurant and you feel under the table, guess what? Also plywood, just a little thicker. And he’s like, you know, when you rest your arms on the table, even if it doesn’t come forefront in your mind, you kind of subconsciously know that they’re kind of fooling you. And he’s like, why can’t we just have like black, beautiful tables? It’ll show the food grade. It’ll show the plate where it’s great. And then I kind of went like, well, yeah, but the health department doesn’t let you put in Chicago, doesn’t let you put silverware right in the table. And if you put a glass there, the condensational form a little ring and then you have a wear issue, but you’ll save $70,000 a year in laundering linens. And so we started going like, well, how do we solve the water problem? Well, you create a fridge that’s just above the duty point. Forty four degrees, you know, in the winter, maybe a little warmer in the summer because it’s higher humidity in Chicago and you just get rid of ice. So you have these cascading decisions that become part of the art of the place that some of them start from like a really practical thing, like, hey, we want to have a quality table. And then all of a sudden you need a little pillow that the silverware goes on that Martin designed because you can’t put we didn’t want to have placemats. That’s too cheap. So all of a sudden we had to design like a silverware holder. So it just became this cascade of like interesting little art projects that were there for good reasons and really created a unique atmosphere. And it was like one of those things like we never tested it until the day we opened.

[01:49:45] Dishonest Reservations

🎧 Play snip - 1min️ (01:48:22 - 01:49:45) Dishonest Reservations

• In the restaurant industry, reservations often involve a degree of dishonesty on both sides.
• Restaurants overbook to compensate for no-shows, leading to a frustrating customer experience.

📚 Transcript

Click to expand

Speaker 1

So I get a lot of grief for this for saying this in the industry and in the press. But basically, whenever you make a restaurant reservation, one of the two of you talking is lying to each other. If you think about it, nor are there industry form of entertainment, which dining out is a form of entertainment. I know it’s sustenance. I know there’s so much culture embedded in it and all that. But you could eat at home, right? No other form of entertainment. You just call them up and say, hey, hold the seat to the Bears game or the Cubs game or the Opera. And I’ll show up around 730. And then they tell you, yeah, yeah, we’ll have the seat ready for you at 730. And then when you get there, they go, oh, you know what? Go wait over there for 30 or 40 minutes because we’re running a little behind tonight. You know, the reason that they’re running behind is because they overbooked because about 15 to 18% of the people just don’t show up. So they overbooked. They also know that if they tell you that they’ll really seat you at 9 and you wanted to need 15, you’ll just go to the restaurant down the street from them that will lie to them. Right? Right. So they do that and ultimately it’s just bad all around. It’s bad for the restaurant. It’s wasteful for food and it’s bad hospitality. There are so many pop culture references and entire sitcom episodes built around someone trying to get into a restaurant. Right?

[01:59:40] Next’s Ever-Changing Menu

🎧 Play snip - 2min️ (01:57:34 - 01:59:40) Next’s Ever-Changing Menu

• To address the issue of staleness, Nick and Grant decided to change Next’s menu every four months.
• They themed each menu around a specific city and time period, creating a sense of novelty.

📚 Transcript

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Speaker 1

Yeah, we did a video where, you know, next restaurant was about a restaurant that’s always new, essentially. Like, what’s one of the big problems of the restaurant industry? Well, when you open a new restaurant, it doesn’t matter what it is, people are going to show up for like five or six months. And then after that, you know, you guys struggle to like get regulars and find new audiences and all that. But people like the new quote unquote. The other problem is that our own staff and chefs were the kind of people who I said to Grant one time, he cooked this amazing French dish for me at a linear right in the middle of his sickness Because I had driven down from Michigan. I’ve never eaten before after in the linear kitchen, but he whipped up this little French dish for me of duck. And I was like, man, let’s open a French restaurant someday. And he went like, we’ll get bored after six months. Then I was at one of our chef’s homes on a day off Tuesday and he made he loves Thai food and he made this amazing Thai meal amazing. And I was like, wow, I had no idea these guys were so versatile, you know, and then it made sense. Hey, these are passionate, amazingly talented people. And it kind of dawned on me like, let’s change the restaurant every four months. Like, you know, let’s do and then we dwelled on that for like a year thinking like it was kind of impossible to do. And then I said, well, like, let’s start with the French menu. He’s like, well, what does that mean? Like there’s Southern France, there’s the lower valley, there’s France, that’s the new Val cuisine. And then there’s France from like, you know, 100 years ago, totally different. And I was like, yep, Paris, 1906. I don’t need to explain to you what that is. You’d want to eat that. If I just said, like, if someone said, hey, new restaurant opening, what’s the menu? It’s Paris, 1906. I’d go like, cool, like, I want to do a little time travel and see what that was like. And so as soon as we had like a city in a time, we instantly knew that was the idea that kept us up at night, you know, where we went like, wow, look at all these different places we can travel. And what does that restaurant look like? And how do you create a kitchen, versatile enough to make all these different cuisines? And how do you make it not feel like Disneyland where one time you have a theme of Paris and the next time you have a theme of Japan?

[02:50:26] Challenging Publishing Norms

🎧 Play snip - 9min️ (02:41:02 - 02:50:26) Challenging Publishing Norms

• Nick researched printing costs and discovered publishers were not transparent about them.
• He negotiated a distribution deal for the Alinea cookbook, retaining more control and profit.

📚 Transcript

Click to expand

Speaker 1

Yeah, I mean, I’m going to back up before the aviary, just a little bit and just go like, you know, for a chef, doing a cookbook is something that they dream about if they’re serious chef From the time they’re 15. You know, just like if you’re a basketball player, you want to make the NBA or, you know, if you’re a runner, you don’t want to be in the Olympics or whatever, like to grant to a bunch of chefs, Having their own ideas in a physical, beautiful cookbook. Is kind of a holy grail for them. It’s very sacred. And what was interesting is that just before Grant was sick, we started getting a lot of publishing offers. And the natural inclination was to go to what he knew, which was Artisan Press, which published the French Andre book, which is one of the best selling high end cookbooks ever. And it’s certainly beautiful. It was very revolutionary. It’s time. I think it was published in about 98, 99, something like that. And the typical publishing deal, like kind of came into us, which was great that they were coming in. And it was 250 to $300,000. And they would basically say, well, out of that, you’re going to pay for the designer and the photographer. And you need like a 30 day photo shoot. And, you know, here are the guidelines for how many photos you want in the book and, you know, to keep costs down and this and that. And I kind of looked at all that and all the offers came in within about 10% of each other, which immediately, you know, the hair on the back of my neck, like the Spidey Sense. The Spidey Sense that’s telling me that something back there is pricing this in an unusual way. And then I started going like, oh, this is actually like the music industry.

Speaker 2

Very much so.

Speaker 1

I knew people in bands that would get signed to a record label back in the day and they would get a quarter million dollar advance. You know, shit, that seems like a lot of money, right? And then all of a sudden, all your studio time comes out of that and you don’t recoup another dime until you sold. You know, X number of records or CDs or in this case, books. And then in the contract, it actually said in the restaurant guarantees that they will buy 2,500 books at half of retail price. And I was like, whoa, whoa, whoa, that’s, you know, you’re looking at something like $80,000 right there that goes right back to them. In essence, like, and then I kind of went like, well, I wonder what a book costs to print. And I mean, I just call, I asked them like, well, how much is this book going to cost to print? Well, I don’t really know. And so what they would do is that they would always have layers of people. So that they said, well, that’s not what I do. Like, I am the person that does this. The lawyers give the contract.

Speaker 2

The printer does the printing like I there’s always a plausible deniability or plausible ignorance.

Speaker 1

Yes, willful plausible ignorance. Yeah. And so I do what I start doing. I’m like, well, let’s just Google that up and see what it costs to print a book. Or how many copies of the French launch we booked sold? How many copies of 50 other books that we wanted to emulate or that we thought were well done sold? And man, it’s like asking for like, you know, keys to the Vatican or something when you call a publisher and ask them that. They I’m sure you know this, right? You probably know now because you’ve you’ve been so entrenched in the industry, like, you know, you’re numbers. And you might know that of some of your colleagues and trends, right? But if you wanted to actually do a meaningful comparison across the industry, it’s almost impossible. Do it even though that there’s a company that does that. Then you start trying to reverse engineer it and you go to the New York Times, which you can go to the New York Times website and just look at how is the New York Times bestseller list created? And on their own site, they say it’s like compendium of known publishers like publishing houses, as well as these like top 50 retailers, you know, back in the day and it’s a gameable system, Right?

Speaker 2

Like the way that publishers want to do it is that they want to ship out all the books at the same time because that’s how they’re counted for the New York Times bestseller list and stuff. I should also know it’s not only gameable, but it’s also conversely highly subjective within the New York Times. So there there’s a lot of wiggle room. In other words, it is not like the Olympics. We’re like, OK, clear gold, silver bronze video replay. We know exactly how this was tabulated.

Speaker 1

So the more that we dug, the more that we got like more and more curious, a little bit angry actually. And but Grant was weirdly angry at me because he’s going like, well, dude, like, why do you care? Like, you know, it’s like I’ve been wanting this since I was 15. And I was like, well, look, if this is our budget, it’s not going to be the book you want. This I can be as good as you want it to be because we’re not going to be able to spend six months doing the photography. We’re not going to be able to get great pages. We’re not going to be able to get a picture of every dish. Like, what do people cook in a cookbook? Well, they tend to cook those pages where they see a picture of the final dish. Because you know what it looks delicious. You know what it’s supposed to look like. You got something to emulate, at least, right? And so when we did the specs for the book, I had one of the best publishers in America say, if you do that book, there’s no way you sell more than 5,000. No way. And no one’s going to publish it. And you can’t use metric and you can’t use a gram scale and you can’t have that font and you can’t have those pictures in full bleed and it’ll cost way too much to print. And so it took about a month and a half before I got lucky. And I called the print broker who had actually printed, you know, brokered the print job of one of the famous books. And I was expecting that the book retailed for $60.Itwouldcostlike15toprint.20?Idid{n}^{\prime }tknowanythingaboutit.Andwhenhetoldmeitwaslike$2.23 per book to print per 30,000, you know, 30,000 copy run. I went no way like that. And he went, well, it’s probably less now. Like he thought in a minute, it was like too much. Right. And and instantaneously I went, oh, shit, everything makes sense. And when I would call publishers and tell them this, they would go, oh, yeah. But look, like we did 40 different prints, you know, 40 different books last year. Only five of them did well. And I’m like, that’s your problem, man. Like I know what we’re going to sell well. I don’t really give a shit if you lost 35% of the time and need to spread your portfolio risk. I’m the one you’re spreading it on. So we decided with the linear book, we put together like 20 pages and Martin made this beautiful stainless steel bracketing system. And we shipped it out to eight different publishers. We like two of which were art houses that had never done a cookbook. And they all came