Shane Parrish is the curator behind Farnam Street, a website aimed at mastering the best of what other people have already figured out. Shane is the founding partner of Syrus Partners,, a holding company that acquires and operates businesses in North America. Before Syrus, Shane worked as an executive in the Canadian government, where he led the creation and execution of key cyber-defense initiatives.
This isn’t your typical value investing interview, but one around topics of reading, learning, and multidisciplinary thinking.
Over to Shane!
Safal Niveshak (SN): Please share about your background. What led you to the wonderful work you are doing at Farnam Street today?
Shane Parrish (SP): I started working for an intelligence agency on Aug 27, 2001. Two weeks later the world changed forever, and I was thrust into a leadership role — not because of any competence on my part but rather because of necessity. As the promotions kept coming, I realized that I was increasingly making decisions that impacted not only my team and their families but also the organization and people around the world. The problem was, I had no idea “how to make decisions.”
My first response to this was to look around the organization and study how most successful people made decisions. This was a great inside view. To complement that I wanted to get an outside view, so I decided to get an MBA.
As intelligence agencies are incredibly insular, I figured the MBA was an opportunity to study decision making in the context of other environments. Only it didn’t really work out that way. A few weeks into my MBA, I realized that I wasn’t going to learn what I wanted to learn. I happened to run into someone who pointed me to how these two guys in Omaha made decisions. I was hooked. While I didn’t quit my MBA, I stopped doing almost all my homework and just focused on learning about Buffett and Munger.
When I decided to keep track of what I was learning, I created a website. That first website was called 68131.blogger.com. The reason it was 68131 is twofold. First, that’s the zipcode for Berkshire Hathaway’s main office. Second, I figured no one would ever type in a series of 5 seemingly random digits to get to a website. The site, which I no longer own, was a means for me to keep track of what I was learning. It was intended just for me.
To look at what it’s become today is crazy. From those beginnings we’ve come a long way. It wasn’t until about 2013 that I changed the website to farnamstreetblog.com so people could remember what to type in. Now we also have fs.blog which makes things even simpler.
Today we cover more than just decision making, but that’s always been the root of what we’re doing. Leading a good life is often a function of: Having good habits, good relationships, and making good decisions as they arise. It’s simple but not easy, my favorite category.
SN: You’re a voracious reader on a wide variety of topics. How did you first get interested in reading?
SP: When I was young, I hung out with the wrong kids. I was too busy to read — too busy with television, video games, and trouble. My report card was full of D’s. My teachers were not optimistic about my future to say the least.
Grade 8 was one of the worst years of my life. At 13 years old, I moved across the country to live with my biological father for a year. I had no rules. I could drink. I could stay out late. And I had near zero consequences.
Making friends was easy. One thing I’ve discovered is that it’s very easy to befriend the wrong people. These friends brought trouble — a lot of trouble. What began as childhood mischief quickly escalated into more serious problems. Skipping school was the least of my worries. If nothing changed I was headed to jail.
I can’t remember how I picked up The Stopwatch Gang, but that was the first book I read cover to cover. That book probably saved my life. I remember it because my friends knocked on the door to cause trouble, and I said “no” for the first time. Of course, I couldn’t tell them I wanted to finish a book. No, I told them I wasn’t feeling good and went back to my room to finish reading. As chance would have it, my friends found themselves in a police car that night.
Reading became a way for me to escape my reality and stay out of trouble. I could live in an alternate world. As I spent more and more time in my room alone, and less and less time with my so-called-friends, the amount of trouble I found myself in rapidly declined.
I was never the same after the year. Through reading I escaped a lot of disastrous outcomes. I returned to my mother for Grade 9 a very different person. And while we couldn’t afford many books, reading has changed my life.
One thing I did right away was that I changed my peer group to the smart kids. I learned how to program computers. Getting good grades became the expectation.
After University, I got a fantastic job working for an intelligence agency. I was making more money in my first year than my parents made combined in their last year. The only thing this changed for me was that I could buy any book that I wanted to read. Now my collection is over 2,000 volumes.
SN: That’s wonderful, your journey and your collection! Coming to the chief problem for someone who reads a lot, how do you retain what you read? Do you have any specific system for making notes and keeping track of what you’ve read?
SP: I get asked this question so many times, I wrote an in-depth article on how to remember what you read.
Let’s assume that you mean learn instead of retain. For me retain implies simply banging back some answer. It doesn’t mean I understand what I’m talking about. The world values understanding over retention, school is sometimes the opposite.
I’ve spent the last few years doing a deep dive into learning. Not just the academic theory but putting it into practice on myself and others. I’ve been experimenting with helping others learn better through our courses and our learning community, and I’ve dramatically improved learning outcomes across a wide variety of subjects for thousands of people from very different backgrounds.
One of the biggest misconceptions is that people think to read is to learn — we tend to think that just because we read something that we’ve learned it. That is simply not true.
To learn you need to mentally engage with what you’re learning. If it helps, picking up a book and reading it passively is the equivalent of going to the gym, but watching other people workout. You still have to actually do something for yourself – to own the book You have to think about what you’re reading and why you’re reading it. This is the work of reading. You won’t get the results you seek until you start to do this mental work. One thing I do that seems to resonate with others is to do the Feynman Technique before and after reading a book and compare the differences.
SN: Doesn’t all this work as part of your reading process slow you down?
SP: Yes, all of this work appears to slow you down. Why would I spend 10 minutes before reading a book to think about what I know about the subject, where I might be confused, and what I’m trying to learn when I can just open the pages and start reading (which feels like progress). But this is a great example of something I call first order negative, second order positive. In other words, you pay the piper early on to get the benefit later – you go slower to go further. When you take the ten minutes at the start, you dramatically improve learning outcomes.
SN: That’s some insight. Thanks! Tell me how has your reading style changed in last 5 years?
SP: Part of my job is to keep up to date with new books, so I don’t entirely ignore them. But I spend a lot less time with them now that I ever used to. Now I’ll wait till the end of the year, look at the Amazon’s top 100 books of the year, order 25 of them, and spend a few weeks flipping through them and reading them. One book I enjoyed by doing that this year is Fear City.
More and more though, I’m reading older books. I want to spend my efforts on things that won’t change or change slowly.
SN: How well do I relate to that! This is exactly what I tried doing in 2017 – read more and more of older books – and the outcome has been enlightening.
Anyways, using Charlie Munger’s principle of inversion in the context of reading, I think it’s more important to figure out which book to abandon rather than which ones to finish. How do you decide that it’s time to stop reading a book and move on to next one? In other words, what’s your process for separating signal from the noise?
SP: Seneca the younger said: “Time discovers truth” and he was entirely correct. Time is the best filter for sifting signal from noise.
Of course, there is no formula for this but here are some of the things that go through my mind.
• Is this a book I want to read right now, at all, or later?
• Is the structure of the book well laid out? Am I familiar with the vocabulary?
• What do I already know about the subject?
• How will this book age? Will it still be relevant in 10 years?
• Are there general principles in what I’m reading?
• Am I reading for facts and figures, so I can do my own thinking? Does this book have the necessary information?
The list goes on, but you can kind of get a feel for the mental checklist that I have running through my mind.
SN: What do you consider your biggest mistake and what lesson did you learn from that mistake?
SP: The real answer is losing track of what’s important. I wrote a bit about it here. The biggest lesson: it’s not our failures that define us so much as how we respond to them.
Generally, I try to think forward and work backwards to shift perspective. This is a great way to self-correct in real time without getting terrible into the mistake category. What will I regret when I’m 70? The easy answer is not spending enough time with my kids. Thinking like this frees you from letting others use your time because it reminds you of what really matters.
SN: Great thought! I am reminded here of Jeff Bezos’ regret minimization framework. Anyways, how do you go about learning a new topic? Where do you start?
SP: I start by trying to figure out what the very best resources are on the topic. In this day and age, there’s just no excuse for looking at the B-grade stuff. Stick with A-grade. What are the best books? Who are the best teachers? What are the best methods? Start there and then work your way out, in concentric circles.
Exactly how I go about doing that will depend on what sort of thing I want to learn – am I trying to understand some physics or play the piano? Very different manifestations of the learning process.
SN: What are your thoughts on compounding in the context of knowledge and learning?
SP: Good question. The answer is that some things are more important than others. I think one of the best ways to compound knowledge is to focus on the things that don’t change or change very slowly.
SN: In a rapidly changing world, this thought of focusing on things that don’t change or change very slowly is refreshing!
SP: When you learn things that don’t change, more of your time is going toward learning something that will still be useful next year and in five years. This is how we intelligently prepare to operate in an uncertain world. Of course, you can’t spend all of your time learning these invariant general principles. Most of us have to specialize to make a living. You’re compounding your knowledge correctly if, every few years, you realize that you’re reading or learning something new and connecting it to something you already know — If now you see 50 shades of grey instead of only 49.
I read books today that my five-years-younger self would have passed on very fast, for lack of comprehension or interest. That’s because a lot of compounding has happened in the meantime. Learning compounds more infinitely than money and it’s something we control. We don’t control what country we’re born in. We don’t control our parents. We don’t control our home life. But at some point, we need to take control of ourselves and learning is something we do control.
SN: That’s a wonderful insight! Anyways, what are the three most important psychological blind spots that one should try to overcome in order to be a better decision maker?
SP: Answering this question is hard because it’s so contextual. General advice often falls short because situational knowledge matters. And yet, situational knowledge often prevents us from seeing the wisdom of general advice.
And when you think about it, this could be one of the biggest blind spots that affects everyone.
Let’s assume you’re in an office reading this for a second. If I ask you how fast you’re moving, you’d say you’re not moving and you’d be correct from your vantage point. But let’s go back to first year physics for a second. The classic example I learned was the guy on a train holding a ball. Relative to him the ball isn’t moving despite the train moving at 60 km/h. But to the observer watching the train go by the ball is moving at 60 km/h. Going back to us in an office. We’re actually moving at about 30 km/s around the sun.
What we see by default is very dependent on what’s right in front of us. It’s only by doing what I call perspective shifting that we develop a better sense of reality. We have to learn to see the world through different perspectives. That’s what farnamstreetblog.com is about.
SN: You inspire many through your writings. Which are some of the books, blogs, and other resources that have inspired you the most over the years?
SP: I’m inspired by people doing amazing things. I’m inspired by attitude. I’m inspired by bravery and courage. I’m inspired by trying to live a more meaningful life.
SN: What are some of the books that you’ve re-read multiple times?
SP: Oh man. There are many.
The first one that comes to mind is Poor Charlie’s Almanack, which I hope everyone reading this has gone through many times. I re-read portions of that basically every single year, and I keep learning new things. I re-read the Meditations by Marcus Aurelius with some regularity, of course. I re-read biographies I like – I’ve read the Buffett biographies several times, Steve Jobs’ biography, and a number of others. I also re-read great multidisciplinary books like The Lessons of History by Will Durant. Of course, that’s a short one. Re-reading is more important than reading. Schopenhauer nailed this
SN: If you were to give away all your books but one, which one would it be and why?
SP: I’m not sure which one I’d keep. That’s a tough question. The one I’d want to share is the one we’re writing right now that’s a compendium of the best knowledge. Stay tuned.
SN: What big ideas have you changed your mind on in the last few years?
SP: My biggest learning over the past few years was to understand the value of vulnerability, especially amongst my close friends. I used to think that being open about discussing my worries, problems etc. was burdensome – but I learned that being a good friend means being open, sharing my problems and sharing my thoughts.
I wrote a piece about this on FS that resonated with a lot of people I think. It’s been a big change for me, it’s made me a better friend I hope. I have learned lots of other good ideas, but that one is important to note.
SN: I would like to know your take on Peter Thiel’s famous question, “What important truth that you know which most people disagree with you on?”
SP: I don’t think great decision makers necessarily are good problem solvers. That’s the common conception. Great decision makers are masterful problem avoiders. The people I know who consistently make great decisions have fewer problems than the rest of us because they’ve avoided most of the difficult problems.
When you think about how we spend our time, most of it is correctly crappy decisions. It’s a treadmill that we never seem to get off. When you start making better decisions, however, you free up lots of time in the future. Time you can invest in preparing to make better decisions. Time you can invest in thinking. Time you can invest in making sure you’re facing easier decisions than the next guy. It’s a competitive world. If you’re shooting layups you can get the same points as shooting from 20 feet away. One of these things is much harder than the other. To make better decisions now, however, often requires short term pain. Which is why most people won’t do it.
SN: And here’s a question you asked Naval Ravikant, which I want to ask you – What’s a habit that you’re trying to change right now? What are you working on?
SP: Sleep! I’m trying to value sleep more. I’m trying to go to bed earlier, sleep more consistently. There are few better habits to develop.
SN: Now, that’s a habit I have mastered! Anyways, what do you do with the money you save? Do you invest in stocks or mutual funds? What’s your investing style?
SP: I’m lucky that I don’t have a lot of wants, which increases my happiness. Wanting something you don’t have is a recipe for unhappiness. So much of our misery derives from this.
Any excess money goes toward investing in stocks, purchasing entire companies, or reinvesting in the companies we already own. I like to remain flexible and go where I find opportunity. My investing style, if you want to call it that, is certainly based on the discount from value approach, as is all sensible investing.
SN: If you were to bet all your money on just one person – Elon Musk or Jeff Bezos – who would he be and why?
SP: I wouldn’t want to compete with either of them. I’ll leave that to the people who are much smarter than I am. Luckily I don’t have to bet. I’ll keep the cash and watch others do the hard work.
SN: What does your typical day look like?
SP: On a typical day, I’ll drop the kids off at school and head to the office. My mornings are blocked off for deep work. This is when I’m most creative and focused. Meetings and emails are moved to the afternoon. Everything else needs to fit in before I pick up the kids after school, and if it doesn’t, it gets dropped. At night we spend 30-45 minutes reading together before bed. The kids are now into the “Who Was…” series, so it’s fun. We’re learning together. After they’re asleep I’ll write down my top 3 priorities for the next day, read some of my own books, and then off to bed.
SN: Hypothetical question: Let’s say that you knew you were going to lose all your memory the next morning. Briefly, what would you write in a letter to yourself, so that you could begin relearning everything starting the next day?
SP: You’re a father. You have two young kids. Find them. Everything else can come later. They will teach you everything you need to know.
SN: Wow! I could see myself writing a similar letter like you just did! Anyways, my final question is – What would you be doing if you weren’t reading, writing and teaching? What other things are you occupied with?
SP: Growing up I wanted to be a Navy Seal. Not only was I attracted to the mental and physical toughness, teamwork and determination, I wanted to continuously push myself out of my comfort zone. Push myself to do more and learn more. That’s how I’m wired. (Despite my persistent requests, the Seals wouldn’t accept an application from a Canadian citizen.)
Every year I take time to reflect on what changes I need to make in my life and what matters most. I want to play with my kids, spend time with family and friends, watch football on Sundays, and enjoy nice wine. And I want to get smarter. So I read, write and teach. I structure my life to avoid the things I don’t want. I don’t want to sit in traffic, I don’t want to be in meetings all day, I don’t want others to dictate my time for me.
Acquiring knowledge is not easy. You have to read, a lot. You have to do the mental work to have an opinion. You have to surround yourself with people who aren’t afraid to challenging your thinking. You have to do the work. I can’t imagine having it any other way.
SN: Wonderful, Shane! Thanks for sharing your insights. I wish you all the best for your work and life.
SP: Thank you Vishal.[/show_to] [hide_from accesslevel=’almanack’]
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