The Only Rules You Need to Know
- Posted by James Altucher
It really sucked to be Moses. The guy was abandoned as a baby. Then he stuttered (must have been hard to pick up girls with that).
Then he was a slave. Then NOBODY would listen to him. He’d throw a stick down and it would turn into a snake and STILL nobody would pay attention to him.
So finally he killed a lot of “eldest sons” and brought down plagues, etc and they let him and his crew out of town. But STILL nobody believed him and he had to part an entire sea and kill a lot more people.
Then he went up to a mountain to talk to a god and STILL nobody believed him. They made a gold thing while he was gone and started praying to it. And people say Jews are smart.
So he smashed the stones that god gave him, he got new stones with new rules (they are totally different. God changed his mind).
And finally, when everyone believed him, God punished him for no real reason and didn’t let him into Israel. Israel was just a few miles away but somehow it took them 40 years to walk there and Moses died right before he was supposed to go in the front door.
Making rules is really difficult. Jesus tried it and they killed him. Buddha, Lao Tzu, all of these guys tried to make rules but nobody pays attention.
And here’s why: those aren’t rules. All of those guys just tried to give self-help. Like, if you don’t murder people you might live a better life. Things like that.
Those aren’t rules. That’s ADVICE.
A rule is like a fact. It works whether you believe it or not.
I’ve had lots of ups and downs. I’ve had situations where I’ve gone against the rules and I’ve lost everything.
And I’d have times when I made the rules work for me and I made a lot of money, friends, success, happiness.
Again, this is not advice. I’m telling what happened to me. These are the rules that seem to be universal. Like pi will always equal 3.1415…. That’s a rule.
Some of these rules people have already written books about. I’m not going to repeat what they say. You can read their excellent books.
Instead, I’m going to enhance the rules they give because every rule can be enhanced or better applied to make it work for you or me. It doesn’t help if you know pi but still don’t know how to calculate the area of a circle (or is it the diameter… I forget).
If you have more rules, please add them to the comments. If you think these aren’t really rules, DO NOT DISAGREE, but just try not following them, see what happens, and then report back.
- THE 4/64 RULE.
Everybody has heard of the 80/20 rule but this post is going to make it a lot more useful.
When I worked in the IT department at HBO there were about 100 programmers. But 20 of the programmers did 80% of the ultimate work that was created.
The rest was dead weight. The financial crisis of 2008 gave every company the excuse to start firing the 80% and they are still doing it. That’s why there is still so much economic uncertainty now.
That’s the 80/20 rule. Another famous example in science is if you plant a garden, 20% of the seeds you plant will fill up 80% of the garden.
Another famous application of the 80/20 rule is: 20% of your customers make up 80% of your profits.
This is described very well in Tim Ferriss’s book, “The 4 Hour Work Week”. Basically, you can fire 80% of your clients and still get most of the profits if not more (because once you fire clients you can cut some costs to increase profits.) And that’s a big part of how you get to a 4 hour work week.
BUT…. and this is important. I still think 80/20 is too hard. I’d rather get rid of 96% or 99% of my clients (or acquaintances or work that I do during the day, etc).
I prefer what I call the 4/64 rule. Do the 80/20 rule and then DO IT AGAIN.
In other words, in whatever area you are focused on (clients, employees, seeds, activities, acquaintances, meetings, etc) first identify the 20% that is providing 80% of the value.
And then ON THAT 20%, find the 20% that is providing 80% of the 80% of the initial value. (ugh, math! But bear with me).
Now you are left with 4% providing 64% of the value. For instance, 4% of your employees create 64% of the value of your company. 4% of your customers, provide 64% of your profits. 4% of your acquaintances provide 64% of the benefits of friendship. 4% of meetings you can take (of any sort: business meetings, dates, lunches, movies) provide 64% of your enjoyment in life. Or more.
I’m a big believer in minimalism. Not materialist minimalism although that’s part of it but time and energy minimalism. The body is given only so much energy a day.
You can expand your energy in various ways: sleep more, stress less, exercise, eat food (to a limit), laughter, etc. But if you spend a lot of energy on things that are wastes of time then you waste energy, get sick, and die faster.
So I don’t like the 80/20 rule. It’s still too much energy used. I like the 4/64 rule.
And take it one step further you have the 1/50 rule. But when you have too much free time on your hands that can be dangerous also.
This is not a rule but a theory: free time expands into the maximum unhealthy uses of it.
Phew. ONE RULE only and that took up 1000 words. I thought I could get through this quickly.
I still have a lot more rules. Hmmm, I don’t really know what to do now. Maybe I’ll put one more rule in there.
- THE 1000 HOUR RULE (note: this is NOT the 10,000 hour rule. One less zero).
Everybody knows the 10,000 HOUR RULE. The one popularized by Malcolm Gladwell that basically says if you do dedicated practice for 10,000 hours you can master a field. You can reach your full potential or close to it.
He used the Beatles as an example. They spent 10,000 hours playing music 18 hours a day in German porn clubs for five years and became the best in the world.
It makes sense. If you practice painting water colors for 10,000 hours you will be among the best in the world at water color painting.
Here’s the problem: We don’t just have one passion or love in life. The universe wants us to have fun doing more than one thing in life. That’s how it learns. You don’t have one purpose in life. You have maybe 500 or so.
And 10,000 hours is a lot of time. It’s anywhere from 5-30 years of your life. And then you die. And what do you show for it? That you’re great at watercolor painting. Not everyone is going to be the Beatles. That involves some luck also.
So I prefer the 1000 hour rule.
If you practice ANYTHING for one thousand hours and make sure it’s dedicated practice then you will STILL be among the best in the world.
How come? Because with anything worth learning there is a steep learning curve. In the first 1000 hours your ability goes straight up. Then it starts to even out as you learn more of the subtleties required to be among the best.
Here’s the thing: NOBODY GIVES A SHIT.
Since only the best in the world can really appreciate the subtleties and 99.9999% of the world can’t tell the difference between somebody who has studied for 1000 hours versus someone who has studied for 10,000 hours then you can appear to be the best in the world and get much of the benefits of it by just putting in 1000 hours of dedicated practice.
In fact, if you get good at learning new things, then you can even take another zero off. The 100 hour rule. Or maybe 200 hours. This makes life a LOT better and more fun. You can take that zero off after you get really good at the first thing.
Because then you have learned how to learn. So that saves a lot of energy on the next thing you learn.
Phew! This one rule has saved me decades of time. I can’t be the world champion at chess but I can be a chess master. I can’t be a billionaire but I can perhaps learn enough about a field to make a real contribution to society.
And I can do it more than once. In fact, I can do it every year of my life and learn many things.
Thank god for the 1000 hour rule. (or the 100 hour rule).
- The 30/150/MILLIONS RULE
This rule took 80,000 years to make but it allowed humans to go from the middle of the food chain (eating just the bone marrow after the lion killed the prey and ate all the good meat and the vultures picked at the rest and we were left with the bone marrow) to the top of the food chain (and now the lion is in our zoos and the Neanderthals are all dead).
The important thing about this rule is that it applies to leadership and organizations and where you fit in in them as well as how to do well in an organization or business or industry or any kind of group. You NEED to know this rule.
30: This is the number of people we can directly know. Nomadic tribes were 30 people.
Jane knew that Mike was good to hunt with because she directly knew him and knew “Good” or “Bad”. She could make a judgment call.
More than 30 and this breaks down. It’s no longer possible to retain information about everyone to know if they are good to hunt with and then a tribe that depends on hunting starts to break down or split in two.
But then around 70,000 years ago humans developed an important skill that no other animal had. Not even other near-humans like Neanderthals.
Now Jane can say to Harry, “Mike is good to hunt with” and now Harry, who trusts Jane’s ability to gossip, has confidence he can hunt with Mike, even if Mike is a total stranger.
BAM! End of Neanderthals and every other type of sapien except for humans. Go team!
This works in organizations, groups, “tribes”, up to about 150 people. We can retain information and gossip up to 150 people.
If we don’t have 150 people to gossip about, then we feel the need to read gossip magazines and keep up with people like Kim Kardashian, Obama, etc.
For businesses between 30 and 150 employees, it’s good to make use of this rule by starting employee communications like newsletters or “best employee” awards and give titles, and add a little bit of hierarchy, etc.
This is important because between 30 and 150 people, we are now going to occasionally have to work with strangers and we need ways to determine whether or not we can “hunt” with these strangers.
Then something unexplainable happened 10,000 years ago that propelled us truly to the top of the food chain and enabled strangers who lived thousands of miles apart to work together.
If you tell a good story, and two people from opposite sides of the world trust that story, then they can work together. Hence, religion. Hence politics. Hence labels.
If you are “pro-choice” and I am “pro-choice” then we get a sense that we can work together. If you label yourself “Republican” and I label myself “Republican” then we get a sense we can work together. Nationalism is a powerful story. Political dividing lines like the environment, pivotal issues, etc are powerful stories. Religions are powerful stories that unify millions of people.
All of these stories allow us to work with strangers who we have nothing else in common with. Oh! You drive a Honda Civic? Me too! Now we can maybe work together. (Actually, I am banned from driving but this is just an example).
A brand is a powerful story. The more a company or person tells a powerful story about their product, the more value it has.
This was shown in a recent study where a guy bought a bunch of junk and then sold it on Ebay. He made $X. Then he re-sold it on Ebay but told a story under each product about where the product came from, why it was important, etc. It was still the same products but he made $X * 4.
Stories create value and allow us to cooperate with millions of strangers.
The only problem is: we’ve been evolving for millions of years and this is only in our genes for 10,000 years. So occasionally it breaks down. Hence wars, hence a financial crisis, etc.
Being aware of the stories in my life helps me to decide what is BS and what is something that is really true to me. The only thing really true to me is not any of the stories outside but the way I feel inside.
When I laugh, that is real to me. When I feel good that is real to me. When I am kind to people, regardless of their story, this makes me feel better.
But I will never argue with someone about a story. I only have so much energy and I like to use it as efficiently as possible so I can love my family, create things, do fun things, and be healthy.
I am a personal energy minimalist.
Ugh, 2100 words in. I have 13 different Rules and this is just 3 of them. I can’t do all of them. Maybe on my email list I can do some (you can sign up at jamesaltucher.com but I’m not trying to get anyone to sign up. Don’t do it if you don’t want).
If you found some use in this, please tell me and maybe I can write more about this. I’d like to.
Anyway, I have to prepare a talk today. I’ll use “the 4 Us Rule” and the “10 Minute Rule” to make my talk as good as it can be. These are rules developed maybe a million years ago.
Meanwhile… Moses… poor bastard. Your story has created countries, wars, laws, ethics, arguments. But I feel bad about your stutter. It’s like you had a secret you always wanted to get out but it was trapped inside and struggling to escape.
Maybe one day we’ll hear it and it will contain the secret rule we were all waiting for.
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