Graham Weaver, Lecturer at Stanford Graduate School of Business and Founder of Alpine Investors, shares four ways to live an asymmetric life as part of the GSB 2023 Last Lecture Series.

20 years ago, I'm in this meeting, I'm in this huge, there's this huge conference table that seats 20 people and I'm the only 1 there.

I'm in the 29th floor in the financial district.

There's this window, I can see the entire Bay and Alcatraz and everything.

And again, I'm about your age at this time.

It's a conference room of my largest investor, this guy, I'll call him Joe.

And Joe is this bigger than life person, hedge fund, magnet, household name.

And I'm sitting there and I am petrified, I am shaking.

And my throat is dry and I can hear Joe walking toward me.

And then I hear the knob turn and he walks in, as he always did, just huge personality, Graham, he's all excited.

And I'm sitting there and he sits down and he can see something's like really wrong.

I tell Joe that his investment in my firm is down 50%.

And It wasn't his firm's money, it was his personal money.

And I can just see the energy drain out of him.

And the worst part is he's trying so hard to be positive because he knows if he says the wrong thing, like he's just gonna crush me.

Because I was so fragile and he's my largest investor.

I had been told no by over 100 people raising my first fund and there were about 5 or 6 people like Joe who said yes, not because I had any track record, because I didn't, but because he believed in me.

And it was the worst day of my career at that point, and even to this day.

The thing that I thought I knew about investing back then, it was all wrong.

What I thought I knew at the time was, rule 1, don't lose money.

So I spent all that time, I spent all that time just playing small, just trying to protect my downside, trying not to lose really hard.

So we bought businesses at a discount to their net asset value.

And even when things went right, it didn't go that right.

But there were 3 times, I wrote literally in an investment memo that it is mathematically impossible to lose money on this investment.

So what I learned is that, it's kind of like, imagine you start dating, and your only purpose of dating is not get your heart broken.

And you're gonna have 1 foot in and 1 foot out.

And even if you have a good date, it's not gonna be that great because you're not really in it.

But the more likely outcome is you're gonna guarantee the very outcome you're trying to avoid, which is you're gonna get your heart broken.

And so I started deciding over the next 30 years, I started realizing that that was 180 degrees from what I should be doing in investing.

That no matter what you do in this life, like if you're gonna invest, there's gonna be downside.

You can reduce it maybe a little bit, but the more valuable part and the magic is what can you do on the upside?

In 30 years of being a professional investor, I can summarize great investing in a single word, which is asymmetry.

And you are looking for the biggest possible outcome relative to your risk.

And your risk typically is just losing 1 time your money.

So you want to be stacking criteria on top of each other where it becomes asymmetric.

So for example, if you have the criteria of an amazing management team that is going to work super hard and hire well and they're going to be in this industry that's got infinite capacity, they could redeploy capital at high rates of return, and you can hold it for 10 years, and they want to keep going, and you stack those on top of each other.

And you can have an almost infinite outcome.

You're not playing for 1 and a half or 2 times your money as we were in the early days, you can be playing for 10, 20, 50, 100 times your money with that criteria.

And you don't have to do many of those investments in your lifetime.

So as I started realizing that this was how I was living my life investing, It also was how I was living my personal life.

And so what I'm gonna share with you today is how to live an asymmetric life.

And if you get 1 of these principles right, you will dramatically, dramatically improve your life.

If you get 2 or 3 right, you'll have this magical, incredible life.

But if you can run the table on all 4, you can have literally an infinite life.

You can have almost anything that you want.

And you can live with joy, and you can sustain, and you can have energy, and you can sustain that for decades.

So we have this view, we have this thought that life is supposed to be easy.

And that comfort is where we're gonna gain happiness.

So you can order Harmony Bowl from Sweet Greens on your app.

You can binge watch Succession and Ted Lasso, and you can have a life of ease.

And that will give you a quick hit of dopamine.

But make no mistake, that is not the path.

I rowed crew in college, and the way you measure progress in rowing, and the way you kind of determine what boat you're going to is, as Logan was saying, is you have an erg test.

You sit on a rowing machine, you row 2, 000 meters as hard as you can.

And the saying is, if you get done with that erg test and you can pull 1 more stroke, you didn't pull hard enough.

So it's going to hurt no matter what you do.

Well, throughout the course of the season, the day that I'd show up, which would be like September 1, from that date all the way through March, I would improve my erg time by

seconds, roughly, from the first day with all the conditioning, everything we do.

So a big part of that would be rowing, stadium stairs, lifting weights, and on and on.

But all that stuff I just said would take about 6 months and only 10 seconds of that 20 would come from that.

The other 10 seconds would come in the first 2 weeks.

So what happened in the first 2 weeks to give you 10 seconds?

You didn't change your cardiovascular fitness.

You didn't change your VO2 max or your technique.

All you changed is your comfort to be uncomfortable.

You realize that you could push yourself a lot harder than you thought you could.

That was half of the gains I would get all year would just be me reminding myself that I had a lot more than I thought I did.

And that at 750 meters, with when my heart rate's 175 beats a minute, I'm not, I can keep going.

We get kind of complacent, you know, or we get comfortable.

And if we wanna move forward and get to the next peak, the magic is to understand that your life is almost always gonna get worse first.

Any change that you wanna make is almost always gonna get worse first.

So you're in a relationship and you have to have a hard conversation.

That particular night, your life is gonna get a little worse and then you're gonna come out the other end and it's gonna get better.

Or if you need to leave a relationship that you shouldn't be in in the first place, your life's gonna get worse first.

If you want to change careers and you want to learn something new, you're gonna go down the learning curve, your salary's probably gonna go down, you're gonna not be good at your job when

you first start, your life's gonna get worse first.

If you wanna change careers and you wanna learn something new, you're gonna go down the learning curve, your salary's probably gonna go down, you're gonna not be good at your job

when you first start, your life's gonna get worse first.

You wanna start a new habit, you wanna take a cold shower, you wanna meditate, you wanna start exercising, it's gonna get worse first.

And you're gonna follow this pattern, but you need to realize that the thing that's keeping you there is the first move is always gonna be worse.

And eventually, what's gonna happen is these downward curves are gonna get a lot shallower.

Because you know what the biggest part of that curve is?

The biggest part of that curve is just fear.

So the more you put yourself in situations where you do hard things, the shallower and shallower those divots are going to get, because you're going to remove that fear, just like I mentioned in the rowing example.

I had no fear at 2, 000 meters, or at 1, 500 meters.

Everything that you want in this life is on the other side of worse first.

If you wanna have an asymmetric life, do hard things.

Second principle, if you wanna have an asymmetric life, do your thing, do your thing.

When I graduated from school, probably like many of you, I had a choice to make.

There was a firm that came to recruit on campus and I knew I could do it, it was what I did before business school.

There was a number of my classmates went with me.

There was a salary and a bonus and free lunches and it was really clear.

And then there was another path, which is I'd done these, as Logan said, I'd started doing this crazy stuff in business school with buying companies on my credit cards.

And I was like, I don't even know how that's gonna work.

I don't know how to raise money, whatever.

So I chose the path of going to the big firm.

My boss is like, here's what you need to do to be vice president.

So I'm gonna sprint like hell to those goalposts as fast as I can, as all of you are, right?

You're competitive and you wanna go there.

So I got on early flights and would start bidding on businesses and they'd tell me which companies to go to, and I would do those.

And I threw myself in with everything that I had.

And if I had kids at the time, I would have been home late, and I would have missed little league games.

And the thing is, Buddha figured out something 2, 800 years ago, first principle of Buddhism, which is called dukkha, which is that there's gonna be suffering either way.

There's no path that's gonna make everything right.

But I'm 20 years out of school, and It's the truest thing I'm probably gonna say today.

Life is suffering, and so choose something worth suffering for.

The other thing you're missing in this equation is you're gonna do an expected value calculation, right?

But there's 1 thing you're not factoring into that equation, which is you're not factoring in you when you're turned on.

I went to this dinner in New York, and it was a bunch of other private, it was ridiculous, this dinner.

There's a whole bunch of private equity people there and we go to this restaurant in New York.

It's 1 of those restaurants that has like the ice and the fish's heads are like in the ice.

And you can like go up and you point to the fish that you want and for the privilege of doing that, you pay like 4 times more for the same fish, but they're in the ice.

And then we had a reservation at like 08:00 at night.

And then even with a reservation, we still didn't get seated till like

And then we're at the dinner, And this 1 woman comes in with a driver and everything, and she's from the Hamptons.

If I had a counter, she said the words Hamptons probably 13 times at dinner.

I was like, just out of curiosity, do you happen to have a place in the Hamptons?

But there's this 1 guy there, Dave, okay?

We're in the same, he's at a competing firm.

There was this debt, this is what we did on the debt covenants.

We had the debt to Ebitda that didn't step down for 2 quarters.

We're gonna save 50 basis points on our interest, and we use pro forma adjusted trailing 12 months.

Yesterday, Ebitda times 365, and we, therefore, we're getting an extra quarter return of debt, and that's gonna help our, and he's going on and on and on, and I'm thinking, Dave thinks he's colonizing Mars, you know, he's so excited about this.

Like, he's in his head, You know, he's colonizing Mars.

I'm thinking first, Dave is gonna kick my ass because I don't care at all about any of this stuff.

And the other thing I realized is that this is what Dave had written his business school essay about.

He was doing the thing that he wanted to be doing.

And you're not going to win doing someone else's dream.

You can survive for a little while, but you're not gonna win.

The third principle is do it for decades.

And this is 1 that probably a lot of people don't wanna hear.

So like I have conversations with a lot of you and the conversation will go something like this.

My roommate's sister's friend, Megan, is trading Dogecoin and made $2 million, and that could have been me, because I just wasn't in the right place at the right time.

And her friend, Kristen, is day trading board APE NFTs and makes $30, 000 of passive income and all this stuff, right?

And that could have been you if you were just in the right place, but you're all behind.

You're just way behind where you should be.

And I thought that same thing when I was here.

When I was here, it was internet 1.0, B2C, like petfood.com.

And Dave, at that dinner, had asked me, although Dave was not a good conversationalist, so he never asked me, but had Dave asked me about what I was excited about, I would have talked about building this little label business.

I would have talked about the culture we were trying to build at this company.

I would have talked about how we punched way above our weight and we hired this person for his attributes and no 1 thought of this.

And we pulled him from this public company and then we were putting lean manufacturing in the plant.

We were building a culture where people wanted to stay and spend their lives and we were training people from high school to be press operators, and Dave would have been like, Graham thinks he's freaking changing the world, you know, with this little label business.

But what, So what we didn't factor in at the time was I was willing to just keep going because I loved it.

If you think of the equation for returns, it's 1 plus R to the N.

That's the most powerful part of the equation is N.

And so if you think of me, my rate of growth, it almost doesn't matter.

Year 3 I'm a better CEO than I was in year 2, and in year 5 I'm better than I was in year 4.

And if you take that R, which is how fast you're improving, and you can work on that R a little bit, the executive coaching and writing out your goals and meditating and trying to work and be good at your job, and now you put a 23 on it, You can be the best in the world.

It's just about how long you're willing to do it.

And there is no obstacle that will not yield to you excited about something for a decade or longer.

If you wanna have an asymmetric life, do hard things,

The fourth and final point is the most important of all.

In 2008, we had just started, we'd finally got going at Alpine.

Things were starting to get going, and bam, we just got flattened by the recession.

It turned out we wouldn't raise a fund for 5 years.

Trained my savings account to make payroll.

We had 7 companies in default, including our largest business was in default at the time.

So for some reason during that time, I had lunch with this guy named JP Flom, and he was an executive coach.

I was like, what the hell's an executive coach?

That sounds, I had no idea what that even was.

But he was super persuasive, and he's like, hey, let me level with you.

It ain't going so great in the executive coaching business right now either.

So I'm gonna give you this incredible thing that I just pitched you for half price, which was still a ton of money for me, which I just drained my savings account.

And I don't know why to this day that I said yes.

So I hired my first ever executive coach.

I would not know it until much later that I actually hired probably 1 of the best coaches in the world.

We start talking about the largest business that we have and how it's not going well.

And I said, JP, have you not seen the news in the last year?

He's like, well, it sounds like you're just kind of helpless then, Graham.

So I was like, all right, well, what do we do?

He's like, all right, here's what we're gonna do.

And there's 3 rules to writing this story.

The first 1 is, it's gonna take place 5 years from now.

We're gonna get out of the fog of war, you're right.

You can't look past where you are 6 inches in front of your face.

The second rule is, let's start with nirvana.

I don't want to hear something that's mediocre.

What would you do if you knew you would not fail?

What would be your genie goal, as Logan said?

And third, he said, the how is the killer of all great dreams.

Turns out, with those 3 rules, it's a pretty fun exercise.

I get to go out 5 years, I don't have to worry about how I'm gonna do it, and I get to pick anything I want.

So we put in place this plan for this 1 company.

And what we basically said is, all right, we're gonna hire this best CEO you could imagine in the world, this CEO's gonna build this incredible team, our technology's gonna be better than anyone else, and therefore we're gonna have better uptime, we're gonna hire the sales team, we're gonna start winning contracts, we've been losing all of them, we're gonna, and then we're gonna start buying competitors because they're down too, and we can do add on, and, and, and, and, and we had this incredible thing, and I was like, and that was really fun, and then I started saying, well, that was great, but there's no way we're gonna do that.

Aspirational, by the way, is a euphemism for how the hell are we gonna do it?

a recession, that's a pretty good time to hire a CEO.

We spent 6 months and we brought on the best CEO.

We started doing exactly what we talked about.

We started building the team, we started building the technology, we had better uptime, and then when Mark and his team got going, after 18 months, we won every single contract that came up in that business for the next 2 years except 1, And we just started stomping on our competitors.

And by the way, what didn't, our industry didn't change, the market didn't change, our competitors didn't change, we changed.

You know, don't write a story about what happens.

Write your story and then make it happen.

You put out the thing in the universe that you want to happen and the universe responds.

And that sounds like woo woo, you're like, oh God, here we go, universe responds.

But what's really happening, what's really happening is you're putting on blinders to where you wanna go.

You're making goals, you're aligning your day to where you wanna go.

You're attracting people that wanna go to the same place that you want to go.

So it is the universe, but it's actually there's some mechanics behind it too that make it happen.

After that experience, I was like onto something.

We started writing stories at Alpine about everything.

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Last Lecture Series: “How to Live an Asymmetric Life,” Graham Weaver