Protecting The Downside

Welcome to the Wabi Sabi podcast. This is Lawrence and Jim. We are here to talk about all things about how life is so imperfect at times and so perfect at the same time. So the art of imperfection is what we talk about in these episodes, and I hope that you are getting so much value. Jim, you brought up an issue here that you wanted to share a story to kind of start our conversation today around protecting your downside. So I haven't heard the story, so I'm really looking forward to hearing. how the story relates to what we're talking about.

Sure, well Lawrence the theme of what we're going to be talking about today is really covering your downsides. Risks are, you know, very often when we go into any interaction and whether it's a business dealing and investment, we look at the potential upsides. Hey, this could go great, this could go gangbusters, this could really help me achieve this, this and this. And a lot of the times we do not factor in the downside, the what if scenarios. And in a way that... isn't just, oh yeah, this could happen, but it's like, no, assume that this goes 180 and it goes totally the other way. Have you basically set in processes and systems to ensure that your downside risk is limited or minimized as much as possible? So really, that's really what I wanted to focus on today.

It's almost like great, you know, if you're a trader is almost like creating like stop losses and things like that is to get a good know the trader that yeah, we all, we all want the stocks to go up and up and up and up, but there's always that potential downside, which what you're saying is like, how do we put stop losses in our, in our lives and our decisions, uh, or in business or real estate investments or whatever, so that, you know, in case it goes, it does slide backwards where we don't get caught, uh, you know, being the only person who holds all the, uh,

Correct. Yeah.

altcoins of, you know, say crypto or stocks.

That's right. That's right. Yeah. Well, it happens even in interactions. I mean, you and I have noticed that many times, particularly in consulting people where there's a new situation, let's say there's a principle and a practice and a health practice brings on an associate. Everything's great at the start. Everything's awesome and great. I was always honeymoon period. No one ever factors in what could, what would happen if things

Always. Honeymoon period.

didn't work out that way. How is the principal protecting their practice? You're laughing because we've gone through this how many times, right?

Yeah. Oh my God, yeah. Everybody expects like an associate to just be perfect. Of course you do, because you're the one who chose that person, right? So you just hire, and this is anybody who hires anybody, right? So you hire the staff member knowing and hoping that you chose right, right? It's no different than hiring a coach, picking a player in a draft, picking an associate. You always have the upside of thinking like, that person is gonna be the one, right? They're one, and exactly, they're gonna be the superstar.

A rocket. They're gonna be brilliant.

And you have all of a sudden that you have this great expectations, but what you're talking about is, which I always advise people, but what if though, they never even meet 50% of your expectations, and what do you do then? And you just basically bet the house on this staff by training them and expecting and projected all your future earnings or revenues of this business on this one person. I think that's always never a great idea. I bet on myself, right? But.

Yep.

You know, betting on other players, other people, that sometimes you definitely have to know your risks.

And it's true, and it happens because we look for the good in people. And one of the first things that I learnt, I still look for the good in people, you know, like I've learnt through experience that I needed to build in systems and process to safeguard that ability. So I now have an amended rule and that is still look for the good in people and get it in writing purely because it covers my downside risk. You know, I don't want to be. so jaded that I look for and have the expectation that everything's going to go bad and everybody's out to get me because it just it doesn't inspire me to think that way. So I would much rather have these situations where I look for the good, I give opportunities, I'm staying open, however, I've built in protection mechanisms to ensure that I don't get burnt.

Yeah, and I think that's, it's not, so oftentimes I think when most people go into any situation, they are the optimists in every situation. So they think that everything is gonna go well. And then the flip side of it, which is also just as bad, is that if you're a pessimist, thinking that, oh, I'm gonna just go into this knowing that everything's gonna go bad, so therefore I'm protecting everything. What we're saying is the balance between those two. It's like being in the middle. It's like, be optimistic, think things are gonna go well. but also be able to protect with a pessimistic view to going, what if it doesn't go well, are you willing to accept the consequences of that? And that's what you're kind of talking about.

Yep. So which leads me, I guess, to the motivation to talk about this and take what I was going to talk about and let you pull out what you need to pull out of it. So I've really been sitting with this, as I said, I haven't even shared that with you, but I'll go with it. The last few weeks for me have been a really stressful period. Not so much from anything other than for exactly this scenario. I'm not going to go into the nitty gritty details, but I'm going to give a high level overview of what's been going on. And you'll actually see where, had I not protected my downside, I could have been in all sorts. So, long story short, a few years ago, I bought an apartment block with multiple units in there. It's one of my chosen areas of investment and exceptionally well, we bought very well. And... We decided because of the way that interest rates were going, we were going to get out of the deal rather than be a long-term hold. And we sold the property for a tidy profit, multiple six-figure profit. But we had some hassles in that the people who were buying the property wanted a delayed settlement. And that wasn't ideal for us. But we went, OK, we can deal with it. We had a couple of people who... just weren't getting to the level that we were, these people said, okay, we'll do it. So, and one of the stipulations they had was we wanted vacant possession of the, of the property. So we went, okay, we can do that. We'll, we'll follow that along. We'll make sure that happens. And long story short, once we were progressing in the deal, there were a couple of things that were starting to show up that were giving us an indication that things weren't going. ideally to plan. A couple of times the people buying the property missed progress payments and they eventually made all those up. But along the way things just weren't going great. But we had great legal advice along the way that ensured that the process was still moving forward and progressing. And we got to the point where settlement was meant to happen, but because we couldn't actually provide vacant possession because a couple of the tenants hadn't quite moved out. We had to... defer things and everything was all keeping great. We then basically had to institute, we were actually then given a rescission notice for the property deal which basically meant the whole deal was going to fold. We would actually be liable for multiple hundreds of thousands of dollars because we couldn't deliver what we were looking at delivering. But long story short, the reason why we couldn't deliver was because two of the tenants that were in the property were people who couldn't find alternative accommodation. One of them was unfortunately a lady with a substance abuse problem and who had stopped paying rent and who was really squatting. And the other one was a young mom who really couldn't find anywhere to move to. Now... Just before Christmas, so just after Christmas before New Year, which traditionally in Australia is a very quiet period as you would know, Lawrence, nothing gets done there. We were given, and obviously this is going to date this story a little bit, but so between Christmas and New Year we were given a 14-day rescission notice to mean that unless you can deliver this outcome, pretty much, the deal's off and as I said, you're liable for a whole lot of money. And it was a very strategic ploy because it was done at a period of time when nothing else happened in Melbourne, right? So it was exceptionally well played. And we only have just found out later on that the guy was trying to get out of the deal and he was prepared to pay someone 50 grand to ensure that those tenants didn't move out. Right. So we not only had things that were hard enough to deal with, we were also having

Hmm.

scenarios in place that were trying to sabotage us progressing and moving forward. And honestly, we called in the favors. We did things that shouldn't be able to be done in the timeframes that we had. We had to make some concessions. I'm letting this know not because I'm an awesome guy, but it was just in the interest of making a deal. So we had to put up one tenant in an Airbnb for two months to just get them out there. And another person, we had to

Hmm.

basically secure a six month rental for them that we paid for to get them out of the deal. And the cost of all of that was significant, but it piled into a fraction compared to the deal not going through. So it was one of those scenarios, right? Where you go, this isn't great, however, which one's worse? So that was palatable. So all along the way, we had, we looked like we had the legal process on our side. We had all these things going.

to come by what you go to do. Yeah, yeah, worse, yeah, which one's worse? Yeah.

but it was our legal people. We invested a lot of money in the legal agreements that we had so that we had covered our downside. And had we not, had we not been proactive, had we not, had we, you know how sometimes people say, listen, I think this will be okay, take it easy. And your instinct goes, I don't like the sound of this. I don't like the feel of this. I've got to move. Had we not done that, it would have been done. So. I think that was really the catalyst of why I wanted to talk about that today by sharing a personal story. And we are on the end of it, the other side of it, things will be fine. We've saved the deal. We won't be liable. If anything, the buyer will walk away from a deal and they'll lose their deposit. But this could have gone south really quickly for us, even though the thing that held us up were factors that were outside of our control. I physically couldn't. move people from the outside of the world out of a place, even though they're doing the wrong thing, even though the law says, yes, you're right. So it was just, yeah, anyway, I just thought I'd get that one off my chest and let you go where you wanna go with that one, Lawrence, and let's perhaps make this something that everybody else can sort of benefit from through my experience.

Yeah, no, it's an incredible story because I feel like there's so many things there that we could talk about. But one of the key elements is one is sort of that here that you have to go through that. I mean, no one likes to hear through, you know, going through any situations like that, especially on that much of a financial property and not only a financial deal, but it's not just a financial deal. But it's actually how, you know, forgetting about the numbers for a second, like there's the money side of things. But then there's also the people effects, too. Right. That's what I hear, too. the impact that you would have to make. I mean, a lot of people in business, unfortunately, they deal only in numbers. And I feel like, you know, knowing you, that it wasn't just about numbers for you, it's also like the impact, the implication on how it's gonna be affected, not on just you, but the people that are, you know, not collateral, well, the collateral damage that could also be affected on terms of their lives and, you know, that family's life and how that, I'm sure you would have thought that through as well, and that impacted on your decision making.

Hmm.

process to do it within the values that you uphold as a person, as a human being as well, which not everybody factors that in. Which also complicates the decision making. It also complicates what you can or cannot do. And I think that's commendable and I want to make sure that I note that. I guess one of the key elements for you is what do you feel that out of all that, the lesson that we can extract from? What was the most valuable lesson you felt that you took away from this particular experience?

Yeah, I think that's a great question. So that's why it's still pretty raw. Right. And I'm still integrating a lot of that. Uh, I, what I have taken out of this scenario is that we were very careful in what we did at the start of the deal. So we had any time that we wanted to do something and look, it, the bigger, the game you play, the more areas that things can go wrong. And so. It's really, I guess that's what I want to say is that with complexity, with bigger deals, with bigger situations, there's more things that potentially have to be, that potentially could go wrong. And you need to mitigate those and you need to create a safety net around all those possibilities. You can't factor all of them. That's where insurance comes in. That's where all kinds of things. But what you need to do is minimize the maximum risk. And we did that. We feel we did that by virtue of the fact that. We had our lawyers draft up amendments and amendments and amendments along the way. So we were minimizing our downside all the way along. What we couldn't anticipate the imperfection in this whole process, the perfection and imperfection is when you follow that through and then the tenant says, I'm not moving out, I've got nowhere to go. You can't physically kick them out. And that was the scenario where you go, okay, it doesn't sit right on me to just, um, kick a young mom on the street, out on the street. Uh, for that, so that it goes in conflict with the philanthropic part of me, right? And so a big philanthropic vision for us is to create a foundation that's going to help these kinds of people. And so here I was presented with a scenario to go, okay, he, you want to help this, but this is where it's really affecting you. Are you still going to hold true to what you're saying? And it was the toughest thing to just go, Hey, just writing a check for somebody who is doing the wrong thing by me. That I need resolution from.

Yes.

that I'd rather donate it to. And you know what, it's what really helped me because I went through a stage, I'm not gonna lie, where I was really frustrated with it. But here's the thing, I donate a lot of time, energy, and money to causes that are important to me. You and I are in the process of planning something. that will come out in the next little while about what we're planning as well, which is really excited about. So I see myself as a philanthropist, I really do. And the moment that I shifted and I went, I'm donating to this person's wellbeing for the next X amount of time, it shifted the whole narrative. And so it took me out of being frustrated, like in an instant, like it was just amazing. So I went, no, I'm in control here. You're not controlling, I'm in control, I'm the voice. And I literally...

Yeah, beautiful. Yeah.

from one day to the next, it totally changed.

You know, so I'll bring that, I think, let's continue that discussion here. I think that's really vitally important for us all human beings to kind of really think that through because the reality is most of the, sometimes the situations that we put ourselves in or expectations that we hold ourselves or have, it really creates the downfall or the emotional downfall that we are experiencing at any given moment in time. So what I mean by that is like, if you are being frustrated with any particular, you know, situation that you're going through. We'll take yours for example. You were frustrated, you know, let's say last week with this whole situation. And what you just did was brilliant, right? That's why I mentioned this, right? Because what you did was brilliant, is that you basically switched the narrative on how you perceive the experience. So all you really kind of did, you just changed your glasses or the lens you saw the experience. The experience didn't change, right? Everything stayed the same. It's just that you saw it through a different color glasses. And when you did that,

Yeah. Yeah.

all of a sudden your experience changed internally in consequence. And I think that's really, really important. So I used to do this when I was in practice. When I was a chiropractor, oftentimes, there's moments where patients don't pay their bills. You deliver on services and you trust that there's gonna be this fair exchange in values. And there's sometimes a handful of experiences where patients just don't pay their bills. Now of course you do the right thing by, you know, you chase after them a little bit, you call them and stuff. And then after a while though, I just kind of go to my team, I just go, and you know what, like just let it go. Like just, I do, like I'm not saying I don't do anything because that's not right either by principle, but you know, do something to a point, but then you just got to go, like in certain circumstances, like you write it off. And the write off to me is like, well, that's my, in my head, I flip it, I was like, that's the charity.

Yep.

That's my charity. They obviously need it more than I do. And you know what? I just chalk it up to, and this is where the optimistic personality comes into play, is like, I'm optimistic that everybody's trying to do what's right. And for that person to not pay their bills, that's probably, there's a good reason for that. That's at least the story I write now. Whether it's true or not, I don't care. That's the world I choose to live in, and I might as well choose, if I get to choose the life that I wanna have, I may as well choose a better story.

Yep. Yep.

to live in it, like I'm not gonna put myself in a horror movie, I don't enjoy horror movies. Like why would I put myself through that? I'd rather be in a hero's movie, right? Where I'm part of something that actually great happens. So I also change the story and the narrative so that I become, because really I see, this is just one of my things, I see life is just like a movie, but you're the director. So you get to direct.

Yeah. Yep.

the script and the narrative and the road and the process that you're gonna have to go through, but why go through those movies that's so depressing at the end, there's no fulfilling ending, just actually gets more depressing. I hate the movie. Like there's no payoff. Oh God, those movie drivers, I literally watched two hours of this for this payoff. I hate those movies and I definitely don't want that.

Yeah. Yeah. Because you want to, because you're looking for, if you're watching a movie, you're looking for a feeling. And if that feeling is just horrible, with no joy at the end, I think that's the whole escapism that we, while we look at movies, while we go for movies is for a feeling, it's the, it leaves you at the end going, Hey, I cycled through adversity. It was so tough, but they got through it. That's great. And it's, it's a different narrative. So I agree. I use film and music to create a particular narrative in my mind.

Yes. Yeah.

to shift it. So if I'm noticing I'm going one way, I'll use it on the specific scenes and movies that I'll watch and I've watched to death because it helps me reframe the whole experience. And that effectively helps me be in control rather than the effect of something.

Yeah. You know, we were discussing this earlier before we actually recorded it, and I think, you know, I'll bring this up, and I don't know if you, because it's so raw, you may not even have thought about this yet, but I think this whole experience that you just described, one of the things that you created, okay, you and Bettina created in your life, is that you created all these long-term connections. these long-term relationships that really didn't have like an immediate benefit. And this is something we just discussed earlier about how we do that and how we, maybe we'll do a podcast on that. But like oftentimes we create relationships for the relationship's sake and the connection, not because out of something that we need, not that we need something we want, but we're creating the relationship because we want to create relationships. And you have done such a great job, I find, in your life. that allows you and affords you the opportunity to call on those favors in between the most summertime Christmas New Year break, where no one works, and they put you into situations where you can then lean on favors. So I think there's two lessons, strong lessons. There's one is, develop the relationships that you need to develop, when, not when you need them. but develop them because you never know when you need them. I think that's number one lesson, so I think I want you to make sure you honor that too. And the second thing I think too as well is what I loved about it is that you were unafraid to ask for help and assistance during the times when you need it. Because oftentimes I find with a lot of people, including myself, where we are in situations, we have the right connections, but we're too scared

Yep.

Um, proud to ask for help. And, and you didn't do that in this situation. Cause I know you would have thought twice because it's Christmas time. You know, it's new years, everybody's with their families. You would have thought two, three, four times before you just asked whatever favors you needed to ask and, and you would, but you asked, and that's the most important thing that took guts and that took courage. I just want to make sure you honored that too. And I want to say one more thing. The third thing here is, is that.

Yeah.

You this whole situation that I learned that the one of the biggest takeaway I heard from this was actually you took action. So instead of like sitting in pity, instead of, uh, I'm sure you had moments of that, right? So don't get me wrong. I'm sure like, I'm not saying that you just like, okay, well, that's it. Turn around. I'm sure you sat in pity and I'm sure you sat on like stress levels and you know, like why me kind of like, you know, that victim mentality, I mean, we all go through it like that's just normal. That's a normal process. But what you did that most people wouldn't have done is that you decided to take action.

Oh, yeah.

Like you found ways. Yeah, sure. Like, like that's where, that's where my brain went off. Like, because I'm a third, I don't have the emotion part of it. Like when you said like, all these are happening, like, yeah, I would have like, how much money would it take me for me to put these people in somewhere else for the next three to six months? Right. That's exactly where my brain went. Yeah, sure. You're not going to get as much of a, a profit on this, but at the end of the day, you help them out, you know, you take less of a profit guarantee is going to be just a percentage of what you, you know, your, your profit was going to be. And it's kind of worth it. So I think it was a win-win situation for you and the deal goes through and yeah so I want to make sure I commend you for all three of those things.

Yeah, thanks for that. Thanks for that. And in the spirit of it's interesting, because this was a really interesting role for me because I've got a couple, I've worked out who's in my foxhole. And when everything goes. you know, potentially everything's getting nuked. I've now, I've reaffirmed, I already had a great understanding of what certain people and their character is. This is just solidified it even further. And so, you know, there were, there were people who were offered money to sabotage this deal who chose not to, right? I'm eternally grateful for that. So, you know, I'm going to be rewarding them and acknowledging that.

Yeah, interesting. Yeah.

to go, thank you for helping me when you could have. So there's that. But really significant thing, there were two key people who were drivers of this that I had to surrender to. I had to empower them and go, here's a scenario. Here's where I really need some help if you can do it. One of them, like me, is overseas. You know, this guy was in Scotland and unbeknownst to me, he was in Scotland, I thought he was in Melbourne. And I said, listen, dude, I'm really needing some help. The whole real estate industry is shut down. I can't get any person to answer an email or a call, can you help us? And he found it. He found a place, he organized it. We've got it all settled. It's just, people are just coming back online after Christmas in Australia, and we should not have been able to do theoretically what was done. In post-mortem, we're talking to our lawyers and other people that go, you shouldn't have been able to do what you did. Right? There's, there's one part of it, but I didn't, I wasn't the driver of it. I was the, the empower of other people who were absolute ninjas in that field who made it happen. So the learning for me was, like you said, is asked for help. And I physically couldn't do it. Had I been in Melbourne, I would have been the one running around doing it all. But because when I'm in the other side of the world and I've got to go, what, how do I maximize the impact while I can't do a thing? And that's been a really big learning as well too. Sometimes we get in our own way. We think that we're the ones that have to come up with the best solutions. And sometimes when you're the maximally stressed one, you're not at your most capable. You're better off delegating to, you know, trusted generals and people who actually can, can execute a mission or whatever it is that they need to do with the objectivity and lesser the emotion. Correct.

Well, that's what a coach does, right? Like, you know, I know this is a bias thing for us being coaches, but the thing is, most people don't realize, and they don't factor this in, right, is that you have a coach in your corner, not like because you, yes, of course, you hire a coach typically. Most people hire a coach because they want someone to guide them towards, you know, greater profit, greater freedom, greater mindset, or whatever. Like, it's usually going towards something, right? But they never think about needing a coach in their corner when things are going bad, right? it's not something intuitively a part of the processing because most people don't anticipate things going bad. The amount of times that I'm sure your clients have been in situations where you're there, a phone call away when situations happen, that's what a coach, that's where you, as us, as coaches, where we really shine. My clients know. they can call me 24 seven. Doesn't mean I'm gonna answer 24 seven, right? You know, I usually, for my clients, I'll answer within 24 hours. Just because of time difference and stuff like that. Now it's gonna get me. But if you say, if you alert that it's an emergency, dude, I'm gonna be there, first thing, I'll drop everything to make sure I'm on that call. Because I know my clients are not gonna call me. Like, they're not gonna SMS me or like, you know, send the bat signal, unless something is drastic.

Yeah.

And so they know that. So is it, has it happened? Yeah. Has it happened often? No, it doesn't happen every week. Maybe it happens like once a year, but it doesn't matter. They know that they have someone in their corner, but that's, I think that's the power of a coach is having someone in your corner, in your corner man to be able to, like my coaches need to call himself as a corner man. It's like, he's there on a phone call, ready to go when things are going bad. He was the guy that gold medalist. I remember him telling me this story where

Yep.

a gold medalist was in the summer Olympics. And he was the favorite to win. And the day before the gold medal round, and I think it was shot put a discus or something, or no, long jump, it was long jump. He was having the yips. You know, he just like couldn't, like, couldn't perform. Who does he call? Right? He's the guy, right? Talk him through it, goes through the process, da, wins the gold medal, right? Because sometimes, and that's the thing, that's where you need it. That's the covering the back side, the downside of things too as well is being having someone in your corner. And you talked about that. Having the right people in your corner is such an important thing. And so I'm gonna go back to, yeah, go ahead. Yeah, go for it.

Yeah. And having someone in your corner, I was just going to say, you know, if you've got a cut man in your corner or someone in your corner, the hardest part sometimes is they're going to make decisions or they're going to see things that you can't see and they're actually protecting you and you may not be able to see it. And it's, and it, there's a, there's a level of development and growth and trust you have to have. You might be annoyed at them, but you ultimately know you are, you've got my blind side covered.

Mm-hmm.

and you're keeping me safe. And for me, that's a part of it. You know, it can be legal. It could be people you put in strategic positions to cover and protect you. And I can't tell you how highly I value those relationships. So in those scenarios, I was deeply grateful. I went, you know, I got to the point where I went, okay, one fundamental rule of investing as I mentioned to you earlier on as well, is that No one deal should make you or no one deal should break you. So this wasn't going to break us. Right. But it was like, and so I never get myself in scenarios where that's, that's another protecting your downside, downside principles, you know, making sure that's the case, but I understood that when push came to shove, I had people who would. Um, do the right thing by me and the bigger vision, even if that meant confronting how I was going about that. And I think that that's a level of. that I've learned because I'm a very driven type of a person. I need to have people who are okay with a level of, I wouldn't say confront, but rather to go, hey, I care about you, so I'm gonna give you some hard truths. Are you open to it? And to me, someone who's prepared to do that, I don't take that as an aggressive, I take it as I care about you enough to get into this discussion with you. because I'm ultimately trying to help you because I'm protecting your downside.

Yeah. And you know, when you're talking about this, uh, you know, when it comes to investing, I, one of the things I learned, you know, the, I remember going through the GFC in 2008 and we were investing in this, uh, property development deal and it was, you know, it definitely came with a lot of sophistication that we were not prepared for because we thought we were untouchable, uh, you know, and that's, that's probably another lesson on investing is like, don't jump into invest in, don't jump your steps. Like, yeah, we were, but from basically elementary school to like university. like in one leap because we thought, you know, we're that good. And so we put ourselves in a situation. How, what, one good thing that came out of all that was that I never put myself in, I didn't put myself in a position that if we lost it all, which we did, um, that wasn't going to break us. And, but we were in partnerships with, you know, other people who are investing as well, and because the deal was so good, everybody was in and they got caught up in the optimistic side of things and, you know, how great it was, they put.

Yeah. Yep.

some of their savings or their retirement funds. And, you know, when everything kind of flushed out, there were some people that, man, it just, it broke them. And it was sad to see, you know, and I guess I was young too as well. So I knew that I had that ability to be able to earn that back. You know, I don't like losing money, especially when it's that much, but it's one of those lessons I learned. It's like watching other people really kind of like,

Yeah, yeah, heart breaking. Yep.

putting money that they couldn't lose and putting themselves in that position was not a good thing. And it was something that I realized that every deal, and this is where we talked about at the beginning of this, is when you go into a situation, a business investment or a deal, or any type of investment, I always kind of go into, what if we lost it all? I got, you know, of course you don't, like that's the worst case scenario, but every situation I always think like, what's the worst case scenario here? And let's play that out. Like, is that, if I play that out, is that going to, you know, is that gonna take me out of the game? because the key element here is to stay in the game, right? Everything is like, can you stay in the game? Because can you stay in the game long enough to play it again? Like even if you lost everything, but can you still play the game? Are you still alive? If that's true, then that's okay, right? But if it takes you out and you can't play the game anymore, that becomes a problem. And I think that's a really bad situation. I learned that one lesson. I was watching this movie, Alex Honnold. is the guy, I'm trying to remember the documentary. He basically climbed Al Capitan and he did, Free Solo, Free Solo is the movie. And Free Solo is basically about Alex Honnold, who's one of the greatest climbers of our generation. And he climbed Al Capitan in California with no harness. And so he, and he did, he's the only person who's ever done that, you know, I think Free Solo and also in the time that he did it at.

Okay.

And the film basically takes you through the journey. And there was one moment in the film, sort of like midway, maybe a quarter, where he climbs it. And they're like, because you don't know when it's going to happen. He doesn't tell you this is the day. Like, he's not all planned. He's like, you know what? Today feels like good. And they go. And so they just kind of film it. There was this one moment he had to like make a jump, right? Make a leap. And there's moments in rock climbing. I don't rock climb, but you guys just, I appreciate, you know, what they do. Free solo, like there's nothing, right? And holding you on. And he's so, if he makes that jump, like he has to make that jump. If he doesn't It's death, right? It's game over, right? And there's always something, as you go all the way up, there's always gonna be one or two moments where you do have to make that leap. And that comes in life. Life, we have these opportunities where sometimes you have to go, do I stop it here, go back, restart, rethink, or do I make the leap? And sometimes we make the leap, and we all praise for the people who make the leaps. When we make decisions, move countries, move jobs, change businesses, whatever.

Yeah, yeah, the ultimate leverage, the ultimate leverage, you get it right.

We all praise it, but we never look at the people who made the leap and died or made the leap who just go, okay, now like, oh, they didn't make that work or they got canceled. They started this business and failed. Like we don't talk about those people. Right. Which happens more often than the not. And I think we'll in the part of the movie where he makes a decision. He's like, do I do this? And he's like, no, and he climbs back down. Right. And I'm like, why is this in the movie? He shows failure, right? But no, it was smart because he's like, I get to live and play another day. That's the point of a climber. It's like, if it's not in him that day.

Yep. Yeah.

Best thing to do is go back down. He was climbing all the way up. Anyways, I came all the way back down. You know what? Do another day because he has the opportunity to do that. And I think that's what we're talking about by protecting the downside is that you've got to be able to protect your downside enough that you can still stay in the game and that that's an important lesson.

Yep. Yeah, that's a really good point because, and I've heard similar stories of people who are climbing and are like a hundred yards, a hundred meters from the summit, but the conditions are terrible and they've got to turn around and come back and the people go, no, we're going to make it there. And they push for the extra hundred meters, they perish. So that's an example of that where you're so seduced by the outcome that you're not actually hitting the warnings or taking.

Yes.

the message and the feedback that this is dangerous. That's not protecting your downside, you know? And I think it's, because a lot of the times there's a difference between taking risk and being reckless, right? And you can be, you can, I'm always reminded by, and Warren Buffett always says, I love, I've made that sense to you guys, I don't go to jump, I'm paraphrasing here, I don't take five foot jumps.

Yeah. Yes, massive difference.

I minimise the risk so that it's only ever a one foot jump. And so to me, that's equally applicable. If you're working, if you've got a business, you've got a family, you take out insurance. Personal income insurance, business insurance. Why? In the event that you can't work, you can't operate, your needs are met, you're protecting your assets, you're protecting your family. That to me is covering your downside. you know, taking insurance on the car, all those really basic, that's what they're about, because that allows you then to go, okay, there's a minimum, I'm not going to be taken out of this whole scenario by that. And that to me is the equivalent of, and it happens, you know, perhaps the, you know, I'm, I will say I'll take bigger steps now, but I've actually much better at the risk management side of it. I'm not shooting for the fences and putting any of the farm on the line. They're very considered calculated risks that I'm taking. Like we talked about earlier on about moving from one side of the country for the world to the other, we didn't just wake up one day and go, sounds like a great idea. Let's, let's put it all on read it and go. We, we take, we took steps, which on the outset looked like, holy smoke, how did you do that? But that was strategic along the way.

Yeah. Yeah, we're more risk adverse than we are risk takers, but people don't see it that way. Cause they see, they see that we're, you know, the risk takers and we done all these things, but it's most because we're actually more risk adverse and we actually thought about all the downside. And by all calculations, by taking the risks is actually, we've minimized the risk enough that it we takes, it allows us to our courage to kind of kick in to kind of finish the rest, you know, rather than, Oh, it's like, we, it's not like the When it, yeah, like wake up one day and the wind was like, well, let's move to Spain, right? It's like, it's doesn't happen that way. It's like, it's, it's a, you know, we've done all the protections. We've done all the scenarios and, and all that stuff. Yeah. Did we burn the boats? Hell yeah. We burned the boats. We sold up everything. We did all that stuff. Yeah. Did we do that? Did that force us to kind of move forward? Absolutely. We talked about that. And I think you need to do that, but you know, at the end of the day, you know, my downside is, and maybe this is too risky for him. My downside is that I haven't, I'm an Australian and Canadian citizen.

Yeah.

I can always go back. You know, there's nothing stopping me from going back. And so that's my downside. Like I can always go back. So it's okay, right? It's like, but you don't have a home to go to. Well, I never had a home when I moved there in the first place. You know, so, you know, it's like, I don't have a home, you know, moving into a new country either. So it's like, it's all that stuff. But I have a great story that I'd love to share, which is what you talked about going to the summit. I don't know his name, unfortunately, but I actually had the opportunity. I was in an entrepreneurial group.

Yeah. Yeah. Yeah, please do. Please do.

And we were, we went, it was a small group of us and we got to meet one of the climbers, the first, who was part of the first Irish exposition team to go up to Mount Everest. So their mission was to be the first Irish team, all Irish team to be able to make it to the summit of Everest. And so they tried it several times. I'll keep the short short, but basically, like I said, I wish I didn't remember his name, but it was really cool because he basically talked about the story where they were literally.

Oh well.

like what you said, they were about a hundred meters from the top of the summit. And they were, they basically settled in for the night. And then the next day where they were, the plan was that they were going to summit. And there was four of them. And the two of them were the chosen ones to go summit and be the first Irish team, put the flag, the Irish flag on there and go, yeah, we did it. And we're the first Irish team to go there. And so they grabbed three oxygen bottles each. Uh, to go up there because it wasn't enough for all four. And they decided to pick the two and they went for, they were the best climbers in the best shape and, you know, given that team situation. And so they did. And, uh, he was climbing up, you know, the last, I can't remember, I would call it a hundred meters. He was climbing up and climbing up and then recognize that the first oxygen bottle was like empty. I was like, okay, that's not good. So he switched the second one and climbed a little bit more and then realized the second one was also empty. Uh, And he went on the third one and realized like, okay, I happened to make a choice here. Do I continue forward? Which the other guy had perfect oxygen tanks and were able to go. Do I continue forward to try to make it through? Cause you're so close, right? You're so close to being, you know, uh, summiting and there was just a whole purpose and a whole goal, uh, do, or do I, you know, or risk life or do I make it down and be safe to know that, you know, I gave it my best and this was it. And he never did. He basically stopped and said to his mate and go, you continue. And they did. And they summited. And they climbed back down. And we asked him, do you have any regrets? And you can really see it in his eyes. He was like, he goes, no, I accomplished my mission. And I'm like, what do you mean you accomplished your mission? You didn't summit, right? He goes, no, we accomplished our mission. The mission was the first Irish team to summit. I was part of that team. He didn't do it. He himself, it wasn't an individual accolade, it was a team effort.

Mm-hmm. Yeah. Yeah.

to kind of get there and I thought, wow, that is, and that's such a huge mindset, right? And that's exactly what you're talking about in a real life story of that first Irish team to climb the Mount Everest. And yeah, he never, he goes, no, I don't have a desire to go back to finish what I started. And I accomplished my goals and that was it. And he went on to doing other things. And that was just an incredible story to look at life. And that sometimes it's like, you just gotta know when.

Nice.

it's time and you've done enough.

Yeah, you're right. There's the ability to traverse your emotions and bring logic at a time where you could very easily be understood to be feeling emotional and going, my life's work, this is my dream, whatever, a hundred meters out, man, the discipline and the internal, yeah, the, the courage, but also the clarity to go. It's not, it's not going to happen. And there's, you're not prepared to pay the price. And in that one, I don't think there's any bigger price that you can pay than your life to try and proceed with not much chance of success. That's fascinating. You know, Lawrence, when you're talking about going back, you know, with the potential to go back, we're in the same boat. I'm systematically building up passports. I was a running joke that I feel like I'm a CIA agent and I'm building up all these passports from countries of the world. In particular, stop being ridiculous, right? You're not a CIA agent, you're not a spy. You're...

You should have Jason Bourne.

Yeah, I'm Jason Bort. Like that's what, that's what I play. That's probably the narrative, mate. You know, I just open up, I've got this visual in my head where I'm just opening up some things get really, um, serious. So I'll just go into some secret compartment in my house, pull out the passports and the cash and yeah, you know what, you have to have these downsides, but even in those movies, they are contingency plans in the event that everything doesn't go to plan.

They are.

What's your backup? You've always got a backup. They've always got some safe house or those little shed somewhere or a stash of cash and passports and a gun somewhere because that's effectively covering their downside. In the event that everything goes to ruin, what am I left with?

Oh, absolutely. I mean, I have, you know, one of the reasons why I remember, you know, when I was in Australia, back then, you know, when I was there 20 years ago, I only, you only needed to be in Australia for two years as a resident before you can apply for the passport. I went for the passport as soon as two years was up. I was, you know, I didn't go for the whole celebration thing. I didn't care. Just give me my passport, I'll write the test. I had to memorize a few, I don't know, some laws or whatever it was I had to go through.

Yep.

you know, and then I did it. Because why? Because why not? Like why wouldn't I have a secondary passport? You know, and I'm going for, you know, my third passport in Portugal for European. Like why wouldn't you? If I have an opportunity to do so, why wouldn't I? Because I don't know what life is gonna be. And I think oftentimes we've lived long enough to know that, you know, something tragic's gonna happen in the world that is totally unexpected, right? COVID, you know, GFC.

Yeah. Yeah.

Ukraine war, you know, what happened in Israel. Like things happen, right? No one expects it, but that's the point. It happens, you know, once every once in a while. And you don't know the thing that took you out. Actually, this is the greatest story around the war, you know, not unexpected. And so I was reading this, I've been reading this book called Same As Ever by Morgan Halso. He wrote the book, The Psychology of Money. So he came up with this new book called Same As Ever. Great book.

Yep. Okay. Yep. I've read that one. I haven't read the next one.

Okay, great. So he tells this brilliant story and I hate to ruin it for you. If you don't want to listen to it, then please, you know, turn off and fast forward. But he talks about the story about Houdini. And so, you know, think of the Mystique of Houdini, like, oh man, you know, greatest magician and, you know, he must've, you know, died in some contraption, you know, like that's always the theory, right? How he must've died into one of his tricks. You know, the reason how Houdini died was, one of the things that he did is that, in one of his stage plays, is he picks someone in the audience, some big guy in the audience. and he brings him up on stage and he goes, punch me as hard as he can. And so as the guy prepares, he's obviously bracing himself, holding his breath, and he trained his body. I'm not saying it's easy, right? He's trained his body to be able to absorb someone's punch, and then that's one of his tricks on stage. Right, simple thing, we've seen it a thousand times. So afterwards, at one of his shows, afterwards he brings on a few fans to come to the backstage with him. And this one of them was a kid, a teenage kid, or a teenager, or maybe a student. comes on stage, meets Houdini, and he punches him in the stomach, right? Unexpectedly, Houdini obviously just takes the blow and just like, oh, knocks the wind out of him. And then he clears everybody out and is like, okay, you know, it's over, I'm, you know, in pain. He's in pain all night long. And the next day he goes to the hospital or, you know, whatever happens, he dies from a burst appendix. That's how Houdini dies, right? Not from some crazy stuff that, you know, he was doing. No, he died from a... from someone punching in the stomach unexpectedly, you know, has a burst appendix. And what's the moral of the story? Well, the moral of the story is that, the life, we never know. The things that take you out are the things you don't even know about or never expect. And that's what, and the thing is, it's hard to prepare for that. And even though we're talking about preparing for your downside, you can't prepare for the worst case scenario because the most likely, the worst case scenario, it's something that you would have never even thought and imagined could have happened.

Yeah. Yeah.

And I think that's so sometimes it's like, but it also just knowing that it's going to happen, but also knowing that the worst case scenario is most likely something you can't prepare for. But you do have to protect your downside on the things you can prepare for. But don't have to be so protected on things that you just can't, no one can predict what's going to happen. And we all say, Oh, yeah, but Bill Gates predicted, you know, COVID and something I project. Yeah, and all in hindsight is always easy, right. But there's no way we don't know what the next big thing the world events gonna happen. No one will ever predict that. And that's what makes it. And it's gonna happen. It's gonna happen in the next 10 years. Something's gonna happen. And we just don't know what it is.

Yeah, these black swan events as they're called, where no one knows that they're coming, like they're things that you can't, you know, you don't know what you don't know. We don't know the, that's just the nature of the uncertainty of life. What we're really talking about is control what you can within your sphere of control to mitigate 98% of the stresses or the potential things that could happen that you have some influence over. Because the things that are outside of there where you're talking about, um, That's exactly right. They're acts of God, so to speak, that you just don't anticipate. That's why they're all in insurance policies now where you can't insure against that. You can't insure against certain acts of war or terrorism or basically acts of God, because there's no way to absolve all the risk. It's like, how do you minimize that to an acceptable level of risk? Otherwise, you just wouldn't do anything. So that's the go.

Yeah.

I'm just about done. So I was just going to say the same sort of thing with, um, along the lines of the story you shared, the one, a famous one about Al Capone, the famous gangster who lived in a very risky environment, got done for tax evasion. And that's how they finally caught him. You know, he didn't go out in a shootout, uh, whatever they got done, you know, so the IRS finally, finally got him. So they're the minimize the, you know, cover your downside. Or had you actually been taking care of that? Um,

for a simple thing.

they wouldn't have been able to get you. So it's, it just, you know, I shared the story at the start as a means of highlighting where it can look, there's so many applications of where this applies in all areas of life. And really what we're trying to say is, you play the long game, you want to try and stay in the long game, in the game for as long as possible. And if you take steps to keep yourself safe, you increase your chances of being able to play the game for much, much longer.

Yeah, so great summary and I think I'll just summarize by saying be an optimist that know that the world is in a much better place and you can actually create the narrative of how you can live your life by just being an optimist and thinking things are great but at the same time be a pessimist to know that there are going to something that are that you need to protect your downside. So I think balancing those two things but having hope that the world is great and that you can make it great but also knowing that certain things and expect this is like that you know, having the hope of things are gonna go really well, but also knowing, accepting the reality of, of what is true in this moment in time and what you need to deal with and face in this moment in time is going to be super important. So we'll leave you with that and hope that you got a lot of value out of that and, uh, and can apply this to all aspects of your life, whether it be relationship, your investments, your business, uh, and your decision making. So we hope that you continue listening to Wabi Sabi, and we just sharing our life, knowing that life is never perfect. And it is about the art of. and I hope we can share enough tips and tools to allow you to live a life of those imperfections and embracing it. This is it for us for this episode. So you see you on the next episode. Take care.