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

[CROSSTALK] Change the world. [MUSIC] >> [APPLAUSE] >> 20 years ago, I'm in this meeting. I mean, there's this huge conference table that seats 20 people and I'm the only one 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 really wrong. I tell Joe that his investment in my firm is down 50%.

He's lost half his money. And it wasn't his firm's money, it was his personal money. And I can just see the energy drain out of them.

And the worst part is he's trying so hard to be positive because he knows if he says the wrong thing, he's just going to crush me because I was so fragile and he's my largest investor. I had been told no by over a hundred people raising my first fund and there were about five or six people like Joe who said yes not because I had any track record because I didn't. Because he believed that me, just me, he was investing in Gramm Weaver and that's what I had to show for him.

I get i lost half his money. 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 one, don't lose money. And rule two, never forget rule one. So 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 three times I wrote literally in an investment memo that it is mathematically impossible to lose money on this investment.

And we lost money all three times. [LAUGH] So [LAUGH] what I learned is that, is kind of imagine you start dating. And your only purpose of dating is not get your heart broken.

And you're going to have one foot in and one foot out. And even if you have good data, it's not going to be that great because you're not really in it. But the more likely outcome is you're going to guarantee the very outcome you're trying to avoid, which is you're going to 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, if you're going to invest, there's going to be downside. You're never going to get that to zero.

You can reduce it maybe a little bit but the more valuable part and the magic is what can you do on the upside. When it goes right, and in class, I write assume success. What happens if things go well?

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 one times your money.

That's all you're going to lose. 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 can redeploy capital at high rates of return.

And you can hold it for 10 years and you want to keep going and you stack those on top of each other. They don't stack linearly, they stack logarithmically and you can have an almost infinite outcome. You're not playing for one and a half or two times your money as we were in the early days.

You can be playing for 10, 20, 50, a hundred times your money with that criteria. And you don't have to do many of those investments in your life. 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 I was just playing small. I was playing not to lose. I was just trying not to lose.

And so what I'm going to share with you today is how to live an asymmetric life. And there are four principles, and if you get one of these principles right, you will dramatically improve your life. If you get two or three right, you'll have this magical incredible life.

But if you can run the table on all four, you can have literally an infinite life, you can have almost anything that you want. And you can live with joy and you can have energy, and you can sustain it for decades and I can tell you this from experience. Principle one is do hard things.

So we have this view, we have this thought that life is supposed to be easy. And that comfort is where we're going to gain happiness. So you can order harmony bowl from SweetGreens 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. It is exactly the opposite.

I road crew in college and the way you measure progress in rowing and the way you determine what boat you're going to is, as Logan was saying is you have an earth test. You sit on a rowing machine, you row 2000 meters as hard as you can. And the saying is if you get done with better tests, and you can pull one more stroke, you didn't pull hard enough.

So it's going to hurt no matter what you do, it's going to hurt. Well, throughout the course of the season, the day that I'd show up, which would be like September 1st, from that date all the way through March, I would improve my time by 20 seconds roughly. From the first day that was all conditioning, everything we do.

So a big part of that would be rowing, stadium stairs, we're lifting weights, and on and on. It was grueling and it was a lot. But all that stuff I just said would take about six months and only 10 seconds of that 20 would come from that.

The other 10 seconds would come in the first two weeks. You like what? So what happened in the first two weeks it could be 10 seconds.

I'll tell you what didn't happen. You didn't change your cardiovascular fitness you didn't change your strength, 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's all that changed, that was half of the gains that would get all year would just be me reminding myself that I had a lot more than I thought I did. And then it's 750 meters, when my heart rates 175 beats a minute, I can keep going. This chart right here shows our lives and this is what happens.

We get kind of complacent or we or we get comfortable and if we want to move forward and get to the next peak, the magic is to understand that your life is almost always going to get worse first. Any change that you want to make is almost always going to get worse first. So you're in a relationship and you have to have a hard conversation, that particular night your life is going to get a little worse.

And then you're going to come out the other end, and it's going to get better. Or if you need to leave a relationship that you shouldn't be in first place, your life is going to get worse first. If you want to change careers, and you want to learn something new, you going to go down a learning curve.

Your salary is probably going to go down, you going to not be good at your job when you first start, your life's going to get worse first. You want to start a new habit. You want to take a cold shower, you want to meditate, you want to start exercising, it's going to get worse first.

And you're going to follow this pattern, but you need to realize that the thing that's keeping you there is the first move is always going to be worse. And eventually, what's going to happen is these downward curves are going to get a lot shallower. Because you know what the biggest part of that curve is?

It's just fear, the biggest part of that curve is just fear. So the more you put yourself in situations where you do hard things, the shallow 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 want to have an asymmetric life, do hard things. Second principle, if you want to have an asymmetric life, do your thing. When I graduated from school, probably like many of you, I had a choice to make, there were basically two options.

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, it was a big private equity firm. 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 going to work, I don't know what that looks like, I don't know how to get started, I don't know how to raise money, whatever. So I chose the path of going to the big firm. Let me tell you what happened during that time.

My boss is like, here's what you need to do to be vice president, here's your goalposts. So, I'm going to sprint like hell to those goalposts as fast as I can, as all of you are, right? because you're competitive and you want to 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.

The first principle of Buddhism, which is called dukkha, which is that there's going to be suffering, either way. There's no easy path, there's no safe path, there's no path of ease. There's no path that's going to be, that's going to make everything right.

You're going to suffer either way, I'm sorry to be the one to tell you that. >> [LAUGH] >> But I'm 20 years out of school and it's the truest thing I'm probably going to say today. Life is suffering, and so choose something worth suffering for.

The other thing you're missing in this equation is you're going to do an expected value calculation, right? But there's one 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 one of those restaurants that has the ice and the fish's heads are in the ice. And you can go up you point to the fish that you want.

And for the privilege of doing that, you pay four times more for the same fish, but they're in the ice. And then we had a reservation at 8 o'clock at night. And then even with a reservation, we still can get seated till like 9:15 which is like my bedtime typically.

And then we're at the dinner and this one 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. >> [LAUGH] >> I was like, just out of curiosity, do you happen to have a place in the Hamptons because I'm kind of confused.

>> [LAUGH] >> But there's this one guy there, Dave, okay? And Dave is in the same business, he's in the same role as me, he's at a competing firm. And Dave starts going off, Dave is like, I just won this deal, you won't believe this.

Here's what happened, this is what we did on the debt covenants. We didn't step them down, we had the debt to EBITDA that didn't step down for two quarters, we're going to save 50 basis points on our interest. And we use pro forma adjusted trailing 12 months yesterday EBITDA times 365.

Therefore we're getting extra quarter of return a debt and that's going to help our, and he's going on and on and on. And I'm thinking, Dave thinks he's colonizing Mars, he's so excited about this, >> [LAUGH] >> In his head he's colonizing Mars and I'm thinking to myself two things. I'm thinking first, Dave is going to kick my ass- >> [LAUGH] >> Because I don't care at all- >> [LAUGH] >> 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 living it, 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 going to win.

If you want to live an asymmetric life, do hard things, and do your thing. The third principle is do it for decades. And this is one that probably a lot of people don't want to hear.

So 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 Bored 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 not there yet, you're 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, B to C, like petfood. com. My classmates all went into that and Dave at that dinner had asked me, although Dave was not a good conversationist, so he never asked me but had- >> [LAUGH].

>> 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 punch way above our weight and we hired this person for his attributes and no one thought of this and we pull him from this public company and then we were putting lean manufacturing in the plan.

We're building a culture where people wanted to stay and spend their lives and we're training people from high school to be press operators [SOUND]. And Dave would have been like, Frank thinks he's freaking changing the world, with this little label business. >> [LAUGH] >> 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, n is quadratic. The n is the number of years you compound, 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.

I'm growing every year. In year three, I'm a better CEO than I was in year two, in year five, I'm better than I was in year four. But I'm in year 23, and if you take that r, which is how fast you're improving, you can work on that r a little bit, 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 willing to do it. That's the most powerful factor and there is no obstacle that will not yield to you Excited about something for a decade or longer. If you want to have an asymmetric life, do hard things, do your thing, and do it for decades.

The fourth and final point is the most important of all. In 2008, we'd finally got going at Alpine. We're starting to get going and bam, we just got flattened by the recession, I mean flattened, we were not well-positioned.

It turned out we wouldn't raise a fund for five years, drained my savings account to make payroll. We had seven 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 GP Form, and he was an executive coach.

I was like, what the hell's an executive coach? I had no idea what that even was. But he was super persuasive.

[LAUGH] And he's like, hey, let me level with you. It ain't going so great in the executive coaching business right now either. [LAUGH] So I'm going to give you this incredible thing that I just pitched you for half price, [LAUGH] 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, I don't know why, but I did, I said yes. So I hired my first ever executive coach. I would not know it until much later that I actually hired probably one 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 he's like, well, what's going on here? What are you doing?

How's this going? I said, GP, have you not seen the news in the last year? Market's down 50%.

Lehman Brothers blew up, Merrill Lynch just got bought. Banks aren't lending, we're toast. He's like, well, it sounds like you're just kind of helpless then, Graham.

And then he is like, [SOUND] sorry. He's like, [SOUND]. So I was like, all right, well, what do we do?

He's like, all right, here's what we're going to do. We're going to write a story, okay? And there's three rules to writing this story.

The first one is, it's going to take place five years from now. We're going to get out of the fog of war, you're right. And you can't look past where you are six inches in front of your face.

Let's go out five years. The second rule is, let's start with nirvana. I don't want to hear something that's mediocre.

I want to hear what would happen. What would you do if you knew you would not fail? Would be your genie goal, as Logan said.

And third, he said, the how is the killer of all great dreams. Forget the how, I don't care about the how right now. I just want to hear about the dream.

Turns out with those three rules, it's pretty fun exercise. [LAUGH] I get to go out five years. I don't have to worry about how I'm going to do it, and I get to pick anything I want.

Who doesn't want to do that? So we put in place this plan for this one company, we just started with one company. And what we basically said is, all right, we're going to hire this best CEO you could imagine in the world.

The CEO is going to build this incredible team. Our technology is going to be better than anyone else. And therefore, we're going to have better uptime, we're going to hire the sales team, we're going to start winning contracts.

We've been losing all of them. And then we're going to start buying competitors because they're down too, and we can add on. And we had this incredible thing, and that was really fun.

And then I started saying, well, that was great, but there's no way we're going to do that. It was just so aspirational. Aspirational, by the way, is a euphemism for, how the hell are we going to do?

No way that's going to happen. It was aspirational. She's like, well, what's the first step?

First step is hire a CEO. It turns out in 2008, a recession, that's a pretty good time to hire a CEO. We spent six months, and we brought on the best CEO.

His name's Mark Strauch. He's a great friend of mine. Now he's a partner at Alpine now.

And so we brought him on. We started doing exactly what we talked about. We started building the team, we started building the technology.

We've had better uptime. And then when Mark and his team got going after 18 months, we want every single contract that came up in that business for the next two years except one. And we just started stomping on our competitors.

And by the way, our industry didn't change, the market didn't change, our competitors didn't change, we changed. We just changed our story, that's all we did, we changed our story. Don't write a story about what happens, write your story, and then make it happen.

And there's so much magic in this. 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, god, here we go.

Universe responds. But what's really happening? What's really happening is, you're putting on blinders to where you want to go.

You're making goals, you're aligning your day to where you want to go. You're attracting people that want to 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 onto something. I was like, this is magic, pure magic. We started writing stories at Alpine about everything.

We wrote stories about how we could have MBAs become CEOs, right, when they graduate. We wrote stories about building cultures where people would want to spend their whole careers, where people could feel like they mattered, and feel like their life had meaning and that they were contributing. We wrote stories about companies.

We wrote stories about sourcing. And just pretty much every single thing we ever wrote came true from that point on. I had the privilege of meeting with Joe very recently, from the very first story I told you.

And this is 20 years after the first story. And Joe stayed. I didn't tell you, Joe was incredibly gracious.

I could tell how hard it was for him to do that. But he was gracious because he too had had some struggles in his early days, and he understood that things take time and that they're hard. So he stayed with us, and he was a supporter of us for the last 20 years.

So Joe left the hedge fund, and he devoted his life to climate change. So we sit down, and we had an hour meeting. We spend the first 55 minutes hearing all about climate change and all the stuff he's working on.

He's just bouncing off the walls, he's so excited. He was doing his thing. And then as we do every single time that we meet, I give him our deck and our performance sheet.

And Joe's been a big investor of ours, and his foundation that does climate change is our investor. And he looks at this sheet. And he just looked at me and he just said, you know what, Graham, you did it.

You did it 23 years later, this is amazing. He said, thank you. And just like back then when I had to have that meeting over and over, I had the privilege of having this meeting over and over.

I meet with college endowments and boards that are like, that they will say literally, you've helped us fund ten years of financial aid for our school. Or another university shows us that this is going to go a huge part of the budget toward the buildings that they're building. Okay, yeah, we have investors that are running cancer foundations or doing climate change work.

And it's been a long ride, but a really glorious one. And I go back to that meeting with Dave who said, Graham's buying these stupid label printing companies and thinks he's changing the world. And I'm maybe having, hopefully, a little bit of an impact.

So where does this leave all of you? All of you right now are about to graduate. And a lot of you have chosen jobs and careers, and each of you has an opportunity, no matter where you are in your life, whether you're a parent who's even watching here tonight, you have an opportunity to write the story you want to have.

You can write any story that you want. You just have to start writing it. And if you want to have an asymmetric life, do hard things, do your thing.

Do it for decades. And write your story. I thought I'd end with catalysts that I had in my life.

Probably the biggest turning point. So I wrote crew in college as I mentioned before. I had a nickname in rowing, which was dream weaver, and my last name is Weaver.

And so my friends called me Dram Weaver, and what a great name, right, because who doesn't want to be Dram Weaver? So the person who gave me this name was a guy named Monty Razor. And my sophomore year he was a senior, and I didn't make the boat as Logan said.

And I wasn't very good, and he was amazing. But anyway, I can still picture, I would walk into the rowing room and Monty would just say, dream like this. And I would just get this surge of energy, and the name just stuck.

Everyone started calling me Dram. It was awesome. And it signified who I was back then.

Well, a few years after I graduate, I'm sitting down and my friend calls me on the phone and says, hey, you need to sit down. Nothing ever good comes of that first intro and a phone call. And he says, hey, your friend Monty's gone.

He was killed in a plane crash. He was 23. And I was just like, I couldn't even process this information.

I was just like, it just couldn't register. I was just devastated. But also, I was kind of just not dealing with it.

And so long I go with my life year after year. And as I said, I worked at this firm and a little bit of me was, that dream weaver character that Monty had found in me was nowhere to be seen. And so around that time, right as I was in this large private equity firm, I flew out to New York.

And I ended up having dinner with a bunch of our colleagues who had road crew with Monty and we ended up talking all night and I think all of us kind of needed a process what had happened and none of us had really done that. And so we start talking all night, and we're drinking and we're telling stories about Monty, and this went on pretty much all through the night. And it was awesome, we needed it.

We needed basically to kind of clear this out and deal with this loss that we had. So the next day I get on a plane to go home and I just lose it. I'm in one of these huge planes going from San Francisco to New York and it has two seats and then five seats and then two seats.

And I'm not right in the middle, I'm one over, but in the middle, and I'm just bawling hysterically. And people on both sides of me are trying to help me and tell me if I'm okay. And the flight attendants keeps bringing me water and I'm like, I'm good at you.

And three hours, I could not continue, I was exhausted too. That never helps. I'd stayed up all night.

So anyway, finally, I kind of get my act together and I'm going to splash some water in the bathroom. It's like three hours now into the flight. And I sit back down at this point.

And I just remember thinking to myself, so I sit back down and I close my eyes and I can kind of still see that visual where Monty says dream when I walk into the locker room. And I just remember thinking, Monty would be so disappointed in me right now. I'm so far from the person that he thought was this dream weaver.

I haven't seen that person in years. And then I started thinking, what am I doing? What am I doing?

I'm playing for this downside. I'm trying to protect the downside. Well, guess what, I just seen the ultimate downside with my friend.

And really ultimately, there's no way to totally protect against loss or downside. And so I said from this point on, I'm going to play for the upside. I'm just going to go big, and from that point on I did.

I made a decision right then that I was never again in my life going to say not me or not now. I was never going to say those words again. So I landed, I ended my relationship that night.

The next day I walked in and handed in my resignation at my firm that I'd been working at, that my crude equity and bonus and everything. I didn't have any income coming in. And then a few days later, I packed up my car and drove out to Steamboat Springs Colorado where my ex High school girlfriend, Cindy, was living, who's here, and my wife of 21 years.

>> [APPLAUSE] >> And in 23 years since that plane flight, I've never said again not me, not now, never. And it's been amazing and it hasn't been easy as we've talked about. So, Bringing it back to you all, the biggest thing that you're going to face as you graduate for most of you, and through your lives, the biggest obstacle you really have is going to be fear if you really boil it down.

And fear is very manipulative, and it shows up in all these kinds of different ways. And it tries to disguise itself, okay? It disguises itself as being practical.

I'm being practical right now. It disguises itself as I'm helping you. It disguise itself as I'm saving you.

And most of all it disguises itself as not me, not now. What I have given you today is the antidote to fear. That's been my goal.

The four things that we talked about are ways that you can tangibly and tactically throughout your lives look fear in the eye and say to fear, not today, today I'm going to play big, today I'm going to play this asymmetric life. Now is the time to do hard things. There's something that you fear right now, that's exactly where you should go.

You should be doing that thing. There's something you're putting off right now, you should be doing that thing. Everything that you want is on the other side of worse first.

Now is the time to do your thing. There is suffering, you will suffer. So pick something worth suffering for.

And realize that you are underestimating yourself at your full power when you're excited about something that's not going into your equation. Do it for decades because you excited for a decade knows no bounds. There is no obstacle that will not yield to you excited for a decade.

And finally, write your own story. No matter where you're starting and no matter what role you have after school or where you are right now, it doesn't matter. You can start today writing your story.

Inside of you, you have magic. You have your own life. You have something that's special for you.

And there's really only one question you need to answer, which is are you going to give yourself permission to lead that life, to live that life and to let that out? That's the question you're going to answer over and over and over in your life from now on. Are you going to give yourself permission?

It's permission you need. So class of 2023, here we are. And class of 2023, you're about to graduate from Stanford Freaking Business School, Stanford Freaking Business School.

You did not come this far to play small. You came this far to move the world. Now is the time, now is your time.

Thank you so much. >> [APPLAUSE] >> Thank you.