Principles For Success by Ray Dalio (In 30 Minutes)

Principles For Success by Ray Dalio (In 30 Minutes)

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principles for success an ultra
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mini-series adventure in 30 minutes and
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in eight episodes episode 1 the call to
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adventure before we begin let me just
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establish the fact that I don’t know
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much relative to what I need to know
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whatever success I’ve had in life has
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more to do with my knowing how to deal
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with my not knowing than anything I know
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that I should be telling other people
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what to do sounds kind of presumptuous
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to me but I’m going to do it because I
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believe that the principles that have
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made me successful could help others
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achieve their own goals I’m now at a
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stage in my own life in which it is much
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more important to me to pass along what
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I’ve learned about how to be successful
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than to seek more success for myself
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what you choose to do with these
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principles is up to you you have to be
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an independent thinker because only you
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can develop your own principles based on
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your own values this brings me to my
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first and most fundamental principle
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which is that you need to think for
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yourself about what is true so let’s get
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started early on I discovered I needed
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principles principles are smart ways for
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handling things that happen over and
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over again in similar situations there
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are principles for everything from
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skiing to parenting to cooking and so on
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I’m going to share some of my most
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important overarching life principles
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that influence how we approach
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everything
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I didn’t start out with principles I
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acquired them over a lifetime of
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experiences mostly from making mistakes
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and reflecting on them my life
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principles are simple but they’re not
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complete I still struggle to make the
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best decisions and I still make mistakes
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and learn new principles all the time
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this is the reality at the beginning I
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needed to escape the conventions that
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surrounded me which meant that I needed
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to think for myself unless you want to
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have a life that is directed by others
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you need to decide for yourself what to
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do and you need to have the courage to
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do it but I didn’t know that at first I
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only learned that from going on my
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adventure looking back on my own journey
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I now see the time is like a river that
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carries us forward into encounters with
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reality that require us to make
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decisions we can’t stop our movement
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down this river and we can’t avoid the
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encounters we can only approach them in
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the best possible way in your lifetime
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you will face millions of decisions the
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quality of your decisions will determine
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the quality of your life over the course
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of my lifetime the most valuable things
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I’ve learned were the results of
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mistakes I reflected on to help form
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principles so I wouldn’t make the same
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mistakes again these principles took me
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from being a very ordinary middle-class
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kid from Long Island
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to becoming very successful as judged by
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conventional measures they also gave me
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the meaningful work and meaningful
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relationships that I value even more
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than these conventional successes people
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often ask me how I did it I can assure
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you it wasn’t because of my uniqueness
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as a person it was the result of a
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unique approach to life I believe almost
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anybody can adopt
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it starts with embracing reality and
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dealing with it the path you take in
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life is your most important decision in
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my case I wanted my life to be great and
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I feared boredom and mediocrity more
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than I feared failure since I didn’t
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start out with money and I didn’t need
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much more than a bed to sleep in and
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food to eat I could skew my decisions to
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pursue my adventures so ever since I was
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a kid I ran after the things I wanted
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crashed got up and ran again and crashed
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again and each time I crashed I learned
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something got better and crashed less by
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doing that over and over again I learned
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to love this process even the crashing
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part of it through it I encountered
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reality and I learned how to deal with
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it which inspired another one of my most
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fundamental principles which is that
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truth is the essential foundation for
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producing good outcomes by truth I don’t
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mean anything more than the way the
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world works I believe that we were given
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the laws of reality by nature humans
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didn’t create them but we can use them
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to foster our own evolution and achieve
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our goals
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realizing that made me a hyperrealist by
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which I mean I became someone who has
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discovered the great rewards of deeply
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understanding accepting and working with
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reality as it is and not as I wish it
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would be
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what I say I’m a hyperrealist people
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sometimes think I’m saying that dreams
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can’t come true that’s absolutely not
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true without pursuing dreams life is
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mundane what I mean is that to me hyper
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realism is the best way to choose one’s
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dreams and then achieve them having big
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dreams plus embracing reality plus
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having lots of determination will bring
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you a successful life I believe this
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formula is true for everyone but what
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does a successful life look like we each
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have to decide for ourselves what
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success is I don’t care whether you want
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to be a master of the universe or to
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live under a palm tree or anything else
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I really don’t each of us chooses goals
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based on our values and decides on the
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best path to achieve them but we all
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need approaches to making decisions that
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work well especially when facing
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problems mistakes and weaknesses that
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stand in our way to succeed we must
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embrace all our realities especially the
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harsh realities that we wish weren’t
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true
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at first looking at these harsh
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realities caused me a lot of pain but I
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learned that this pain was just
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psychological and that my seeing things
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differently made all the difference
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I came to view problems like puzzles
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that would reward me if I could solve
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them they would help me deal with the
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problem at hand and they would give me
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principles for dealing with similar
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problems in the future
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I learned to treat pain as a cue that a
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great learning opportunity is at hand
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which led me to realize that pain plus
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reflection equals progress meditation
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has been invaluable in helping me see
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things that way I found that when I
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calmed myself down and embraced my
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realities and dealt with them the
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rewards brought me pleasure and the pain
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faded each of us has the unique
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capability to think logically to reflect
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on ourselves and our circumstances and
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to
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direct our own personal evolution doing
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this well is just a matter of following
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a simple five-step process we’ve
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discussed how important it is to reflect
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carefully after experiencing pain when I
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did this I was usually able to discover
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principles that would prevent me from
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repeating the same mistakes in the
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future and I could see that being
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successful simply consisted of five
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steps step one is to know your goals and
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run after them what is best for you
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depends on your nature so you need to
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really understand yourself and know what
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you want to achieve in life step two is
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to encounter the problems that stand in
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the way of getting to your goals
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these problems are typically painful if
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handled badly some of them can lead to
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your ruin but to evolve you need to
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identify those problems and not tolerate
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them step three is to diagnose these
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problems to get at their root causes
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don’t jump too quickly to solutions take
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a step back and reflect in order to
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really distinguish the symptoms from the
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disease step four is to design a plan to
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eliminate the problems this is where you
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will determine what you need to do to
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get around them and Step five is to
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execute those designs pushing yourself
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to do what’s needed to progress toward
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your goal a successful life essentially
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consists of doing these five steps over
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and over again this is your personal
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evolution and you see this process
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everywhere it’s just a law of nature
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think of any product any organization or
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any person you know and you will see
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that this is true for them evolution is
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simply a process of either adapting or
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dying conceptually it looks just like
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the five-step process I’ve described as
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you push through this often painful
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process you’ll naturally ascend to
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higher and higher levels of success I
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found that when I did it better
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my struggling never became easier
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because the more capable I became the
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greater the challenges I would take on
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because different people are strong and
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weak at different things most people
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can’t do all five steps well not facing
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this reality means you could stretch
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further than you should and as the
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heights get greater your Falls could
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also be great sometimes terrible things
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happen to all of us in life they can
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ruin us or they can profoundly improve
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us depending on how we handle them
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something like this happened to me in
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1982 we progress forward until we
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encounter setbacks whether or not we get
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out of them and continue forward or
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spiral downward depends on whether or
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not we’re willing to face the failure
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objectively and make the right decisions
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to turn the loop upward again something
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terrible happened to me in 1982 when I
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bet everything on a depression that
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never came
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the period between 1979 and 1982 was one
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of extreme turbulence for the global
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economy and markets and for me and I
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believe that the US economy with the
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world economy tied to it was headed
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toward a catastrophe this view was
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extremely controversial
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I wanted the great upside and very
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publicly took a big risk and was wrong
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dead woman after a delay the stock
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market began a big bull market that
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lasted 18 years and the US economy
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enjoyed the greatest growth period in
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its history this experience was like a
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blow to my head with a baseball bat I
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had to cut my losses so that my company
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Bridgewater was left with one employee
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me I was so broke I had to borrow $4,000
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from my dad to pay my bills but even
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worse was having to let go the people I
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cared so much about I wondered whether I
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should give up my dream of working for
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myself and play it safe by working for
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someone else in a job that would require
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me to put on a tie and commute every day
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though I knew that for me taking less
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risk would mean having a less great life
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being so wrong and especially being so
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publicly wrong was painfully humbling I
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am still shocked and embarrassed by how
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arrogant I was in being totally
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confident in a totally incorrect view
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though I’d been write much more than I’d
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been wrong I had let one bad bet erase
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all my good ones I thought very hard
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about the relationship between risk and
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reward and how to manage them but I
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couldn’t see a path forward that would
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give me the rewards I wanted without
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unacceptable risk this kind of
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experience happens to everyone it will
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happen to you
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you will lose something or someone you
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think you can’t live without or you will
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suffer a terrible illness or injury or
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your career will fall apart before your
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eyes you might think that your life is
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ruined and that there is no way to go
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forward but it will pass I assure you
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that there is always a best path forward
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and you probably just don’t see it yet
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you just have to reflect well to find it
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you have to embrace your reality
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sometimes things happen that are hard to
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understand life often feels so difficult
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and complicated it’s too much to take in
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all at once my deep pain led me to
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reflect deeply on my circumstances it
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also led me to reflect on nature because
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it provides a guide for what’s true so I
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thought a lot about how things work
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which helped to put me and my own
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circumstances in perspective I saw that
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at the Big Bang all the laws and forces
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of the universe were created and
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propelled forward interacting with each
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other as a perpetual motion machine in
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which all the bits and pieces coalesce
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into machines that work for a while
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fall apart and then coalesce into new
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machines this goes on into eternity I
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saw that everything is a machine the
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structure and evolution of galaxies the
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formation of our own solar system the
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makeup of Earth’s geography and
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ecosystems our economies and markets and
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each of us we individually are machines
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made up of different machines our
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circulatory system our nervous system
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that produce our thoughts our dreams our
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emotions and all the other aspects of
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our distinct characters all of these
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different machines evolved together
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through time to produce the realities we
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encounter every day and I realized that
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I was just one tiny bit in one nano
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second deciding what I should do while
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that perspective might sound very
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philosophical I found that it was very
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practical because it showed me how I
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could deal with my own realities in a
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better way for example I observed that
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most everything happens over and over
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again in slightly different ways some in
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obvious short-term cycles that are easy
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to recognize so we know how to deal with
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them like the 24-hour day some so
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infrequently that they haven’t occurred
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in our lifetimes and we’re shocked when
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they do like the once in a hundred year
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storm and some we know exist but our
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encountering for the first time like the
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birth of our first child most people
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mistakenly treat these situations as
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being unique and deal with them without
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having proper perspective or principles
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to help them get through them I found
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that if instead of dealing with these
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events as one-offs I could see each as
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just another one of those and approach
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them in the same way a biologist might
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approach an animal first identifying its
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species then drawing on principles for
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dealing with it appropriately because I
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could see these events transpire in
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pretty much the same ways over and over
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I could more clearly see the
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cause-effect relationships that govern
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their behaviors which allowed me to
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develop better principles that I could
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express in both words and algorithms I
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learned that while most everyone expects
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the future to be a slightly modified
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version of the present it is typically
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very different that’s because people are
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biased by recent history and overlooked
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events that haven’t happened in a long
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time perhaps not even in their lifetime
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but they will happen again with that
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perspective I realized that what I
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missed when I mistakenly called for a
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Great Depression was hidden in the
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patterns of history and I could use my
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newfound knowledge of these patterns to
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make better decisions in the future
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and when I thought about my challenge
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balancing risk and reward I realized
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that risk and reward naturally
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together I could see that to get the
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most out of life one has to take more
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risk and that knowing how to
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appropriately balance risk and reward is
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essential to having the best life
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possible imagine you are faced with the
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choice of having a safe boring life if
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you stay where you are or having a
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fabulous one if you take the risk of
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successfully crossing a dangerous jungle
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that is essentially the choice we all
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face for me the choice was clear but
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that doesn’t mean the path forward was
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without challenges I still needed to
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face two big barriers that we all must
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face I can’t tell you which path in life
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is best for you because I don’t know how
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important it is for you to achieve big
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goals relative to how important it is
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for you to avoid the pains required to
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get them this is the courage I spoke of
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earlier and we each have to feel these
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things out for ourselves after my big
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mistake in calling for a depression I
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had come to one of life’s Forks in the
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road as we all do if I made the choice
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to take a normal job and play it safe I
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would have ended up with a very
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different life than the one I had but as
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long as I could pay the rent put food on
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the table and educate my kids
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the only choice for me was to risk
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crossing the jungle in pursuit of the
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best life possible my big mistake in
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vetting on a depression gave me a
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healthy fear of being wrong in other
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words it gave me deep humility which was
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exactly what I needed at the same time
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it didn’t stop me from aggressively
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going after the things I wanted to
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succeed I needed to see more than I
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alone could see but standing in my way
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of doing that were the two biggest
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barriers everyone faces our ego and
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blind spot barriers these barriers exist
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because of how our brains work first
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let’s explore the ego barrier
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when I refer to your Eagle barrier I’m
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talking about the parts of your brain
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that prevent you from acknowledging your
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weaknesses objectively so that you can
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figure out how to deal with them your
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deepest seeded needs and fears reside in
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areas of your brain that control your
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emotions and are not accessible to your
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higher-level conscious awareness and
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because our need to be right can be more
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important than our need to find out
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what’s true we like to believe our own
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opinions without properly stress-testing
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them we especially don’t like to look at
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our mistakes and weaknesses we are
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instinctively prone to react to
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explorations of them as though their
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attacks we get angry even though it
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would be more logical for us to be open
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to feedback from others this leads to
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our making inferior decisions learning
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less and falling short of our potentials
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the second is the blind spot barrier
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everyone has blind spots the blind spot
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barriers when a person believes he or
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she can see everything but it’s a simple
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fact that no one alone can see a
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complete picture of reality naturally
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people can’t appreciate what they can’t
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see
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just as we all have different ranges for
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singing hearing pitch and seeing colors
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we have different ranges for seeing and
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understanding things for example while
20:18
some people are better at seeing the big
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picture others excel at seeing details
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some are linear thinkers and others are
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more lateral while some are creative but
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not reliable others are reliable but not
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creative and so on because of how our
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brains are wired differently everyone
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perceives the world around them
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differently
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by doing what comes naturally to us we
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fail to account for our weaknesses and
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we crash either we keep doing that or we
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change Aristotle defined tragedy as a
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terrible outcome arising from a person’s
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fatal flaw a flaw that had it been fixed
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would have instead led to a wonderful
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outcome in my opinion these
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two barriers of the main impediments
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that get in the way of good
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decision-making
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taking risks and occasionally being
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ruined wasn’t acceptable and neither was
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not taking risks and not having
21:24
exceptional results
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I needed an approach that would give me
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the exceptional upside without also
21:30
giving me the exceptional downside when
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I discovered it it turned out to be my
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Holy Grail to get it I needed to replace
21:39
the joy of being proven right with the
21:42
joy of learning what’s true this need
21:46
prompted me to seek out the most
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thoughtful people I could find who
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disagreed with me I didn’t care about
21:53
their conclusions I just wanted to see
21:55
things through their eyes and to have
21:58
them see things through my eyes so that
22:00
together we could hash things out to
22:03
discover what’s true in other words what
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I wanted most from them was thoughtful
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disagreement going from seeing things
22:12
through just my eyes to seeing things
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through the eyes of these thoughtful
22:17
people was like going from seeing things
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in black and white to seeing them in
22:21
color
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the world lit up that’s what I realized
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that the best way to go through the
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jungle of life is with insightful people
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who see things differently from me think
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about the five-step process I described
22:40
earlier as I said because we are wired
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so differently not everyone can do all
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the five steps well but you don’t have
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to do them all alone you can get help
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from others who are good at what you’re
22:53
not who are wired to perceive things you
22:56
can’t all you need to do is let go of
22:59
your attachment to having the right
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answers yourself and use your fear of
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being wrong to become open minded to
23:06
these other views
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in this way you could point out the
23:12
risks and opportunities that you would
23:14
individually miss I found that taking
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this radically open-minded approach and
23:19
believability weighting people’s
23:21
thinking significantly increased my
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probabilities of making the best
23:25
decisions possible this enabled me to
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ascend to greater heights and greater
23:31
challenges in the past I would have
23:33
always wanted to do what I myself
23:35
thought was best but now I sort out the
23:39
strongest independent thinkers I could
23:41
find I still do there is nothing better
23:44
to be on a shared mission with
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extraordinary people who can be
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radically truthful and radically
23:50
transparent with each other
23:52
this approach led me to create a company
23:55
with the unique idea meritocracy
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operating in a unique way that produced
24:00
unique successes in an idea meritocracy
24:04
you get the best of everybody
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everyone thinks independently then we
24:09
work through our disagreements to get at
24:11
what’s best however not every opinion is
24:14
equally valuable and we had to learn to
24:17
distinguish between good ideas and bad
24:20
ones to get the best decisions in other
24:22
words we need it to believability way to
24:25
people’s thinking but that’s another
24:27
story I will explain in my work
24:29
principles right now there are many
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wonderful opportunities and dangerous
24:35
risks surrounding you that you don’t see
24:38
if you saw them free of the distortions
24:41
produced by your ego or your blind spots
24:44
you would be able to deal with them more
24:46
effectively if you could acquire this
24:49
ability and with practice you can you
24:52
will radically improve your life
24:54
[Music]
24:56
so far I described how I learned to
24:59
confront my own realities my problems my
25:02
mistakes and weaknesses and how I
25:04
surrounded myself with others who could
25:07
do things better than I could this was
25:10
the most effective way I discovered from
25:12
making great decisions this is not the
25:15
normal way of being but through this
25:18
approach I became very successful and
25:20
being successful enabled me to meet
25:23
extraordinarily successful people and
25:25
see how they think I’ve discovered that
25:29
their journeys were similar to mine you
25:31
might not know it but they all struggle
25:34
and they all have weaknesses that they
25:37
all get around by working with people
25:39
who see risks and opportunities that
25:41
they would miss over time I learned that
25:44
by nature most people’s greatest
25:47
strengths are also connected to their
25:48
most significant weaknesses and striving
25:52
hard for big things is bound to lead you
25:54
to painful Falls it’s just part of the
25:57
process
25:58
such setbacks will test you they sort
26:01
people some think hard about what caused
26:05
their setbacks learn lessons and
26:08
continue progressing toward their goals
26:10
while others decide that this game is
26:13
not for them and get off the field
26:15
I’ve come to realize that success is not
26:18
a matter of attaining ones goals I found
26:22
that when I reached each new higher
26:24
level of success I really remain
26:26
satisfied the things we are striving for
26:30
are just the bait struggling to get them
26:33
forces us to evolve and it is this
26:36
struggle toward personal evolution with
26:38
others that is the reward I no longer
26:42
wanted to get across the jungle but
26:44
instead wanted to find greater and
26:46
greater challenges to go after
26:48
surrounded by great people working
26:51
together on a shared journey eventually
26:55
the success of the mission and the
26:57
well-being of the people alongside me
26:59
became more important than my own
27:01
success I also started to see beyond
27:04
myself and wanted others to be
27:07
successful when
27:08
no longer here I realize that if I fail
27:12
to do that I will be a failure I
27:15
struggle with this now we all struggle
27:18
with different things at different times
27:20
until we either choose to give up or
27:23
until we die and become part of the
27:25
larger evolutionary story this is how
27:29
all machines work and are recycled
27:31
through time when a machine breaks down
27:33
its parts go back into the system to
27:36
become parts of new machines that also
27:39
evolves through time sometimes this
27:41
makes us sad because we’ve become very
27:43
attached to our machines but if you look
27:46
at it from the higher level it’s really
27:49
beautiful to observe how the machine of
27:51
evolution works now you must decide for
27:55
yourself how you will evolve forget
27:59
about where these principles came from
28:00
just assess whether or not they are
28:03
useful to you and evolve them to suit
28:05
your own needs as with all of life’s
28:08
decisions what you do with them is
28:10
ultimately up to you my only hope for
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you is that you have the courage to
28:16
struggle and evolve well to make your
28:19
life as great as it can be thank you and
28:23
goodbye
28:24
[Music]
28:35
you

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