What up, guys? It's your boy Lit Nomad.

Sorry for the long break. Was having a

little bit too much fun out here in

Vietnam.

[music]

>> But the video is about how to succeed in

business. And I would summarize it like

this. I would say it's kind of like

being on a sailboat where you're subject

to the randomness of the elements of the

world. And what you're trying to do is

survive the headwinds while getting

maximum value out of the tailwinds. And

so the quote that I like best that

describes business is to say, you can't

control the wind, but you can adjust

your sales. So what are some tangible

examples of business headwinds? Well, if

you're a realtor, it would be something

like rising interest rates making it

difficult to finance homes. If you own

restaurants, it could be something like

COVID hitting out of the blue. If you

deal with imports and exports in your

business, it could be Trump's tariffs.

And lastly, if you run a trading firm or

worked at a trading firm like I did, it

would be something like a low

volatility, low volume trading

environment, making it difficult to

scalp and arbitrage large amounts of

money out of such a calm market. So now,

what are examples of business tailwinds?

Well, obviously the opposite of all of

those headwinds examples can be

tailwinds. like interest rates going

down is good for a realtor. But I want

to focus on one specific type of

tailwind, which is the very bursty gold

rush type of tailwind because these are

really exciting examples to talk about.

Now, I'll go through three separate

examples of these gold rushes. The first

is the tech paradigm shift. So, in the

last few decades, there have been a few

of these. the.com boom. You know, we've

got at least three out of the four or

five fang names out of this, right? We

got Google, we got Facebook, now Meta,

we got Amazon. These are firms that grew

out of the advent of the internet and

saw the business opportunity there. The

next uh tech paradigm shift I would say

is circa 2008 when the smartphone

revolution hit. And the main difference

here is that now you have computers that

are portable that are on everyone,

right? I mean, they call them phones,

but they're basically just mini portable

computers. And the main value ad here is

the GPS and the fact that it's on you

all the time. So, you can unlock

business models like Uber where cabs can

come to you and see where you are. You

can unlock businesses like Tinder. And

the next example I can think of, circa

2010s, is when like crypto and

blockchain really blew up. There were a

lot of opportunities there. And then the

2020s, I would say, has been mostly AI.

The next category of gold rush I would

say are regulatory or political paradigm

shifts. So an example of that is when

they legalized weed or when they

legalized online gambling. There were a

lot of businesses that tried to rush

into these spaces to capitalize on these

regulatory changes. Now, as far as

examples of political paradigm shifts, a

great example is the fall of the USSR

and how it created this vacuum for

businesses to fill. And yes, it's true

that a lot of the now oligarchs, a lot

of them were friends with Boris Yeltson,

but you know, some of them weren't. Some

of them are just very entrepreneurial,

risk-taking people who saw the

opportunity and seized it. And it's

funny because if you talk about Trump's

tariffs, it's an example of both a

business headwind and a tailwind

depending on who you ask because if you

have an existing import export dependent

business with China, then you know it is

likely a headwind. But for some

entrepreneurial guy in Vietnam, now this

is your chance to try to fill that space

and replicate that business model that

normally was owned by China. Now you can

try to do that from Vietnam. So that's a

tailwind for them. And the third

category of gold rush is crisis. There's

this quote from JFK which is something

like the Chinese character for crisis is

danger plus opportunity. Or in other

words, when there's blood on the

streets, buy real estate. I don't know

if you guys have ever heard this

expression, but if you have the balls to

buy real estate in somewhere like

Ukraine right now, you could make a lot

of money in 5 years. Where there's

crisis, there's opportunity. Or as my

favorite character in Game of Thrones,

Littlefinger likes to say, "Chaos is a

ladder."

>> This guy is my favorite character

because he's just an ordinary guy, but

he's very crafty and he's constantly

playing the long game and calculating

and, you know, he kind of reminds me of

myself cuz that's kind of how I, you

know, made my way up in in this world in

this competitive game of life. Like when

I entered the hedge fund division of my

trading firm, one of the reasons I did

it is because chaos is a ladder, bro.

This hedge fund was completely

disorganized and chaotic and there was a

lot of fingerpointing going on and

people people couldn't figure it out.

And I I came in there and I and I

hustled my ass off and I sorted things

out and I led the meetings and all of a

sudden I was like this shining light

within this chaos and the higherups, the

CTO and people were like, "Let me just

talk to that guy. That guy knows what's

going on at the hedge fund." And I got

immediately promoted into this like high

up position in the hedge fund where I

kind of had all these other groups like

reporting up to me like trading quant

tech operations were all like reporting

up to me in weekly meetings. So yes,

Littlefinger is right. Chaos is a

ladder. Another more finance example I

can think of is when the 2008 real

estate crash happened and Goldman Sachs

was going bankrupt and Warren Buffett

stepped in and lent Goldman Sachs some

stupid billions of dollars on some

really favorable terms. And you can look

it up, but he made like billions of

dollars from that deal with Goldman

Sachs. So he he clearly understands the

little finger mindset of chaos as a

ladder. So we've covered three separate

categories of gold rushes. There's tech

paradigm shifts, regulatory and

political shifts, and then there's the

crisis. And I don't want to make it

sound like it's so simple.

Realistically, it's the smartest and

most hardworking people that end up

winning in these chaotic environments.

And it's because highly intelligent

people can see patterns and can go to

where the puck is going. I mean, that's

essentially one of the measurements of

IQ. It's Raven's progressive matrices.

It's pattern recognition. They can sort

of see how the chaos is going to

eventually settle and see the patterns

in it and they'll know where to invest

their efforts to start some kind of a

business. And of course, luck is going

to play a role as well. So, I don't want

to make it sound like anyone can benefit

in these situations, but in a gold rush,

right, you don't necessarily want to

chase the gold because it's so

competitive and such a small percentage

of people come out of there with most of

the gold. The wisest, highest EV play in

these gold rushes is to sell shovels.

And the difference with selling shovels,

you compare it to baseball, when you

chase the gold itself, it's like you're

swinging for the fences. And when you

swing hard, you have a high chance of

missing. So with the startup, right,

it's like a 5% success rate

statistically, but when you sell

shovels, it's a way higher success rate.

It's probably like 50%. But, you know,

it's like bunting and trying to just

make it the first base. You might make a

quick million dollars or $2 million

selling shovels. And with the actual

example of selling shovels, Levi Strauss

is an example of someone who sold

shovels during the gold rushes, the

actual gold rushes, cuz people needed

denim jeans when they were digging and

mining and stuff. And I think a great

example of selling shovels is with my

trading firm that I used to work for. We

were a market making firm. So when that

whole Roaring Kitty thing happened with

Melvin Capital trying to short GameStop

and Roaring Kitty and all of his uh Wall

Street Bets people were buying the crap

out of it. Those guys were chasing gold

cuz when this thing was shooting up,

there were opportunities to make a ton

of money, especially if you were buying

calls or just buying on leverage in some

way. But my trading firm was selling

shovels. What they did is market making.

So they spent like 24 to 48 hours

straight just standing up the trade

desk. Once they got everything stood up,

they were just trading the crap out of

things two ways, right? Because that's

what a market maker does. They're buying

and selling for a profit. And the amount

of volume and volatility in this in

GameStop was crazy during this period of

time. So they were making millions of

dollars every day. And that's an example

of selling shovels because you're not

really chasing which way it goes. you're

just profiting from the volatility and

the amount of volume of people just

reaching both ways, reaching down to

sell, reaching up to buy. You're just

scalping it all day. So, that's a great

example of selling shovels, right? Some

people who got into GameStop when it was

too high, they lost a lot of money. So,

once the gold is gone, what happens? The

people who originally mined all the gold

and were early leave their billionaires.

A couple people who came in late get a

few scraps. the people who sold shovels

made their money and then they all turn

their attention to the new people coming

in who are late to the game and they

sell hopes and dreams to all those

people. So in a modern context what this

looks like is people selling newsletters

or courses or books about oh how to mine

gold, how to make money in AI I guess

would be a more modern day example. And

what these people don't realize is that

the gold rush is over. But the gold rush

for suckers is never over. So this is

the new gold rush. It's selling the

dream to the people who came late. You

know, whether you're in a gold rush or

outside of a gold rush, there's two main

ways that you can make money in this

world. One is you earn it like a

surgeon. You spend 10 years in medical

school and residency and fellowship

specializing in this esoteric complex

skill so that you can charge and demand

such a high salary on the free market

after all of this rigorous training or

or you can just take it. You can just

take the money from someone else

legally. An example of this is trading

where lots of trading is literally zero

sum. Like the derivatives markets,

futures and options, those are zero- sum

markets. You can get paid just as much

as a surgeon while only having a 4-year

degree. So, in any environment, gold

rush or not, there's always more

opportunity if you're willing to be

unethical and you're willing to dabble

within the gray area of regulation. So

ultimately running a business or even

life to a greater extent, it's like a

long poker tournament where you're

exposed to variance. So even if you're

playing very plus EV poker, it's always

going to be two steps forward, one step

back, two steps forward, one step back.

And you kind of got to get used to

riding those waves a little bit. You got

to you got to have the stomach for it

because as any poker player can tell

you, there are going to be points where

you run so bad. You know, in life,

you're gonna have a month where your

girlfriend cheats on you, your dog dies,

you get hit by a random drunk driver,

you know, and you're like in a in a

wheelchair or something. And you got to

be ready for these these lows, you know,

they're going to come. You can't just

off yourself during that month. You have

to be mentally ready for it. And cuz you

have to remember that there's an equal

and opposite point where you're going to

run super hot. You're going to run like

god, where you're going to have aces

back to back to back. and you need to

get maximum value out of those

situations. And so, in many ways,

running a business, it's kind of like

being at war. You're like a military

general like Napoleon. And you got to be

strategizing and thinking, you know,

even if I lose three major battles in a

row, how am I going to adapt so that

ultimately I can win the war. You know,

you can't just be disheartened. Oh

we're losing. We lost three major

battles. You got to just push through.

Okay, how does this change my long-term

strategy? You know, it takes thick skin.

It's not for the faint of heart. And so

I think that's important for people to

understand if they want to get into the

more entrepreneurial side of things.

They have to be very adaptive and they

have to have thick skin and they have to

accept that variant as part of the game.

So again with the sailing analogy, you

can't control the wind, but you can

adjust your sales. So hope you guys

learned something. Like, comment,

subscribe. Take it easy.