TIP182: THE COMPOUND EFFECT BY DARREN HARDY

W/ PRESTON & STIG

17 March 2018

The Compound Effect is a book written by New York Times Best Selling author, Darren Hardy. Hardy is the former editor at Success Magazine and is an expert and understanding peak business performance.

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IN THIS EPISODE, YOU’LL LEARN:

  • How and why you should be the world’s biggest believer in consistency.
  • Why you should claim 100% ownership of everything that happens to you.
  • 5 step checklist to get momentum behind compounding success.
  • Why success is something you attract by the person you become.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

Preston Pysh 0:02
Hey, how’s everyone doing out there?

On today’s show, we cover a really great book written by a New York Times bestselling author Darren Hardy. The name of the book is “The Compound Effect.”

We’re covering this book because Darren Hardy was the former editor at Success Magazine. He has an enormous amount of experience interviewing billionaires and highly accomplished individuals. His notes and his comments on this book are really profound, especially if you’re the type of person who’s always trying to improve and add more success into your life.

Also, his book is one of the top selling business and success books on Amazon. This was the case for an extended period of time. Without further delay, let’s go ahead and get started.

Intro 0:44
You are listening to The Investor’s Podcast where we study the financial markets and read the books that influenced self-made billionaires the most. We keep you informed and prepared for the unexpected.

Preston Pysh 1:04
Alright, how’s everyone doing out there? Like we said, In the introduction, we’re going to be covering the book “The Compound Effect” by Darren Hardy. I personally really liked this book. In fact, I might go as far as saying that this would be like a top 10 or top 15 book for me.

I’m curious, Stig, if you had the same opinion on this. Did you like this as much as I liked it or did you think it was average?

Stig Brodersen 1:29
Well, I like the book in terms of the universal rules that he outlines. It’s so clear that he’s a great motivational speaker. Whenever he explains something, it’s never this is how you get wealthier. It’s always not 10 times. It’s not 100 times. It’s 1000 times richer than before.

If you like that, I know I probably come off as a lot more skeptical than I want to, I think you need to know that before you are potentially reading the book.

However, as I said before, like all the principles that he outlines for having successful life, I think that’s pure gold. His mindset is just such an abundance of good advice and a good way of living your life. I definitely agree with you on that one.

Preston Pysh 2:14
What I also liked about it is he’s saying how you can achieve success and use this compounding effect in order to achieve success, but he doesn’t say what success is. Je leaves that up to the person who’s reading it to define what it is that they’re trying to achieve.

I think a lot of people immediately turn to think that it means financial success, but that doesn’t necessarily mean what he’s getting at here is a person who would read this, this is going to help them achieve whatever it is that they’re going after whatever that goal might be.

I’d also say this would be one of those books that I think would be really important for a person to read multiple times. This would be something that you should probably pull out every six months or every year and probably read this.

It’s not a long book. It’s around 150 or 160 pages, but it’s just straight to the point. It tells you what you need to focus on in order to keep not going away and achieve what you want.

What we’re going to do for the book is we’re going to go chapter by chapter and just kind of give you the highlights of what we read here. The very first chapter defines what the compound effect in action is.

He starts off the book by stating this, “Ever heard the story of the tortoise and the hare? Ladies and gentlemen, I am the tortoise. Give me enough time and I will beat virtually anybody, anytime, in any competition. Why? Not because I’m the best or the smartest or the fastest. I’ll win because of the positive habits I’ve developed and because of the consistency I use in applying those habits. I am the world’s biggest believer in consistency.” That’s how he starts the book.

Having read a lot of different books on these billionaires that we study, these success habits and stuff, I can honestly say this is one of the critical variables. This is one of the things that keeps coming up over and over again is developing good habits and then doing them consistently. Also, optimizing those habits. That’s how he starts off the book.

He says, “In short, the compound effect is the principle of reaping huge rewards from a series of small, almost miniscule smart choices day in and day out.”

Stig Brodersen 4:30
He provides this great example with these three friends: Larry, Scott and Brad. In this example, they just have very similar characteristics.

Let’s assume that Larry keeps doing what he has always done. Now, Scott makes those small positive changes that Preston talked about before. He would be reading 10 pages in a book about self development. He will be counting 125 calories per day by simply replacing soda with water. Then he will also be walking an extra 1000 steps.

Then you have Brad. He’s the opposite of Scott here. He makes a few poor choices. For example, he’ll be buying a new big screen TV, eating more dessert. Just say adding one drink more per week by going to a new bar. Not anything big, just small, consistent bad changes in his habit. He also did the math for us.

He said, “After month 10, there was no perceivable difference. By month 20, there are some differences. But by month 31, the differences quickly become quite stark.”

Scott, the guy with good habits, loses 33.5 pounds. He gets a promotion, a raise, and his marriage is thriving.

Rhen Brad, on the other hand, with the bad habits, he puts on 3.5 pounds, which is 37 pounds more than Scott. He starts feeling sluggish, less confident about himself, probably also becoming less productive and work, more withdrawn from his marriage, and basically being too both on happiness both at work and at home.

I really like this example in the book. He actually provides the detailed math of how he came up with this. But I think it tells you something about the consistency of having habits.

Also because when we are thinking about changing in our life, we think about big changes like a divorce or winning a lottery, but that’s not your life. Your life is all you have. It’s all the small changes you do on a daily basis, either to your advantage or disadvantage. This book is all about using those universal rules to your advantage.

Preston Pysh 6:46
One of the things that I liked and this kind of piggyback on the Charles Duhigg theme of keystone habits is that this compounding impact and this ripple effect, that if you change one thing, it’ll ripple off into other areas of your life… That’s kind of what Stig was describing there with the story.

In Charles Duhigg’s book, he talked about how if a person tries to become healthier, how that actually rippled into all these other areas. They had all these other better habits because of that one habit. He doesn’t describe it that way in the book but he kind of hints at that by this section that he calls ripple effects of your habits.

So that’s how he defines this compounding effect. It’s these small little things that you do day in and day out, that are just slightly tweaking your habits, and that in the long run, it produces these massive rewards and interest, if you will, on the behavior.

In chapter two, this chapter is titled choices. What he says is, “Every decision, no matter how slight alters the trajectory of your life, whether or not you go to college, whom to marry, to have the last drink before you drive, to indulge in gossip or stay silent, to make one more perspective call or to call it a day, or to say I love you or not, every choice has an impact in your life. The result of all of those choices is what you have today.”

What I really like about this idea is he also gets at the fact and I’m sure people have heard this before that not making any choice is a choice as well. If you decide to do nothing, and just sit on your hands, that in fact is a choice. That’s going to also drive what path you’re going down.

After stating that, he says, “Your biggest challenge isn’t that you’ve initially been making bad choices. That’d be really easy to fix. Your biggest challenge is that you’ve been sleepwalking through your choices. A majority of the choices that people make, they have no idea they’re making on a daily basis.”

They’re just habits and just almost like a programmed response. I think there was a part in here where he quoted some Harvard… I don’t know if it was in the second chapter.

But he quotes a Harvard PhD who did some analysis. It was something like 95% of the choices that a person makes throughout the day are just completely habit-based. They’re doing them just out of a total habit, like you’re driving to work… You’re just making decisions. You’re making choices that are completely subconscious for the most part. You’re just putting on your turn signal.

You open the refrigerator at this time when you walk down the steps. All of these things are just naturally happening because of their habits and that’s where he’s saying, “You have to figure out what those things are and start taking control of those habits.”

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Stig Brodersen 9:41
I absolutely love this when he says that the day you graduate from childhood to adulthood is when you take 100% responsibility. I think that’s just such an important thing.

He even starts out this chapter by saying, “If there’s just one thing, just one thing you can take away from this book, it should be, it’s your responsibility.”

That’s it and I absolutely love that. He comes up with great examples saying, “If you’re late from work, don’t blame the traffic. It’s your responsibility just to leave earlier, if there’s a lot of traffic. If your coworker messed up your presentation, is that your fault? Well, you could double check. own your successes and your failures. Always point the fingers to watch yourself because otherwise, you’d come into this mindset of being a victim.”

It’s something he talks a lot about in this book. Never ever be a victim. It’s not about luck, right? I mean, because that would be the next thing. Well, some people are lucky. He debunks that by saying, “80% of US millionaires are first generation.”

So yes, you can make an argument that the other 20%, they’re lucky. Sure, but the vast majority, they made it by themselves. They made it because they are responsible for what they’re doing.

He says, “Yeah, you can get lucky. But that’s more in terms of health issues, or where you were born.”

He has this formula in his book, when he says, “This is the formula for luck, if anything. Preparation, which is personal growth. Plus attitude, which is your believing mindset, Plus opportunity, that the good things are coming your way, you seize it. Plus action, meaning doing something about it. That’s luck. Nothing more and nothing less.”

I like how he lists us off because I always used to say, “Yes. I’m just an okay person. I wasn’t born with a million dollars.” So what? It’s still your responsibility, 100%.

Preston Pysh 11:38
When I was younger, in my high school days, I was really, really bad at taking 100% ownership for anything that happened. For me, it was very easy to say, “That happened over there because of this other person, or it was maybe a little bit of my fault, but it was always like partially my responsibility. It was never 100% my responsibility.”

One of the most difficult things that I learned when I showed up at West Point, the very first day was this idea of 100% ownership, because let me tell you, that was the thing that probably stood out more than anything that I learned those first couple days or the whole four years. It was this idea that no matter what happened to me personally, whether it was good, or whether it was bad, it was 100% my fault or my responsibility.

It was weird because we would do these things called duties, it is what they were called. Your very first year you do these things called duties.

One of the duties that you have to do each week was to do all the laundry for the whole school. We’d have to send out these laundry bags and then the laundry would come back. Then the freshmen, we’d have to sort the laundry and we’d have to prioritize it by the rank of all the students in our company, which was about 120 people. Then we’d have to deliver it to all the upperclassmen in the highest rank to the lowest rank.

Then somebody couldn’t go out the door, and we were all stuffed into this room. We couldn’t be like out in the hallway or anything. We were stuffed in one person’s room. Their room would just get destroyed with all this laundry in there. Then we had to deliver it to each person and you couldn’t deliver it out of order.

If I tried to take it to somebody who was 50 ranks lower than the number one guy in the company, we had to wait in the room with his laundry until that guy came back. And so, long story short, we’d make tons of mistakes and we’d make all these errors.

You would get stopped by these upperclassmen as you’re delivering. They would ask, “Why did this happen?” You would say, “Maybe my buddy did something or he messed it up and he handed it to me wrong.”

If you even thought about responding, that it was somebody else’s fault, you were just done. You were just dead. They were going to destroy you. This is one example of like many that happened on a daily basis where you’d be asked the question about why you did or didn’t do something, and it might be 100% somebody else’s fault, but you had to always say, “Sir, there’s no excuse. I failed to do whatever it was.” Then that was the reason why you were late. That was the reason why you failed to accomplish something.

It always came back to why you failed to do something, or why you might have done something right. So this experience for me totally manipulated the way I thought before I went there.

I never really understood how powerful that lesson was until years after I’d graduated. because later on as I’m looking back, I was having a conversation with my kids. One time, and I was saying, “Well, you just have to take 100% responsibility for anything that happens in your life.” They looked at me like I was nuts.

They’re like, “Well, what if somebody comes up and punches you in the back of the head? How do you take responsibility for that?”

I said, “I don’t know. I shouldn’t have been walking on that street.” They just looked at me like I was nuts.

A person listening to this, they might think that’s nuts and that doesn’t make any sense whatsoever. However, I think what Darren Hardy is getting at in the book with this idea is that people who take 100% responsibility for every single thing that happens to them, they’re always looking to improve because of the thing that they’re asking themselves…

Let’s just take the extreme example, somebody comes up and hits you. You don’t even know this person. The person who takes 100% responsibility would be asking themselves, “What could I have done different so that wouldn’t have happened to me?”

At the end of that question, they might come to the response of really, there was nothing I could have done. But by starting with, I’m 100%, responsible for everything that happens with me, you go through that process of trying to optimize or figure out how you could have done something better.

When you don’t start with that mindset, you’ll never think that way and you’ll never try to optimize. It always be like, “Well, I wasn’t responsible for any of this. It was all that other person.”

You never go through that process of trying to optimize yourself. I don’t know. I’m a very, very firm believer of owning 100% of everything for yourself because it forces you to stop playing the victim card, because there isn’t a victim card in the pocket anymore when you start thinking like this. However, I think it’s a strong leap for a lot of people to do.

Stig Brodersen 16:43
Let’s say that your boss is mean to you. You might think just because he’s mean, it’s not my fault. Perhaps you’re right, but if that’s the situation, it is your responsibility to find another job. It is your responsibility to be transferred to another department or whatever that might be. It is always your responsibility because otherwise, you will just fall into this role of being a victim.

Preston Pysh 17:04
I want to say this, too, I think it’s important for people to recognize that everyone starts out life at a different starting point. There’s some people that start life with a very easy upbringing. They have fantastic parents that have groomed them and trained them to think in a certain way. They go on to do really successful things.

Then there are people that grow up in the worst possible circumstances you could ever imagine. I’ve seen this firsthand with my own eyes in some of the places I’ve lived like the combat zones. Let me tell you, it’s almost mind boggling to think about the differences of where people start their lives.

However, I think this is what’s really important… I’m not saying one is right and one is wrong, or anything in between. I think what people need to understand is… I look at it like this: Some people when they start their life, they have to climb a hill that is much steeper and other people don’t. It’s just completely flat.

For those people that are climbing the very steep hill, you can look at it from this perspective: You’re being groomed to handle some of the most difficult situations possible so if you can work your way out of that, once you do start getting some momentum and moving forward, it’s going to make the comparison to the person who had the flat surface from the start that much easier once you do break through.

However, I think one of the key things to break through even though you had a disadvantage from the start, you can get to that same level. It’s going to be harder, but you can get to that same level.

When you do get to that same level, you’re going to blow past them. It’s such a clip in such a speed that it’s going to make them look like they’re standing still so you can almost say that it can be an asset. However, it’s very hard to overcome. It’s very hard to get the momentum going from the start. That’s what’s really difficult, but I think that this mindset of 100% ownership is such a vital piece to success, whatever you define success as.

Stig Brodersen 19:06
I think that’s a good transition to chapter three which is called habits. Preston was already hinting at momentum, which is the fourth chapter, and how to get that whether or not you are handicapped from day one.

Preston Pysh 19:19
Chapter three starts off with a story that I just absolutely love. It says a wise teacher was taking a stroll through the forest with a young pupil and stopped before a tiny little tree a little sapling.

He looked at the pupil and he said, “Pull up that sapling there. Pull it right out of the ground.” And so, the pupil went up and just pulled the sapling right out of the ground real easy.

The wise teacher walked over to now like a little bit more of an established sapling. It was a little bit taller, maybe like up to his knees or his waist. He says, “Pull that small tree out of the ground.” The pupil goes and he just kind of pulls it straight out without much of a fuss.

He goes over to another tree. This one’s like up to his shoulder and he says, “Pull this one out of the ground.” Then he grabs a hold of it. He’s kind of yanking and twisting. It’s a little bit difficult. Then all of a sudden, the roots kind of snap, you pull it down, and you fall on your butt.

The wise teacher says, “All right, come on over here.” He stands in front of this massive oak that he’s looking up and it’s just like reaching towards the sky. He says, “Pull that out of the ground.”

Of course, the pupil just kind of smiles and starts laughing.

His point is this, “Some of your habits get so big, with the roots so deep, you might hesitate to even try pulling it out of the ground.”

Whenever I think about people in their 50s, 60s, and 70s, and you try to teach them or maybe have them from a different habit than what they’re used to doing, that’s almost like an impossible task. That’s like trying to pull an oak out of the ground.

I think anybody here in that story can quickly realize that if you’re in your 20s, 30s, 40s, maybe your 50s, if you’re not trying to change a habit that you know is a bad habit that’s causing pain in your life, man, you got to get to work on that thing fast, because it might get to the point where you just start laughing and saying, “Yeah, that’s not changing.”

So the thing here is that changing your habits, regardless of what age you are, can be extremely difficult. They’re very difficult if you’re older, just for the same reasons that we’ve talked about.

And so, he says that the solution to changing a habit needs to start with the “why.” I’m going to pass it over to Stig to explain what the “why” is all about.

Stig Brodersen 21:48
Chapter three was probably the best chapter because it’s about habits and for people listening to the podcast and knowing how billionaires are on habits and forming the right habits. For me, that was kind of like a [similarity] to Duhigg’s book, a compact version of that in chapter three.

The best point that he has is about the “why” power. Just to explain what the “why” power is, it’s that to achieve something you need to have a reason to do it. Why should I do this? Why should I get up from my couch? There should be a good reason for you to do so. Otherwise, you simply won’t do it.

He comes up with this example where something very dangerous like jumping off a cliff or going into a burning house or something like that. He said, “I would never do that for 20 bucks. Why would I do that? Super, super dangerous.”

Then he said, “Of course, I would do it to save my cat. I wouldn’t hesitate the moment. I know that would be extremely dangerous, but my ‘why’ power, going to that burning house is just so much stronger.”

I think that’s such an important concept for everyone who sets a goal because we can always set a goal of losing 50 pounds or become a million now in five years. Yeah, that’s great. However, if your “why” power is not good enough…

So what can you do if you lose those 50 pounds, can you play around? You can. That is your “why” power or if you got that million bucks, like you could quit your job and start your dream business or whatever because before you have that, it’s just not going to happen.

I can see that for myself in one of the jobs I had. I really like my job. I really like my boss. Yes, I want to start my own company at some point in time but why now? It was a dream, but I really didn’t have a good “why” reason to do so. There was a rotation and I got a new boss at exactly the same department. Everything just became extremely toxic for me.

Of course, I didn’t blame myself. It was always my boss’s fault and not mine. I didn’t take personal responsibility at all, even though I should.

The point in terms of this chapter is now I had “why” power. Now I came home just as late. Before, whenever I was happy about my work, I would just be hanging out with my friends or watching TV or whatever. Now that I was displeased my job, even though I came home at the same time, *inaudible*I still forced myself to figure out how I started my own business. It’s just because of that simple factor. I had a reason to do so.

That is what’s happening when you have this “why” power. This is where your attention goes and with that, your energy and time. It’s kind of like giving yourself a new set of eyes.

I know it sounds very spiritual, but I think anyone who has really had a reason to do something very badly suddenly sees how the stars sometimes align.

Preston Pysh 24:50
After hearing Stig talk about the “whys,” I think what we’re really getting at here, which is I think maybe even a deeper level than the “why,” is like what are your fundamental goals.

For example, you’re on a boat, and you’re steering this boat somewhere. What is the destination? I think for a lot of people out there, they’re just kind of like the sail isn’t even set. They’re just kind of flapping around in the wind. It’s just blown them all over the place. They’re not really steering the boat anywhere. They’re just kind of along for the ride. Wherever the wind blows them is where they’re going.

I think what a lot of people need to ask themselves is you got to start with, “Where am I going? What’s the destination? What’s the big destination? What is it that I’m trying to solve here? What’s my end state?”

If you can’t define that very clearly, then you’re just kind of flapping around in the wind out there. You’re probably listening to this in your car, but when you get back, pull out a piece of paper and write down the five things: where are you going? What is it that you’re trying to accomplish in life? What is it that you’re trying to do? Because whenever you know that, all the other “whys” will fall into place.

They can be sub-nested underneath those big overarching goals that you’re trying to achieve. I think that that is just so important for people to do. I would argue, I would have no idea what percent of people literally have no idea what their goals are, their end states, or what it is they’re trying to achieve. I think they’re just going day by day. Whatever comes their way, they just kind of take it.

Alright, so chapter four is titled momentum. He refers to momentum as Big Mo. He keeps saying Big Mo in the book. But in general, he talks about this idea that whenever you start doing things consistently, you’ve set up goals, and you’re saying, “I’m going to achieve this and I’m going to do this for 30 minutes every day at this time,” and you kind of get in this rhythm, what you do is you start building momentum behind that thing that you’re working towards.

He has a picture in the book of a kid on a playground with like those merry go round. So you can kind of start spinning. These things are kind of hard to get going but once they start spinning, they get going faster. Then after you get that thing moving so fast, it’s kind of easy to keep it going the speed that it’s gone. He says that’s what it’s like when you set a goal.

Whenever you do these small things every single day, built through habit loops, that you’re consistently doing over and over and over again, what you do is you build up this momentum. Then once that momentum is moving, it’s really hard to stop you.

In the book he says, “A couch potato has the momentum to continue to be a couch potato, but a person who has this success rhythm continues busting their butt, and ends up achieving more and more and more. They just keep achieving at a faster clip, because they’ve got these success loops and these success habits in place.”

You then have to figure out what it is that I can design around my lifestyle that I can start building these success loops and success habits to gain this momentum. Again, once that momentum gets going, it’s really hard to stop.

However, at the same time, it’s very hard to get it going. He uses a water pump, if you’ve ever used the water pump, it takes forever. If you just keep pumping and pumping at first, no water comes up, and it just feels like your arms are going to fall off. Then all of a sudden, the water starts coming out. If you stop pumping, it goes the whole way back down and you have to do it all over again. However, if you just keep gradually pumping it once the water starts coming out. You can just keep that momentum going.

He says that’s exactly what success is like. Once you start achieving it, you have to keep doing it. You have to stay in that rhythm.

Stig Brodersen 28:55
He has this beautiful example of the rocket ship that uses more fuel the first minutes than the rest of the journey, because it has to break free from the pull of gravity. That is especially true if you’re born under unlucky circumstances. But then what happens is that once you’re pulled from your gravity, you can glide into orbit because you have that momentum.

That’s also why it’s so important not to break the consistency. Say that you want to lose weight and then you just slip one day and you’ve eaten burgers. Now it’s not the damage of the 10 burgers that’s the problem. It’s the momentum that you lost. That’s the problem because it takes so long to build.

Preston Pysh 29:40
I got a really cool story to tell. When I was a cadet, back in the day, I think it was between my junior and senior year that I had the opportunity to do an internship at NASA. I worked in the astronaut office at NASA. This was with my degree. I did an aerospace engineering degree. They gave me this awesome opportunity to go down there and work in the astronaut office.

Well, when I was down there, I had a couple astronauts who asked me if I’d like to go on a flight with them in their simulator. Well, yes. Who the heck wouldn’t want to do that? This was the coolest experience ever.

We go into the simulator. This is a Johnson Space Center in Houston. They take me into a large room with a simulator on hydraulics. The simulator starts. When you climb in, you kind of lay down on your back, because I don’t know if people think about this, but when the shuttle launches, this is before SpaceX and all that kind of stuff… This was decades ago. But the space shuttle is upright. And so, the crew is literally sitting on their backs when everything starts off.

In the simulator, I am sitting next to where I think there were three or four astronauts sitting beside me. Then you had the captain and the co-pilot there in front so I could see them in front of me. I had a bunch of astronauts sitting right next to me in the back seats. This is how it is in the real space shuttle.

The simulator starts shaking and it goes through like this simulator… And there’s like a small window right to my left that I could look out. I could see everything there. It wasn’t the best graphics, but it was decent.

So the spaceship starts shaking and I can see and they showed me this before we started. They said there’s your speed. It’s going to be in Mach, like the speed of sound. It’s going to click off by the speed of sound of how fast you’re going.

We took off. It was probably a minute or two minutes into the sequence. It’s hard for me to remember the exact measurements here but I want to say like two minutes or two minutes and 30 seconds we had left from Florida. We were like halfway across the Atlantic Ocean in two and a half minutes or something like that. It was totally nuts.

As the ship kept going in the simulator, mind you this is in a simulator, as it kept going, I was watching the airspeed. The speed was like going pretty slow. You could see it went Mach one, then you were going Mach two, then you were going Mach three, and the speed was going up. We were probably like Mach 10. All of a sudden, the speed just started going exponential, because it was like clicking down. I was like Mach 9, Mach 10, Mach 11, Mach 12, Mach 13 to 18. It just took off.

Once we got up to orbit, and we started hitting orbit, the speed just went crazy. It just started clicking by in what felt like just seconds, you were going another Mach faster. Whenever the thing had an orbit, I don’t remember what the Mach was, but it was really fast. The shuttle at that orbit went around the Earth every hour and a half. Every 45 minutes, you had sunlight. Then another 45 minutes, it was total darkness. It was mind blowing. It was the coolest thing ever.

The reason I’m telling the story is to get at the momentum piece. This thing was moving. Although it was fast, it wasn’t going really fast until the very end *inaudible* just coming out of orbit. You went double the speed in just a couple seconds. It was just fascinating the impact of what momentum looked like in that situation.

Stig Brodersen 33:34
What a great story,

Preston Pysh 33:37
I flew helicopters after this experience. I had a checklist on my left leg and then another checklist. One was for my personal notes, and one was like how to fly the aircraft.

For the astronauts, they had checklists on their arms, both arms, they had checklists, like multiple checklists on each leg. Then they had these rods that they would pull out of their flight suit. They would unzip a portion of their flight suit. They pull out this rod and then the rod would extend. Then they were throwing switches because we did emergency procedures when I was in the simulator with them. They would start throwing these circuit breakers and switches with these rods, because they couldn’t reach the switches. They were so buttoned down inside of the cockpit. It was just so fascinating to watch them go through these emergency procedures.

One other thing that was really cool was on their checklist, every page had Velcro because once they hit orbit, what happens is all the pages open up and they can’t keep track of what page they’re on. So every single page in their checklist is velcroed. It was so cool. It was the neatest thing.

Now that I’m done, we’re going to go back to the book. I apologize if I bored people and got off topic here but now we’re going to go back to the book.

Stig Brodersen 34:47
No, that was really cool, especially for all of us who have no clue what’s going on in NASA but just know that doing a bunch of really cool stuff. That’s how we are able to describe it so thank you for sharing some of the details of the inner workings.

One of the things you might take away from reading this book is his five step checklist of how to invite a big moment or how to get momentum if you like.

The first step is to make new choices based on your goals and values. Then the second step is to put those choices to work through new positive behaviors. Okay, so you can almost see how we are going through the first chapters of the book.

Number three, repeating those healthy actions long enough to establish new habits. Number four, building routines and rhythms into your daily disciplines. Of course, to round this off at the fifth step, staying consistent for a long enough period of time.

The best example I could come up with here was not for me, but it was actually based on my wife, who I will now shamelessly brag about. I think she speaks six or seven languages really well. Then she has some languages on the side. People’s immediate comment, whenever they hear that, or anyone that comes up, which is a lot more modest about than me, by the way, is typically something like, “Oh, wow, you’re so lucky that you’re born with the right talents to learn many languages,” or something like that.

I see where people are getting that from, because they might have learned a second language in school for two years, then that’s it. That’s not what she’s been doing. She’s been extremely consistent about forming habits. To use one of the metaphors, she is really gliding into orbit here.

Whatever she does, whenever she wakes up, whenever she goes to bed is just to focus on learning languages. That’s what she does. Preferably an hour, sometimes shorter, but she always does something, even if it’s just learning two new words.

She has this saying, “Two cents in the piggy bank.” It’s just all about forming those habits.

One of the points that Hardy talks about here is that you mind work subconsciously. They keep on working, even if you’re asleep. If you start your day doing what’s important, which to my wife is learning a new language before she goes to work. If you do that, your mind still works. If you do that just before you go to bed, when you sleep, you just absorb that. Apparently, you just need to do that for 33 years, if anyone’s interested in that.

Preston Pysh 37:35
I can totally vouch for Stig’s wife. She can speak six languages. You hear a lot of people say, “Oh, yeah, they can speak six or five languages or whatever.”

Usually, they can maybe speak three really well. Then the other two are like they can say hello, and goodbye. Stig’s wife is 100%. legit. My wife’s Korean. The first time we met Stig and his wife, Stig’s wife is from Denmark….

The first time we met Sofie, she just started talking to my wife in Korean and I was like, “Holy moly, this is crazy.”

Another funny story. We were in Korea, Stig and myself and both of our wives, we were writing up an elevator in a department store. These two little Korean girls came in. They said something in Korean. Stig and I just kind of looked at each other. I don’t know what they just said.

Then Sophie out of nowhere says something back to them in Korean. I looked at Sophie, I said, “What did you just say to those little girls?” And she says, “Oh, they said to each other that they wish that they could talk to me and then I responded back to them. I said, ‘Yeah, I can talk to you just talk to me in Korean.'”

When Sofie said this to them, they both went, “Woah.” They just couldn’t believe it.

As a side note, Stig’s wife also has a PhD in economics.

Stig Brodersen 38:51
Yes. Whatever I can to shamelessly brag. I just said. I guess that’s the best way of rounding off chapter four.

Preston Pysh 39:00
She’s way more impressive than both of us combined. That’s for sure.

Stig Brodersen 39:03
Oh, by far.

Preston Pysh 39:06
Sorry, for all the stories. We’re going way off on a tangent. Usually we’d like to think we’re fairly focused whenever we’re going through book reviews, but today might be a little bit different.

I think it kind of relates to this last one where we were talking about Sofie and it’s about influences and surrounding yourself with people who are going to take you to a higher level.

We had talked about this on a show one time it was with the Real Vision guys, I believe. I didn’t know that this idea came from Jim Rohn.

For anybody who doesn’t know who Jim Rohn is, he is an unbelievably successful author. I highly recommend anything that he writes. In fact, Tony Robbins attributes most of his start and most of his success to Jim Rohn.

Anyway, Jim Rohn evidently said you need to figure out who you spend most of your time with. The top five people in your life that you spend the most time with and understand the good attributes and the bad attributes of those people.

More importantly, before you identify who those five people are, you need to think about who are the five people that you really admire and why. Then you need to marry those two lists up. You need to determine: are these people that I spend most of my day with, do they have the same characteristics of the five people that I admire? If not, why?

Whenever you can kind of come to that analysis, and you think, “Well, why am I hanging out with this person who makes fun of me every time I’m with them and who encourages me to do these habits that are not good habits? Why do I have that person in my life? What can I do to slowly start moving away from that person and attracting another person into my life, that is going to take me to where I want to be in who I want to become?

Stig Brodersen 40:55
The way he explains this is, he’s saying, “You should ask yourself, who your friends are and who you surround yourself with? Then you should categorize them as either an engine or an anchor? So is it someone who is pushing you in the right direction or is that person holding you back? Then you have to make the hard choice of taking out quite a few people who are not good for you.”

Unfortunately, he didn’t come up with any good formula of how to do that. I think that would actually be a very interesting thing, but I think we can all find people in our lives who do not have a proper influence on us. Sometimes we allow people to take us down that we shouldn’t.

For something like health, you might go out and you might be eating very unhealthy food. You might be getting quite a few beers. That’s probably fine. You’ll be like, “Yeah, that’s just happening once.”

But there are two problems. With the first one you lose momentum, which we talked about before, when you do. The other thing is, if it happens way too often, if that’s happening with all your five best friends, and you’re you’re meeting often, how will you maintain that healthy lifestyle, or if you meaning up with co-workers who are holding themselves and you back, and all you have to talk about are all the things that they don’t like about the company, it’s never a conversation about how to advance in the company, or how to improve yourself.

It’s just all those small, not the big things, all those small choices of who you surround yourself with, that results in the big things at the very end. I guess to me, that was my key takeaway from chapter five.

Preston Pysh 42:39
I think it’s important to also say that some people will maybe make the excuse that, “Well, I don’t have access to insert name whoever you would like to bring into your top five, I don’t have access to that person.”

What Darren Hardy talks about in the book, he says, “Jim Rohn, for me, was one of the top most influential people in my life. My interaction time with him was just a couple meals together and a couple random occurrences where we were doing an event together. But outside of that, I really had no other interaction with him at all. How I became so close with him is because I’ve read his material so many times and I’ve studied his material so much that he basically became one of my top five.”

Hardy has inserted him through media, through books, audio books, whatever, into his life. I think that that’s really important for people to think about. If there is a person you want to bring into your inner circle, and there’s no way you’re going to get access to them, you can still do it by reading or listening or whatever that is. Make that a daily habit that you bring into your life and you can still have that kind of access.

Stig Brodersen 43:52
At the end of the day, you attract good things in your life. You also attract bad things in your life. If you don’t meet the right people, I would say it’s 100% your own responsibility. There’s this saying that it’s not about making a million dollars. It is about becoming that person that’s required to be a millionaire. That’s the important thing.

Preston Pysh 44:16
What Darren Hardy says in the book, and this is an exact quote that he says and I think this is such a good quote. He says, “If you want to have more, you have to become more. Success is not something you pursue. What you pursue will elude you. It can be like trying to chase butterflies. Success is something you attract by the person you become.”

What he’s saying is if you want to attract successful people into your life, in whatever way you define success as you have to start with yourself and start changing yourself so that you can become that way. Then those people will be attracted to you. Not the other way around.

If you go out and you try to basically capture those people, pull them into your life. It’ll never work.

Alright, so in general, I really liked this book. I think that this book is for the person that if you’re young, if you’re in your 20s, I think this is a really, really important book for you to read. You should probably read twice, simply because of all the books that Stig and I have read, I think that this does such a good job at summarizing a lot of the key points of some of the critical factors that we’ve uncovered through all these books that we’ve read.

You kind of get it all in one small little 150 page book. I’m a very big fan of this. I think that Darren Hardy did a great job writing this and it’s very concise. It’s straight to the point and hits the stuff that’s really important.

If you take this book, and you actually do the stuff that he says in this and you focus on working on your habits, listing out what your goals are, like working towards that a little bit at a time, man, you’re going to see such big results. This is going to be such an important book in your life if you take the time to read this.

Stig Brodersen 46:06
I think if there are two things you will take away from this book, it should always be 100% personal responsibility. Always, always always, especially when it’s not your fault. That’s the time when it’s been I’d seen the dumbest, the most unfair, but that’s really the point in time where you should take 100% responsibility.

The other thing is consistency. Now that’s not the same as not quitting something that is horrible like a toxic relationship, for instance, but consistency of something you know that is completely aligned to your values and new goals.

Preston Pysh 46:39
Alright, so that’s all we really had for the book. I hope you guys enjoyed the review of “The Compound Effect.” Go ahead and check out the show notes. We’ll have some of our notes in there. We’ll have links to the book if you forget and we have everything there for you.

Stig Brodersen 46:51
Alright guys, that was all that Preston and I I had for this week’s episode of The Investor’s Podcast. We will see each other again next week.

Outro 46:58
Thanks for listening to TIP. To access the show notes, courses or forums, go to theinvestorspodcast.com. To get your questions played on the show, go to asktheinvestors.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP Network. Written permission must be granted before syndication or rebroadcasting.

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