Preston Pysh  01:11

Laura, I love this topic because everyone listening to this is facing some sort of adversity in their lives, and it’s always interesting to hear different ways in which we can approach those challenges. So, my first question for you is one that involves writing your own book. For people that have never written a book, they might not realize how challenging and time-consuming that process is. I often tell people that you really need to have a lot of passion for the topic in order to finish writing a book about it. My question for you is this: What happened in your life where you had enough passion for the topic of adversity to write such an inspiring book about it?

Laura Huang  01:48

Yeah, the book was a long time coming for me. I mean I didn’t really think about writing a book until very recently, but I had been doing research for over a decade on inequality, disadvantage, and people who feel underestimated. I kept coming back to this aspect of how people would say, “But I put in so much hard work. I put in so much effort, and the hard work just isn’t speaking for itself.” We’re taught, from a really young age, that it’s about hard work. You take super successful people, CEOs of companies, and really successful investors, and Olympians, people who have won gold medals; and if you ask them, “What’s the secret to your success?” And inevitably, they mention hard work. But what happens is, at some point in our lives, we realize that hard work alone is not enough. It’s sort of that dirty little secret. We put in all that hard work, we put in all this effort. People who are underestimated and people who feel like they’re not achieving the success that they want are hitting the same walls over and over and over again. People were asking me, and they would say like, “What can I do about this? Are there strategies? Tactics? What can I do to level the playing field?” And when I recognized that it’s not about the hard work, but stereotypes that are driving these outcomes, what can I do? So, in the last couple of years, I started studying how we put stereotypes and put obstacles in our favor, so that we can create our own edge. There are going to be those people, who naturally have an advantage, but when we’re not that, we can still empower ourselves. So that’s the passion that I had for this book is people who are putting in the hard work, but we’re not able to achieve that.

Stig Brodersen  03:40

I love your point, and it leads right into my next question. You have this elegant formula for getting an edge, and you laid it out so simply in the book, but the concept is very deep. Please talk to us about your formula for getting an edge.

Laura Huang  03:56

That is so kind of you, that you think it’s elegant because when I was writing the book, it’s funny because I don’t ever make it explicit that there’s this framework. And the core parts of the book are exactly about gaining an edge, but edge actually stands for this framework I developed through my research. The E stands for enrich, which is it’s knowing how you enrich and provide value, which is so critical for gaining an edge. It’s knowing what are your superpowers and what are your basic goods; what are the things that you’re really good at; and your strengths; and where you’re underestimated. Not only your strengths but also your weaknesses. Knowing those weaknesses and how those weaknesses actually can be flipped to be an asset. So the E is for enrich.

The problem with it is that we often don’t have the opportunity or the chance to show how we enrich and provide value to other people or our counterparts. That could be because we don’t belong to the right networks. We don’t belong to the right groups. We just don’t have that opportunity to show how we enrich and provide value. And so, D is for delight, which is this element of when you’re able to delight others, it’s the equivalent of cracking open the door a little bit. It’s about showing people a side of you, or showing them an aspect of you that is surprising to them or counterintuitive, that almost makes them take pause, and say, “Huh,” and they wanted to ask questions, or learn a little bit more. That’s when you have that opportunity to enrich and provide value.

The G is for guide because even after you enrich and provide value and delight your counterpart, you still need to be able to guide the perceptions that other people have of you. They’re going to have perceptions, and they’re going to be making attributions of you, so you need to redirect and guide them to who you authentically are; both your traits and your trajectory and where you’re going.

And the final E is for effort and hard work. Often, effort and hard work is something that we think comes first; that if you put in the hard work that it’ll speak for itself. But in fact, effort and hard work come last, because when you know how you enrich and delight and guide, that’s when your effort and hard work actually work harder for you.

Preston Pysh  06:13

So one of the things that I really enjoyed in your book was this point about delivering key elements. Tell us the story about the Texas gas station that you fell in love with.

Laura Huang  06:26

So I talked about these key elements or these basic goods, right? When we talk about how you enrich and provide value, the first step is just identifying those basic goods; your sort of superpowers, or those key elements that make you essentially who you are. So, I talk a little about how it’s hard to get a grasp on what this is, but I give this example of my mother, who’s from Taiwan. Whenever she’s cooking, she starts with a couple of key things by her side. She has soy sauce, some sesame oil, and ginger and scallions. Whatever dish she comes up with, it ends up having those ingredients, and those ingredients sort of become the essence of what she’s cooking. My husband, who’s Italian, right? When he’s cooking, he starts with olive oil, and garlic, and red wine, and prosciutto. Those are sort of the essence or the key elements that make up what he’s cooking with. And so, when you’re sort of making different dishes, you’re still having those basic goods.

For companies, organizations and individuals, we have the same thing. We were on this road trip in Texas. We were driving through Texas, and there’s this gas station called Buc-ee’s that I had never heard of. Apparently, it’s a huge thing, where they are basically the mother of all gas stations. These are gas stations that are prestige, and they have their own branded line of food, and stuffed animals, and clothing. They’re basic goods. What do you stop at a gas station for? You stop for gas, and you stop to use the bathroom. If you’re in Texas, you also stop for ice to put in your softdrink or soda or whatever. In their early days, they were like, “Those are our basic goods: ice, clean bathrooms, and gas.” They started this company, Buc-ee’s, by excelling on those basic goods. And so, every time they started to grow, and every time they started to add other things, they kept going back to these basics. They were voted the cleanest bathrooms in America. If you drive through them, there’s like 50 gas pumps. You never have to wait. You walk inside, and there’s an ice machine after ice machine. Now, they have all of these other things that they’ve been able to build on top of their basic goods. It’s the same with individuals to identify and deliver those key elements. That’s when you’re able to really create that edge for yourself.

Stig Brodersen  09:17

I think that is so true. It really makes me think of this insightful quote in your book: “It’s not about giving it your all. Your basic goods help you get it all.” That is just such a powerful insight.

Laura Huang  09:30

It’s definitely something that is applicable to us as individuals, but I see it with companies all the time as well. And sometimes, it’s easier to sort of understand from the company perspective. Companies are in their early days, they are really focused on their basic goods, and they are really good at it. There are restaurants that you go to because they have amazing salsa, or they have amazing bread. Those are the basic goods. What happens with a lot of companies is that as they start to grow and scale. Now, they try and expand. They lose sight of the basic goods. They lose sight of what their bread and butter is because they start going into other products. I always tell companies that in order to grow, you have to prune. If you think about a tree, right? In order to grow, or a bush, in order to grow bigger, you have to be able to prune away and continue to focus on the roots of what you’re doing and what the essence of it is. And a lot of times, companies get away from that. When you do focus and continue to maintain your basic goods, at any time something doesn’t fit or doesn’t align well with what those basic goods are, then you know it’s something that perhaps you should be pruning, so that you can grow in a different area.

Preston Pysh  10:49

What immediately jumps to my mind is really kind of corporate governance. When you see some of the founders that had that vision of these core elements that they got it so right. Then, as they fizzled out, or maybe their equity got diluted through growth and whatnot in that corporate governance becomes so decentralized with all the shareholders. It’s almost like the people that come in to manage the business afterward just don’t have an appreciation for how important those core items are. Is that an idea that you would agree with? And if so, how would a company protect against something like that?

Laura Huang  11:25

Yeah, I think that’s one of the toughest challenges of companies is to simultaneously really still embedding the essence of what makes the company what it is, especially from the early days, while they continue to sort of grow and establish themselves in other areas. And so many companies, they do bring in external people and add in extra layers into their company. It’s something that you see even in companies that spanned campuses. What happens is there’s this inflection point to keep that original culture. These are trade-offs that companies make every day and have to make as they continue growing.

Stig Brodersen  12:10

Laura, you have this exercise you do with your entrepreneurship classes at Harvard. You call it the $5 exercise? What is that? And what can we learn from it?

Laura Huang  12:19

The way that I approach and a sort of the unique twist that I give my students is that I give them $5 in an envelope. And in teams, they use that money to start a company. They have two weeks to start this company. Their goal is to use that $5 as startup capital, and come back two weeks later, and report on what the start-up, you know, what did they found. How much were they able to make? What was their end revenue, profits, whatever, and present to the entire class.  The point of this exercise is something that kind of emerges. We find companies that you would expect, right, like car washes, bake sales, because they only have two weeks to kind of make as much money as they can. People use $5 for materials for their carwash or ingredients for their bake sale, and *inaudible* other things.

The big “Ha Ha” is that the teams that are often the best are inevitably the ones that never open the envelope or never use that $5. Because what happens is that $5 becomes a constraint. They start thinking in terms of, “What can we do with the $5 as our raw materials or as our startup capital?” Whereas, the teams that don’t use that $5, they’re not constrained by anything, so they start companies that are able to make a lot more.

So one company, for example, each of them thought about what talent they had. They recorded each of them doing a 30-second commercial on their talent, broadcasted that, and then they sold tickets to this event, where people could come and learn from each of their talents, right?

There was another company that was selling air. People would have bicycles, and they would have to fill up their bicycle tires on college campuses. And even when the that was free at the gas station, it was inconvenient. So they would fill tires up with air, which didn’t cause anything. We’re not constrained by these $5. The point of this exercise is to show that a lot of times, even when we have $5, it’s to not see that for what it is, and to be not constrained by what you’re actually given.

The other lesson from this, perhaps illustrate this even more, is that we talk about corporate incubators. This is like the $5 exercise in a more macro context, which is there’s all these companies that have incubators, so Microsoft, Google, and all of these companies have their own corporate incubators, because when they’re making acquisitions, they go out into the market, and they’re sort of acquiring different companies for this technology, or whatever it might be. The origins of this was, “Hey, well, if we actually have our own incubator, then all of these companies belong to us to some extent. We’re able to then go, and pick the ones we want, and they’re sort of at our disposal. We don’t have to go out into the market and find these companies that we want to acquire. These companies in our incubator are going to sort of know more about us, and what we’re looking for, and our technology, and so it’s going to be more suited to what we are actually looking for.”  Most of these corporate incubators are actually very unsuccessful in the sense that these companies like Microsoft and Google end up still going out into the market and wind up with XML startups because the ones inside are less innovative; are not able to provide them with something that’s new or that’s counterintuitive. They’re too close. They’re providing products and services that they think the Googles and the Microsofts want. They’re also not constrained in the sense that they don’t have to hustle in the same way. They know that they’re getting funding from the parent company. They know that they’ve got access to products and services that lots of different companies will want. There’s this absence of constraint that makes them exactly what it is that they were trying to look for otherwise. And so, that’s sort of this $5 exercise on a more macro kind of level.

Preston Pysh  16:42

So one of the words that you use in the book, Laura, is the word, delighted; and that’s the D in your EDGE acronym that you have there. And whenever I was first reading it, and you used that word, I was a little bit taken back by the word because it’s just not a word that you really hear in business books at all, is delighted. And so, you provide a few examples of why people need to be delighted before they will let you in, but I’m curious if you would explain in more detail what you mean here by the word, delighted.

Laura Huang  17:14

When you’re able to delight somebody else, that really makes them pause and notice you. So, delight is such a critical factor, especially when you’ve gotten written off, or you don’t belong, or you’re somehow facing, you know, the odds are against you. This word, delight, is hard to sort of understand and get the emotion behind this, but I often liken it to the first time that you rode in an Uber. Right, so forget all the other stuff that happened like later on, around like the management or the mismanagement, or whatever the case might be. The very first time that you sat in an Uber, there was a sort of feeling that made you go, “Whoa, what is happening here? This is so strange. I’m not in a taxi. I’m in this person’s car, and this person is a stranger. And here he or she is going to take me to where I need to go.” There’s this feeling of, “Whoa! This is so cool, but also so terrifying. I don’t know what’s happening!” That’s delight.  It’s this feeling of unexpected surprise while being delighted. And when you make other people feel that in some way, that’s when they’re going to take notice. That’s when they’re going to, perhaps, ask a question to sort of understand a little bit more. Once they ask that question, that’s when you’re now in a conversation. And once you’re in that conversation, that’s when you’re able to have that richer, deeper interpersonal interaction, where you can show how you enrich, provide value, and really be able to get at the heart of who they are and who you are.

Stig Brodersen  19:07

That was a great example. And Laura, you have this principle, and the principle is to know how others see you, so you can redirect them to how they should see you. This is all about turning the preconceived notion of bias into your advantage. Please talk to us about that idea.

Laura Huang  19:24

There’s a couple of different pieces to that. The first piece is that people are going to have a perception of you. They are going to be making attributions about you, regardless of whether you guide them to who you authentically are or not, right? People, when they meet you, are already crafting this story in their heads about who you are. Why not write your own narrative for them? And so, the guiding piece is so important to redirecting how they should see.

The second piece of that is, a lot of people don’t do this, because they see it as it feels like strategic, or it feels like manipulative like they’re trying to manage other people’s impressions. We all have those situations, where we see somebody kissing up to the boss or doing something that just feels like, “Ugh, I don’t want to be that.”  This is something that I emphasize that is very different. This is the opposite of being manipulative and managing impressions. You’re showing them who you authentically are. They are going to see you in some way, and what you’re doing is you’re redirecting them to *inaudible* your unappreciated assets, and the ways in which you enrich and provide value. And so, when you’re able to flip those stereotypes that they have about you in your favor, that’s when you’re able to really be authentic and really create your own unique edge.

Preston Pysh  20:54

Laura, you have expertise in entrepreneurship like you were saying earlier, you teach that at school. So what are some of the top mistakes, in your humble opinion, a person makes when they want to become an entrepreneur for the very first time?

Laura Huang  21:09

I think one of the mistakes people make is thinking too much, to be honest. I think a lot of entrepreneurship is about doing, leaping, and figuring it out. You need to just try. I tell a lot of my students, who are especially like, “Oh, I’m planning this. I’ve got this strategy, and I’ve got that.” I tell them, “Go get those first five customers. Once you have five customers, then let’s talk about strategy, execution, and all those sorts of things. You’ll learn so much just trying to get three customers, who will want to buy your product or service. Find three people that will buy into your vision. And then after that, it’s going to change your entire perspective.” So, it’s sort of the doing first, and then thinking and planning. And it’s something that’s pretty counterintuitive, especially for people from corporate settings, who are in large organizations, because it’s really flipping things on its head. One quality that I look for in entrepreneurs, that I think is a huge asset, is the ability to ride the waves. What I mean by that is there are so many emotions in entrepreneurship. There are these extreme highs, and there are these extreme lows. There are periods of resounding success, and then there are periods of devastatingly embarrassing failures. And sometimes those are all on the same day. The entrepreneurs, who are able to ride those waves…but what I mean by riding the waves is not just being able to get through those emotions, but also feeling those emotions, and knowing how to hone that. There’s so much data in those as well. There’s so much data in those extreme highs and those extreme lows. And so, it’s about being able to get through those highs and lows, but also being able to experience them without letting them impact what you continue to do.

Preston Pysh  23:03

All right, last question for you. You were talking about preconceived notions. My impression of Laura before this discussion was somebody, who is very accomplished, somebody who’s very smart, and I can tell that you do a lot of critical thinking in the way that you view the world and the way that you think through and organize the environment around you. And so, that just doesn’t happen by chance. You have had people in your life that have shaped you, or you’ve had heroes in your life that you admired that have put you in that direction to view the world in that way, and to come up with those amazing skills to accomplish what you’ve accomplished. My question for you is: Who is one person that you can name that you really admire, and who had this huge impact on you in order to accomplish all the things that you’ve accomplished at such an early age?

Laura Huang  24:03

Wow, that’s such a great question. I can only pick one?

Preston Pysh  24:08

You can only pick one. I would prefer it if it’s not family, but if it has to be family, you can.

Laura Huang  24:14

Definitely my dad, but it’s so hard because people have so many dimensions to them and picking one person is like picking all of the dimensions of that person. People are just varied and multi-dimensional, so it’s so hard to think of just one person, where I embrace every single facet. I think my dad has given me such great advice, and he handles things with humor and with grace. He passed away when I was fairly young, so I think I also remember and just like those continue to influence me.

Outside of my family, there are people, who demonstrate grace under pressure like people who can really take pressure-filled situations and not let it get to them, but still stay really centered; people like Coach K. I’ve always been so impressed how he has sustained such a long, great, illustrious career, but still has these moments of extreme pressure. So things like that.

And then, there are also people, who have given me a chance. That’s like a profound impact. We talk about luck and how a lot of times in situations we’re lucky. But luck is really in a lot of cases, somebody who gave you a chance, or someone who gave you an opportunity, or someone who had your best interests at heart, but had no reason to do that for you. Luck is something that we make for each other, and that other people have made it for me, and so I think all those people as well have had a profound impact.

Stig Brodersen  26:03

Laura, what a great book and such a great inspiration for all of us. Adversity and trying to navigate all the roadblocks that are going to be in our way, you simply can’t get better advice than reading your book. And what you’ve done, really making it simple, but yet extremely insightful is just absolutely amazing. Thank you so much for taking time out of your busy schedule to speak with Preston and me here, today.

Laura Huang  26:31

Thank you so much. It’s such a pleasure. And you guys are making me blush here, so thank you!

Preston Pysh  26:39

Thank you so much, Laura.

Stig Brodersen  26:41

Before we end the show, we have an exciting announcement to make. We are launching an extra podcast feed. Now, this is not to be confused with our other shows: Millennial Investing, Silicon Valley, The Good Life, and Real Estate Investing. It’s an entirely new feed with more content, just from Preston and me.

Preston Pysh  27:00

So in our extra feed today, you’ll already get access to our two-part series about The Investor’s Podcast, where Stig outlines the history of our podcast and the business model behind our company.

Stig Brodersen  27:11

With a new feed, we’re trying out quite a few new things. We also want to focus on business, and not just on the investing side, like we particularly do here in a regular feed for our podcast. As Warren Buffett says, “I’m a better investor because I’m a businessman, and I’m a better businessman because I am an investor.” But we’re also focusing on investing, and we’re giving you more of the content we know that you like. For instance, in our extra feed, we’re having a discussion about a specific stock, and it’s with our friend, Tobias Carlisle. It’s about the investment thesis of Southwest Airlines. Tobias is coming on the show and pitching that. It’s a stock that he owns, and I actually also own this stock, too. We’ll be discussing why or perhaps why not it’s a good investment.

Preston Pysh  27:58

We’re testing out a bunch of new things with our feed. If you like the extra feed, we’ll continue. And if not, we’ll simply stop creating more content. So, please let us know if you want us to create more content, where we study different businesses to make money, or if you’d like to listen to more traditional episodes like you’re used to in our regular feed like more stock pitches, for example. Please let us know that as well.

Stig Brodersen  28:19

Now, any feedback you have is much appreciated. And you can reach me directly at stig@theinvestorspodcast.com. The extra feed is not just about extra content. All the episodes on the regular feed will also be there, and it will be without ads. We’re working on an e-book with transcripts for all the episodes, too, that comes with the extra feed. We’ll answer a bunch of questions from subscribers and much more. Now, everything here in our regular feed that you’re listening to right now will stay exactly the same. You won’t notice any difference. Our extra feed is just that. It’s extra.

Preston Pysh  28:54

All right, so make sure to check out our extra feed right now. You can sign up for the free trial on theinvestorspodcast.com/extra. That’s theinvestorspodcast.com/extra.

Outro  29:06

Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permissions must be granted before syndication or rebroadcasting.