Shane Parrish: Make it a little less about luck every day
When you talk to Shane Parrish, it’s clear he has a lot on his mind. And that’s partly because … it’s his job to have a lot on his mind.
The founder of Farnam Street runs a blog that posts once a week on weighty topics like “The Decay of Knowledge,” decision making, and mental models. Or as Shane calls it, “the best of what everyone else figured out.” It’s the kind of philosophical stuff that is more likely to be found in university lecture halls than the clickbait-y world of the web.
The unsurprising side effect is that Shane is equally cerebral when it comes to his business. And it’s paying off.
The blog that started as a side project is now something much more. Farnam Street is growing 50% a year. He now has a staff of four employees. He has started an entirely other business holding company called Syrus Partners.
But most importantly (and impressively) is that Farnam Street has blossomed into a full-fledged movement that is attracting the likes of NFL general managers, best-selling authors, legendary poker players, and an impressive community of hyper-ambitious learners.
Which is why we wanted to talk to the most thoughtful man on the internet about how he got there and the mindsets he’s learned from meticulously studying people smarter than him.
Interview edited for length and clarity.
Where is Farnam Street as a business? From the outside, it seems like you’re experimenting with lots of things.
Most of this is new to me. I have the beginner’s mind. I’ve never been involved in someone else’s online business and I’ve never been involved in building a community or courses or platform. So I’m operating from the premise of “I don’t know much, how can I know more?”
That starts with doing lots of things and iterating and seeing the results. Learning what’s time-consuming and what’s not. Learning what scales and what doesn’t. Learning what makes a difference and what doesn’t. That gives me a deeper fluency in how all these different things work, and helps me try to get better.
It’s meta that the site is about learning from other people … and that is how you run your business.
I tried to reach out to other people beforehand but I was just getting these high-level, kind of cliche answers. Frankly, it was a waste of time. Maybe that approach works for other people but it didn’t work for me.
The Farnam Street homepage
Did any “cliche” advice connect afterwards?
Not really. I discovered that a lot of people outsource most of their business. They really manage freelancers. And it’s not the non-core stuff they outsource, but the core stuff. A lot of people will outsource content creation from articles to courses. My theory is that if you do that long enough, you get out of touch. While they might grow numbers, they are less and less in tune with their audience. It’s a shell game. The longer it goes the more likely it is to end poorly.
You have to be close to the ground and know what’s going on in people’s lives and what they are facing. And one of the ways to do that is to meet them in person. That’s why we host events. We run four a year. And they are all small. Two are about 50 people and two are about 10 people. We do that intentionally.
If you made a pie chart of your revenue sources, what would it look like?
The bulk of our revenue comes from the learning community, which is an annual membership program. The workshops are a great source of revenue, but we only have four events and we run them each once a year.
One thing we discovered is at the 55th person is where we start to really make money, yet we’ve never allowed more than 50. We’re not trying to optimize for making the most money. We’re trying to optimize for the best long-term experience. It’s hard to run a 75-person event that doesn’t feel like just another event, where you just become a person in the crowd.
Shane holding court at a Farnam Street workshop
Easy to say that, but what have you turned down that would have, on paper, been great for business?
I turn down speaking engagements for $20,000 all the time. I do six speaking engagements a year. That’s it. Speaking is not the way I want to earn a living.
I’ve turned down multiple book offers. People approach us to write books and it’s not the right time and not the right book.
Because there’s one shareholder, me, it’s easy to make choices asking: What is in the best long-term interests of Farnam Street? What is in the best long-term interest of our readers? The rest will take care of itself, but you have to be in a position of strength to make those choices. You can’t be defensive.
Is it fair to say that five years of underwriting put you in that position of strength?
Yes. But there’s a whole bunch of other stuff we do that puts us in a position of strength. We’re not out trying to grow the audience, we’re not out here doing Facebook Ads. We’re not out here doing all of these traditional things people do to grow their following. When we did experiment with that… we found that the people we attracted didn’t stick with us. We acquired growth, but it was the wrong kind of growth. Those people weren’t getting as much value out of us. So why play that game?
Also, I don’t want to play the game everyone else is playing. Because they are better at that than I am. They have a better budget, they’re smarter, they have better people doing marketing … and we don’t want to be a content factory. We want to help people make better decisions in their life. We want to help people live a more meaningful life. And we want to help them really see what’s happening in the world around them with as few blind spots as possible.
The audience will grow if you put out good content. If you have a critical mass of people, which we do. I get calls all the time from people asking “How do I do what you’re doing?” and I’m like “I have no idea!” I feel like everything we’ve done to date has been luck. Every morning when I wake up, I ask myself, “How do I make it a little less about luck today?”
You’ve written a lot about long-term thinking, how do you know when to stay with things?
I’m out there interacting with people all of the time. Nobody filters my email. I get about 1,200 emails a week. I don’t reply to everything, but I do see what people are thinking.
When I drop the ball I hear about it right away. That doesn’t mean that every time I read a complaint I run and try and solve it. But it does mean I get that feedback right away about what’s going right and what’s going wrong and why.
I also give people my cell number all the time. I posted it in our learning community once. People were so surprised, but I want to really make sure we’re not messing up.
The problem with this approach is that it’s hard to scale. But why push for more unless we have a solid foundation and we understand the intricacies of everything we’re doing and how they connect, how the brand fits together?
You talk about the uniqueness of your own mission, but you also talk about copying the best. How do you square those?
Start with the premise that you don’t know anything, broadly speaking. Start with the premise that what other people are doing is a good starting point. Then build onto that. I take what other people do and tinker with it. I don’t feel like I need to reinvent the wheel. I figure out what works for me, what works for our audience, what I can do better. I’m always trying to figure out if something applies to our company or our culture or if it sends the right message to our readers. I’m not smart enough to figure out everything on my own.
Does this give you a local maximum of sorts, that you’re limited by the things you’ve seen elsewhere?
No, I know how easy it is for people to copy our content and even our business model. So that drives a lot of what we do. We want to do things that are hard to copy and that means we can’t cherry-pick what’s easy, because there is a lot of competition in easy.
There’s something bracing about making a decision knowing you will hear from your readers. How do you decide what feedback to act on?
I’ll give you an example: I’ve always viewed our podcast as an experiment. Part of it is to introduce listeners to fascinating people they would never have heard of otherwise. Most people are expecting these highly polished well-orchestrated podcasts like “Serial” or the same old surface knowledge answers that sound awesome but don’t deepen your understanding. … We don’t do any of that.
I get feedback from people: “I didn’t like that.” I dig in and they say, “I want to hear these name brand people that I know.” But that’s not what the podcast is about. So that means I have to tune the messaging so people’s expectations are aligned with what I’m actually trying to do. Then they can self-select between people who want to go deeper and people who want only the surface.
When you’re only doing what people want, that can put you out of business. As Steve Jobs noted a long time ago, you can’t always ask people what they want.
I see a version of that with stuff we write on GrowthLab. People will say “Give me the pre-packaged system. Give me the hack.”
Everyone just wants the answer. The answer is easy. And when the answer doesn’t work, they can blame you instead of looking in the mirror.
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And then when you don’t have it, and people can’t use it in the next ten minutes, they think, “Oh this article sucks!” and they leave.
Well, think through that problem. If there was actually a system that worked for all people, there’d be like one book on every topic! The world would be amazing and totally boring.
But the system that works in your context doesn’t work in my context. That’s where people drop the ball. People may get 90% of what they need, but they realize it’s a lot of work or that they need to fine-tune the last 10% for themselves. And then they go “Netflix is calling!” We’re brought up to be pain avoiding. But that pain is thinking. And thinking through problems is painful. Doing the work is painful.
A lot of smaller online businesses haven’t really struggled. They haven’t been through a long financial downturn. They haven’t seen a situation where people’s discretionary income is decreasing. And I think what people will find is that it’s highly probable that the revenue of these businesses will drop in half if there’s a significant financial downturn.
Do you ever get frustrated with people who demand simple answers?
We’re trying to cultivate an audience to do the exact opposite. The people who love Farnam Street are the people who know they have to do the work. The way to success is simple, but it’s not easy. Of course, I acknowledge that people start off with different advantages in that journey, but where you start is less important than the vector you get on.
I read somewhere that you start every day orienting around 2-3 things you must get done. What have those things been lately?
I want to spend time doing things that are first order negative and second order positive because I know that not a lot of people are willing to do that. For example, taking time out of your day to read and learn makes you different than other people. It slows you down in the short term but pays dividends in the long term. I want to do as many of those things as I can.
I mentioned before that everything can be copied. Well one of the things people have a hard time copying is things that are hard in the short term. Like going to the gym. You might like running but I don’t. I don’t like going to the gym. But it will likely lead to a longer, happier life.
There are things you can do in your business in the same way. But you need time to think through these things.
Right now, I’m writing a couple of books. I’m working on a new course for next year. I’m looking for businesses that we can buy [at Syrus Partners]. Those are the main priorities.
You’ve mentioned a few times about how you’re fearful of being copied. How come?
It’s kind of like cars. High-end features start in luxury cars but in a couple of years every car can self-park. In the online business sphere, if you develop a course nobody else has thought of, it won’t take years to copy. It will take months. And if they have a better audience, or better marketing, they will win.
You have to think about things that can’t be copied. Or things that are at least harder to copy. That makes me go slower. Information wants to be free. If you have a paywall, it will come out eventually.
I learned very quickly there is a difference between the value you create and the value you capture. If you only create value you won’t be able to make a living. If you only capture value you’ll go out of business. If I have to err, I choose the side of creating too much value.
It sounds like your community is the thing that’s hard to copy.
Yes. And the cool thing is people self-select, which makes the community amazing.
For example, it’s work to justify our events as an attendee. If you want corporate approval, you have to sit and think about it. But the people who do that are the people who will be ready to have real conversation, contribute, and will know why they are coming.
Mike Lombardi, the former general manager of the Cleveland Browns, showed up last week at one of our events. He showed up because he loves Farnam Street. Annie Duke showed up too. So we’ve created a platform that people identify with. A platform where they have something to learn, where we all believe that we’re not the smartest people in the room, and that we all have a lot to learn.
Look, the people in our community are not your frenemy, like the people in your organization. I mean those people want you to succeed but not too much. They want you to fail but not too much. With frenemies, it’s all relative to them.
The people in our community want to get better so they want you to get better. They don’t care how much money you make or what projects you run. And since that’s the collective goal of every member of the community, it creates a very special atmosphere for growth and learning. We had a debate last year in the community where one of our members was trying to tell the general manager for an NBA team how to run his organization (of course he had no idea he was talking to an NBA GM, which is why we allow people to, if they choose, remain anonymous).
A lot of people create businesses for work for as little time as possible. Why not do that?
What people don’t understand is that I spend 50 hours a week on this and maybe another 20 on Syrus Partners. But I only work 15 of that. What I mean by “work” is “doing things I don’t want to do.” The rest of the time isn’t work to me, it’s life. It’s fun. It’s engaging.
But when you look at people online selling things, they are selling a lifestyle more than actual value. I mean that from a marketing perspective. They sell, “You can live this life just like me. Here’s my Lamborghini! Here’s my private jet. Here’s my beautiful partner. Here’s my perfect stress-free life.” And then people have the impression that that lifestyle is easily accomplished. You just have to buy some course. That’s not the way we operate. If we had a lifestyle it would be someone that wants to read books. [laughs] I get emails from spouses that say “you’re the reason there are so many books in my house!” I’m like “sorry!”
You don’t have an Instagram?
We do, but it’s not curated for a lifestyle. I talk about going to the museum with my kids, getting nervous before speeches, and some of the events we run. But it’s still an unreal view into my life.
In our annual letter to readers last year, I pulled back the curtain and showed people what they don’t see about me. From the outside, you think “oh man Farnam Street is growing 50% year-over-year.”
But you miss so much when you only see curated reality. Here’s what you would have missed about my year: My biological father wants nothing to do with me. I’m divorced. I cry on my couch sometimes. It’s like social media is this curated view of the best of everyone.
Think about it. It used to be that you would see your neighbor get a new car or go on a vacation. These events would happen once or twice a year and you’d still feel generally happy about your life. But now there is someone online that you follow getting a new car, a new job, a vacation, every single day. It’s non-stop. There is always someone doing something amazing … but if that’s all you see then you think less of yourself. You start to become unhappy. You start to get angry. What I wanted to do was balance things out. You see X but here’s what you miss and that’s not pretty.
In the end, I want to be the website I want to read. The person I’m competing with is me. But not me right now, me yesterday. There’s a cohort of people out there who want the same thing for themselves. I want to hang out with those people in real life. And I want to interact with them. And I want to help them. Those are the people I want to spend my time with.