In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner chats with James Clear, New York Times bestselling author of Atomic Habits. He has a unique and elegant style for self-development that has helped countless people. Learn how you can implement it in your daily routine to achieve your goals.
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This video was recorded on March 31, 2020.
David Gardner: Would you like to be the best version of yourself? Sure. I think we can all vote for that. Well, my special guest this week, spends as much time as anyone on earth today helping as many people as possible discover how to become their best selves and he does it by promoting habits, Atomic Habits, no less. Have you read James Clear's book by that name? Well, you should, but even if you haven't yet, you're going to learn a lot more about how to become a better self; only on this week's Rule Breaker Investing.
Welcome back to Rule Breaker Investing! Well, assuming you were listening to the first 30 seconds of the show, you know exactly where we're headed this week. I'm delighted, shortly, to be joined by James Clear, the author of the book Atomic Habits, a book I've greatly enjoyed, and whether or not you've read it, A. I think you would enjoy, B. I hope you will read it, but C. I can guarantee you a good time, a thoughtful and reflective time this week.
James Clear is a personal development keynote speaker. He's The New York Times best-selling author of Atomic Habits. His entertaining talks teach audiences about small habits, about decision-making and continuous improvement. James and I will run the gamut from the four laws of behavior change to entrepreneurism, how he invests a lot of delights all the way through. I'm really delighted to bring you a new friend to The Motley Fool, James Clear.
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Well, probably the most moving part of your book, James. I think one of the better introductions of any book I've ever read is your introduction. You entitle it "My Story" and I want to start there.
So, typically the first question I like to ask each of the superheroes who joins me here on Rule Breaker Investing is, what is your superhero origin story? What is the mutation that shaped you as a younger person? Where did you come from?
I realize there's no way to abridge your story and truly do it justice, but, James, I'm still going to ask you to try what is your superhero origin story?
James Clear: Thank you. Yeah, well, it's great to talk to you and nice to do this together.
Before I was born, my dad played professional baseball for the St. Louis Cardinals, played in the minor leagues for them. And growing up, baseball, many sports were a big part of, kind of, my origin story, my childhood. And I played a variety of things, including baseball, until my sophomore year of high school when I suffered very serious injury and I was hit in the face with a baseball bat.
And it was an accident, a classmate of mine took a swing, the bat slipped out of his hands and, kind of, struck me right between the eyes. Broke my nose, broke the bone behind my nose; it's called your ethmoid bone, they're fairly deep inside your skull. Shattered both eye sockets. I, you know, with the help of some teachers and friends stumbled back down into school and went to the nurse's office, they started to ask me questions, which I didn't answer very well. I had to be taken out of the high school on a stretcher in an ambulance to the local hospital. Once I got there, I started to struggle with basic functions, like swallowing and breathing, I lost the ability to breathe on my own. I had a seizure. I would end up having three more over the next 24 hours.
Eventually, I had to be air carried to a larger hospital, which was more equipped to handle the situation. As I was getting ready to undergo surgery, I had another seizure, so the doctor's decided to place me into a medically induced coma.
And the process of recovering from that was really the first time that my hand was forced to focus on small habits, and that's kind of where it comes back into the work that I've done, the writing in Atomic Habits and connects to that.
I couldn't drive a car for the next nine months. My first physical therapy session, I was practicing basic motor patterns, like, walking a straight line. I had double vision for weeks.
And eventually, once I recovered a little bit and got out of the hospital and finished the physical therapy, all I wanted to do was get back on the baseball field, but my return to baseball is not smooth. You know, I ended up being the only junior that was cut from the team the next year. And I had to focus on really small habits, stuff that almost seems insignificant to mention now, you know, like, went to bed at the same hour each night, prepared for class for an hour each day. After physical therapy, this was the first time in my life when I started strength training consistently. At first once or twice a week, and then three or four times.
And individually, those habits seem like very small things, but collectively, they gave me a sense of control over my life again, a sense that I felt like I had lost. And so that period, in that sense, it kind of was my first introduction to small habits and behavior change as a practitioner.
And then it was only a couple of years later, once my baseball career -- I ended up playing in college and having a good career there. So, I recovered and bounced back to a certain degree. And I studied biomechanics, so I was a science guy, mostly chemistry and physics. And then I went to graduate school and got my MBA. And [...] which sort of sparked my desire, kind of got this itch going in me to start my own thing, which I did after I graduated.
And it was only then, during those years and then the, kind of, intervening years that followed, as I built my business and started writing about habits, that I became more familiar with the science behind them and how they worked and kind of had a more structured description for what was going on. And ultimately that culminated in the writing of Atomic Habits.
But at the time, when I was going through this as an athlete, I wouldn't have used necessarily that language, I was just experiencing it.
So, in the long-run, I see it as a benefit, it was a big learning experience for me and I was able to learn a lot about myself, learn a lot about what it takes to change behavior, bounce back from things, overcome challenges, etc. But it's now, kind of, the merger of, both, the practice of those ideas and the study and science of them as a writer that ultimately has kind of developed into the work I do at JamesClear.com and the book that I wrote, Atomic Habits.
Gardner: And, James, it is an incredible story and you tell it so well. You did a nice job summarizing here, but of course. Some readers like to skip introductions, I would certainly suggest anybody inspired by this interview, who picks up Atomic Habits, if they haven't already read it, make sure you don't skip James' introduction.
I know you graduated from Denison University. Go Big Red.
Clear: That's right. Proud alumna, I love Denison. And, really, yeah, I just have very fond memories of my time there. I think it was one of the best decisions of my life to go there.
Gardner: That's wonderful. And, James, what year were you a graduate?
Clear: Yeah, I was in Denison from 2004 to 2008. And then I went to graduate school at Ohio State in 2009-2010. And then I started my business in September of 2010. Fumbled around for two years, tried a bunch of business ideas that didn't work. And then I began writing at JamesClear.com in November of 2012. And so, it's really been the last eight years or so that I've built up the audience there and done the work that I'm doing now.
Gardner: Which is amazing. And it's a classic demonstration of all of your principles of being resilient and being regular. And we're going to talk about that a little bit later. I definitely want to hear from James Clear, the entrepreneur. But our focus initially is, of course, on your wonderful book Atomic Habits written in 2018.
And I want to quote you briefly and just have you reflect on habits. So, you say early on in the book "Becoming the best version of yourself ... " (which by the way, I think we're all trying to be.) So, "Becoming the best version of yourself requires you to continuously edit your beliefs to upgrade and expand your identity ... " and then a little later, " ... and habits are the path to changing your identity. The most practical way to change who you are is to change what you do."
James, is that something that you knew all along since that horrific incident in tenth grade or did you discover that some later time?
Clear: Well, I mean, maybe I knew implicitly. I guess I hope that we know it implicitly. Most of what I write, when people read it what I want to feel like is, yeah, that resonates, that feels like what I've experienced in my life, you know. I think that's the ultimate test of an idea is, does it hold up in the real world? There are a lot of very beautiful theories, but do they actually hold water in practice?
So, to a certain degree, I feel like, yeah, I understood it. I didn't put it into words until relatively recently. But this core idea that you're getting at, the passage that that section is from, is around this concept that I call identity-based habits and this idea that your habits are how you embody a particular identity. So, every day that you make your bed, you embody the identity of someone who's clean and organized. Every time you do one pushup, you embody the identity of someone who doesn't miss workouts. Every time you write one sentence, you embody the identity of a writer.
And ultimately, true behavior change is really identity change. You know, ultimately that's what we're trying to get to. The goal is not necessarily to run a marathon, the goal is to become a runner. The goal is not to read a book, the goal is to become a reader. The goal is not to do a silent meditation retreat, the goal is to become a meditator.
And I think when you talk to people who've been through transformations, they say things kind of like that or they'll say, like, "Yeah, I used to have to force myself to get into the gym, but now I can't imagine not exercising" or, "Yeah, it used to take a lot of effort for me to meditate every day, but now, like, it's just part of what I do." And so, what you're seeing there is, it's been integrated into their lifestyles, part of how they define themselves now.
And identity-based habits, sort of, get at that idea. They get at this idea that every action you take is like a vote for the type of person you want to become. And that, I think, is the real reason, the true reason, the deeper reason, habits matter so much. We often talk about habits as being the pathway to external results. Oh, they'll help you make more money or reduce stress or lose weight. And that's true, they can do all those things, which is great.
But the real reason that habits matter is they provide evidence of who you are. And so, you know, no, doing one push up does not transform your body, but it does cast a vote for I'm the type of person who doesn't miss workouts. And, no, reading one page does not make you a brilliant genius, but it does cast a vote for I invest in my own learning or I'm a reader. And ultimately, I think it's the building up of that body of evidence that habits provide that gives you something new to root your self-image in, it gives you a new way to look at yourself.
And so that line that you read, that growth requires us to continuously update and expand and upgrade our beliefs, that's really what that's about. It's like, look, if you update your habits, then you will update the way that you look at yourself, because they provide evidence of all that.
So, I think there's a kind of the deep connection there with the story we tell ourselves and the behaviors that we take. And my argument is that we should let the behaviors lead the way. We should start with small habits and let that reinforce the type of person we want to be.
Gardner: And it is a wonderful way of framing things that identity-based, as you as you said, James. You know, I think back to the first time I read a book that was kind of about habits. And somebody who's been on The Motley Fool interviewed before Charles Duhigg. I know you know of Charles, The New York Times writer, he wrote a great book. It was 2012, somewhere right around maybe when you started blogging it sounds like James. But Charles wrote a book, which certainly we'd recommend about, and it's a little bit more a journalistic, kind of, the science behind habit, whereas, I think, your book really takes it and makes it personal in a way that Charles wasn't necessarily aiming for.
Clear: Well, that actually, I had the great benefit of his book having already been written, and so, you know, I could read it. And one of the things I did when I was working on Atomic Habits is that I went to Amazon and looked at all the three-star reviews for Power of Habit, because those were all people who liked it but then they felt like something was missing. And as you mentioned, Duhigg is a journalist and so his goal was more to describe, what habit is and how it forms and like the phenomenon of habits. And a lot of those three-star reviews said, "Great book, really well written, but I wish it told me how to put into practice." And so that was the gap that I thought, OK, I can do that, I can try to fill that.
And so, my approach was, I wanted the Atomic Habits to be like the most comprehensive guide on what a habit is and how it works, but most importantly, how do I implement this, how do I apply it to my daily life? Yeah, anyway. So, I thought he did a great job with the book.
And I'll tell you, after finishing a book, you have even more respect for anybody who has written a good book. So, I remember after finishing writing mine thinking, "Yeah, he did a really nice job. I'm sure that took a ton of work."
Gardner: That's great. I want to focus next on, we've talked about the habits part, I think we need to talk about the atomic part. Now, one of the truisms of most business and, kind of, cultural books is, if you read the subtitle, you can maybe often grasp more quickly what's going on than just the title itself. And if I remember, I'm not looking at your book cover right now, James, but if I remember, I think it's: tiny changes, remarkable results. So, atomic/tiny. Could you please explain?
Clear: So, I chose the word "atomic" for three reasons. So, there's kind of, like, three different meanings. The first meaning of the word atomic is what you're referencing, tiny or small like an atom. And that is a core part of my philosophy, I think habits should be small and easy to do.
The second meaning of the word atomic is, the fundamental unit in a larger system. So, like, atoms build into molecules, molecules build into compounds and so on. And your habits are kind of like that, they're like these little units in your daily system, your daily routine. And you put them altogether and you end up with what your normal lifestyle kind of looks like.
And then the third and final meaning is, the source of a man's energy or power.
And so if you can understand all three of those meanings, I think you see the narrative arc of the book, which is: We're going to make changes that are small and easy to do, and we're going to layer them on top of each other like units in a larger system. And if you can do that, when you put it all together, you're going to get some really powerful, remarkable results in the process.
And so, in that sense I got lucky, I feel like atomic encapsulates not only the idea of starting small and getting 1% better each day, but also, another one of the core ideas of the book is that, you do not rise to the level of your goals, you fall to the level of your systems. And so, we want to build a system of small changes that is inevitably taking us toward this desired destination. And you get some really powerful outcomes when you do that. So, I really like the word for all three of those reasons.
Gardner: Love it. And as an English major myself, I love it when I'm talking to a writer, somebody who loves the language. Somebody who's written a lot more than I have over the months and years, thinking about your blog. And, James, for you to have the triple meaning really connects well with me; I know a lot of people listening to us right now.
Fractals is one of my favorite concepts from science that as an English major, I don't often rock, but this idea that a small piece of something is emblematic or demonstrative of that thing. And that's what's going on here, I love how you --
Clear: ... Fractal nature to habits, it's like if you can win the moment, then that helps you win the hour and if you can win the hour, that helps you win the day. And if you can win the day, then you can win the decade. And it all comes down to mastering that habit in the moment and it comes down to making that small 1% improvement now and then repeating that choice again and again. And you'd be surprised how far it can take you.
Gardner: Yeah. Quick side note, have you ever read the book Thinking in Systems?
Clear: Yes, it's great, Donella Meadows. And she has a couple of different -- in addition to that book, I think she has an article that's called Places to Intervene in a System and it gives 11 different ways to do that I read that, and it was very informative as I was working on Atomic Habits and kind of thinking. The problem with human behavior -- and which you know well and anybody who deals with the market and trading and all the human behaviors that came out of that, know implicitly -- is so complex, it's such a complex system that nobody can understand what is going to happen for sure on any given day or moment. And so, Donella Meadows' approaches to complex systems thinking and dealing with that uncertainty and where to intervene in a complex system, all of that is useful not just for thinking about some of the ones that she thought about but also for, as someone who is working on human behavior and behavior changes, a lot. So, great book as well.
Gardner: That's great. I'm not surprised you had read her work, because it fits so well with systems and processes. I'm a very process-driven person myself, that's why I love stuff like her work and your work, James. And somebody else that I've had before on this podcast. And I know you're aware of this person as well, David Allen and his Getting Things Done work. And whether it's the two-minute rule which you speak to in your book.
But I'm thinking in particular here, sticking with Atomic, one of David Allen's great concepts is this concept of small wins, of just having a small task and doing it and then feeling a sense of energy that you've succeeded at it. And so, it gives you a momentum behind what you're doing, a small win. And you speak to that, in your book you say, "It's a simple two-step process going back to identity. One, decide the type of person you want to be. Two, prove it to yourself with small wins."
Clear: Yeah. I think we all know this implicitly from our experience that momentum is a powerful thing. It kind of feels like you either got yourself in this upward spiral or this downward spiral. And when you're on a downward spiral or when you're locked in a holding pattern, you kind of feel like you're stagnant, you need something to create a foothold that can stop the negative momentum and give you something to push off of and kind of get the things going in the right direction again.
And a small win is basically that. You know, it's like, it gives you a foothold and you can use that as a little bit of leverage to step up to the next level and then you can use that to continue the process.
And the action of winning by 1% each day or by making some small win, it's not that intimidating on any given day, it doesn't feel like that much. [...] compound and add up. And this idea that we're looking at our habits as something that compounds over time and the way to get that is by carving out these small wins each day, I think that can be a powerful way to think about behavior changing.
Gardner: I love it. Well, we're about to go into your four laws of behavior change; and that'll be an important part of our discussion. But before we get there, since we're talking about, kind of, a day in the life, I wanted to ask you that question. So, to the extent, James, that you can generalize about a typical day in your life. And I don't know how typical for you is one day to the next, but I at least assume you've got some consistent habits. So, James Clear, can you talk us through a typical day in your life these days?
Clear: Yeah, I guess broadly speaking there are always some exceptions, but broadly speaking I kind of have two different versions of a day. A day where I'm either at home, is like one version or traveling is another. So, the at home version, which is most days throughout the year, I have a cardinal rule where I don't cheat myself on sleep, so I get usually eight hours, sometimes nine if I'm training heavy in the gym or whatever. And then I usually wake up -- and really, I don't set an alarm, which is one of the great benefits of the job that I have is that I don't have to be anywhere at a particular time, usually.
So, depending on when I go to sleep and what I have the day before, I usually wake up sometime between 7:00 and 9:00. And then, let's say I'm up at 8:00, and I take a shower, I get a glass of water and I have a home-office, I walk to my office, like 10 seconds commute. And then I start working right away. And one of the habits that I have is that I keep my phone in another room until lunch [...]. So, that gives me a block of three to four hours where I get to work on my agenda rather than responding to everybody else's agenda or whatever happens to come into my inbox or whatever.
And so, that morning time is more like a kind of sacred thinking time, that's usually when I'm reading a lot or I'm writing a lot. Right now, I'm kind of working on a new manuscript. So, I'm putting ideas together and whatnot. So, that's usually when a lot of that deeper thinking happens.
Then I have lunch around noon, that's also usually my first meal of the day. So, I do intermittent fasting or have been doing it for eight or nine years now. So, usually that means my first meal is around noon. And then in the afternoon is when I do interviews like this or calls with my team or my agent or whoever I need to be talking to at the time. And that typically goes to about 5:00.
And then my wife comes home from work and we go to the gym. And so, that's when I get my workout in. That's, again, kind of like a sacred space where I shut everything off, like, I don't have to think about anything else, and just work out and be with her. And come back, eat dinner. So, usually from, like, 5:00 to 9:00 is pretty much blocked off.
And then, I often get like a second wind around 9:00 or 9:30, where I'm like, well, maybe I'll just answer a couple of emails. And, of course, it's never just a few, right. And you turn around, it's like 11 o'clock and you're still working. So, I'll either do that or we'll be watching The Wire or The Sopranos or something like that.
And then the next day it, kind of, starts over again. So, that's usually what it looks like, broad strokes.
I'm reading constantly throughout the day. So, probably the main habits that are part of my daily routine would be the intermittent fasting, the carving out the deep-thinking time in the morning, leaving my phone in another room, reading often and then the exercise routine in the evening. Those are probably the four or five big chunks that I come back to again and again.
Gardner: That's awesome. I love, James, hearing your own habits and what an exemplar you are for so many people. I know there's a whole separate part of you, we won't prolong this, that travels, but, you know, we do have a lot of listeners who travel. Now, not many people are traveling right now, but once we start traveling again, do you have one or two tips, for example, good habits you have in travel?
Clear: Yeah. I don't know that I have great travel habits, but I do have a couple of thoughts and ideas. One is, and this is not unique to me, many people will say, oh, working on a plane is one of the best places for me to work, because they don't feel like, they either don't want to buy internet or that plane doesn't have internet or whatever. And so, they just use that time to read or to write or work on things without getting interrupted digitally. And so that is a good, kind of, little focused zone.
And I have a writing playlist that I have on my phone. And it doesn't have any words, just instrumental music. And I will say, when I get on a plane and I sit in my seat and I put those headphones on and I press "play" on that playlist, I get into a zone where I'm like, yeah, this is what happens when I write. And I almost always have a good session when I do that. So, that's one little tip.
And then the second one, and this is, anybody who travels often will know this. It's hard to build -- well, this is actually a bigger principle about habits in general, which is, it is impossible to have a habit outside of an environment. All of our lives occur within a particular context. You're always moving from one environment to the next and so your behaviors, your habits get tied to a particular place, they get tied to a location. You know, your couch at 7 PM might be where you have the habit of watching Netflix, or the coffee shop across the street from your office is where you have the habit of browsing Twitter or scrolling social media or whatever.
So, the problem with people who travel a lot is they're always switching context, they're always changing environments, and so it becomes hard to stick to habits because you're always switching things up. So, my other tip for travelers is, focus on a part of the experience that is the same even if the location is different. So, for example, you could have a habit that's like, after a check-in at the hotel, I say one thing I'm grateful for that happened today. And so, you don't know which hotel it'll be or what city you'll be in, but you do know you'll be checking in, and that's a signal or a trigger to cue to start your gratitude habit.
Or after I put my luggage on the bed or after I put my luggage on the luggage rack in the room, I do 10 burpees or I do 15 pushups or whatever it is. And so, now that action -- again, you don't know which room or which hotel, but you know that you'll be doing that and you can use that as the cue for the habit.
So, if you can find parts of your travel process that are stable, you can use those as reliable cues for new habits, even if the context or location is changing.
Gardner: Love it. Alright, James, before we move, the four laws of behavior change, you've definitely aroused my curiosity, what are one or two tracks or artists you would recommend for writers for their listening playlist?
Clear: Well, obviously, it depends on what you want to listen to, I prefer to work to things that don't have words in them. So, there's a song called data Datta and it's by an artist called Solen and it's just kind of like a moody, slow, instrumental. That's usually the song that I kick the playlist off with. And then there's a great, there's a whole, this Italian artist, I believe, Ludovico Einaudi, and anyway, he has this whole, like, very epic album that is -- yeah, like, usually gets me in this writing mindset. So, those are two to dig into.
Gardner: Love it. Definitely going to add that to my playlist. Thank you, Sir. Alright, so the heart of your book, and perhaps the heart of our interview is, just your four laws of behavior change. Spoiler alert right away, for anybody who hasn't yet read Atomic Habits, we're going to be talking about making it obvious, making it attractive, making it easy and making it satisfying. So, for each of these, James, since we have you with us, I'd love maybe an example and a little coaching around each of these.
Now, I've already heard you for the first one, make it obvious. I've already heard you speak a little bit, you talked about doing a few push ups as soon as you get that hotel room or open up your luggage, that sounds like habit-stacking to me, but could you talk us through that first law of behavior change: Make it obvious?
Clear: Sure. So, first I should say, you know, roughly speaking, you sort of want those four things to happen if you're trying to build a good habit. Now, you don't always need all four, but I think the way to think about it, is they're kind of like levers you can pull, and different levers are better for different situations or different tools are better for different situations. And the more of those four do you have working at the same time, the more likely it is you're going to stick with a habit.
So, it's kind of like we're trying to put the odds in your favor, basically, with those four things. So, as you mentioned, the first law of behavior change is to make it obvious. And the idea is that, the more obvious, available, visible, easy to see that a habit is, the queue of that habit is, the more likely you're to stick with it.
So, let me give you an example for my reading habits. So, right next to me, on the desk here, I have five or six books sitting next to me, I got a little stack here, so I can reach in at any time. If you open up my phone, when I first started building a reading habit, I took Audible and I put it right in the home bar at the bottom of the phone, so it's the first thing I see when I open it up. And then there's also an app called Pocket that lets you save articles online and read them for later, similar to Instapaper as some of these other ones. And I put that right next to Audible. And so, the first thing I see when I open up my phone is a prompt to read.
And then, I also usually, when I'm spending time on the computer, most of that time is spent in the browser. And typically have between 10 and 20 tabs on my browser at any time. And usually, like, two or three of them have to do with work, Gmail or Asana or whatever, some stuff like that, but the other 10 or so are almost always articles that I'm either in the middle of reading or I want to read soon.
And so, my point is, the act of reading is very obvious in all of my environments. It's around me in my physical environment, next to me on the desk. I have some next to the end table by my bed, I've got a few in the living room. It's in my digital environment. It's like all those tabs that are on the screen or things that want to read, and it's the first app that I see when I open the phone. And those are all ideas for making it obvious.
And what ends up happening is that, I had someone ask me once, "What's the one thing that you think every person in the world could get better at?" And I don't know if it's a good answer or not, but what I ended up coming up with was allocating your attention. It's almost certain that not every person in the world is always allocating their attention in the highest and best way. And so, what you're trying to do by making good habits obvious, whether it's all these reading examples I just gave or putting healthy food on the kitchen counter or putting the task that's most important for you to accomplish on top of your keyboard when you leave work each day, so that's the first thing you see when you get there in the morning. All of those strategies are trying to make it more likely that you allocate your attention to the thing that's productive. They make it so that when you get distracted with whatever tab you are on in your browser, you look around, you're like, "Oh, maybe I'll click on that, I'm supposed to read that article." So, you're just trying to increase the odds that you follow-through and do the obvious actions, the more productive action.
Gardner: Yeah, love it. And that makes so much sense. And we're going to talk with the next one, I think, about your environment, because that's a big part of making it attractive. But before we bounce forward to making it attractive, let's just stick with "make it obvious" a little bit longer. Can you speak to habit-stacking?
Clear: Yeah. So, this is an idea that originally comes from B. J. Fogg. Who's a Professor at Stanford, also writes about habits. He calls it Tiny Habits methodology. And his structure for doing this is to come up with this -- it's basically a sentence that you fill out. Where you say, after I do my current habit, I will do a new habit. And I like to refer to that strategy as habit-stacking, because you're essentially stacking the new habit on top of an old one. He refers to it as anchoring or tiny habits method or whatever, but the idea is the same.
And so, let's say for example, that you want to build a habit of meditating. And you already have a habit of making a cup of coffee in the morning. And so your habit stack might be something like, "When I wake up and make my morning cup of coffee, I would meditate for 60 seconds" or "After I write down my to-do list for the day, I will meditate for 60 seconds," or whatever it is, you're tying that new habit with the old one.
And that connection makes it easier to remember when to do it. There's also a strategy that I think is very similar to this, it's got hundreds of studies around it, which is called implementation intention. And the idea is, you're just trying to state your intention to implement the behavior at a particular time. So, for those sentences, researchers have people fill things out, like, if you want to build an exercise habit, they fill out a sentence that says something like, "I will partake in at least 20 minutes of vigorous exercise on this day, at this time, in this place." So, you're making it very clear when and where the habit is going to live. Very similar to the idea of tying the meditation habit to the coffee habit.
I think the core lesson for all of those strategies is that, a lot of people feel like what they lack is motivation, when what they really lack is clarity. They think, "Oh, I need to wake up, and I hope I feel motivated to work out today," or "I hope I feel motivated to write today." But the truth is, you just need to have a very clear distinct line for when and where that habit is going to live and that alone will increase the odds that you'll follow-through. So, anyway, all those strategies give you a more obvious location for the habit to live.
Gardner: Wonderful. Now, make it attractive. So, at one point you say; I love this line, "Environment is the invisible hand that shapes human behavior." I'm going to requote you again, another few sentences I love, "Environment design is powerful, not only because it influences how we engage with the world, but also because we rarely do it. Most people live in a world others have created for them, but you can alter the spaces where you live and work to increase your exposure to positive cues and reduce your exposure to negative ones. Environment design allows you to take back control and become the architect of your life." You coach us, "Be the designer of your world and not merely the consumer of it."
Clear: I think environment design is a powerful strategy, I talk about it in a couple of different places in Atomic Habits. And you know, all the reading examples I just gave you, shifting the apps on the screen, shifting the location of books, those are all examples of environment design. And the core idea is to make the good habit the path of least resistance, to make the good habit the obvious thing, the easy thing to do, make it frictionless, simple, reduce the number of steps. And the more that you do that, the easier it is to find yourself living and operating in a way that's productive and effective.
And there are a bunch of different examples. Like, we can also invert this and talk about breaking bad habits, which is, you want to increase the number of steps. And rather than making it obvious, you want to make the bad habits invisible.
So, take, for example, a lot of people feel like they watch too much television, but if you walk into any living room where do all the couches and chairs face? What is this room designed to get you to do? Everything is oriented toward the TV.
And so, there's a spectrum of choices that you could do, you could take a chair and turn it away from a television, have it face a coffee table with a book on it. You could put the TV inside a wall unit or a cabinet, so it's behind doors, you're less likely to see it. You could also increase the friction of the task. So, you can, like, unplug the TV after each use and only plug it back in if you can say the name of the show that you want to watch. So, you can't just turn on mindlessly and find something.
But the key point here is that no single environment design choice like that is going to radically transform your life, but imagine the impact of making 5 or 10 or 20 or 50 choices like that, now suddenly it becomes much easier to act in a productive and effective way because your environment is moving you in that direction.
So, the way I like to summarize environment design is just say, "Look, if you want to have it to be a big part of your life, make it a big part of your environment." You know, so often we say things are important to us but then you look around and you're not surrounded by it, you're surrounded by a bunch of other stuff that's pulling you off course. So, try and design the environment to make the good habit obvious and easy to do and the path of least resistance.
Gardner: And in terms of attractive, James, could you give me maybe an example from your own life or your house or what you've done to make something more attractive? Again, the second law of behavior change.
Clear: So, let's use a common example. Let's say that you're like, "Alright, listen to this podcast, listen to this guy talk about habits." So, you know, I'm gonna set my alarm, tomorrow is going to be the day, I'm going to wake up at 6:00 and I'm going to go for a run.
And 6 AM rolls around and you're like, "Well, my bed is warm, it's cold outside." But if you rewind the clock and you come back to today and you text a friend and you say, "Hey, can we meet at the park at 6:15 and go for a run?" Well, now, 6 AM rolls around and your bed is still warm and it's still cold outside, but if you don't get up and go for a run, you're a jerk because you leave your friend at the park all alone.
And so, simultaneously what's happened is, you've made it more attractive to get up and go for a run and less attractive to press snooze and sleep in. And this strategy, I'm going to make a choice in the present, when I text my friend and set up a time to meet them, that locks-in my behavior in the future. Now, I don't want to press snooze, because there's a cost to the behavior. Scientists refer to that as a commitment device, and it's one of the strategies that I discuss in the book for. And it just kind of changes the calculus that's going on in your mind, where you're like, "Oh, now, it's more attractive to do this behavior than it was before," and less attractive to sleep in then it was before.
It doesn't mean it's easier. Make it easy is the next step, that's a different stage, but it does make it more attractive in your mind. So, that's an example of how to do that.
Gardner: Awesome! I'm going to keep things moving, because I want to get through these two and then I have so many other questions and time is the finite resource that none of us can get more of. So, James, let's cruise in to make it easy and make it satisfying.
Now, you've already spoken to make it easy a fair amount in some of the things you've said, but you entitle the chapter for make it easy The Secret to Self-Control, so maybe you could start with just a thought or two about self-control and easiness?
Clear: Well, this also comes back a little bit to the environment design stuff that we've been discussing. There are a group of studies, I mentioned some of them in the book that basically show, there's not too much difference between people who exhibit high self-control and those who exhibit low self-control aside from one factor, which is that those who exhibit high self-control tend to be tempted less frequently. So, in other words, they're in environments that don't require as much self-control.
And some examples, like, if you're trying to stick to a new diet, don't follow a bunch of food bloggers on Instagram. If you're trying to curtail your spending all electronics, don't read all the latest tech review blogs. Like, you're constantly triggered to do the thing that you're trying to avoid. So, reducing exposure to temptations, whether that's unsubscribing from emails, unfollowing people, whatever it is, increases the odds that you'll be able to follow-through, makes it easier to stick with the behavior that you want to perform.
Gardner: You know, 10,000 or more times in my life I've said a well-known prayer that includes, "Lead us not into temptation." And it seems to me, James, that you're in part saying, while we could look to divine beings to help us in that way, a lot of it comes down to environment design and thinking about our own role. I think you speak to this very directly; we have a huge amount of self-control over what we're choosing to be tempted by or not.
Clear: In a sense that's kind of a prayer for yourself, like, "Don't lead myself into temptation," you know, it's like, what choices can I take to structure the environment so that I increase the odds that I'm seeing productive things and not seeing unproductive things?
One final thought to add to this, kind of, third law, this idea of making it easy. One of the strategies, you mentioned David Allen earlier, and I kind of did a little twist on his two-minute rule for habit change. And I think that's a great way, if you're just looking for, "What's a simple way for me to make a habit easy?" I would recommend the two-minute rule.
And it basically just says, take whatever habit you're trying to build and scale it down to something that takes two minutes or less to do. So, read thirty books a year, becomes read one page. Or do yoga four days a week, becomes take out my yoga mat.
And you know, sometimes people resist that a little bit because they're like, "Okay, I get what you're saying, but I also know I actually want to do the workout, I'm not just trying to take my mat out every day. So, is this some kind of mental trick sort of thing?"
And I like the story of, there's a guy named Mitch, a reader of mine. He ended up losing over 100 pounds. And for the first six weeks that he went to the gym, he had a rule for himself where he wasn't allowed to stay for longer than five minutes. So, he would get in his car, drive to the gym, get out, do half an exercise, get back in the car and drive home. And it sounds ridiculous, right. It sounds silly, you're like, obviously, this is not going to get the guy the results that he wants. But if you take a step back, what you realize is, he was mastering the art of showing up. He was becoming the type of person that went to the gym four days a week, even if it was only for five minutes.
And that I think is a much deeper truth about habits that people often overlook, which is, a habit must be established before it can be improved. It has to become the standard in your life, before you can worry about optimizing or scaling it up.
And so, the two-minute rule, kind of, helps you do that and it helps make it easier to standardize and to master the art of showing up and make those habits easy.
Gardner: Wonderful. Alright, let's keep moving here, James, make it satisfying. Of course, the fourth law of behavior change. You're speaking to the role of dopamine in part [laughs] in that chapter, maybe you could talk us through dopamine in our brains and then in this law of behavior change, and how it works.
Clear: First, I just should say about dopamine, dopamine plays a very important role in habit formation. I discussed in the book in more detail. It is not the only brain chemical involved in the process. So, I think sometimes it gets overstated a little bit, because there's a lot of other things going on as well. But it definitely plays an important role.
And one of the things that happens is that the first time you experience something. So, for example, the first time you take a bite of a pancake, you get this spike of dopamine. And it's a signaling process for your brain where it says, "Hey, that was enjoyable, you should repeat that again in the future." And this is what the fourth law of behavior change is based around, which is this idea that you need some signal of pleasure, of enjoyment, of joy, of satisfaction, you need some type of positive emotion to cement the new habit in your mind. Because if it's just a neutral experience or it's not really that enjoyable. Then your brain is kind of, like, why would I do that again, it didn't seem worth remembering?
And so, there are a variety of ways you can do this. One way that you can practice this fourth law of behavior change and making it satisfying is to practice the style of the habit that is most enjoyable to you. Like, in the case of exercise, not everybody needs to be a bodybuilder or do strength training, maybe you find rock-climbing enjoyable or cycling or hiking or whatever it is, do the form of the habit that's most enjoyable to you.
If you're trying to build a reading habit, if you love romance novels or fantasy books or whatever, like, read what's exciting to you in the beginning. Once that habit is established, then sure, it's easy to toss in a non-fiction book or something different or whatever it is. In my case, I love reading non-fiction because it feels like it has a practical application in my life. So, for me, that's really enjoyable, but whatever it is for you, focus on the most satisfying or enjoyable form of the habit and that helps cement it. And then you got a lot of options for expanding down the road.
Gardner: Really well put. Let me just summarize then the four laws of behavior change James Clear just talked us through: make it obvious, make it attractive, make it easy and make it satisfying.
And, James, a little later you talk about the cardinal rule. And like most cardinal things, it may feel very natural and normal to us, but we need to be reminded of the cardinal things in the eternal verities from time-to-time. So, you're right, very simply, what is rewarded, is repeated; what is punished, is avoided.
Clear: Yeah, and a couple pages after that I make a slight adjustment to it as well which is, what is immediately rewarded, gets repeated; and what is immediately punished, gets avoided. And it's really that speed of feeling the cost and the consequence of a bad habit or feeling the reward and the benefit of good behavior that's really important. And so, you know when I mention, like, choosing the form of a habit that you like, that's because you feel that emotion right then in the moment.
One of the downsides of good habits is that the greatest returns are often delayed. This is actually the hallmark of any compounding process, right. Anybody who's associated with finance knows this. Like, early on, you're at the shallow end of the curve, you don't hit the hockey stick growth until years later. And habits, they're not exactly like that, but, man, they feel like that a lot of the time. You know, all the effort you put in upfront, you're waiting for those delayed rewards to accrue.
And so, for that reason, it often becomes hard to stick with good habits, because you don't have much of a signal in the moment. And so, another part of this fourth law, making satisfying, kind of sticking to this cardinal rule of behavior change: What gets immediately rewarded, gets repeated; what gets immediately punished, gets avoided; is finding ways, whether it's tracking your habits in the moment, so you got some little signal, a visual progress. "Oh, hey, I showed up today, I did the right thing." Or choosing a form of the habit that's enjoyable to you or adding some type of reward on top of doing a habit. "Oh, if you did the right thing, then you get this kind of benefit." All of those are ways to get a little bit of signal now while I'm still waiting for those long-term rewards to show up.
Gardner: Well, you've got tens of thousands of investors hearing you right now and these are people who understand that the only term that counts in investing, not trading, is the long-term. So, we are very familiar with the idea, as you say, of aiming to be great in ten years. This is one of your top ten tweets of last year. "Aim to be great in ten years. Build health habits today that lead to a great body in ten years. Build social habits today that lead to great relationships in ten years. Build learning habits today that lead to great knowledge in ten years." We certainly could add, "Build investing habits today that lead to a great portfolio in ten years." Which is really the only way to make a portfolio great. So, this is very natural for fellow Fools who're hearing you right now.
You know, James, I want to talk some about social media. I think you're doing a great job on social media. You got a quarter-of-a-million followers on Twitter, that's all that I check or use. I'm not on Facebook or anything, so I see you there. I don't mean the numbers though, what you actually do through social media seems to be you boil a lot of your work down to maybe the best insights or the best lines and you put them out through social media. And each time I see one of your tweets, I'm like, "That is a great insight." So to me your signal-to-noise ratio out there for @JamesClear on Twitter, one of the highest that I see.
You compiled your top ten tweets of 2019. I just rocked one with the, "Aim to be great in ten years." But I want to give another example and just have you speak to it, James. One of your other top ten tweets last year. "Real Wealth ... " Again very relevant to Rule Breaker Investing, "Real wealth is not about money, real wealth is not having to go to meetings; not having to spend time with jerks; not being locked into status games; not feeling like you have to say, yes; not worrying about others claiming your time and energy." You conclude "Real wealth is about freedom."
Clear: So, there's a couple of different things going on here. One, thank you for saying that about Twitter and just social media, in general. I do try to make it very high signal, very low noise. And I sort of view, because of what I'm doing in other areas of my business, like, writing articles or writing books, I kind of view social media as a testing ground for ideas. So, I'm able to, you know, iterate kind of quickly. Let me try this little idea, like, the one that you just read about wealth is not getting locked in a status game and it's about freedom and not necessarily money. Although, of course, money obviously can provide a lot of freedom.
That could be a whole article on status, on how status blinds us on how status kind of leads us astray. On why we tend to focus on status signaling rather than things that may pay off more for us in the long run. But I just want to test the idea a little bit. And so, I can't write that whole article in 280 characters, but I can condense it into a tweet and see how this lands with people. And so, it gives me a chance to iterate a little bit. So, in that sense I kind of view social media very helpful for what I do elsewhere.
But as far as growing a following, like, it's crazy how often this is the case, but it's really, like, building a great product. And so, you know, if Elon Musk has talked about that with Tesla, like, he wanted to build the best product when he came up with that car, something completely new. It looks like a racecar, but it also is totally electric. And so, it was really the product focus that made people salivate and want it and place all these orders.
And a lot of time, for some reason, with online marketing, people get this misconception where it's, like, well, what tactics are you using? How are you growing your following or whatever? It's like, ultimately, the only tactic is really providing great value. That is the tactic.
And other stuff can be useful too. It's not necessarily that marketing strategy never has a place, but every great marketing strategy is easier if you're sharing something valuable, if you're doing great work. And so, the first thing that I always try to do is just to write the best sentence possible.
I think, Naval Ravikant, who also has a great Twitter feed. He said something like, I don't know if it's a Hemmingway quote or something, but it's like, just write one true sentence. And I think about that sometimes when I write. I just want to write the one sentence that strikes the reader as true, that resonates with you and feels like, yeah, that's valuable. I need to think about that and remind myself more.
And the final thing I'll add to this is. I'm often writing for myself, you know, basically every tweet in my feed is a reminder to me to try to stay on track and do that. So, yeah, anyway, but those are just a couple of thoughts there. And I think, ultimately, they really just come back to providing as much value as we can.
Gardner: Alright. So, from a few thoughts about social media -- thank you for that, James -- let's briefly go to my social creatures question. So, this one ultimately comes from Ana Filipovic Windsor, who is the person here at The Fool, our Motley Fool employee, who was the first who told me about your book and inspired me to read it. So, naturally I asked Ana for her best question for you, and I think it relates to how we're such social creatures.
So, first let me quote, in chapter nine of your book, you say, "The Role of Family and Friends in Shaping your Habits." That's actually the title of the chapter, but you remind us, how much we influence each other. You say things like, you know, if you're surrounded by fit people, you're more likely to consider working out to be a common habit. And if it's jazz lovers, you're more likely to play some jazz every day.
But now, James, as so many of us find ourselves arguably cooped up with these family and friends during this unusual time, Ana asks, "What's your best advice for creating new habits while living with other people, whether it's your partner, kids, roommates, etc.? Oftentimes you want to create the space to help you start better habits, but if someone else interrupts you and your schedule, how do you deal with that?"
Clear: Yeah, that's a great question. And it might be a little bit of a unique challenge this time. First, I should say. So, chapter nine discusses some of this in detail, as you mention. And I knew it was important enough to write a chapter about it, but this is one topic that since Atomic Habits has been published, that I think is even more important than I realized, that the social environment it has such a strong pull, it's like social norms are like this gravity that pull on all of our behaviors. And we don't even really talk about it that much. We don't even really realize it that much, but it is around us constantly.
Like, you move into a new neighborhood and you see that your neighbors are trimming the lawn and cutting the hedges and stuff. And you're like, "Oh, we need to get some landscaping done," or "I need to mow the lawn." And partially, you mow the lawn because it feels good to have a clean lawn, but mostly, you don't want to be the one to be judged by your other neighbors. It's that social expectation that gets you to stick to that habit for 30 years or however long you live there. We wish that we can have that level of consistency with our other habits.
And so, I think the lesson there, the takeaway is, whenever possible, you want to join a group, join a tribe where your desired behavior is the normal behavior. And if it's the normal behavior in that group, then you're going to feel a strong pull to stick to that habit. We talked about making it attractive, it's going to be very attractive to stick with those behaviors because that's what other people are doing, it's what feels normal. So, they help you fit in, they help give you a sense of belonging. So, just earmark that to say that I think it is a very important force in our habits.
To Ana's question, which I think is a great one, my first thought was, well, as much as possible, you need to dedicate a space to where that habit happens and that a lot of that has not happened for people if they're working from home for the first time.
I remember this, when I was starting my business, I was working in my apartment and it was like, "Well, is the kitchen table the place where I answer emails or it's the place where I eat dinner? Is the couch the place where I work on this article or it's the place where I watch Netflix with my wife?" Like, there's this blending of context and that makes it hard to stick to new behaviors. So, as much as possible, have a habit assigned to a location.
If you can manage it, it's best for it to be a location or a chair or something that you don't usually sit in, that is not already tied to another behavior. You want, like, as much of a blank slate where it's like, this has now become the reading chair or this has now become the workout corner or whatever. So, dedicating that space is one piece.
Now, of course, you know, people are like, "I live in New York City and my apartment is the size of a phone booth. What am I supposed to do?" So, there is some difficulty with that. And her point about people interrupting or your kids coming in or whatever, like, you know it's a reality that everyone is dealing with right now. So, I think there needs to be some conversation about that with everybody else to try to get on the same page.
One thing that you can say is, "Look, I'm not asking you to do this with me. If you're not interested, that's fine, but please don't sabotage it," basically. You know, it's like, we don't all have to want the same thing, but when I'm doing this, it's important to me and so all I'm asking is, you can support by making sure that you don't interrupt it, even if you're not there, like, actually supporting and doing it with me.
Gardner: Really well put. And thank you, again, to Ana for turning us all on through this podcast to Atomic Habits. So, thank you, James.
Well, you know, I have five more questions, but I think we have about five more minutes. So, let's enter the lightning round phase of this. So, you know, I'd love to hear more than a minute, but let's just go with a minute for each of these. James, here we go.
First one is, basically, COVID-19, I think we have to speak to it, but I didn't want to lead off with it or anything. I know it's top-of-mind for so many people. Any suggested habits or advice, in a minute or less, around this unusual time?
Clear: One, so whenever the environment changes in a big way, behavior changes in a big way. And so, a lot of people are changing their environment by sheltering in place or working from home. So, one thing that you can do is, if you're going to build a new routine, for example, home workout routine, try to do it at a time or a place in your day where you'll still be able to stick to it when you go back to your old pattern.
So, for example, if you build a home workout routine around lunch, that's kind of tough, because once you start going back to the office, you're not going to be at home for lunch anymore. But if you build it at, you know, you get up and you get out of bed and it's the first thing you do. Well, now, once you go back to work, you can do it to start your day off again. And then you can go on with your commute. So, try to find a space where your new habits that you want to stick to can continue to live on once the COVID is over.
And then the other one is just to try to get outside as much as you can. You know, get some fresh air. You obviously, will still want to be separated. But being outside, I think, is very healthy and having some kind of separation when you're inside so much will probably be good for both mental and physical health.
Gardner: Great. Alright. You wrote a great book in 2018, Atomic Habits, it sounds like you're working on another manuscript now, but in-between, I'm wondering, you know what have you since concluded that changes anything you may have written in Atomic Habits or represents new thinking? I realize you pointed out the importance of social just minutes ago, but what else?
Clear: Yeah, that's probably the biggest one is the influence of the social environment. But I think if I could unpack that more in a new chapter or something, I would add that, and possibly also as part of it, the influence of status and status-seeking, status-signaling on our behavior. A lot of the choices and behaviors we make each day are signals to the people around us that, "Hey, I belong," or "I get it," or "Look at the way that I'm representing myself," or whatever. So, that's definitely a big motivator, perhaps, in behavior. So, social environment is one.
And then the other one is probably, I guess what I would broadly call timing. So, I almost wrote a chapter at like the 11th hour. As I was getting ready to finish the manuscript. The publisher is waiting for it. I wrote a chapter on timing and how to find the right time of day to insert a new habit. And I was just scribbling at 3 AM trying to get it in. And I stepped back and read it, and I was like, this is terrible, it's not nearly as good as the rest of it. So, I just need to stop.
But I still think that idea holds water. You know, if you're trying to build a meditation habit and your six-year-old is running around the kitchen table in the morning, the morning is not a good time for you to go about that habit. So, looking for the right place for habits to live that could be [...]
Gardner: Yeah, and Dan Pink wrote a pretty good book about that entitled When, which we talked about on this podcast months back.
Alright, James, next one, you've spoken to this. I think you were an entrepreneur before you were a writer. So, a minute about your business and what are you learning from it?
Clear: Yeah, I actually in a lot of ways identify more as an entrepreneur than as a writer. It wasn't really until the book came out that I, like, had to admit that I was not [...] existed, that I talk about it that way. So, I care a lot about conversion rates, revenue, expenses, profit, all that stuff. The growth rates, marketing, etc. I really like it, it's fun for me.
So, in my particular business, I try to run very lean. So, we have a small team. I have one full-time staff member, we're hiring a second right now. I tend to hire very slowly, I probably hire a year or two later than I should. I have eight or nine people who touch my business in various ways. So, agents, publisher, marketing team, etc.
And my philosophy is that I try to keep expenses as low as possible, try to maximize profit margin. There's a great book called, How to Double Your Profits in Six Months, I think, is what the title is. It's basically a list of 75 things that you can do to cut expenses and to raise revenue. And it's literally like a checklist. And it only takes like an hour to read. I thought it was so good that I listened to it twice in a row. First time I just listened to it, the second time I wrote down, like, all the things that you could do. And so now every year, once-a-year we go through all of our expenses and apply a lot of that thinking.
So, I try to attack my goals from both ends. And so, in the case of business that means, you know, we're, both, cost cutting and we're doing revenue growth. But anyway, yes, so I love all that stuff.
Gardner: And I realize that I made the mistake of not even introducing what your business is, James. Can you give us the 30 second elevator pitch?
Clear: So, JamesClear.com is the home of all of it. Obviously, Atomic Habits, is kind of the most well-known thing right now, but the backbone of the business is really my email newsletter. So, we have about 700,000 people on the email newsletter now that goes out each week. And books are part of it, speaking is part of it, we have an online course and then we're working on a podcast right now.
So, there are a couple of different arms to the business. And I really like books as a product. Speaking more to the business side of things, I like stuff that, 1) it has limited downside and unlimited upside. And the book could just, you know, people can keep selling and selling and selling --
Gardner: Forever.
Clear: Yeah. Right. And I don't have to do much; the publisher takes care of that. 2) I like things that have a long duration for success. So, habits are a topic that were relevant 30 years ago and 300 years ago. And hopefully they'll be relevant 300 years from now. And so, that gives us a long timeline for things to potentially go well. You know, if it doesn't take off right away, maybe we can find a different way to frame it and it will work well in a couple of years.
So, I like things that have those kinds of qualities where they are sort of timeless, they are sort of universal and they've got this unbounded upside. And I think that books, particularly, about non-fiction topics that are evergreen are a good fit for that.
Gardner: Wonderful. Alright, well, if we've gotten one minute on James Clear, the entrepreneur, how about James Clear, the investor? I kind of have to ask this question on Rule Breaker Investing, James. But what's your own approach to investing, do you have some habits here?
Clear: Yeah, so I certainly do not claim to be an expert here. But I do have a couple of principles. So, first, I am a big fan of margin of safety. I like the book Margin of Safety that Seth Klarman wrote. I thought it was really good. And so, I tend to have like a good cash buffer and I am very happy that I have that now, given the current situation. But I like that idea. I like that.
Warren Buffett has some quote where it's something, like, cash is like oxygen, you know, when things are going well, it's easy to just be like, oh, it's not that big of a deal, but when you really need it, it's the only thing that matters. And so, I adhere to that philosophy.
As far as stock investing goes, I'm super-boring, Vanguard-style, lowest cost possible mutual fund and just make contributions, take advantage of tax advantage funds as much as possible, etc., max out, you know, 401(k), all that stuff. So, my strategy there is pretty simple.
I do have some bond exposure, but because I have such a cash buffer, I don't worry as much about that. I tend to be mostly in VTSAX, if I'm investing through Vanguard stuff. And then I have a little bit of, I want -- that accounts for -- that and real estate mostly in my case [...] our main property or main home. That accounts for, like, let's call it 80% to 90% of the investment portfolio, but I then do have this 10% to 20% that's sort of like, I just want exposure to other stuff.
So, the other thing, this is something that I've only come to realize a little more fully recently, but talking about investing is very hard because people have such different timelines, you know. Like, what makes sense for my parents is very different than what makes sense for me, because I've got such a longer timeline ahead of me. So, I have some exposure in, like, bitcoin, for example. Because, I'm like, you know what, it's a relatively cheap bet right now to see what will happen over the next 50 years, because I could potentially wait 50 years for that to do well. And so, I like things like that, but again, have possibly unbounded upside and a long timeline for potential payoff. And so, I want to use 10% to 20% of the portfolio for things like that.
I haven't done much start-up investing, because I'm not convinced that I have an edge there that I can do it well. But I'm interested enough in it that maybe I'll pursue it in the future, but for now, I think, keeping it boring and just cash, Vanguard Real Estate bonds, that's good for to let it ride.
Gardner: That's tremendous, James. I had no idea what the state of you as an investor is, but I'm not surprised to hear how thoughtful you are about it, rocking names, like, Klarman, Buffett, etc. Do you own any individual stocks?
Clear: No, I don't pick anything individually.
Gardner: Aw! One.
Clear: [laughs] Here's my problem with it. I'm not necessarily against it in theory, and this is something, I went to the Berkshire Hathaway annual meeting a couple of years ago. And you're around a lot of this money managers, they're people who are picking stocks, etc. And my takeaway was, "Yeah, there are people who can do it quite well. The problem is I'm going to be a hobbyist and I'm competing against people who are doing it full-time." And I don't trust myself to be good enough. I think you're lying to yourself if you think you can do something for two hours a day and beat other smart people who are doing it for ten hours a day.
And so, I'm like, no, I'm just going to keep it simple and I'm going to focus on growing my business and that's where my leverage is at.
Gardner: Alright. Great. Well, thank you. And you've been so generous with your time and insights, James, not surprising, because I suspected after enjoying your books so much that your person of real character and I think we've all heard that over the last hour.
Let me ask you, in conclusion, so at the end of your book there is a conclusion, it's entitled, The Secret to Rules That Last. And I'm going to quote you, "Success is not a goal to reach or a finish line to cross, it's a system to improve, an endless process to refine." In chapter one you say, "I said, if you're having trouble changing your habits, the problem isn't you, the problem is your system. Bad habits repeat themselves again and again, not because you don't want to change, but because you have the wrong system for change."
James Clear, any concluding thoughts here for your debut on the Rule Breaker Investing podcast?
Clear: Yeah, so that idea of building a system of 1% improvements, that's one of the central ideas of Atomic Habits, that you do not rise to the level of your goals, you fall to the level of your systems. And making these small habits, making these small improvements, trying to get 1% better each day, utilizing all the things we talked about, environment design, two-minute rule, social expectations and norms, etc., Each of those strategies are like little things that you can layer into the system. And kind of shift the weight of it so that it's moving you in a positive direction.
And I think, also in the conclusion of Atomic Habits, I say something like, "The Holy Grail of behavior change is not a single 1% improvement, it's a thousand of them." And that's really what we're talking about here. How can you, just like that word of Atomic, how can you take each one of these little changes, each one of these little atoms, these little 1% improvements and put them together to build a larger structure, a larger system that inevitably leads you toward that desired outcome. And that I think is one of the core messages of the book. And hopefully, this conversation will help people achieve some of that --
Gardner: James Clear, Fool on!
Clear: Thank you.
Gardner: Well, thanks again to James Clear. I should also add, thanks to Maggie Dorn here at The Motley Fool. Maggie is responsible for booking most of my top-level talent interviews over the years, those authors in August, people like James Clear even outside of August. So, Maggie, thanks for bringing James to all of us Fools.
And next week, well, it's time to pick some stocks. That's right, it's going to be a five-stock sampler coming at you on Rule Breaker Investing next week. Maybe James will want to buy one of these stocks, who knows? It's going to be five stocks, and why wouldn't it, five stocks for coronavirus next week on Rule Breaker Investing.
In the meantime, wash your darn hands and stay safe out there!
