We Study Billionaires - The Investor’s Podcast Network

TIP336: Mental Models Used by Billionaires w/ Sahil Bloom

12 snips
Feb 14, 2021
Guest
Sahil Bloom
Sahil Bloom, Vice President at a Private Equity Firm and popular finance commentator, shares his insights on mental models used by billionaires. He emphasizes first principles thinking, drawing on examples from Elon Musk and Warren Buffett to inspire independent investment strategies. The discussion covers the importance of second-order thinking, financial literacy, and the power of compounding. Sahil also addresses the balance of confidence and luck in investing, all while highlighting the need for early investment to maximize financial outcomes.
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INSIGHT

First Principles Thinking

  • First principles thinking is foundational for nonlinear outcomes by grounding yourself in fundamental truths.
  • Stop taking things at face value and rebuild from foundational truths.
ANECDOTE

Elon Musk & SpaceX

  • Elon Musk used first principles thinking to build SpaceX by analyzing the fundamental cost of rocket materials.
  • He realized it was cheaper to build than to buy, leading to significant cost savings.
ADVICE

Second-Order Thinking

  • Go beyond first-order effects and consider the second and third-order consequences of actions.
  • This is crucial for gaining an edge and achieving asymmetric outcomes in investing.
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