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In today’s episode, I’m joined by investor, entrepreneur and philanthropist Andrew Abernathey. Andrew has a really impressive story and background. From starting his investing journey at 13 and raising $300k at 18 to building a multi-million dollar holding company before age 25 and bouncing back after losing a lot of money, Andrew’s journey is packed with valuable lessons. Today, Andrew really gives a ton of insight into the thought process of investing and shares some of the pitfalls we can fall into and how to avoid them.

Andrew Abernathey is the founder and CEO of Abernathey Holdings (AH), a leading real estate holding company driven by a passion for business and inspired by the value investing approach of Warren Buffett and the simplicity approach of Gary Tharaldson. His investing journey began at the age of 13, exploring a diverse range of public securities. Established in August 2012, AH initially pursued a diverse investment strategy. However, in 2019, they strategically shifted their focus to developing and owning class-A self-storage facilities across the sunbelt region, while also owning the operating companies to ensure vertical integration. This streamlined approach has not only enhanced their returns but also propelled AH to achieve remarkable market-beating results, elevating their assets under management (AUM) to an impressive $250 million.

As driven entrepreneurs and hungry investors, we’re always searching for that big idea or once-in-a-lifetime deal. Then we find ourselves in a bunch of random businesses and investments in a bid to increase the odds of success.

More often than not, that only leads to a loss of focus and ultimately, a loss of wealth. What if getting to that billion dollar idea is as simple as picking something and concentrating on that? There’s a ton of different things we could be doing, the real challenge is learning to focus and be patient.

For Andrew Abernathey, concentrating on one idea allowed his business to ramp up to $250 million in a very short space of time. At one point, he was involved in a slew of random areas. It took losing a ton of money for him to realize that he didn’t know who he was or what exactly he was good at, and that’s why he was trying everything. That was the major turning point that made him think about his billion dollar idea and let go of everything else. The effect of his concentration can be seen in his results, and it’s something all entrepreneurs should think about.

The urge to do everything will never go away for entrepreneurs. If you follow that urge, it might just rob you of the big idea you’re looking for. Instead of searching for the perfect idea and trying to do everything, think about what you can be great at and just focus on that. It’s hard and goes against every instinct we have as investors - just like the instinct to never sit on cash. Ultimately, putting your hands in too many pies and doing a deal for the sake of doing a deal is how big mistakes are made.

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There’s a reason people keep gambling even though we know the house always wins. There’s a reason we compulsively open apps on our phone without realizing it. Human beings are prone to falling into the trap of behaviors that feel good in the short term but hurt us in the long-term.

It’s the scarcity loop, and some of the ways our world has changed make it easier for us to get caught up in it. From food to slot machines and social media, there are whole industries pouring billions into keeping us stuck in the loop.

In order to escape the trap, we have to embrace short-term discomfort in different ways so we can live better and healthier lives. The good news is, the scarcity loop can be leveraged to work another way - to get us to install and maintain positive habits. Sneaking the broccoli into the Mac and Cheese, if you will. We’re naturally attracted to the scarcity loop. If we can find a way to leverage it for good, that’s the ultimate hack for doing the right things.

Why can't we escape the things that are bad for us? What can we learn from other parts of the world about doing what’s good for us? In today’s Book Club, we’re joined by speaker, professor, and New York Times bestselling author of Scarcity Brain, Michael Easter. He talks about the book, the research that inspired it and interesting insights about habits - good and bad.

Quotes

Vegas wouldn’t exist if the house didn’t always win. It’s not a town based on winners. -Michael Easter

Humans are naturally attracted to the scarcity loop. If you can find a way to leverage it for good, that’s the ultimate hack for falling into a positive habit. -Michael Easter

The faster and easier you repeat a behavior that’s rewarding to you, the more likely you are to keep repeating it. -Michael Easter

It’s easy to do research on the internet but that means someone else already figured that thing out too. Experience is one of the greatest teachers that can lead you to experiences that aren’t already out there. -Michael Easter

Key Points

The problem with bad habits
Most behaviors that people get hooked on, be it slot machines or social media are things that are fun in the short-term but can hurt us in the long-term. The truth is: most of us don’t abuse social media or have a gambling problem, but the problem is when you bundle all these bad habits together.

Why social media is more addictive for young people
When it comes to social media use, we need to put more protections around younger people. Between puberty and age 18, people’s brains change and we start to value certain things more than others. This is where the brain starts to form how we find comfort and escape. When you insert a behavior that provides short term comfort, quantifies your social ranking and is on you all the time, young people are more likely to get hooked on social media. It’s important to get kids to focus more on sports, in-person interaction and academics rather than worrying about social media.

Use the scarcity loop to your advantage
There are 3 parts to the scarcity loop - the opportunity, the unpredictable reward (with a crazy range of outcomes) and repeatability. Once we know what’s going on, we can leverage this loop for our benefit. Humans are naturally attracted to the scarcity loop. If you can find a way to leverage it for good, that’s the ultimate hack for falling into a positive habit. One way we can turn the scarcity loop on its head is to slow down the repeatable behaviors. With phones and apps you use too much, you can use an app like Clearspace to delay the gratification we get from them. Research has even found that having grayscale on your phone reduces your screen time by 40 minutes because colors direct behavior.

Why junk food is addictive
The scarcity loop also shows up in food. In fact, the junk food industry uses it a lot. The 3 Vs that make junk food addictive are value (cost), variety (many flavors) and velocity (ease of consumption). The opposite is the way tribes like the Tsimane people eat. They eat single ingredient food that isn’t all that exciting but is way healthier. 70% of what we eat is ultra-processed and that tends to concentrate calories. Foods like potatoes will fill us up but will have less calories.

How to tell better stories
Every story has to stand for something larger. Stories are just a way to walk the reader or listener or customer into the bigger idea. Once you have the big idea, you need the story that gets you there. Every story ultimately has to be about change. If nothing changes, it’s just an anecdote, a retelling of something that happened in chronological order. The great stories of literature have the main character thinking one thing or behaving in one way, and as they go through this narrative, they learn things that ultimately change them. They go through some sort of ordeal or trial and come out on the other side a different person.

Why Moneyball ruined the soul of baseball
The problem with quantifying things is we often end up focusing entirely on the number and losing the meaning of why we’re doing the thing. Anytime we start to quantify things and strive specifically for this one measure, we often miss the overall point.
Think of baseball - it’s meant to be an entertainment product, measuring everything takes the joy and fun out of it. This also applies to grades - they weren’t designed to actually show how well a student is understanding, but rather to make things easier for educators. What gets you a grade doesn’t often feel like you’ve mastered material. This problem of quantifying things can also ruin something like wine. If you focus on scoring a wine, you miss the whole point.

The rucking revolution
Humans are an athletically mediocre species, but there’s two things we are great at. We’re good at running long distances in the heat and we’re the only mammals that can carry things for long distances. You can combine the two to introduce some discomfort and work on being fitter.

Don’t underestimate the insights of experience
It’s easy to do research on the internet but if you’re researching everything that means someone else already figured that thing out too. Experience is one of the greatest teachers that can lead you to experiences that aren’t already out there.
The truth about happiness
There’s no perfect path to happiness, though it often gets communicated to us that there’s a formula. The commonalities happy people have is they figure out what brings them deeper satisfaction, they focus beyond the worldly trappings like possessions, titles and money in the bank. They also have a bigger reason and higher purpose that will help other people. The promise but also the peril of living is you have to find that path for you.

Call the f***ing Vatican
If you want to know something, you have to go right to the source. Today it’s really easy to mess around online and find answers by Googling things. If you want to know things and fundamentally understand, you have to go right to the source.

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Guest Info

Michael Easter is a speaker, professor, and New York Times bestselling author of Scarcity Brain and The Comfort Crisis. He has made a career of traveling the world to uncover practical ideas that help people live healthier, happier, and more remarkable lives. Michael’s research has taken him everywhere – from war zones to the Arctic to the Bolivian jungle. He’s interviewed thousands of experts, from Nobel laureates to world-class athletes, and pored over countless studies to find the best science-backed tactics you can use to optimize your life. His goal has always been to take these insights from the edge and make them accessible and actionable for readers. Go to https://eastermichael.com/ and sign up for The 2% Newsletter.

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