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Mental models

The paradigm shift

I believe your intellectual life is divided into two parts: before you embrace mental models and after.

Mental models are frameworks for thinking. They simplify complex things so your brain can reason through them. They are shortcuts through the noise. You use them to make good decisions without needing to know everything about a situation.

This is the highest-leverage tweak you can make to your mind: When you repeatedly make good decisions, you receive compounding returns. This is how a young physics geek obsessed with clear thinking finds himself the founder of PayPal, Tesla, and SpaceX in such a short amount of time.

“You get further in life by avoiding repeated stupidity than you do by striving for maximum intelligence.” — Charlie Munger

The challenge

I’ll share mental models worth memorizing. That’ll be the easy part.

The hard part is finding the discipline to use them.

Your hunter-gatherer brain is not wired to use mental models. It’s wired to rely on instincts and to prioritize the short-term over the long-term. Our inability to plan for the future is a phenomenon known as hyperbolic discounting.

In every generation, however, a few outliers manage to rewire their biology: they force themselves to always think in mental models.

By figuring out how to do this, they enter God mode at the game of life.

What exactly are mental models?

Mental models do two things: they help you assess how systems work and they help you make better decisions. These two concepts underlie everything you do.

For example, how does a rocket engine work? And which type of rocket fuel should you use?

The rocket engine is a system for you to assess. It has many parts that depend on each other, and you want to understand how. As for which type of fuel to use, that's a decision you make.

You approach these two types of questions in various ways:

  1. You forget you should ask these questions in the first place, and pursue whichever direction is easiest. This is our default behavior, and it doesn't go anywhere that's interesting.
  2. You use your instincts. Instincts are shaped by your experiences and the advice you’ve received. This is a better approach than going in whatever direction is easiest.
  3. You use mental models to consistently approximate the best answer to every question. This is how you enter God mode.

Jeff Bezos, Elon Musk, Warren Buffett, and others who move mountains use the third approach. Meanwhile, you consistently use the first and second.

That’s the biggest reason you’re not them.

You probably think they’re outliers because they’re privileged, have high IQ’s, work hard, and lucked out.

That's an important part, yes, but here's the conundrum: that also describes tens of millions of other rich, well-educated people. So, why is there only one Elon Musk among them all?

The answer lies in our broken education system: Growing up, no one taught us mental models nor instilled the discipline to use them. Musk, however, uniquely stumbled into them then forced himself to think only in models. He overrode his hunter-gatherer biology because he internalized the importance of doing so.

Recognizing that our education system fails us by prioritizing dinosaurs over mental models, Musk built his kids a school from scratch. It’s called Ad Astra.

Musk, Bezos, Buffet, and others are on record talking about this extreme importance of mental models.

The problem is nobody is listening.

If you were to listen and read between the lines, here's what you’d learn.

1. The world is a patchwork of systems

A system is anything with multiple parts that depend on each other. In other words, every machine and activity is a system on some level. For example:

A mental model of a system is the reduction of how it works. The model cuts through the noise to highlight the system's core components and how they work together. This clarity helps you get more out of the system:

Let’s look at a mental model that helps assess systems. Here’s the model Musk uses to simplify physical systems:

First Principles — What is the most efficient way to solve a problem if you started from scratch? If you look past humanity’s attempts to solve it, what is the best approach if you reasoned back up from its fundamental principles?

The SpaceX team looked past decades of incremental rocket improvements to re-examine spaceflight from scratch. They asked, What do the underlying engineering (not historical) principles reveal to be the most cost-efficient and power-efficient way to build a rocket?

They worked up from those physical constraints to build the world’s most efficient rocket.

They let a simple mental model — one that fits on a cue card — guide them through the deconstruction of a massive system so they could drastically improve its efficiency.

That is the leverage of mental models. Imagine if you looked at every part of the world this way. Some people do.

Hear Musk explain it:

First Principles in practice

How do you use First Principles for your down-to-Earth problems?

For every important activity you're involved in, periodically ask:

  1. What system underlies this activity? Is it a relationship, a business, a product, or something else with multiple components depending on each other?
  2. Is this system efficient yet?
  3. If not, what are the underlying principles it relies on?  
  4. Can I restart from those principles to identify a remarkably better way to run this system?

Anything that takes up a lot of your time should be regularly investigated like this.

The bigger question, however, is how do you identify which systems in your life are worth optimizing?

You use a second mental model: Local/Global.

Local/Global

Local/Global — Repeatedly ask whether you’re optimizing a cog in a machine instead of the machine itself. The higher the level you optimize at, typically the greater your ROI.

Consider how many people work for years to get a 15% raise when they could quickly switch to a new job that pays 25% better.

Workers aiming for that 15% raise are optimizing a cog (their job) in the job market machine. They could instead achieve their goals more efficiently if they optimized for the job market itself: what is the best job among all the available options?

You can go a level higher too. The job market is itself a cog in yet another machine: financial stability. If your true goal is achieving financial stability — and you don’t care that much which job you work because your real passion lies in pursuits that don’t pay wages — then aiming for the best-paying job is the wrong approach to your future. You’re falling prey to the momentum of climbing a salary ladder without questioning why you're climbing it.

You’re falling prey to flow.

If you were to step back and examine your life as a neutral third party, assuming what matters to you is achieving financial stability, then the right path would be reducing your expenses by moving to a cheaper city and working part-time instead of full-time. Reducing costs and reducing work hours allows you to maintain your savings rate while freeing up your time to enjoy hobbies. You know, to actually enjoy life.

Isn’t that the higher-level game you're really optimizing for?

Then optimize that machine. Not the cog that is your job.

This mental model takes minutes to apply, yet its effects profoundly change your life trajectory.

Pausing to re-think the systems that make up your life is the highest-leverage exercise you can run for your future self. No high IQ is needed here.

However, knowing you should use mental models is the easy part. The tricky bit is having the discipline to rigorously apply them.

Discipline is your obstacle

A mental model is like dental floss. You know what it is, you know why you should use it, but you can’t be bothered.

Why? Using a mental model to break out of your flow and question what you’re doing is like ripping the carpet out from under your goals. It’s painful to confront the possibility that you’ve spent years working on the wrong thing.

Whether it’s coding, working a 9-5, saving money, building muscle — anything — you’ve been riding the momentum of steady progression toward objectives. In the process, you’ve buried your head into your hustle and gone with the flow.

Losing agency over your life to extended flow is flow paralysis. It is the archenemy of critical thinking. It is the clearest sign you’ve abandoned mental models, because the ongoing use of mental models is supposed to continually adjust your life trajectory — whereas flow keeps you doing the same thing over and over again.

Appreciate the beauty of flow when you're in it, but don't abuse it.

Because, after you enter flow, your world continues changing: You're reading books, you're receiving advice, and you're learning from your mistakes. Your role as a critical thinker is use these new inputs to update your mental models to see if they still suggest you're working on the right things.

For example, should you really be going to school for the degree you chose? Or did you choose it because “it felt right" and you haven’t re-examined the decision since? And now you're in the flow of completing classes and trying to graduate college. That's four years of your life you're treating like a homework assignment.

Could you make a convincing argument for why all the other degrees you could have chosen would be materially worse options? If you can’t support that argument, you’ve gone with the flow. You’re not thinking critically. You haven’t rewired your biology.

This applies to everything in your life. How about your job? Did you accept it simply because it met your conditions and it was available when you needed it? And now you've been working there for years, yet you learned everything it could teach you in the first year?

And how about your friendships? Are you hanging out with anyone who isn’t wonderful to be around? Why? There are seven billion other people in the world.

And are you dating the right person?

These are the systems and decisions in your life that you must periodically reassess.

I wasted three years of my career retreating into the cozy embrace of flow. I didn’t realize that working hard without a developing awareness of the better things to work on is a hidden form of laziness.

For three years, I coded from sunrise to sundown, achieved great output, and released meaningful projects into the world. That seems wonderful, right? Not really. In hindsight, it became painfully obvious I could have had ten times more fun, gotten ten times more meaningful work done, and would feel far more fulfilled today if I lifted my head up even once to recognize that “output” and “impact” for their own sake is irrelevant if there are other things I’d much rather be doing.

I shouldn’t have been coding for nearly that long. I should have been starting startups and meeting amazing people.

To spend years of your life on the wrong thing when the right thing is a five minute intellectual exercise away is self-destructively lazy.

Yet it’s the default state of human nature.

Shouldn't you question defaults?

"Your entire life runs on the software—the models—in your head. Why wouldn’t you obsess over optimizing it?" — Tim Urban

2. How to make decisions

I’ve only discussed half the power of mental models: optimizing systems. The other half is learning to make good decisions. (After this section, I'll share the most important models for navigating your life.)

Good decision-making is the discipline of silencing your instincts and switching to mental models instead. Leave the "gut decisions" for when you're playing video games, but be careful relying on them when you're playing life.

The decisions you make fall into two categories:

Here’s an example of a mental model for prioritizing the big projects you work on:

Regret Minimization — To maximize your long-term happiness, prioritize the projects you’d most regret not having pursued by the time you’re old and looking back at your life.

This mental model leverages a lifehack that encompasses all others: be good to your future self. Our brains aren't wired to prioritize for our future selves, so we need mental models to help us out.

Hear Jeff Bezos explain how this model works:

Bezos used Regret Minimization to break out of his Amazon flow and create a space exploration company. Like Musk, he then used First Principles to re-examine space flight from the ground up. His space company, Blue Origin, will soon compete with Musk's SpaceX for NASA contracts.

Here’s another decision-making model. This one helps you allocate resources:

Pareto Principle — 80% of your output will come from the top 20% of your inputs. To maximize ROI, preferentially invest in the 20%.

For example, 80% of the value you get from socializing comes from the top 20% of your friends. So, preferentially strengthen relationships with those friends and drop the rest who bring you down. Be cognizant of nourishing friendships that actually matter.

Another example: 80% of your procrastination comes from 20% of your indulgences. So, place those 2-4 top indulgences out of arm’s reach, and you’ll see an outsized gain in your output. The implication is that you don’t have to completely isolate yourself from distractions. That would be inefficient and impractical. You’re an imperfect human, not a perfect robot. Follow 80/20.

"When you view the world as a series of outputs, you form opinions. But when you view the world as a series of systems, you form strategies." — Channing Allen

Examples of mental models

Enough theory. Let's apply these models to your life.

The mental models below are recommended because they’re frequently needed, easy to apply, and reliably accurate at achieving better outcomes.

After these examples is the most important part of this essay.

Approaching systems

As a reminder, here are examples of systems:

And here’s what to do when encountering an important system in your life.

1. Local/Global

First, when dealing with a system, start by identifying the highest-leverage level to optimize at: Ask whether you’re optimizing the machine or a cog within it.

2. Theory of Constraints

Once Local/Global has shown you the best level, begin optimizing the system by following the Theory of Constraints: At any time, just one of a system’s inputs is constraining its other inputs from achieving a greater total output. Therefore, to continuously increase a system’s output, iteratively identify and address the current constraint.

This is really obvious when you think about it, but for some reason we don't treat the world this way. When a system doesn't work, we get overwhelmed and flail around.

For example, if you’re trying to pursue a hobby but you can’t get yourself to start, identify your underlying inputs:

Ask yourself: By doubling which of these inputs could I finally get myself to pursue the hobby? Increase that input first. Then, if you find yourself stuck once after starting, repeat the process. Perhaps next time your time or motivation will be the constraint.

The Theory of Constraints is especially important in business. For example, ask if the reason you’re not getting more customers is because one of these inputs is under-optimized compared to the others:

Find your bottleneck, increase its capacity, and continuously repeat this process until you get where you want. At any given time, one thing will be holding you back. Your job is to remember to look for it.

3. First Principles

If making iterative improvements using the Theory of Constraints doesn’t get a system to your desired level of efficiency, discard the system's current approach and re-examine the system from the ground up. Take nothing but the proven, underlying principles as given. Work up from there to create something better.

Making decisions

We can follow a similar chain of mental models when making decisions.

1. Regret Minimization

Make long-term decisions using Regret Minimization: Choose whichever option you’ll most regret not having done when looking back at the end of your life. This is how you optimize for long-term happiness.

When you're done this post, see my other post on choosing your career path using Regret Minimization.

2. Pareto’s Principle

Make medium-term decisions using this model: to maximize ROI, preferentially invest in the top 20% of inputs.

This is how you optimize each year or decade of your life. Personally, this is how I decide who to spend time with, which skills to hone, and which businesses to build.

3. ICE

Make short-term decisions using this model: When facing many options needing prioritization, score each on a scale of 1-10 using three variables.

  1. The positive impact it would have if it succeeds.
  2. The confidence you have that it will succeed if you try it.
  3. How easy it would be to try it.

For each option, average its three numbers to get its ICE score. Then order all your options by their ICE scores. Options at the top of your list will have the highest expected value and should be given priority.

This is how you plan your life on the timescale of weeks or months. This is how my business decides which growth projects to pursue.

4. Eisenhower Matrix

Finally, this is how you make day-to-day decisions: Make a 2x2 grid with axes labeled "Important" and "Urgent." Bucket your daily tasks into the four quadrants and prioritize them in this order: important and urgent, important but non-urgent, unimportant but urgent, and unimportant and non-urgent.

Refer to this image.

Elon Musk and Jeff Bezos

Mental models are what we mean by “wisdom.”

When we think of someone as “wise,” they’re just using models to generate insights — whether they realize it or not. Specifically, they are:

Every wise thing you’ve ever heard falls into one of those two categories.

Wisdom is therefore the advantage one person has over another due to their greater use of mental models.

This gets us back to Musk and Bezos. They’ve unlocked God mode by learning to love breaking out of their flow to use mental models.

To them, this isn’t a painful process. They’ve rewired themselves to get dopamine hits whenever they discover they’ve been working on the wrong thing.

They do this by overcoming future self-continuity, the phenomenon where, by default, humans see their future selves as other people whose problems are not their own. Musk and Bezos uniquely internalize their future selves as part of their present selves.

This is the heart of the Regret Minimization framework: be good to your future self because you are your future self.

To upgrade your mind to this same level of wisdom, here's what you can do.

What you're supposed to do now

Mental models are critical for living wisely. Yet somehow they're not even a blip on our educational radar.

Why on Earth are kids learning about dinosaurs before learning the skill of clear thinking? And why are colleges teaching us anything before helping us choose the degree that’s right for us?

School failed you.

But you no longer have that excuse. You now understand the significance of mental models.

The onus is on you to cultivate the discipline to use them.

Take this next step: Schedule a recurring event in your calendar. Every second Friday, block out 20 minutes to step back from your life and run all your systems and decisions through the mental models listed above.

Apply these models to your life as if you’re improving somebody else’s life. Research shows that when you act like you’re giving a friend advice, you sidestep your flow paralysis. Talk to yourself in the third person: “Julian, you are doing X. Why aren’t you doing Y instead? What would a mental model suggest is the best path forward?”

That’s all you have to do: Every week, run your life through mental models as if you’re assessing somebody else’s life.

It took 3,800 words to get to this conclusion. This was an enormous PSA telling you to be more thoughtful about your life because you only have one and your future self is you.

Subscribe below for my full upcoming guide to critical thinking. In the meantime, read my What to work on post to learn the decision-making model I used to decide that writing Julian.com guides is a wise use of my time.

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Who's Julian?

I go deep on topics I find interesting.

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