Sarah Harrelson on the art market correction: 'Are we back? No. But is it better? Yes.'

This is the longest. We have Yes, we have Morgan Howell, author, friend of the show. Welcome to the show. This is the longest sound queue. Thank you so much for taking the time to join us. How you doing?

Welcome back.

Good to see you guys. Doing well. I like your shirts. Looking good.

Thank you. Uh should be in the mail for you.

Yeah, hopefully already.

Love it.

We'll work on it.

Can't wait. Um,

let's uh let's get into it. What is new in your world? Take us through the latest and then I want to go into some psychology of the holiday, psychology of shopping. Uh that we have a bunch of things that we want to run through. Um but is there

Yeah,

I mean not not that much going on right now. I'm not writing a book right now, which is kind of the most enjoyable part of my career because it lets you just spend all day reading and thinking about what's next, which is always the most enjoyable part of it. So, I I guess to answer your question, I don't know what's next, but I love this area of my life of just doing a bunch of reading and talking to people and thinking about different topics to try to figure out what might be next.

How how how much have you kind of keyed in on what you want to write about next? Is it

I think I have a pretty good idea of what it would be.

What about the next book? What about the next book after that?

Is that Is that starting to come into focus?

I'm curious. I think that's not you know I think what what's what is true that I I have an idea for a distant book. I don't know when this is going to be but there are so many topics that are worth exploring but not in a full book. And I I do think there is an idea. It's hard to do right but there's an idea for a book that is a huge hodgepodge of like 80 different ideas all of which are worth exploring in three or four pages. And obviously the issue with most non-fiction books, particularly business books, is you have a topic that is worth exploring, but not in 250 pages, but then the author has to stretch it out and just keep on rambling about the same topic over and over again. And that's what's why business books are so difficult. So if you can get around that by just going shallow or not not even shallow, but giving the treatment that they deserve on a bunch of small disperate topics, I think that's something I'm interested in. Have you have you ever been tempted into trying to build a subscription like newsletter and and really focus in on that by saying like, "Hey, there's a bunch of, you know, instead of the next three or four books, I'm going to basically just write the chapters and publish them as I have them." I'm sure you've had I mean, you've had every opportunity to do that. And you haven't. Uh, it hasn't been like the focus so far, but I'm curious if that would ever change. I think the reason I have not is because I think you have to be very careful as a as a content creator for for lack of a better word that you don't become beholden to your audience that you say, "Look, my audience is paying me a hundred bucks a month and I have to feed the ducks because they're quacking." That's a very dangerous spot to be in for a content creator of like being forced to say stuff when you have nothing to say is a bad spot.

You're saying that to the guys that go live for three hours every day and if we don't

Yeah. But but you're talking differently like nobody expects you to do your your PhD thesis every day.

Totally. Totally. The bar is like and we're not we don't necessarily need to generate the content. The world generates the content and we figure out what what we want to talk about.

Yeah. We're kind of like

What about have you been have you seen some there's some uh I feel like I've seen some authors like that are writing fiction instead of just writing a book like releasing the book as a subscription product. That seems somewhat interesting. almost like treating it like a you're subscribing to Netflix and Netflix is releasing a show and they're sort of dripping it out over time.

Uh do you think that's a model that that uh authors could like how powerful is the book industrial complex? Is there enough incentives to keep people from not doing that and not you know self-publishing and kind of dripping out content and just staying true to the traditional path? I think it's I think it's true that books are and this is true for podcasts as well that they are the ultimate tail driven content. 99% of books that are published don't don't work and but the ones that do really really work. Same for podcasts and whatnot. And so I think it's true that if you're an author you need particularly if you haven't had that hit yet you need to figure out your business model in a different way. It's very difficult to say I'm a talented writer. I'm going to go write books and try to make a living out of it. some for every writer who does that, there are 10,000 who have stumbled and tripped and ultimately failed doing it. It's a it's a tough model to make it work. And I've I've seen a much higher success rate in the people that go on Substack or whatever it might be and have that that level of of of subscription. I think people are more willing to pay 30 bucks a month for your consistent content, your daily or your weekly newsletter, than they are to pay $30 for a book that took you two years to write. And so it's it's a more stable model I think with a higher hit rate to have that paid subscription even if the rewards for a book that works can be higher. It's just so much more difficult to make it work.

What do you think about like consumer churn or like conversion to actually consuming the content fully? because I know that there's this there there's like this odd uh you know a lot of people buy physical books, they gift them and then they sit on bookshelves and uh they wind up being props in many cases that people don't just have enough time to read all the books that they acquire. Um I actually did subscribe to one of those new books as a newsletter fiction and it was odd because I wound up paying for it for a very long time but I didn't wind up reading it

as they were as the chapters.

Yeah. And I and I thought I when when I first when I first subscribed, I was like, "Oh, this is going to be even easier because it's so bite-sized. It's going to be easier. I'm more likely to get through this than if this was just another book that I had added to my audible."

It it also creates a weird tension where there's an incentive to have like crazy cliffhers because so that people don't turn like if you get a little bit if you get a little bit bored with a book and you have the ability to turn from the book, you know? Think about how often I I I'll start a book and if I'm not, you know, I'll get three chapters in, I'm not like

really engaged with it, I'll just say like, cool. I'm not necessarily

hopefully I learned something, but I'm not going to just read it just to see it all the way through.

Sure. Yeah.

I think what's true too for every good non-fiction book is that people don't remember books so much as they remember a couple sentences from those books. So most non-fiction books are about 50,000 words. If you read to the end, which is rare, but if you read all 50,000 words and you come away having remembered two or three banger lines, yeah, of the 50,000 words, you remember 50 of them, that can be great. And it's true. Like some books that I know changed my life, books that I recommend that are so good. If you actually if you ask me about them, I can tell you two or three sentences maybe that I remember verbatim that were fantastic and the rest kind of drifts away over time. So I think that's true even for the absolute best books totally that can change your life. It's just very small snippets that you're gonna remember from them. And so like what one takeaway in that too is that

you can you can remember two or three banger lines from a blog post as well.

Yeah.

And so all the books that I've written most of the ideas started as blog post and then I I could take that idea okay that idea worked. People like that. How can I kind of transform that into a chapter in a book? But the core idea is like if you can remember one sentence from this idea, from this chapter, I've done my job. That's that's that's the goal.

Yeah. I uh I I I wonder if I actually read this book, but there's a book that left a really really long like impression on me uh all about immortality. It was this very interesting way of uh of like framework of thinking about immortality from different cultures. And I don't even know if I actually read the book, but it stuck with me because like the actual idea was so powerful. And then there's other books where I've read the whole thing. There's been a lot of interesting anecdotes, but like it didn't like change my whole worldview and yeah, just it's just fascinating. Wait, sorry, what were you gonna say?

Well, I was talking about I I wrote an essay called Rage Bait is for Losers and I what I wanted people to remember was the title because it it in itself was important. Well, it was it was rage bait itself because if you've been rage baiting and and you then are are thinking, well, I'm not I I like you kind of want to defend it as like a strategy and some people

this is interesting. So, how do you think about rage bait in the context of picking a title for a book that might jump off the shelf in a store? Because I can imagine there's a world where a book is called, you know, like if you don't read this, you'll be poor forever or something like that, you know, and then then it's like all of a sudden I I'm not going to let them get the best of me. I got to read that book. Um, but

I think it's no different than any product where you overpromise and underdel. You're just going to piss off your customers. And if you're just trying to get a quick hit and then disappear, maybe that's the right way. If you're trying to build a long-term brand, your title has to be very honest. Yeah.

And so my first book, The Psychology of Money, it's it's a pretty boring title. A lot of the people who are involved in it said, "We should not use that as a title. It sounds like an academic textbook."

Yeah. Yeah. Exactly. It's a textbook,

but it's an honest but it's an honest title. Yeah. What is the book about the psychology of money? Do you think you would have sold more copies if if you just changed the title to how to get rich and stay rich or something?

Well, it's not even that. It it it's like it's like how to make sure that you have a good psychology of money. How how to make sure you have a good relationship.

I think you didn't set that in.

You clearly care about NPS.

Yeah.

Maybe more than other writers or or or uh publishers. Uh, Mike,

I heard Rory Sutherland say this on a podcast recently. He said, "If you uh are like a family business and you're in it for the long run, you're trying to build a generational business. By and large, you don't care about metrics. You're not tracking how much your gross profit margin shifted last quarter. What you care about is customer satisfaction and brand. And it's only when you're like a private equity owned business where you're like, we're just trying to flip this thing in the next quarter that you become very metric driven and you and you want to measure everything down." So I think to answer your question, if I was very metric driven and it was just like my goal is to sell as many books as I can next quarter, you can use something bombastic that's going to overpromise. That will probably work in the short run. If your book, if your goal is to have a long tale sales cycle and be like, I want to this book to sell for years or even generations if I'm lucky. It has to be honest. It has to be brand driven where people are like, I enjoyed this book. I'm going to recommend it to my friends and family.

Uh Emily Herrera in the chat says, "Books are just titles and thumbnails." So same same experience on YouTube. You might you might have a crazy title and thumbnail and then if it's not very truthful then all the comments are just like congrats on baiting you know baiting people into watching this and and again the sort of NPS is is quite low. Uh should you write a book on

gambling? I think it's all kind of embedded in uh in behavioral finance

and it I I think the idea the the proliferation of gambling whether it's crypto or uh uh sports betting or whatever it might be

I think by and large this is not a a unique take many people have talked about this but Daniel Conorman wrote about when all of your uh options are bad or perceived to be bad people become very risk-taking

and so if you feel like if a young person feels like if I work hard, excuse me, if I work hard and work my way up the the corporate ladder and save my money and buy a house and start a family, that's what you'll do. If you perceive that option is available to you. If you don't, then you're like, who cares? Like, like I I have no vested stake in this system. Might as well throw it all on black and see what happens.

And I think that that comes down to it. So, I think the psychology of gambling is a pretty deep social issue. And I think you could probably accurately summarize it as youth pessimism. When people are pessimistic, they're much more likely to just throw it all down and see what happens. They have nothing to lose.

Uh, I have more on that. So, do how do you think about the level of risk that people were taking at the time of the American dream? Like, because there's one world where we where we go back and we say like, oh yeah, it was like the 1950s and you could just get a job at this law firm and it would just be massively successful. Or even if you were coal miner, you'd have a job in healthcare forever and you go to the auto plant and be an auto worker and work your way up from, you know, the person sweeping up the floor at night to the manager at the end of the day. And I'm wondering if there's like well like we remember that as not risky because America was successful, but like there was an emerging new new order where you know like the USSR could have steamrolled in the in the cold war and America could have been a disaster. And so in fact like it was risky but it just worked out well. But I don't know if that's like like am I thinking about that even in the right realm of all at all? What do you think?

Yeah, I think I think a lot of that narrative of what the job market used to be and kind of the 1950s Americana nostalgia that we have is is just that it's it's kind of false nostalgia. It's this idea that you know the narrative that you just described of you could go get a job at a at an auto factory and work your way up and stay there for 30 years. I mean, if if you understand the the history of the US economy in the 1950s, particularly the 1970s, there were huge recessions. There were huge job losses. And so, I think it's easy to put together a charming, you know, uh uh uh Norman Rockwell picture of what it used to be. By and large, it's it's it's not the case. But on the flip side,

it was like everyone had a, you know, this idea of like if you were employed, you you had a very good shot of owning a home, but the homes were like 750 square ft,

right? And they were like,

that's true.

Yeah.

And I but I think it's also true that uh you know, you can throw around a lot of statistics and I have about how the median American family earns more, is wealthier, is better off today than they were in in the 1950s, in the 1960s. It's also true, indisputably, that home ownership uh was was more accessible and cheaper back then. And I I I've I've been thinking a lot about the topic that I think almost every societal problem that we have today

is downstream of housing of housing affordability. It's the single biggest issue that we have. Even back to the gambling issue that we were just talking about. If you are 28 and you feel whether it's true or not, you feel like you will never own a home. it's impossible for you to get there to save the down payment. You become much more likely to be like, I have nothing vested in this system. Might as well throw it all away. I have nothing to lose. I might as well throw it all away. And so to so even if median incomes adjusted for inflation were lower back in the 1950s, if owning a home was more accessible, and by and large it was for most people, that just gave you more of a vested sense in the system caused you to take, I think, smarter risks, not betting everything on on the spread on tonight's game, but taking a risk of I'm going to move to a new town and try to get a job at an auto factory. That was a risk, but it's more calculated risk than today's gambling mentality. I think there's something to be said too of just access that which we're seeing in the gambling world today. If you gave a 19-year-old boy uh Khi and and all the sports bettings apps in 1955, they would have latched right onto it. There's nothing unique about today's young generation by and large. It's just that we didn't have those tools that we do today.

I encourage people to look up um uh John and I were going back and forth on on this on our on our flight on Friday. We're looking at the the how popular gambling was during the fall of the Roman Empire. It was all social classes were doing it on the exact same levels that we're seeing today. Sure, they weren't on a mobile device, but it was like everywhere that you would be eating and drinking, and it was in private and public, and it was illegal and and legal in some areas, like at certain festivals, it would be legal, and then it would be il like illegal otherwise. But, you know, it was kind of seen as okay. So, there's nothing there's nothing new. uh these things just are going in in waves. But it certainly was I think people were like somewhat nihilistic and they were just like sure like things are we're experiencing a collapse. We may as well put it all on black.

Yeah. And so I I think it's easy to look at the issues of today and and frame it as we have degraded particularly the younger generation. I don't think that's the case. I think any other previous generation would have become degenerate gamblits gamblers and crypto trachers traders if they had the option to like today's generation does.

Yeah. I wonder how much of it is uh is just mimemetic just uh like like like the myth that we tell ourselves like uh if we can yeah I don't know somehow steer away. I also I also wonder like you know there there is the uh like the paternalistic the the puritanical like ban the bad thing. Uh but there's also the op the more optimistic view of just like maybe just do more of the good thing like if if we have like a national project to build something meaningful. Well, I think I think the thing that uh that makes you want to put your hand through a wall is people having their uh in their brokerage account the ability to one click, you know, sell Apple stock and in another click buy uh trade on sports contracts. Um because I mean that again at least there was historically some separation where there was at least some friction of getting out of uh maybe a higher quality investment and getting into something that's just rolling the dice. And I think that's very clearly going going you know has gone away in some cases and probably uh will just continue to erode. Also, I mean,

yeah, I I think it's I think it's important to point out, too, that Vanguard has 12 trillion dollars AUM. Uh, you know, Fidelity has$10 trillion AUM. The vast majority of capital these days are people saving uh in their 401ks, dollar cost averaging. They don't even know their password. It's being invested into good, stable businesses, diversified, lowcost. So, it's easy to to point out around all the the crazy speculation that goes on. And look, I'm a free markets person. people want to speculate and do whatever they want with their money. You're allowed to set your financial life on fire, but the vast vast majority of capital is still being invested in what I would consider to be a pretty smart, conservative, long-term way.

The the chat has a little bit of a counterpoint. Uh they said that uh we we might not be considering the fact that 99% of gamblers quit just before they hit it big. And so that is a little bit of a counterpoint to a lot of the arguments that we're making here. And I just want to make sure we Consider that.

Fair enough. Yeah, we should have just done one more bet. One more bet.

Just one more bet. You're good. Um, wanted to go back uh get your thoughts on on startup launches. Kind of random. I think everyone has launch video fatigue. I know we did we were doing a lot of like launch style videos earlier this year and we pretty much stopped completely just because we felt like the the meta was kind of dead. It wasn't actually a way to like truly break through anymore. and wanted to get your uh if you think that writing is underutilized as like a launch uh as a launch strategy. U there's been some you know viral PDFs. I think you know uh situational awareness is a is a good example of like just if you can put together a good enough document you can attract you know bill I mean obviously Leopold is in a unique situation but um it feels like writing is super underutilized uh and went viral on a blog post on hacker news and drove 10,000 signups a ton of interest and people were starting a conversation around that it was just a blog on some random random person's website basically and it actually broke out massively. But yeah, it's tricky, but I'd love to know your thoughts.

I think it tends to be true, and this is not black and white, but it tends to be true, that if you can explain your value proposition in a paragraph of text, you will do it. And if you can't, you're much more likely to say, well, we need some glossy pictures. And if you can't do it with that, then you kind of work your way down to like, can we just create a movie out of this kind of thing? That's not always the case, but I I do think it's a case like if your idea is so obvious and so good, you can just explain it with crayons on a piece of paper and you're good. You're good from there.

And so I think look,

when I started writing books, somebody told me advice that I thought was great for books, but true for almost any product. And it was if the book is good, you don't need to market it. And if the book is bad, no amount of marketing will help.

Sure.

I think you could apply that to a lot of different things. If your product is good, you don't need to market it. Not true. I'm being I'm being very generalized here. Marketing is important. But if your product is good, then it it can kind of sell it itself. If the product is bad, no amount of marketing will help, particularly in the longer term. And so, look, I I like good design. I like flashy videos. I like I like all that kind of stuff. But good ideas are very obvious. I think that's one of the keys to good writing is that you don't need to spend a lot of mental horsepower to understand what the author is saying.

You can just kind of glance your eyes over a paragraph and be like, "Yeah, I got it. Make makes perfect sense. I don't need any more flashy video. That one sentence explained everything I need to know. Let's move on from there. I think that tends to be true.

Do you have a book of the year? Do you do you like looking back and creating like a list of the things that you most enjoyed this year? I know that you don't this is this is like total newsletter fodder and we already talked about how you're not uh you know you know in service to people that demand the uh the end of the year review, but uh has anything stuck out to you this year? I thought the best book that I read uh was probably Andrew Ross Orcin's 1929. Fantastic.

Just absolutely phenomenal.

Also the best book launch ever was I think that's I think that's probably great book and then also like absolute master class. I was taking screenshots of if you search Andrew Osorin 1929 on YouTube, you can see that he just did every single podcast. Like he did 20 shows and it was so good and and I didn't realize like he's someone that everyone knows, but he's not constantly on a tour. So he had a lot of builtup energy to like go full tilt and it worked really well. It was

and it's such a a fascinating period of American history that to my surprise has not there's not a lot of books written about the Great Depression. There's not like like what's the classic book on the Great Depression? There's not many there's not many of them. There are 10,000 books written about World War II as there should be. But but the Great Depression, which was so monumental in the history of this country, there's not a lot written about it. So, I thought he did a great job. Somebody brought this up uh when they were reviewing 1929, I thought it was such a fascinating point

that all of the big characters in the book, except for maybe Jesse Livermore, are pretty much forgotten today. M

all of the titans of industry of banking, the Jamie Diamonds of their day are all forgotten now. Unless you're like a history buff, Charlie Mitchell, all those people, we don't remember them anymore.

And I think there's something to be said that if your only accomplishment in life

is that you made a lot of money, you're going to be forgotten very quickly. And that was true for a lot of the bankers back then. It's probably true for a lot of the private equity hedge fund people today. Nothing wrong with that.

I will remember all the private credit legends,

Wall Street's new rich. I will remember them. I'm going to keep this episode or this edition of Baronss and bring it to the grave.

No, no. What you need to do is you need to wait a hundred years. You need to write an amazing book about it. Then you need to turn that book into a movie and a TV show and then cast an iconic actor and then we'll remember and then that's what

how are you processing the AI trade uh in the in the context of history? I think I think historically the gap between uh a product changing the world and people making a lot of money off of it can be 20 miles apart. The railroads were probably the most transformational technology ever. Way more transformational than anything we've had over the last hundred years. And a few people made ungodly fortunes from it. 99% of railroad investors lost everything. And and that was true for the airplane completely changed the world. A lot of people lost huge fortunes on automobiles. There were 2,000 car companies in the early 1900s. Three of them remained by by the 1930s or so. And so you can go on down the list of like change the world and 99% of people lost everything. Of course, that was true of the the dot bubble. Everyone's thesis by and large in the late 1990s of what the internet would become was right.

But it it didn't mean that you were going to make any money from it. In fact, many were going to lose everything.

Web van, I think, is such a good example because it's like

Door Dash just

Yeah. 15 years ago. Chewy is a banger company. MP3.com. Spotify is the company you want to own. Like there's just so many every every current company there was some.com that was doing the basic idea and just didn't get to didn't get to scale at all. Yeah.

I think so. I think I think that I think you could easily imagine just based off of history that in 20 years of course AI completely changed everything. Nothing is the same. And when we talk about the businesses that have been involved over their previous 20 years, there's two or three unbelievable winners, 99% of of companies went to zero. And the three companies that won uh are either not around today or are not the obvious ones today. So if you're talking about the internet in 1998, Google was in a garage. Obviously, Facebook didn't exist yet. There that that tends to be the story of what it was. The the the Wright brothers themselves didn't make very much money from the airplane, if anything. It wasn't until you had someone named William Boeing who came along and he was like, "I'm just going to copy your idea, but do it way better than you guys could do it." And that that that tends to be the idea. It's what Google did with Yahoo and uh ex and Hotbot and all the other search engines who were the actual front runners. You just took someone else coming along to be like, "Great idea. Hold my beer and watch me do it 100 times better than you could."

Speaking of AI, uh we we've talked about this before. Obviously AI is not ready or equipped to uh write a book or

Oh, it'll write it, John.

Happily,

it will write it, but it won't write it. Uh but uh what do you think about AI generated voices? Do you think that those are past the uncanny valley? Would you listen to an audible book that was uh where the where the voice was AI generated? I'm I I'm not much of an audiobook guy, so I'm probably the wrong person to ask for that. What I will say is one of the most amazing AI products that I've seen in the last two years, I think a lot of people have had this experience, is Google's notebook LM

where you go in and you say, "Here's a topic. Make me a 10-minute podcast and it spits it out and it's unbelievable."

So, when I first saw that, I was like, "This is this I this is magic. I can't believe it." And how many Notebook LM podcasts have I listened to since then? Zero.

I was about to ask.

I think none. None. I think there's something to be said and of course I am literally talking

actually I actually think it's I think I think the use case there where they probably have traction

is students that have not studied for an exam and they have an hour to try to figure it out. So it's not for enjoyment at all. It's pure function which is that I need to listen to something for an hour that is like hyper specific to a topic and it's boring. So nobody necessarily made the like definitive podcast episode on it but I just need it. And then it in terms of like the way that most people people listen to audio to get to be entertained even if it's like educational and so they're going to go to people that are good entertainers that are opinionated.

Yeah, I think that's true. And of course I am I am such a a biased person to say this as an author myself, but I think what I like about reading books, whether it's fiction or non-fiction, is the idea that a fellow human wrote this thing. I could never write this. My brain doesn't work this way,

but but some other authors did. And I feel like that like that connection is amazing and it breaks down as soon as you have AI generated content. And I think that's why I have no interest in a notebook LM podcast. I'd much rather listen to David Senra and his, you know, even with all of his quirks and his stumbles and whatnot. But I'm like, yeah, but David read that. He did this. He's thinking that. And like I love that. Um, and so I, you know,

I listened to an hour of of uh OG Senra, the PT Barnum episode yesterday. And then I got to hang out with David for a couple hours last night for dinner at my house.

One of the best guys around. I love him.

Truly.

Yeah.

Truly. Yeah. The the um I I I think uh I I need to listen to the the James Dyson episode uh today, but he released that and and for Senra OGs, you know how significant that episode is is to him. like the the full circle moment of, you know, studying Dyson to being able to to interview him live. It's very cool.

Love it.

Yeah. Wild. Well,

um, great having you on the show. We hope you have an incredible end uh end to the year and thank you for being a part of this this year. You're somebody that we one of our favorite guests and can't wait for next year.

Thanks so much for having me. Always an honor to be on. Looking forward to my shirt.

Yes.

We'll talk to you soon.

Talk soon. Have a good rest of your day.

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