Business Tricks We've Learned From Gamblers, Pickup Artists, & Feynman

**Sam Parr** (0:00)
All right, we're live. Shaan, I've got a story for you, and this story, I'm going to take a weird take on this. I have a weird take on this, and I'm going to appeal to all the young single men out there.

**Shaan Puri** (0:11)
All right, this is your specialty, young single men.

**Sam Parr** (0:24)
All right, listen. The story is about Ed Thorp. Have you ever heard that name, Ed Thorp?

**Shaan Puri** (0:28)
It sounds like a swimmer. No.

**Sam Parr** (0:30)
It does sound like a swimmer, but he's not. Ed Thorp, I'm reading his biography called Man for All Markets. Ed Thorp, today he's 91 What does that mean? He's born in the 1940s, 1930s. Ed Thorp, he grew up as a math whiz kid. He was a prodigy at a young age. Grew up in a very poor household, didn't have a lot of money. But as a young kid, when he was 12 and 13 years old, he got moved up a bunch of grades and he took a bunch of standardized tests. At the time, when he lived in California, he got something like the highest scores in California for high schoolers when he was 13 years old. At the time, they didn't have calculators, but they had little counting devices. He would take these tests without these counting devices because he couldn't afford them. He still crushed it. He killed it.
Eventually, Ed Thorp, he gets a scholarship to Berkeley, and then he goes to UCLA where he gets his PhD in mathematics. He becomes a professor and he starts going down this track where he's in his 30s, and he's this brilliant professor and whatever.
But then he does something interesting.
He gets interested in applying his theories to real-life situations, because he's reading these academic papers and he's like, this is cool and all, but we got to apply this stuff. His specialty was probability and statistics. He got super interested in how he could use his theories to beat Blackjack.

**Shaan Puri** (1:50)
This is the gambling guy. I saw this guy on Tim Ferriss.

**Sam Parr** (1:54)
This guy's interesting because he's done so much more than just these few little stories I'm going to tell. But basically, you could actually verify this.
Blackjack is what? 51% chance the house is going to win. Is that right? Is it like 51, 49?

**Shaan Puri** (2:06)
51, 52, something like that.

**Sam Parr** (2:08)
It's a small margin. But back in the 60s when he was getting going, he had this theory where he thought that if he saw the cards on the table, he could have a higher probability of getting 21 because he basically could count cards, changing the ratio of 51 percent in the user's perspective. He was 51 percent chance of winning, the house was 49 percent chance. He creates this paper where he explains all of this. Inevitably, people are like, man, this is just some academic theory. There's no way that you're going to be able to do this. Thorp is a fun guy and he's like, we got to prove it. He builds out this blackjack table at his house and he gets his wife to smoke cigarettes and blow cigarettes smoke into his face while she's talking to him and like annoying him. Then he has friends come over who are drinking alcohol and yelling in his face as if he's at a casino to distract him. He spends a handful of months doing this and it starts working. He's like, I think this actually can work. I think I can do this. He publishes this paper and all these people reach out. He gets hundreds of letters. But eventually, he gets this one letter from this guy named Manny. Manny, he doesn't really know it at the time, but after a while, Ed realizes that Manny is basically in the mob. He helped make bootlegging a thing in the 20s when alcohol was illegal. Manny goes, hey, Ed, let's see if you can actually pull this off. I'm going to front you 10 grand and we're going to split the winnings.
10 grand at the time in the 60s is something like 80 grand. It was a lot of money, particularly for a professor who's making the equivalent of $150,000 back then. They go and they spend this weekend at a casino in Las Vegas and they make $11,000 in profit and Ed's like, holy moly, this thing works. But he doesn't really want to become totally a professional gambler, but he's really interested in proving his theories.
Eventually, he writes a book on this. If you Google Ed Thorp Blackjack book, he wrote this book in the 60s that was a massive hit.