Charlie Munger: 'You want to deliver to the world what you would buy if you were on the other end', USC Law School - 2007

13 May 2007, University of Southern California, USA

Well, no doubt many of you are wondering why the speaker is so old. Well, the answer is obviously he hasn’t died yet.

And why was the speaker chosen? Well, I don’t know that either. I like to think that the development department had nothing to do with it. Whatever the reason I think it’s very fitting that I'm sitting here because I see one crowd of faces in the rear not wearing robes, and I know, from having educated an army of descendants, who really deserves a lot of the honors that are being given are the people here upfront. The sacrifice and the wisdom and the value transfer that comes from one generation to the next can never be underrated.

And that gives me enormous pleasure as I look at this sea of Asian faces to my left. All my life I’ve admired Confucius. I like the idea of filial piety, the idea that there are values that are taught and duties that come naturally and all that should be passed on to the next generation. And you people who don’t think there’s anything in this idea, please note how fast these Asian faces are rising in American life. I think they have something.

All right, I scratched out a few notes and I’m going to try and just give an account of some ideas and attitudes that have worked well for me. I don’t claim that they are perfect for everybody. Although I think many of them are pretty close to universal values and many of them are can’t fail ideas.

What are the core ideas that have helped me?

Well, luckily, I got at a very early age the idea that the safest way to try and get what you want is to try and deserve what you want. It’s such a simple idea. It’s the golden rule so to speak. You want to deliver to the world what you would buy if you were on the other end. There is no ethos, in my opinion, that is better for any lawyer or any other person to have.

By and large, the people who have this ethos win in life and they don’t win just money, just honors and emoluments. They win the respect, the deserved trust, of the people they deal with, and there is huge pleasure in life to be obtained from getting deserved trust. And so the way to get it is to deliver what you’d want to buy if the circumstances were reversed.

Occasionally, you find a perfect rogue of a person, who dies rich and widely known. But mostly, these people are fully understood by the surrounding civilization, and when the cathedral is full of people at the funeral ceremony, most of them are there to celebrate the fact that the person is dead.

And that reminds me of the story of the time when one of these people died and the minister said, “It’s now time for someone to say something nice about the deceased.”

And nobody came forward.

And nobody came forward.

And nobody came forward.

And finally one man came up and he said, “Well, his brother was worse.”

That is not where you want to go! That’s not the kind of funeral you want to have. You'll leave entirely the wrong example.

A second idea that I got very early was that there is no love that’s so right as admiration-based love, and that love should include the instructive dead. Somehow, I got that idea and I lived with it all my life and it’s been very very useful to me.

A love like that celebrated by Somerset Maugham and his book “Of Human Bondage”… that’s a sick kind of love, it’s a disease. And if you find yourself in a disease like that my advice to you is turn around and fix it. Eliminate it.

Another idea that I got, and this may remind you of Confucius too, is that wisdom acquisition is a moral duty. It’s not something you do just to advance in life. Wisdom acquisition is a moral duty.

And there’s a corollary to that proposition which is very important. It means that you’re hooked for lifetime learning, and without lifetime learning you people are not going to do very well. You are not going to get very far in life based on what you already know. You’re going to advance in life by what you’re going to learn after you leave here.

If you take Berkshire Hathaway, which is certainly one of the best-regarded corporations in the world and may have the best long-term investment record in the entire history of civilization, the skill that got Berkshire through one decade would not have sufficed to get it through the next decade with the achievements made. Without Warren Buffett being a learning machine, a continuous learning machine, the record would have been absolutely impossible.

The same is true at lower walks of life. I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than when they got up and boy does that help—particularly when you have a long run ahead of you.

Alfred North Whitehead said it one time that “the rapid advance of civilization came only when man invented the method of invention” and, of course, he was referring to the huge growth of GDP per capita and all the other good things that we now take for granted, which started a few hundred years ago and before that all was stasis.

So, if civilization can progress only when it invents the method of invention, you can progress only when you learn the method of learning.

I was very lucky. I came to law school having learned the method of learning and nothing has served me better in my long life than continuous learning. And if you take Warren Buffett and watched him with a time clock, I would say half of all the time he spends is sitting on his ass and reading. And a big chunk of the rest of the time is spent talking one on one either on the telephone or personally with highly gifted people whom he trusts and who trust him. In other words, it looks quite academic, all this worldly success.

Academia has many wonderful values in it. I came across such a value not too long ago. It was several years ago, in my capacity as a hospital board chairman. I was dealing with a medical school academic. And this man over years of hard work had made himself know more about bone tumor pathology than almost anybody else in the world. And he wanted to pass this knowledge on to the rest of us.

And how was he going to do it? Well, he decided to write a textbook that would be very useful to other people. And I don’t think a textbook like this sells two thousand copies if those two thousand copies are in all the major cancer centers in the world.

He took a year sabbatical, he sat down in front of his computer and he had all the slides because he saved them and organized them and filed them. He worked 17 hours a day, 7 days a week, for a year and that was his sabbatical. At the end of the year, he had one of the great bone tumor pathology textbooks in the world. When you’re around values like that, you want to pick up as much as you can.

Another idea that was hugely useful to me was that I listened in law school when some wag said, “A legal mind is a mind that when two things are all twisted up together and interacting, it's feasible to think responsibly about one thing and not the other.”

Well, I could see from that one sentence that was perfectly ridiculous, and it pushed me further into my natural drift, which was into learning all the big ideas and all the big disciplines so I wouldn’t be a perfect damn fool who was trying to think about one aspect of something that couldn’t be removed from the totality of the situation in a constructive fashion. And what I noted, since the really big ideas carry 95 percent of the freight, it wasn’t at all that hard for me to pick up all the big ideas and all the big disciplines and make them a standard part of my mental routines.

Once you have the ideas, of course, they are no good if you don’t practice. You don’t practice, you lose it.

So, I went through life constantly practicing this model of disciplinary approach. Well, I can’t tell you what that’s done for me. It’s made life more fun. It’s made me more constructive. It’s made me more helpful to others. It’s made me enormously rich. You name it, that attitude really helps.

Now there are dangers there, because it works so well, that if you do it, you will frequently find you are sitting in the presence of some other expert—maybe even an expert that’s superior to you, supervising you—and you will know more than he does about his own specialty, a lot more. You will see the correct answer when he’s missed it.

That is a very dangerous position to be in. You can cause enormous offense by helpfully being right in a way that causes somebody else to lose face. And I never found a perfect way to solve that problem. I was a great poker player when I was young, but I wasn’t a good enough poker player so people failed to sense that I thought I knew more than they did about their subjects, and it gave a lot of offense. Now I’m just regarded as eccentric, but it was a difficult period to go through. And my advice to you is to learn sometimes to keep your light under a bushel.

One of my colleagues, also number one in his class in law school—a great success in life, worked for the supreme court, etc.—he knew a lot and he tended to show it as a very young lawyer and one day the senior partner called him in and said, “Listen, Chuck, I want to explain something to you. Your duty under any circumstances is to behave in such a way that the client thinks he’s the smartest person in the world. If you have any little energy and insight available after that, use it to make your senior partner look like the smartest person in the world. And only after you’ve satisfied those two obligations do you want your light to shine at all.”

Well, that may be very good advice for rising in a large firm. It wasn’t what I did. I always obeyed the drift of my nature and if other people didn’t like it I didn’t need to be adored by everybody.

Another idea, and by the way, when I talk about this multidisciplinary attitude I’m really following a very key idea of the greatest lawyer of antiquity, Marcus Tullius Cicero. Cicero is famous for saying, “A man who doesn’t know what happened before he was born goes through life like a child.” That is a very correct idea of Cicero’s. And he’s right to ridicule somebody so foolish as not to know what happened before he was born.

But if you generalize Cicero as I think one should, there are all these other things that you should know in addition to history, and those other things are the big ideas in all the other disciplines. And it doesn’t help you just to know them enough just so you can prattle them back on an exam and get an A. You have to learn these things in such a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life.

If you do that, I solemnly promise you that one day you’ll be walking down the street and look to your right and left and think, “My heavenly days! I’m now one of the few most competent people of my whole age forward.” If you don’t do it, many of the brightest of you will live in the middle ranks or in the shallows.

Another idea that I got—and it was encapsulated by that story the Dean recounted about the man who wanted to know where he was going to die and he wouldn’t go there—that rustic let that idea have a profound truth in his hand.

The way complex adaptive systems work and the way mental constructs work; problems frequently get easier and I would even say usually are easier to solve if you turn around in reverse. In other words, if you want to help India, the question you should ask is not, “How can I help India?” You think, “What’s doing the worst damage in India? What would automatically do the worst damage and how do I avoid it?”

You’d think they are logically the same thing, they’re not. Those of you who have mastered algebra know that inversion frequently will solve problems which nothing else will solve. And in life, unless you’re more gifted than Einstein, inversion will help you solve problems that you can't solve in other ways.

But to use a little inversion now, “What will really fail in life? What do you want to avoid?”

Such an easy answer: sloth and unreliability. If you’re unreliable, it doesn’t matter what your virtues are, you’re going to crater immediately. So doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability.

Another thing I think should be avoided is extremely intense ideology because it cabbages up one’s mind. You’ve seen that. You see a lot of it on TV. You know preachers, for instance, you know they’ve all got different ideas about theology and a lot of them have minds that are made of cabbage. But that can happen with political ideology. And if you're young, it’s easy to drift into loyalties. And when you announce that you’re a loyal member and you start shouting the orthodox ideology out, what you’re doing is pounding it in, pounding it in, and you’re gradually ruining your mind so you want to be very careful with this ideology. It’s a big danger.

In my mind, I got a little example I use whenever I think about ideology and it’s these Scandinavian canoeists who succeeded in taming all the rapids of Scandinavia and they thought they would tackle the whirlpools in the Aaron Rapids here in the United States. The death rate was 100 percent. A big whirlpool is not something you want to go into and I think the same is true about a really deep ideology.

I have what I call an “iron prescription” that helps me keep sane when I naturally drift toward preferring one ideology over another. And that is I say, “I’m not entitled to have an opinion on this subject unless I can state the arguments against my position better than the people do who are supporting it.” I think only when I reach that stage am I qualified to speak.

Now, you can say that’s too much of an iron discipline. It’s not too much of an iron discipline. It’s not even that hard to do. It sounds a lot like the iron prescription of Ferdinand the Great, “It’s not necessary to hope in order to persevere.” That probably is too tough for most people. I don’t think it’s too tough for me, but it's too tough for most people.

But this business of not drifting into extreme ideology is a very very important thing in life if you want to have more correct knowledge and be wiser than other people. A heavy ideology is very likely to do you in.

Another thing, of course, that does one in is the self-serving bias to which we are all subject. You think that your little me is entitled to do what it wants to do and, for instance, why shouldn’t the true little me overspend my income?

Well, there once was a man who became the most famous composer in the world, but he was utterly miserable most of the time and one of the reasons was he always overspent his income. That was Mozart. If Mozart can’t get by with this kind of asinine conduct, I don’t think you should try it.

Generally speaking, envy, resentment, revenge, and self-pity are disastrous modes of thought. Self-pity gets pretty close to paranoia and paranoia is one of the very hardest things to reverse. You do not want to drift into self-pity.

I have a friend who carried a big stack of linen cards about this thick, and when somebody would make a comment that reflected self-pity, he would take out one of the cards, take the top one off the stack and hand it to the person, and the card said, “Your story has touched my heart. Never have I heard of anyone with as many misfortunes as you.”

Well, you can say that’s waggery, but I suggest that every time you find you’re drifting into self-pity—I don’t care what the cause, your child could be dying of cancer, self-pity is not going to improve the situation—just give yourself one of those cards. It’s a ridiculous way to behave and when you avoid it you get a great advantage over everybody else, almost everybody else, because self-pity is a standard condition and yet you can train yourself out of it.

And, of course, a self-serving bias, you want to get out of yourself: thinking that what’s good for you is good for the wider civilization and rationalizing all these ridiculous conclusions based on the subconscious tendency to serve one’s self. It’s a terribly inaccurate way to think and, of course, you want to drive that out of yourself because you want to be wise, not foolish.

You also have to allow for the self-serving bias of everybody else, because most people are not gonna remove it all that successfully, the only condition being what it is. If you don’t allow for self-serving bias in your conduct, again, you’re a fool.

I watched the brilliant Harvard Law Review-trained general counsel of Salomon lose his career. And what he did was, when the CEO was aware some underling had done something wrong, the general counsel said, “Gee, we don’t have any legal duty to report this, but I think it’s what we should do. It’s our moral duty.”

Of course, the general counsel was totally correct, but, of course, it didn’t work. It was a very unpleasant thing for the CEO to do and he put it off and put it off and, of course, everything eroded into a major scandal and down went the CEO and the general counsel with him.

The correct answer in situations like that was given by Ben Franklin. He said, “If you want to persuade, appeal to interest not to reason.” The self-serving bias is so extreme. If the general counsel said, “Look, this is going to erupt. It’s something that will destroy you, take away your money, take away your status. It’s a perfect disaster.” It would have worked! You want to appeal to interest. You want to do it of lofty motives, but you should not avoid appealing to interest.

Another thing: perverse incentives. You don’t want to be in a perverse incentive system that’s causing you to behave more and more foolishly or worse and worse. Incentives are too powerful a controller of human cognition and human behavior, and one of the things you are going to find in some modern law firms is billable hour quotas and I could not have lived under a billable hour quota of 2,400 hours a year. That would have caused serious problems for me. I wouldn’t have done it and I don’t have a solution for you for that. You have to figure it out for yourself, but it’s a significant problem.

And you particularly want to avoid working directly under somebody you really don't admire and don't want to be like. It's very dangerous. We're all subject to control to some extent by authority figures—particularly authority figures that are rewarding us. And that requires some talent.

The way I solved that is I figured out the people I did admire and I maneuvered cleverly, without criticizing anybody, so I was working entirely under people I admired. And a lot of law firms will permit that if you're shrewd enough to work it out. And your outcome in life will be way more satisfactory and way better if you work under people you really admire. The alternative is not a good idea.

Objectivity maintenance. Well, we all remember that Darwin paid special attention to disconfirming evidence, particularly to disconfirm something he believed and loved. Well, objectivity maintenance routines are totally required in life if you’re going to be a correct thinker. And they were talking about Darwin’s attitude—special attention to the disconfirming evidence—and also to checklist routines. Checklist routines avoid a lot of errors. You should have all this elementary wisdom and then you should go through and have a checklist in order to use it. There is no other procedure that will work as well.

A last idea that I found very important is I realized very early that non-egality would work better in the parts of the world I wanted to inhabit. What do I mean by non-egality? I mean John Wooden, when he was the number one basketball coach in the world. He just said to the bottom five players, “You don't get to play. You're sparring partners.”

The top seven did all the playing. Well, the top seven learned more—remember the learning machine—because they were doing all the playing. And when he got to that system, why, Wooden won more than he'd ever won before.

I think the game of life, in many respects, is getting a lot of practice into the hands of the people that have the most aptitude to learn and the most tendency to be learning machines. And if you want the very highest reaches of human civilization, that’s where you have to go. You do not want to choose a brain surgeon for your child among fifty applicants, all of them just take turns during the procedure. You don’t want your airplanes designed that way. You don’t want your Berkshire Hathaway’s run that way. You want to get the power into the right people.

I frequently tell the story of Max Planck, when he won the Nobel prize and went around Germany giving lectures on quantum mechanics. And the chauffeur gradually memorized the lecture and he said, “Would you mind, professor Planck, just because it's so boring staying in our routines, would you mind if I gave the lecture this time and you just sat in front with my chauffeur's hat?” And Planck said, “Sure.”

And the chauffeur got up and he gave this long lecture on quantum mechanics, after which a physics professor stood up in the rear and asked a perfectly ghastly question. And the chauffeur said, “Well, I'm surprised that in an advanced city like Munich I get such an elementary question. I'm going to ask my chauffeur to reply.”

Well, the reason I tell that story is not entirely to celebrate the quick wittiness of the protagonist. In this world, we have two kinds of knowledge. One is Planck knowledge—the people who really know. They've paid the dues, they have the aptitude.

Then, we've got chauffeur knowledge—they have learned to prattle the talk and they have a big head of hair. They may have fine timbre in the voice. They really make a hell of an impression. But in the end, they've got chauffeur knowledge. I think I've just described practically every politician in the United States.

And you are going to have the problem in your life of getting the responsibility to the people with the Planck knowledge and away for the people who have the chauffeur knowledge. And there are huge forces working against you.

My generation has failed you to some extent. We are delivering to you, in California, a legislature where only the certified nuts from the left and the certified nuts from the right are allowed to serve and none of them are removable. That’s what my generation has done for you, but you wouldn’t like it to be too easy would you?

Another thing that I found is an intense interest of the subject is indispensable if you are really going to excel. I could force myself to be fairly good in a lot of things, but I couldn’t be really good in anything where I didn’t have an intense interest. So, to some extent, you’re going to have to follow me. If at all feasible you want to drift into doing something in which you really have a natural interest.

Another thing you have to do, of course, is have a lot of assiduity. I like that word because it means “sit down in your ass until you do it.”

I’ve had marvelous partners all my life. I think I got them partly because I tried to deserve them and, partly, because I was wise enough to select them and, partly, maybe it was some luck. But two partners that I chose for one little phase of my life had the following rule and they created a little design-build construction team. And they sat down and said, “Two-man partnership. Divide everything equally. Here’s the rule: Whenever we're behind in our commitments to other people, we will both work 14 hours a day until we're caught up.”

Well, needless to say, that firm didn’t fail! The people died rich. It’s such a simple idea.

Another thing, of course, is life will have terrible blows, horrible blows, unfair blows. Doesn’t matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every mischance in life was an opportunity to behave well. Every mischance in life was an opportunity to learn something and your duty was not to be submerged in self-pity, but to utilize the terrible blow in a constructive fashion. That is a very good idea.

And you may remember the epitaph which Epictetus left for himself: “Here lies Epictetus, a slave, maimed in body, the ultimate in poverty, and favored of the gods.”

Well, that’s the way Epictetus is now remembered. He said big consequences. And he was favorite of the Gods! He was favored because he became wise, and he became manly. Very good idea.

I got a final little idea because I’m all for prudence as well as opportunism. My grandfather was the only federal judge in his city for nearly forty years and I really admired him. I’m his namesake. And I’m Confucian enough that, even now, I sit here and I’m saying, “Well, Judge Munger would be pleased to see me here.”

So I'm Confucian enough, all these years after my grandfather is dead, to carry the torch for my grandfather's values. And, grandfather Munger was a federal judge at a time when there were no pensions for widows of federal judges. So if he didn't save from his income, why, my grandmother would have been in penury. And being the kind of man he was he underspent his income all his life and left her in comfortable circumstances.

Along the way, in the thirties, my uncle's bank failed and couldn't reopen. And my grandfather saved the bank by taking over a third of his assets—good assets—and putting them into the bank and taking the horrible assets in exchange. And, of course, it did save the bank.

While my grandfather took a loss, he got most of his money back eventually. But I've always remembered the example. And so when I got to college and I came across Houseman, I remember the little poem from Houseman, and that went something like this:

“The thoughts of others
Were light and fleeting,
Of lovers' meeting
Or luck or fame.
Mine were of trouble,
And mine were steady;
So I was ready
When trouble came.”

You can say, “Who wants to go through life anticipating trouble?” Well, I did! All my life, I've gone through life anticipating trouble. And here I am, well along on my eighty-fourth year, and like Epictetus, I've had a favored life. It didn't make me unhappy to anticipate trouble all the time and be ready to perform adequately if trouble came. It didn't hurt me at all. In fact, it helped me. So I quick claim to you Houseman and Judge Munger.

The last idea that I want to give you, as you go out into a profession that frequently puts a lot of procedure, and a lot of precautions, and a lot of mumbo-jumbo into what it does, this is not the highest form which civilization can reach. The highest form that civilization can reach is a seamless web of deserved trust. Not much procedure, just totally reliable people correctly trusting one another.

That's the way an operating room works at the Mayo Clinic. If a bunch of lawyers were to introduce a lot of process, the patients would all die. So never forget, when you're a lawyer, that you may be rewarded for selling this stuff, but you don't have to buy it. In your own life, what you want is a seamless web of deserved trust. And if your proposed marriage contract has forty-seven pages, my suggestion is you not enter.

Well, that’s enough for one graduation. I hope these ruminations of an old man are useful to you. In the end, I’m like the Old Valiant-for-Truth in The Pilgrim’s Progress: “My sword I leave to him who can wear it.”

Arnold Schwarzenegger: 'The first rule is 'Trust Yourself', USC - 2009

15 May 2009, University of Southern California, USA

Well, thank you very much. (Applause) Hello, everybody. What a great introduction, what a wonderful thing. What a great, great welcome I'm getting here, so thank you very much. I mean, I haven't heard applause like that since I announced that I was going to stop acting. (Applause)

But anyway, it is really terrific to see here so many graduate students and undergraduate students graduating here today. I heard that there are 4,500 graduating here today, undergraduate students, so this is fantastic. There are 2,200 men, 2,300 women and five have listed yourselves as undecided. (Applause)

So this is really a great, great bunch of people here, I love it. But seriously, President Sample, trustees, faculty, family, friends and graduates, it is a tremendous privilege to stand before you this morning. There's nothing that I enjoy more than celebrating great achievements. And I don't just mean your parents celebrating never having to pay another tuition bill, that's not what I'm talking about.

I'm talking about just celebrating the great accomplishment. So let me congratulate the Trojan class of 2009 on your graduation from one of the finest universities in the world. Let's give our graduates a tremendous round of applause. What a special day, what a great accomplishment. (Applause)

Now, this an equally special day, of course, for the parents, for the grandparents, siblings and other family members whose support made all of this today possible. And let's not forget, of course, the professors, those dedicated individuals who taught you, who came up with exciting ways to share their vast wisdom, knowledge and experience with you.

And I must also say thank you to President Sample for honoring me with this fantastic degree. Thank you very much. Wow, Arnold Schwarzenegger, Doctor of Humane Letters. I love it. (Applause) But, of course, I noticed that it wasn't a doctorate in film or in cinema or in acting. I wonder why?

But anyway, that's OK. I take whatever I can get. But maybe now since I'm the doctor, I can go back up to Sacramento and maybe now the Legislature will finally listen to me. (Applause) But anyway, I stand before you today not just as Dr. Schwarzenegger or as Governor Schwarzenegger, or as The Terminator, or as Conan the Barbarian, but also as a proud new member of this Trojan family.

Now, some of you may know that my daughter just completed her freshman year right here. One of the most exciting things for me has been to learn about the great traditions that make this university so wonderful and so special.

My daughter told me all about, for instance, the Victory Bell. She sat me down and she told me it weighs 295 pounds and how the winner of the annual football game between USC and UCLA takes this bell and gets to paint it in the school colors. And I stopped her in the middle of talking, I said, "Wait a minute, Katherine, back up a little bit. UCLA has a football team?" (Applause)

Now, of course, my daughter's journey here at USC is just beginning, and yours is ending. I know that you're a little bit stressed out right now as you start this exciting new chapter in your lives. Some people say it is scary to leave the comfort of the university and to go out into the cold, hard world.

But I have to tell you something; I think this is a bunch of nonsense because after all, this is America. This is the greatest country on earth, with the greatest opportunities. (Applause) It is one thing if you were born in Afghanistan or in Swat Valley in Pakistan where you'd be forced to join the Taliban or be killed. Now, then I would say yes, that is a little bit scary.

But this, this is going to be a piece of cake for you, trust me. You live in America and you're prepared for the future with this tremendous education you have gotten here at one of the greatest universities in the world. This is going to be exciting, it's a great adventure and this is a new phase in your life. This is going to be awesome. (Applause)

Now, of course, this journey is not going to be without any setbacks, failures or disappointments. That's just the way life is. But you're ready and you are able, and you would not be here today with your degrees and with your honors if you wouldn't be ready.

So now, of course, to help you along the way, I thought that the best Schwarzenegger gift I could give you today is to give you a few of my own personal ideas on how to be successful. And parents, I just want you to know, maybe you should close your ears, you should plug your ears, because maybe there a few things that you maybe won't like in what I have to say.

But anyway, I can explain how I became successful and who I am today by going through what I call Dr. Schwarzenegger's Six Rules of Success. (Applause)

Now, of course, people ask me all the time, they say to me, "What is the secret to success?" And I give them always the short version. I say, "Number one, come to America. Number two, work your butt off. And number three, marry a Kennedy." (Applause)

But anyway, those are the short rules. Now today, I'm going to give you the six rules of success. But before I start, I just wanted to say these are my rules. I think that they can apply to anyone, but that is for you to decide, because not everyone is the same. There are some people that just like to kick back and coast through life and others want to be very intense and want to be number one and want to be successful. And that's like me.

I always wanted to be very intense, I always wanted to be number one. I took it very seriously, my career. So this was the same when I started with bodybuilding. I didn't want to just be a bodybuilding champion, I wanted to be the best bodybuilder of all time. The same was in the movies. I didn't want to just be a movie star; I wanted to be a great movie star that is the highest paid movie star and have above-the-title billing.

And so this intensity always paid off for me, this commitment always paid off for me. So here are some of the rules.

The first rule is: Trust yourself

And what I mean by that is, so many young people are getting so much advice from their parents and from their teachers and from everyone. But what is most important is that you have to dig deep down, dig deep down and ask yourselves, who do you want to be? Not what, but who.

And I'm talking about not what your parents and teachers want you to be, but you. I’m talking about figuring out for yourselves what makes you happy, no matter how crazy it may sound to other people.

I was lucky growing up because I did not have television or didn't have telephones, I didn't have the computers and the iPods. And, of course, Twitter was then something that birds did outside the window. I didn't have all these distractions and all this.

I spent a lot of time by myself, so I could figure out and listen to what is inside my heart and inside my head.

And I recognized very quickly that inside my head and heart were a burning desire to leave my small village in Austria -- not that there was something wrong with Austria, it's a beautiful country. But I wanted to leave that little place and I wanted to be part of something big, the United States of America, a powerful nation, the place where dreams can come true.

I knew when I came over here I could realize my dreams. And I decided that the best way for me to come to America was to become a bodybuilding champion, because I knew that was ticket the instant that I saw a magazine cover of my idol, Reg Park. He was Mr. Universe, he was starring in Hercules movies, he looked strong and powerful, he was so confident.

So when I found out how he got that way I became obsessed, and I went home and I said to my family, "I want to be a bodybuilding champion."

Now, you can imagine how that went over in my home in Austria. My parents, they couldn't believe it. They would have been just happy if I would have become a police officer like my father, or married someone like Heidi, had a bunch of kids and ran around like the von Trapp family in Sound of Music.

That's what my family had in mind for me, but something else burned inside me. Something burned inside me. I wanted to be different; I was determined to be unique. I was driven to think big and to dream big. Everyone else thought that I was crazy. My friends said, "If you want to be a champion in a sport, why don't you go and become a bicycle champion or a skiing champion or a soccer champion? Those are the Austrian sports."

But I didn't care. I wanted to be a bodybuilding champion and use that to come to America, and use that to go into the movies and make millions of dollars. So, of course, for extra motivation I read books on strongmen and on bodybuilding and looked at magazines. And one of the things I did was, I decorated my bedroom wall.

Right next to my bed there was this big wall that I decorated all with pictures. I hung up pictures of strongmen and bodybuilders and wrestlers and boxers and so on. And I was so excited about this great decoration that I took my mother to the bedroom and I showed her. And she shook her head. She was absolutely in shock and tears started running down her eyes.

And she called the doctor, she called our house doctor and she brought him in and she explained to him, "There's something wrong here." She looked at the wall with the doctor and she said, "Where did I go wrong? I mean, all of Arnold's friends have pictures on the wall of girls, and Arnold has all these men.

But it's not just men, they're half naked and they're oiled up with baby oil. What is going on here? Where did I go wrong?" So you can imagine, the doctor shook his head and he said, "There's nothing wrong. At this age you have idols and you go and have those -- this is just quite normal."

So this is rule number one. I wanted to become a champion; I was on a mission. So rule number one is, of course, trust yourself, no matter how and what anyone else thinks.

Rule number two is: Break the rules

. We have so many rules in life about everything. I say break the rules. Not the law, but break the rules. My wife has a t-shirt that says, "Well-behaved women rarely make history." Well, you know, I don't want to burst her bubble, but the same is true with men.

It is impossible to be a maverick or a true original if you're too well behaved and don't want to break the rules. You have to think outside the box. That's what I believe. After all, what is the point of being on this earth if all you want to do is be liked by everyone and avoid trouble?

The only way that I ever got anyplace was by breaking some of the rules. After all, I remember that after I was finished with my bodybuilding career I wanted to get into acting and I wanted to be a star in films. You can imagine what the agents said when I went to meet all those agents. Everyone had the same line, that it can't be done, the rules are different here. They said, "Look at your body. You have this huge monstrous body, overly developed. That doesn't fit into the movies. You don't understand.

This was 20 years ago, the Hercules movies. Now the little guys are in, Dustin Hoffman, Woody Allen, Jack Nicholson." Before he gained weight, of course, that is. But anyway, those are the guys that were in. And the agents also complained about my accent. They said, "No one ever became a star with an accent like that, especially not with a German accent.

And yes, I can imagine with your name, Arnold Schwartzenschnitzel, or whatever the name, is, on a billboard. Yeah, that's going to draw a lot of tickets and sell a lot of tickets. Yeah, right." So this is the kind of negative attitude they had.

But I didn't listen to those rules, even though they were very nice and they said, "Look, we can get you some bit parts. We can get you to be playing a wrestler or a bouncer. Oh, maybe with your German accent we can get you to be a Nazi officer in Hogan's Heroes or something like that."

But I didn't listen to all this. Those were their rules, not my rules. I was convinced I could do it if I worked as hard as I did in bodybuilding, five hours a day. And I started getting to work, I started taking acting classes. I took English classes, took speech classes, dialogue classes. Accent removal classes I even took.

I remember running around saying, "A fine wine grows on the vine." You see, because Germans have difficulties with the F and the W and V, so, "A fine wine grows on the vine." I know what some of you are now saying, is I hope that Arnold got his money back.

But let me tell you something, I had a good time doing those things and it really helped me. And finally I broke through. I broke through and I started getting the first parts in TV; Streets of San Francisco, Lucille Ball hired me, I made Pumping Iron, Stay Hungry. And then I got the big break in Conan the Barbarian. (Applause)

And there the director said, "If we wouldn't have Schwarzenegger, we would have to build one." Now, think about that. And then, when I did Terminator, "I'll be back," became one of the most famous lines in movie history, all because of my crazy accent.

Now, think about it. The things that the agents said would be totally a detriment and would make it impossible for me to get a job, all of a sudden became an asset for me, all of those things, my accent, my body and everything.

So it just shows to you, never listen to that you can't do something. And, "You have to work your way up, of course, run for something else first." I mean, it was the same when I ran for governor, the same lines, that you have to work your way up, it can't be done. And then, of course, I ran for governor and the rest, of course, is history.

They said you have to start with a small job as mayor and then as assemblyman and then as lieutenant governor and then as governor. And they said that's the way it works in a political career. I said, "I'm not interested in a political career. I want to be a public servant. I want to fix California's problems and bring people together and bring the parties together.

So, like I said, I decided to run, I didn't pay attention to the rules. And I made it and the rest is history. Which, of course, brings me to

Rule number three: Don't be afraid to fail.

Anything I've ever attempted, I was always willing to fail. In the movie business, I remember, that you pick scripts. Many times you think this is a wining script, but then, of course, you find out later on, when you do the movie, that it didn't work and the movie goes in the toilet.

Now, we have seen my movies; I mean, Red Sonja, Hercules in New York, Last Action Hero. Those movies went in the toilet. But that's OK, because at the same time I made movies like Terminator and Conan and True Lies and Predator and Twins that went through the roof.

So you can't always win, but don't afraid of making decisions.

You can't be paralyzed by fear of failure or you will never push yourself. You keep pushing because you believe in yourself and in your vision and you know that it is the right thing to do, and success will come. So don't be afraid to fail.

Rule number four: Don’t listen to the naysayers.

How many times have you heard that you can't do this and you can't do that and it's never been done before? Just imagine if Bill Gates had quit when people said it can't be done.

I hear this all the time. As a matter of fact, I love it when someone says that no one has ever done this before, because then when I do it that means that I'm the first one that has done it. So pay no attention to the people that say it can't be done.

I remember my mother-in-law, Eunice Kennedy Shriver, when she started Special Olympics in 1968 people said that it would not work. The experts, the doctors that specialized in mental disabilities and mental retardation said, "It can't be done. You can't bring people out of their institutions. You can't make them participate in sports, in jumping and swimming and in running. They will hurt themselves, they will hurt each other, they will drown in the pool."

Well, let me tell you something. Now, 40 years later, Special Olympics is one of the greatest organizations, in 164 countries, dedicated to people with mental disabilities and that are intellectually challenged. (Applause)

And she did not take no for an answer. And the same is when you look at Barack Obama. I mean, imagine, if he would have listened. (Applause) If he would have listened to the naysayers he would have never run for president. People said it couldn't be done, that he couldn't get elected, that he couldn’t beat Hillary Clinton, that he would never win the general election.

But he followed his own heart, he didn’t listen to the "You can't," and he changed the course of American history.

So over and over you see that. If I would have listened to the naysayers I would still be in the Austrian Alps yodeling. (Laughter) I would never have come to America. I would have never met my wonderful wife Maria Shriver, I would have never had the wonderful four kids, I would have never done Terminator, and I wouldn't be standing here in front of you today as governor of the greatest state of the greatest country in the world.

So I never listen that, "You can't." (Applause) I always listen to myself and say, "Yes, you can."

And that brings me to rule number five, which is the most important rule of all: Work your butt off. You never want to fail because you didn't work hard enough. I never wanted to lose a competition or lose an election because I didn't work hard enough. I always believed leaving no stone unturned.

Mohammed Ali, one of my great heroes, had a great line in the '70s when he was asked, "How many sit-ups do you do?" He said, "I don't count my sit-ups. I only start counting when it starts hurting. When I feel pain, that's when I start counting, because that's when it really counts."

That's what makes you a champion. Arnold Scvhwarzenegger in Kindergarten CopAnd that's the way it is with everything. No pain, no gain. So many of those lessons that I apply in life I have learned from sports, let me tell you, and especially that one. And let me tell you, it is important to have fun in life, of course.

But when you're out there partying, horsing around, someone out there at the same time is working hard.

Someone is getting smarter and someone is winning. Just remember that. Now, if you want to coast through life, don't pay attention to any of those rules.

But if you want to win, there is absolutely no way around hard, hard work.

None of my rules, by the way, of success, will work unless you do. I've always figured out that there 24 hours a day. You sleep six hours and have 18 hours left. Now, I know there are some of you out there that say well, wait a minute, I sleep eight hours or nine hours. Well, then, just sleep faster, I would recommend. (Laughter)

Because you only need to sleep six hours and then you have 18 hours left, and there are a lot of things you can accomplish. As a matter of fact, Ed Turner used to say always, "Early to bed, early to rise, work like hell and advertise."

And, of course, all of you know already those things, because otherwise you wouldn't be sitting here today. Just remember, you can't climb the ladder of success with your hands in your pockets.

And that takes me to rule number six, which is a very important rule: it's about giving back. Whatever path that you take in your lives, you must always find time to give something back, something back to your community, give something back to your state or to your country.

My father-in-law, Sargent Shriver -- who is a great American, a truly great American who started the Peace Corps, the Job Corps, Legal Aid to the Poor -- he said at Yale University to the students at a commencement speech, "Tear down that mirror. Tear down that mirror that makes you always look at yourself, and you will be able to look beyond that mirror and you will see the millions of people that need your help."

And let me tell you something, reaching out and helping people will bring you more satisfaction than anything else you have ever done. As a matter of fact today, after having worked for Special Olympics and having started After School Programs, I've promoted fitness, and now with my job as governor, I can tell you, playing a game of chess with an eight-year-old kid in an inner city school is far more exciting for me than walking down another red carpet or a movie premiere.

So let me tell you, as you prepare to go off into the world, remember those six rules:

Trust yourself, Break some rules, Don't be afraid to fail, Ignore the naysayers, Work like hell, and Give something back.

And now let me leave you with one final thought, and I will be brief, I promise. This university was conceived in 1880, back when Los Angeles was just a small frontier town. One hundred and twenty-five classes of Trojans have gone before you. They have sat there, exactly where you sit today, in good times and in bad, in times of war and in times of peace, in times of great promise and in times of great uncertainty.

Through it all, this great country, this great state, this great university, have stood tall and persevered. We are in tough times now and there's a lot of uncertainty in the world. But there is one thing certain; we'll be back. (Applause)

And we will back stronger and more prosperous than ever before, because that is what California and America have always done. The ancient Trojans were known for their fighting spirit, their refusal to give up, their ability to overcome great odds.

So as you graduate today, never lose that optimism and that fighting spirit. Never lose the spirit of Troy. Because remember, this is America and you are USC Trojans, proud, strong and ready to soar. Congratulations and God bless all of you. Thank you very much. Thank you. (Applause)

Six Rules on How to Be Successful

1. Trust yourself
2. Break some rules
3. Don't be afraid to fail
4. Ignore the naysayers
5. Work like hell
6. Give something back.