TKP Insights: Making (Even) Better Decisions

0:16 Welcome to the Knowledge Project. I'm your host, Shane Parish. The goal of this show is to master the best of what other people have already figured out, so you can use their insights. in your life. What you're about to hear is a special episode of the Knowledge Project. Over the last five years I've been lucky enough to speak with some of the most incredible people in the world, and when I re listen to these episodes they feel like they were recorded yesterday.

0:41 Except I sound like even more of a clumsy dork than I am now. What really stands out is how the insights in these conversations stand the test of time. They're as applicable today as they were when they were recorded. So a few times a year we'll go back to earlier episodes, some of which you may have missed, some of which you may have forgotten.

1:00 and we'll pull out some gems on a single theme, weaving together multiple guests. This episode is on making better decisions. As you can imagine, this topic comes up quite often on the show, so it wasn't easy to pick some of our favorite moments for this episode. This episode includes some timeless insights from Stripe co founder and CEO Patrick Collison. Psychologist.

1:22 Maria Kornakova, consultant Fankitash Rao. Poker player and author Annie Duke, and Shopify co-founder and CEO Toby Luke. Let's start with Bank Attache. Venganesh Rao is a consultant and author of Tempo, a book that examines decision making by weaving together concepts and principles for math, cognitive psychology, and philosophy. Venkatesh appeared on episode seven of the show back in twenty eighteen, and he starts this portion of our interview by discussing

1:52 The three types of decision makers as well as an analogy of how world building in fantasy books like Lord of the Rings can demonstrate how mental models work. It's time to listen. And learn. Right after I wrote the book Um

2:12 some of the more interesting criticisms that I encountered actually helped me see what the book didn't cover well and Exploring that ended up um being a very fruitful thing for me. So I'll just uh point out a couple of those things. One was

2:30 A couple of major categories of uh decision making styles, so to speak, and the book really is strongly focused on one of them. And I was sort of unaware of the sort of structure of the other approaches to decision making that were equally big. So go the big one that I've

2:49 concluded in my mind is Does this uh approach to decision making that you could say is based on not reasoning per se, but uh it's a very conceptual approach where you think in terms of say mental models. What frames am I looking through? What metaphors am I using? Uh what is the sort of significance of my decisive actions versus my

3:12 uh random actions, what narrative is sort of uh framing the unfolding of events. So that's an approach that's very natural to me. It's why I think I ended up becoming an engineer. Uh it's also an approach that's very natural to you. Uh Farnham Street, I think uh explores that in a great deal of detail from a variety of different sources. So that's uh I I don't know what to call it, but uh let's call it sort of conceptual reasoning as a framework for decision making. And I would say maybe a third of humanity operates that way. It's their operating system for life. But the other two thirds does not operate that way. And the two uh

3:47 Categories that I've realized that I'm very, very unlike are One is what I would call Ethical reasoners. And ethical reasoners very sincerely and honestly start with a very deep and intuitive sense of right and wrong. And

4:03 These people, in my opinion, uh right and wrong are In the sense of uh good and evil. Not in the sense of true or false. So these people who start with the framework of uh good and evil. Uh not only do I not resonate with them I often really struggle to understand why they're thinking the way they're thinking and

4:22 invariably when I disagree with people very strongly about something. It's uh Usually the fact that they're starting from good and evil premises. And it's not as unsoph sophisticated as we tend to think, that these are just, you know, like uh not very sophisticated religious thinkers, for example. That that's a subcategory of people who use ethical reasoning as a framework. But there's um it's much broader and it can get much more sophisticated. So I think that's a big blind spot in my own thinking that I've only slowly become aware of and explored a lot more. And the other, which I would say the second um

4:55 third of uh the category of people I don't uh Truly get It's people whose Entire decision making process and framing is based not on something that goes on in their own heads

5:08 But in the Sort of. collective consciousness of the group they belong to. So these are what a friend of mine, uh Greg Rader, uh he phrased as affiliational thinkers, people for whom every decision basically boils down to Which group do I wanna be like? Which group do I wanna

5:27 uh belong to and They do that by saying, All right, let's take a Issue like abortion or is Trump good for pr being president And I'm not going to process that through examination of the issue itself.

5:40 But Which group would Can I belong to that their views on the topic are comfortable for me to be socially. Does that make sense? It's it's your social skill. That's your first consideration. So those are my three big buckets of types of human

5:55 Decision making and you and I I think represent the first kind, which is Explored quite a lot in tempo and your blog. The second is uh these people who start with good and evil. uh who I understand

6:07 a little bit now, a little better, four years down the line. And the third is official affiliational thinkers or tribal thinkers, whatever you want to call them. Uh these are the people I understand the least because in a way understanding these people individually is Yeah. the wrong thing to even attempt. You have to understand sort of how their groups or tribes think.

6:27 and think of these individuals only in terms of which tribes they choose to join. So that's the only decision that ever matters in their life. Which is which tribe should I join? Every other decision or uh uh thought process they go through is really

6:41 Somewhere in the collective consciousness. Do you think those tribe decisions are based on the particular decision that you're making, or are they based on the tribe right large? So if I Am I gravitating towards a tribe on particular issues? Or is it that I wanna be like that tribe in all issues? I think it's the latter because uh if you're talking about being like the tribe on particular issues

7:05 you're way too individualistic. You're making decisions based on the merits of a particular case. Like you might say that on capital punishment I'm with uh liberals and I'm against it. Uh uh I'm referring to a US context, of course, here. So you might say on capital punishment, I've thought through the issues and I'm against it, therefore I'm with the Democrats. But on um gun control, I've thought through it and I'm with the Republicans on that. That's too much thinking. It's it shows that you're not a tribal thinker. For a tribal thinker it would be Who do I wanna be

7:38 With as sort of the operating system of my life. Who do I want to have barbecues with? Who do I want to hang out with? Who do I want Um sort of as my friends in my bowling league that sort of All right. Issue. It's not explicit. They don't sit through and say, All right, these are the fifty activities and habits that define my life. Therefore, I'm going to pick the

7:58 optimal tribe to join. No, it's not like that. It's It's more a process of emotional resonance. And after that you basically are partisan in a predictable way on all issues. And to people who are more individualistic and discriminating thinkers. The film's

8:13 kinda stupid. It's like how could you possibly take this huge set of like fifty different issues with very different context and um considerations. And basically agree with one tribe on all fifty of those issues. But if you look at just how tribal reasoning works, uh

8:30 It is possible and that's Kind of how it does in fact work. And I would say that this is my total I know nothing kind of guess that each group is a third, a third, a third. It could be that tribal thinkers are actually much more numerous than the other two kinds.

8:44 And and do you think that I mean between um the framing of those, I mean, it leads us to the obvious conclusion that the first one is better. um, you know, not putting it in a good versus evil context. Do you think people approach the good versus evil in terms of I'm the hero and I'm trying to write this evil? Or do you think it's More nuanced than that. Uh well

9:05 First I would uh resist the Temptation to conclude that the first approach to thinking and decision making is the best. It's the one most suited to certain personalities, certainly. And in certain situations it makes for like um much higher probability of survival and success and thriving, right? Like uh in say the American context, because of whatever the social operating system for the country at large is.

9:31 Um Whether for better or worse. Americans tend to believe in individualism, the myth of individualism, even though Americans are not super individualistic, but if you believe in the myth of individualism, the first approach uh to decision making where you kinda maintain this fiction of uh

9:49 uh processing everything on your own and staying away from tribal uh bandering and so forth. That tends to work very well. Whereas if you go over to like uh strongly traditional Asian cultures, the reverse might be true, where uh Yeah. Everything is framed with respect to the context of uh the social environment and that might be a much better survival strategy.

10:11 if you want to actually succeed in that environment. So I I I'd say Whether or not one is better than the other is uh a question of context and what you mean by better. But to Your other question of um good and evil types

10:27 I don't know. I've been thinking about it for a quite a while yet and at A philosophical and a practical and a reasoning kind of level and the epistemological level of are they actually Uh exploring the truth about

10:41 The way the world works. I think there Kinda full of shit on all those fronts. But there's something Hardwired deep in human nature that

10:50 Um seems to work very well with good versus evil reasoning frames. And I think uh here's my hypothesis on why that is the case. Why is it that this is buried so deep in our firmware? If you think about most species of animals, their survival concerns all have to do with their material environment, which is Uh, can I get enough water? Can I get food? Uh can I hunt my prey, right?

11:14 Верес Хімен. A great deal of their survival depends on other humans. It's how do I get along with the group. Does the leader of the troop of monkeys like me or not? what will happen to me in

11:27 a tropical environment if I'm kicked out of the monkey troop. versus a temperate environment versus an Arctic Environment, right? So ninety percent of our consequential survival behaviors as a human social species depends on

11:42 things having to do with other people. And good and evil, if you think about it, is a very, very good way. of simplifying that whole area of decision making. Where if you simply decide that a certain group is good and other groups are evil, everything else gets massively simplified. So that's how you get, I think, the abstract good and evil Uh

12:02 approach to thinking, it's it's a rare fight form of uh tribal affiliational thinking. So w if you want to stag them and sort of evolutionary primacy order. I think tribal affiliational is the sort of uh most ancient of our decision making frameworks

12:17 the good and evil framework is slightly more recent in evolutionary history because you have you need a certain capacity for abstract thought before you can frame good and evil as categories. And then the kind that uh you and I try to promote in our writing and thinking is the most recent of all. It might be I don't know, no more than five hundred years old. I was just thinking that they were almost inverse from the way that you had mentioned them from an evolutionary perspective. And the two the two and three, so the good versus evil and the tribal tend to blend, right?

12:46 Uh more so than um the other one. Uh it was mental models that first um drove me to your book. I mean one of my friends read it and um They pointed out that you were talking about mental models in your book. And at the time, and I mean to a large extent today, so few people are talking about that. What's your definition of a mental model?

13:07 Well I I have a sort of technically inspired definition in the book, as you may recall. So I use something called the belief, desire intentional model of Michael Brockman, who's a philosopher at Stanford, and it's been the uh basis of a lot of uh artificial intelligence research. So that's one sort of effective way to get at defining what a mental model is. It's a set of beliefs

13:29 Desire desires and intentions. But I think um that sort of definition is useful for certain narrow technical needs. Um U I people have uh similar sort of technical definitions. Uh Politics people have similar definitions. Like uh you've mentioned George Lakoff a couple of times in your writing, I think, and Lakoff has one based on conceptual metaphor. All these narrow technical definitions of mental models

13:53 They're useful for certain Certain questions that are honestly a little I don't know, too detailed and deep for a general mass audience. They're not interesting. So for a mass audience, I would say The

14:07 Best definition of a mental model is uh A world in the sense of science fiction or fantasy, right? So you've got, say, a universe like the Harry Potter universe or the Lord of the Ring universe. And so there's the world and then there's the story that's told in the world. And uh look at the way the most popular science fiction and fantasy is written.

14:28 You're told the story. But through learning the story, you also learn about the world. And uh stories differ in their ability to do that elegantly. So Lord of the Rings is sort of has a poetic elegance to it in that you don't feel like you're learning about the world, but by the time you're done with the trilogy, you actually know a lot about it. Right. Uh whereas Harry Potter is a little bit more heavy handed

14:52 Well a lot of it is very clearly world building and uh you kinda get the tedious sense of reading a geography book or being asked to memorize a list of countries. That's sort of explicitly learning uh uh a world in which uh story set. But if you look at the movie versions you realize that uh in a way J K Rowling is a product of her time.

15:14 Where she's not really Thank you. the author of a book so much as a media property that she was at least at some level aware would turn into a movie, an online world, a game, and so forth, right? So it could be that it she's just a product of our times and they're two different very different words. But that's basically my idea of what a mental model is. It's your sort of implicit

15:37 understanding of what the world is. And it's very easy to see in the case of like fictional universes with a few rules that are different from our own. But it does Same thing is true for uh much more realistic uh worlds as well. So Like take uh the the Law and Order franchise.

15:56 You've got um I I don't know if it as popular around the world as much as it is here, but you've got this franchise of T V shows, uh criminal intent. uh special victims unit and so forth. And this sort of gives you a sense of an entire universe of uh

16:12 police work and crime and A sense of the world as a very dangerous place where you've got these brave defenders protecting you. And that's a mental model, right? So while you're watching. Law and order episodes, that mental model is active in your head and it allows you to make sense of the stories you're being told very efficiently. So mental models allow you to very efficiently make sense of stories and if you are not

16:37 familiar with the mental model, then the author must build the mental model. And that's what happens with science fiction and fantasy. But the interesting thing is When you read say extremely foreign fiction. So fiction that's very alien to you in terms of mental models. Yeah.

16:53 The author may assume you understand the mental models. But you may not. So for example, Japanese comic books. The couple of times I've tried to read them. they just feel so bizarre to me. They're sort of uh conventions for indicating, you know, emotions and actions and so forth. They're just so unintuitive to me that

17:10 The world kind of uh uh that should be in the background and implicit and I should just be able to reference it like an operating system. It sort of becomes a little too visible for me to read the fiction seamlessly. So it's like I'm trying to run a Windows on a Mac computer without realizing it. So

17:28 I think that's sort of his uh uh the best way to understand mental models for um I don't know, people who don't need to deal with them in any technical way. That's Venkatash Rao from Episode 7, The Three Types of Decision Makers. Check out the show notes for a link to the full episode. Next up is Maria Kornakova, a professional poker player, psychologist, and author of three New York Times bestsellers including The Biggest Bluff, How I Learn to Pay Attention, Master Myself, and Win.

17:58 Maria holds a PhD in psychology from Columbia University and took a unique route to becoming a professional poker player, but as you'll hear in this segment, she mastered the game by closely observing her own emotions when it came to making high-stakes decisions at the poker table. And I started playing online first. So even though I was going to be playing live poker, that's what I wanted to do. Online is an easy way to learn because of the sheer volume of hands. You have a computer dealing hands, so it's just it's really quick. So whereas in live poker

18:33 you know, in an hour you might play, I don't know, thirty hands, maybe even fewer. Depending on the t the table you're sitting at, you know, one slow player and suddenly You're playing ten hands an hour. But

18:46 Online, it's hundreds. And so you just get a lot of experience quickly because you see all of these situations unfolding before you. I did not enjoy playing online. Um I did not make me want to become an online player, but It did allow me to get more experience quickly and it also allowed me

19:06 A really important tool that Eric and I could use because I could record myself playing. So we actually were able to go through my games and he could explain. what things I was doing wrong, what things I was doing right. what I could change about my thinking because the way that he approached it is he never said this is a mistake. He would say, what are you thinking here?

19:27 Why did you do this? And that's how he taught me. It was not a prescriptive this is what you do here. It was a Why did you do this? What motivated you? What were you thinking?

19:41 That's fascinating because you're getting a lot of iterations. And you're getting feedback, but what you're really getting is reflection. Like by making you walk through your thought process, you're reflecting on what you were thinking given the information at hand. Exactly, exactly. And just you can't underestimate how important that is. One of the things that I suddenly realized after we did this a few times that

20:06 was that I started thinking better because I just started thinking in advance, what am I going to tell Eric? And that made me actually stop and reflect for that extra second. Whereas before I would have just acted because, well, you know Let's do this. And it seems right. Now I'd say, okay.

20:24 If I say that to Eric he's going to say, Well, that's not good enough. That's not a decision process. that means that this is a mistake. Even if you did the right thing, it's still a mistake. So one of the things that he really taught me is that you have to distinguish the

20:41 Action And the outcome from the thought. As long as your thoughts is solid, as long as you're thinking through things correctly. Then you did well.

20:53 Even if you ended up coming to the wrong conclusion, because that means that eventually with better inputs, you'll come to the right conclusion. And even if you came to the right conclusion, but then the card went against you and you were, you had a bad outcome. In both of those cases. As long as your thought process is solid. Then You've won, basically, then that's all you need.

21:17 And so forcing me to actually Think through. What am I going to tell Eric? force me to start thinking and to start thinking better and to start reflecting on elements of my thought process. that I didn't even realize were there because I would just kind of do things. Um

21:33 And it really L let me tell you, it transferred out of poker very quickly. Um, and I w found myself doing this. in all sorts of situations, but At the time it was just helping me become A more thoughtful player.

21:47 and through being more thoughtful, a better player. Not necessarily a player who was winning right away because I didn't know enough. I didn't have enough experience. All of those input variables weren't there. But the player who was building kind of creating the building blocks that would enable me to be a successful player. Down the line. I want to double click on two things you said there. First the thought process. Like how do we know we have a good thought process? Especially if you're a novice in it. Do you need a mentor or coach? Or can you like ascertain that for yourself? And then how did you apply that to life?

22:20 Like outside of that. Well, I I yeah. Um, I do think you need someone to tell you if you're a complete novice. I mean, I would have had no way of knowing. what I should be paying attention to. what I should be thinking through. what I should be doing if I didn't have Eric to direct me. I mean I could have gotten some level of that from online tutorials, online videos.

22:41 But it just would not have been the same. The fact that it was personalized, the fact that it was directed at me, at how I was playing, at how I was thinking, and that it was kind of this. direct feedback. I think that was crucial um in enabling me.

22:55 to improve as rapidly as I did. And to actually appreciate what was going on. So sure you can get some of those tools elsewhere, but I do think it's very important to have someone else. And I actually don't think this is true of everything, not just poker. I mean the way that I became a better psychologist is because I had great mentors who were able to talk me through my thought process. along the way. The way I improved as a writer was obviously doing it myself and you have to with all of these things Nothing will supplement or nothing will completely

23:28 Override the need to just do it and do it and do it and practice and kind of get better that way. But I also had amazing writing mentors. I had people who really Helped me learn. How do I think through pieces? How do I Think through writing? How do I think through all of this? People who taught me to take apart other people's books.

23:48 So that I could figure out how they did what they were doing and how, you know, how I could apply that to my own writing. So I think in everything in my life. that was incredibly important. And I think that, you know, my my first book was about Sherlock Holmes. And I think that

24:07 One of the really interesting things people talk about the Sherlock Watson relationship as you know, Watson being this foil for Holmes. And that's true. But Watson also plays an incredibly important role in forcing homes. To think better. to be actually a better detective, to be better at

24:26 His job. to have a clear thought process. Because he asks questions. And Holmes needs to respond to him and needs to bring him through his thoughts and tell him how he arrived at a certain conclusion. And doing that.

24:42 helps Holmes see claws in his logic that he didn't see before. And I think he actually becomes a much better detective through their friendship and through kind of that evolution that happens. only because he had to talk things through with Watson. So I'm I mean, I'm someone who works by myself. I'm a writer. Um and in poker I write I you know, I play by myself. No one else is playing my cards for me.

25:06 But I do think that forming those relationships, having someone to talk to being able to verbalize your thought process, I just think it's so crucial in becoming a good thinker. No matter what you're doing. I think that's really insightful. And Pooker gives you sort of like the added component of you have something at stake, right? Didn't Emmanuel say something about um the role of betting in his critique of pure reason. Yes.

25:33 He did, he did, and I was so excited when I found that section of Critique of Pure Reason and was able to to apply it to poker. Um Kant says that. Betting, actually. Forms an integral part Two

25:49 Improving your decision process and improving your level of certainty in something because People can say all sorts of stuff and just make all sorts of pronouncements if they're not held accountable for it. However, if you're forced to put a monetary value on your opinion on how certain you are of something you're saying.

26:10 on how certain you are about you know, if you're a doctor, how certain you are about your diagnosis. If you have to bet on it. All of a sudden it forces you to s stop for a second and think, Okay Am I really this sure? How much do I value it? And Kant even proposes a thought experiment to start upping the values, you know.

26:29 Would I would I say this and stand by it for ten dollars? Yeah, sure. What about for a hundred? Okay, yeah, that seems reasonable. A thousand? Okay, well maybe I need to look through some of my assumptions. Give me a second. A million? Okay, okay, right. I'm not I'm not that sure anymore. I really need to figure it out.

26:47 Or, you know, a million, yes, I will bet even a million, I'll bet everything because that is how certain I am that I'm right. It really forces you to take a step back and reflect because all of a sudden you have something very, very tangible. On the line. And Kant uses this as an experiment for you know how to how to make people reason better, how to make people better thinkers, how to make people actually stop to consider what they're saying rather than just spewing stuff and being experts.

27:16 Um and yeah, when I when I was reading this And um working On um rereading Kant and and thinking through all of this, it just made me realize how relevant he is to the modern world and to social media and to the internet where once suddenly, you know, everyone's an expert on everything and everyone is so certain about everything. And You have all of these amplified opinions online. And I just wish all of them would just do that thought exercise and be forced to.

27:47 you know, actually forced to go through with it. That we had some mechanism by saying, Okay, before you tweet something out. You know, how much money are you willing to bet? on the fact that what you're saying is actually correct. think that could lead to some pretty interesting results. Yeah, it's definitely it forces you to think about not only your thought process, but but sort of like how confident am I

28:09 That this is Um, so how how did that just thought process like explore this with me a little bit in terms of how that changed outside of poker? Did you find yourself thinking out loud and like self-critiquing your thought process? Or did you go to somebody and you're like, Here, I want you to hear my thoughts process on this and then point out So I started critiquing myself a lot more. And I started being my own fact checker a lot more than um I had been used to doing in the past. So No, I'm someone who What does that mean you're a fact checker. Yeah. So I'm someone who's a

28:43 A fairly opinionated person. And I'm also prone to exaggeration, especially when I speak. And it's just kind of for a rhetorical effect. And I never really I've never really thought about it. It's just something that I do.

28:58 But all of a sudden I actually started Saying, Okay, well If this isn't accurate, maybe I shouldn't say it and maybe I should verify the accuracy. before saying it, you know, let me start fact checking myself a little bit. And if I'm offering an opinion, you know, there was a a really, really funny thing that happened um when I was

29:18 Pretty pretty young. maybe fifteen years old or so. Um, my mom and I were taking a walk and I grew up in the Boston suburbs and we were in the city, um, visiting.

29:30 and walking around and we got a little bit lost. And I just so confidently said I knew where to go. And really thought I did, and just got us further and further lost. And at some point, this was obviously before smartphones. This was before w everyone had a GPS on them. All of a sudden we just we were deep in Chinatown and had no idea where we were or how to get anywhere. And my mom had actually kind of known where we were before, but I was so confident that she just deferred to me.

30:00 And And I I I've done things like that a few times not a few, a number of times in my life in the past. Where I think I know something and so I just confidently do it. And poker and No thinking about things in this

30:14 more metacognitive way where you have to think about your thinking. And not just think, Oh, I think I know what this is. And I'm pretty confident in it. It actually

30:25 I think Made. examples like that much less likely to occur. These days I'm actually much less confident in any of my opinions and in any

30:37 even if my opinion of which way we should turn in order to get back to where we were trying to go. There's something as simple as that. Um, I've learned to really tone it down and to really question myself every single time and say, Okay, wait, why am I sure? Why am I so confident in this?

30:55 Is the data reliable? Is it something that I can trust or not? You know, where is that confidence coming from? Because one of the things I learned in psychology is that we have intuitions all the time and we are actually horrible, horrible, horrible at being able to tell the correct intuitions from the wrong intuitions. We're about fifty fifty. And that's that's a really bad track record. And sometimes our intuitions are spot on and sometimes they're completely wrong, but we can't tell the difference.

31:26 And poker really to go deeper into that. And to figure out why can't we tell the difference. And how can you become

31:36 more confident in your intuitions. Well, you have to go back and say Do I have a basis for this? Do I have the experience in this? Do I have No, is there a reason my intuition should be right? Because what correct intuition is, is all of this experience that we've accumulated in something that we don't necessarily have conscious access to, the process of acquiring. And so

31:58 Your intuition y should only be trusted. if you're an expert in this area, if there's a reason why you should be confident here. And learning to kind of Disentangle that. And learning to spot false confidence for what it is, I think is a crucial skill just in absolutely anything.

32:18 How how to like i if you factor in a continuum between rational and emotional. How how does that factor into your thought process and how you're thinking about something? I think that we are all necessarily emotional if we're human. I mean even Sherlock Holmes uh was

32:38 someone who experienced emotions even though people think of him as this kind of cold, almost computer like person. what he did and this is it's interesting, they're actually A lot of ways that Writing about Sherlock Holmes helped me.

32:53 become a better poker player because it's a it's a lot of things, um a lot of things overlap there. And this rational emotional thing is one of them. So what Sherlock Holmes does is he acknowledges his emotions. he recognizes that they exist and then he dismisses them if they're irrelevant to the decision. So he says, you know, sure, you know, I feel sympathy for this woman. Sure, I I see that she's, you know, a really good person. But now I'm going to dismiss all of that because it's irrelevant to the decision. So I feel the emotion. I experience it. And then I put it away.

33:26 And Do not use it. When I'm coming to a decision and Because it's not relevant. In poker.

33:34 There's this idea called tilt. Which Eric introduced me to, and which is just it became one of my favorite words in the world. I use it all the time now. Another way that poker has filtered its way into my life.

33:47 Is that now I I say that I'm tilted and things put me on tilt and that something is tilting all the time without even thinking about it, because it's such a such a convenient word. What tilt means is that you've let emotion into your thought process. Irrelevant emotion into your thought process. Usually it's negative, so And by negative I mean a negative emotion. So For instance, you lose a really big pot.

34:12 So you lose a lot of money and you get angry or you get, you know, really frustrated. And so that affects how you're playing because you start making decisions not because that's the right decision to make, but because you want to get those chips back, or you want to punish the person who took them from you because you think that he's being a jerk or whatever it is. But it can also be positive. So sometimes there are positive emotions that also are irrelevant to your decision process. So in poker, the the example would be. You've won a lot of money. You know, you've won a number of pots and all of a sudden you think you're invincible.

34:47 And so you have kind of this very You're feeling great. You're feeling so confident. But and then you start maybe taking risks you shouldn't take and making decisions in a way you shouldn't be making decisions because You're letting that emotion. Seep into your decision process. So when you say something is tilting, it means it's something that's like getting under your skin, making you

35:09 kind of emotional when you say that you're on tilt, it means Oh, you're emotional. You're not thinking as rationally, you're not thinking as clearly anymore. What The goal should be

35:20 And this actually also relates directly to what I did my PhD on because Walter Michelle, what he studied with the marshmallow kids was self-control and hot and cool decision making. How do we In the face of a marshmallow Which we can use just as a symbol for anything that is

35:39 enticing anything that we want kind of this This craving, this hot condition. In the face of that, how do we resist? How do we cool it down? How do we let rational thought processes prevail when we're four years old and we just want to eat the marshmallow.

35:57 And all of his work was basically centered on how do you teach self-control. How do you teach people? to cool down hot processes. How do you go off tilt?

36:09 How do you actually learn cool down your emotions so that you can make the correct decision. In the case of the marshmallow, don't eat the thing. Wait for your second marshmallow. Um, or in the case of poker, you know. Maybe I should fold this hand or whatever it is.

36:24 They can make the analogy to basically any decision that you want to make where you're being emotional. So all of these things kind of came together. And helped me.

36:36 Understand that You can't ever be purely rational because you're always going to experience emotion and yet You what you can do. is learn this goes back to the being kind of more self reflective and going through your thought process. Learning to be more mindful.

36:54 about the emotions your experience. to say okay I am experiencing this emotion right now. Why? What made me experience it? Because sometimes emotions are actually incredibly relevant to a decision. It's the irrelevant emotions that you need to.

37:10 that you need to get rid of. There's psychological work that shows that people who can't experience certain emotions like fear because they have Neural damage. they actually make really bad gambling decisions and they go broke.

37:24 Because they just don't care. they have no risk aversion whatsoever. Well, that's also not good. Right, they're completely not emotional, but in that particular case, the the fear was important. It was integral to the decision. And they no longer had that. emotional feedback.

37:39 So what you need to learn Yeah. Identify the emotion. figure out that you're experiencing it. Because a lot of times you don't even realize it, you know, you don't realize you're angry. You don't realize you're frustrated. You don't realize you're hungry. You don't realize that all these things are going on. So first you identify it. Then you try to identify the root cause.

37:58 Is this something that's totally incidental? Or is this something that's actually integral? More often than not, it's incidental. And then you say, okay, now I need to dismiss it, figure out How does this normally affect my decision process? And how do I correct for that? How do I actually take it out of the decision process? And the funny thing is. Just the very process of

38:19 identifying and kind of Going through that thought process tends to cool you down. Because all of a sudden you've kind of distanced yourself from the immediacy of the event. all of a sudden you're actually thinking about it in a different way. And so by the time you even get there, you're already calmer. you're already more rational, so it helps in more ways than one.

38:41 That's Maria Konakova from episode eighty nine, Less Certainty, More Inquiry. Check out the show notes for a link to the full episode. Next up we hear from Patrick Collison, co-founder and CEO of the leading online payment processing company Stripe. If you've purchased anything online over the past few years, there's a good chance that Stripe facilitated that transaction. We'll start this portion of our interview with Patrick's thoughts on the biggest differences in his decision making practices from five years ago up until now.

39:12 I think there are four big differences. The first is I I and I just place more value on decision speed. uh in that uh If you can make it

39:23 Okay. If you can make Twice as many decisions. Uh Half the kind of um half the precision.

39:31 That's actually often better. Um and it's but and then given the fact that sort of The uh rate of improvement of decision making with additional time almost necessarily tends to kind of flatten out.

39:44 I think that Most people, certainly the Patrick of five years ago, and potentially even the Patrick of today included, um, should be sort of Earlier. sh should be operating uh earlier in that curve. Make more decisions with less confidence. Um, but in significantly less time.

40:00 Right. uh and just recognize that in most cases you you you you can course correct and and treat fast decisions as a kind of uh Acid. and capability in their own right.

40:12 Uh and it's quite striking to me how some of the organizations that I hold in the highest regard Uh tend to do this. The second thing is um n not treating all decisions kind of uh uniformly.

40:25 uh I think the mo most obvious um Kind of axes to break'em down on are degree of reversibility and magnitude. Uh and

40:36 Things with low reversibility and you know. Great impact and magnitude. Uh those ones you do want to, you know, really deliberate over.

40:45 Um and and try to get right. But I think it's very easy uh sort of Absent care. to have maybe those mechanisms you put in place. For those decisions to seep into decision making for the other categories. And really in the other three quadrants. You can afford to be sort of

41:05 much more flexible and and much more fluid and and again, really just to prioritize speed because obviously if if it's very reversible, then you know by definition, uh you can always correct it later. Uh and if it's you know, of low import, then who cares, right? Um

41:20 Uh and so that's kind of the second one. And just being kind of cognizant of that and and before making the decision, trying to categorize, well, what kind of decision is it? Uh the third thing is Uh I now try to fairly deliberately just make fewer decisions. Uh, in that why am I making the decision? Uh, and for some kinds of decisions, you know, there are some um good reasons for that. I mean there are some decisions the CEO ought to make and is kind of fundamentally on the hook for, but there were some decisions where if I'm making it or if I have to make it, that probably suggests that something else organizationally or institutionally has broken. Uh and I think the need for a decision, uh from from anyone, not just from me, is often like only a sort of

41:59 um an epi phenomenon, uh and there's really some other underlying issue that's causing you to have to make in the first place. And so thinking about that. Uh and concretely doing more to push others to make decisions. Um and and sort of uh Pushing them back. Sort of.

42:17 ought to be the the domain experts. And then fourth. When I realized that I would make a decision differently to how someone else is making it. Uh not even really discussing the decision itself.

42:29 But trying to dig into What is the difference in our models such that you want to make decision A and I wanna make decision B? And one thing we're currently spending a bunch of time on. Your stripe is having different parts of the organization write down

42:43 what they're optimizing for, essentially, like what their mission is, what the long term key metrics are for for kind of their part of the organization. Um What who who their customers are, either internally or externally. Uh and sort of things of this kind of thing.

42:57 persistent, on ongoing, underlying nature such that Hopefully once there's agreement on those longer term things. Then maybe a difference on um uh onto any particular decision. Might just be well

43:11 Oui. Different. Sort of on what the most instrumentally effective way to achieve this outcome is, but we're sort of both really unified on what the desired end state is. And there I think I think disagreement over sort of Instrumental efficacy, yeah, well

43:27 th th that's rarely that problematic a disagreement because well, if you're right, then we'll soon learn that if you're wrong, reality will probably uh sort of make that pretty clear in in short order. I think the more troubling ones and the ones that tend to cause more kind of persistent friction in an organization are where sort of there is latent disagreement in what you're actually optimizing for. Um, but that's kind of never explicitly surfaced and uncovered. And so now I guess again in decision making uh I I place kind of more importance on making sure that we have the right sort of foundational agreement such that the kinds of disagreement that then tend to arise are of the sort of essentially more superficial sort uh and their agreement is actually less important.

44:06 Part of culture is Learning uh from the decisions the organization makes. What do you do at Stripe to make sure that people are learning and what do you do personally? to make sure that you're learning from the decisions that you've made, both positive and perhaps ones that you in retrospect would have

44:26 Um wished you could make differently. I'm inclined to say, I don't know if I actually believe this, but I'm inclined to say in response to that question that decision making in organizations is slightly overrated. Uh, in that organizations are not like Investment. Entities. Um or funds or or managers.

44:44 Uh in that Or organizations Well well, with investing, it's fundamentally very binary. There is a moment uh at which you either buy or or or don't or sell or don't or whatever. Um

45:00 And maybe it's somewhat more continuous in the case of, say, public market investing and so on, but given sort of um constraints on just decision making time, I think you have to treat it a bit more binary. You assess the stock and you make a buy or or or a Um Or not decision. Uh Where in organizations

45:16 Everything is much more fluid and continuous. It's much more about I think designing the feedback mechanisms. You know biological. Yeah, exactly. And you know, there's the famous um uh sort of um water model uh of the economy. Um uh we know with the sort of uh circulating fluids and you can vary the interest rate or the inflation rate or or whatever, but just kinda try to get a sense for the overall kind of um uh biological apparatus. Uh and I think an organization is much more like that. And so the the I think the things the things to optimize.

45:47 are the incentive structures and the mindsets and the definitions of the goals and the feedback mechanisms from the outcomes to the inputs and the work and the operations themselves and all of those things. Unless the the binary decisions. And I don't kind of

46:06 Completely. Um dismissed obviously the importance of decision making and that there are times where you've decided well, are we going to launch this product or not? Are we going to start this project or not? Are we going to replace this system or not? And so on. So there are, of course, real decisions, but I think it tends to be much more Well, I guess maybe it doesn't feel like the right unit of analysis to me. Uh I think the right universe analysis is Is that of the cell. Uh and the question is well, in an organization

46:33 What are the cells and what are the organs and and how do they interact? What are the feedback mechanisms between them? Let's geek out a little bit on the the feedback mechanisms here. What sort of feedback mechanisms do you try to make sure are in place? What point In the process do you try to acknowledge what they are? I really think that uh and this is not to evade the question, but um I really think it's too early.

47:01 to answer that. Uh in the sense that I mean I I I can kinda tell you what I think today and the sort of changes we've made over the last year and things like that. But Like Stripe has been a thousand person organization. For

47:13 Uh Yeah. A a more than five hundred person organization. Uh for just over a year. Right?

47:21 Um we're we're beginners at this. Uh and You know? Three years ago Stripe was under a hundred people. Uh

47:32 And And I think Either to uh opine as if Uh or to even more

47:42 problematically believe that we can have it figured out. Would be it would be real hubris. Um And so kind of in what we've been talking about, I think that's maybe some of Uh

47:55 where our and my thinking comes from. But but I don't know what the right answers are yet. Um And and we spend a lot of our time s sort of scrutinizing other organizations, trying to find out and and kind of reverse engineer

48:12 What works for them and why. Um And I think that part of what's interesting about the tech industry is that It's It's a kind of pure knowledge work. that we're still, I think, quite early in sort of figuring out um in in in terms of how to optimally

48:28 coordinate it. Uh and and Collaborate on it. Uh in that You can sort of draw a lineage of H P and Intel and Microsoft and Google and

48:39 Facebook and So on the yeah. What's up? Um And there are all these sort of suggestive

48:45 Examples. That I think at least Again, suggest that we may not have it all figured out. I mean the the fact that WhatsApp was such a minuscule team, and Instagram too, of course, despite operating at such a scale. Um, or the fact that

49:02 Yeah, yeah, and the way kinda Facebook operates is very different to the way you know H P operated. That's Patrick Collison from episode thirty-two, earning your stripes. Check out the show notes for a link to the entire episode. Next up, we'll revisit our conversation with Annie Duke, who not only killed it in poker, but has since become a celebrated author focused on cognitive behavioral decision science and decision education. She's the author of Thinking and Betts, How to Decide and Quit. In this portion of our interview, she's discussing best practices for decision making in business and your everyday life.

49:41 I think there's Two pieces to it. I the piece number one is that you have to really get people to feel like they shouldn't be afraid of the outcome. on any given try. Because on a single try, we don't have enough data to know whether it's any good. You flipped one coin. Right, like one time.

49:59 What does that tell you? You don't you don't have ten thousand coin flips. So you you have to get people to feel like it's okay if the one try doesn't work out. And I think that that's it as a leader, you just have to culturally, you really have to be good at communicating that. And then you have to live it, you have to act it. Um So how do you do that? Well Work the decision process through.

50:18 with the group. and actually memorialize The tree that you create. So how do you do that? You're you have decisions under consideration. Um

50:29 And what you wanna do is try to figure out as best as you can what are the scenarios that you think are gonna result. From Uh decision A versus decision B versus decision C. And then try to assign probabilities. to those

50:44 scenarios. And don't be afraid of it. That most people are afraid to sign probabilities because they think that there's a right answer. And it's true. There there is some objectively right answer. And it's likely that the guess that you give is not going to be If we could if we had some mirror into the objective reality, you know, it's probably not gonna be perfect. When I said that I was whatever, seventy three percent to get my Food back correctly. I d I don't know if I was exactly seventy three percent.

51:08 But the But the fact that I was making a try at it. Is better than not trying at all. Because if you don't try it all, you're either saying that that well, you're certain it's gonna turn out in a certain way. Or you're saying something like, Well, it either will or it won't. I mean, the fact is that it is probabilistic and you're probably more of an expert than anybody else because you have your own experience in making these kinds of choices. You can certainly go and look at

51:31 you know, there's all sorts of business cases and there's data that you can go look at to try to refine. um that gas and The desire to make the guess makes you very information hungry. So it actually makes you more open minded because now your goal is not like I have to have the right answer. It's I want to try to get as close as I possibly can to what the objective probability is. And I can only do that. by getting lots of information or listening to people who have different points of view so that I can start asking myself, like why why might this be wrong? Might why might I be off on this?

52:02 Um, and going back and just constantly trying to refine and get that feedback. So it causes you to be really information hungry. It causes you to view uh other people's perspectives as incredibly helpful. Again, it's that sort of identity shift around it. And so one if you can do that, if you can sort of get, okay, well, here's here's how what I think the outcomes of this decision might be. Here are the probabilities. that I think that those might occur with.

52:27 And then in that process make sure that you're really wrapping in the dissenting voices. This is very important. Um, and you can do that in a variety of ways. One is that you can do, you know, you can create red team, blue team. So you just create a team of people who are supposed to argue against Um

52:44 You know what the prevailing opinion is. If you have uh people in the room who really disagree on what the probability of a particular outcome is, which will happen. Force them to change sides. And we disagree. You're at thirty percent and I'm at seventy percent. Wow, we're way off. First of all.

53:01 Cool. we're probably gonna learn something through this process. That's actually much more exciting than us agreeing. If we all agree. Right. Now this is really exciting because you and I are pretty well informed. We're on the same team, we're in the same company, we're kind of working with the same information, and yet we really disagree about about the probability is That's exciting and that's good for us. Somebody has an opportunity to update their view. We might just not know who that person is at this point. Or we might all update our view. Because we might all come now to something that's more in between. Yeah. Right. But m now make us switch sides. You now have to argue my side that I'm seventy percent, and I have to argue your side that you're thirty percent.

53:38 And the people in the room are gonna judge who wins the debate. In other words, not who's right, but who's the better arguer of the other side. Notice that makes me construct The best version of your argument. My goal is to be able to argue it better than you could because I want to win. Right. Right. I want I want the people in the room to judge me. And what's really wonderful then is that now I'm going to start thinking about, well, why, why are we so far apart? Why does he think it's 30%?

54:05 I'm likely to probably moderate my view. you're likely to probably moderate your view and everybody in the room is now gonna learn because they're exposed to what our process is. That's wonderful. And now Let's say most of the room agreed with me. And you were this outlier at thirty percent, you get a chance to have your voice heard and your voice is now represented.

54:25 in that scenario plan that we've now created. So that's a great way to do it. Um, another way you can do it in order to really make sure that you're getting those, you know, why might it go wrong and those dissenting voices is to do what's called a pre-mortem. Which is examining the patient before it's dead instead of after. So imagine, okay, we have this goal as a company. We wanna increase sales by X amount.

54:49 Let's imagine and that's say a goal that we want to have. It's a two year goal. Um, let's imagine at the end of two years that there's a newspaper that says we failed, we did not reach our goal. Let's all everybody in the room now write down five reasons why we failed. And now what happens is that Very often in these these rooms you end up with this team player problem. Everybody wants to be seen as a team player. Everybody wants to be seen as agreeable.

55:13 Everybody wants to be seen as sort of like we're winning the game because we're all so smart and like cheerleaders. When you do a premortem, now you've changed what it means to be a team player, right? Like the people who are gonna get pats on the back are the ones who come up with the most creative reasons for failure. Right. And that's uh gonna allow you to now anticipate sort of where things might go wrong. It's gonna allow you to wrap that into Uh the scenarios that you think might occur. It's gonna allow you to adjust the probabilities of success or failure.

55:41 Okay. So you go through Those kinds of exercises you create Now okay. We're gonna go with decision A. Here are the scenarios we think might occur. Here are our stabs at the probabilities.

55:52 and you memorialize it. So now When the thing happens. That's right up there on the whiteboard. You took a picture of it.

56:01 that didn't work out. And it's got that Percentage by it. You know, okay, well, we thought thirty three percent of the time this was gonna happen, it was gonna be bad. It makes it very hard to result.

56:12 Because you how do you go back and say our process was really bad? It's like well here it was. Right. We kinda knew it was gonna happen. So I think that that really allows you to now focus much more on what's the process for getting us to understand what the decision is. And obviously, as the future unfolds as it does, you can go back in and examine and say, you know, did we miss something? in that process, or was it just it was the twenty seven percent. you know, where our probabilities right. Like you can

56:40 Ask that, but you've done it all together. Right. I like that a lot. One of the differences that I see between poker and maybe organizations, as in poker you're making very individual decisions. You're the person making the decision. You're responsible and accountable for those outcomes. Those lines in organizations tend to blur in the sense of Sometimes you're responsible for implementing somebody else's decisions. Sometimes they're responsible for implementing yours. And sometimes you come to decisions as a group instead of an individual. How does that affect how you think about this?

57:14 Well, first of all, I think that the the process for coming To what the right decision is. um can be similar regardless, because what I was doing was certainly in the moment I was making my own decisions, but it was my responsibility to go talk to the people who were my peers that I was trying to learn with. and work through and Deconstruct those decisions and talk about strategically what I might be doing in the future. So, in some sense, that's a similar problem, right? I have to go execute on my own.

57:40 But I'm I'm interacting with a group in order to try to figure out what my best strategic plan is. And I think that that's actually in in large sense very similar. Um That being said, obviously it would be really nice if I could go through a group decision making exercise at the table, but that would be bad because it's one player to a hand and you need to play on your own. So Um, but I actually don't think that it's that dissimilar. And I think that you can sort of view as a leader the same thing that yes, the person has to go execute on their own.

58:08 But It's my job as a leader to have worked through. what the process is and what the strategy is with that person before they go off and execute. So that we're all bought in. And they and I understand what their reasoning is. They know that I've bought into the process. They understand that. I know that there's some probability that it doesn't work out, but we've agreed that as they go and execute.

58:30 that they're gonna, you know, they're gonna execute on this plan and then they're gonna come back and we're gonna discuss later to see how we might refine in the future, but they're not gonna be held responsible for the bad outcome. they're gonna be held responsible for having worked through the process together. And that's actually this very similar actually to poker. So I'm executing on my own, but then I'm going off to my group and saying, Hey, can we deconstruct this session that I played? So that I can start thinking about What are different lines of play?

58:57 And if I make these kinds of decisions in particular situations, what are the different ways that I think that could turn out? And let's start thinking about strategically what I should be doing so that when I go back and execute on my own, I'm sort of executing what I've learned. And what I've I'm sort of bought into in terms of process. Do you keep a decision journal? Um I actually don't I'm not a journaler and I I wish that I were because I think it would be way better.

59:24 I'm much more than I've been. journals as you were like Meteoric rise and highs and lows associated with that. So I think I think that people learn in different ways. And for me, the way that I really learned was through conversation.

59:43 With others. The way that I found that I was best held accountable to my own ideas was to expose those ideas to other people. And have them challenge. And have them challenge. And that's just my learning style. Um When I imagine

59:59 A decision journal. The kind of decision journal that I imagine would be H you know Go talk to people about what you've changed your mind about today. Right. It would em all involve, I think, go talk to other people, go find other people to speak to. Go. You know, and then I also

1:00:18 Because I had that group, when I was on my own and I was kind of thinking about those things on my own, I was always imagining it as if I were talking to somebody else. You know, so for me that internalized conversation of the group. became my own journal. Um you know, as opposed to physically writing it down. It it's interesting, though, because this that, you know, even in the writing process of writing the book,

1:00:42 Um I don't write a whole lot of drafts because most of my drafting is in my head. I'm like w you know, I'm like you know, in yoga, and I guess this is bad'cause you're supposed to only be on your map, but in yoga it might be, you know working through some ideas or

1:00:56 um, you know, walking around or I'm driving or whatever it might be, I'm actually composing in my head And I'm working through the structure and the arguments, and then I'm sort of imagining Talking about those with other people and trying to refine them. And then I do talk, well, here's what I'm thinking about. This is what I'm thinking about writing in this section. And um

1:01:16 bouncing it off other people and trying to hear what they have to say. and how it's playing with them. And that's actually a lot of what I do a lot of keynoting. And that's a lot of what that is, is your your putting these ideas out to the audience and then sort of seeing how they respond.

1:01:30 Back and getting that feedback, and that's allowing you to figure out your narratives and the way that you're expressing it and whether you think the ideas have fidelity. What how are you being challenged when the people come up to you afterwards? So by the time I ever get it down on paper, it's been really well journaled. It's just been journaled in this way that I have my mind happens to work really well. What information would you require from somebody else to or would you want from somebody else to judge the quality of their decision not knowing the outcome?

1:02:02 Well, I think it depends on what the decision is. Um What I think is really important that you bring up is that there is that there are details that I need to have.

1:02:12 Um А найдет you have to think for yourself. in whatever you're doing. And you can work this through with a a group of people who are also experts in whatever you're doing or trying to become experts in what you're doing or what are the details that you always need in order to construct a good decision, because you know that for yourself better. than I do. I can tell you from poker, for example, there's all sorts of details that I need.

1:02:35 They be in poker, yeah. Sure. I need to know how many people were at the table. Were you in a cash game or a tournament? If you are in a tournament, what point in the tournament are you? How close are you to the money, for example? Have you already made the money? These kinds of things. In a cash game, Um have you been winning or losing recently? What does your stack size look like? Is it, you know, what's the form of poker that you're playing? Are you in early position, middle position, late position? In other words, where exactly are you sitting at the table?

1:03:03 What was the action? Prior to the hand. prior to the point that you have a question for me. Were you the pre flop raiser? Were you so this is all jargon. You keep going. This is awesome. Um were you the pre flop raiser? Did you call? How many people were in between you when you called? All you know, so

1:03:20 Because I can't The problem is that if I don't know some very simple facts, like were you first to bet or second to bet, or d were you the raiser or not the racer? Or How had the people been playing around you? Like w was the person that you were playing against were did they tend to be looser or tighter? Um

1:03:37 Any of those questions, what did the board look like? Then There's literally no point in me giving you any advice because I'm not gonna give you an advice of any fidelity. I was actually talking to a friend of mine, Liv Bourie, who very early on early on in her career, I uh mentored her and was working with her in terms of she's a very, very good player now, but um way back when when she was first learning, I was working with her.

1:04:00 And She I was talking to her about it the other day. I said, Do you remember when you first started playing with me and you come and describe a hand to me? And I was a little bit Eric Sidelish here, and I was like, Well, there's no point. Um, because you're not I d have no idea, like where were you in the action?

1:04:16 Like you can't tell me all three cards that came down on the flop. Uh I don't know who raised or who didn't. Like you just described a hand where you were the pre-flop raiser and somebody called and then somehow they checked in front of you, but they weren't in a blind the but like it doesn't even make any sense. So why should I give you advice? It won't help you. It was vague and lacking information or context. Right. So that I If I gave them advice, it her advice in this particular case, it wouldn't have helped her. Because

1:04:43 I would have just been like making things up because I didn't have the detail. So you can think like you can imagine fitting this. to whatever you're doing, figure out what the details you are. If you're in sales. Figure out what you need to know. Like I mean I can imagine Um

1:04:59 that there are certain things you need to know, like where in the sales cycle are you, where in the fiscal year are you? I in, you know, uh What was your relationship with the person In the other company? Did you have other relationships with people in the other company, or was it just you just had one point person and how had things gone in the past? Um, you know, what kind of uh during the conversations, what were they telling you about where they were? Like what w how were they describing

1:05:24 how they wanted to continue to have interactions with you. Was it vague? Was it, we're gonna set a date to be able to do this? What are the strategies that you were using? How did you figure out how to figure out when you were interacting with them and when weren't you, you know, I mean w I'm making this up, but I assume that these are I uh maybe salespeople can write you and tell me that was the most ridiculous thing that anybody ever said. But the point is like you should try to do that for yourself.

1:05:50 I I think like understanding the situation is great, knowing what information that the person had at the time making a decision is super important. Are there anything else that comes to mind for you in terms of how you might structure what you would want to know from people? that may be less situation dependent, more like what range of outcomes did you think was possible or So when you're actually working through a decision with someone you want context for one thing. So I would want to know

1:06:17 Um, how things had gone in the past for them with other decisions. So in other words, what was I first of all I want to know how things have been working out for them sort of over the long run. So like I'll give you a really simple example. If someone's coming to me and complaining about a problem that they're having in a relationship. It's good if I know how things went in all other relationships. So

1:06:38 If they're telling me Uh this person I've been dating is such a jerk. And I know that the last ten people But they have all been jerks, that changes the way that I'm thinking. About the

1:06:51 what, you know, what kind of advice I might be giving them or how we might work together more importantly through the decision than if the last nine people that they Um, and now they happen to be with a jerk. You can see how that really matters that context. Um, yes, I wanna know when you were working through the decision. What

1:07:09 information was informing. the decision that you were making. what were the possibilities that you thought Could happen because maybe I disagree with you. Maybe you say to me I was 70% that this was going to work out really well. And I'm like, uh, that seems high. So now I can quiz you on it. Well, why did you think it was seventy percent?'Cause gosh, it really feels lower to me.

1:07:29 So let's explore that together. And see why that is. I wanna know the you know, particularly I want to know the information that you were pulling. um mainly in order to drive the decision. Why did you make this prediction in this particular way? Because maybe I have information that

1:07:46 You missed? That I can now provide to you. Maybe I can start quizzing you. Well, do you think that there it can you think of any information that you could have brought into it that maybe would have made you make a different decision? What is it that you

1:07:59 Do you think you could have found other information in retrospect, what w you know, did you go you wanted to go toward a certain conclusion and so you drew this particular information that you had or this detail or whatever it might be. Well, what about all this other stuff that existed out in the world? Like why weren't you considering that? Um, did you ask yourself why it might not be true? Did you seek out the advice of other people? Did they tend to be people who agreed with you? Were you asking people who disagreed with you? Did you ask anybody why they thought you might be wrong? Like you you know, these are all the kinds of questions that you're always asking yourself if you really want to be a good decision maker and hopefully If we're in a decision pod.

1:08:38 Part of what I'm doing is asking you those questions. Because I know that because of the way that your mind works, you're just less likely to ask them of yourself. So am I. I'm less likely to ask them of myself. But it's easier to ask other people when you're part of that group or tribe. Because we have an agreement to it. And I think that what's really cool about that kind of agreement. Is That

1:08:58 Going back to the idea of how do you disagree without being disagreeable? Again it I think it depends on how you view the disagreement. Because

1:09:08 If we'd agree if we if we have an agreement that you're gonna help help me with my decision making, you're gonna help me construct an accurate view of the world. If you withhold information from me Now that's hurting me. You're violating our agreement.

1:09:23 By not giving me a perspective that disagrees with me, if you have one. You're violating our agreement by not sharing information that you have that might moderate my opinion. Downward. That's Annie Duke from episode thirty seven, getting better by being wrong. Check out the show notes for a link to the entire episode.

1:09:46 Last we look back at a conversation with my friend Toby Lupke, the co founder and CEO of the e commerce giant Shopify. Toby is back on the show again in a few weeks with a brand new three-hour sit-down conversation with me in episode 152. The clip you're about to hear is from episode 41. Toby is one of the most thoughtful and intentional business leaders I've ever had on the show. and his thoughtful process when it comes to decision making and how he learns from some of the mistakes he's made,

1:10:16 is a fitting way to end this themed episode. Here's Toby discussing. one of those times he made a mistake in decision making and how he learned from the process. Taken from episode forty one, The Trust Battery. I don't know what the hardest decision is that I ever made. I can tell you one I

1:10:36 Did the worst on. Um It was the most important decision which I Took too long to make. Which was um

1:10:45 So again, Shopify's story is a little bit different from most venture backed and than public companies. Um In the way that Uh you know, it started with snowboard selling Um So it was actually profitable.

1:10:57 there. And then I stopped telling Snowboys to focus completely on building Shopify. And then for a lot of work, you know, and many years. Um Eventually Shopify became a profitable Company, etc.

1:11:10 Um But it was a Um, my goal was I wanted to build world's best twenty people. lifestyle business. That was really my

1:11:19 Uh Shopify. You know, but way like I just didn't love the idea of venture capital. I'm I'm European, so I tend to think that companies exist to make money at a certain point, you know, like it just seems like

1:11:33 So um using other people's money to, you know Just try to growth over everything. It's like it just it just seemed wrong to me. But I had lots of evidence that

1:11:45 Shop if I really was a growth company. Like it it's like the venture capital model is For a certain kind of business. And um It's a really good fit for that kind of business. And I

1:11:56 I think I knew that Shopify was one of those companies. And then I kind of artificially constrained it. So the decision I didn't make. Was Can I and should I transition Shopify from being a lifestyle business to a

1:12:09 Grove business. And um The reason like the reason why I ended up uh like so so I feel now that um I was the limit. I was the um

1:12:21 The bottleneck on potential for Shopify for like a good year and a half period in which I just drag my feedback in this call. And I I'm so um traumatized from that. I never want to be a bottleneck of a company again. And this was another one of those things that just pushed me into like I need

1:12:38 p to look af after my own personal growth. I need to be ahead of where the company needs me to be at and so on. And um Um You know, eventually I made the decision in a very sort of data driven way. I I I saved up some money instead of investing it immediately into hiring someone new. Um

1:12:54 Once I had Like fifty thousand dollars saved. I Took Five ideas we had. But

1:13:01 you know, like of marketing ideas or ideas to how to grow Shopify. And just funded all of them at the same time and said if two of them work, we are really a growth company that's being s being held back. Uh by its resources. And um Uh they're all five booked. So uh it became super bloody obvious, yes. Um

1:13:19 It became very, very, very obvious. Y you mentioned uh you took too long to make the decision. How do you think about uh speed when it comes to decision making internally? Yeah, the most important thing I I I tend to talk with people about this a lot. I think the most important thing that people have to understand is how undoable is a decision. Like if if an idea is f fully undoable, it's it's I want people to almost You know, make it as quickly as we can. Um

1:13:44 So Um the problem is that The You know, you can never un V C fund yourself. So Um when an when a decision is something that you can't take back, then it's worth really, really understanding.

1:13:59 So in terms of like decision making, I don't think I I I can teach terribly new things. Like it's The most important thing is um Get all the context and then make a decision. If you just do that. You already

1:14:11 Doing a better job than the vast majority of people in business because almost everyone makes a decision and then gets data to support that decision. So so that you you're already out ahead if you do that. And then um Um, your skill in decision making is directly proportional to your quality of information acquisition.

1:14:29 So Um How good are you at making decisions? Um, like how good are you at acquiring information? How far can you go? Um How many resources do you have? Do you have ability to go directly to a database and ask it question? Now you have ability to call the right people up to to to ask them about their experience. Did you read

1:14:47 the books already, which um uh allow you to sort of Identify a situation as something that's like something else, where you can go and reread it to s figure out, um, are you considering the same fact. Um

1:15:00 So that m both things are um uh the things that you need to cultivate as a uh as a skill. And then lastly Um, one thing I started really early which was has been exceptionally useful is um when and ever since this decision of um Turning shop find or growth company occurred. I tend to take um

1:15:19 Uh then I have a to do a major decision. I I I I I have a small log file. May I just put one paragraph in about the decision I made. And um um what information I consider to be the most important one which pushed me into uh in into the direction. And then um I uh I just sort of revisit that every half year, um and just say

1:15:43 Was I right about this given? benefit of hindsight because eventually you know if your decision was right. And so it's it's actually If you if your job is to make decisions, it's worth treating it like any other kind of uh thing to be to b get better at. And uh so this this allows you to do it.

1:15:59 W what have you learned from going back and reading that? Not not about outcomes of decisions, but maybe more about the process by which you use to reach a decision. Yeah, I think um uh Kahneman calls it hindsight bias, right? Like S V if you have a very, very strong uh bias to uh Um underestimate how difficult it was to make a um uh uh decision and and and really um Um Uh

1:16:25 Just just just treat difficult decisions that were made as if they were obvious. all along ba because you now have all these additional information afterwards, right? Um So it kills you of that.

1:16:36 To a degree. Which is really, really, really helpful um for anyone who leads people. Um It's also um Like I've just learned You know, every single time I got a decision wrong, uh, which is

1:16:48 Happens. Um Like I found that the piece of information I was missing was actually totally available to me. And I just

1:16:56 You know, I I just didn't go get it. Um is it because you didn't get it or you didn't realize it was going to be a relevant or salient piece of information? Usually I didn't I just didn't pull it in. Uh it's like You thought about it, you dismissed it. Yeah, like I you realize um Like Hey, um This was a thing that would have actually made me change my mind and and th that person knew it already.

1:17:16 Um and so I didn't I didn't go to ask that person. So I didn't And d do you think subconsciously that's you going like I know this bit of information might make me change my mind, but I've already made my mind up and I don't want to have to do the mental labor of going back and then Uh and that happens and then you have to be honest with yourself, saying, Hey, you know, how would you want to make decisions based on what the best ideas or based on being right in a way or getting your way and so on. Again, you need like This is why it's a good practice because it it just forces you to recognize when you're making mistakes, right?

1:17:49 What's the most common mistake that you see people make over and over again? Um Uh it's it's it's uh people are terrible at. Deciphering. Um

1:18:01 Uh cause and effect. uh or even correlation, um versus causation, right? Like again, I said this earlier. Um Systems thinking is the best cure for this kind of thing, but Um Like there there isn't always a cause for things. There we're much more often there's a system that just reinforces something. Like

1:18:20 Everyone's complaining. Why is every like why is all of them the word of business um so short term focused. Well it's because Wall Street wants quarterly reports. Right. Um so Uh you know, the it's it's it's it's system reinforcing the thing that you want to fix. And then People love putting Hex on easily identifiable

1:18:39 problems um and then think the problem goes away even though the full thing that's reinforcing this is not uh is not being addressed. So that that's that's what I see. Um see a lot. You keep bringing up systems thinking. What does that mean to you in terms of how you want people to apply it here at Shopify? Yeah, I mean systems thinking is um teaches you to draw diagrams of a certain kind, right? Like which really are the like, hey, let's zoom out, let's declare Um

1:19:07 System of but all the stuff that doesn't matter. But within it. Let's really figure out what forces exist and how they Uh like how they balance uh the loops, how they

1:19:19 Reinforce the loops. Um And once you do that. You can then For like Part of what is so great about just this exercise.

1:19:28 Is um It is almost impossible for room of people To um Like Everyone in the room can talk about the same thing and mean completely different things.

1:19:38 But if you're writing a Like a systems diagram on a whiteboard. Afterwards there is sim Like Versus Sync. Like if someone has an assumption about that system working differently, that will come up.

1:19:51 And so I think this is that's why it's so powerful. So that's the actual way of how I want I wanted to exposing it it forces people to expose how they're thinking about something in terms of interactions, which allows people to kind of challenge Oh, I don't think it's that way. And then you get to a better uh deeper version of reality or understanding through that. But there's also this entire other thing that's also acting on this. Is that relevant? And then everyone's like, Oh my God. You're right.

1:20:16 And then suddenly you make progress against you know, coming up with a solution. I think that's a great point to leave this, Toby. This has been a fascinating conversation and maybe we'll continue for part two next year. Awesome. That's dead. Take care. Yeah, well I'm happy that we made it work out and that you got to be in my home town. Philadelphia. Philadelphia, yes.

1:20:48 Thanks so much, Fankate. This has been great fun. I really appreciate you taking the time. The conversation was amazing. Yeah, it's a lot of fun to be here. Thanks, Shave. Thank you so much. Thank you. Maria, this has been a phenomenal conversation. I want to thank you so much for your time. Thank you. It has been really interesting and thought provoking. You've uh you've asked questions that nobody has ever asked me.

1:21:12 Thanks for listening and learning with us. For a complete list of episodes. Show notes. Transcripts and more. go to fs dot blog slash podcast or just Google the Knowledge Project.

1:21:25 Until next time.

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