Systematize Success #20 - Fear, Decision-Making & Avoiding the Easy Path
Fear, Decision-Making & Avoiding the Easy Path
Hi Friends,
And happy Monday!
Most of the time, people make decisions based on the past only.
Actually, worst than that: based on their past only.
But, as we say in finance: “Past performance is no guarantee of future results”.
It implies that, more often than not, we should go back to first-principle thinking.
But thinking for ourselves is annoying, cumbersome, riskier and scarier than going with the flow.
Sticking with the trending opinion is the safe choice.
Until it is not.
Like this:
It feels like this essay illustrates this idea extremely well:
How timeless is timeless advice? 12min
Things you want to look for when evaluating strategic decisions:
Compounding
If the outcome of your decision will compound, insource. Your personal financial strategy, for example: the dollars in a given financial decision may seem small, but the compounding effect of finance makes the outcomes highly consequential, such that the seemingly small benefit of insourcing is larger than it appears.
Reversibility
Can the decision, once made, be reversed? If not, insource. Career paths and partners are hard to reverse.
Stereotype
If you’re making a decision because it’ll help you fit in, you should think twice about it. People often travel to fit in, and they subconsciously understand this: if you didn’t post on social media about your trip to Cabo, did you really go? Not all cultural consensus is bad, but stereotypes are a form of ill-supported consensus, so they’re worth questioning.
Iteration
If you do something repeatedly, like reading the news, you should think more deeply about how and why you’re doing it. Sleep, diet, and entertainment also fall into this category.
Magnitude
This one is most intuitively obvious. If the decision you’re making is obviously big, like your choice of career, it’s worth insourcing.
Examples:
Should we read the news every day?
Trusting news institutions is outsourcing your worldview.
Should we buy houses?
Consider the IRR opportunity cost of the down payments: how could you invest that money towards your future? You could invest into equities in the literal sense, but you could also be betting on yourself or your family with that money – investing in education (e.g. a tutor or coach), better sleep and fitness, or starting your own business.
Should we prepare for a rainy day?
This is good advice for most people – if losing your job would put you or your family at risk, high savings is a must. However, in the tech sector specifically, there is high employability, so you don’t want to over-optimize for downside protection. Insulate from existential risk, but beyond that, there are highly diminishing returns to savings.
Should we get a stable job?
Starting in a professional role narrows the band of outcomes, so you’re less likely to fail, but no more likely to have outlier success. A lot of careers – consultant, lawyer, banker – are still good, but they were timeful for the mid-20th century, and there are much higher leverage opportunities today if you look for them.
Should we travel the world?
Most tourism is highly curated, such that it doesn’t enable learning about new cultures at all.
If you’re looking to explore new ideas, you can find differentiated viewpoints and cultures right around the corner, if you look in the right places.
Once you escape the filter bubble, the Internet is also a good place for finding differentiated viewpoints.
Should we be in no rush to find love?
Should we avoid talking to strangers?
You're not talking to enough strangers. The internet massively unlocked our ability to reach anyone in the world at any time. Use this to your advantage.
Concluding my point on two very short but very incisive essays by Ben Horrowitz.
For those who don’t know him, he is one of the most legendary Founders/CEOs from the first tech bubble (2000-2001), and one of the two co-founders of a16z, one of the top VCs in the world.
He also wrote two brilliant books that I strongly recommend to anyone in management. I have them summarised on my website for you: The Hard Things about Hard Things & What You Do Is Who You Are.
He always speaks from a CEO’s perspective, but I find his teachings apply to anyone in a position of leadership, ownership, or autonomy.
Most importantly, it elegantly builds up the previous essay: ultimately, nobody cares about your fears to think things right or about why you stuck with the easy decision.
In the end, the only thing that truly matters is the result.
Your result.
Which way you run is often the key differentiator between effective and ineffective CEOs. Almost all CEOs know where the problems are, but only the truly elite ones run towards the fear.
Nobody Cares 1min
That might be the best CEO advice ever. Because, you see, nobody cares. When things go wrong in your company, nobody cares. The press doesn’t care, your investors don’t care, your board doesn’t care, your employees don’t care, even your mama doesn’t care. Nobody cares.
And they are right not to care. A great reason for failing won’t preserve one dollar for your investors, won’t save one employee’s job, or get you one new customer. It especially won’t make you feel one bit better when you shut down your company and declare bankruptcy.
In the end, nobody cares, just run your company.
Please don’t forget to share if you think this type of insights can help others:
Thanks for reading, and have a decisive week,
V