Why everything we’ve been taught about quitting is wrong — Annie Duke

Annie Duke  00:01

This comes to the first problem with goals is that once we set that finish line, we grade it, pass, fail. If you quit a marathon after mile eight, you fail. If you cross the finish line, you pass. So the progress along the way doesn't matter, right? That's not the way we think about it. So this is one of the problems with goals, is that once we set a finish line, they're graded, pass, fail, and we will barrel toward that finish line Come What May broken leg or not, any signals from the world. Nobody's buying the product. We clearly have an achieved product market fit, and it doesn't look like it's on the horizon. We'll keep developing the product anyway, because we have a finish line and it's graded, pass, fail.

Brett  00:48

Welcome to in depth, a show that surfaces tactical advice. Founders and startup leaders need to grow their teams, companies and themselves. I'm Brett Burson, a partner at first round, and we're a venture capital firm that helps startups like notion, Roblox, Uber and square tackle company building firsts. On the in depth podcast, we share weekly conversations with startup leaders that skip the talking points and go deeper into not just what to do, but how to do it. Learn more and subscribe [email protected] for today's episode of in depth. I am thrilled to be joined by Annie Duke. Annie is a retired poker pro, and she joined first round as a special partner focused on decision science. Over the years, I've seen firsthand how Annie has transformed the way that first round approaches our investment decision making process. She's also the author of the best selling book, Thinking in bets. In today's conversation, we're talking about her follow up to that book titled quit, the power of knowing when to walk away, which was just released this week. Quitting is not a popular topic in startup circles. It's almost like how actors won't say Macbeth inside a theater for fear of bad luck and history is marked by success stories of founders who refused to quit, even when just about every signal was telling them to do so, but Annie offers a counterintuitive approach. She dives into all of the misconceptions about quitting and makes the case that it can actually be a superpower rather than a weakness. Annie explores the psychology behind why it's hard to walk away and tactically what folks can do to get a clearer picture of the decisions ahead of them, rather than being clouded by biases, she also offers specific advice for advice givers who are trying to nudge someone to change course with tested tips for getting your message across gently yet firmly, while just about anyone can benefit from Annie's approach. Founders in particular, have tons to learn from her tough love advice. And if you've enjoyed the episode, be sure to check out her new book, where she dives even deeper into everything we discuss in today's conversation. All right, I'm excited for the conversation, Annie. Let's make it happen.

03:18

All right, here

Brett  03:19

we go so in building venture backed technology companies, I'd say in general, we kind of pray at the altar of never quitting or giving up. And I think that there are good reasons for that. We've seen in companies that we've partnered with, like Roblox, or notion it often takes years and years and years of grinding to get to that inflection point. You also just recently solid in figma, a similar story of years and years of building and iterating and pivoting to get to a very, very large outcome. And so I'm curious, what do you think is wrong with this line of thinking?

03:51

Oh, gosh. Well, first of all, let me just say a little bit what's right about it, and then a little bit of a redefinition, if I can. The first thing I want to say is like, I know that my book is called quit, but in no way do I want to say that grit isn't an important trait. It's not a muscle that you should develop. Because the thing that grit does to your point is it gets you to stick to things that are worthwhile, but also very hard. And most of the things that we do that are worthwhile, that are going to change the world. Are going to have periods which are really, really difficult, and grit is what allows you to power through that. Where we go wrong is in thinking that grit is just good period. So it's true that in order to be successful at something, you will have had to stick to it. But that doesn't necessarily mean that sticking to something makes you successful. And so when we look at something like a notion or a Roblox or a figma, there's a temptation to say, sticking to it is just good. But the problem with that is that that grit that we can show that allows. Allows us to power through things will also get us to stick to things that aren't worthwhile. And there's value in understanding the difference. Because if you have a founder who's incredibly brilliant, who is really gritty, who has the ability to change the world, and they're butting up against a problem that is insoluble, that's never going to work. They can't achieve product market fit. They can't get into the market that they want to and start to grow. And it's very obvious, looking at it, that it's never going to work out. It doesn't make sense for them to keep pounding at it. Because while you might have the temptation to say, but Roblox or but notion, we know that those situations are somewhat rare, and we need to be able to tell the difference between when there's enough of a probability to be able to achieve that kind of outcome and when it really is someone just really, honestly wasting their time when They could be switching to something that would absolutely change the world, and that's where it gets really hard, because it's hard to tell the difference between those two. But even so, you mentioned the word pivot, and we know that, for example, with notion there was a pivot involved, well, a pivot is a quit. And I think that we also need to remember that that quitting isn't just about the whole thing we're doing. We're pursuing a company and trying to bring it to exit. It's that within a company, when we start to think about developing products, or we start to think about projects that we might engage in, or we're thinking about strategic initiatives, or what our strategy is, or are we going to be B to C, or B to B, or whatever it is, that when you butt up against those things within the larger goal that you have that aren't working, we also have to be able to quit those and that when you see these situations where things look on the brink of death, and then they sort of rise from those ashes into Success, there's a lot of quitting that's usually happening. They're not just pounding their head against a product that isn't working. They go back and they hide in their room and they completely redesign the whole thing, and then all of a sudden you have notion coming out of it. So

Brett  07:12

building on that, when you've looked at these, what we would define as slow bake or long build companies. Do you think more often than not, they were executing the way in which you think is optimal. Or no, they just, if you get 1000 people to try to do the thing, one out of 1000 it'll work.

07:34

Yeah, you know, I mean, it's the thing is, it's hard to say, but the base rates would tell us that it's the latter. And that's the thing that I think that we have to remember right now, in general, there is going to be a difference between people who are sort of pounding the same pavement, and it just takes a really long time before they hit, versus people who are pounding the pavement and then they figure that pavement isn't working, and then they what we would call a pivot, But which is really a quit while keeping the company sort of intact, right? Like, I'm still pursuing the same company, but now I've made some sort of switch within it. I think that those tend to be the ones that do better. The fact is that it's going to be very rare when you get feedback from the market for that long, for five years or 10 years, that you're sort of banging against the same wall and you're trying to develop the exact same product or the same community or whatever, that it's the case that you're supposed to necessarily keep going. Because I do think that that will happen sometimes, but the question is, is it going to happen enough of the time? And I think the answer to that is probably not, how

Brett  08:43

do you think about the individual relative to the system? Meaning, and we should re explain what base rates are, because it's such a powerful idea that you've taught me over the years, that tends to be underappreciated, but meaning that the base rate could be very low. So that means that the average individual stepping into the system doesn't make sense, but that the one in the 1000 is so transformative that broader society where it works for the whole do you think about that at all?

09:12

So yeah, so let's start with just reminding people what base rates are. It's how often does something happen in the situation that you're considering? So there's all sorts of examples of base rates. An example would be how often year over year in any given fiscal year is the stock market up from where it started at the beginning of the year. That's a base rate. I think, depending on how you calculate it, it's, I think, somewhere around 70% 75% of the time the stock market is up. And what that means is that it doesn't matter if, over the last five years, it was up all five of those years the next year, unless something significant has changed, but the next year it should be up about three quarters of the time. As an example, we can think about base rates, which we've talked about in terms of valuations. So. If historically, the top SaaS companies are valued at about 16 to 20 times revenue, then if all of a sudden there's one year where they're being valued at 40 to 60 times revenue, that would be odd compared to the base rate. Now that doesn't mean that that valuation might not be true. It means that something has to be really substantially different than other companies, or something has to have substantially changed in the environment. That would make you think that the base rate that you had calculated before it didn't hold anymore. So I'll give you two examples of that. One would be if you look at the valuation for retail companies, it was very different in the 90s than in the early 2000s in the odds. And the reason was that retail went from brick and mortar to online, and that's a paradigm shift. So at that point, you wouldn't use how has Walmart or Kmart or target or whatever been traditionally valued in terms of trying to figure out what the valuation for Amazon is, because there's a paradigm shift. Another example of that would be, it doesn't make any sense to look historically like, say, over the last 100 years, at either the strength of hurricanes or the frequency of hurricanes, because we know that there are big shifts in average temperature and how warm the ocean is that are pretty recent, that are making hurricanes stronger and more frequent now. And so those base rates wouldn't hold, because something significant has changed about the world. So when you're asking me about, you know, if it's one in 1000 that are actually going to be able to break out in that way for those slow bake companies, does that make sense? We're really talking about a base rate there. And your question is, in that case, should we expect that there would be something different than the reference class that you're thinking about, which is sort of of all companies that are being started? I hope that's a clear definition of base rate. I'll throw that back to you to see if it's clear. It

Brett  11:57

is, I guess, before we loop back to the original question, can you explain, maybe why this idea is so useful and maybe why it is often not used? Sure.

12:09

So the way that people actually make predictions, and forecasts tend to be something like this. You get some information, you're sort of thinking about it in relationship to your own experience, and then you make a forecast. Well, I mean, here's a simple example, like you're sort of making predictions for yourself about how long it's going to take to finish a project. So you're thinking about, what's the project, what do I sort of have to accomplish in order to complete the project? And then you sort of make a determination for yourself, how long do I think it's going to take? The base rate asks you to do an extra step, which is to say, don't just sort of look at the information that you have and then think about it in relationship to your own experience. Take one step in between, which is, look at the information you have, think about the problem you're trying to solve, and then try to figure out how that generally goes, before you start to think about your own experience. And the reason that you have to do that is because the way that we look at the world, our perspective on the world, is actually quite riddled with cognitive bias. So there are things like availability bias, for example, which is just the things that are easier for us to recall we think of as more frequent. So we want to go and look at a base rate, because that's going to help us sort of solve that problem of our own availability. So as an example, if I were to ask you to estimate the probability of a terrorist attack on US soil, your estimate would be much higher than what the actual base rate is. And the reason it just is it's easier for you to recall because those things tend to be on the news, and so we think about those as more frequent than they actually are, because ease of recall becomes sort of a proxy for our judgments of frequency. So we'd want to actually go look up the statistics on that in order to discipline that. And that's true in every way, like there's something called the planning fallacy. So if I'm trying to figure out how long a project is going to take, I'm going to tend to underestimate how long it's going to take, and I ought to look at the base rate for that. There's also something called illusion of control, which is that we think we have more control over outcomes than we do. This is also included similar to this as the gambler's fallacy, that we think we have a higher likelihood of things happening then they actually will. And if we want to actually discipline those cognitive biases that make it so that our forecasts and our predictions so that our decisions are inaccurate, one of the best ways to do that is to go look out and see what's going on in the world in general. And if we go back to say venture valuations, I heard a lot of people in the summer of 2021 talking about, you know, the world is different, and really convincing themselves that the valuations in part because they were investing at those valuations, right? Right, in part because they were seeing other founders raise at those valuations. It's very easy to convince yourself that the world has somehow changed and that this is the way it is, and that you're seeing something in these companies, or the companies have fundamentally changed in terms of the way they're executing, or what part of the market that they can capture, but again, unless there's some sort of paradigm shift like that, Walmart to Amazon shift, going and looking up the base rate and saying, Well, what is the historical base rate for valuations of companies of this sort helps to discipline that desire that we have to think that something special is going on. And again, I want to be clear, it's not that something special isn't ever going on. It's that it gets you to sort of think about the other side, and at least have to disprove that the base rate would hold in that situation. I

Brett  15:49

think that was a great explainer. So going back to what we were talking about a second ago, have you sort of contemplated in the type of outlier systems like venture the difference between something being bad for the individual and good for the broader ecosystem.

16:06

So I absolutely have, let's think about it from an evolutionary standpoint, a bunch of humans ventured out to far away places to seek resources because human beings in general are curious whatever. And obviously for the individual that did that, it may have not been positive expected value for any given individual who went and ventured off to go to Europe or whatever, from Africa, it may have been not a great choice for them individually. In other words, the probability of death may have been higher than you would expect someone to be willing to tolerate, but that one person who bucks the odds and gets through it's really good for humanity as a whole, and that's true in anything where you're going to see power law. So you can think about like these migrations are kind of power law, right? Like the chances of success, the chances of actually getting to the destination that you want to get to safely, is going to be incredibly rare. It's small, but if you have enough people trying it, then somebody is going to break through, and that's going to be really good for the system as a whole. And that's true with innovation as well. Like any individual founder who might be working on a problem, the probability of failure is really, really high. And while there are certainly lots and lots of founders where the payoff is positive expected value, even in the case of the chances of succeeding being really small, there are certainly lots and lots of people who are working on problems where the payoffs don't actually justify the low probability of them doing it, but it's good for humanity that people do do that, because the lowest probability is going to happen sometimes, and when it does happen and it's successful, it's a big innovation, and it's amazing. So I think this is something that, you know, it's kind of a paradox, and we need to think about it, that you can have a lot of individuals where personally, they're losing to the decision long run, but humanity is winning to it, because humanity is kind of holding a portfolio of people who are trying to innovate and make the world better, and the fact that people are willing To do that, even though they individually might not be winning to that decision is really good for humanity as a whole. So

Brett  18:26

switching gears slightly. One of the things that I've noticed in working closely with early stage companies over a very long period of time is for whatever reason, it feels like when things aren't working, more often than not, a founder makes incremental changes. Or an example would be our go to market's not working. Once I hire the right salesperson, everything's going to work. Have you sort of observed this? And what do you make of incremental change versus drastic change when things aren't working?

Annie Duke  19:03

Oh gosh, there's so many different ways to go with this. I mean, it seems like such a simple question, right? But it's actually incredibly deep, like there's so many layers here. So let me start with the first layer, which is that you're viewing from the outside as a viewer from the outside, as someone who's observing, you can see that, no, it's not that you just need to hire the right salesperson. It's like you need to change your go to market motion, yeah, or the product, right? Or the product, or whatever, that something really needs to drastically change. You need to go hide in a hotel room and completely start over. But what's interesting, and I imagine Brett that you've had that feeling when you're looking at which is, why can't they see that? Why don't they see what I see? And the fact is that we all have this intuition. This is the intuition they have, this very strong which is when I see signals that the world is giving me, that the thing that I'm doing isn't working. Obviously. I'm going to change gears. And this is a really important intuition, because that intuition is kind of what allows us to make decisions under uncertainty in the first place. Like, when you first think about what product am I going to develop, or you have a product, and what's my go to market motion going to look like, or whatever you're doing that under conditions of uncertainty, right? Like, there's just a whole bunch of stuff you don't know, and there's going to be a lot of information discovery, post, decision, post having started something. So when we start things, there's a lot of stuff we don't know, and then also the world can just intervene, which is called luck. And so after we've actually started, we're gonna learn a whole bunch of stuff. So how do we then make a decision when we're making a decision under so much uncertain? Uncertainty, it's because when we learn that new stuff, we can change our minds. We can do something different, we can walk away, we can change course, we can quit. And we have that intuition that when we see those things, when we discover that information, that obviously we will quit. So let's just start with the first thing, because this is really like important for people to understand, is that that intuition is wrong. When we get signals from the world that are negative, that the thing we are doing isn't working, we actually escalate our commitment to whatever it is that we're doing. We don't want to abandon it. And there's a variety of reasons for why that is. One of them, which I think is pretty familiar to people, is called the sunk cost effect, which is when we've put a lot of effort into something we don't want to switch because we think that then we'll have wasted all of the time or the effort that we put into the thing. So like the simple example of that is, if you buy a stock at 50 and it's now trading at 40, you don't want to lose the $10 and at that moment that you might sell the stock, that's when you feel like but then I will have lost that $10 but of course, that $10 has already lost. It's already sunk. And what should matter is, is it worth it to go forward? And that's true in the case that you're talking about, right? It's broken. If I just hire another salesperson, get the right person, it's going to work out that part of what's going on is, if I switch, then all the work that I put into this motion is going to have been wasted. But really, what really matters is, does it make sense to spend resources, time, a great salesperson's energy, executing the strategy that you have going forward. So that's kind of like piece number one is just this reaction that we have to bad news, where we tend to double down on what we're doing. And then piece number two, which I think is really important in terms of this kind of issue, is that we really have a preference for the status quo. And once you've established a status quo, which in the example you're giving me, there is one right which is the strategy that you're executing today, it's very hard for us to switch, and part of the reason that it's hard for us to switch is that we are much more tolerant of bad outcomes that come from the status quo than We are tolerant of bad outcomes that come from something new, so when we switch and get a bad outcome. So you can imagine thinking this, but what if we throw this strategy away? What if we just completely say, Nope, that go to market motion wasn't working, or that product wasn't working, I'm going to dump it and go try to develop something else we have this fear of, but what if that doesn't work? And when it doesn't work, we feel regret. There's an asymmetry to the way that we process that regret. It it does add it not working, and we feel it much more keenly when we started something new than when we lose kind of like on the individual path that we're on. So now we have sort of two forces working against us. We don't want to abandon the work, and so we'd prefer to make incremental changes, hoping that we can turn it around, and if it doesn't work out, if it continues not to work, well, we're just much more tolerant of that than we are in terms of toleration of the bad outcomes that come from switching to something new.

Brett  24:05

So given that framing, if this fictitious founder that we're talking about called you and said, Annie, what should I be doing? What is the advice and or tools that you would give him or her?

Annie Duke  24:18

So I think one of the things that's really important to realize is that it's really hard to do it in the moment when you're actually facing like, am I going to just throw this product out, or am I going to change my strategy? It's hard to do it right then. So generally, if you're trying to coach somebody, well, the first thing I would say is it's really good that they came to somebody else, because one of the best strategies you can employ in order to get better at making these decisions. To quit is actually to get somebody from the outside to help you in the book, I talk about Ron Conway, who really prides himself, actually, on coaching founders to quit. It's kind of like people would be surprised, because obviously Ron Conway has helped people really grit. Out to great success. I think he sort of thinks the thing he's proudest of is when he sees that a company is not going to work, that he feels an obligation to the founder to free that founder up so they can go work on something amazing, because the thing they're working on isn't so amazing, and he steps into that role. Because, again, we can't see those things for ourselves. It's hard for us to get to those decisions for ourselves, but we can generally see them pretty well from the outside. So getting outside help in these things is really important. But then the second thing that you need to realize is someone who's in that coaching position is that the person's always going to say exactly you said, No, I know. I can turn around. We just need to get the right salesperson in here. We need to make some tweaks to the way that we're messaging, whatever it is, right? Whatever the things are that they say they need to do that. They need to make these small, incremental changes. They're going to turn it around. Generally, it's a good idea actually, not to disagree with them in that moment. And this is actually the strategy that Ron Conway uses, and just say, Okay, you're a brilliant person. I have no doubt you can turn it around, but then what you have to do is follow that with but what does turning it around look like within what time? So in the case of this fictitious founder that comes to me, I would say, Okay, you think you can turn it around and you're gonna be able to start actually hitting your marks in terms of generating that new Arr, how long would we have to wait to see that change occur? So in this case, they might say, well, you know, it's a long sales cycle. It might take six months. And then I would encourage them to say, well, it might take six months to close new business, to close the business, but you should be seeing changes at the top of the funnel. If it's working, can we agree to that? And they'll usually say yes, and you say, Okay, so let's say that this new salesperson really does what you say they're going to do, like, how long would it be until you start to see the top of the funnel start to populate? They'll say, within two weeks to a month, and I'll say, okay, great. So let's call it a month. What does it look like if we look at the quantitative data in terms of what's happening at the top of the funnel? What are the numbers that we're going to see there? So now I sit down and I would partner with them and get them on a pretty tight timeline and try to get to what are the leading indicators that things have actually turned around. So I want to get to the leading indicators, because I don't want to wait until it's six months from now, and they again, haven't generated any net new Arr, and they're going to tell me again that they just need to tweak things. So I need to get to the leading indicators, and then we actually write down what are the benchmarks, what are the things that we're going to see that are going to tell us that things have turned around within the next month? So we work on that, and then I would say, Okay, so let's agree we're going to revisit in a month. And if you're not doing that, then something drastic needs to change. Then we really do need to think about quitting or pivoting. I prefer the term quit because I don't think we should hide behind the term pivoting. So now what you've done is you've gotten the founder out of the moment so that they can think about some version of themselves in the future. You've agreed with them that you think they can turn it around, but you've gotten them to tell you what does turn it around mean? And now you have benchmarks, and those benchmarks now become what I call kill criteria. If you miss them, we're going to kill we're going to quit, and if you hit them, then we're going to go along our merry way and be really happy. Now, one of the things that you might be saying is, but Annie, if you see it today, that they need to change, isn't it better to get them to change it today? And my answer to that is, of course, in a perfect world, if you can see very clearly that hiring a new salesperson is not going to help. The new seller isn't going to do it. This is an incremental change, and they'd actually need to do something more drastic. Then, yes, of course, like in an ideal world, they would just stop what they're doing today and quit and go do something else. But it's not an ideal world, and we need to realize we're dealing with human psychology. And it just turns out that okay, now they might not quit for a month, but that's better than them continuing down this road for six months to see that they haven't closed the new business that they missed their number two more quarters in a row, and now maybe they've run through their capital and they can't even go out and raise which is death. So if I can get them there in a month, instead of six months, that's a huge win. If I can get there where maybe they're going to burn a few extra, maybe they're going to burn 100,000 more, but it's going to save them from burning 600,000 more, then that's a huge win, because I'm getting them there faster, in a way where they can process it and actually execute on it. The other thing that comes from that is that when you really sit down and define what does success mean, what comes with that is a question about what do the inputs need to be in order to create that success? And now you start to actually get to the real heart of the. Matter is, are the inputs correct? And that brings clarity to the whole conversation anyway, just as sort of like a side benefit of it.

Brett  30:06

How do you think about there's a couple jumping off points that I wanted to go to. One is, how do you think about pivoting versus actually quitting and shutting down? Yeah, so

Annie Duke  30:16

a pivot is quitting. I just want to be really clear about that. We think about quitting as leaving the court. Pivoting is still quitting. If you were developing game never ending and then you pivot to Slack, that's quitting. You quit developing game never ending and you started developing slack. Notion is a good example of what people sort of call a pivot, but it was really a quit. It is like, I'm throwing out all this code and I'm just going to build in a new so I think that the distinction is, in one case, you have this sort of broader goal of really creating a successful startup, and that's the thing that you're abandoning when you shut the company down. Now there's no question that psychologically, that is much harder to do, because obviously that's the moment that, in the largest sense of the word, toward the goal that you were ultimately trying to achieve, which is, say, create a venture scale business that actually exits, say over a billion dollars, or has a great exit, that's the moment that you have to say it was failing before, but now I have failed. That is what it feels like to us, and that's really hard, because that's when you can't turn it around anymore. You don't have any chances. So pivot, what we think of as pivots, which are really quick, are easy for us to handle cognitively, because we still have a chance to make the company work, even if we have to abandon the product that we were initially developing, for example. But I want to make it clear that quitting and saying this isn't the right product, we need to switch to a different product that we're developing is also very difficult, and we tend to get to those decisions too late as well. They just tend to be a little bit easier because they're within the context of a broader goal. We don't have to give up, and that's the thing that's really hard for us, is giving up those broader goals.

Brett  32:17

So when should someone leave the arena versus pivot. Isn't

Annie Duke  32:21

that the whole thing right there? So I can give you the objective answer. The objective answer is when your expected value goes negative in comparison to other things that you could be doing. So what do I mean by that? When we start anything, there's some sort of expected value that you can calculate, which is just essentially, you can think of it as like, does the upside outweigh the downside? So when the upside is great enough to outweigh the downside, then we would say we're winning to the decision. It's another way you can put it, but it means we're positive expected value. So positive expected value, I want to be clear, it doesn't mean that you're not going to realize the downside, right? It doesn't mean just because you're winning to the decision to have started a company. It doesn't mean that the company's not ever going to fail. It means that if you were to do that over and over and over again, that would be a positive expected value decision, that there's enough upside to compensate for the downside that's associated with it. Okay? So we can think about that just in terms of the road that we're on when the expected value is negative, we ought to walk away. But then we can broaden it to say, I can be in situations where I am gaining ground to my goal, where there is enough upside to compensate for the downside, but there's other things that I could be doing which are associated with even more upside. And so then it would behoove me to switch to the thing that has even more upside. I think a good example of this actually is Stuart Butterfield, where, in terms of what was happening with game never ending and glitch at the time that he was developing, that they were gaining a lot of customers, I think they're week over week growth in terms of customer acquisition for that game at the time was something like six or 7% per week. They were doing a big marketing push, and it looked like they were probably going to get to break even within 31 months, if they could sustain the growth, which is probably a bad assumption, but they were probably going to get to break even within a year, and then past break even, they were probably going to make some money. But what Stuart Butterfield sort of realized when he kind of looked ahead into the future for whether it was worthwhile to continue developing glitch, was that, yeah, they could get to a place where they were going to make money, but it was never going to be a venture scale business like it wasn't going to make enough money to make it worthwhile. So there's a case where the expected value was most likely positive, but it just wasn't big enough compared to what somebody like Butterfield felt like he could accomplish. And then you can see that sort of realizes he switches to slack. Within about two days of shutting down glitch, he starts doing something that has a much higher. Expected value, in his opinion, and we sort of know what happened there. Okay, so, but we're not all Stuart Butterfield, that's kind of the problem. And trying to figure out when these things switch, when it's like, okay, I'm doing this, and my best estimation is this is totally worth my time. And I think that I'm winning to this decision when that thing goes negative, or when at least it's not positive enough in comparison to other things you should be doing or could be doing, that's really the hard thing, and that's where you need like a Ron Conway, and you need something like kill criteria that you put on a regular cadence, which is to say, with clear eyes, here's what I expect to see happen within a quarter, or within two quarters, or within three quarters or within four quarters, whatever it might be, if you're pre revenue, it may have things that are having to do with the product, how tests are going, so on, so forth. What's your ability to hire and get other people excited? Can you tell the story in a compelling way that gets people to want to give you money so that you can develop it? There's all sorts of benchmarks that you can be setting for yourself, and if you're missing them, then you need to pay attention to that. And it's really good to have a mentor who's going to help you pay attention to that so that you can understand what are these decisions that I should be making. When should I be pivoting to develop a different product? When should I be thinking about a different go to market motion? When should I be thinking about shutting the company down? And again, this is something that Ron Conway does so well. He sees a company. He thinks it's negative expected value. He thinks it's not really worth the founder's time anymore. And as he says, like Life's too short for someone so brilliant to be working on something that's not worth their time. And when he sits down with them, they say they can turn it around. He agrees with them. They set kill criteria together for what they're going to see say over the next six weeks or two months. And then he comes and revisits them, and he helps them to get to that decision. And I think that's really kind of the only way that you can do it, unless you just have a special talent for it. I think that you need outside help. And I think you need to be thinking about these things in advance, which is and really benchmarking. What are the things that I need to be seeing? And then some of those benchmarks are going to be well, that means that I should kill it right away. Some of them are need to seek more information, but you should be putting that on a regular cadence

Brett  37:19

for someone to be in the Ron Conway seat and to be very good at it. Is it they generally sit on a larger data set than the individual founder? Or what are the other conditions that position somebody to play that role effectively?

Annie Duke  37:37

Yeah, so definitely they have a much bigger data set than the individual founder. So if we go back to base rates, they certainly understand the reference class better. So the founder is just one individual caught in their own perspective of the thing they're doing. That not only do you have these sunk cost issues right, which is like they've put everything they have into building. What if I stop after a year and a half like, I'll have wasted a year and a half of my time. I'll have wasted the time of my employees. Then I'll have wasted their time. I'll have wasted my investors time and money. That's what we think about when it's a year and a half in and it's like we're sort of facing that decision to shut it down. But again, it's like, but do you want to waste another minute? Do you want to waste the next minute of your employees time? Do you want to waste the next dollar of your investors? Do you want to waste the next minute of your time? Okay, but you're caught in it thinking about all these ways that have to do with like that feeling of waste that you're carrying with you. And then also the other thing which is really true for founders is when you do things that are outside of the mainstream, they become very much part of your identity. Being a founder is an identity, and walking away from your identity is so incredibly hard because you can't see the world, but from through your own perspective and the effort and the time and the money that you've put into it, and how much of your heart and soul and who you are is in it with you. So what is the value of somebody like Iran Conway is that they're not in it with you. It's not their time and effort that have been put into it, they can see really clearly that if you have employees that are working for very little cash comp and lots of equity, that the moment that you determine that that equity isn't worth their time, you should let them go and not think about, oh, you know, in this honestly irrational way, in that cognitive bias sent that Oh, you'll have wasted their time if you shut it down. It's like no continuing to have them work at something where their equity isn't worth their while is wasting their time. So if you have access to the base rates, if you understand the reference class, if you've seen this before, so that you can identify when it is a dead come. Company walking, as opposed to one that's just going through hard times that they can push through. That's going to be really helpful, and that's going to take a lot of experience with companies like this. And obviously Ron Conway, who's such an experienced investor, is going to have a good eye for the difference between the two, but they're also going to be able to understand, and this is something that to be really good at helping people through this is he's going to be able to understand how to give them advice, while not ending up in it with the founder. And I think that this is something really hard for us, right? Like you can kind of think about it this way. Parents are in it with their kids. If someone's mean to their kid, they feel attacked. If a teacher says that their kid isn't doing well in school, they feel attacked, right? They're in it with them. It's hard to feel objective about your own children. So if you're going to try to help a founder, you have to not be in it with them. You have to step back and see it objectively so that you can do the best that you can for guiding the founder to have the best life, which is assuming what you'd like the founder to have. The other thing is that you have to really be good at getting permission from the founder to tell them what you see. And that actually is something that not everybody is willing to give. And it's one of the reasons, I think, why Ron Conway agrees with them when they say they can turn it around, and then says, Okay, let's talk about what turning around looks like. Let's talk about what those benchmarks are going to be. And then can we agree to come and revisit this in six weeks? Notice that that's an act of asking for permission to then be able to give your advice at a later date, and I think that's something he really understands as well. So you don't want to go to someone who doesn't have experience in the thing that you're asking about. They have to have a lot of experience, because you have to be able to trust their judgment, that what they see is not made up, that they have a good reference class, that they've been there before, and then you have to give them permission, and they have to ask for permission to be able to tell you what they

Brett  42:04

see. Are there any other strategies for getting permission in sort of the way that you're talking about, outside of kill criteria or alignment around what's going to happen over the coming weeks or months?

Annie Duke  42:16

You know, it's really hard. I have to say, you can always ask directly right then, do you want me to tell you what you want to hear? Are you looking to just vent to me, or are you asking for actual advice here? Do you want me to tell you what I see? And the thing is that most people are going to say, Yes, I do want you to tell you what I see. And then when you tell them what you see, they're going to get mad at you and reject it. And it's not that they're jerks, it's that that's just kind of the way that the world works, particularly, particularly when your identity is so wrapped up in what you're doing. Because when your identity is wrapped up in something and the facts of the world become misaligned with what you would like to be true of the world, you will generally find a way to reject the facts. So when that situation happens, when the world comes in conflict with your beliefs or what you want to be true, it creates what's called cognitive dissonance, this uncomfortable feeling that comes with the dissonance created by the world conflicting with you, and there's two ways to resolve the dissonance. One is to change what you're doing or change what you believe. So you can do that, and the other is to reject the facts. And the fact is that we mostly reject the facts. So you can say to someone in the moment, do you really want my advice? And if they tell you, yes, sometimes they really want your advice, but a lot of times they're gonna reject what you say. And I'm sure, Brad, I'm sure you've experienced that. Right? You're wrong. I know this is right. I know I can turn it around. Okay, so that's why I think getting them to some date in the future works better. Because when we think about, I know it sounds strange, because it's still you in the future, except that when we think about our identity, the identity that we're really trying to protect is us today, and the person in the future who's going to exist we don't really think about is us. So we're able to see that sort of person more like we're an outside observer. And plus, I mean, this is kind of silly, but it's sort of true, like the future is never going to come anyway. You know what I mean? Like, it's like, you know, you you agree to something in six months that when it comes to the day that you have to do it, you're like, Why did I ever agree to this? This is so odious. I don't really want to do this thing that I've agreed to. And the reason why you agree to it is because it was six months away and like, that doesn't even exist. So, by the way, it's just strategy. If you want someone to do something you know that they're not going to want to do for you, ask them to do it like six months

Brett  44:46

from now, let their future self deal with it. We all do this with calendaring when we don't want to meet with someone, and then you stare down that calendar invite three months later,

Annie Duke  44:55

right? And you're like, Ah, why did I do that?

Brett  44:58

It's a tax on your future. Self, but let them deal with it.

Annie Duke  45:01

It's a tax on your future self. So basically, you can use that to your advantage. And honestly, the thing is that you can do it pretty quickly. I've done this where I'm like, Okay, what will we see in a week? Right? If you want to get to the answer really fast, what will we see in a week? Other than that, you just have to have someone who's temperamentally wants it from you. So the thing is that that permission really has to go both ways, and this is something that I would recommend to anybody, whether they're a founder or an investor or whatever, is that, find somebody who you really trust and just give them permission and be okay with hearing what you don't want to hear, so that you don't have to waste another six weeks or another two months or whatever to get to the answer that's already obvious to the person from the outside. So this is something where, as someone from the outside, it's hard to do any better than to say, let's revisit in a week or two weeks, or six weeks or whatever, like to get it into the future. But the thing is, as the advice seeker, you do have some control over it. And if you truly give permission to someone, please tell me what you see, and you're going to be open minded to it, and they're willing to do that, then you can save that extra week, or that extra two weeks, or that extra six weeks, or that extra three months, and that's going to be really good for you. So the onus there is very much more on the seeker than it is from the mentor. A

Brett  46:27

couple of things I wanted to pick up. The first is the idea of identity as it relates to building companies, and maybe more broadly, and to the point that you just, it's funny, you proactively brought it up, but it's one of the things that I was curious to get your thoughts on, and one of the things that I've noticed is, the longer someone builds a thing, oftentimes, the more tightly their identity is bound with the thing. And thus, in their eyes, the stakes of quitting, quitting in the definition of leaving the arena versus pivoting, the stakes go up as a thought exercise. You've been working on a company for six months and shut it down, versus nine years and shut it down is entirely different sunk cost fallacy, but it's also identity. People ask you, how's the company going? What's going on, and so are there strategies or things to think through to kind of keep your identity small in the context of building a business,

Annie Duke  47:23

I think that that's actually really hard, particularly when you're doing something that is out of the mainstream, you know, and obviously, if you're founding a startup, you're doing something that's out of the mainstream, so your identity is going to be more tightly wrapped in that. I think that the better thing to do is to try to reduce exactly what you just said. You know, there's a big difference between shutting something down after six months and shutting something down after nine years. So I think an important strategy to think about is, how can we reduce the sort of cognitive debris that we're bringing into that decision about when to abandon something because that cognitive debris snowballs. Just as you said, it's like you work on something for six months that makes you more likely to continue working on it, because you've put six months into it. That decision that maybe you continue something when you shouldn't, then causes you to put another year into it, and now 18 months later, instead of six months, you have 18 months in it, and that makes you more likely to continue, and then you continue for another year, and so on so forth, and it's nine years later, right? So one of the things we need to realize is, the longer that we continue to do something, the more debris we're building up. So it becomes like the self reinforcing cycle, the more that we have into something, whether it's the more of our identity that is tied up with what we're doing. The more that we're accumulating, the sunk costs, the more endowed to the product that we have, the more ownership over the ideas and the product and that kind of thing that we feel like we have, the more of a status quo that's been established that all makes it harder and harder to quit. So the recommendation that I have is approach things in a way that is going to get you to understand, should you continue or should you not, as quickly as possible? And the model that I like to use for this actually comes from Astro Teller, who's the CEO or otherwise known as Captain of Moonshots over at x at Google. They're obviously trying to do super innovative things that have a very high chance of failure, but their motto is, like 10x better for the world. And so they're really trying to do these, like huge, non incremental discovery. And they want to get these things, these big world changing ideas, to commercialization in five to 10 years. So that's their charter, 10x better in five to 10 years. That's what they're trying to do. So this is something that asroteller has really thought pretty deeply about, because even for Google, they have limited resources. You only have a certain amount of time and attention and money that you can devote to things. And so he's trying to really understand. Is this worth pursuing, or is this not in comparison to other things that we could pursue as quickly as possible to reduce those sunk costs, to reduce the amount of identity that gets put into something. And it uses a mental model called monkeys and pedestals to help to get people to know and know quickly. And monkeys and pedestals basically goes something like this. Imagine that you have decided that you want to train a monkey to juggle flaming torches while standing on a pedestal in the town square. Obviously, if you could accomplish that, you would make lots of money. People would be throwing lots of dollars in your hat, and that would be a great thing to do, since, when you're approaching this particular project of training this monkey to juggle the flaming torches while standing on a pedestal in the town square. The thing you should not do first is build the pedestal. You should make sure that you can actually train the monkey to juggle the flaming torches. Why? Because that's the bottleneck. There's like no point in building the pedestal if you haven't figured out if you can actually get the monkey to do this trick. That's the unknown. That's the thing that you don't know if you can do. So you have to figure out if you can do that first before you do the other thing, which is building a pedestal, which, in a pinch, you could turn a milk crate upside down. Now, why does he say that? It's basically like tackle the hard part first, that's the first thing. And then obviously you can figure out. So figure out, what is the thing that I need to solve for that's going to actually unlock this whole system? What is the hard thing that I really need to figure out and prove out and get to that first? Because all the things that you do besides that are first of all, going to create an illusion of progress, right? Like, if I build a pedestal, I feel like I'm making progress toward my goal, but I'm not really, because I already know I can build a pedestal. But there's a second problem that astral really understands, which is the time and effort and money that you put into building the pedestal now starts to create those sunk costs. Now starts to create that endowment now starts to get your identity more wrapped up in what you're doing, even though it's not creating any progress. But that's going to make it much harder for you to actually quit when you figure out that you can't get the monkey to juggle those torches. You'll have been doing all this other stuff, and you're also sort of in parallel, trying to train the monkey to juggle the torches. And then what's going to happen, just like your fictional founder, is that when it's a few months in and you haven't gotten your monkey to do this, you're going to say, but I know I just need to do this one more thing. I'm almost there. I'm so close to the breakthrough, and you're going to continue going, or you're going to pivot to starting to build a lot more pedestals instead of abandoning, course. So he thinks about it as if I can figure out that this thing isn't going to work after $2 million instead of $9 million it's not a waste of the $2 million right? It's not a problem with my identity. It means I save $7 million actually, I didn't waste $7 million but we can see this problem in like so many different situations. So an example, one of my favorite examples, is actually the California bullet train, where they're trying to connect San Francisco and Silicon Valley to LA and San Diego through high speed rail. So they floated a bond way back in 2010 which was for $9 billion and the projections at the time were that it would take about $33 billion to complete, and in 2021 the line would be net positive in terms of revenue, between ridership and actually public private partnerships, that it would be self funding to Beyond the $9 billion bond that had been floated. Okay? So they approved some track between, like, I think it was Merced and Fresno, something like that, but sort of on the interior of the line, right, like in the middle of the line they approve track, it's on flat land. And the problem with this approach to this is that any track that you build on flat land is in essence, going to be a pedestal, because you already know you can build it. We've been building railroad track for a couple centuries over here. Like it's not, it's not a hard thing to build track. You know that you can do that. It turns out that when it comes to the California bullet train, there are actually a couple of monkeys that are really hard to figure out if you can solve for it. And there are two mountain ranges. One is the Diablo Range, which has the Pacheco Pass, which you currently have to drive over in order to get from San Francisco to the north into the interior of California. And then there's another pass, the chachapi mountains that are to the south of Bakersfield, north of LA and it just turns out that those are massive engineering problems to try to figure out in terms of being able to run any rail, like, how do you blast through those mountains in a safe and cost effective way that will allow you to actually complete this line? But they didn't start with the monkeys. They started building pedestals first, which was this flat track in the interior of the line. So. So at some point, I think it was around, like, 2016 or 2018 they recognized, oh, shoot, there are these mountain ranges. This is like, six years after they've already floated the bond. And, like, we're supposed to have started things. They're like, Oh no, there are these two mountain ranges. And so now you would think, Okay, so now what they're going to do is try to figure out these mountain ranges. Because at that point, the engineers had said, Oops, didn't realize about those mountain ranges. Actually, the budget is going to be $80 billion as opposed to $33 billion okay, so now they like almost triple the budget. It's like two and a half times as much when they go, Oh, wait, there's mountains that we didn't notice before. So it now goes to Governor Newsom. And the question is, like, what happens? Because this seems like a perfect opportunity to shut the whole thing down. They've hardly built any track. They've got about $7 billion sunk into it. At that point they can just abandon course. And it's like they said, We think it's $80 billion but it could be a lot more, because we really don't know if we can tackle these mountains. So you would think if they're going to continue with this project, they would go after the mountains next. But no, they approved two more sections of track. One is between Bakersfield and I guess it was Madeira and Fresno was first, was Merced and Bakersfield or something like that. But it was another piece of track, like to the north of the TIA choppy mountains. And then they also approved track. The next piece they're going to build is between Silicon Valley and San Francisco, which is super silly. There's already roads, but notice it's to the north of that mountain range. So here they are still going. It's 2022, they've hardly built any track. And I think the latest estimate of the budget was now. I think it was like 120 billion in the latest report. And they still haven't figured out whether they can solve for the mountains. But this is what we all do. Because, like, let me ask you this, have you ever heard anybody say the term, well, low hanging fruit, right? So you're trying to tackle some sort of project, and then people figure out what's all the low hanging fruit, and then they go send people off to do that. That's the opposite of the way that Astro Teller wants you to do anything, right? That's the opposite of the way that monkeys and pedestals tells you to do anything, because that's what happened with the California bullet train. What was the low hanging fruit, the track that you already knew you could build? So I don't have any problem with tackling the low hanging fruit eventually you have to in order to be able to build anything, but you better make sure that you solve for the bottlenecks first, before you tackle the low hanging fruit, because otherwise, the problem that you brought up so astutely is just going to be true, is that every bit of low hanging fruit that you tackle before you've actually solved for the monkeys not only creates illusion of progress, but it also starts to create sunk cost problems. It creates endowment problems, and it creates these problems of identity, because you're just collecting debris without actually solving for the hard thing first, you know, and I think that's the thing that you need to do. It's like, it's very hard to, like, reduce your ego, but it's really easy to find out fast. And that's what it behooves us to do, is find out as quickly as possible.

Brett  57:57

So maybe picking up this line of thinking, let's imagine another fictitious company and founder, and the person just read your book and really connected with the ideas and wanted to implement them, and they build their company for five years. And you watch them do it, and you're like, bravo. You really did internalize and behave in the way that I think is optimal. And we were to sit down and talk about what that founder did over those five years. What would they say?

Annie Duke  58:35

This is something that I think we've implemented quite a bit of these ideas at first round, but I've also done that with some clients of mine. Like, you know, I have a client, it's a SaaS company, and we do this. I mean, there's certain things, like, on the surface there would be things like, they would be really efficient at letting people go who weren't good fits. So that's something that you would see on the surface. That would be a signal that they've really internalized what I'm talking about. So we know that most people let people go way too late, and they would have figured out how to do this really quickly. You can basically just the Ron Conway example is a great way to get to that. As soon as you start thinking, maybe this person isn't a good fit, you would sit down with the person and figure out what you expect to see from them, in terms of seeing that they're turning it around and actually ramping in a way that you're happy with, work that out with the person, and then revisit it pretty quickly and figure out, did they turn it around, or didn't they? Because that's one of the things that I see so much when I'm working with companies, is that the first thing that happens is there's just complaining about a whole bunch of people who aren't doing their job. And the question is always, well, why are they in those jobs in the first place? And the answer is, well, I'm not sure, or I don't have a lot of certainty, or what if the next person who comes into the job is bad and it's like, well, the person that's in the job isn't performing, you know? So, so I know that that's like a surface thing that you would be able to see, but to answer your question, I think in a deeper way, what would be happening is that you would. See these things on a regular cadence, that when you were thinking about, what are the things that we expect to see, what are the leading indicators of those? If I imagine it's six months from now and this project has failed, or we've missed our targets, and I think about looking back that there were early signals that we were going to miss, that we were going to fail. What were those early signals? And they would be thinking about what those are, and actually writing those down and making commitments broadly within the team to actually act on those. And that doesn't mean for any signal that you see, that you would necessarily kill. Some of them would be, if we see this, there are certain actions that we need to take, because what we recognize is that something now needs to be recovered or fixed, or there's new information that we need, and that that would all be on a regular cadence. So when they're starting things, they would be thinking about making forecasts. They would be actually examining their options, giving their best guess of what the future might hold, they'd be writing those things down so they can go back and revisit and see what the accuracy of those forecasts were. Those decisions to start looked like, and then once they'd started something, they would put on a regular cadence these revisiting are these goals still the right goals for us to be pursuing, given the things that we're trying to achieve, they would be continuing to do exploration and thinking, what are the other options? Are there creative alternatives to what we're trying to do? How are we going to find out as quickly as possible that the thing that we're doing isn't working? Are we actually tackling the bottleneck, or are we retreating into pedestal building in order to make ourselves feel better. And I think you would start to see this all kind of enculturated within the company, and I have seen it start to get enculturated in companies that I work with.

Brett  1:01:49

So the interesting thing about scaling technology companies is you get to this certain point, and people come obsessed with goal setting and inventing goal setting frameworks. Obviously, there was Andy Grove and John Doar who brought OKRs into Google, and there's a zillion other goal setting frameworks. What is good or bad goal setting look like in your mind? And maybe you could lens it, maybe both through sort of your own experience as well as maybe specifically in the context of a startup or a founder.

Annie Duke  1:02:19

Yeah. So let me just say, from the get go, that there's lots and lots of evidence that goal setting is good, right? Like, I'm not going to argue with the body of evidence that says if you create very clear, specific goals, that it will help people to achieve them more quickly. So that is true. But let me tell you a little story about a woman named Siobhan O'Keefe that can maybe help us understand that just as anything, grit can be really good, but it can also be really bad. That's true of goals as well. So Siobhan O'Keefe was running the 2019 London Marathon, and she started experiencing some really bad pain in her legs somewhere around mile three, and somewhere around, like mile six, I think six or eight, her fibula snapped, so she broke her leg. And here's the amazing thing, she kept running, and on this broken leg, she finished the marathon. Now I imagine that seems pretty nutty to you, right? Like, I mean, I think it seems pretty clear, like, if you knew in advance they were going to break your leg in the middle of a marathon, you probably wouldn't have started it. And I think we all share the intuition. This goes back to Barry stah that, having started a marathon, if you broke your leg on Mile eight, you would not continue running. And you might be saying to yourself, Okay, that's just one nutty person, but four people in that marathon broke something and continued. And if you just do a quick Google search where you're like, broken leg, broken ankle, whatever finishes marathon, you're gonna see that these stories are incredibly common, that people are finishing these races in a way that's probably going to damage their ability to run again in the future. Obviously, if you continue to run on a broken leg, you're going to be extending your anytime that you're going to have to recover, and you may actually be in danger of never being able to run again. But it's a little bit like this problem with like we should think about, like the portfolio of marathons that we want to run, or the portfolio of races that we want to enter, but we're thinking about this particular race, and the reason why we keep doing that is because there's a finish line. So a marathon, the finish line is 26.2 miles. And this comes to the first problem with goals is that once we set that finish line of 26.2 miles, we grade it, pass, fail. If you quit a marathon after mile eight, you failed. If you cross the finish line, you pass. So the progress along the way doesn't matter. If you stop a marathon after 20 miles, you failed. It's not. You ran 20 miles. That's not the way we think about it, and that's true of anything. If you're 300 yards from the summit of Everest and you don't actually summit the mountain, you failed. Never mind that you climbed higher than almost any human being ever has. This is one of the problems with goals, is that once we set a finish line. They're graded pass, fail, and we will barrel toward that finish line Come What May broken leg or not, any signals from the world being caught in a snowstorm. Nobody's buying the product. We clearly haven't achieved product market fit, and it doesn't look like it's on the horizon. We'll keep developing the product anyway, because we have a finish line, and it's graded, pass, fail. So that's the first thing that we need to think about, is that we have to be very careful when we set these things, because people are just going to barrel to them, and that's going to cause you to start ignoring the signals that you shouldn't be because you're afraid you failed, even though running 16 miles is better than not having tried at all, but cognitively, not having tried at all feels better to us than having run 16 miles of a marathon and having to quit. So that's sort of piece number one is this pass fail nature of goals. Piece number two, that's problematic with goals is that they're fixed objects in a changing world. So what does that mean when we set a goal? It's some kind of proxy for a cost benefit analysis, right? So whenever we're trying to achieve a goal, we think we're going to get certain benefits out of that, but it's going to cost us certain things. So even if we're running a marathon, it's going to cost us, like time with our family and our friends. When we're training, we're going to have physical discomfort, so on, so forth, but we're willing to bear those costs for the benefits that we're going to get out of physical fitness and that feeling of achieving something that other people haven't achieved, and that's true of any goal that we set. So we set a goal, it's some sort of proxy for a cost benefit analysis. But remember that that cost benefit analysis has been done under uncertainty, that once you set the goal, after you cross that starting line to start the race, you're going to start to discover new information, information like my leg is broken, okay, but the goal itself now becomes the object, and it's a fixed object, even though the world might be changing and you might be changing, so that is a really big problem. So if you're going to grade goals pass fail, they better not be fixed, because if they can't change with the world, then you're barreling toward the finish line trying to pass, but the finish line is no longer the appropriate finish line for you to be heading toward. That's problem number two. And then problem number three is that goals, by their very nature, cause a myopia. So one of the things that we need to always remember is that when we're pursuing something that is time and attention, of money that we cannot spend pursuing other things, and we just don't see those other opportunities, those other paths that we could be taking, as long as we're on a particular path. So when we're pursuing a particular goal, we don't see the other things that we could be doing. So we become myopic, and we don't want to do that. One of the things that gives startups an advantage is, when they enter into it, they're exploring in a way that established companies, that enterprises aren't enterprises already have a product that they're selling. We all know that there's an innovation problem with enterprises. The reason is that, for a variety of reasons, they just stop the exploration of what are different ways that we could do this? What are other products? Because they don't want to disrupt themselves in that sense, so they just sort of stick to the path that they're on. The advantage that a startup has is they come in and they're very exploratory. They're just trying stuff. But what we have to realize is that once you decide what you want to do, you're going to become more and more enterprise like you're going to become more and more myopic as you stop exploring those other avenues, those other strategies, those other products, those other motions that you could be pursuing. So how do we solve all of these problems at once? You have to have some really good unlesses So goals are great, as long as you have thought in advance about what would make it so that you don't pursue that goal anymore. So it's like, I'm going to develop this product unless. And what are those unlesses? They're going to be something like kill criteria. They're going to be benchmarks. They're going to be what are the signals from the world that are going to tell me that I ought not to continue this I'm going to run this marathon unless I break my leg in the middle of it, and then I'll stop. And I know it all seems so silly, because obviously we really think, well, if I break my leg in the middle of a marathon, I'm going to stop, but just Google it. No, you're not, you're not going to stop once you're in the middle of it. So when we do the goal setting, we have to set those unlesses in advance, and then you have to put it on a regular cadence once a quarter, re examine those things and say, Is this the right goal, or if it is the right goal, is this the right way for us to be pursuing that goal, for us to be trying to achieve it? And then, if you decide that it is still the right goal, set your new one. Lessons. Okay. Can we see over the next quarter that's going to tell us that maybe we ought to tweak some things, or maybe we ought to quit altogether, or maybe we should consider or maybe we need more information. So I always tell people, like, set those goals, but then set the unlesses at the same time. What

Brett  1:10:14

advice do you have for quitters, like this sort of canonical bad type that we think of, like people that aren't gritty or quit too easily.

Annie Duke  1:10:22

You should read Angela duckworth's book called Grit, the power of passion and perseverance, which is an amazing book, because the fact is that the advice that I would give people is very similar to the advice for getting better at quitting. And that's not accidental, because it's the exact same decision. If you choose to quit something, you're by definition choosing not to persevere. If you choose to persevere and be gritty, you're by definition choosing not to quit. So the strategies that work well for one are going to work well for another. What does success really look like? What do I expect to see happen? What am I going to do? Like, thinking about a lot of times we quit things because they're hard. That's, in fact, the main reason why we quit things. So get somebody from the outside to help you find a Ron Conway to let you know, is this just hard, or is it hard and not worthwhile? Is it hard because I am actually failing and it's not worthwhile to continue? Or is it hard just because it's hard, because hard things are often worthwhile to do, and get somebody from the outside to help you with that. If we think about things like kill criteria and setting these benchmarks, let's say that you, for example, Miss A sales target to say, All right, what's reasonable for the next quarter or the next two quarters? What are the inputs that I need? Is this still worth spending my time on? Because what do I think the probability is that I'm actually going to be able to achieve that? What are the things that I need to change in order to do that again outside help really helps with this. So that can help you to stick to things if you are hitting the benchmarks, but it's really hard, and you just feel like you're working all the time, or whatever. It's telling you that the thing that you're doing is worthwhile. Because I think that the problem that we have with both sticking and quitting is that we're very short termist. It's like, it's hard right now, I don't want to keep doing it. So what you always have to do is think, in the future, what would it mean that I turned it around? Do I think I can? What are the solutions that I can come up with that would tell me that I would be able to do that, and then set that out very clearly, so that you understand, is this something that I'm supposed to stick to, or is this something that I'm supposed to quit? And I've now made it very clear what that's going to look like at some point in the future. I thought about what the inputs are for success. In this case, I've got somebody from the outside helping me, and that's going to actually help you with both decisions. Oh,

1:12:43

great place to end. Thanks, Annie,

1:12:45

thank you. You.