Dr. Peterson’s book is, in many ways, a distillation of his lectures on religion combined with his deep knowledge of psychology. Quite simply, this book is a must-read. Nat Eliason and I also did a Made You Think Podcast episode on this book, which you can listen to below:
In today’s world, we’re constantly being inundated with “newness”. It seems like every day, there’s a new startup or company coming up with a technology to improve how we do things. Despite how much media hype there is around these new technologies, it’s hard to know which ones have lasting power and which will fall by the wayside.
When looking at something new, a mental heuristic I find really helpful is examining it through the lens of the Lindy Effect. Those who have read Nassim Taleb’s The Black Swan and Antifragile are already familiar with the Lindy Effect. If you haven’t, here’s a brief summary (though you should still go read the books):
The Lindy Effect refers to the life expectancy of non-perishable things, like ideas or technology. Basically, the rule states that the longer something has been around, the longer it will be around.
An easy way to grasp this concept is to compare two successful books, one old – say, The Bible and one new – like Fifty Shades of Grey. The Bible has been around for about two thousand years while Fifty Shades has only been around for a handful of years. Which book is more likely to still be around in a hundred or a thousand years? Obviously The Bible. This concept applies to more than just books though – it applies to anything. Technology, media, transportation – everything. Something which survives a long time has, by definition, gone through the crucible of time…and survived. That bodes very well for its future survivability.
While not true 100% of the time, the Lindy Effect can be a useful tool for predicting which new technologies or ideas will survive and which are just blips on the radar. A great example of this is the butter vs margarine debate. For literally thousands of years, humans have consumed butter. Then, for a brief stint during the twentieth century, humans were told butter was bad for them and many people switched to margarine. But as is becoming readily apparent, butter isn’t nearly as bad as once thought and margarine may literally kill you. And accordingly, butter has made a comeback. Which is more likely to be around in a hundred years?
Thanks to what I do for a living, I’ve been thinking about the current state of the beer industry and looking at it through the “Lindy Lens”. I’ve made a series of predictions with explanations below that arise from following the Lindy Effect to its logical conclusions in the beer realm:
Similarly, the concept of “zen” is pervasive in popular culture yet I would argue that very few of us know what the word is referring to.
A quick disclaimer about everything in the key takeaways below: these notes are the parts of the book which spoke to me. I make no claims on it being a comprehensive overview of Zen Buddhism or of The Way of Zen. If the ideas below intrigue you, reading the book will give you a much better grasp of these (admittedly) difficult to verbalize ideas.
I’ve been making a point to ask startup founders I hang out with for advice, particularly about management, priorities, and growth. I’m mainly trying to preemptively ensure we at Unlimited Brewing don’t fall into the same traps that others have already solved.
A few weeks ago, my friend (and East Village neighbor!) Sebastian Metti gave some advice which really stuck with me. I asked Sebastian how founders should spend their time. His response was super simple:
“You should spend your time planting seeds.”
This is brilliant advice. The idea of “planting seeds” loosely translates to building relationships, which applies to sales, business development, hiring, fundraising, press, and pretty much everything else. Some of these “seeds” will flourish and yield gigantic harvests. Most of them will go nowhere. And that’s totally fine.
When a business is just getting off the ground, the founder is the entire company. They need to build, sell, market, pick up the trash – everything. But as a company grows, there’s no way the founder will be the most skilled in every function. Nor should they want to be. That said, the founder will still be the only person with a high enough view of the company AND the ability to steer the company where it needs to go. And that’s where building the right strategic relationships becomes super important.
Finance is something I’ve had more than a passing interest in for the better part of a decade. Back in high school, I was pretty sure I wanted to go into finance. Even the 2008-2009 financial crisis did nothing to shake that belief. What did eventually shake it, however, was an Introduction to Mathematical Finance class, which I found to be so abstract and irrelevant to the “real world” that I eventually dropped both the class and the idea of studying finance altogether.
While reading TheWisdom of Finance, I re-learned why I was interested in finance in the first place – namely, its intimate connection to real, human problems.
As a side note: It’s always an awesome experience to read an author with erudition like Mihir Desai. I got something like twenty other book recommendations out of this book, many of them fiction.
There are two schools of thought about how information should flow within companies. By far the most common way is chain of command, which means that you always flow communication through your manager. The problem with this approach is that, while it serves to enhance the power of the manager, it fails to serve the company.
Instead of a problem getting solved quickly, where a person in one dept talks to a person in another dept and makes the right thing happen, people are forced to talk to their manager who talks to their manager who talks to the manager in the other dept who talks to someone on his team. Then the info has to flow back the other way again. This is incredibly dumb. Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company. No kidding.
Anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager’s manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else’s permission. Moreover, you should consider yourself obligated to do so until the right thing happens. The point here is not random chitchat, but rather ensuring that we execute ultra-fast and well. We obviously cannot compete with the big car companies in size, so we must do so with intelligence and agility.
One final point is that managers should work hard to ensure that they are not creating silos within the company that create an us vs. them mentality or impede communication in any way. This is unfortunately a natural tendency and needs to be actively fought. How can it possibly help Tesla for depts to erect barriers between themselves or see their success as relative within the company instead of collective? We are all in the same boat. Always view yourself as working for the good of the company and never your dept.
There are sooo many great points in this email. Let’s break them down:
500 Startups, one of the world’s leading startup accelerators, recently released a report on how large companies can best work with startups. Given their unique position in the market, 500 Startups surveyed executives at companies like General Motors, Simon Ventures, Embraer, and more to learn what they’re doing to drive collaboration with startups.
The 500 Startups Corporate report has tons of useful takeaways for both startups and corporate innovation teams. Here are their best practices for corporate innovation teams and my take below:
Disclaimer: When I first heard of The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber, I was extremely skeptical. I was catching up with my friend Spencer Whitman, who is the General Manager of Rent Jungle, and asked him if there’s anything he recommend I read as I embark on my journey of growing and scaling Unlimited Brewing Company. He immediately mentioned The E-Myth Revisited, whose title made me recoil in horror. My first thought was that this was some weird book about how the dot-com era was a fluke and that technology is overrated. Luckily, Spencer went on to explain that The E-Myth Revisited title stands for “The Entrepreneur Myth Revisited”, not the electronic myth. I immediately bought the book because I knew if I thought too much about the decision, I wouldn’t read it.
The E-Myth Revisited turned out to be one of the better business books I’ve ever read. Part philosophical treatise, part business advice, and part psychology manifesto, this book provides a whole new way to think about the personal development of an entrepreneur. Key takeaways are below.
“Get good grades in school. You’ll have more options when choosing a college.” -Parents
“Pick a major that applies to many different industries. That way you’ll have more job options.” -College Counselor
“Consulting is a great field. From there, you can do whatever you want.” -Career Advisor
While this advice isn’t necessarily wrong, very rarely do we take a step back and examine what exactly we’re collecting all these options for. Perhaps at the beginning of our careers, we have some vague idea of a goal or accomplishment we want to reach but we’re not quite sure: a) how to reach the goal and b) if we even want to reach the goal in the first place. So naturally we choose the path that keeps the maximum number of future possibilities available to us. Unfortunately, this fuzzy goal mindset is often carried through to adulthood and leaves us grasping for optionality with all of our major life decisions. And over the course of a lifetime, this optionality maximization mentality turns us into habitual option collectors and prevents us from reaching our goals.
But I’m getting ahead of myself. Let’s start with the basics.
What is Optionality?
Optionality is a concept from the finance world. When someone holds an option, it means they have the right to do something but no obligation to do it. As Mihir A. Desai puts it in his Crimson article, “Optionality is the state of enjoying possibilities without being on the hook to do anything.”
When the universe conspires in your favor, you participate in the upside. And when it doesn’t, you aren’t on the hook for the negative consequences. It sounds pretty great, doesn’t it? In finance, this is referred to as a “non-linear payoff”, which literally means you stand more to gain than you do to lose.
Thanks to books like Antifragile, the idea of optionality has become popular in the mainstream. Predictably, people are very interested in the idea of having possibilities without any obligations. The optionality concept has been applied to things like careers (picking a job that opens up as many future opportunities as possible), relationships (dating around and not making commitments because you never know who else you’ll meet), and more.
Of course, in the financial world, every option has a cost associated with it. And so do real world options. But while financial options have an explicit price attached to them, real world options have more subtle costs.
What is The Optionality Trap?
When we first start making life decisions on the basis of the future options they create for us, we do so to reach some long-term goal. Perhaps we want to someday travel the world or start a company. Maybe we want to build enough skills and reputation so we can work on our own schedule. Or most common, we just don’t know what we want to do so picking an option that gives us more options seems to make the most sense.
However, when we do this for long enough, it becomes a habit and we start making all of our decisions through the lens of future optionality. After awhile, we aren’t even conscious of this rationale. We post-rationalize decisions and think we want to go to business school or consulting for their own sake but really, we’re optimizing for the opportunities we’ll have afterwards. Quoting Mihir Desai again:
The Yale undergraduate goes to work at McKinsey for two years, then comes to Harvard Business School, then graduates and goes to work Goldman Sachs and leaves after several years to work at Blackstone. Optionality abounds!
The optionality trap is something that ensnares us, not through outside forces, but through our own risk aversion and indecisiveness.
My opinion is that the optionality trap originates from an aversion to being hurt emotionally. A desire to avoid emotional pain is of course, completely natural. But in this avoidance lies an emotional stuntedness that prevents us from ever trying anything worthwhile and learning through the process.
Common Optionality Trap Examples
The optionality trap can affect more than just our career choices:
Let’s face it: coming up with startup ideas is not hard. The hard part is determining if your idea is viable and then of course, executing on it. And yet there are thousands and thousands of potential entrepreneurs sitting on the sidelines with a concept or an idea that “isn’t quite ready yet”.
Guess what? It’s never going to be ready. Instead of getting started with customer development to see if their idea has legs, these would-be entrepreneurs are keeping the option of being an entrepreneur alive, while not engaging in any of the emotional (ego) risk of being wrong.
If you have ideas, start testing them.
I also often see entrepreneurs who come up with tons of ideas but can’t pick one to go deep on. This is a close cousin of the “not ready yet” problem. These entrepreneurs are giving themselves optionality but never actually selecting one of their options.
As Chaz Giles frequently reminds me when I try to get “clever” with startup ideas, “Someone has built a profitable business selling bird diapers. Don’t overthink it.”
By focusing on optionality of ideas over execution, would-be entrepreneurs will never succeed. But perhaps more importantly, they will never make mistakes and in the process, completely stunt their own learning curve.
Individuals aren’t the only ones guilty of optimizing for optionality. Companies frequently do it too.
In companies, the optionality trap is often seen in the insidious form of endless meetings, which leads to decision-making procrastination. Quite simply, companies that don’t make decisions can’t be wrong. Actually, that’s not true at all – by not making decisions, companies are defaulting to making the wrong decision. But the individuals at the company (a key distinction) get to avoid making a decision which could potentially be wrong, which means they avoid any potential blame.
This is once again the optionality trap at work. By not making decisions, individuals within a company keep all their options open. But by not making a decision, their company (which ultimately includes them) fails at solving whatever problem they were trying to solve.
The optionality trap in dating is the ultimate modern day problem. When you can login to a dating app and get access to a huge number of single people, it becomes tough to commit to anyone. What if there’s someone better just on the other side of that app?
Plus, as you get to know someone, their flaws start coming out while the ephemeral “people” on the dating apps are still perfect. At least in theory.
When you live with the belief that there are people better than your current fling just a tap away, it becomes impossible to emotionally commit to someone. And without emotional commitment, no relationship can flourish.
For those lucky few who have the option to live wherever they want, the easiest thing to do is to live nowhere. I’m referring, of course, to the currently en vogue nomad lifestyle. Don’t get me wrong: the ability to live and work anywhere is generally awesome. Lord knows I’ve taken full advantage of it. But there are downsides that very few people talk about. For example:
When a person spends all his time in foreign travel, he ends by having many acquaintances, but no friends.
This quote about the nomad lifestyle was made by Seneca in Letter II of Letters From A Stoic, which is about 2000 years old but still holds true today. By not living anywhere, you experience a wide variety of locations but never develop deep relationships with people and place that someone who lives in the same area for years would enjoy.
How To Get Out of The Optionality Trap
You’re probably sitting there thinking to yourself, all this talk about optionality traps is fine but HOW do you actually make a decision? If you’re looking at two options with different risk profiles and appeal, how in the world do you decide which one to go for? Andy Dunn from Bonobos says it better than I can:
The risk is not in doing something that feels risky. The risk is in not doing something that feels risky.
Very little is obvious in the research on human decision-making and happiness. Very few things are proven. One thing that is proven is this: the only regrets octogenarians have are for the risks not taken.
If the risk taken does pan out, it is good. But if it doesn’t — and here’s the key thing — we find a way to justify the risk taken as learning.
That’s the secret.
If our goal is to live a good life without regrets, it’s so important to internalize Dunn’s quote. If we choose the path that doesn’t speak to our souls but feels safer, there’s a very strong likelihood that we’ll ask that dreaded question years later: What if? What if we took the plunge?
But if we choose the risky path and it doesn’t work out, we can (usually) call it a learning experience and move on. There’s very little thinking about what would have happened if we had taken the safe path.
By knowing this and then projecting to how you’ll feel in 10, 20, or even 40 years out as a result of this decision, you can take on the fear that quite naturally arises at a decision point. And by taking fear out of the equation, you can make a decision that’s based on what you actually want, rather than basing it on what’s safe or comfortable.
Is There a Time and Place For Optionality?
Despite what you may think from my railing against the optionality mindset for the past ~1800 words, there are plenty of times in my life where I’ve chosen optionality over the more direct path. While I do regret some of those decisions, there are a couple times that I’ve chosen optionality and it worked out.
Like most complex matters, there’s no “one size fits all” solution to decision-making. Big life decisions are deeply personal. Even something like deciding to go into consulting, which on the surface seems like it’s driven by optionality, can be a courageous decision depending on what the motivation is.
Ultimately though, if you know you want something, the fastest way to get there is to chase it directly. Optionality is a backup tactic, not something to pursue first.
The siren call of optionality is admittedly an alluring one. But it’s also dangerous. Unfortunately, when we don’t know what to do or the path to our goals is unclear, the easy default choice is to defer and pick something that gives us the most future choices. But the universe is strange. When we choose a path, things start to happen. Things we can’t necessarily predict in advance. Andy Dunn says it nicely:
If you can’t decide what to do, get on the road. You won’t find the answer. It will find you.
In other words, go punch the optionality trap in the nose and get after it.
Crucial Conversations: Tools For Talking When Stakes Are High was recommended to me by my brother, Jay. Like many of us, I have a bad habit of shying away from confrontation and difficult conversations. It’s a natural reaction. Tough conversations are usually unpleasant and have the potential to escalate into full blown conflicts. But the truth is, by avoiding difficult conversations, we suppress disagreement and emotion until they bubble to the surface and blow up. Crucial Conversations provides a toolkit for those of us not naturally gifted at the art of handling difficult conversations.
Biggest Takeaway: Crucial conversations require finding “The Pool of Shared Meaning”
If there’s one thing to take away from this book, it’s the idea of creating a “pool of shared meaning” between key stakeholders. In their research for the book, the authors examined what unique conversational tactics are used by those who are more skilled at dialogue than the average person. Here’s one of their key findings:
People who are skilled at dialogue do their best to make it safe for everyone to add their meaning to the shared pool – even ideas that at first glance appear controversial, wrong, or at odds with their own beliefs.
The pool of shared meaning is essentially where a group’s collective knowledge goes. When the group has more accurate or relevant collective information, they can make a better decision. And when people don’t feel safe or comfortable adding their opinions to the pool of shared meaning, it means people are operating with different information, which of course will lead to differences of opinion and conflicts.
Equally important, since by definition the pool of shared knowledge is shared, people are much more willing to follow through on whatever decision the group makes. As Samuel Butler once said:
He that complies against his will is of his own opinion still.
When a group needs to take an action, you don’t want to be using force or authority to convince them. It’s much better, both for long-term and short-term cohesiveness, for individuals to willingly go along with whatever the group collectively decides.
Start With Heart: The Mindset For Crucial Conversations
The first step to achieving the results we really want is to fix the problem of believing that others are the source of all that ails us. It’s our dogmatic conviction that “if we could just fix those losers, all would go better” that keeps us from taking action that could lead to dialogue and progress. Which is why it’s no surprise that those who are best at dialogue tend to turn this logic around. They believe the best way to work on “us” is to start with “me”.
The key framework here is to understand what you really want out of a crucial conversation, what you want for others, and what you want for the relationship moving forward. Once you’re clear on those things, it becomes a lot easier to operate with a cool head and take a skillful approach to crucial conversations.
Part of the reason this technique works so well is it allows you to hijack the normal physiological response to conflict. Normally, when engaging in crucial conversations, our body has difficulty distinguishing between a tough social encounter and a physical threat. Accordingly, blood will be diverted to your muscles and less will flow to your brain, leading your mental facilities t0 decline – at the worst possible moment! But by applying a logical framework and thinking about goals, your body realizes that this is not a physical altercation, and you’ll be able to think clearly.
Apart from the physiological benefit to using this framework, the other advantage is that by working on yourself first, you may find that you are the reason the conflict is happening! Taking this moment to stop and reflect can nip conflicts in the bud before they really escalate.
Getting Others To Share: AMPP Framework
It’s all well and good to understand the concepts above but without getting the other person/people to open up and share, there’s not really a “conversation” happening. The AMPP Framework shared in Crucial Conversations is a useful one in getting others to open up. You may already use some of these techniques but it’s useful to see the entire framework:
Ask to Get Things Rolling
This technique is simple – you just need to be willing to stop sharing your thoughts and step back to invite the other person to talk about their viewpoint. This far easier to say than to actually do in practice.
An example of asking: “I’d really like to hear your opinion on this.”
Mirror to Confirm Feelings
The main purpose of this technique is to convey to the other person that it’s ok to share their feelings. Conveying this doesn’t have much to do with the words coming out of your mouth. Instead, your body language, tone of voice, and attitude are going to give the other person the confidence to share their feelings with you.
An example of mirroring: “You say you’re okay, but by the tone of your voice, you seem upset.”
Paraphrase to Acknowledge the Story
Again, this technique will either work or fall apart based on your body language. Paraphrasing is exactly what it sounds like: repeat what you’ve heard in your own words to confirm you understand correctly. It also helps the other person see that you truly want to understand what they’re saying.
An example of paraphrasing: “Let me see if I understand this correctly. You’re saying….”
Prime When You’re Getting Nowhere
This is mostly a last resort technique but in cases where you’re pretty sure what the problem is, you can share your best guess as to what the other person is thinking. Crucial Conversations recommends you use this technique only when the other party still doesn’t feel comfortable sharing, even after trying all the other tactics. In my experience, priming can be pretty helpful – it shows the other person that you’re aware of what they’re feeling.
An example of priming: “Are you thinking that…”
Resolving Differences of Opinion: The ABC Framework
Differences of opinion are a fact of life. So how do we resolve them? The ABC framework is a good place to start:
This is something I can personally attest to: In many, if not most, disagreements with other people, I agree with 90% of what they’re saying. But in the heat of the moment, that 10% difference escalates into a standoff. The authors of Crucial Conversations are instead suggesting that you first find the places you and the other person agree. Which then sets the stage for…
Instead of looking for trivial differences between your opinion and the other person’s opinion, skilled communicators take the areas of agreement and build from there. For example, when the other person leaves out an element of the argument, an unskilled communicator will say something like: “Wrong. You forgot to include…” while a skilled communicator will say: “I agree. In addition, I noticed that…”. It’s so simple but this little switch takes a conversation from confrontational to friendly.
When there is a difference of opinion, instead of pronouncing the other person’s ideas as wrong or conveying your opinion as if it’s confirmed truth, it’s more effective to treat both opinions as two sides to a story. This can be conveyed through phrases like “I see things a bit differently”. Again, this invites others to share their opinions and test your ideas. While you may not ultimately end up agreeing, communicating in this manner creates a larger pool of shared meaning and a more productive conversation.