Today’s guest, Annie Duke, is an author, speaker, and decision-strategist. As a former professional poker player, she has won more than $4 million in tournament poker. During her career, Annie won a World Series of Poker bracelet and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012. Prior to becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania.
In today’s episode, Annie dives deep into decision-making under uncertainty, and gives you the kick in the pants you need to take action and apply it – so, for once, I don’t have to!
Specifically, she covers these key concepts and tools that are essential to understanding how to make good decisions:
- How to evaluate your situation using a “Cause-benefit analysis” (29:50)
- How to leverage the “endowment effect” to properly place value on things, ideas, or beliefs (32:50)
- How to use the “sunk cost fallacy” to avoid making poor decisions (39:30)
- How to set “kill criteria” so you know when to quit (44:00)
More on Annie:
Annie’s latest book, Quit: The Power of Knowing When to Walk Away, will be released October 4, 2022 from Portfolio, a Penguin Random House imprint. Her previous book, Thinking in Bets, is a national bestseller.
Website: Annieduke.com
Twitter: @annieduke
Nonprofit Organizations:
The Alliance for Decision Education
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TRANSCRIPTION
Brett Bartholomew 0:11
Every single one of us knows one of these three people. One, we know somebody who is stuck in a job where they feel like they could be doing more. And more importantly, you know, they could be doing more. And they just are really uncertain of themselves and scared to take that next leap, even though they could offer so much value to the world. We also know some people that are in a current entrepreneurial venture, but they’re scared to scale, they’re scared to take that next step. They’re scared to grow. And finally, we also know somebody who is just a consummate over thinker. And they are always wondering who is going to listen to them who’s going to care about what they have to do.
Now, even if you don’t know one of those people, the chances are that you are one of those people in some way, shape or form, a lot of us want to make a bigger impact in the world. And that is exactly why we do our Brand Builder course. And the doors are closing soon for our final course of the year on November 5th and 6rh, it’s the bottom line. Listen, we have done something to help more coaches get out of their own way so they can provide more value for other people. It is a two day course, we try to be really cognizant of your limitations. This is hosted at an incredible mansion in Phoenix, Arizona, that’s poolside, and you’re going to walk away with the following tools.
One, you’re going to be able to identify what’s keeping you from taking the next step, and how you should really niche down and approach your target market, two you’re going to get a lot more clear on what your time is actually worth and how you can get people to pay you in accordance with that. Because there’s a lot of people out there that respect you respect your work. Respect your perspective, no matter how much you doubt yourself that want to do that, you’re going to be able to better pinpoint that unique problem, you solve the value you have to offer. clarifying your target audience and learn how to manage your time your staff, your effort, your growth, your doubts, your insecurities, everything is going to be done in these two days.
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If you want a little bit more detail, this is also not something where you’re just sitting there watching presenters speak, you’re going to break out into pot, you’re gonna do a lot of role playing scenarios. So you can practice refining your niche and your pitch, you’re gonna be able to work with other people in different industries who can give you direct feedback on how they think you should approach things. And I want to be very clear, it doesn’t matter what your social media following is, that does not matter at all. It doesn’t matter what your business is, what your age is. All that matters is that you are somebody that wants to help people and wants to do something that lasts. So again, artofcoaching.com/brand get there right now.
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Welcome to the Art of coaching Podcast. I’m Brett Bartholomew, and at a young age poor communication nearly cost me my life. Now, I help others navigate the gray area of social interaction, power dynamics and communication so they can become more adaptable leaders regardless of their profession, age or situation. This podcast is for everybody who is fascinated with solving people problems. So if you’re in the no nonsense type who appreciates frank conversations, advice you can put to use immediately and learning how others navigate the messy realities of leadership. You’re in the right place. I’m glad that you’re joining us. Let’s dive in.
Today, I’m joined in conversation by author, speaker and decision strategist, Annie Duke. Annie loves to dive deep into decision making under uncertainty which makes this conversation a favorite of mine, because that’s something we nerd out about at art of coaching. And her latest obsession is on the topic of quitting. In particular, she’s on a mission to rehabilitate that term, and what it means to quit. And to get people to be proud of walking away from things to know when enough is enough and to be able to use information that’s based on research, not just intuition to be able to do so effectively. Now, her latest book Quit: The Power of Knowing When to Walk Away is going to be released October 4. And you can purchase it via the link below in our show notes.
And at the time of this recording. We were the first people to interview her in this detail about the book so you’re getting a unique inside look. Her previous book Thinking in Bets as a national best seller, and as a former professional poker player, and he has won more than $4 million in tournament poker. During her career. She also won a World Series of Poker bracelet, and is the only woman to have won the World Series of Poker Tournament of Champions, and the NBC national poker heads up championship. She retired from the game in 2012.
Prior to becoming a professional poker player as if that wasn’t enough, she was awarded a National Science Foundation fellowship to study cognitive psychology at the University of Pennsylvania. Needless to say, this is a rich discussion. I know you guys are going to enjoy this, make sure you have your reflection guides and your notes handy. Without further ado, Annie Duke.
Alright guys, you’re joining me right in the midst of a conversation with Annie Duke. And this was something where usually before the show I try to give our guests context. And sometimes that turns into conversations that you think man, we really need to start recording this. So Annie, let me first say welcome and give the audience a chance to hear your voice. I’m glad you’re joining me today.
Annie Duke 8:45
Well, I’m glad to be here. And the conversation already has been great. So I’m glad that we’re circling back because you kept saying like, Oh, we should be recording this. So make sure to turn during the recording and let’s go so I’m so happy to be here
Brett Bartholomew 8:58
And an early connection point for you guys listening why you’re gonna love Annie, especially her new book, Quit: The Power of Knowing When to Walk Away as we were both just kind of commiserating about the woes of trying to write a book that challenges people. Isn’t this kind of how did you phrase it? You’re not trying to do
Annie Duke 9:17
I’m not I’m not trying to write Chicken Soup for the Soul like, which, you know, that it’s that’s for some people, like sometimes people just need to feel good type of book. But, you know, my the way that I sort of do my role is as a translator and synthesizer, right, like I’m translating science, and synthesizing, you know, different results across behavioral science. And then trying to say that in a way that like the average person who doesn’t have a PhD in cognitive science can really understand and incorporate into their lives. And one of the things that one of the challenges that I think that all writers have is that a lot of books are kind of like playing into what intuitively feels good or what intuitively feels right.
And the problem, and this is something that comes up repeatedly in the book Quit, is that our intuition is wrong about so many things. And this is a theme that I say over and over and over again, through the book is I have the phrase, as you know, because you’ve read it, you know, our intuition tells us, you know, and I say that over and over. But as with many things, in this case, our intuition is way off base. Because the science just really conflicts with a lot of intuition. And I think that that’s very challenging for a lot of readers, like people who have intuitively felt that something was true for so long, when you challenge that I think it can be really hard. But that’s the audience that I want to speak to, is people who want to find out when Wow, that’s something that I’ve thought forever. And it turns out, it’s just not true. Thank you, you know, that’s what I’m looking for well,
Brett Bartholomew 11:02
And right off the bat on page 43 of the book. And granted, there’s bias here, and I’ll explain it. But you say our intuition is that quitting will slow down our progress, the reverse is actually true. If you walk away from something that is no longer worthwhile, that frees you up to switch to something more likely to help you achieve your goals. And you’ll get there faster. Now, just to contextualize this, you know, when I started transferring over from strength and conditioning into what I do now, and we’ll talk about how you in your journey transferred careers, a couple of different times, you know, what I always dealt with this people being like, Hey, I thought pro sport was gonna make me happier.
I thought working at this division one was gonna make me happy, I thought, and you know what, I’m just finding that I can only move so much I kind of feel they love the idea of what they are. But what they do is becoming a bit stagnant. You mentioned this really well, in the book, too. I don’t want to all that you talk to this. But what you started finding is they fell victim to what you talked about in your book, the sunk Cost Fallacy, so many of them felt that they had already put in, you know, oh, I’ve got the master’s degree, I’ve done the internships I’ve done the years of hard yards, and all this.
If I turn away, now, I’m not going to look like a true blue, I’m going to look like a quitter. And I start asking some of them like, what is more important, right? Like you having something that is sustainable, that you feel you’re good at, and that you can actually keep your family and keep moving forward, or you trying to meet this idealistic outcome? Because you feel like if you let go, now, it was all a waste. And I’d love for you to just touch on that. I know it’s broad. There’s many points in the book on this, but that I can ask Yeah.
Annie Duke 12:32
Yeah. So let me start with when you said like quitting gets to where you want to go faster? So this is something that’s very counterintuitive, like our intuition is that quitting stops our progress, it slows us down, but actually gets us one where we want to go faster, because we can think about any path that we’re on, is meant to have us. We’re making decision that should advance us as much as possible toward our goals, we’re trying to gain as much ground as possible toward our goals. But what we know is that, you know, when we make that choice, what action am I going to choose whether it’s a career or a particular job, or a project that we’re pursuing, or even a relationship,
Whatever, right, whatever it is, that we’re pursuing, it could be like a country decided to enter into a war, for example, or particular policy that we might be engaging in, right. It’s all meant to advance us toward our goals as quickly as possible. But when we make that decision, we’re making under conditions of uncertainty, which stems from two places, one is just luck, right? Like, we can make a choice that’s going to work out 80% of the time, it’s going to get us to where we want to go 80% of the time, and 20% of the time, it’s going to be a bad result, it’s going to cause us to lose ground.
And that doesn’t make the initial decision bad and but by definition, 20% of the time, you’re gonna observe that bad results. So 20% of time you’re gonna find out Wait, the path that I’m on is not actually advancing mature toward my goals in the way that I had hoped it would. And then the second issue is that we’re always making decisions under conditions of hidden information, right? Like we just, we don’t have all the facts whenever we make any decision, and new facts are going to reveal ourselves afterwards themselves rather afterwards.
So I think a really good example of that is like at the beginning of the pandemic, you may have been doing this to I was like quarantine my packages, I was wiping everything down. I was wearing gloves. You had Lysol everywhere. Because we thought this is the problem of incomplete information. We thought that COVID was spread by respiratory droplets. So you know, in that case, the goal is don’t get infected. And I’m doing all of these things, try not to be infected. And then we found out afterwards so it’s actually spread through aerosols and you can just let your Amazon packages in the door, right?
So that’s a case where like you find out new information, you quit what you were doing, wiping down packages, and you just switch to something else. So that’s like a very simple examples of the problem with hidden information. But what all of that means is that when we choose something, we’re making our best guess that it’s going to get us to where we want to go fastest. But then after we’ve done the choosing, we’re going to learn new stuff.
Brett Bartholomew 15:19
Hey, quick heads up that if you guys haven’t gone to artofcoaching.com/resources, do so now we have so many free resources for you, regardless of the field that you’re in. We have free downloads and guides and manuals for people that are dealing with impostor syndrome. People that want to figure out how do I find the right mentor and reach out to them? Do you guys have an intern guide? Do you have quizzes that helped me learn what makes others around me tick and figure out what they’re most motivated by literally everything, from guides on how to manage your finances to how to manage your life, when things get chaotic, to all kinds of free webinars, you can find it artofcoaching.com/resources.
Every year, we put out more than 1000 hours of free content, you can find so much of it there. So please go there. Now, if you’re more than newsletter type, you don’t really want a bunch of free resources. But you’d love to know what’s going on the latest and have events and anything that we release, well, then you can just go to artofcoaching.com/begin. Either way, both are great opportunities for you to stay up to date, stay connected, and stay on top of all things, art of coaching.
Annie Duke 16:34
When we choose something, we’re making our best guess that it’s going to get us to where we want to go fastest. But then after we’ve done the choosing, we’re going to learn new stuff. And when we learn new stuff, what we might find out is actually, this is causing me to lose ground toward my goal. Or what we might learn is that I’m gaining ground, but I could be doing this the other thing that actually would cause me to gain more ground. And that’s why if we’re good at quitting, right, not just like quitting, because something’s hard, right? But quitting something regardless of whether it’s hard, because it’s no longer worthwhile, then if we can get ourselves to do that, that’s what’s going to get us to achieve our goals faster
It’s going to get us to where we want to go faster, because we’re going to be able to switch to something new, that’s actually going to cause us to gain more ground. Now, as you alluded to, and we can talk about if you want. And this is why I can write a book that’s more than that sentence. It turns out that most of the time that we quit, we do it too late. Which means that we’re all losing ground all the time, because we have this very negative with these very negative feelings toward quitting, which stop us from quitting. And then separate from that we have these issues, like you said, like fear of waste, for example.
Brett Bartholomew 17:56
Yeah, with that, I remember you said something that stuck with me one time, when we think of terms like quit, it’s very like, uh, let me let me phrase this another way. Grit has been popularized, right. And we can think of like, oh, grit, bravery, steadfastness. There’s all these terms that coincide with that kind of like hero to pop positive terms, we have all these, you know, positive connotations with very few negative and then there’s terms like quit, which can seem like this negative connotation, and you look up synonyms, and almost all of them are negative. And I know Roy Baumeister talks about this in his book, that negativity bias. But in reality, like, these things have tremendous positivity to them.
Like you need to know when to do these things, I think, a very basic, and it might be banal, to you example, but something we were talking to somebody this morning, that was about changing careers, and he said, What was one thing that you struggled with? And I said, Well, you know, I knew that we could make easy money right away, if I would have just stayed in strength and conditioning and talked about the role of social science and, you know, behavior change in that. But I also know that I like solving problems for people that are a wide range of topics, it was no longer just human performance, you know, and we wanted to work with other professionals and the work had crossover.
But that was really troublesome at first because we had to brand ourselves differently than you have to get to kind of get through that glass ceiling of like, you know, people thought I was a fitness guy, why are you talking about behavior change, and you’re like, hey, as it turns out, getting you know, 50 to 70 athletes that are worth 150 million or more do things they don’t want to do is a lot of behavior change is a lot of the messy realities of leadership. We have these things too. But it was this long kind of trench, almost like this Maginot Line, we’re scared to cross for a while, because you knew you’re gonna lose short term popularity.
And it was like, Well, is this worth it? I’m gonna lose kind of the following in the base that got me here. But then in reality, if we just keep trudging forward, if we keep trudging I’m not scared to say hey, I’m not talking about training in isolation anymore. I’m not talking about athletes anymore. I’m not even using the term coaching. In the context of anything sport related coaching is guiding leading or whatever For, I can quit that because there’s this other goal, this other mountain that we want to achieve.
And I just remember that person said, That’s it, I am scared a little bit of that short term loss of popularity, certainty, which I know you talked about your book and even the social rewards that come with having a certain identity that is inveterate to us for a long time. And I wonder if your background right you having almost gotten the professor route for a while, and then everything that you did in the world of poker, everything that you’ve done since? Are there situations like that, that you tremendously struggled with from a social rewards ambiguity, uncertainty and desire for safety standpoint?
Annie Duke 20:38
I mean, the answer is, of course, I mean, one of the things that you’re pointing out is that we have a it’s called the ambiguity aversion. And I talked about this in the book that we prefer, we prefer things that we know to things that we don’t know. And I actually talked about, like a particular person. In the book, his name is Sarah Martinez. And, you know, she was an ER doctor, but also an administrator, she found herself in this place where she was just very unhappy because of the extra administrative duties meant that she was taking work home, it was affecting her relationship with her kids. She actually was getting very little time in the actual ER.
And she was unhappy for a really long time. And I got this email that got lobbed into me from her, just like, oh, I don’t know if I should actually quit. Can you talk to me about it? And I talked to her, and what you’re talking about is exactly what she said. So I said, she said, I don’t know, because I have this other job opportunity. But I don’t know if I’m going to be happier in it. Right. So that was the problem is that I don’t know what is on the other side. I don’t know if I can climb that other mountain. I’m already standing here. But like, what if it doesn’t work out? Like what does it look like that we’re afraid we’d rather take something that we’re certain about, yet unhappy than something we’re uncertain about.
So what I said to her was, well, let me ask you a question. It’s a year from now, what’s the probability you’re happy in your current job? And she said it was 0%. That’s literally what she said. She said, I’ve been in it long enough. I’ve been unhappy for a couple of years now. I said, Okay, so if you switch the new job, what’s the probability you’re happy in a year? And she said, Well, I don’t know. And I said, Well, is it more than 0%? And that was that moment for her right, like, but we don’t like that, right? Like we, it was the uncertainty that was stopping her from switching. So I think that in my life, basically, what happened was that I had this moment, and I talked about this in chapter 10, of what I call forced quitting.
Right? So we think about quitting as something that we do voluntarily, right, like I choose my own switching. But sometimes the world makes you quit. It makes you stop. And in my case, what made me stop was because I was an academic, I was getting my PhD, I had done five years at Penn. It’s a lot of time and effort, right? Like, oh, you know, how am I going to switch from that, I’m going to feel like I wasted all of that time and effort, right. So this huge fear of waste. And I was on my way for my job talks, actually, like it was literally on my way to NYU. But for the few months before that, I’ve been struggling with like a chronic stomach thing that was happening with me.
I’ve been going to Dr. Sort of trying to figure it out. But I was trying to sort of power through just to get my job talks done, so that I could, you know, start the next chapter of that career. And basically, the stomach issue became acute, and I ended up in the hospital actually, for two weeks. So obviously, like I was in the hospital, I had to cancel on my job talks, my doctors were like, You got to stop, like, you got to figure out what’s going on. And so I was forced to stop what I was doing. So during that period, at that time, I intended sort of a year later to pick up where I had left off after I sort of figured out what was going on with me.
But I needed money in the meantime. So I started playing poker. And just in order to make ends meet, because I had very particular needs, like I didn’t want to rebuild a new career because I thought I was going back to academics. And I also needed very flexible hours, because I didn’t know how it’s going to feel from day to day. So poker was actually a pretty good choice. For me. This was in the 90s, before it was on television or on the internet. So it’s actually kind of a weird thing for me to end up doing. But my brother was already doing it. So I had like a little sort of a door that was ajar for me to push open.
And I started doing that, and I loved it. And there’s all sorts of science behind like when people are kind of forced to quit when they’re forced into this mode where they have to start exploring other opportunities that they just become less averse to the ambiguity, because they’ve sort of had the experience of well, I quit the world and then right and then I started doing this other thing. And that’s certainly what happened to me. And then I took another important lesson from it, which was sort of realizing because remember, I thought it was going to go back to academics, so poker So we’re sort of thinking about in the meantime, but we can think about that. So something I was doing in parallel.
Right. So what I sort of figured out at that moment was you can do two things at once. And then that helps you sort of figure out right, when I would call this expected value equation, right? Like, which thing Do I feel like, is advancing toward my goals more? Or do I want to keep doing both things at the same time, so in tooth out, so I didn’t go back to academics at that time, in 2002, I got asked to give a talk where, which was essentially merging sort of lessons from poker into, you know, decision making sort of what eventually became thinking and bats that that first book that I wrote, and I really liked it.
And so I said, Oh, I’m going to explore this. But what I kind of realized from before was that I don’t need to quit poker in order to explore this other route, because I can give talks, and I can start to put together like a suite of topics that I talk about, and then that turned into consulting. And then in 2012, I was like, What am I most excited about? Like, I’m just much more excited about the consulting and the speaking work and that kind of stuff that I’m doing. And then I retired from the game and went on to that. And then interestingly enough, through that, I had the opportunity to start going back to academics.
And now I’m a visiting scholar at Penn. I do research with Phil Tetlock who wrote Super Forecasting. Yeah, yeah, he’s great. So So I’m now writing a dissertation on work that I’ve done in improving forecasting skills. I teach some exec ed at Wharton. And you know, so I ended up circling back there anyway, which I think is also an important thing to realize is that when you quit, there’s a lot of things that you quit, where the door isn’t completely shut, like you can roll back to it.
But I think that the flexibility that I’ve had in terms of just like I’ve quit and started so many things, it comes back to that moment where I was forced to quit. And then you just sort of realize at that moment, like, well, the world didn’t end like it’s okay. And then that just got me into much more sort of exploratory mindset that I was just much more open to exploring other opportunities, even though I was currently like, you know, like, I was currently a poker player, or is currently an academic or I’m currently a consultant, or I’m currently whatever that I just explore a lot.
Brett Bartholomew 27:22
Yeah, well, I think and there’s a couple of things off that it’s funny that you mentioned, Dr. Philip Tetlock, I remember something from his book where he said, the more that is unknown, the greater the opportunity, the opportunity to discover. And this goes hand in hand with what you’re really talking about is if we don’t ever, quote unquote, quit our identity are these things that we hold sacred, whatever these things that we think, are the I must say, on this path? It’s very much, you know, when I read chapter seven, and eight, I thought that what you talked about with the endowment effect, and chapter eight is our identity, like how we really kind of encapsulate who we are with the things we own isn’t that different, right?
We value things that we have, right? Like, I value a coffee, if you want, if you want to buy if I have this coffee cup, and somebody is asking me to give it away, well, I have memories, I have emotions I have things that are tied to this much like this idea, that social identity of this job or this relationship that I don’t want to quit. Whereas if you say like, Hey, if you just like thought blank, if you thought and this is part of the problem, right? Is humans don’t do this? Well, because of the grip emotions have on us. But if you just stopped and thought again, and you said right, what are my behaviors? What are my goals? Do my behaviors match my goals long term, you’d realize that we overvalue sometimes we aren’t, and we undervalue what we are.
And it’s just like, No, just stop, right? You didn’t waste your time, you didn’t waste the work, you are going to waste it if you continue to go down this path. And like it doesn’t help too if you were to come into most of these weight rooms, they’re all these cliches, right? Like, you can’t fail unless you quit. Pain is weakness leaving the body or I remember something was like, you can’t, what was it? Like when you think about quitting? Consider why you started? And then How silly is that in the broader context of our lives, where it’s like, Well, okay, I’ll consider why he started. I was hospitalized too.
And I got into coaching because I nearly lost my life, in part due to poor communication, poor medical care, and I had to, basically gained from a body weight of 96 to 156 pounds that made me obsessed with the body. There’s also a psychology with that time of my life that I found fascinating. But that’s why I started one profession, right? That was me at 16 years of age me at 36. And what I’m doing now and it sounds like what you did you know, how you continue to move from poker to consulting and everything else. Like it’s just all these old axioms are rooted into our mentality. How do we fight that your books obviously a huge step, right. We’ve got to change the narrative. And how well do you think Go ahead?
Annie Duke 29:54
Yeah, I mean, there’s there’s so much to unpack there. So let me just start with like, if you want to quit, consider why you started Like, yeah, because why you started, you made some sort of decision when, again, under conditions of uncertainty, you didn’t know how it’s going to turn out. You didn’t know there’s a whole bunch of stuff. You don’t know that disgust? I mean, can you imagine? Like, if you want to quit quarantine your packages and wiping them down, consider why you started. Yeah, I will. Because we thought one thing, and then we learned a thing
Brett Bartholomew 30:24
That’s life!
Annie Duke 30:25
Yes. Consider why you started because you have to think about what’s the cost benefit analysis? Like, why did I choose this goal in the first place, because I thought that I was going to gain certain things. And I was willing to bear the costs of gaining those things. But sometimes the world tells me that’s not worthwhile. And sometimes my values change. Right? So this is something that I think that we miss in here, right. So like, one of the examples I give is like, someone might start a career in their 20s, where they’re working for a startup. And we all know what that’s like. And they’re working, you know, 100 hour work weeks, and like, they love the challenge and the stress and the fast paced and you know, the uncertainty of it all.
And what they’re willing to sacrifice the cost that they’re willing to sacrifice or like time with their friends time with their family, you know, and I say like, if you want to run a marathon and train for that, that’s time that you can’t do a whole bunch of other things. Right? Like maybe going to the movies or relaxing on the weekend, or whatever. So we’re choosing one goal, because we think that that’s going to give us happiness and life satisfaction. And we’re taking the costs in some way of some other things.
But what if you’re in your 30s, and you get married, and you have kids? Well, now your values have changed? And maybe you don’t want to work 100 hour work weeks anymore, because you never see your children. Right. So that’s one thing that can happen, or the world can change. Like, I might be willing to sacrifice all sorts of stuff in order to be able to climb to the top of Mount Everest, and then I get 300 feet from the summit. And a snow storm comes in. Right. Well, so am I supposed to not quit? Because consider why I started consider all the things that I’ve sacrificed along the way. Well, okay, but now I’m gonna sacrifice my life.
Brett Bartholomew 32:16
And you tell a good story about that as well that I’d love to. Yeah, but keep going.
Annie Duke 32:21
Yeah, well, I mean, yeah. So I mean, that’s the thing is that we have to realize, like conditions change. So what you should consider about, you want to consider why you started not that you started.
Brett Bartholomew 32:32
That’s a good point.
Annie Duke 32:33
And what we think about is, well, I started this, so therefore I have to finish it. And it’s like, no, you started this for a reason. And that may no longer hold given all the new things that you’ve learned both about the world and about yourself. So just I just wanted to sort of pick on that we can talk we definitely talk about Everest, because there’s a lot of Everest in the in the book. But then the other thing I kind of wanted to unpack there is what you said about the endowment effect, right? So you said, Well, what if I have a mug in history with the mug, and I have all sorts of sentimental value around the mug, what I want people to know about the endowment effect, which is simply that we value things we own more than we value, an identical thing that we do not own is that the endowment effect is so strong that you can basically have no history with a mug.
So this is science from Jack Nash, along with some work that he did with Kahneman and Thaler. And basically, this is what Jack Nash did and sort of the original work that’s been replicated a million times. You come in, you’re a participant in the study, and he’s going to have you fill out a questionnaire. And what you’re gonna get in exchange for the questionnaire is an item. And the item is either going to be a mug or a big chocolate bar. Okay, so it’s randomly assigned. So like, half the people get a mug, half the people get a chocolate bar.
Now, we happens to know that people basically equally liked the chocolate bar and the mug because he has a group who comes in and there’s just a mug and chocolate bar sitting there. And they say, okay, you can choose one of those two things. Okay. And when they do that, they split about equally, pretty close to equally on sort of, you know, close to half of the people choose the mug close to half of the people choose the chocolate bar as their price. So he kind of knows that there’s a pretty equal preference for the two things. But you come in and I say, Here’s your mug.
I’m giving you a mug so I don’t give you a choice. And then obviously, there’s somebody just like you who comes in I say, Here’s your chocolate bar. Okay, so now at the end, after you filled out the questionnaire, and I’ve just randomly given you this mug, I say, Oh, by the way, we also have chocolate bars, would you like to switch? Okay, so now if you think about it, given the people split about 5050, when they’re fresh to that choice, you would expect that half the people would say, yeah, actually, I’d rather have the chocolate bar and vice versa. And it’s like no, like 98% of people just stick with the thing they they’ll notice here you have like no history with it,
You literally I just gave you a mug that you didn’t even ask for. You didn’t choose it, nothing, but you’re unwilling to give it up. And then there was a follow up study that was so great where basically they gave people cash, some people cash and some people the mug. And the people they gave cash to said, Oh, if you’d like, you could have this mug, what would you buy it for? Right? And they were like, at like, 250, I’ll give you $2.02, but a mug. And then they had people who had the mug and they said, Oh, well, you could sell your mug, what’s your selling price? And they were like five bucks.
So you know, and we have to understand like, just broadly what quitting is like, if you sell your mug that’s a form of quitting, I’m quitting my ownership of the mug, right? So where this gets really bad is that it’s not just about like mugs, or bottles of wine or a car you own that you’re unwilling to sell for the Kelley Blue Blue Book price, because you think it’s worth so much more, right? It’s not just that it’s ideas, we have ownership over our ideas. So when we think about the beliefs that we have, that’s where we really need to be flexible, because every single belief that we have, that we form, is formed under uncertainty, like what we know fits on the head of a pen, and what we don’t know is like the size of the universe.
So after you believe certain things, you’re going to learn new stuff, and we ought to adjust our beliefs. Like I believed at one point that COVID was spread by respiratory droplets. Now, I believe it spread by aerosols, right, like, it’s good that I know the difference between those two, I was willing to change my belief, right? So but the endowment effect holds for beliefs as well. And so when we get frustrated, like think about political discourse, right, when we get frustrated that in the face of so much evidence, someone who’s on the other side of us, won’t change their belief about something. Just understand that you’re doing that too.
Brett Bartholomew 36:59
Yeah, well, listen, I say this to my mom of all people all the time when she complains about something my uncles do, and I go, Well, Mom, where are you a pain in the ass? You know, like, well, that’s different. No, it’s not. And I think, you know, your work resonates with me so strongly, because you know, a big part of my job, well, even what you’re talking about with the endowment effect and everything else, and not wanting to give up the mug for the chocolate bar, even if they don’t have experience with it. It’s just to me, and you see this great new book, it’s about loss aversion, like we’re much more bothered by, as you say, by the downside potential changing course than the downside potential of seeing the path we’re already on.
And, you know, we run we run workshops, right, we have a workshop called the Apprenticeship. And it’s a leadership development workshop that is open to all professions. And a lot of is role playing based. And what we do is we have like this evaluation, it’s a social skills evaluation where people can, they can enact certain scenarios that are really challenging for them as leaders, right? asking for a raise or dealing with somebody at work, whatever, you get the idea. And sometimes it’s just couples coming to work out things in their marriage, we will roleplay these scenarios. They’ll do it with perfect strangers, we will watch these on the screen, and we will evaluate they’ll get peer feedback. They’ll say, Hey, I thought I did, I thought I was a three on assertiveness. And somebody might say, well, I thought you were a one. And here’s why.
Right? And what’s funny is we get all these people that generally are like, oh, yeah, I agree with what Andy’s saying, I love this, you know, I challenged my biases daily, I you know, I nothing sacred, I go into the unknown. But then what we found is, despite such a huge portion of our audience, saying that they’d like this, when we first rolled them out, I think in 2019, they were hard to sell out. Because what we found is the idea was really awesome to them. But then coming and having their communication broke down by peers and whatever. And it’s like, Oh, my God, what you would get the benefit you would get from just not worrying about saving face. Not worrying about acting cool, not worrying about winning the game, you would get so much more by the feedback and just the rawness and the openness than you would ever have to worry about about like, you know, did I look silly,
But like that’s, I think that’s the thing that’s troubling is I read books like yours. And I’m like, God, yes, we need this. We like people need to continue to be challenged by it. But then I worry that this broader audience that will read your book and the love of your book, that they don’t put it to action in their damn life. And that’s always the heartbreaking thing. They don’t see themselves in it. They see everybody else. That’s the problem. Does that make sense?
Annie Duke 39:28
It totally does. And that’s why I think one of the things that I tried to get across in the book is, there’s a few things. The first is that just knowing about these things, doesn’t make it better. Right. So I think that that’s really important. So when people say like, I challenge my biases every day, they’re saying, like, I know that I’m biased, and I think it’ll make it better. You know, that I know about it. I’m canned in hand with that kind of number two Which is kind of a corollary to that is that you can’t sort of Jedi mind trick yourself out of this stuff. Right?
So I actually was interested, I was just working with an investment group yesterday who said, Oh, yeah, no, we don’t have a problem with, you know, some costs and the fear of waste and endowment, and so on so forth, it stops people from quitting, because what I tell people, but the people who work for me all the time is, I want you to think about whether in the morning, you would still own this position on the stock, right, and this is what I hear all the time is people will say, Oh, I have a fix for it. Because now I know about the sunk cost effect. So just, I think we have, let’s just define the sunk cost effect for everybody.
Sunk cost fallacy is when we put time or money or effort into something, we take the money and the resources and the time that we’ve put into something into account when thinking about whether to continue. Okay, so this is that specifically the time that sunk cost effect. Now, we shouldn’t do that, right? Because what matters is the next dollar or the next bit of time, or the next bit of effort that I put into something gonna get a positive return for me, particularly in comparison to other things I could do. So the simplest example is from investing, right?
I invest in a stock, let’s say I buy it at 30, it goes down to 20. The fact that I’ve lost $10 on the stock should make no difference to whether I continue to hold it or not, right? Because I should look at it and say, What do I think the stock is going to do in the future? Should I keep my money in this stock versus TAKE THAT $20 out of the stock and put it into a different investment, that might have a more positive return? So that’s like what a rational person would do. But nobody does that. Everybody’s like, well, I can’t quit now, because I’ll have, you know, I need to get my money back. Or I’ll have wasted my time. You see, when people go into grocery store lines, right?
Brett Bartholomew 41:53
Like, that’s why Vegas have such beautiful buildings, you’re paying for it, you know
Annie Duke 41:57
Right? Exactly. Like you go to a grocery store line. And you’re like Einstein, like who’s got the coupons? Like, How much stuff do people have in their carts. But then once you get in the line, you won’t quit it, because you feel like you’ve wasted your time in the line if you quit. But we’re thinking about waste waste, then in the wrong direction. We shouldn’t think about it backwards, we should think about it in a forward looking way. Is the next thing that I do? Is that a waste of my time, right? Because you can’t get it back. So anyway, I just wanted to define the sunk cost fallacy since we’ve been sort of throwing that term around.
So what people tell me all the time is I’ve solved I’ve solved the problem. Which is, I think, like, if I’m holding a stock, I think, what would I buy it today? Yeah. Like, what if I refresh the stock today? Would I buy it today? And that’s, again, this goes back to like, you have to challenge your intuitions because intuitively, that sounds like it would work. I know about the sunk cost fallacy. I’m now saying, If I were looking at the stock today, would I buy it? And if the answer is yes, I should continue to hold if the answer is no, I should sell it. And that’s going to put me into a rational place.
But there’s been great work from Barry straw and his collaborators who have shown that doesn’t do anything, it doesn’t change it at all, like you’re, you’re still affected by the money, you can’t just sort of like think your way out of this problem. And so I think, sort of speaking to what you were saying, a lot of what I’m recommending in the book is, I think about why you might quit in the future. Yeah. Right. So don’t sit there and approach the stock today. And when you’re actually facing down that decision, as Daniel Kahneman says, you know, Nobel laureate, author of Thinking Fast and Slow. He says, it’s really hard to make a good decision when you’re in it.
Brett Bartholomew 43:39
Environment of the moment?
Annie Duke 43:41
Right? Yeah. Because like, you’re literally facing the choice down. So when you talk about, like, for example, your worry about if I switch careers, like, oh, there’s all the short term stuff that I’m going to be facing, right? What does that mean for like, I’m gonna have to rebrand or what are people going to think about me? Am I going to appear consistent to myself and to other people, like there’s all these things, that now it’s really hard for you to do. But if you can step back and say, Well, you know, what’s that going to look like in six months, then we can get much better at these types of decisions.
So what I try to tell people is don’t decide where they’re going to sell the stock today, think about what would things have to look like in a week? Yeah. What would I have to see in the world that would make me sell the stock in a week? And then commit to those things? Is it called Kill criteria. And this gets you into a much better place. So like, one of the things I want people to really understand whether it’s quitting or anything else, right, is that you need to first of all commit to the idea that this is something that you want to get better at.
But then you actually have to build some sort of press process, process and structure around it. That will actually increase the chances that you execute on that goal. Because if you think you’re going to do it on the fly, you’re not aren’t going to. And I think, to really get at the heart of the matter across all the topic of quitting, I think that we can go back to Barry Starr who said something in, in sort of one of the seminal papers on this topic, it’s called knee deep in the big money. We have the intuition, that when we get signals that tell us that things are going really badly, right, whether it’s like a snowstorm coming in, on Everest, right, or being miserable in your job, or a toxic work environment, you know, or you’re in a committed relationship, where you it’s not an open relationship, and you find out that your partner has broken that promise, right?
Many, many times over, right? Or whatever it might be, right? That we’re going to obviously pay attention to those signals. If I’m running a marathon, and I break my leg on Mile six, I’m going to pay attention to that. And I’m going to stop running the marathon. If I’m climbing Everest in a snowstorm comes in stems. And we all have the intuition that will turn around if I’m in a job, and the work environment becomes toxic, because my old boss quit, and the new leadership is awful. I’m obviously going to quit my job. But what star shows so nicely is that intuition is just wrong. We think we will, but we don’t, not when we’re in the middle of it. And when I when you think about someone breaking their leg on Mile six of a marathon, I can show you a billion stories of people continuing on to the finish line in horrible pain and then sacrificing their ability to run in the future because of it.
Brett Bartholomew 46:45
Well, I mean, that’s because we and you mentioned this, we celebrate those things. Right? Those stories are sexier, I think, you know, it’s right.
Annie Duke 46:51
It’s so great.
Brett Bartholomew 46:52
It coincides with, you know, I would even think before we break down intuition. It’s this false dichotomy that we have worldwide now, what’s good, what’s bad? What’s this? What’s that, and, like my particular take on that is even when you look at it in leadership, like of course, like the ends can always justify or the means can always justify the end. But like, you know, people don’t know how to play in the gray area in general anymore. And there are really good people out there that fail in leadership, because they’re not willing to like, color in the dark, you know, and that’s what I meant by early on, like I’m really biased on is people don’t know how to channel different versions of themselves,
Even if like, even if in an unethical person’s, let’s say somebody that’s unethical uses a certain influence tactic, or leverages a certain power dynamic, okay, like that can be bad. But that’s no different than tools, like a hammer can be used to build a home, or it can be used to bludgeon somebody. There are also some people that are very good people that need to learn how to play dirty sometimes. And so when we romanticize certain things like enduring and grit and what’s tough and mental toughness, which is the most bastardized phrase, and then we look at things like quitting. And it’s like, oh, well, no, I just, I don’t want to do that. I mean, that’s just a lot of wasted time.
And I do want to get into kill criteria a little bit when I’m going to have you define it, but two I also want to get your take on, because you mentioned this, like, Alright, we’re gonna have signs in the future, that would cause me to exit the road that I’m on. So after you define it, I do also want to ask you then, like, what’s your take on nonlinear progression, however, because there are some times of course, where that enduring this is where I’m just kind of playing devil’s advocate, there are some times where like, damn, like, I was really, like, we were so close to that hockey stick growth, and we gave it up.
And we didn’t know, you know, like, because when people want to build a business, right, so much of that is, well, people gotta find you. First, you have to have a good product, you have to do these things. And there are people that say, Well, I’ve been doing this for two or three years. And it’s like, Well, alright, like, but have you have you exhausted all these methods? Because it’s not just you, like, people have to be able to find you make sense of it like Mark, sometimes it’s just a smart marketing decision away from somebody finding you out. So talk about Kill criteria, and then give me a little bit of insight as to like, how also, we need to still not be blind to nonlinear progression? And like finding that balance? Not that there’s a easy answer to that.
Annie Duke 49:12
Yeah. So, oh gosh, okay, well, let’s address the second piece, like sort of a separate bit, because I think that’s a really cool topic to explore. So let’s go into the simpler part. And and one of the things that was the about the same thing, it’s like, here’s a great thing about grid, it gets you the stick to hard things that are worthwhile, exactly what you’re talking about, like you have a debt, right? Is it a dip? That’s about to take off, right? You need to know that? Is it just something that’s really hard that you’re gonna have to struggle through, but the rewards are still well worth it? Right? Or not.
And the issue with grit is that while it does get you to stick to hard things are worthwhile. It also gets you to stick to hard things that are not worthwhile. And this is what we’re trying to do is like be able to tell the difference between the two, which is ultimately about expected value, like is this still going to advance you toward your goals? So let me let’s Start with kill criteria. Now I’ll just open with a little story here. And then we can talk about your issue which we can open with another story.
So let’s open with a story here. So we’re like, we’re on the top of Everest, right? Because, you know, obviously, like, the thing I like about talking about Everest, and it sort of opens the book is, you know, when we think about grit, like, that’s that, like, oh, people get to the top of Everest, like, it’s really hard to get that high in the air, right? Very few people actually accomplish it. So this particular ever story is about three, three climbers, Dr. Stuart Hutchinson, John TASKI, and Luca siskey.
So they’re part of a group, which is, has a climbing sort of outfit called adventure consultants. And there’s eight climbers and like three climbing Sherpas and the expedition leader. So down at Basecamp, the expedition leader tells everybody, the turnaround time for each day’s climb. So let me explain what a turnaround time is because this will get us to KO criteria. So when you’re climbing Everest, you have to acclimate. And so there’s camp, there’s base camp camp, one camp to camp three camp for, and then Summit.
So you’re basically you climb up to camp one, and then you climb back down, up to camp camp one climb back down. So then then you sort of get to camp one, and then you go to Camp two. And you’re trying to get used to the altitude obvious, because these are big changes in altitude. So they set a turnaround time for for each of those climbing days. And a turnaround time really simply put is that if you’re not at point A by time, B, then you must turn around. And the reason that they do that is that most of the dangers of climbing actually are not on the ascent, they’re mostly on the descent.
And in particular, it’s really bad if you’re descending in the dark. So you never want to be descending in the dark. So the turnaround time for summit day, and they had set this down at Basecamp. The turnaround time for summit day was 1pm. Now why was it 1pm? Will you leave Basecamp, somewhere around midnight, and that allows you to get to the southeast red, which is this very, very narrow ribs that you have to traverse in order to get to the summit and the way that Ken Candler who was a doctor on Everest actually put it to me, it’s like you can fall 1000 feet into Tibet, or 12,000 feet into Nepal, right? Like those are two choices. So you don’t want to slip.
So you want to be there in the daylight. And so if you leave at midnight, you’ll get to the southeast ridge in the daylight, so the sun will have already risen. So you can see. And then the 1pm turnaround time meaning you if you’re not at the summit, by 1pm, doesn’t matter where you are, you have to turn around is because if you’re at the summit past 2pm, the chances that you’re getting to the southeast region in the dark are too high. So that’s a really bad thing to have happen. So they’re on summit day, they leave at midnight, and it’s a particularly slow climbing day. And they get caught behind kind of like some pretty slow climbers two or three guys.
And the expedition leader actually comes up to them who’s behind them. And Hutchinson asked the expedition leader oh, by the way, like how long do you think it is to the summit? Because it seems like we’re going pretty slow. And the expedition leader tells them three hours and continues past them to try to get past this group of slow climbers. So Hutchinson holds tasking because he back and he says, gosh, you know, he just told us that it’s going to be three hours to the summit, but it’s already 11:30am. So if it’s three hours to Summit, that means we’re going to get to the summit at 2 30.
And even if we like somehow speed up, it doesn’t seem like we’re gonna get there by one. So I think we should turn around. Okay, so he’s just making the calculation that they’re not going to make it to where they need to go by one. So they ought to turn around at this point. He got a little bit of a push back from Kosinski, who was on his seventh Summit. So there’s something called the Seven Summits. And you know, you it’s like, you’re, it’s like the Vinson Massif and like, in Antarctica, whatever, like it’s hard to do, right? Because a considerable amount of time and effort. So this gets into a class problem. But eventually, they convince him, No, we should turn around and they turn around. So that’s a story.
And what I say is, wow, that seems like a pretty uninteresting story, right? Like that the stuff movies are made up, that’s for sure. Because it’s three people. They follow the rules. They follow the turnaround time, and they live, except that these three people were part of Rob Hall’s expedition in 1996, which was chronicled in Jon Krakauer book into thin air and we know what happened there. Right, Rob Hall died on top of the mountain, Doug Hanson, who was also on the expedition also died on the top, as well as many other climbers who continued on who either died or got or really seriously injured.
So, I think what’s so interesting about this story is that the story was there for the telling, because these three people are absolutely central in Krakow hours book. In fact, he says they were probably the best decision makers on the mountain that day, right? There in the movie, they’re in the documentary. They’re, you know, so they exist there to be seen, but we don’t see them. It’s like they’re invisible to us, because we don’t view it as heroic. Except it’s incredibly heroic. There was a turnaround time that’s that was that. That was to keep you alive, which I assume is ultimately your goal is to get back down the mountain alive. And they’re the only ones who followed it.
That’s heroic, when they’re going against what everybody else is doing and making the correct decision to actually just turn around. Right. So I think they’re amazing. So this tells us the power of following kill criteria. So a turnaround time is the perfect example of a kill criteria. It combines a state and a date, if I’m not in this state by this date or time, then I must turn around if I am not it no matter where I am on the mountain at 1pm, I must turn around. So they actually followed the rules there.
So kill criteria come in many forms, like an example might be let’s say that you want to be a an Olympic sprinter. And you could say, well, let me see when people if I look across all of the Olympic sprinters in the world, let me see how fast they were running the 100 yard dash, at 18 years old. So you could see the range, like what’s the lower bound, what’s the upper bound for like the speed with which they were able to run that race, and then you can say, if at 18 years old, I’m nowhere near that, then I will change my goal from being an Olympic sprinter. Now, that doesn’t mean you might stop training, you know, you might still train you might still run, but you would understand that like the Olympics, sprinting is not necessarily in your what you’re going to be able to do. And so you would switch your attention to something else
Brett Bartholomew 57:00
And to your point, like there’s trials along the way that makes it evident that you’re not going to meet it for worlds or this and that. And, exactly, I think it’s funny, because some people would say, well, somebody might not be, you know, that caliber at a young age, and then all of a sudden, they hit, you know, every athlete develops differently. But the point is salient, that, like you have to have, and not only just the kill criteria, you have to stick to it, because we’re really good. I think and you make this point as well, we’re really good at engaging in these gymnastics and being like, well, you know, and it’s almost like it that that version of fundamental attribution error. There’s always something that with this situation change.
Annie Duke 57:34
Yeah, exactly. Yeah. But this is, I mean, for people read Phil Tetlock book super forecasting, the base rates are the base rates. And the fact is that it’s really hard to break the base rate. So that’s why I say like, you can figure out the lower bound and the upper bound for people who are actually successfully ended up at the Olympics sprinting, the lower bound is like, Oh, the people were kind of slow at your age, right? But then really did well. And then for you, you can decide how much risk Am I willing to take on because obviously, the closer you are to the people who are the fastest at that age, then you’re you know, it’s much more likely the probability that you’ll actually make the Olympics is much higher, the lower you are, the more risk you’re taking on.
And that just has to do with your risk appetite, right? Like, how much leeway do I want, what’s the what’s the probability that it’s a threshold for me to say, I’m willing to continue doing this, and that that’s going to be like a personal preference. And it may have to do with, for example, like your love of the sport, right? If you’re at the lower bound, and you just really love the sport, and you just want to give it a go, and you’re not sacrificing a lot to do it and go ahead, like, that’s a personal preference. But the classic, I think the classic like mental gymnastics that I always hear, it’s like, you know, people have, people will have what’s called like, a stoploss. For investments, like, you buy a stock, and you’re like, if it dips below this point, then then I’ll sell it. And then they hit the stop loss. And they say, but now it’s really cheap,
Brett Bartholomew 59:08
right? Buy the dip, right Right? When I think about this, I’m gonna
Annie Duke 59:13
actually put more of that physician on. So I think that we are really good at doing that. But, you know, kill criteria are so powerful, because again, when we go back to what I said about don’t make these decisions, when you’re in it, make them in advance. Now, whatever is tells us is that you’re not going to be perfect at it because lots of people are, you know, the expedition leader set the criteria himself and kept going, Rob Hall kept going, but three people live, and that’s more than zero
Because they had those kill criteria. So if you have kill criteria, you’re going to be perfect. No. Right. Are you going to always stop at your stop loss? No, but you’re going to do it more often than you would and those gains are going to accumulate over time. So like a simple examples, I worked with a sales team. And I said, Alright, imagine you have a lead that comes into an RFP or RFI um Okay, everybody, take some time go on your own and write down like, looking back, you realized there were early signals that you were not going to close this lead. What were they?
And they all generated a big long sort of list and brainstorm. And so like, one of the examples that they gave was the first conversation was only about price. And what they were what they said, you know, when you sort of query on it, well, why do you think that’s such a bad signal? Well, because it means that they’re already way down the road with a competitor, and they’re just trying to sort of use us as a stalking horse. So that became now for that sales team to kill criteria that if the if all that person wanted to talk about was price, they actually stopped pursuing the lead. Right. Okay. So. So that’s a good example of a kill criteria. Right. But did they opt? Do they always stop pursuing the lead? Do they sometimes go to a second conversation? Sure. Right, of course, but they do it less than they otherwise would have? And that’s a huge one.
Brett Bartholomew 1:00:53
Yeah. I mean, I think about this, just even in our own business, we talked about hot leads, cold leads, whatever, and people will reach out, they’ll want to, they’ll ask a certain question, we want to serve them. So we’ll go all in. And we’ll say, Hey, here’s some resources, you give them a lot of free help upfront advice. But if all of a sudden, now it’s you’ve reached out 567 times, and you’re not going to invest in something of ours, like, I’m still gonna give you respect. But you’re not you’re not getting the goods, you know what I mean?
Annie Duke 1:01:18
You’re taking the it’s like, look, you’re taking them out of the funnel is what you’re doing. Because in the end, when you’re looking at your funnel, your funnel is telling you like how much revenue is going to come in right. And so if you’ve got a strong enough signal, whatever that might be. So like, another signal that this team came up with was that they were unable to get an executive in the room, right, or a decision maker in the room. So the follow on to that, once they saw that signal, they would then offer up executive alignment at the next meeting, I’ll bring a decision maker from my side, you bring a decision maker from your side, we find that that makes deals go better?
If the answer was still no, they just took it out of the funnel. Yeah. Now sometimes those things will still close, I suppose. But you’re not counting it for anything, which is really important from like, understanding what your revenue is going to be. Because so often people look at their funnel and like, Oh, look at you know, we have so much coverage, right, except that if a bunch of those things are people who are only asking for price, and you can’t get a decision maker in the room. And the RFP was written with a competitor in mind. And it’s very clear, right? Like, why are you counting that for anything in your funnel, you and you shouldn’t be wasting your SDRs time or your sellers time on taking a lot of time on those leads, when there’s when we think about the opportunity costs, right,
There’s a whole bunch of other things you could be doing in terms of lead generation or pursuing leads that are more likely to close, that are going to actually bring in more revenue. And that’s a good example of not quitting slowing you down, I know that you don’t ever want to give up a lead that had some even the smallest chance of closing, because just maybe, right and like, you know, so I’m just gonna keep going at it. Because I don’t want to quit, I don’t want to have failed, I don’t want to have not closed the deal. But that’s slowing you down, if that deal is going to close 1% of the time, and you could go be working on deals that are going to close 30% of the time, think about how much ground you’re losing, by just focusing on the one lead that you just don’t want to give up on when there’s all these kill criteria that have already come into play, that should tell you that you should be switching
Brett Bartholomew 1:03:23
No question and two more just practical applications of everything you say in your book, one sport related one finance related and then I’ll give you the final word to honor your time is that remember one time in particular, and this speaks to even your every story because it shows so much of what I think continues to power. The Myth of grit in some circumstances is just again, social factors. We know people are influenced by other people, right, and this is where grit can turn into rot. We were doing an activity and it was a competition, we had 10 NFL players on a treadmill, that it was self powered and long story short, they had these handles and they had to drive against it at a percentage of their body weight it was made to like the whole purpose of this activity was to increase lower body power relative to this printing drill that they were doing right.
And I said, Hey guys, we’re going to take a percentage of your top speed and and you’re gonna hit that but then we’re going to add a little bit of resistance along the way during your rest periods. Now the minute we start to see a decrement, and the number that you should hit that’s below X percent, let’s say 15. Just for the sake of this discussion, you’re done. Like you’re done. Now, a lot of things play into this your recovery, obviously, your lower body strength, genetics, ability to produce power, whatever and so, you know, inevitably you have one athlete that wants to be the top dog you have another one that’s already the top dog. And you know this guy got it got down to two of them.
They had whittled it down there were 10 of them now there’s two and this one guy he doesn’t hit his speed and he says I got another one in me I go you get one more try. doesn’t hit it even after a long rest period. He goes Come on bro, I got another one. And I’m like, This is not that kind of game. I go what’s gonna happen If you keep doing this, you’re gonna be screwed for tomorrow’s session and the session after that, right? lose the battle win the war. And I remember whispering to him because he was like, I can’t go out like that That dude’s not going to take my spot I go, there’s two more opportunities where you can get them tomorrow. Is it worth it?
And that’s a predominant example of grid in Iran, I think of another thing much more just basic on investing. And this goes to risk tolerance, like you mentioned, you know, I think the crypto world is learning a lot right now. And I remember, you know, like, I put a little money into that, and I’m like, Alright, we’re gonna play and I have a friend of mine that he did as well. Now, I sold my position before the big shit show. And he says, Well, you’re an idiot, you should have done this. I said, Listen, my risk is my business I employ, I employ five people, you know, like, you have to know what’s worth it, I can take that he’s like, but you lost 20,000? Or whatever I go, did I? Or did I take this amount of money, put that in Apple, put the rest of my business and now I haven’t, you know, like, know your risk, right. And like, know that different forms of risk?
Annie Duke 1:06:01
I love what you just said, somebody just chime in here, because what you just said is so true. Like he was thinking about it, he lost 20,000. But like, why does that mean that you need to hold the position? Right? What matters is what’s the best way for me to win money in the future? Right, right to make money in the future, just because I lost 20,000 In a crypto position. That doesn’t mean I’m supposed to hold it. If I think that there are better opportunities for me to shift that money toward but your friend who said but you lost 20,000 How can you sell? That’s how we think that is how we all think. Right?
And then The other thing is, I love sort of to the same point, like, you know, don’t win the battle win the war. Right? Well, there’s, you know, there’s something that I didn’t end up putting in the book. But I think, at Washington, who we think of as like one of the most amazing generals ever, right? I think he fought 13 battles. And just so you know, he lost seven of them. But he won the war, because he retreated a lot like he had very few resources and comparison. And he wanted to make sure that he had a healthy resource to army for, you know, for the battles that he felt he could actually win that would advance him most toward winning the war.
So, you know, the athletes would say, just give me one more time like to refocus them and say, but there’s tomorrow when there’s the next day, or the person who’s running a marathon and breaks their leg and keeps running. It’s like, Don’t you want that to heal up so that you can run the next race? Like when you were in so much pain that it was about to happen? Didn’t you want to stop at that point? So you can win the race, but too often we don’t we just sort of barrel? We barrel toward the goal no matter what. And we won’t stop. Yeah. So you know, I think we maybe we could just like, go back to that question of what do you do about like hockey stick situations? Right?
So I think that this is a such a good example of like, kill criteria are so good. And while getting out of the moment is so good from both? When do you stick to it? And when don’t you because we can get into the problem both ways. So when you’re in a situation where everything feels really hard, right? Sometimes you’ll quit too early, right? Mostly, you’ll quit too late. Alright, so how do we distinguish that from? It’s really hard, and I’m going to dip, but things, maybe you’re going to go really well at a high enough probability that I ought to stick to it as hard as this is to stick to.
And no, this isn’t a dip. This is a cliff. And you’re like a lemming, and you’re about to fall off of it. And this is where I think like take chains are like Ron Conway is the founder of SV Angel, is it’s such a good example of like how you handle this in a def def way. So he he is an angel investor was able to see sort of what was going on from the outside. And when he would see, you know, founders, who he really felt like the endeavor was no longer worthwhile, he would sit down with them, and that he would say, look, I think things maybe aren’t going well, like, you know, we should really consider maybe shutting things down and returning capital.
This is not something founders want to do for the same reason that sellers don’t want to give up leads, or people climbing Everest don’t want to stop until they get to the top. Because founders obviously are gritty by nature. You have to be in order to be a founder. So they would always say things, like, but I think that we can really turn this around like I know, we can turn it around. Right, which is what everybody says, right? Like, I’m going to hold on to Krypto because I lost his 20,000. But I know it’s about to go up. Right?
I can tell right? You’re so dumb to lose it and take the loss, right? Because we hate to quote what we call close accounts and the losses don’t like to close things losing and obviously if you put tons and tons of time into an endeavor quitting it’s like really closing that account in a loss, at least the way that we feel about all the money that you’ve spent a time and sacrificing time with your family and all that kind of stuff. So he does something really brilliant it, which is he agrees with them when they say they can turn it around.
And I think this is that thing about, like, maybe you’re just in the dip and you’re about to take off, right? Okay, great. What does that look like in three months? How are you going to accomplish it, tell me what you’re going to do in terms of the marketing push that you’re going to do. Like you talked about, maybe you just need to take change the way that you’re marketing, like, maybe it’s just simply changing the message, whatever. He’s a very good advice giver, he gives him advice and all of that stuff. He says, Great. Tell me what that looks like in three months, or tell me what that looks like in six months. Right?
So whatever time period it is that you feel it’s reasonable that when you now change strategies, you should see results that tell you, you’re starting to go back up in the world. Let’s talk about what those benchmarks are. So he sits down with the founder, he says, I agree with you, you can turn this around, tell me what you’re going to do to to have that happen. And then tell me what that looks like, in three months. Tell me what the benchmarks you’re gonna hit. Now, notice, all he’s doing is setting kill criteria, but in the future. And if you really are going to be in a hockey stick situation, where you have hockey stick growth, and you think you’re down at a dip, then you should know what the handle looks like.
Okay, so you’re just looking out and saying, I’m going to know that I’m now starting to climb that handle? Because this is what benchmarks I will start seeing this is what I’ll see in the future. Now, having done that, he then comes back to the founder in three months and says, Did you hit the benchmarks? And I think this is such a good example of like, this kind of strategy actually helps you deal with nonlinear growth, because we should all kind of know what that looks like. And we don’t want to just be sitting in something that’s not a dip. It’s actually just where you are.
So the last thing that I’ll just say in that regard is like, I think Stewart Butterfield, that guy named Stuart Butterfield is also a very good example of this. So this was a situation where they were in a dip, but maybe it was going to be hockey stick growth, yet a company called glitch that developed a game called game never ending, which was like a online massive multiplayer world building game that like, was beautiful. Like the critics loved it. They say, it’s like Monty Python meets Dr. Seuss. Like, it was great.
And about 5% of the people who played were like, diehard users, like they come to the game and about 5% of the people who play 20 hours or more. And obviously, that’s where the revenue was. The problem was that like, 95% of the people would come and play for seven minutes and then leave. Okay, so this is obviously sort of a customer acquisition problem. So the growth was kind of slow, right. And so but the everybody loved it, the critics loved it. The his co founders loved it, the investors loved it. So they did exactly the sort of this Ron Conway thing. Okay, so what do we need to do in order to make this a venture scale business?
And, you know, the glitch, his investors? Were like Andreessen Horowitz, Excel, like these were big investors. So they said, Okay, exactly what you said, we’re going to do a big customer acquisition push before they had been doing mostly PR and word of mouth. Now they do a marketing push. And they do this over the course of a few weeks. And it’s amazing, right, like they acquire like growth and customers is like 6% week over week or something. And then, on the weekend of November 11, and 12, they actually experienced the biggest growth and new users ever.
And on that Sunday night, Stewart Butterfield finds himself unable to sleep. And he wakes up in the middle of the night just in a like a complete panic. And the next morning, he writes a note to his co founders and to investors. I woke up this morning, with the dead certainty that glitches over. So what was going on? So that’s weird, right? Because like they experienced all this growth. But this is a good example of like, you know, all this time traveling, like, which is what kill criteria do for you, right, like they help you to get into the future, is he realized, okay, we did this huge marketing push. And we acquire all these new customers.
And if I assume, if I make the assumption that we will continue to acquire customers at the same rate, it will be 31 months before we break even 31 month. And that’s assuming at the same rate at the same cost. And what he realized was, well, we’ve already now marketed through the core gaming community. So every eyeball that we reach from now on is going to be much lower quality, because we’re going to start to go outside of the the core gaming community, so it’s going to be more expensive to get a single person. And so to make the assumption that over the next 31 months, we continue to acquire customers at the same rate he felt was absurd.
And at that moment, he realized that it’d be 3031 weeks whether or not 31 months I’m sorry, 31 weeks To get to break even assuming the same growth and that assumption is silly, then this isn’t a venture scale business and we shouldn’t be doing this. So, you know, the, the investors were pretty surprised, and his co founders were pretty surprised. And he told them his reasoning. And he actually said something interesting. He said, I just want you to know that I felt this way six weeks ago, but I didn’t want to pull the trigger than for fear that it would seem like I, you know, I just had lost interest or was being, you know, lazy or what I mean, so even for him, he, he still probably quit too late, at least if he tells the story.
But so it’s not clear whether his investors or co founders ever kind of got on board with his reasoning, but because he was really the person behind game never ending, it didn’t really matter, right? Like they kind of knew they had to shut it down. And he offered return the capital. So I think this is a good example of sort of, he sort of realized, like, if I think about kill criteria, right, what what does it need to look like in 31 weeks, that we’re not going to be there, we’re not going to have grown at the rate that we’re supposed to. So you know, a lot of people hear that story. And they think, Oh, he failed. He failed in his quest to build this amazing game. Because he shut it down. And that’s a failure.
But it’s not because he was going to burn, he had $6 million still in the bank, he was going to burn through that capital, when he already knew with the dead certainty that this game was not going to be venture scale, it wasn’t going to get to profitability. And from the for his employees, they were mostly working for equity. And he realized the equity that his employees were working for was was worthless, and he wanted to free them from that. So that itself is a success story. Now, there happens to be a coda here.
But I don’t want people to get confused when I tell this coder that this is what makes it a success story. Because what I just told you is the success. It’s like turning around at 11 30 in the morning on Everest, when you realize you’re not going to get the summit by 1pm. And living, that is a success. Okay? But what ends up happening is, is two days later, he says, Oh, I realized that within my company, we had developed this internal communication tool that everybody in the company really loves. And it combined kind of the best of like texting and email, and, you know, message boards and that kind of thing.
So he says, You know, I think maybe we could develop this into something. So he goes to his investors, and he says, hey, I can return the capital to you. But I’ve got this other thing I could show it to it’s like this in terminal communication tool for this company. Do you want to roll the capital into that? And they all say yes. And that particular internal communication tool was an acronym for searchable log of all knowledge. About company knowledge. Yeah, Slack, and it becomes Slack. So what I think is really interesting about this story is that it combines kind of the best of, you know, killed criteria, the best of understanding like, just because something is nonlinear doesn’t mean you can’t see into the future and know what the benchmarks would have to be.
And you don’t want to use sort of the idea of non linearity as an excuse to keep going, because you can always convince yourself, you’re in the dip, right? Like, I think that that’s something that’s so great about the story. And then the last bit is what you just said, right? Tell the athlete, but no, you got another chance tomorrow. What Butterfield did once he quit glit Is he allowed himself to see slack for what it was. And not putting the resources into glitch, not spending the time not having his employees work on that allowed them to now switch to something that was going to be much more fruitful, that was going to actually get him to the goal of a venture scale business much more quickly. And so I just love this story, because it combines all the best kind of lessons about quitting into one really amazing god.
Brett Bartholomew 1:19:02
Yeah, yeah, no question. And it’s a perfect example of that asymmetrical returns and just how you know, some of greatness can always be planned, but you still have to pre mortem, it, you still have to have you ever. Like, again, it’s the neverending battle of rationality and motion the the fact that we can never be purely logical but obviously purely intuitive, because intuition fails us. It’s just it’s, it’s something that is always going to be a part of the human problem. And it’s why I’m really grateful for you writing as this conversation started a book that is not Chicken Soup for the Soul.
You know, I hope people will take to my work that same way they do yours when I come out because I’m writing the version of this for leadership that’s like good and bad and what we view as events but you know, the book is called Quit: The Power of Knowing When to Walk Away. And Annie I know our audience will want to support you in every way imaginable. Where can they go right now to preorder where will it be available? What is most helpful to you plug it away?
Annie Duke 1:19:58
Well, Think so the usual sites you can go to preorder it? For sure. It comes out .com.
Brett Bartholomew 1:20:01
Tell me, did you get quick.com?
Annie Duke 1:20:01
No, you can just go to annieduke.com. And you can find all of my books there. Actually, I’m on Twitter @AnnieDuke. And I would love for people to just check out a couple of nonprofits that are really important to me. The first is the Alliance for decision education. I’m a co founder of it. When we talk about these types of conversations that we’re having about decision making, we talked about the science that’s been done. We have all this understanding about like, how you might help adults to become better decision makers, but we don’t teach this to children.
Where we’re teaching kids, you know, the curriculum is like lots of memorizing facts and doing trigonometry, as opposed to how do you actually think about those facts? How do you feel figure out what’s true? How do you make a decision about what to do? How do you think probabilistically right, and we don’t teach statistics and probability except maybe it’s like an elective very late. We certainly don’t teach this how to make a decision. So trying to get decision education into every classroom, K through 12, you know, across the country, hopefully across the world.
So I’d love to be able to check out the Alliance for decision education. They can check out after school, also an incredible organization that provides after school care for kids across the country, most of whom received Title One benefits. So these kids are in underserved communities. And the last if they could just go check out renew democracy initiative. rdi. Garry Kasparov is the founder, this is a group of people from the left and right who have come together with the idea that democracy is worth it and worth saving and making sure that it’s propagated across the world. This is not just focused in the US, but worldwide. So we have, for example, like a big focus right now on Ukraine, whose democracy obviously there, it’s being threatened as a budding democracy. So just really believe democracy is worth it. And would love people that are check out that organization as well.
Brett Bartholomew 1:22:08
Absolutely, guys, as always, we’ll make sure all those links are in the show notes for you, and you’ll be able to find them at art of coaching.com. And you do thank you for sitting down with a stranger and chatting about this and just being willing to be so open so tactical, you know, it’s refreshing to be able to have conversations with people that don’t want to just talk about fluff, you know, or don’t want to just black out and get into sell mode of their book like this was a real conversation. You’re everything I hoped you would be and I appreciate you deeply.
Annie Duke 1:22:36
Oh my gosh, thank you so much. That’s like the nicest closing to a podcast over time. I really appreciate that.
Brett Bartholomew 1:22:42
I mean it for myself and the rest of the coaching family guys, we’ll talk to you next time.
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