So, Adam, I'm delighted to have you on the podcast today. I wanna jump right in and say hi. Sorry. I am for your new book. Think again. Oh, thank you, Pete. I hope you don't rethink that by the end of this conference. I'm sure it won't. So reading through, I especially like the underlying scientific Maxim you wrote about, which is that what you know, be curious about what you don't and update your used based on new data.
And it strikes me that this step where you know and be curious about what you don't, why is that your core OS of successful entrepreneurs that we see here at NFS? And really Beller disrupted company had a founder who looked around and challenged a convention, saw something that was previously thought to be impossible and made it possible, but there are so many men to our hurdles for startup founders and artifacts we see time and time again that learning at speed is critical for founders.
So today, I'm excited to have you on and share your frameworks with thinking and 10x learning with us today. The excitement is mutual. I think it's fascinating just hearing you talk about this because and I hear you reflect some of my writing back to me through the lens of entrepreneurship. What I hear is you basically saying, look, entrepreneurs need to be good learners. And they need to be fast learners. I think there's so much truth to that.
I think what's interesting about what you just said is, yes, without question, almost every great entrepreneur that I've met has excelled at questioning assumptions. I think that's where disruption begins. I think where we run into trouble though is we're great at questioning other people's assumptions. We struggle a lot more at questioning our own.
And just to sort of build on that question, my own assumptions, I actually last night took a quiz, took your quiz on the website on Morgan on that, and it's telling me how open minded I am and test our way of thinking. So if you're okay with it, we'll do some sort of armchair analysis Pete, and I would share my results. I'd love to explain to me kind of how I did and break it down for me. How's that sound? Let's do it. Okay. So here we go.
I was a preacher at 20% a prosecutor at 10%, a politician at 10% and a scientist at 60%. So preacher at 20, prosecutor at 10, politician 10 scientists at 60. So break that down for me. What does that mean? How did I do? I have no idea what that means. I put the quiz up as a fun way to get people thinking the core framework of Think Again, which is really based on some work that my colleague Phil Tetlock did over the past couple decades.
He found that, basically, when people form judgments and make decisions and think and communicate that they tend to slip into these 3 mindsets that sometimes lead them in the wrong direction. So when you're in preacher mode, Pete you already believe that you found the truth and your job is to proselytize it to everyone else. When you're in prosecutor mode, it's the reverse. You're trying to prove everyone else wrong and win your case.
And my worry about people who score high on either of those is that they don't rethink their beliefs and opinions and assumptions often enough. Right? If I'm right and everybody else is wrong, then I can stick to my guns. Politician mode is a little more flexible because there, what you're trying to do is you're trying to campaign for an audience's approval.
So you might be trying to convince a VC to bet on startup, you could be trying to sell your board on you being the perfect candidate to keep running the company. And that means you're gonna cater to whatever you think your audience wants to hear. The problem with that though is that you're often changing your mind at the wrong times for the wrong reasons. You're just saying what you think the audience wants to hear, but you're not actually adjusting your beliefs at all.
I think we're generally better off if we wanna be open minded in scientist Morgan. And I think your highest score being scientists doesn't surprise me because I know from our past interactions that when you have an idea, you're not sure it's gonna change the world. You're interested in finding out, okay, I have this hypothesis. Is it true or not? And what data do I need? What observations do I need to make in order to figure out whether it's true or false?
So I would have guessed that that was your dominant style. What's your reaction to that before we dive into when you preach and politics and prosecute? No. It makes sense. I have an undergrad and a master's in physics. And so, you know, if I wasn't a scientist and I kinda wonder what happened to that expensive education that I had many years ago, so I'm kinda happy Pete it worked out. I the sort of question, like, why is this mental flexibility so important and perhaps so important today?
I think it's important today because the world is changing or than it ever did before. If you're not willing to adjust your beliefs as the world around you changes, then you're gonna stand still and other people are gonna end up seizing the opportunities that you miss. There's a great experiment that I think demonstrates this beautifully. It's with over a 100 startup founders in Italy. They're all pre revenue.
And the control group goes through a couple months of entrepreneurship education, and they get to build a business plan and figure out what they want product to look like and formulate a strategy, you know, the drill. The experimental group does the exact same education. Only they're given this lens to think about their startup as if they were scientists. So they're taught that whatever strategy they have, that's just a theory.
And they should try to build a bunch of testable hypotheses around then they should treat their customer interviews as initial data points. They should say, okay. You know what? When I launch my minimum viable product, that's my first experiment. And my job is to collect a bunch of evidence about whether my hypotheses were supported or falsified.
Those founders over the course of a year, the ones who are in the control group, they average And if we look at why the big difference between the two groups is that the scientific thinking group pivots significantly more often. They're more than twice as likely to make a major shift in their vision or their strategy because instead of getting locked in on one product idea or one way of addressing a market, they say, alright.
I've gotta stay flexible and figure out what's actually going to work build a customer base. I think to me, that's some of the most compelling evidence that I've seen that's at least some of the principles of lean startup were on target. Yeah. That makes sense. You know, from what we've seen and then effects with founders. And so I guess, you know, from a founder perspective, an entrepreneur perspective, is there an optimal formulation is it just driven by sort of data and scientific thinking?
You know, at the same time, you meet many entrepreneurs that have, you know, this force of nature, this kind of like unbreakable vision, which is like and if you sometimes if you have too much data, you become a sort of a paralyzed by you're not able to break through to the other side. Is there some degree of optimal formation to kind of start something out of nothing? Yeah. I think In an ideal world, you rethink your opinions 2.7 times. No. I wish we had it per se.
This is where it would be so much easier if we were all doing physics. Right? But I think the, obviously, the world of startups is a lot messier than that. I think the best data that I've seen on this come from studies of super forecasters. You familiar with that world at all? A little bit, but, personal. Alright. So in super forecasting tournaments, what people do is they compete to try to predict future world events. So you might be asked 6 months from now, is the euro gonna go up or down?
Or in 4 years, who's going to be the Republican challenger to president Joe Biden. And your scored not only on how accurate you are, but also on how calibrated your confidence is. So in an ideal case, you were very confident about the predictions you were right about and you had wide confidence intervals, a lot of uncertainty about the predictions you were wrong about.
If you look at the research on Super Forecasters, what you see is the best predictors of their accuracy are not the usual suspects behind success. They're not grit. They're not intelligence. The single strongest predictor. 3 times more powerful than cognitive ability or IQ is how often they rethink their forecasts. And then you wanna know to your question, okay, well, how flexible should I be?
So the average forecaster in a tournament will do about 2 updates the average super forecast or the best of the best makes 4 updates. So it's not like you have to be pivoting every day. Right? It's about saying, okay. I just wanna rethink some of my fun mental assumptions a little bit more often than my peers might or than my instincts might tell me to it too. And I think there's a sweet spot there that probably varies by industry. It probably varies by the life cycle of your firm.
I think if you talk to I actually had an interesting conversation with Jeff Bezos a couple years ago. Where I asked him how he decides when to rethink a decision. And he said, look, if this is a decision that's highly consequential and irreversible, then I'm gonna keep myself open to rethinking as long as possible. Because once I've made the investment, I can undo it and the stakes are really hot. But if it's reversible or if I think it's inconsequential, then I'm gonna act quickly.
And over time, I know I'll have lots of opportunities to rethink in reaction to the feedback that I in response to the data. I thought that was a helpful framework. So what I've tried to do now is I'll draw that 2 by 2 and say, okay. For the decision I've gotta make, when I'm involved, startups either as an investor or an advisor or occasionally in an entrepreneurial role. I'll look at is it consequential? Is it reversible? And I try to do my rethinking Flint it's consequential and irreversible.
And I'm willing to do the rest of it on the back end. We'll get into some sort of startup pivots in a bit, but that's sort of often the ultimate irreversible position is startup pivots, but there are so many day to day decisions that need to be made.
In Silicon Valley, we often think about contrarian decision making in the sense that you know, the sort of, like, the consensus side is the ones that, everyone's going after and there's so much competition that you're unable to really build a a large company. And then in sort of entrainment thinking, it's really just the alternative perspective. I guess, how do you think about this sort of rethinking mentality alongside this Contrearian mentality in entrepreneurship and in start ups.
So I think about being contrarian is betting against consensus, which is obviously high risk, high return because probably more often than not consensus is right. I think about rethinking is something that you do independent of what other people believe. I think the worry I have Pete with contrarian thinking is that it has to contrast with the crowd. Right? You're buying some norm or some widely shared view. And I think in a lot of cases, that is what rethinking involves. Right?
Other people have made an assumption that maybe they don't even realize they're making they're taking it for granted and you need to question it. And I think there's actually a term for why that happens among experienced people. It's called cognitive entrenchment. And it's the problem that you run into if you have a wealth of knowledge in a domain or deep expertise is you no longer look at the problem with a beginner's mind or with fresh eyes.
So I think in that sense, rethinking and contrarian thinking are very similar. At the same time though, there might be times when you need to rethink your assumptions to get in line with the right, to follow the norm, to go in the direction that most people are going. And so I think if your default is just to be contrarian, you're probably gonna miss out on a lot of good ideas that other people have already decided are good ideas. And that's not always a bad thing.
Like, you don't have to reject every single norm when it comes to how to hire, how to promote Pete, how to compensate people. Right? I think generally speaking, founders are better off if they're original in some areas. And very conventional and others, but let me ask you. I mean, you've obviously with Trulia, you're super successful. You've now invested it in a host of companies with great returns. How do you differentiate between healthy rethinking and contrarian thinking?
Well, I think, you know, there can often be a desire to be different And I guess I often like to reframe the question is, how do you be uniquely better? Because I think there's, you know, in start up Beller the people look at competition, look at the competitors in the place, and there's a desire to be different because this is inconvenient. But realistically, it it's the uniquely better companies that are actually the better ones. And I hear you.
There's a lot of pressure to be sort of alternative in thinking, but so much of this is just following this sort of, you know, an element of proven execution, improve a model that, you know, can stand, you know, companies can succeed and stand out from alternatives. That's interesting. It makes me wonder if being contrarian isn't just figuring out what you would do if you were politicking and then doing the exact opposite.
Possibly. And, obviously, in Silicon Valley, everyone's trying to contrail in the contrarian can often make consensus before you know it. So it's this sort of kind of rabbit hole situation. Let's maybe talk a little bit about the internal mind a startup founder. So, you know, externally, you kinda need to have this sort of incredibly high conviction.
I know just raising capital and hiring Pete, it's like, if you're seen as someone that has a sort of very clear vision, then you're unable to kind of turn on customers to raise capital and have that high conviction on the on the flip side, if you don't have that internal perspective of rethinking assumptions or humility about how you approach things and then an attitude to learning, then you're just unable to kind of seed, how do you reconcile
those 2 things, and how do you think about learning the principles that have got you to where you are today? That is an excellent question. Can think of a couple ways to navigate that tension. The first one is to recognize that confidence and humility can go hand in hand. That they're not opposites. You can be confident in your abilities as an entrepreneur while having lots of doubt about your knowledge and skills and your tools and strategies.
You can be confident in your vision while having just a huge amount of uncertainty about your plan for how to execute that vision effect You could be confident in your team, but be full of doubts about whether you're actually entering the right market. And I think we could make a long list of the ways confidence could go hand in hand with humility.
But when I think about confident humility, I think about even just the early stage of starting a company I remember Pete asking both Sarah Blakely and Reed Morgan, how they had the confidence to go all in for their first startups. So in Sarah's case, how in the world did you know that you could build spanx when you'd never worked in fashion or retail? You didn't really have much of a business background.
And then in Reeves case, how did you know you were ready to start LinkedIn when, okay, you'd worked at PayPal, but building an online social network for professionals not exactly something you had a lot of expertise in, not a lot of independent entrepreneurship in your history, and they both told me a version of the same thing. They both said, look, I didn't have any confidence in my ability to solve these problems today, but I had confidence in my ability to learn and figure it out tomorrow.
And I think seeing yourself as a learner is at the very heart of confident humility. And say, okay. You know what? I've got some capacities that I'm excited about. I have conviction in my ability to grow, but I also know there's a lot I don't know Pete. And that I need to learn in order to achieve my goals. That might be the first place to start is just to try to blend confidence and humility. What do you make of that? I hear you.
I guess from a sort of sitting at my vantage point today as an investor, being the founders that have a clarity of vision, but an open mind is about the path to getting there is one of the most attractive qualities. They see the North Star, and there is a sort of a logical reason why that should exist, but the path is not predetermined. And so to be open minded about the destination, to get in their fields like the sort of goldilocks zone for founders that we see. It does.
And I guess this also goes to your point about which is it's pretty hard to go for a startup if you're not confident that you're onto something Morgan, either that the problem matters or you have a novel and compelling solution.
What I think that founders should do more often, and this is a technique I learned from a super forecaster named Jean Pierre Bugam, who is arguably not only the world's best election forecaster, but the world's most accurate super forecaster, period, if you look at his tournament results, which Jean Pierre does before he makes a prediction, is he makes a list of the conditions under which he would change his mind.
And I think this is especially powerful to think about in the wake of this pandemic that we've all been dealing with. Because I think what a lot of people do, I've I've watched countless founders do this. I'm sure you have a longer list, Pete, is founders will say, okay. Here's my thesis for what the world is gonna look like in 3 to 5 years. And given that, here's my strategy.
What a super forecaster like Jean Pierre will do is make a list of 10 or 12 different ways that the world might look and then consider the strategy that will be effective in each of them and then choose the strategy that's robust across as many possible worlds as he can. And I don't think we do enough of that anticipate I don't think we spend enough time saying, okay. You know what? Let me figure out all the possible conditions that might hold.
Let me find a strategy that could work across 7 or 8 worlds as opposed to just 1 or 2. And then if I'm not in one of those worlds, that's a clear indication that I need to rethink a major assumption here. Fascinating.
It's interesting from a sort of venture perspective and start a perspective, you sometimes need to dive in with kind of like gusto and passion and sort of almost burn the boat's mentality, but these sort of risk adjust did outcome based thinking is critical because you just don't know the destination. And if you're if you're if you're tied to one singular outcome, or one singular part, there's gonna be problem. Yeah. There's a term for that too in the organizational psychology world.
It's called escalation of commitment to a losing course of action. I mean, how many entrepreneurs have you watched fall into an escalation trap where they make an initial commitment of time and money and energy? It doesn't pay off. Yeah. And then instead of cutting their losses, they say, well, I've got to invest even more to prove to myself and everyone else that this was an ingenious idea.
Yeah. And it's the more capital you raise and the more people you have and the more constituents you have, the the harder that is.
You know, as you think about these sort of journeys, you know, startup founders are kind of famous for sort of, you know, there there were these stories of startup pivots where Slack is a famous example where they start off as a game and then just kind of rethought that sort of entire approach you know, there's Twitter, which started as a hot casting service way too early. Yeah. Out of that curve. And then obviously ended up in, you know, phenomenal platform.
Is there any sort of advice for perhaps soft or hard pivots for founders to think through? Okay. Obviously, if it's not working, then you have to think otherwise, but any frameworks that you found to be helpful in thinking through that big pivot point. Yeah. Perry Stroud Berkeley has spent his career studying escalation of commitment And one of the things that he's found is that it's helpful to separate the initial decision makers from the later decision evaluators.
If you're the person who dreamed up the vision and locked in on the strategy, you are the least qualified person to decide whether it's time to pivot because you've already gotten yourself invested in justifying your prior choices. And we are remarkably skilled at rationalizing, right, as human beings. We can find a long list of reasons. To justify the choices we've made in the past. What you want is is somebody with an independent opinion to come in and take a look at it and say, okay.
You know, let's try to write off the sunk costs. And let's ask, what would we do if today is the beginning of our startup? One of the thought experiments that often gets recommended in this is to say, okay. Let's imagine I got fired as the CEO. What are the first three major changes that the new CEO would make? Not being attached to my commitments. And now why don't I become that CEO and make those changes? There's no baggage. There's no sort of historical bias.
I mean, that's easier said than done. Like, I kinda know from as a startup founder that, you know, I've pitched so many investors and being rejected more times and I've raised capital. And, you know, it goes from sort of gentle kind of like skepticism to harsh criticism. And how do you keep your head? I mean, you are very rational economists. Like, how do you keep your head when you've got this sort of disagreements such as almost fundamental to successful learning.
I think you already answered your own question there if you Pete a mislearning opportunity. It makes a big difference to walk into a pitch meeting and say, you know what? I could see these people as critics who are threatening my future success, or I could see these people as teachers. Who are challenging my thinking and are here to teach me something new. And, you know, I think every entrepreneur I know has a great support network.
A group of people who are willing to help them out and cheerlead for them and encourage them when maybe the chips are down. I believe we also need a challenge network. Which is a group of thoughtful critics who hold us to the highest possible standards and help us see the holes in our own thinking.
And as you've experienced a lot more than I have, when you go and pitch a startup, you are introducing yourself to a whole new challenge network, right, a group of people who are going to find every flaw in your ideas. And if you look at that and say, okay. This is something that's gonna either just crush my ego or I'm gonna feel like a failure, then your natural response is gonna be defensiveness. As opposed to if you come in and say, you know what? Every startup has flaws.
These people that I'm meeting with, their job is to find them so they can help me fix them Morgan least hold up a mirror so I can see them more clearly and then fix them myself. Now I don't see the, you know, the VCs that I'm going to pitch as adversaries. Right? I actually see them as coaches. And I think that mindset shift can make a huge difference.
Yeah. I Pete. And if founders have come back and they've they're weak back and they've gone Flint try to raise capital and perhaps the first few meetings haven't gone well. They're learning Morgan the one hand, they're pissed because they didn't, you know, if the investor didn't get it. On the other hand, it's it's such a good learning experience, and it's almost a test of kind of the resilience and confidence to figure that out. And every experience can be a learning for them.
Yeah. Sheila Heen and Doug Stone have written about a pretty helpful technique for taking that critical feedback when it comes, which is they say, look. When somebody tells you that they're not gonna invest in your idea or they don't think it's gonna make it. That's a first score that you've been given. And you can't undo that first score. They've already made a judgment that your idea is not investable or it's not a fit for them right now.
The best thing you can do is try to ace the second score. Which is how well did you take the first score? I've watched a few founders turn that around instead of by arguing with the investor saying, you know what? That's a really good Flint. If what you say is true, how do you think I should reimagine what my mission is or what my strategy is?
And in rare cases, that's actually gotten the investor excited in the start to brainstorm together, and now they're co constructing this idea for how to either pick a better problem or come up with a better solution to the problem that's been identified. And I don't see a lot of entrepreneurs do that on shark tank, but I think it might be a missed opportunity in some cases.
Yeah. That's and particularly in a time when there's sort of lack of straints, something that we've seen where there's sort of an excess of capital, it delays a forced decision making situation. So constraints create good outcomes Morgan, because they create this situation like described earlier, which is if a new CEO came in, what would they do? These constraints force a decision making framework, we can often lead to the right outcome.
Yeah. I think there's a lot to be said for the power of constraints. And I think sometimes there's even value in placing them on yourself. Right? So I met an entrepreneur a few years ago, Rufus Griskum, who would come in to start up pitch meetings and say, here are the three reasons you should not invest in my company. He eventually sold his company after he got spent that way. He sold his company by saying, here are the 5 reasons you should not buy my company.
It was actually a slide in the pitch deck that way. And I think partially it seemed like a marketing gimmick right, that people were intrigued. It was different. He was clearly a nonconformist who is rethinking how you pitch your ideas. You know, some of the investors tried to educate him along the way, say, you know, Rufus, your job is actually to tell me why I should invest. Not why I shouldn't.
I don't think you understand what a pitch is all about, but the more interesting thing that Rufus was doing was he was showing his confident humility. He was saying, look, I believe enough in the strengths of this startup that I don't have to hide the weaknesses. I think all of the upsides outweigh the downside. He also was recognizing that because the investors were gonna find the flaws in his company anyway, he said, alright.
I might as well get credit for having the foresight and the integrity to point them out myself. And then instead of having these gotcha moments where a VC says, alright. You know what? This is doomed. I can say, I realize I have this roadblock. And I would love to talk with you about how to overcome it. And again, you have then much less of a competitor and much more of a collaborator talking with I'm curious if you don't mind getting personal for a minute. Is this happened to you?
Is it been feedback that you received in your professional career that the press broke your heart or disappointed you. And how did you handle it? And how did you coach yourself? Oh, let me count the ways. Where should we begin? Let's see was the time that my literary agent told me to throw out the 102,000 words that I had written as a draft of a book and start over from scratch.
There was the time I went to interview for my first job as a professor, and I was told by the hiring committee that they weren't offering me a job because they didn't think I could teach MBA students. There was the moment that I got my first feedback from students. And one of the most common comments was that I was so nervous I was causing them to physically shake in their seats. Those were all delightful moments. There was also the time that I passed on investing in Warby Parker, don't know.
Where do you wanna start, Pete? Well, you know, every successful person has their kind of fair share of challenges along the way. I guess question is how did you coach yourself? What was the psychology that you went through to kinda help you turn this around? The question that I've tried to ask myself in those situations, and sometimes I've done it more effectively than others is, okay, what's my goal here? Am I trying to prove myself, or am I trying to improve myself? And that's come in handy.
That mentality I guess it, you know, goes back to this idea of seeing yourself as a learner. It's motivated me in some situations to say, alright. This is time to rethink my fundamental So when my agent told me to throw out my manuscript draft, he said something that really stuck with me. He said, I want you to write like you teach, not like you write journal articles.
It was a light bulb moment because I realized I had already spent a decade learning how to communicate ideas for an audience that wasn't reading these boring academic journal articles. I just needed to figure out how to put what I did in the classroom or at least a bit of it on the Pete. And I've written differently ever since I got that feedback. So interesting not to prove something, but to improve yourself. Great. I love it.
Just thinking about the so critical in entrepreneurship that the founder relationship sort of the relationship between start up founders. And, you know, you have a whole chapter on the psychology of constructive Flint. And how that creates a learning environment. What do you think are the top killers of startup founder relationships? Wow. Between co founders? Yeah. I've founder, co founders, and early team members.
I think the inability to have constructive conflict has to be high on the Flint, if not number 1 on the Flint. There's some evidence actually that if you look at founders who are friends, there are some advantages of starting a company with people that you know well and like The problem is though that liking someone is not necessarily a proxy for liking working with that person or collaborating effectively with that person.
And one of the ways that the co founders get in trouble when their friends is they shy away from having difficult conversations because they don't wanna hurt each other's feelings. They don't wanna damage friendship and sometimes the trust between them is put on a pedestal. And they say we won't do anything to jeopardize that and running a successful business starts to take a exceed. And, of course, it's a false dichotomy. Right?
Last time I checked, if you have trust in a relationship, then you can tell the other person the truth and recognize that they will recognize that it's coming from a good place and that you're actually trying to help solve a problem or, you know, work out an issue as opposed to criticizing them or judging them in some way. And there's this distinction, Pete, that I think every founder should understand between what's called task conflict and relationship conflict.
Relationship conflict is the personal, emotional, think the world would be a better place if you didn't exist or at least my world would be a better place if I didn't have to deal with you. And It's not surprising that that ends up really undermining the effectiveness of startups and teams, but there's another kind of conflict that can be productive called task Flint.
And that's where we're disagreeing about ideas where we have a clash about what our strategy should be or what our vision should be or where our product road map should go. And I think those kinds of task Flint, the data suggests are especially important to have early on if you wanna come up with creative ideas and if you wanna make a thoughtful decision because if you don't have them, you're committing to groupthink and saying, alright. You know what?
We might have different opinions in the room, but we're all gonna keep those to ourselves and not learn from each other. So I guess I'd say that one of the keys for founders to figure out how to work together effectively is to have task conflicts without spilling over into relationship conflict. Yeah. From a personal perspective, my co founder, Trulia Sami, we were both grad students at Stanford who went through touchy feely Carol Robins. I'm sure you Of course, you did.
We went through it independently, but we kind of brought everything through it as a sort of a British physicist, as you now know, that was enormously helpful for me to kind of learn those dynamics, but just to stop these things getting personal, but to make them kind of rational or the sort of abstract to the task in hand, Curious. Are there any other techniques you've seen to how to build constructive relationships and constructive conflicts between small teams?
Well, on the conflict side, I think the evidence tells us a couple things. One is that it's helpful to frame a disagreement as a debate rather than an argument. I think the simple reason for this is that we all have a mental model for what feisty debate looks like, and we know we're not supposed to take it personally, right, that it's intellectual, not emotional.
At the same time, sometimes I worry that if you come in with a debate mindset, the goal is for someone to be right and someone else to be wrong as opposed to saying, alright. You know what? We disagree. Maybe we're both wrong. Maybe there's another possibility that we haven't seen.
And in fact, there's a whole Pete study that I think is great on this, which shows that if you look at failing organizational decisions, which by the way, in his study of a massive number of organizational choices, over half of decisions failed. If you look at what separates the failed decisions from the successful ones, The clearest indicator is the failed decisions only considered 2 options.
And just considering a third was enough to increase the possibility or the probability that you would land in a wiser choice in the long term. And I think that anytime I sit down with founders and they're playing tug of war and trying to figure out who's right, what I wanna know is Okay. What's the perspective that neither of you have considered yet? Yeah. Options create outcomes. They're thinking through available options. That makes sense.
And how is you think about the sort of investor perspective? We talked about super forecasting earlier. You know, one thing that is sort of very apparent within Silicon Valley and that investing communities that there were sort of widely held views and then suddenly those change overnight, you know, the principles that helped vestors to be successful in their medium term kind of limit themselves being assessed in the long term.
So so many examples, whether it's like music has seemed to be a bad category and Spotify comes out or being in the car industry is a terrible business and then Tesla happens. Like, the things that you Pete, either from a super forecasting perspective about how things change literally overnight or from a kind of learning perspective, how you change the perspective to see these enormous outcomes. That's a fascinating question.
The first thing that jumps to mind is I've spent enough time in Silicon Valley to understand the perspectives that a lot of founders but also I'm not embedded in Silicon Valley. I haven't junk all the Kool Aid. Probably a good thing. It's okay. I like having this kind of outsider perspective on the because one of the things that just mystifies me is how obsessed people are with cool technology. And I don't care how brilliant your technological solution is.
If there are not customers for it, if there's not a potential market, it's not gonna go anywhere. And I think what happens when, you know, I think the examples you gave are instructive, right, because let's take music, for example. I think my impression on Silicon Valley and music was a lot of people dismiss because the tech wasn't revolutionary. Right? You're not building something that never existed before. And so why the hell should you do it?
It's not a 0 to the reality is, though, there is tremendous demand for music. It wasn't going anywhere. The iPod shoulda taught us that. And what we were missing was a good set of solutions for people to get access to the music that they love and to share and Spotify solve that problem. Right? So I think thinking about customer demand before thinking about the brilliance of What do you make of that?
The spotify 1 is interesting one because a lot of investors, we just had sort of negative views of the industry, just navigating rights and egos and those organizations was challenging, but I think you're hold on. I think a lot of founders are just not as focused on invention versus customer delight and solving the relevant problem at hand. And you see this often apparently happening in pivots where, you know, founders are doing 7 things. The money's running down. They're stuck in a situation.
There's like, oh, screw it. We'll just do the thing that people are using because that's the only thing we've got. And then suddenly their eyes open up because this is the thing that's working rather than the thing that they thought would be working. And that sort of perspective driven by constraint it's necessary to kind of find that breakthrough. It is. Some founders find it they want, but that journey to find product market fit and scale is Sorry.
That also goes to the other thing that jumped to mind as you were mentioning Tesla as an example. I think one of the hesitations that so many of the VCs I know had about cars was Well, it's already an established Morgan, and there's so many barriers to entry and fixed costs. I just can't imagine accumulating the capital to do it.
And I think that there's surprising that the myth of the first mover advantage persists because my read of the evidence is that more often than not, it's actually the fast followers. That are successful because all the work you have to do to create a market ends up putting you in an escalation commitment situation. You're stuck to the initial investment you've made.
Whereas if you let somebody else create the market and then you analyze what's working and what's not, you have an opportunity to then jump in and improve it. And I don't think we see enough of that. Right? I think it's so interesting looking back that almost all of the tech company that have fundamentally changed their landscapes. We're not the first movers. Right? Last I checked, Google didn't invent cert Facebook did not invent social media. Apple did not invent the personal computer. Right?
Those are all improvers, not first movers. And so I wonder if we need to walk away a little bit from the pioneer mentality and say, you know what? There's nothing wrong with being a settler in a land that somebody else discovered.
We've talked a lot about learning here, relearning, and often you kind of can overweight experience in a startup situation over kind of core skills and, you know, we've talked about those innovations, whether Tesla or Spotify often really coming from outsiders, you know, is experience kind of a false proxy for knowledge or is that a mistake? I think experience like almost everything else in life is a double edged sword.
If you look at the relationship between experience and innovation, my read of the best evidence available is that it's curvilinear. So if you have no experience whatsoever in a domain, very little knowledge, it's hard to influence that domain or come up creative idea because you don't understand the problem well enough to try to solve it. But if you go to the other end of that spectrum and you have extensive experience or expertise, that's when we see cognitive entrenchment start to kick in.
They become prisoners of their own prototypes. They get too attached to doing things the way they've always been done. There seems to be a bit of a sweet spot in the middle where you know enough to understand the domain, but you're also not it's that outsider perspective that I was talking about earlier. You have enough distance to say, alright. You know what? Maybe we could rethink a lot of the assumptions that everybody else in this area has made.
And I don't think that means that everybody has to try to live in that sweet spot. Right? It doesn't mean that you should limit the amount of experience you get in the domain, or you should try to put a ceiling on your expertise. What it means is that when you get to that level of experience or expertise, it's time to diversify.
That means you wanna immerse yourself in another industry or a different culture, or you wanna bring someone onto your team who has a very fresh perspective and doesn't know your industry well and see what kinds of assumptions they question and what curiosity is they bring to the table? Yeah. I certainly see that. I know just from my own experience to the US, bringing outside as mentality and then building a company with very limited knowledge of the core industry.
That naivety in some ways was an asset, but I bought to it a lot of kind of experience in other domains, which was super helpful. I think that's what we're looking for. There's a great Karl White quote where he says that creativity is mostly just putting old things in new combinations and new things in old combinations. Yep. It's so much truth in that.
So how can we not atrophy in terms of open mindedness as we learn more and go through life you know, as we learn, we create patterns, you know, right or wrongly, we create shorthand for making decisions and operating beliefs. And how can we avoid this potential classification and what tools can we use in everyday life? I think one place to start is just to treat your ideas and opinions as hunches rather than truths. I had to say, okay. I've just landed in an idea.
I wonder if that's accurate or not. Let me go ahead and explore it. A second step is just to recognize that one of the marks of being a lifelong learner is knowing that you can learn something from every single person that you meet. And I think what you probably underutilized the people in our lives as sources of new perspectives, right, to say, okay. Maybe there's value in running my startup idea by somebody who's completely Morgan to my industry. And seeing, 1, can I explain it to them?
And, 2, what do they find is, you know, is interesting about it? What questions and concerns do they have? And do I discover a way to broaden my market or to adjust my approach a little bit? You know, there's always something that you learned, and I think the moment you write someone off as not knowledgeable is the moment that you decide you're not interested in a fresh perspective anymore.
The third thing I would say, Pete, is that we need to build cultures of open mindedness To me, one of the biggest enemies of that openness is the idea of best practices. The moment you declare a practice Beller, you are done rethinking it. Right? You've already found the perfect routine, the ideal way to do things. I think it's subtle, but I think looking Morgan better practice keeps us open to reimagining and reinventing. Yeah. That's great. I couldn't agree more. Well, that's disappointing.
That's the best practice for you. You've just outlined that. Exactly. I mean, seriously, I do not want you to agree with me on everything I say in this conversation. I would like to have some ideas that you decide are good ones, right, but I'm much more interested in finding out what I should rethink. And in, you know, thinking about how we can all cultivate a mindset as being people who are excited to rethink things.
So, yeah, no, it's a little disappointing to hear you say that you agree but I'll try to remember that you're not always gonna say that. Okay. We will rethink everything very frequently, and thanks for keeping us honest in this. Always relearning environment. So if I can ask a fun final question, you were a junior Olympic springboard diver. That's right? Kelsey is charged. Long, retired. So Is there anything you'd learn from that experience that made you pick psychology. Is it correct? Oh, yeah.
Definitely. Not only did diving have a big impact on my future in psychology. It also taught me one of the most valuable lessons I've ever learned for getting other people to be open to rethinking things. Was afraid of heights when I started. And I mostly got over that, but every once in a while, I'd climb up on the three meter springboard to do a new dive and just have a a sense of panic about this idea that I was gonna hurl myself into the air.
I was gonna do two and a half flips and a twist and I might be completely lost in mid air. And the crash landings hurt. There was one day after practice where my back was bruised so badly that it took 5 weeks to heal. If you think about hitting the water at 20 or 30 miles an hour, the surface tension is not what you would want it to be. There were days, especially when I was learning a new dive when I would just stand up at the end of the board, shaking, afraid to go for it.
And I had an incredible coach, Eric Beller, who was as brilliant about psychology as he was the physics of diving. And Eric Finally, just I was standing there. It must have been 35, 40 minutes. He said, Adam, are you going to do this dive one day? And I said, well, yeah, it's as part of achieving my goals. I know I need to do it to get to the next level of where I wanna be. And he said, well, okay. If you're gonna do it eventually, why don't you get it out of the way?
You don't have to agonize about it for the next hour or week or year. And what I took away from that experience was that so often when we're trying to persuade people, we think it's our job to give them answers. But we're usually better off asking them questions and letting them find their own answers. So if Eric had given me a list of reasons why I should go for it, the diving term is just chuck it. Like, just throw yourself into this. Just do it.
I would have found a bunch of reasons to resist. When he asked me if I was gonna do it eventually and I made the commitment, it was a lot easier for me to take ownership over that plan. And lo and behold, after I retired from diving, I ended up doing a lot of coaching, and found myself as a coach having very similar conversations with my own divers who were afraid to try something new. And it's something that I need to do more often in my job now than I do. That's great. Fascinating.
Adam, thank you so much for joining us on the podcast today. Been a fascinating conversation, and I'm already thinking of things I need to relearn and rethink and eliminate those best practices, fascinating conversation. Thank you so much today. I thoroughly enjoyed it. Thank you for having me, Pete. And, Adam, thank you again. Looking forward to the book. We ordered a few copies for our founders as Beller, so appreciate it. Honored. Thank you for doing that.
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