The Billionaire Framework For Making Hard Decisions (#387)

Shaan Puri

This is Framework Friday, and we have a special guest, Andrew Wilkinson. Joining us, Andrew, I wanted to hear from you because I think you like frameworks just as much as I do. Is there a framework that you've been using or that has stood out to you as particularly useful lately?

Andrew Wilkinson

It's actually a quote: "Easy choices, hard life. Hard choices, easy life." This quote is by a guy named Jersey Gregorick. I think Tim Ferriss famously shared this quote years ago, and it always sticks with me. Most recently, it has been on my mind. It's one of those things where you often find a situation where you know what the right thing to do is. For example, let's say an employee is just not working out, or there's a difficult decision that needs to be made. Naturally, the thing to do is to delay it or to try and make it work. I have really shifted over the last two years to really trying to make the hard choice. I found that it always results in an easier life. The road to hell is paved with good intentions. When I try to make it work with someone or I try to make a business work, it just never does. For me, the other piece of that framework is: if I ever think, "Should I fire this person?" that means I absolutely should. You never think about a superstar and go, "Should I fire them?" You think, "Oh my God, I'd be lost without them." So if you have that thought, you’ve got to immediately fire that person. Make a hard decision, and that applies to so many different parts of business.

Shaan Puri

I like that I'll give one one personal experience caveat with that recently in the past 2 years there's been a couple people that we were like should we fire this person and I had the same mentality as you like once the question comes up you know it's obvious right this sort of like if it's not a hell yes it's a no type of approach to people on your team especially on a small team but the one caveat was have I given this person clarity on what their role is and what's expected what winning looks like and what I found was that in a couple circumstances I didn't give them a clear role and I didn't give them clarity on what I needed what was winning in this role and once we did that we said okay before we just make you know cut the cord I'm gonna do this one thing and I'll know within 2 weeks 3 weeks from that from this. On if that was correct and that actually turned somebody who was we were about to fire them into basically like a star driver in in like that function of the company and so that's my only caveat with that one but I'll also add one of the like takeaways from the easy choices hard life hard choices easy life thing is when you think 2 option when you're trying to weigh a decision should I do a or b and you're trying to weigh a or b a or b you can't you just literally can't decide you should just simply say which one is harder because your brain is naturally discounting the the hard one and and making it seem like oh these are about equal because the difficulty is something that you're taking into consideration and your brain wants to avoid difficulty it wants to avoid the short term pain or struggle that might come so what looks to be equal 2 equal choices are not actually equal at all the the one that's that's harder is actually a much better choice and your brain is just trying to sandbag it and weigh it down because it it wants to avoid that that struggle so that's another useful one because I had a situation recently where I was a or b a or b I just couldn't decide for the life of me and then I went down this rabbit hole of like how do you make a tough decision because I was like normally I'm very very decisive normally it's pretty easy this one was so difficult and when I went down this rabbit hole I'm like okay what is the world's philosophy on this that was one that really helped me which was your your brain is not accurately pricing the two decisions correctly it puts a huge tax on the one that's difficult and that's why it seems equal but that tax is not real it's just the brain trying to like you know punish you for short term pain I can't find this client info have you

Hubspot

heard of hubspot hubspot is a crm platform so it shares its data across every application every team can stay aligned no out of sync spreadsheets or dueling databases hubspot grow better I love that and that exactly it's pushing through and doing the hard thing and there's been so many times where chris and I you know let's say that we're doing a hire and we've been doing the hiring process for 6 months and we haven't found the candidate and we have someone that we think is like a b or a c but we're exhausted at the end of it the right thing to do is to actually continue the process and do the hard thing and do more phone calls and stuff but it's so easy to get fatigued and choose the wrong person and every time I do that it's always a colossal failure so I'm really trying to lean into that the other one that I've been finding really interesting lately so there's this great quote by upton sinclair never expect a man to understand something that his paycheck depends on him not understanding so effectively let's say you go to someone and you say hey you know this business model is terrible you shouldn't do it it's doomed in 5 years but if they're making a ton of money doing it and it rewards them it will be very difficult cognitively for them to face that painful truth and this can apply to anything effectively it's people will not do things that are that don't benefit them or they're not incentivized to do in some way so here's an example so we own a whole bunch of different agencies and the logical thing when you own all these agencies is to say hey big agency you should refer your smaller leads to the smaller agency and so you know we kind of introduced everyone and we're not gonna force them to but we figured you know they would get it they're like oh they're part of the family we'll refer the leads over here and I just did a call with one of the smaller agency guys and he's like man I'm not getting any leads what's going on and I realized that for these guys there's no reason to do it right they might get a little referral fee or something that we've structured but it actually will not make a difference to their bonus and on the downside if they refer the work they could lose the person that might come back to them for future work or if it goes badly that person might email them and say hey I can't believe you referred me to this agency they sucked or whatever it is and so I've just realized time and time again people will not do what they're incentivized to not do

Shaan Puri

Yeah, the thing you said at the beginning is sort of like the **Innovator's Dilemma**, right? It's like a company whose success depends on the world being a certain way is going to have a huge blind spot to the change in that scenario. This is why, for the **Innovator's Dilemma**, you would assume that the big company, whose domain expertise is in this area, will be the ones to invent that future. However, it's almost never them that invents that future. It's some upstart who sees the world a little differently and says, "Oh yeah, all that stuff? That's the old way. Yeah, screw that! We're going to do it this new way." The big companies are like, "Screw that! What do you mean? How could you screw that? That's the way the world is." So, you can sort of... can you use that to your benefit? For you, for example, what would be your blind spots? Basically, what would you not see because your paycheck depends on it being a certain way?

Andrew Wilkinson

And I've been thinking about this a lot. Right? You look at DALL·E and you go, "Okay, in 5 years, will you be able to type into DALL·E, 'Build me a website that looks like this,' and then it comes back and you say, 'Oh, more creative,' or 'Make the logo bigger,' or 'Do this'? Will design still be a thing?" I've always been rewarded by not overestimating these things in the near term and just trucking on. But I've been thinking about that. I think about some of our other businesses and how they can be disrupted. I don't want to over-index on that, but I always try to remember that I have this crazy, perverse cognitive bias where, you know, what is the great quote? It's like, "All forecasts are based on the past," right? Or "All your knowledge is based on the past; you don't know what's coming." I don't think that someone who owned... I'm reading a great book about the newspaper industry right now, and all the guys that owned newspapers in 1998 thought, "Oh, we're good forever. This is the best possible business. We have a monopoly. It's okay to pay 20 times earnings to buy a paper." And you know how that turned out. You could not have predicted Craigslist, classified disruption, etc. So yeah, people are just incapable of seeing these things in themselves.

Shaan Puri

Yeah, that's great. I think it's also true with investments. If you're invested in something, when new information comes to light, you sort of have to recalculate from scratch. You should ask yourself, "If I didn't have this investment today, would I invest the same amount of money in this thing?" People would be surprised how often the answer is no. You would not put that same amount of investment in this thing. It happens even on a small scale with employee stock options or whatever. It's like you get stock options or RSUs in a company, you earn them, and now, like, 50% of your stock portfolio is in this one company. You probably wouldn't have put 50% of your money into this company if I just gave you that amount of money. But you'll leave it there, right? Because of inertia. So, let's let it continue to be that way. I think one of the best things you could do is train your brain. Train yourself to get rid of some of these biases and blind spots. Just know that by default, they're there. You're not special; you're not going to just not have them. You're going to have them unless you proactively fight against the gravity to rid yourself of them. This way, you won't make the same mistakes everybody else does.

Andrew Wilkinson

So, there are two really amazing things that people should go and study. If you want to, I spent a couple of years actually just reading and rereading books on psychology to try and hammer this stuff into my brain. My favorite book on it is **"Influence"** by Robert Cialdini. It's amazing! It just kind of goes through all of the thinking traps we get into, such as anchor bias, comparison, and all these kinds of ways that you trick yourself. The other great one is **"The Psychology of Human Misjudgment"** by Charlie Munger, which is a speech he gave at Harvard. If you just Google it on YouTube, you'll find it there. I listened to that in the car over and over again, and now I see it everywhere.

Shaan Puri

Totally! Alright, this was great. Thanks for joining the Framework Fridays. If you liked this, tweet at Andrew and tweet at me. Andrew, your handle is "What A Wilkinson" on Twitter.

Andrew Wilkinson

yeah a wilkinson

Shaan Puri

cool and I'm sean vp on twitter alright see you