Dan Martell - December 27, 2021


How The Rich Make Decisions


Episode Stats


Length

11 minutes

Words per minute

177.818

Word count

2,096

Sentence count

89


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

If you struggle with making faster decisions, and you get anxiety from making the wrong decisions, I wanna teach you a different way that really can unlock and open up the floodgates for not only you to feel more confident and comfortable making decisions, but more importantly to allow your team to make decisions on your behalf and know that you re not dragging your feet.

Transcript

Transcript generated with Whisper (turbo).
00:00:00.400 FEAR is actually an acronym
00:00:03.040 and it stands for false evidence appearing real.
00:00:19.480 What's up, everybody?
00:00:20.840 Hope you're having an amazing day.
00:00:22.400 I've got a super fun video to chat with you today,
00:00:26.600 talking about type one versus type two decisions,
00:00:29.440 Something that I think can really serve,
00:00:31.200 especially if you're like dragging your feet
00:00:33.280 to make any type of decision in your business.
00:00:36.380 Maybe it's new software, key hire,
00:00:38.880 deciding if you should get new credit cards
00:00:41.840 for your corporation, whatever it is.
00:00:43.440 Literally, if you struggle with making faster decisions
00:00:46.800 and you get anxiety from making the wrong decisions,
00:00:49.300 I wanna teach you a different way
00:00:51.020 that really can unlock and open up the floodgates
00:00:53.960 for not only you to feel more confident
00:00:57.520 and comfortable making decisions,
00:00:58.760 but more importantly, to allow your team
00:01:01.100 to make decisions on your behalf,
00:01:02.360 or at least know that you're moving things forward
00:01:04.640 and you're not dragging your feet,
00:01:05.760 or I like to say driving with the handbrake on.
00:01:08.620 Oftentimes when people get anxious around making decisions
00:01:14.020 it's literally in your business,
00:01:16.000 like driving with the handbrake on, you know,
00:01:18.700 you got it pulled up and you're hitting the gas.
00:01:20.940 And at the same time,
00:01:21.840 it's just like the back tires
00:01:23.120 are just dragging on the pavement.
00:01:24.740 You need to drop the handbrake and move things forward.
00:01:28.160 So I wanna share with you a framework
00:01:30.140 called type one versus type two decisions.
00:01:32.040 I first learned this from Jeff Bezos of Amazon.
00:01:35.480 He's made the concept famous.
00:01:37.680 The analogy is very simple.
00:01:39.740 Imagine there are two types of decisions
00:01:42.560 you can make in your life.
00:01:44.240 There's one type, which is type one,
00:01:46.500 which is kind of like a one-way door, right?
00:01:48.920 Kind of a door that opens
00:01:50.060 and once you step through the door, it closes.
00:01:52.880 That's a type one decision.
00:01:54.440 A type two decision is a decision
00:01:56.340 more like a revolving door,
00:01:58.340 where as you go through the revolving door,
00:02:01.720 you can come back and work your way out
00:02:03.980 of entering that building by staying in the door
00:02:06.780 and moving backwards.
00:02:07.900 And the reason why it's really important to distinct,
00:02:11.500 to create distinction amongst which one
00:02:14.100 you're making a decision around is that things
00:02:16.900 that are type two decision allow you to make a decision.
00:02:21.360 And if it's wrong, you learn new information,
00:02:23.540 you can always step back for it.
00:02:24.980 Whereas a type one decision,
00:02:26.840 something like buying a company or bringing on investors
00:02:31.460 or deciding what bank you're going to go with.
00:02:34.780 These are things that are kind of like one way direction.
00:02:37.300 Well, maybe not the bank one,
00:02:38.320 but they're one way decisions.
00:02:41.040 And the risk in a business is that you use the thoughtfulness
00:02:48.900 and the pace of a type one decision
00:02:50.900 for things that are really type two decisions,
00:02:52.460 things that you can easily work your way out of.
00:02:55.340 You should never use the level of thought and rigor
00:02:58.640 and assessment and information gathering
00:03:01.460 as you would for a type one decision.
00:03:03.020 So the key idea is to slow down to make small decisions,
00:03:08.100 but make the key ones.
00:03:09.140 Jeff Bezos famously said that, you know,
00:03:11.040 in the morning when he wakes up,
00:03:13.220 he only has to make one or two really good decisions
00:03:16.620 to make his day really productive.
00:03:18.400 And the reason, because of that,
00:03:20.280 he usually front loads those decisions early in the morning
00:03:22.920 when his cognitive abilities are really strong.
00:03:24.980 So I wanna walk you through some strategies
00:03:27.880 to help you make better type one and type two decisions.
00:03:31.580 First off is, I want you to understand
00:03:34.000 that in every decision you make,
00:03:36.300 you're essentially, there's a component of you
00:03:38.560 that's making decisions out of fear
00:03:40.620 based on past experience.
00:03:43.120 And like most people, there's probably a good chance
00:03:45.800 that you've had some challenges or trauma
00:03:49.400 or issues come up in the past
00:03:51.400 that are fogging your ability to make decisions today, okay?
00:03:55.760 So, fear is actually an acronym
00:03:59.440 and it stands for false evidence appearing real, okay?
00:04:03.420 So, fear is an acronym, and I want you to memorize this,
00:04:06.640 for false evidence appearing real.
00:04:09.560 The reason I share that is because most people
00:04:13.260 can't make a decision based on, you know,
00:04:16.660 some people call it trauma, PTSD, whatever,
00:04:22.160 on a scenario that happened in the past,
00:04:24.500 but if you objectively look at the situation you're in today,
00:04:28.660 there's no artifacts of that previous scenario
00:04:34.100 represented in today's decision,
00:04:36.100 and you're not making the decision out of a fear
00:04:38.780 that's just not real.
00:04:40.340 The people involved are different,
00:04:42.280 the scenario's different, the person you are today,
00:04:46.100 you've grown to become somebody that can deal with
00:04:48.860 and handle issues.
00:04:49.920 I mean, just ask yourself this question.
00:04:52.000 If you make the decision and you move forward,
00:04:55.740 instead of being fearful that it won't work out,
00:04:57.840 ask yourself, what's the potential downside
00:05:00.220 and who have I become?
00:05:01.540 And have I dealt with bigger challenges
00:05:03.860 than the one that potentially could happen
00:05:06.080 if this thing doesn't go in the right direction?
00:05:07.760 The answer for a lot of people is yes.
00:05:09.500 You 100% have dealt with situations today
00:05:14.320 that even you don't even realize
00:05:16.100 when you're dragging your feet to make a decision,
00:05:18.560 your ability to deal with the challenge it could
00:05:21.940 probably won't ever happen.
00:05:23.320 Most people stress themselves out over scenario.
00:05:26.760 The stress of the decision usually causes more pain
00:05:31.380 than the potential of the thing not working out.
00:05:33.860 That's crazy, but happens all the time
00:05:35.740 where there's more challenge and frustration
00:05:38.920 and anxiety and emotions around making the decision
00:05:42.820 than would have come from the thing
00:05:45.720 that you decided to do not working out.
00:05:47.600 You could have actually got through that easier
00:05:49.440 than the anxiety you brought to yourself.
00:05:50.900 This is the opportunity
00:05:52.780 that I really wanna shed some light on.
00:05:54.120 So first off, again, I wanna remind you,
00:05:56.140 fear is an acronym, false evidence appearing real.
00:05:58.520 So you just have to audit yourself
00:05:59.880 and really write down like, is this even true?
00:06:02.840 Is there any component of this belief system
00:06:05.680 that I've got right now that's even true around
00:06:08.060 moving this forward and what could go wrong?
00:06:09.440 So that's number one.
00:06:10.280 And the second is always look at the upside
00:06:13.440 and the downside in making a decision.
00:06:15.160 The way I think about it is,
00:06:16.840 doesn't matter if it's an angel investment,
00:06:18.440 I've invested in 40 plus companies as an angel investor,
00:06:21.160 buying companies, I've done a lot of that lately.
00:06:25.040 Key hires, I think I've hired about 15 people
00:06:27.520 in the last four months.
00:06:28.780 So like making decisions around hiring.
00:06:31.320 So the moving forward upside versus the downside,
00:06:36.320 If I can, if the upside is disproportionate
00:06:40.400 to the potential downside,
00:06:42.020 meaning that worst case scenario,
00:06:43.780 like for example, you hire somebody
00:06:45.780 and in two months they don't work out.
00:06:47.080 Yeah, I got to go through the process
00:06:48.280 of recruiting somebody new, I got to cross train them.
00:06:50.720 But the downside of that is manageable.
00:06:54.360 And the upside of hiring somebody amazing
00:06:56.820 that just takes things off your plate,
00:06:58.160 that creates a ton of value for your business is so high
00:07:00.840 that for me in that situation,
00:07:02.740 the downside risk is worth the upside reward.
00:07:06.400 What most people never analyze is,
00:07:08.820 can they live with the downside?
00:07:10.640 So let's say you've saved a couple hundred thousand dollars
00:07:13.860 and somebody comes to you and says,
00:07:14.860 hey, you should invest in Bitcoin.
00:07:16.180 You know nothing about cryptocurrency
00:07:18.380 and you just have some blind faith trust
00:07:21.560 and you take all of your life savings, $200,000
00:07:24.080 and you put it into crypto.
00:07:25.700 And then all of a sudden the value of the coin
00:07:27.940 drops by two thirds.
00:07:29.880 Can you live with that downside?
00:07:31.720 If it's your life savings, the chances are,
00:07:34.900 I'm gonna assume that that would crush you emotionally.
00:07:37.840 And what's the potential upside?
00:07:40.000 Yeah, you could probably 10X your money, right?
00:07:42.320 Maybe 100X, I don't know, over the next decade.
00:07:44.940 But for a lot of people, they make decisions
00:07:48.720 without asking themselves,
00:07:50.300 what's the potential real downside?
00:07:52.840 And if I can't live with that, should you do it
00:07:55.560 just because the upside is so big?
00:07:57.340 So, you know, it sounds crazy, but as an entrepreneur,
00:07:59.880 I don't take as much risk as I used to.
00:08:01.820 I used to be way more risky,
00:08:03.760 but now it's almost like I'm looking
00:08:05.960 for these asymmetrical reward scenarios
00:08:09.280 where the downside I can mitigate
00:08:11.380 and the upside is disproportionate.
00:08:13.560 It is geometrically opposed to the potential downside.
00:08:20.180 There's so much upside of my world today
00:08:23.340 with high-speed ventures is buying companies.
00:08:25.880 The amount of upside potential versus the downside
00:08:28.840 I buy a company, it doesn't work out the way I want it to.
00:08:31.380 Potentially I divest of it, get my money back, mitigate it.
00:08:34.880 No harm, no foul versus the upside of 25,
00:08:38.460 you know, 50 X in the investment or the acquisition
00:08:41.440 through that period of time.
00:08:42.840 And I think the upside downside evaluation
00:08:45.140 is such a great way to make a decision quickly.
00:08:48.020 And then finally, the third thing is,
00:08:50.120 I think for a lot of people that know they have anxiety
00:08:53.200 around recruiting, around financial investments,
00:08:55.740 around, you know, make even just like software decisions,
00:08:58.260 like what products to buy.
00:09:00.120 I think it's better for you to build a system,
00:09:02.240 almost like a decision tree.
00:09:03.900 Like if this, then go to this,
00:09:05.760 like you could write down a system like, you know,
00:09:08.080 for recruiting, you might have a process like I have,
00:09:10.200 which is called the talent pipeline
00:09:11.440 that I teach my coaching clients,
00:09:13.000 which would be like, okay, the video gets submitted,
00:09:15.160 you evaluate these things,
00:09:16.380 these are the questions you ask,
00:09:17.400 then you go to a cognitive assessment,
00:09:19.280 you go to, you know, profile assessment,
00:09:21.340 you go to a test project,
00:09:22.520 and there's always three candidates before you hire somebody.
00:09:24.920 That's kind of like high level part of my recruiting process.
00:09:27.880 Well, now if you've got that, if you delegate,
00:09:31.600 you move the decision off your plate through a process.
00:09:34.480 So even investment decision, you know,
00:09:36.500 a lot of investors that trade options or day trading
00:09:39.560 or angel investment or buying companies like me,
00:09:42.200 I have a decision criteria list.
00:09:44.940 So I can give that to somebody else.
00:09:47.740 They can move processes through forward faster,
00:09:50.600 make decisions on my behalf.
00:09:52.060 I'm not involved, but they're not bringing any emotion to it
00:09:56.940 because they're just following a process.
00:09:58.520 And I think that is such a powerful way
00:10:00.660 that if you're self-aware enough to know
00:10:03.400 that certain things trigger you
00:10:05.400 and it's better if somebody else handles it,
00:10:07.420 but in doing the delegation, you give them a process,
00:10:11.700 it can help you really move things along faster.
00:10:13.980 So those are the three big ideas
00:10:15.580 that I want to share with you.
00:10:16.480 Number one, remember that fear is nothing
00:10:19.000 but false evidence appearing real.
00:10:20.560 Number two, to measure the upside
00:10:23.020 and the downside potential of making a decision.
00:10:25.260 And if you can't live with the downside,
00:10:26.540 don't make the decision.
00:10:27.720 And number three, always look at opportunities
00:10:31.580 to move decision-making off your plate through a process
00:10:34.620 to an individual, a contractor, an agency,
00:10:36.900 so that the business can continue to grow,
00:10:39.960 regardless if you have emotional triggers being fired
00:10:43.000 around decisions you need to make.
00:10:45.000 If you like this strategy, I'm gonna link below
00:10:48.520 a framework that I created for my clients
00:10:50.400 called Future Living, which teaches you how to,
00:10:54.420 In your mind, live six months into the future.
00:10:58.140 And I'll tell you why this is powerful
00:10:59.740 in the links below if you wanna click through and watch that.
00:11:02.100 But it's designed to be able to bring an energy level
00:11:06.320 and a creative process today to the future
00:11:10.040 you know you will create with certainty.
00:11:11.940 And that's really where confidence come from
00:11:13.620 is the ability to have the discipline to execute today,
00:11:16.600 to have conversations today.
00:11:17.800 If you're hiring somebody,
00:11:19.420 you wanna speak six months into the future,
00:11:22.800 not where you're at today,
00:11:24.020 to get them excited about where you're going.
00:11:26.080 And there's a whole bunch of nuances around doing that.
00:11:28.340 But I thought if you like what I've shared with you today,
00:11:30.940 it's called future living,
00:11:32.080 click the link below to get access to that.
00:11:35.080 But I just want to share some thoughts
00:11:36.500 on making decisions faster
00:11:37.900 so that you can drop the handbrake
00:11:39.960 in your decision-making life and move things forward.
00:11:42.680 I hope this video finds you amazing.
00:11:44.560 And we'll talk soon.
00:11:45.560 Peace.
00:11:46.400 Later.