Dan Martell - How The Rich Make Decisions

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.

Dan Martell - December 27, 2021

How The Rich Make Decisions

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