Defeat FOMO & Make More Confident Decisions — The Science of Success Podcast

In this episode we share how you can be more confident when make the tough decisions in your life, discuss how to deal with FOMO and show you the key to ultimately achieving greatness with our guest Patrick McGinnis.

Patrick J. McGinnis is a venture capitalist, writer, and speaker who has invested in leading companies around the world. He is the creator and host of the hit podcast FOMO Sapiens, with over 2 million downloads. Patrick coined the term “FOMO” short for “Fear of Missing Out”, which was added to the Oxford English Dictionary in 2013. He is also the creator of the term “FOBO” or “Fear of a Better Option” and has been featured as the creator of both terms in media outlets including the New York Times, The Financial Times, Boston Globe, Guardian, and many more! Patrick is also the author of the international bestseller The 10% Entrepreneur: Live Your Startup Dream Without Quitting Your Day Job and the newly released Fear of Missing Out: Practical Decision-Making in a World of Overwhelming Choice.

The FOMO man himself...The guy who coined the term Fear of Missing Out
Our earliest ancestors were very keyed in to what they needed.. but didn’t have.. FOMO is an evolutionary artifact that has come into prominence and been multiplied by social media.
Technology has been a massive amplifier for FOMO
FOMO is an aspirational feeling.. there is something better out there that we could be having.
We often fill uncertainty with our own projections… which may not match reality at all.
The worst thing you can do is spend all of your life chasing things that you don’t want.
FOMO has been studied in depth by clinical psychologists and has a severe negative impact on your mental health.
Studies show that FOMO also negatively impacts your personal finances.
FOMO negatively impacts your productivity by robbing your attention
The good thing about FOMO is that if we listen to our FOMO it may be a guide for things we want to do.
FOBO… starting to become more well known now. “Fear of a Better Option"
In a desire to maximize you hold back and keep your options open for as long as possible in hopes that something better comes along.
FOMO = being a follower
FOBO = being stuck in analysis paralysis
The reason that entrepreneurial ventures often best large vested companies is because big companies are stuck with FOBO while as entrepreneurs are extremely decisive.
You make thousands of decisions a day, and decision making is one of the best skills you can improve and master.
We often waste HUGE amounts of time making minor or irrelevant decisions.
You often bring too much drama into making irrelevant or inconsequential decisions in your life.
Which decisions should you actually pay attention to?
For many of the things that you get stuck on making decisions in your life, it ultimately doesn’t matter that much.
Decisiveness is much more important than perfection.
There is no perfect decision.
You never heard a great leader being described as indecisive. Leadership requires you to be decisive. Leadership requires you to be a master decision-maker.
If you’re too risk-averse to make bold decisions, you will never achieve greatness.
If you wait too long to make a decision, your options may ultimately evaporate.
The job of a CEO or entrepreneur is to take incomplete data sets and make hard decisions about what to do next.
We very rarely go back and learn from our decision-making process.
How do you make better BIG decisions in your life?
- Write everything down.
- Make an investment memo on your decision.
How to use Decision Journals to make better decisions
VC concept of Portfolio Review is a great way to see flaws in your investment decision making process.
Just because you made a good decision, it doesn’t mean you will be right.
What are the key strategies you can use to make better decisions, especially in the face of FOMO?
- Gather the relevant information
- See how it aligns with your goals and priorities
- Socialize it with a few key people (3-5 people)
- Take action.
How do you overcome FOBO and analysis paralysis to make the best decisions possible?
It’s OK to want the best (FOBO) but FOBO can often incorrectly short-circuit and hijack your decision-making process
When you make a decision.. you have to let go of something else.
Indecision is like a prison, the moment you can break out of that your world opens up.
Homework: Be ruthless with yourself about not wasting time on no-stakes decisions.

PORTFOLIO REVIEW STRATEGIES

Quarterly Cadence
Structure into an investment memo
Original financials vs actuals
Original Investment Thesis (how has it held up?)
Top 10 KPIs Quarterly
Sit down and talk through it with all the partners
- Come up with action items
- Put them into writing

Thank you so much for listening!

Please SUBSCRIBE and LEAVE US A REVIEW on iTunes! (Click here for instructions on how to do that).

This week's episode of The Science of Success is brought to you by Best Fiends.

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The games developers and team are constantly updating with new themes and levels so the game never gets old or less challenging. This really keeps you on your toes in a fun way as you need to utilize different characters and strategies in order to succeed. What may have gotten you to a certain point in most cases won’t get you to the next.

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Want To Dig In More?! - Here’s The Show Notes, Links, & Research

General

Patrick’s Site and Wiki Page
Patrick’s LinkedIn, Facebook, and Twitter
FOMO Sapiens Podcast
FOMO Quiz

Media

Politico - “Is FOBO Paralyzing the Democratic Primary?” by Patrick McGinnis
LinkedIn - “Patrick J. McGinnis shares how to overcome FOMO and FOBO, and our next guest will help you find your voice” by Victoria Taylor
Article Directory on HuffPost, Medium,
HBR - HBR Presents: FOMO Sapiens with Patrick J. McGinnis
New York Times - “How to Beat F.O.B.O., From the Expert Who Coined It” by Tim Herrera
Business Insider - “A Wall Streeter turned venture capitalist uses a strategy from his investing career to make the personal decisions that stress him out most” by Andy Kiersz
Inc - “The Inventor of FOMO is Warning Leaders About a New, More Dangerous Threat” By Peter Kozodoy
Crunchbase Profile - Patrick McGinnis
WeWork - “Can’t quit your day job? Author Patrick McGinnis says be a ‘10% entrepreneur’” by Patrick McGinnis
Boston Magazine - “The Home of FOMO” by Ben Schreckinger (2014)
[Podcast] So Money with Farnoosh Torabi - Patrick McGinnis "The 10% Entrepreneur" Author
[Podcast] 33voices – Ep 1151 | The 10% Entrepreneur — Patrick McGinnis
[Podcast] Art of Manliness - Podcast #251: Be an Entrepreneur Without Quitting Your Day Job

Videos

Books

Fear of Missing Out: Practical Decision-Making in a World of Overwhelming Choice by Patrick J. McGinnis (Release May 5th, 2020)
The 10% Entrepreneur: Live Your Startup Dream Without Quitting Your Day Job by Patrick J. McGinnis

Misc

Bessemer VC Anti Portfolio

Episode Transcript

[00:00:04.4] ANNOUNCER: Welcome to The Science of Success. Introducing your host, Matt Bodnar.

[0:00:11.8] MB: Welcome to the Science of Success; the number one evidence-based growth podcast on the Internet with more than five million downloads and listeners in over a hundred countries.

In this episode, we share how you can be more confident when you make the tough decisions in your life, discuss how to deal with FOMO and show you the key to ultimately achieving greatness with our guest, Patrick McGinnis.

Are you a fan of the show and have you been enjoying the content that we put together for you? If you have, I would love it if you signed up for our e-mail list. We have some amazing content on there, along with a really great free course that we put a ton of time into called How To Create Time for What Matters Most In Your Life. If that sounds exciting and interesting and you want a bunch of other free goodies and giveaways along with that, just go to successpodcast.com. You can sign up right on the homepage. That’s successpodcast.com. Or if you’re on your phone right now, all you have to do is text the word smarter, that’s S-M-A-R-T-E-R to the number 44-222.

In our previous episode, we shared how to decide what's really important in your life, how self-care can actually lead to massively increased productivity and how you can put away the guilt of not working hard enough with our previous guest, Denise Gosnell. Now, for our interview with Patrick.

Patrick J. McGuiness is a venture capitalist, writer and speaker who has invested in leading companies around the world. He's the creator and host of the hit podcast FOMO Sapiens. He coined the term, “FOMO,” which stands for fear of missing out, which was added to the Oxford English Dictionary in 2013. He's also the creator of the term FOBO, or fear of a better option and has been featured as the creator of both terms in media outlets, including the New York Times, the Financial Times, The Boston Globe and many more. Patrick is also the author of the international bestseller, The 10% Entrepreneur and the recently released Fear of Missing Out: Practical Decision-Making in a World of Overwhelming Choice.

[0:02:17.3] MB: Patrick, welcome to the Science of Success.

[0:02:19.6] PM: Great to be here, Matt.

[0:02:20.8] MB: Well, we're super excited to have you on the show. Your background is so fascinating and you have a very unique claim to fame.

[0:02:28.8] PM: I do. Shall I say it? Or do you want to?

[0:02:30.7] MB: Lead the way.

[0:02:31.5] PM: All right. I am the person who invented the term FOMO, or fear of missing out.

[0:02:35.7] MB: Did you know at the time when you wrote that that it was going to become such a cultural phenomenon? I mean, really in many ways, defines in a major sense a huge piece of our culture today?

[0:02:45.5] PM: No. In fact, I came up with this idea and I wrote an article about it when I was at Harvard Business School. This was back in 2003. This was pre-social media. It was a really nichey problem that me and my friends lived with. Then thanks to the Internet and social media and all the other things that we now have in our lives. It has become an affliction that affects billions of people around the globe. It's incredible. I certainly didn't expect it.

[0:03:10.5] MB: It's so fascinating, because social media has in so many ways, really exacerbated this challenge. I'd love to hear your perspective on where we are from a cultural standpoint today in terms of FOMO and all of the overwhelming choices and everything that are circulating all around us.

[0:03:27.0] PM: The thing about FOMO is it is definitely enabled by technology, but it is also part of the human experience. If you think back to it, there are really three things that cause FOMO in people and maybe just helpful first to define what FOMO is. FOMO is and anxiety created by a belief that there's something better out there that we could be doing, often fed by social media, and it's also a desire to be part of the crowd, or to not be excluded from a social experience where others are taking part.

That's really what it is. If we think back, it is part of our DNA. Our earliest ancestors were keenly aware of what they needed, but maybe didn't have in order to survive in the Darwinistic survival of the fittest. Even the earliest humans felt feelings of FOMO, even though there was not a word for it at the time. It's also been part of our culture for a long time. The expression keeping up with the Joneses is a lot like FOMO and that's been around for over a 100 years. It actually comes from a comic strip that was run in the early 1900s about this family that lived next to the Joneses.

The Joneses were always doing something a little extra, and so this family felt pressure to keep up. That was the whole conceit of the comic strip. Ironically, the name of this family was the McGinnis family. When I heard that, I read that, actually there was a researcher at Boston University who wrote a history of FOMO. He tied that back to me and I couldn't believe it.

Then we have technology and that's where things changed. Even though we had expressions like keeping up with the Joneses, where FOMO became a necessary word to have in our lexicon, because all of a sudden, it wasn't just that you would compare yourself with your neighbor, it was that you compared yourself to people across the globe, or to people, or celebrities who you have no ability to keep up with. More than that because of social media, not only are we super connected, but also we are able to shape our lives in specific ways that are completely unrealistic.

We look at the way people portray their lives online and they're not at all connected to reality. When we look at them, we spend a lot of time idealizing them and injecting into that space our own expectations, and so you see that perfect picture with that perfect family and the life that looks so great to you. When you're sitting on your couch in your underwear, it's easy to feel inadequate. That's what's happened and it's become a big part of your society. You look for FOMO now, on Google there are 10 million hits, it's in the dictionary and it's become a word that's used not only by advertisers, but by people across our society to communicate the specific anxiety that many of us feel.

[0:06:02.9] MB: It's so crazy that in many senses, technology and really specifically, social media has basically just been a massive amplifier for FOMO and this phenomenon, which as you said in some sense is really an evolutionary artifact that's baked into the neurology of our brains.

[0:06:19.6] PM: Yeah, it is. You obviously can have FOMO without social media, of course as it is part of the human experience, but it is that proximity to comparison that reference anxiety that we provoke all of the time that has weaponized these feelings and made them something that there's interesting statistics out there that show that more than half of people feel FOMO when they're away from new sources, or from social media networks.

It's also the 24-hour news cycle and all these other things that are constantly bombarding us with information that we cannot possibly begin to process and that hijacks our feelings and uses them against us.

[0:06:59.0] MB: Tell me a little bit more about what happens when we experience FOMO. What is that like and why is it such a bad thing?

[0:07:06.7] PM: Yeah. We can talk about the good parts of FOMO, because I don't want to be totally negative. Just with the bad stuff, so FOMO is basically as I defined earlier, it's this anxiety that we feel when we [inaudible 0:07:15.4] and others and it's also this desire to be part of the herd. In one sense, FOMO is an aspirational feeling. It's the idea that there is something better out there that we could be having. As human beings, we naturally want to have the best.

There is this perception that, “Oh, my goodness. If I were just doing this or that, my life would be better.” The reality is we don't know if that's true, because we can't know if it's true. There is definitely an information asymmetry that's at play when you're seeing something out there and you say, “Oh, that looks so great.” If you could actually jump through the screen and see if it were actually good, then you would know and you could actually have authentic feelings. Unfortunately, because of information asymmetry, we can't know if those things are as truly good as they seem from the outside, right? That's the first part.

One of the big problems there, of course is the fact that because there is not clear information, we spend a lot of time inventing things and filling the uncertainty with our own projections, right? Second is this herd element. It's the idea that other people are doing something and I don't want to be left out. That is really at the end of the day if you think about it, it reminds me a lot of being a kid, or in high school when you're a follower. When you are worried about what the herd is doing and you want to keep up with the crowd, you are unfortunately not doing things that are actually authentic to you.

It's the classic example of – I remember when I was growing up, I wanted to buy a pair of Air Jordans, because everybody had Air Jordans. In fact, I bought them. My mom, I convinced her, bought the Air Jordans. Then I got them home and they were not comfortable and I didn't like high tops and I never wore them.

When you have FOMO, not only are you aspiring to things that you may not even like, but you're aspiring to the dreams of other people. The worst thing that you can do in your life is spend all of your time fixated on getting, or achieving something that isn't even actually the thing you truly want. That's what happens when you have FOMO. That's really bad. It leads to three major outcomes. The first is that it can affect your mental health. FOMO has been studied in depth by clinical psychologists and it's shown to provoke feelings of inferiority and stress and just a lesson overall mood and it just creates a lot of pressure on people that doesn't feel good.

It's really shocking how much ink has been spilled in the psychology world on how FOMO affects our mental health. The second is it affects your finances. There have been incredible studies out there by for example, Charles Schwab, that show that people spend money because of their FOMOs, money that they don't have in order to keep up with other people.

The third is productivity. If you spend more and more time focusing on other people and on social networks and really immersed in this world of comparison, it takes time away from your normal life. That's part of the reason why we so much time on our phones. Believe me, I look at my phone and I ask myself, how is it possible I spent four hours on my phone today? Then I look at it and it can be things like social media that cause us to do those things. Those are the bad things about FOMO.

The good thing about FOMO and this can be harnessed and used for good is that if we listen to our FOMO, it may be suggesting to us things that we wish we could do. Say you hear about your friend who started an entrepreneurial venture and you think to yourself, “Man, I'm going to the office every day, punching the clock. I really wish I could be an entrepreneur. I really wish I had an idea for a startup.” That actually even though it is FOMO, may actually prompt you to think about doing something entrepreneurial. It can be very positive in terms of waking us up to latent interests that we might have.

[0:10:50.6] MB: Yeah, that's a great insight. It's important too to have that perspective that it probably is largely a negative phenomenon, but there are ways that you can harness it or listen to it and glean some positive insight. One of my favorite comments about negative emotions, it's a very similar idea which is that negative emotions are data, but not direction, right? You can listen to them, doesn't mean you have to do necessarily what they're telling you, but there's valuable information that you're getting from your FOMO in some sense.

[0:11:15.7] PM: Yeah. I spend a lot of time in the book talking about this. I call the response to this feeling, when you learn that there's something interesting to you, of course there's still information asymmetries. You may think, I really want to be an entrepreneur. If you've never been an entrepreneur, you don't know quite yet, even if you like it, right? You're just projecting again.

What I encourage people to do is to engage in those things part time and I call it going all in some of the time. My whole first book, The 10% Entrepreneur was about part-time entrepreneurship. You try it out, see if you like it. Fill in that information asymmetry with information. Then if you do like it and if you think it's promising, then go after it full time. It can be a great strategy. I love what you said about negative emotions, because it is true that it is data. If you look at it clinically and strip out some of the emotion, then you can actually benefit from it.

[0:12:02.4] MB: I want to bring in the other term that you've coined and explore that as well and how it relates to FOMO and how relates to our lives and how we make decisions. There's so many interesting things to unpack from that. Tell me a little bit about FOBO.

[0:12:16.0] PM: All right. FOMO and FOBO were invented at the same time on the same day. They were put in the same article that I wrote back in school in 2004. While FOMO went on and became a word celebrity and is in the dictionary today and the article was called McGinnis’s Two FOs social theory at HBS.

The other FO of the two FOs, FOBO never really got famous. It's getting its day now and it's been written about in different magazines, like the New York Times and it's been in Politico. It's getting its moment in the sun now, but it really hasn't been prominent. Which is ironic, because as I think about FOMO and FOBO and FOBO stands for fear of a better option. FOBO is actually far worse for you.

FOBO is an anxiety that when you're making a decision and you have acceptable options before you, that there might be another option you haven't found yet. Therefore in the desire to maximize, you hold back and keep your options open for as long as possible in hopes that something better comes along. It is a very interesting form of risk aversion. Some people would say, “Well, that sounds optimistic.” You're looking forward to something better coming along, so you're waiting for that to show up on your doorstep. I see that as risk aversion, because it is actually the unwillingness to settle for less than perfect. As a result, never actually settling for anything at all. That's what happens when you have FOBO.

If you think about FOMO as being a follower, FOBO is doing nothing. It is being stuck in analysis paralysis and therefore, being unable to do anything. The reason why I think it's far worse than FOMO is that as I just mentioned with FOMO, listen, FOMO affects you and it has clear effects, but there is also a potential upside to your FOMO if you can learn to manage it.

FOBO on the other hand doesn't just affect you. It affects the people around you and there's nothing good that can come of it. I like to think of FOMO like drinking wine. A little wine never hurt anybody if done in moderation. In fact, maybe you loosen up and try something new. FOBO is like smoking cigarettes. Nothing good for you, nothing good for the people around you. All it does is cause problems.

[0:14:23.9] MB: It's really interesting to re-examine, or classify FOBO as risk aversion, because that [inaudible 0:14:29.7] in a light where you can really start to see the downstream effects of it, which is essentially that you stop taking risk, you stop taking action and your decision-making gets paralyzed.

[0:14:40.0] PM: Yeah. Think about this paradigm. I invest in companies. I'm an entrepreneur. I know that you are as well and many of the people listening to the show are entrepreneurs. If you think about how an entrepreneurial venture would operate, if it were riddled with FOBO, you could never make progress.

In fact, the reason why entrepreneurial ventures oftentimes are so successful and why they are able to kill off large companies is because entrepreneurial ventures are decisive and large companies are stuck with FOBO. There's a great example that I think shows this and that's the example of Audi. Audi decided in 2009 that it wanted to build an electric car. Then because of FOBO, procrastinated and changed its mind and Bob in accounting got involved and Sheila in marketing got involved and all of these things happen. It took them over 10 years to come out with an electric car.

Meanwhile, you have a pure-play startup, Tesla, Elon Musk. We can definitely all agree that the man does not have FOBO. He builds that company. He's got a product in market within a couple of years and now even though the number of units sold is far lower when you compare Tesla to Audi, Tesla is worth a lot more and is a much more valuable company. Why? Because startups are decisive and they take advantage of the indecision of large, stable companies.

[0:16:02.6] MB: We're getting into one of my all-time favorite topics and really one of the main reasons I even started this podcast years ago was because I was so interested in decision-making. You even touched on that to some degree. Selfishly, I use this show I mean, we share all kinds of really interesting ideas and conclusions and everything but selfishly I take everything and apply it to the business world and reap the benefits of that.

Decision-making to me has always been one of the most important and high-value skill sets that you can cultivate. It's so interesting to me to see in today's world, especially with things like FOBO that there's so many people and I get e-mails all the time from podcast listeners who in the same place, they don't know how to make a decision, they don't know how to be decisive, they're stuck, they feel they don't have any confidence, they can't choose between the myriad of options in front of them. How do you start to pare down this world of overwhelming choice and the trap of over analysis and really start to hone that into better decision-making?

[0:16:59.6] PM: This is something that I have spent a lot of time thinking about. I know you too. Decision-making. I mean, we make thousands of decisions a day, right? It's something that we all need to learn how to do. In fact, many of us think we're very good at it, right? I think in general, we all feel like, “Okay. I know how to make decisions.” When we get into a time of crisis, that's when our flaws are exposed. We see that with leaders around the world, whether it's Brexit and the indecision of the British government, or it's the response to the coronavirus and who move quickly and who didn't. Who had the FOBO and who didn't? All of these things get exposed.

What's interesting is also the thing about is that many of us waste a lot of time in our daily lives on things that don't really matter and we are mired in decisions on things that suck up our time, but don't give us much of a benefit return. First of all, I would say that then the first thing you have to do as you think about making better decisions is realize that many of us spend time on decisions. We waste our time on decisions that aren't important. When we do that, we then give ourselves less time and energy to focus on the things that really matter.

That right there is something that I learned way back in college. In the book, I talk about decision-making and I give you strategies to deal with FOMO and FOBO and they're different for when it comes to major decisions. Major decisions are have their specific strategies for each one. When it's for minor decisions, what I call low-stakes and no stakes decisions, they both have the same solution. Because when it comes to unimportant decisions, you make most of your unimportant decisions, or minor low-stakes, no-stakes decisions in a day without really thinking about it. It's completely reflexive.

When you spend a lot of time more than a couple of minutes or seconds, deciding which sweater you're going to wear, or what you're going to have for lunch, or whether you should go for a run or not, that is simply wasted time. The strategy that you can deal with for both FOMO and FOBO in that instance is the same. That is to basically outsource your decision-making.

When I was in college, I used to spend a tremendous amount of time worried about things that didn't matter. Should I go for a run or not? That would consume 20 minutes of my life. Should I go to the library now, or should I go in an hour? Well, by the time I've made my decision, it had been an hour. A friend of mine told me that whenever she had indecision, she would ask her watch. I thought to myself, “What could that possibly mean?”

She would say, “Listen. Basically, it's like, should I go for a run or not? Yes or no. I imagine the left side of my watch, the left half of my watch is yes, the right half of my watch is no. Then I looked down, I see where the second hand is and my decision is made for me.” You can do that in many different ways, whether it's even a rod and looking at the time on your cellphone, you could ask the magic 8-ball, whatever you want to do. The idea is taking decisions out of your own responsibility and outsourcing them, whether it is to something inanimate, or to a person, asking a person to make that decision is really helpful when it comes to these small decisions, because at the end of the day, you're not going to remember even making this decision in a couple of hours, or a couple of days and you are bringing all of this drama in the decision-making, and so you must take yourself out of the process in order to move forward with your day.

[0:20:05.0] MB: That's such a great way of looking at it, that you're bringing all this drama, I like that phrase, into what ultimately really are irrelevant or inconsequential decisions that have absolutely no impact on your life. It can end up wasting huge amounts of time.

[0:20:20.6] PM: Yeah, and it takes all your energy. If you spend all your time trying to decide which pair of socks to wear and then you walk into the office and you have to make a major strategic decision, you've already been running down the gas tank before you even get started. It's just not a good use of time. It is oftentimes, it's a self-deception trap that many of us use. It's like, “Oh, man. I have to make an important decision today. Why don't I waste the entire day doing other things, procrastinating, dealing with minor parts of my life, so that I can avoid dealing with what's really important? That's why it's important to get those off of your plate as quickly as possible.”

[0:20:56.6] MB: Tell me a little bit more about the concept of outsourcing these low-stake or no-stakes decisions and for somebody who might not really have clarity around when a decision fits into those categories, how do you think about categorizing stuff into either low-stakes or no stakes as well?

[0:21:11.2] PM: It's very simple. Some people I'm sure will read the book, or listen to our conversation and they'll say to me, “Well, how can you simplify it down to three levels?” I mean, I have low-stakes and no-stakes and medium-stakes and medium low-stakes and medium high-stakes. Absolutely, we could make it that complicated. By doing so, all we're doing is procrastinating and making our lives more complicated. The point here is that we want to simplify things as much as possible and that's really at the heart of the strategy I set forward in the book.

When it comes to low-stakes and no-stakes decisions, the way I think about it and it's really simple is number one, is this ephemeral? Will you have forgotten making this decision in a week and that's for no-stakes decisions, or a month for low-stakes decisions? If it's going to be something that impacts your life beyond a month, if you're going to in three months’ time look back and say, “Oh, my goodness. This was really important. I'm glad I spent tons of time on it,” then that is important and it has long-term effects and it requires more than being outsourced.

For many of the things that we get stuck on every day in our lives, that just won't happen. That's number one. Number two is does the decision have consequences in terms of money, time, or its impact on yourself and others? If not, then it's either low-stakes or no-stakes. Finally, can you abide by the decision no matter what the outcome?

For example, if you're trying to decide again, what to watch on Netflix, which is something that people spend tons of time on, even though it's not going to change your life. Think about it and ask yourself, “If I end up watching one series or another, is my life going to be ruined?” Of course, not. Therefore, you can easily and comfortably put it into the world of low-stakes and no-stakes. That's the way I divide them.

Now the no-stakes again is something that's truly, you're not going to remember in a day or two, or perhaps a week. Those are the ones I outsource to the watch. For anything a little bit more considered, something like for example, where I should go on vacation, or where should we go to dinner this weekend, or should I buy this desk, or that desk, or this TV or that TV? What I recommend is actually going and outsourcing to a person.

Letting somebody in your life help you with the answer, because chances are 99% of the time, you won't even need help. You'll have made the decision on your own. If you do need help, what that tells you is that you have options and they're so close in your mind that you're basically indifferent. Any of them could be fine. Any of them could work out, so therefore you want to find somebody to help you just make a decision already.

That could be asking a family member, or a colleague, or delegating to somebody, but it's the idea of just I don't make dinner plans anymore. When somebody says, “Where should we go?” I always just say, “I'm looking for something healthy this weekend, so let's do healthy food and then why don't you pick what you like?” You know what? I'm very happy with that outcome. I think as I've done this, I've realized that I feel more and more comfortable outsourcing and it's a great way to free up time in your life, in your schedule for the things that matter.

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[0:25:45.0] MB: Something that entrepreneurs I think really intuitively grasp that underpins this whole idea, one of the most important conclusions from all of this to me is this core idea that decisiveness is really much more important than perfection.

[0:26:00.9] PM: Most definitely. Because and we see this in entrepreneurial ventures all the time. One of my favorite books and I'm sure you read this and many of the listeners have read this is Eric Ries, The Lean Startup. That book is all about making tiny decisions, testing and then learning and then moving on to another thing. If you can't make even the smallest decisions and try something out, see if it works, how can you build a new venture?

There is no perfection. Asymmetry and information makes that guaranteed, but what there is is pushing the ball down the field towards the goal, being flexible and then pushing it forward again and again and again.

[0:26:37.7] MB: One of my favorite decision-making heuristics from the entrepreneurial world is a great letter to shareholders from Jeff Bezos, where he just talks about two heuristics that he uses to help make better decisions. One of them is is it reversible? Which oftentimes, people never ask themselves that, but how easy is it to reverse it? It's another way of looking at how bigger the consequences. The second heuristic is make decisions with 70% of the information that you think you need, instead of a 100%. To me, both of those are such great ways to get to that same conclusion, which is at the end of the day, it's better to make a half-decent decision and move on than it is to waste an hour, 5 minutes, 10 minutes, whatever it is depending on the stakes on a decision that has no impact on your life ultimately.

[0:27:19.2] PM: Absolutely. What's more, I love that example, because Bezos is such a decisive person, what's more is great leaders, you've never heard a great leader being described as indecisive. It's like, “Oh, I love Angela Merkel. She's so indecisive.” No, of course not. Leadership requires people to be decisive and to communicate a vision to the people around them. If you as a leader are waiting to have all the answers so that you can make a riskless decision, if you're that risk-averse, you will never achieve greatness. You won’t achieve mediocreness, because you won't get out of the gate. You’ll be stuck waiting for the perfect thing to come along and it's just not realistic.

The scary part is if you wait for too long, the options that you had in hand that you decided to wait before choosing, they may disappear, right? Nothing stays forever. That is another reason why it's important to be decisive, because if you wait too long, you may have no options at all.

[0:28:11.6] MB: That really brings to bear a fundamentally important conclusion that gets back to why decision-making is such a powerful skill to learn and master, which is that if you want to be a great leader, you basically have to be a great decision-maker.

[0:28:25.2] PM: Yes, you do. At the end of the day, if you think about what the job of the CEO is, or the job of an entrepreneur is, it's to take data, incomplete datasets, draw conclusions and plot a path forward. If you are not doing that, if you are the micromanager CEO who's worried about the catering, I mean, that's when you should be outsourcing, right? You were asked the lodge or something, because what happens a lot of times with leaders who fail is they spend their time and energy making the wrong decisions and that's because they are procrastinating and avoiding the hard decisions.

That FOBO scenario that I talk about with Audi, that was all about just not being able to make the hard decisions and it cost them a market. It's really important to not get mired in the indecision.

[0:29:10.6] MB: You brought up something earlier that I want to come back to that touches on the same subject, which is this idea that it's easy to delude yourself into thinking that you are a good decision-maker, but really in the bigger high stakes decision points, that is where the cracks really show up. If you haven't done the work and spent the time improving your ability to make decisions, that's when it really comes out. We've seen that, I mean, you had a couple great examples, but the coronavirus pandemic has really demonstrated that in many ways too.

[0:29:37.8] PM: It has. What tends to happen is when we make decisions, we very rarely go back and learn from our decision-making process. In the book and in the strategies that I lay out in how to make better big decisions, because big decisions you're clearly not going to outsource them, right? These need to be made by you, you need to take responsibility, these are things that impact your life, your well-being, the well-being of those around you, going forward in a meaningful way. When you do the big decisions, there's a whole process for that.

One important part of the process is to write everything down. I actually do this. Write everything down. Create a little memo. I think about it as a venture capitalist, which is what I do by day as an investment memo, because every decision you're making is like an investment in yourself and in your time and your energy going forward. Then keeping that written record and going back to it in the future periodically and assessing, “Okay, what did I get right? What did I get wrong? Where can I learn from what I did? What would I do differently? How would I gather better data to make this decision?”

Then as you go forward, it's one of these things we often don't think about is you can learn to make better decisions, not just by doing and reading and studying and learning from great people, but by looking at your own decision-making process and saying, “What worked and what didn't? What can I change going forward?”

[0:30:51.1] MB: Yeah. I don't know if you're familiar with the term decision journals, but it's essentially exactly what you're describing. It's a great exercise to really just write down what's the decision, why are you making it and even do a little bit of a pre-mortem, or a forecast of here's what I think's going to happen, here's what might go wrong. You do that for the major decisions in your life and it gives you an incredible record to go back and look at, “Wow, I'm systematically underweighting this risk, or I'm systematically too optimistic about this particular thing.” It's one of the few ways to access a little bit the power of the concept of deliberate practice and apply it in some way to getting feedback on your decision-making over time.

[0:31:25.9] PM: Yeah. I never heard of that term. I always think about from my own experiences, when you make investments as a venture capitalist, every year you do a portfolio review and you look at the company that you invested and you assess where it is today and you compare it versus your original investment thesis and your due diligence and your projections and you say, “Okay, what do we get right and wrong? What were the patterns we missed? What does this implication have for? What we do going forward with our capital?”

One thing that I really love is that some venture capital firms, they're very open about talking about their anti-portfolio and the anti-portfolio is basically the companies they didn't invest in, that they had the opportunity to. There's a VC fund called Bessemer, which very open about the fact that they could have invested in Facebook and Google and tells the story behind why they didn't invest and where they got it wrong and they celebrate it. I think that's a very healthy way to think about decision-making, because the other thing that we have to remember is just because you made a decision and you did your best, you did the process, it doesn't mean you're going to be right. It's just life. We never know what's going to happen. We can't control the outcomes of everything we do. Therefore, we should be comfortable knowing that we are going to make mistakes, but we should be open to learning from them.

[0:32:42.2] MB: Yeah. That's another hugely important conclusion and I'm a big poker player. That's one of the lessons that poker can teach you very rapidly is that the decision quality and outcome are not necessarily the same thing. You can make a great decision and get a bad outcome and you can make a terrible decision and get a great outcome. That makes it even more important to have some ability, or mechanism to go back and really review your decision-making in some way.

I'm curious. I want to dig into some of the other strategies that you recommend for making better high-stakes decisions when it really matters. What are the tools that you can use to make a better decision?

[0:33:19.7] PM: Yeah. Let's start with FOMO and then we'll move on to FOBO. Yes, when you get to a major decision and it could be something, let's take jabs, okay? I think all of us have been through this before, especially we can all understand. You are working in a job and all of a sudden, you feel this FOMO, “I want to be an entrepreneur.” Many of us have felt that. I certainly have. You ask yourself, “Maybe I should do this. Maybe I should start a company.” Okay, great. How do you know whether you should do that? How do you know whether this is simply FOMO, or if this is something that is meaningful and should be explored?

Well, when we think about the components of FOMO, there are really two things. Number one as I mentioned before, it's this aspiration, it's the idea that there's something better out there for you than what you're doing at the moment. The second is this idea of the herd that you see all these people making money and entrepreneurship is marketed in a way to us, that makes it look like it's the greatest thing ever, and that if you become an entrepreneur, all of a sudden you're going to be rich and happy and were going to make a movie about you and there's definitely this whole marketing element that provokes FOMO in people. That's been part of entrepreneurship as an industry for a long time now.

You need to attack each one of those separately for the aspirational bit. You need to ask yourself, okay, it looks great on the surface and I can have a lot of control and make a lot of money. Wow, I'd love to be an entrepreneur, but is that even real? That's the big thing you want to get at is you want to have a process to find out if all of the stuff that you think is so great, which by the way, you have no way of knowing because of information asymmetry. Are those things for real or not? You're going to ask yourself some very basic questions like, “Can I justify doing this, becoming an entrepreneur? Can I afford to do it? Can I do it without sacrificing other more important goals? Is there an ROI, a return on investment if I decide to do this? Is this even possible? Can we actually make this happen?”

If I'm dreaming of opening a restaurant but I know nothing about the industry, does that even make sense to me, or am I just daydreaming, right? Doing the work of gathering the information, doing your due diligence to strip away as much of the information asymmetry as possible is part one of making good decisions when you feel FOMO.

Part two is really about attacking the herd. Why do you want to do this? Is this is something you've always wanted to do and make sense in your life? Or are you doing it because you saw it on TV and it looked good for a minute, or because your friend did it? It sounds silly, but people do these things all the time. You really need to ask yourself, is this actually something I want to do, or am I just falling victim to wanting to do something I saw somebody else do? If you attack each of those components and gather data, write your memo, that will nine times out of 10 give you the answer to what you're trying to decide.

At that point, if you still haven't decided, I would encourage you to consult other people, show them what you've written, explain it to them and try to get their feedback, because other people can poke holes in your logic, if it isn't sound. Then if you're still indecisive and you're still stuck, it's at that point I say, go for it. Because at that point, you've done the work, you've gone through, you've attacked information asymmetry, you've figured out your true motivations, you've exposed it to the sunlight of day by getting other people's opinions.

If you're indifferent at that point, you've done enough work to know that it probably is a good idea. Life is about taking a little risk, so go for it. That's how you deal with FOMO when it comes to a big decision. If you still are afraid, then you could consider going in a part-time nature as we talked about earlier, because you can approach something in a risk-mitigated way and say, “I'm not going to throw caution to the wind and jump in full-time, but I'm going to find a way to explore this and at least further validate what I think is a good decision.” That's the FOMO.

Now on the FOBO, it's a different thing. FOBO as we talked about before is a combination of a belief that something better is going to come along and a desire to keep your options open for as long as possible, because the longer you wait, the more flexibility you have. Here, what's interesting is initially, I thought the problem with FOBO is that maximization is bad for you. In fact, it's okay to want the best.

The problem is that when we have FOBO, we make decisions incorrectly and it's our process that we need to change. Let's think back about should I choose this job or that? Say you've got three job opportunities on the table and you're trying to decide between them, right? This happens all the time. Somebody who's hired people, it’s like, you know who your candidate is basically delaying and delaying, because they're indecisive and they're waiting for something else to come along. That's not good for anybody.

How do you deal with that? Well, the thing is the problem that candidates have, or when they're making a decision between jobs isn't so much that they want the best thing, it's if they're not willing to let go of the thing they can have. When you make a decision and choose just one thing, you must let go of other things that you cannot have. People when they get stuck aren't willing to let go. That's what you've got to do. You've got to simply eliminate options from the pile and not return to them.

The process I recommend is basically pick a front-runner based on all this resource. You're going to do the same due diligence and try to strip away the information asymmetry and learn as much as you can and that will eliminate some things naturally as you learn more about them, then you're going to write your memo and try to figure out the base elements of these things and then you're just going to pick one of them, the one that your gut tells you is the best. You're going to compare one by one the other options to this front-runner.

Each time you do that one-on-one comparison, you're going to choose the better of the two and eliminate permanently the lesser of the two. By doing that, you're cheating two things. First, you're choosing the better, so you feel good. It's like, okay, I'm getting the better of these options. Second, you're eliminating something forever. Therefore, you are not tempted to go back to it.

In doing so, you're just cleaning the clutter out of your life and that allows you to move forward and finally choose something. If you get stuck at the very end, again this nine times out of 10 will solve your problem. If you get stuck at the very end, then I encourage you to consult with a couple of people and I actually would consult with three to five people, odd number of people and actually just have them make the decision for you and if you need a tiebreaker, you've got one, because it's at this point, remember you have acceptable options. It's not that you have nothing to choose from. You have acceptable options, the problem is that you are so close between them. They are so similar that basically you're indifferent. Therefore, the problem here isn't that you don't have something to choose. The problem is that you can't choose and you need to actually get somebody else to do that work for you.

[0:39:51.6] MB: It comes back to something you said a minute ago that I thought was really insightful is this idea that to be a great leader, to be a successful entrepreneur, to achieve what you want in your life, you have to be willing to take risk. At some level, you can do the due diligence, you can do the homework, you can get as much information as possible, but ultimately even the root of the word decision itself is to cut something off. You have to be willing to take some level of risk to make those bold decisions, to really achieve anything meaningful in your life.

[0:40:23.8] PM: It's hard to close doors in order to – when you walk through one door, you have to leave the rest behind you. We don't want to mourn what we can't have, right? Because it's attractive to feel like you can keep all your options open and always go back. Of course if you do that, as I mentioned before, let's think about the decision-making around coronavirus. Did difficult decisions, right? If you procrastinate and wait and wait and wait until you take action, the problem itself can grow so big that suddenly, the things that you could have done before aren't even available to you anymore. That can happen in all aspects of your life and you need to move as quickly as you can, choose something acceptable in order to make sure that you still even have options later on.

[0:41:06.9] MB: Yeah. That's another really great point. The idea that it's almost an illusion that you think waiting may lead to better options, but it just as easily maybe more likely could lead to the evaporation of the options that you thought you had.

[0:41:18.7] PM: Definitely. Because part of it is environmental, like the example I just gave. If you're dealing with a fast-moving situation, every day your set of options may change. That's just part of reality. Even if you're not in a crisis situation, by delaying your decision-making, you really truly risk the danger of alienating people around you. For example, say you're pushing off employers before you make a decision, that's why people give exploding offers, because they don't want to deal with you.

Unfortunately, we have to come up with all these mechanisms to basically force people to make decisions. That's why companies will have a 15-minute flash sale, because they know that at the end of the day, nobody wants to decide on anything, so they have to create a sense of urgency to get people to do anything. That is part of the game and other people aren't going to tolerate your indecisiveness forever.

[0:42:07.6] MB: The flip side of this, or the upshot of this in many ways is that if you can train yourself to be a better decision-maker, it's a pretty rare skill set to be very decisive and willing to take risk and take action, and in a world where there's so much indecision, it becomes really valuable to be able to train yourself in that skill set.

[0:42:26.7] PM: Most definitely. I think we are drawn to leaders who are decisive and there are not that many of them out there. This is something that can be very valuable to you, not just in the corporate environment or in entrepreneurship, but in your personal life, just setting direction and moving quickly through things and giving the people around you a sense of security and the fact that things are getting done is very valuable in the family settings and with friends and everybody.

I mean, if you think about your friends, how much time do you spend trying to organize that group chat, or trying to organize the trip, or the dinner, right? How much time do we spend on those kinds of things these days? It's completely ridiculous. I do this all the time now. I'll say like, let's do this at this time. You have 10 minutes to say yes or no. If you don't respond, I assume you're not coming. Guess what? People show up. They respond.

[0:43:14.2] MB: I've been very fortunate and I don't know if it's a combination of spending so many years and so much time studying the topic of decision-making, or maybe some of it is just my innate disposition, but I think the more you study this, I've really started to internalize almost this checklist, or this framework of any decision in my life I run through in almost instantaneous speed, is this something that really matters? Is it important? Is it going to really matter which option I pick? After you train yourself in it, it becomes really easy to just say, “Oh, this is irrelevant. Do whatever you want. I don't care. I'm indifferent. Do it and let's move on.”

[0:43:47.1] PM: I'm glad to hear that. I feel like having written a book about decision-making, I thought I was fine, but I feel I'm a much stronger decision-maker than I was. What I realized in the process is that indecision is like prison. The minute that you can break out of that, you have freedom. It's very liberating to just say, “This isn't important. Just going to decide. I'm moving on to something else.”

[0:44:09.4] MB: For somebody who's been listening to our conversation and they want to take action in some way to be more decisive, to make better decisions, what would be one action item, or first step you would give them to begin down that journey?

[0:44:22.8] PM: The first thing I would do is be ruthless with yourself about not wasting time on no-stakes decisions. As you proceed through your day today, or when you wake up tomorrow and you're starting and you find one of those little no-stakes decisions as just doesn't matter, what t-shirt should I put on, which shoes should I wear, one of those things. Or what should I order? Should I have the fries, or the salad with my burger? Or whatever that is in your life, I want you to number one, call it out, recognize that it's FOBO. Number two, I want you to ask the watch, or ask the cellphone, or whatever it is an inanimate object you want to choose, but simply outsource it.

I guarantee, do it one time and it's one of these things that like, it sounds so silly. When I first heard this idea I was like, “Uh, really?” The amount of people who have gotten in touch with me to tell me how powerful that was in their lives was shocking to me. I know, because I use it four times a day. Try that. That is your first step. If you can start doing that and see the power of that, I'm convinced that you'll move on to some of the other concepts we've talked about as well.

[0:45:26.6] MB: Great strategy and really good recommendation. Patrick, for listeners who want to find the book, find out more about you and your work online, what is the best place for them to do that?

[0:45:36.9] PM: Yes. Well, the best place to go to find me is my website, which is patrickmcginnis.com. There, you can find a link to order the book. It's on Amazon, of course. Also, you can check out. I have a podcast called FOMO Sapiens, which is distributed by Harvard Business Review. You can find episodes there, or wherever you like to listen to podcasts. You can also find me on Twitter @PJMcGinnis. Instagram @PatrickJMcGinnis. On Facebook, it's Patrick J. McGinnis. I'm in all of those places. The best place to go to find all of that together is my website, patrickmcginnis.com.

[0:46:10.0] MB: Well, Patrick, thank you so much for coming on the show, for sharing all this wisdom, some really great insights into how we can overcome FOMO, FOBO and how we can make much better decisions.

[0:46:21.5] PM: Hey, thanks a lot Matt and best of luck.

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