All Segments
This will make you a better decision maker | Annie Duke (Thinking In Bets, former pro poker player)
45 segments available
Annie Duke is a former professional poker player, a decision-making expert, and a special partner at First Round Capital. She is the author of Thinking in Bets (a national bestseller) and Quit: The Power of Knowing When to Walk Away and the co-founder of the Alliance for Decision Education, a nonprofit whose mission is to improve lives by empowering students through decision skills education. In our conversation, we cover: • What Annie learned from the late Daniel Kahneman • The power of pre-mortems and “kill criteria” • The relationship between money and happiness • The power of “mental time travel” • The nominal group technique for better decision quality • How First Round Capital improved their decision-making process • Many tactical decision-making frameworks — Brought to you by: • Vanta—Automate compliance. Simplify security: https://vanta.com/lenny • UserTesting—Human understanding. Human experiences: https://www.usertesting.com/lenny • LinkedIn Ads—Reach professionals and drive results for your business: https://www.linkedin.com/podlenny Find the transcript at: https://www.lennysnewsletter.com/p/making-better-decisions-annie-duke Where to find Annie Duke: • X: https://twitter.com/AnnieDuke • LinkedIn: https://www.linkedin.com/in/annie-duke/ • Website: https://www.annieduke.com/ • Substack: https://www.annieduke.com/substack/ Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • X: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ In this episode, we cover: (00:00) Annie’s background (03:53) Lessons from Daniel Kahneman: humility, curiosity, and open-mindedness (09:15) The importance of unconditional love in parenting (15:15) Mental time travel and “nevertheless” (20:06) The extent of improvement possible in decision-making (24:54) Independent brainstorming for better decisions (35:36) Making sure people feel heard (42:41) The “3Ds” framework to make better decisions (44:49) Decision quality (55:46) Improving decision-making at First Round Capital (01:05:05) Using pre-mortems and kill criteria (01:10:15) Making explicit what’s implicit (01:10:55) The challenges of quitting and knowing when to walk away (01:19:23) Where to find Annie Referenced: • Daniel Kahneman, Who Plumbed the Psychology of Economics, Dies at 90: https://www.nytimes.com/2024/03/27/business/daniel-kahneman-dead.html • Adversarial collaboration: https://en.wikipedia.org/wiki/Adversarial_collaboration • Does more money correlate with greater happiness?: https://penntoday.upenn.edu/news/does-more-money-correlate-greater-happiness-Penn-Princeton-research# • Income and emotional well-being: A conflict resolved: https://pubmed.ncbi.nlm.nih.gov/36857342/ • Strategic decisions: When can you trust your gut?: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/strategic-decisions-when-can-you-trust-your-gut • Cass Sunstein on X: https://twitter.com/CassSunstein • Dr. Becky on Instagram: https://www.instagram.com/drbeckyatgoodinside • A framework for finding product-market fit | Todd Jackson (First Round Capital): https://www.lennysnewsletter.com/p/a-framework-for-finding-product-market • First Round Capital: https://firstround.com/ • Brett Berson on X: https://twitter.com/brettberson • Renegade Partners: https://www.renegadepartners.com/ • Renata Quintini on X: https://twitter.com/rquintini • Roseanne Wincek on X: https://twitter.com/imthemusic • Josh Kopelman on X: https://twitter.com/joshk • Bill Trenchard on X: https://twitter.com/btrenchard • Linnea Gandhi on X: https://twitter.com/linneagandhi • Maurice Schweitzer on X: https://twitter.com/me_schweitzer • Create a Solid Plan on How to Fail Big This Year: https://www.forbes.com/sites/forbesfinancecouncil/2020/02/07/create-a-solid-plan-on-how-to-fail-big-this-year/ • Quit: The Power of Knowing When to Walk Away: https://www.amazon.com/Quit-Power-Knowing-When-Walk/dp/0593422996/ • Richard Thaler on X: https://twitter.com/R_Thaler • Stewart Butterfield on X: https://twitter.com/stewart • Glitch: https://en.wikipedia.org/wiki/Glitch_(video_game) • How the Founder of Slack & Flickr Turned Colossal Failures into Billion-Dollar Companies: https://medium.com/swlh/how-the-founder-of-slack-flickr-turned-failures-into-million-and-billion-dollar-companies-7bcaf0d35d66 • The Most Fascinating Profile You’ll Ever Read About a Guy and His Boring Startup: https://www.wired.com/2014/08/the-most-fascinating-profile-youll-ever-read-about-a-guy-and-his-boring-startup/ • The Alliance for Decision Education: https://alliancefordecisioneducation.org/ • Make Better Decisions course on Maven: https://maven.com/annie-duke/make-better-decisions Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com. Lenny may be an investor in the companies discussed.
Segments Timeline
Making Implicit Decisions Explicit
Annie Duke emphasizes the importance of making implicit decisions explicit to improve decision quality. She discusses how intuition can be valuable but must be articulated to identify when it is incorrect. Duke introduces the concept of pre-mortems and kill criteria as frameworks for better decision-making, particularly in long-term scenarios where feedback loops are extended.
"it's so incredibly necessary in improving decision quality to take what's implicit and make it explicit it's not that intuition is crap your intuition is sometimes right if you don't make it explicit ..."
Lessons from Daniel Kahneman
Annie Duke reflects on her friendship with the late Daniel Kahneman, highlighting his humility and open-mindedness. She shares how Kahneman's willingness to acknowledge uncertainty and seek collaboration, even with those who disagreed with him, exemplified his approach to knowledge and decision-making. Duke illustrates this with Kahneman's work on the relationship between money and happiness.
"choose to shorten the feedback loop is to say what are the things that are correlated with the outcome that I eventually desire today my guest is Annie Duke Annie is the author of the bestselling book..."
The Importance of Humility in Decision-Making
Duke discusses the significance of humility in decision-making, inspired by Kahneman's approach. She contrasts this with the common tendency in academia to defend one's work despite contradictory evidence. Duke emphasizes that acknowledging what we don't know is crucial for growth and better decision-making.
"learned a ton from this conversation and this is definitely going to change the way I think about a lot of things with that I bring you Annie Duke after a short word from our sponsors and if you enjoy..."
Adversarial Collaboration
Annie Duke explains the concept of adversarial collaboration, a method pioneered by Kahneman. This approach involves working with someone who disagrees with you to design studies that can resolve disputes. Duke highlights how this method fosters a deeper understanding of complex issues, using Kahneman's research on happiness and wealth as an example.
"off vanta when you go to vana.com Lenny that's V nt.com Lenny this episode is brought to you by user testing get fast feedback from real people throughout the development process so that you can build..."
Curiosity and Open-Mindedness
Duke shares anecdotes illustrating Kahneman's curiosity and open-mindedness. She recounts how he would engage others in discussions about their work, demonstrating a genuine interest in learning from different perspectives. This quality, she argues, is essential for uncovering new insights and fostering collaborative environments.
"podcast together I know you grew to be good friends over the past few years sadly he passed away about a week ago at this point yeah I'm curious what are some lasting lessons that you took away from y..."
The Role of Parenting in Decision-Making
Annie Duke transitions to discussing parenting, sharing her insights on how decision-making frameworks apply to raising children. She emphasizes that the most important aspect of parenting is ensuring children feel loved unconditionally, which outweighs specific parenting styles or methods.
"lot of uh studies in there that didn't end up replicating and what I've seen from a lot of other people in the field who who really who where their work is defined by some line of work that didn't rep..."
Mistakes in Parenting: A Learning Experience
Duke humorously reflects on the inevitability of making mistakes as a parent, such as accidentally dropping a baby. She reassures parents that these small accidents are part of the learning process and that children are resilient. This perspective encourages parents to be forgiving of themselves and to focus on the bigger picture.
"did work on happiness as it relates to wealth conoman uh and a collaborator a a Angus Deon they published a result that got a lot of press about the relationship between money and happiness and the id..."
The Influence of Personality on Parenting
Duke discusses the limited influence parents have on their children's personalities. She shares her experiences with her own children, illustrating how temperament plays a significant role in their behavior. This insight serves as a reminder that parenting outcomes can vary widely, regardless of the effort put in.
"issue he was just always seeking out like it was just like everything was like why am I wrong and he was eager and he was excited and he wanted to you know I remember having a lunch with him where I r..."
Mental Time Travel in Parenting
Duke introduces the concept of mental time travel as a decision-making tool in parenting. She encourages parents to help their children envision how current challenges will be perceived in the future, fostering resilience and perspective. This technique allows children to see beyond immediate frustrations and appreciate the humor in their experiences later in life.
"like there's going to be a strong correlation with that and and finding really interesting insights on covering new things yeah yeah yeah well thank you thank you for sharing all that um I I wish I ha..."
The Parenting Smugness Trap
Annie Duke reflects on her experiences as a parent, sharing a moment of pride in her oldest child's choices and contrasting it with the different temperaments of her other children. She emphasizes that parenting outcomes can often be attributed to temperament rather than parenting style, highlighting the unpredictability of raising children.
"wilderness you know like right we were living in case we're fine we're built for it we're built for a much rougher world than the world that babies actually grow up in now I will say my my oldest chil..."
Mental Time Travel as a Decision Tool
Duke introduces the concept of 'mental time travel' as a decision-making tool, explaining how she used it with her children to help them gain perspective on their immediate frustrations. By encouraging them to envision how they would reflect on their current challenges in the future, she illustrates how this technique can alleviate the weight of present emotions.
"is concerned which is a totally different thing I'll actually quote Danny Conan on this one nothing is as important as it seems when you're thinking about it that's a really important one um one of th..."
Perspective on Life's Challenges
Annie discusses the importance of perspective in decision-making, particularly when faced with emotional turmoil. She shares anecdotes about how young people often feel overwhelmed by heartbreak or setbacks, and how adopting a long-term view can help mitigate those feelings, allowing for better decision-making in the moment.
"kind of a fun thing I was doing with them but it's actually a really good decision-making tool for us in general right like look there are absolutely things that 20 years from now are going to matter ..."
The Power of 'Nevertheless'
Duke explains the significance of the word 'nevertheless' in parenting and leadership. She illustrates how acknowledging a child's feelings while still enforcing rules can create a balance between authority and empathy, fostering better communication and understanding in both parenting and workplace dynamics.
"things you can do with your kids and you can do it in small ways too right like you can choose to play this video game or you can choose to study for your test a week from now when you get that test b..."
Listening and Leadership
Annie emphasizes the importance of making children feel heard while maintaining authority. She discusses how this principle applies in leadership contexts, where acknowledging employee feedback is crucial, yet decisions must still be made. This balance is essential for effective leadership and decision-making.
"is incredibly important that your children feel heard and following through on what you know or believe is right so it's I hear you now nevertheless you're grounded for two weeks like I hear what you'..."
Improving Decision-Making Skills
Duke addresses the question of how much someone can improve their decision-making skills through education and practice. She references Daniel Kahneman's insights on decision-making and highlights the gap between knowledge and practical application, stressing that improvement is possible but requires commitment.
"parenting podcast because there's so much stuff here but I'm going to try to resist uh something that so we've been talking about decision- making and Frameworks and things like that something I wante..."
From Intuition to Structured Decision-Making
Annie discusses the transition from intuitive decision-making to structured processes, using Kahneman's work on hiring as an example. She explains how making implicit criteria explicit can significantly improve hiring outcomes, showcasing the effectiveness of structured decision-making frameworks.
"things I mean I think that that's what the issue is so you know I mean I think you know conman uh did some work way back when like that sort of started him on this journey uh that was basically work o..."
The Importance of Implementation
Duke highlights the challenge of implementing decision-making frameworks in practice. She discusses the disparity between knowing effective strategies and actually applying them, emphasizing that those who are willing to adopt structured approaches will have a competitive edge in decision-making.
"job right so he he was an academic doing research and so on so forth I'm like living in companies like embedding for years um you know I I've been with one client for five years one client for four ye..."
Rethinking Meeting Dynamics
Annie critiques traditional meeting structures, advocating for a shift in focus from group discussions to independent input. She explains how gathering opinions asynchronously can lead to better decision-making by reducing groupthink and allowing for more diverse perspectives.
"you when you look at companies that you've worked with or companies that have read your book and really dove in and started to implement some of your piece of advice to make better decisions if you ki..."
Effective Decision-Making Strategies
Duke outlines practical strategies for improving decision-making in meetings, emphasizing the importance of independent brainstorming and prioritization. She encourages leaders to gather input before meetings to facilitate more productive discussions and enhance decision quality.
"confident person is also right uh but the problem is that's not always so um so that's the discovery piece right and we tend to do that in a group and then there's discussion which is I've now discuss..."
The Myth of Alignment in Decision-Making
Duke critiques the concept of 'alignment' in group decision-making, arguing that expecting everyone to agree is unrealistic and counterproductive. She explains that true decision-making should acknowledge differing opinions and foster an environment where individuals feel comfortable expressing their views without coercion.
"to be discussing in this meeting and I'm going to send it out to everybody independently and I'm going to say don't reply all right just send it back to me independently if it's a repeated decision yo..."
Creating a Culture of Curiosity Over Coercion
Annie Duke highlights the shift from a coercive decision-making model to one based on curiosity. She explains how this approach encourages open dialogue and allows team members to express their opinions freely, leading to more thoughtful and inclusive decisions.
"exist like you have 10 people in a room and they're all really different people with different opinions and they're never going to come out of the room agreeing with each other and it's really bad if ..."
Fostering Inclusion in Decision Processes
Duke shares strategies for ensuring that all voices are heard in decision-making processes. By using independent input methods and reflecting back what individuals say, leaders can create a sense of ownership and inclusion among team members, even when the final decision does not align with everyone's preferences.
"able to get people to do and they're actually quite impactful imagine a place where you can find all your potential customers and get your message in front of them in a cost-efficient way if you're a ..."
The Power of Independent Forecasting
In this segment, Duke discusses the benefits of independent forecasting in project planning. By allowing team members to submit their estimates and rationales separately, organizations can capture a wider range of opinions and insights, leading to more accurate and well-rounded decision-making.
"thing about moving from a a coercive model to a to a a really I guess you could say a model of curiosity right like you want to be curious not coercive which means that the way that people in the meet..."
Structured Decision-Making at First Round Capital
Annie Duke explains how First Round Capital implements structured forums for evaluating investment opportunities. This approach ensures that diverse opinions are considered and that decisions are made based on a comprehensive understanding of the facts and differing perspectives.
"are created equal in terms of how well they work remotely or how well they work in person or what the flexibility might be so what you're saying is there's some there are some functions that have to b..."
Feedback Loops in Decision-Making
Annie Duke discusses the misconception of long feedback loops in decision-making, particularly in venture capital. She argues that feedback loops can be shortened by identifying necessary indicators of success, such as funding milestones. By tracking these indicators, investors can make more informed decisions and adjust their strategies in a timely manner.
"the other thing that um I'll just kind of add to what you said is that you can actually be in the same room together and still discover information independently so this will happen on the fly all the..."
The Misunderstanding of Feedback Loops
Duke challenges the notion that venture capital feedback loops are inherently long. She illustrates that investors can receive valuable insights much sooner than a decade by focusing on key performance indicators and milestones. This perspective encourages a proactive approach to decision-making, allowing for quicker adjustments based on real-time data.
"Market fit that episode will have come out before this episode uh also so ask Brett Bon your colleague at first round what to ask you by the way okay yeah yeah by the way your title of first round is ..."
Psychological Safety and Decision Quality
In this segment, Duke explores the psychological aspects of decision-making, particularly the discomfort of being wrong. She highlights how the desire for psychological safety can lead individuals to avoid confronting their decision quality. By fostering an environment that values honest feedback and learning from mistakes, organizations can enhance their decision-making processes.
"they they sort of work at different stages first round to seed obviously um Renegade is more like AB tiny bit of dabbl Andy but uh before running into them I talked to quite a few uh Venture firms you..."
The Trade-Off Between Short-Term Comfort and Long-Term Growth
Duke discusses the common human tendency to prioritize short-term comfort over long-term growth in decision-making. She explains how this trade-off can hinder effective decision quality, as individuals often avoid facing uncomfortable truths. By recognizing this pattern, decision-makers can strive for better outcomes by focusing on long-term benefits rather than immediate gratification.
"was one thing I that I found quite surprising but the one that I really found very interesting was being told well what you're talking about doesn't apply because our feedback loops are a decade and i..."
The Importance of Explicit Decision-Making
Annie Duke emphasizes the necessity of making implicit assumptions explicit in decision-making processes. She argues that clarity in defining what constitutes a good investment can significantly improve decision quality. By establishing shared definitions and criteria, teams can enhance their understanding and alignment, leading to more effective outcomes.
"know very much on one hand for one thing I almost never see my opponent's cards so I'm kind of left in in a dust of uncertainty but separately from that the the main thing that I said was what how cou..."
Forecasting Success in Investments
Duke shares her insights on forecasting success in investments, stressing the importance of tracking key indicators such as funding milestones. She explains how understanding these metrics can provide valuable feedback on decision quality and help investors refine their strategies over time. This proactive approach allows for better alignment with long-term goals.
"I'm like okay so it sounds like that's necessary might not be sufficient but it's necessary and it's certainly a signal that is actually more highly correlated with exiting uh well than the investment..."
Shortening Feedback Loops in Venture Capital
In this segment, Duke argues that feedback loops in venture capital can be shortened by focusing on necessary indicators of success. She illustrates how tracking milestones like Series A funding can provide timely insights into investment decisions. This approach encourages a more dynamic and responsive decision-making process.
"that means is that this this is the big I'm going to make a bold statement here there is no such thing as a long feedback loop you can make a decision about how long the feedback loop is that is your ..."
Understanding Decision Quality Over Time
Duke discusses the importance of understanding decision quality over time, particularly in the context of venture capital. She highlights how investors can learn from past decisions by analyzing the outcomes of their forecasts. This reflective practice enables teams to improve their decision-making frameworks and enhance overall investment strategies.
"fast mind you I mean think about like think about being in 2021 there were companies that were raising an a six months after seed you know today it's a little more 16 month is but but even so let's ju..."
The Role of Psychological Safety in Decision-Making
Annie Duke explores the role of psychological safety in decision-making, particularly how it affects individuals' willingness to confront their decision quality. She explains that the fear of being wrong can lead to a reluctance to seek feedback, ultimately hindering growth. By fostering a culture of openness and learning, organizations can improve their decision-making processes.
"stay long because really have two main factors one is that look if if I was early into Uber and now I'm like you know a celebrity investor or something I don't really want to know if I'm good or not d..."
The Challenge of Facing Uncertainty
Duke addresses the challenge of facing uncertainty in decision-making, emphasizing that individuals often prefer to avoid uncomfortable truths. She discusses how this tendency can lead to poor decision quality and highlights the importance of embracing uncertainty to foster better outcomes. By confronting these challenges, decision-makers can enhance their effectiveness.
"good right and not actually find out the answer because why would I want to unless you're really super focused on decision quality then you would want to do that so that's you know that's part of the ..."
Inspiring Decision-Making Practices
In this segment, Duke reflects on her experiences with First Round Capital and Renegade Partners, praising their commitment to improving decision-making practices. She shares how their focus on explicit definitions and structured evaluations has inspired her and emphasizes the importance of continuous learning in the decision-making process.
"do some stuff you know most of us are like no I don't really want to make that trade I'd rather just kind of feel good now and I can kind of use the fact that you know we're living in power law you kn..."
Evaluating Investment Decisions
Duke discusses how First Round Capital has evolved its approach to evaluating investment decisions. By implementing structured frameworks and shared definitions, the firm can better assess potential investments and track their outcomes. This systematic approach enhances decision quality and allows for more informed forecasting.
"as a result of this analysis they did and how they evaluate well first of all let let me just say uh they didn't really record a lot about their decisions uh when I first came in they voted uh and the..."
The Importance of Mediating Judgments
Annie Duke highlights the significance of mediating judgments in investment decision-making. She explains how establishing shared definitions and criteria can improve the accuracy of evaluations. By ensuring that all team members are aligned in their understanding, organizations can enhance their decision-making processes and outcomes.
"judgments that you make related to Market prior to actually judging what you think of the market in general so you could think of of something like um competitive landscape uh so you might you you wou..."
Understanding Decision-Making Accuracy
In this segment, Duke explains how First Round Capital assesses the accuracy of their partners' investment forecasts. By analyzing past decisions and outcomes, they can provide feedback on individual strengths and weaknesses in decision-making. This process helps partners refine their judgments and improve overall decision quality.
"can now start to give people we can give the partners insight into their own decision- making not only to allow them to improve the decision- making but also to allow them to understand that they not ..."
The Power of Premortems and Kill Criteria
Annie Duke introduces the concept of premortems and their role in decision-making. She explains how identifying potential failure signals before launching a project can lead to better outcomes. By establishing kill criteria, teams can make informed decisions about when to pivot or abandon a project, thus avoiding the pitfalls of sunk cost bias.
"important to understand about this and this is why it's so incredibly necessary in improving decision quality to take what's implicit and make it explicit is that our intuition is sometimes right and ..."
Setting Up for Success with Kill Criteria
Duke provides practical examples of how to implement kill criteria in decision-making processes. She shares insights from a sales team that identified early warning signs of failing deals and established actions to take based on those signals. This proactive approach helps teams avoid pursuing unproductive leads and enhances overall decision-making efficiency.
"but I think what's actually more important than that is what a premortem allows you to do is to set up kill criteria so kill criteria are just uh a set of signals that you might see that would tell yo..."
The Importance of Quitting at the Right Time
In this segment, Duke discusses the challenges of knowing when to quit a project. She shares her belief that by the time one considers quitting, it is often already past the optimal moment to do so. This insight underscores the need for awareness of decision-making biases and the importance of making informed choices about when to walk away.
"be doing that use the portum to now create structure around those signals that you've spotted and commit to actions that you're going to take if you see those signals and I think that's the best use o..."
Understanding Sunk Costs
In this segment, Annie Duke elaborates on the concept of sunk costs and how they influence decision-making. She explains that people often continue investing in failing projects due to the resources already spent, rather than assessing the future value of their efforts. This mindset can lead to missed opportunities.
"unless we know for sure so as Richard Thor put it most people won't quit until actually isn't a decision in other words the the whole thing is blown up or you know the startup has no money or you're u..."
The Cost of Not Quitting
Duke highlights the hidden costs of not quitting, such as the opportunity cost of pursuing unworthy projects. She illustrates this with the story of Stewart Butterfield, who realized that quitting his unsuccessful game Glitch allowed him to focus on developing Slack, a highly successful product.
"trying to protect the the resources that we've already sunk into it in the past then there's other issues that have to do with for example endowment uh the ownership over the things that we've built t..."
The Birth of Slack from Failure
Annie Duke recounts the story of Stewart Butterfield's decision to shut down Glitch, despite its initial acclaim. This decision led to the creation of Slack, demonstrating how recognizing when to quit can open doors to new opportunities. Duke emphasizes that sometimes, letting go is essential for future success.
"everything that went wrong and you nobody's going to question you they're going to be like ah well it sounds like you put in your your best effort but if you walk away early people are like what so ju..."
Empowering Decision Education
In the closing segment, Annie Duke shares her mission with the Alliance for Decision Education, aiming to enhance decision-making skills in education. She invites listeners to support this initiative, highlighting the importance of teaching effective decision-making to empower future generations.
"that is a incredibly beautiful way to end our conversation I feel like I have at least a billion more questions to ask you and uh on the other hand I feel like we've also helped a lot of people make m..."