453: Pursuing Your Passion & Knowing When to Walk Away with Annie Duke

[INTRODUCTION]

Casey Weade: Hey, this is Casey Weade, and it is my mission here on the podcast to deliver clarity and purpose and elevate meaning in your life. And if you’re new to the show, you might be wondering, well, what exactly does that mean? Well, that means we take an approach here that is both financial and non-financial, helping those that are pre-retired and retired make some of the most important decisions of their lives. And we do that through conversations that we have every Friday and periodically, with our guests. Every Friday, we get together with you and we discuss a trending topic, a trending subject, a trending blog post, and you’ll find a lot of these topics show up in our Weekend Reading for Retirees email series, an email that hits your inbox every single Friday for articles, trending topics, summaries, takeaways for myself, and all kinds of other great resources that we love to share with you at no cost. You have to get signed up for this email as people all around the world have, and it’s super easy to get signed up for that free resource. Just shoot us a text with the key letters WR to (866) 482-9559.

And today, we are joining you for an interview-based podcast. We invite world-class guests from around the globe to bring to you a variety of different topics and different subjects. It’s my job to deconstruct those individuals and share with you the most important takeaways. Today, we have, joining us, Annie Duke. Annie Duke joined us actually back in Episode number 216 of the podcast, one of my favorite interviews. I’d say definitely one of my favorite books and one of the most giveaway books, if you will, that I have ever had on the show. I’ve given away How to Decide many times to many friends and many individuals, clients, and family members that are just struggling with making important decisions in their lives. And I’ve personally leveraged a lot of what I learned in that book to make better and better decisions, I think, year after year. Thanks to Annie.

Today, if you aren’t familiar with Annie, I want to give you a little refresher. She is an author, a speaker, a consultant, a PhD in cognitive psychology, and is a special partner focused on Decision Science at First Round Capital Partners, a seed stage venture fund. And most knowingly, you probably recognize Annie’s name as a professional poker player. She won more than $4 million in tournaments. She won a World Series of Poker bracelet. I remember watching her when I was much younger. And she is also the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012.

She’s the author of three books. We mentioned How to Decide, if you haven’t read How to Decide, I highly recommend you do so. Check out a link in the description in the show notes. You’ll find everything at HowardBailey.com that we talk about throughout the conversation. She also wrote Thinking in Bets. And we’re going to be focusing on her latest book today, which is Quit: The Power of Knowing When to Walk Away, particularly when it comes to your finances. If you’re trying to make a difficult decision about walking away from your work and stepping into retirement, hiring a financial advisor, making some dramatic changes to your investment strategy, this is the show for you. If you know anybody going through that, share this with them.

And if you’re more of a reader or you want to take a deeper dive, we’re going to be giving away Annie’s book. So, if you want a free copy of that book, we partnered up with Annie to give that away. All you have to do is write an honest rating and review for the podcast on iTunes, and then shoot us a text. When you text us, we’re going to ask you to verify your iTunes username. We’ll send you the book for free. It’s that easy. Text us the word Book, B-O-O-K, to (866) 482-9559, and we will get you a link to choose the book that most suits you.

[INTERVIEW]

Casey Weade: Annie, welcome back to the show.

Annie Duke: Well, thank you for having me. I’m excited to be back. Thank you for the kind words.

Casey Weade: Oh, this is a fantastic opportunity to have you back on the show because I feel like we did just kind of start scratching the surface in our last conversation, and we get to take a deeper dive, but into a very different topic, not just deciding, but specifically deciding when to quit. And I wanted to kind of take a dive into one of the areas you quit off the top here. And we had a lot of questions from our Weekend Reading subscribers that came in over the last week. And I think you can tie the answer to this question very neatly into this book, in particular.

You posted an interview on your blog about finding meaning within and outside of work, and you stated your poker career started to feel like work while writing didn’t. And we had a question from Kathleen. Kathleen said, “Why did Annie decide to walk away from her professional poker career?” And when I think about this, well, let me pause there. Only you answer that, and then I have a follow-up question.

Annie Duke: Yeah. So, I mean, it was a few things. So, first of all, I feel like I had kind of walked away from it much earlier than it appeared I did. This is actually an important lesson in being good at quitting. So, in 2002, which was a decade before I retired, I started giving talks that were at the intersection of poker and cognitive science. So, for people who’ve read Thinking in Bets or How to Decide, those books are really a result of that work that I was doing. As you know, I had gone to graduate school for cognitive science, and then I had become a poker player.

And then eight years into my poker career, which I had done exclusively during those eight years, I started to really actually think about the intersection between those two disciplines and how one might inform the other. And so, I gave a talk and started getting recommended out for other talks and started to build a business, where I was doing a lot of speaking around the country about specifically, decision making under uncertainty and how you get better at figuring out how to make good decisions when sort of the dual problem that I talk about, which is you’re not omniscient, you don’t know everything, and you don’t have a time machine, so you can’t see into the future. And this makes decision making very hard.

So, I would say about 80% of my time was spent doing that. But there were some other things that happened during poker. So, 20% of my time was spent on poker. So, people thought of me as a poker player because that 20% of the time was actually on television. And the rest of the time I was doing this other thing.

I sort of considered walking away before that. But it’s hard to walk away when such a big part of your identity is this thing that you’re doing. And that’s something that I talk about in the book Quit. But a few things happened along the way, right? Sort of in the mid, online poker basically became illegal in the United States. So, that caused a real crater in the poker economy. And I think that that was just very hard for a lot of people in the business. I was okay because I sort of had these endorsement contracts and things like that. But just like in the broader economy, people are pretty unhappy when the economy isn’t doing well. Within the poker economy, it had been this huge boom. And then all of a sudden, it was kind of like a big bust, which I think was really hard for everybody.

Secondly, when I first started playing poker, it was a very different world than the world that it became. When I was playing full time, you were playing live games. And at the levels that I was playing with, I could have told you every single person who played at the levels that I was playing with. It was a small group of people, maybe somewhere between 30 and 50 total. If a stranger was in the game, I knew they had to be a bad player because if I didn’t know them, they clearly weren’t a regular player.

And there was a real sense of kind of community. The players who were really good were also older. And the reason that they were older was that you need to get a lot of reps in. And without online poker, it was very difficult to get enough reps in by the time you were 21 to be an amazing player. So, most of the great players were already in their 30s. And I’d actually gone through quite a lot of hard knocks and things like that, but there was a lot of community.

When online poker started booming, the good news about that was that that was what caused the economy to go kind of nuts within poker, but it also brought in a lot of new people into the game who had learned in a very different way. They had learned through playing online poker. They were much more quant. And I don’t know, like, I kind of felt like I lost a little bit of sense of that community that had been so attractive to me at that time.

But then the other thing is, they were just really good. And remember I was spending 80% of my time doing this other thing, and they were doing a lot of mathematical work on the game. And to tell you the truth, at that point in my career, I didn’t want to do that work. So, I sort of recognize, like, unless I’m going to go back and kind of deconstruct my game and do all this work that all of these young people were doing, that probably I wasn’t going to be able to keep up. And I had to make a decision about whether I actually wanted to keep up. And it was very clear to me in terms of sort of my revealed preferences that I loved, I enjoyed much more the work that I was doing with businesses, talking about this problem of how do you make decisions under difficult circumstances.

There were some other things that happened at the same time. I had started a startup in poker that had failed. That was kind of a miserable experience and some other stuff, but in the end, I really wanted to sort of transition and write this book. And when I went and played poker, I wasn’t happy, and when I went and worked with these businesses, I was really happy. And I think a lot of it is just the zero-sum nature of poker. For me to win, you have to lose an equal amount.

So, my job is to make you sad. But in the work that I was doing, where I was coming and speaking to people, and then people started asking me to consult and I was consulting in this world, my job for me to win, I have to make you happy. And I think that I just really enjoyed that equation a lot more. And that was separate from I actually probably wasn’t good enough at that point. To continue doing that much, I was going to put in a lot of work. And then there was just a lot of stuff sort of swirling in the poker community that added unpleasantness into it, regardless.

Casey Weade: There’s so many parallels with so many that are listening that are going through this in their own careers. When I hear what you’re saying, I think what you had was something that many don’t. You already had another passion. Poker wasn’t your only passion. You had other passions, and many don’t have that other passion yet. They have something that they’re world class at, and that might mean that they’re in the peak of their earning years. They’re a CEO, they’re well recognized in their community as a leader or something even greater than that. They know they’re world class, but they don’t have the passion.

I think you see this in sports many times where I am world class, but I don’t have the passion from the game anymore. How do you walk away from something where you are world class, but you’ve lost that passion because there’s a sense that I’m letting other people down, I’m not really leveraging the God-given talents and gifts that I was given to make the world a better place?

Annie Duke: Yeah. So, what I think is interesting is that a lot of the kinds of things that you’re talking about are actually, I think, ways that we rationalize sticking to the thing that we’re already doing. And I think that there’s two big driving forces to why it’s really hard to walk away from things. The first is a simple one. It’s called the sunk cost fallacy. This is a very well-known phenomenon in cognitive psychology, which is basically that we take into account what we’ve already spent on something and deciding whether to continue on and spend more.

So, let me give you a very simple example of that. Let’s imagine that you were looking at a stock that was trading at 40 and you did all your analysis and you decided it wasn’t a buy. Okay, so that’s pretty simple. What that means if you decide it’s not a buy when you’re looking at it fresh at 40, is that even if you bought the stock at 50 and it’s now trading at 40, you should not hold it, right? Because you decided when you have no history with the stock, that it’s not a buy. Holding it is the same as buying, and it means it’s in your portfolio, right?

But what we know is that having bought the stock at 50, if it’s now trading at 40, you’re just much less likely to sell it under conditions where the math says that you should, compared to somebody who never owned the stock in the first place. And I’m sure that you’ve experienced this before, and what people feel like is but then how will I get my money back? So, what we forget in that situation is, it’s something called the opportunity cost. In that case, it would be the cost of capital, which is the money that we’re keeping in that stock, we could move into something else and that that might actually have a greater opportunity to recover the money that you’re talking about, right? To actually get that money back.

But we have this strange thing with our mental accounting that we don’t think about how it crosses all the things that we do. We think we have this stock. We open up an account for the stock. We’re in the losses now, and we want to get even before we close that account, right? Even though, that’s the whole point of a portfolio, it should actually be what’s happening across your portfolio. So, that’s one thing that makes it very hard. And in the case of like a professional athlete or in the case of me as a poker player, because it was difficult for me to walk away, I’ve put so much time and effort, I’ve built my brand, I’ve done all of these things, how can I walk away from all that? Won’t I have wasted everything that I put into it?

And the core problem there is that waste is not a retrospective problem. It’s a prospective problem. If I’m not passionate about it anymore, if I’m not enjoying it anymore, then the effort that I put in in the future is going to be wasted, right? And that’s what we should care about. So, that’s kind of the first thing.

The second thing, which I think is much deeper to your question, is a problem of identity. So, what happens is that, I mean, if you think about sort of how do we define internally the way that we view ourselves, our identity, it’s the things we believe and the things we do. And then, so that would be called what we call the internal validity, the way that we view ourselves.

And then you also have something called external validity, which is how do other people view me, right? So, other people view me as the things I believe and the things I do as well. And this becomes a real problem for walking away from thing. So, let me tell you a little story that can help, and then we can sort of roll back maybe to the professional athletes.

So, I’m going to tell two little stories that are connected to each other. The first is a simple one. It’s about the company Sears, which I’m sure you’re familiar with. And I’m sure you’re familiar with sort of some of the arc of Sears, right? They were founded in the late 1800s, has a huge catalog. The catalog was so that people in rural areas could get the same stuff as people in city. So, if you lived in a rural area, it was, for example, hard for you to get a bike. But in the city, it was obviously very easy.

The catalogs sold, like, everything you could imagine, including, you could actually buy a house in the catalog. Okay? So, this becomes a very big company, this catalog, it actually IPO’s in the ‘20s. And I think it’s still the largest IPO in the history of like, I think, it’s Goldman Sachs. So, it’s huge, right?

Now, in the ‘30s, people start having cars. And the catalog business starts to not do quite as well because now, it creates mobility for those people who were using the catalog to get their stuff. And so, at Sears, they actually have a very smart idea, which is we should open stores because people can drive now. So, we’ll open stores and we’ll have the catalog, but we’ll also sell the same stuff that we do in stores. That worked really well. By 1950, Sears represented 1% of total US GNP. So, it’s a huge store.

But then we also know kind of the tail end of the Sears story. By the ‘90s, they weren’t even the number one retailer anymore. That was Kmart. Then, obviously, Walmart comes along, then Target comes along. So, they’re kind of getting squeezed from the bottom. And then you have the Saks Fifth Avenue’s and the Neiman Marcus’ and things like that. And they’re getting squeezed from the top. They kind of lose their place in the retail industry.

In the 2000s, they merged with Kmart, which at that point had already been pushed out by Walmart and Target. That was termed a double suicide, by the way. Then they got acquired by, I think, Apollo or whatever. Anyway, then they went bankrupt. So, we kind of like know that story. They go from like 1% of US GDP in the ‘50s to bankrupt, right? So, we kind of know what happened.

But there’s another story of Sears, which I think is actually kind of interesting. So, in the 1930s, when they opened all those stores because people had cars, they had a really brilliant idea, which is if people have cars, they need insurance for the car. So, we should sell insurance in our stores. And so, they founded a company called Allstate Insurance. Have you heard of it? I bet you have.

Okay, so they found Allstate Insurance. Eventually, Allstate becomes kind of, it doesn’t just sell in Sears stores, it kind of sells everywhere, but Sears owns it. And then they also wanted to be able to give credit to their customers. So, they founded something called the Discover card. So, that was Sears. They bought a stock brokerage called, or they founded rather, something called Dean Witter. And Dean Witter was a very big stockbrokerage. It made the joke that at Sears, you could buy stocks and stocks. That was a joke around that.

And then they also had a company called Coldwell Banker, which sold real estate. Okay? So, those are four really big companies. Now, Dean Witter, Discover got acquired by JPMorgan, I think it was. It was their JPMorgan and Morgan Stanley. We don’t really know, like what the worth of those would be today, except that at the time, they represented 40% of the market cap of JPMorgan. I think it was JPMorgan, but it might be Morgan Stanley. But anyway, so obviously, huge company, right?

The last time I checked the market cap of Allstate, which was when I was writing Quit. So, it had been three years ago. It was 40 billion. It’s higher now because the market’s gone up. And Coldwell Banker, which had merged with some other things, was over 2 billion. So, you have a $40 billion company, a $2 billion company. And then two things that combined represented 40% of the net worth of one of the biggest financial services companies in the world.

Okay? So, now, the question is how is Sears broke? Because that’s a confusing question. And we can go back to that moment when they don’t become the number one retailer anymore. And what happened was the board met because the retail stores were now losing money. The financial services were making money hand over fist, but they’re losing money. And from the outside looking in, you can see it’s a very easy decision to get rid of these loss leaders, which are the stores and keep the financial services.

But that’s not what the board decided to do. Instead, they said, “Well, we have to get back to our retailing roots.” That’s actually in the board notes. We have to get back to our retailing roots. And they spun off all the financial services companies. They sold them off in order to try to fund a turnaround of the retail stores. And obviously, we know how that turned out.

So, the question is like, why did that happen, right? And it goes back to the CEO problem or the person who’s the famous person in sports. How are they known? How was I known, right? Even though I did this other thing, most of the time I was known as a poker player. What was Sears known? If you ask the person on the street, what a Sears do? They’d say they sell stuff in stores. So, it was their identity that they didn’t want to let go, even though it was a much easier decision. Like, from the outside, it was a clear decision. Not an easy decision, but a clear decision to just let go of those and go with Allstate because then, they would still do really well.

So, this is where we get into these core identity problems. And these identity problems, in particular, become hard when that identity makes you stand out from the crowd. So, quitting your job is going to be harder, the more unique the thing that you do is. So, the uniqueness itself makes it hard to let go. The way that I kind of put it is like, I’m sure, Casey, at some point, like all of us, you believed that Pluto was a planet. Okay? So, when the astronomers told you that it was not a planet, did you have any issue with that?

Casey Weade: Personally, no, but.

No, because the reason is that everybody believes Pluto is a planet. This is not an identity-defining belief. It’s like whatever, okay. But what if you believe the Earth is flat? And we see in these documentaries where like, they’ll do experiments and they’ll try to prove to the people through their own experiments that the Earth is not flat, and then they reject the evidence, right? Because what’s happened is that they have this identity-defining belief, the Earth is flat, that makes you stand out from the crowd, right?

And then the evidence conflicts with that belief. And then the question is what happens? Do you let go of the belief? Or do you let go of the evidence? And time and time and time again, we can show that you let go of the evidence when it’s an identity-defining belief. So, that’s really what happened to Sears and that’s what happens to all of us. It’s just very hard to walk away from things when they define us.

Casey Weade: Well, it seems like what you did in order to overcome that yourself is what I would assume your guidance would be, to a lot of the retirees that did submit questions, that’s probably the most common question that we had asked, from Scott and Jamie. Just how do I walk away from this? How do I know that I should walk away from this? And it seems like the key to that is developing another source of identity prior to making that transition.

Annie Duke: Yeah. So, I mean, look, I think that one of the problems is that it’s very hard for us to imagine the other things that we could be doing. So, if you have something going on in parallel, if you have another way to define your identity, it’s very helpful. It was certainly very helpful for me. I had another thing that I knew made me happier. I had been doing it the whole time.

And even today, I do many different things, right? So, I’m a book author. I’m a consultant. I also still give talks. I also still teach, right? So, I have all sorts of different things where something stops making me happy, I have other things to go to. So, if you can do that, if you can sort of develop these sort of parallel identities, it’s going to be much easier for you to move from one thing to another.

Casey Weade: Yeah. And just make a healthier human being at the end of the day.

Annie Duke: Well, yes, you will definitely be more rounded that way. But there’s other things that you can do also. So, one of the things you can do is start to get sort of the right comparisons going. So, one comparison that, I think the best comparison that I give people, and so, I’ll think about this, let’s think about this in terms of you have an employee who’s underperforming and you’re thinking about letting them go. Okay, so this is a form of quitting. We happened to call it firing, but it’s actually quitting because I, as an employer, am quitting the employment relationship, right? So, it’s just quitting my job or someone firing me, though both of those are quitting.

All right. But we know that people are very slow to fire people, to let people go. We know that, right? Like, the data shows that we keep people on too long. And one of the things, when I’m coaching people on this, that I try to say to them is sort of twofold. And this kind of is going to go to getting the right frame. They’ll say, “What if I can’t find somebody new?” So, that’s that same thing of what if I quit and then I’m unhappy? What if I quit and I can’t find another job? What if I quit and I don’t actually like what I’m doing?

And what I say to them is, “Okay, well, don’t think about whether you can find somebody new. Think about whether you think you’d be better off with nobody in the seat.” Okay, so that’s it, like a cleaner way to think about it, because you’re not worried about what’s the probability of finding someone to get into the seat. Instead, you’re just saying, “Do I think that we’d be better off without anybody there?” And you’d be surprised when people are really deep in these decisions where they’re paralyzed about letting somebody go. Most of the time, they answer yes, I would be better without somebody in the seat. So, that’s one way that you can approach that.

Another way that I try to make, get them to think about it is to say, “Well, what about everybody else on the team?” So, they’re very worried about the one person, right? And I try to get them to say, how is this affecting the other people on the team? And then they realize it’s a huge negative impact for the rest of the people on the team that can often help them, let them go.

And then, the last thing is this idea of what we call clogging the seat. And what that means is that when that person is in seat, it means that you can’t get somebody else into that seat. So, that’s that opportunity cost problem. And that’s a really big problem. So, now, you’re affecting the team negatively. You’d be happier if that person were in seat and you didn’t have anybody. But also, that person who’s making you seat, you can’t get somebody better. And that would usually help people think about that.

So, when we’re going to that, should I transition to a different career? Should I retire? Those things. One thing that you want to think about is what would I do with the time? Because that’s the clogging the seat problem, right? So, that, every minute that I spend doing this job is a minute I can’t spend doing something else. So, I’m clogging my own seat in that sense.

And then you can think about how does this affect people around me who I love, my family. Would they be better off? What are the other things I could be doing with this time, right? And so, you start to sort of think through those problems. And it tends to get you there a little bit faster.

Another really good strategy, and I also use this to coach people through firing is to run an exercise which is called kill criteria, developing something called kill criteria. So, one of the things that we know about exits is that it’s very hard to make the decision in the moment. That is when we are most irrational in the moment. So, it’s pretty easy, like looking back to say, “Oh, I should have quit that earlier.” And it’s pretty easy, if I’m looking at somebody else to say, “Oh, they should probably be quitting.” But for me, it’s very hard because of all these issues of what about all the time I’ve put into it and then who will I be and how will I feel about myself and when other people think I’m a loser that I quit my job and they’ll be disappointed in me and all the kind of things that you said in the beginning, right? Like, they’re going to look on me more negatively and all these things that go through our head.

But we tend to be actually relatively rational about a future version of ourselves. So, the easiest way that I could describe that is that I think all of us are pretty good at recognizing that we’d like a future version of ourselves to be healthy, right? Because then we know that we’re going to have better quality of life, we’re going to live longer, all of those things are good. But none of us are particularly good at avoiding the piece of cake when it’s sitting right in front of us. But we all would want our future self to not eat cake, right? But when the cake is right there, it’s very hard in the present to resist the cake.

So, that’s true for these types of decisions as well. It’s very hard to resist all the biases that make it hard to walk away if we’re making the decision in the moment. It’s much easier to imagine a future version of ourselves. So, when someone has lost the passion for their job and they’re unhappy, what I encourage them to do is say, “How long are you okay with the situation as it stands?” Okay, so you’re unhappy in your work, you’ve lost the spark, you dread going into work each day, you’re going through the motions, it’s making you depressed, whatever, right? All the things that are making you consider it in the first place, how long is this okay?

So, in the firing example, letting someone go, Casey, let’s imagine that you were thinking about letting somebody go, but you were having trouble actually making the decision. I would say, “Okay, you’ve got Morgan in the seat. How long are you okay with the situation as it stands, with Morgan performing the way that they are?” And maybe you would say, “Three months.” Maybe in the case of someone who’s a CEO or in sports or whatever, who’s sort of lost their passion, maybe they say, “I can do this another six months.” Okay? But whatever it is, you set a deadline. And a deadline is very important piece of the puzzle because otherwise, you get I’ll think about it tomorrow, but then there’s another tomorrow.

Okay, so now we have a deadline. So, now, I would say to you, “Casey, so Morgan’s not performing.” At the end of the three months that you say this is okay for them to stay, what things would you want to see them change? Like, what would have to change in that job? So, now, we’re setting benchmarks in these create kill criteria. If they exceed those benchmarks, you would continue the employment relationship. If they do not hit those benchmarks, then we’re making a commitment that you would not continue the employment relationship.

So, basically, you can do that in your own career. I’m really unhappy. I’m okay being unhappy for six months. Imagine six months from now, what would be the state of affairs? What would be the things that would be true, that would tell me that I’m still unhappy, that I ought to be walking away, that things haven’t changed? What would be the things that could be occurring that would tell me that this is something that I want to continue? So, you’re setting out very specific kill criteria.

Then you take the step of saying, “Okay,” so during that three months that Morgan is still in your employ, you now need to figure out what the inputs are. So, what is it that could help Morgan to actually achieve those benchmarks? And you can sit down with Morgan and you can figure out what those are. So, you have some sort of inputs that are helping you get there, what you would do with yourself too.

Okay, here’s the version of the world that would make me happy. Here’s the version of the world which would tell me I was still unhappy. During the next six months, what can I do to get me to the happy version of the world? Okay, so that’s basically what you’re trying to do that’s going to help you to get there.

Now, what’s interesting about this is that, first of all, that alone is going to help you to get to the decision and notice that I’m not saying I’m going to coach you to quit. I’m going to coach you to figure out whether you should stick or quit because it’s the same decision. And I think that this is something that we need to understand is that quitting is neither good nor bad. Sticking is neither good nor bad. Is it right for you to stick? Or is it right for you to quit? So, this is helping you actually on both sides of those equate that decision. So, it’s going to help you figure that out.

But what I find really interesting when I’m coaching people, particularly on the employment relationship problem, is that very often, when the employer goes through this, they share this with the employee, and the employee often quits, themselves. They resign themselves because I think they kind of realize what’s being asked of me, I can actually achieve in the next three months. And then sometimes, the employer says, actually, I just need to let the person go now because I realize they can achieve it in the next three months. I’ve been working with them already on this problem for six months or whatever.

And in this case where I say, “Okay, set a deadline. How long are you okay in this job? Let’s figure out what those kill criteria are.” And once we set that out and we sort of imagine what that happy version of the world looks like and what you would need to do to achieve it, the person actually realizes at that moment that that’s not what they want and they can’t achieve it, and they’ll actually get out of this situation immediately at that point.

Casey Weade: Yeah, I mean, what a great example for so many that we could leverage in a lot of different ways. And I can see why you’re on a mission to rehabilitate this term quit because it is seemingly the most difficult and the most impactful decision that we can possibly make. But I wonder how we’re failing as parents. As you’re saying this, I’m thinking about how we’re raising our kids and how I see other people raise their kids. You’ve got four, and I’m curious how you help them and how you think about quitting in this process. As a kid, quitting was greatly looked down on. It was all about grit. It wasn’t about, anything but sticking to it. You made a commitment. You stick it out. And I see other parents, their kids sign up for a sport, and the kid hates it. They don’t want to do it. But they say we don’t quit in this family.

And what are we training our children about the moral value of quitting? And and how do we do better? How do you think about this when it comes to raising kids? We’ve got parents listening, we’ve got grandparents that are listening, and they want to help their children and their children’s children through this process to shift the way that we think about quitting, to ensure that we’re leading the most impactful way that we possibly can, leading the most impactful life and leading children that are going to be able to make some of the most difficult decisions in their lives.

Annie Duke: Yeah. Okay, so first of all, let me just say, like, I think that part of the reason why parents are saying, like, in this family we don’t quit, is because generally, in the culture, there’s just a bias against quitting, right? We think about quitting is failure. And when I say, let’s think more about the quitting side of the equation, I’m not saying there isn’t worth the sticking to things that are worthwhile, even if they’re hard, right? Obviously, even if they’re hard, if they’re worthwhile, if they’re going to get you to achieve your goals, then you ought to do that, right? If your goal is to graduate high school and you have to get through high school algebra, there’s a lot of value in sticking to that, even though it’s hard.

But what I’m trying to say is like, but we take that way too far where grit is considered this act of heroism. So, we’re sort of thinking that we’re building character, not just for ourselves, but for our kids. But quitting is considered failure so much so that if you look at any marathon that’s ever run and you search for people running that marathon with a broken bone, what you’ll find is like, for example, there’s this example, this woman Siobhan O’keefe who ran the 2019 London Marathon, who broke her fibula on mile 8 and finished the race despite all the doctors telling her not to do that. That’s just patently absurd. Except that somewhere inside of all of us, we’re like, oh, she’s a badass. No, she’s not. She could have maybe never run another race again, right? Like, her whole fibula bone could have shattered under those circumstances.

And it’s clearer that beforehand, if you had said to her, do you think you’re going to keep running if you break your leg? Her answer would be no. Look at all the people who continue up Everest, including this year, under circumstances in which it’s clear that there’s going to be a disaster. A blizzard has come in. They’re well past the time that they ought to have turned around because they’re going to have to descend the mountain in darkness. They’re hypothermic, whatever it is, but they continue because otherwise, they failed. Nevermind that they climb 300 feet within the top of Everest, which I personally haven’t done. I consider that a big success, right?

Okay, so this is now being translated into the way parents are speaking to their kids. And I think what’s happening is that it is true that kids are much more likely to quit things that they ought to stick to. That is true. It’s not true for adults. Anybody over 25, it’s more likely to stick to things that they should not be sticking to, but kids for sure. And the reason is that they just don’t have quite as long a time horizon, so they can’t see what sort of the long-term benefits of the thing that they’re doing is. That’s fine.

But I think that where the parents are going wrong is that, and this is generally kind of like a downside of goal setting, is that goals are great for sort of setting a North Star, and getting you to sort of head toward that North Star, right? Like, they motivate you to get there. But when we set a goal, it’s actually a proxy for some cost-benefit analysis that we’ve done.

So, if we enroll our kid in soccer, for example, what we’re saying is that I think the social aspects of soccer and the athletic endeavor, getting my kid moving out on the pitch and, like, learning some strategy and meeting other kids their age and whatever it is and you’re trying to think about, like, what’s the thing that I could put my kid in that’s going to achieve that goal for my kid? Physical movement, communion with other kids, so on, so forth, strategy. And so, you say, okay, so I wanted my kid to do all that, so I’m going to put them in soccer. Okay, so that’s all fine so far.

But then what if your kid is miserable? What if they’re being teased by the other kids because they’re uncoordinated and bad at the game and they really don’t enjoy it and all of those things? Was your goal to make your kid miserable? I don’t think so. Are there other things that you can put your kid in that will help you to achieve the original goal? Yes, but you lose sight of the original goal, and soccer itself becomes the goal. And the idea that your kid quit soccer now becomes the reflection on your identity, right, that you’re a loser and that your kids are failure. And that’s why you say, in this family, we don’t quit and you’re passing that on to them.

What would be better would be to sit down with your kid and say, okay, you’re miserable. Let’s give it another month. Or let’s give it another, however many games and practices, right? But let’s say we’ll give it another month. We’ll see if you’re still miserable. Let’s figure out what you need in order to feel like you’re happier. Maybe I need to talk to the coach. Maybe we should get you a private soccer coach, whatever. And if the end of that month, you’re still miserable, that’s fine, but here’s why you’re in soccer.

What is the other thing you want to try? Because remember, when your kid is playing soccer, they can’t go do other things, right? So, you have to sit down with your kid and you have to start early with teaching them how to think through these problems and say, “Okay, we’re going to give it another month. Let’s see if you’re still unhappy. At the end of the month, let’s figure out what we can do. I can talk to the coach. I can do this.” But if you actually end up leaving, you have to know at that time what is the other thing you’re going to try. To make sure that they understand, it’s not the goal that you’re giving up. It’s the way that you’re getting to the goal that you’re going to give up, right?

So, if I feel like it’s really important for my child to do physical activity, maybe team sports aren’t the thing for them. So, maybe I put them in something that isn’t a team sport and then they get the community from doing band, right? But if we figure out whatever that is, that’s going to allow us to get to the goals. And then the thing that we have to remember, and this is particularly true for children, but we sort of lose this idea for adults, is that the point in life, and for people who’ve read Angela Duckworth’s amazing book called Grit, she says this also, where she and I are very much in agreement about this, that the whole point is that you’re supposed to sample a bunch of stuff and then quit the stuff that you don’t like and stick to the stuff that you do.

And particularly, in childhood and for adults as well, when I try something new, I don’t really know if I’m going to like it. I don’t really know if it’s going to be the thing for me. So, whenever we start something new, whenever we try something, we should actually think about it as sampling the thing. And when we sample it and find out we don’t like it, we should be very willing to give it up.

Casey Weade: Makes it very difficult for us to try new things if we think we’re going to have to stick with it forever.

Annie Duke: Well, that’s exactly right. When we think about analysis paralysis or the way that enterprises lose their ability to innovate, which we know, if people can read The Innovator’s Dilemma, right? Why is it that they lose their ability to innovate? Well, because once you get in an enterprise situation, we get all these issues of identity if I’m really behind a product. And I push that to the people that I report to and I’m the champion of it and I start it. What does it mean when I quit it, right? What’s the career risk to me? How are people going to judge me? How do I think that I’m going to judge myself?

And so, it makes it very hard to start things, unless you have a lot of certainty that you think it’s going to work. And then if you start it, even when it’s not working, you’ll still stick to it, which then makes it. So, how could you ever possibly innovate? Whereas when you’re in a startup environment, the idea is it’s all sampling.

So, one of the advantages that startups have over enterprises is that they sample a lot more, they put a lot more things so that they can find the thing that’s actually going to work, that’s actually going to find product market fit. And that’s how Apple can beat IBM, which seems impossible if you think about it, right? Like, who has all the resources? Who has all the money? Who has all the customers already? IBM does. So, how does Apple do that? Well, it’s easier for them to sample because it’s easier for them to quit. Those two things go hand in hand.

And we need to remember, childhood is the time of sampling. And we have to encourage our children to be big samplers. But what we have to remember is the goals remain the same. So, the idea is sample a bunch of stuff that are going to help you to achieve the goals that are actually the broader goals, not like you’re going to stay in soccer for a year. What a silly goal, right? It should be, I want you to do something physical and I want you to have friends that you get along with and community and learn how to be social and learn strategy and things like that. Well, they can learn strategy from playing D and D for all I care, right? And if I want them to be physical, they can do cross-country running with nobody else around, I don’t know, like, we’ll just figure out what it is, but let them sample stuff to find out what it is.

Casey Weade: Yeah. And Stacy asked a question about overcoming this analysis paralysis that you talk about, that we see so many that are making this transition to retirement. They’re trying to figure out how they’re going to invest that portfolio. Do I buy an annuity? Do I allocate more to the stock market? How much should I own in equities? How much should I own a bond? Should I move on mutual funds, ETFs? Should I hire this advisor, that advisor? And it seems that your focus for them would be on making decisions that would be, in a sense, low cost probes, flexible decisions that if you make the wrong decision, it won’t hurt too bad. And you can change that decision down the road. It’s not something you have to stick to forever.

Annie Duke: Yeah. So, there’s a couple of strategies for making those decisions. The first and simplest strategy is basically to say– so one of the problems that we have when we’re making our own decisions is that we’re caught in what we call the inside view. This is something I talk about in How to Decide, also in Thinking in Bets. And the inside view is the view from within our own perspective. So, actually, the people who are caught in that, for example, quitting decision in that moment are unable to actually follow through on it. When I’m saying, hey, why don’t you go think about the future instead? I’m actually helping them to get out of the inside view, which is the world through your own perspective kind of in that moment, right?

So, the outside view could be like imagining some future version of yourself where you’re sort of acting actually as an outside advisor to a future version of yourself at that point. It’s also to find somebody else’s perspective on your situation. So, remember, I mentioned that you often are looking at other people and saying, “Man, you should really be quitting,” but they can’t see it for themselves. So, they’re also seeing that in you as well, right? So, we can see other people more clearly than we can see ourselves because they’re not caught up in all this sunk costs and the identity and all of the stuff that makes it very hard to walk away from things.

And then a third piece of the puzzle is something called base rates, which is what usually happens in a situation similar to the one that I’m considering. So, that’s a good way to think about base rates. So, the first place I always start when I’m like, what should I do with my money, is what are the base rates? So, I’m going to look up historically how have ETFs done, how has like a 60/40 or 70/30 or 75/25 split between stocks and equities and bonds or whatever done, right? How much should I be holding in cash, like those kinds of things?

And you can actually go find that data for what types of portfolios have the best returns given the risk, so you can understand what your risk profile is. Are you willing to take more risk or less risk? And then you can actually look historically at what sort of the best composition is for the portfolio, historically. So, that’s a very good place to start.

Then what you do is you think about what your own goals are and you can start refining around that, right? So, you can look historically at what’s worked. But for example, maybe you only want to invest in clean energy and you don’t want to invest in fossil fuels, and you can tweak the portfolio around your own, but then you would bring in your own inside view at that point. That’s a very good place to start. And that’s true of anything, right?

So, if I want to imagine, if I start a business, for example, and I want to sort of plan for what I think the probability is that that business that is successful, it’s good for me to go look at businesses like mine and see what the probability is, that those are successful as my first place to start. If I want to know what my chances of getting heart disease are, it’s good for me to go look at people like me, people of my age with my health profile and see what the probability is in the population, that I develop heart disease. So, this idea of base rates, what normally happens in a situation similar to what I’m considering is very powerful. So, that would be the first place to start.

The next thing would be get an outside view, right? So, that would be a financial advisor. Obviously, you want to find somebody that you trust. Ask your very smart friends who they use. You could research and see who has the highest ratings, those kinds of things, and then interview people and see who sort of jives with you the most. Find out if they understand base rates. That would be a really good thing. That’s why that’s first, right? Do they actually understand base rates? But having somebody on the outside who has experience looking in and helping you with these decisions is also very helpful.

And then the third thing is what you mentioned. Make the decision small and easily quitable. So, what I would say is that if you’re going to put your money into something liquid, there shouldn’t be a lot of analysis paralysis because it’s something that you can move out of there pretty quickly. If you’re going to put something into something that’s illiquid, then you should spend a lot of time on the decision. That’s where the analysis is actually really helpful, not the paralysis part. But the analysis is much more helpful spending your time on things that are illiquid.

But if what you’re putting your money in is liquid, then you can move in and out of it pretty quickly. And so, there shouldn’t be a lot of paralysis around it. You should sort of look at the base rates, find a financial advisor, and go with it, right? And you should be okay because you can always change. Now, what I think people sense and the reason why they get into the paralysis part is that people don’t change, right? They get into something that is liquid, that they should be able to quit, but they don’t quit for all the reasons that we’ve talked about.

Casey Weade: They haven’t put together kill criteria.

Annie Duke: Exactly. So, if you’re going to go in with a sampling mindset, then you have to set these kill criteria because that only works if you’re actually willing to cut your losses.

Casey Weade: Would you consider yourself a decisive person?

Annie Duke: Yes, I’m actually very decisive.

Casey Weade: And all the work you’ve done, Decision Sciences, you’d think, yeah, that would be the answer. You’re a very decisive person. Is that a positive thing? Is it good to be decisive? We look at others and go, oh they’re decisive. Yeah, that’s the person that I want to look like, but you talk about the power of uncertainty and how beneficial that can be. Do we have the right view on decisiveness?

Annie Duke: So, I’m decisive in a very particular way. I used to be decisive in all the ways, but then I moderated because it’s not good across the board. So, let’s go back to what I just said, right? What we were just talking about, rather, which is, there are decisions that are pretty low impact and that are easily reversible. So, there’s those types of decisions. And then there are decisions that are very high impact and very hard to reverse. So, I used to be very quick to decide across all of those. But I’ve actually changed my behavior given sort of what I know and the science behind it. I’m very decisive when there’s not a lot of impact to getting it wrong and I can quit the decision pretty easy.

Casey Weade: There’s this guilt around having uncertainty, right?

Annie Duke: Right. Because I don’t really care. Like, I don’t really know. But if I get it wrong, who cares, right? So, that’s the kind of thing. So, I’m very quick to decide those types of things. So, if I’m picking a fabric for a chair, how bad could it be? Like, if I’ve got three fabrics that I really like, I’m going to be pretty quick to decide. And that’s where people really freak out, right?

So, it’s interesting because where people really have a hard time with a decision is when they have multiple options that are good. So, if I’m picking a fabric for a chair and I have three options that are great, that’s where people get into analysis paralysis, trying to decide among the three. Where I look at it is they’re all great, I don’t know. I don’t have a time machine. How could I possibly be certain about this? And the question that I ask myself is this, if this fabric were the only option I had, would I be happy with it? Yes. If this other fabric were the only option I had, would I be happy with it? Yes. If this third fabric were the only option I had, would I be happy with it? Yes. And once I get to yes on all three, I flip a coin.

Casey Weade: Yeah, when I see that, how that could show up in a financial planning situation where you’re maybe evaluating six different advisors and they all have different plans, and one saying, well, you’re looking at 5% to 6%, you’re never going to run out of money. You’re going to be fine. If that was my only choice, would I be happy?

Annie Duke: Would I be happy? And if the answer is yes, then find those choices. Okay, so here’s how this works is that when we think about this sort of quitability, like how easy is it to reverse the decision, and what’s the impact of getting it wrong? That’s how you figure out the threshold for getting to sort of a good enough option. So, let’s take this example, right? Let’s imagine that I’m hiring interns. Interns are never going to have a long-term impact on my business, whether they’re good or bad, and it’s very easy for me to let them go without having much of an effect on my business. So, you should have a very low threshold for getting to an option that’s good enough.

In fact, when you get resumes for an internship, you’ll probably end up with 10 people who would be fine, where if you said, if this were the only person that I could bring in, would I be okay with that? And the answer will be yes. And you’ll have 10 of them, maybe 20. So, in that case, you should put the names in a hat and just pick out because why do you need to be certain that you got the very best one? It doesn’t have a lot of impact and you can reverse it pretty quickly. So, getting to good enough, you should get there pretty quickly.

But if you’re hiring a CFO, the threshold should be higher. You may only get to two. But then once you’ve gotten to those two candidates for CFO, this is where we get hung up, right? So, how many people have you seen trying to decide between 10 interns and they’re spending all their time on that? Can you imagine what they could be using with that time for that would have a much bigger impact on the business, right? You get to hiring a CFO, you get to two candidates. Both of them are good enough. This is where you have to get comfortable with uncertainty.

I hate to tell you this, but you don’t have a time machine, so you can’t actually tell which one is going to be better in the job from the perspective of where you’re standing in time. So, once they’re good enough, but again, you only have two instead of 20, then you can flip a coin between the two of them. Doesn’t matter. So, I do a lot of like in restaurants, I’ll figure out three dishes I like, and then I’ll tell the waitstaff to surprise me. So, that’s the way that I deal with that decision. So, I do a lot of that.

Casey Weade: You’ve helped me there. I’ve sped up my decisions from the menu perspective. Good tips, right?

Annie Duke: Well, this is actually, so...

Casey Weade: Now, my wife loves you for that.

Annie Duke: Yeah. So, I call this the menu strategy, which is basically when you’re looking at the menu, you’re dividing it into stuff you like and stuff you don’t like. And then the problem we have is choosing among the stuff we like, but that’s where you shouldn’t have a problem, right? You already decided you like it. It’s all good enough, right? Just order one of them. Who cares?

So, this is true for all types of decisions. And this is going to help with that analysis paralysis. Now, remember I said the thresholding problem, the amount of analysis you should do to get to a candidate that satisfies your criteria for a CFO should be much greater than for an intern. So, that’s where you should be spending your analysis time. However, I don’t want you to ever get to the paralysis point because, again, once you get to options that are good enough, you’re done. Once they’ve satisfied the criteria, you’re done.

And the paralysis comes from the choosing among good options. It doesn’t come from the other part. And that’s where the menu becomes really intuitive, right? It’s not hard for me to figure out that I don’t like that half of the menu. Where we get paralyzed is in the half we do like. And that’s what we’re trying to avoid. And once we recognize, look, you’re not omniscient. You don’t have a time machine. You’re going to have to live with the uncertainty. It’s totally fine. Then just flip a coin.

Casey Weade: Yeah, well, and if we know we’re coming back to the restaurant, then we will...

Annie Duke: Then that really gets it. Or actually, you don’t even have to go back to that restaurant because it could turn out the food was bad. You can go to another restaurant or you can cook at home, like you’re going to have another meal in six hours. Like, it’s really not a high-impact decision.

Casey Weade: So, I know we have to bring things to a close and I want to wrap it with a question. And I think you can give people a good starting point if they’re struggling with quitting or struggling with decision making. And so, Theresa says this, she said, “I often let others opinions make my decisions for me. I need to evaluate things on my own but don’t know where to begin.” She says, “Any advice?” Now, in this vein, I think about it and what you often discuss, which is decision fitness. And so, I go, okay, I’m a beginner in decision making, I’m struggling with making decisions, I don’t feel like I’m good at making decision. What does a decision fitness program look like?

Annie Duke: Yeah. Well, okay, so first of all, one thing that, with decision fitness is to recognize that in the moment, you’re usually not decision fit. Whatever you’re deciding about, you’re not going to be great at it. So, a lot of decision fitness has to do with sort of getting yourself to imagine the future, right? So, what are my goals? What are the things that would get me there? What does my future self want? And that actually is a really good plan.

So, one of the most powerful tools for decision making to help with this decision fitness problem is what’s called the pre-commitment contract, otherwise known as Ulysses contract. So, look, if I’m trying to make a decision to go to the gym right now, I’m like, well, I don’t want to do that. There’s a good show on TV. But if I make a pre-commitment that I’m going to go to the gym every Tuesday and Thursday and actually, it’s really good if I do that with somebody else, right? So, I commit to a trainer that I’m going to meet them every Tuesday and Thursday, notice them. Now, it’s not that I’m making a decision to go today for myself, I’m making a decision that my future self is going to go, and then I’m putting in some commitment devices around that. I’ve contracted a trainer. They’re going to hold me accountable, those kinds of things. So, that’s one of the ways to actually really help with this, if we can get what I call like decision coaches or quitting coaches or that kind of thing to actually help us with those things. So, if we want to go on a diet of some sort, like, I want to eat higher protein or whatever, I can buddy up with somebody, get them to hold me accountable. I can work with a nutritionist. Those kinds of things are actually incredibly helpful for getting us to be decision fit.

The other thing is, getting other people to help us with the decision is so incredible. Now, not in the way that she’s describing, which is, I just sort of whoever I talked to last, the last person in the room, is who I’m influenced by. Instead, it’s this, I have some decision that I have to make. I’m struggling with it. I’m not, look, I need to sit down and say, what is the information that I need? What are the judgments and the opinions from other people that would be really helpful for me in order to make this decision? Go get those judgments without telling them what you think.

So, I would just go and describe to you, I’m thinking about, I’m trying to decide whether to stay in my job or quit. I just want to understand from you, Casey, do you have an idea of what the other opportunities that might be available to me or what do you think my reasonable expectations are within this job? What do you think the chances are of advancement? What do you think the chances are that I’m happy? What do you think I would have to do in order to help me to be happier? You may ask me some questions, and I’ll provide you the information.

But I can sort of figure out what’s the advice that I’m trying to get. And a lot of times, we don’t actually think about that in advance. We should have a little checklist of those things. And then I can go to you and get your judgment and then go to some other people, some other trusted advisors, and then get their judgment. And then what I really ought to do is look at where the three of you disagree with each other, and then go back and ask you about that, so that I can understand why that disagreement is occurring. So, I want to get multiple perspectives and then really pay attention to where the disagreement is. And that’s really going to help me.

Now, notice, this is a much sort of more analytical way to think about it and that also helps with decision fitness. But you can imagine a 21-year-old going to you and saying, “I’m going to quit my job because I’ve been in it for six months and I haven’t been promoted.” Well, you’re going to be very, they’re not decision fit. You can help them with that and say, well, that’s an unreasonable expectation. But don’t take my word for it. You should go ask some other people who are deeper into their career and ask them the same question. And what that person is going to find out is everybody says that’s an unreasonable expectation. That’s going to help them to reset and become decision fit.

So, that’s basically the two things is set up a lot of pre-commitment of, well, it’s three things. Figure out what you’re trying to decide and what the judgments and criteria that you need to decide. Set up some pre-commitment contracts and go illicit outside help, but in a way where it’s not just letting them decide for you, it’s getting their input to help you actually frame that decision out really well.

Casey Weade: Well, I know, for me, this often starts with a little bit of education. Maybe this was just the tip of the iceberg here. And if you want to take your decision fitness to the next level, we want to help you do that by getting a copy of Quit: The Power of Knowing When to Walk Away in your hands. Again, we partnered up with Annie to give that away. To those of you, then write a review for the podcast over on iTunes and then shoot us a text with the keyword Book, B-O-O-K, to (866) 482-9559. We’ll send you a link to get that book in your hands and verify that iTunes username.

Annie, thank you so much. This has been really a pleasure. And I know it’s going to help so many people, including myself. I can’t wait to go make a decision.

Annie Duke: Awesome. Thank you so much. This was so fun.

Casey Weade: Thanks, Annie.

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