This will make you a better decision-maker | Annie Duke (author of “Thinking in Bets” and “Quit,” former pro poker player)
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
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Find the transcript at: https://www.lennysnewsletter.com/p/making-better-decisions-annie-duke
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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/
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Where to find Lenny:
• Newsletter: https://www.lennysnewsletter.com
• X: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
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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
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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
• Problems with premortems: https://sjdm.org/presentations/2021-Poster-Gandhi-Linnea-debiasing-premortem-selfserving~.pdf
• 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
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Lenny may be an investor in the companies discussed.
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How to Make Better Decisions
Can you get better at decision-making with practice? Many founders, investors, and builders must make many critical decisions, big and small, every day, and improving the quality of your decision-making process can become a big competitive advantage.
In this episode from October 2020, expert decision strategist, author and professional poker player, Annie Duke, joins a16z managing partner Jeff Jordan, to discuss some of the frameworks, strategies, and tactics for better decision-making by both individuals and organizations that she outlines in her second book, How to Decide. This was Annie’s second appearance on the podcast – she first joined a16z co-founder Marc Andreessen and host Sonal Chokshi to discuss her first book, Thinking in Bets, where they went deep into how to frame taking risks and placing bets, especially in the context of innovation.
You can read the full transcript of this episode here, and you can read the transcript of Annie's first episode on the a16z Podcast with Marc Andreessen here.
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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Innovating and Deciding, for Companies and People
original episode notes and transcript here:
https://future.a16z.com/podcasts/innovating-in-bets/
Longtime podcast showrunner (2014-2022), primary host, and editor Sonal Chokshi shares three best-of episodes as she shifts gears and the show goes on hiatus until relaunched with a new host.
The second of these three special rerun episodes is a conversation that originally took place spring/summer 2019, pre-pandemic (ah, that we could remember that time!) – between a16z co-founder Marc Andreessen and Sonal interviewing author, consultant/advisor, and former pro poker player Annie Duke, on one of her first few appearances with us. It’s a conversation quite unlike her other conversations, and one in a series of special joint interviews Marc and Sonal did. So there's a lot of high-speed talking, but the three cover a broad range of topics relevant to both businesses and individuals: on skill vs luck, on outcomes vs process, on asking the right questions, on how to communicate in probabilities within an organization or team, and, on how NOT making a decision is also a decision and why that matters.
Be sure to also check out this feed for the followup conversation with Annie, Jeff Jordan, and Sonal on the specifics of HOW to Decide as well -- the practical and organizational implementations. (Because the a16z Podcast became an early go-to for book authors to release their books, Annie agreed to share her next book with us first.) But overall, these evergreen episodes are really all about INNOVATION, which is another signature theme in defining the identity of the a16z Podcast…
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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20VC: Annie Duke on Reversible vs Irreversible Decisions, How To Evaluate Risk, The Theory of Sunk Cost in Venture & How to Optimise Both the Discussion and Quality of Investment Decisions
Annie Duke is a former professional poker player and the author of National Bestseller, "Thinking in Bets" & "How To Decide". During her poker playing days, Annie was a World Series of Poker bracelet winner, the winner of the 2004 Tournament of Champions and the only woman to win the NBC National Poker Heads Up Championship. Today, Annie is also the founder of How I Decide, a non-profit that creates curricula and tools to improve decision making and critical thinking skills for under-served middle schoolers.
In Today's Episode You Will Learn:
1.) How Annie made her way from professional poker player to National Bestselling author and coach to the world's leading investors?
2.) How does Annie evaluate the nature of risk? What is good risk vs bad risk? How does Annie think through reversible vs irreversible decisions? What is her framework? Why does Annie believe most irreversible decisions are actually reversible? How does it change your thinking?
3.) How does effective solo-decision-making differ from effective group decision-making? What decision-making biases does Annie often see venture being guilty of making? What 3 things can one do to improve the decision-making of the collective group?
4.) How does Annie think about sunk cost? How does one know when enough is enough and you have to walk away? How does this tie into Annie's thinking on portfolio theory? How does Annie think about pre-mortems? How should they be structured? What is included?
5.) How does Annie define critical thinking? What tips would Annie give to someone in really advancing their level of critical thinking? What behaviours can one implement to seek to protect critical thinking? How does this differ in team environments?
Item's Mentioned In Today's Episode
Annie's Favourite Book: The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing
As always you can follow Harry and The Twenty Minute VC on Twitter here!
Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.
How to Decide, Convey vs. Convince, & More
It seems like investors are especially obsessed with the psychology of decision making -- high stakes, after all -- but all kinds of decisions, whether in life or business -- like dating, product management, what to eat or watch on Netflix -- are an "investment portfolio" of decisions... even if you sometimes feel like you're making one big decision at a time (like, say, marriage or what product to develop next or who to hire).
Obviously, not all decisions are equal; in fact, sometimes we don't even have to spend any time deciding. So how do we know which decisions to apply a robust decision process too, which ones not to? What are the strategies, mindsets, tools to help us decide? How can we operationalize a good decision process and decision hygiene into our teams and organizations? After all, we're tribal creatures -- our opinions are infectious (for better and for worse) -- so how do we convey vs. convince, and not necessarily agree but inform to decide? Especially given common pitfalls (resulting, hindsight bias, etc.), and "the paradox of experience", including even (and more so) winning vs. losing.
Decision expert (and leading poker player) Annie Duke comes back on the a16z Podcast -- after our first conversation with her for Thinking in Bets, which focused mainly on WHY our decision making gets so frustrated -- to talk about her new book, which picks up where the last left off, on HOW to Decide: Simple Tools for Better Choices. In conversation with a16z managing partner Jeff Jordan (and former CEO of OpenTable and former GM of eBay among other things) -- so, from all sides of investing, operating, life -- Annie shares tips for decision makers of all kinds making decisions under uncertainty... really, all of us.
The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.
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Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see a16z.com/disclosures.
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Annie Duke – Wanna Bet? - [Invest Like the Best, EP.125]
My guest this week is with Annie Duke, and the topic of our discussion is how to improve decision making.
We break decisions down into their component parts: values, beliefs, decisions, randomness, and outcomes. After diving into each, we discuss how to make better decisions, how to work in group settings, and how to harness power of tribes and identity to improve our behavior.
Annie has thought about this as much as anyone, and her various tricks for getting us to think in probabilities and to stop evaluating decisions based on outcomes that have been tainted by randomness will be useful for anyone listening.
Please enjoy.
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.
Follow Patrick on Twitter at @patrick_oshag
Show Notes
1:23 - (First Question) – Why people don’t take the best investing advice
2:11 – Investing tribes
4:21 – Jay Van Bavel twitter
6:34 – Rule setting as a way of crafting an investment strategy
11:13 – How much control do we have in choosing our values
15:52 – Anatomy of a decision
19:28 – Her concept of resulting
26:47 - How beliefs impact your decision making
34:28 – Tact’s for making the best decision
42:40 – Ego and decision making
47:06 – People who are exceptional at changing their decision making
48:18 – How often do people who change their decision making, stick with the rules of the game
50:07 – Finite and Infinite Games
50:28 – Psychology of making decision that involves other people
59:20 - Never close doors on other people
1:01:57 – Best decision that Annie made
1:04:24 – Kindest thing anyone has done for Annie
Learn More
For more episodes go to InvestorFieldGuide.com/podcast.
Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub
Follow Patrick on twitter at @patrick_oshag
Annie Duke Explains How To Apply Poker Skills To Markets And Other Business Decisions
Anyone who watched poker on TV during the golden age of coverage a few years ago is familiar with Annie Duke. She's one of the most famous poker players of the era, and is one of the winningest women poker players of all time, with 38 money finishes at the World Series of Poker. She's been retired from poker for a few years now, but she has a new book called "Thinking In Bets: Making Smarter Decisions When You Don't Have All The Facts." On this week's episode of the Odd Lots podcast, Annie talks about the skills that made her good in poker, and how they can be applied to many areas of our lives, including trading and business.
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