Calculated Decisions Risk, Reward, and Entrepreneurship (with Erika Kullberg) Pt.1 Apr. ‘23 Ep 567

Alex and his co-host delve into the philosophy of incremental progress, contrasting the common desire for quick success with the reality that achievement often requires handling a myriad of small tasks. Alex shares his personal journey, from his early realization in college that hard work correlates with outcomes to his leap from management consulting to entrepreneurship. He discusses the challenges of decision-making and the importance of testing and iterating in business. Alex emphasizes the need for internal validation and the evolution of his motivations over time. He also touches on his approach to networking, valuing providing worth to others over seeking connections. Throughout the conversation, Alex reflects on the role of character traits, such as patience and honesty, and the impact of action over feelings in personal growth. He is candid about his limited media consumption, preferring action and experience over theoretical learning, and concludes by encouraging listeners to share the podcast to support entrepreneurs.

• Alex felt a strong need for external validation of his pain.
• This need for validation was a powerful motivator for him to push forward.
• The pain and the drive for validation helped him to stay focused on his goals.

"Either get what I wanted or die because I was just in a tremendous amount of pain, in the need of." "Validation from exterior that that pain was." "Motivation enough for me to just continue to drive no matter what happened until I got where I wanted to be."

The quotes express the intense personal drive and the role of pain as a catalyst for relentless pursuit of success. The pain is both a burden and a motivator, pushing one towards achieving their goals at all costs.

• Success is not about finding one secret or shortcut; it's about managing many small factors.
• There is no single savior or mentor who will make you successful; it's a personal journey.
• Realizing that everything is your responsibility can lead to actual progress.

"But the reality is it isn't one." "Thing, it's 100 small things. And if you can accept that it's 100 small things, then you don't expect something to happen overnight and you don't expect some secret that you're going to find." "Then everything's your fault and then you actually can start making progress."

The quotes emphasize that success is a complex process involving many small, often overlooked factors rather than one major breakthrough. Accepting personal responsibility for success or failure is crucial to making tangible progress.

• Alex's upbringing did not allow for the illusion that success comes without hard work.
• A pivotal moment was in college when Alex linked the amount of work put in with the results achieved.
• Setting a high bar for himself became the norm, leading to a disciplined and structured approach to work and study.

"Tied hours of work to outcome." "And then that just became my mo."

The quote illustrates the realization that outcomes are directly tied to the amount of work invested. This realization led to a disciplined approach to work, which became a defining characteristic of Alex's method of operation (MO).

• Leaving a traditional, prestigious career path to start a gym was a terrifying decision for Alex.
• The decision was based on a risk analysis of guaranteed outcomes versus potential opportunities.
• Alex aimed for financial success and autonomy and believed that entrepreneurship offered a better chance at achieving these goals.

"That still is, to date, the most terrifying decision I made in my entire life." "If I continue down this path, I am guaranteed to not get what I want. On this other path, I'm not guaranteed to get it, but I have a shot at it."

The quotes convey the fear and uncertainty associated with making a significant career change, but also the calculated risk assessment that led to the decision. The desire for a better chance at success was a stronger motivator than the fear of leaving a secure path.

• Alex believed that the longer he waited to start a business, the more difficult it would become due to increasing responsibilities and assets.
• He reasoned that the risk was lowest when he had fewer obligations and that it was the best time to try and fail if necessary.
• It took Alex six months and many conversations with a close friend to finally make the leap into entrepreneurship.

"I reasoned at least, that the." "Later I got in my life, the harder it would be to change."

The quote highlights the strategic consideration of timing when embarking on a new venture. Alex understood that life's increasing complexities could hinder the ability to take risks later on, so he chose to act while the opportunity cost was lower.

• Decision-making does not necessarily require a long time.
• Speed of decision-making can decrease with experience in business.
• Acceptance of mistakes contributes to faster decision-making.
• Delays in decision-making are often more detrimental than wrong decisions.
• Decisions are categorized into reversible and irreversible ones.
• Irreversible decisions, like having a child, require more consideration.
• Low-stakes decisions, like choosing where to have lunch, are reversible but can still be difficult for some people.
• A "best bad guess" approach lowers the expectation and action threshold.
• Commitment to testing and iterating is key, rather than to a specific path.

"It's not a gut thing. I think I'm pretty calculated with decisions, but I don't think that decisions need to take a long time."

This quote emphasizes that while decision-making is a calculated process, it doesn't need to be time-consuming.

"Because I can accept mistakes much more easily now and realize that most of the biggest mistakes have come from delay more than actual wrongdoings."

Here, the speaker acknowledges that the ability to accept mistakes facilitates quicker decisions and that delays have been more harmful than incorrect decisions.

"Two buckets, which is, is it a reversible decision or an irreversible decision."

The speaker categorizes decisions into two types: reversible and irreversible, which helps streamline the decision-making process.

"This is my best bad idea. And we only commit to one thesis@acquisition.com, and everything we do, which is test and iterate."

Introducing the concept of "best bad idea" as a means to decrease the action threshold and the commitment to a process of testing and iterating instead of a fixed path.

• Best case scenario planning involves envisioning the optimal career outcome.
• Worst case scenario planning helps assess the risks and fallback options.
• Having a backup plan, such as a good essay for business school, can provide downside protection.
• Opportunity costs of business school were evaluated against the potential of becoming a business owner.
• The speaker had prepared by taking the GMAT and applying for a master's in accountancy.
• Entrepreneurial experience was seen as a valuable asset for business school applications.

"So best case scenario is what I'm doing now. Worst case scenario was I would have a really good essay for business school."

The speaker describes the best case scenario as their current situation, and the worst case as having a compelling story for a business school application.

"Best case, I actually succeed. And I'll zoom out for a second. When I looked at business school, for me, it was 200 grand in opportunity cost."

The speaker assesses the opportunity cost of attending business school and compares it to the potential success of their own business venture.

"And so that was kind of like the reasoning on that side. But to your point about the knowing that I could use it in an essay, which sounds so silly, to increase my likelihood of getting into a good school, actually was one of the major factors of me being okay, of taking the jump."

The speaker explains that the potential for a strong business school application essay was a significant factor in their decision to take a career risk.

• High-tier business schools offer valuable networking opportunities.
• The networking aspect of these institutions is likened to a paid mastermind group.
• Socializing is an integral part of the business school experience due to its networking value.
• Social media now provides similar networking opportunities without the cost.
• Providing value in networks grants access to further connections.
• Networking doesn't require traditional methods when one provides sufficient value.

"Super high tier schools, it's just the network. I mean, you're paying for a mastermind of sorts for 200 grand or 250."

The speaker points out that the main benefit of attending top-tier business schools is access to a network of high-caliber individuals.

"You could post a story and just be like, anybody know an amazing commercial real estate attorney who does deals over 50 million and then you'll get like six dms and you're like, perfect."

This quote illustrates the power of social media to quickly access a wide network without the need for formal education or events.

"Networking has never been an issue for me because at least my perspective on it has been if I provide sufficient value to everyone in my network, by extension, have access to everyone who I've already provided value to."

The speaker shares their perspective on networking, emphasizing the importance of providing value to others as a means to grow and access networks.

• Personal experiences are shared to illustrate decision-making and career choices.
• The speakers reflect on their past decisions and how they have shaped their current success.
• The importance of considering both best and worst case scenarios is highlighted.
• Valuable lessons are shared about the importance of providing value and the effectiveness of networking.

"And she turned around because she wanted to teach her kid a lesson."

This quote is part of a personal story shared by the speaker, which underscores the importance of imparting practical life lessons to the younger generation.

• Networking is seen differently by individuals based on their worldview.
• Some see themselves as the ones who should be contacted by others for value.
• Others see networking as managing numerous acquaintances and extracting value from them.

"And she was like, these are the types of people you have to know. You have to know these people, all right? Because you have to stay in contact and you have to know this stuff."

This quote emphasizes the advice given about the necessity of knowing certain people and maintaining contacts within networking.

"I'm the person that everyone needs to be in contact with."

The speaker, Alex, challenges the traditional networking advice by positioning themselves as a valuable contact others should seek out.

"And she was a super networker, but she'd never seen herself as the person to provide value."

The quote highlights a common networking approach where the focus is on managing contacts rather than being a source of value.

• The podcast does not run ads or sell products.
• The host asks the audience to help spread the word to support entrepreneurs.
• The call to action is for listeners to leave a review, which is a simple yet significant way to contribute.

"You guys already know that I don't run any ads on this, and I don't sell anything. And so the only ask that I can ever have of you guys is that you help me spread the word so we can help more entrepreneurs make more money, feed their families, make better products, and have better experiences for their employees and customers."

The host explains the ad-free, no-sales nature of the podcast and how audience support through spreading the word can have a broader impact.

"The single thing that I ask you to do is you can just leave a review. It'll take you 10 seconds or one type of thumb. It would mean the absolute world to me."

A direct request to the audience to leave a review to help the podcast reach more people, emphasizing the ease and importance of this action.

• Success and the path to it are not always predictable.
• Entrepreneurs often have a strong belief in their eventual success, despite not knowing the exact path.
• The drive to succeed can stem from a need for validation, whether external or internal.

"Yes and no. Ultra success, yes path? No. I felt very confident that I would either get what I wanted or die."

Alex expresses a strong conviction in their eventual success, though the path to it was uncertain.

"And they're motivated a little bit differently."

This indicates that motivations can evolve over time as an entrepreneur's goals change.

• Entrepreneurs may initially seek external validation but gradually shift towards seeking internal validation.
• The need for validation can decrease over time, but it may never disappear entirely.
• Goals and motivations are dynamic and can shift as one progresses in their entrepreneurial journey.

"Probably to a degree, yeah. I think a lot of it even just comes from internal validation."

Alex acknowledges the ongoing need for validation, highlighting a shift towards internal validation over time.

"But I would just say it shifted in percentage. I would say when I was 19, it was 99.99, everybody else and .001% me."

The quote illustrates the change in the source of validation from primarily external to a more balanced mix with internal validation.

• Early success can provide immediate validation but may not offer long-term security.
• Rapid financial gains can occur, but they are often accompanied by a fear of potential loss.
• Entrepreneurs may adopt frugal practices to maximize profit and reinvestment in the early stages.

"Well, the first month I broke even. The second month I made $5,000, which was what I was making at the consulting job, more or less."

Alex describes their initial financial success, which provided immediate validation for leaving their job.

"I would say that feeling has taken a long time to get rid of."

This quote reflects the persistent fear of loss that can accompany early entrepreneurial success.

• The nature of challenges changes as a business grows.
• Entrepreneurs may face different kinds of stress at different stages, such as operational fatigue or financial management.
• Personal growth and character development are essential at each stage of business expansion.

"Hard changes the way the heart feels is different."

The speaker implies that the perception of difficulty evolves over time and with different business challenges.

"Gym launch is hard was, well, one, it was realizing that there was an opportunity in licensing and just called digital products, or b, two b services that weren't, like, in person."

Alex discusses the realization of new opportunities and the shift in challenges from physical to digital services.

"But there the issues were me."

This quote suggests that personal challenges and growth become more prominent as the business scales.

• Emotional tolerance is crucial when leading a company with a significant number of employees and customers.
• Bad days should not lead to strategy changes but rather be recognized as temporary setbacks.
• The ability to remain calm and avoid erratic behavior is essential for stable leadership.

"Okay, we have a bad day doesn't mean we need to change the strategy." This quote highlights the importance of maintaining a consistent strategy despite temporary challenges or bad days, emphasizing stability in leadership and decision-making.

• Character traits are a significant factor when evaluating entrepreneurs and their potential for success.
• Actions, rather than feelings, define character traits such as patience, loyalty, and honesty.
• Being an effective leader involves acting in accordance with positive character traits, despite personal feelings.

"But the number one thing, 80% of our scorecard, is based on the entrepreneur." This quote underscores the emphasis placed on the entrepreneur's character when assessing the potential success of a business venture, suggesting that personal attributes are heavily weighted in investment decisions.

• Character traits are not defined by feelings but by the choices and actions a person takes.
• Traits like patience, honesty, and courage are demonstrated through actions, even when feelings contradict these traits.
• Leadership involves making decisions that align with long-term thinking and company interests, regardless of immediate desires.

"It's not, do you want to lie? It's do you choose not to despite wanting to lie? Right." This quote illustrates that honesty is not about the absence of the temptation to lie but the choice to tell the truth despite such temptations, highlighting the action-oriented nature of character traits.

• As businesses grow, the standards for character traits such as patience, discipline, and focus must also increase.
• Character traits are not binary but exist on a spectrum, and the level required can increase with the scale of business goals.
• Aligning actions with the necessary character traits is crucial for achieving significant milestones in business growth.

"And to get to a billion plus, which is what we're on the path to do now, I got to be a nine." This quote reflects the speaker's belief that as their business aims for higher goals, they must also elevate their personal standards in character traits to match the level of ambition, indicating a direct correlation between personal development and business success.

• The speakers are not heavily reliant on external media for personal development.
• They emphasize the importance of action and experience over consumption of information.
• Learning is defined by behavioral change in response to the same condition, not just by the acquisition of knowledge.

"And so once I realized that, I realized that behavior and action was the thing that actually got me to learn, and so I biased all of my activity towards that rather than massive consumption of information." This quote conveys the realization that true learning comes from taking action and changing behavior, not just from consuming information, leading to a shift in focus towards experiential learning.