Ep601: Annie Duke – Do Things in Parallel

Listen on

Apple | Google | Spotify | YouTube | Other

Quick take

BIO: Annie Duke loves to dive deep into decision-making under uncertainty. Her latest obsession is the topic of quitting.

STORY: Annie’s worst investment ever was becoming a poker player.

LEARNING: It’s ok to do a few different things at a time. Quit more if you have to.


“Quit more.”

Annie Duke


Guest profile

Annie Duke loves to dive deep into decision-making under uncertainty. Her latest obsession is the topic of quitting. In particular, she is on a mission to rehabilitate the term and get people to be proud of walking away from things. Annie is an author, speaker, and consultant in the decision-making space, as well as Special Partner, focused on Decision Science at First Round Capital Partners, a seed stage venture fund. Annie’s latest book, Quit: The Power of Knowing When to Walk Away, was released October 4, 2022, from Portfolio, a Penguin Random House imprint. Her previous book, Thinking in Bets, is a national bestseller.

Worst investment ever

Annie had been pursuing a Ph.D. in cognitive science for five years. The plan was to become a tenure track professor. Right at the end of her time at university, Annie started suffering from stomach problems, which became acute. She got pretty sick and landed in the hospital. Annie then decided to take a year off. She needed money during that year off, so she started playing poker to make money.

Annie considers going into poker her worst investment ever because there wasn’t a lot of process behind that decision. She just thought it would be a fun way to make the money she badly needed. She didn’t think about the consequences of that decision, and even though she did well at playing poker and had some pretty good wins, Annie wishes she had put more thought into it.

Lessons learned

  • If the time and investment are small to complete something, just do it.
  • Do things in parallel. That means it’s ok to do a few different things at a time.
  • Keep your investments robust, not just against luck, but against your poor decision-making.

Andrew’sAndrew’s takeaways

  • Your focus doesn’t need to be single-minded.

No.1 goal for the next 12 months

Annie’s number one goal for the next 12 months is to finish her PhD. to create more time for things that are outside of work.

Parting words


“Don’t be afraid of quitting. When things aren’t working out, get to that decision earlier. It’s going to move you along in your life faster.”

Annie Duke


Read full transcript

Andrew Stotz 00:01
Hello, fellow risk takers and welcome to My Worst Investment Ever, stories of loss to keep you winning. In our community, we know that to win in investing, you must take risk, but to win big, you've got to reduce it reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And that mission has led me to create the Become a Better Investor Community. In the community, you get access to our global asset allocation strategies and stock portfolios, and our investment research weekly live sessions and the risk reduction lessons I've learned from more than 500 guests go to MyWorstInvestmentEver.com right now, to claim your spot. Fellow risk takers this is your worst podcast host Andrew Stotz, from A. Stotz Academy, and I'm here with featured guest, Annie Duke, any Are you ready to join the mission? I am, it is going to be. It's going to be fun. All right. Let me introduce you for anybody in the audience that doesn't know any dude, and he loves to dive deep into decision-making under uncertainty. Her latest obsession is on the topic of quitting. In particular, she's on a mission to rehabilitate a term and get people to be proud of walking away from things. And he is an author, speaker and consultant in the decision-making space as well as special partner focused on decision science. At First Round Capital Partners, a seed stage venture fund, and his latest book quit. The power of knowing when to walk away was released October 4, 2002. From Portfolio A Penguin Random House imprint or previous book, Thinking in bets is a national best seller. Any take a minute and fill in a little bit about the unique value that you bring to this wonderful world.

Annie Duke 01:52
Oh my God. Now that now I really look, I think I think here's what I think is unique about me is sort of some accidents of my background. So I started off my adult life at the University of Pennsylvania on a pretty like normal, straight and narrow path. I mean, normal if you consider pursuing a PhD normal, but I was there for five years studying with Lila and Henrik Lightman working on getting my PhD in cognitive science. So UPenn, that was one of the first really the first programs where cognitive science was kind of a thing that you could study thinking about this sort of interdisciplinary way of thinking about how the brain works, and how we interact with the world. So I was planning to go become a tenure track professor, which is what you would normally be doing if you're doing five years worth of PhD work. And right at the end of my time there, I actually had been suffering from some stomach problems that were pretty chronic, and they became acute. I got pretty sick, I landed in the hospital, I need to take a year off. And during that year off, I just needed money. So you know, as one does, I started playing poker to make money. Yes, which was actually now I think it sounds less weird. But I just in the 90s Poker was not on television, and there wasn't online poker, if you told people you were playing poker, they assumed you were also like dealing drugs, as well as in back room, right, like hanging out in the mafia or something I don't know. So they didn't, you know, I think now there's much more of an understanding of poker as an activity very similar to investing particularly like fast cycle investing, like options trading. But back then it was sort of firmly in the like, Vice world. So anyway, I started playing poker to make money in the meantime. And ended up actually not going back, at least not then into academics. So the meantime turned into quite a long time, about 18 years, and I won some World Championships along the way. But by 2002, which is about eight years into my poker career, I started to kind of bring those two pieces of my background together. And thinking about the way that cognitive science and poker could have a really interesting conversation with each other, that might inform a lot of the ways that we think about decision-making under uncertainty. So I kind of overlap those two careers. And then in 2012, I rolled out of poker to focus on this entirely. And now I'm back at the University of Pennsylvania. So it didn't come full circle. But I think that the the fact that I did engage in this very high stakes, high pressure, fast cycle decision-making problem that poker presents where you're making decisions under very high degree of uncertainty, that really changes the way that I've thought about the cognitive science part of it. And I think that my cognitive science background has changed the way that I've thought about sort of the poker part of it. So I think that in that sense, like I just sort of have a unique perspective that someone who was just an academic, or someone who As maybe Justin finance, for example, wouldn't necessarily have because I'm coming at it from both angles, I think. So maybe that's, that's been?

Andrew Stotz 05:08
Yep. And what when you said you go, you're coming back or you're back. Are you teaching now? Or what is what is What do you mean by that? Oh,

Annie Duke 05:15
well, I so I'm doing a variety of things. So I do teach in the executive education program at Wharton. So twice a year, I co-lead a class with Murray Schweitzer there who's wonderful human being, and it's on effective decision making that shouldn't surprise you that that's what I'm teaching. I also do active in research with Murray's we work on decision tools like pre mortems, and understanding how they work, whether they work, under what circumstances, why they might be good or bad. But then, about a year and a half ago, two years ago, I started working really closely with Phil Tetlock who wrote super forecasting and his wife and collaborator, Bob Miller's. And he asked me if I would help develop a training for individual novice forecasters to start thinking about how can you help people to become better at both prospective forecasting, but also will be called retrospective counterfactual forecasting, kind of like, you know, when people say, like, you know, what, if baby Hitler had been a girl, right, then how would How would things have turned out? And those problems turned out to be really hard for sort of the human brain? To complicate it to contemplate, like, what if we change the conditions of the past? How would things have turned out differently? So he asked me to kind of start working on that problem, I created a training, we ended up running for very large scale studies together, got really interesting results. At which point, we both sort of said, it seems to me, this could be a dissertation. So um, so I ended up sort of looking into that. And so I had left abd all the doctors. So I'd done all five years, I'd already done what I call my qualifying exams, I had done all of my PhD research, but when I got sick, I hadn't actually defended the dissertation. And then because I stayed in poker, I actually didn't circle back and defend that. So I am, I've done everything you need to do except for defend this silly dissertation. So I went back and I said, Well, what would that entail? And it turns out that you sunset, which means if you've been gone for over 10 years, they're like, You need to re qualify, which means you have to re show expertise in the field. So I, so we sort of talked about it, we sort of work that through, and I'm currently I'm just about to be enrolled, and I should be defending my dissertation, this fall ish, certainly by spring, at which point, hopefully, they won't fail me, I hope. And then, and then we're planning more research together. So you know, so I teach there, and I'm in two different labs that I work in. And, you know, I guess back in the academic saddle, so

Andrew Stotz 07:57
it's kind of like closing that loop of that dissertation.

Annie Duke 08:01
Well, as it turns out, and I think this is actually an important lesson about quitting that which is obviously the topic that I've been obsessed with lately, which is one of the things that we need to remember when we quit is that there's very few things that you quit that you can't go back to. There are some, but most things you can actually circle back to even if in my case, it's a few decades later. You can you can circle on back. And I started doing that even in 2002, like when I first gave a talk to a group of people in finance, it was a traders at a hedge fund. You know, and that was sort of my first coming back to academics, where I was really thinking about this conversation between cognitive science and poker. And I started to do talks in that to kind of work that out. And that got me headlong back into the sort of reviewing the research and understanding that world. And certainly when it came, you know, to write thinking in bets, you know, it's any book like that ends up being kind of a lit review, where you're sort of doing the lit review and synthesizing and thinking about how you put these ideas together. You know, and then, and then I ended up back at my home. So you know, which is bad. So, there you go.

Andrew Stotz 09:16
Yeah. Well, it's unlike presenting all of your work to a panel of a dissertation committee. You presented it to millions of people around the world. And I think the judges, the judgments been made, that it's been excellent work, I think, Oh, thank

Annie Duke 09:31
you. Yeah, I

Andrew Stotz 09:32
mean, thinking in bets is fascinating. I've been, you know, getting through the final steps of how to decide and maybe just for a moment, I want to ask a couple quick questions about those before we talk a little bit about quitting, because I have to tell you that I've been quite a quitter, but Oh, good if before.

Annie Duke 09:49
I'm a ridiculous quitter, so let's, you know, be quitters together.

Andrew Stotz 09:53
Exactly. Yeah. The more I read this book, How To decide I mean, it's full of tools about had to think about deciding and the decisions that we make. And but I kind of went through a lot of different feelings. And one of them, I was frustrated, because when I started, actually put the book down, and then start to think about the decisions I have in front of me, it's a lot of work. It's a lot of work to kind of put the framework up there, and what actual decision am I really making here? And, you know, that was the first thing. And I mean, I'd consider myself a pretty good, I've made pretty good decisions, I thought, you know, based upon outcomes. But, so, but the frustrating thing is that I started realizing that even my, you know, my brain is pretty good at thinking about these things, I realized that, you know, I'm not that clear about the decisions I have in front of me. And that was a little bit frustrating. I mean, you'd think that I would feel a kind of hopeful. But I was a little bit frustrated about that. The second thing that got me that I was a little bit frustrated about assessing and you know, is this really going to make the world a better place? Or is it just going to make a small group of people, a ton of money? And then I started thinking or a ton of success? And then I started thinking, and maybe that's, is that, if that's the case? Is this good for the world anyways, when a bunch of people get, let's just say that the top 1% of people get better decision making, and the other people don't aren't going to put in the effort. And now you've given a tool for these people to concentrate their power. Now, maybe that's good. And I wrote down in the margin, maybe that's good for the world? I don't know. So those are some of my frustrations I was feeling and I just was thinking about, you know, the way you.

Annie Duke 11:39
Okay, so let me just start with frustration. Number one, a lot of the work that I do with organizations that I console is getting them to figure out what they're deciding about, right? What's the decision that you're making. Because we don't do enough of that. Now, that's not to say that every decision you make should be like really slow and deliberative, I have a whole chapter on how to speed your decisions up hurt, part of which was the inspiration for the book quit. Because I, you know, optionality, this ability to reverse the choice that you've made, allows you to go much faster, that is when you can sort of wing it and throw some spaghetti against the wall, and try to get some information out of the world. The way that I sort of think about it, like from a business perspective is there's a difference between hiring a CEO and hiring an intern. And when you hire an intern, you can probably spaghetti against the wallet, right? Because it's like super reversible, it's not going to have a lot of impact on your org. But when you're hiring or CEO, you have to figure out a whole bunch of things. Who is the person that we want? Or CFO or whoever, anybody who's important to your org? What is the right person for us? If we were describing this person to recruiter? How would we describe them? What are the opportunities they're going to create in the near and far term? What are the challenges that they're going to face? What are the decisions that we think that they need to make, you know, so on and so forth. And you have to actually think that stuff through and then go through a deliberative process with those candidates. That's true when you're thinking about resource allocation across projects, for example, right. But there's a reason why we have agile product development. Because as long as you can pull it back, as long as you can reverse it really easily, I don't really have a problem with someone going fast. I do have a problem. If you don't have like a roadmap to how you're going to sort of throw the spaghetti against the wall, I do have a problem if you don't actually know how to structure a good decision and then make a deliberate decision to take shortcuts, because there's lots that we can take shortcuts when, when, and it all has to do with what's the impact of getting the outcome wrong, like getting a bad outcome, you know, so the lower the impact of getting a bad outcome, which could just be it's not that important of a decision, or I can reverse it really easily. That's the two ways to mitigate that. The more that I have a margin of error, the more that I can wing it. But that has to be a choice. So know what it looks like in its fullest form. And then, you know, figure out is this one I can wing or, or is it not? So I think that that is something that's really important. And in the end, what we need to realize is, it may be frustrating to find out that your decisions weren't necessarily structured really well, in the past, or as well as you might have thought they were. But you have to start making what's implicit in your decisions explicit because otherwise, you can't close good feedback loops. You can't say to yourself, like how do I actually improve on this? What did I get wrong? What did I get right, separate and apart from finding out that you had a good or a bad outcome? So that's kind of hopefully answering frustration number one, to answer frustration number two, look better decisions lead to better lives, which I think leads to a better society. Now, is everybody going to read my book? No, but some people are and a lot of them are going to be decision makers that have a lot of impact on society. So I hope that that that sort of getting through that way but even so, I co-founded an organization because I to have your concern. I co-found founded an organization called the Alliance for decision education. And what we're trying to do is create an educational movement around getting decision education in our K through 12 classrooms. So in the same way that stem became an educational movement, where it was like in K through 12, every single year, we need to start focusing much more on this particular area of learning or social emotional learning, which, when I was young, there was none of that. And then, you know, my kids had social emotional learning at something every single week for basically their whole education. And we feel that that creates a better child, a better member of society, someone whose life is going to have better outcomes. What we're doing at the Alliance for decision education is trying to do the same in K through 12. classrooms, every single classroom in the country, that is our goal, we have very, very lofty goals for just the reason that you sad, right? That if you can take one child and teach them to be a better decision maker, that is the one thing they have control over in terms of the quality of the life that they have, you don't control luck, you don't, you can't control for mostly the actions of others, you can't control the circumstances into which you were born. And society should certainly work to try to, you know, create equal access, in terms of that stuff that you don't have control over. But the thing that you as an individual do have control over is the quality of your decisions. So we need to be concentrating on that for every single child. And so we put lots of time and effort toward that. And so hopefully, that helps you with number two.

Andrew Stotz 16:40
Yeah, I mean, it's, I am hopeful, I mean, at least you're doing that. And hopefully, that can work. But like the other the third thing that I was thinking about was that I just, I left America 30 years ago. So I look back at America and kind of see the changes from a different perspective. And I just look at the decisions going on at the political level, at the societal level is just getting worse and worse. And the impact, you know, there are people right now, going without food in Nigeria, because of the insistence of maintaining this war, you know, from the US and no willingness at all, to talk to the Russians to do anything. Now, I absolutely understand the side of you know, Russia bad. But I mean, the consequences of that decision that America has the ultimate power in the world right now to be able to do whatever. And the ripple effects of that, you know, you just think, gosh, are we really getting a society getting better or worse at decisions?

Annie Duke 17:46
Yeah. So I mean, in terms of in terms of that particular decision, you know, personally, I mean, I'm also on the board of the Renew democracy initiative. And so we're very anti authoritarian governments, pro democracy is particularly but in democracies like Ukraine, so we probably have a different perspective on what the value is of maintaining that democracy and Ukraine. So we'll just put that aside, because that's a matter of policy, and what are your long term goals? And we probably agree on what we're trying to accomplish. The question is, how do we actually do that the concern that I have much more is that I think that we have the intuition that more information is better, and more information is going to create better decision makers, you know, and so that's the wonderful power of the internet, right is that I can go and I could see a full video instead of a little clip of something that might be framed in a particular way. Or I can see all sorts of different viewpoints, and so on, so forth. So we can take this very rosy view of the information environment that we live in now, right. But then we can think about the dark side of that, which is, first of all, it's way too much information for any individual to ever process on their own in a given day. And so you tend to rely on proxies more. And I've actually done some work on this with Jay van Babel at NYU. So it tends to be like that part person's part of my team. They're part of my tribe. So what they say must be true. And this person I don't like so what they say must be false, which obviously isn't really information processing, not in the way that, you know, we'd ideally like you in terms of what's true, and what's not on a factual or an objective basis, but more just on who's the deliverer of the message. So I think that's one problem is that we just are overwhelmed. And we've turned to proxies a lot more. And I think the other issue is, has to do with like, how easy it is for the information to spread. So there's one thing in cognitive science which are called processing fluency, and processing fluency is associated with believing things are true. And there's different ways to get to processing fluency. So we can think about this, the easier something is for us to understand or for us to pull up from memory, the more true The thing is that we think you Do we think so? Notice that this means that nuance makes it very difficult for us because that is harder for us to process. So sort of categorical messages that are really simple, we're going to feel are more true. And then here's the really bad thing is that the more we hear them, the easier it is for us to process them. And the easier it is for us to recall them, which increases processing influence. So So what is the internet or social media but a repetition machine? So you're getting these these messages that are repeated over and over and over again? And regardless of whether they're true or not, when we hear them a lot, they feel true to us. So

Andrew Stotz 20:42
does that mean we end up just lining up on sides? And we get see the other?

Annie Duke 20:49
Yes, so it becomes very like us versus them, you know. And then I think there's also the issue of really weird and extreme ideologies, were just kind of hard to spread back in the day. And now they're very easy to spread. So fringe views, it's like your neighbors would just look at you funny, right? But now it's like, well, I don't really need to talk to my neighbors, I can talk to these other people who have these fringe views, with who are repeating the same messages over and over again, and then they become part of my tribe. And then I become very suspicious of people who are out of outside of my tribe. So the interesting thing is that I think that when you talk about like a policy thing between Russia and Ukraine, you're actually talking about a pretty normal conversation that I don't think is harmful for the world, right? Because people are gonna have differing viewpoints. And I think those viewpoints colliding are probably not a good for society. Right? It's what I think is what's happening in the information ecosystem that's making things very hard. And then of course, politicians consider their constituents their customers, well, let's say not their constituents, but their base, their customers, and then they're only echoing sort of what the most activated part, you know, which tends to be the more extreme part of the base wants to hear. And now you get this audience capture. So like, just like you see, social media figures get captured by their audience, politicians experience audience capture, also. And this creates a whole problem with decision making as well. So that's the part that really concerns me, what I feel like to have a conversation about Russia and Ukraine. And like, I feel like that's a throwback. Yeah.

Andrew Stotz 22:30
If I think about what you're saying, I'm kind of imagining a tribe of people under an emotional bubble, that are processing things, you know, in a certain way, and another tribe of people are under another emotional bubble and try bubble. And then I'd see them using your book and making excellent decisions. And you know, they're using logic and reason. And they're, they're really, really proud about the interactions that they're having with each other and really breaking it down. And they never see the other side at all. That's my, that's the kind of what I see happening. And that's where I feel like your solutions are fantastic. And they're awesome, particularly for a logical person like me, like, Wow, I love the way they all flow. But sometimes I just feel like people are broken down by this emotional connection that they can't get past. How do you feel about that?

Annie Duke 23:22
Well, I'm just gonna go back to the Alliance for decision education. Right, we have to start teaching kids to figure out what's true. You know, and part of the thing that I say I'm thinking about is this one a bat, right. And I think that whenever someone holds a really extreme view, if you actually were to put something immediate on the line, I think you would see them back off of it. But I think that the way that and I talked about this in quip as well, when your identity starts to get wrapped up in your belief system, it's very hard to let it go. And it's very easy to rationalize it away. I mean, this is why I really recommend this mechanism of, you know, think about it as a bat, because every decision that you make is really a bat, right, you have to sort of balance that out. So, you know, I think there's just a lot of tribalism, which starts to really represent, you know, very similar to being in a cult. And, you know, and that's true, no matter what, you know, if you're super activated politically, it means you identify very strongly with a tribe. And it becomes cultish in nature. Even if the stuff that you believe is, like more true, say, than the stuff that another tribe believes, you will, I can I could show you very quickly, your ability to rationalize information away that contradicts the belief that you have no matter, right. So. So, you know, essentially what happens is, as our identities get wrapped up in this, it just becomes really hard to let go of those beliefs. And of course, people who are sitting in say, the more rational, middle or you know, or so bit of looking and saying, whoo, everybody's a little nuts. Now, can you not see the facts, and assuming that the facts are going to change the mind, right, that's where we're really going wrong. Because what we have to realize is that that's just kind of not true. It's too easy for us when we experience that dissonance of the world, the information and the world colliding with the things we believe when those beliefs are part of our identity, it's too easy for us to reject the facts in some way. And you can see this in the political dialogue, one of the easiest ways to do that is like, well, here's an extreme case of rejecting the facts, the fall back on, it's a false flag. So if you don't want to accept the, the truth of whether you're, you know, pro gun control, or anti gun control, if you're anti gun control, and you don't want to accept the truth of children getting shot in an elementary school, we see this this, this is obviously an extreme fallback. But we can see this but it was a false flag, it's a way to sort of rationalize away that piece of information that might contradict your belief that guns should flow freely, for example, right, so So this is something that we're all capable of doing. But they're not all just that extreme. Some of it is it's the deep state, they're out to get them there, you know, so on so forth, where you just say, I don't have to believe that information, because that's not coming from a trusted source, or somebody from the outside is trying to hurt the person that I'm a fan of, or whatever it might be. And it doesn't just come to that. It's like in your personal life. People do that all the time. You know, it's like,

Andrew Stotz 26:39
I was just thinking about, I think you were born one month after me from what I can see. I was born in July of 1965. And then, okay, two months. So I grew up in Delaware. That's kind of Connecticut, Delaware, and then eventually I'm going to Ohio. But do you remember those banana seat bicycles?

Annie Duke 27:02
Oh, yes. Love them. The really, but the handles with the with the streamers on

Andrew Stotz 27:07
the stream, as you know, I would ride that thing into the dirt and into the park and down by the railroad, and I'd be gone all day, and there was no information that was coming in on me. And I just think about what kids you know, like, think about our youth. I mean, I don't think a kid could even imagine the lack of information that we dealt with at that time. Like, I remember going to my friend's house, I wrote over and I asked his mom, hey, is John here? And he she said no. Where is he? I'm not sure he left about an hour ago. All right, I'll just wait under this tree. Yeah. So for an hour, I looked up in the tree and thought about,

Annie Duke 27:44
I actually had that I had a very similar thought today, because I saw an old picture. Do you remember when the milk cartons used to have the pictures of the missing kids on them? Yeah. So someone was like, oh, imagine this cheeriness for your breakfast as a child? You were you, you know, wonder when could I go missing as well? It was it's just you know, someone was sort of making a comment online. But then I thought, oh my gosh, like, I used to sit at the kitchen table with my cereal. And I would just look at the back of the box and read the back of the box over and over again. And no television, no phone. Nothing. And I was like we just weren't, we just got to sort of sit with our own thoughts, right? Because I was just sitting there with my bowl of cereal and my carton of milk in my cereal box. And that's, you know, that's kind of what I did. And I would do the maze or something like this. And I was like, oh, yeah, that was a really different time.

Andrew Stotz 28:40
Yet, I guess when I was talking in the beginning, kind of like, I'm worried about how much we can, you know, develop part of what I'm thinking is how do we overcome this barrage of information and distraction that young people are under? And yeah, it just was, you know, maybe a bit of an overwhelming moment when you go back in time. That 111 thing that I want to understand. And people always ask me, you know, how are you so happy that you have this job that you love, and you have this life that you love? And they said, What advice would you give and I always said for many years, I said, quit. I said the only thing that you're really sure about in life, you don't know what the 15 options are in front of you. But if you know that the one you're in is not satisfying, you then act on it. And I said then most people don't, they don't quit, and therefore they never get to the next place. So I had a career, a corporate career at Pepsi and I, you know, was going to be a successful executive in Los Angeles. And after three years of doing my MBA, I quit. And I moved to Thailand took a 80% pay cut, and basically arrived in Thailand with $2,000 in my pocket $20,000 of student loan debt and an 80,080% pay cut. And I thought this is going to be interesting and so quitting off never was a stick. I was never funny stigma, stigmatization of that. But just, let's get into a little bit of the background of kind of why you're talking about quitting, and maybe just some of the main points that people should take away and then go get the book.

Annie Duke 30:18
Yeah, so, you know, we're gonna have to do speed round here, because I, yes, I have to go at seven o'clock. But okay, so, Alright, so here's the issue is that I, you know, I assume a lot of your listeners have heard Grit by Angela Duckworth. If they hadn't, they should go get it and they should read it. Basically, her point is, there's lots of things that you can be very fulfilling, that can you can be really successful at that are going to have hard moments. And you have to have the ability to persevere through those things. Okay. But the way that people actually think about grit is just grit builds character, it is a virtue and quitting is shows a lack of character and being weak willed and its failure. But to your point, that can't possibly be true, because whenever we're sticking to something, there's a whole bunch of things, that means we're foregoing. So there's huge opportunity, cost of capital of time, of effort, so on so forth. And if you're not happy in the thing you're doing, or if it's not the thing that is optimized for your best life, then exploring other opportunities, which often involves quitting, the thing you're doing would actually be the right choice. Now, a lot of people say, but I don't know what those things are? And the answer is, yes, and how much risk you're taking on the willing to take on, it's going to be different for different people, right, so some people might not have been able to afford the risk to go to Thailand. But that doesn't mean that you shouldn't explore all that means is that your bar for how unhappy you are on the path you are gets a little bit lower before you're willing to switch, or you're you you are required to have other opportunities lined up before you switch. Right. But in either case, no matter quitting is probably the right choice. How do you actually go about doing it, it's just different depending on what your circumstances are, and how much you can just chuck it. Right and, and move off to Thailand, which is gonna be different for different people. So the point that I make in the book is that there needs to be a dialogue between sort of the grit side of things and the Quit side of things. Because while grit definitely gets you to stick to hard things that are worthwhile, it also gets you to stick to hard things that are not worthwhile, sometimes resulting in death, like people can take Ewing up Mount Everest, you know, past turnaround times, you know, when you're supposed to actually stop climbing in snow storms, in fog, and whatever, and ending up perishing up there. And it's not just people on Everest, it's people in their jobs, or their relationships, or so and so forth. And there's all sorts of different reasons that have to do with sort of the way that we're wired cognitively, that make it really tough for us to quit. One is a very well known problem called the sunk cost effect, first identified as sort of a wide wide phenomenon, a widespread phenomenon by Richard Thaler, which is basically when we put time or effort or money, like I spent three years in my MBA, and I've already been in this job for so long, and I've done my onboarding. And if I leave, I will have wasted that time. If I sell the stock, I will have wasted my money, if I so and so forth. And of course, and actually, this is a problem with something like the Afghanistan war, or the Vietnam War, if we stop now, without having won the war will have wasted all of that money we spent on it, the lives that were lost will have been for nothing. So that's a sunk cost problem, right? As heartbreaking as losing a life is that something that's already occurred in the past, what should matter to us about whether we stick to things is is the next dollar that I put into this project worthwhile is the next bit of my time or effort can bring me happiness as compared to other things that I could be doing, or in the case of a war, it's heartbreaking that we've lost lives in this cause, but is the next life that we put at risk worthwhile, given the probability that we're actually going to achieve our goals here? Right. And I think that when we look back on things like the Vietnam War, or the Afghanistan war, most people agree we were in those things way too long. And so sunk costs is like one of those things that creates debris. You know, Don more, of course, he talks about over optimism and overconfidence. Just thinking the future is going to be more rosy than it actually is makes it hard for us to walk away from things. Status quo bias, that feeling of wanting to stick with sort of how we've always done things, instead of switching to something new, which might be more ambiguous or uncertain, where we might feel the loss more greatly because it feels more like an active decision to quit. That gets into omission, coalition bias. Talk a little bit about the way our identity gets wrapped up in the things we're doing. So when we quit, we're sort of you were quitting being an executive. Right and going off into something you didn't know you were putting in some sense being an American ish, because you are now going to be an expat. There's all these things that go into that decision as well, like, who am I going to be for me when I, when I stopped playing poker when I quit, it was like, but I was Annie Duke, the poker player. Now what was I going to be? Right. And these things also make it very hard for us to quit. So there's just a lot of kind of like headwinds that make it difficult for us to actually execute on that decision, despite the fact that you said that, you know, people think that quitting is going to slow you down. But it actually speeds you up for exactly your point, right? If you can move from what you're doing, which isn't getting you to where you want to go or causing you to gain the kind of ground that you want to gain toward your goals. And there's other opportunities you could switch to, they're going to get you there faster, then switching to those things is going to get you there faster, it's actually a way to speed things up and create better outcomes for yourself.

Andrew Stotz 35:52
It reminds me of a conversation I had with a fund manager, I was a young analyst here in Thailand in the stock market. And I was, you know, trying to be an expert in the banking sector back in 1994. And I he asked me about a particular bank, and I said, well, over the last six months, it's fallen my axe, and over the last 12 months, it's fallen behind. And I was talking all about the past of what happened. And he said, I don't give a shit about what's

Annie Duke 36:15
happening tomorrow. Yeah,

Andrew Stotz 36:17
he said, I mark my mark, I mark my portfolio to market every day. All I care about is this the right stock to own now for the future. And that was like, my first lesson to become a real analyst is that everything is about the future. But you know, I have to say, I know you're in a hurry. So the world wants to know your answer to this question any. Now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it, and then tell us the story of your worst investment ever.

Annie Duke 36:51
So I just want to make sure I can Can I talk about like investment of time or attention? Okay, so here's, here's the thing, I actually think that my decision to become a poker player, which is an investment, I'm choosing to invest my time and money and whatnot in something was my worst investment. Now the thing is, it worked out really well. And I think that this is something really important to understand is you can make terrible decisions about what you invest in, I, I can't tell you the number of poker hands that I invested in, that I went all in on, that were terrible investments that I ended up winning, because I just got darn lucky. So I that's kind of as a poker player, the things that I would obsess about. So I could tell you hands that I invested in that I think were terrible. I could tell you stocks where I think that my process wasn't great. But my worst investment ever was actually becoming a poker player. Because there wasn't a lot of process behind it. It was a time when I was sick, I didn't feel good. I left graduate school because I kind of had to I was casting about for something to make money. I started doing pretty well at it. And then I never really thought through the decision in a way that I would recommend and the books that I write about, should I go back to academics, or should I stay in poker? It was like almost like, well, here I am. I guess I'll just do this, because I'm kind of having fun. But I didn't really think about like, what were the consequences of that. Like, is this something that I want to do or don't want to do? And in the end, I may have made the same decision. Like I may have decided to that that was where I wanted to invest myself in terms of my career. I'm not sure because I can't rerun history. But what I know is that the process was bonkers. Hmm. Interesting. I mean, it was just like, I'm sick. I don't feel good. I'm playing this game. I'm making some money. I guess this is it. I mean, for real, like I you know, for someone who writes books about decision making, I'm just telling you, like, not every decision I've ever made is has been that great.

Andrew Stotz 38:53
That's, that's the thing that everybody thinks as they read through this. It's like, your decision making must be perfect. But this is a good one to think about. And how would you describe the lessons that you learned? As you look back to that?

Annie Duke 39:06
Yeah. So I mean, you know, I'm actually deeply embarrassed by the decision process that that had me decide to invest my time in poker and, and actually give up the investment that I had made in graduate school. That's not to say, I thought I'd wasted my time or my money or my effort, or whatever. But I actually did really enjoy graduate school. I was just kind of, I think, embarrassed that I gotten sick and embarrassed, you

Andrew Stotz 39:32
walked away from something pretty serious that you put a huge amount of time. By the way,

Annie Duke 39:36
it was only a very little bit of effort that I would have needed to finish it, which is one of the reasons why I think that was such a bad decision because I wasn't really thinking about like, it's not a big investment of time for me to to defend the dissertation. And I could have actually had that in my back pocket, which I think would have been a good thing. So I think if I went back and did it, even if I had stayed in poker, I would have finished the PhD and then said I'm going to take some time off from academics in a more thoughtful way. Because I think that we need to realize it's not just like investing in stocks or investing in companies, all of which I do, right I, I've done seed investments and later investments in angel investments. But it's like a lot of it is just the investment of yourself and things and your training and your time. So that you know, the things that I learned from that, where if the if the time and investment is small to complete something, do it, right, even even if you don't want to, because it's not a big deal, it's not a lot to get a lot out of it. So I think I'm much more likely to complete things, I'm also much more likely to quit things really fast, right? So I'm trying to sort of get into that sweet spot of finding out I don't like it fast. I've started books that I didn't finish and things like that, where I just figured out pretty early on that it wasn't the right book for me to be writing and I should be doing something else. But the big lesson that I took from that was do things in parallel.

Andrew Stotz 40:56
Because I think that kind of what I was thinking about your education and your poker, and then the development of your, you know, that there was another option you didn't have to go all in.

Annie Duke 41:05
That's right. And so I've taken this idea of what you would want to do look, you're going to make bad investments, right? This is why we have a portfolio because you want your investments to be robust, not just against luck, but against your poor decision making. So this is why we create a portfolio I think that you know, I've thought about creating a portfolio of opportunities. So I'm a big explorer, I tend to be exploring things that I could be doing exploring conversations, exploring lines of research, exploring book ideas, exploring with clients, who I might want to take on, within the clients that I talked to that I'm sort of a thread polar, because I really like to explore different opportunities, which I think I learned from them that I didn't need to make a decision between one or the other, I could have done both. And I eventually got to that decision. And when I actually came, started doing the corporate speaking and started doing the consulting, it took me 10 years before I left poker, not because I'm a bad quitter, but because I realized I could do them in parallel. And I didn't need to abandon one or the other until I really understood what my own values were in a more robust way. And then I could decide to actually exit you know, so I, when I told you what I do now it's like I teach it pen, I do research a pen, I write books, I consult with my clients, I also do speaking, I You see all these things, I do all these things in parallel, they have the same thread of decision making under uncertainty. But there's all different ways that I want to explore that. So like, I'm a big fan of David Epstein, right, I think range is the way to go. And that's something that I learned from back then I was just a graduate student. And then I was just a poker player. And I didn't think that I could be doing both at once. And it turns out that I totally could have.

Andrew Stotz 42:50
That's great, great for the listeners in the audience to hear you know that you can do a few different things at a time. Don't try to do 10 things at a time that can start to overwhelm you. But you don't have to be so single minded focus. I know you've got to run. So last question. What is your number one goal for the next 12 months?

Annie Duke 43:12
Okay, so my number one goal for the rest of the next 12 months is really honestly, I want to get through a very busy time in my life. With this book that you know, releasing a book is a lot. And then obviously I need to do the finish the PhD. And I have my client work. And then as soon as I'm done with that, I actually want to start thinking about what do I want to do that isn't work focused. And this comes from I after I finished this book back in March, I took a sabbatical for a few months. And I really just honestly, like hiked with my dog. I did a little bit of client work. But my clients, it was only when the like the bat signal went up. But I did. I was I was working on the dissertation. But it was kind of the only thing I was doing. workwise was mostly just the dissertation. And I was like hiking with my dog in the morning and night and playing a lot of tennis. And I kind of realized at that point that you know, I hadn't really taken a break since I was 14. And so I don't want to fully take a break. But I realized that I would like to create more time for things that are outside of work. I think that I'm someone who defines myself through my work quite a bit. And I want to start to learn how to define myself through other things and to recognize the productivity in doing things like walking your dog, because that is a very productive activity and I need to start to be kinder to myself and allow myself those kinds of activities more

and you've learned No,

Annie Duke 44:57
I mean, I don't think you have to you know this What I'm trying to learn is there shouldn't be earning it because hanging out with your dog is a perfectly product productive activity. So that's what I'm, you know, I'm trying to get out of this idea that like you are your work, and start to think about like, who am I? And what do I want to be spending my time on a little bit more thoughtfully?

Andrew Stotz 45:17
Well, that's going to be interesting to watch the next 12 months. Listeners, there you have it another story of loss to keep you winning. As we conclude, Annie, I want to thank you again for joining our mission. And on behalf of A. Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Annie Duke 45:39
Quit more. That's, that's what uh, don't be afraid of quitting. Don't be afraid that don't you know, you can say the Q word. It's okay. You know, so just like when things aren't working out, get to that decision earlier. It's a time saver. It's going to move you along in your life faster, and don't be afraid to do it.

Andrew Stotz 45:57
That's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that. Today. We added one more person, Annie to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.


Connect with Annie Duke

Andrew’s books

Andrew’s online programs

Connect with Andrew Stotz:

About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

Leave a Comment