Stupid is as stupid does.
- Tom Hanks, “Forest Gump,” 1994
Nearly every VC firm in today’s market is focused on showcasing their brilliance: white-papers, 50 slide powerpoint decks, marketing departments and prescient theses that can be referenced for credibility. In fact, when I’ve met with elder VCs to seek mentorship, I’ve often been asked some variant of “what makes you a good picker of companies?” The implication is that I need to prove I’m smarter than the herd.
I’m now convinced that’s wrong. Great investors don’t need to be smarter: they need to be dumber.
To be more nuanced, one needs to be entirely comfortable in looking dumb – in feeling comfortable being wrong. Great firms (venture firms, startups, big cos, etc etc) will be cultivated when team members are comfortable being vulnerable enough to say dumb things, make dumb decisions, yet find collaborative support even when they are wrong.
At first glance, this approach might appear to be simply a question of a firm’s risk tolerance (should we make this investment?!? It seems too dumb to work!). But I think it runs far deeper – coming face to face with cognitive dissonance itself. Several months back, Roy Bahat, founder of Bloomberg Beta (a seed fund I respect immensely) noted to me that their investment process was rooted in a culture that focused on mitigating the cognitive bias of fearing looking dumb:
“A lot of this has to do with the psychology of the team. Peoples’ need to “feel smart” and, more importantly, avoiding looking dumb… that drives a lot. In our structure, it’s designed for me to be dumb. As long as *someone* around the table is smart enough on each deal to say yes, we win.”
Early in my tenure as a professional poker player, I realized that I was far more adventurous, creative, and risk-taking while playing online poker than I was while playing in casinos (my winnings online ultimately exceeded those in a casino by a factor of probably 1,000x). Given that my opponents in a casino were on average actually worse than my online competition, and I was focused on only a single table in a casino as opposed to 4-12 simultaneous games online, I was miffed. I identified two causes of this incongruity:
- I would keep a very large bankroll in my online poker accounts and this large number gave me the confidence to make mistakes knowing that I had ample reserves. In a casino, I rarely kept more than a couple of buyins in my pocket at any time and often felt cash constrained.
- Online, I was largely anonymized. I could experiment with moves, run crazy bluffs, and trust my instincts to make daring call-downs knowing that I would never be blushing out of embarrassment, that no one would ever “ask to see my cards,” or berate me for my decisions.
The truth is that 99% of the time my play in both worlds looked identical. But the outlying 1% made all the difference – the confidence to tap inner creatively, reimagine a situation, and make a decision entirely antithetical to the standard move in a certain context. The greatest players I ever encountered: Tom Dwan, Jason Strasser, Vanessa Selbst, Phil Ivey, just to name a few, became great because in those moments where 99.9% of players would follow a formulaic, auto-pilot approach of the “optimal play,” they would catch themselves and ask: how would my opponent react if I did something entirely novel and unexpected? What would happen if I changed the assumptions underlying what is “optimal?”
They were willing and confident to look dumb because they instinctively knew you could never be great by being slightly smarter or slightly more optimal than the field. Being slightly smarter will undoubtedly win money – but it won’t yield greatness. To be fundamentally great you need to be fundamentally different. Simply put: you need to look dumb.
The underlying question is how one gets there.
Greg McKeown writing in what is probably my favorite book of the past several years, Essentialism, stresses the importance of playfulness to drive creativity:
Our modern school system, born in the Industrial Revolution, has removed the leisure – and much of the pleasure – out of learning. Sir Ken Robinson, who has made the study of creativity in schools his life’s work, has observed that instead of fueling creativity through play, schools can actually kill it: “We have sold ourselves into a fast model of education, and it’s impoverishing our spirit and our energies as much as fast food is depleting our physical bodies… Imagination is the source of every form of human achievement. And it’s the one thing I believe we are systematically jeopardizing in the way we educate our children and ourselves.” The idea that play is trivial stays with us as we reach adulthood and only becomes more ingrained as we enter the workplace.
When we play, we are engaged in the purest expression of our humanity, the truest expression of our individuality…Play expands our minds in ways that allow us to explore: to germinate new ideas or see old ideas in a new light. It makes us more inquisitive, more attuned to novelty, more engaged…Play broadens the range of options available to us. It helps us see possibilities we wouldn’t otherwise have seen and make connections we would otherwise not have made. It opens our minds and broadens our perspective. It helps us challenge old assumptions and makes us more receptive to untested ideas. It gives us permission to expand our own stream of consciousness and come up with new stories. Or as Albert Einstein once said: “When I examine myself and my methods of thought, I come to the conclusion that the gift of fantasy has meant more to me than my talent for absorbing positive knowledge.”
When more traditional thinkers look at startup culture – stocked pantries, ping pong tables, arcade games, frequent parties, kegs in office, open space for chatting – and express confusion, or even disdain, they are missing its root function: to cultivate fun; to cultivate play. There many ways to keep employees happy – health benefits, lenient vacation policies, etc. And those are also undoubtedly important. But they don’t promote playfulness within an office setting. Playfulness will drive creativity – and will drive extraordinary thinking.
It took me years to realize it but what made my friends so darn good at poker is that they were always having so much fun when they played. Looking back, I now realize that I played my best poker when I stopped trying to be technically perfect – and instead focused on the pleasure of interpreting puzzles and analyzing challenging situations.
When a group of people are engaged in creative thinking, they’re all, intrinsically, exposing themselves – their ideas, their thoughts, their essence. And the vast majority of ideas expressed in a creative setting are rejected – frankly, because they’re dumb. The catch is that the winning ideas may well actually be smart (although they’re often controversial) – yet they can only emerge in an environment where team members are comfortable being vulnerable, being dumb.
The firms and companies that can cultivate this culture have a shot at greatness. All others are playing for second place.