Ego’s a very powerful thing. It can empower you to do things. But ego’s a very corrosive thing, which is that it can entrench you in a set of decisions that fundamentally are about outsider’s perceptions of you versus your true-north internalization.
We should all have ego, but we should not be ego-driven in critical decision-making. We should be unpacking our behavioral biases constantly, and finding ways of mitigating them. I think those are examples where that screaming red flag of things that are structural that just provide a very poor future forecast for that company’s ability. Even if you were to fix it, if you don’t fix that psychological tendency, that framework for decision-making, it’s going to fail.
I made $4.55/hour at Burger King, I’d get a $50 cheque, and I’d buy bus passes. That’s awesome, and I don’t ever want to forget that. I’ll go months and not remember that.
I started as a good, earnest person, and I need to stay a good, earnest person.
It’s very easy to end up really drunk with power.
I can give you a very elegant narrative now: I came to a point in my life where I was tired of checking boxes for people. I had basically been living my parents’ life. When I went to college, they basically helped me decide what college, what major.
In many ways I was repressed. I wasn’t myself. I didn’t have a particularly fun high school experience. My dad was the one who went to the guidance counselor and got me to skip a grade, but then I was smaller than everybody else. I graduated at 16, and my voice had barely broken, I had not even really gone through puberty. I never had a girlfriend. All this shit!
I graduated and got a job working at this bank, and we were in a really tough financial situation. I grew up on welfare. With this bank, you could make money, and so I went to this bank to make money. I was a derivatives trader, I did really well, and I learned two things.
One, is that I’m really good at risk. I know how to take risk, and I’m relatively fearless about money because I never had an attachment to money, because I didn’t have money. The second thing I realized about myself is that I would ask these questions about my surroundings and I could never get a good answer but I would be pushing it down. You know, the guy that I work with is a total douchebag, but who cares? I’m going to make $120,000.
Eventually I got to a point after my first year where I was paid well, I was able to pay off my student debt, and I had a really seminal moment. I was going in for a super bonus, on top of what I’d get paid, because I’d done something really good for [the bank] and I had made them money. I expected $300,000, or $400,000. My boss at the time paid me $0. And it was because he saw that I was getting too egotistical and superficial.
I broke down, and I was crying. I walked out of his office, crying, I walked into the bathroom. And I asked, what am I doing? He’s right, I’m wrong. I didn’t like the person I was becoming, and I was like, “I’m just going to stop checking the boxes that my parents were telling me to check.” And it’s not their fault. They came from this place where they gave up everything, and not only did they want me to be successful, but they needed to have social capital that they could trade with their friends to make them feel better about their decisions.
It was a very complicated time, and I just [decided to leave] and apply for any job.
Even when the smartest of the smart allocate 24 hours of the day, they can barely run a public company well. In fact, none of them can except one guy. Statistically, it makes no sense!
The only reason why this stuff happens is because of ego, and that’s a terrible way to make decisions. It’s a really good thing to have, we all need it to make ourselves feel valuable and feel confident in decision-making, but that is not what should drive the decisions.
Hollywood is the perfect example. You had a bunch of people, unbelievably ego-driven, ego-ridden, ego-filled. Power brokers, power mongers, betrayers, cajolers, all of these people sitting on top of what really wasn’t a huge industry. Kind of a meh industry, but it had a lot of social capital. To be a producer meant something. And then here you have this company of a few hundred people, now a few thousand people, who were like, “Yeah, I’m just gonna charge eight bucks a month and I’m just gonna completely fucking blow it up.” And so when it happens, it happens fast. And maybe we’re the version of the eight dollars a month.
We’re not there to be mercenary about it. We try to put our best foot forward and help people across the spectrum. But when ego overrides good decision making, I’m not going to sit there and not take an opportunity to just pound them into the ground.
Specifically in my group, what I would tell them all the time is, we need to do three things consistently, and repeatedly:
We need to measure things, we need to test hypotheses, and we need to try all kinds of random things — especially the things that may sound silly, or wrong, or stupid.
And the reason is because it allows you to take the ego out of running a company. Ego and arrogance are poisonous in building successful organizations. And so these three things, in my opinion, do more to create a culture of transparency and openness, where you can stumble into, and hopefully find, product leverage in a B2C company.
Company building is very difficult. Very, very, very, hard, especially if you think about this framework that I’ve talked about. If you’re going to build a successful company, by definition, it means that you have selected an area that is scarce. Which means that you will be alone. In order for you to thrive and to be successful, you have to eliminate ego. Because ego is what will cause you to second guess yourself. It will be the thing that then says to you, “Oh, I should actually do the more obvious thing.” And it’s very hard to do. And when you look at the great entrepreneurs, they’ve done an exceptional job, more than anything else, in eliminating their ego.
The second is invalidating lore. In a company, there are always anecdotes. People always believe they know the right answer. Some people will say things like, “Oh, we’ve tried that before, it didn’t work.” Other people will say, “Oh, I know what the answer is, it’s this.”
Most people, most of the time, are making things up. And that’s just the truth of most companies: Most people, most of the time, are making it up. And so if you’re really going to figure out how to build something successful, if you’ve figured out something scarce, and you apply this framework, not only do you have to do it without ego, but you also have to make sure that every time someone tells you the answer, and it’s not supported by facts and data, you have to invalidate it.
And the reason is because, it demonstrates to the rest of the company that you are a structured, sound, competent decision maker. And that you will not let your ego or emotion get in the way of doing the right thing. Even if you figure out the best business model in the world, even if you are the first to find a scarce resource… again, I look at our examples: Friendster and Myspace. Between ego and lore, it destroyed both those companies and yet Facebook is now the $400 billion company.
Google. Yahoo should have won search, Alta Vista should have won search, Microsoft should have won search… but Google won search.
Eliminating ego, invalidating lore, focusing on the “aha moment,” and then doing it. Again, the formula is simple. The execution, though, is always very difficult because it requires you to confront your emotions. And emotions can either be very empowering, or be what destroys most companies and people.
So I’ve said this before, I think it’s worth writing down, this is not meant to say that people are stupid. That’s not what I’m saying. What I’m saying is that, especially in the culture that we live in now, information travels so fast, people communicate so quickly… there’s a desire for people to believe that they always know what they are talking about. It’s rarely true. It’s not meant to be malicious, but the reality is that you have to be circumspect. You have to be skeptical, and you need to use data to validate.