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Hey, this is Sharon Srivatsa. Welcome back to the Business School podcast.
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And in this episode, I'm going to tell you about why failing is normal. It's even cool because companies say things like fail fast, but our brains are wired in a weird kind of way. I actually made a YouTube video that breaks down how to think about this. Why we make these weird decisions and simple ways to fix it.
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These are the things that we should
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learn in school, like algebra or tying our shoelaces, but we end up learning them the hard way. If you actually want the YouTube version, I break it down visually. The team did an awesome edit, but I made this audio version so that you can listen to it on the go. I break this down step by step, starting right now.
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One thing is for certain, just because it's tried and true doesn't mean it's working right now. So the big question is this. Where can you learn what is working right now? The strategy, the tactics, the psychology, and the exact how to how to grow
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your business, how to blow up your
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personal brand and supercharge your personal growth. That is the question and this podcast will give you the answer. My name is Sharan Srivatha and welcome to Business School.
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Here's what most people get wrong about failure. They they think it starts with a bad decision. But that's just the symptom, not the root cause. Failure starts with fear. And fear has three forms. Each one has a different trigger, each one has a completely different cost, and each one requires a different tool to fix it. Let's start with the first one. The first reason people fail is the fear of exposure. And I want you to understand something about this. Fear is a feeling. It makes you clam up. It makes your heart raise. It sounds like negative self talk that we have heard before. Things like, I'm not ready yet, or I just need a little more time or I'll do it when I know more. That's what fear of exposure sounds like. It doesn't sound like fear when you phrase it like that. It sounds like patience. It sounds like preparation. Heck, it even sometimes sounds like wisdom. Not always, but in many cases, what we're actually saying is I don't want anyone to see that I'm not good enough. And that pushes us to avoid situations where our weaknesses might be visible. It's totally normal. You and I are human after all. The moment you stop yourself from doing something because you're not sure or because you don't feel ready is the moment where failure begins. Let me tell you about when I was trying to get a job at Goldman Sachs. I did 39 one on one interviews to get that job. And every single one of them, I walked in thinking I was going to be exposed as someone who didn't belong there. I had no fear finance experience. I barely knew what investment banking was. I had no prep school or hedge fund or Wall street pedigree. And every interview felt like they were going to figure that out. But here's what I learned. The fear of being found out never really goes away. You just learn to become more and more comfortable with who you are and what you can bring to the table. And as these interviews happen, I felt more and more comfortable. I got the reps in and the reps break down. The Fear Let me tell you about Oprah for a moment. Because she faced this exact type of fear early in her career. She was co anchoring the news in Baltimore, and then she got demoted within months. She admitted later that she had a fear of being disliked. She viewed that demotion as a horrible failure. But here's what she did. She didn't fight for that anchor chair back. She took a daytime talk show instead. And in that format, the exact qualities that got her demoted from the news, like her empathy, her emotion, her willingness to be vulnerable, became the very thing that resonated with millions of people. The weakness they demoted her for, became the foundation of a $2.5 billion empire. Even over a decade later, she was still fighting the same fear when it came to building the Oprah Winfrey Network. She called it the worst period of her professional life. But instead of hiding from it, she addressed the fear and acknowledged the mistakes. But publicly, both times, Oprah could have hidden her weaknesses, and both times she didn't. It paid off at a scale nobody could have guessed. The big question is, if this happens to you, what do you do? So here's the first tool to break the fear of exposure. Don't tell yourself to be brave. That's ridiculous. That doesn't work. Affirmations are cool, but they don't work when the stakes are high. Instead, build what I call the graded exposure ladder. Because it's all about the stakes. There are three steps. Low stakes, medium stakes, and full exposure. Let me give you an example. Say you are a content creator and you're afraid of being judged on your content. That's very normal. You're probably judging me right now. Step one, low stakes. Write the post or script it and send it to one person you trust. Not for approval, just to get a friendly reaction. Step two, Medium stakes. Post it in a smaller channel first. Maybe a newsletter or a private community or closed friends story. You get a little feedback before you go much wider. And step three, Full exposure. You publish it to your main platform. Heck, you can always take it down, right? But by the time you've hit step three, you've already survived two rounds of judgment and the content is better because of it. The latter works because fear shrinks when you approach it gradually instead of waiting for it to magically disappear by shouting affirmations. Here's the second tool for fear of exposure. Instead of forcing yourself into a decision, decide when you're going to make the decision. This separates the stress of the choice from the stress of the timeline. Let me give you an example. Say you're a founder and you found someone who could be the next right hire. But it's more money than you've ever paid anyone. You'd have to take a pay cut yourself in the short term. And you've never made a bet like this before. You know you should do it, but something about it is stopping you. That's normal. It's not a red flag about the candidate. It just means that the bet is big. So here's what you do. You decide when you're going to decide. You keep the candidate warm. You tell them about your timeline for the process, and then you give yourself the 10 days that you actually need to sit with it. You run the numbers again, and you make the call. The stress usually isn't the decision. It's the feeling that you should already know the answer. The deadline gives you permission to not know. Yet remember, instead of forcing yourself into a decision, decide when you're going to make the decision. So once you can identify how the fear of exposure works, you need to understand how the second one operates. It stops being about what others might see, and it becomes about what you might lose. The second reason people fail is the fear of loss. This is not about losing money or material things. It goes to the heart of who you are. This is when the fear of losing what you have becomes stronger than the opportunity to build something better. Let me tell you a story about when I first arrived in America. I had $100 to my name and my meal plan at college had not kicked in yet. So I wandered through every pizza party on campus to see if I could get food for the day. And when the parties ran out, I was one day walking by a dumpster and I saw two people drop pizza boxes into this dumpster. Having not eaten for a while, I Jumped in the dumpster, grabbed the pizza boxes and ran to my dorm room. And it happened again the next day. And this time I saw a Subway sandwich being dropped in the same dumpster. And when I jumped in the dumpster to grab the Subway sandwiches, I also saw a box of Pop Tarts. Right when I was grabbing the sandwiches and the Pop Tarts, something smacked me in my face. I realized that there was a raccoon in this dumpster fighting me for this box of Pop Tarts, not knowing what to do, fight or flight kicked in. And I grabbed the Pop Tarts. I grabbed the Subway sandwich as I climbed out of that dumpster. And then I sat on a bench, bleeding a little, eating my Subway sandwich and holding onto my Pop Tarts. But when I was sitting on that bench, I made a promise to myself that I would build something for myself so that I would never have to feel that way ever again. Now you might say, well, Sharon, what does a raccoon and a dumpster have to do with the fear of loss? Here is the connection. Fear of loss isn't just about the thing you might lose. It's also about protecting the status that comes with it. That night in the dumpster, I was a 16 year old kid that nobody really knew, meaning I had no status or no reputation to protect. But looking back, here's a big lesson that I learned. People are afraid to fail because they're always protecting something. Sometimes it's a title, maybe it's their reputation or just a feeling of status. So when the moment comes to make the change that is good for them, they end up waiting or hesitating. They tell themselves they'll do it when the time is right. Or my favorite, when they have more information. We often forget that the doors of opportunity don't stay open forever. In fact, let me give you a perfect example. The fear of loss isn't isolated to people. It can destroy businesses too. In 2007, a Nokia engineer showed management a working prototype of a full touchscreen phone. And do you know what the response from management was? Oh, interesting. But that's not how phones work. By 2013, their cell phone division was sold to Microsoft for a fraction of what it was worth. Many people think that Nokia lost to Apple because Apple had a better product. But Nokia actually lost because their leadership refused to change. The fear of loss wasn't losing their product. It was about protecting their identity. Because accepting that the strategy was wrong meant admitting that they were wrong. In fact, Netflix did the opposite. In 2011, Netflix split their DVD and streaming business and raised prices. Their stock dropped 77%. But streaming was where the media industry was headed. Hindsight is definitely 2020. We can see it now, but nobody has a crystal ball. Back then, people only see the decisions we make and not the choices we had. Netflix didn't spend time trying to protect their identity as a mail order DVD company. They chose to create a new one. Which is why all of us have a Netflix account today. Ask yourself, if I did not already own this, or build this, or identify with this, would I choose it today? This breaks the sunk cost logic. It forces you to evaluate forward, not backward. Let me give you an example. One of my clients at Goldman Sachs was selling his company to Google. He was not going to get any cash, but he was going to get over $100 million in GOOG. This was his life's work. This would obviously create generational wealth for his family. At that time, Google stock was volatile. So I suggested that he consider some protections in case the price dropped. He refused. He was so bullish on Google and he did not want to hedge his position. This is when I asked him one question. If you got $100 million in cash today, would you put all of it in Google stock? He paused. The answer was no. That's the zero base question. It strips away all the emotional attachment to how you got the asset and forces you to evaluate whether you choose it again. Right now, you may have to ask yourself this question often, not just once. Every time you're holding on to something you're not sure of, run the zero base question. Here's the second tool. For fear of loss, before you commit to anything significant, write your exit conditions in advance. I call this the kill criteria. Your job is to decide what evidence would make you stop, meaning at what point you walk away. Regardless of how you feel. Say you're a business owner and you don't have enough leads. You've heard about running paid ads on YouTube or Facebook. You've never put this much money into ads before and you're not sure if it's going to work. So you give yourself a kill criteria. You write down something like this. If I spend $10,000 and don't see at least 50 qualified leads, I'm going to stop. This was just a random example, but it illustrates the point. Once you set the kill criteria, you have to go all in. You have to do the work, you have to learn the skill. Because now you've given yourself a way out even before you started. The kill criteria isn't permission to quit. Early, it's permission to commit fully, because you already know what would make you stop. You've got to give the world a chance to work for you. Here's the third tool for fear of loss. Use a question that creates distance from the emotion and tells you what's actually true. The format is what would need to be true for blank. Let me give you an example. Let's say everyone around you wants you to start a podcast, but you're not sure if that's the right idea. You have friends who started a podcast and quit, and you know that the average podcast makes one to four episodes before it dies. You're not sure if it's going to work at all, but you're willing to give it everything you've got. But you're still afraid. So you ask yourself, what would need to be true for me to consider this a success? And then you write down the answers. Maybe it's 10,000 downloads in the first six months. Maybe it's landing three guests who open doors for your business. Maybe it's building a body of work you're proud of, regardless of the numbers. And you give that list to your podcast manager. Those become your goals. That's what you focus on now. You're not chasing a vague idea of is it working? You define what success looks like before you even started. Now, once you understand how the fear of exposure and the fear of loss work, there's one final form, and this one is probably the most expensive. The third reason people fail is the fear of error, meaning you don't want to mess up. This is when protecting your credibility becomes more important than correcting the mistake. You become fearful that if you admit you are wrong or made a bad decision, you would lose credibility. So instead of correcting the decision, you defend it. It's hard to accept the mistake and easy to make excuses to defend it. We even find new and creative reasons to make it make sense. And meanwhile, the mistake just keeps sitting there, getting bigger, getting more expensive. And it messes with us emotionally, like we're carrying this heavy load. Here's what I know. Protecting your identity will always slow you down, because the effort that should be going towards fixing the problem is going towards defending the person created it. So here's the first tool to break the fear of error. It's called the After Action Review, and I learned it while working with the US Navy. After any mission, you run the AAR by asking four simple questions that everyone should memorize. Number one, what was supposed to happen? Number two, what actually happened? Number Three, was there a gap? And number four, what will we change next time? Let me give you an example. Say you're a founder and you just lost a key hire. You made an offer to a candidate you wanted badly. They turned you down and went to a competitor. And here's a kicker, they even took lower pay to go there. Within 24 hours, you run the AAR, the After Action Review. Number one, what was supposed to happen? We were going to close this candidate with a competitive offer and had a compelling vision for this role. Number two, what actually happened? Well, they took less money to work somewhere else. Number three, what was the gap? We found out later that the other company offered a one day hybrid work from home because of childcare. And we never asked about logistics. We just assumed that it was just about compensation and title. And number four, what will we change next time? So in the first conversation with any candidate, we ask, hey, is there anything logistical that would make taking this job easier for you? Like childcare or commute or travel or schedule or whatever it is? That seems like common sense. But common sense is not always common practice. Especially when it's personal. People feel embarrassed to bring it up. Solving for the logistical things makes taking the job frictionless. And sometimes a logistical thing is the whole decision. Here's the second tool for the fear of error. Every expensive mistake must buy us a principle. Instead of looking back at a tough situation and saying, yeah, I learned my lesson. We end with something concrete. A new checklist, a new decision process, a new framework, a new metaphor or story or a quote. We do that to lock in the learning. If the mistake didn't produce one of these, you kind of didn't learn the lesson. There's this great quote that says lessons in life will be repeated until they're learned. Let me tell you about a mistake that cost me a million dollars. So I made a million dollar investment. After what I believed was pretty good due diligence. I consulted with the company for six months. The business owner paid me for the consulting. I met the employees, I visited the offices, I examined the tax returns and had a specialized attorney draft the right contracts. To be clear, I was a banker at Goldman Sachs. I've run $2 billion companies. I have made over 100 plus investments. For all practical purposes, I am a professional investor. But I found out after the fact that the company had two sets of books. I had been conned big time. The CEO disappeared. I even hired a private investigator to try to find him. The money was gone. By the way, nobody wants to lose A million dollars. The harder thing was what it meant about my judgment. I'm a professional investor. That was my identity. Getting completely fooled was not something I knew how to handle. It totally messed me up, and I lost my confidence. And as an investor, I didn't even want to tell my wife, partly because I had to take responsibility for being conned and partly because saying out loud made it very true. But when I did, she asked me one question. She said, what did you learn? That question hit me harder than I thought. Instead of defending the loss or burying it or making excuses, I actually built something from it. I built this framework called the Four Goods. And every investment I've made since then runs through it. Let me tell you about it. Number one, good people. Did you vet the person and their background? Number two, good intentions. You can't make a bad deal with a good person, so you have to find out their intentions. Number three, good rationale. Every deal must make sense on a spreadsheet. Number four, good contracts. When everything else lines up, writing up the contract is the easiest part. If any of these four are missing, the answer is no, regardless of how compelling it looks. It took me a million dollars to build this framework for myself, meaning the loss paid for itself. Here's one more tool I want to give you. Once you extract a principle from a mistake, anchor it to something that you'll remember, like a movie scene or a quote or a picture. Something that triggers the lesson instantly so you don't have to relearn it every time. Let me give you an example. One of my friends invested in Dogecoin when everyone else was piling in. My friend lost a lot of money. He was upset about it for a long time. He kept replaying that decision. He kept beating himself up. Then one day he. We were watching the movie the Matrix together. There's a scene where Morpheus is training Neo and a woman in a red dress walks by. And Neo gets distracted. And Morpheus freezes the simulation and says, were you listening to me, Neo, or were you looking at the woman in the red dress? My friend turned to me and said, that's exactly what happened. Dogecoin was the lady in the red dress. And from that moment, he had a trigger. Every time he feels the Shiny Object Syndrome, he asks himself, is that the lady in the red dress? That one reframe has saved him from three bad investments just since then? That's what a good principle does. It gives you a pattern you recognize instantly so you don't have to relearn the lesson every single time. Here's what I want you to take away from this Fear is not the problem. Everyone has fear. The people you admire have fear. The people who built great companies have fear. The athletes who win championships have fear. The difference is they learn what to do with it. It may sound like courage, but it's actually learned behavior. It's just a skill. And just like any skill, you can learn it. Because the fastest way to stop being afraid of something is to get good at it. Hey, if you want more frameworks like this, I break them down every week on my substack called My Next Billion.
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Hey this is Charan. I have an awesome free gift for you. You just for listening to the podcast. As you may know, I've got a chance to build 2 billion dollar companies the hard way. So if you like this episode, you will love getting the exact playbooks from those wins. It's on my sub stack called My Next Billion. It has the exact frameworks I wish someone had given me when I was figuring it all out. Now you get the real lessons from the trenches as I go for a three peat and build the Next Billion. So Everything's free@mynextbillion.com Please check it out. My nextbillion.com.