Mimetic Theory & Decision Making (Classic)

What's up, everyone? This is Alex Lieberman, co-founder and executive chairman of Morning Brew. Welcome back to Founders Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. I want to share a little update with you all. For the next little while, we're going to be republishing classic episodes of Founders Journal. Why? Well, first of all, I think these are really good episodes and there are a lot of new people who haven't heard them before. And second, I've been spending a lot of time thinking about how to evolve Founders Journal so that we can make the show as good as humanly possible for the next generation of builders and entrepreneurs. We are almost at what that evolved version looks like. We just need a little bit more time, and I would love your help as we dream up the future of this show. So once you've listened, shoot me an email to alex@morningbrew.com and tell me what you'd like to see from me, knowing that this is a show by entrepreneurs for entrepreneurs. That's the update. Now time for the episode. In today's classic episode, originally published on November 1st, 2021, I talk about why it is essential to understand mimetic theory and how it impacts the choices you make every single day. Let's hop into it. Mimetic theory sounds fancy, but all it means is that when people around you want something or do something, You want it or do it too. Human beings at our core are copycats. You see, the theory was created by this guy, René Girard, and it was popularized most recently by Peter Thiel, who is huge in the startup and tech world. René Girard was a French historian and philosopher who wrote 30 books, and he finished his career teaching at Stanford. That's how Peter Thiel met him. Peter, who is the co-founder of PayPal, Palantir, and Founders Fund. He was also the first outside investor in Facebook. He was a student of Girard when he was an undergrad at Stanford, and he actually spoke at Girard's memorial service after he passed away in 2015. So beyond this basic definition of all of us being copycats, Girard's theory goes on to say that everything, all of our behaviors, every decision we make in life, All of them are imitative. Only by observing others do we learn and know what to desire. And as I think about it intuitively, it makes sense, right? We all need shortcuts in life. It's what allows us to navigate this ever-changing world without being overwhelmed by making millions of decisions per day. Think about if we had to make every decision from scratch and then every decision we've already made, we had to make that decision again today, we wouldn't be able to function in society. We don't question every day why we're brushing our teeth or drinking water or getting out of bed. We did the behavior because we were taught to do it. And now the shortcut has been established where we don't need to question doing it every day moving forward. And how mimetic desire works is we look to our circle of people, people that we trust, which are ultimately the people we aspire to be like. And we leverage that trust to make decisions quicker because we don't have to go through the process of thinking for ourselves. And so to push this forward, Andrew Wilkinson, who's the founder of Tiny Capital, which owns dozens of software businesses, he wrote a thread on mimetic desire and gave a few really good examples of what it looks like in real life. First example. When you're at a bar with friends, you're going to order a beer or some other drink, and then your friend who's with you decides to order a martini. All of a sudden, nothing changed except you decide to switch and do the same. That's mimetic behavior. Or in business, your friend is raising money for their startup. They decide to go the venture capital route. You also have a business, but rather than raising, you've been bootstrapping your business from the ground up and funding it with profits from the business. All of a sudden, after hearing about your friend raising, you start questioning yourself and all the choices you've made with your business. You ask, why was your friend able to raise money? Should you have raised money like them? Maybe you should think about raising around now. Wow. The valuation they got raising from VCs was crazy. And unless you're deeply self-aware of your beliefs and the impact of mimetic desire, you don't realize that the things you choose to do are often so driven by those that you surround yourself with. People decide to start many businesses, multiple businesses. People decide to be serial entrepreneurs because they see people on Twitter also being serial entrepreneurs. People decide to be in long-term romantic relationships because everyone in their friend group is in a long-term romantic relationship. People decide to no longer really like an employee at their company because a few of their close friends or colleagues shared their frustrations recently about this employee. Mimetic behavior is everywhere, and while it serves a purpose, there are very real challenges created by imitation. When used appropriately, it can propel us forward, inspire our decisions, and provide much-needed shortcuts. But when abused, you end up living the life of others. Your life becomes infested by comparison, one-upmanship, and externally driven decision-making. Let's take it back to Peter Thiel for a second. Girard's theories on mimetic desires are actually what inspired Peter Thiel to get into startups and investing in the first place. Prior to being introduced to the ideas, Peter Thiel was on track to become a lawyer. He worked as an associate for Sullivan and Cromwell in New York City, where the hours were crazy and everyone was competing against everyone else. And when Thiel left the firm just 7 months after starting there, one of the lawyers on the floor said to him, you know, I had no idea it was possible to escape Alcatraz. Obviously a crazy thing to say. But yes, this happened in the context of corporate law. But honestly, you could name so many other industries like banking, sales and trading, financial services in general, where the same conversation would happen. This just shows the psychological hold that imitation has on all of us when our identity is so defined by competing with and comparing ourselves to others. And Girard's theories actually not only informed Peter Thiel to leave his job in law, it informed a ton of his business decisions that he made after switching careers. When he was the CEO of PayPal, Thiel set up the company structure to eliminate competition between employees by overhauling the entire org chart every 3 months. Employees were evaluated on one single metric, and also no 2 employees had the same metric. This is obviously pretty crazy and unconventional and out there. But what this policy did is it tried to attack the heart of mimetic theory, which said that when we're driven by comparison and 2 people fighting for the same scarce resource, one person will always end up unhappy. And mimetic theory is also why Thiel invested in Facebook. He invested $500,000 in Facebook because he believed social media was the culmination of René Girard's theory. He described the company as doubly mimetic because Facebook spread by word of mouth on Harvard's campus when students were telling other students about it. But also the product at its core is all about human beings sharing their word of mouth. We are all victims of mimetic desire, and Thiel was just smart enough to embrace that fact. I am as guilty as any for being pulled by Girard's theories. For the first 21 years of my life, I was on a path to become a trader at a bank, not because I knew what that meant or if I would be any good at it, but because my role models, my mom, my dad, my grandpa all did this and my barometer of success was anchored to them. So where does that leave us if we're all guilty of imitation? How do we leverage the good of it and make smart decisions quickly in life, but navigate the bad of tying our identities and therefore our happiness to other people rather than our own intrinsic drivers and knowledge? I think the answer is twofold. The first answer is relatively easy to accomplish. The second answer is extremely difficult. Let's start with the first. The answer that is easy is understanding the aspect of decisions that we make based on our thoughts or other people's thoughts. For example, let's say we're looking to hire someone at our company and you're about to interview the candidate. The person before you who interviewed this candidate comes to you and says they really like the person. How do you know if you really liked the candidate because the other person did, or if you actually really like them genuinely yourself? I think when it comes down to dissecting your thought process, you can literally map it out. I can map out why I thought the person was a good candidate. I thought they were a good fit for the job because they possess these 2 strengths that are essential to do the job well. They are motivated by this one thing, which I think will get them to work super hard. And they have these 3 traits that I think will make them a cultural fit. At the same time, to be intellectually honest, and this is what Peter Thiel is known for, is taking both sides of the argument. You should list out why the person is not a good candidate and what would make you wrong in your decision-making if you decided to hire them and had to fire them down the road. Now, the other answer to the question is, how do you combat the negative of mimetic desire is really hard because you don't just make decisions in your life, in your career, with employees based on thoughts. You also make them based on emotions and feelings. I went into finance because I was excited to be a trader. How did I know that I was excited because of my own intrinsic desires, or I was excited because I was driven by what my parents did? Knowing what is the source of your feelings is really, really difficult to triangulate. And the best answer I have for how to identify it is time. I believe that things that intrinsically drive you stand the test of time and you maintain your level of excitement long term. Whereas when you are driven by other people's choices and desires, your level of happiness or fulfillment wane because the thing you're doing is drawing energy from you rather than giving you energy. And the thing that gave you energy in the first place wasn't the act that you're doing or the decision you made. It was the person you were imitating in making that decision. And so this is René Girard's mimetic theory, which has been popularized by Peter Thiel. And I just think it is so incredibly important, whether you are a builder of a business, whether you are building a team in a company, or whether you're just starting your career, to understand that all of us are plagued by mimetic desire. It serves a function for us in life. But there are also challenges and negatives that are associated with it. We need to understand that it exists, and we need to understand how to identify when our decisions are made based on imitation versus intuition and what intrinsically drives us. With that, I would love to hear from you. As I mentioned last episode, the episode before that, and the episode before that, this show has been growing like crazy. It is wild that Founders Journal has become as big as it is today, and we just have a ton of new listeners. With that, I want to learn as much as possible about this community. So if you just started listening to the show or you've been listening for a while and you've never written in, I implore you to do so. Shoot me an email to alex@morningbrew.com or DM me on Twitter @businessbarista. Tell me who you are, what you do, and why it is that you choose to give your time to Founders Journal versus do anything else. Finally, if you enjoyed this episode and you want more of it, please pound the subscribe button on Apple, on Spotify, or whatever podcast player you listen to the show on. It is the number one way to grow the podcast. Thanks again for listening, and I'll catch you next episode.