Solving Problems and Making Better Decisions (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 an update with you all for the next little while. A few weeks, probably. We're going to be republishing classic episodes of Founders Journal. Why? Well, first of all, these classic episodes I think are really good and many of you haven't heard them. And second, I've been spending a lot of time thinking about how we can evolve this show so it can be as good as humanly possible for the next generation of builders and entrepreneurs. And I'd love for you to help me as we think about what is this next iteration of Founders Journal. So once you've listened to this episode, shoot me an email to alex@morningbrew.com. And the prompt is simple: if you had your perfect entrepreneurship show, What would we be talking about? What are the biggest pain points you're dealing with? Who would I be talking to? Shoot me that email. Now, time for the episode. In today's classic episode, originally published on November 15th, 2021, I talk about a powerful mental model known as inversion. Let's hop into it. So what I'm going to start by doing is walking you through the typical way that I solve problems in business in order to introduce inversion, which is a third and really powerful way to solve problems and make decisions. Let's use Morning Brew as an example. If I was to pick something like, let's say, Morning Brew Education, which is a new but fast-growing line of business for us, here's how I would think about planning for the future of Morning Brew Education. I'd start top down where I'd say something along the lines of, okay, let's say we want Morning Brew Education to be a $6 million business in 2023, and today let's say it's a $500,000 business. What would need to happen to close that gap? I would say, well, there are several ways we could find that revenue. First option would be to take our one educational product right now, which is Morning Brew Accelerator. It's an 8-week, $1,500 offering. And I would say, how many cohorts do we need for the business to get to $6 million on its own just using the accelerator? And so assuming there are 150 people in a cohort, we would need 27 cohorts a year to get to $6 million. Now, the second option would be what new products could we introduce within Morning Brew Education? Say we think Morning Brew Accelerator can only get to $3 million without spreading the product too thin. I would then start thinking about what other offerings can we introduce into this line of business to close the gap, the, the remaining $3 million. And so what I do is work backwards from there and get to a plan that I feel confident about getting to $6 million by 2023, which probably means, say, $3 million by 2022 without diluting the product or the brand. And then what I do is that was tops down. I'd also think about it bottoms up. I would talk to the Morning Brew education team. I would ask them about ideas they have for expanding education at the Brew. We would probably run a survey asking alumni, people who went through Morning Brew Accelerator, What other products would get them interested in staying involved with Morning Brew Education? And basically what we do is we would start at the idea level with the employees and the customers that are most familiar with the education product. And then we would work up from there to ask ourselves, what mix of these ideas are we both most excited about and actually give us a real chance to grow the business to $6 million by 2023? So these are 2 very common ways of approaching decisions in general and in business. Understand your end goal, work backwards from there, either from the micro level, so bottoms up, or the macro level, tops down. But now I want to give you a 3rd option, and it's called inversion. Inversion is a way of thinking where you invert problems that you're solving or invert decisions that you're making. You just flip everything on its head. Said differently, you envision what would need to occur for failure to happen. Let me give you a few examples. So the Stoics, who I talked about in a recent episode when I talked about Stoicism, you should go back and listen to that. They pioneered inversion through an exercise that was called premeditatio malorum, which basically just means premeditation of evils. They would ask themselves questions like, What would need to happen to lose my job? And the answer would probably be something along the lines of showing up late or not being thoughtful before doing something or not being kind to customers. They would also ask things like, what would need to happen to become homeless or have my reputation ruined or suffer a bad injury? Now, fast forward from the Stoics and one of the most famous investors and billionaires of our time, Charlie Munger, who is Warren Buffett's partner at Berkshire Hathaway, he goes through the same exact process. And what he said is, it's not enough to think problems through forward. You must also think in reverse, much like a rustic who wanted to know where he was going to die so that he'd never go there. Many problems just can't be solved moving forwards. And he doesn't just use inversion in his investing approach. He also references it Any time he gives advice to motivated young professionals. So when they ask him, how do you achieve success? He simply asks back, what do you want to avoid? And that question is likely far easier to answer than how will I be successful? Obviously, you want to avoid being unreliable. You want to avoid being lazy. You want to avoid being untrustworthy in order to be successful. And that's why inversion can be so powerful and provide new perspective. All it does is it makes so glaringly obvious what the errors are that you need to make or the roadblocks that you would face to not be able to achieve your goal. And before I get back to Morning Brew Education, the example I was using earlier, without knowing it, we have always used inversion in our process for hiring at Morning Brew. So whenever we're looking to make a final decision about a candidate, We ask ourselves, if we had to fire this person 3 months from now, what would be the 1 to 3 most likely reasons why we had to do that? And sometimes I even ask that question to the candidate to see if they're thinking about what they need to do to succeed in the role. By understanding those 1 to 3 things that we must avoid, it makes it super clear if the person we're considering will likely commit those exact errors. Now, to wrap up with the Morning Brew Education example, here's what inversion would look like if we looked at Morning Brew Ed through that lens. Rather than asking the earlier question of how do we get to $6 million in revenue by 2023, I invert it and I say, what will cause us to fall short of $6 million in revenue by 2023? And there's a few likely answers that come to mind. And the first answer that comes to mind is there's not enough demand for the product, which makes me think harder about product-market fit and adequate marketing. The second answer would be us trying to do too many things and not having the capacity to execute our plan well, which makes me think harder about are we creating the right hiring roadmap that helps us or allows us to accomplish our ambitious plan? And the third thing that it makes me think of is Not having a realistic course load. So, for example, earlier I said we would need to do 27 cohorts of our Morning Brew Accelerator to get to $6 million in revenue. That's simply too much. And so what that makes me think harder about is, are we being ambitious but also being realistic? See, that's the power of inversion. It makes clear what you need to think hard about if you want to avoid failure. It's simply a new lens for looking at problems and decisions. So if you want to put it to the test in your own business or your own work, simply just pick a big decision like someone you're thinking about hiring or a presentation that you're giving to senior leadership and ask yourself the following question: What will cause me to fail? What will cause me to make the wrong decision in hiring someone and have to fire them? What will cause me to not give the presentation that I want to? What will cause me to not be able to sell through the idea I want to sell through. And in this decision or this career move or this problem, make an exhaustive list of the 2 to 3 most likely answers of what would cause you to fail. By the way, this is the beautiful thing about mental models in general, not just inversion. You don't have to just default to using inversion or some product thinking or top-down thinking. You can use a patchwork of these models when making important decisions. So you give yourself the best chance of removing blind spots when thinking through something. As always, thank you so much for listening to Founders Journal. I hope you enjoyed this one on inversion, and if you did, make sure to tune into all 6 episodes this week that are part of our 3rd miniseries on mental models. Also, make sure to pound the subscribe button for Founders Journal, whether it's on Apple, Spotify, or the podcast player of your choice. It is the number one way for us to grow our show. And if you do already subscribe, make sure to check out Founders Journal content on Morning Brew's YouTube channel. Just go to YouTube, search Morning Brew, and click on our channel. There you'll see an entire playlist of Founders Journal videos from how to deal with imposter syndrome to how we exited Morning Brew for 8 figures to why Ethereum matters. Thanks again for listening, and I'll catch you next episode.