Brian Gubernick argues that false certainty, not ignorance, drives poor business decisions. He uses prediction markets to show how assigning probabilities to outcomes, like a 65% success rate that still means 35% failure, helps leaders price risk instead of denying it and make better hiring and investment calls.
Chapters
Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. I think that most bad decisions in business do not come from ignorance or laziness. They actually come from what I would describe as false certainty. We, we say things like, this is, this is a sure thing, or I don't see how this is going to fail, or I'm confident that this will work. The real world though doesn't operate in guarantees. It operates in probabilities. I'm talking about probabilities today because I've been fascinated as of late with these various prediction markets. That have really gained attention. Maybe you've heard of Polymarket and some of these others. I'm, I'm fascinated by them, not because of the gambling aspect of it all, because there is this money-making component. I'm most fascinated because of how accurate they've been at forecasting real-world events. I want to, I want to talk about these prediction markets today. I wanna talk about what these markets teach us about how to think more specifically and how that can make us better leaders and business operators. If you don't know what I mean before I go into the podcast, you're unfamiliar with prediction markets, just go on ChatGPT or something and say, tell me about the prediction markets or tell me about Polly Market and you'll see exactly what I'm talking around. But I'm not diving deep into the prediction markets themselves. I just wanna talk about some of the lessons, you know, what these markets teach us about how to think. Prediction markets force one uncomfortable question. They force the question, hey, what are the real odds here? What are the odds, like really? Not how you feel or how badly you want it or not how confident you sound, but what's the actual likelihood of this occurring? And what would change it. Now entrepreneurs already live in probability, they just don't label it that way. Every hire you make, you are, you know, betting that it's going to work out. Every investment you make, you're probably optimistic and, and betting that it's going to play out favorably. Every expansion decision or new service or whatever it may be, You are betting that the probabilities are in your favor. Now we pretend these are yes/no decisions when in reality they're more like 60/40 or 70/30 or even 90/10 type of bets. See, the danger isn't the uncertainty. As entrepreneurs, we're willing to deal with the uncertainty. The danger though, in my opinion, is just not acknowledging it, not acknowledging that the uncertainty does in fact exist. Now, there's confidence versus probability. One of the biggest mistakes leaders make is confusing the two. One of the biggest mistakes leaders make is confusing the confidence with the likelihood. See, confidence is internal, but probability is actually external. In other words, you can be extremely confident and still wrong. At the same time, you can feel unsure, but still make a really smart decision. So when I look at the prediction markets as a guide, prediction market thinking forces, in my opinion, humility. There's a 30% chance this goes sideways, or this probably works, but not without risk. That kind of thinking doesn't weaken your position or weaken leadership or negotiation. It actually strengthens preparation because once you better acknowledge and admit that risk exists, you can then plan for it. So let me give you a, an example. We're gonna call this the 65% example. If something has a 65% probability of happening, That means what? It means it's more likely than not to occur, but it also means it still fails 35% of the time. Now, 35% of the time is not rare. It's actually pretty common, right? Like 3 out of 4 out of every 10 circumstances is failure. That's not considered rare. I think entrepreneurs hear things like 65% and act like it's guaranteed, But really successful operators hear 35% downside and, and plan a little differently. Or, you know, if you're unsuccessful, maybe you hear 35% and you kind of ignore it. Now, prediction markets don't let you do that. They constantly remind you, hey, this works most of the time, but not always. And that mindset changes how you structure deals and build buffers, pace growth, build contingency plans and response when— and how to respond when things don't go your way. Now, this applies in real life. It goes without saying. When you're hiring, there's a strong chance this person works, but what's our plan if they don't? How often do we ask that question? In other words, let's assign some numbers to it. If you feel great about somebody, maybe there's a 70% chance that it's going to work out. Well, there's still a 30% chance that it doesn't. So what's our plan if it doesn't work out? Or in investments, hey, what's the downside if this underperforms? Or in, in timing decisions, what would need to be true for this to fail? High performers, I think, don't necessarily eliminate risk, though we strive to eliminate risk. It's really difficult to do so. High performers don't necessarily eliminate the risk. What they do is price it in. They factor it into the equation. They don't say things like, "Hey, this won't fail." They say things like, "Hey, if it fails, here's how it would fail, and here's how I'll pivot." That takes a lot of maturity in business, in my opinion. So what's the core of this lesson? I think here's the real takeaway. These prediction markets that I'm describing, they're not powerful because they predict the future perfectly. They're powerful because they, they punish overconfidence, they reward accuracy, and they separate belief from probability. And I think that's exactly what good leadership requires. You don't need certainty to move forward. You just need clarity about the odds. So, here's your exercise for the week. Okay? I want you to pick one decision you're currently facing. Again, maybe it's a hire or a spend or a strategic move. Now, force yourself to answer this. If I had to assign odds, what are they? If I had to assign odds, what are they? Okay, so take that hire or that spend or that move you're going to make and assign some probability to it. What's the likelihood it works out? And therefore, the counter to that would be, what's the likelihood it does not work out? Once you've done that, I want you to then to ask, hey, what would have to happen for this to fail? I also want you to ask, what would meaningfully improve the odds? And then lastly, if I'm wrong, how am I most likely wrong? Now, I don't think you need perfect answers here. I think you just need to stop pretending that uncertainty doesn't exist. I think taking that step back and doing that analysis will— that alone will improve your decisions. So the best of the best don't guess better at scenarios, they think better. They stop asking things like, will this work? And they start asking things like, hey, what are the odds? And am I prepared for both outcomes? That's how you, you stay steady. And I think that's how you compound good decisions. That's how you lead your business, your investments, your family, your people in the real world. That's all I have for you today, the No Days Off Podcast. Thank you so much for listening, and remember, every single day brings a new opportunity to get better. So let's get after it.
