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The Tim Ferriss Show | When to Quit — Lessons from World-Class Entrepreneurs, Investors, Authors

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The Tim Ferriss Show | Episode 254 | When to QuitÔøΩ Lessons from World-Class Entrepreneurs, Investors, Authors, and More

Tim Ferriss | Photo: source

Tim Ferriss

[00:03:55] Hello, boys and girls, ladies and germs, this is Tim Ferriss and welcome to another episode of the Tim Ferriss Show where it is my job to tease out the habits, tools, tactics, routines, favorite breakfasts of some of the world's greatest performers whether they are leaders, athletes business icons, chess prodigies, military strategists, or fill in the blank your favorite category.

This particular episode is one I am very excited about. It is an experimental format. It does not focus on the lessons of one particular person; instead, it shares the tips and tricks of multiple people on one topic. So you consider this the first ever roundtable conversation on this podcast. Now, I would love your feedback so please let me know on Twitter @tFerriss, T-F-E-R-R-I-S-S, what do you think of this, 0 to 10 how much do you like it, what would you change, etc. And here's how it came about. Some time ago, I prompted subscribers to my 5 Bullet Friday newsletter, which is free. Every Friday, I sent out a very short email with 5 bullets of things that I am reading or that I've discovered experimenting with, etc. It could include supplements, articles, books, who knows? I find a lot of weird stuff that I end up enjoying and if you want check that out, you can sign up, it's always free. It is just tim.blog/Friday, so check it out, tim.blog/Friday. And I solicited questions, these were up voted and one of the most up voted questions was one that I struggled with, and this is from JF Curns, here's the question, "Where's the line between stubbornly pursuing an idea which isn't working and the patience and persistence needed to actually make it work?" In other words, when should you give up versus when should you push on?

And I thought about how I would answer this and I realized I actually struggle with this, so rather than make up some bullshit and just play that off and give my own response, why don't I reach out to a number of people I think would have better answers to this? And that's exactly what I did. So I took that question and I sent it to a number of friends of mine and past guests on the podcast and they dug into it. So when should you quit? When should you persist? When do you know if an idea, or how do you know if an idea is a bad idea that just isn't going to work versus a good idea that you haven't made work yet? So, the first person we're going to start off with is Scott Belsky, he is an investor and entrepreneur best known, perhaps, for co creating Behance, an online portfolio platform. In 2010, Belsky was included in Fast Company's 100 most creative people in business list. Then, you'll learn from 17 time, I think it is, best-selling author Seth Godin and then we have hedge fund manager, author, entrepreneur James Altucher; Debbie Millman, who's episode on this podcast is still one of the most downloaded of all time; Adam Robinson, the co-founder of the Princeton Review and adviser to some of the masters of the universe out there and then we have the incredible photographer and also CEO Chase Jarvis, and many more.

So, I am excited about this, I hope you enjoy it. Let me know what you think of this format @tFerriss, on Twitter. One quick house cleaning point, this is very, very important for any of you who receive 5 Bullet Friday or subscribe to any of my email. Here it is, I clean my email list every 6 months so that email service providers know I'm only emailing people who really want what I am sending because you gotta remember, it's not the size of the list that counts, it's how you use it. So, if you subscribe to any my email and you want to keep receiving them, please open a recent message from me and click on any of the links within, doesn't matter which. I'm gonna be doing a big purge soon, getting rid of people who have been getting a lot of emails and not opening any of them because it's just crowding up your inbox and it's a waste of everyone's time. So, I'll be doing a bitch, big, I'm doing a bitch purge. That's not what I was gonna say. I'll be doing a big purge soon, getting rid of people who are not opening email and removing folks from the list. So, if you are interested in still getting those, please just open one of my email, doesn't really matter, a recent one, and click on any link and that will keep you subscribed and if you're interested in checking out what more than, uh, I suppose at this point around a million people get every Friday, check out 5 Bullet Friday at tim.blog/Friday.

Okay, back to the episode, this one covers a wide range of stories and lessons and will ultimately, I hope, help you determine when to keep pushing forward and separate that from when it is wise to quit. And I did this one for myself as well, so enjoy.

Scott Belsky | photo: source

Scott Belsky

[00:08:41] Hey, Tim. It is Scott Belsky, entrepreneur and investor, responding to your question about when to keep going and when to call it quits. I've been thinking about it, there are many times in the middle of any bold journey where the ambiguity and the self-doubt and endless iteration get you down and really make you question, uh, everything. It's especially hard before you have any customers before anyone even knows what you're building. I always like to say that, uh, anonymity is both a blessing and a bitch. It's a blessing in that you can play and iterate as if nobody is watching, it is a bitch because nobody is watching because nobody cares. Every journey is like, to some extent. So you can't quit because of it. Hardship means you may be doing something special and creating something defensible from competitors and copycats. The question, I think, is, is whether or not the difficulties are making you question your core assumptions and belief in the final vision or if they're just getting you down.

I guess the trick is to separate the hardship in tough times from what you're learning. If you're learning that your assumptions were wrong, that customers don't want your product and that you're potentially building something, uh, you know, in the wrong space or just building the wrong thing, then you should ask yourself the classic question, knowing all you know now, would you pursue this, this project all over again? Would you invest the money and energy you have invested to get as far as you've come in solving this problem? Or, knowing all you know now, would you just do something different? If you still believe in the vision, and well, impatient with progress and deflated by the process you still have conviction, then don't quit; keep on trucking. You are just having some of those mid-journey blues. You know, society's immune system is trying to squash you, don't let it, keep going. But, uh, but if your answer is, "Hell, no," if you're, if you're, if you think, "Jeez, you know, if I can go back before I got into this mess, there is no way I would head into this direction," then ask yourself why are you still trying? Are there sunk costs keeping you from quitting? Are you overvaluing the plan you have only because of how much you've invested in it so far? I have heard the human tendency behind this is referred to as divestiture aversion or, more simply, the endowment effect. You know, we have this tendency to disproportionately value things just because we own them, regardless of how you got them. And I think you're liable to believe more in your vision and hold on dearly to the progress you've made thus far because of all you've invested in it.

I find the, uh, "winners never quit" mantra to be very elementary because I think it goes against what we've learned from many successful startups that have pivoted from their original vision, you know, with great successÔøΩ Twitter, Pinterest, and Airbnb to name a few. If you've lost conviction but refused to change because of past progress you've made or past investments from others or just investments from yourself, then you've become misaligned with your own vision. You're officially doing things for the wrong reason.

So I guess to sum it up, if your conviction remains, if the vision is still something that gets you all giddy and teary eyed, don't let the incremental obstacles and setbacks push you to quit. , you know, instead, use these periods to build muscle. Um, I remember and will never forget, even if I want to, uh, the bootstrapping years of Behance where I encountered this quite a bit. , you know, doing, uh, being just a, a few months away from running out of money and having tons of fits and starts because, honestly, didn't have the right experience and expertise on our team to get it right the first time, we felt being done quite a bit. But the, the division of organizing the creative world's work never got less interesting. You know, despite all these hardships, I don't think we ever lost conviction in, you know, what that might look like, you know, and getting excited about it. So we just got tired and despondent a lot, uh, while trying to achieve it but we never, we never really lost that conviction. Um, so we didn't quit, we just tried to learn how to become more resilient. You know, when we were low on cash, we tried to become more resourceful. We had a saying on our team, you know, whenever we wanted to hire new people, "Refactor, refactor, and then hire." And we became super fucking resourceful as a small team and this definitely made us stronger. But, always keep asking yourself, "Do I still believe in the vision here?" Would you embark on the same journey if you knew everything, you know, that you know now? If the answer is no, save yourself the struggle by making an inflection sooner or quitting and trying something entirely new. Don't just stick with it for the sake of it. Only put up and put in the hardship, uh, when you've got enough conviction. Hope that's helpful.

Seth Godin | photo: source

Seth Godin

[00:13:24] Hey it's Seth Godin and I might be the only person you know who's written a bestselling book about quitting. It's called The Dip and I'm gonna explain it to you now. There're two big ideas and the first one is this, things that are scarce are more valuable and creating something that's scarce is difficult because if it was easy, it wouldn't be scarce. So, what we have is a situation where lots of people start a project and then, they hit the dip. The dip is the thing that makes that project worth doing in the first place. So, for example, consider the case of doctors. To be a doctor, you've gotta go to the medical school and the dip in medical school is organic chemistry. Organic chemistry is designed to winnow out people who aren't going to make it the rest of the way. If it weren't for organic chemistry, there would be a lot more doctors and if there were a lot more doctors, being a doctor wouldn't be as valuable. Or, consider the case of washboard abs. Many people aspire to have them, but they're difficult to get. So lots and lots of people join the gym in January, to much glee and celebration, but by February, half of them have quit and by March, half of the rest have quit. Why? Because it's hard. And the only people who get out at the end have made it through the dip because they didn't quit.

So, the first lesson we take away from this is that it doesn't make sense to repeatedly start projects and quit them in the dip because you're wasting an enormous amount of time. If we think about it from the point of view of a company, a company like Amazon worth $7 trillion or whatever it is today, how many of you were their customer the first week or the first month or the first year or even the first decade? That what happens is, it's fun to start a company because you've got nothing but blue skies and then it gets difficult. In the case of Amazon, it got difficult when those headlines were Amazon.toast and it was never gonna work, but they persisted and they made it through the dip and came out on the other side. Their competitors didn't have the temerity and the stamina to make it to the other side, that's why it's so valuable to be Amazon.

Okay, so I said that was the first thing. What's the second thing? The second thing is that knowing the difference between a dip and a cul de sac or a dead end is critical because persistence alone doesn't guarantee success. That persistence is one of the requirements, but so is a smart strategy and generosity [inaudible 00:16:10], so is doing something that might work. Too often, we find someone stuck in a cul de sac because they don't have the guts to stop because they're telling themselves the story that winners never quit and quitters never win, which is baloney. Everybody who's a winner has also quit. You don't see many high-powered, 50-year-old executives walking around in tutus. That's because they took ballet when they were 4 but they quit. We don't do everything forever; we have to give up some of those things to get the energy and the resources we need to get through to the other side of the dip.

So I think we can all agree that cigarette smoking is a dead end; that it leads to emphysema and death. It makes sense to quit, there is no dip when it comes to cigarette smoking. But it may also be said of your freelance career or it may also be said of this huge plan you have to change the world. And you've gotten those emails as much as I have, Tim; those plans to change the world like a thresher through a wheat field, like a hot knife through butter, if only, if only, if only, if only and the poor person has been doing it for 7, 10, 12 years because they think they're in a dip. They're not; it's a dead end. And how do you tell them apart?

Well, I am afraid I cannot give you a map, but I hope I can give you a compass. How do we tell them apart? We tell them apart by, first, understanding that someone else must've gone down this road before us. The chances that you will be the first person, the first human to get through this particular dip are very, very low. So it makes sense to put your resources into projects where others, on similar projects, have gone through a dip. If there's no one who has, then yes, go be a pioneer and I'm cheering for you, but it's a low profile way to move forward.

The second thing is to ask yourself do you have more assets than you had a week ago or a year ago? Is it adding up? Is there forward motion? So back to the Amazon example, every day, Amazon had more customers than the day before, every single day. That's forward motion. If, on the other hand, you're living from paycheck to paycheck, from funding to funding, from short-term customer to short-term customer and it's not adding up; then, you might be in a dead end not a dip.

So to summarize, and the book's only 85 pages long, hope you'll check it out, but to summarize the book, it's pretty simple. We know that Rogers adoption curve shows there is a big, fat middle if you can get to the chasm. That chasm feels like a dip, that chasm feels like that moment when you should quit because that's when most people do quit, and the people push through it get to the other side where they are the best in the world. And being seen as being the best in the world, the best blogger, the best podcaster, the best, uh, online store, the best eyeglass maker, the best talent. Once you are seen as the best, you are rewarded by the search engines, you are rewarded by your customers, you are rewarded by the marketplace, but to get there, you must have the resources to make your way through the long and lonely dip. So, if you're gonna start, understand it's harder than you think. If you're gonna start, commit to not quitting in the dip. And if you're gonna start, practice understanding the difference between a dip and a dead end. Thanks for letting me chime in, Tim.

James Altucher | photo: source

James Altucher

[00:19:53] Hey, this is James Altucher and you can find me, or at least the cyborg part of me, at JamesAltucher.com and then there's links to me at Twitter, Facebook, LinkedIn and all sorts of other fun places. This is such a fascinating question, Tim, because it's not as if people should quit or it's not as if I have quit things that are going bad and stuck with things that are going good. There's really 3 types of situations and 2 things that can happen in each situation. So, uh, there are things that are going bad that you should stick with, there are things that are going bad you should abandon, there are things that are going neutral which you should abandon and there are things that are going good, and even great, which you can either abandon or persist and step on the accelerator of. So I'm gonna give some examples and actually, I'm gonna start, I'm gonna start at the top.

So, I've been in several situations that were going absolutely great and fantastic and those were important situations for me to abandon. And a classic example, before I get to me, a classic example is Jerry Seinfeld. So, GE, General Electric, offered Seinfeld $100 million bonus if he would just do another season of Seinfeld at the end of his run and he still said, "No." So Howard Stern asked him, "How could you do that, Jerry? The entire country wanted you to do another season and you were offered $100 million. How can you say no to that?" And Jerry Seinfeld said, "Uh, Howard, that's why those people are not writing the best show on television and I am, because I know exactly when to quit." Sometimes when things are going very well, every project in the world has a half-life, every brand, every personality, the sales of every book or movie or business, everything at some point has a half-life where it starts to decline after that and you could say, "Okay, well, I'm gonna diversify revenue sources or I'm gonna find other things to do." But one thing is for sure, is that when things are going great, often at the peak, when things are, feel so good, you can't imagine how they can possibly go bad, that's the exact time you need to say, "You know what? I need to diversify my life or I need to stop this at the top and pursue other creative or entrepreneurial pursuits or I need to expand my life in other ways instead of continuing, you know, this thing that I, that I've built up and I feel so good about. Now is the time where I can be proud of what I've done and it's time to move on."

So in my very first business that I sold, we were growing really fast, I was, I was building websites for mostly entertainment companies. So we did the websites for just about every record label, uh, Bad Boy Records, Loud records, Interscope, Jive and so on, we did, uh, HBO.com, Miramax.com, New Line, uh, tons of movie websites, band websites and so on. We were doing great, we were growing, you know, 100% or 200% year over year and yet, I had this sense that I didn't really know what was going to happen in the next phase of the internet and we had, I, I didn't know if I needed to build, uh, more software skills among my employees or more strategic skills among my employees and I felt the ability to make websites was gonna get commoditized. And we had such a great brand at that point and everybody was making an offer to acquire us. My own partners felt, "You know what, maybe we should keep on hitting the accelerator and grow as much as we can," but I felt, you know what, if they're, if they're learning how to build websites in junior high school, something's going wrong. And so, we sold at the top of our game and I'm glad we did because two years later or a year and a half later, the, the internet bust happened. And there was no way to predict that, I could have sold maybe at the very last minute, there was no way to predict, but sometimes you want to just sell or change gears at the top. When you've learned everything you feel, you, you could have learned at that phase, when you've been through the steepest part of the learning curve and now it's, the slope is very flat and it's very difficult to learn new things, you can even say, "Okay, well, I'm gonna try really hard and pour all my energy into learning, getting incrementally better at something." Or, "I could be proud of what I did, start a new project at the bottom of a learning curve and begin again." And so that's not always the best answer but it's a perfectly valid answer to, to abandon something that's doing great.

Now other times, you might say, "Well, we're continuing to grow, we're continuing to serve people, I have a very clear vision of what the future holds, I have so many ideas of what can happen next," like with my own, with my own writing for instance. I always have ideas of directions I want my writing to continue, so even though I might not always write in the same genre, I always just love writing, this is a personal passion I feel, so that when I do it, I feel this nice feeling in my chest when, when I do it and I feel good about it. Doesn't matter the genre, sometimes I switch that, but I always feel good and I always want to learn more and more about writing because I, I personally love it so much and I feel it delivers value not just to myself but to an audience. Because everything you do has to have an audience; you can't think of just yourself, you have to determine also, "Am I delivering value for others?" And you get feedback on that and other people will tell you.

So, how does this apply, for instance, to the Seinfeld situation? Clearly, he was getting feedback that his show was great and he was at the top of his game, he was super creative but he had basically run out of ideas to continue his show about nothing and he had that sense then, he was hitting a wall that he had never experienced before so he decided to abandon it. Whereas for me, right now, with something like writing, I can see 10 different directions it can go, I can picture the future a little bit about what directions I can go on for the next one, two, three years so it's something I continue.

Now, the other thing, what about if something is only going okay; it's not bad and it's not great? It feels like you should persist because it's going well and you may, and let's say you're making money and you're feeling creative and people are noticing. When do you persist and when you abandon? So here's a small example, I was doing a podcast for a little over a year; we did 177 episodes; it was called Question of the Day. In fact, a young man by the name of Tim Ferriss was a guest host on the podcast. My co-host on the podcast was Stephen Dubner, who was the co-writer of, uh, a little-known book called Freakonomics, and we were having success; we were the number one podcast in iTunes when we launched and we were getting a good, we were always in the top 100 or so, we were getting a good amount of downloads per month, we were making, uh, very nice profit on advertising, we did some live events that were fun and were, were sold out and we were, and Steven and I are good friends, we were having just fun getting together and joking around for a few hours every day while being recorded.

So everything was going well but, the number of downloads that we were getting, and this is almost a meaningless metric in every other case, but the number of downloads was not going up. It wasn't going down nor was it bad, it was enough to create a profitable business for everyone and to pay some employees and to take care of the people selling ads for us. So it was a great little business, it was a fun, creative podcast, it was with my friends, we had many great guest hosts including, uh, you know, of course Tim Ferriss, uh, Brian Koppelman, the director of, uh, or the writer and creator of Billions and Rounders and, and other movies; uh, Marina Franklin, who's one of my favorite comedians; we had all these great guest host, AJ Jacobs. We had so much fun doing it and yet, it didn't feel like something we should persist with because we knew the podcast audience, in general, was going up for, for the world and we were wondering why are our downloads were not going down but they weren't going up either. So we felt like something was wrong. And after 177 episodes, we only had so many Questions of the Day left and meanwhile, it was taking a lot of creative effort away from our other projects, for instance our own individual podcasts, our writing, our other business endeavors. I miss doing the podcast, it was great, it was fun, it was successful in terms of, of profits, but it wasn't going up. And sometimes, to feed that extra bit of creativity, you need to have a sense that you're improving at what you do. And so even though there was no complaint and no criticism and everything was fine, we decided to give it up.

Now, sometimes when you are learning and you feel like, "Oh, I'm learning really hard. I, I love playing golf but I'm stuck at a, uh, a 5 handicap," sometimes, you're at the top end of a learning curve where the subtleties of improvement are so nuanced that it becomes very difficult, every little millimeter of improvement that you have. And yet, because you've learned, at this point, to appreciate those subtleties, that even though it feels like everything is going flat, it's those moments when you should persist the most because every little improvement you have will feel so incredibly good. And I have felt this, not only in business and in writing but even in games like chess where I'm, uh, a, a tournament chess player and I constantly seek to improve and I'm already at a high ranking so every little improvement that I notice feels so pleasurable to me that I get to another level. That even though it's not like I improve a lot, I, it just betters my life to see myself improve at that level. And there, there's many areas that I, I feel the same way, that I persist with.

Now, what about when something is going poorly? There's many reasons why something could be going poorly. It could be nobody likes what you do, it could be that your partners, uh, in something are no good or you don't enjoy being around them, it could be that, financially, you can't seem to figure it out, either you're not, uh, making a profit or you're not raising money or you're not getting customers. So, this obviously, it seems like most of the time, you should abandon that situation and I would agree with that. If you're, if you're running a business and no customers like what you do, there's a very big danger, uh, smoking your own crack. That because you, you think… It's a cognitive bias, that because you put so much time and effort and energy into thinking of the idea and building the idea or the product or the service, you think this must be good. Your brain tells would not have wasted that time on a bad idea, but the reality is you always have to take a step back, and this is really important, I, I've had to do this on, on every business I've ever been involved with, both good and bad, you always have to take a step back and say, "Am I smoking crack about my own idea?" Or, "Should I put this down and move on to the next idea?" And, and often, just asking that question every day and being very analytical about it, uh, and, and determining what metrics you're gonna use to judge success in advance and seeing if you're meeting those metrics, that will tell you very clearly whether you should abandon something.

So there was one period where I created several different websites at the same time, this is in the mid-'00s, to see if I should con-, if there's a, a business in any of these. And 9 of the websites I created, no matter what I did, no matter what marketing I did, I just could not generate any traffic and even members of my own family were telling me, "You know what? I would never use this website you've created." Finally, I created a website, stockpicker.com, which, it, it combined various levels of my, uh, my interests in finance, my interest in software, my interest in, uh, writing and combined them all together in one site, uh, and it was almost like this idea sex that created this one business idea. Within a month or so, I had millions of users, I had ads, everything. So I'm glad I very quickly abandoned, um, the first 9 ideas so I could focus on the tenth idea. So you have to recognize very quickly when something's, A, not working out and, B, not worth persisting in.

Now, other times, something might not be working out. Uh, so a recent example is I have been involved in a great business, but it wasn't working out for me. I was having a problem with one of my partners. No, nobody's fault, it's just sometimes two people don'