All right, we acknowledge that your new gym hip will never be used. You bought it with good intentions but a very limited desire to execute. Also, the Lululemon outfit does not really fit and accentuates certain features that you don’t care for, which is why you bought a gym hip. Furthermore, there is no parking at the gym in the morning. So, what other moderately misguided decisions are we likely to make that will haunt us as well into the new year?
Sports and betting. It is the season.
“People don’t just invest with their wallets – they invest with their identity,” says Kwabena Donkor, assistant professor at Stanford in his research study. Donkor’s study was based on 40,000 bets made on English Premier League matches. People rated their team (the one they most closely identified with and rooted ionately for) as having a 10% to 18% higher chance of victory — going against the professional odds makers.
The fans who loved a particular team bet in a way that ignored the real odds, the most likely outcome. Even with “the spread” (the over/under odds betting adjustment that is supposed to even things out), it turns out that we bet more with our hearts than our heads, he writes.
You grew up in Seattle, you love the Seahawks, who cares about the odds, put me down for a hundred and order some more beer and wings. Donkor says in his study. “When it comes to money, loyalty isn’t cheap.”
We wear particular jerseys to sporting events with the specificity of the number on the back signaling who we identify with, root for, care about. That is why some jerseys sell better than others
I wonder how this behavior influences our own entrepreneurial endeavors. I will confess to one. I sometimes fall into the trap of “favoring” an employee who I have known and worked with for years in the past over a new one who has just ed the team.
I am aware of that bias, and I for it and balance carefully. But it lurks out there, and all of us have seen how the “favorite” often gets the promotion. It is an insidious form of old-boy-nepotism. That clearly puts that mantra about hiring the best and brightest to the test.
Donkor points out other “identity-based biases” in finance, politics, policies, you name it. How else can you explain spending $20,000 on a Birkin bag. Or buying 101 Ash St.
The venture capitalist often wants your company to “scale,” but perhaps a better strategy might be to create an “identity.” Think Chuck Taylor All Star sneakers – “Chucks.” Make a statement. (Even though they are kind of flimsy and do not give much arch ). Bottom line, the trick is to create a “must have.”
I have just completed two agonizing and annoying negotiations. Egos and stupidity (in my humble opinion) were rampant. I thought the final settlement/agreement in each case was obvious and could have been reached in a much shorter period of time. But we humans are fascinating people when it comes to deal making.
One night on a recent vacation, it was pouring rain and armed with a martini (maybe two) I sat through four hours of Shark Tank re-runs. Real live negotiations. It was terrific theater. And, of course, after each session, I went to the internet to see if the deal really got done, was the company still in business, what happened. Tell me the truth of the tank.
What surprised me was that I found myself yelling at the television telling the founder to take the deal, how stupid can you be, this is incredible, why are you arguing about a nickel.
I recently took a cohort of mine to lunch, and I told the negotiation stories. Here is what he said about deal making. Each side has to “need” each other in some way – and to acknowledge that need. Not just product market fit, but also culture.
He said each side also needs to feel gratitude that they are in this deal together. Interesting word – gratitude.
His problem — should he partner with Mr. XYZ, a quasi-rockstar in the space. My friend finally concluded that given the ego of XYZ, it was unlikely that he would ever really be able to feel “gratitude” for the relationship. My friend politely bailed out.
Rule No. 835: Tell me again about win-win.
Senturia is a serial entrepreneur who invests in startups. Please email ideas to [email protected].
