The Mishcon Academy Digital Sessions.
Anne Rose
Welcome everyone and thank you for joining this Mishcon Academy Session. I am Anne Rose and I will be hosting today’s event. So without further ado, I’d like now to introduce Patrick McGinnis. So Patrick McGinnis is a venture capitalist, writer and speaker who has invested in leading companies globally. He is the creator and host of the hit podcast, FOMO Sapiens. Patrick coins the term FOMO – short for Fear Of Missing Out which was added to the Oxford Dictionary in 2013. He is also the creator of the term FOBO or Fear Of A Better Option. Patrick is also the author of the international bestseller, ‘The 10% Entrepreneur: Live Your Start-Up Dream Without Quitting Your Day Job’ and ‘Fear Of Missing Out: Practical Decision Making In A World Of Overwhelming Choice’. So thank you for joining us Patrick.
Patrick McGinnis
Thank you so much for having me, thank you for holding up my books, that is so nice.
Anne Rose
I thought they would help frame the talk, I thought it would maybe helpful to look at some of the definitions for these terms first. So do you want to talk a little bit through about the definition that you use in your book?
Patrick McGinnis
The definition that I provide which I think is comprehensive is that FOMO is an anxiety caused by the few that there is something better happening than what you are doing right now combined with a fear of being excluded from a beneficial collective experience.
Anne Rose
And you also talk as well about the term, Fear Of A Better Option as well. So do you want to talk a little bit more as well about that definition too?
Patrick McGinnis
FOBO is this idea, it’s the perception that there is something better out there than the options in front of you right now and it’s also the fear of settling in the belief that option value is sort of, even of itself, worth something and so therefore even when you have a perfectly acceptable outcome that you could chose, you wait because you are waiting for that riskless decision, that perfect outcome which of course we all now is… doesn’t actually exist.
Anne Rose
You coined it back in 2004 in your academic paper but do you think it existed before then?
Patrick McGinnis
Most definitely. If you think about the impulses behind FOMO and FOBO, they really are part of the human experience. If you think back to the earliest humans roaming the earth, they were very keen to figure out who had sort of the better sources of food and shelter and they needed to be part of a group to make sure that they weren’t left out of the opportunity to find those things but now because of technology, all of us are inundated with data and information that causes us to be, sort of every day put into a situation which we have to make decisions among many, many options and therefore these, these phenomena which are very much part of what it is to be a human have become persistent whether we are choosing what to have for lunch or whether we are deciding where to go on our vacation.
Anne Rose
Do you think these terms are really only for the privileged, like do you feel like they only apply in those sort of circumstances because you have these more options potentially?
Patrick McGinnis
FOBO is definitely an affliction of affluence, of abundance because the Fear Of A Better Option has to assume that you have better options, like think about like, Brad Pitt is an actor. When Brad Pitt was like 22 years old in Hollywood if you offered him like a Rees commercial or a Wendy’s commercial, he would be delighted, he would do all of that. By this point in his career he’s not going to do a movie unless he thinks he can win an Oscar or you know he’s going to get a huge payday. FOMO however is something that all of us can feel. You can go to a small village in a rural community anywhere in the earth and find somebody with a cell phone and an Instagram account and they can see the opportunities that others are enjoying and they can feel FOMO or perhaps, perhaps even more than that, resentment.
Anne Rose
Psychologists talk a lot about you know, maximisers and satisficers and you know, you have these maximisers who for example, like if we took for example, a car they’ll buy the biggest, the best car in, in the potential that they will need to use it in the future and if you are a satisficer you will just buy the car and you will make a choice on modest criteria. You’ll get it for what you need right now. Do you think in a sense that FOBO really is just maximisers and it’s kind of facilitated by contemporary technology?
Patrick McGinnis
It’s very much in the same vein because it’s… maximisers they spend more time making a decision and in fact they make a better decision if you look at sort of the merits and the outcomes. But they are less satisfied with their decision because they’ve spent so much time contemplating the alternative pathways that they are bound to be disappointed because they are seeped in the regret of what they did not chose.
Anne Rose
When we talked a little bit earlier we talked potentially as well about, about finance is present as well and crypto investing?
Patrick McGinnis
You know FOMO is a, is a motivator at the end of the day. But the problem is when we have FOMO it’s based on the perception that there is something better out there than what we are doing right now. Now on the investing side there is this whole ethos around it that people are starting to invest more about being part of the crowd than being part of a collective experience. They are doing a lot more than investing based on that kind of judgement than based on you know, have I thought deeply about this as an investment and where it’s going and so that’s where you see, you know, with GameStop and all these means spots…
Anne Rose
Yes.
Patrick McGinnis
…it’s really about people investing based on belonging and emotion rather than having done a fundamental analysis and as with any sort of economic bubble, the people who come in late and are investing based from momentum rather than on fundamentals, they always get burned and so I, I really worry about those people.
Anne Rose
Another one we put up stress and finance, what about productivity as well?
Patrick McGinnis
All of these, these apps on your phone, all the technology in your life is designed to steal your attention and therefore they are pulling you away from the things that if you had your sort of, your total control and autonomy over your time, you would say, I’m going to read this you know, memo or I’m going to you know, build this model or whatever you need to do that day. It’s really sucking us away from having time for free thought, creative thought, you know think the big ideas that make us better people, more creative people and so it’s, it’s extremely, it’s extremely adverse to our success.
Anne Rose
Do you think it has any sort of positive impact?
Patrick McGinnis
FOMO is an inspiration that we see people doing great things. It’s a really powerful thing but at the same time the idea that looks so amazing is based on perception. You have no way of knowing truly if that thing is going to make you happy. What I tell people is you know, listen to your FOMO like if you are dreaming about running a marathon, like wonderful that could be the right thing for you to do but instead of just signing up for the marathon and you know, sort of trying to run every day and you know, why don’t you sign up for a 10k and see if you like running first and whether it is suitable to you.
Anne Rose
So we’ve talked a lot about like the impact on, on individuals but what about the impact on say, companies?
Patrick McGinnis
A lot of times companies will you know, try to do things to, to stay relevant or to compete with other companies getting outside their areas of expertise and as a result they end up doing things that aren’t particularly successful. On the FOBO side, the example that I talk about in the book which I find particularly interesting is Audi and the electric car.
Anne Rose
Yeah.
Patrick McGinnis
Audi, you know, tries… they are actually early to the game, they tried to launch an electric car in 2010. Meanwhile it took them ten years because they kept on changing an optimising and they never committed to a plan, this Fear Of A Better Option is the idea of holding out for the better thing. That’s every negotiation can end up in that spot.
Anne Rose
So do you think actually it’s more likely to impact say a bigger, a big business, someone where they’ve got you know, hundreds of different people to talk through before they can actually make a decision rather than say someone who’s, who’s is just starting up?
Patrick McGinnis
The notion here is that Audi with FOBO you know, there are so many stakeholders in the conversation and everybody is bringing up their concerns, there is so much data and information that it’s really hard to drive the quick decisions. Audi has got a 4 billion Euro RND budget a year. They can spend so much time and energy trying to get to the perfect solution. With a start-up you don’t have that luxury. You are dealing with limited time and limited resources. Now as a result you have to make bets and test them and move quickly and fail quickly and move to the next thing. But when you do that you avoid the temptation of FOBO and that’s why small companies are constantly disrupting large companies.
Anne Rose
So it seems to be as though we are leaning towards like decisiveness is better than perfection? But for lawyers or you know, attention to detail, making sure that everything is perfect, you are going to want to make sure that you know, nothing goes wrong as well for your client it could have huge repercussions. So do you think it actually applies in all sectors?
Patrick McGinnis
Being inter-orientated is fundamental to being a successful lawyer, that’s very clear. But where decision making fails is, is not in the details you know, it’s always in the big sort of like, it’s like, are we going to you know, in our negotiation settle for this or that or are we going to hold out for this you know, sort of outside scenario and I think what happens when people get into these situations and they dig in, is that they think that, if they do sort of hold out that their opportunity set will either stay the same or grow but what we know of course is we think about this, is that as time goes on opportunities fall away and so I think that’s the thing, we have to understand that the more we wait for the perfect solution, the more likely it is that the things that we could do today and the options in front of us, could very well disappear.
Anne Rose
It is almost contrary to you know, Daniel Kahneman, think about Thinking Fast, Thinking Slow where he is almost like, we rely on this huge 9.40 thinking ability much of the time and we actually make really quick, emotional decisions most of the time but this is almost saying that we actually will hold out a bit more?
Patrick McGinnis
You know I think it comes down to, you, you just opened a door which is a great door to open which is the idea of which decisions really matter…
Anne Rose
Yes.
Patrick McGinnis
…and which don’t. The scary part is or the sad part is that many times very intelligent people get bogged down in the little things and therefore they have no sort of bandwidth left to deal with the important things in life.
Anne Rose
When we talk about that, what decisions should you actually be paying attention to and what sort of methods can you use to actually help you make a better decision?
Patrick McGinnis
The way that I think about it is that there are three levels of decisions; there are high stakes decisions, low stakes decisions and no stakes decisions and a high stakes decision is something that has clear implications for the long run, something that is not necessarily reversible or not reversible, something that has major financial life professional, personal implications. Low stakes decisions are things that you will not remember having sort of thought about deeply, you won’t remember the, the deliberation in a month or two. Things are like they do matter, you don’t want to just sort of go at it willy nilly but you do you know, you don’t want to spend the next four months on it.
Anne Rose
Yes.
Patrick McGinnis
And then no stakes decisions are the things that you literally you won’t remember in a few days and so you know, what I, what I recommend people to do is with no stakes decisions I, I outsource them. I literally will say you know, I am going to look down at my watch, if the time is even I am doing this, if it’s odd, I’m doing that. With low stakes decisions, where shall we go to dinner tonight, which hotel shall we stay in. I outsource that to other people like I haven’t chosen a reservation in years and then on the bigger things that’s where I really spend the time to go through a very structured process around decision making. The vast majority of decisions we make in a day you just make them, reflexably. But when you get stuck, it’s at that moment when you get stuck, that’s where you just don’t want to waste time for thirty minutes because you could just do it or not and that’s where you know, the outsource in decision making is really powerful.
Anne Rose
So one of the questions here is, is FOMO a millennial problem?
Patrick McGinnis
FOMO is clearly… impacts young people more. As we get older in many ways we are FOMO lessons because we have enough life experience to be able to pass perception for reality so I would say that you know, millennials clearly, because they sort of came up in social media and they are much more connected and they have sort of, they are sort of, the stage of their life where FOMO is at a peak, they feel it more but the reality is that like anybody can feel FOMO depending on where they are in, in their life and, and how much data they are taking in and where they are mentally because the other thing is if you are like sort of, if you are less fulfilled in your life and you spend more time on social media looking for answers then you have more data points that can drive you into that head space.
Anne Rose
Do you think these concepts disappear if we got rid of all social media and do you think there are any particular social media platforms that are worse?
Patrick McGinnis
I’ve been a couple of places where there was just no connectivity. I was in Turkmenistan two years ago and Turkmenistan has very little connectivity. What I noticed when I was there is people are living in a low information society and so when I would talk to people at you know, at dinner parties about FOMO, people just didn’t, they were like, wow we just don’t have that here because we have no way of knowing what other people are doing, we just very much are kind of living in a very kind of cloistered experience so, I do think that that is true. If you got rid of social media it would greatly decrease the amount of FOMO. In terms of what drives FOMO in terms of the particular social media networks you know, clearly Instagram, because Instagram is all about positioning things to look better than they are. I think LinkedIn is another one where it taps into our, our feelings of inadequacy around our careers.
Anne Rose
In terms of how, how you can cope with social media would you say people should have caps on the amount of time that they spend on social media how can they manage this a little bit more?
Patrick McGinnis
It’s so simple but getting phones out of the bedroom is really important, number two, getting rid of all notifications on all of your social media and other things like that and the other one which is really important and this is a bit deeper is that when we feel these feelings it’s because, as we’ve mentioned, it’s based on the perception that there is some better thing out there than what you are doing right now. But perception and reality are not the same thing and you are inventing an entire narrative in your head that is not, that is not connected to reality and so a mindfulness practice whether it’s meditation or some other form of mindfulness helps to route you back into the real world around you and into the facts instead of the fear and so I recommend you know, everybody to find ways to engage your mindfulness. I do that every day; I have done it for several years now, three years…
Anne Rose
Amazing.
Patrick McGinnis
…and I see a tremendous ability for me to not fall into the trap of inventing a narrative that doesn’t connect to reality and so I recommend that people consider that.
Anne Rose
Thank you so much Patrick for coming on the show and for sharing unclear 14.48 with them and some really great insights into how we can overcome FOMO, FOBO and actually make better decisions.
Patrick McGinnis
Well thanks’ for having me, this is an awesome conversation, I really enjoyed it.
Anne Rose
Fantastic, thank you so much Patrick.
Patrick McGinnis
Thank you.
The Mishcon Academy Digital Sessions. To access advice for businesses that is regularly updated please visit mishcon.com