The Halo, Four Components, Randomess and Luck.

1. The Halo Effect

The Halo Effect is a cognitive bias where our perception of one positive trait influences our opinion of a person, product, or even company in an overall positive way.

It’s basically our brains taking a short cut to enable us to make faster decisions.

Generally speaking we take things on first impressions. If we meet someone who is wealthy and kind; we automatically assume they are intelligent, honest and trustworthy.

If someone drives our dream car, or supports the same football team as us, we more than likely see that person in a positive light.

If a company announces they have just raised a large funding round, we’ll view that company as a superior product or service.

The Halo Effect can be a good thing, but because of this bias, it clouds our judgment and distorts our decision making process.

If you’re deciding to go into businesses with someone, or begin any kind of relationship, remember that this is a natural and strong effect we all need to manage.

You can combat it, though.

Next time you’re faced with a decision, slow down, collect more information, challenge your assumptions, have friends play devils advocate, and actively seek contrasting opinions.

Focus on objective data and set a clear criteria before making the decision.

Look at your past and identify your own tendency to fall for the Halo Effect.

Understanding yourself is key.

Better decision making process > better outcomes (more luck.)

2. Four Unspoken Critical Components

If you’re exploring the idea of starting a new business or venture, here are four critical components that have helped me through my early stages of building a Venture Capital backed software company.

1. Low Personal Burn: this is rarely mentioned and sometimes difficult to do. Look for ways to cut your personal expenses to the bare minimum while you’re building. This alone will reduce more stress and pressure than anything else. Having a high personal burn rate is the hidden killer of start up success.

2. Eliminating Foods: cutting out high energy carbs, processed foods and minimising alcohol. Energy, focus and speed are your secret weapons. Being hungover all the time and afternoon crashes will steal these three weapons from you.

3. Training: while building your startup, train every day; but don’t obsess over it and don’t over do it. Don’t set crazy goals to complete Ironmans, run marathons, etc. This will only distract your focus and energy from what matters — finding Product Market Fit. I lift heavy weights 4 times a week and HIIT/cardio twice a week. This seems to be a good balance for me. Find out what works for you.

4. Read and Write: read and write about specific topics that will accelerates your rate of learning to help you through the early stages of building a software startup. The writing doesn’t need to be published publicly, but it does need to be thought out and written down.

As you can see, what I care about most is my ability to focus, think clearly, and have the energy to execute.

All four of these ideas have enabled me to keep a strong focus on building, managing my emotions/stress, and enjoying the process of the first two years of building a venture backed startup.

3.The Difference Between Randomness and Luck

Imaging flipping a coin five times and asking 100 people to guess the outcome of each flip.

A few people will guess all five correctly.

Most will not.

The coin tossing is a system that is random.

Guessing the correct outcome is luck.

Michael Mauboussin says: “You can think of randomness as operating at the level of a system and luck operating at the level of the individual.”

The stock market, the weather and biological mutations are random.

Picking stocks, getting caught in the rain and being born with a third nipple is luck.

With some of these activities you can increase your decision making stills to achieve better outcomes; like the stock market and not being caught in the rain.

But others, like coin tossing and not being born with an additional fun nipple, are not skill-dependant, therefor, no matter what you do the outcome is out of your control.

Of these three topics, what did you enjoy reading most?

I’d love to hear from you.

Ryan