Most of our decisions are limited by our personal history. The variety of decisions and actions that we see around is a direct result of the diverse experiences people have in their lives. Our experience plays a far more influential role in shaping our worldview thus our action than anything else.
In most instances, people don’t act out of intelligence or education, they act according to their experience. Since our action defines how our life eventually turns out, our behavior has a lot more to do how we turn out in life than our intelligence or smartness. And our behavior has a lot to do with our personal history. In his fascinating book The Psychology of Money, Morgan Housel, put this brilliantly:
“Let me tell you about a problem. It might make you feel better about what you do with your money, and less judgmental about what other people do with theirs.
People do some crazy things with money. But no one is crazy.
Here’s the thing: People from different generations, raised by different parents who earned different incomes and held different values, in different parts of the world, born into different economies, experiencing different job markets with different incentives and different degrees of luck, learn very different lessons.
Everyone has their own unique experience with how the world works. And what you’ve experienced is more compelling than what you learn second-hand. So all of us—you, me, everyone—go through life anchored to a set of views about how money works that vary wildly from person to person. What seems crazy to you might make sense to me.
The person who grew up in poverty thinks about risk and reward in ways the child of a wealthy banker cannot fathom if he tried.
The person who grew up when inflation was high experienced something the person who grew up with stable prices never had to.
The stock broker who lost everything during the Great Depression experienced something the tech worker basking in the glory of the late 1990s can’t imagine.
The Australian who hasn’t seen a recession in 30 years has experienced something no American ever has. On and on. The list of experiences is endless.
You know stuff about money that I don’t, and vice versa. You go through life with different beliefs, goals, and forecasts, than I do. That’s not because one of us is smarter than the other, or has better information. It’s because we’ve had different lives shaped by different and equally persuasive experiences.
Your personal experiences with money make up maybe 0.00000001% of what’s happened in the world, but maybe 80% of how you think the world works. So equally smart people can disagree about how and why recessions happen, how you should invest your money, what you should prioritize, how much risk you should take, and so on.”
Like every other aspect of our life, our behavior dictates what outcome we generate in business. Intelligence, ability to think, and smartness - all these attributes play a critical role in building a business from scratch. Of all that, our behavior plays the biggest role in determining the future of any initiative we take. If we make the right decisions at the right time, if we do the things that we need to do, if we build the relationships that we need to build, if we hire the right people, if we take the right risks and avoid the wrong one, and if we get lucky, our chance of succeeding improves. And Housel suggests that many of these things are dictated largely by our personal experiences than how smart we are.
For example, the kind of people we attract in our life is directly related to the kind of people we are. Now while building a business, you probably need to attract people who are different from you and have different skillsets and see the world differently than the people more like you. Similarly, our financial decisions are dictated by our personal history. As a consequence, we might make the wrong financial decisions in a critical moment putting the future of the business in jeopardy.
Thus the job of a founder is not only building a business from scratch but also rebuilding himself in the process. Because if we are to make the right decisions, hire the right people, build the right relationships, get the right things done, we all will have to do some breaking our mold things.
We have to transcend our personal experience and act beyond our personal biases. Since most of our decisions and behaviors are limited by our personal experiences, we must have to find ways to overlook our personal experiences to make the right decisions. The journey internally is no less intricate and important than the actual work of building the business.