Think Small, Win Big

Original Interview: EEC 164: Think Small, Win Big with Maceo Jourdan

Announcer: Hello, and a very warm welcome to the “Excellent Executive Coaching” podcast. This program is all about helping you thrive in some of the most challenging, coaching situations. Our aim is to support you in bringing your coaching to the next level, whether you’re new to coaching or you’re already an expert professional.

Dr. Katrina Burrus: Welcome to the Excellent Executive Coaching podcast. I’m your host, Dr. Katrina Burrus, and today we have Maceo Jourdan. Maceo, welcome.

Maceo Jourdan: Thanks, Katrina. It’s good to be here.

Venture Capitalists and Psychology

Dr. Burrus:  You’re a venture capitalist, so that’s unusual. We haven’t had a venture capitalist here on the show before, but I think what you have to say has a lot to do with helping coaches in their business aspects. My first question to you will be, how did you get into venture capitalism?

Maceo:  Funny enough. I got into venture capital through coaching. My claim to fame, I took an E‑Commerce company from a $25,000 friends and family loan to about $720 million in enterprise value during the boom of the Internet days from 2005 through 2012.

After you exit something like that, you sit around and wonder what you’re going to do with the rest of your life. Like most, I said, “Oh, I’ll go get into consulting.” I had had consultants come through my company, of course. What I took to that consulting practice was far more about performance and coaching.

I like to figure things out. I like to know how things work versus the way they say things work. That stems from my physics background. I fell in love with physics in high school, precollege. I always had that desire to know the reality. Like, “How do things work, really?”

I found when you do that, when you start with first principles, you have a much better time producing something that actually works. As I was getting involved in these companies, we were discussing a little bit pre-show, where, yes they have system problems, either marketing or processes or something like that.

Ultimately, it was the people, which echoes what I found as a hedge‑fund trader. Any successful trader will tell you, unless they’re purely systems, which means the computer makes their decisions, so they have preset instruction. They will tell you that psychology is everything.

The way we perceive reality impacts our decisions. When humans think about probability or what a future outcome is going to be like, they approach it from an emotional standpoint first. Once I was able to untangle that for entrepreneurs and companies, I saw some good success.

Venture Capitalists and Emotions

Dr. Burrus:  Tell us how it applies to entrepreneurs. What is the mindset and the emotional energy necessary to be a good venture capitalist?

Maceo:  Wow, well, if I can unpack that, we would be flying off to Monaco to enjoy my trillions. Some of it starts with understanding that you never know out of a selection of companies, which ones are going to be successful.

Now, authors like Taleb will tell you well, it’s because of randomness. I don’t necessarily buy into the whole randomness theory, as in things are completely up for grabs or you could just roll the dice.

It’s rather that we’re dealing with a complex system, which a business is. A business interacts with…Even if it’s a village or a town, it’s going to interact with a lot of people. If it grows, it’s going to interact with multiple cities, national…As you grow, the complexity grows. I will absolutely say in a complex environment, you can never know everything.

If you have a better heuristic…To steal one of Taleb’s favorite phrases, if you have these shortcuts, you can take big chunks of variables or things that are unknown, and distill them down to usable assets. Which, ironically enough, the ancients were far better at.

If you go back to the Greeks and the Romans, the way that they really thought about things, especially Mesopotamia, there were quite a few of the authors coming through the Ottoman Empire that were just great thinkers in the sense, they distill down these complex systems into usable things. If you then distill those down, what you’ll find is that there’s a large emotional component to things.

Some of it is getting out of, I’ll call it the mathematical version of economics, and into more of the Austrian School, which understands that humans are emotional beings. We have to have emotions to move and act in the world.

When we acknowledge that, that is what provides and creates that space for the possibilities that follow, which are improvements and increased performance, and of course, profits. At the end of the day, that’s what you’re trying to get more of.

Venture Capitalists and Daydreams

Dr. Burrus: Let’s apply it to your particular company. What did you need to change both business-wise and emotionally wise to raise money for your company? What mindset did you have?

Maceo:  Oh, boy. I’m a ruminator, which is probably responsible for a lot of my success because I don’t ruminate in a vacuum. Rumination can get really ugly, I’m sure you know that. I’ll ruminate on things, what I did wrong, and then I’ll just dissect them but then I also build a mental model of possibilities.

I can run through different mental scenarios of, we’ll call it better outcomes, of course, based on past information. Then the important part of this is I’ll then go out and test them. The answer to everything is testing on real humans. I’ll go out and have conversations and I’ll try it again. That’s really it.

It was this iterative process where I would fail [laughs] miserably at first, just like everybody does. Ruminate on that sometimes and most likely most of the time too long. Then I would try it again.

Dr. Burrus:  Give us concrete examples for our listeners so that they can see in context what you did.

Maceo:  Yeah, of course. Try to go through my failures might take me a while. In one of my ventures, we were building a company with some cofounders, “canceling Hollywood” is what we’re calling it. We needed to raise some venture capital for that. In probably the first 15 conversations, it was rambling, the people didn’t understand what we were doing. I could tell that by their questions.

They would even say at some point say, “I have no idea what you guys are doing.” I would get off the phone and ruminate on that and think, “I’m horrible, I’ve got all this experience, I’m supposed to know what I’m doing.” Fast forward through calls roughly 30 days or so and I was able to raise $200,000 for the company.

It sounds great to focus on raising the $200,000 but it’s understanding that all of these conversations were giving me information. I’m able to trust my brain enough to do something with that information in my, we call it the subconscious in the background, which will come out as ideas. It’ll come out as daydreams and thoughts.

The concrete example would be, as you’re going through your day and you’re thinking about your business, if some random thought comes into your head, don’t just think it’s a daydream. Understand that that literally is your brain distilling what you’ve given it and then giving you a potential solution to your problem.

Years ago, I realized that when I could harness those things. Sometimes it’s dreams, which a lot of hedge fund traders wouldn’t like to let you know that they get quite a few trading ideas from their dreams. I read that early in my career. I opened up that possibility for myself. The dreams that I have, the ideas.

I’ll put myself into a situation where I can get into a flow of thought and talking, not brainstorming. I don’t like brainstorming, but more directed thought. We’ll take a problem and we go after it. This is more like Edward de Bono kind of creative thinking. I’d like to solve problems that have nothing to do with what I’m doing.

I’ll pick things at random from headlines, from articles, and I’ll sit down, I use an iPad now. I would sit down and write down entire plans about how to fix that thing. Sometimes, immediately following that, I would get an idea that I say, “Wait a minute, I can do that or I can say that.”

Most often, a few days afterwards that lightning, so to speak, will strike. The key part is then I would test that on another potential investor. I would wait to see if I got the feedback, which isn’t necessarily the money. It’s the understanding.

In order to get the funding, in order to raise money for a company, you have to not only communicate that you as an individual are fit to be invested in. That’s confidence, that’s affinity, it’s rapport, it’s all of that. You also need to demonstrate at least an understanding of the industry you’re going to get into.

More than that, it’s that the person who’s going to give their money needs to have that emotional relationship to their future probability of success through you. The way that gets distilled is when they can understand your idea enough so that they can repeat it, which remember the first 30 days they didn’t even understand what I was doing.

Once they were able to repeat it to me or what I find is even better if they’re able to expound on it. Concretely, it would be you pitch somebody. You wait, get their feedback. That’s second, or third‑best.

You pitch somebody and they interrupt you excitedly, not like they’re frustrated. They start talking about what you’re saying. The best is when you pitch them, they interrupt you and then you can’t make them stop. They’re going on about the future prospects of the business.

Concretely speaking, if you can raise your pitching to get that sort of feedback, then use the sales language. You got them. That’s somebody who is “sold.”

Dr. Burrus: I see. You wait, making sure they understand, giving them information, and waiting until they get enthusiastic, and they project themselves in the business. They see their success through that business, and then you have them on the fishing line. It may be a parallel. What do you do then?

Maceo:  Well, then I ask them for the money.

Dr. Burrus: [laughs]

Maceo: Now we’re getting to pure sales, then you have to “close” them. All of this started with me going through sales training after sales training. I’ve always had this improvement mindset, but whenever I got into a sales program, I always wondered, “Why are we doing this?”

People tell you, “Oh, just do this,” or “It’s the Sandler method, or SPIN Selling,” or whatever thing they want to bolt onto it. Then, I started to break down. Again, using the thinking of the ancients and first principles like, “What are we really talking about here? What do we really want?” I don’t know a single business that doesn’t want excited customers.

Venture Capitalists and Excitement

Maceo: Excited customers have a better experience. In fact, if you listen to Rory Sutherland, you’ll find out through behavioral science that there’s no difference between somebody that has objectively, measurably, a better product, and somebody who thinks they have a better product.

When I look at that, and I say, “OK, to this human being, if there is no difference, then there is no difference.” I broke down then what creates excitement. I honestly ran into lots of roadblocks, went down the rabbit trail of psychology.

When I finally came out of my about‑10‑year stupor, I realized, “Oh, wait a minute. I don’t need to understand the neuropsychology, and whether it’s dopamine or serotonin.” I don’t need to understand that, although I have a handle on it. What I need is a measure. What’s the measure of excitement? It’s excitement.

If I’m talking to somebody about a project that I want them to invest in, whether it’s their time, their money, or both, then my measure is can I say things to them, and have them demonstrate to me that they’re excited.

Now, this isn’t the heavy‑handed qualifying the sales prospect the salespeople talk about. It’s not the seven ways to close somebody, because once those investors excitedly told me about the project, at that point, I knew I had somebody who wanted to be involved.

Then, my job is to facilitate that, which is, “Hey, we’ll get the paperwork over to you,” “You can have a conversation with the rest of our team,” etc.

It’s simply transitioning from one stage, which is me sharing information, waiting for their response. Once I see that I’m getting the appropriate response, I move right into the next stage.

Dr. Burrus:  Maceo, very interesting. I’m going to make a parallel to coaching. I coach brilliant jerks. They do not want to be coached generally, but they’re high achievers. I call them brilliant because they’re high achievers and they want results.

It’s gauging when the client is ready to hear certain information, that’s one, and bringing them slowly to it. When I can bring them irrefutable data about themselves that they’re not competent in a certain area, then I get their attention.

There’s a prefocus before that, but let’s say I bring them the irrefutable ball. They can’t stand not being performant in that area, but I then have to make them feel like they can change.

It’s in their power so they’re not drowning with this negative information to some degree, because it’s usually they don’t have interpersonal skills, but they see 20/20. What’s wrong, but at the same time, they have the hope that they can change and make it better.

I see some parallels between executive coaching and what you’re saying. I want the listeners, who are many of them are coaches or leaders, to listen to the parallel, the timing of things.

Magic in a Bottle

Maceo:  The question is, how do you sell opportunity? Depending on how deep down the rabbit trail you go on marketing, you’ll find that there’s a different quality to selling a future opportunity, versus you’re selling an iPad or an iPhone or something like that.

I tended to look at it differently. I tended to see that most of what we do as humans relate to future opportunity. Is this coaching going to increase my prospects? Am I going to make more money? Am I going to close more sales? Or something like that.

It’s a brilliant distillation of what I would normally put into the marketing realm which ties into what I saw, where these parallels between marketing and psychology, sales, and even therapy blended together.

It’s partially how I’m wired that I wasn’t afraid to mix and match, to try different things on. Truly what we’re talking about, although some people would be uncomfortable, it is in one context sales. If I took what you just said and put it into a group of people that I have on a Discord channel, they would think that that was actually sales instruction.

What that tells me is that we’re on to something that’s universal. It has a universal application. The good news then for…Because coaches, they have to sell, they’ve got to get more clients, is that that skill set that the coach has been practicing day in and day out to do what you just described with a small tweak. A shift of context into the sales environment is very affected.

In fact, in my experience, it’s the most effective way to sell, because you’re dealing with the unsaid objection is if you learn anything…If you study behavioral finance or behavioral economics, is that people are going to lie to you. 

They’re not going to tell you why they did something. Now, it’s not because they’re diabolical. Most oftentimes, they’re not aware of it. It’s this thing in the back of their mind, and what you said not only unlocks the specter of the possibility of the negative. It does it in the context that they have power and agency.

I’m telling you when you give people power and agency over their situation, you’ve got magic. You got magic in a bottle.

Irrational Decisions and Future Opportunity

Dr. Burrus: Now, you did say that humans relate to future opportunity. Put that into context. What do you mean by that, they relate to future opportunities?

Maceo:  Well, it’s because of the way humans relate to future probability, the odds of something succeeding. The way it’s expressed would be, “Hey, what’s the best way to fill in the blank?” What they’re really giving you in some sense is a probabilistic question.

What are the odds of my success? Or a way to say it concretely would be, “How do I have guaranteed success?” Which, of course, is back to probability. What they’re telling you is that they’re going to relate to what you’re saying in an emotional way.

The mainstream school of economics, especially the Chicago School here in America, they’re very much thinking that people are rational actors.

That, they have access to information, and they’re going to consider it. I would say those people have never tried to sell anybody, anything in their entire lives. People are not rational. Even if you take an economist, and put them into, say, a sales environment, they’re going to make irrational decisions to the outside. It’s irrational from the standpoint of it’s emotion based.

What I mean by that, there’s a delay, or there’s lateness to it, is that, especially for men, they’ve got to overcome that emotion usually in hindsight. They’ll make an emotional decision to do something. Then they’ve got to go look and find reasons to do it.

If you ask them why you did that. They’re going to say, “Well, I bought that car because it’s 0 to 60 in 2.4 seconds, and, it’s got heated leather seats, and WiFi.” They’re not telling you is that the last time they had their car valeted, the valet made a comment about how the last guy had a better car. He didn’t like that.

He actually wants the valet to say, “Wow, man, this is the best car I parked today.” We can say, well, that’s a really shallow reason to spend $250,000 on a car. I assure you, that’s exactly why somebody is going to spend $250,000 on a car.

Dr. Burrus:  Yes, so what you’re saying is, basically, it’s all emotional. There’s an underlying unconscious need, sometimes even conscious, but they rationalize it by giving facts and figures to justify the emotional decision.

Maceo: That’s why there’s a delay between what I call the actual decision and then we’ll say inking the deal. If we’re talking in a sales context, like if you’re talking to an investor. They get excited. They go on about the other future prospects. They put themselves in the deal, and then I deliberately give them a break.

Meaning, I want more things in time to be in the process to acknowledge that they have to justify this emotional decision that they just made with me on the phone, or in Zoom meeting, or in person.

Dr. Burrus: You give them time to find the rational reason to buy it.

Maceo:  Well, I’m a bit more diabolical, and I tell my investors this. I give them those reasons. The thing that I learned is best not to leave that up to chance, and so I will provide them with the information that they need. What most people don’t expect is I don’t just give them positive information.

I supply them with quite a bit of what some people might call negative information, but I also give my opinions. “OK. Here’s why this might not work.” I usually give it to them first, but then I say, “In light of this, this and this, we think that we can do better.” Because again, what people are trying to figure out is, is this going to work in the future.

If you try it, give them this pollyannish rah, rah, “It’s all positive. It’s nothing but sunshine and roses,” then what you’re going to build in them is the cognitive dissonance, because they know it’s not going to be that easy.

While yes, they did make that emotional decision to get involved, you’ve got to be careful to not do what some sales trainer will say which is unsell them. I will give them both sides of the coin. I’ll give them the risks, but I’ll also give them the possibilities.

That’s brilliant! We have to try that…

Dr. Burrus:  Very good. We got tricks of the trade, I guess. Unfortunately, we’re coming to the end of our podcast, this very interesting podcast. I wanted one last question. You say, you told me, “Thinking small is the path to growth or think small, win big.” What do you mean by that?

Maceo: What I found universally with companies is if sales aren’t working, if marketing isn’t working, if customers aren’t happy, is because the focus has gone off of individuals and onto some average or some aggregates.

I love picking on economists. I’ve got friends that are economists, which is why I do it. Economists love to talk about averages, or on balance, or something like that. When you focus on a single person and you find that you get a response, they buy something from you, and then you focus on the next person and so on.

By focusing on those individuals, you will diagnose what’s going on far faster than if you’re dealing with an average or some abstract. One way that people do this is they’ll have problems with their marketing and they’ll just do more marketing. They’ve got a Facebook campaign.

Someone says, “Well, try a lookalike audience,” or they’ll say, “Try this campaign structure,” or “try targeting this specific group.” What I say is, no. Pick up the phone or go out of your office and talk to a person.

Sell a person your thing, because when you do that, you’re not only going to get faster feedback, but you’re going to take advantage of this biology we have, mirror neurons and a lot of the mimicry things that human beings do, and you begin to get this visceral understanding of what’s going on.

I’ll get back to the exercise that I would use where you’ll get flights of fancy or daydreams, or you might be in a conversation with somebody and you’ll say something, “That is brilliant, we have to try that.”

Actually what I found, it usually comes from somebody else. The magic thing that happens with people. We say they’re on our wavelength when you get your team together and you’re all talking about the same thing.

This is going to sound weird, I assure you it’s not. This is like hardcore neuroscience. Someone else will take your facial expression, your tone, the words that you’re saying, your gestures. They’ll mix that with their experience, and then they’ll come up with a brilliant idea.

This is where working in isolation can be difficult. You can’t pull this off on Zoom, but ultimately it’s all about…If you’re running into problems, focus on smaller and smaller elements.

This comes back from my military training, when I was a hedge fund trader. You were trained to go to smaller and smaller pieces and diagnose there.

For example, in combat, you might find if you’re trying to enter a building and free hostages, if you run into problems, it literally will come down to somebody who was one step too far into a room, one single step.

As a trader, it can come down to fractions of a second. It can come down to the positioning of my keyboard, my mouse, or my monitor, if I’m an electronic trader.

Back in the day, when we were pit traders, it could literally be getting into the office five minutes earlier, so you can get to a particular place in the pit that you normally couldn’t get to.

Again, if you could only figure those things out, if you take smaller slices of what you’re trying to do, smaller elements of what you’re trying to do, and work on those, which in sales I’d like to start with a single person, although you could go down to your sales pitch and script it out.

I’ve seen exercises where I’ve gone down to individual words and tested different words with people that have had significant effects.

There are ways to do this down to the nth degree, but I think the simple thing for people to do is just get out and talk to somebody about what you’re selling, see if they want to buy it.

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