Quitting Can Be Good

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1:59You've heard it before. Quitters never win and winners never quit. Play the music.

2:10But wait a second. What if quitters do win? In order to succeed, you're going to have to quit the things that aren't worth pursuing. This is Annie Duke. I'm Annie Duke, lapsed academic, former professional poker player, consultant in the decision-making space, cognitive scientist. Actually, I should say no longer lapsed academic because I'm back at Penn now, which is where I started my academic career. And I write books. Including a book called Quit, The Power of Knowing When to Walk Away. When successful entrepreneurs tell their stories, they often speak of perseverance. Things were hard, but they did not give up, etc., etc.

2:51It's an inspiring message, but it can also be misleading. Because as Annie says there, in order to succeed, you can't stick to everything. Some things just don't work. So in order to succeed, you have to walk away from something and know what you're walking away from. Quitting has a bad reputation, Annie Duke says, and she is out to clear its name. It is why she wrote this new book, she thinks that quitting should be thought of as a virtue, as a characteristic we want to develop. And that's true, especially for entrepreneurs who may equate quitting with failure and therefore may ignore the warning signs that their business is in trouble and in turn waste their time and their investors' money and their employees' efforts and all those things.

3:40And in fact, will make it harder for them to ultimately find the promising thing ahead. So how do we think differently about quitting? How do we know when to quit? How do we think of quitting as good? Annie and I had this conversation back in 2022 when her book first came out, and I have thought about a lot of the things that she said in this conversation and have repeated them so many times to so many people over the years. And I was just talking about this recently with someone and thought, you know, I need to make sure everyone has heard this because what Annie has to say is powerful. So that is what you're going to hear today.

4:21Annie Duke explaining how and when it is best to quit or at least why to leave the option on the table. Coming up after the break. All right, we're back. Now, here's my conversation with Annie Duke. Annie, this is such an important subject for entrepreneurs and I'm really glad that you wrote about it. And as I was reading it, I just kept thinking back to this moment that happens so often when I am interviewing entrepreneurs, which is that they are explaining how they reached their level of success and how they got their business through some insane pivot or challenge or whatever. And they tell me that the reason for the success was their perseverance, that they did not quit on it, and that their advice to others is to keep going despite the hard times.

5:11And I always ask them, because I'm waiting for somebody to have a really good answer, and it turns out you are the one with the really good answer. I always ask them, but what if it wasn't the right idea? What if perseverance would have gotten you nowhere? Because in the case of whoever I'm talking to, it did get them somewhere, which is the reason I'm talking to them. But there are a lot of people who persevered into the ground and they should have quit earlier. And it's so hard to know when to do that. So I guess that's why you wrote this. Yes. So it's exactly that problem. Look, we have this issue, probably because of survivorship bias, that we see successful people.

5:57And by definition, if you've succeeded at something, you stuck to it, right? Like think about my book, it wouldn't be released if I hadn't stuck through it. And like sometimes it was hard, right? Like I had to persevere through doing something that was difficult and now you see the book. So it is true, like if I've succeeded at something, I had to have stuck to it. But that doesn't mean if you stick to something, you'll succeed. And this is a really big error that we make, that we think if we stick to something, you'll succeed. And it just doesn't work in both directions. It only works in hindsight.

6:33It doesn't work in foresight. So, you know, there's this big kind of both cognitive and cultural conversation around perseverances and grit. And there are, you know, grit is a virtue. It diametrically imposed, you know, opposed to the idea of walking away from something, which is a vice. So you have sort of the grit versus quit battle. And in that battle, you know, cognitively and culturally grit just wins the day. It's the hero, you know, while quit is like cowardly soldier number three or something. Nobody wants Yeah. You, you write while grit is a virtue, quitting is a vice. Right. And, you know, so, so, I mean, think about just even the, the aphorisms, right?

7:23Like winners never quit, quitters never win, but here's the problem. And this is what you're getting to. is that I look at, I have, I do not knock grit. Like in order to succeed, you are going to have to stick to hard things. And that is a characteristic that is worth developing a hundred percent. But also in order to succeed, you're going to have to quit the things that aren't worth pursuing. And we should not think about that as a character flaw. We should also think that, you know, of that as a virtue, as a characteristic that we want to develop. So we need to start thinking about kind of the conversation between grit and quip because they're the exact same choice.

8:07And that's the thing that we need to do. So here's, you know, here's the tragedy is that if we think that blind perseverance, that there's somehow some sort of virtue or heroism and sticking to something until you have no choice but to quit, meaning you've run it into the ground, you've got no more capital, you can't raise another dime, you're having to, you know, lay everybody off, that getting all the way there is a virtue because then you stuck it out. There's something wrong. And it's wrong in several dimensions. It's wrong from the standpoint of you. I have no doubt that the person who is starting a business is brilliant.

8:56Entrepreneurs are like go-getters and they're brilliant and frankly gritty by nature. And so there's all sorts of things that they could do that could bring great value to the world, great value to themselves. And if you stick yourself in something that isn't worth pursuing, what that means is that you're not allowing yourself the other opportunities that you might also pursue. So there's a huge cost to that. Not only are you sticking to something that is no longer worthwhile, but you're preventing yourself from moving to something that is worthwhile. So that's a concept that we call opportunity cost, right?

9:32So there's opportunity cost to capital, to time, whatever. And that there is specifically this problem that while grit gets you to quit, sorry, while grit gets you to stick to hard things that are worthwhile, it also gets you to stick to hard things that are not worthwhile. And that stops you from being able to switch to other things that are worthwhile. So that's kind of thing number one. Thing number two is that people will say, but I owe it to my investors. But that's not true. The minute that you determine that the next dollar of your investor's money is not worth putting into the to the idea that you are trying to start up, that you're trying to develop, then that next dollar that you put in is doing a disservice to them.

10:17So you want to return the capital and move on to something else. So that's kind of piece number two. And I think that most investors, and I work with a lot of VCs, would agree that they don't, if an entrepreneur figures out it's not worth pursuing anymore, that they would prefer that the capital get returned. And they actually have a very positive view of people who have the ability to do that because they know that that's hard. And then the third thing I always hear is I have to, I owe it to my employees, right? I got them into this. They've been toiling away for very little money and promise of equity or whatever.

10:50And so I owe it to my employees to keep going. And again, the minute that you discover that the equity that your employees are toiling away for is probably not going to be worthwhile, right? Or maybe your employees have joined up because they want to change the world because of your amazing idea. And the minute that you figure out that's not going to happen, you should allow them to go. So you're doing a disservice to them because they're now toiling away for something that is also not worthwhile. And you're trapping them in your own decision to persevere. So I think that this is just really important conceptually is that we have to be able to tell the difference between the ideas that are just hard but worthwhile.

11:31and the ideas that are worthwhile, regardless of whether they're hard. You write that quitting on time will usually feel like quitting too early. And I think that describes a lot of the kind of thinking that you were just listing out here, where people say, I owe it to my investors, I owe it to my employees, because what they're saying is, I owe it to them to see this thing through and see if I can make this work. Because right now, quitting feels like it's too early. Like maybe there's still more to do. And you said that's not the right way to look at it. Can you help people understand, well, I guess if quitting on time feels like quitting too early, how to quit on time?

12:17Sure. So let me just explain why quitting on time feels like it's quitting too early. So whenever we make a decision, we're making it under conditions of uncertainty. And there's two sources of uncertainty. One is just plain old luck. As an example, if you started some sort of brick and mortar business right before the pandemic, you got bad luck. Couldn't have foreseen that. But there's also hidden information. There's a whole bunch of stuff we don't know, right? Like if we have an idea for a product, we have some guesses about, for example, product market fit, but we don't really know. We're going to discover that after, right?

12:48We're going to start to figure those things out after long. But we're willing to make those decisions, even when we're uncertain, even when what we know is so small in comparison to all there is to be known, precisely because we have the option to quit. Because when we do find out that new information, whether it's some, you know, how luck is influencing the outcome, like, oops, there's a pandemic, or as we start to discover information about, you know, product market fit or CAC or so on and so forth, we can now react to that information in some way. And And sometimes that means walking away and cutting your losses.

13:25Okay. So that's kind of the setup for this. Now, why does it usually feel like we're quitting too early if we actually get it right? Well, because the decision to quit is also made under uncertainty. And as you're thinking about, should I stick to the path that I'm on or move on to something else? You're so worried about the what ifs, like, but maybe I can turn this around. Maybe I can make this work. Maybe I can actually get there. I know it's been slow going. I haven't been hitting benchmarks. I haven't been hitting targets. You know, our code is buggy, you know, whatever. But maybe I can make it work, okay?

14:06As compared to, you know, switching and going off and doing something else. Now, the difference between the two is if you stick to it, you'll find out. That's the big issue is that then you'll get to certainty. You'll know. Did it work out or not? Did I do everything I could? Was it worth pursuing? You will definitively get an answer to that. Whereas if you walk away, you're going to be left with these sort of like, well, what if I had stayed? What if I had kept going? So what that means is that at the point generally that we're willing to walk away, it's when we actually no longer have a choice.

14:38It's when we've kind of gotten to certainty because we're trying to avoid those what ifs. What do I mean by that? Well, your employees have all quit and you have no more money, right? And then you're like, okay, well, I have no more money. I guess I have to walk away. And then you're not questioning yourself if that was the right choice or not, because at that point, it's the only choice. So what we really want to do is quit at the time when we still have a choice, right? When we still have money in the bank, when we can still free our employees and help them to get into a better situation, when we still are able to move to something else that might actually be more worthwhile in an easier way.

15:15And that means that it's a forecasting problem. that means that at the point that you quit there's still going to be a possibility that you could make it work the problem is that it's not enough of a possibility to make it worthwhile so if i could just for a second because i love this story of stewart butterfield to help people understand what i mean by like when you quit on time it's really going to feel like it's too early mostly yeah please so stewart butterfield uh was on his second iteration of trying to develop a online cooperative sort of massive world building game. And this iteration was under a company called Glitch.

15:54And it was a game called Game Never Ending, which critics described as, you know, Dr. Seuss meets Monty Python. Very, very beautiful game, critics' favorite. So through word of mouth and PR, they had started to build some loyal users and they had about 5 ,000 really diehard users. And by that, I mean, they played 20 hours a week or more. The problem was that in order to acquire one user who would do that, they had to get the game in front of somewhere between 95 and a hundred people, because most of the people who played the game over 95 % of the people who played the game played for seven minutes and left.

16:30Okay. So they've got this loyal user base. Obviously that's going to be, they're going to generate the income, but they have a problem, which is they have to get a lot of people to come try the game, but everybody loved the game, you know, who saw it. I mean, it was beautiful. The critics loved it. So they decide he and his co-founders and the investors, which included Andreessen Horowitz and Acel, decided we're going to do a huge marketing push. So they had done everything, as I said, through word of mouth and PR. Now they were going to do a real marketing push, paid advertising. And they do that for six weeks in that they experienced about six to 7 % week over week growth in new users.

17:05So this seems like fantastic news. The weekend of November 11th and 12th, they actually have their best weekend ever of acquiring new users. That was a weekend. And then on Sunday night, Butterfield goes to sleep, has a very restless night, wakes up the next morning, sends an email to his investors and his co-founders saying, I woke up this morning with the dead certainty that Glitch was over. so it's weird right because they've just had this great weekend of acquisitions they had six million dollars in the bank still so they had a lot of runway and he now declares that it's over so the question is like why because he this really took everybody by surprise and he explained that if they were to maintain the exact same growth it would take 31 weeks before they got to break even So that's pretty long.

17:56And that he felt it was absurd to assume that you could maintain that growth at that cost because you were going to start to get to the same people that you had previously gotten to and you were going to start to move out of the core gaming audience. So he just felt like this isn't a venture scale business. Like we can't make these assumptions. And so therefore it's over. So, you know, I asked him, well, did he ever, did he convince the investors and the co-founders? He said, well, I'm not actually sure. They just sort of knew if I wasn't into it. There was no point in continuing. So, so they shut it down now.

18:28I want, and he returns the capital and he frees up his employees at the moment that he feels like their equity isn't worth it. He frees, he frees it up. Right. So that's that thing about, you know, don't, your employees are better off once you figure out it's over. So that in itself is a success, but, but by the way, everyone around him kind of thought he was a little nuts. He tried really hard to show them that he was being thoughtful about it because they didn't see the future in the way that he did. Because you have to look into the future and say in 31 weeks, we have to make a whole lot of assumptions to even get to break even here.

19:02And I think that's just wrong. So he's looking very far ahead because the future that he was living in at that moment was incredibly rosy. He just saw what was to come. That's part of the problem of quitting is you have to be sort of a fortune teller in that way. You have to be a really good forecaster. Now, just as a coda to this story, because I think that that's a great story and a happy ending on its own. Two days later, Butterfield said, oh, you know, we have this internal communication device that our team seems to really like. Maybe I could develop that into something awesome. He called it the searchable log of all company knowledge.

19:36And its anagram is Slack. And he asked the investors if they wanted to roll their capital into that, brought some of the employees back in and the co-founders. and obviously we know what happened with Slack. Now, there's a temptation there to say that what makes that story happy is that Slack came out of it, but it's not true. Those are two separate stories. They're both happy. Even if he had shut it down and never done anything else, it would still be a happy story. But that also brings up that problem that we discuss about opportunity costs. Like, why should you care about quitting so much? Well, because it stops you from pursuing other opportunities when you're pursuing something that's not worthwhile.

20:09Slack was under Stuart Butterfield's nose the whole time. The company already used it. They developed it as an internal tool for glitch, but he didn't see it for what it was until he actually quit. Then he started exploring more and saw it. So I think there's also that lesson in there, but I think it's just such a good demonstration of at the time that the expected value goes negative on you, it doesn't mean that things are really going to be bad. Now you're not going to be standing at the bottom of a crevage. You might only be halfway up the mountain at that point with nothing particularly bad happening.

20:43So other people around you aren't necessarily going to see it. And most people are not like Stuart Butterfield. Most people are going to think things are pretty darn good. And they're going to go the whole 31 weeks before they figure out that they should walk away. Don't quit on this conversation just yet. There is a lot more coming up after the break.

21:13Thank you.

22:02All right, we're back. Now let's pick up on my conversation with Annie Duke. So there are two things that I want to jump off from there. Number one is to build off something that you said there at the end about what quitting enables you to do next or how it frees up your capacity. And then the other thing is to talk about a forecasting trick that people can use to understand how what they're doing may be paying off or may not be paying off. So number one is just to reiterate that, I pulled this out of your book and I wanted to read it to you. having the option to quit helps you to explore more, learn more, and ultimately find the right things to stick with.

22:41I thought that the phrasing here was particularly smart because you're writing having the option to quit. A lot of people take that option off the table for themselves, and therefore the only thing that they are focused on is making something work. And that then comes at the exclusion of basically every other opportunity around them. So can you speak a little bit more to adding quitting as simply an option on the table that people may not be taking seriously? Well, I think that we need to have that option because, you know, I think there's some mythology that like, if you have a plan B, your plan A won't succeed.

23:15And it's not true for a couple of reasons. One is that you're still focused on plan A. You're just sort of exploring and finding out what plan B's are. I mean, after all, Butterfield was, did create this internal communication tool while he was devoted to glitch, right? So there was another option that was on the table. He just wasn't thinking about it as a venture-scale business. But so it's not going to ruin your chances for success. But what it is going to do for you is if luck intervenes in a really bad way, then you're going to have something else that you've already started exploring. You're going to have an idea of what you might move to next, which speeds you up, right?

23:55Because you're already going to have something like Stuart Butterfield. It took him two days for his next product, right? So I think that that's really important. Then the other thing is that sometimes the plan B turns into plan A. In other words, you happen to be exploring something and then you actually think, Ooh, this is, I think this is actually better. And I think that that happens with entrepreneurs a lot, right? You have some sort of side project or something that you're building to support the key product, you know, the, the, the core product. And then you realize that the, the thing you're building to support that is actually better.

24:24And that had actually, actually happened to Stuart Butterfield once before, he had another game around the dot-com crash where the game itself failed, but there was a photo sharing property of the game that turned into Flickr. So this is something he was well familiar with that having different things around, you know, exploring different options is actually really good. And this kind of speaks to this myth that we have that if you quit, it's going to slow your progress or stop you in your tracks, but it's actually going to get you to where you want to go faster for two reasons. One is that when you are, when you do quit, you're going to have something to move to pretty quickly, but it's going to free you up to go do something that's more worthwhile.

25:04That's going to advance you toward your goals more quickly. And it's going to get you out of doing something that is actually not advancing you toward your goals. It might actually be causing you to lose ground. So the issue with, you know, why is it that it seems so obvious that when we speak it this way, that when you're in it, you won't do that is because of all sorts of cognitive biases, like sunk costs, for example, where we feel like we'll have wasted our time. These issues, which I think is really true for entrepreneurs of what we call internal and external validity because it's consistency and identity, right?