Confidence or Con? The Psychology of Tech’s Boldest Leaders

0:07Good morning, good evening, wherever you are, and welcome back to the Enterprise AI Show. This is your host, Aaron. And on today's roundtable, Brian and Brandon look at the psychology behind tech's most confident leaders and why some of them keep making bold claims long after the evidence has turned against them. Starting with the new Elizabeth Holmes documentary, they ask whether the kind of unshakable conviction is something founders are born with or something that funding rounds and glowing headlines slowly build. They also take on the venture capital playbook for picking winners and share a simple framework that can help any organization spot the moment inspiration turns into fiction.

0:56And that is coming up right after this quick break.

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1:54and we're back brandon good to be with you again man that's it's been a little while since we spoke how you been fantastic ready to maybe talk about a little something something different this week brian yeah we're gonna we're gonna go this is gonna it's gonna be in the technology realm but it's a little different so where this got started was a couple weeks ago you were on this show i was supposed to be on your show your show famously has a recommendation at the end one of my favorite parts. And I recommended the movie about, I always call it the blood lady, the Elizabeth Holmes story. There's a new documentary out about Elizabeth Holmes.

2:25I think it's called, I can see everything. You can see everything. It came out on October 16th. So probably in theaters now. I don't know when it will come to streaming, but sometime soon, I'm sure. That's right. So what we wanted, what we got to talking about was just first and foremost, go take a look at the trailer. If you want to stop the podcast right now and go watch the trailer for two minutes and then come back and be like, oh, okay. I see why these guys are so fascinated by it. She is, I don't want to say she comes across as a psychopath because she doesn't, I don't think she actually kills anybody.

2:54I'm not aware that she killed anybody. I'm pretty sure she didn't kill anybody, but in the same vein as other psychopaths in movies, you watch her and you're like, okay, there's something wrong. And the context of why we wanted to talk about this was her level of confidence in stuff that the rest of the world sort of now sees as complete lies is just fascinating. And where we jumped off of this is we said, it would be a really interesting study by somebody, some psychology department at some university with a bunch of PhDs, to look at a number of people that are incredibly well-known. It could be Elon Musk.

3:29It could be Sam Altman. It could be startup founders or whatever that exhibit unbelievable levels of confidence that the rest of the world sort of looks at and goes, that is just nothing but a fire hose of lies, or at least myth truths, and wondering, do they realize that they're lies, or have they just had to mentally convince themselves so much that what they're telling will eventually be true? You just have to get through failure after failure. So that was the starting point we had for this. Brandon, run through your sort of premise of why this was interesting to you. I always just come back to it.

4:06It's like, is it a psychological profile? Is something people are born with or is it something that people come to over time? I think Elizabeth Holmes is a good example. We now look back on most everything she was saying and it was, it's pretty easily easy to see. And obviously she's been convicted of crimes here that it was all basically lies, right? Right. Well, the conviction, especially if you watch the documentary, I haven't seen this one yet. Hopefully I'll see it soon. But the ones that I think there was one on Hulu and there've been a couple of those and a lot of the interviews with her, especially when it's her and it's like, she is looking you dead in the eye, right?

4:41And telling you something is a hundred that we now know to be a hundred percent false. But I always think it's interesting because even for, I'm just going to quote, quote unquote, quote unquote, call it a normal person. The act of lying usually requires some mental process. It's hard to lie for a long period of time. I think even if you want to do it, even if you believe you're justified, it can be hard. Like in the classic example is everybody knows somebody that just can't keep a secret. They just cannot do it. It's like the act of keeping a simple, like the birthday party secret. They just, you can just look at them the right way and they just, they crack.

5:13They're like, I have to tell you the birthday party's tomorrow at nine o 'clock or whatever. Right. And it's like, that's, and so you kind of take that kind of person and you put it against Elizabeth Holmes. The other one I think of was a little bit like SBF, right. Where he had this incredible success going. Right. But for the most part was just kind of lying his way through it, right? It was, I'm doing this, I'm doing this. And behind the scenes, I guess, in retrospect, he was making some good investments, but he was just lying about where the money, like what money he was using, right? So it's like, you can't be right in one area.

5:44One right doesn't, if you will. And so I guess the question is always, and I feel like if you're listening to this podcast and the reason I guess I am interested in is I feel like we see this at levels of tech all the time, right? There's maybe in your life, you've been close enough, all of us listening, you probably know somebody who's gotten very successful in tech, like you've just somebody in your, I don't know, neighborhood, right? And the question I always think about is like, over time, do these people just start to, is it just the act of being successful that if you will, starts to feed an ego that makes you almost start to believe everything you say, even in the face of obvious evidence?

6:24I know Elon Musk is a very polarizing figure, but like, he's clearly, I think I feel okay saying this. And that's not too like crazy. Like I think it's clearly he said some stuff that's not true. Right. I think it's clear that we can look at that. I don't think that we're breaking any news, even if you're an Elon Musk fan. And it's just like, how do people get to this point? Right. And, and then of course, is it actually the case that it does happen more in technology than say like in education or in healthcare or in whatever other industries that we happen to think about? So I don't know. So So what do you think?

6:56Is it like a nature? Is it a nurture problem? What's going on here? Yeah, I think it would be fascinating because I think if I think about the sort of, I don't, it's not even the hierarchy, just like the evolution of it. And I think you and I talk about this. Is this something that's inherently in certain people, but maybe it's not in certain people, right? So it's the sort of, it's nature. Or is it something that because you're exposed to certain things, you're exposed to being around certain scenarios, is it nurture? Did it, You just build this skill. And I think about it, like I watched one of the first Elizabeth Holmes movies.

7:28I forget which one it was, but it's the famous one. And it does start off with, hey, this was a very smart person. She got accepted into Stanford and people can have their opinions about, hey, is book smart different than sort of street smart? But she was an intelligent person. She got past some number of other intelligent people around Stanford who were like, hey, that idea that you're kicking around, it's interesting enough. She got it past a number of very intelligent people who worked in, that worked in the military and worked in other aspects of healthcare, who again, you know, on the intelligence spectrum are considered relatively smart people.

8:01So there was a part of this that was like, oh, that is a distinct problem that the world has today, or it's a distinct challenge that the world has today. And if you're willing to take on that challenge, good for you. And if you somehow see a path through stuff, like good for you. And we've always rewarded people who see the world a little bit differently, are able to quote unquote, see around the corners. So there was a part of her story where you're like, okay, this is somebody who is willing to see the big picture of things, is willing to try a new way of solving stuff. And then you immediately, they kind of contrasted that with people who had worked in this segment of the world.

8:38And they were like, yeah, I know she spoke very eloquently about it and very confidently about it. But like the math doesn't math or the science of this, like you're defying the laws of gravity, or you're just defying the basics of physics. And they were like, this was crazy. And the fact that people let this continue to go on, I think what's really interesting to me, and I've been around a bunch of startups. I know Aaron's been around a bunch of startups. You've talked to different people. I think from the, like, could you learn this perspective? I think there's, I think there's stages of this, and I've seen this with different startup people.

9:09So there's the stage where you go, hey, I see a problem somewhere in life and I think I could build a better mousetrap. And that's a lot of the, hey, I quit my job. I'm gonna go try and build this thing. And that's the stuff where it's like, you're super passionate about it. You know that the old way of doing things could work, but it's not the way you have some vision for it. And then at some point you go and you ask somebody for money. And I think there's that first stage, which is, oh, somebody else believes in the thing that I see And they may not see it completely, but somehow they believe in that.

9:39And that gives you a level of, okay, I'm not wrong. I think that's the first stage is somebody actually gives you a set of funding money to go try and make the idea bigger, but they believe in you. So they're your first champion. And then I think the second level of I'm indestructible or I'm smarter than everybody else or whatever it is, is that first big article that's written about you that, hey, so-and-so is going to change the world. And I think once that, at least from what I've seen from a number of founders is like, once those two first couple stages happen to you, or maybe it's that second round of funding, there's something about that becomes like, I have to defend this worldview that I've created to the end.

10:19because otherwise it's not just that I failed to create this thing or we didn't solve the problem or we lost the game. It's like my, my persona of the world, my, my view of the world, my existence of the world doesn't exist anymore. And that lying or that again, lying is a certain kind of that having to manipulate the world that your view is right becomes, becomes your DNA. It becomes the same thing that like we think of as truth. And I think once you've lived to that point, and then obviously if you get to a Elon Musk level where you've done it at multiple times, I don't think they at that point know how to break that cycle because, and I think people don't understand this is like, if that, that perception breaks, it's not that you're wrong.

11:04It's like, you don't exist because you exist as the person who created this gap, this glue between some problem space that didn't exist before. And I think that leads you to, I don't know, more I think about it, I believe in the idea that you acquire this skill. It's not maybe built into you, but I might be wrong. Again, this is where it'd be great to see psychiatrists or psychologists look at little four-year-old kids that lie in elementary school versus the person who does it as a startup founder. Because it's going to say it's like - Start in life? Yeah, where does it? Like the kid that's hustling for the extra snacks on the preschool is actually going to be the - Yeah, because everybody knows the little kid who's like, he's not hustling somebody out of billions of dollars.

11:44But that kid is a liar. He's like a serial liar. Yeah, he's got a lot of Halloween candy. What's the story there? That's right. That's right. But I don't know what you're saying there. I want to even take it maybe a little further. I would almost call, there must be somebody that's already written this, but let's call it the contrarian effect. It's like there may be nothing more powerful in society to be a contrarian and then to be proven correct, right? Because I think that is where these things start, right? And of course, given the population of the world, there's just going to be a certain amount of people that will have crazy beliefs that are just never right.

12:15They're not contrariens. They're just wrong. And there's going to be some people that do hit on it. They're like, yeah, I see the world in a slightly different way. And the time of the world is such that this belief, I'm going to prove it's right. And everyone's ultimately going to look at me. Because I think it's almost part of the hero's narrative. I think we all want to be that person and be like, I saw the thing. I saw this. No one believed in me. It's like sports that we like to talk about, right? No one believed in us because we were the team that no one believed in us, even though most of the time the people do believe in the team.

12:48Right. But they believe that they have that no one believed in them. And they went out and they did something that no one could have done. And then from that starts to draw the confidence. And I think when you are in anyone that's ever so I don't even think you have to be a tech founder. I think if anyone has ever just tried to start a club in a high school, just the simplest stuff. It's like at the beginning, there literally is nothing but you, right? And it is a powerful thing. Even if you're just creating something really small, right? Like writing a school play. You're like, I want to write a school play that's going to be a production.

13:18And it's like at the beginning, no one really, they're like, nah, I don't know. Can you really do that? But eventually you do it. And if you do that, it does provide you a level of confidence that I think is very powerful. Maybe that's almost like they're narcotic going forward. It's like you start to believe that. And then I think what also happens is in our world, especially venture capitalists, right? If you really distill it down, they really have no idea which ideas are going to succeed. Because if they did, they would just fund those ideas and they would all have 85 % hit rates. But we all know their hit rate is 10 or 20%, right?

13:53So they have to then justify. We can't just say that these people just happen to be the people that we gave capital to. and we just randomly, they kind of randomly won some type of, I don't, lottery. They got that job. And of course, when they allocate the capital, it's like another lottery. And some of them are going to be like super successful. No one likes that. If you say that out loud at Central Capitalist, they'd be pissed. They'd be like, no. You're just basically, yeah. If you're just saying, hey, you're no different than a gambler. Right. But I think what they then do is convince themselves to say, I like David, something along the lines of, listen, I can go find the great contrarians.

14:27I know how to identify those people. And even if those people, maybe their first idea is not so good. Maybe their first idea is a little crazy one. But like, I know that this person is the type of person that will be the contrarian that will succeed and I'm going to go recruit them. So what does that lead to? It leads to a group of people finding this group of contrarians and telling them like, you're special, Brian, you've got the idea. I will listen. All I do is interview people and I've chosen you and I'm going to give you the$50 million valuation and you're that person. And so like that must feed the ego of the fact that you can kind of see like all of this happening all the time.

15:04It's almost becomes institutionalized right inside. And that's why, and then maybe that starts to lead to the crazy behavior. And this is where, and again, you and I are talking about this. We very well could have solved this entire show by being like, Hey, let's do a couple of Google searches to see if there's any really well-known research on this, but we didn't. But yeah, I think there'd be interesting research on the person who is the center of the story, the Elizabeth Holmes in this example. Because it's like, not only are there lots of examples of these sorts of people, but as a society, we can't totally decide whether we love this sort of person or we hate this sort of person because we do make movies about them.

15:42We make movies about the Elizabeth Holmes and show her rise and downfall. And at the same time, we make movies like The Big Short about the folks who in this context are the financial crash versions of the Ed Zitron who were like, I think I saw a flaw in the system and I bet against it. And I was the contrarian and I could have lost huge, but I did win. And we're going to center it around those people being smarter than everybody else. So as a society, we haven't figured out, do we pick them as winners or losers or whatever we do with it? So I think that would be a fascinating study. But yeah, you're right.

16:14I think the other fascinating study would be on the VC side of things, what does their profiling thing look like? Because like you said, if you're just simply picking technology and your win rate is one in 10, okay, that's no different than basically, it's better than playing the lottery, but it's not much better than just gambling blackjack or anything else. But it's like, have you guys figured out some way of evaluating these people? Because maybe there is a correlation, for example, between the true true contrarians and being like, was there something earlier in your life, some hardship, some crisis that made you so determined to be like, I'm going to stick it to the man.

16:52I have a chip on my shoulder, right? We talk about the sort of chip on my shoulder. And sometimes you just, you want that person on your team because you're like, that person doesn't give up. And I think that would be another sort of interesting because you do hear sometimes VCs be like, yes, especially if you're an early stage investor, you're really betting on the founder more than anything so much more than the idea because you're like, I need to know if they have the fortitude to get through all of the David and Goliath odds that they're playing against. But yeah, it would be a fascinating thing to keep digging into.

17:22A couple of things. One, I have a book, I apologize to Software Defined Talk listeners because I had to stop recommending this book because people got tired of me talking about it. But there is a book called The Halo Effect that you can go read that I think is the only business book anyone needs to read. And I'll just give you the short example is it's just correlation versus causation. And it just basically distills down. It's like most of these successes require a lot of luck around timing, right? And that book systematically goes through and says, it picks out a lot of companies you would know about, like everyone's just one, I mean, close to you.

17:53Cisco in the nineties was like the greatest company ever. And they kind of go through and systematically explains like, then what happened? And he does this through a bunch of these different books. So you can read it and it, I think it outlines it perfectly. Right. And, but I've, and this book's been around for, I don't know, 20 plus years, maybe longer. But no one ever really wants to, I like to whip this, I just like to have this book to mention it when people start telling me about like the next latest book that was written, like whatever, the Jensen Wong biography or whatever. I'll be like, have you read this other one?

18:20So I think it's a good way to just answer it. But for the most part, no one really likes, no one ever wants to like really dive into that. They're like, you don't get it. Did you not read Shoe Dog by Phil Knight? And did you not know that he, and the number of these, I've read a lot of these other books. I don't know why. It's just a waste of time. You can too. And it's just one of these things that like, I don't know, no, like the information is there. I've even like in a popular nonfiction sense, been exposed to it, but for the most part, people want to ignore it. They will not accept it. They will just keep telling you that you're wrong.

18:49And so I don't even really mention it as much anymore. So that's one thought about why does it kind of continue to perpetuate? And then I guess we kind of just get into, I don't know, Maybe it's just human nature is we just like those stories more than we like the boring clinical explanation that was just lucky, right? And I think it does kind of come back to, and again, I think what you were saying before is true, and there probably is. I have seen venture capitalists talk about they do like to invest in people that have, for lack of a better phrase, have had some type of childhood trauma, right?

19:26because they feel like it drives a certain level of persistence that someone that came up through, let's just say a fairly normal childhood doesn't have. And like examples would be like Jeff Bezos was like, he was adopted, right? So that's like certain, I think he went on to have, I think his upbringing was good, but that's obviously going to affect you, right? I don't think in some way, right? So they will often like Steve Jobs, like kind of the same thing. There's like, they will kind of, and again, like we should be real careful here, right? Like they'll kind of pick out these archetypes and be like, these are the kinds of people that succeed.

19:57I would always like to say, listen, I think what you're really trying to select for is just someone that will have persistence in the face of challenges, right? And I certainly hope, and I know you're as fathers, as parents, I would think we all would hope that we can instill some of these values in our children without having to subject them to significant childhood trauma. And I think that would be the answer to these people. And of course the answer I always like to give back to the undercapitalists is like, cause like, I don't know how many times I've heard this story. They'll be like the founder, this was like the last dollar he or she had.

20:31And if this didn't work, they had, that was it. They had nothing. It's like, no, most of the people came from like a good family and they would have had somewhere to go. It's like one of these things like Travis Kalanick, I think famously lived in his parents' basement for seven years while he struggled. Right. And And it's so like people forget that part of the story. It's like they were in a pretty good position. If you truly were, this is your last dollar and you couldn't eat, like it would be crazy to spend your last dollar doing something high risk. You should go buy food, right? So again, I think we should just always think about like you're looking for people that have persistence, but like you can go overboard with this archetype, which I think venture capitalists do.

21:07But of course, they would tell me I'm all wrong. And I think the other thing that you highlight and where I think we've we started with this thing of what sometimes causes these charismatic leaders to be not only charismatic, but also to be like tremendous liars, or at least the world perceives them as liars and maybe they don't perceive it themselves. I do think there is a certain thing in society where people are, they're looking for somebody to tell them where to go in the future, what to do. And people like to say, I like to control my own life and all these sorts of things. But you look at, whether you look at like mass religions or you look at just other things in life, like there are most people are like, I would like for you to tell me the direction to go in.

21:44I can figure out the nuances, what to eat, what to wear, but where should we go? Is somebody going to create a scenario that makes me feel safe, hits on all the five hierarchies of Maslow's hierarchy sort of things? And I think there are people that recognize that there is a need for that and they can play on the emotions, which is like you didn't ask for somebody to lie to you, but you asked for somebody to give you a direction that you feel like is going to make you safe. And then they realized, oh, I also, that gives me a lot of leeway to create the reality that I want to create around that thing.

22:16And I think because tech works in such a big scale in terms of what we can do and the marginal cost of the next thing that you bring out can be pretty cheap. I think it does lend itself maybe more so than other industries to have that person that crosses the line between being like, yes, you're just trying to set a vision for something. And that vision you sent, you set is completely full of shit, for lack of a better way, whether it's a lie or it's completely manipulating or whatever it might be. Plus, there's a lot of money in this industry and money in any industry creates opportunity for con men and charades and all sorts of stuff like that.

22:49Yeah, I think as we kind of wrap up here, I kind of come back to this is for a forthcoming business book I will never write. But I've always said you really have three types of people at every company, right? And you can put yourself and I would encourage everyone, you can probably put yourself in one of these categories going forward. You have the operator, right? It's usually the CEO or the leader, founder of the company. You have a group of pragmatists and you have a group of believers. Those are the three types of people in every company. And it's to your point, like we may all, and I'm probably on this call or on this podcast today, we've said portrayed the operators a little bit more evil than we should.

23:22It's like, but ultimately we absolutely need someone to stand up and be like, I want to go solve this problem. I believe we can solve this problem and they are motivating. If you don't have that in a company, you don't have anything. If you just have a bunch of people that are around like, I think it's mostly luck. I don't think it really matters what we're going to do. Like you just have like nothing actually happens. So it's like we need that person, right? But that person is then going to have to surround themselves with two other types of peoples. One, the people that absolutely believe in every word that person is saying, right?

23:54Because those are the people that are going to show up every day and do exactly what they want done and not question one thing. Right. And that's just typically. And they have to be the buffer when people go like, this doesn't make sense. And you go, you just have to believe us. We don't know the answers, but we're going the right direction. And you've absolutely got to have that kind of people. Right. And then you have got to have that group of people with a group of pragmatists who are like, okay, I'm looking at what the operator saying. I think he or she maybe has a good idea. At the same time, I'm not going to take everything they say at face value.

24:26I'm going to critically think about whatever they want. They're like, we're going to Mars. You'd be like, I understand that's a great goal, but I have many questions like, how are we going to live? How are we going to grow food? You've got to have people in the organization asking these questions so that the believers can start working on some of these problems. I know you believe we're going to Mars, but we got to solve this problem or pick any big thing. Because if you don't have those people, you just have a bunch of people basically convincing themselves that everything's going to work out when it won't.

24:54So you've got to have some of these pragmatists. And I always find in myself, it's like, probably for everyone listening to the show, many of us, you've probably been all three. You've been at different companies and you've been everything in every place. And so that's what I always think when I'm sitting in these companies or I'm working on anything, which person am I and what role am I playing and what blind spots do I personally have? And I think for most of us, I think even if you operate a small business, you can at least reflect on yourself and be like, am I inspiring people or am I outright lying?

25:25And I think this is maybe like, this is where the topic kind of ends. It's like, there's clearly people on the operator side that just go too far, right? They think they're inspiring, but they're really absolutely lying. And those are the places where I think as a pragmatist, you should be like, it's time to leave, right? And as a believer, this is your moment to maybe rethink that. Never be like too carried away. So I don't know. That's how I think of it. I don't know if we answered any of these questions. We probably just made it more confusing, But I do think it's a fascinating topic. No, I do too.

25:53I do too. And I think your point of this isn't always just the leaders, the top person is the one who has to create these stories and whether they're 100 % true or partially true. I think you're right. There's people at every level of an organization who are like, I've been asked to do this thing and maybe it is a task that is just cut and dry. It's black and white. You're either going to do it or you're not. But there are plenty of things in between. And yeah, it is interesting, like you said, to think about that. you probably have been in every one of those roles at some point. And maybe even in the same job, you had to be the manipulator versus the pragmatist or whatever.

26:28But yeah, no, it's, it's, I think it's fascinating stuff. I think it's, I don't know if it's more prevalent in our industry. I think we live in this industry, so we feel like it's fairly prevalent, but yeah, I'd love to hear. We should invite the audience, either send us recommendations, like what should we be reading? Or maybe more importantly, who's someone that should come on the show and that's done all the research and explain it all to us. If you have that person, what is it? Show at the Enterprise AI Show. Show at the Enterprise AI Show dot com. Yeah, email us and we'll read all the emails.

26:55Yeah, just find one of us. Exactly. And they might come on the show and be like, you two fools, you two idiots, don't have any idea. Even better, you know what? Fantastic. We're contrariens that are wrong. Fantastic, I like it. That's right. All right, good stuff, man. I appreciate the topic idea. I think we touched on it a little bit. I think we're both fascinated by it. So folks, if you've got feedback, we'd love to hear it. And with that, we're going to wrap it up. And we'll talk to you next week. Thanks for listening. Check us out at theenterpriseaishow.com for past shows, newsletters, and all things Enterprise AI.