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Mathew Hayward explores vulnerability in business leadership, arguing that embracing vulnerability fosters stronger connections and builds trust with colleagues and clients.

Image courtesy of interviewee. September 24, 2024

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This video video reflects on the themes of overconfidence and hubris, particularly in the context of business and investment banking. The speaker shares personal observations from their career, noting that overconfidence often leads to poor decision-making that results in financial losses, especially during mergers and acquisitions or capital raising activities.

To combat overconfidence, the speaker cites insights from Professor Daniel Kahneman, suggesting that considering situations in which one might be wrong can serve as a useful antidote. However, they express skepticism about the effectiveness of this strategy among executives, arguing that a more tangible sense of vulnerability may resonate better.

The discussion touches on the stigma surrounding the expression of vulnerability in the workplace, emphasizing the need for executives to disclose challenges judiciously, as vulnerability is often seen as a weakness. The speaker urges leaders to carefully choose whom to disclose their vulnerabilities to, highlighting the importance of establishing trust through mutual vulnerability in relationships.

Case studies of influential figures like Sarah Gilbert, who developed a vaccine rapidly during a crisis, and Microsoft's cooperation with IBM illustrate how leveraging vulnerability can lead to successful partnerships. This video video concludes with a call for increased awareness among influential leaders—like Elon Musk—regarding their vulnerabilities to avoid perilous overconfidence in their decision-making processes.

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Here are five key points extracted from the video:

1. **Overconfidence and Its Consequences**: The speaker discusses the dangers of overconfidence and hubris in the convideo of investment banking, emphasizing that many failed deals were a result of excessive confidence about their prospects.

2. **Vulnerability as a Strength**: The concept of vulnerability is framed not as a weakness but as a necessary aspect of leadership and decision-making. The speaker highlights that expressing vulnerability can be valuable in building trust and fostering relationships in business.

3. **Importance of Relationships**: Building strong, trusting relationships is crucial for success, especially in vulnerable situations. The speaker uses the examples of Sarah Gilbert and Microsoft’s relationship with IBM to illustrate how effectively managing vulnerability can lead to collaborative successes.

4. **Navigating Risk and Trust**: Trust is depicted as essential for managing vulnerability. The speaker argues that once trust is established, leveraging vulnerability can further strengthen business relationships and lead to greater resource access.

5. **Warning Against Hubris**: The speaker expresses concern about individuals, such as high-profile CEOs, who may become blinded by success and make overconfident decisions that can lead to significant losses, stressing the need for a grounded understanding of vulnerability to prevent such pitfalls.

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Here are some key quotes extracted from the video , focusing on themes of overconfidence, vulnerability, trust, and the importance of relationships in business:

1. **Overconfidence and Hubris:**
- "It's been on overconfidence and hubris... we got ourselves into terrible trouble when we became overconfident about the prospects of... deals."
- "The times when we lost money on deals were almost invariably because we were sort of overconfident about the prospects of deals."

2. **Antidote to Overconfidence:**
- "The best antidote to overconfidence was to think about the conditions in which one could be wrong."
- "I never really felt as though executives could relate to those types of conditions."

3. **Vulnerability and Business:**
- "Vulnerability has been associated with weakness."
- "Even though there's much greater recognition of the need to express vulnerability in the workplace now, it’s not something that comes natural to... most leading business people."
- "You want to be able to disclose aspects of... the challenges that you are facing in your professional role without coming across as... some kind of a weak person."

4. **Building Trust:**
- "The classic definition of trust is that the trustor is prepared to make themselves vulnerable because they have confidence in the other party."
- "Once trust is extended, there's an interdependence between the two."

5. **Case Studies on Vulnerability:**
- "One of the case studies that I use... is Sarah Gilbert, who developed the vaccine within the space of 12 months under extraordinarily difficult circumstances."
- "Microsoft... was able to leverage its vulnerability to establish a privileged relationship with IBM."

6. **Relationships Over Transactions:**
- "What I advise every young leader to do is... to see every relationship, particularly with critical resource providers, as an opportunity to undertake social exchange rather than financial exchange."
- "What really matters is... building a lasting relationship with the prospective resource provider."

7. **Checking Overconfidence:**
- "I wanted to see if there's some way to get people like... Elon Musk... to try and get them in touch with what vulnerability looks like for them."
- "It could be very, very, very perilous... to avoid overconfident decisions."

These quotes reflect the overall messages concerning the dangers of overconfidence in business, the importance of vulnerability, and the value of trust and relationships in fostering successful ventures.

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Here are a few articles that explore similar themes of overconfidence, hubris, vulnerability in leadership, and decision-making in the convideo of business and investment:

1. **"The Perils of Overconfidence in Business"** - This article discusses how overconfidence among executives can lead to misguided strategies and unnecessary risks. It explores case studies in various industries where leaders' hubris resulted in significant financial losses.

2. **"Vulnerability as a Strength in Leadership"** - This piece delves into the misconception that vulnerability is a weakness in business convideos. It argues that leaders who show vulnerability can foster trust and enhance teamwork, thereby creating a more resilient organization.

3. **"Behavioral Economics Insights for Better Decision Making"** - This article provides an overview of behavioral economics, including the work of Daniel Kahneman. It highlights how cognitive biases, including overconfidence, affect business decision-making and offers strategies to mitigate these biases.

4. **"The Importance of Mutual Vulnerability in Team Dynamics"** - This discussion focuses on how mutual vulnerability among team members can foster better relationships and collaboration. It underscores the idea that leaders should create safe spaces for open dialogue about challenges.

5. **"History’s Lessons on Corporate Hubris"** - An examination of past financial crises driven by overconfident leadership. The article reviews cases such as the dot-com bubble and the 2008 financial crisis, shedding light on the consequences of ignoring warning signs due to overconfidence.

6. **"Case Study: Sarah Gilbert and the Rapid Development of the COVID-19 Vaccine"** - A focused article that looks at Sarah Gilbert's innovative approach during the pandemic, emphasizing how vulnerability in science and leadership can lead to breakthroughs in high-pressure situations.

7. **"Trust and Leadership: The Role of Vulnerability"** - This article explores how trust is built in leadership through the willingness to show vulnerability and share struggles, using examples from various business leaders and their management styles.

These articles provide insights into how overconfidence and vulnerability play critical roles in leadership and decision-making within businesses.

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Could go back to my, original work.

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Uh, it's, it's been on overconfidence and hubris.

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Uh, and, and as an investment banker, I noticed that,

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we got ourselves,

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we could get ourselves into, into terrible trouble.

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Uh, when we became overconfident, about the prospects

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of, doing a mergers and acquisition or,

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or a capital raising.

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Uh, and,

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the times when we lost money on deals,

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were almost invariably

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because we were sort of overconfident about the prospects

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of, of deals.

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It's one thing to be mindful of being overconfident

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and how that can spill over into hubris.

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Um, it's another thing to, be able

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to do something about that.

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Uh, and, the, a great man,

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professor, professor, Danny Kahneman,

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the Nobel Laureate, once told me that,

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he thought that the best antidote to overconfidence was

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to think about the conditions in which one could be wrong.

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I worked with executives on, on those kinds of conditions,

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but I never really felt as though they cut through.

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Uh, I, I never really felt

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as though executives could relate

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to those types of conditions.

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And what does seem to cut through, is,

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is when executives, feel a sense of,

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vulnerability reminds me of, it reminds me of,

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my publisher when I, when I published the book Ego Check.

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He, you know, and the, I was

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provided with a, a very generous, advance.

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But he said that the problem with the book is

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that the people who really need this book are the least

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likely to read it, you know, the, the people

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who are terribly overconfident

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and fall into the traps of hubris of the,

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of the least likely to read a book like this.

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Um, so I wanted to try

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and, get through, to business people,

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who are, sensing,

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overconfidence, in their work life.

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And I also wanted to send a message, to,

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business people, who feel vulnerable, who, who feel

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as though you know, their projects or their ventures

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or their organizations are susceptible to

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material and uncontrollable losses.

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And I, I, and I wanted to tell them,

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and explain to them, some very real options

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that they have to address that vulnerability.

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But, you know, historically,

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vulnerability has been associated, with weakness.

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Uh, and, you know, there, there are cases in which,

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it's invidious, inadvisable,

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to express vulnerability,

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because you can potentially be, inviting,

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exploitation

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and op opportunism, from the person that you, you,

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you would, confide your vulnerability, in.

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Uh, so, you know, even though,

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there's much greater recognition of the need

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to express vulnerability in the workplace now, it, it,

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it's not something that comes natural to,

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most leading business people.

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You want to be able to disclose aspects

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of, the challenges

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that you are facing in your professional role, without,

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without coming across, as, some kind

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of a, a weak person, you know, if not loser.

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So it only really makes sense to disclose vulnerability,

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when, the person

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to whom you are disclosing, can assist you with

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that vulnerability in some sort of,

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you know, meaningful way.

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Um, so that, that means that, you have

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to be very careful about the nature of vulnerability

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that you, you disclose,

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and you have to be very careful about whom you disclose it,

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it to, because,

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because, no, no boss wants a newcomer to come

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to the workplace and run a project

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and start talking about, you know,

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all the possible ways in which one, might fail.

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I mean, there has to be some sort of rate relationship there

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that, that, that one can sort of build on to begin with.

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One of the case studies that I use,

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and a particular hero of mine, is Sarah Gilbert,

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who's the famous,

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professor at Oxford University who developed,

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the vaccine within the space of, of 12 months actually.

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And, you know,

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under extraordinarily difficult, circumstances.

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Uh, and the challenge that she faced is that,

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even though she was making extraordinary progress,

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with the vaccine, she was only going

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to succeed if she could find a partner,

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who could manufacture the vaccine to, to at large volumes

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and distribute it to the people you know, who needed it.

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Um, and that required her to, build a relationship,

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and her team to build relationships.

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Um, with, with, with Pfizer, in particular, and,

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and, and, and, so, you know, that

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that wasn't an indiscriminate, disclosure

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of vulnerability, Sam.

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I mean, she was very judicious, you know, in

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who she approached and how, and how she approached them.

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And, and there were all sorts of challenges in doing that.

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And one was, the prospect that, that, that,

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that someone else would,

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Um, appropriate, you know, her work and,

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and the commercial potential of her work.

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Uh, so vulnerability is something that has to be disclosed

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very, very judiciously.

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The classic definition of trust is, is that the, the,

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the trust or the person who's grounding trust is prepared

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to, make themselves vulnerable,

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because they have confidence, you know, sort of, you know,

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in the other, in the other party, there has to be some sort

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of, there has to be something really sort

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of significant, you know, at stake.

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And when we talk about trust,

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we usually talk about the pa party granting trust,

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and we miss out on, the, the scope,

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for the trustee or the party, that's seeking trust

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or could be the recipient of the trust, to be able to,

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you know, manage and even leverage their own

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vulnerabilities, in order to,

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develop strong relationships that would allow them to access

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ongoing resources, which of course is, is absolutely vital

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to, to any startup.

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Think about Microsoft, now as, as one

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of the most successful and valuable,

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businesses out there that, you know,

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if I could take you back to 1980,

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when Microsoft really didn't have, significant revenue

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and needed to, it was,

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it was an incredibly vulnerable situation.

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Um, and, it developed a relationship with, with IBM,

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of course, a famous relationship, you know, whereby,

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you know, Microsoft would developed,

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the operating system, for, for IBM's,

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personal computer business.

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Uh, and, and of course that was the genesis really, of,

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the Microsoft organization.

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And you think about the vulnerability that Bill Gates

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and Microsoft had, back in those days

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because, all their revenues were coming from, you know,

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Microsoft, sorry, from IBM,

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IBM completely dictated the terms of the,

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of the relationship.

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So the survival of Microsoft depended upon its ability

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to manage its relationship with IBM

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draw resources from IBM.

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And, and, and there were two really,

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I think pivotal ways in which, Microsoft, was able

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to manage and leverage its vulnerability

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to IBM in those days.

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And IBM, was only going to work with, Microsoft

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if it could trust Microsoft.

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Um, and, and when we think of the trustworthiness of, of a,

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of somebody like Gates

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and Microsoft, it, it depends on, the trust,

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or in this case, IBM's perceptions of,

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of Microsoft's ability, benevolence, and integrity.

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And IBM m just thought that, you know,

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because it was in a more powerful position, it, it was going

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to, it, it was, a better placed, to ensure,

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that those dimensions of,

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trustworthiness would be evident in its dealings

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with, with Microsoft.

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And Microsoft really played into that, by sort

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of exceeding to, to IBM's demands.

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So Microsoft was essentially able

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to leverage its vulnerability

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to establish a privileged relationship with,

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with IBM, just as Sarah Gilbert did.

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Um, in the case of, Pfizer.

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Um, and then later, once Trust was established,

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Microsoft was able to do all sorts of very clever things

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to actually escalate its vulnerability to IBM so

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that it could further secure that relationship.

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Uh, and, you know, we,

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we could talk in depth about the kinds of things

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that Microsoft did there.

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Once trust starts to be extended, is

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to escalate their vulnerability to the other party,

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in a way that will strengthen the relationship.

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Now, there's a danger of that as well, which is of course,

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the weaker party can become more dependent upon the

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more upon the stronger party.

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But if you are in a really vulnerable condition, if,

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if your project's really struggling, then, you know,

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there are times when, you would want have

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that strong relation to that dependence, even codependence

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with a view to later sort of extracting yourself from

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that dependence in a way that Sarah Gilbert

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and Microsoft, managed beautifully.

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Um, in the end, let's work with a little bit of I imagery

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for, for the time being, before I get to,

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before I get to your answer.

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So one of the great metaphors for, for trust is,

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is the metaphor of, two mountain climbers,

204
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on, on, on a sort of a precipice.

205
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Um, and, and sort of the idea is that one

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of the mountain climbers has sort of got to sort

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of a summit kind of point,

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and it's helping the other mountain climber up to where,

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you know, they are on that summit point.

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And we normally think about the,

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we normally think about the trust door, as the person

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that's already at the top there

213
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and helping, you know, the other mountain climber come up.

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But, but once you, once trust is extended,

215
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there's an interdependence between the two.

216
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So now that I'm, as I'm climbing up the mountain as a,

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as a founder in a new venture

218
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and I'm clinging on to the trust door, all of a sudden

219
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I'm in a position, where, I'm, I'm granting trust

220
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because, just as I was sort of vulnerable

221
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before to the other party

222
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and getting up, now, the other party's vulnerable to me

223
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because I could potentially pull that other party down,

224
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you know, with me, both literally, you know, sort of

225
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and metaphorically.

226
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Um, so, you know, so, so once,

227
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once Microsoft used its, vulnerability to,

228
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elicit trust, from, IBM,

229
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then there were various things that Microsoft did to try

230
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and make itself more vulnerable to IBM in order to,

231
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you know, sort of strengthen, strengthen that trust, because

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after all, trust is, is the idea

233
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that we accept vulnerability based on the confidence

234
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that we have in the other party.

235
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Um, so this is where, where Microsoft was very clear,

236
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in, in trying to ensure, first of all,

237
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that a lot of its dealings with, with,

238
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with IBM were sort of as informal, you know, as possible.

239
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And of course, disadvantage of that is you,

240
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you can lose some contractual protections,

241
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but the advantage of it is that, you know,

242
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people do business with people, companies don't do business

243
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with come, people do business with people.

244
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You're beginning to secure relationships

245
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that are gonna stand the test of, time.

246
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So there was an informality that that i, BA,

247
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that Microsoft was able to, put in place,

248
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specific specifically Gates and and Bama back in those days.

249
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Um, and, and there was an open-endedness, to,

250
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to, to the dealing.

251
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So, so often when we think about transactional

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and contractual arrangements, you know, sort there,

253
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there are sort of finite deadlines

254
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and finite military, investments associated with them.

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And, and Microsoft was very clever not to do that.

256
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You know, Microsoft, w was trying

257
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to create the space even though there was a vulnerability

258
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associated with, with relinquishing contracts

259
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or a stewing contracts.

260
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The theory that I'm working on is really predicated on,

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you know, sort of what we call social exchange theory,

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and that's the idea that, you know,

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relationships will be predicated on, you know, sort

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of goodwill, rather than, transactions.

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So what I advise every young leader to do is, is

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where possible, try

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and see every relationship, particularly,

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and I'm thinking about a number of founders I'm working

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with at the moment, see every relationship

270
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with critical resource providers, as, as an opportunity

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to undertake,

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social exchange rather than financial exchange.

273
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So you, it's a little bit counterintuitive

274
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because you might say as a sort of a, a younger,

275
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a younger person, you know, starting a venture,

276
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that, that what matters most, is, is financial security

277
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and, and going to the lawyers

278
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and getting a contractual agreement, that sort of,

279
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you know, sort of underpins how your product

280
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or service would be used.

281
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Um, but in my experience, you know, what, what,

282
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what really matters, is, is working on,

283
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social exchange, building a lasting relationship,

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with the prospective, resource provider.

285
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Because what you're

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after really is enduring access to resources,

287
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enduring access to, referrals and, and networks.

288
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Um, and, and that will take you much further than,

289
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you know, securing, you know, $50,000 for, you know,

290
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a certain percentage of your, you know,

291
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company could be in a large organization,

292
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could be in the public service wherever, in, in,

293
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you know, in how to build relationships

294
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to navigate their way through, some choppy waters.

295
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Um, but what I'd really love to do is return to my

296
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previous interest in, in overconfidence and hubris

297
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and see if there's some way, to get,

298
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people like, you know, sort of Elon Musk

299
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or others who, who are starting to perceive a sort

300
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of sense of invulnerability.

301
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Um, try

302
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and get them in touch with what vulnerability looks like

303
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for them, with the idea of helping them

304
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to avoid overconfident decisions.

305
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Um, that could be very, very, very perilous.

306
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And, you know,

307
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and, you know, I'm thinking about now, Musker,

308
00:16:07.675 --> 00:16:12.335
ill-fated decision to buy, Twitter,

309
00:16:12.395 --> 00:16:15.655
and how that's cost him and, his fellow investors.

310
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Um,

311
00:16:17.595 --> 00:16:20.895
and, it would've been, it,

312
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it would've been very meaningful to be able to connect

313
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with somebody like that as he was making a decision,

314
00:16:28.515 --> 00:16:30.895
as momentum, as momentous as that one was.

"Overconfidence and Vulnerability: Navigating Risks in Business Leadership"

00:00:00 - Could go back to my, original work. it's, it's been on overconfidence and hubris. and, and as an investment banker, I noticed that, we got ourselves, we could get ourselves into, into terrible trouble. when we became overconfident, about the prospects of, doing a mergers and acquisition or, or a capital raising. and, the times when we lost money on deals, were almost invariably because we were sort of overconfident about the prospects of, of deals. It's one thing to be mindful of being overconfident and how that can spill over into hubris.
00:00:46 - to do something about that. and, the, a great man, professor, professor, Danny Kahneman, the Nobel Laureate, once told me that, he thought that the best antidote to overconfidence was to think about the conditions in which one could be wrong. I worked with executives on, on those kinds of conditions, but I never really felt as though they cut through. I, I never really felt as though executives could relate to those types of conditions. And what does seem to cut through, is, is when executives, feel a sense of,
00:01:30 - my publisher when I, when I published the book Ego Check. He, you know, and the, I was provided with a, a very generous, advance. But he said that the problem with the book is that the people who really need this book are the least likely to read it, you know, the, the people who are terribly overconfident and fall into the traps of hubris of the, of the least likely to read a book like this. so I wanted to try and, get through, to business people, who are, sensing, overconfidence, in their work life.
00:02:12 - business people, who feel vulnerable, who, who feel as though you know, their projects or their ventures or their organizations are susceptible to material and uncontrollable losses. And I, I, and I wanted to tell them, and explain to them, some very real options that they have to address that vulnerability. But, you know, historically, vulnerability has been associated, with weakness. and, you know, there, there are cases in which,
00:02:52 - to express vulnerability, because you can potentially be, inviting, exploitation and op opportunism, from the person that you, you, you would, confide your vulnerability, in. so, you know, even though, there's much greater recognition of the need to express vulnerability in the workplace now, it, it, it's not something that comes natural to, most leading business people. You want to be able to disclose aspects
00:03:31 - that you are facing in your professional role, without, without coming across, as, some kind of a, a weak person, you know, if not loser. So it only really makes sense to disclose vulnerability, when, the person to whom you are disclosing, can assist you with that vulnerability in some sort of, you know, meaningful way. so that, that means that, you have to be very careful about the nature of vulnerability

"Navigating Vulnerability: Lessons from Sarah Gilbert and Microsoft"

00:04:12 - and you have to be very careful about whom you disclose it, it to, because, because, no, no boss wants a newcomer to come to the workplace and run a project and start talking about, you know, all the possible ways in which one, might fail. I mean, there has to be some sort of rate relationship there that, that, that one can sort of build on to begin with. One of the case studies that I use, and a particular hero of mine, is Sarah Gilbert, who's the famous, professor at Oxford University who developed, the vaccine within the space of, of 12 months actually.
00:04:57 - under extraordinarily difficult, circumstances. and the challenge that she faced is that, even though she was making extraordinary progress, with the vaccine, she was only going to succeed if she could find a partner, who could manufacture the vaccine to, to at large volumes and distribute it to the people you know, who needed it. and that required her to, build a relationship, and her team to build relationships. with, with, with Pfizer, in particular, and, and, and, and, so, you know, that
00:05:39 - of vulnerability, Sam. I mean, she was very judicious, you know, in who she approached and how, and how she approached them. And, and there were all sorts of challenges in doing that. And one was, the prospect that, that, that, that someone else would, appropriate, you know, her work and, and the commercial potential of her work. so vulnerability is something that has to be disclosed very, very judiciously. The classic definition of trust is, is that the, the, the trust or the person who's grounding trust is prepared to, make themselves vulnerable,
00:06:21 - in the other, in the other party, there has to be some sort of, there has to be something really sort of significant, you know, at stake. And when we talk about trust, we usually talk about the pa party granting trust, and we miss out on, the, the scope, for the trustee or the party, that's seeking trust or could be the recipient of the trust, to be able to, you know, manage and even leverage their own vulnerabilities, in order to, develop strong relationships that would allow them to access ongoing resources, which of course is, is absolutely vital
00:07:03 - Think about Microsoft, now as, as one of the most successful and valuable, businesses out there that, you know, if I could take you back to 1980, when Microsoft really didn't have, significant revenue and needed to, it was, it was an incredibly vulnerable situation. and, it developed a relationship with, with IBM, of course, a famous relationship, you know, whereby, you know, Microsoft would developed, the operating system, for, for IBM's, personal computer business. and, and of course that was the genesis really, of, the Microsoft organization. And you think about the vulnerability that Bill Gates
00:07:46 - because, all their revenues were coming from, you know, Microsoft, sorry, from IBM, IBM completely dictated the terms of the, of the relationship. So the survival of Microsoft depended upon its ability to manage its relationship with IBM draw resources from IBM. And, and, and there were two really, I think pivotal ways in which, Microsoft, was able to manage and leverage its vulnerability to IBM in those days. And IBM, was only going to work with, Microsoft

"Navigating Vulnerability and Trust: The Microsoft-IBM Relationship"

00:08:26 - and, and when we think of the trustworthiness of, of a, of somebody like Gates and Microsoft, it, it depends on, the trust, or in this case, IBM's perceptions of, of Microsoft's ability, benevolence, and integrity. And IBM m just thought that, you know, because it was in a more powerful position, it, it was going to, it, it was, a better placed, to ensure, that those dimensions of, trustworthiness would be evident in its dealings with, with Microsoft. And Microsoft really played into that, by sort
00:09:08 - So Microsoft was essentially able to leverage its vulnerability to establish a privileged relationship with, with IBM, just as Sarah Gilbert did. in the case of, Pfizer. and then later, once Trust was established, Microsoft was able to do all sorts of very clever things to actually escalate its vulnerability to IBM so that it could further secure that relationship. and, you know, we, we could talk in depth about the kinds of things that Microsoft did there. Once trust starts to be extended, is to escalate their vulnerability to the other party,
00:09:48 - Now, there's a danger of that as well, which is of course, the weaker party can become more dependent upon the more upon the stronger party. But if you are in a really vulnerable condition, if, if your project's really struggling, then, you know, there are times when, you would want have that strong relation to that dependence, even codependence with a view to later sort of extracting yourself from that dependence in a way that Sarah Gilbert and Microsoft, managed beautifully. in the end, let's work with a little bit of I imagery for, for the time being, before I get to,
00:10:28 - So one of the great metaphors for, for trust is, is the metaphor of, two mountain climbers, on, on, on a sort of a precipice. and, and sort of the idea is that one of the mountain climbers has sort of got to sort of a summit kind of point, and it's helping the other mountain climber up to where, you know, they are on that summit point. And we normally think about the, we normally think about the trust door, as the person that's already at the top there and helping, you know, the other mountain climber come up. But, but once you, once trust is extended,
00:11:10 - So now that I'm, as I'm climbing up the mountain as a, as a founder in a new venture and I'm clinging on to the trust door, all of a sudden I'm in a position, where, I'm, I'm granting trust because, just as I was sort of vulnerable before to the other party and getting up, now, the other party's vulnerable to me because I could potentially pull that other party down, you know, with me, both literally, you know, sort of and metaphorically. so, you know, so, so once,
00:11:55 - elicit trust, from, IBM, then there were various things that Microsoft did to try and make itself more vulnerable to IBM in order to, you know, sort of strengthen, strengthen that trust, because after all, trust is, is the idea that we accept vulnerability based on the confidence that we have in the other party. so this is where, where Microsoft was very clear, in, in trying to ensure, first of all, that a lot of its dealings with, with,

"Navigating the Balance of Vulnerability and Trust in Business Relationships"

00:12:37 - And of course, disadvantage of that is you, you can lose some contractual protections, but the advantage of it is that, you know, people do business with people, companies don't do business with come, people do business with people. You're beginning to secure relationships that are gonna stand the test of, time. So there was an informality that that i, BA, that Microsoft was able to, put in place, specific specifically Gates and and Bama back in those days. and, and there was an open-endedness, to, to, to the dealing. So, so often when we think about transactional
00:13:17 - there are sort of finite deadlines and finite military, investments associated with them. And, and Microsoft was very clever not to do that. You know, Microsoft, w was trying to create the space even though there was a vulnerability associated with, with relinquishing contracts or a stewing contracts. The theory that I'm working on is really predicated on, you know, sort of what we call social exchange theory, and that's the idea that, you know, relationships will be predicated on, you know, sort of goodwill, rather than, transactions.
00:13:58 - where possible, try and see every relationship, particularly, and I'm thinking about a number of founders I'm working with at the moment, see every relationship with critical resource providers, as, as an opportunity to undertake, social exchange rather than financial exchange. So you, it's a little bit counterintuitive because you might say as a sort of a, a younger, a younger person, you know, starting a venture, that, that what matters most, is, is financial security and, and going to the lawyers and getting a contractual agreement, that sort of,
00:14:38 - or service would be used. but in my experience, you know, what, what, what really matters, is, is working on, social exchange, building a lasting relationship, with the prospective, resource provider. Because what you're after really is enduring access to resources, enduring access to, referrals and, and networks. and, and that will take you much further than, you know, securing, you know, $50,000 for, you know, a certain percentage of your, you know, company could be in a large organization,
00:15:20 - you know, in how to build relationships to navigate their way through, some choppy waters. but what I'd really love to do is return to my previous interest in, in overconfidence and hubris and see if there's some way, to get, people like, you know, sort of Elon Musk or others who, who are starting to perceive a sort of sense of invulnerability. try and get them in touch with what vulnerability looks like for them, with the idea of helping them to avoid overconfident decisions.
00:16:28 - And, you know, and, you know, I'm thinking about now, Musker, ill-fated decision to buy, Twitter, and how that's cost him and, his fellow investors. and, it would've been, it, it would've been very meaningful to be able to connect with somebody like that as he was making a decision, as momentum, as momentous as that one was.

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