A New Kind of Intelligence

(upbeat music) Know that your value and your expertise as an investor will definitely change and that there needs to be a letting go of the rigidity of how you see yourself where like, oh, I only, you know, look at X type of market or X type of company or this is where my sweet spot is. Let all of that go and think from a first principles perspective of where it is that you want to take your expertise. I don't let the past dictate where you're gonna go in the future. (upbeat music) - That was Liz Tran, author of AQ, a new kind of intelligence for a world that's always changing. I'm Motley Full Producer, Matt Greer. Motley Full contributor, Rachel Warren, recently talked with Tran about that new kind of intelligence and about investing in a world that yes, is always changing. - Hello everyone and welcome back to Motley Full Conversations. I'm Motley Full Analyst, Rachel Warren and today I'm excited to welcome Liz Tran to the show. Liz is the founder of Energenius and a leadership coach to CEOs and founders of some of the world's fastest growing companies. She's worked with companies like Facebook, Instagram and the Ford Foundation and her transformative work has been featured by publications including The New Yorker, The New York Times, At Today's Show, Bloomberg, Entrepreneur, Fast Company and other publications. She brings engaging interactive workshops to startups and Fortune 500 companies, speaking to employees about how to avoid burnout, build unshakable confidence and unleash their Energenius. Liz is also an expert on unlocking employee potential in the modern workplace and redefining what it means to be an exceptional leader. She's the author of The Karma of Success and the newly released book, AQ, A New Kind of Intelligence for a world that's always changing. Liz, welcome to the show. Thanks for having me, Rachel. So excited to speak with you today and I wanna start off the conversation by talking about your new book, AQ, A New Kind of Intelligence for a world that's always changing. Now in your book and in conversations I've seen about it, you assert that IQ is the product of industrialization, EQ emerged from globalization, AQ, short for the agility quotient, is the intelligence born of the tech revolution. So I'd love if you could tell us about your book and its core themes and why it's relevant, not just for leaders, but also for investors in today's market. It is so important for us to understand the actual rubric by which we are going to be evaluated for our success and happiness in life. And the idea for AQ actually came to me about 10 years ago when I was working in venture capital. So I was an executive at a firm called Thrive here in New York City for those of you who follow venture fund, news, Thrive just raised their 10th fund of $10 billion. But when I started there, we were fewer than 10 people and we were really just starting to begin to understand what made investors and also company leaders successful. Big project I embarked on was to interview our most successful founders, the ones who had exited or pulled off really great M&A for their companies. And I gave them personality tests, I had long interviews with them. At the end, I could not identify any commonalities they had except that they were always changing. They had high AQ, which is what I call the agility quotient. It's your capacity to handle change, uncertainty, and the unknown. I kind of left that there 10 years ago. And then as the pandemic occurred, I started noticing that even people who had really high IQ or EQ were struggling during this time of tremendous uncertainty and change. And then finally about two years ago, when I became a parent myself and started to think about what it was and why I was struggling with this big transition in life. And also there are larger micro macro changes happening in the world at that moment. And I just realized, you know what, this definition of success that we've all been given around, you know, do well in school, do well in certain nice tests, follow sort of what has been prescribed to you through a blueprint. That's not working for anyone anymore. And that's especially true for investors who make up a big part of the clientele who I coach, meaning I speak to them on a weekly or biweekly basis for years to get them to reach their greatest potential as investors. Something that I thought was really interesting is this assessment you've developed to identify your, you know, EQ archetype. And I'd love if you could talk about what that is and it kind of break that down for our audience. - Yeah, absolutely. When we talk about being high, EQ, the opposite of that is being rigid. And rigidity comes from when you're sort of stuck in a mindset, stuck in a perception of the world or stuck in a perception of yourself. So what the AQ archetypes assessment does is it helps you to actually see yourself more thoroughly and codify what your strengths and weaknesses actually are to help you spot blind spots. I actually think this is one of the core fundamentals of being a competent and successful investor these days is this constant pressure testing of yourself, of understanding where your biases are, where your blind spots are. And that's actually what the assessment hopes you do. It characterizes you as one of four archetypes. You're either a firefighter, great under pressure, great in emergency situations, but not very planful. A novelist, which is the opposite of that, extremely planful, goal-oriented, great at synthesis and narrative, but not so good at emergency situations. You could be an astronaut, which is the most quote unquote, innovative of all the types. You're always thinking about the next frontier of innovation, but people might not be able to quite follow you because you move so quickly. And then finally, the neurosurgeon, which is sort of the most thoughtful, the most diligent, and the one motivated by excellence, but can also move a lot more slowly. And so for us, we need to understand our type because one's not better than the other, but you need to know how to make the most of the specific hand that you've been dealt, and know how to play it with sort of the most intentionality and to be able to see yourself extremely objectively. I myself am a novelist. I love making a plan for my life. I always have a five-year plan. I always have an agenda for every call. I always have my weeknapped out exactly, how the meetings need to follow, how everything needs to go. But I do get turned upside down when, for instance, we have a blizzard in New York City, and I'm meant to fly to a work conference in Miami tomorrow. So just knowing the type you are. The study has been in place for the first time in a year, and the sort of cynical pessimistic, but also just very realistic way of seeing the world. And at the same time, I think that what's required for AQ is to hold that black hat in tandem with the green hat. And the green hat represents future, hope, potential, what could be in the future for your investments, right? You're always looking at, oh, okay, if I believe the story that's going to happen, then we're going to get X-ray to return on this because this company, this stock, is going to live up to its greatest potential. And so what I think is really interesting is that investors are being stretched to where both of those hats equally. As our operators, I mean, I think we all are. And so this is what I mean by AQ is that there's actually like this fluidity and this flexibility with mindset where you can actually hold these two very opposite sides of the spectrum simultaneously. And so I'll give you an example of that. One of my clients is a GP of a crypto fund. And he holds hundreds of millions of dollars in his portfolio in liquid crypto assets. So constantly evaluating whether or not he should buy or sell. And of course they have a very, very detailed sell plan that they've worked on. They've had this in place for four years. And then they have individual plans for each of the individual assets. And then in this past fall, as things started to change a lot in crypto, there was this big conversation of do we sell everything? What's going to happen? Is there going to be a downturn? And he, for months, would look at that cell plan every single night in different parts of it. And he would, this is what we call an AQ language, he would strategically unlearn. So he would look at the cell plan and think, does this actually make sense? Can I pull more data? Is this accurate? And truly 80% of the time, 90% of the time, he would leave these thinking sessions and think, yeah, actually the cell plan's right, right? And so that was the thing. It's like there wasn't actually that much movement, but there was the constant black hat of thinking, is this wrong? Right? Was I wrong before? He didn't really change his plan at all. Like when he looks back at this month-long period, but it was all necessary to get to an accurate understanding of like, not just holding the green hat of like, our cell plans right, we did a great job. You know, we're just going to keep going with this. The market looks good. And then here we are a few months later. And out of all the top funds, he was the only one that sold and actually timed it correctly. And all of his GPs and his investors said, you look like a genius. You're the only ones who did that. And it was his willingness. The reason why he looks like a genius now is because he was willing to look like a moron for months. You know, they're constantly making himself think, are you wrong? Where are you wrong? Where are you wrong? Is there more data I can pull from somewhere? Should I look at, you know, the trades that ETFs are doing? Like, should I keep, you know, is there an area that hasn't been explored? And he didn't just rest when he said, yeah, okay, cell plan looks right. He would do the same thing the next day from 9 p.m. when he put his kids to bed to 11 p.m. at night. He would just go back through and say, okay, am I a moron? I don't know. Let's figure it out. Is there any data you've seen whether, you know, observationally or otherwise about how, you know, founders, execs of public companies with high AQ tend to make better financial or investment decisions or just decisions for the direction of the company overall. I mean, that could be publicly traded examples or otherwise. Yeah, I mean, I think that the proof is in the putting in a lot of ways. Like, I think as is just a very specific example to go to one person, you know, end of one. I think about when Satya and Adela took over Microsoft in 2014 and, you know, the stock price at Microsoft had been flat for a number of years and they had really missed out on big trends like mobile, social gaming and investors were not bullish about that stock. When he took over the very first thing that he did was instead of making, you know, kind of big strategic decisions, he turned around the entire culture and he said, we're not going to be and know at all culture anymore where everyone says, I'm right, I'm the expert. We're going to transition into a learn at all culture, which is about as high AQ as you can be. This idea that success isn't in being the expert, but success is in constantly being a sponge open to learning, open to growing. And so they made mugs and they put them in all the kitchens about how you need to be a learn at all. They put up posters everywhere. He trained the executive team to constantly come back to this idea that people need to be learning, learning, learning constantly and then look where they are now. You know, their stock price has 10xed and, you know, the few years that he had taken over and then they actually have been innovators in AI and really been bullish about their investments there. It's been a totally different Microsoft. And so that is just like an end of one example that I think about all the time where you can hire the best and the smartest people, but unless you're also pushing them to be agile and adaptable, then you're not going to get the performance out of them or your company. You know, and so much of I think what we're talking about today has to do with the psychology of being an investor, which is something that we really talk about a lot here at the MollieFull is that mindset with which we approach portfolio building. And of course, that looks very different for every individual investor. But I think as we've seen a lot of volatility in the markets of late, there's of course a lot of exciting trends in which to invest. Of course, AI is on the tip of every investor's tongue, a space quantum computing the list goes on. But as we see these movements and changes in the market, whether it is concerns over a bear market or just the ongoing volatility, what are some principles that we as long-term investors can apply to not see those changes as threats, so to speak, but as proactive change events? Yeah. So the first thing I'll say is that it's about defining what you think makes you successful as an investor, right? And AQ is really at the heart of that. And that's actually fun and exciting. I think it opens up an opportunity for everyone to see this moment where the markets are quite volatile as a moment to level up. And there's some doors opening for people to gain expertise in footing in places where they haven't had it before, which I think is actually really exciting. In this new world, there's also new opportunities and new chances to broaden your portfolio in a way that you hadn't thought about before. So one, I want to say, let's all level set and just say, this is an exciting moment. It's scary, it's different, but with newness and with change invites in opportunity. And so there are three strategies that I recommend, given that mindset. And one is one that we touched on briefly, which is this idea of practicing strategic unlearnings. So on a regular basis, conducting some sort of audit, and the cadence of which is going to depend on how actively you're making portfolio changes. For some people, once a month is enough, for some people once a week is enough, but it's basically going through pieces of what you've invested in or parts of the knowledge that you've made assumptions on, and you can choose one piece every time you do an audit. And then you simply ask yourself, is there a part of my core belief about this industry or about this investment that is no longer true? And how can I find new or different sources of information or data that could prove or disprove this? You can also ask yourself what parts of my workflow are no longer accurate? Are there, you know, ways that I've been writing investment memos or making investment decisions that no longer hold true to how quickly or slowly I need to move through these decisions right now? What parts of my expertise might I be clinging to too tightly right now? And then with that strategic unlearning, you remove something. Maybe that means actually removing something from your portfolio or it could mean killing a legacy process, redesigning an investment thesis from scratch and seeing if you come up with the same thing but doing that again. But really what you're doing is you're creating new space for new expertise to emerge. And I think a lot of us were trained to just add more, right? Add more information, add more knowledge and that can be a fire hose these days if you're just absorbing, absorbing, absorbing and people can become overwhelmed. But high AQ people are also willing to let go of some of what they've learned before. That's the first one. The second thing I will say is expand the contours of your universe. And so a lot of this comes down to talking to other people, growing your network, coming up with new strategies and tools for the way that you invest. Because the blueprints that we've used in the past are not going to carry on towards a future. And I think that that's just something that we need to accept that maybe you've been taught, you know, you've grown up on value investing or you know, you've grown up with a specific mindset of the way that you know, you manage your long-term investments. Not to say that it's not going to be fully accurate, but part of your new thesis as an investor is going to be brand new. I call it Bushwacking. It's an important skill of AQ. And it's creating a path we're not existed before. So we are not going to just be able to rely on, you know, the old philosophies or the old ways that we've grown up, whether it's in business school or what we've learned from our mentors about, you know, the principles of investing. We can hold on to those, but we also need to create our own. And so this means talking to people who are maybe newer or more free-flowing with their investments. Not to say that you should take everything from them, but just expanding your repertoire of what is possible in terms of the way that you see the world. And so I think that's a really, really important one. How do you expand the aperture of your universe, your toolkit of investing, even if it seems opposite to what you've learned in the past, because you're knowing that like what the future demands is not a path that has been already clear cut, you're going to have to make your own way. Because the world is not the same as it was even five, 10 years ago. And finally, the last, you know, skill I will use is to know yourself really well. It's about self-awareness these days. And you have to know your biases, your limitations, the places where you're holding on too tightly to pieces of your investments or where you're holding on too tightly to the way that you see yourself. Because a big part of AQ is about relinquishing the ego, which I think makes everyone a better investor. When you can see the mirror very clearly, you're not going to be tricking yourself into specific decisions that may not be the best for you. You're able to look at yourself very clearly and say, "Okay, maybe I did made this decision a month ago, but it's just not right right now." Have you ever gazed in wonder at the great pyramid? Have you marveled at the golden face of Tudankamun or admired the delicate features of Queen Nefertiti? If you have, you'll probably like the history of Egypt podcast. Every week we explore tales of this ancient culture. The history of Egypt is available wherever you get your podcasting fix. Come, let me introduce you to the world of ancient Egypt. One final question, I think that what are the big takeaways I've had from our conversations? today is that AQ is one of the most important skills that we can pass down and implement certainly as investors, as well as in other areas of our life. But as we look ahead over the next five to ten years, how can investors prioritize remaining financially agile rather than just financially literate? Yeah, definitely. I think part of this is also creating a learning plan for yourself knowing where it is that you want to go. And as we discussed before, there are moments to be reactive to the market and let that dictate the type of investor that you need to be, right, what you need to learn. But then there's also this part of knowing that you are going to be evolving and growing and constantly having individual development plan for what your gaps are. You know, I've definitely seen investors who say things like, oh, well, like, I'm just not an AI person, right? Like I'm a consumer person. Like those are the companies that I understand. Those are the markets that I want to be in. We can't say those rigid things about ourselves anymore. You can't be like, oh, well, like, I'm an ex person, not a Y person, because it's just not true. We all are so adaptable and lately. And that's actually what we need to remember is that AQ is our birthright. We all have the potential to be extremely high AQ. Our ancestors were nomads who were hunter-gatherers and they didn't know what was going to happen tomorrow. They didn't even know what they were going to eat or where they were going to sleep. And so they were dealing with like a much greater degree of volatility than even the most risk-taking investors are, right? We ultimately live in temperature-controlled buildings and like, you know, we can like predict our future with like a far greater certainty. And so I think what it is is like, know that your value and your expertise as an investor will definitely change. And that there needs to be a letting go of the rigidity of how you see yourself where like, oh, I only, you know, look at X type of market or X type of company or this is where my sweet spot is. Let all of that go. And think from a first principles perspective of where it is that you want to take your expertise. I don't let the past dictate where you're going to go in the future. Well, I think you've given us all a lot to think about today, Liz. And it's been so fun to chat with you and talk about the concept of AQ. And for those who are listening or watching, check out Liz's book AQ and new kind of intelligence for a world that's always changing. Liz, thank you so much for joining me today. Thanks for having me, Ray Jolley. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against. So don't buy yourself stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For the Motley Fool Money Team, I'm Matt Greer. Thanks for listening and we will see you tomorrow.