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Skydeck Live: The Rise of the FOMO Sapiens
Dan Morrell: Fifteen years ago, while Patrick McGinnis (MBA 2004) was a student at HBS, he wrote a column for the student newspaper, the Harbus, about his observation that the student body’s social schedules were driven by two forces: The Fear of Missing Out and the Fear of a Better Option—or FOMO and FOBO, for short.
And then he graduated and started his career, and mostly forgot about it. Until about ten years later, when FOMO had reached a cultural saturation point, and a reporter looking into its origins tracked it back to McGinnis. A venture capitalist and author of the bestseller The 10% Entrepreneur, McGinnis has since turned FOMO and FOBO into a career unto themselves, with a podcast on the HBR network called FOMO Sapiens and a book on the topic in the works.
In this excerpt from our conversation, recorded live onstage during Spring Reunions, McGinnis and I discuss the broad span of these ideas. Namely, how these forces at work in our social lives can also impact our professional lives—and how we can manage them.
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Dan Morrell: I think what we think of or what I think of when I think of FOMO is I'm scrolling through Instagram and that, "Oh, must be nice to be in Havana right now," or all these sorts of things. But talk about its applications to business decisions, to being an investor. How does that manifest itself?
Patrick McGinnis: I spent a lot of time talking to neurobiologists as I wrote the book and I talked to business people and I talk to a really fascinating woman who’s an HBS, I think class of '05, Yael Melamed (MBA 2005), who is, she's a psychotherapist and she deals with relationships. I talked to all these amazing people and interviewed them to try to build a base of knowledge and that I thought about my own career and I started to build these sort of ways of thinking about FOMO and FOBO.
Let's break them down. So FOMO, fear of missing out, is really based on two factors. It's about the perception that you're missing out on something that's better than what you're doing right now and it's about inclusion. It's the desire to be involved in a group that's doing something. So as you think about that, what does that really melt down to? It's about asymmetries of information. It's about the fact that you are sitting here—whether it's an investment opportunity or whether it is your Instagram—this asymmetry of information allows you to fill in the dots of what is out there that you're missing out on. So as you think about that, that can apply to anything. That can be you sitting in the boardroom and saying, "Geez, we are Pepsi and we want to come out with something to compete with Sprite. So why don't we come up with something called Crystal Pepsi?" And that happened. So it's these decisions to launch products that you think will achieve something but you really don't know why you're doing it. It's not authentic to you. But it also gets into investment decisions.
I think Bitcoin is a perfect example. It's also 1929. It's the tech boom in the year 2000. Think about that tech boom. Everybody was investing based on the fact that other people were doing it and Warren Buffet, who famously restrained from that, was mocked by the media. In fact, he stuck to his knitting and ended up doing quite well in the end.
But I think that's where FOMO really hits the business community. So you see this over and over and over again with economic bubbles going back to the dawn of time. So the book really looks at how that happens and then tries to give you the tools to get away from that and to be able to make much smarter decisions.
Morrell: But these are two different forces. You have a nice analogy where you say FOMO is kind of like a glass of wine, but FOBO's kind of like smoking a cigarette, because it doesn't do anything good for anyone. Make that analogy make sense for everyone.
McGinnis: FOMO is not uniformly bad, because it may be that your FOMO informs you about what your desires are, things that you actually want to do. If you see somebody, on your Facebook and you see somebody that's in Italy and it looks like they're having an amazing time, maybe you should take your next vacation there. If you see your friend that started their startup and you're working in investment banking, maybe you should get involved as an investor, or maybe you should try to start something, right? So it can unlock the things that maybe you should try doing in a sensible way and inform you about sort of your subconscious and what it wants to do. So there's a positive there. All things in moderation, but there's a positive there. Like a glass of wine, first glass of wine loosens you up. Second glass of wine, you get a little friendlier. It's when you get to the 15th glass of wine and you're on the table that you're in trouble. So FOMO in moderation can be good.
FOBO, like a cigarette—there's nothing good about a cigarette. I mean may feel good at the moment, but it's bad for you. And also it's bad for the people around you. And so FOBO is really about the combination of a desire to hold out for the best. And it's also this belief that option value is really sort of valuable in and of itself. That combination not only hurts you because you become indecisive and you become trapped in this analysis paralysis, it hurts the people around you because all of us know that person who will never decide on anything and strings us all along and those people are toxic. That's the second hand effect of the FOBO just like smoking.
Morrell: We've identified what these forces look like. As a business leader, we can see what they look like. How as a business leader do we manage those forces?
McGinnis: There's a couple of different things that you can do and I'll give you a few examples today. The first thing you need to do is... It's amazing. There's no stats out there by the way. I've read this stat that people make 30,000 decisions a day. That's one of those things that was put on BuzzFeed and then copied over to another...But we make many decisions every day and most of them don't actually hold us up too much. But it is incredible to me how many times a day I spend valuable waking hours trying to decide if I'm going to have the turkey or the chicken. If I'm going to have Earl gray or green tea.
At the end of the day being decisive, which is the antidote to both of these things, is about finding the power to choose what you actually want and finding the courage to miss out on the rest. And so the first thing you need to do is separate the big things from the small; I call them high stakes, low stakes and no stakes decisions. No stakes decisions are not worth any of your time. So what I do actually, when it's literally choosing that sandwich flavor, it's sort of like I say, "Okay, the left side of my watch is the chicken, the right is the fish." Look at it, decided, done. Moved on with my day, I spend no time on it. And I basically just outsourced that to the universe.
I outsource a lot of decisions to other people. "Where are we going for lunch?" "You decide." And so I just clear my desk and that gives me the mental energy, time to focus on the things that actually matter. And so when it comes to FOMO, really what I try to do is attack that information asymmetry. I do the research on the opportunity. "Is this realistic? Can I afford this? Do I have time for this?" And then I start to think about my motivation. "Is this something I want to do or is this being driven by this desire for inclusion?" And once I do that, it allows me to then get closer to a decision and usually, I am able then to make a decision and other people are too.
And on the FOBO, I think like an investor, and again it comes down to this process of doing your due diligence and looking carefully at what are the options that I have. And then... This is the critical part, this is the part it's quite interesting. Maximization in and of itself is not a bad thing. The problem is your process. If you keep reverting and returning to the same options without discarding them, that's where you get stuck in a negative sort of loop.
Anybody here know who Marie Kondo is? Marie Kondo, we love her. She's this expert on cleaning your house. And she says, "When you get rid of something, thank it before you get rid of it." You need to do that with the options that you're not choosing. You need to mourn them and you need to move away from them. And if you can do that and say, "I'm glad I was able to sort of do this, but I'm now going to move on with my life," that process of actually clearing those things out of your decision-making process in of itself, that's the magic. And so that's what I sort of talk about in the book and that's what I've been sort of also doing in my own life.
Morrell: Yeah. And let's talk about the podcast, too. you've had the opportunity to interview dozens of really thoughtful business leaders. I wonder how those conversations have furthered your thinking about FOMO and FOBO.
McGinnis: I focus on a diverse set of decision makers in politics, business, and life. And I try to get to the roots of what their decisions are and how they got where they are, how they decide. Because these are people who live in choice-rich environments, but they're doing things that are unconventional.
And what I've learned, I mean I think, listen, everybody has their own sort of path that they go for. But what I've seen is the ones who do it really well combine data with intuition. And the reason that is, is that it is data that allows us to remove all of the emotion and then we can tap into our intuition. Because at the end of the day, you'll never have perfect data. You just can't. And so even in the age of big data, I would argue we have way too much data. But the people who do this well are comfortable saying, "I'm going to use all the data to reduce my opportunity set and then from there I'm going to accept that at times it's also going to just have to come from what I believe and what I feel." And I think that combination is very powerful.
Morrell: At the base of so much of what you do, so much of what you've written is a deep reflection on how you live. I think it's a deep reflection that we often don't take the time to do, but I wonder what it's taught you about yourself.
McGinnis: It's a great question. I've never had that question. When I came to HBS, I come from this small town in Maine, I'd worked in private equity and I really wanted to... my identity was wrapped up in doing private equity. That was who I was. And then I went to do private equity and it just blew up and all of my sort of self-esteem was caught up in that and I remember coming back to my 2008 reunion, AIG had just blown up and I thought, "I might as well just come in the room and say that I murdered somebody because I just feel like I've just failed and I'm a terrible person."
And it was very hard on me as it was on many of my classmates. What it did for me was in the end a good thing. After AIG blew up, I remember I got very sick actually. I had this weird stress related illness where I had blurry vision for six months. I couldn't get out of bed for a week. I was all messed up and they didn't know what was wrong with me. My doctor was just like, "We don't know. There's nothing. You don't have mono," which they thought it was. And then a sectionmate of mine, named Shashank Singh (MBA 2004), got married in India, in Bombay. And I went to that wedding and I stayed at the Taj and the Taj had just been bombed.
I thought, "The Tata family, what they've done for me is incredible. I want to support them." I stayed at the hotel. It still smelled like burning and I got in and it was 3 in the morning and I walked outside of the hotel and I was walking around the neighborhood because I'm kind of a curious guy and I noticed all these kids sleeping on the street. And I thought to myself, "You don't have it that bad and you can do other things and frankly maybe you should try something new." And so I got back to New York and I tried to quit my job and I ended up... It took a while to extract myself, but I just decided that I was going to bet on myself.
And so I think for me this whole thing has taught me that... I know people say this all the time and it sounds so ridiculous, but when you find that thing you're supposed to do... And by the way, I never thought I would find anything. I had friends who had startups, they started companies and I was so jealous of them because I was like, "They found that thing and they're really good at it. It's so natural. It's so seamless. I'll never have that." When I found it, I realized like it really does change the game, but I did it in a very risk mitigated way. I still have a day job. This is all a side thing that I do. It's part of what I do, it's part of my portfolio. What I do it full time, I don't know. I like the other things I do as well. But being able to tap into that part of you that is like the thing that you can do better than everybody, you're the one who's meant to do it, that to me, it is so powerful.
Andreas E. Stavropoulos: Andreas E. Stavropoulos, MBA class of 1997. Any ideas about how to help, let's say young teenagers or kids sort of recognize and potentially arm themselves against FOMO and FOBO?
McGinnis: This is a very important topic because it's just so unhealthy. It's so unhealthy to live your life like that. And obviously, so as I said, this has been around since the dawn of time, but it has been supercharged by technology. And so I actually had a guy on the show who is a very interesting character. His name is Giancarlo Pitocco, and he worked at Apple and he worked at Facebook and he worked at Instagram and he has left those places and started a business called Mindfully, which is all about having a healthy relationship with technology because I think that for kids is the place to start.
I've seen all these interesting businesses. There's a business I saw at CES this year where kids can put their phone in a little locker and it unlocks one hour a day. I don't know about that stuff. To me, I mean it may be helpful, but that's not really addressing root causes. I think the critical thing to do is teach kids early on about how to have a healthy relationship with their technology. And that means like the basic things like, "Phone should never come in your room." And the thing that's funny is phones have this funny little Trojan horse, which is the... The most insidious thing about your phone is the fact it has an alarm clock on it. Because then... I do this too. I bring it in my room and then it's there and then you can grab it and look at it anytime. You can make changes.
I have an Alexa now and Alexa wakes me up every day and it's my way of making sure I don't need my phone in my room. And so it's those kinds of things with kids. Teaching them how to have a healthy relationship, exposing them to things that aren't digital, and getting them outside and away from that. And those are really hard.
The good news is, and I don't purport to be an expert on digital mindfulness at all, because I think there's so much ink being spilled in that space and there are people who are better at it than me, but I would say that early intervention about the proper role of technology is important.
And I think kids are super receptive to it, because what I have seen is that they watch their parents and they take cues and they're like, "You know what? Dad isn't present ever. Dad's on his phone or Mom's on her phone all the time. And you know, I don't want to be like that." And kids always do the opposite of their parents, right? And so I think that this is a chance to really tap into that rebellion, as it were, as a way to actually cultivate some health there.
Jacob Navon: Jacob Navon, MBA, 1984. So in psychology, there's an expression that neurotics build castles in the air, psychotics live in them, and psychiatrists collect the rent. The reason I bring this up is, as we connect FOMO and FOBO to option analysis, what I think I learned about that at HBS is, you need to accurately assess what the payoffs are, and then the probability of each of the payoffs.
But in this case, you talked about the information asymmetry, and it's very clear in the social media context, the fear of missing out totally miscalculates what the payoffs are, because it's internal to you. You may be looking at that great picture of the family on the beach smiling, but not seeing the fact that the father kicked the kid just 10 minutes before they posted this picture. So, can you comment on that?
McGinnis: Yes. So, this neurobiologist that I interviewed for the book, Michael Rogan, this is where the really pernicious elements of FOBO come in, because this is where it goes from, "I can't decide what I'm going to do Friday," to where it's a real emotional and mental problems, because the more disconnected from reality you are, and the more time you spend filling the gap between reality and fiction with your own disconnected view of reality, the more space you fill, and the less connected you are to reality, the more damaging it is.
And so, you're absolutely right. That's where people go from having small sort of interruptions in their lives, to having major, major mental problems. I always think about Miss Havisham in Great Expectations, sitting in that old house in her wedding dress. She's completely divorced from reality. She could have a great life outside the house. She may have been an executive at JP Morgan, for all we know. But she stayed at home, wondering about what would happen if that wedding had taken place, and so that's where the neuroses come in.
And so, what Michael talks about, and I have talked about a lot myself, having spoken with him and learned from him is, that's why it's really critical to disconnect yourself, to take the time away from that unhealthy feedback loop in your head, and say, "Okay, what's reality here? Let me just take 10 minutes and let me go for a walk, and then I'll have more clarity in terms of how I'm going to think about this."
Skydeck is produced by the External Relations department at Harvard Business School and edited by Craig McDonald. It is available at iTunes or wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.
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