Make Better Decisions With 5 Unique Rules of Thumb

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I like cats. I had a cat, Max, as a pet when I was in grad school, but he ran away one day and I never found him despite lots of searching. 

I did find an explosion of Max-coloured fur in our backyard, and our neighbourhood had stray wolves that roamed at night, but my wife and I still put up posters and searched the neighbourhood for weeks, because you shouldn’t make decisions based on limited evidence. Or should you? 

Our brains aren’t wired to think rationally. We take action based on emotion mostly, which is fine when it comes to life and death decisions that have proven out over thousands of years.

Food looks disgusting? It’ll probably kill you. Animal looks scary? It’ll probably kill you. 

But what about decisions that we’re not evolutionarily wired for? Often a heuristic (simplified decision-making shortcut) will result in the best decision. These are sometimes called ‘Rules of Thumb’, but heuristic is the correct term and makes me sound smarter. 

In the book Moneyball, Michael Lewis details the discovery by the Oakland A’s baseball team that the best baseball players are the ones who can run fastest and who get the most walks. This went against years of conventional wisdom that you had to send scouts to watch players, and scouts made their decisions based on their ability to hit home runs and whether some guy ‘looked like a baseball player’. In retrospect, laughably bad decision-making. But only in retrospect, because someone came up with a better heuristic.

Just before I went bankrupt at age 31, I was pretty desperate for money. I was at an airport and my credit card was declined when I was trying to buy a ticket home to San Diego. I went from person to person in the departure lounge asking if they’d buy me a $500 ticket in return for a $2,000 check. I even let them call my bank to verify the money was in the account. Desperate right?

I got my flight home. The check to my benefactor bounced.

The heuristic? The more desperate someone is to get money from you, the less likely they are to be able to pay it back. Now that I have money and people keep asking me for some of it, it’s even more obvious. 

You should always be examining your heuristics. When I started investing in private companies, I made a list of the reasons I invested in each company. Reasons included ‘I like the CEO,’ ‘I want to use the product,’ or ‘A trusted friend recommended it.’ 

None of these were indicators of future performance. The heuristic that works is, ‘Who else is investing?’ 

This means investing in companies that graduate from well-known accelerators like Y-Combinator or 500 Startups, or companies that already have a brand name venture capital fund interested.

The most valuable heuristics are those that are both surprising and useful. After I got divorced at age 31, I began a decade of online dating, and I noticed things. For example, whatever picture someone posts of themselves — that is often the best they’ve ever looked. 

They never look better in person. 

More significantly, I came to realize there was a disturbing consistency among the most disturbed women I met. They all lived alone with a cat. After one of the worst dates of my life, as I dropped her off at her house I asked, “By the way, what’s the name of your cat?”

“I never told you I had a cat,” she responded.

I said, “But you do have a cat, right?”

She huffed “Yes, her name is Mischief!” then she started crying, turned and ran into her apartment building. 

Mischief’s owner had posted a photoshopped picture on her profile and lied about her weight, her age, and her interests. She told me Friends was her favourite TV show, but couldn’t name a single character. Oh. My. GOD.

I bet her building didn’t even allow pets. 

When I told my sister I had discovered this heuristic, she scoffed. “Don’t be ridiculous, I know lots of women who have cats, and they’re fine.”

“Really sis?” I questioned, “Think about those friends specifically and their relationship histories.”

She paused for a few seconds, then said, “Ohhhh, damn, I think you might be right.” 

For the record, my sister never had a cat and she’s been with the same guy for 40 years. I had a cat when I got married, and my first wife also had a cat. We were doomed from the start. 

Current wife — no cat. Seventeen years of marital bliss and no end in sight. Dogs roam our home and property like they pay the mortgage, but my wife and I? Solid.

Many heuristics are so well known that they’re considered common sense. Look before you leap. Don’t throw good money after bad. A bird in the hand is worth two in the bush. 

Some heuristics sound a lot better than they work, for instance, ‘If a little is good, more will be better.’ 

When I decided to take Electrical Engineering in college instead of Computer Science, it was because I was using the heuristic, ‘Difficult things are more worthwhile.’ I’ve had serious reason to question that one, and nowadays I’m more likely to advise people to get into a career that uses skills they find easy that other people find difficult. 

Speaking of careers, I have never had a bad employee get better after a warning or a performance improvement plan. Relationships that were once great can become great again, but relationships that start out poorly will never become great. 

The best it’s ever going to be is at the beginning. And if your employee is incompetent or your boyfriend is an ass when you first get together, it is not going to get better over time. 

Give up. Start over. With someone else.

I’ve also found that when I make a job offer if the prospective hire asks for more than one change in the proposed offer, they’re not going to work out. The reason is that if they’re so focused on the minutiae of the contract, they don’t want a great partnership, they just want to come out ahead. 

The best relationships are based on mutual trust and respect, and the belief that you’re better off together than apart. Great relationships don’t come from contracts, they come from character. 

Stop negotiating. Start over. With someone else.

One final heuristic — many people believe that articles with numbers in the title have better information. I guess it works since you’ve made it this far. 

If you have some additional unusual heuristics of your own, please let me know and I’ll add them to a future update of this article. The summary:

1. The best signal for investing in a company is when other good investors are also investing.

2. A good relationship can return to being good, but a bad relationship will only ever get worse.

3. When negotiating the start of a new relationship, too much haggling means it’s not going to work out.

4. The more desperate someone is for money, the less likely they’ll be able to pay you back.

5. Don’t date anyone who lives alone with a cat. 

This isn’t to say that cats are bad. They’re entertaining, they’re low-maintenance, and they’re affectionate as long as you treat them well. Cats are awesome.

It’s their owners you have to watch out for.

1. I really do like cats, but I still found this the funniest thing I’ve ever read on the internet. 

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