23 Reasons Your Mind Loses You Millions
episode
Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
56 min
1 speaker
5 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the decision‑framework the host built and why does it matter for fund performance?
About a decade ago, I was one of the controllers for a major energy company's $500 million portfolio of investments in their investment portfolio management division. My job was to support the investment committee, senior leaders making multi-year investment decisions with hundreds of millions of dollars on the line every single week. I built a decision framework. I built the risk models, I built the economic assessments, and I documented every single pattern I watched derail otherwise intelligent professionals. professionals not because of bad markets, not because of bad data. Well because of twenty three specific ways the human brain sabotages rational decisions around money. That document has never been fully shared publicly, but today it becomes this episode.
Today we're gonna learn how your blind spots put you out of business and how to mitigate them so you can build your fund into a top decile investment company. So if you're managing capital right now or you're preparing to, this episode is probably one of the most important things you will listen to this year. Not because what I'm going to teach you about the market, but because of what I'm going to teach you about yourself. Here we go. Before we dive in, just a word from our sponsor. When doing deals, we all know that raising capital is the one thing that unlocks everything. That's why I've partnered with ReefPass investors that are actively funding deals right now. So if you're a deal syndicator or founder thinking about launching an MA-focused buy and build platform, reach out to ReefPass Investors at reefpassinvestors.com.
They are one of the best investors in the game that are helping you launch a new long-term holding company. So here's what I want you to do. Click the description in the notes and contact them for a discovery call and potentially get an invite to pitch your next MA deal. Now let's get back to the show. Before we dive in, just a reminder that nothing in this episode is investment, financial tax, or even medical advice. Always speak to a qualified professional before making any decision or diagnosis from any part of this episode or otherwise. Other than that, let's dive in. So here's how we're going to do this. 23 biases. For each one, I'm going to do three things. First, I'm going to show you what it looks like in yourself, what the internal experience is, what the thought pattern feels like from the inside.
I call this the mirror. Then second, I'm going to show you what it looks like in other people around you. Those are much easier to see than in yourself. Your investment committee, your team, your LPs, your co-investors, the person on the other side of the table. I call this the room. And then third, I'm going to give you the fix, the specific actionable practice just as a thought exercise to become one of those top fund managers to help you override some tendencies that are making you potentially lose money right now. So the mirror, the room, and the fix. twenty three times and by the end of this episode you'll have a complete map of the psychological forces that could be destroying investment decisions in your fund or in others.
And you'll know exactly what to do about every single one of 'em. The portfolio I was working on, it grew ten times over from fifty million dollars to five hundred million dollars. That did not happen by accident. Remember, the man at the top of the mountain doesn't fall there. Decision quality compounds. So let's build yours. So the first bias is anchoring bias. Your mind becomes over reliant on the first piece of information that it receives. That first number, that first valuation, that first impression becomes invisible gravitational fields that pull every subsequent judgment toward it. You did not notice it happening. That is what makes it dangerous. Now, in the mirror, here is what anchoring looks like in you.
You receive a pitch deck. The company is asking for a valuation of $80 million. You spend three weeks doing your own analysis. The work says the business is worth $55 million.
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Chapters
5 chapters
1
What is the decision‑framework the host built and why does it matter for fund performance?
0:00–11:49
2
How does anchoring bias distort valuation negotiations and what practical fix can prevent it?
11:49–21:03
3
Why does the availability heuristic cause investors to over‑weight vivid successes and how can base‑rate analysis counter it?
21:03–31:05
4
What is the bandwagon effect in investment committees and how can pre‑commitment protect independent thinking?
31:05–41:14
5
How does blind‑spot bias hide our own errors and what structured reviews expose it?
41:14–55:43
Speakers
1 identifiedMore from Making Billions: The Private Equity Podcast for Fund Managers, Alternative Asset Managers, and Venture Capital Investors
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