Chapter 1: What is the main topic discussed in this episode?
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.
Like don't let the past dictate where you're going to go in the future. That was Liz Tran, author of AQ, A New Kind of Intelligence for a World That's Always Changing. I'm Motley Fool producer Matt Greer. Motley Fool 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 Fool Conversations. I'm Motley Fool analyst Rachel Warren, and today I'm excited to welcome Liz Tran to the show. Liz is the founder of InnerGenius 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 The Today Show, Bloomberg, Entrepreneur, Fast Company, and other publications.
Chapter 2: What is AQ and why is it important for investors?
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 inner genius. Liz is also an expert on unlocking employee potential in the modern workplace and redefining what it means to be an exceptional leader.
She is 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 want to 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 was the product of industrialization. EQ emerged from globalization. AQ, short for the agility quotient. is the intelligence born of the tech revolution.
Chapter 3: How can strategic unlearning enhance investment success?
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. And 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 on standardized 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 AQ archetype. And I'd love if you could talk about what that is and kind of break that down for our audience.
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Chapter 4: What are the AQ archetypes and how do they impact decision-making?
Yeah, absolutely. When we talk about being high AQ, 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 helps 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 week mapped out exactly how the meetings need to fall, 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, Have you ever gazed in wonder at the Great Pyramid?
Have you marvelled at the golden face of Tutankhamun? 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.
Well, and something that I think as well is really interesting to think about as long-term investors, understanding this reality that you've been discussing and really leveraging the power of AQ to kind of free ourselves from these patterns of avoidance and cultivate more agility when it comes to actual investment decisions.
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Chapter 5: How can investors balance optimism and realism in their strategies?
Yeah. And I think this is especially true for long-term investors is that the way that I describe this in AQ is about wearing both a green hat and a black hat. And what I'll explain by that is that there's this way of describing different methods of thinking. And there are six hats. Each color represents a different way that you can work through a problem.
So, for instance, the white hat is just facts and figures. It's just understanding literally the information in front of you. The black hat, which is one of the hats that all investors need to hold, is truly that of what is the worst case scenario? What is the downside here if everything goes wrong? What would that be? What are all the details that I need to understand here?
It's almost 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 rate of 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 wear 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, you know, he holds, you know, 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. You know, they've had this in place for four years.
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Chapter 6: What role does self-awareness play in effective investing?
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 sell 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 sell 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, this cell plan is 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 sell plan's 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.
Chapter 7: How can investors leverage AQ during market volatility?
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 were the only ones who did that. And it was his willingness.
The reason why, quote unquote, he looks like a genius now is because he was willing to look like a moron for months, you know, to constantly make himself think, were you wrong? Were you wrong? Were you wrong? Or 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, the sell 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, OK, am I a moron? I don't know. Let's figure it out.
Is there any data you've seen, whether observationally or otherwise, about how 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?
Chapter 8: What strategies can investors use to adapt to changing markets?
I mean, that could be publicly traded examples or otherwise. Yeah, I mean, I think that the proof is in the pudding in a lot of ways. Like, I think as just a very specific example, to go to one person, you know, out of one, I think about when Satya Nadella 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 a know-it-all culture anymore where everyone says, I'm right. I'm the expert.
We're going to transition into a learn-it-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-it-all. They put up posters everywhere.
He trained the executive team to constantly come back to this idea that people needed to be learning, learning, learning constantly. And then look where they are now. Their stock price has 10x in 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.
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 Motley Fool 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, 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 are some doors opening for people to gain expertise and footing in places where they haven't had it before. which I think is actually really exciting.
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