3 ways to measure your adaptability and how to improve it Natalie Fratto

I met 273 start-up founders last year.

And each one was looking for money.

As a tech investor,

my goal was to sort through
everyone that I met

and make a quick determination

about which ones had the potential
to make something really big.

But what makes a great founder?

This is a question I ask myself daily.

Some venture capitalists place bets

based on a founder’s previous background.

Did they go to an Ivy League school?

Have they worked at a blue-chip company?

Have they built out a big vision before?

Effectively, how smart is this person?

Other VCs asses a founder’s
emotional quotient, or EQ.

How well will this person build teams

and build rapport
across customers and clients?

I have a different methodology
to assess start-up founders, though,

and it’s not complicated.

I look for signs of one specific trait.

Not IQ, not EQ.

It’s adaptability:

how well a person reacts
to the inevitability of change,

and lots of it.

That’s the single most important
determinant for me.

I subscribe to the belief

that adaptability itself
is a form of intelligence,

and our adaptability quotient, or AQ,

is something that can be measured,
tested and improved.

AQ isn’t just useful
for start-up founders, however.

I think it’s increasingly
important for all of us.

Because the world is speeding up.

We know that the rate
of technological change is accelerating,

which is forcing our brains to react.

Whether you’re navigating
changing job conditions

brought on by automation,

shifting geopolitics
in a more globalized world,

or simply changing family dynamics
and personal relationships.

Each of us, as individuals, groups,

corporations and even governments

are being forced to grapple
with more change

than ever before in human history.

So, how do we assess our adaptability?

I use three tricks
when meeting with founders.

Here’s the first.

Think back to your
most recent job interview.

What kind of questions were you asked?

Probably some variation of,
“Tell me about a time when,” right?

Instead, to interview for adaptability,

I like to ask “what if” questions.

What if your main revenue stream
were to dry up overnight?

What if a heat wave prevented
every single customer

from being able to visit your store?

Asking “what if,” instead
of asking about the past,

forces the brain to simulate.

To picture multiple possible
versions of the future.

The strength of that vision,

as well as how many distinct scenarios
someone can conjure, tells me a lot.

Practicing simulations
is a sort of safe testing ground

for improving adaptability.

Instead of testing how you take in
and retain information,

like an IQ test might,

it tests how you manipulate information,

given a constraint,

in order to achieve a specific goal.

The second trick that I use
to assess adaptability in founders

is to look for signs of unlearning.

Active unlearners seek to challenge
what they presume to already know,

and instead, override that data
with new information.

Kind of like a computer
running a disk cleanup.

Take the example of Destin Sandlin,

who programed his bicycle
to turn left when he steered it right

and vice versa.

He called this his Backwards Brain Bike,

and it took him nearly eight months

just to learn how to ride it
kind of, sort of normally.

The fact that Destin was able
to unlearn his regular bike

in favor of a new one, though,

signals something awesome
about our adaptability.

It’s not fixed.

Instead, each of us
has the capacity to improve it,

through dedication and hard work.

On the last page of Gandhi’s
autobiography, he wrote,

“I must reduce myself to zero.”

At many points in his very full life,

he was still seeking to return
to a beginner’s mindset, to zero.

To unlearn.

In this way, I think
it’s pretty safe to say

Gandhi had a high AQ score.

(Laughter)

The third and final trick

that I use to assess
a founder’s adaptability

is to look for people
who infuse exploration

into their life and their business.

There’s a sort of natural tension
between exploration and exploitation.

And collectively,

all of us tend to overvalue exploitation.

Here’s what I mean.

In the year 2000,

a man finagled his way
into a meeting with John Antioco,

the CEO of Blockbuster,

and proposed a partnership

to manage Blockbuster’s
fledgling online business.

The CEO John laughed him
out of the room, saying,

“I have millions of existing customers

and thousands of successful retail stores.

I really need to focus on the money.”

The other man in the meeting, however,

turned out to be Reed Hastings,
the CEO of Netflix.

In 2018, Netflix brought in
15.8 billion dollars,

while Blockbuster
filed for bankruptcy in 2010,

directly 10 years after that meeting.

The Blockbuster CEO

was too focused on exploiting
his already successful business model,

so much so that he couldn’t see
around the next corner.

In that way, his previous success

became the enemy
of his adaptability potential.

For the founders that I work with,

I frame exploration
as a state of constant seeking.

To never fall too far in love
with your wins

but rather continue to proactively
seek out what might kill you next.

When I first started
exploring adaptability,

the thing I found most exciting
is that we can improve it.

Each of us has the capacity
to become more adaptable.

But think of it like a muscle:

it’s got to be exercised.

And don’t get discouraged
if it takes a while.

Remember Destin Sandlin?

It took him eight months
just to learn how to ride a bike.

Over time, using the tricks
that I use on founders –

asking “what if” questions,
actively unlearning

and prioritizing exploration
over exploitation

can put you in the driver’s seat –

so that the next time
something big changes,

you’re already prepared.

We’re entering a future where IQ and EQ

both matter way less
than how fast you’re able to adapt.

So I hope that these tools
help you to raise your own AQ.

Thank you.

(Applause)