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Natalie Fratto: 3 ways to measure your adaptability -- and how to improve it
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When venture investor Natalie Fratto is determining which start-up founder to support, she doesn't just look for intelligence or charisma; she looks for adaptability. In this insightful talk, Fratto shares three ways to measure your "adaptability quotient" -- and shows why your ability to respond to change really matters.
Natalie Fratto - Venture investor, writer
Natalie Fratto invests in underestimated startup founders and writes about how technology shapes the world around us. Full bio
Natalie Fratto invests in underestimated startup founders and writes about how technology shapes the world around us. Full bio
Double-click the English transcript below to play the video.
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I met 273 start-up founders last year.
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And each one was looking for money.
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As a tech investor,
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my goal was to sort through
everyone that I met
everyone that I met
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and make a quick determination
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about which ones had the potential
to make something really big.
to make something really big.
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But what makes a great founder?
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This is a question I ask myself daily.
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Some venture capitalists place bets
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based on a founder's previous background.
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Did they go to an Ivy League school?
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Have they worked at a blue-chip company?
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Have they built out a big vision before?
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Effectively, how smart is this person?
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Other VCs asses a founder's
emotional quotient, or EQ.
emotional quotient, or EQ.
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How well will this person build teams
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and build rapport
across customers and clients?
across customers and clients?
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I have a different methodology
to assess start-up founders, though,
to assess start-up founders, though,
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and it's not complicated.
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I look for signs of one specific trait.
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Not IQ, not EQ.
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It's adaptability:
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how well a person reacts
to the inevitability of change,
to the inevitability of change,
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and lots of it.
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That's the single most important
determinant for me.
determinant for me.
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I subscribe to the belief
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that adaptability itself
is a form of intelligence,
is a form of intelligence,
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and our adaptability quotient, or AQ,
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is something that can be measured,
tested and improved.
tested and improved.
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AQ isn't just useful
for start-up founders, however.
for start-up founders, however.
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I think it's increasingly
important for all of us.
important for all of us.
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Because the world is speeding up.
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We know that the rate
of technological change is accelerating,
of technological change is accelerating,
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which is forcing our brains to react.
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Whether you're navigating
changing job conditions
changing job conditions
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brought on by automation,
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shifting geopolitics
in a more globalized world,
in a more globalized world,
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or simply changing family dynamics
and personal relationships.
and personal relationships.
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Each of us, as individuals, groups,
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corporations and even governments
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are being forced to grapple
with more change
with more change
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than ever before in human history.
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So, how do we assess our adaptability?
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I use three tricks
when meeting with founders.
when meeting with founders.
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Here's the first.
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Think back to your
most recent job interview.
most recent job interview.
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What kind of questions were you asked?
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Probably some variation of,
"Tell me about a time when," right?
"Tell me about a time when," right?
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Instead, to interview for adaptability,
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I like to ask "what if" questions.
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What if your main revenue stream
were to dry up overnight?
were to dry up overnight?
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What if a heat wave prevented
every single customer
every single customer
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from being able to visit your store?
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Asking "what if," instead
of asking about the past,
of asking about the past,
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forces the brain to simulate.
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To picture multiple possible
versions of the future.
versions of the future.
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The strength of that vision,
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as well as how many distinct scenarios
someone can conjure, tells me a lot.
someone can conjure, tells me a lot.
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Practicing simulations
is a sort of safe testing ground
is a sort of safe testing ground
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for improving adaptability.
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Instead of testing how you take in
and retain information,
and retain information,
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like an IQ test might,
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it tests how you manipulate information,
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given a constraint,
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in order to achieve a specific goal.
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The second trick that I use
to assess adaptability in founders
to assess adaptability in founders
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is to look for signs of unlearning.
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Active unlearners seek to challenge
what they presume to already know,
what they presume to already know,
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and instead, override that data
with new information.
with new information.
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Kind of like a computer
running a disk cleanup.
running a disk cleanup.
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Take the example of Destin Sandlin,
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who programed his bicycle
to turn left when he steered it right
to turn left when he steered it right
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and vice versa.
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He called this his Backwards Brain Bike,
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and it took him nearly eight months
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just to learn how to ride it
kind of, sort of normally.
kind of, sort of normally.
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The fact that Destin was able
to unlearn his regular bike
to unlearn his regular bike
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in favor of a new one, though,
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signals something awesome
about our adaptability.
about our adaptability.
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It's not fixed.
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Instead, each of us
has the capacity to improve it,
has the capacity to improve it,
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through dedication and hard work.
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On the last page of Gandhi's
autobiography, he wrote,
autobiography, he wrote,
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"I must reduce myself to zero."
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At many points in his very full life,
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he was still seeking to return
to a beginner's mindset, to zero.
to a beginner's mindset, to zero.
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To unlearn.
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In this way, I think
it's pretty safe to say
it's pretty safe to say
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Gandhi had a high AQ score.
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(Laughter)
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The third and final trick
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that I use to assess
a founder's adaptability
a founder's adaptability
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is to look for people
who infuse exploration
who infuse exploration
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into their life and their business.
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There's a sort of natural tension
between exploration and exploitation.
between exploration and exploitation.
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And collectively,
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all of us tend to overvalue exploitation.
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Here's what I mean.
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In the year 2000,
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a man finagled his way
into a meeting with John Antioco,
into a meeting with John Antioco,
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the CEO of Blockbuster,
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and proposed a partnership
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to manage Blockbuster's
fledgling online business.
fledgling online business.
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The CEO John laughed him
out of the room, saying,
out of the room, saying,
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"I have millions of existing customers
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and thousands of successful retail stores.
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I really need to focus on the money."
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The other man in the meeting, however,
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turned out to be Reed Hastings,
the CEO of Netflix.
the CEO of Netflix.
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In 2018, Netflix brought in
15.8 billion dollars,
15.8 billion dollars,
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while Blockbuster
filed for bankruptcy in 2010,
filed for bankruptcy in 2010,
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directly 10 years after that meeting.
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The Blockbuster CEO
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was too focused on exploiting
his already successful business model,
his already successful business model,
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so much so that he couldn't see
around the next corner.
around the next corner.
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In that way, his previous success
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became the enemy
of his adaptability potential.
of his adaptability potential.
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For the founders that I work with,
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I frame exploration
as a state of constant seeking.
as a state of constant seeking.
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To never fall too far in love
with your wins
with your wins
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but rather continue to proactively
seek out what might kill you next.
seek out what might kill you next.
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When I first started
exploring adaptability,
exploring adaptability,
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the thing I found most exciting
is that we can improve it.
is that we can improve it.
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Each of us has the capacity
to become more adaptable.
to become more adaptable.
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But think of it like a muscle:
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it's got to be exercised.
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And don't get discouraged
if it takes a while.
if it takes a while.
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Remember Destin Sandlin?
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It took him eight months
just to learn how to ride a bike.
just to learn how to ride a bike.
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Over time, using the tricks
that I use on founders --
that I use on founders --
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asking "what if" questions,
actively unlearning
actively unlearning
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and prioritizing exploration
over exploitation
over exploitation
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can put you in the driver's seat --
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so that the next time
something big changes,
something big changes,
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you're already prepared.
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We're entering a future where IQ and EQ
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both matter way less
than how fast you're able to adapt.
than how fast you're able to adapt.
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So I hope that these tools
help you to raise your own AQ.
help you to raise your own AQ.
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Thank you.
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(Applause)
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ABOUT THE SPEAKER
Natalie Fratto - Venture investor, writerNatalie Fratto invests in underestimated startup founders and writes about how technology shapes the world around us.
Why you should listen
A Y-Combinator alum and former IBM Watson strategist, Natalie Fratto most recently led international expansion at Silicon Valley Bank. She's written for Fortune, Fast Company and Motherboard. Today, she's building Launch With GS, a $500 million initiative to invest in women-led businesses and investment managers, at Goldman Sachs in New York, NY. She tweets a lot @NatalieFratto.
Natalie Fratto | Speaker | TED.com