About half of the students that come to office hours want to talk about life and career stuff, rather than the subject matter of class (which is about capital markets). One of the recurring themes is “what should I do with my life” and my response is usually something like “I don’t know what I should do with my life either so why do you think I would have any insight on yours?”

With that said, I do have a few frameworks for how to think about this question. One is the career cube, which illustrates the interaction between industry focus, functional skill, and interpersonal dynamics in setting up your career. Another is making decisions based on emotional cues such as fear. What these two approaches have in common is that they come from internal inquiry—what do I like, how do I feel.

What about external inquiry?

The Case for External Validation

Society tells us that external validation is bad, and that we ought to find value and self-worth internally.

That’s all well and good, but for those of us that have a hard time thinking positively about ourselves or struggle with self-doubt, it’s critical to get a “second opinion” about the situation or about ourselves. If our default self-assessment is negative, then it’s a terrible idea to rely exclusively on that.

This is where external validation becomes useful. It’s like getting a second opinion, just like when we see another doctor before making a big medical decision. If we hear multiple people telling us that we’re good at something, maybe they see something we don’t.

Can You Take a Compliment?

I’m going go out on a limb and say that most of the readers of this blog have a hard time receiving praise.

Don’t get me wrong—we all want praise, but many of us have a hard time receiving it. When someone says something genuinely nice to us, if we are the “beat yourself up” type we probably respond in one of the following ways:

1)      Downplaying it “oh I just got lucky”

2)      Self-deprecating “well I’m still terrible at XYZ”

3)      Distracting by changing the subject, counterattacking with a compliment, or offering some long-winded explanation

Why do we do this? On some level, we reject the praise of others because it conflicts with our beliefs about ourselves and the human mind doesn’t like cognitive dissonance, and we may assume the person is just being nice or has some agenda.

However, most people don’t give out compliments just to be nice. The person paying the compliment usually doesn’t have any emotional stuff wrapped up in what they’re saying. They are just stating what they see, without overthinking it.

I’ll give you an example. People have been telling me my entire life that I’m good at public speaking and in my 30s, people started telling me that I should be a professor. It took me a while to act on that advice, but you know what? I’m a pretty good professor!

People also told me in my 30s that I should be in sales. I resisted that, because it didn’t comport to my self-image. But you know what? Turns out, I kinda like sales and I especially like pitching. So maybe these people were onto something. Absent these external pushes, I probably would never have adopted the frame I have around teaching and sales.

Self-Evaluation vs. 360 Degree Feedback

People tend to assume they are the best judge of their abilities, but that is often wrong:

·       Each of us is just one tree in the forest, so it’s hard to see the forest

·       Many of us focus more on our flaws than our strengths

·       Our understanding of the world is limited to our own experience, which is incomplete

(We are capable of making this mistake in both directions--underestimating in some areas and overestimating in others.)

This is why 360 degree feedback is valuable in the corporate world. Each person has a different view of us and from those different vantage points, can see things that we can’t see. That information isn’t always valuable but there are cases where it can be.

A Finance Analogy: The Market Price

I’ll wrap this up with a finance analogy.

No one investor ever decides the “correct” price of a stock—the market does. Price discovery—the process through which a market of investors buying and selling arrive at a price for an asset—is considered one of the most valuable functions of a market. Assets that don’t have a readily available price discovery mechanism, such as illiquid assets bought in private markets, often experience wild swings in price when the owner finally tries to sell them.

An investor buying an asset that doesn’t have a ready secondary market is the equivalent of us evaluating our abilities solely on our own without any external feedback. Eventually, the investor will be proven right or wrong by the market. When another person praises us, that’s the equivalent of a buyer coming along and saying “hey investor, you own an undervalued asset and I might like to buy it.” When you take your personal asset out in the market, you might be surprised at how high the market is willing to bid for it.

The bottom line: when other people tell you that you are good at something, take them seriously.

Exercise

Journal on the following or discuss with a friend.

1)      Noticing

In what aspects of my life, personality, or work have people consistently praised or complimented me?

What patterns do I notice?

When a person compliments me, how do I respond? Do I dismiss or downplay?

It doesn’t matter if you think people are off-base with their compliments. In fact, the more off-base you think people are the more growth potential (asset price appreciation) there is in the gap between your self-view and their view of you.

2)      Acceptance

How would it feel to fully accept compliments that people pay me?

How would I act if I believed those compliments to be true?

3)      Price Arbitrage (Action)

If people keep telling me I’m good at something, how can I test that hypothesis?

If I truly have an undervalued asset—a hidden talent—how can I bring that asset into the market?

What’s the immediate first step I can take?

Remember, private companies that are offering themselves for sale usually have a period of months they spend refining their pitch and “roadshow.” The market may not be ready to immediately pay full price for for your asset without some refinement.