Being confident means that you are self-assured in your decisions. However, if the outcome is uncertain, should that not go against confidence?

I recently wrote an essay about delusional confidence and its necessity in achieving anything great. I also recently wrote about politics and investing, where I stated that most predictions cannot be certain. I believe these two ideas to be important and true, yet are they not contradictory? Being confident means that you are self-assured in your decisions. However, if the outcome is uncertain, should that not go against confidence?

Listening to successful leaders and entrepreneurs, you will find no shortage of confidence. After all, confidence in a leader is essential for people to trust and follow you. Which will ultimately enable you and your team to build something incredibly challenging.

You will also often hear some modesty mixed into the tone of a seasoned veteran. The modesty comes from the reality that almost nothing is certain. This is especially true in business and investing.

Let’s dissect a rare interview with Jeff Bezos done recently on December 4th. In the past few years, Jeff has been hovering around the title of the world’s richest person. He earned that by building the second-largest company in the world by annual revenue.

This is a person who has every right to feel intensely confident in himself—which he is to some extent. However, as you’ll see in this interview, Bezos remains grounded in the fact that very little is certain. Even he, as qualified and accomplished as he is, must make decisions based on probabilities and bets.

Another thing you’ll notice is that smart people know a lot about what they know, and admittedly know very little about what they don’t. Probably because they understand what it takes to know a lot about something. So it becomes clear when they don’t know something. They also spend most of their time focusing on what they want to know, thus allocating little time for other topics.

The interview with Jeff Bezos was conducted by Andrew Ross Sorkin at the 2024 New York Times DealBook Summit. The link to the full video can be found here.

Below are some direct phrases used by Jeff Bezos during the interview:

• “again, I could be wrong about that, but I think it could be true.”
• “I have a bunch of ideas and I’m working on that right now and I have a couple of small inventions there so we’ll see.”
• “I mean, it may take who knows how many years it will take” [discussing his vision of moving polluting industries off Earth]
• “I don’t know.” [best approach to dealing with climate change]
• “I think it’s going to be from a business point of view, from a financial returns point of view, I think it’s going to be the best business that I’ve ever been involved in, but it’s going to take a while.” [future success of Blue Origin]
• “I think– this– first of all, a very good question, very interesting question, and I’m not sure I know the right answer or maybe there are many answers. So let’s start with that.” [his confidence in taking risks and recognizing opportunities]
• “I think Blue Origin has a lot of runway.”
• “in retrospect, I think that might have been a little naive um but I thought– but I think it was true. In fact, if anything I think I was giving myself better than the odds, better than the real odds.” [Reflecting on his decision not to take additional equity in Amazon, Bezos admits to potentially underestimating the risks involved in the company’s early stages. Shows his delusional confidence early on with Amazon and now his wisdom on probabilistic thinking]
• “I don’t think they’ll be exactly commoditized but I think there will be– I think models will end up being specialists at certain…” [the future of large language models]

Throughout the hour-long interview, the phrase “don’t know” was used 7 times, “probably” 15 times, and “I think” 35 times. This is the richest man in the world who built the 2nd largest company in the world.

I didn’t initially listen to the interview to analyze his thought process. But his humble tone was very pronounced and impossible to miss.

And this is just a single example. You’ll find this same tone coming from many prominent individuals in business. In the 2019 Berkshire Hathaway Annual Meeting, Warren Buffett and Charlie Munger used the phrases “I don’t know whether” 6 times, “probably” 65 times, and “I think” over 130 times. In Elon Musk’s interview with Lex Fridman in 2021, Elon used the phrases “don’t know” 25 times, “probably” 17 times, and “I think” more than 50 times. Even those who hide it still think in terms of probabilities. I’m confident they would acknowledge it if they were honest and truly knew what they were doing.

Every investor, even those highly qualified ones employed by the likes of Goldman Sachs and JPMorgan, will have ideas that don’t work out. It’s just the nature of dealing with uncertain outcomes in a world of unlimited possibilities.  

So how do you deal with uncertainty without sacrificing confidence? This conundrum is very well taught in the game of poker: there’s a difference between making the right decision and having the right outcome.

Even if you made the right decision, sometimes you still lose. Sometimes, you make the wrong decision and still win. Both situations happen in poker, and very often in investing and business decision making.

With that in mind, it should be your goal to always make the right decision. Winning in business is not a matter of winning 100% of the time. That is impossible and not even necessary.

Business is a game of making big bets where the probability of a large win is high while the probability of a large loss is small. Of course, other factors come into consideration like ethics, strategy, and other contextual factors, but a large upside with little downside is a good starting point. Despite occasional losses along the way, if you consistently make the right decision, your wins will outweigh all losses.

As Jeff Bezos wrote in his 2018 annual Amazon shareholder letter,

“As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures. Of course, we won’t undertake such experiments cavalierly. We will work hard to make them good bets, but not all good bets will ultimately pay out. This kind of large-scale risk taking is part of the service we as a large company can provide to our customers and to society.

The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.”

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