Data vs. Instinct

One is driven by intuition, the other by math. Which is better?
Seth Kniep
November 1, 2019
Ecom News
As a business owner, how often should you be trusting your instincts versus data?

What if the data says, "Go west," and your instincts say, "Head east!"? You are about to find out. But first, here's your latest week of curated Amazon and eCommerce news:

Amazon sales tax‍

Amazon is now collecting and remitting sales taxes for the following states: Arizona, California, Colorado, Maine, Maryland, Massachusetts, Nevada, North Dakota, Texas, Utah.

If you are selling on Amazon, do this right now: in seller central click on Settings, click on Tax Settings, click the name of the state, type in your Tax Registration number, then click the button that says, Click To Assign Custom Tax Rate.

Amazon will now collect and remit—that means payout to that state—the sales tax due on this.Back in the day, we had to pay these ourselves.Keep in mind: you are still responsible for all sales tax as the business owner. You still need to send in the form as often as each state requires it (usually quarterly).

WeWork suffers

Can the founder who started a company, scale a company?

BBC News reports that WeWork, the office space-renting company formerly valued at $50 billion and grew from "a single office in New York City to more than 500 locations around the world," lost around $900 million the first six months of last year.

Adam Neumann, the CEO, is stepping down. BBC News puts it this way, "The co-founder's brash charisma, which once attracted investors, emerged as a liability."

What happened? How could a dynamic leader grow a company this huge, have to step down to avoid accelerating the demise of the company? What it takes to launch a company is a different set of skills from what it takes to scale a company. Launch and scale are NOT the same thing.

To launch a company requires visionary, forward-thinking that takes risks and moves fast. But to scale a company requires systems, automation, delegation, and deep amounts of trust from a lot of people, anywhere from staff to investors.

Mr. Neumann's colorful personality and his wife’s fame by proxy (being the cousin of actress Gwyneth Paltrow), may have added some charm to WeWork's phenomenal growth in the early days, but his hard-partying life raised the eyebrows of too many investors, and the charm that launched his company could not sustain the scale of his company.

If you want to see your company grow, you must become the person your company needs you to be. This is absolutely necessary for its survival.

Megamall

While shopping malls suffer from a vacancy of shoppers due to the rise of online stores like Amazon, eBay, and your own eCommerce brands, does it make any sense to build a three million-square-foot jumbo mall with a theme park?

In the coming months, take a drive to East Rutherford, New Jersey and you will find ski slopes, the largest indoor water park in North America, a beach kept at 87 degrees Fahrenheit year-round, a Sea Life aquarium, a regulation National Hockey League skating rink, an aviary featuring local birds, a Nickelodeon universe, a Slime Stage and costumed characters including SpongeBob, Dora the Explorer and the Teenage Mutant Ninja Turtles.

They are calling it the American Dream Shopping Mall.

I said it a month ago, and I'm telling you again: your chance of surviving the brick and mortar apocalypse is selling online or creating an in-person brick and mortar experience that no one can compete with. I predict that this mall is going to be insanely profitable.

Zuckerberg grilled

US lawmakers are grilling Mark Zuckerberg because Facebook does not fact check ads run by politicians.

According to BBC News in an article that came out last Thursday, "Mr. Zuckerberg said the platform would take down posts from anyone, including politicians, that called for violence or tried to suppress voter participation. As for untruths, however, he said it was not Facebook's role to prevent people in an election from seeing that you had lied'."

I agree. Since when did it become the responsibility of Facebook to police the truthfulness of others' ads run on their platform? If the politician who created those ads tells lies, let the government hold them accountable—but why on earth is it Facebook's job to research every single ad for its veracity? Finding the truth of an ad is not just doing a quick Google check. There are so many layers to finding the truth or falseness to something it's not even funny.

No one would care if Facebook was still a struggling startup. But now that they are big and successful does this now mandate government control of their policies? What about freedom of speech?

Data versus instinct

John D. Stoll wrote an article in the Wall Street Journal entitled: "'Feel the Force': Gut instinct, not data, is the thing."

The question is simple but monumental: should I trust data or my instincts when making decisions for my companies?

What about that moment when the data is saying one thing, but you have this strong sense—a hunch—a hunch you can't even prove—that you should go the opposite direction?

Senior executives of the accounting firm PricewaterhouseCoopers LLP were asked how reliant they would be on computer-generated analytics in 2020? The answer was, "Much more.”

Starbucks' CEO, Kevin Johnson, said that "data-driven decision making is the secret blend he has used to keep the coffee empire percolating" since the departure of Howard Schultz.

Yet years back, when Starbucks was floundering, Howard Schultz made decisions that the data analysts said was suicide for the company. And Schulz did it anyway. And today, Starbucks is the global icon for coffee.

A billionaire venture capitalist named Masayoshi Son approaches business decision-making more like Yoda and less like Warren Buffet. He likes to "feel the force" when sizing up an opportunity.

Mr. Son made a high-risk investment of $1.5 billion into an unknown Finnish mobile game developer, Supercell. If you've played Clash of Clans—that's Supercell's fingerprint.

Here's where Mr. Son drives analysts crazy: he said he felt chemistry with Supercell's founder. 

Well, that's a really analytical approach! That risky, gut-driven, non-data verified decision made Mr. Son $8.6 billion less than 3 years later when he sold his stake in the “Clash of Clans” game maker.

But doesn't Warren Buffet counter this leader-by-instinct approach? He runs all his investments entirely by data. Or does he?

It's been said, "Data doesn't lie." Sure it doesn't. But how you prioritize one set of data over another, the process you use to collect data, and how you interpret that data is as subjective as asking a cactus to name the best desert plant.

The answer is simple: use all that you can of both.

The company entirely driven by data will struggle to innovate or excel because data alone leaves out the human ingenuity of instinct that a computer can never replicate.

Data cannot measure the non-mathematical elements of timing, personality, and moments of opportunity that exist before enough data is relevant to prove their existence.

On the other hand, only trusting instinct only will destroy a company fast with risky decisions because without data, one is blind.

Learn to use both. Integrate the two.

My business partner and I would spend several days in a row from morning to night, just analyzing data based on our followers and our prospects.

The need for data drove us to spend over $100,000 to build a software platform that would get us data faster and more accurately.

But then we would also look at what kinds of things prospects got more emotional about, and we knew that focusing on those topics would be easier to persuade someone to buy the product.

When you mix data with leadership instinct, the result is strategy.

Here is an example: You create a survey asking people their favorite type of monkey.

The survey is multiple choice with two options: funny or jumpy.

This survey subjectively assumes that funny and jumpy are the only two important options for why someone loves monkeys.

If a third choice had been offered, snuggly, 50% of the respondents may have chosen the third option, but because it was not offered originally, they had to choose between option one and two.

This means that the person who created the survey had to make a decision about the parameters of the data. You can have all the data in the world, but the decision on how detailed the data collection is can completely change the final numbers.

Data only looks backward. With data, you can only deal with what’s already happened. Instinct looks forwards. It sees something before it happens.

Data shows patterns, and instinct seizes opportunities that data could never see because it hasn’t happened yet. Both are vital.

Collect all the data you can and then apply your instincts. Sometimes, you'll just know. Don't second guess yourself. Act on it and make it happen.

That's my 10 cents!


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Seth Kniep

Married a pearl. Fathered 4 miracles. Fired his boss. Turned a single dime into $104,857. Today, a self-made millionaire, Seth and his team of 8 badass coaches teach entrepreneurs how to build passive income on Amazon.

Dead serious about building income on Amazon with eight successful coaches in a community of badass Amazon sellers? Join the Amazon FBA Mastery membership.

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