A Mindset To Help You Plan Your Success
Eben Pagan teaches how two psychological mechanisms - emotional estimation and seeking only validation - prevent success in business and life. He provides specific strategies including data-driven decisions and a test-model-project framework to overcome these mental traps.
Teachings 8
Emotional estimation prevents success by making us terrible at predicting how future events will make us feel and using current emotions to judge opportunities
Eben explains this has two sides: predicting future feelings ('if I do this it will make me feel good') and using emotions to estimate outcomes ('because I feel good about it, it's going to be good'). He uses stock market investing as a specific example.
80% of lottery winners are in worse financial condition five years after winning than the day before they won
Eben cites specific studies on lottery winners and shares a personal conversation with his mother who insisted she would never lose lottery money, demonstrating the universal nature of this blind spot.
People seek validation instead of truth, which blinds them to where they're wrong and prevents growth
Eben gives the therapy example where people pay $175/hour just to hear 'That must have been hard, I'd feel the same way.' He describes how people constantly look for where they're right instead of examining where they're wrong.
Hiring people based on emotional liking rather than data leads to expensive mistakes
Eben specifically mentions 'hiring people that you like' as an example of emotional estimation, noting these decisions usually turn out 'expensive' - emphasizing both money and other costs.
Early business success creates dangerous emotional estimation where entrepreneurs calculate unrealistic future profits
Eben shares his personal experience finding a great lead source that converted at high rates, leading him to plan buying 'by the million' and make Excel spreadsheets calculating $1,200/hour profits 24 hours a day, which didn't work out 97% of the time.
Believing that reaching a financial goal will permanently solve all problems is emotional estimation because you bring yourself to that new level
Eben explains the common notion that reaching $5 million will solve all problems fails because 'it's still going to be you' - you bring your same self and issues to that new financial level.
Data-driven decisions prevent emotional estimation by using external information rather than internal feelings
Eben emphasizes that if you're not using data 'coming from outside of this dome piece of yours' to make decisions, you're probably making errors. This is his first solution to combat emotional estimation.
The test-model-project framework prevents emotional estimation by creating systematic validation of business ideas
Eben teaches his specific formula: do a test, build a little model with the results, then project. He states this process 'will get you off on the right foot' when combined with data-driven decisions.
Quotable Moments 4
“If you're not using some data that's coming from outside of this dome piece of yours to make your decisions, you're probably erring in some way.”
— Eben Pagan“It's still going to be you. You're going to bring you with you to that $5 million.”
— Eben Pagan“We humans are not very good at predicting how things in the future will make us feel. We're horrible at it.”
— Eben Pagan“We just look for where we're right, and we don't see where we're wrong. We don't We just don't do it.”
— Eben Pagan
How to overcome emotional estimation in business decisions
A systematic approach to prevent emotional decision-making that leads to costly business mistakes
- 1
Recognize the two types of emotional estimation
Identify when you're predicting how future events will make you feel or using current emotions to estimate if something will be good or bad
- 2
Implement data-driven decisions
Use information coming from outside your own mind and emotions rather than relying on gut feelings when making business choices
- 3
Apply the test-model-project framework
Do a small test first, build a model based on actual results, then project future outcomes from that data rather than emotions
- 4
Notice validation-seeking behavior
Catch yourself and others when looking only for confirmation of being right instead of examining where you might be wrong
Questions Answered
What is emotional estimation and how does it hurt business success
“Emotional estimation actually has two sides. It's looking from now into the future and saying if I do this it will make me feel good or if I do avoid doing this it'll make me feel bad. And the other side of emotional estimation is using your emotions to estimate something because I feel good about it. It's going to be good.”
— Eben Pagan▶ 1:03
Emotional estimation is using your feelings to make business decisions instead of data. It has two sides: predicting how future events will make you feel, and using current emotions to judge if something will be good or bad.
Why do lottery winners lose their money
“Most of us are familiar with the studies they've done with lottery winners. They win the lottery, something like I don't remember what it is, 80% of them five years after they win the lottery are in worse financial condition than the day before they won the lottery.”
— Eben Pagan▶ 1:34
About 80% of lottery winners are in worse financial condition five years after winning than before they won. This happens because of emotional estimation - the same mindset that made them think winning would solve everything also makes them lose the money.
What is the test model project framework
“The other is a little formula that I like to use and I call it test, model, project. do a test, build a little model with the results, and then project, test, model, and project.”
— Eben Pagan▶ 6:20
Test-model-project is Eben Pagan's framework to prevent emotional business decisions. First do a small test, then build a model based on the actual results, then project future outcomes from that data rather than emotions.
How to make data driven business decisions
“If you're not using some data that's coming from outside of this dome piece of yours to make your decisions, you're probably erring in some way, datadriven decisions.”
— Eben Pagan▶ 5:45
Use information from outside your own mind and emotions when making decisions. Don't rely on gut feelings or how something makes you feel - look for objective data and external validation before committing resources.
Why do people seek validation instead of truth
“And what do we do most of the time? We sit around and go, 'Oh, yep. That's where I was right. Yep. That's where I'm smart. Oh, yeah. I was right there, too.' So, we just look for where we're right, and we don't see where we're wrong.”
— Eben Pagan▶ 3:08
People naturally look for confirmation that they're right rather than examining where they're wrong. This prevents growth and learning because we avoid uncomfortable feedback that could actually help us improve.
Does reaching financial goals solve all your problems
“And what we typically fail to take into consideration is it's still going to be you. You're going to bring you with you to that $5 million emotional estimation.”
— Eben Pagan▶ 5:25
No, reaching a financial goal won't permanently solve all problems because you bring yourself and your same fundamental issues to that new level. Your personal challenges follow you regardless of financial success.
Summary
The Two Success-Killing Psychological Mechanisms
Eben identifies emotional estimation and seeking only validation as the primary mental traps preventing business success. He emphasizes how humans are terrible at predicting future emotions and naturally seek confirmation rather than truth, using examples from lottery winners to therapy sessions.
Real-World Examples of Emotional Estimation
Through personal stories and research, Eben demonstrates how emotional estimation appears in hiring decisions, early business success projections, and the fantasy that financial goals will solve all problems. He shares his own costly experience with lead generation projections and Excel spreadsheet fantasies.
The Data-Driven Solution Framework
Eben provides two practical solutions: data-driven decisions using external information rather than internal feelings, and the test-model-project framework for systematic business validation. These tools help entrepreneurs avoid the expensive mistakes that come from emotional decision-making.
Counterpoint
Claim: “Trust your gut feelings when making business decisions”
Reframe: Use data from outside your emotional system to make decisions because humans are horrible at predicting how future events will make them feel
Even experts trained in emotional prediction are terrible at it. Eben gives examples of hiring based on liking someone leading to expensive mistakes and his own experience with lead generation where emotional projections of $1,200/hour profits failed to materialize.
Claim: “Seek validation and confirmation that you're right”
Reframe: Actively look for where you're wrong instead of seeking validation, as people naturally only see where they're right
Eben compares this to therapy where people pay $175/hour just to hear validation. He notes people constantly look for confirmation rather than examining their errors, which prevents growth and learning.
Claim: “Reaching your financial goal will solve all your problems permanently”
Reframe: You bring yourself and your same fundamental issues to any new financial level you reach
Eben explains that thinking making $5 million will solve everything fails because 'it's still going to be you' - your personal challenges and patterns follow you regardless of financial success.
Key Points 8
Emotional estimation prevents success by making us terrible at predicting how future events will make us feel and using current emotions to judge opportunities
▶ 0:3180% of lottery winners are in worse financial condition five years after winning than the day before they won
▶ 1:34People seek validation instead of truth, which blinds them to where they're wrong and prevents growth
▶ 2:37Hiring people based on emotional liking rather than data leads to expensive mistakes
▶ 3:39Early business success creates dangerous emotional estimation where entrepreneurs calculate unrealistic future profits
▶ 4:10Believing that reaching a financial goal will permanently solve all problems is emotional estimation because you bring yourself to that new level
▶ 4:34Data-driven decisions prevent emotional estimation by using external information rather than internal feelings
▶ 5:45The test-model-project framework prevents emotional estimation by creating systematic validation of business ideas
▶ 6:20Related Content
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Topics
Coaching Strategies
Business Frameworks
Common Mistakes