TLDR: Most people don’t think you can minimize risk and maximize reward simultaneously, but you can, and it’s called non-linear upside.
Insurance policies & lottery tickets.
You pay money for both, with a good probability of losing it all.
One minimizes risk. The other maximizes reward.
But what if you could have both at the same time?
What if you could invest your time and your money into things that shared those qualities, instead of choosing between them?
It’s something I always try to optimize for. Here are some examples:
Taking big swings: I have no reservations about cold outreach or asking for introductions, the worst they can say is no, but the yes is a game-changer
Venture investing: earn a salary to protect your personal downside while earning equity that has unlimited upside
Having a LinkedIn profile: build your network in case you need it (ie. incase of layoffs) while being discoverable by recruiters for your dream job
Sharing content: develop a habit of learning & writing to improve your thinking (ie. writing MMM, publishing a podcast) while reaching people who might change your life in unsuspecting ways (ie. deal flow, introductions, hires)
Hiring the intelligent risk: the chance of total failure for an employee is low, but picking the outlier has the chance of improving the entire team and company
Creating first principles: develop clarity to avoid bad decisions while introducing a common language that drives focus and leverage for compound returns
Being a good person: like heaven and hell, regardless of your beliefs, if there’s even a tiny chance that being a good person determines the rest of eternity for you, and being a bad person could ruin you while alive, the upside is worth it
Sometimes we only think about minimizing risk or maximizing reward, but we often forget that both can be true at the same time.
Insurance policies and lottery tickets aren’t one of them.
See you Monday.