Life starts simple. All you need to do in school is to understand the instructions and execute them accordingly. If you work hard, you succeed. Simple. The moment you leave school, everything changes. Suddenly, you cannot just work hard to be extraordinary. There is no definitive path to greatness anymore. Sure, you can get a job and do what the boss tells you, but soon you will find that you cannot achieve breakout success by doing what you are told. Instead, you have to make bets.

When I left school, I was lucky and got an amazing first job at Recorded Future, working for a group of highly successful entrepreneurs. They assigned me crazy hard tasks and pushed me to my limit. I am incredibly grateful for that. But, there is one thing I wish I knew then that took me many years to learn:

Most valuable tasks are bets. This is particularly true when innovating. You assume something is possible without knowing for sure. Before realizing this, I was hesitant to take on really hard tasks. Or even worse, I inadvertently took on extremely risky tasks and suffered when I “failed”. It was grueling. I wanted to succeed and do good, but I kept failing. Since I had no experience, I could not articulate why I failed, so I felt like I was a failure. I confused taking huge risks and failing, with being a failure.

Learn what sorts of bets you make and tell people upfront. You can make high-risk bets, which typically come with high rewards. Or you can make low-risk bets, which typically come with lower rewards. Of course, most of the high-risk bets will not pan out. But that does not necessarily mean that the one making the bet is a failure. It just means they bet on something unlikely. Of course, skill and hard work can improve your odds. A task that is impossible for someone is easy for someone else. In some cases, such as programming, skill has a huge impact. In others, not so much. Some claim that ideas are worthless and execution is everything. My experience tells me otherwise. Some ideas have an inherent upper bound value that no amount of skill can overcome. That is why most great venture firms only bet on huge markets - that way, they eliminate the risk of the idea setting an upper bound for returns.

It would have been much easier if I’d known this in my first job. Instead of taking on crazy risky projects without setting expectations, I could have said: “I have this crazy idea that might work, but it also might not. If it works, it’s super valuable. If it doesn’t, we won’t get any value except lessons learned. Can I go ahead with this idea?”. I think my superiors would have allowed me to test most of my ideas. High risk is not inherently bad, as long as everyone involved knows what sort of bet you are making (and preferably that there is a lot to win). If you are great at what you do and work hard but still fail, then just try again. And if someone calls you a failure in that case, just ignore them.

I have struggled with the tension between making bold bets and being true to my word. My instinct is to want to keep my word and not exaggerate. On the other hand, audacious things are only possible if you take great risks. Day by day, I’m learning to make the risks of my activities clear while not letting that discourage me. It is not lying or exaggerating if you are clear about the risks. To get comfortable with this fact, you must realize there is a huge difference between what is possible and probable.

Speech is my hammer, bang the world into shape - now let it fall

"Hip Hop" on “Black on Both Sides” by Mos Def

I firmly believe that action shapes reality. I expect the world to bend to my will. What we do and say matters. What I mean by that is: I believe my actions can significantly change the probability of something happening. The probable is what happens when no one interferes. The possible is sometimes achieved when someone takes action. People too often assume that things are normally distributed and beyond their control. They assume they will experience “the most likely outcome”. In reality, many distributions are heavily “right-skewed”. Or we can make them “right-skewed”.

For example, it turns out that global mean income is higher than the median, i.e. income is “right-skewed.” I think this is because highly leveraged bets with huge potential upsides sometimes pay off. In most cases, they do not, and those “failing” resort back to salary-paying jobs. Salaries are probably closer to normally distributed since they are upper bound by the amount of time you can work in most cases. While wealth likely begets wealth, most of it results from risky bets actually working out.

Huge value can only come from the unlikely. In an age of increasing machine intelligence, efficiently doing what is expected will bring lower and lower returns. Humans are not suited to compete with machines regarding memory, efficiency, or repeatability. To use a finance term, there is no “alpha” in doing what is expected. You can, at best, replicate what everyone else is doing. Only those with the courage to believe in the possible over the probable will be able to generate huge returns. So, learn to let go of your fear of failure and start betting.

PS. If you want downside protection, you can just learn how to program.
That way, you can always make a living. DS.