After all, you need to take the juice into account. A bookmaker takes 10% from the losing side in a -110 wager, meaning a 50% win rate won’t get it done. Sports betting is fun because you may never truly. I recognize that this sounds very fuddy-duddy, but I hate to see the burning anger of the masses squandered on what amounts to a doomed attempt to beat the house with a series of bets. You can’t hurt the gangsters at the capitalist casino by shuffling the chips around to different bets. You take their chips off the table.

1. How To Make Bets Online
2. How To Take Better Notes
3. How To Take Better Iphone Photos
4. How To Take Better Selfies

I previously wrote about how starting a company is less risky than people think. This piece is a follow up to that piece as well as my piece on building personal moats.

To recap: remember, there’s two types of risks:

Job Risk: the chance your job will no longer exist

Career Risk: the chance your long-term career will be negatively affected

Founding a company might have job risk, but it often has little career risk. It’s an example of an asymmetric bet—a bet that, if it works, will have tremendous upside, and if it doesn’t, will still generate optionality.

I think the ways we’re taught to think about these concepts is backwards: we think something is risky (e.g. starting a company) when it actually buys optionality, and we think we’re buying optionality (e.g. joining Goldman Sachs) when we’re actually taking a big risk. In starting a company, we’re capping our downside—assuming the privilege to afford it—and in joining Goldman Sachs etc, we’re capping our upside.

In short, I think the mistake we make is not understanding that taking more risk, when the benefits are asymmetric, often creates more optionality.

Consider starting a company for example—the bigger risk is not that you fail, it’s that, if you don’t start enough companies, you don’t get enough actual shots on goal to actually create a big company.

I want to talk about asymmetric bets more broadly and how people should pursue them—particularly early in their career—as their downside is often just their time.

As an example, let’s consider crypto investing over the last few years:

If you think about it, many prominent crypto fund managers are in their early/mid 20s, whereas most successful tech VCs are often 2x their age.

There’s no axiomatic reason for this age difference. VCs in theory should have the same advantages: investing acumen, operating experience, relationships, etc.

Why is this not the case? In my opinion, it’s a form of the Innovator’s Dilemma at work:

In 2014, it was far easier for VCs to cater to existing customers (traditional tech startups) than to sacrifice that and explore this new space (crypto) that was weird, unproven, and entailed reputational risk.

Consider Kyle Samani, one of the aforementioned young hedge fund managers.

In 2016, he was 26, unemployed, unknown, and playing a lot of video games. He soon got into crypto.

In 2015/2016, Crypto had the following attributes, among others:

1) The financial opportunity was still largely unclear.

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2) Specializing in crypto entailed social & reputational risk.

3) You needed to spend a lot of focused time in different social/intellectual circles to get smart.

In 2015, if you had something to lose, it was a lot harder to get into crypto. It was financially risky. It took a lot of time. You also took real reputation risk—if it didn’t work, you’d look dumb.

And no to mention there was already this tried and true way of making money, so why risk it on this new, unknown thing?

So in 2015, the best person suited to get into crypto was someone who didn’t have a lot at stake—financially or reputationally. Or, in other words, a young, unemployed, unknown person with lots of time on their hands. (Bonus points if you had a cartoon twitter avatar.)

It’s worth emphasizing that the biggest risk was neither financial nor did it have to do with time—it was the reputational risk.

Kyle was used to that. Before starting a crypto fund he started a company built on top of Google Glass. People still make memes of him to this day for that.

However, his risks had an asymmetric payoff: If he’s right, he wins big. If he’s not, who cares — he’d have learned a lot and built a network by being where the cutting edge was. And he’s 26, people forget. Indeed. Years spent on failed ideas are often forgotten when success comes along.

You’re not known for your losses, you’re known for your wins.

e.g. Ever heard of Reid Hoffman’s 'SocialNet'? Nope, because LinkedIn & Greylock.

e.g. Ever heard of Marc Andreessen’s “Ning”? Nope, because Netscape & a16z.

As I mentioned last time, I spent three years working on a rap battle website. I looked dumb before, during, and after. Some people thought it was ingenious. And not just my grandma.

If you’re young, you can always blame it on youth, or find some way to rationalize it post-facto. (“rapt.fm could have been huge. It was ahead of its time.”)

And indeed, as time went on I did look ahead of my time. A website streaming rap battles recently raised over $100M. As Marc Andreessen says, there are no dumb ideas. Only early ones.

Joining Product Hunt was also an asymmetric opportunity: If it failed, I’d still have built an incredible network. There’s no other experience I could have pursued that would have set me up to start On Deck and Village Global.

Asymmetric opportunities usually have meaningful upside in a success case, and meaningful learning or development in a downside case. If the downside case is still one of the best case scenarios you can imagine, then that’s an easy asymmetric bet to take. In addition to pursuing things that have meaningful upside (and thus some risk), asymmetric bets can also involve taking a bet in risky spaces that other people aren’t pursuing:

Many ambitious people, even though they understand intellectually how smart risk brings optionality, still prefer the more conventional paths of accumulating optionality.

They compete insanely hard to accumulate options for the future instead of figuring out what they really want to do & doing that instead.

I’d argue we are trained to optimize for optionality from a young age:

“I don't know what I’m gonna do with my life so I’m gonna get a degree.”

“I don’t know what to do with this degree so I’m gonna get a grad degree.”

“I don’t know what to do with this grad degree, so I’m gonna get a consulting job to figure out what I truly want.”

It’s like spending your whole life filling up the gas tank without ever driving.

Why does this happen? Because people don’t want to look dumb, even for a short period of time.

And that’s the biggest mistake I think young people make: They’re afraid to look dumb, so they follow safe paths that cap their downside, not realizing that they also cap their upside.

And said paths are often tournament-style competitions, perhaps not as safe as they think.

The irony is that, in failing to take risks, we fail to gain the optionality that comes from doing so.

Risk-taking brings its own optionality. Especially when you’re young, accumulate optionality through the skills you gain, knowledge you acquire, and the unique experiences you undergo.

Accumulate optionality through differentiation, not conformity!

I’d even take this one step further to say if what you’re doing doesn’t seem dumb to somebody, or just plain weird, maybe it’s just not interesting enough.

If you’re not afraid to look dumb for a certain period of time, you can benefit from a sort of social-cultural arbitrage—you’ll take high upside bets others won’t take, and you’ll keep trying when your last try fails.

But to the extent that one wants to be seen as “smart,” the goal isn’t to look smart every step of the way; it’s to look “smart” at the end of your journey — often you have to look dumb for a certain period of time to get there. This is why Steve Jobs told Stanford's 2005 graduating class to 'stay foolish.'

Sometimes, however, you’ll look dumb forever, so pursue something that, even if it bombs, the pursuit was its own reward.

Even if it’s a website for real-time rap battles.

Read of the week: Contra Krugman by Robert Murphy. It’s funny (and inspiring) how some people can do such amazing work purely motivated by proving other people wrong. Unrelated, but Antonio Garcia Martinez’s interview of Martin Gurri is also fantastic.

Listen of the week: Philosophize This is a fantastic podcast. I’ve been listening front to back. I also released a podcast today with Keith Rabois and Jacob Helberg on China and the election.

How To Take Better Notes

Watch of the week: Patrice O’Neal on white people’s love of Radiohead. Hilarious.

How To Take Better Iphone Photos

Cosign of the week: Speaking of rap battles, the big homie Frak battled Dizaster, one of the best battle rappers of all time, and while he lost the battle, he won the popular vote 3-1. Here’s a clip. Stay tuned for his upcoming album and for the full battle release.

Until next time,

How To Take Better Selfies

Erik

P.S. Speaking of asymmetric bets, On Deck is envisioning a demo day early next year for people who want to self-IPO. Stay tuned for more information.