How To Increase Your Odds of Success

Sarah was a sales associate for an office supply company.

She was frustrated that she couldn't find a pantyhose that didn't show panty lines under her dress.

So she decided to make her own.

She took her entire life savings, $5000 at the time, and invested it into a new company.

The company went on to make $20 million in revenue in its first year.

Today, Spanx is a billion-dollar company and Sarah Blakely is one of the most successful women in business.

Now let's switch gears and take a look at Elon's story.

In 2002 once PayPal was sold, Elon had $165 to $180 million in the bank.

Most of that money went into starting SpaceX and keeping Tesla alive.

There's a common thread between these two stories.

Risk.

They both risked their entire savings to pursue new opportunities and businesses.

There are plenty of other stories like this.

People who risked everything to make their dreams come true.

These stories are inspiring and get lots of eyeballs.

But I believe these stories do more harm than good.

They make people think that they need to take insane risks to achieve what they want in life.

But what about the people who risked it all and haven't succeeded?

We rarely hear stories like that.

I'd be willing to bet that there are far more people who gambled everything and failed than those who have gambled and succeeded.

Although a certain level of risk is necessary, risking everything is stupid.

The last thing you want to do is undo years of compounding with a single mistake.

In reality, some of the wealthiest people are the most risk-averse.

Bill Gates kept a year's worth of payroll in liquid cash when running Microsoft.

Warren Buffet also takes a lot of time to analyze the risk of each of his investments.

He summed it up perfectly when he said:

Many people do just that.

Blinded by the thrill of potential success.

Rather than blindly making decisions. It's time to start taking calculated risks.

In the most simple terms calculating risks involves thinking about the worst that could happen and having a plan for it.

None of this positive thinking bullshit we've been told to believe.

But let's go deeper into how we can mitigate risks and increase the odds of success.

3 Types Of Risk

1) Preventable Risk

Preventable risks are a fancy way of making stupid decisions.

It's the obvious thing that everyone understands.

Not getting behind the wheel after a night of drinking.

Following tax strategies that fall in a gray area to save a couple of dollars.

Essentially these risks are sacrificing the long-term goals for short-term gains.

The simple fix is to stop being a fucking dumbass.

Create rules and boundaries to prevent you from making bad decisions.

All it takes is a little common sense.

2) Strategy Risk

Strategy risks come from a lack of knowledge.

Starting a new business with zero experience.

Throwing your savings into the stock market not knowing what you're investing in.

Buying property without understanding real estate.

All these actions come with good intentions but can put you in a big hole if you make the wrong decision.

This doesn't mean you shouldn't pursue these ambitions.

It's about finding the right balance between taking action and learning.

There are a few things you can do to mitigate strategy risk.

The first comes from making small bets.

Test out a hypothesis to see if it's true before committing.

Is there a way you can start a business without having to invest your life savings?

What could you do to validate your hunch for zero to no cost?

Maybe it means working on your business a few hours a day while working full time.

If you want to move to a different country maybe try living there for 3 months and see if you like it.

The second comes from learning from people who have already walked the same path.

We tend to think that our problems are unique.

That we're special snowflakes and the world doesn't understand us.

The truth is that there are a ton of people who have gone through something similar to you.

If you think about it, all your problems fall into three buckets:

1. Health

2. Wealth

3. Relationships

All you have to do is find someone who's further along than you on their journey and seek advice.

If you don't know anyone that has that experience, find a book on that topic.

Search it up on Google and YouTube. You'll find a lot of answers.

Seeking knowledge and learning from others is the easiest way to fast-track your journey.

You can also take advantage of your own experience.

Sarah Blakely putting her entire savings into Spanx isn't that risky when you think about how many years she spent doing sales.

Those years put into developing those skills helped her get to where she was.

Same with Elon.

He already had two large exits before putting all his money into SpaceX and Tesla.

If it failed he could always go back to software and make a ton of money.

What unique traits/skillsets do you have or can develop to reduce the risk of failure?

3) Tail End Risks

Tail-end risks are events that have a very low probability of happening but have a massive impact once it does.

Things like the pandemic.

Natural Disasters.

Market Crashes.

These are things that feel almost impossible to prepare for.

But there are things that you can do to help you stay protected.

Like wrapping yourself in bubble wrap.

Probably won't help but better to have it than not have it.

The first comes from focusing on prevention rather than cure.

Prevention is focusing on exercise and eating healthy rather than relying completely on medicine once issues pop up.

Prevention is putting money towards your savings rather than investing it in the latest get-rich-quick scheme when the bills come in.

Prevention is loving your partner every single day rather than waiting until she's ready to leave to start changing your behavior.

This means to start preparing well before the event happens.

Which means starting now.

Another way to prepare is to think of worst-case scenarios and create a plan on how to handle them.

A lot of people don't want to think of negative outcomes.

We've been told that if we close our eyes and picture our goals then poof! It will become a reality.

Unfortunately, life isn't a fairy tale.

By thinking about what could go wrong and creating a plan around it you become bulletproof.

Of course, it's impossible to predict what can happen but you become resilient to potential challenges.

A good way to come up with a plan is to study history.

As I mentioned before, your problems aren't new.

Someone has already dealt with it and figured it out. Learn from their mistakes.

Regret is the Biggest Risk

Before starting Amazon Jeff Bezos worked at an investment bank in New York.

He had a good job, was paid well and life was good.

One day he went to his boss and told him:

His boss urged him to think about it for another 48 hours before committing.

Jeff went to get some space to think about this decision.

As he spent time thinking he thought:

Despite taking the plunge, Jeff applied some of the frameworks I provided above.

He had years of coding experience and studied computer science and electrical engineering at Princeton University.

He also understood that he would likely fail which prevented him from having unnecessary blind spots.

When collecting early rounds of investments of friends and family he warned them that the chances of failure were quite high.

He told his family:

By getting very clear on what the risks are you can create a plan to prevent them from happening.

But the worst thing you can do to mitigate risk is not even trying.

No one wants to live with the pain of regret.

No one wants to look back on their lives and wonder what could have been.

I hope you continue to take action along the way. And I hope these frameworks will help make the journey less painful.

Thank you for taking the time to read this.

Ashvin