Without brave people taking risks, we wouldn’t get to enjoy the society we have today.
Any rational person can see how much better our lives are because of the inventions, products, and even movements that took risks, sometimes massive risks, to create for us. This is why, when it comes to taking risks, the victor gets most of the spoils. The risk of losing makes the payoffs big.
When it comes to taking risks, sometimes the ball just doesn’t bounce your way. Or worse, you can take a stab at something and just not be cut out for it. Either way, though, taking risks usually doesn’t put you out of the game for good.
As long as you’re alive, you have another opportunity to place another bet. And placing the right bets can change your whole life. Not just in business, but in a ton of other areas that matter.
Let’s take a detailed look at taking risks. Let’s talk about the type of risks you should go for and the ones you should avoid. And let’s talk about the mindset you need to pull the trigger when you know the time is right.
Why You’re Afraid of Taking Risks
I’m not the type to downplay the negatives. Yes, taking risks probably won’t kill you. But you can suffer consequences from it.
Often, the downside is just that you don’t get the outcome you want. You launch a product and it fails. You ask for that date and say no. Really, it’s that feeling of putting yourself out there in this mentally naked and vulnerable way and getting shot down.
What’s so bad about putting yourself out there and falling short? It says something about you. Something deep, right? Otherwise, why would we really care and be so afraid to fail?
It says that all the shitty things you think about yourself and try to push down to the recesses of your mind are true. When you avoid taking risks you get to tell yourself a comforting story, even if it’s a slightly sad one.
You could’ve taken that swing, but [x]:
[x] You made the smart and pragmatic move that ultimately saved you in the long run. [x] You’re above all that risk-taking nonsense because life isn’t all about getting what you want. You’re mature and humble and content and down-to-earth. [x] What would happen to society if everyone started taking crazy risks? Someone needs to keep the gears turning. We can’t all be dreamers. [x] Being an artist? Starting a business? Silly. You have a mortgage, two kids, student loans, medical bills. [x] If only you lived in a society that would really support you, then you’d fly freelyI don’t know what [x] is for you.
And, also, I’m not going to do what you think I’m going to do.
I’m not going to tell you you’re wrong. I’m not going to look down on people who take care of themselves and their families. It’s easy for someone like me to look down on others because they’re afraid to take risks. They should be afraid. And, also, some people truly are just good where they’re at.
This is about what you want. We’re all born with different innate appetites for risk. Same with natural levels of ambition. But we’re also malleable. We can change. We can decide it might be time to pivot.
Here’s a bit of food for thought to help you learn how and when to pull the trigger.
The Regret Minimization Framework For Taking Risks
Jeff Bezos came up with something called the regret minimization framework that he uses when deciding to take risks. Ask yourself this question when thinking about something you want to do: In X years, will I regret not doing this?
What Bezos had to say about his decision to start Amazon:
I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried.
Look, I know everyone isn’t a huge fan of the guy — drop an F in the chat for late-stage capitalism — but it’s a good framework. And risk-taking helped turn that seed of an idea into an amazing company (you love prime, don’t kid yourself).
Several times along the way, the company made moves that could’ve ended up in total disaster. Another quote from the infamous man himself:
“As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle”
Some of those risks flopped, like the Kindle phone, and others built the seeds for giant sections of the business like Amazon web services. The point isn’t billionaire hero worship, but some of the lessons you can draw from the philosophy and the story.
- If there are certain shots you wanted to take but didn’t, you’ll probably regret it
- The potential for public failure is a feature, not a bug, of achieving something extraordinary
- You don’t have to hold onto who you were or what you’ve built. It’s tempting to. It might be a good idea to, but you don’t have to. And sometimes you have to let go of it for something better.
So that’s the way I try to think about my life. If I’m sitting on a big decision I try to think about how things will play out. What am I going to feel like if I pass? If it feels like passing means I’m denying my true nature, who I really want to be, I feel like I have to do it. I’m not a cheery type of person. I often think about the things that eat at me and use them as motivation.
Is it healthy? I don’t know. Is sitting on the sidelines in life healthy? I don’t know. It’s not like we always get this set of amazing choices, right? You can’t get something for nothing. More security means less reward and vice versa.
Safety can come at the expense of freedom. You have yourself to worry about, but other people to take care of, too. Stop looking for people like me to make decisions for you. Use the frameworks and arrive at the answer you probably already know to be true deep down.
You’re in the Right Place at the Right Time
Here’s the good news. There’s never been a better risk-taking environment. Honestly, it’s not all that risky. Some argue that the traditional route itself has become risky and taking risks provides a counterintuitive level of safety:
“Because of the qualitative and structural changes to the economy, it’s getting harder to find jobs, they’re more risky, and they’re less profitable.” – Taylor Pearson
Conversely, there are opportunities that feel risky emotionally but aren’t all that risky. From Taylor again:
“If you do things that are safe but feel risky, you gain a significant advantage in the marketplace.”
The environment we live in allows for convexity. This is a fancy word for opportunities with a massive upside and a known downside. A lot of opportunities available to you mostly require time.
Say you wanted to make some extra money online. You can get web hosting for as little as $5 a month. There are free platforms to promote your services and products like YouTube and social media sites.
You can learn how to set up these ideas for free or invest a bit of money into a course. And you can do it in your spare time. No need to burn the boats and quit your job.
Naval Ravikant has a great list of convex opportunities:
- Invest in startups
- Start a company
- Create a book, podcast, video Create a (software) product
- Go on many first dates
- Go to a cocktail party
- Read a Lindy book
- Move to a big city
- Buy Bitcoin
- Tweet
All you have to do is set up a risk-taking framework that doesn’t put you in ruin. There are smart risks like throwing a bit of money down and trying to start a business. And then there are dumb risks like borrowing $20,000 to buy GameStop stock.
You can ‘risk’ some of your money to grow more money in the form of investing — from buying index funds that almost always go up to taking wild swings with a bit of money speculating on crypto. The point? Even though I don’t know your situation, I’d bet that you have the ability to make a bet that can change your life.
It’s All Risky…
Here’s the punchline. You can’t avoid taking risks even if you wanted to. Like Jim Rohn said, “the minute you were born it got risky.” Hell, leaving the house to go to work is a risk. So is staying inside. Maybe it’s a little bit safer to stay in but do you want to be safe or do you want to experience life?
On top of the inherent risks that come with just breathing, playing it safe entails a level of risk, too. Having a single source of income living paycheck to paycheck with a bunch of debt is quite risky. A lot of people are a few paychecks away from ruin.
Some people might say that’s not fair. I’m saying it is what it is.
The value of $100 in the year 2000 is now just $60. Stack up the consumer price index plus the price of all the assets that got inflated when the money printer went brrrrrrr and the real inflation number is a lot higher than a few percentage points. Keeping your money in a savings account means you’re literally losing money.
We live in a world where it’s becoming more important to become antifragile. The days where you could support an entire family off of a single income working at the factory 40 hours a week are gone and they’re never coming back. The wealth gap is growing and it’s getting riskier to be middle and working-class every single day
You can be upset about that or adapt. Because I promise you no one is coming to save you. So, here we are, risk every single place we turn. We all have choices to make. We all have to measure one risk vs another. But we don’t get to escape the game. No one does.
Final Thoughts
Aren’t you tired of gurus telling you everything will be okay if you just believe in yourself? It’s not true. Aren’t you tired of hearing that success is guaranteed if you follow these 10 steps? Nope. There are too many steps to count no matter what game you play.
There’s no easy answer. You’re in charge of your own life and there are a ton of variables and tradeoffs in it. There are a bunch of different emotions involved. You can try things that might blow up in your face or you can sit still and boil alive like the frog who sits in the slowly heated pot.
Life is not a game my friend, which is why one of the best ways to live is acting like it is.
Sometimes it helps to understand that even though life is quite serious, none of it is serious either. Money is just money. If you lost it all you could move into a homeless shelter or something. It would suck but people around the world live like that every day.
If you get embarrassed and ridiculed, does it really matter? We’re all floating on a rock in the middle of nowhere. Failure? You’re afraid of it even though it doesn’t really mean anything and you know that but it’s still scary. Just gotta face the sting eventually. Or don’t.
Risk is one of the few levers you get to catapult to crazy heights. It’s your trump card in a world that is anything but fair. And you can pull that card out of your deck as many times as you need to until it works.
Or not.
Your choice.