Bets

Hi, 

For those of you who follow the poker world, you will know that right now is the World Series of Poker. Every time the topic of poker comes up I think of one hand. 

I will give you the rundown. I get pocket 5s and we go 3 ways to a flop (the first 3 cards) and it comes 7,5,3. I hit a set, I raise, the guy next to me folds, the guy across from me raises. I decided to go all in and he called with 5 4. The next card is a 2 and the last card is a 6. 

I lost the hand. I lost a hand that I had a greater than 80% chance of winning when I put the money in. This hands still haunts me. Not because I lost very much money, but because I did everything right. 

Sometimes you do everything right, and the cards don’t go your way. 

Last week, I wrote about the right kind of failure. This week, I want to talk about bets, but specifically about how it's not just about making the right bets, but it is even more important to build the habit of handling the outcomes of the bets you make. 

A lot of this concept is covered in the book “Thinking in Bets” by Annie Duke, so if you want to do a deep dive that is a great resource. 

So what makes a good bet? There are a lot of definitions, but I would say the most important quality of a good bet is the likelihood that you will be right. This is different from only taking bets that are set at a high probability of happening. These are the kinds of bets (and we aren’t only talking about gambling) where you have some skill or knowledge that gives you an advantage over time. 

Another piece of a good bet is that there is a proportional upside. If I have to bet everything I have to get 5% more, that isn’t a good bet. If I only have to bet 5% of what I have and get double what I have, that is starting to sound like a good bet. 

The last thing is bet quantity, making 20 bets with 5% of everything each that are all long shots is not a good strategy because you won’t have enough bandwidth to positively effect the outcomes of each shot. 

A good example would be if you speak Russian, you are an expert software developer, startup costs are negligible to what you have, and Russia doesn’t have anything like AirBnB. You could leverage your skills, resources, and time to fill a void in a market with a proven product in a different market. 

Like I mentioned at the top, “Thinking in Bets” covers this in detail, and uses more robust definitions of bets. A good bet isn’t actually what I want to talk about today. What I want to talk about is what happens to your narrative when it goes your way or doesn’t. 

To overly rely on an aphorism, ”entrepreneurship is you against you.” So when you are making bets the result is completely separate from the narrative you are telling yourself about yourself in lieu of the result. 

This topic resonates with me because over the course of the 7 years running The Hero’s Journal I rode the waves of self-talk and my weakness to it held me back as an entrepreneur and as a person. There would be days where I would wake up at 9am, and the business had already cracked $8,000 in revenue on the day. And there were other days where we wouldn’t get over $1,000 on the whole day. 

Sometimes both of those days would happen back to back. Sometimes they would be months in between. It was the game. 

The issue was that the way I spoke to myself about how I was doing was tied to the number on the screen which changed the way I would approach the day's problems. I am sure that if we could go back and watch the tape on good days and bad days, the disparity in my approach could predict the ups and downs on the path. 

So why does this matter? 

Right now, I am listening to the book “Life at the Speed of Play” and the author talks about the importance of building failure factories. The logic was that if most ideas fail, then I need to test as many ideas as possible to get through all of the failures so I can crack a win. 

This is a great approach, but only if you are able to sure yourself up for the internal narrative decay that a string of failures will have on you. 

A few weeks back, I spoke about this idea of FOMO of progress. The feeling that you are not doing enough to become the person you see yourself becoming. When you pair that with the outcomes of your efforts not reflecting that person you have to have reliable fortification to not fall into the doom spiral of narratives like, “maybe I am not the kind of person who can see the winning ideas” or even worse, “maybe I am not the person who can execute on an idea.” 

The whole purpose of making a bet is to get a chance at the world that you want. Whether that be financial or it be lifestyle or whatever it may be. The outcome has to be worth it to make the bet. But you also need to make sure that you are open to continuing making the bets in order to get that outcome that you want.  

Alex Hormozi would say, “It is just a volume problem.”

The goal of a bet isn’t to win on every single one. The goal of a bet is to put yourself in circumstances where you build the requisite skills in order to build the life that you want. 

When you realize that, then you finally start playing the real game… you against you.