[00:00:00] So that's my goal for you today is to try and give you a new mindset around decision making Handling fear and risk assessment
[00:00:06] when learning to code I bought a bunch of cheap courses Everybody does we first try to learn for free We try and do it and figure it out because we think you can because we read about it in some blog And then we try to spend as little as possible perfectly natural perfectly normal.
[00:00:18] I spent a little over eighteen hundred dollars So maybe not cheap, but it's felt like tiny amounts at a time, 20 bucks here 50 bucks here.
[00:00:25] And it got me nowhere in four years.
[00:00:27] had I even become a professional coder in half that time, I would have earned a few hundred thousand dollars more. Just to save a few grand. I lost a few hundred.
[00:00:36] We all Hate making mistakes and being made a fool of and making fools of ourselves.
[00:00:39] and I couldn't have known that I was a bad decision maker.
[00:00:41] Welcome to Easier Said Than Done with me, Zubin Pratap, where I share with you the tens of thousands of dollars worth of self development that I did on my journey from 37 year old lawyer to professional software engineer. The goal of this podcast is to show you how to actually do those things that are easier said than [00:01:00] done.
[00:01:00] Hi guys. Welcome back to this episode this is an interesting one because i've been thinking a lot about this and speaking to a lot of people about how they assess risk now one of the greatest lessons i'd learned when I was doing my MBA was that people who are making money, you know, whether it's businesses or entrepreneurial activities or Finance a lot of the finance guys Just thought about risk completely different from how the rest of us thought about it and it was such a massive stage shift for me because It kind of felt like the wool fell from my eyes.
[00:01:31] It's you know, I was in my mid 30s and i'm like, oh that explains Everything when I figured it out or when they explained to me how they approach assessing risk making decisions What happens to mistakes how you optimize for you know, sort of upside and downside like their entire world philosophy Was so completely different from anything I had learned because to be honest i'd grown up in a white community Call a household knowledge workers very much salaried [00:02:00] professionals.
[00:02:00] And all my family's ever done for years is go to school, you know, get an education and then get a job and hold on to it, you know, for, for as long as you can and nothing wrong with that. That's absolutely the healthy way to do it. for most of us but Because of that set of experiences it was very fear based.
[00:02:18] It was very, avoidance of mistake based It was very much a hold on to what you've got and not an abundance more scarcity sort of mindset around this for understandable reasons like different generations had different challenges and so We know I never learned how to assess risk, how to take risk intelligently, how to understand the payoffs and the trade offs involved.
[00:02:40] And so when I was in my mid thirties, I'm like, ah, I now see how so many of my decisions in the past were fear based. And fear is kind of what I want to talk about today because it's perfectly natural and we should get into it you know, in detail,
[00:02:52] but really, and I'll share my screen here. You know, really what I want to try and do for you today is to bring to you a sort of venture [00:03:00] capitalist financiers, a mindset to your decision making, because after that MBA program, and this is what I keep saying, it was the most expensive thing I've ever done as a single investment apart from buying a home and taking a mortgage and it, yeah, Had unexpected returns right completely unexpected returns.
[00:03:18] It wasn't the mba Curriculum itself that changed my life, but all the things I learned indirectly from that experience and the exposure to it so so let's let's let's get into this, right? At the heart of fear. What is it? Right? It's it's making a mistake Right, and typically these are these are what they are losing money losing face or embarrassing yourself or doing something that doesn't work out for us. Okay, this is not going to work for us That's often what we subconsciously if not consciously thinking but let's talk about Take a step back and think what is fear?
[00:03:48] Well, fear is basically an evolutionary response. It's a biochemical Neurological and physiological response to perceived threats. Okay, and I should add that here [00:04:00] on the screen So those of you who are listening on spotify or any of the other audio channels, you know Take a look at the youtube channel to to download this worksheet if you want to look at it and do some thinking on it.
[00:04:10] So FEAR is an evolutionary response to perceived threats or uncertainty, right? Now, threats and uncertainty are very different. So for example, the threat of someone punching in the face is very difficult, different from Uncertainty of you know, if I, if I move country is, is it going to work out if I switch jobs, if I change career, if I ask this person out on a date, if I you know, all those sorts of uncertainties, right?
[00:04:36] And fear was there in all creatures. It's there in all creatures as far as we know. And it evolved to keep the creature alive because in nature mistakes can be fatal. They can be the end of that life, right? So in nature, mistakes can be fatal. A lot of mistakes can be fatal. And therefore, in an environment where a mistake Can be the last thing you do fear is a superb survival [00:05:00] strategy, right?
[00:05:00] Because even if you're wrong about the thing you're afraid at least you're still alive But if you're wrong about whether or not you should be afraid and you ought to have been afraid But you did something stupid you could be dead.
[00:05:11] So in other words, that's what's known as false positive or false negative thinking, right? So for example a false positive is I should be afraid of this And then it turns out that you're not you don't really need to be afraid so that's a false positive But in doing so there's no downside really because you're still alive you survived, right?
[00:05:29] But a false negative can be fatal in other words Or this thing is not likely to kill me and then you're wrong and it ends up that it does kill you now That's a false negative, but you don't get another chance to play the game anymore because you're out, right? So that's a false negative. So because false negatives are so much more sensitive false positives, fear makes a lot of sense because it keeps you alive.
[00:05:50] However, fear in modern society kind of makes a lot less sense, but it's still part of our evolutionary wiring. Cause you know, modern society is a few [00:06:00] hundred years old and our brains are a few million years old. So in modern society, the reality is, All most of the things 99. 9 percent of the things that people in, you know, especially people watching this, you know, 99 percent of the things we're worried about aren't fatal, okay, they're uncomfortable, but they're not fatal.
[00:06:17] They're not even that serious when you really look at it objectively. And the reality is, the vast majority of these things are certainly not going to kill you. Or even hurt you. It's almost entirely in your imagination. Just think about that for a moment. Don't, don't be provoked or triggered by this in any way, because I'm not saying that your problems and fears aren't real.
[00:06:34] I'm saying the consequences are not fatal. They're not even likely to hurt you at worst. They're going to be really uncomfortable and make you sting for a while. Okay. That's the worst, but most of it also happens in our imagination, right? Think about difficult conversations we've had to had. Think about the times you had a breakup with someone or we went for an interview, but things went okay.
[00:06:53] And our imagination made it much worse than it was. Anticipation of the fear produces these biochemical responses. And the funny [00:07:00] thing is the way our brain works is imagination uses the same centers of the brain, the visual cortex and other parts of the brain that are used to see. So imagination is like they say in the old days, Seeing with your mind's eye and the same parts of the brain are operated and, and the same parts of the brain are used for imagination as it is used for eyesight.
[00:07:20] It literally lights up the same parts of the brain. So the brain can't really tell the difference between imagined and fake, right? Which is why you blush. For example, if you think about something slightly embarrassing, or you think about something that's funny, you will laugh even though that actual thing hasn't happened, but you will still laugh or you'll smile because in your brain, you can't tell.
[00:07:40] It's as real as seeing it and that's just the way the brain works, right? So usually the things we're afraid of aren't true.
[00:07:45] Now Seneca, the famous stoic philosopher said, we suffer more in our imagination than we do in our real lives. And he said that what 2000 plus years ago. So this is part of the human condition.
[00:07:57] This is not something that's new, right? It's certainly not [00:08:00] something that's recent. It's, it's, Social media makes it much worse, though. I get it. Okay. Now, why does fear kill success? Now, this is the key lesson I got from my colleagues during the NBN, the finance people I met over the years. One is, fear causes indecision through paralysis.
[00:08:15] Right? That's one outcome. It's a very common one. I don't know what to do, so I'm not going to do anything. I'm worried about this outcome, so I'm just going to sit still and hope nothing happens. Or I put my head in the sand. Sweep it under the carpet, whatever it is. There are lots of metaphors for what people do when confronted with fear and uncertainty.
[00:08:29] It paralyzes us. The other thing that can happen is that we choose to avoid the thing that's making us afraid. And then we rationalize, right? Okay. For example, a lot of people would say, well, I didn't really think it was that bad a deal. So I didn't want to raise it with them. Like something bad happens at work something bad happens to their friend.
[00:08:48] You're upset. You know, you don't want the confrontation Somebody says something to you that's offensive and you don't say anything about it because you say well, it's not really that big a deal and you know Maybe in the big scheme of things i'm going to look silly or whatever [00:09:00] whatever it is You rationalize why you don't take action, right?
[00:09:03] Or you know very common thing. I really want to start that business I just don't know now is the right time. Maybe later on in my life, I'll have more capital or something, but the reality is, even if you have more capital, let's say you're 27, you want to start something and you think, Oh, I'll save till I'm 35 and then I'll start.
[00:09:19] The reality is by the time you're 35, your life circumstances are different. So you may have the capital, but your circumstances don't support your, your entrepreneurial dream anymore. So, you know, you, you've kind of rationalized away the decision and lost the opportunity, right? So that's why fear kills success is ultimately, it reduces your decision making.
[00:09:36] And, and the, the reality is that by reducing decision making, it drives inaction, right? Which is actually worse than failure because with inaction, you never know, you never know either way, right? You could die wondering or die regretting that he never tried because you never get any data or insight.
[00:09:51] If you try and fail, you get data insight. And now, you know. Okay, now, you know you get the relief of knowing or more often than not you get the [00:10:00] learning from the failure And then move to the next step, right? That's just how it is But action is only possible after you've made the decision and so That's what fear does it reduces decision making which means it reduces action, which means you're never going to know Okay?
[00:10:13] The other thing it does is it reduces risk taking and risk taking is essential guys This is a universal law higher risk higher reward. Now of course risk feels very uncomfortable and you shouldn't take ridiculously high risk How much is too high it depends on you and your circumstance and your appetite for risk but the reality is We often underestimate how much risk we can take and we overestimate the consequences, right?
[00:10:39] That's the false negative false positive issue and we'll talk more about that in a moment But when you reduce risk taking and this is what america is very good at they're good at taking risks When you reduce risk taking which a lot of other countries don't take enough risks and a lot of people don't take enough risk They you reduce the odds of success and you reduce the The size of the success.
[00:10:58] So it's not just the [00:11:00] probability. It's the quantity of success as well. Okay, that's just the nature of it That's just the nature of the universe ... upside Or potential upside or profit for example is the reward for risk taking that's intelligent. Okay Now let's consider why this doesn't work for our Our personal goals whether it's learning to code becoming a professional engineer changing your career starting your own business Heck even starting your own family.
[00:11:24] Okay, humans are good at noticing Detectable risk. Okay. I'm going to change calculate in the sheet to noticing. That's really what I meant to say humans are good at noticing Detectable risk, but we're actually really bad at calculating it. Okay, but we'll talk about that in a moment So we're good at noticing risk, but we suck at noticing invisible risk Now for those of you haven't I reckon I recommend reading or listening to nicholas talib's anti fragile Where he talks about systems that become anti fragile .
[00:11:54] Anti fragile doesn't just means it doesn't break It's that it's not fragile. Anti fragile [00:12:00] actually means something quite different it means that when the Stimulus happens that would normally break something,
[00:12:05] not only does this thing not break, it becomes stronger. Or in other words, the stress doesn't break it. It's not neutral. It actually, the stress actually makes it stronger and more powerful. And a classic example of an antifragile thing is a human muscle. Okay. When you put it under stress in the gym, it grows and becomes stronger.
[00:12:24] It doesn't break. Well, it could if you overdo it, obviously So there are limits but in general in the right conditions with the right training with the right Pressure or stress on it. It grows it becomes that's an anti fragile thing It actually gets stronger because of the stressor, right? So read that book if you haven't it's really quite life changing if you ask me.
[00:12:43] Now the other reason why the fear thing doesn't work and causes really bad outcomes for us is we we also suck at probability Calculation.
[00:12:49] So even if we notice or detect the risk You Right. We suck at assessing how serious it is. We just do. And, you know, Economists and finance people have talked about this and [00:13:00] behavioral scientists have talked about this for a long time So we get even the detectable risk badly wrong and then not only are we wrong We then rationalize the wrong thing, right?
[00:13:10] So for example, have you ever wanted to And you thought, Oh, it's going to be really great if I have it, but it's kind of expensive. And then you thought about it a lot. Oh, it's kind of pricey. And then you decided I'm just going to do it. And then when you decide to do it, you suddenly come up with all these reasons as to why it was the right thing to do.
[00:13:25] And it's very rare that we have the insight to say, ah, I just blew that money away. Right. We, we always say, you know, but. Unexpectedly, it ended up giving me this benefit, which is, which could be true and also goes to the point that if it is unexpected, that means you didn't calculate the risks correctly because it was unexpected.
[00:13:40] If it is expected, then you calculated the risks correctly. So we rationalize or we discover unexpected benefits and then we use those to rationalize and they may or may not be as much as we wanted, or we may not admit to them being less than we wanted, but we always rationalize the decision, right?
[00:13:53] People do this with relationships too. Being in a less than perfect good relationship will cause people to rationalize why [00:14:00] they were that person Why they didn't leave earlier. This is just normal human self protection guys. This is normal. It's not i'm not judging anyone I'm, just saying know yourself know the human brain.
[00:14:10] This is our nature. We self protect we minimize to avoid pain Okay, that's just who we are and we avoid risk. So After we rationalize now the same thing also happens when we We don't take the action and then we rationalize, right? We convince ourselves and then we explain that we didn't succeed because, well, I didn't take action because it wasn't the right time.
[00:14:29] It wasn't the right place. I didn't have the right resources. I didn't have enough time. I wasn't sure it was the right thing to me. And then when you don't get the results, we're like, yeah, well, the market was down. You know, you can't trust the internet. The internet is full of scams. You know, I hear this one a lot, right?
[00:14:42] The reality is the internet's not full of scams, maybe full of misinformation, but they're very few scams. Scams as a proportion to the overall data on the internet, you know Of course the internet makes it easier for scams just to be there. I'm not saying that the internet isn't quite a risky place at times, but the on my honest truth to you is [00:15:00] We get scammed more often by our own thinking and decision making and lack of accountability than Any internet scam.
[00:15:08] Okay, that's my honest truth to you We will scam ourselves way more and way better than anybody else can why because we trust ourselves And we trust our brains and often our brains aren't actually Doing the right calculation and even if it is our fears will make us scam ourselves Our need to self protect will make us scam ourselves, right?
[00:15:27] And so Ain't nobody gonna fool you like the way you fool yourself, you know There's an old saying something to that effect and it's kind of true All right Now part two as to why this fear based thinking and risk avoidance doesn't actually work for us Okay, because our fears are almost always wrong Now this is linked to the point about how we're very bad at calculating the probability of an outcome and a risk Especially a risky outcome and also upset outcome, right?
[00:15:49] We're just bad at probabilities It's not the way our brain evolved. Now since our fears are almost always wrong Yes, you know, to us in our minds, we feel that [00:16:00] making a mistake is nasty and in no way am I saying making mistakes is a desirable thing. We want to minimize mistakes. We can't avoid them, but we want to minimize them or make intelligent ones.
[00:16:08] Right. And we'll get to how we make intelligent choices in a bit. Now, yes, of course, losing money feels awful, but Very few times do we actually lose a lot of money. For example, I remember buying something. It was, it was a gadget, right? It was something for my guitar. I didn't really need it.
[00:16:23] I thought I did. I got carried away. I bought it was a few hundred dollars and I sold it at a loss, right? I think I lost maybe a hundred dollars on it. And. I recovered the cash my life didn't change, but I spent so much time agonizing about that. Honestly, my life didn't change Okay, I mean and that's a position of privilege.
[00:16:39] I get it. It could be 10 bucks. It could be five bucks It could be five thousand dollars. There are people who wouldn't even sneeze At ten thousand dollars wouldn't even look at it and i'll be sitting there agonizing about it, right? One of my coaches you know, my annual income was her worst month. So, you know, that just that that That's going to happen right people are just it's all degrees.
[00:16:58] I get that [00:17:00] So when we make a mistake or when we do something that doesn't quite work out as to plan Yes, we're going to be disappointed. Yes. It's going to feel nasty. Yes, it's going to suck It's going to hurt a bit, but it's not fatal. It's not serious. It's definitely not something that's going to 99 percent of the time it's not going to change your life Okay, because life will go on and we don't really suffer if it's a a reversible mistake and this is what I want to talk about when it comes to good mistake making Okay, a wise mistake making or well calculated risk taking okay
[00:17:29] It comes down to this some mistakes Have a capped downside.
[00:17:34] Okay, which means the worst case scenario is capped. There's a limit to it Okay example spending fifty thousand dollars in a college The worst case situation is you lose the 50 grand you're not going to because you're going to get some education You're going to get a piece of paper that's going to make your life a little bit better But let's say you don't think it was worth the 50 grand fine I challenge you to actually tell me what it's worth objectively without your anger and disappointment and [00:18:00] frustration.
[00:18:00] Okay, because you would have learned something. So the worst case scenario is you learn absolutely nothing. You didn't go for a single day of class. You didn't crack open any textbook You didn't somehow you got the degree without even doing a sitting single exam And your knowledge after three years is exactly what it was before you started Never happens in a college degree program.
[00:18:16] Let's be honest, but that's the worst case scenario fine Maybe you lost 50k and that was the worst you lost the 50k that's money gone, you know, and all that I was gonna say you're not gonna get it back, but that's not true. That's not true with money It's true with time, but it's not true with money. So you could get it back.
[00:18:30] You never know right now The worst case scenario is okay spending that money was a serious mistake, but it's a capped downside The worst case scenario is 50k. Let's look at other things. That are capped downside starting a business Right. Even something as extreme as losing something you really value, like when you lose a house or somebody steals your money or something like that, it's a capped downside.
[00:18:51] You can actually measure the full extent of the loss. You can actually put a number to it. That's a capped downside.
[00:18:58] Asking people out Okay, you can't [00:19:00] put a number to it But the capped downside is "NO!" Right you don't ask you don't get end of story The worst case situation is you got rejected.
[00:19:06] Putting in small amounts of time now This is a hard one because it depends we none of us actually know how many minutes we have left to live Right.
[00:19:13] And when we don't know how much time we have left, we don't know how much time is, is well spent, well or, or badly spent or, you know, where, whether there's a mistake to, to spend some time, but things like, I don't know if this, this meetup's gonna be particularly useful, or, I don't know if I, this work function's gonna be particularly useful.
[00:19:31] I don't know if I want to go. And you go for like an hour, an hour and a half and it ends up being really great. Either you had a great time and was you enjoyed yourself hardly, or you met some interesting people, or you learned something new, or it advanced your career in some way. So that's capped downside for you know X number of minutes You lose it.
[00:19:47] The worst case scenario is you at least get a meal or you, you know, you get a walk. So it's not a hundred percent loss situation, but even 99 percent of it was a waste of time. Fine. It's capped. You lost 90 minutes or an hour or whatever it is. Okay. [00:20:00] That's one category of risk.
[00:20:01] And this by the way is most decision making in life. 99 percent of decisions fall into this category, but some mistakes have an uncapped downside. Right? And this is, you know, where the evolutionary biology of fear comes in. For example, some mistakes like driving too fast when you're drunk or under the influence of something else on the wrong side of the street without your headlights on at night.
[00:20:20] Bad decision. Okay? Because if it goes wrong, there's no coming back from that. Okay. Likewise with unprotected sex with people you don't know, you don't know the medical histories of, you know, I don't know the statistics of it, but there are situations where you could contract something and you're stuck with it for life.
[00:20:36] Irreversible, right? You, you can't go back from that. Jumping a motorcycle across a ravine without any helmet. Probably you may make it across the other side. Nothing may happen. That's possible. But if it goes wrong, That's it. You're out of the game, right?
[00:20:50] Like there is no way to really quantify how bad this can get. And in some cases, you know how bad it can get, but it's, it's fatal, it's final. So your downside is uncapped in that [00:21:00] you lose your life. So that's it. It's uncapped, right? Gone.
[00:21:03] But what about things that have uncapped upside? Now, here's the interesting thing to notice about this guys.
[00:21:08] A lot of the things that have a capped downside, including shitty college education, if you don't like yours have theoretically uncapped upsides. But we know they have Not theoretical actual cap downside. So we know the worst case scenario can be quantified. We can't really know what the upside is So examples, actually, all the things that I talked about with capped downsides.
[00:21:34] College education, spending on your education, starting a business, asking people out, small amounts of time invested in, things, or even if it's not invested, just pure serendipity and good luck, right? This is known as increasing your surface area exposure to, to fortunate upside outcomes, right?
[00:21:49] Getting in the way of opportunities, another way of looking at it. So these are things that have uncapped upside. The thing is with things that have uncapped upside and a capped downside [00:22:00] Not doing it or the the cost of not taking that action is rarely calculated, right? So for example for people who think oh, I don't want to spend twenty thousand dollars starting the business Why it's too expensive.
[00:22:14] It's too risky. Okay, I understand that I really do i've been there. I totally understand it and i'll give you an example of my story in a moment but When you think about it objectively or as a finance person would or if it wasn't your money I bet your decision making would be a bit different because you'd look at it and say All right, the worst case scenario is i've lost the 20k I could probably get it back in a few years, you know with the right hustle or maybe even the next month I don't know how much you earn but who knows right?
[00:22:39] Okay. So the worst case scenario is you lose a bit of money Maybe it's one month's salary or two months salary. Let's say in this example fine that person takes your money and runs away You What is the upside if it's the thing that's aligned with your goals and your upside is that you could earn anything north of The the money you've invested.
[00:22:55] Let's say you've invested 20k. You're worried you're gonna lose all 20k. That's the worst case That's [00:23:00] the capped downside the uncapped upside is that 20k can get you Let's say 100k a year for the rest of your life. That's a 500 return every year. Okay, that's the upside And that's the minimum upside because hey, you don't know what that opportunity is going to create What doors that's going to open up for you how you're going to change what new ideas a single idea can change your life, right?
[00:23:20] You don't know all these potential upside things. And so now the upside is uncapped and unlimited You can't put a number on it, but you know, the downside is $20K.
[00:23:27] Now in those situations It's really hard to actually decide to put in the 20k. I know this from personal experience. So or whatever number it is and so we we let fear hold us back from making that decision without really thinking through well Okay, if I lost it, it would suck.
[00:23:41] But is my life gonna change? Am I gonna lose my house? Am I gonna go hungry? Am I gonna starve to death? Is my family gonna die? No, you know, it's rarely that bad yeah, it's just gonna sting a bit. But if it worked out If it worked out and there's no upper limit to that, well, what happens for my life then?
[00:23:56] Right? Now that's how the finance guys tend to think about is they quantify the [00:24:00] risk, they quantify the upside, and they assign probabilities to each. And they're probably wrong on all these probabilities, but in general, if the upside significantly more than the downside it's called an asymmetric payoff and asymmetric payoff games are where people make money.
[00:24:13] Okay, so that's from the finance world. I see no reason why it shouldn't apply to our personal lives. Asymmetric payoffs asking that person you want out on a date could mean that that's the person you end up starting a family with. Who knows, right? Asymmetric upside. Asymmetric payoff with a limited downside.
[00:24:28] So here are some of the examples that I want to actually share with you. Oh, before that I do want to mention You know, there's an old saying, right? You miss a hundred percent of the shots we don't take. That is so true. And that is the one that talks about asymmetric upside. Okay. Or uncapped upside and asymmetric payoff in that when we don't take the shot, we missed all the opportunities and possibilities that could have come from that decision.
[00:24:53] We miss them all. Okay. And because they're uncapped, it's potentially an infinite amount of loss [00:25:00] because of that one shot. And the downside of taking the shot is you take the shot and miss. Not a biggie. Really. That's the, that's the whole mental model to have. It's going to suck. You're going to be embarrassed.
[00:25:11] Okay. It's the last minute of the countdown clock, but the last second, and you could take that shot or you could not. Now, if you take it and miss, fine, you're going to lose anyway. But if you take it and win, you go home in the championship. That's that's the kind of bet You've got to make with yourself in your life.
[00:25:25] So let me give you some examples in my own personal experience to bring this all home for you Okay, when learning to code I bought a bunch of cheap courses Everybody does we first try to learn for free We try and do it and figure it out because we think you can because we read about it in some blog And then we try to spend as little as possible perfectly natural perfectly normal
[00:25:41] Now the funny thing I noticed is when I bought these courses a couple of things One is they all kind of taught the same thing because hey A line of python or java, whatever it is same for you and me, right?
[00:25:49] The compiler expects the same thing. So You know, everything's teaching is the same thing you find in a book It's the same thing you find for free on the internet. They all taught more or less the same thing But I didn't actually do them [00:26:00] properly. I didn't engage with them properly and I had zero support and I kept jumping around a lot Okay So I did that for years.
[00:26:05] I did that for four years. Remember i've talked about the story publicly So was it cheap? Well, I looked at it and over four years. I spent a little over eighteen hundred dollars So maybe not cheap, but it's felt like tiny amounts at a time, 20 bucks here, 50 bucks here. Right. And I didn't do any of it properly.
[00:26:20] And it got me nowhere in four years. But let's also look at. What I was talking about earlier is we don't calculate the cost of not having achieved success. We calculate the cost of failure, but we don't calculate the cost of the success we managed to avoid. Right?
[00:26:36] So over four years, had I even become a professional coder in half that time, I would have earned a few hundred thousand dollars more just to save a few grand. I lost a few hundred. Okay, and I couldn't have known that because I was a bad decision maker. It was during my MBA that I suddenly realized Oh, duh, I saved a bunch of money But I lost like 20 times more. For example had I chosen to [00:27:00] go to computer science school and get instead of the MBA You know, I would have probably got a way better ROI But I didn't know I wanted to be a coder at that time I knew I wanted to get into the business side of things and do my startup So the MBA was the right decision, but in hindsight, it wasn't.
[00:27:13] At that moment, it was right So you could say I lost, you know, whatever the six figures I spent for my MBA, I borrowed against the house like plus the interest. So I lost money on that. You could say I don't think so it didn't get me to the goals I had then But it opened up a whole completely different life that I didn't even begin to think I would have okay completely different Unquantifiable upside unknowable upside and we suck at assessing what we actually want or What probability of success there is and we don't know what we don't know.
[00:27:43] So we don't know what the upside is Okay, so that was the example from learning to code and the MBA stuff.
[00:27:47] Now my parking startup. I'll give you another example, right? So I quit my corporate job. This is after the NBA quit my, and this is how I ended up becoming a coder. So I quit my corporate job. I didn't get any income for over two years.
[00:27:57] And you know, before that I was a fairly high paid, well paid [00:28:00] lawyer. I was a well played sort of middle management executive for a while. And I left all that and went without income for two years. I had a mortgage, family, and all the rest of that. And so no income for two years. And I put six figures in hiring the coding team, cause I wasn't a coder in outlay and investments.
[00:28:16] I pulled it all out of the mortgage, a combination of mortgage and savings. I took a lot of risk. It felt so uncomfortable, guys. There's a blog out there about feeling fear somewhere in medium from six years ago. But I can't even begin to describe how uncomfortable it was. Now, the thing is I lost both.
[00:28:30] I lost the income. I lost the startup. So I actually lost three things. I lost the income. I lost the investment I made. And I lost the startup, right? I lost all the money I could have earned in a steady job. I lost the entire investment I put down in the in the startup because I couldn't actually make revenue positive.
[00:28:45] So I just kept bleeding cash and eventually had to shut down the startup. But. But along the way, I was forced to learn to code because somebody who had agreed to help me out as a fractional CTO ended up having to quit. And, you know, cause he had a baby [00:29:00] and he could go take the risk of the startup thing anymore.
[00:29:02] So, and I had all these contracts with potential clients that I had to deliver the proof of concept for. And so I had to learn to code to A, to save my honour and B to actually deliver on the contract. So I learned to code. And because of that, because of that one thing, you could say it cost me several six figures, right?
[00:29:18] Cause a few hundred thousand dollars a year in salary, plus the, the, the investment outlay, it's a lot of money, close to half a million, to be completely honest with you. And because of that, my entire new career has opened up. Okay. I got to be a developer at the age of 38. I started over a new career that I always dreamed of.
[00:29:35] I managed to get that. And then I managed to be in Google. Then I went to Chainlink. So I kind of feel like I made back the lost cash. Probably not the lost time but because you can't make back time, but I kind of feel like I Made back the lost cash. And yeah, yeah, you know you're thinking oh crap.
[00:29:49] I lost a lot of money then Kind of still stings even now, right? What what if I hadn't done that I would have had the cash, okay But would have I had this set of opportunities in my life to earn back even more cash? [00:30:00] Probably not, you know because there's a cap in in most other professions and if you're not in tech, you know You you don't have a lot of fun in my view like I I wanted to be in tech right and so You The life I have now ahead of me for the next 25 years is way more interesting attractive and potentially lucrative than the life I thought I had before I took the risks, but I didn't know this was going to happen I did not know.
[00:30:20] This is how it was going to play out, right? I thought I was going to be successful in my startup business That's why I started right and it didn't work out. So all of us suck at predicting the future assessing probability The reality is the the worst case scenario was what happened in the sense that I lost a bunch of cash I got a lot of value in exchange for that cash that set me up for this new life Okay So my conclusion here is we we're all going to get it wrong a lot and fear and risk are very real things and we all Hate making mistakes and being made a fool of and making fools of ourselves But the serious question is what is the worst case?
[00:30:55] Is your life really going to fall down the toilet if you hit that and then also think about [00:31:00] When you calculate the absolute worst case, draw it out, make it raw, make it real, make it the worst, wartiest, ugliest, gnarliest worst case scenario you can possibly think of, make it as bad as you can, okay?
[00:31:11] Good, now you've got the worst case scenario and you know it's bad. Probably exaggerated, but okay. That's the worst case. What's the best case. And if you can't figure out what the best case is, then the imagination starts to, you know, take you all over because it's possible. Yes, it is absolutely possible.
[00:31:25] There's unlimited potentiality, right? Then when we acknowledge that we suck at calculating probabilities, we don't actually know what's going to happen. Are we going to have the worst case scenario, which is capped, or are we going to have the uncapped upside? We don't know. We don't know the probability.
[00:31:38] It's very rare that we're very sure.
[00:31:40] We're not talking hundreds of thousands of dollars. or a massive life changing event. We're talking about relatively small things that we're not really going to feel drops in our life's ocean, right? And so we should then optimize for upside.
[00:31:51] And this was my big learning from the finance guys.
[00:31:54] Know your risks. quantify them and then figure out is the Asymmetric payoff [00:32:00] substantially more than the risk and when they say substantially more they're not talking 10 times more They're like, okay if my if the thing is going to cost me a hundred thousand dollars and there's a 50% probability of failure That's 50% of a hundred thousand dollars Well, I value that as 50, 000.
[00:32:16] And if there's a 50 percent chance that I'll make 200, 000 of it, then the upside is 50 percent of 200, 000, which is 100, 000. So would I pay 50, 000 to get a 100, 000 when it's both risk adjusted at 50%? Yeah, absolutely. No brainer. That's how they calculate risk. They assign a probability to the number, then calculate what the new number looks like.
[00:32:39] And if the return is anything more than 1. 5 or two times, which is just 200% . If it just doubles my money or it gives me 50 percent more, that's a great bet and they'll take it. And that's huge returns. 50 percent is considered huge returns, right? So that's how finance people do it. And I think there's a lot of value in applying that because the reason we don't do For ourselves is not because it doesn't [00:33:00] work the reason we don't do it for ourselves It's it's harder to do it when it's your own money when it's your own skin in the game But it's easier to do it with somebody else's money.
[00:33:09] We make better investors with other people's money emotions and time That's why we it's easier for us to advise people on how to make money than it is for ourselves to make money So hope this is valuable. Remember that the purpose of fear is to keep you alive So something's not going to kill you or seriously Destabilize your life.
[00:33:26] Then the fear is probably overstated. We suck at probability So don't try and calculate it too much But you know what the worst case scenario is because usually it's a time or money investment often it's both and so you can calculate what the worst outlay of time and money is and then you say well is the upside significantly more than that Even if it doesn't look possible for me right now, is it in theory possible?
[00:33:46] Have other people done it in my stage of life? If other people have done it, then why not you? And the reality is The vast majority of people aren't going to succeed at anything they do . Failure is the part of the world like being successful is a 10 percent thing 90 percent [00:34:00] of people will not succeed at a given thing but it's not because they couldn't do it is usually because they gave up or they followed the wrong plan right, so Someone's got to be in the top 10%.
[00:34:09] So why not you? And if you've got to, someone's got to make up the statistics, so it might as well be you. You just got to pay the price for it. And we're not talking about money. I'm talking about emotionally you know, overcoming fear, understanding risk, and just sheer grit and effort. You know, so why not you?
[00:34:24] All right. Hope that was helpful. If it was helpful, you know, even if it wasn't, I'm just kidding. If it was helpful, please like, and subscribe, check out the links at the bottom for more material that you can find. And if, if you're stuck in your career change to code journey, it's not for everybody. I get it.
[00:34:37] But if you think I'm the right person to help you reach out, then I'll see if the Inner Circle Program is the right thing to get you to your goals. And yeah, all the very best stay in touch and maybe I'll see you on LinkedIn or YouTube. Catch you later.
[00:34:48] Just subscribe, you know you gotta do it.
