2015 saw some major shifts in the way I think and interact with the world. Here’s a list of the top 3 things I learned.
Make Decisions based on Expected Value
Probably the most important concept I learned this year is that of Expected Value. Everyone knows you have to balance risk and reward. But how do you do that? If you’re like I was, you probably think of it in terms of managing the extremes – don’t do things that are REALLY risky, and don’t do things that are BARELY rewarding.
But mathematically, as long as you follow some pretty reasonable rules, there’s actually a different way to think of the relationship between risk and reward – multiply them. If you have a 10% chance of making $1,000,000 from a venture, and a 90% chance of losing $1,000, the above heuristic would tell you that’s a terrible venture to enter. But using EV, you get (.1 * $1,000,0000) + (.9 * -$1,000) = $99,1000… which actually seems like quite a nice amount of money.
My fascination with EV started after reading the first linked article above, and ended up with my doing a 1 month experiment where I got into the habit of calculating almost every daily decision based on it’s EV. While that habit turned out to be too cognitively taxing (factoring in computation cost btw is still an open problem in decision theory), it profoundly changed how I approached the big decisions in my life.
Playing Zero-Sum Games Really Well Doesn’t Raise Their Expected Value
This realization, along with the one above, is what led to me move away from Self-Made Renegade and decide to start focusing on systemic change in startups. A zero-sum game is a game where in order for a player to win, another player has to lose an equal amount. Think of Mancala – if you end up getting more beads in your side, the other player has to lose an equal amount of beads. No matter how many beads you get on your side… it doesn’t change the total amount of beads on the game board.
It turns out that helping liberal arts graduates get their dream job is lot like playing mancala. No matter how many people I helped get their dream jobs (and I WAS helping lots of people), there was a corresponding group that I wasn’t working with, who I was simply taking jobs away from. I was getting really good at shuffling happiness around, and having the illusion of making difference, while not really changing anything. This is what ultimately led me to consider systemic change as the best way to ACTUALLY make a difference.
A Mentor is Just a Friend Who Offers Advice Sometimes
One of the consistent negative patterns in my life has been the ability to develop relationships with mentors. I consistently distanced myself from mentors because I felt I somehow wasn’t worthy of their mentorship, or because I didn’t actually feel a connection to them, or because I didn’t feel like I had anything to offer.
All of these reasons really came down having some sort of weird transactional model in my head about the relationship between some more successful than you and yourself. This year, I began to be able to let go of that model, and just enjoy being around, connecting with, and being silly with people at all levels of personal and professional development. This is a shift which I’d like to continue to make in 2016.