Why there is no downside in going for it

James has made $100k in bitcoin, and prevented a $100k loss in a sushi restaurant. Here's his framework.

Why are we afraid of failure? Because we evolved to be afraid of lions.

James's Most Epic Failure

James had a stupid investment, but he didn't die!

Assume 100% of the downside risk goes to zero and only take bets you can handle walking away from

Consider the implications of your actions on a 20 year macro and reason through the 2nd & 3rd order effects

The Emotional Foundation For Risk

1. Assume 100% of the downside risk goes to zero and only take bets you can handle walking away from
2. Consider the implications of your actions on a 20 year macro and reason through the 2nd & 3rd order effects
3. Understand your ancient psychology is messing with you and it’s not actually life and death

Learning Business

James taught himself business from TV, which helped him be cautious of a restaurant investment broker who didn't know the numbers.

Every bet has risk and reward.

• 9-5 job: DOWNSIDE = zero; UPSIDE = capped at salary+benefits
• Business: DOWNSIDE = capped at capital + opportunity cost; UPSIDE = all the money you could possibly make on that venture

Expected value

The formula for expected value is:

(Total Upside * Probability) – Opportunity Cost = Expected Value

Simple case:

($1,000,000 * 25% chance) - $0 = +$250,000 Positive Expected Value

More realistic case:

($1,000,000 * 25% chance) - $100,000 = +$150,000 +EV

Thought Experiment

What If you…

• Read a new book every week
• Talked to customers / potential customers every day
• Constantly shipped product
• Continuously met credible and connected people

…for 300 years?