“If you have a 10% chance of a 100x return, you should take that bet every time even if it’s going to feel bad 9 out of 10 times.”
- Jeff Bezos
One of the best investors I know, personally, is named Tim. Tim and I used to share an office in California. One day, it came up that he had over 40 K1s from his angel/VC investments and I asked him "How much money are you making from all of these companies?"
His response was something like "In my lifetime one or two of them may have a liquidation event which is where I get paid".
In other words, he is comfortable with the fact that 1 out of 40-something will work and the others may not.
Back to Bezos:
“If you have a 10% chance of a 100x return, you should take that bet every time even if it’s going to feel bad 9 out of 10 times.”
- Jeff Bezos
This is an extension of Competitive vs Petty.
Most people rather win more frequently for the sake of "winning". They'll take the path with the most wins because losses hurt.
To be clear; I'm not saying that anyone should take more risk. I am suggesting that everyone should step back and think about what they are actually doing, and the strategies they are deploying. And deepen their understanding of themselves and what they understand.
If you believe that you are looking for asymmetric bets (to the upside, specifically) you cannot also believe or expect a majority of them to "win". If you cannot stomach more losses than wins, it might be a good idea to change your strategy to be more conservative and count on time + compound interest to get you where you want to be.
If hitting singles is your game, play your game and play it well. But you forfeit the right to complain about not getting invited to the home run derby.
If you're a power hitter, play your game and play it well. But you forfeit the right to complain about not hitting lead off.
There is no right or wrong, there is only misalignment.
For a 10% chance of 100x returns to work in reality like it does on paper requires two things to be true:
The human must be willing to take 9 losses out of every 10 tries
The human must be able to take 10 bets, meaning bets 1-9 cannot risk complete ruin/taking them out of the game.
A short video about it here:
A 10% chance to 100x returns might make sense to you, on paper. But if you are not willing to lose more often than you win or you take so much risk you won't survive 10 bets in a row, it's not a good strategy for you.
Again, no right or wrong. Just remember that when things sound good on paper, that on paper things do not move. In reality, things move.
Know yourself.
Play your game.
Nic