Thinking in Bets!

Portfolio of small bets approach

Globally, the pandemic situation has surely facilitated a plethora of wannabe entrepreneurs and stock traders in last couple of years! Mind you, startups have a fail rate of >90 % depending on multiple variables . It can vary as high as 97% in some geographies. The reasons can be many including :

• No market need ~40%

• Poor product ~20%

• Ignore customers ~15%

• Product mis-timed ~15% etc.

The bottom line is success rate would be in single digit!

Andrew has some handy suggestions :

Andrew Gazdecki @agazdecki

You can create a startup on the side while having a job and paycheck. Build without financial stress and go all in when you find product market fit.

On the financial markets side, again a pandemic driven phenomenon, only 1% of active traders in India are making more money than Fixed Deposits! (which are around a lowly 5%!) Nithin from Zerodha has some really useful suggestions which can be very handy:

Nithin Kamath @Nithin0dha

I'm surprised that, so many are surprised that just 1% of active traders make more than bank fixed deposits over 3 years timeframe. Active trading is like running a business, only a small % succeed. The only easy bit about trading is starting trading. 1/3

zerodha.comWhat does it take to win at trading? – Z-Connect by ZerodhaHindi: इस पोस्ट को हिंदी में पढ़ने के लिए यहाँ क्लिक करें। Contrary to what most people think, trading the markets isn’t easy. The stock market is probably the toughest place in the world to make easy money, especially in the long run. While opening and funding a trading account is perhaps the easies…

Nithin Kamath @Nithin0dha

Traders with an alternate source of income tend to do better or have higher odds of winning than those who rely only on trading for a living. This is similar to how the businesses that are well-capitalized tend to do better than those that aren't. 2/3

Nithin Kamath @Nithin0dha

The pressure to generate profits daily or monthly can lead to more mistakes. So in a way, traders who also earn by talking or teaching trading have higher odds of winning. But don't trust every profitable screenshot that people share to find ways to make money from you. 3/3

Whether you creating a startup/starting a new career or stock trading every one needs better odds. But the big question is how do you improve your odds? A portfolio of small bets approach/mental model can provide good insights. I found this thread by Daniel Vassallo very intriguing and resonated with me very well.

“Don't build a product. Build a portfolio of small bets.” @dvassalo

Daniel Vassallo @dvassallo

And this is how I intend to keep making the unpredictable, predictable: - Aggressive input minimization - Ruthless application of the 80/20 rule - Curbing grandiose ambitions - Going for small wins - Doing a few things at the same time A portfolio of small bets.

The nuanced approach to increase your odds is to hustle/side-projects before you build a full fledged startup and keep a day job while you trade. Both will help to reduce the financial stress and pressure to make daily profits. That said, this would take a whole new mindset/ mental model. I really liked the "portfolio of small bets" approach. Most of our "risk" perceptions in life are unidimensional! Further reading Nassim Taleb books and living those ideas can be more empowering.

Sahil Lavingia @shl

Don’t take risks. That’s scary! Place small bets. That’s exciting!

In a creator economy context, a venture capitalist style approach/thinking may not be needed for solopreneurs to start with . The basic caveat remains that you are not chasing any numbers till you find the right product market fit. This means no early stage investing style thinking needed.

• No chasing numbers for being unicorns

• You need not know what others don’t know

• No tight deadlines on a weekly basis.

• Not every company needs to a unicorn and most things should not!

In a bear market context, sticking to the fundamentals would be my philosophy on investing (as I don’t trade!) In terms of trading, these suggestions can be handy :

Coin by Zerodha @CoinByZerodha

What a sentiment change from euphoria to despair. "Experts" now say that we're headed for the mother of all crashes because of inflation & the Fed stopping money printing 📉 So, what should you do if we're headed for a serious crash? Here are some obvious do's and don'ts 👇

No matter how sophisticated our choices, how good we are at dominating the odds, randomness will have the last word.

~ Nassim Nicholas Taleb