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About Lucky Maverick

About Jonathan Bales

NOTE

This article was supposed to be a quick look at my “Moneyball” approach to health. It’s now 16,000 words. For a seriously condensed version with all of the main points but less of my sophomoric humor, just read what’s in bold.

SECOND NOTE

A reader sent me this line immediately after publishing:

“You expect me, a lazy man, to read all this!?”

It’s a fair point, so I’m adding the AI synopsis he generated so his lazy ass didn’t need to read the entire thing…

AI SUMMARY

• The author’s angle: Jonathan Bales is a sports analytics/gambling guy (not a doctor) who applies a “moneyball” lens to health — treating fitness like a game to be solved rather than a medical discipline.

• Core principles: Think in probabilities, make +EV bets (meaningful upside, limited downside), favor via negativa (removing negatives beats optimizing in the tails), and prefer reversible mistakes since bad health interventions have asymmetric downside.

• Use multiple lenses for truth: Run ideas through the lenses of personal experience, believable experts (track record + logic), math, “what works” empirically, and science. The more lenses it passes, the higher the conviction.

• Adherence beats perfection: A worse plan you’ll follow for years crushes a perfect plan you’ll abandon. Engineer your environment, think long-term (ignore daily weight fluctuations), and track what matters without becoming a data scientist.

• Key resources: Momentum Shake is the author’s foundational health and longevity supplement. He uses Examine.com to cut through the noise on supplements and studies by weighting for sample size, design, and funder incentives — critical since most studies are junk. Bales also recommends Function Health for bloodwork.

I failed my first college test because I took way too much creatine and my body wouldn’t stop making these ridiculous farting noises, so I just left the classroom.

I’ve told this story in How to Get Better at Anything ASAP: My Extreme Theory of Learning (which I recommend checking out because it’s relevant to this post):

When I began working out a lot, I went to GNC and got protein and vitamins and stuff, as well as some creatine. The directions said to pre-load the creatine, which meant taking four teaspoons a day for the first four days and then one a day after that. My roommate was joining me and said this was to be done four times per day. He meant like one teaspoon four times a day, I think, but for some reason I got it in my head that it was 4x4, or 16 servings a day. And I was doing tablespoons, not teaspoons, which meant I started taking TWELVE TIMES the recommended serving of creatine, which was already too much since you don’t actually need to pre-load it at all.

I started on a Wednesday. I specifically remember this because I had a Spanish test—the first test of my college career—on a Thursday afternoon. I went into that test with 24 tablespoons of creatine eating away at my insides. I failed that test. I failed it after I panicked and started writing shit down in Spanish that made no sense for the first half, then just got up and left before finishing the rest. I did this because my body was repeatedly making this ridiculous farting noise. Not my ass. My body. Like my back and sides and stuff—very loud, very extended farting noises that were making everyone extremely uncomfortable.

Think about the wettest fart you’ve ever had. Now imagine that extending for maybe 3-4 seconds. Now imagine those noises coming from the depths of your body every 30 seconds or so in a quiet classroom filled with your peers who you’ve just met, all turning and staring as your face is dark red, entire body covered in sweat, sitting in terror as you wait for the next eruption.

Anyway, I got super jacked in college. At my peak, I was 178 pounds and could bench press 225 pounds 31 times. I’m not bragging; that’s actually embarrassing, but I’m just trying to demonstrate how much time I put into this. Didn’t learn a word of Spanish, but you should have seen my triceps.

I did eventually stop mainlining creatine, but I got legitimately strong and learned a ton about training and nutrition. And since it’s a passion of mine, I’ve retained a large percentage of the information I’ve picked up over the years.

There was no real strategy behind anything I was doing in terms of learning, but since that time, I think I’ve gotten much better at learning and, in hindsight, can look back and identify specific principles that I’ve built upon as a foundation.

Learning how to learn is more important than racking up useless bits of knowledge, and, similarly, learning how to build, implement, and adjust a fitness protocol is more important than which one you choose or where you start.

Why You Might (Reluctantly) Listen to Me

The creatine incident was my origin. Since then, I’ve spent an embarrassing amount of time lifting weights, doing stupid fitness prop bets, and collecting more health data than any reasonable person should. Here’s the quick version of my “resume” so you know what you’re dealing with:

• As someone who worked at a gym for about six full months, I’m uniquely qualified to give you health advice.

• One of my first businesses in high school was as an online personal trainer. I had one client and wasn’t certified to be a trainer. That business generated $60 in revenue over two months before I realized hey this is pretty fucking stupid.

• I’ve done a variety of fitness prop bets in my day, including one called the 6-12-18-24 Challenge in which I had to drink 24 beers, eat 18 donuts, jack off to completion 12 times, and run six consecutive miles in a 24-hour period. You might think you know a thing or two about fitness, but try running six miles outside in 105-degree heat with a belly full of beer and donuts after not sleeping because you were up all night masturbating. I know what you’re thinking, and yes, a grown man in a hazmat suit verified each time I jizzed into a napkin.

• Hey, are you still reading this?

• I also won a bet in which I did 2,400+ pushups in under 12 hours. This was during the start of COVID and because all you degenerates had no sports to watch and nothing to gamble on, there were literally hundreds of thousands of viewers and millions of dollars bet on this. I booked this bet sort of as a joke two days before I completed it, and it was covered by People, Men’s Health, etc. Pretty hilarious.

But seriously, the real reasons I want to write this:

• Over the past couple years, I’ve once again gone deep down the rabbit holes on fitness, health, longevity, sleep optimization, etc., so I’m currently very interested in this stuff and I’ve been doing tons of research, putting together my own resources, and collecting a lot of data on my own.

• I’ve long been passionate about fitness, but also how people can use analytics to learn, evolve, and win games (whether winning means making money or beating your family’s ass in Monopoly or maximizing happiness). So it’s natural to me to apply data to my health for the same sort of reasons I used to chart every NFL play into 50+ categories for “fun” or how I know, at the time of this writing, I’ve caught 2,021 fish (and 168 different species) in my lifetime.

• Holy shit, I can’t believe I just revealed that on the internet.

• So, if there’s one unique angle I have, I think it’s living at that intersection and understanding how to properly apply a data-driven approach to health—by turning it into a game and figuring out the optimal way to beat the game. In my opinion, if you can win one game, you can win any game, and basically everything you do in life can be turned into a game. I discussed my strategy for winning the pushup bet in this thread:

• I think there’s a lack of truly useful intel when it comes to fitness, health, exercise, sleep, nutrition, and supplementation. There’s plenty of data and information out there, for sure. I just think it mostly sucks, gets incorrectly interpreted (mistaking correlation for causation being the biggest contributor), generally comes in the form of a much-too-small sample size, isn’t specific to the individual, and almost always is proposed by people/companies with incentives unaligned with yours.

So no, you probably shouldn’t blindly trust the guy who once failed a college exam because his BCC (Blood Creatine Content) led to his back making the same noise you hear when you stick your fingers into this:

But if you’re trying to get in shape without turning into a full-time biohacker, I might be just the idiot you want to listen to. I’ve spent years on this stuff; you can use my obsession, spreadsheets, and general autism to your advantage to get in shape while still being a lazy fuck.

This all might look promising if you squint, but none of it makes me a doctor. So before we go any further, let’s be extremely clear about something…

I’d Prefer You Don’t Die From a Blog Post

Disclaimers: I figured I should put disclaimers in here even though I think it’s just painfully obvious you shouldn’t be blindly trusting a guy on the internet.

First, I’m not a fucking doctor. My background is in sports analytics, entrepreneurship, and gambling. I’m simply a dude with some thoughts on how to apply a data-driven approach to life and some experience in doing it for myself. I believe that background is applicable in fitness and nutrition, but none of this is meant as medical advice…obviously.

Second, I recommend some websites, tracking tools, supplements, etc. in this article. As you’ll read later, my approach to uncovering “truth” in wellness is governed first by the principle “Primum non nocere,” i.e. “do no harm.”

I personally use everything I recommend and have done so for a long period of time. For three of these–Examine, Function Health, and Momentum Shake–I have links with an affiliate code. In each instance, I reached out to the company to get an affiliate link–not the other way around–and always because I already used their product.

I could link to many products/services, and I’ve chosen these three because they’ve changed my life: they’re the foundations of my research, bloodwork, and supplementation. I full-heartedly believe they’re the most high-impact purchases you can make for your overall well-being. But please DYOR on any link you click.

And finally, I must reiterate this: I’m a self-taught schmuck. If you want to look into the things that have worked for me, that’s awesome, but I’m just conveying my experiences so you can maybe have a head start in researching on your own. Literally, I’m begging you, DO NOT TRUST ME AND VERIFY EVERYTHING IN HERE.

The Principles Behind This Article

Before getting into any protocol building, I want to explain the general operating system fueling my approach.

I think the “game” of health/fitness is much like any other game, which includes making better decisions under uncertainty, avoiding obviously stupid shit, and setting your life up so the healthy choice is not only easier to make repeatedly, but also not even really a choice–just a necessary byproduct of your environment.

That’s really all I’m trying to do here.

My background isn’t medicine. It’s becoming unreasonably obsessive about things until I feel like I understand and can solve that particular game by separating signal from noise.

And health is a domain with an absolutely insane amount of noise.

There are studies that contradict one another, many of them funded by those who’ll benefit from a specific result. There are influencers promoting whoever pays them the most. There are pseudoscientists, weird longevity guys, peptide nuts, meatheads, and–somewhere within all that–information that can help you better your life.

So the point of this section is simple: these are the broad principles I use to decide what seems real, promising, risky, or worth trying.

• Think in probabilities, not certainties.

A lot of people seem to want health to work like a trial in which there’s a final verdict. Are seed oils bad? Is red meat good? Is this supplement legit? Is that study bullshit? Everyone wants a hard yes or no.

Things are usually not so black and white. Most of the time you’re dealing with incomplete information, mixed evidence, incentives you can’t fully identify, and people who are way more confident than they should be.

Rather than asking, “Is this definitely true?” I think the better question is, “How likely is this to be true, how strong is the signal, what happens if I’m wrong, and how much do I even care?”

That framing alone is helpful because it makes you less dogmatic.

• Think in terms of expected value (EV).

This one comes naturally from gambling. A good decision is not the same thing as a guaranteed outcome. You can make a smart bet and lose. You can make a dumb bet and win. That doesn’t mean the dumb bet was secretly smart; it just means you got lucky.

Health is similar. You’re looking for actions where the upside is meaningful and the downside is limited. Lift weights? Clearly a very obvious good bet. Sleep more? No shit. Try a low-risk supplement with real evidence behind it? Depending on your goals, probably fine. Take a foreign peptide because someone else claims positive results? Maybe not as sharp.

Most of what I’m doing in health is just trying to make a bunch of good bets, repeatedly.

• Use a “via negativa” mindset.

The fitness world is tricky to navigate because not only are there all kinds of reckless ideas floating around, but there’s a clear financial incentive for many people to make these ridiculous ideas sound sophisticated to sell something. That’s a problem because the downside of being wrong can be a lot more meaningful than in other areas of life.

If you’re wrong about a business idea, maybe you waste time and some money. Or maybe you even iterate on the bad idea until it’s good.

If you’re wrong about some health intervention, maybe your hormones are toast, your sleep is wrecked, or oops shit you’re dead now.

So I heavily prefer asymmetry: meaningful upside, limited downside, reversible mistakes. That’s a really important point: the more easily reversible the mistake, the more feasibly you can take the chance.

That’s also why I think removing obvious negatives (via negativa) matters so much more than adding marginal positives. If you sleep like shit, barely move, drink excessively, eat everything in sight…your problems are probably not going to get solved by optimizing in the tails.

• Use multiple lenses to figure out what’s true.

This is a huge part of how I think, and I’m going to get into it in much more detail in a bit, but the basic point is that no single source gets to monopolize truth.

Studies matter. Experts matter. Logic matters. Pattern recognition matters. Personal experience matters. Common sense matters. The experience of smart people with skin in the game matters. And depending on the question, some of those matter more than others.

If you’re trying to decide whether caffeine helps you focus, your personal experience matters a lot. If caffeine makes you feel like you were chased down by a rabid dog, it doesn’t matter that some population-level data says it improves alertness.

If I’m trying to decide whether a supplement is worth trying, I want some combination of robust studies, believable people I trust, logical sense-making, and enough anecdotal real-world signal to justify experimenting. The more lenses something passes, the more confident I get. If it only passes one lens, I’m skeptical.

Later I’ll break down the lenses more specifically. For now, the simple version is: don’t blindly trust studies, don’t blindly trust anecdotes, don’t blindly trust doctors, don’t blindly trust influencers, and definitely don’t blindly trust me.

• Use trial-and-error (but not chaotically).

You have to test things on yourself. You are not the median participant in a study. You are one little data point with your own genetics, diet, habits, preferences, schedule, psychology, injury history, and so on–but you’re the most important data point.

So yes, personal experimentation matters. A lot.

But random experimentation is not the same thing as useful experimentation. If you change twelve things at once and then declare that some mitochondrial stack changed your life, you may in fact just be redacted.

The better approach is to alter one variable when possible, pay attention, give things enough time to work, and cultivate your pattern recognition. Some things have immediate effects. Some take weeks. Some are too subtle to judge cleanly in the short term. It’s important to know the correct time horizon you should be using on experimentation.

• Be data-driven, not a data scientist.

I love data. There’s no evolution without trial-and-error, there’s no trial-and-error without a survival mechanism for smart beliefs, and there’s no survival mechanism without data.

But that doesn’t mean you need to be drowning in numbers. Many times, how you feel is the only relevant piece of data you need.

The point of tracking things is to improve decisions, not to create a full-time job logging every gram of food and change in REM sleep.

Track what matters and use data to sharpen your instincts and improve your pattern recognition. You can analyze data as much as you want if you find it genuinely interesting, but it’s not necessary to be a data scientist to unlock amazing health–just someone who’s aware of relevant pieces of information.

One caveat here, as I’ll discuss in a bit: the ability to run massive amounts of data through LLMs increases the value of at least collecting it.

• Optimize for adherence, not theoretical perfection.

This is where a lot of smart people overthink it.

Finding the “best” plan in a vacuum is worthless if you can’t stick with it. You’re not going to eat healthy all the time. And even if you could, why would you want to?

A slightly worse plan that you’ll actually follow for years is much better than a perfect plan you’ll follow for a weekend.

This applies to everything: your diet, your workouts, your supplement routine, your sleep practices, your step count, your meal timing, all of it. The best plan is the one that gets implemented consistently without you becoming miserable.

A huge amount of health success is just smart architecture. Make the most beneficial behaviors the easiest to complete, both psychologically and practically day to day. Make the bad behaviors annoying. Exploit your own psychology in useful ways.

• Think long-term.

Getting in shape is pretty much the ultimate long game. The reality is what you do today is going to have such an inconsequential effect on your overall health to the point that it’s effectively imperceptible.

But your choice of what to do today matters, because that choice can (and must) be repeated, over and over again. The commitment to making the right decisions on a daily basis–and ultimately rigging your environment so they’re not even really conscious choices–is what will lead to compounding benefits.

Eating junk is something that’s obviously short-term fun and long-term detrimental, but people who are actually trying to be healthy can suffer from short-term thinking as well. Some ways I’ve noticed short-term results throw off a long-term plan:

• Worrying about day-to-day weight fluctuations, which are influenced by a number of variables, most notably water retention

• Eating as few calories as possible to reduce weight (at the cost of long-term metabolism)

• Doing cardio because it burns the most calories during your workout (at the cost of long-term caloric expenditure and a lower base metabolic rate)

As mentioned, time horizons are extremely important when it comes to health because they dictate how we interpret data and optimize a path forward.

In general, we want long-term compounding effects over fragile short-term gains.

• Turn health into a game you can actually win.

“Health” is a vague concept. There’s no real target. But if you pick your desired outcome and turn the entire process into a game to reach that end state, you can determine the “rules,” work backward from success, and continually iterate and evolve to “win.”

What are you optimizing for? Muscle growth? Cardiovascular benefits? Better sleep? Reduced anxiety?

Pick your game.

Then learn the rules, use the right lenses to identify signal, find the potential edges, and stack +EV bets.

I’m not trying to find one grand unified theory of wellness. I’m trying to make better bets, avoid needless downside, use multiple filters to find what’s likely true, and build a system that works for me in real life.

Everything else in this article is just that idea expressed more specifically.

Lenses: A Multi-Dimensional Search for Truth

“Be data-driven” and “balance risk with reward” are nice taglines, but in the real world you’re drowning in information and most of it sucks. There are data points everywhere, and you can confirm any preconception you have if you look in enough places.

The reality is that your job–not just in health, but in every form of life’s decision making–is to weigh each piece of evidence according to its merit (with most being discarded).

To make sense of anything in health, you need multiple filters that you can run ideas through to see what survives.

In his book How to Fail at Almost Everything and Still Win Big, Scott Adams proposes that we determine what’s true through various lenses–personal experience, experiences of people you know, experts, scientific studies, common sense, and pattern recognition.

Once you start running decisions through these lenses, you find that:

• A few habits, tools, and products keep showing up as obvious no-brainers.

• A few things look promising but need skepticism and testing.

• And a whole lot of shiny nonsense reveals itself as exactly that.

Instead of pretending there’s one single source of “capital T” Truth, I try to view ideas through a set of lenses—different ways of looking at the same thing—and then see what survives.

The more lenses something passes, the more confident I am in it. If they conflict, I decide how much I care based on 1) which lenses have historically been most useful for certain types of problems and 2) the upside and downside of being right/wrong.

So that’s the game: use the lenses as a filter for the firehose of truth, then make decisions and build plans based off of your most high-conviction beliefs, followed by your speculative-but-interesting beliefs that have limited downside.

I’ve molded and blended some of Adams’ filters, as well as added some of my own, to look something like this:

Personal Experience

There are times when your personal experience matters a lot, and times when it’s sort of irrelevant. For example, when deciding if you can beat a casino at roulette, the fact that you’ve won money in the past is worthless (assuming you didn’t cheat).

In this case, other filters should tell you that your experience doesn’t matter; others have lost money, the math guarantees you’ll lose long-term, and it’s just common sense you’re not going to make money playing roulette.

If you make the mistake of viewing the economics of casino gambling through solely the lens of personal experience–and you’ve won in the past–you’re going to be in for a rude awakening.

In terms of health and fitness, there are times your personal experience is really all that matters. If when you eat almonds you consistently get a horrible rash, it doesn’t really matter that almonds are healthy for the overall population, does it?

Sometimes, though, you might not have personal experience related to a particular decision, or you might have experience that shouldn’t be weighted with great strength. Health is closer to roulette than almonds most of the time because of the vast number of variables that go into your health—sleep, stress, nutrition, exercise, supplement interactions. A particular supplement could be useful and you might not see it over a short timeframe (or vice versa that it’s junk but you see “results” over a short timeframe).

Overall, your personal experience might seem completely representative of reality (and thus predictive of future experiences), but it’s flawed more often than you think due to confounding variables. As an example, let’s say you take a supplement to improve sleep quality during times when you have big upcoming work projects. You track your sleep with your Oura ring and see your total sleep, deep sleep, and REM sleep levels all remain unchanged or even get slightly worse when taking the supplement.

Does that mean the supplement doesn’t work for you? Maybe, but what if during those times you were also working late, causing you to eat dinner very late just before going to bed? Add in additional work-related stress and you can see how you might not see any signal from a supplement that could in fact be effective for you if you were to remove the correlation with life habits that are negatively impacting your sleep.

Another example that pops up all the time is water weight. At any given time, your weight is almost completely the result of how much water your body is storing, which is why short-term weight fluctuations are an absolutely awful barometer for determining the effectiveness of any single variable in your health protocol.

For example, when I start exercising a lot after some time off, I immediately gain a bunch of weight and, for a short period, look worse in the mirror. This is a pretty common occurrence for many people’s bodies when reacting to stressors. It would be foolish to assess the merits of any action you take without acknowledging the impact it has on your fluid retention.

This is why a multifaceted approach to uncovering truth is so valuable; each individual lens through which we view the world is limited–oftentimes in ways we cannot see–and so we have to sort of “bake in” that uncertainty and possibility of being wrong by considering various viewpoints.

Typically speaking, your experience matters when the effects are immediate and repeatable–think of the effect on your energy after drinking two cups of coffee–such that there aren’t 100 confounding variables making it impossible to trust the results.

Experience/Opinions of Qualified Individuals

In Adams’ list of filters, he explains why you should consider the opinions of others in seeking truth. This is undoubtedly accurate–we have to trust other people some of the time, right?–but not all opinions are of equal importance.

One of the most important skills you can cultivate is learning who to trust. I wrote an entire article on this called How to Determine What to Believe that I recommend checking out. Here are the bullet points from that post:

• We’re always making implicit judgements on what Ray Dalio labels “believability”—how much you should trust a person and subsequently weigh their opinions in forming your own beliefs.

• When you find a highly believable person in a particular area—even if it’s very specific—you can save an incredible amount of time. So much of finding success is being able to identify and tail the right people.

• I’ve found two useful heuristics when determining who to trust in specific areas: track record and logic. Has the person accomplished something that suggests they know what they’re talking about, and can they articulate it in a way that is logical and rational?

• To accurately (and quickly) identify the logical practitioners, you should first search for those with a proven track record—those with “skin in the game.”

• You should determine how believable you are in a certain area by considering your track record and how well you can logically explain what you believe to be true.

Bryan Johnson and your favorite TikTok wellness influencer are both people talking about health and longevity on the internet, but the latter probably doesn’t have millions of dollars invested into testing the viability of every imaginable health-related protocol with clear-defined, measurable goals and transparent bloodwork. I don’t think Johnson’s path is necessarily optimal–he takes a wide array of supplements that are unnecessary for most who aren’t vegan, for example–but he’s certainly a more believable person than your average online fitness schmuck.

This “believability” concept actually embraces the next three lenses through which we find truth: math/logic, “what works,” and science.

We want people who can clearly explain their beliefs (logic), with actual downside tied to their actions (what works), and an evolutionary-like mechanism for strong beliefs to survive and bad ones to die (science).

Math/Logic

Perhaps the only lens through which we can know something is true independently of any other lens is with math and/or logic. By math, I don’t mean just numbers from a study, which can be easily manipulated or misinterpreted. Rather, I mean actual logical and mathematical proofs.

An example would be something like:

1. If I burn more calories than I consume, I will lose weight.

2. I did not lose weight.

3. Therefore, I did not burn more calories than I consumed.

This is a logical argument known as “denying the consequent.” If you accept premise A, you must accept conclusion C if B is in fact true.

In a bit, I’ll explain why I think counting calories is overrated and the CICO (Calories In/Calories Out) principle–while technically true–is a somewhat misleading concept. But nonetheless, it is logically true, even if tautological.

Math/logic help you spot obvious bullshit.

“This diet lets you eat as many calories as you want and still lose fat.”

Sure, okay.

I don’t build my health on pure logic—biology is too messy—but if something violates basic math or logic, it’s out.

What Works

I have a tendency I wasn’t even aware of until not too long ago to take long pauses before speaking. During this time, I’m processing information and generally unaware of how it might be affecting the flow of a conversation.

This trait has worked to my advantage even when I was completely oblivious to it happening. Silence is one of the most powerful forms of communication. Silence often comes off as strength. This has aided me in negotiations, even when I’ve had no logical reason for taking time to speak; my social awkwardness and proclivity for introspection has at times been very valuable, despite no conscious effort on my part.

Ultimately, we should really only care about what works, regardless of how we get there. The Chinese have a term called “yeet hay” or “hot air,” which is effectively synonymous with foods that cause inflammation (though not a perfect 1:1). Most people in Western medicine would probably say “yeet hay” is bunk because it’s more of a cultural concept with a lack of scientific rigor, but who cares if it leads to a diet that’s long-term healthy?

It really doesn’t matter if we’re “wrong” if 1) the downside is limited and 2) the result of the belief works in terms of accomplishing the objective.

Evolution is the ultimate “what works” mechanism; if something has been around for a long time, chances are there’s a good reason for it.

Through this lens, we’d be more likely to trust bodybuilders than PhDs about how to build muscle; the latter knows the theoretical truth, and the former is a walking representation of it.

Science

Science doesn’t have all the answers, but it’s the best tool we have for falsifying information and slowly whittling away at the truth.

In terms of health, science is the most useful tool we have for asking the right questions. If you want to try a new supplement to help your sleep, you’re not going to just blindly start taking anything. You’ll probably first look at what’s worked for others, and in the world of health, this is represented by studies.

Here’s the reality about scientific studies; they’re potentially of immense value, but widely plagued by:

1) small sample sizes,

2) poor interpretation of data,

3) non-applicable conclusions (such as applying in vitro results to “real life”), and

4) conflicting incentives (many studies are funded by companies who benefit from a specific result).

This is all a giant problem, because the science that we see among, say, theoretical physicists, isn’t the same “science” we see in a study showing the effectiveness of a particular antidepressant that’s funded by the company that makes said antidepressant.

Interpreting studies is an incredibly valuable skill in its own right, requiring an understanding of not only science, but statistics, logic, and even incentives. You can put a bunch of time into this if you find it interesting, but there’s a shortcut: Examine.com.

A Quick Aside on Examine

Examine is, without a doubt, the most accurate and robust online resource for analyzing health conditions, supplements, fitness protocols, and scientific studies. They have a fundamental understanding of what constitutes useful data; they assess who funded a study and the level of scientific rigor involved, they have a strong grasp of the difference between types of studies and what that means for the conclusions, they properly adjust for sample sizes, and overall their results can be trusted far more than any other source of information I’ve found.

I’m highly skeptical of most studies (and the way they’re interpreted) because they’re so often small sample sizes, poorly randomized, not double-blind, funded by those who have a stake in the findings, and draw wildly inaccurate conclusions from the data, most often conflating correlation with causation.

The reality is most studies are junk, but some aren’t. Examine does an insanely effective job of separating the signal from the noise and delivering it in a really useful way. It’s been an unbelievably vast resource with:

• Supplement Guides

Step-by-step guides with all the practical information you need (dosage, safety, synergies)

• Examine Database

Grades for hundreds of supplements and other health interventions for thousands of outcomes, based on the latest randomized-trial data

Via Examine:

“We provide you with the study’s key details, such as dosage, duration, and the characteristics of the participants. We discuss practical implications and major caveats, such as design limitations, flawed conclusions, or conflicts of interest. And we contextualize each study and its findings within the broader literature.”

• Protocol Builder

Turn evidence into personalized supplement plans; get goal-specific dosages plus safety notes.

Examine is indispensable to me as really the only source I trust to help determine the safety and efficacy of various supplements and protocols.

I highly recommend using Examine either for free or, as a time-saver, signing up for a premium subscription. I am about as skeptical as they come, and I’ve analyzed Examine enough–I use it literally every day–that I’d say you can effectively trust their analysis outright. It’s an indispensable tool for anyone interested in health.

Putting this together, what we really want to see when deciding if we can trust someone else’s opinion is a combination of inherent downside if they’re wrong (which thus becomes a powerful incentive to figure out what actually works) and an embracing of math and science, with logical reasoning for their opinions.

Bryan Johnson is an example of a believable person because, whether or not you think he’s batshit crazy, he talks the talk, analyzes every piece of relevant data in a (mostly) sophisticated way, and then walks the walk.

The economist is logical, while the successful entrepreneur makes the money; the trainer knows the science, while the athlete produces on the field; the nutritionist reads the studies, while the bodybuilder implements the results.

The latter person in each category who can logically reason like the former—an admittedly rare combination—is the most believable, and thus the most worthy of our trust.

Instincts/Pattern Recognition/Common Sense

I’ve long been a data-oriented decision maker, but that doesn’t mean every piece of data needs to come from an algorithm or model or something. Your experience and instincts are pieces of data, too. And as you take a more multifaceted and scientific approach to decision making, your instincts will naturally become more accurate, specifically through pattern recognition.

Your brain is constantly running pattern-matching software, whether you’re conscious of it or not.

“When I eat late in the day, I notice I’m lethargic the next day.”

Is that recognition considered science? Not really. But it’s absolutely useful, particularly when tracked (which then starts to become science).

Use the lens of instincts/pattern recognition to ask the right questions, then use your scientist lens to track data and find the solutions.

If you build your life around data and testing, your “gut feel” continually improves to become a legitimate asset.

How the Lenses Work Together

No single lens is perfect; each has its own holes. That’s sort of the point. Even math/logic, if flawless in theory, simply might not be the correct filter to use for a specific issue. Ever try to logically solve the problem of someone who’s emotional but looking for support, not solutions? Your logical hat won’t help at that time.

The overarching idea here is that there are a variety of methods through which we can uncover the truth, and the more of these lenses you can hone in, the higher your likelihood of being right. Regardless of the exact filters used, I really like the general concept of approaching new problems from different viewpoints to see how they stand up.

For example, if you’re trying to determine if a particular supplement is effective, there are a variety of pieces of information that could help you get closer to the truth. Maybe there’s been a handful of robust studies showing signal. Or maybe you have some friends who used it successfully. Or maybe it’s been widely used in Eastern medicine for thousands of years.

Each of these things is a different data point. Sometimes these might conflict, at which point you can weigh their respective importance and make a decision. If you’re trying to determine the relationship between coffee consumption and cognition as it relates to your effectiveness at your job, your past experience is really all you need to consider.

Now, let’s say coffee makes you jittery and you want to experience the benefits of caffeine without the downsides, so you consider supplementing theanine, which has been said to alleviate potential caffeine-induced anxiety. You could just try it out for yourself, which is probably safe with that particular supplement, but how are you to know that for sure?

In this particular case, the various studies pointing to theanine’s calm-inducing effects combined with the fact it’s used widely by longevity experts–who’ve spent tons of money and countless hours studying and testing these types of things–suggest it’s something worth trying. Then, after garnering additional feedback via trial-and-error, you can make a qualified decision.

Mostly, what I’m looking for when building any sort of protocol is evidence from various angles and a meaningful asymmetry in the payoffs.

Stacked evidence:

• Robust, independent studies support it.

• People I trust vouch for it.

• It makes logical sense.

• It works in practice, including for me.

Asymmetry:

• The upside is meaningful.

• The downside is minimal and reversible.

One other piece of advice when considering which lenses are most apt at any given time: consider the time horizon. If you want to know the effects of Adderall on your cognition, you don’t need much else if you have personal experience. Take Adderall and immediately respond to 100 emails you were neglecting; the effect is pretty obvious (but you probably still shouldn’t take unprescribed Adderall).

Compare that to the effects of things like probiotics, collagen, antidepressants, Vitamin D, and so on–all of which can take weeks to produce effects. In this case, your personal experience, at least in the short-term, matters less, and the science/studies start to matter a bit more. At the far end of the spectrum is pure longevity, which effectively expands your time horizon to “forever.”

Simply put, the time horizon of effects often dictates which lenses you should weigh most heavily.

Freerolls & The Risk-Reward Continuum

There are many times when it’s optimal to seek risk–particularly in game-theory-driven environments in which the crowd is generally risk-averse–but in the area of health/wellness, there’s not much incentive to seek risk for the sake of it.

There are times when taking on some risk is worth the potential reward–think experimental treatments for late-stage cancer–but in most situations, you should minimize risk before upside. Just thinking logically, the upside of being right about a new herbal remedy is, say, slightly better cognition, whereas the downside is maybe uncontrollable diarrhea leading to hospitalization and potentially death. One of those seems more extreme than the other.

If we were to plot the risk/reward of certain habits, we could sort each into one of four quadrants:

• 1 High Risk, Low Reward

Alcohol consumption, disaster foods (cake, candy, soda, etc.), sedentary lifestyle

• 2 Low Risk, High Reward

Daily creatine, morning/evening sun, sauna, don’t eat 4+ hours before bed, breathwork

• 3 High Risk, High Anticipated Reward

GLP-1 agonists, psychedelic therapy, sprinting, TRT

• 4 Low Risk, Low Anticipated Reward

Grounding, acupuncture, blue-blocking glasses, cupping

For the most part, we are good at identifying which actions are in the health “tails” (quadrants 1 and 2) because they’re quite obvious.

If you’re trying to get healthy, you should first remove everything that’s a clear detriment: sleep deprivation, smoking, excessive alcohol, lack of exercise, etc. This is so much more important than anything you add that it’s really not even worth addressing anything else until you significantly reduce your downside behaviors.

Now, I’m not the type of person to tell you you can never participate in these habits. For some people, occasional alcohol consumption can be a net positive (it can facilitate more social interactions, for example).

But anyone can tell you to do obviously good things and avoid obviously bad ones. The more interesting sections are quadrant 3 (things that are likely effective in some way, but also possess known risks), and quadrant 4 (might work, might not, but unlikely to cause harm).

Note I added the word “anticipated” to describe the payoffs of these. I submit that when it comes to health, it’s much easier to assess the risks than the payoffs for most things outside of the tails. This is especially true in the low risk/expected low reward section; the benefits of acupuncture beyond placebo are highly debatable, but the risks are known and mild.

When you bake in the uncertainty in payoffs, the result in terms of your behavior should be two-fold:

• First, you need to have more confidence that the anticipated reward for high-risk choices is greater than your alternatives.

As an example, GLP-1 agonists like semaglutide and retratrutide don’t come without risks, but they’re also highly effective tools for weight loss and metabolic health, among other things. For many people, the risks–even if moderate–are likely not worth it. But someone who is significantly overweight or has diabetes already has lots of downside; the potential benefits almost certainly outweigh the risks for these people.

You don’t need to avoid high-risk/high-reward behaviors; they’re just very dependent on your specific situation. However, you need very high confidence in the benefits to consider these approaches.

• Second, you should be doing more experiments on things that are known to be low-risk with uncertain payoffs, even if the rewards are anticipated to be minimal.

The key is that the cost of being wrong is near zero. In finance, there’s a saying “What do I win if I win?” which effectively translates to “What’s the possible benefit to me if I’m right?” I’m going to propose the inverse of that as it relates to health: what do I lose if I lose, or what’s the potential downside if this doesn’t work?

This is the land of the freeroll.

Finding Your Health Freerolls

I’ve written about the concept of freerolls in Arbitrage Betting, Chinese Businessmen & Real-Life Freerolls. There’s a five-part article series called the paradox of Chinese businessmen that I really like. In it, Cedric Chin writes:

“First, (I learned) that the most successful Chinese businessmen were often the least educated ones. Second, that Chinese businessmen as a group were more superstitious than most, but that this didn’t seem to have much of an effect on their ability to run their businesses! And finally, that the vast majority of Chinese business people did not think too far ahead. They optimised locally, and by keeping close tabs on the bottom line, shut down lines of business that weren’t performing as well.”

Chinese business is sort of the antithesis to business school. Instead of being rooted in theory, Chinese businesses (and much of Eastern philosophies and ways of living) are rooted in pragmatism..

What’s true is what works.

There are a couple immediate ramifications I can see from this perspective. The first is that payoffs matter more than accuracy. The second related point is that “wrong” beliefs/actions can stick around if they cause no harm. Like the tailbone or the appendix, there are a lot of seemingly vestigial Eastern practices that likely don’t “work,” but like being superstitious for the businessman, it doesn’t matter because they cause no harm.

I bring this up because when you look at something like acupuncture, you’re kind of seeing a situation with little, zero, or negative synthetic hold; that is, the downsides of being wrong are effectively removed and the base case from random bets/ experimentation becomes +EV.

I made a visual representation of this idea:

When actions have bounded floor downside but more open upside with a wider error band, this is effectively a freeroll–a chance to benefit from variance, or get lucky.

The more freerolls you can identify, the wider your surface area for luck–in both wellness and life.

Let’s use grounding as an example. Grounding, or earthing, is the practice of touching your body to the earth: walking on grass or on the beach, for example. There are numerous reported benefits, including lowered blood pressure, better sleep quality, and reduced inflammation by transferring electrons into the body that improve blood flow and neutralize free radicals.

When I first heard of grounding, my initial reaction was that it was hippie nonsense. I was at least partly right, because hippies do indeed love that shit. Grounding is considered an alternative therapy and there’s not much research on it, but the initial results are promising.

But here’s the thing that’s most important for us: there’s effectively no downside to putting your bare feet into the ground outside of potentially looking like a crazy person if you do it in an unconventional situation (I’m looking at you Adam Neumann).

And there are tangential benefits to grounding, namely that it gets you outside. And who knows–maybe the benefits we see from grounding aren’t from the practice of grounding at all, but from getting outside, taking in more sun, and being more active in general.

And that’s sort of the entire point of finding health freerolls: we can be right for the wrong reasons and increase our surface area for unknown health benefits–effectively luck. If we’re wrong, it costs us next to nothing.

Note that the opposite effect is also in place in the high risk/high anticipated reward quadrant, except in this case, your reward is unbounded toward the downside. I’m no peptide hater in the absolute sense, but many of the peptides I see people buying from shady foreign sites are a reverse freeroll: known risks with uncertain benefits.

Some supplements that I’ve found effectively act as a health freeroll: theanine, magnesium, glycine, taurine, creatine, NAC, garlic extract, and many others.

The big idea here is that if you can eliminate the downsides of being wrong, you can try more things and increase your chances of finding something that works.

To summarize:

• Remove the worst of the worst habits, foods, etc.

• Build a foundation upon the most high-conviction actions.

• Remove everything else in between that’s non-essential.

• Slowly add things back one at a time to properly test their efficacy.

• Experiment while emphasizing harm reduction.

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How to Build Your Fitness Protocol

In Personal Organization for Degenerates, my friend Brandon Adams–a fellow degen I know from the gambling world–argues that those with degenerate tendencies strongly value the present over the future. This leads to writing checks that your future self needs to cash, with compounding effects; bad habits beget more bad habits, and vice versa.

When it comes to health, I’d argue almost everyone’s base instinct is to be a degenerate. Why? Because optimizing for the present feels a whole lot better than for the future.

What seems better to you, right now: eating a cupcake or eating celery? Disregarding any health concerns or long-term benefits, which one is just tastier?

Which do you think would feel better right now: running up stairs or getting a massage? Doing stairs is a wonderful exercise, but if I knew I would die tomorrow, I’m sure as shit getting my back rubbed at sea level.

So we all are sort of hardwired to want to do at least some things that aren’t good for us long-term, and we ultimately devolve to the systems we put in place around us.

Even those with degenerate tendencies can create a path to success by setting up long-term systems that minimize the impact of their short-term preferences.

The key to creating a lasting health framework is simplicity: I love studying every intricacy of nutrition, exercise, supplements, and anything health-related, but ultimately I need to synthesize all of that information into an extremely simple plan of action, taking all of the nerdy stuff I’ve learned that “probably” works and turning “probably” into action.

The lazy man does this by making the best long-term decision not only the easiest one to make right now, but the default result–what happens when you do nothing at all. Make it difficult to make bad choices, and make your desired outcome the one you get even in your lowest-energy state.

Step 1: Decide What You’re Optimizing For

Let me start this section by letting you know I couldn’t give less of a shit about your fitness or health goals or frankly anything about you. No really, unless you’re one of my friends or family, to me you’re just a stranger on the internet and I just don’t care. How could I?

While that means you’re potentially reading the ramblings of a psychopath, it also has one clear advantage: I’m not trying to shill you on a particular way of living your life. If you want to get super jacked at the cost of future quality of life, that’s cool. If you want to increase your lifespan and don’t care about aesthetics, that’s sweet too. If you want to heal your gut or increase your motivation or improve your mood, awesome.

I of course have opinions on some of this stuff—I think certain foods and exercises and supplements and overall philosophies are (generally) better than others for various goals—but I’m more interested in laying out my approach to health from a super high-level view such that it’s applicable enough to build your own protocol, regardless of your goals.

My general approach to solving a problem is this: turn it into a game, figure out what constitutes a victory (your goals), determine the rules you must play by to win, and reverse-engineer a strategy based on the desired outcome.

Because fitness and health are ongoing processes, you’re probably going to have more success if your “goals” are to master some sort of ongoing process: maintaining a healthy body fat percentage is a better goal than losing 10 pounds. Becoming an overall strong person who seeks continual improvement in all lifts is a better goal than benching 225 pounds for X reps.

The reason you have to reverse-engineer a strategy based on your desired outcome is because, outside of the basics, your path to get there is going to look a whole lot different; if you want to be Mr. Olympia, I’d venture to say you’re going to need a different workout and nutrition plan compared to a 55-year old mom trying to get in better shape while minimizing injury risk.

Then, you start with the most basic things imaginable:

Goal: I want to gain muscle (and overall weight).

Fact: You have to be in a caloric surplus.

Goal: I want to lose fat (and overall weight).

Fact: You have to be in a caloric deficit.

Goal: I want to get stronger.

Fact: You gotta lift them heavy-ass weights.

Goal: I want to live longer.

Fact: You have to slow down your quantifiable rate of aging.

Step 2: Build a Conviction Pyramid

You start with things that are logically true—basically tautologies—and then work downward in terms of conviction. What are the chances that, say, eating blueberries is good for you? Pretty high. What are the downsides? Pretty low.

And we just continue to work down a chain of conviction to build a foundation upon which we can build. What are the odds that supplementing with creatine is good for you (and I mean you, specifically)? Well, maybe not as high as blueberries, but still pretty high, based on all current research, with minimal downside at normal dosages.

But how do we actually know that’s true? Well, outside of pure logic and math, we don’t really know anything is true, but we effectively assign a probability of it being true using the lenses discussed earlier. Some people do this in a very concerted way, but everyone does it intuitively and their assessment of the odds is reflected in their actions.

In health, like poker, we are almost always working with incomplete information. So many studies, so much data, so many opinions…

Think of building a health protocol as a sort of pyramid of beliefs/actions. At the base we need our most high-conviction items—things like “it’s important to get good sleep.” In the middle are somewhat speculative things we can test–like “lifting weights three times a week will make me stronger than five times a week” or “using the sauna improves longevity”–but with minimal downside if incorrect. And at the top are things we can decide to experiment with based on our risk tolerance, such as aggressive fasting.

If we build our health protocol on the speculative items, and they’re wrong (which some inevitably will be over time), then the whole thing topples. And without the base (say, high-quality sleep), then the top of the pyramid (say, most supplements) is effectively worthless.

Step 3: Test Like a Scientist

Once we have a base of knowledge and a means of discovering what’s true, it’s time to implement, test, and evolve.

How you test things depends on your goals. For some things–like losing body fat–it’s easy to quantify your results. For others, like improving mood, it might be more subjective.

The key here is to add and remove one thing at a time. It’s already a challenge to find signal in a vast sea of health variables, so trying to test multiple things at a time is suboptimal.

And of course, the most important piece of feedback you’ll receive: how you look and feel. This might be mostly subjective, but just because it’s more difficult to quantify doesn’t mean it’s not important; in fact, I’d argue it’s the most important data point of all (and you can find ways to quantify it).

Step 4: Exploit Your Own Psychology

The best protocol for you is not only one that works, but one that you’re actually going to stick by.

The key to developing a long-lasting protocol is reducing necessary willpower as much as possible. This might sound counterintuitive–and indeed you need to put in work, specifically in the form of intense exercise, to see the best results–but there are things you can do to effectively put your sleep, diet, etc. on autopilot as much as possible.

Make systems that are so easy that the right thing is easiest and the unhealthy thing is difficult. Some examples:

• I design my environment to make being healthy as easy as possible. I have an outdoor gym, for example, meaning the excuse to not work out gets reduced from “I don’t want to drive in traffic to the gym” to “I don’t want to walk 20 steps outside,” which becomes indefensible. The biggest environmental factor under your control is what food is in your house, of course. You can eat unhealthy food all you want; just make it more difficult to secure. I’ll be the first to admit that DoorDash and UberEats are a problem.

• I don’t personally have a trainer, but a lot of people find success in using one, and, while trainers can be knowledgeable and motivating, I suspect most of their effectiveness comes via a sunk-cost fallacy; “I paid for the trainer so I’d be wasting money if I didn’t work out now.” You can utilize this psychological trick in buying nice workout clothing, for example, if it motivates you to use it.

• Commit to the bare minimum. I’m still surprised at how well this works. On days I don’t want to exercise, which is fairly often, I commit to doing the absolute bare minimum I know I could do with little resistance. If I’m working on my back, then I’ll commit to doing just one set of pullups. I don’t think there’s been a single time that I’ve done the bare minimum and then stopped. It’s incredible how much easier it is to continue working out after you’ve already started.

• Fake it. Pretend to be the person you want to be. It’s not “I want to be someone who is healthy.” It’s “I am a healthy person who does healthy things.” You become the person you want to be through action, and you take action by believing you’re already that person. I don’t mean this in some phony “manifestation” sort of way; I just mean you’ll develop the mindset of the person you want to be by doing the things that person would do. Your beliefs lead to your actions, but the inverse is just as true: your actions lead to changes in your brain that result in different beliefs.

• Create associations. You might not think you’re a dumb little human who automatically responds to stimuli like Pavlov’s dogs, but you are. When you associate something pleasurable with something that’s not, you’ll come to find the non-pleasurable thing more palatable without any effort. If you only ever watch TV after you’ve done five sets of stairs, it’ll be easier to do the stairs. If you commit to scrolling social media only after you’ve done yoga, you’ll do more yoga. You’re never going to completely eliminate mindless behaviors with instant gratification, so pair them with something beneficial.

• Turn things that suck into games. While I like the benefits that lifting weights provides, it’s not like I love it independently of the outcome it produces; it’s not particularly fun to lift a heavy weight repeatedly and then set it back down where it started. Like that’s not incredibly exhilarating to me. But I make games out of working out; I might try to complete a workout as fast as possible, for example, or lift a certain amount of weight for specific reps (adjusted for my body weight at the time). Playing sports is the most obvious form of turning exercise into a game. This idea is also how I trick myself into doing laundry, which is the all-time nut-low activity to me, by seeing how quickly and efficiently I can fold things. This sounds really fucking dumb now that I’m typing it out.

• Create novelty. When working out, write down every exercise you aim to do on cards, mix them up, and draw them at random to create the order of your workout. Not only does this probably have some benefits in terms of how your body responds to the workout, but it also just makes it a bit more fun (and, to me, psychologically easier to tackle workouts knowing each one is a new challenge).

• Side note: I always find it funny when people rave about how much they love the taste of a certain coffee or alcohol. I guess I can see coffee, but alcohol–I mean, it tastes awful. Like it’s horrendous. From a pure taste perspective, if you’d rather have rum than, I don’t know, like a glass of juice, then something is seriously wrong with your taste buds. I drink coffee almost every day, but purely for utility; it’s almost unrecognizable from what you’d likely refer to as “coffee,” as I mix six spoonfuls of instant coffee, a scoop of Bryan Johnson’s “Super Shrooms” mushroom blend, and a scoop of cocoa powder. I stir this up really quickly into about three small gulps of semi-hot water and chug it like it’s a glass of horse diarrhea. I don’t know why, I just imagine horse diarrhea to be super thick and nasty. And my guess is that it would taste just slightly better than the sludge I drink every morning; I love the Super Shrooms product, btw, but it tastes like absolute ass.

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On Using AI to Test and Build

Let me tell you about something pretty sweet I recently did. I’m frequently in the lab on the latest supplement, exercise, and overall health research. This process is tedious in that it’s just me reading individual articles/studies, which would be impossible to do consistently if I didn’t genuinely enjoy it.

As I was reading a recent Examine email, I thought to myself how much knowledge I’ve accumulated over the years that’s very difficult for me to properly assess; my brain is quite limited in that I forget a lot, can’t properly index what I’ve learned, have difficulty weighting data properly over time, suffer from cognitive biases, and so on. It’s really the epitome of the type of thing an LLM is perfectly suited to handle much more effectively.

I’ve been aware of the power of AI for some time–my current business focus is a company that provides AI tools to sports bettors–and I recently began taking AI coding courses. Much of the value in “vibe coding” is just learning what’s possible with AI; it’s really unbelievable.

Let me give you some context: I have effectively no idea how to code. I’ve worked in tech for over a decade, but as a non-technical founder/CEO. Nonetheless, I’ve been building stuff that is incredibly valuable in my personal life–dashboards, apps, alerts, and so on.

I recently took a photo of my supplements/vitamins and gave Codex my Examine+ and ConsumerLab login information, then told it to analyze every relevant study on every supplement in the photo, assess the scientific evidence for every primary goal and any secondary goals, then create an interactive dashboard with:

• risk/reward ratings

• redundancies

• a daily timing board of when to take each (based on things like their fat- or water-solubility, nervous system effects, possible interactions, etc.)

• links to the most relevant studies

• cycling vs. daily use

• biomarkers each might affect

• possible supplement replacements

• suggested forms and brands using third-party testing results from ConsumerLab

• any other features it might find useful

Again, I cannot code, and I had effectively a second brain–a much more robust and less flawed brain–distilling all the most relevant scientific studies on every supplement I do or could take into an actionable dashboard.

And this entire process–one that would have taken me months (maybe even years with all of the knowledge that would need to be accrued)–was completed in under six minutes.

SIX MINUTES!

If you think you lack the necessary skills to leverage AI coding tools, trust me, you do not. If you can think it up, you can probably code a crude version of it with the help of AI.

This article is ultimately about building systems that work even when you’re lazy or otherwise in a low-energy state. Asking ChatGPT questions is helpful, but this is really a surface-level use of AI, especially if you’re on the free version.

AI is unbelievably skilled at parsing through data and building protocols around it, which is exactly the type of thing that can help you when you’re in a low-energy state. The more data it has, the better.

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• Wearables like Oura ring or WHOOP or Apple watch or Fitbit

• DEXA scans

• Smart scale

• RMR, VO2 max tests

• Vitamin/supplement protocol

• Tape measurements

• Body photos

• DNA results

On the last item, a lot of people don’t know this (I didn’t until pretty recently), but sites like Ancestry and 23andMe give you downloadable genotype-array data. If you’ve had an ancestry test completed, you can upload this data to any LLM for analysis. This isn’t full genome sequencing and there are obvious limitations, but some gene variants are strongly tied to specific traits that AI can assess quite accurately, such as:

• Caffeine metabolism

• Lactose intolerance

• APOE status

• Androgen-related genes

• Type 2 diabetes risk

• Body composition tendencies

• Endurance vs. power bias

• Omega-3 conversion

• Circadian preferences

• Longevity profile

None of this analysis should dictate decision making on its own, but it’s useful in helping to form testable hypotheses. Here’s an example of a high-impact finding from my own DNA analysis:

Highest-priority medical item

Prothrombin / Factor II (F2) rs1799963 = AG

This is the classic G20210A thrombophilia signal in heterozygous form. It raises clot risk versus baseline and matters most when layered with other risks: dehydration, long travel, surgery, immobilization, smoking, obesity, and estrogen-containing meds. For someone who knows this result, the practical value is mostly in risk management during high-risk situations, not in living scared day to day. This is the one result I would strongly consider confirming through a clinician or a clinical lab before relying on it medically.

This is an inherited gene mutation that occurs in about 2-4% of those of European descent. Not great! But certainly useful for me to know.

Another interesting finding is a mismatch with late eating and my natural circadian preference, which fits with my experience. This was not something I was aware of until recently and, had I known of the mismatch, I would have been able to more easily identify one of the root causes of my poor sleep.

In addition to all the data I listed, you can also track your food intake, workout results, etc. However, the goal is to create a protocol that requires a bit of upfront effort to reduce long-term complexity; if you truly like tracking things on a daily basis, go for it, but for me, it’s a big non-starter because it creates future obligations I’m working hard to eliminate.

Automate as much as possible and focus on putting energy into the few very impactful data points, the most important of which is getting the right bloodwork.

There are so many health variables that it’s very difficult to identify a signal in a sea of noise. AI is uniquely positioned to help if set up properly.

“Here’s access to all my recent tests and real-time data on every measurable I’m tracking. Analyze every possible data point and correlation and send me Telegram alerts when you’re confident you’ve identified a meaningful signal that could lead to actionable changes in my behavior.”

How to Analyze & Choose Vitamins/Supplements

My take on supplements is somewhat unique in that I think they can be unbelievably effective in certain contexts, but the actual things most people take are worthless, in a handful of ways:

1. The supplement itself has poor evidence of efficacy.

Most supplements simply don’t work. The ones that can work are often effective for some tail of the population–those with a nutrient deficiency or some other extreme condition–and provide no value to normal people with normal diets.

2. The supplement could work, but the form is ineffective.

The prototypical example here is magnesium oxide, which is cheap and allows brands to advertise a large amount of elemental magnesium, almost none of which can be absorbed. There are many similar examples of this, so it’s quite important to get the right form.

There’s also the possibility the form is theoretically useful but simply not the right match with your body. This is the case for me with magnesium citrate–fine in small amounts, but anything more gives me what’s known in the medical world as “the shits.”

3. The supplement is a proprietary formula that has a bunch of stuff that’s wildly under-dosed.

I’m not sure how supplement companies can get away with this, but proprietary blends should arguably be illegal. You’ll often see supplements that have some ratio of, say, five things in a proprietary blend, but you have no idea what the ratio is. Usually, some cheap ingredient is listed first because there’s a mega-dose of that alongside micro-doses of the things that could actually be beneficial. For the most part, just avoid proprietary blends.

4. The supplier does not do independent third-party testing.

You’d be surprised how often (or how little) a supplement contains what it says it does in terms of both the ingredients and the dosage.

The Science: Using Examine

The first step in deciding upon a possible supplement addition is defining what you’re trying to achieve (and how you’ll quantify if you’re realizing your goal). Be specific. If you want better sleep, is it help falling asleep, staying asleep, or getting into deep sleep?

As mentioned, the single best place to analyze the efficacy of vitamins, minerals, and supplements is Examine, and frankly nothing I’ve found is close. The free information is great for simply learning about a particular supplement; here’s the creatine page, for example.

I pay for Examine+, which is necessary to really dig into what works and what doesn’t. It’s just a massive time-saver when it comes to knowing the actual science on what types of things might be worth even looking into.

The Brands

Let me start by saying that the best supplement brands cost more. That’s the nature of the beast when you’re sourcing the highest quality, providing real doses, and spending money on true third-party testing.

Examine helps me analyze which types of supplements and which forms are worth taking, and ConsumerLab is an excellent resource for studying specific brands, as they do actual third-party testing and reviews. Search for a brand and you can see every supplement they tested, if it was dosed properly, its purity, etc.

I could go on at length here, but I’ll just list some of the brands I’ve found to be most reliable and you can DYOR.

• Thorne

Very expensive but arguably the most rigorous testing available

• Pure Encapsulations

Similar to Thorne

• Blueprint by Bryan Johnson

I don’t think every supplement on Johnson’s site is worth the cost, but his products are high-quality with proper testing. The ones I take: Super Shrooms, Longevity Mix (cheaper than purchasing the combination of ingredients individually), and Cocoa Powder.

• Codeage

Best source of collagen products I’ve found; other products are overpriced

• Momentous

One of the better values on the high end

• Just Ingredients

Some stuff is just marketing but they also have quality; this is where I buy my creatine (in Creapure form)

• NOW Foods

Good for specific “generic” supplements and one of the better quality/cost combinations if you’re trying to save money; not in the overall elite category for everything

• Life Extension

Similar to NOW Foods

• Nootropics Depot

Massive selection of nootropics you can’t find elsewhere; COAs available for every product at a third-party ISO lab

And of course, my favorite and the core of my stack…

Momentum Shake: My Foundation

I ordered Momentum Shake for the first time in early 2023 and it quickly became the foundation of my “stack.”

Near the end of that year, I found a way to get in touch with Michael Tecku, the founder of Momentum–what I consider to be the highest tier of longevity product on the market by a large margin–and begged him to give me the opportunity to be an affiliate.

If you don’t believe me…

Disregarding the fact it’s been over two years since I sent this and I’m just now publishing the article (I got busy okay?), you can see how much I believe in the product.

Let me start by noting Momentum is expensive. It’s $80 per bag of 15 servings, meaning you’re paying $160 per month if you use it daily. Now, I’d argue that it’s actually very cheap for what you’re getting; in fact, I know it’s cheap, because Michael told me he’s breaking even on the product.

Before I started my current company, I actually thought about getting into this space. One reason I didn’t–in addition to knowing absolutely nothing about creating products in the real world–is because Momentum already existed and it’s effectively what I would create if building the world’s best overall health and longevity shake.

To show how I go about analyzing a supplement, let’s take a look at Momentum through each of our lenses.

Lens 1: Experience/Opinions of Qualified Individuals

Do people with real judgment trust it?

Figuring out who you can trust in various areas of life is an incredibly underrated skill.

• I first looked into Momentum via a recommendation from someone I trust in the health space. They began taking it and vouched for it as the crème de la crème of nutritional shakes.

• Michael had clearly built a brand that was obsessive from the perspective of actual quality, which instantly built trust as someone knowing what to look for. It’s clear nearly all other brands optimize for profit and marketability. Momentum looks like Michael built it for himself.

• Everyone I know who I’d consider a believable person in the health/wellness/longevity space emphasizes the importance of the traits you see in Momentum: the most impactful ingredients with real evidence of efficacy, high bioavailability, transparent labeling, real doses, third-party testing, etc.

Lens 2: Science

Do the ingredients, forms, and doses make mechanistic sense?

Science is arguably the most important filter when analyzing which supplements are worth taking. When I looked at Momentum’s ingredient list and dosages, it was completely in line with research on health/longevity I had been doing; every component has mountains of evidence supporting it.

I created this list of ingredients using images from the site:

Some highlights:

• The whey is sourced from family-owned farms in Ireland where the cows are more than 95% grass-fed.

• Momentum contains 2.5g of colostrum. If you’re not familiar with colostrum, it’s the first milk produced by mammals after giving birth. It’s not only the most potent source of immunoglobulins, IGF growth factors, and lactoferrin on the planet, but it’s also expensive as shit. I’m actually shocked Michael was able to get this into Momentum; I have to imagine it’s the most expensive individual ingredient in the bag per gram. Most colostrum you buy is collected in the first seven days after birth; Momentum’s is in the first four hours.

• The NAD+ precursor–widely linked to anti-aging and longevity–is the most bioavailable form of B3.

• The hyaluronic acid in Momentum is 1600 kDa. Most companies use a lower molecular weight because it’s cheaper, but it’s not well absorbed.

• The Lion’s Mane comes via the fruiting body, which contains nearly all of the beneficial compounds, whereas many mushroom supplements use the cheaper roots.

• Magnesium taurate is the most bioavailable form of magnesium and the one I take during the day (and magnesium biglycinate at night).

• The vitamin D3/K2 comes in the most bioavailable forms (mk7 and D3 from lanolin).

• The Omega-3s come via flaxseed that is heat-treated to avoid oxidation and provide max absorption.

• All ingredients are third-party tested for heavy metals and purity. They’re also dosed properly and transparently, without any proprietary blends that nearly always hide under-dosing. It’s real doses of the highest quality stuff on earth that makes an actual difference.

I could go on. Science isn’t about whether an ingredient sounds impressive in isolation. It’s about dose, form, absorption, and whether the final product is built in a way that gives your body a real chance to use what’s in it.

Momentum clears that bar unbelievably well.

Lens 3: Math/Logic

Do the incentives and economics point in the right direction?

When we consider the merits of something from a math or logic perspective, we’re trying to think in terms of expected value, incentives, and first principles.

• Momentum is expensive relative to other shakes, but it’s cheap when considering the ingredients; if you were to buy each of them separately in comparable forms and doses, it would be much more expensive, quite a pain in the ass, and far less likely you’d take them consistently. Seriously, start to calculate the cost of buying things like high-quality colostrum, NAD+/TMG, magnesium taurate, etc. individually.

• Most supplement companies have an obvious incentive to underdose expensive ingredients and hide behind proprietary blends. Momentum does the opposite.

• The presence of expensive ingredients in meaningful amounts is a giant signal of quality over hype because it’s economically inconsistent with what the majority of supplement brands are: marketing scams.

• From a pure incentive perspective, if a company is choosing the costly form repeatedly across many ingredients, that is evidence about priorities.

• The fact that Michael is breaking even on the product is another massive signal that the goal is quality above all else.

The important point here is even if I could theoretically optimize a stack better than Momentum, it would be more expensive and I’d be far less likely to use it consistently compared to the ease of making a single shake a day.

Lens 4: What Works

Does it solve actual problems in practice, not just theory?

The point of science is to question and predict what will work. It’s forward-looking. But what works in theory can sometimes diverge from what works in practice.

• The best products are not just theoretically sound; they get used by serious people for long enough to survive real-world testing. Momentum has reached that point.

• The product solves an actual problem: most people do not consistently eat and supplement at a truly elite level.

• As discussed, a product that makes doing the right thing easier is often more effective than a perfect-but-cumbersome protocol. Momentum works on two levels: biochemically and behaviorally. It compresses what would otherwise be many +EV decisions into just one.

I’ve recommended the product to dozens of people, all of whom have loved it and become repeat users because it works.

Lens 5: Instincts/Pattern Recognition/Common Sense

Does it give off the aroma of the real deal or a pig with lipstick?

Pattern recognition is the skill of cultivating your instincts/common sense over repeated exposure to something.

• When you analyze enough supplement brands, you see the same scammy tactics. Momentum shows the opposite pattern.

• It “looks like” a product made by someone who knows quality. If it were a scam, it’d be one hell of an expensive and unprofitable scam!

• Just from a common-sense perspective, we know the quality of inputs matter. And when they’re completely transparent, it’s a giant green flag.

On a personal level, I’ve spoken to many entrepreneurs over the years, and it was clear to me Michael’s priorities are in the right place; his primary goal–maybe his only goal–is to create the actual best possible product he wants for himself.

Lens 6: Personal Experience

Does my own use reinforce the other lenses?

When it comes to supplements, the other lenses help you determine when it might be worth experimenting. Ultimately, the most important filter is personal experience–whether something works for you and if you should continue using it.

• First, I enjoy taking Momentum. That’s a subjective feeling but it’s more important than people might admit. It creates consistency.

• Momentum makes it incredibly easy to be a supplement guy without being a supplement guy. It lowers the required energy to be healthy.

• I feel more nourished when I take it.

My experience doesn’t guarantee my belief in Momentum’s effectiveness is correct–the placebo effect is real–but it reinforces a view that’s also supported by every other lens.

Ultimately, there’s stacked evidence in favor of Momentum. It works for me. It’s worked for others I know, including people I trust in the space. There are common-sense reasons it should work. It shows the signs of real quality over the appearance of quality. The math suggests it’s cheap compared to buying everything individually. The science on what’s in the bag is overwhelmingly positive, and the ingredients have withstood the test of time.

Momentum is the epitome of what we should be looking for in a supplement brand.

By the way, peanut butter, berry, and matcha are the best flavors. Michael talked about them in a recent email (this gives a little look into the thought process behind sourcing):

***Use this link to get a welcome kit, free travel packets, and free shipping over $100.

Some Random Things I Think I Know That Range from Maybe-Not-Immediately-Obvious to For-Sure-Non-Consensus

The goal of this section is to not just supply information, but more specifically, to supply scarce, actionable information. And if it’s something that goes against conventional wisdom, even better.

Anyone can tell you to prioritize sleep.

No fucking shit.

But if I tell you I’ve found success using this exact sleep support which contains real, third-party-tested dosages of magnesium byglycinate, theanine, tart cherry extract, and inositol–all of which have been widely studied and proven effective for relaxation and sleep quality–then we are getting somewhere useful. And if I tell you I sometimes add GABA, which has conflicting reports on crossing the blood-brain barrier but a plethora of anecdotal reports and studies suggesting it promotes relaxation, that could be useful as well.

You’re lazy and busy and don’t want to think about this too much, so what should you actually do?

This list is a word vomit of some stuff I think is probably true and not highly obvious to everyone. Please DYOR.

If you’re looking for metrics to optimize, choose these three:

• Sleep quality

• VO2 max

• Base metabolic rate relative to mass

The sleep thing is cliche, but outside of all the evidence of the importance of sleep for overall health, it’s a useful metric because it’s a proxy for many other activities. For example, rising early and getting morning sun, exercising, and avoiding alcohol are all things you should be doing anyway that will absolutely influence your sleep quality.

Your resting heart rate before bed–relative to your baseline–is an incredible predictor of sleep quality. This is why I’ve found that my sleep gets wrecked if I work out too late in the evening. It’s also why sleeping in cold temperatures is associated with overall sleep quality, and why many hypothesize things like glycine help sleep by indirectly reducing heart rate. The only thing I’ve found that increases evening heart rate that actually helps sleep quality is the sauna, likely due to a rebound effect.

VO2 max measures how much oxygen you use while exercising and is a useful proxy for overall cardiovascular fitness. Yes, it’s just a proxy, but if your VO2 max is high, you likely have good cardiovascular fitness.

My most non-consensus view here is that, after accounting for VO2 max, you should raise your base metabolic rate relative to your mass as much as you can; that is, you should aim to burn as many calories as possible from doing nothing, adjusted for weight.

Let me explain this a bit more. Your body does an absolutely amazing job maintaining homeostasis, so it works kind of like a thermostat does in getting near a neutral net caloric burn. Think of how difficult it would be if your body didn’t do that–if you had to track calories and eat within a narrow range to survive.

Instead, if you go absolutely apeshit and eat 4,000 calories in one sitting, your body will burn more calories than normal just processing the food, and you’ll likely move around more, which burns more calories, and the surplus gets stored for future use, which often results in you being less hungry later.

The point isn’t that eating 4,000 calories at once is good, but rather, if you were looking to burn as many calories in a day as humanly possible, you’d actually want to gain a ton of weight and eat a massive amount of food; and on the flipside, the way to burn as few calories as possible would be to lose weight and eat nothing.

What we really want is:

First, a high percentage of muscle weight; lean muscle requires more calories to maintain than fat.

And second, high thyroid signaling; thyroid hormone is one of the biggest drivers of energy expenditure, and one of the main things drives it down is being in a prolonged caloric deficit, which can lead to a lack of proper nutrients.

To maximize base metabolic rate relative to your mass, you should optimize for “nutrients per calorie.”

How much of the things my body needs can a food provide per calorie? This makes it more obvious that some foods that are marketed as healthy really aren’t all that good for you, containing few nutrients per calorie: most protein bars, granola, sweetened plant milks, veggie chips, some nuts, flavored yogurt, Lean Cuisine frozen meals. And some things that are higher in calories and claimed to be unhealthy are maybe better than first thought: potatoes, dark chocolate, eggs, full-fat milk, honey, and even some types of ice cream (this is my favorite).

By the way, the most nutrient-dense food I’ve found is beef liver.

There is simply nothing close; beef liver is the absolute crème de la crème in terms of micronutrient-dense foods.

These numbers are pretty wild.

Despite enjoying nearly all foods, I personally don’t love the taste of liver, as is the case with many people. So instead of consuming as is, I buy lean burgers that have liver mixed into the meat, which more or less disguises the taste.

Some of the other most nutrient-dense foods:

• Shellfish (oysters, mussels, clams)

• Small oily fish (sardines, anchovies)

• Wild-caught fatty fish (salmon, mackerel, trout)

• Eggs

• Leafy greens (spinach, chard, kale)

Ultimately, we want to be high in the following: quality sleep, VO2 max, lean muscle mass, and nutrients (the latter two of which directly contribute to a high base metabolic rate relative to your mass).

In short, stop trying to consume as few calories as possible and start becoming a person whose body naturally burns a lot of calories for its size.

You should try to consume grass-fed meats, wild-caught seafood, pasture-raised poultry/eggs, and organic produce.

I used to obsess over macronutrients–getting enough protein per pound of body weight, for example–without much concern for the quality. But the idea that “protein is protein, healthy fats are healthy fats, carbs are carbs” is simply wrong. There are differing levels of quality for each of these–different quality, micronutrient profiles, bioavailability, and so on.

The way that the animals you eat were raised–what they ate, how they moved around–matters a lot in terms of how consuming them ultimately affects your body. Grass-fed/grass-finished meats and wild-caught seafood have superior fatty acid profiles to those that are grain-finished and farm-raised, for example.

Eating superior ingredients is more expensive, no doubt, but there are some ways to consume the healthiest ingredients without completely breaking the bank.

In terms of seafood, which is where I think the biggest differences in quality-per-dollar lie, canned wild-caught oily fish like sardines are unbelievably nutritious for a relatively cheap price. Canned oysters are similar. Large quantities of frozen fish, including wild salmon, are much cheaper than fresh.

Pasture-raised eggs can be purchased in bulk at big-box stores like Costco, and grass-fed meats don’t need to be the fanciest cuts; ribeye is expensive, but grass-fed ground beef is just as good. And of course no one wants to eat liver, so it’s quite cheap despite being the easiest way to acquire so many high-quality nutrients with just a couple servings a week.

In terms of organic, I don’t think you really need to buy everything organic at all. Bananas, oranges, avocados, etc. are all naturally protected from pesticides, for example, and probably a waste to pay extra. I eat a massive amount of berries, though, and they’re more difficult to effectively wash, so buying organic makes more sense there.

Also, frozen fruits/veggies are said to actually be slightly more nutritious than fresh because they’re at their most beneficial when picked, at which time they’re immediately frozen. If cost is an issue, buying frozen items saves a lot.

Related to the above, counting calories is mostly a waste of time.

When it comes to calories, our concern should be the net caloric effect a food supplies, which is affected by its nutrient-density, how it affects your metabolism, how it pairs with other foods in your diet, its effect on your hunger, and so on.

A lollipop has relatively few calories, for example, but provides no nutrients and won’t do much to quell your hunger. Diet sodas have no calories but have been proven to increase hunger. A small amount of wine might not seem like a huge deal, but it can be a disaster if it affects your sleep, and thus your future energy levels.

On the flip side, extra-virgin olive oil, avocado, and sardines are all quite high in calories, but provide all kinds of nutrients and typically have a positive overall net effect on your body.

The reality is that, while knowing how many calories are in something is generally useful, trying to calculate what actually matters–your net caloric intake and expenditure–is very difficult, if not impossible, especially with your body continually adjusting things behind the scenes to maintain homeostasis.

And, if I may say so, it’s boring as shit.

A lot of people, especially in the United States, should be on GLP-1 agonists.

Not because there’s no risk, but because the downsides of being overweight are greater. This is one of the moderate-to-high risk choices I think is worth it for many because the benefits are plentiful and proven, while the risk that accompanies being overweight is probably underappreciated.

One of the easiest paths to better health is regular sauna use.

For cardiovascular health, the evidence is incredibly strong. It’s kind of a way to “cheat” your way to better heart health. Being in an extremely hot sauna for 15-20 minutes isn’t a walk in the park, but it sure beats doing actual cardio. You should do both, of course, but the sauna is one of the better combinations of efficacy and low total “suckage.”

For longevity, the evidence is fairly strong–namely via the release of heat-shock proteins and improved immunity (the benefits of which seem to come with longer use at the higher end of the sauna temperature spectrum).

The single-most important thing that’s helped my sleep is “reverse fasting”– not eating within 5-6 hours of going to bed.

I typically have a really big dinner, but early in the evening, such that I don’t get uncomfortably hungry at night. If I’m hungry, I’m going to eat; the key is maximizing how long I can go during key periods without being hungry.

An added benefit of eating a very large (but very early) dinner is that I do natural intermittent fasting without much effort. It’s kind of a “reverse” intermittent fasting, as most people begin the day by not eating. I find the opposite to be psychologically easier while also improving sleep.

Walk at least 10 minutes after meals.

Walking after eating reduces glucose spikes.

Also, walking in nature is great and you should aim to do it as much as you can; whereas that’s quite relaxing, going for a walk on a treadmill or in an urban environment solely to get steps can be quite boring or stressful.

If you work online like me, you’ve likely transitioned from phone meetings to Zoom/Google meets since Covid. If you’re able to turn off your video, turn these meetings into walking sessions. If I do a one-hour meeting while walking in my backyard, I easily take 5,000 steps and don’t even notice it; walking back and forth like a caged animal would be miserable if my mind were focused on the steps instead of the call.

You should probably supplement creatine, even if you don’t lift weights.

I’ve talked about creatine a lot because it’s arguably the most well-researched supplement ever; it’s been widely proven effective for enhancing exercise/workout performance, but what’s most interesting to me is the more recent research on cognitive performance and mental health. There’s growing evidence that creatine improves memory, especially in older adults, and reduces symptoms of depression.

There’s also evidence that creatine greatly enhances symptoms of fatigue/sleep deprivation, and this is one of those things I can say is 100% true for me. On days on which I didn’t sleep well but still need to be productive, a larger-than-normal dose of creatine consistently and significantly improves my subjective feelings of fatigue.

This is one of those situations where I combined various lenses to find something effective for me. I already knew about the benefits of creatine, but saw one particular study on its benefits for sleep-deprived individuals. Knowing how creatine works–by regenerating ATP, particular in times of high demand–it made logical sense as to why it would help when tired. I then saw someone I believe to be a highly believable person discuss this exact benefit. With multiple filters leaning one direction and knowing the risks were minimal, I was in position to perform an experiment on really the only lens that ultimately matters: personal experience, or what works for me. I only do it occasionally, but I find it highly effective to take a mega-dose of creatine for cognitive aid when necessary.

tl;dr I have my grandma on creatine and you should too.

Also, just a note that if you’re vegan, your incentive to use creatine is even greater since it’s naturally only found in animal tissue (but vegan as a supplement).

It mostly doesn’t matter how many reps per set you do when lifting weights.

What matters more: training to near failure. I’ve anecdotally found this to be true, but there’s plenty of scientific evidence for it.

If you don’t know if you’re training hard enough, you’re not. I’ll adapt one of my favorite sayings from bodybuilder Ronnie Coleman: “everyone wanna be a bodybuilder, but don’t nobody wanna lift no heavy ass weight!…(or a moderate weight for more reps but to near failure, or even a weight that’s quite light relative to your overall strength, but for lots of reps, or preferably as part of a superset or drop-set after achieving muscular failure with heavier weights.”

An example of how I might do this for back: weighted pullups, followed within 30 seconds by bent-over row, followed within 30 seconds by weighted back extensions–all taken to just before failure.

I’ve found there are four things that determine the quality of a workout: the weight you lift, your form, the number of reps, and the time between sets–but none of them matter in isolation. If you’re doing heavy weight, you’ll do fewer reps. If you’re taking less time between sets, you won’t be able to lift as much for most muscles. And while this might be controversial, I’d argue that even semi-poor form (when done properly without injury risk) is okay at the end of sets to squeeze in more half-reps.

My argument is that the specifics of the workout don’t matter in isolation–only in relation to other variables–and the most important thing is that you train to near failure on every set.

Even if your goal isn’t gaining muscle at all costs, you should mostly act like a bodybuilder.

That means you should be on just a completely outrageous amount of steroids.

Psych.

But I do think there’s a ton to learn from bodybuilders without taking it to such an extreme level, in the same way you can learn entrepreneurship traits from Elon Musk without working 100 hours a week.

Looking back to our lenses, bodybuilders are the epitome of “what works.” They are literally the men in the arena. Although professional bodybuilders must possess unreal genetics and can’t possibly compete without steroids, I’d label those traits as necessary-but-not-sufficient, i.e. they’re doing many other things right.

Although most of what’s considered “bro science” today is actual garbage science, those at the highest level of bodybuilding have also historically been ahead of the curve on many things exercise- and nutrition-related that we consider true today, including the importance of protein, creatine, rest days, proper sleep, and so on.

I also want to note that most people’s actions reflect a goal of becoming smaller, even if that’s not their intention. For the most part, your actions should reflect a goal of trying to become more robust and harder to break, and adding muscle is like armor for your metabolism. A slightly beefy but muscular body can become a lean one at will, whereas the skinny-fat prototype doesn’t have such optionality.

Bodybuilders have mastered the art of gaining muscle and losing fat, which is relevant to everyone looking to make any change in their body composition.

Discipline isn’t a personality trait. It’s the result of a well-curated environment.

I believe anyone can become highly disciplined in the right situations.

At various points in my life, I’ve been incredibly focused, motivated, and productive. At just as many others, I’ve been the laziest piece of shit you’ve ever seen for extended periods of time.

I didn’t change as a person, but my environment–including those with whom I surrounded myself–did change. This creates a situation that can snowball and become very challenging to reverse.

Discipline is an effect: the context of how you design your surroundings plus the momentum you generate in one direction or the other.

The End

Your entry point into fitness doesn’t need to be elegant. I live in Miami and when people ask why I can’t speak Spanish, I have to tell them it’s because a long time ago I took 16 heaping tablespoons of creatine at once. A lot of people don’t know this, but the word creatine actually stems from ‘creatina’–the Latin word for “torso farts.”

Despite what you might hear on social media, you don’t need perfect information to get healthy. Usually, you don’t even need more information.

You also don’t need to be a monk. Discipline is necessary, but it’s just as much an effect of smart behavior as it is a cause.

You can be (relatively) lazy and still look and feel great. But you need a smart plan of attack to implement the right systems to make discipline an inevitable outcome.

We first need to treat health as a game. What’s the end-state we’re trying to reach, what are the implied rules, and how do we go about solving it?

Start with the highest-conviction items. Lift weights. Sleep more. Eat mostly real food. Stop doing obviously self-destructive shit. Remove downside first and foremost. Build from the bottom up. Test things one at a time. Use logic, science, incentives, experience, and pattern recognition in the right proportions. Make asymmetrical bets.

That’s really it.

The point of this article was never to propose some grand unified theory of fitness. Rather, it was to provide the foundation for you to build a better health operating system–one that helps you separate signal from bullshit, make +EV bets, and build a life where being healthy doesn’t require Napoleon-level motivation.

That’s what most people miss: winners in any field aren’t necessarily those with the most internal disciple. They’re those whose environments facilitate behaviors that naturally lead to the desired outcome.

Use lenses to determine what’s likely to be true, figure out which decisions will lead down the right path, then make those decisions easier to repeat.

The goal is to build a system that even your lowest-energy future self can follow.

Health is a long game, which means it’s mostly a compounding game.

One perfect day does almost nothing for you. One terrible day also does almost nothing to you. That’s why it’s so easy to do the wrong things; realistically, each choice matters an imperceptible amount. Like, it really is kind of annoying because your short-term incentive is basically always to do what feels best right now.

The solution isn’t to somehow muster more self-control; it’s to not even let yourself make choices in the first place. Design your environment–your operating system–so your actions are simply an outcome of the default settings you’ve employed.

This makes it much easier–inevitable–for smart decisions to compound. If your system keeps spitting out slightly better decisions, over and over, for years, you can look up one day and realize you accidentally became one of the healthiest people you know.

What’s crazy is this will happen without you even being aware of it.

So no, don’t be a hero. Be a normal, even lazy guy or gal who simply racks up enough high-conviction, low-risk bets that the math eventually has no choice but to work in your favor.

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About Lucky Maverick

About Jonathan Bales

Subscribe for future updates. It's free!

About Lucky Maverick

About Jonathan Bales

It’s so easy to mistake facts and the accompanying words we’ve memorized to convey them as understanding. The real test for comprehension, though, is predictive power.

I’ve believed for a long time that things we say we know are not only mostly false, but even when correct, they’re still actually things we don’t understand. When I think about what I “know,” I realize I actually understand almost none of it.

Why does my television turn on and play when I click the power button on my remote control? I can say generic things I’ve been told.

“The controller sends a code to the TV at a specific frequency, flipping a transistor to energize a logic board. The TV receives code from satellites at the speed of light that details which exact photons to send to specific pixels at exact times to create a motion image I understand.”

I think this is factually accurate, and yet I don’t understand a single word of it. I really have no idea how this works, at all. Like none of it, and it’s probably fair to guess you don’t either.

Seriously, how does a TV do that? And if you know a whole lot about TVs, I’m sure you can explain it in a lot more detail than I can, but my guess is you’re just better at remembering the exact combination of words to use to make it seem like you understand, but you don’t really understand.

And it seems to me most knowledge–basically all of it–is just remembering how to utter syllables in such a way that it resonates with someone else who has heard a similar combination of syllables in the past.

And so my current theory of knowledge can be represented by this wonderful Paint drawing I just created…

…where the different colors represent the following:

Red: Things you “know” that are factually wrong

Orange: Things you “know” that are factually correct but misleading or useless

Yellow: Things you “know” that are factually correct, useful, but you don’t understand

Green: Things you superficially understand

Tiny Blue Dot You Probably Can’t Even See: Things you understand and can predict

Most of what you think you know is not even factually accurate. The easiest way to see this is true is to consider what you believed to be true, say, 10 years ago, and how little of it you still believe.

Most of what you know that’s factually accurate is misleading and often useless information. Polar bear skin is black. Who gives a shit?

And even that statement has different levels of “truthiness” to it. It’s factually accurate in that if we shave a polar bear down like Michael Phelps so he can swim faster, his skin would be a color we’d all use the word “black” to convey.

But from another view, the polar bear’s skin isn’t black at all. Color is a mind-dependent quality. There’s no trait inherent to the polar bear’s skin that’s black, but rather it just reflects light back to our eyes in such a way that our mind recognizes it as something that we’ve labeled “black” in the past.

And even in explaining that, I don’t actually know what the hell I’m talking about. I just know key phrases to say to evoke some imagery in your head that I’d like to.

Then we have facts that are true and useful, such as “fire heats up the pan on my stove,” that still mask ignorance of what’s actually going on.

Yeah, the pan heats up, but how does it do that? Of course I can say things like the fire emits energy and the heat molecules transfer this kinetic energy to the pan, and the electrons in metal are structured in such a way that they carry that heat energy uniformly across the pan to heat it. But again, I don’t actually know how that works. I’m just saying things I’ve heard in the past. Even the things we know to be true and useful, we don’t really understand.

So how do we get to true understanding? It’s certainly not by repeating memorized words.

In my view, the only way to demonstrate understanding is to make accurate predictions. That’s the hallmark of science–it’s how we prove theories to be true–and it’s how we demonstrate comprehension over observation.

And so in the progression of knowledge to understanding, I think it goes something like…

1. First you’re wrong;

2. then you’re technically right about something misleading/useless;

3. then you’re right about something useful but can’t explain why;

4. then you’re right and can retroactively explain why;

5. then you’re right and can predict what will happen in the future in that domain.

I’m going to leave you with my own progression through these steps with something I think we can agree everyone finds interesting: the hand size of NFL quarterbacks.

I used to believe being tall was a primary driver of NFL quarterback success, and to this day, I’d say most NFL analysts believe quarterbacks need to be tall to “see over the offensive line” to deliver the football. This doesn’t really make any logical sense for a variety of reasons, and if you talk to quarterbacks, they’ll tell you they throw through lanes rather than growing to like 10 feet tall and seeing over top of their linemen.

There is data that taller quarterbacks perform better, which is why this idea persists. But why is that the case? This is probably my favorite piece of information I uncovered in my years doing football analytics; for the most part, tall quarterbacks perform better not because they’re tall, but because being tall is correlated with something meaningful, which is having big hands. Large hands allow them to control and more accurately throw the football. You ever throw around a small NERF ball? I feel like fucking Dan Marino whipping those things around.

So my personal path from knowledge to understanding in this area was something like:

1. Quarterbacks need to be tall to see over the offensive line.

2. Tall quarterbacks do better than short ones.

3. Tall quarterbacks do better because they tend to have bigger hands.

4. Quarterbacks with bigger hands can better control and more accurately throw the football.

5. Short quarterbacks with big hands will outperform expectations, and tall ones with small hands will underperform.

In my case, the correlation between height and quarterback success does indeed break down when you adjust for hand size.

For example, second- and third-round quarterbacks Drew Brees and Russell Wilson found amazing success despite being very short by quarterback standards, due in large part to their 10.25-inch hands.

Meanwhile, first-rounders like Ryan Tannehill and Paxton Lynch were busts despite being tall, due to possessing the hands of a prepubescent girl. Lynch checked in at 6-7 with 9.25-inch hands, able to see completely over the offensive line while incapable of palming an apple.

You start with a wrong belief, observe things about the world, attempt to better understand why things are the way they are, and then test that belief with a falsifiable theory.

Until you’re able to consistently predict things about the future, you’re effectively just reciting memorized syllables.

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About Lucky Maverick

About Jonathan Bales

Subscribe for future updates. It's free!

About Lucky Maverick

About Jonathan Bales

This is my second new Lucky Maverick article in the past two days after not posting since April 2, 2021’s instant classic “The Time I Sold Furbies for Money.”

I got a lot of great feedback from that article, such as “this really changed my understanding of the risk/reward spectrum,” “I’ve never thought about probability in that way,” and “this is literally the gayest thing I’ve ever read.”

That post was exactly 1,566 days ago, so set your calendars for October 15, 2029, when the next two Lucky Maverick articles will spontaneously drop back-to-back.

My Entrepreneurial Background

I started my first business when I was five. I stood on the sidewalk before kindergarten and did magic tricks for those passing by for 25 cents each. By “magic tricks” I mean “magic trick,” because I had just one.

I’d close my eyes and have someone pick a crayon, any crayon at all except that one please, then hand it to me behind my back. Incredibly, without moving the crayon from behind my back, I’d tell them what color they chose. Well it wasn’t that incredible, because I’d color the crayon onto my thumbnail and then slowly pass my hand over my forehead, checking for the color on my nail as I repeated the same line: “Boy it’s hot out here!”

Except I grew up outside of Philly and it typically wasn’t hot at all. It was like 40 degrees some days and I was pretending to sweat as I perfected my act. Anything for a quarter.

Throughout high school and college, I started a variety of businesses and hustles. They say you only learn from failure, which is why I’m so uniquely qualified to write this article; nearly everything I’ve ever tried has been a horrific defeat!

Ideas matter. Execution and iteration matter a lot more. I hear the same thing so often from people who say they want to work for themselves–“I would, but I don’t have any good ideas”–and it’s so ridiculous because I’ve had some of the dumbest fucking ideas you could ever imagine.

Consider I once invested in lots of glass. Or that I purchased an acre of a literal swamp on eBay. Or just Google “Bales Ja Morant.”

It’s really, really important to realize that good ideas mean nothing without execution, and bad ideas can become good ideas with the right evolutionary process in place.

In The Secret to Success: Mimic Evolution, I wrote:

Evolution is more or less one giant system of trial-and-error. Nature changes, species adjust. Some traits live and some die off.

The key is that there’s a mechanism for the weakest traits and species to fizzle out. The harsh reality is that’s death. Survival of the fittest.

We see the same thing in some industries, which do a pretty decent job of mimicking evolution, mostly via competition. Take the restaurant business, which is fiercely competitive. Mostly, bad restaurants end up dying off—no one comes to eat—and only the strongest survive. The entire system gains from the process, and the food industry as a whole evolves fairly rapidly.

The faster and more efficient you can make this trial-and-error cycle, whether it’s in your personal life or your business life, the quicker you will find success. Your starting point for truth is way less important than your process for refining and improving your beliefs, especially when you get away from a static worldview and begin to (appropriately) see it dynamically.

Over time, differences in the speed at which you can process information and adapt become exponentially more important than where you begin.

I firmly believe in this idea as it relates to starting and operating a business, even if just as a solo entrepreneur. Come up with some ideas (I’ll discuss some techniques shortly), put them into action, test and iterate, and then adjust.

To give you an example of how this might look in practice, consider two businesses I started in college.

One was a fantasy sports contest that assigned salaries to every player; users had a salary cap to build a lineup, choosing any players they’d like, and the contests ended after just one day. This was like 6-7 years before the first true daily fantasy sports site–an objectively good idea! I even raised a small amount of money and gave away $30,000 in a championship, which was a huge prize at the time.

This idea failed miserably because I had absolutely no clue what I was doing. I didn’t understand marketing. I didn’t understand product. I didn’t understand UI/UX. I didn’t understand pricing. I didn’t understand advertising. I didn’t understand data feeds. I didn’t understand SEO. I also had a blonde mohawk at that time, which didn’t directly contribute to the failure of the company, but I mean c’mon.

That business was actually near breakeven, which in hindsight was a huge signal it was a good idea given how poorly I ran it, but I still shut it down. At that point, I didn’t fully comprehend how to learn and adapt.

The second business–and I use the term “business” lightly here–was an objectively bad idea, but the first one that actually made money. I wrote about it in a recent article, and I’ll call it writing arbitrage:

Basically, internet content was becoming king around that time and there were a bunch of sites that would pay freelance writers decent money to write short (and shit) articles. Remember eHow and About.com and those sites? Stuff like that.

They paid enough that I thought, “Man, this is too much money, I bet people would do it for less.” So they did do it for less, for me. I advertised my own company on Craigslist and Facebook that paid writers very handsomely—and by that I mean about 50% of what I was paid to write through another freelance publishing company at which they couldn’t be accepted—to create short articles, which I’d then publish under my name (with permission, of course…from the writers, not the company).

$25 out, $50 in, and we’re off. I really learned a lot about hiring, marketing, editing, managing a staff, and a variety of other important skills during this time. The best part? I’m not even sure it was technically illegal!

I just remember I was writing and editing a lot of articles like “How to Prune Rose Bushes.” I found interest in the creativity of building a secret stable of ghostwriters, but writing and editing articles about how to build a garden trellis didn’t get me super hard.

My interests at that time were philosophy/theoretical physics, fitness/nutrition, sports analytics…and that’s it. If there was a more jacked amateur physicist working on win probability, I’ve yet to meet him.

So naturally, I started watching all-22 film and charting Cowboys plays into like 50 categories just for fun–each game took me about 15 hours to complete–then writing about the results.

Here’s a screenshot of a few plays:

Talk about a wild early-20s. Did I mention I’m a complete fucking psychopath? The weird part is despite grinding so hard, none of this ever got me laid.

I had all this data that could theoretically be very useful to the team—and perhaps quite valuable for me—so I made the logical move and emailed the entire thing to everyone in the organization for free. I’m talking everyone: head coach Jason Garrett, Jerry Jones, marketing interns, offensive tackle Marc Colombo, writers, social media managers, event coordinators, sales consultants, a homeless man who slept outside the stadium…everyone.

Anyway, I think the team felt bad for the autistic kid who wouldn’t stop leaving them alone and they gave me a job just to make it all stop. I stayed there a little bit before realizing I’d end up broker than when I was writing about how to care for your hydrangeas.

But really what happened was something called daily fantasy sports came along, which allowed me to apply basically the same analytical process to sports, except for real money. That’s really where I got lucky, as it became clear this was the area in which I needed to focus. It was the perfect blend of my interests and skills: math, sports, writing, and games.

And it was play for me. I got up early and stayed up late playing, writing, and thinking about DFS. I just loved it.

I got my leg in the door the easy way: by simply writing an entire book. I started writing because I could do it quickly and I needed to make money, but for some reason the New York Times let me write for them around this time, mainly about football analytics and the NFL Draft. Even though I wasn’t really an employee, I signed my name like this…

Jonathan Bales
New York Times

…any time I wanted someone to respond to my emails. And that’s what I did when researching how to win at daily fantasy sports; I emailed as many of the top players as I could, telling them I was a New York Times writer publishing a book on DFS strategy. It was technically true.

And that shit worked. These motherfuckers told me everything they knew! Granted, the community was much more open about publicly sharing advice as the industry was so new and growing rapidly, but it led me to a lot of the sharpest minds in the game, one of whom–Peter Jennings, aka CSURAM88–became my business partner.

After briefly building a DFS lineup optimizer that would have failed miserably, we were contacted by a sports betting analytics company called Sports Insights looking to get into DFS. They were extremely engineering-heavy, which is exactly what we needed, and together we founded a company called FantasyLabs, which turned into my first “real” company of note.

I became the CEO of FantasyLabs and learned so, so much during that time. We were immediately profitable, taking on just one investment from Mark Cuban only for strategic reasons. We were acquired by Chernin Group in 2017 in a half-cash/half-stock deal as the largest component of a rollup into a larger media company called Action Network. That company had a large exit in 2021.

Recently, I’ve been back on the grind with a new company called Gambly that builds AI tools for sports bettors. That one is going extremely well–we just sent our 5 millionth bet to sportsbooks this year–which makes me wonder if I’m actually good at starting companies at all or I just got extremely lucky in the highly specific field of sports betting tools and analytics. I guess it doesn’t really matter.

In starting Gambly, I’ve realized how much better prepared I am to be successful compared to before. I’ve learned all sorts of skills over the years–not from theorizing, but from doing–and thought it might be useful for some if I share the most important ideas.

An Outline for Success

This is a general outline I’d use as a starting point for creating a business, being a “solopreneur,” or even for employees looking to progress in their careers. Note that it’s not the only path to success, but just one I retroactively realized has worked for me.

Find Your Area of Focus

The biggest hurdle most people have in starting a business or side hustle is figuring out where to focus.

This is also the most important choice you’ll make, because most ideas are either really bad and not going to work, or just not capable of making much money. Most of your hobbies should just be hobbies.

The place to start, in my experience, is the intersection of your skills and interests. I’ve heard many names for this over the years–cross-pollination, idea sex, skill stacking–but the general concept is that you combine the areas in which you’re naturally talented or have interest. If you’re having trouble figuring out what those areas are, consider the things you do that seem quite easy that others find challenging. For me, one of those areas is writing; I’m not saying I’m some world-class writer, but it seems as though I at least find it quite a bit less challenging than the average fella.

This idea of cross-pollination or skill stacking works out to be a math problem. If you’re top 10% in music knowledge, top 10% in SEO skills, top 10% in writing copy, top 10% in designing landing pages, and top 10% in affiliate marketing, you might not be an elite talent in any particular area, but boy are you going to be able to design landing pages that convert search engine traffic to affiliate leads in the music space.

You’ll be a 1-in-100,000 talent, to be exact, even if you’re just the 90th percentile in each category. And getting to the top 10% in something isn’t particularly difficult, even if you have little experience in that area, because most people are quite bad at everything.

As compared to becoming a world-class talent in any one specific area, it’s much, much easier to become pretty good in a bunch of areas, then combine those skills/interests to find your excellence.

Dominate a Niche

Related to the above idea is dominating a niche. When you combine ideas/skills, you’re basically narrowing down your area of focus until you’re effectively among the best in the world in one niche.

There are a lot of reasons this is important, which I’ve written about this concept in My Extreme Theory of Learning:

In the business world, writer Anthony Bardaro summed up this concept nicely in his article on the future of media: "If you’ve already won with either huge scale or niche focus, you can then try to creep down or up in scale to grow. But, you cannot start in the middle of either spectrum and grow out."

Why is this? There are three primary reasons, in my opinion.

• Limited Competition

The first is because there’s less competition in the tails. It doesn’t matter if we’re talking about business or poker or chess, in the game of life, you don’t just want to be the best at what you do, but just as important, you want to be the only person doing it.

Keep redefining what you do—by gravitating toward logical extremes—until you have little or no competition. It’s much easier to move the goalposts and eliminate others from “the game” to reduce competition than it is to contend with everyone and become the top dog in a crowded space. Plus, it’s fragile; in areas in which you’re forced to constantly compete with a shit ton of people rather than innovate, there’s sure to be a lot of turnover at the top. You’re better off playing your own game over taking on the masses at theirs. So extreme learning works because of the 80/20 rule, and it also allows for the (sometimes) unintended advantage of limiting competition.

• Bigger Payoffs

The second reason—related to the first—is that if you’re alone in your strategy, you’re more likely to hit on something groundbreaking, and the payoffs for that will be huge. They say you can’t keep doing the same shit and expect different results—that’s the exact quote I think, right?—but you also can’t do what everyone else is doing and expect a sensational outcome. Carving your own path isn’t just more fun; it’s also the best decision for maximizing the rewards you reap when you’re right—and the only one who’s right.

• Most Useful Feedback & Faster Learning

The final reason—and the most important as it relates to rapid learning—is that going “extreme” in your decision-making is accompanied by the hidden benefit of gaining more useful feedback on how to adapt. If your starting point for evolution is a logical extreme, you know which direction you need to move should you be wrong. If you’re a writer and unsure on the best length of your writing for whichever goals you have, it’s superior to start writing very short, quick-hitting posts in abundance or go super longform with fewer, more in-depth articles/stories than to be somewhere in the middle. With the latter, it takes longer to adequately adjust to what’s optimal (for whichever goals you have) than with the more extreme approach, which allows for the benefit of obvious adjustments toward a less extreme strategy. And many times, you’ll probably find that working at a logical extreme is the place you want to stay, at least for a period.

It’s much easier to be a big fish in a small pond, and then jump to a bigger pond as you grow, than starting in the deep end. Fish can’t really jump between ponds though I guess, unless the ponds are like super close to each other? But you get the idea.

Become the best in the world in one highly specific area–no matter how niche–and then slowly expand outwards.

Solve Your Own Pain Points

Once you know where to focus, you should go about solving problems you personally have in this area. When we built FantasyLabs, the entire idea was solving my personal problem of quickly creating customizable daily fantasy sports models, and ultimately lineups from that data.

In the Gambly origin story, I wrote about how Gambly began as a chat bot for sports bettors looking to uncover unique bets and perform odds comparisons. The initial idea actually came to my co-founder Cal Spears when he was looking to make a bet on the second tight end off the board in the NFL Draft, but couldn’t find the available bets on sportsbooks.

We decided natural language was the best way to solve this problem we both experienced. That idea is highly specific, but it gave us a springboard to start building other tools sports bettors need that AI is uniquely qualified to solve.

Build Publicly

Talk about what you’re building—struggles and all—as you do it.

I stumbled upon this “hack” accidentally. In writing so much content and so many books over the years, I was indirectly building a customer base for future products. Even though my books did very well for what they were, it’s quite difficult to make a lot of money from writing alone. I think I saw somewhere the median book on Amazon has sub-$1k lifetime sales.

But in writing the books and free content across the internet, I built a base of people who came to trust me in my highly specific area of expertise. So when we launched FantasyLabs, we had a crucial wave of early adopters I had effectively been marketing to for years, unbeknownst to all of us.

The other reason to build publicly is because it opens up a world of future possibilities to find luck. Nearly every person I’ve ever hired has reached out to me, as opposed to me needing to find a convince talent to join, and basically all of them knew of me because of my writing.

Even if you don’t write, create some form of content, even if just on social media, to show others what you’re doing and why you’re a domain expert.

Apply Leverage

Once you find something that works, you want to apply leverage, meaning you need a way to scale.

This is actually an important question to consider early in your journey: if this works, can I reasonably scale it? Effectively, what’s the payoff here if I’m “right” or I “succeed” in creating something of value? What do I win if I win?

The reason I’ve focused on internet companies is that there’s a very high ceiling on potential customers. Whereas a successful restaurant can make only so much money in a year even if it crushes, a successful online subscription service, for example, can scale indefinitely with very little cost of replication. The cost to Gambly for 10,000 customers isn’t much greater than for 10 customers.

Find what can grow, preferably without the need for much additional time/energy/money from you, and then throw fuel on the fire.

Double down when things are working. Create content and products that can live forever. Build for the long haul.

Some Other Lessons I’ve Learned

I really have learned so much, mostly from failing so often, that I could write 100 pages here. Maybe I will do that in a book at some point.

But off the top of my head, here are a few quick-hitting lessons I wish I learned earlier…

There is no “skill” of entrepreneurship or business.

Business isn’t a skill. It’s made up of hundreds or thousands of micro-skills you need to develop along the way.

Communication. Negotiation. Design. Social media. SEO. Email marketing. Whatever…you need to learn how to do many things, and the best way to do that is to…

Learn by doing.

You can theorize about what will work all day long, but there’s no substitute for action. Bad decisions are better than no decision because bad decisions can become good ones, primarily when you…

Iterate.

A plane gets from one destination to another not by perfectly calibrating from takeoff, but from making many small adjustments along the way. Similarly, you’re never going to have perfect vision–not even close–and so it’s more important you learn to make good educated guesses on what will work, then iterate.

Do something. Anything. Gather feedback. Adjust it quickly. Repeat.

Part of your ability to improve this cycle is your willingness to…

Quit early.

You’re going to have lots of bad ideas. Most of your ideas are probably awful. Mine are. Give up on them. Don’t see them through. It’s a waste. For the most part, when an idea is a winner, you know it pretty quickly. Whether it’s a single feature of your business or the entire concept, if it isn’t working early, you shouldn’t actually stick with it unless there are additional signs it will improve.

They say you should quit while you’re ahead, but you should also quit while you’re down only a little (money, time, energy). Quitters win.

And you’ll need to quit a lot, because you should…

Take many chances when the cost is low.

They say the best poker players get the luckiest. This is true in a way, as the best players put themselves in position to benefit from variance the most often.

When the cost is low, you should try many things. Most of them will fail, but you’ll get “luckiest” when you increase your surface area for luck as much as possible. And to help keep costs low…

Don’t raise money.

Some businesses need to raise money, particularly those that benefit from network effects and need to reach a tipping point of usage. But even those are typically better off finding market fit before taking on investors.

There are many reasons you almost certainly shouldn’t raise money:

• Stress

• Dilution

• Needing to answer to others

And with the growth of AI and the ability for very small teams–even a team of one–to now produce at the level of many, there’s simply not the same incentive to raise money as in the past.

And finally…

Motivation is driven by necessity.

The most motivated I’ve ever been in my life was when I had $600 in the bank and moved to New York City because of a girl. A theoretically horrible decision that actually pushed me to figure out how to make money because I was absolutely fucked otherwise.

I also didn’t want the girl to find out I had only $600, which obviously didn’t work since it’s a little hard to live in NYC and hide the fact you only have $600. Want to go to a nice dinner, baby? That’ll only be one-third of my net worth.

Your natural motivation will wax and wane, but you can manufacture it when it’s really needed by making success a necessity. This might mean running a super lean company, publicly committing to shipping something you haven’t yet completed, making a bet on future productivity, or otherwise taking on some form of downside if you fail.

If you forget about the time I sold furbies, and the time I spent all of my money on glass, and the time(s) I gave away all of my high-quality work for free, and the time I bought swampland on eBay, and the time I gave up on literally creating DFS, and the time I pursued ‘magician’ as a career path, I’d say I’m a pretty good businessman.

If you learn anything from me and my failures, it’s to keep firing lots of shots, quit fast when things don’t work, pour fuel on the winners, and remember that every mistake is an opportunity to learn and improve.

So go work on something. Anything. Take on risk. Lose a little. Or a lot. The sooner you do, the sooner you’ll be able to figure out how to win.

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About Lucky Maverick

About Jonathan Bales

Subscribe for future updates. It's free!

About Lucky Maverick

About Jonathan Bales

You might think that blogging about probability, game theory, and expected value wouldn’t be much of a panty-dropper, and you’d be correct. Literally haven’t met or even heard from a single woman from this fucking newsletter.

I still like to start off each post with something about myself I know the opposite sex would find irresistible, just in case. So, ladies…

I had a dream about sports betting arbitrage the other night.

I know, I know. Women go crazy for arbs.

And before you even say it, I know what you’re gonna ask:

“But did your dream recognize arbitrage as nothing more than negative synthetic hold, not a guarantee that both sides of a bet are +EV?”

Yes, actually, as a matter of fact it did.

The dream got me thinking about real-life “arbitrage” situations, and how we might apply the concept of asymmetrical payoffs in sports betting or other markets to day-to-day decisions. This post will take a look at:

• Why you shouldn’t blindly bet arbitrage situations

• Why searching for arbs is still of importance

• Focusing on payoffs more than accuracy

• How to identify real-life arbitrage/freerolls/+EV bets

Synthetic Hold

Arbitrage betting is the act of taking advantage of differences in pricing in a market to guarantee a risk-free profit. This applies to effectively any market, and sports betting is no different.

In sports markets, bookmakers offer odds that reflect their estimate of the probability of an event occurring. Even money represents 50/50 odds, +200 (bet $100 to profit $200) equates to 33% implied odds, and so on.

Sportsbooks leave themselves wiggle room on these odds, typically offering -110 on a standard “coin flip” bet, i.e. you must bet $110 to win $100. If the odds are 50% or close to it, the sportsbook will eventually make money from the difference in what they charge versus what you get paid if you win.

This is called the hold. Every bet at a sportsbook has a hold percentage you must overcome in order to make money. To beat a standard -110 bet, for example, you need to win roughly 52.4% of bets.

That’s more difficult than it sounds, but the good news for sports bettors is they don’t need to just blindly bet at one sportsbook. For most bets, there are odds flying around all over the market, in constant flux as bets come in and information comes out.

For the bettor, the hold that really matters is synthetic hold. You can think of synthetic hold as the percentage that a theoretical sportsbook would take if it only offered the best price on every bet from every sportsbook you use.

Let’s say DraftKings is offering a Chiefs/Bills game at -110 on both sides. You also bet at FanDuel, Fanatics, BetMGM, and other books, and notice that DraftKings has the best price on the Chiefs at -110, but the Bills are -105 at Fanatics. The hold at DraftKings is 4.55%, but the synthetic hold–the hold offered by your theoretical book that only offers the best prices–is only 3.48%.

The reason that synthetic hold is so important is that, the lower it goes, the higher the odds that you’ll make a profitable bet solely by chance. If you imagine a scenario in which you can get -101 on each side of a bet–0.5% synthetic hold–even the slightest bit of good information could overcome the hold to get you on the profitable side.

Arbitrage As Negative Synthetic Hold

Sometimes, the synthetic hold turns negative. This is an arbitrage situation, and although they’re not all over the place, they’re not incredibly scarce, either. This is particularly true in smaller markets or niche sports where odds fluctuate far more than popular markets with a lot of action.

If you can find both sides of a bet offered at +101, for example, you can bet $100 on each to return a total of $201–a total of $200 bet, $201 returned, and a profit of $1 or 0.5%. This might seem trivial, but we’re talking about effectively overnight risk-free profit. At +105 on both sides, the return is 2.5%.

The important point I want to make is that moving from 0% to negative hold–an arbitrage–simply means that you can profit by betting on both sides of a bet, not that both sides of the bet are long-term profitable on their own.

If we take this to a logical extreme, you can see why betting both sides of an arb often breaks down. Would you rather have a guaranteed $1 or flip a coin for $100? Obviously the latter option, with $50 of EV.

When an arb has a very small negative synthetic hold–let’s take the same example of +101 on both sides of a bet–the odds of both bets being +EV is extremely small: effectively the same as if the bet is exactly 50/50. If both sides of a bet are +110, on the other hand, the true odds are much more likely to fall between that range, making both sides good.

An arbitrage opportunity allows for the possibility that both sides of a bet are profitable, but it far from guarantees it. Your willingness to actually bet on both sides should be a function of the spread between the odds on each side and your confidence in knowing which side is actually good.

When an arb’s negative synthetic hold is minimal, which is the case most of the time, one side of the bet is still likely to be bad. If you can identify it with any regularity, you’re better off betting only one side and forgoing the guaranteed profit.

Why You Should Still Look for Arbs

The reason you should still look for arbitrage opportunities is simple: they’re a proxy for EV. In identifying arbs, you’re looking for situations in which a quoted price is likely to be “off” from reality, just as with any other situation. It’s a very effective tool for quickly scanning robust markets and finding which odds are most likely to be wrong.

There’s nothing magical about a bet when both sides move to +101 as opposed to even money. One side is still likely to be profitable, and one is not. The only thing that changes as that spread increases–say to +105 on each side–is that your confidence in which side is actually good needs to increase in order to make it smart to not bet both sides. At, say, +120 on both sides, you’d need extraordinary confidence one side is much better than the other to only bet just one.

The overall process of identifying arbs is very useful, regardless of whether or not you bet both sides, because it’s the way you should go about analyzing bets anyway.

Freerolls

It’s become popular in the sports card collecting community to determine a card or collection’s sale price by flipping a coin. If a card’s “real” price is $400, the buyer and seller might flip a coin to determine if the final price should be $350 or $450, and neither would come out ahead in the long run. The variance around the price increases, but the EV is still $400.

There’s a hidden assumption in that logic, however: that both parties are acting ethically. And this is a giant assumption, as if one party plans to back out of the deal after losing the coin flip even part of the time, it completely throws off the math.

I recently saw a video of just this–a video I just spent 90 minutes searching for and still cannot find but I know a reader is going to know what I’m talking about and send it to me soon after I publish this article, at which point I will embed the video and delete this unnecessarily verbose explanation of why I’m about to describe a video readers cannot view.

In the video, the buyer offered to purchase a $40,000 card collection for $30,000 if he were to win a coin flip and $50,000 if he were to lose. This is a fair deal in theory, but not in practice, as the buyer lost the coin flip and immediately declared he’s not paying.

In this case, we’d say the seller got “freerolled.” The buyer unethically went into the deal knowing he’d either get a deal on the collection or back out at no cost, pushing all of the downside in the transition to the seller’s side. The seller shouldn’t have put himself in this position with someone he didn’t have trust in–even a small percentage chance of the buyer backing out after a loss equates to a -EV deal for the seller–and his naivety resulted in the opportunity for a freeroll.

Another example of a freeroll can be seen in the game credit card roulette. Popular in the gambling and finance communities, credit card roulette involves everyone chipping in a credit card at dinner or a night out and selecting one at random to pay the entire bill. The expected value of credit card roulette is neutral, assuming 1) everyone orders roughly the same amount over the long run, and 2) they don’t back out of the game as it progresses. If you knowingly and continually spend more than those around you or try to buy out of the game at a price that doesn’t reflect the current EV, that’s an unethical freeroll.

Not all freerolls are bad, of course. Some poker tournaments are freerolls, for example, offering prizes but requiring no entry fee, and it’s common for companies to run the equivalent of freerolls in order to attract business.

Freerolls are easy to spot in gambling situations, but your entire life is filled with them, just less obviously. Some are unethical, with people or businesses trying to exploit you, and some are not.

Arbitrage is the most obvious example of an ethical freeroll.

Although the sportsbooks might not agree, sports betting arbitrage is an ethical freeroll because you’re simply taking each book up on their offer to bet a specific team at a particular price. You’re not doing anything nefarious on either end of the bet; you’re just leveraging small volatility in the market’s pricing of an event to your advantage.

Many years ago, I performed what I’ll call “writing arbitrage,” which I discussed in my post Should You Work for Free?:

Internet content was becoming king and there were a bunch of sites that would pay freelance writers decent money to write short (and shit) articles. Remember eHow and About.com and those sites? Stuff like that.

They paid enough that I thought, “Man, this is too much money, I bet people would do it for less.” So they did do it for less, for me. I advertised my own company on Craigslist that paid writers very handsomely—and by that I mean about 50% of what I would be paid to write through another freelance publishing company at which they couldn’t be accepted—to create short articles, which I’d then publish under my name (with permission, of course…from the writers, not the company). $25 out, $50 in, and we’re off. That idea worked for a bit until the site contacted me wondering how I was writing 100 articles a day.

“I started drinking a new coffee,” I said. “And I’ve been experimenting with various writing styles, some very different than others.”

Okay, I’m going to call that one a “semi-ethical freeroll.” But a freeroll nonetheless.

Note that something isn’t a freeroll just in terms of money. You typically need to invest time and energy into identifying and leveraging freerolls, which could easily make them not worth the cost.

My aunt is a coupon-cutting freak, for example, and can easily turn a $150 grocery bill into $100. The only cost? Twenty hours of her time and a kitchen filled with barely edible foods that were on sale.

Real-Life Asymmetries and Chinese Businessmen

Remember, in betting, synthetic hold represents the probability of you being on the profitable side of a bet by chance. As it decreases, your odds rise. When it goes negative, your odds are 100%.

In real-life, you can think of synthetic hold as the risk you’re taking on with each decision and the odds you’ll be harmed by making a bad choice. When the risk is high, you need disproportionately high confidence you’re on the right side. When it’s low, you can take more chances, similar to what investors do when interest rates are low.

Unlike in sports betting, though, real-life payouts are typically not fixed. The upside and downside scenarios in certain areas are massive. This means that when “real-life hold” goes to zero or negative–when you’re effectively paid to take chances–you should go crazy firing off bets.

There’s a five-part article series called the paradox of Chinese businessmen that I really like. In it, Cedric Chin writes:

First, (I learned) that the most successful Chinese businessmen were often the least educated ones. Second, that Chinese businessmen as a group were more superstitious than most, but that this didn’t seem to have much of an effect on their ability to run their businesses! And finally, that the vast majority of Chinese business people did not think too far ahead. They optimised locally, and by keeping close tabs on the bottom line, shut down lines of business that weren’t performing as well.

Chinese business is sort of the antithesis to business school. Instead of being rooted in theory, Chinese businesses (and much of Eastern philosophies and ways of living) are rooted in pragmatism.

What’s true is what works.

There are a couple immediate ramifications I can see from this perspective. The first is that payoffs matter more than accuracy. The second related point is that “wrong” beliefs/actions can stick around if they cause no harm. Like the tailbone or the appendix, there are a lot of seemingly vestigial Eastern practices that likely don’t “work,” but like being superstitious for the businessman, it doesn’t matter because they cause no harm.

I bring this up because when you look at something like Eastern herbal remedies, you’re kind of seeing a situation with little, zero, or negative “synthetic hold.” That is, the downsides of being wrong are effectively removed. When you take something like green tea extract or turmeric–or perhaps get acupuncture–you’re effectively getting a freeroll. Maybe it will work for you, and maybe not, but you’re highly unlikely to be harmed.

You can acquire life freerolls/arbitrages by applying this same mindset. In the field of health/wellness, for example, you might perform low-risk wellness experiments on yourself, looking for a combination of a solid base of evidence of efficacy with minimal side effects/downsides.

In doing this myself, I’ve landed on supplements like creatine, magnesium, and theanine–all of which I take daily–that have significantly improved my overall quality of life. Creatine, for example, is arguably the most studied supplement ever due to a lot of myths that arose when it became popular among bodybuilders; the evidence is extremely strong for creatine’s effectiveness in enhancing not only exercise performance, but also cognitive and mental health, while being extremely well tolerated.

Some other supplements that I’ve found effectively act as a health freeroll: glycine, taurine, NAC, apigenin, garlic extract, and many others.

Other Real-Life Arbs/“Freerolls”

When you think less in terms of being “right” and more in terms of the payoffs when you’re right/wrong, you notice a lot more interesting real-life freerolls. Some examples:

• Walk while on calls/meetings; you forget that you’re moving and can rack up steps without it being horribly boring.

• Negotiate through questions; ask relevant questions rather than counter to get information on motivations and possibly get the other side to negotiate against themselves.

• Choose the best long-term solution when decision paths have similar short-term returns; you’re freerolling your future upside.

• Do favors; while there is some time/energy commitment, you also can get something out of it–even if the favor is never reciprocated–in feeling good about yourself…and there’s the potential from benefiting from future goodwill.

• Fade consensus opinions when the cost is low/zero; if you’re right (think early Bitcoin), you’ll be asymmetrically rewarded. Being wrong very early isn’t very costly.

• Send cold emails offering value to those you’d like to work with/for; there is a small time cost, but the downside is just getting ignored while there’s a small probability for big upside.

• Talk less, listen more; there’s very few downsides to speaking up “too little”–very often it’s even beneficial in terms of how you’re viewed–and the upside is your words carry more weight when you do use them.

• Use emotional freerolls; bet against the team you want to win when it’s +EV, accept the worst possible outcomes as your fate, etc.

Just as reducing synthetic hold decreases the probability of being wrong by chance, focusing on payoffs instead of accuracy improves your odds of finding real-life freerolls where you can truly generate value from nothing.

When the downsides are very minimal or zero, you should be more concerned with taking lots of chances–running lots of “experiments”–than being “right” with the risks you decide to take.

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About Lucky Maverick

About Jonathan Bales

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About Lucky Maverick

About Jonathan Bales

I love philosophy. I majored in philosophy and took it for every possible elective, partly because of how much I enjoyed studying it and partly because after majoring in biology for four days before quitting, I kind of knew I wasn’t going to have a normal career anyway. Philosophy’s marketing campaign should be “Eh, fuck it, I’ll just major in philosophy.” That’s how I got there, and it was one of the best decisions of my life. See: most decisions really don’t matter.

My favorite philosopher was and still is Friedrich Nietzsche, who gets a bad rap for being characterized as many things he wasn’t (and some he was). Nietzsche has a lot of parallels to Nassim Nicholas Taleb, who is my favorite living philosopher (one of those similarities is walking for long periods each day, which I highly recommend). I’m not putting Taleb on Nietzsche’s level—and I disagree with a lot from both of them—but to me, it’s doesn’t matter how much you get right as much as how useful/innovative/paradigm-shifting the things you do get right end up being; despite being kind of crazy people, no one has shifted my worldview more than Taleb and Nietzsche.

One of the themes inherent to both philosophers’ work is evolution, in slightly different ways. A 19th-century philosopher, Nietzsche was the first to really apply natural selection to ethics, metaphysics, epistemology, and basically everything about how we exist (despite harshly critiquing Darwin). Taleb more so employs human evolution as a basis for “what works”—the ultimate Lindy effect—and then draws principles from natural selection about how the world works and how best to operate.

If there is something in nature you don't understand, odds are it makes sense in a deeper way that is beyond your understanding. So there is a logic to natural things that is much superior to our own. Just as there is a dichotomy in law: 'innocent until proven guilty' as opposed to 'guilty until proven innocent', let me express my rule as follows: what Mother Nature does is rigorous until proven otherwise; what humans and science do is flawed until proven otherwise.

Taleb

I’m not sure how much my views have been shaped by these philosophers as opposed to me gravitating toward ideas naturally similar to mine, but I fundamentally believe in the power of both copying natural selection and applying the lessons it has for us in our everyday lives. It’s the ultimate selection bias; what’s left standing after millions of years is here because it works.

This isn’t a new concept; it already exists in fields like biomimicry—design that’s modeled after nature—and there are many examples of its pragmatic value. Velcro was created after someone noticed how burs stick to clothing. Climbing pads mimic gecko’s feet. Shock absorption is modeled after woodpecker beaks, architecture after termite mounds, and swimming suits after shark skin. Even materials designed for water absorption mimic the shell of the Stenocara beetle—a desert insect whose back is covered in small bumps and a hard wax that funnel limited water and condensation to the beetle’s mouth.

What we see today is the best of the best of the best because, if it weren’t, it wouldn’t be here. I’m sure there was a beetle out there at some point with a random gene mutation that caused it to funnel water to its asshole instead of its mouth. And now that beetle is dead.

What to Learn from Evolution

There are many reasons why we can look to natural selection for knowledge and insights, but I’m going to focus on what I believe are the most important lessons, along with how they can be applied to better yourself.

• You can be dumb.

There is no guiding hand behind evolution; all the marvels of the natural world—the processing power of some human brains, the speed of Peregrine falcons, the complexity of mantis shrimp eyes (really, look it up)—has been accomplished without a single individual even being aware of the process.

You can be dumb and still find huge success, as long as you…

• Perfect the trial-and-error cycle.

Evolution is more or less one giant system of trial-and-error. Nature changes, species adjust. Some traits live and some die off.

The key is that there’s a mechanism for the weakest traits and species to fizzle out. The harsh reality is that’s death. Survival of the fittest.

We see the same thing in some industries, which do a pretty decent job of mimicking evolution, mostly via competition. Taleb points to the restaurant business, which is fiercely competitive. Mostly, bad restaurants end up dying off—no one comes to eat—and only the strongest survive. The entire system gains from the process, and the food industry as a whole evolves fairly rapidly.

The faster and more efficient you can make this trial-and-error cycle, whether it’s in your personal life or your business life, the quicker you will find success. Your starting point for truth is way less important than your process for refining and improving your beliefs, especially when you get away from a static worldview and begin to (appropriately) see it dynamically.

Over time, differences in the speed at which you can process information and adapt become exponentially more important than where you begin.

In this very hypothetical example, the fast learner begins with half as much knowledge/value as the slow learner, but doubles it every cycle, compared to every other cycle for the slow learner. You can see how the difference in the velocity of the learning curve plays out over time.

The best way to speed up your learning curve: be extreme.

• Don’t suppress chaos.

Natural selection is what Taleb would term “antifragile”—the opposite of fragile—because not only is it not harmed by chaos, it benefits from it. A species can change for the better fairly quickly in evolutionary terms from a single random genetic mutation.

Even natural disasters are positives for most species as a whole, assuming they’re not entirely killed off, because they end up coming back stronger and more prepared. Humans, too, are hopefully more prepared for the next pandemic; COVID has been devastatingly brutal, but “good” and “bad” are designations that often change based on your time horizon. What’s bad in a static environment can often be one of the most beneficial things when viewed long-term.

Failure saves lives. In the airline industry, every time a plane crashes the probability of the next crash is lowered by that. So these people died, but we have effectively improved the safety of the system, and nothing failed in vain.

Taleb

By embracing chaos in all aspects of life, you’re set up for more sustainable long-term success. That’s one reason I tweeted this:

Not all jobs are the same and every person is different; there’s no one-size-fits-all plan for everyone. In fact, most people are probably best off in the employee role.

Generally speaking, though, one of the biggest misconceptions about being a salaried employee is that it’s safer than something like an independent contractor. Being a contractor isn’t always a great solution—it’s not feasible in some areas and takes a long time to build a customer base—but who do you think is more susceptible to a sharp change in income: someone making $70,000 a year from one employer or someone earning the same amount from eight clients in two different niches? The latter is more volatile, but the former is riskier.

Evolution embraces chaos, and in exchange eventually delivers the best results. Without that volatility, there could be no progress.

Nature builds things that are antifragile. In the case of evolution, nature uses disorder to grow stronger. Occasional starvation or going to the gym also makes you stronger, because you subject your body to stressors and gain from them.

Taleb

Don’t deprive yourself of life’s shocks; they’re what allow for your personal evolution.

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• Think long.

Evolution needs time to operate. This is a characteristic of things that like chaos; they love time. The more time, the better, which runs in opposition to most things, which eventually break down over time.

Many people are doing things—whether professionally or personally—that, unbeknownst to them, will not survive over time; they’re eventually going to go busto, as we say in the gambling world.

If we’re being honest, most people can’t even calculate expected value in static environments. A much smaller percentage know how to do it over time, choosing what’s optimal in arenas in which the first order of business should be eliminating risk of ruin, i.e. “not dying.”

Natural selection does this better than any business in the world; it’s built into the system. Species maximize their chances of survival as a whole above all else. Survive, then optimize.

Build systems that embrace volatility and are meant to survive and improve with time.

• Humans naturally behave in predictably sub-optimal ways.

Because we are conditioned to survive and reproduce, there are certain things we do or ways in which we think that are beneficial for the survival of the species but really crappy for being a successful and happy human.

As an example, I experience extreme nervousness in certain social situations in which I need to talk in front of a group of people. I could be the most knowledgeable person on a topic by a large margin, and I still feel nervous. Why? It makes no sense. It doesn’t help me today—in fact, it’s a detriment—and yet no matter what I try, I cannot shake the feeling.

Evolution takes time, and we’re built for our species of many generations ago to survive. But we’re not the same as many generations ago, and some of the psychological tools we’ve evolved—like feeling nervousness in situations we perceive as high-leverage to survival—are no longer very useful.

We’re in a constant battle between our reasoning selves and our emotions. The latter have their place—specifically when doing what’s best right now, like running away from that angry-ass-looking lion over there, is also best long-term—but our ability to reason is more imperative today. In a world in which survival is nearly guaranteed for most, the best decision is usually the one that’s best long-term; calculating that, however, takes logic over emotions.

The thing is, most people aren’t doing this properly. They’re acting extremely emotionally all the time without even really realizing it, letting their feelings of the way the world is or should be overrule their logical selves, and these psychological biases form a pretty predictable and exploitable pattern.

Practical Consequences in Everyday Life

So those are sort of my semi-philosophical/semi-pragmatic implications for what it means to model our lives after evolution. Using those principles as a foundation, I’m going to do my best to draw what I believe are direct (and pragmatic) consequences for shaping how we live.

• You don’t always need more data. Usually, you need less.

Do you think birds are sitting up there in their trees, working on aerodynamics and calculating the optimal wing shape they’d like to achieve in 10 generations? Crunching the numbers to figure out the best altitude at which to fly to conserve maximum energy?

No, they just sit there being dumb birds and doing dumb bird things. When they do move, they often fly into windows and die. It’s estimated that up to nearly 1 billion birds die colliding with windows in the United States each year. I’m going to go ahead and call bullshit on that one by the way. That’s like three bird deaths per person. It’s 10% of the entire bird population. You’re telling me that in any given year, a bird has a 10% chance of flying into a fucking window and dropping dead? I don’t know man, that seems outrageous.

The point is that birds are dumb and don’t use data, and yet they’re crushing it (literally) because the process above them is iterative. And the faster the cycle, the more they can change in a given time period. The faster you can make your own trial-and-error knowledge cycle—action, feedback, change, another action—the less you need data.

I’m saying this as someone who has written many books on a data-driven process to gambling. Math is absolutely essential to a logical decision-making process. But it almost always should be used to inform the process, not make the individual decisions. Even random actions at rapid pace are better than deliberate ones as long as you’re implementing data to improve the process by which you take future actions.

The more data we have, the more likely we are to drown in it.

Taleb

• The best ideas and actions must win.

An essential part of evolving as a person is to let good ideas live on and adapt and bad ideas die. The key is to drop your ego. Trust me, you have one, and it’s probably larger than you think. Your ego doesn’t always result in being cocky publicly; it can just mean not being honest with yourself about when you’re wrong.

A useful practice: write down one thing you were right and wrong about each day. This becomes quite easy if you make small bets on your beliefs. When you gamble, you’re not only forced to refine your probabilistic thinking about the world (and do it in a way that’s totally honest with yourself as, if you’re wrong, you lose money), but you’re also forced to confront just how often your beliefs are inaccurate.

For so long, people have used upside for motivation. Companies give employees small bonuses if they reach X goals. People make internal deals with themselves: “If I reach this weight, I’ll go on a trip.” But motivation is stronger from downside. “Oh, if I don’t learn what the fuck I’m doing I’ll lose my money?” Okay, let’s get to work.

The biggest hurdle I see in terms of self-improvement is people not understanding they aren’t being intellectually honest with the most important person necessary: themselves. Taking on downside via gambling forces honesty like nothing else I’ve experienced.

You might think you have yourself all figured out, but if you really want to know what you believe, bet on it. Chances are you aren’t being as honest with yourself as you think.

If you run a business, you should set up the same concept as a meritocracy. If you are searching for a company for which to work, you should look for one that rewards greatness and not seniority. This is actually quite rare.

Again, this requires setting aside your ego. Most people don’t want to give up control or aren’t okay with admitting they’re wrong. Let me tell you right now, and I believe this strongly: if the head of a company is not okay being called out by the “lowest” person in the organization, and if there is no process by which the “boss” can and will admit they’re wrong and concede to the best idea when it’s appropriate, the company cannot possibly function at the highest level.

The best leaders lead without anyone knowing they’re leading.

The higher we soar, the smaller we appear to those who cannot fly.

Nietzsche

I don’t mean to get too Taoist (secretly I do), but it’s true. The best leaders are “one of the gang.” And not in some like pseudo- sense in which they pretend to listen to those they’re leading but then go back to their throne; I mean truly on the same level, and then they sort of take all the information around them and just guide the ship without people really even recognizing what’s going on.

The best leaders are those the people hardly know exist.
The next best is a leader who is loved and praised.
Next comes the one who is feared.
The worst one is the leader that is despised.
The best leaders value their words, and use them sparingly.
When she has accomplished her task, the people say, "Amazing: we did it, all by ourselves!

Lao Tzu

Leaders aren’t bosses who tell people what to do. Leaders are the guiding force behind a collective movement toward truth and usefulness—toward the most appropriate ideas, decisions, and actions in any given situation, regardless of the source.

“The best fighter is never angry.”

- Lao Tzu, Tao Te Ching

“The best leader is never bossy.”

- Jonathan Bales, This Article

• Don’t accept fragility.

I mentioned why I believe the typical career—salaried employee—often represents a confusion of risk and volatility. It’s absolutely fine for you to trade in EV for smooth income—we trade in EV for limited downside in the form of health insurance, for example—but my hunch is that many believe they’re limiting their risk with a salaried job, not just their volatility.

As much as possible, you should diversify income streams if it’s an option. The internet has made that more of a possibility than many realize.

Of course, the Catch-22 is that most people rely on their salary and just fully jumping into a freelance role or starting a business isn’t really an option. So do it over time. If you’re a writer, start looking for occasional freelance writing work in your spare time. If you’re an engineer, find a one-off coding project. Or do it when you’re “at work.” Most people aren’t actually working all day while they’re “working all day.”

At the level of the business, I’m a big believer in building companies as an umbrella of various verticals—joined by a common theme but really separate in distinct ways. Each vertical should be run as if it’s its own business—one that is very specific and many would see as almost too “niche.” What this does is unites each vertical (if a customer finds one they can find the others), allows the company to benefit from the 80-20 rule (if you want to grow big, first grow small), and localizes failure (the repercussions of launching a new product or concept that stinks don’t extend throughout the entirety of the company).

Regarding the last point, the equivalent in evolutionary terms is gene diversity. Species evolve to not be heterogenous, which eliminates or reduces correlated points of failure. This should be sort of obvious—don’t build a house of cards—but why does it seem like so many people don’t extend this simple idea to their personal and professional lives?

I’ve always found it odd when companies acquire smaller competitors and then try to roll them up into one. I much prefer the idea of a conglomerate of small, focused companies for “hardcore” power users. My 60-second Paint representation of this idea is something like this:

On the top, you have a sort of web of companies or verticals or concepts that are interconnected; this has some benefits, but the failure of one brings down others. On the bottom, you have a very broad umbrella concept up top, with very specific verticals underneath. This “broad via the collection of specific/separate” idea is far less fragile, easier to scale, and I believe probably possesses more long-term upside. What makes it such is that the diversity within each vertical is maintained by their separation. This localizes failure much like gene diversity does for species following environmental changes.

On the individual level, having a single source of income is the equivalent to having no diversity in a gene pool; there’s a single point of failure. Varied sources of income—and, all else equal, those that aren’t correlated—reduce fragility and maximize the odds of staying in the game.

Antifragility through diversity. The ultimate example of this idea: the founding of the United States of America.

Globalization has created this interlocking fragility. At no time in the history of the universe has the cancellation of a Christmas order in New York meant layoffs in China.

Taleb

Some other ways to remove fragility in various aspects of life:

1.      Avoid risk of ruin.

You should take on all kinds of risk when there’s nothing to lose. If you have $5,000 to your name, it doesn’t really matter if you go busto. If you have $500,000, there’s more to lose and thus your first aim—before any optimization—should be staying in the game.

2.      Admit how little you know.

Overconfidence is fragility. It will eventually blow up. Cocky people look like they’re winning more frequently than others. And they might be winning more battles. But if life is a war that has no ending, they will eventually blow up and lose.

As Vince Lombardi said, “We didn’t lose, we just ran out of time.” If your time horizon is “forever,” then anything that is fragile will always lose, with 100% certainty, and anything that’s antifragile will always improve, with 100% certainty. Overconfidence looks good temporarily, but always loses over time.

Convictions are more dangerous enemies of truth than lies.

Nietzsche

We all have beliefs we hold right now about which we are way, way too confident. I once did magic for girls in bars because I swore it would help me get laid. Actually, I still kind of stand by that; people love magic! No one really know this, but I was really awesome at street magic. Anything that David Blaine could do with cards, I could do. He did it for massive fame and wealth and I did it to once go on a few dates with a girl named Emily who doesn’t like Mexican food and probably should have just told me about that before I took her to La Placita, but it’s all good Emily we can still get dessert or something after I eat my enchilada if you’re down and also is THIS your card?

I bet on Trump to win the presidency in 2016 at ridiculous odds because I thought people were overestimating what they thought they knew about politics and his relative odds of winning. But the thing is that I know nothing about politics. Like really, I know nothing. So one thing I think I did well this election was just shut up. I had a small position on the outcome, but I had next to no confidence in it and so rather than blab about winning last time and delude myself into thinking I know what I’m doing, I didn’t really say a word because I truly don’t have anything to say about it (from a probability standpoint). Actually, that’s not entirely true; I did bet a small amount on Bloomberg, gotta admit. That, my friends, is what we’d call a blunder.

The point is that sometimes, the best thing you can do is just not speak. Like, probably most times.

You have to admit you don’t know everything. Some people stink at that. But an even rarer skill is admitting that, statistically, many things you think you know right now are just wrong. And so you have to have a certain humility to really avoid fragility in most aspects of life. The easiest way I’ve found to do that is look back on how you were years ago—what you believed and how you acted—because that’s usually pretty damn embarrassing. If it isn’t, I’d argue you’re probably not growing enough as a person. If life were a game of regretting as much as possible in the future, I’d be in the Olympics.

Now, how do you go about admitting how little you know while still maintaining a healthy confidence in yourself? Rome wasn’t built in a day. I’m working on it.

No victor believes in chance.

Nietzsche

• Practice constantly dealing with uncertainty, risk, chaos.

I wrote about how to deal with uncertainty. You cannot maximize EV, income, even happiness long-term until you’re comfortable dealing with uncertainty. Again, the easiest way to become comfortable: gamble. Bet with friends, think in probabilities, put downside on your beliefs—just constantly make predictions about the future.

I’ve talked about the benefits of this many times, but one inevitable (and overlooked) outcome of doing it that I haven’t really mentioned is that you get better at seeing obstacles as opportunities.

What doesn’t kill you makes you stronger.

Nietzsche

When a natural disaster hits an island and decimates a species’ population, it’s difficult to not view that as a negative event. But if the species survives, they’ll usually come back stronger over time. Natural selection teaches us nothing is inherently good or bad; it’s relative to your viewpoint and time horizon.

You can embrace this idea in your life, too. When “bad” things happen, they’re usually seen that way on a relative basis and with a static point of view. But they don’t need to be that way. Species don’t sulk in the shitty circumstances they’re dealt; they just adapt.

I was just watching a video of pro poker player Phil Ivey describing a hand he lost to Chris Moneymaker in the early-2000s. Ivey was a huge favorite but lost the hand. He said he didn’t have much money at that point—which seems like a small exaggeration but who knows—and he was robbed of potentially millions of dollars. In that moment, it was a hugely negative outcome for Ivey.

Zoom out, though, and Moneymaker went on to win the tournament—an event most label as the start of the poker boom. Without it, Ivey—who went on to accrue incredible wealth through poker—might have had a much different story. Long-term, losing that hand might have been the best thing to happen to Ivey’s poker career.

I’ve found it helpful in my personal and business lives to view everything that happens simply as information. Whether it is “good” or “bad” is completely relative. It has really helped me to remind myself that when something looks like an obstacle, that’s because I’m thinking too narrowly; expand outward and it often resembles an opportunity—a catalyst for positive change that could not be possible without that short-term hardship.

Of course, doing this in the moment is really damn hard. So just practice and work to improve that mindset over time. I still have a long way to go, but I’m better than I used to be.

• Optimize for five years.

Charlie Munger’s advice to those looking to acquire wealth is to do everything possible to get to a savings of $100,000. Work multiple jobs, spend as little as possible, and do anything you can to create that buffer.

I was on the Hxro Labs podcast discussing a similar idea. I’m not a big believer in getting rich via saving—you get rich by finding ways to make more money—but in the beginning, it’s pivotal for you to build up a base via any means necessary.

This is sort of my “long view” of wealth, which is that what you do early (that I think is generally sub-optimal)—save money—is actually very optimal with a longer view because the sooner you acquire some sort of base, the sooner you can make real money. Actually, for certain people, I think even small -EV gambles early on can be smart if you do +EV things later just because it’s so important to get money early. I’m sure you’ve seen the graphs of your retirement if you invest $X from age 25 instead of 35. Due to compounding returns, it makes sense to do whatever you can to get that early stash. Or maybe that’s just me rationalizing why I kept firing daily fantasy golf on DraftKings despite maybe the worst ever ROI the site has ever seen on the sport.

This sort of long-term EV calculation should be applied to other aspects of life. Exercise is always a great example. When you work out, you put your body through temporary stress for delayed returns that outweigh the pain. If something that sucks as much ass as exercising can transform from “this is the dumbest possible use of my time today” to “there’s maybe nothing better I can do for myself long-term,” then think about all the other benefits you’re overlooking by not thinking far enough into the future about what’s optimal.

• Use emotions as a trigger to think logically.

I got this advice from Ray Dalio in his book Principles. It’s an extension of an idea we have in gambling—one Brandon Adams discusses in his book Personal Organization for Degenerates—to avoid consequential actions when on tilt. Basically, when you recognize emotional behavior in yourself, just stop doing things that matter.

Dalio takes it one step further, arguing you should condition yourself to use emotions as a trigger for rational thinking. When you find yourself in an argument with someone and you really just want to do what comes naturally and scream “Dude just shut the FUCK up!”…use that feeling as a reminder to take a step back and think logically. And then, politely and in a soothing voice, calmly state “Pardon me, kind sir, but if it’s not too much trouble, would you mind doing me the favor of just shutting the fuck up?” I don’t know why but when I say that out loud it’s in a British accent.

There’s a time and place for emotional thinking, but just because it’s necessary for the survival of our species doesn’t mean it has a place in all or even most of your everyday decisions and interactions. I might be in the minority with this view, but I believe emotions are pretty much always a detriment to sound decision-making and they’ll slow down your trial-and-error cycle if you don’t find a way to get around them.

• Think one level above yourself.

Your brain is in a constant battle between the logical and the emotional—what you can reason and what your animal self naturally feels—and what you’re doing when you overcome those emotions is basically thinking outside of yourself on a higher level to make better choices. Whether or not that represents some form of free will I don’t know, but if we think of freedom as existing on a spectrum, then this would be at a higher end of that range than just giving in to your feelings. You won’t ever stop feeling these natural urges, but you can recognize them in yourself and make decisions that minimize their impact. That’s not to say your instincts don’t matter—they most certainly do—but rather that they shouldn’t be driven primarily by emotions.

There are two main reasons I think you should work to think a level above your natural self. The first is that, since almost everyone else is succumbing to their feelings, you’re going to naturally be contrarian—and thus secure the greatest payoffs—by thinking rationally at all times. It’s not only optimal in a vacuum, but also optimal in terms of game theory—a natural way to exploit the masses. This is surprisingly easy to do for groups; an individual might act unpredictably, but humans as a whole tend to have the same sorts of illogical thoughts, suffer from the same psychological biases, and act in the same irrational ways.

I spent a lot of time over my life studying these psychological biases. Even just being aware of the types of ways in which your brain is hardwired to deceive you can have a meaningful impact on your ability to recognize irrationality in yourself—and trust me, it exists in a multitude of ways—so you can make better choices in spite of your natural biases.

Second, it’s antifragile. Humans are fragile at the individual level, but that fragility creates antifragility at the species level in the same way the restaurant business is antifragile because each individual restaurant is fragile. Similarly, your natural ideas and feelings are fragile, but that can create antifragility if properly leveraged to improve your higher-level self. Your process of thought and decision-making can transform into one that improves exponentially over time if you recognize your limitations, overcome your biases, and make decisions outside of what your inner self is naturally telling you to do. The effects of improving that process are compounding. Basically, try to become the Amazon.com of humans.

And if none of this works, might I suggest spending countless hours learning street magic?

The most spiritual men, as the strongest, find their happiness where others would find their destruction: in the labyrinth, in hardness against themselves and others, in experiments. Their joy is self-conquest: asceticism becomes in them nature, need, and instinct. Difficult tasks are a privilege to them; to play with burdens that crush others, a recreation.

Nietzsche

About Lucky Maverick

About Jonathan Bales

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At one point in my life, I thought that in Pizza Hut’s “Makin’ it great” ad campaign, they were actually saying “Brickin’ a brick.”

I mean I was a toddler, but still. Brickin’ a brick. I believed this for years, even when I was old enough to logically understand “brickin’ a brick” doesn’t make any fucking sense.

I always thought it would be funny if a big company ran a huge ad campaign with a slogan that was totally meaningless just to see how it would perform. That’s what I’d do if I were in charge. “McDonald’s: Ready for the lightning?” Then we’d spend millions of dollars on it, maybe changing the classic ‘M’ logo to add in lightning bolts, and then I’d get fired.

It didn’t matter that I believed Pizza Hut’s slogan was “Brickin’ a brick.” I got by. Even if I believed it today, it probably wouldn’t change much for me. It’s okay to have beliefs that are wrong. Most thoughts—and even actions—don’t matter.

The majority of what you think you know is probably wrong, and most of what’s right doesn’t mean shit anyway. Sometimes, though, you come across an idea that’s truly impactful to your life. It might still be wrong, but at least it’s useful for you, which is better than being wrong and useless I suppose.

I think the value of knowledge probably grows exponentially such that most of it is basically worthless but a small percentage is overwhelmingly valuable. This has been my experience, anyway, as a few basic ideas capable of shifting my worldview have been more valuable than everything else I know combined, so I’ve tried to prioritize finding this rare knowledge that actually makes a difference, blocking out almost everything in search of the truly scarce stuff.

With that said, I thought it might be cool to talk about the most impactful ideas that have changed my life thus far. The main criteria I used for selecting these is that each idea is something with which I at some point either disagreed or didn’t even really comprehend. It’s really important to get adequate sleep, but everyone knows that. These are all ideas that at some point I didn’t grasp, but ones that made profound impacts to my life once I did.

The Big Concepts

Convexity

Errors, randomness, and “the unexpected” should help you, not harm you.

If you’ve read my articles for more than 10 minutes, you probably know I’ve learned so much from Nassim Nicholas Taleb. From black swans to antifragility to being a giant dick to anyone who disagrees with you on Twitter, I’d say I owe more of my success to Taleb than anyone else I’ve read, even if he’s a total dick on Twitter.

The main idea that’s changed my worldview is convexity, and specifically the concept of acquiring more benefits than harm from chaotic events. Whereas most people focus on improving prediction accuracy—and sometimes in areas in which that’s nearly impossible—few properly focus on the payoffs, which are more easily controllable and offer a larger usable edge in terms of competition.

I applied this to DFS by focusing on ownership and lineup composition instead of projection accuracy. That is, maybe this player or team that everyone thinks will do well actually will, but maybe they won’t, and if they don’t, how can I benefit to the greatest degree?

One way to apply convexity to your life is to mimic evolution:

• Don’t suppress chaos.

Natural selection is what Taleb would term “antifragile”—the opposite of fragile—because not only is it not harmed by chaos, it benefits from it. A species can change for the better fairly quickly in evolutionary terms from a single random genetic mutation.

Even natural disasters are positives for most species as a whole, assuming they’re not entirely killed off, because they end up coming back stronger and more prepared than before. Humans, too, are hopefully more prepared for the next pandemic; COVID has been devastatingly brutal, but “good” and “bad” are designations that often change based on your time horizon. What’s bad in a static environment can often be one of the most beneficial things when viewed long-term.

“Failure saves lives. In the airline industry, every time a plane crashes the probability of the next crash is lowered by that. So these people died, but we have effectively improved the safety of the system, and nothing failed in vain.”

By embracing chaos in all aspects of life, you’re set up for more sustainable long-term success. That’s one reason I tweeted this:

Not all jobs are the same and every person is different; there’s no one-size-fits-all plan for everyone. In fact, most people are probably best off in the employee role.

Generally speaking, though, one of the biggest misconceptions about being a salaried employee is that it’s safer than something like an independent contractor. Being a contractor isn’t always a great solution—it’s not feasible in some areas and takes a long time to build a customer base—but who do you think is more susceptible to a sharp change in income: someone making $70,000 a year from one employer or someone earning the same amount from eight clients in two different niches? The latter is more volatile, but the former is riskier.

Evolution embraces chaos, and in exchange eventually delivers the best results. Without that volatility, there could be no progress.

“Nature builds things that are antifragile. In the case of evolution, nature uses disorder to grow stronger. Occasional starvation or going to the gym also makes you stronger, because you subject your body to stressors and gain from them.”

Don’t deprive yourself of life’s shocks; they’re what allow for your personal evolution.

• Think long.

Evolution needs time to operate. This is a characteristic of things that like chaos; they love time. The more time, the better, which runs in opposition to most things, which eventually break down over time.

Many people are doing things—whether professionally or personally—that, unbeknownst to them, will not survive over time; they’re eventually going to go busto, as we say in the gambling world.

If we’re being honest, most people can’t even calculate expected value in static environments. A much smaller percentage know how to do it over time, choosing what’s optimal in arenas in which the first order of business should be eliminating risk of ruin, i.e. “not dying.”

Natural selection does this better than any business in the world; it’s built into the system. Species maximize their chances of survival as a whole above all else. Survive, then optimize.

Build systems that embrace volatility and are meant to survive and improve with time.

Via negativa

Addition by subtraction

This is a simple concept, which is that to improve basically anything in life, first look at what you can take away before adding anything.

Unhealthy? What are some things you can remove from your diet or lifestyle before adding something like supplements?

Unhappy? What can you remove from your life before taking antidepressants?

The ‘via negativa’ concept is related to an approach I’ve discussed when it comes to winning games, which is to reverse-engineer a strategy by starting with what success looks like, then working backwards by removing the paths that don’t lead to winning.

Think of how a sculptor creates a statue from a slab of concrete; the “truth” of the statue is already there, hidden and waiting to be realized, but only after removing that which isn’t necessary.

Leverage

Big wins require big leverage.

I used to make the majority of my money as a freelance writer. I liked it and hated it at the same time. I liked that I was in control of how much money I made (sort of), and I disliked that I was broke and forced to write all day long to get by. Still, I can write pretty quickly, so once I got rolling and had some companies paying me, it was a decent income.

But in terms of making short-term money, I had no ability to apply leverage. What I mean by that was I got paid for what I produced, and that’s it. I was paid for my time, which can become quite tempting if you can quickly create things of value.

However, I almost always tried to write evergreen articles I thought could live for a long time. I wasn’t sure why I wanted to do that; it just felt right for some reason. It was one of the best decisions I made because writing in that way was a form of leverage. That’s actually the idea behind what I’m doing right now with this newsletter—building up long-term equity (in the form of trust) that can be cashed in at a later date. I’m not charging for it and I don’t have immediate plans to do so, but my guess is that writing things that (hopefully) help people will always be a valuable use of my time.

Traders are of course familiar with leverage, which can make smart men very rich and dumb ones very poor. The same is true outside of markets. I recently wrote about leverage in Sam Hinkie, Leverage & Dynamic Decision-Making. The key to finding real success is to figure out what works and apply leverage. Fundamental to this idea is understanding and accepting today’s wealth is not created by how hard someone works.

You’ll have a difficult time becoming wealthy by getting paid for your time. You have to get paid for the value you provide others through your unique knowledge, multiplied by the leverage you place on it. The returns from this sort of work—amplified by the internet—are compounding. This increases the importance of logical decision-making. When the results of your decisions are non-linear, it amplifies their impact.

If you consider yourself a sharp decision-maker and you have unique knowledge or skills, there’s never been a better time to get rich. The theoretical bounds of the value you can extract are nearly limitless.

Acquire specific knowledge or develop a unique skill. This is a form of permissionless leverage—meaning no one can stop you from acquiring it—and it’s easy to unlock with the internet. You probably already have a lot of specific knowledge in areas of interest to you. The intersection of those areas is likely where you have the most unique knowledge.

Apply leverage to your distinct knowledge through media or code, i.e. leverage your knowledge to create online content or software. You can use labor and money, too, but they’re no longer required.

Focus on “evergreen” work; put time into things that have no theoretical limit for how much they can earn and require no additional work from you—things for which the cost of replication is zero or near-zero. And “earn” can mean money, but it can also mean trust or respect or some other output that can be monetized at a later date. I’m not currently making money from this newsletter, but it’s still providing leverage.

In the age of near-infinite leverage, you don’t get rich based on how hard you work. You get rich by having specific knowledge, creating something of value to others, and applying leverage to it.

This is a great synopsis of the age of infinite leverage.

Expected Value (EV)

How to calculate the value of a decision over time

I talk a lot about Expected Value, which is Probability multiplied by Payoffs. It’s a fairly straightforward concept with a wide array of uses, yet I don’t regularly see non-gamblers making decisions in terms of EV.

You don’t need to make perfect EV calculations to get use out of this way of thinking. Here’s the key to letting EV thinking change your life: measure decisions based on the amount of EV you can generate and not the outcome of the decision. Your job is done at the moment of the choice; what happens after that is effectively irrelevant.

From the About section of Lucky Maverick:

Payoffs change the name of the game. If I bet on the roll of a die and get paid only when a ‘six’ comes up, it might be an awful gamble if I’m betting straight up or the bet of a lifetime if I’m getting paid, say, 10-to-1 (meaning for every $1 I bet, I get $10 when a ‘six’ is rolled). The EV in the latter scenario is 16.7% x $10) + (83.3% x -$1) = 0.837, meaning if I were to make this bet 1 million times, I’d earn around 84 cents per roll for every $1 bet.

The EV before and after the roll of the die is 84 cents. Most people think of the value of the roll after the fact as either +$10 or -$1. You have to avoid this trap. The value is 84 cents no matter what happens. The result doesn’t change the EV. It has zero impact on the quality of your decision to make that bet.

This isn’t just academics. In reality, many situations—the most lucrative of life’s opportunities, in my opinion—possess way more luck than people realize, meaning they’re closer to a coin flip or roll of the dice than it naturally seems. As such, you see the equivalent of intense analysis of a coin’s properties and how weighted it is toward heads and what the air conditions are at the time of the flip—all in an effort to improve prediction accuracy of a coin toss to 50.1%—with little regard given to the payoffs.

Utilizing EV as a tool to quickly calculate payoffs is also a great way to build convexity. And once you’re comfortable calculating EV, you can move to what I call “dynamic EV,” or decision-making over time. As Taleb has said, “Your grandmother viewed smoking as an activity, not an event.”

Risk-taking is an activity completed repeatedly over time, not a singular event. When assessing risk and calculating dynamic EV, you should (usually) act as though you’d need to make the same decision repeatedly and let it play out millions of times.

When you think in terms of EV, results don’t really matter (in the short-term), which can be sort of freeing in a way.

Opportunity cost

Think about something’s value not just in terms of what is gained, but also what is lost.

I order delivery food all the time. I used to order almost every single meal through GrubHub. Now I’ve grown up, though. So I use DoorDash.

When people have questioned me in the past, I just repeatedly mentioned ‘opportunity cost’ until they left me alone. Basically, this was me…

The most important things to understand about opportunity cost are that 1) discussing it while referencing the value of your time is a surefire way to get people to leave you alone, and 2) it’s an awesome way to justify laziness.

“Oh yeah, no, I didn’t complete even the most basic of life tasks today because of opportunity cost, definitely not because I’m lazy as shit.”

The math on getting delivery, for me, includes what I give up: the need to cook. A lot of people love to cook. I kind of wish I did because it seems like an awesome lifelong hobby, but I don’t. I hate to cook and I hate to clean up. Ordering delivery can be expensive, but I don’t need to pay for groceries (with a hidden spoilage cost that many underestimate), nor do I waste time cooking/cleaning. The delivery life ain’t for everyone, but for me, it’s very clearly +EV. I don’t need to use my extra time to make money to justify the cost; just being able to have more free time to do something I enjoy is worth it long-term. I did this when I was broke, too; there are plenty of good lunch deals out there and you can just stock up at those times.

Every decision you make to do one thing means not doing many other things, and you should have at least a surface level idea of what you’re giving up with each choice.

Usually, what you give up is time. To determine if something is worth your time, ask yourself what you’d need to be paid per hour to complete a task you don’t enjoy. It should really be an aspirational rate—where you want to be financially rather than where you are—but let’s say it’s $100.

Now let’s say you see an item at a supermarket that costs $25 that you know is $15 at another place across town. Should you go get the cheaper one? Well, not unless you can do it in six minutes or less (assuming you don’t need to go there anyway). As much as you possibly can, you should pay to get your time back; even if it’s small to start and you can’t always afford to put time ahead of money, this general mindset will unlock max long-term freedom.

They say you always need to do things you don’t want to do. Maybe, but I’d at least prefer to be able to choose my points of pain rather than having them forced upon me.

Pareto principle

80% of results come from 20% of causes.

The Pareto principle (or 80-20 rule) is seen throughout the world in both natural and man-made systems; the top quintile of causes produce four-fifths of the effects.

As a thought experiment, applying the Pareto principle to itself leads to this sort of Russian doll situation in which, to generate the greatest rewards, you should work in the tails. I wrote about this concept in How to Get Better at Anything ASAP in relation to how to learn things as quickly as possible:

But why would we stop at 80/20? Why not apply the 80/20 rule to the top 20%? That’s 64% of effects from just 4% of causes. And how about again? 51.2% of effects from just 0.8% of causes. And again, again, and again? Just over one-quarter of effects from over 1-in-15,000 causes.

Okay, you get the idea. Regardless of the exact numbers, if most of the benefits of something come from a much smaller percentage of your efforts, as long as you can properly identify which efforts are “working,” you can acquire incredible leverage by continuing to apply the 80/20 rule—by taking your beliefs and hypotheses to their logical end, then working back from there.

Basically, it’s much simpler and more effective to start at logical extremes and work inward than to be general and move toward the tails. This applies to everything from starting a business to learning a new subject to finding a romantic partner.

Truth filters

There are various lenses through which to view the world—and find truth—and we should use as many as possible to assess reality.

Author Scott Adams is an awesome example, for me, of why it’s important not to dismiss information simply because of the source. I believe Adams is wrong about a whole lot—and he’s borderline insane—but there are some insights in his book How to Fail at Almost Anything and Still Win Big that I think are outstanding.

Side note: when reading, it doesn’t matter how much an author is “right.” I’ve read lots of books that are probably highly accurate but don’t really provide me with anything uniquely valuable to live my life. When reading, I’m searching for rare bits of knowledge that can help shift my worldview. In that way, the frequency of informative nuggets is far less important than the profundity of the few truly useful parts. I don’t really care to acquire knowledge for the sake of it; I’m seeking scarce wisdom, in which case you have to read people who go out on a limb to be both right and non-consensus.

In his book, Adams lays out six filters for truth, or how we typically go about figuring out what’s fact and what’s fiction—personal experience, experiences of people you know, experts, scientific studies, common sense, and pattern recognition. I’d add two more filters for truth to the list: logic/math and “what works.” No matter the exact filters proposed, the idea is there are various ways to go about determining what is true.

As an example, let’s broadly apply these filters to betting a sporting event. How do you know which side of game to bet? Well, you could build a model (science). You could poll smart people and take the average (wisdom of crowd, or experience of people you know). You could get information from pros (experts). You could search for historical trends that might be of use (pattern recognition). You could trust your gut (personal experience).

You get the idea. There are many ways to go about searching for what is true. We should be open to using any and all of them at any given time. If my model is the only thing pointing toward playing a particular guy in DFS, my assessment of reality is probably not as likely to be accurate as if he’s high in the model and other pros in my circle like the same guy and there are historical predictors of his success and my gut is telling me he’s a smart high-leverage play.

One of the strongest skills you can develop is this ability to cultivate different lenses and utilize specific ones as needed. Sometimes you should trust in data, but sometimes your gut and natural pattern recognition will lead to better results. Most people view the world in one or two very specific ways and can’t really move outside of that way of thinking. At the very least, you should be open to the idea that other people see a fundamentally different world than you, and their experience is real and shouldn’t be dismissed. Developing a cold rationality is vital to this, as it will always feel as though what you believe is right; logically, though, you should accept that not only do people see the world differently from you, but many times, their view will be more accurate (or more useful) than yours.

The easiest way to come to grips with your fallibility is to look back on what you used to believe to be true that you no longer do, which I presume is a whole lot. If our past selves have been so consistently wrong, why would we think our present selves are anything more than slightly better?

In previously newsletters, I’ve mentioned the book The 5 Love Languages. The main thesis is that there are various ways in which partners give and receive love: words of affirmation, physical touch, quality time, gifts, and acts of service. When I realized the power of recognizing my own and others’ love languages (and not just in romantic relationships) as fundamentally different lenses to view the world, it was life-changing.

The more lenses you can develop, the better you’ll be at both assessing reality (and thus making quality decisions) and seeing others’ viewpoints.

Hidden rules

The game within the game

If you haven’t yet read it, check out my first Lucky Maverick post How to Win Games: Find the Hidden Rules.

Basically, you’ll start to find success when you approach life as a game and find the “hidden” edges others are overlooking—when you begin playing a different sort of game than what your competitors realize you’re playing.

When you become a true long-term winner, you’ll know exactly which hidden rules you’re exploiting and you’ll see others overlooking the real game you’re playing.

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More Important Ideas I’d Tell My Younger Self

• Downside works to motivate more than upside. If you want to improve in a certain area, create a situation in which failure leads to negative consequences.

• You won’t know what people really think until they bet on it. You won’t know what you really think until you bet on it.

• First find specific and unique knowledge. Then become indispensable. Then apply leverage. Once you have leverage, the most important skill to possess is good judgement.

• Accuracy matters the same as payoffs in theory, but much less in practice because the former is what everyone else focuses on and the latter is easier to directionally predict.

• You have to be okay being wrong and being thought a moron. If you’re not okay with people thinking you’re an idiot—sometimes because you make giant mistakes and sometimes because they’re the morons not seeing what’s obvious to you—you can’t achieve unconventional success.

• Your starting point matters, but making quick choices and continually iterating matters more. Work to speed up your trial-and-error cycle.

• Be early. If you’re first, you don’t need to be that good. The easiest way to win is to limit competition, and the easiest way to limit competition is to be first.

• Good negotiations don’t meet in the middle. Obtain things “outside” the negotiation that are more important to you than to the other party.

• When a measure becomes a target, it loses its quality of being a good measure (Goodhart’s Law). If you want to lose 10 pounds in an effort to become healthier, focus on what leads to good health rather than setting a goal weight.

• Process > results short-term, results > process long-term. If after a little while you still suck at something, it’s you, not variance.

• Almost everyone else is faking it. Overconfidence wins and wins and wins…until it doesn’t. It’s a house of cards. Put yourself in position to benefit when the cards topple.

• When you don’t know something, say “I don’t know.” Pretty simple, but you’ll end up doing it a lot. Few actually admit when they don’t know something, and it erodes others’ trust in them when they feign knowledge. You can’t possibly know a lot about more than a few topics, so don’t pretend.

• Making firm decisions is important. Maintaining optionality is important. Doing both at the same time is an incredibly rare skill you should cultivate. Make decisions with conviction but be willing to change your stance at any point that it’s warranted.

• Don’t let your high-energy self write checks your low-energy self needs to cash, i.e. don’t let your best self create future obligations you won’t live up to.

• Being data-driven is incredibly important, but most high-consequence decisions are a combination of art and science. Let data inform your gut.

• Turn anything you want to learn into a game and solve it the same way you’d go about winning Checkers or Monopoly or poker.

• The most stable possible life will stem from being able to withstand and even root for chaos. Accept worst-case scenarios to become free.

• It’s better to be sometimes wrong on your own than right with everyone else because occasionally you’ll be right on your own, which is the most rewarding (and fun).

• The best leaders lead without anyone knowing it.

• Set up meritocracies. Don’t submit to hierarchies and avoid interacting with people worried about status or power.

• Avoid ruin first, then worry about EV.

• Use emotions as a trigger for logic. You’ll always be emotional, but recognize when and why it’s happening, then jump right into rational thinking.

• Work for free.

• Short-term balance is overrated.

• Don’t plan much and change course often.

• Traveling is the most effective way to foster creativity.

• Great writing is the most obvious sign of a clear mind. Writing isn’t solely a way to communicate what you think; it’s also a way to figure out and crystalize what you think.

• Other people see the world in a fundamentally different way than you do. Their experience is just as authentic as yours, even when it seems like you’re right.

• What people say is irrelevant. The only thing that matters is what they do.

• Many of life’s truths seem paradoxical, or at least counterintuitive. Tao Te Ching is one of my favorite books and it simultaneously says nothing and everything at once. When you take core truths to their logical end, even concepts like time or the ‘self’ become paradoxical. Never stop searching for life’s paradoxes.

• Luck isn’t real. But some people keep getting luckier than others.

This is the audio version of my article The Time I Sold Furbies for Money.

*Note: You can now listen to all future Lucky Maverick posts on Spotify and iTunes, read in the sweet, soothing, almost tranquilizing voice of Jake.

If you like what you hear, feel free to leave a review. If you don’t like what you hear, chances are your volume is too low. Turn it up, then leave a review.

About Lucky Maverick

About Jonathan Bales

I used to buy and sell Furbies for money.

For a few months in the late 90s, all I did was trade these furry little creatures on eBay. If you don’t know what a Furby is, it’s this hamster-looking thing:

Furbies were a collectible/toy kind of like Beanie Babies—except much cooler and not at all creepy if you ask me—and even though I was just a kid, I started a business trading them. The Furby stock market was hot back then man. Anyone who was anyone was involved. I got in after my grandpa—the same one who gave me the advice to “buy all the glass you can get your hands on, trust me”—opened a little trading desk himself.

I started slowly, and by that I mean I stayed up all day and night charting every sale to see which traits were most valuable. This was before Billy Beane brought his data-driven approach to baseball, and while I’m not saying my “Moneyball for Furbies” was the catalyst for his work, I’m not saying it wasn’t, either.

“The Oakland A’s have clinched the playoffs! We’re live with the most innovative GM of our time, Billy Beane…Billy, how did you come up with such a genius, outside-the-box foundation for building a championship baseball team?”

“Well, it all started when I was looking to purchase a Generation 1 Leopard Furby on eBay and noticed an intriguing analytical strategy being employed by a young child.”

Anyway, after a string of incredible trades in which I uncovered the most underpriced Furbies by targeting those with a high on-base percentage, I went busto. And not only did I lose all my money, but since I was buying Furbies in bulk and you didn’t need to actually pay right away after winning an auction, I went into debt.

Imagine this. The internet is basically new and I’m a child buying and selling ugly-ass furry owls in an online marketplace. I mean I didn’t even like these things. Look at them.

I didn’t tell my mom about the whole enterprise because not only was it illegal, but even worse, she would have yelled at me and made me stop. I had to hide these things all over my room—under my bed, in the closet. Imagine waking up in the middle of the night and seeing a line of Furbies staring at your half-asleep ass.

Think about the scene when I had to confess to my mom that the family was now in debt because I couldn’t pay for eBay auctions I won, then take her into my room to show her what we lost money on. I say “we” because this was our problem now.

So here’s what happened: I fucked up. Obviously I fucked up. I was so focused on identifying the value of each trait—more or less calculating the EV of each Furby—that I was overlooking the probability of the success for each trade, especially when buying in bulk. I had no downside protection—an unimaginably embarrassing oversight, even at that age.

What kind of fucking idiot assigns a static median projection to Furby value with no concern for the probability of profit—its range of outcomes—and the correlations between each Furby in his collection? My mom was left to pick up the pieces.

I learned a painful-but-valuable lesson that day, which was that as long as you have a safety net, you don’t need to be smart at all because someone else will be left to deal with the consequences. Just look at our entire economy.

But the real thing I learned was that you can’t think about EV in a static way. From a player projection in a sporting event to a company projection in business, the future must be represented by a probability distribution.

The inevitable ramification: your ability to assign probabilities to various outcomes is unimaginably important to your success in almost every area of life. You don’t need to build sophisticated models to do this (you mostly just need to continually refine your gut instincts about the chances of something happening), but if you cannot consistently determine if something is around 1% to happen versus 10% versus a coin flip, you’re never going to make it as a Furby salesman. There’s just no way.

These days, I’d never buy and sell such a ridiculous collectible…because everything is digital now. And you better believe I’m projecting the probabilities for different scenarios when buying and selling pixelated images or free highlight videos.

One funny side story: when he introduced me to this wonderful world, my grandpa told me that Furbies—which talked to you with canned lines, as if they weren’t creepy enough—utilized a really advanced technology and could see you and pick up things you were saying and repeat them back to you.

So I bought some of them for myself, taking them out of the box to talk to them. This was a giant mistake, by the way. Totally cut into my profits. Never get high on your own supply.

But I had a few in my room and every time I walked in, I’d say “Hello Jonathan.” Imagine what was going through my mom’s mind at that time as her child walked into his room 100 times a day and repeated “Hello Jonathan” like he had an imaginary pet parrot or something.

And that’s actually how she found out about the whole deal. She went into my room to clean one day and noticed a Generation 7 Red Wolf in the corner.

Startled, she fell to the ground as the furry toy opened his mechanical eyelids and began to speak, malfunctioning as he repeated what he’d heard so many times from his owner:

“Hello Jonathan. Hello Jonathan. You are a cute little guy aren’t you? Hello Jonathan. Oh no. I’m so screwed. How am I going to tell my mom I lost all our money on these big-eyed fucks?”

Estimating the Percentages: Start with a Baseline + Adjust

Most of you are likely familiar with Bill Belichick’s  famous fourth-down decision in a 2009 game against the Colts. The Patriots were leading 34-28 with two minutes left to play and faced a 4th-and-2 at their own 28-yard line. Pretty much every other coach in the NFL would have punted the ball away in this situation, but Belichick (correctly) chose to go for it. New England was stopped short and the Patriots lost the game.

So how do we know that Belichick made the right decision even though it didn’t work? Well, there’s a whole lot of NFL data on breakeven percentages on fourth down in a variety of game situations. As a whole, coaches are still way too conservative on fourth down, even after a recent uptick in aggressiveness due to more widespread belief in the power of analytics.

Based on leaguewide data, an average NFL offense in an otherwise “neutral” game situation—say, tied the first quarter—should go for it on 4th-and-2 from their own 28-yard line. They should also go for it on 4th-and-3, and it becomes close on 4th-and-4.

That’s just overarching data, though. The Patriots scored the sixth-most points in the league that season. They were also facing maybe the greatest quarterback in NFL history in Peyton Manning, who had led the Colts to two touchdowns in the team’s prior three possessions. Indianapolis also had three timeouts, meaning there was plenty of time remaining for Manning to methodically move the Colts down the field had New England punted. If the Patriots had converted on fourth down, they would have either won the game with another first down or forced the Colts to use all three timeouts before getting the ball back with maybe 90 seconds to play.

On top of all that, one of the perhaps overlooked aspects of this decision was that a Colts touchdown didn’t necessitate a Patriots loss; if they scored “too quickly” from the New England 28-yard line, the Pats would get the ball back with time left to drive for a game-winning field goal.

You can bet Belichick knew the baseline percentages and understood all the game-specific factors that went into making the correct decision. And he made the right call—it wasn’t even close, despite all the backlash he received—with the actual result being effectively meaningless in dictating the merits of his choice.

In most situations, you should start your estimate of the percentages with any baseline data you have. I began my estimate of the Patriots’ fourth-down call with baseline go-for-it data, but Belichick likely used team-adjusted data, i.e. they should go for it more often on fourth down than the typical NFL offense. That baseline can then be modified with consideration given to all the major factors that would affect the quality of the decision.

Many times, this process doesn’t need to be incredibly rigorous. In the fourth-down example, our “all else being equal” starting point was to go for it, and with the specifics of the situation also leaning toward going for it, the choice very quickly became an easy one. Belichick didn’t have time to crunch the numbers to come up with a very specific forecast of the offense’s probability of converting the fourth down, but he didn’t need to; with a close enough starting point for a baseline probability and with the right questions being asked as to what could significantly alter that percentage, you usually don’t need highly accurate projections in order to make the right call. 

In the fourth down-example, we’re aided by the plethora of NFL fourth down data. In many other areas, we can’t have the same degree of confidence in the baseline projection.

Let’s say you’re flipping a quarter for money because I mean come on you’re a degenerate, why not? Unless the coin isn’t legit, you can act with total confidence that the baseline for heads/tails is 50%; you should take any bet that’s better than even money on the flip of a fair coin. If the quarter comes up heads 10 straight times—which will actually happen one out of every 1,024 series of 10 flips—it means next to nothing because you have near 100% confidence it’s just variance.

I say “near 100%” because there’s always a chance the coin is weighted toward heads. Let’s say that rather than you supplying the coin, which would truly mean a near 100% chance of it being fair, the quarter and subsequent bets on it were offered by someone else you know to be a shady degenerate gambler with money problems. Now all of a sudden losing 10 straight bets on tails is a different story, right?

This line of reasoning is known as Bayes’ theorem, which is basically just the chances of an event occurring based on prior things known that might affect the probability.

So in the coin-flip example, the odds of the next five flips being heads if you supplied the quarter are 1-in-32, whereas we can’t just rely on that statistical baseline anymore for a crooked gambler who just took money off of you on 10 consecutive heads flips.

One of my favorite examples of the sometimes counterintuitive nature of Bayesian inference is with testing. Let’s say there’s a screen for a disease that correctly identifies those who have a disease 99% of the time, but also comes with a false positive rate of 1%. What are the chances you’d test positive for this disease but not have it?

Most people’s first guess is 1%. The real answer: you couldn’t possibly have any idea unless you know the overall rate of infection. As an example, let’s say just 1-in-10,000 people in the world has this disease, and you have no reason to believe you’re any more or less likely than anyone else to be infected. In this case, if a random sample of 10,000 people take the test, just one (on average) will be infected. But with a false positive rate of 1%, the test will identify 100 people as having the disease who actually do not. Thus, for a test that has a 1% false positive rate for a rare 1-in-10,000 disease, your odds of testing positive and actually possessing the disease would actually be 1-in-101, or just under 1%.

Now, let’s say you test positive, take the test again, and test positive again. Now what’s the likelihood you’re infected? Well, you have to revise your “prior” estimate of infection probability from 1-in-10,000 to 1-in-101. Now, a 1% false positive rate would happen just about one time in such a sample, meaning your odds of having the disease with a second positive test are right around a coin flip.

The Easiest Way to Become a Better Probabilistic Thinker

Sometimes, you can use data as a baseline for your probability estimates. If you were to independently forecast the odds of rain next week, where would you begin? A decent starting point might be how often it rains this time of year in the location you’re predicting.

Mostly, though, your probability estimates are going to be glorified guesses based on some combination of data and experience. In most areas that offer an edge, the data you use might actually be mainly anecdotal and experiential—mostly the result of pattern recognition. The ability to recognize patterns is enhanced via smart game play.

And the best way to make better probabilistic decisions—to improve your predictions—is to do it. You can study all the probability theory in the world, but the hallmark of true understanding, in my opinion, is the ability to do. People ask me all the time to recommend the best book on game theory, and I always tell them that the best teacher is to simply play games.

I’ve found the top gamblers, traders, entrepreneurs, and the like to have the keenest understanding of probability (and, thus, make the best predictions). Most of these people probably wouldn’t even be able to teach you what they know, but their understanding is pure, and that’s evident because they win. Unlike a statistics professor, who might know how to calculate all the odds of all kinds of hypotheticals but couldn’t win games against toddlers or gamble his/her way out of a paper bag, those who actually do don’t need to say anything to substantiate their competence; the proof is in the pudding.

You can know all the numbers in the world, but becoming an exceptional probability-based decision-maker in the real world is different from being one in theory; the economist knows all the financial data, but the entrepreneur knows how to make the money.

This should make intuitive sense, as gamblers, entrepreneurs, traders and anyone else who deals with risk and doesn’t quickly figure out how to win will die off; if you’re trying to become a world-class poker player, it makes sense to study the strategies of top poker players because they couldn’t possibly be there unless what they were doing actually worked. Anyone can try to tell you how you should play poker; few can actually pull it off at the highest level.

I’ve discussed the survivorship bias of those with downside in a previous Lucky Maverick post:

The primary reason I think it’s important to learn from those with skin in the game isn’t because it’s honorable to take on risk (although it is) or because doing > saying (although it is) or because I’m biased toward placing downside on beliefs (although I am). The main reason is simply because looking to those with skin in the game is a useful heuristic to finding what works—a quick way to get closer toward the “truth”—as there’s a selection bias in terms of who you’re analyzing.

As Nassim Nicholas Taleb proposes in Skin in the Game, those most worthy of our trust and praise—and our attention if trying to learn—are those who take on real risk; they’re forced to learn—and learn quickly—because they have downside. If they don’t figure it out, they go busto. And if someone doesn’t have downside from their opinions or actions—if they aren’t harmed when they’re wrong—then they’re probably full of shit. Not always. But probably.

Thus, my proposal for how to become the best possible probabilistic thinker in the fastest possible time is simple: play games, take on downside, and learn from others doing the same at the highest level.

In short: gamble.

This might seem like the most degenerate fucking thing of all-time—saying that if you want to succeed in life that you need to start gambling—and maybe it is. But I mean it.

This doesn’t mean you should be frequenting the nearest casino and dusting off your savings. But it does mean you should play strategic games—play poker or chess or dice with your friends—and have some sort of repercussions if you lose.

It doesn’t need to be money-related downside. The way I learned to effectively play Liar’s Dice was by competing with a group of friends in restaurants and bars, with the loser being forced to down shots and do the dumbest dares you can possibly think of.

Interested in traveling at warp speed from happy to miserable? Lose a bet with the consequence being you need to go hit on a group of attractive women (or men, or cattle, or whatever it is that you’re into), but only after you literally somersault into their feet. Or you need to talk to them from a perpetual squatting position. Or with six marshmallows in your mouth. Or after telling them you have to pee and asking where the bathroom is located, except you can’t actually speak and need to use only hand motions to do it. Because I’ve needed to do all of those things, and contrary to what you might expect, ladies were not at all throwing themselves at me. In fact, none of these things worked at all!

But I’ll tell ya what…I learned how to win at Liar’s Dice real fucking fast man. I figured out all the percentages. I knew all the data based on the number of players. I could adjust in real-time given the strategies of new players or when I identified a shift from a common opponent. I learned the optimal numbers to nominate and when it was optimal to lie big. I knew which players to sit next to. I’d suggest new game variations like more dice or more wild numbers or whatever, which necessitated learning new stats and probabilities that I had already memorized.

I mean when I put this in writing, I kind of sound like a psychopath.

Nonetheless, I went from a newb to a Liar’s Dice hustler in no time, and my prize was exactly what I wanted: never being forced to speak to a real, live woman out in the wild ever again. I was kicking my friends’ asses and watching them act like total morons, laughing and sticking to what I knew best: picking up girls in the real world (online).

One of the most important parts of winning is picking the right games to play. If the game isn’t suited for you to win, change the rules. I don’t mean in an unethical way; I mean change the hidden rules that govern success (much of these come before the game begins, such as picking the right person to sit next to—huge edge).

Life is best approached as one big game—the skills you learn to become an elite game-player translate very well to areas of life most don’t think of as a game—and the most effective way to become outstanding at games is 1) to play them with purpose and 2) in lieu of participation, study only those who are already winning—not those who teach how to win.

If you’re going to trust anything I say—and you should be skeptical about all of it—trust me not because I’m writing about how I’ve approached games and life, but because I actually did it in a way that’s (perhaps) useful to you. Much of it will be wrong, so cultivate the skill of learning what to believe.

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Playing Games with a Purpose

Your goal in any game is to win. That’s it. We can seek to increase EV or win probability as a means of getting there, but ultimately you just want to win the fucking game, right?

Part of understanding probabilities to improve at games is properly internalizing what happens to you. Every decision you make should be accompanied by a specific reason for doing it. Having a bad reason for doing something is better than no reason; a bad reason can be continually improved until it becomes good reasoning. Make a hypothesis, test it, internalize the feedback you receive, and gradually chip away at your beliefs until they’re less wrong than before.

No matter what happens, you must learn from it. I always loved this excerpt from Louie Helm on how some top poker players learn the game: 

When (Phil) Laak gets his money in behind, instead of moaning about his bad luck, he often says things like, “Wow. This is what 5% feels like,” pointing out that he still has a 5% chance to win the hand. Why would he do this? Is he trying to stay positive and upbeat in the face of long odds? Maybe. But I have another theory. Whether he knows it or not, Laak is actually calibrating. As the cards are dealt, he keeps updating the verbal commentary to reinforce in his mind what different probabilities “feel” like. By the river, he might be saying things like, “This is what 2% feels like.” He’s calibrating his mind to instinctively know what it’s like to be a 50:1 shot.

This may sound ridiculous to you, especially if you’re already good with math. You might be saying, “I already know that if I’m 5% to win, I will win 1 in 20 times. What’s the big deal?” The big deal is that, by default, nearly all the modules of your mind either can’t handle probabilities or skews them in self-serving ways. Even if your deliberative mind knows the math, unless you’ve explicitly done calibration exercises where you’ve got something on the line, the rest of your mind will consistently overestimate how often high probability events will occur (such as 80% probabilities) and consistently underestimate the likelihood that lower probability events will occur.

If you haven’t played poker before, you may hear that some good outcome for you is 91% likely to happen and think, “That sounds fantastic!” Since your mind wants to believe it, it may even trick you into feeling like it’s almost a sure thing. But if you play poker, you’ll know that 91% is like trying to have your hand hold against a gut-shot with one card to come. You’ll know what that feels like. So you’ll know that 91% is far less automatic than it intuitively feels.

I highly recommend that as part of your rationality training, you calibrate like this while playing poker. When you get all in, immediately calculate your chances of winning the hand. Then say to yourself, “This is what XX% feels like.”

Over time, you’ll begin to intuitively sense probabilities instead of just hear a number and think you know what it means. This has ramifications for wider life rationality too. As with all biases, being mis-calibrated costs you utility. The more mis-calibrated you are, the more subject you are to the loss of time, money, and well-being. You’ll be more likely to be loss averse, risk averse, vulnerable to zero-risk bias, dutch-booking, circular preferences, or even neglect probability entirely when making decisions under uncertainty. If you’re mis-calibrated, the world will take advantage of you at every turn. Remember: just like the poker economy, our real economy and even society at large is designed with your mis-calibration in mind. It will supply as much exploitation as your poor thinking will support. So calibration is a big deal. Make sure you’re well-calibrated to avoid this constant loss of utility!

You can learn the science of riding a bike all day long, but you’re not going to be able to ride a bike until you just get on and try. Similarly, you can study stats all day long, but you’re not really going to be someone capable of implementing probabilistic thinking until you get out there and learn what 2% truly feels like.

Turn your goals into games, and accomplish them by learning to win, mostly through deliberate practice with downside when wrong. Seems simple enough, but I want to mention that certain games—especially the most interesting ones in life—are played in open systems with undefined rules and unbounded upside/downside. Whereas only so many things can happen in a game of Connect Four, the possibilities are endless if your game of choice is, say, business.

While I still believe the best way to learn probability, find edges, and make +EV decisions is to actually do it over and over, you should be cognizant that this experience isn’t as useful in grasping outlying low-probability events. Can you really understand the odds of having a royal flush (1-in-649,739) simply by playing poker? Of course not.

These outlying events are very important—one of the biggest exploitable edges I can think of—but that’s a topic for another post.

Right now, I need to estimate the chances of a Furby revival to see what the probability is that I can get in the black to pay back my mom.

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About Lucky Maverick

About Jonathan Bales

If you want to break the rules of grammar, first learn the rules of grammar.

- Kurt Vonnegut

I used to play this iPhone game called “Fun Run.” It’s sort of like Mario Kart in that you race and there are question mark things you can get that have weapons to kill your opponents (lightning, a bear trap thing, a sword, etc).

When I first started playing, I tried to move as fast as possible and finish the race with the quickest time I could. Seems logical…faster is better in any race, right? Maybe, maybe not. You need to perform well to win a race, but the goal isn’t to have the fastest time you can; it’s to have a faster time than everyone else. Those are similar ideas, but not exactly the same.

Once I started playing Fun Run more and more, I did the most psychopathic shit you can imagine and began charting all of the details of the game in Excel—my time, the course, kills, deaths, etc. I was doing this to see which courses were my best because players got to vote on one of two before the race, so I thought that optimal selection would slightly improve my win rate and also I wasn’t a virgin at this time if you can believe that.

As I tracked the data, I noticed that while my win probability improved, my times barely got better. Why? It was due to the recognition that, while fast times and wins are correlated, the former is really just an effect of the latter, not always a cause of it. There are many times it benefited me to reduce my expected time to increase the odds of winning, such as going out of my way to obtain an additional question mark, using a super low-variance strategy late in the race if I’m winning, taking more risks when I’m losing, and so on.

In all games, you work within the confines of the rules to find edges and increase your chances of winning. Sometimes, though, specifically as you become well-versed in a game and begin competing at the highest level, you realize world-class performance requires a completely different way of thinking. Why is it that in so many areas—from poker to business to video games to chess—the greats seem to be playing a fundamentally different game than their opponents?

The path to greatness starts with learning the rules of the game and figuring out how to play within the rules to win. But it eventually transforms into breaking all those rules, approaching problems from a distinct viewpoint to play a game—one I’ll call the “hidden” game—that’s fundamentally different from others.

Speedrunning

This article was inspired by an email I received about something called “speedrunning.”

Hi Bales,

When reading Lucky Maverick articles, I find one area that continuously applies these concepts: speedrunning. If you're unfamiliar with speedrunning, it is a community of gamers that attempt to beat video games as fast as possible. For example, the current world record to beat Super Mario Bros on the NES is 4:55.314. Speedrunners are fighting over frames and fractions of seconds to secure world records, which is why they have to apply some of the tenets of the Lucky Maverick posts.

The two main strategies that are applicable in speedrunning are taking ideas to their logical extreme and playing the game by different, hidden rules. A great example of this is in the speedrun for Wii Sports Resort Golf. The main strategy that runners realized after thousands of attempts was that they were able to manipulate both wind and cup position by intentionally failing the first hole. This is counterintuitive to conventional thinking of “the fastest way to play Wii Golf is to just get the ball in the cup as quickly as possible.” By finding these hidden mechanics of the game, and taking them to their absolute extreme, these runners were able to take the world record down multiple minutes from the early days of running.

I really enjoy your newsletter and would be happy to discuss speedrunning further if you'd like. Feel free to reach out/or use this as a topic if you are interested.

Best,

Chris

A few notes:

• I love when you guys send me emails with awesome stuff you’re reading, watching, or otherwise learning about. I can’t always give super-long responses—and sometimes the emails suck ass, no offense—but for the most part, they’re really great. I imagine the average Lucky Maverick reader is either a super-sharp worldly scholar or a degenerate gambler who responds to his grandmother’s innocent claim that it takes less than 10 minutes to drive into town with “Oh yeah, how much would you bet? I’ll give you 2-to-1.” Anyway, keep sending me sweet content that you’re enjoying.

• In this particular case, I’ve gotten deep into the lab on speedrunning. Even if you’re not that into video games, the way in which the top players go about solving each game is this absolutely beautiful combination of efficiency and innovation—shaving fractions of a second off of their times with small optimizations while also making giant leaps through completely outside-the-box tactics.

• I’d say I’ve played an average amount of video games in my life—maybe a bit less—but like everything I’ve done, rather than a healthy and balanced approach, I’ve become completely obsessed with just a handful of games. As an example, I was the No.2-ranked player in NCAA Football on Xbox for a two-year period in high school. I played all day long, every day, and I’d have my little brother put on the headset and talk smack to my opponents so they’d tilt their faces off thinking they’re getting whooped by a six-year old. I played like 15 hours a day, which tells you that no matter what you do in life, there’s always someone out there, somewhere, who is a bigger loser than you.

This article is going to be about how to truly think differently, using speedrunning as a foundation for the main points. It’s not required, but I’d check out this video and others from the same name—Summoning Salt—on YouTube.

Let your curiosity—and not the need to win—guide you.

Not all who wander are lost.

– J.R.R. Tolkien

I’ve been playing racquetball with my friend Adam Levitan for a few years. I sucked when we started. I never played a racquet sport and my cardio was total shit, whereas Levitan was in decent shape and had played tennis for years.

My only hope was to hit the ball up into the ceiling so it would bounce high off the front wall and slowly drop in the back, hopefully bouncing weirdly in the corner. I wasn’t good enough with my racquet to consistently hit winners and if the game became too fast-paced, I basically looked like a fish out of water, flopping around, completely unable to breathe.

But I became curious about racquetball and began watching pros on YouTube. It turns out that Kane Waselenchuk and Rocky Carson and all our heroes on the court didn’t play like me, if you can believe it. Sometimes they hit flop shots, but I realized that it would be impossible to win long-term against a great player without hitting very low, accurate winners into the corners.

Another thing I noticed my friends Kane and Rocky didn’t do was continually smash their racquet into the court when they lost.

I watched hours of play, and they literally never repeatedly banged their racquet into the ground until it was demolished, then immediately order a new one on Amazon. Not once! I blame Amazon Prime and their uber-fast and reliable shipping. I’d have much better sportsmanship if it weren’t for that fucking Bezos.

Smashing my racquet into pieces was a reflection of my hatred of losing, but here’s what that racquetball experience taught me and what I believe is the most important trait in those who think differently to achieve greatness: your path toward perfection must be governed not by a need to win, but rather a natural curiosity and passion for what you’re doing.

I really believe this is the primary key to being contrarian, non-consensus, non-conformist…whatever you want to call it. A pure, child-like curiosity will take you off the beaten path to identify the best long-term strategies, not because you’re trying to be different, but because children at play have no choice but to wander.

Make no mistake about it: a will to win is absolutely vital. I’m as competitive as anyone I know, hence why my racquets have a shorter lifespan than a gastrotrich. It’s a marine microorganism that lives three days. Now you don’t have to look it up.

However, in choosing to win at all costs, what you’re really doing is sacrificing the war to win a battle. If I never attempted to hit more winners in racquetball—which temporarily lowered my win rate—then I never would have improved enough to consistently win.

So the need to win is still an essential trait, but it can’t be over a short time horizon. It’s sort of like Amazon continually delaying profits. They’re a company designed to make money, yet have chosen to push back short-term net income in favor of a long-term view.

If you extend this idea to its logical extreme, the optimal time horizon for greatness is “forever,” meaning you should let your passions and curiosities dictate your direction. Doing so has compounding advantages over optimizing for the present moment, and those advantages can be “cashed in” for wins at a later date.

Just as Amazon and other great companies invest in innovation, you can achieve long-term greatness by investing time in following your curiosities—by “wandering.”

Don’t stop at local maxima.

Wandering in business is not efficient…but it’s also not random. It’s guided…and powered by a deep conviction that the prize is big enough that it’s worth it to be a little messy and tangential to find your way there. Wandering is an essential counter-balance to efficiency. The outsized discoveries—the non-linear ones—are highly likely to require wandering. 

- Jeff Bezos

When you don’t let yourself wander, you’ll inevitably accept “good enough.” Say an alien is beamed down to our world and asked to find our tallest building. Let’s just forget for a minute how incredibly advanced this alien civilization would have to be just to get here, and let’s instead assume it’s just some regular old dumb alien with human-level intelligence. We’ll call him Joe.

Joe is dropped onto Earth. He walks around a bit, learns how to hail a taxi, and starts exploring. Eventually, he spots a very tall building and finds his way to the top. He looks out in every direction as far as his single alien eye can see and nothing is taller.

“I did it! I found the tallest building on this planet!” Joe exclaims, in English somehow. Happy with his accomplishment, Joe sends word back to his home planet.

“I already found it, guys. Didn’t take long at all. If you need me, I’ll be here on top of the Radisson Hotel in Fargo. It’s over 200 feet high!”

This is one of the dumbest analogies I think I’ve ever had. I mean this is really fucking stupid, but I wrote too much and I’m not deleting it now. Moving on…

Joe is at a local maximum—the highest point in a given range or a larger set.

Just like Joe on top of the Radisson, when you’re at a local maximum, you usually can’t see that there are much higher points that can be reached. Joe might have taken the stairs and it might have been very difficult and he could have felt a great sense of achievement once he reached the top…but he’s still on top of a hotel in North Dakota.

And the only way to improve is to explore, to wander, to seek out what might be uncomfortable out of pure curiosity. This means being below more recent highs almost all of the time. If your goal is to be good or even great, your quest for new maxima need not be strenuous.

But if your aim is to be the best—if it’s the equivalent of Joe making his way to Dubai to find the Burj Khalifa—then you have no choice but to explore. That means passing on other local maxima—giving up future “wins”—by becoming a kid again.

Long-term greatness requires exposing yourself to short-term hurdles; if you’re truly exploring, most of the time you’re not going to be at a peak, but rather at a much lower point looking for something better.

Side note: I can’t find the article, but I saw a really cool breakdown with a formula of the “optimal” number of people you should date before getting married. If you consider the average amount of time it takes you to get to know someone, how quickly you can meet new potential partners, and when you’d like to get married/have children, there’s actually a formula you can employ to maximize your chances of finding the best possible person for you.

The interesting thing is that, mathematically speaking, you should continue to meet, date, and then break up with people, no matter what, until a certain point. I remember putting in my numbers and the calculator said it would be suitable to date 17 people, leave all of them, and then continue to date people until I came across the first one who’s better than the best from that group of 17.

This approach is forgoing local maxima in effort to optimize the odds of finding a true maximum given your time constraints. If you think about it, this happens naturally so much more than it used to. Whereas older generations would frequently date and marry people from their hometowns, the ease of travel and, specifically, the internet and dating apps has made it much, much easier to find suitable partners—to traverse the topological map of dating—to forgo the local maxima.

At some point, though, you need to make a choice. If you settle too soon, you’re very likely to end up at a local maximum, but if you are always searching for something better, that doesn’t seem like a great recipe for happiness either. Maybe I’ll find it and write about it, I just thought the concept was really cool, and it can be applied to everything from job-seeking to esports to buying a house. Wander, then optimize. And for all the straight men out there, if there’s one thing I know about women, it’s that they get super wet when you treat them as a variable in a formula.

Find the hidden rules.

In gameplay, it’s what you know that others don’t that really matters.

- Me, later in this section

The first article of this newsletter was called How to Win Games: Find the Hidden Rules. What I call “hidden rules” are basically the unstated mechanics of gameplay that dictate success. Sometimes, you can reverse-engineer these by thinking about what “winning” means, then working backwards from success to eliminate actions that don’t increase your win probability.

A simple example is that underdogs should increase variance, while favorites should minimize it. An NFL team down 14 points with 10 minutes to play needs things to get chaotic, whereas the favorite wants no volatility. If you’re an underdog in a video game with an opponent, it might make sense to choose an unusual character with which your opponent isn’t familiar, even if you’re new to using that character.

A big mistake I see is making assumptions about what increases win probability, then extending those throughout the entirety of the game. For example, winning a football game is almost always one of point-maximization, but not always; one of the weakest areas of in-game strategy right now is end-of-half clock management, with teams seemingly too focused on scoring points and not enough on point differential, i.e. don’t give your opponent another possession with meaningful time on the clock.

In DFS, the big “hidden rule” I discovered was that the game actually isn’t about scoring as many points as possible, but rather winning with as few points as possible, i.e. where can I unlock points others aren’t and benefit when they’re doing poorly as a whole?

In the game of Wii Sports Resort Golf, it’s easy to make the assumption that the fastest time always equates to the fewest strokes, but that’s not the case. As Chris mentioned in his email, players learned they could tank the first hole to gain a more favorable setup for subsequent holes, which more than made up for the initial time lost.

On one of the later holes, there’s a lake right next to the tee box. One of the top players eventually figured out if you drive the ball straight into the lake and keep hitting it directly into the water, you’d hit the max strokes faster than if you just played the hole normally.

In both cases, astute players found new solutions by asking “What are ways I can lower my time by actually taking more strokes?”

The reason this works—the foundation for hidden rules—is that you’re not going to benefit from something if everyone else is doing it. Few players are specifically trying to search for areas in which more strokes is better, and so if you’re the first to uncover one of these hidden edges, the rewards are yours alone.

Lots of times, this means identifying temporary “losses” that act as a slingshot to higher future win probability, like tanking the first hole, going out of the way in Fun Run, or trying for winners in racquetball when you’re not yet super-skilled.

The key is to decipher what it is you’re actually optimizing for, then look for the few times that the conventional approach has faulty assumptions that makes it sub-optimal.

In gameplay, it’s what you know that others don’t that really matters.

Question everything.

A contrarian isn’t one who always objects. That’s a conformist of a different sort. A contrarian reasons independently, from the ground up, and resists pressure to conform.

– Naval

One thing I find interesting in watching the speedrunning videos is that even though it seems like the new records are unbreakable, they continually get lower and lower over time. Even though the differences in time might seem small, the strategies used by the end are often fundamentally different than those in the beginning.

Super Mario Bros. 2 is a good example of this progression.

There’s one level in one of the games in which everyone previously used Luigi because there’s a crucial point at which you can save a lot of time by quickly jumping up. In an ideal world, the players would use Toad, who runs the fastest when he’s holding an item over his head. However, it was accepted that Toad was not useful in this level because he couldn’t jump high enough to save time over Luigi, until someone came along and figured out a unique way to bounce off of a goomba (edit: idk if it’s actually a goomba? someone told me it isn’t and they aren’t in mario bros 2, but google says they’re in level 4-1. you’d think i’d just change it rather than add this long explanation inside of parentheses. and why am i not capitalizing anything here?) and trick the game into thinking it was still on a flat service, allowing the user to jump again mid-air. This user went on to set a world record by thinking about the ideal scenario—that he could use Toad—and questioning if it were really true that Toad can’t jump as high as Luigi.

Another example of this idea of questioning even basic beliefs comes in Mario Kart—a game with many glitches that allow players to skip large portions of the track.

Two of those basic assumptions you might not ever think to question: you have to go forward to win the race and you should try to stay on the track. There are actually a bunch of situations in which you can go out of bounds strategically to have yourself set back in a more favorable location, and even some in which going backwards at the start of the race—or even at the end of laps—can give you huge edge via securing better items or even tricking the game into thinking you’ve completed a lap you haven’t.

By the way, I’ve never tried any of these, but how sick would it be to sit down with your friends to play Mario Kart and win a race in like 30 seconds?

One way to effectively question your most basic beliefs is to take them to their logical end. I wrote about this in My Extreme Theory of Learning.

Be an outsider.

Whenever possible, I think crosspollinating ideas from other contexts is far, far better than attempting to solve our problems as if no one has ever faced anything similar.

– Sam Hinkie

I’m currently reading a book about psychology and self-image called Psycho-Cybernetics. What’s interesting is that this widely renowned work was written by a plastic surgeon—not a psychologist—after he noticed how patients’ self-respect changed after cosmetic surgeries.

It seems many discoveries, inventions, and insights come from “outsiders,” but why? I think there are two primary reasons. First, “outsiders” don’t have tunnel-vision about the way things “should be.” Everyone views the world through various lenses, and when you get deeply involved in something, it’s very difficult to step back and think about things from a fresh perspective. You inevitably forget the original questions you asked and can have laser-focus that’s perhaps great for small improvements but misses out on the advantages of a beginner’s mindset.

The second reason outsiders can find unique success is that some of the greatest ideas come at the intersection of two seemingly different concepts—what some call “cross-pollination.” I studied philosophy in college, concentrating on Taoism, and was amazed at how many parallels there seemed to be between Eastern philosophy and another passion of mine: theoretical physics. I truly believe an understanding of physics made my reading of Taoism much richer, and vice versa. This isn’t a new concept; if you’re one of the maybe two people reading this sitting at the Eastern philosophy and theoretical physics intersection of interests, check out The Tao of Physics.

To attain a fresh perspective into something familiar, use cross-pollination. Take something else you know or like—anything—and combine it with something else. I used to basically eat, sleep, and breathe DFS, and anything I learned—even if it had nothing to do with sports—I translated into DFS terms. Reading Taleb and applying antifragility to tournaments was the greatest leap of my career. Whether it was playing chess or reading a book about markets or thinking back to psychology classes, I tried to apply lessons I learned or lenses through which one might view the world to something totally unrelated in an effort to generate unique insights. Even when watching speedrunning videos, I find myself taking certain principles or ideas and trying to apply them to my world.

When you’re cross-pollinating ideas—especially those on opposite sides of the brain, like math and art—you’re connecting parts of your mind that normally don’t interact. There’s a lot of really interesting research right now on something that enhances that process—psychedelic drugs—but that’s for another post.

Don’t try to be contrarian.

The most contrarian thing of all is not to oppose the crowd, but to think for yourself.

– Peter Thiel

If there’s one thing to take from this article, it’s that you shouldn’t be afraid to play. Be a kid again. The more unique insights don’t come from following the rules; they come from trying new shit because trying new shit is fun.

When you’re truly child-like in spirit, doing things for the sake of satisfying your curiosities and for no other reason, you’ll naturally find your own way. You’ll be contrarian in the best way possible, rejecting certain widely held beliefs not because they’re widely held, but because they’re false.

Being contrarian shouldn’t be the aim; it should be a byproduct of thinking independently.

About Lucky Maverick

About Jonathan Bales

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You’ve been kidnapped.

That’s probably not the start to the day you were looking for. It was already going to be a long day, what with accounting all over your ass about those expense reports—Suzie needs to just lay off if you ask me—and now you have to deal with this shit?

Your kidnapper is a little different than most; he loves statistics and game theory and randomness, and he’s going to let you play a little game to determine if he’ll hold you hostage. No, the kidnapper is not me, although if I were a kidnapper, I’d let anyone free who could beat me in a best-of-101 rock-paper-scissors contest. Meaning I’d never let anyone free. Sentence fragment for dramatic effect. And another. Something you shouldn’t try unless experienced.

We’re not playing rock-paper-scissors though. The kidnapper puts three cards on a table, two of which say “MINE” and one of which says “FREE.” He knows which are which, and he tells you that you can leave if you choose the card with “FREE” on it.

Damn, a 33% chance of freedom. And even worse, a 2-in-3 chance Suzie’s week-end accounting is going to be askew. She’s already in Robert’s ear about your frequent tardiness. You stay late though, unless you have to pick up the kids, so she really just needs to back off.

“Why are you telling me all this, and who tf is Suzie?” asks the kidnapper. “Just pick a fucking card.”

You pick the first.

“Nice choice,” the kidnapper says with a laugh before turning over the middle card, which reads “MINE.”

With the first card (yours) and the third card still face-down, the kidnapper asks, “Now, would you like to switch cards?”

Think about it. Would it help to switch to the third card? You had a one-in-three chance from the start, so does it really matter which card you select or if you change your choice? Are your chances now 50% since there are just two cards remaining?

What’s your pick?

The Monty Hall Problem

This is of course my version of a puzzle you might have heard of called the Monty Hall problem, named after the host of a show called Let’s Make a Deal on which a version of the game was played.

I presume some of you have heard of the brainteaser, so I’m going to focus mostly on the implications of the answer, but the gist of the solution is this…

Your choice not only matters, but it matters a whole lot, doubling your chances of going free if you make the change. My initial reaction when I heard of this solution was sort of disbelief because it felt so counterintuitive, but it’s right.

The key component of the decision that’s easy to overlook is that the kidnapper has knowledge of the cards and, when he makes the choice to show you one of the “MINE” cards, it’s a huge piece of new information.

Let’s say the order of the cards is MINE, MINE, FREE…

The scenarios can play out in this way:

• If you select the first card, the kidnapper will show you the second. If you choose to stay with your choice, you’re his. If you switch, you’re free.

• If you select the second card, the kidnapper will show you the first. If you choose to stay with your choice, you’re his. If you switch, you’re free.

• If you select the third card, the kidnapper can show you any other card. If you choose to stay with your choice, you’re free. If you switch, you’re his.

By changing your selection, your odds of freedom increase from 1-in-3 at the start of the game to 2-in-3. That’s due solely to the knowledge of the kidnapper and his decision to turn over one of the “MINE” cards.

Some Takeaways

I think the Monty Hall problem is a really interesting game theory and psychology puzzle that has far-reaching implications on the framework we use for certain decisions.

• Difficult dilemmas often require counterintuitive solutions.

When you first encounter the Monty Hall problem, it just seems sort of obvious it doesn’t matter what you do. The solution—that it’s right to make the switch—is extremely counterintuitive.

This is the case with many psychological and game-theory-driven problems, especially. Humans are hardwired to see the world in certain ways, some of which are perhaps useful heuristics to maximize survival, but not as the most effective way to assess reality.

Things become even more complex when others get involved, and this is the aspect of decision-making many overlook; the EV of most meaningful choices cannot be properly calculated without a consideration of what other people will think and do.

And those problems like Monty Hall, whose solutions are so counterintuitive but also so obviously mathematically correct, are those worth analyzing.

• You must consider what other people know that you don’t.

The keystone to the Monty Hall solution that nearly everyone overlooks is that they’re acquiring new information once one of the options is removed. If the kidnapper were selecting a card at random and he just so happened to pick “MINE,” it wouldn’t matter if you decide to change or not.

In reality, whether or not you chose “FREE” is either 0% or 100%, but our ability to predict whether or not you chose that single card changes over time.

When you pick a random card, the odds are 33%.

When the kidnapper removes one card and you stay, the odds are still 33%.

When the kidnapper removes one card and you switch, the odds are 67%.

And if the kidnapper were removing a card at random and it just so happened to be “MINE,” the odds are 50% and it wouldn’t matter if you switch cards or not.

What’s interesting here is that in the last two scenarios, the mechanics are exactly the same: three cards dealt, you pick one, the kidnapper removes one “MINE.”

What changes the percentages—what shifts our ability to predict the future and ultimately the optimal decision—is the knowledge and intentions of the kidnapper. What matters is what he knows that you don’t, and the same is true in a variety of real-life situations.

Poker pros know this well, continually making difficult decisions with new information. Baseline stats are a decent starting point, but your prior beliefs must be adjusted all the time. When someone plays tight and then check-raises out of position, the range of hands he might have needs to be narrowed, in the same way the kidnapper’s offer to remove a card gives information about where “FREE” might be located.

Similarly, if you’re in a situation in which a deal looks too good to be true and you know the other side isn’t a dummy, your first thought should be what asymmetry in information might exist that would propel them to do this; what might they know that I do not?

And again, the most interesting aspect to me that I want to hammer home is that what transpires can be exactly the same on the surface, and yet our ability to predict the card’s location changes based solely on someone else’s presumed knowledge.

The right choice in rock-paper-scissors after both picking rock on the first throw could be paper against one opponent but scissors against an opponent who doesn’t properly understand randomness. (The latter trait leads to alternating as a substitute for “randomizing,” meaning they’re less likely to throw rock, meaning you’d want to throw what loses to rock to maximize your odds of a tie or win…not that I’ve had women lose interest in seeing me after I’ve smoked their ass in rock-paper-scissors on the first date and then explained later in a text why I think they have a big leak in their post-tie strategy or anything like that…no, definitely nothing like that.)

• You have to be willing to change your mind. Often.

I’ve played a version of the Monty Hall problem with friends, and almost all of them choose to stay with their original selection. You should try it with your friends; nothing brings people closer than a good old-fashioned brainteaser and the accompanying statistical explanation for why they’re an IDIOT.

Why do people stay with their original choice? When I stumbled upon the puzzle for the first time, I chose to switch cards—not for any statistical reason or because I understood the underlying game theory, but simply because it seemed fishy to me. Actually, I was also employing game theory, just with different reasoning. My thinking was:

1. It seems like the “obvious” choice—or at least what most would do—is stay.

2. I don’t believe there’s a reduction in success rate if I switch.

3. Thus, if I don’t see downside to switching and it seems like staying is a trick, I’ll switch.

Extending this reasoning to other situations, when you don’t see a clear difference in EV among two different options, choose the one that’s less popular. Contrarians know you can find all kinds of success when you stick by the crowd when they’re obviously right and fade them when they’re clearly wrong, but you should typically side with the less popular option when you’re unsure, too.

Part of this is due to payoffs, but part is because people stick with losing beliefs for too long. It’s just the way we’re wired. I know I’ve done it in the past. Nah, that Odell guy who barely scored at LSU isn’t going to do well in his rookie season. Guys, it was just a lucky start. His quarterback is Eli Manning. Okay, he’s doing well so far, but it’s just variance. Eh, only seven touchdowns in four games. Yeah, okay, but will he even lead the league in yards per game? Oh shit, I’m broke.

We’re bombarded with so much new information all the time, and most decisions are pretty close calls from the start, that if you aren’t regularly changing your opinions—even contradicting your past self—then you’re being stubborn (and wrong).

As an example, sports bettors are tasked with assessing a team’s chances of winning a game at any given point in time and comparing their prediction to the odds being offered. But our best guess of a team’s chances of winning should be changing all the time with new information, just as our best guess of our chances of going free or being kidnapped also change with new information. If you make a bet in the beginning of the day, you should at least be willing to bet against yourself later in the day if the odds warrant it; betting on both teams at, say, -105 locks in a loss (assuming the same bet size), but both could be smart bets if their “true odds” at the time of each were, say, -120.

The point is that “flip-flopping” is bad if it results from indecisiveness, but not in regards to changing your mind when the evidence dictates it. Sometimes—many times—that will result in contradicting your prior self. And that’s okay!

So much of investing, business, and life success is not about making huge gains, but removing big leaks that can lead to disastrous losses, and the most surefire path to the latter is being stubborn in your views.

Changing your mind isn’t a sign of weakness. Actually, it’s quite the opposite, as the strongest, most confident people are able to admit fault, shift gears, and move forward with conviction no matter how others perceive it.

• Take hypothetical scenarios to their logical extreme.

In How to Learn Anything ASAP, I proposed that the most effective strategy for quick problem-solving is to take a problem to its logical extreme, then work backwards from there.

My buddy Joe Ingram is a former poker pro. One of the tactics he employed while learning the game was to form hypotheses about what sorts of strategies he thought were underutilized—three-betting in certain spots, for example—and take them to their logical extreme by employing them 100% of the time. That might sound outrageous, but in doing that, he was able to quickly acquire really valuable information about which theories were astute, slowly adjusting the percentage downward—it was the only direction to go, after all—until he hit the GTO (game-theory optimal) position, a.k.a. the Nash equilibrium, at which earnings were maximized.

In the case of the kidnapper, it’s easy to overlook the solution because the numbers are relatively small. But what if there were 100 cards on the table? You choose one, then the kidnapper removes 98 of the cards, leaving yours and one other. Do you want to switch now? You had a 1% chance of picking correctly when the game started, but now a 99% chance of winning if you switch.

• Figure out what type of game you’re playing.

The key to winning anything is figuring out what game is really being played—the hidden rules. Are you playing a game with no opponents in which others’ beliefs and actions don’t affect yours, such as learning a new language? Are you playing a solved game in which there are clear optimal solutions, like Connect Four?  Are you playing a game with a strategy that changes dramatically based on how others act, like poker or participating in markets?

There are many situations in which what’s “optimal” is only so before adjusting for others’ actions. In the case of the kidnapper, you can only choose the right strategy after realizing the game you’re playing is one of pure statistics/randomness at the start that transforms into one of game theory.

More often than not, the “game” you’re playing—even if it’s finding the most efficient route home—is one of game theory more than people understand. An easy way to determine the extent of this is to ask yourself, if everyone believed something to be true except me, and I were right, would I benefit more from being on an island? When it comes to deciding between two different roads home, for example, you’d clearly benefit if everyone else took the opposite route.

In such situations, think about value in terms of what you believe it to be in a vacuum minus what others think. Finding an edge in this battle of wits is of course tied to your ability to predict what others will do, which is why I believe it’s so vital to understand public psychology—the cognitive biases from which you and others inevitably suffer and the ways in which our minds naturally lead us astray.

But that’s for another day. Right now, I have to go play a best-of-101 rock-paper-scissors match.

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About Lucky Maverick

About Jonathan Bales

“If you ain’t first, you’re last.”

I don’t know if wiser words have ever been spoken. We should all try to think a bit more like the great Ricky Bobby.

There are different ways one can aim to be first. In a car race—where everyone starts from roughly the same point—speed is what matters. Small differences in speed compound over great lengths; a little bit faster car will go a whole lot farther over hundreds of miles.

It reminds me of this passage from James Clear’s Atomic Habits:

Imagine you are flying from Los Angeles to New York City. If a pilot leaving from LAX adjusts the heading just 3.5 degrees south, you will land in Washington D.C., instead of New York. Such a small change is barely noticeable at takeoff—the nose of the airplane moves just a few feet—but when magnified across the entire United States, you end up hundreds of miles apart.

Your starting point can have a profound impact on where you end up over long time horizons…if you can’t make adjustments. When you board an airplane and it takes off, though, it doesn’t really matter all that much if the pilot is off by a few degrees.

I wrote about this idea in my article How to Improve Your Decisions Immediately:

By focusing on choices as existing dynamically, it increases the value of trial-and-error. That is, when you can iterate to “change” the EV of a decision repeatedly over time, it decreases the importance of prior choices.

This should be obvious in the airplane example: would you rather be on a cross-country flight with a pilot who spends countless hours attempting to calibrate the most precise takeoff angle but can’t make adjustments along the way, or one who just sort of takes off in the general direction of New York but can make unlimited adjustments? Uh, yeah, the second one.

In my article The Secret to Success: Mimic Evolution, I added:

The faster and more efficient you can make this trial-and-error cycle, whether it’s in your personal life or your business life, the quicker you will find success. Your starting point for truth is way less important than your process for refining and improving your beliefs, especially when you get away from a static worldview and begin to (appropriately) see it dynamically. Over time, differences in the speed at which you can process information and adapt become exponentially more important than where you begin.

By speeding up your trial-and-error cycle, the returns compound over time; being twice as fast doesn’t make you just twice as better, but rather exponentially so.

Recently, though, I realized that my claim that “your starting point doesn’t matter” is seemingly at odds with another Lucky Maverick principle I hold to be true: the easiest way to maximize payoffs is to limit competition, and perhaps the best way to limit competition is to be first (or early) to a particular niche.

When I look back at my personal triumphs and failures, there’s indeed a trend of finding more success when I’m somewhat early in finding new trends, whether it’s business or crypto or, recently, Topshot (see why I spent $35,000 for a video you can find all over the internet). That’s not to say I’ve been “first” by any means, but simply that the degree to which I’ve benefited from getting involved in a new project is very much correlated to how “early” I found it.

And, at the extremes, the benefits of timing are magnified and non-linear. Buying Bitcoin six months after its launch wasn’t four times more valuable than two years after; it was monumentally more valuable. Investing in Topshot moments one month after the site launched wasn’t four times more valuable than four months after; it was dramatically so.

The timing of finding a potentially lucrative niche is a sort of “singularity” of value; the closer you get to the starting point, the more extreme the effects become. As you approach that singularity and the payoffs become intense, it just seems intuitively true that it must outweigh anything else.

So what’s more important, being early or evolving quickly? Were my seemingly contradictory thoughts on speed vs. starting point truly at odds with one another?

To sort out this MAYHEM, I did what any sane person would do and charted it in Excel.

A Thought Experiment on Speed and Compound Returns

Just as the benefits of +EV investing or exercising or honesty compound over time, so do that of speed. To demonstrate this, I made a graph of hypothetical growth of something that doubles in value every cycle versus every other cycle.

Fairly quickly, the compounding advantages of fast iteration are apparent. Again, someone who works twice as fast with the same quality as someone else isn’t just twice as valuable; they’re exponentially more valuable.

Having a head start matters, too. Assuming the same speed of evolution between each cycle, there’s a gigantic edge in being first.

These effects, too, are exponential. “Move fast and break things” generally works as an approach to building, learning, and evolving because the positive effects of rapid iteration compound over time. Being early to a niche is also of incredible importance.

Both speed and timing matter, and they matter a lot. But which is more important, being early or evolving rapidly? Take a look at value over time for someone who is early but slow (starts first cycle, doubles every other) versus late and fast (starts sixth cycle, doubles every one).

“Late and fast” wins in a landslide. This seems to confirm the idea that iteration is more important than starting point, but then I had a realization: although both speed and starting point are important, speed matters more in non-zero-sum situations, while being early matters more in zero-sum games.

When it comes to Topshot or other competitive games, for example, the results are zero-sum, or at least closer to zero-sum than represented above. Think of a sporting event; each percentage point one team increases in win probability means the other team decreases the same amount.

This makes it of incredible importance to find winning strategies before others. When Billy Beane and the Oakland A’s employed “Moneyball,” using data to uncover undervalued players, the benefits of such an approach were theirs and theirs alone to enjoy. Nowadays, most or all teams have analytics departments that do far more than what the A’s were doing in the early-2000s, and so the advantages of weighing certain stats are dispersed throughout the league; in zero-sum games, it’s not what you know, it’s what you know that others don’t.

I charted the same numbers as the graph above, but this time took out just 20% of the value generated by the “late and fast” participant. That is, they still start on the sixth cycle and still improve twice as fast as the “early and slow” participant, but this time we assume there’s only 80% of the value remaining at each cycle (the multiple changes from 2x to 1.6x).

That small change produces this:

This is pretty amazing to me. When “late and fast” can acquire all available value to truly double every cycle, it ends up generating 32x the value as “early and slow” after just 12 cycles. But by removing just 20% of the value “late and fast” can accrue, it generates roughly half the value as “early and slow”—64x less on just a 20% value reduction.

The exact percentages here are irrelevant. What’s important is that very small changes to payoffs can dramatically affect long-term value. The more a game trends toward zero-sum, the more important it is to be early, as there are compounding rewards in the form of higher payoffs. This doesn’t mean the game itself needs to truly be zero-sum; investing in the stock market (or Topshot right now) is historically +EV, but you’re still competing with others, and the race to capture that EV is zero-sum, i.e. if the baseline return is +5%, then you’re losing if you return +4%.

Now compare these games of competing minds to something like learning to play the piano. As you become better and better, you’re not stealing piano-playing ability from anyone else. Over a pretty short time horizon, your starting point for learning is less important than how quickly you can improve via trial-and-error. In the case of non-zero-sum games, speed matters more than starting point.

Going back to the airplane example, the reason that the takeoff angle is of minimal importance is because the “game” of getting across the country is non-zero-sum. But what if pilots were in a competition to see who could reach the final destination as quickly as possible with as few “turns” as possible? Then the takeoff angle matters a whole lot more. When the dynamic transforms to zero-sum, there’s a shift in the relative importance of speed and starting point.

Expected Value = Probability * Payoffs. When the payoffs of what you’re trying to accomplish are affected by others, timing matters. A lot. In zero-sum games, your biggest edge will come by getting in on the ground floor to limit competition.

In non-zero-sum games, timing doesn’t matter as much. The payoffs of eating healthy or working out or learning a new language aren’t affected by anyone else, and so you’ll achieve the greatest compounding returns by speeding up your learning process via rapid trial-and-error.

Are You Okay Looking Like a Fool?

The benefits of being early and working quickly are obvious. Being early is a sort of overarching multiplier on the value of future work, while quick iteration allows for a lower multiplier that gets repeated over time. The earlier you are, the higher the initial multiplier, and the faster you can iterate, the greater the repeated multiplier. Both lead to compounding returns.

So then why does everyone seem to shy away from things when they’re new and work so slowly even once they’re established? Because they’re scared.

Fear is an incredibly powerful motivator. Isn’t it amazing how many people shy away from buying Bitcoin at X price, for example, but are all-in at 2X? It’s scary to be on an island, and when you’re wrong, everyone knows it.

But you can’t really have extraordinary gains by doing things like others, so you have to get over the fear. The easiest way to do that is to provide yourself constant reminders that the payoffs are worth it.

To get in early, you need to find things before they’re popular. To iterate as fast as possible, you need to be okay failing repeatedly. There’s no trial-and-error without error.

We don’t need fancy graphs to tell us what to do. Well, I do, but you probably don’t. All you need is a little courage to do things a little differently.

Once you accept failure as an inevitable outcome of pushing boundaries, you become free to do what you truly believe is best.

We have two lives, and the second begins when we realize we have one.

About Lucky Maverick

About Jonathan Bales

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This is the audio version of “I Spent $35,000 on a Video You Can Find All Over the Internet.”

Click here to read the article.

About Lucky Maverick

About Jonathan Bales

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These were my exact words when I first learned about Bitcoin: “That’s the dumbest shit I’ve ever heard of.”

My Grandpa told me to buy it in 2011. You read that correctly…my Grandpa. He was into a lot of conspiracies—at that time, he was also tracking lottery numbers because he just knew it was fixed and he’d inevitably crack the code—so when he told me that Bitcoin would be the future, I just wrote him off.

“Uh, I don’t get it.”

I’m also pretty sure he just casually mentioned Bitcoin as part of a larger argument as to why the moon landing was a hoax, so he didn’t exactly have me rock hard to check out this new magical internet money.

Well, it turns out it didn’t matter that I didn’t “get it.” And in many ways, the fact that it was gaining popularity even though I—and so many others—didn’t get it was exactly why it should have been on my radar. I was too young to recognize it at the time, but that period between “I don’t understand so I’m just going to dismiss it” to “Oh this looks like it could be kind of cool” was likely the greatest investment opportunity of my lifetime, and I missed it because I was too stubborn to be bothered to do any research.

Everyone says they want to be contrarian. They want to get in early on the next big thing. They want to be ahead of the curve. Well, by definition, you sort of have to have conviction on something others are dismissing or overlooking, right? If you’re not okay being on an island, you’re not going to do anything worthwhile.

From my last article Eight Important Ideas That Changed My Life:

You have to be okay being wrong and being thought a moron. If you’re not okay with people thinking you’re an idiot—sometimes because you make giant mistakes and sometimes because they’re the morons not seeing what’s obvious to you—you can’t achieve unconventional success.

If it were easy and obvious, everyone would be doing it. As Ronnie Coleman might say, “Everybody wants to get rich, but ain’t nobody wanna take no big-ass chances!”

My initial reaction to the recent rise of various forms of alternative investing—and specifically digital collectibles—was the same as with early Bitcoin: “LOL, what…this is stupid.”

This time, though, I tried to not make the same mistake as I did in overlooking Bitcoin in 2011. Well, this seems dumb as shit to me, but there are a lot of smart people involved, so maybe I should take a deeper look.

There’s something incredibly interesting going on in the world of digital collectibles—specifically with NFTs (non-fungible tokens)—and this time, I’ve tried to embrace my initial hesitation as opportunity.

Ja One Asset to Rule Them All

Long story short, I (along with friends Peter Jennings, Jeremy Levine, Adam Levitan, and Adam Lefkoe) just spent $35,000 on a digital collectible: a highlight of NBA player Ja Morant dunking that you can see all over the internet.

I bought it on Topshot—an NBA-licensed product that lets users purchase digital packs of cards (or what they call “moments”), then instantly buy and sell them (for real money) through a marketplace.

Here’s the dunk, which you can view for free on YouTube:

Now let me tell you why I got the deal of the century in stealing this moment for the low, low (record-setting) price of $35k.

My Investment Philosophy

If you’re a Lucky Maverick reader, you might recall I recently wrote about alternative investments and the types of characteristics I was looking for in identifying the next big thing. That post also has a story about the time I snuck into the locker room at AT&T Stadium and pretended I was former NFL quarterback Jake Delhomme’s son that I think is funny so please read thx.

Anyway, here are some passages from what I wrote in late November:

Over the past decade, I’ve worked primarily in sports gambling and have mostly made money in unconventional ways: crypto, DFS, push-up bets, etc. Gamblers pride themselves on finding edges, one of which—maybe the biggest—is to uncover opportunities before others: to be first. When it comes to all forms of alternative investing, identifying which trends/industries will grow—and doing it before most others—is a pivotal part of success.

A few weeks ago, my buddies and I lost an auction for the most famous sports card ever:

There were a few reasons I liked this card. Some of those:

• As a vintage card, there’s guaranteed scarcity; it can’t be reproduced.

• In many ways, sports cards are new-age art, which I believe, along with another type of art I’ll discuss in a bit, will be collected more so than traditional fine art as younger generations get money.

• Of the few dozen known Honus Wagner cards, I think a large portion will never be up for sale (some are in museums, some owned by ultra-rich who don’t need an extra $1mm, etc.). The actual number of cards available is very low.

• High-end alternative assets could explode with the growth of fractional investing.

• It would just be cool af to own a Honus Wagner.

Anyway, as we were discussing the merits of owning the card, I found this aspect of the investment interesting: I was probably never going to see the card. It was to be placed in a vault and, hopefully, never touched again until sold. I recently met up with one of my good friends and entrepreneur Jeremy Levine (he founded StarStreet, DRAFT, and now Underdog), and he has jumped head-first into sports card investing. He also mentioned he never actually sees any of the cards; he has them sent thousands of miles away where someone else handles them. In that way, what he’s looking for isn’t really a piece of cardboard, but something even less tangible.

A lot of smart people are seeing the bright future of alternative investing.

My background is in DFS/betting, but I’ve been known to dabble in trading cryptocurrencies. My company FantasyLabs made a push to get into esports after bringing on Mark Cuban as our lone investor; we ultimately decided there were better opportunities for us given we knew fucking nothing about video games but had lots of upside (and work to do) in continuing to build tools in DFS.

Recently, I bid on a piece of digital art that went for record-setting numbers. There’s a great explanation of the story behind this piece here.

I’m completely willing to admit this might be the biggest blunder of my life, but I think the future of art is digital. Not only should ownership of actual physical paintings be tokenized—fraud is a big problem!—but there are a variety of benefits to art that exists solely digitally as compared to physical art (the collector/artist relationship can shift and even become aligned, the art itself can change over time, you can quickly buy/sell without storing it, ownership/prices are transparent, and so on).

The concept of digital art and similar areas are so new, which is what is attractive to me. Could I be the dumbest motherfucker on the planet? Perhaps. But I think the idea of people buying internet money a decade ago probably looked pretty dumb as well. To me, it’s a smart gamble because the potential payoffs are unbelievable. The fact that there’s a movement toward things similar to digital art—and digital art itself over the past 6-12 months—and my natural inclination is to dismiss it should be even more reason to be bullish, similar to the idea of Bitcoin years ago, as people initially writing it off is what allows for the big payoffs that accompany being first.

A lot of these new concepts will look ridiculous at first. As Chris Dixon has written, the next big thing will start out looking like a toy (h/t Ezra Galston, who linked to this post in his blog, which I recommend):

“The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.”  This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.”

Trading cards might very well become a stock market for athletes. What was once play—kids trading physical sports cards with friends—could transform into something completely different.

When you start to go down this rabbit hole, you inevitably end up asking “Why does this thing need to exist in the physical world at all to have value?”

As I examined the sorts of areas to which I’ve gravitated from an investment standpoint, I noticed a trend. Digital art, cryptocurrency, esports, trading cards—they’re all a continuation of this inevitable trend of moving the physical world online.

And if you notice, they’re all widely rejected by older generations but overwhelmingly accepted by younger ones. I remember learning how much money kids spent on digital items in video games and thinking it was so stupid, but why? It’s so easy to write off what’s different or what we don’t naturally understand as silly, but it’s exactly those things we don’t naturally understand or agree with—yet are popular—that we should spend the most time figuring out.

And so, when it comes to finding the next big thing, I think you’re on the right track if you’re asking these questions:

• What are kids (high school/college-age) interested in?

• Which things that exist physically will move digital?

• How will the democratization of ownership change the investment landscape?

When you add all this shit together, you end up trying to pay six figures for a jpg of Vitalik Buterin.

But really, I think this trend of physical-to-digital and democratization of ownership will lead to a lot of really cool opportunities. Places like Dibbs.io—a new marketplace for sports card trading—will continue to pop up and redefine what it means to collect, own, and invest, breaking down barriers to entry as well as a lack of both liquidity and transparency. My guess is that either they or someone else will eventually do this with blockchain.

The future is digital. Look to youth and find ways they’re transforming age-old concepts like money (crypto) or athletics (esports) in a digital world.

When I wrote that mere weeks ago, I had heard of Topshot but not yet really experimented with it. Since getting started about a week ago, I invested around $45,000 prior to purchasing the Ja Morant moment.

I’ve been trying to make a big move in trading cards. I’ve collected a bunch, but like I said, I’ve been specifically looking for ultra-rare, high-end cards—for the same reason an art collector might want to buy one Picasso as opposed to 100 paintings from lesser-known artists. Despite the cost, I think a Wagner card is the type of asset that’s pretty unlikely to see a steep (or any) decline in value, yet possesses some upside and lets me get out of the increasingly worthless dollar. In many ways, sports trading cards are new-age art; at the high end, they’re Picasso for millennials.

My interest in the bizarre and beautiful emerging industry of digital art is the door that really opened me up to the world of non-fungible tokens. NFTs are tokens whose purpose is to generate verifiable scarcity and ownership. I’m not going to turn this into a technical article on NFTs, but there’s something very interesting going on in this space, specifically in regards to art and collectibles. Here’s an intro to NFTs and a discussion about NFTs and Topshot (from the seller of the Ja Morant moment—NonFunGerbils—whose podcast is an amazing deep dive into the NFT world).

Can we stop for a second to recognize the absurdity of this all? I was on the phone last night with someone named NonFunGerbils, waiting on a $35,000 transfer of Ethereum so I could purchase a video of Ja Morant you can view anywhere on the internet for free.

And the best part? I think $35k was a deal!

The Ja Morant NBA Topshot “moment” that my friends and I purchased is a unique mashup of all the areas in which I’ve been looking for an investment.

• Trading Cards

• Art

• NFTs

• Super high-end

• Industry bound to move from physical to digital

• Liquid

• Antifragile elements

But Why Digital?

There are signs across the entire trading card industry that these assets are moving from being a physical collectible to more of a conceptual sign of value, possessing worth when one can prove ownership and scarcity. Increasingly, I see less and less interest in holding physical cards, and more and more in the idea of trading agreed-upon scarcity in a more conceptual manner.

As mentioned, my buddy Jeremy has probably spent seven figures on cards and doesn’t ever see them. So what exactly are Jeremy and others actually buying? Why do people believe physical trading cards hold value? I’m interested in sports trading cards from two perspectives: as “fine art” at the high end and as a “player stock market” across the entire industry.

In both cases, when you really dig into it, you inevitably start to ask “Why do these things need to exist in physical form?”

The answer: they don’t. Gold is to Bitcoin as physical trading cards are to NFTs.

And let me be as clear as possible about my view: you can think what I bought has no value whatsoever, which is fine, but if you believe physical trading cards have value, then you absolutely must recognize the value of digital assets; if you don’t, you’re being stubborn and/or short-sighted.

Physical trading cards are valuable because people agree they’re valuable. I’m telling you right now, the younger generation is blurring the line between the digital and physical worlds. We might not fully grasp it, but from items in video games to virtual real estate, it’s being proven again and again that existence in the physical world is not a prerequisite to holding value in the minds of many; they believe it, and that’s enough.

Think about how awful the process is to buy and sell cards right now. Buy the card on eBay. Wait for it to ship. Send it into a grading company to determine its worth (the grade determines its scarcity…sort of…but we don’t know for sure because the entire industry is so scattered). Wait months. Hold it and hope nothing happens to it or sell it and be forced to ship it out.

Now let’s look at how this compares to NFTs, using Topshot as an example:

Ownership: Provable and unfalsifiable.

Authenticity: Unlike with physical art and other collectibles, NFTs make fraud mathematically impossible. Topshot has an exclusive license with the NBA, too.

Scarcity: Every card has a serial number. Supply is known and even ordered. Instead of an unknown number of potential “Graded 10” cards, there’s just a single #1, a lone #2, and so on. Remember all those cards you collected as a kid? They’re fucking worthless now because they just kept printing them. That’s impossible with NFTs.

Transparency: How much is a specific physical trading card worth? Do you have any idea how difficult it is to get an accurate consensus on this in an ever-shifting market? This does offer somewhat of an edge in traditional trading cards, I think, but the overall lack of transparency is absurd. Everything is completely fragmented and difficult to assess.

Liquidity: Despite being early, the liquidity—fueled by the digital nature of the asset—is incredible. Here are a few sales I’ve made.

Overall, the average return has been somewhere around 50% with an average turnaround of about 2.5 days.

My strategy thus far has been to buy and sell as a way to learn the platform, reinvesting all of the proceeds into more moments. My thinking is that it gives me more opportunities to find value as I collect data and learn, hopefully accumulating better and better assets along the way. Outside of purchasing the Ja moment, which we plan to hold, I’ve found this superior to buying and holding because, frankly, I just didn’t know what I was doing in the beginning. The buy, sell, reinvest strategy sort of de-risks my portfolio without limiting the upside.

From provable ownership, authenticity, and scarcity to immediate liquidity, I believe digital trading cards are superior to physical in nearly every way. For the record, I have no deal with Topshot, nor do I make money from them in any way outside of trading on the platform.

I simply think this opportunity possesses the final trait I seek in an investment: antifragile elements and asymmetric upside. Nik Bonaddio summed it up well:

I full-heartedly believe in the future of digital assets and collectibles. Will Topshot win in this space? I have no idea—and my guess is, statistically speaking, they won’t—but my personal belief is that someone will, and they have a huge lead. If that’s the case, I own a premier asset—the #1 of the first moment of the top rookie—that’s likely to be worth far in excess of $35,000, yet with what I think is an underappreciated short-term floor in a growing industry.

And if not, I have a cool story about the time I could have bought a car but instead bought a free video clip.

Final Thoughts

You should take this article as an explanation of how I tried to take an investment philosophy I outlined a few weeks ago and turn it into reality when I saw an opportunity, not as an endorsement to use Topshot. In fact, due to how speculative it is, you probably shouldn’t get involved in this or with other NFTs if you don’t already have a healthy appetite for risk.

My hope is that what’s valuable here is an example of how I go about thinking about risk and finding new opportunities such that you can implement the same principles in identifying asymmetries in various aspects of your life.

What are the areas in which you have vast specific knowledge? What things do you know that others don’t yet realize? If you’re okay being thought an idiot, these areas are the best opportunities for asymmetrical payoffs. I might be wrong about NFTs, but if I’m right at a time when most don’t agree, then I’m really right.

And in terms of the overarching thesis behind this move and others I’m making—that many elements of the physical world will move digital—I totally understand the initial reaction of “I don’t get it” or “this seems stupid.” But guess what? There’s a whole generation of young, smart people who’ve grown up in a fundamentally different way from me and you, so whether or not we “get” the future is irrelevant to how it will transpire.

My prediction is that over the coming years we’ll see the consensus shift on digital items, from “these are worthless and not real” to “this is the best way to prove ownership, scarcity, and authenticity.”

I’m convinced NFTs are the future of collecting. The most exciting aspect, to me, is that the party is just getting started.

UPDATE: Just months later, the perception of NFTs has completely shifted since I wrote this post. Knowing people will need amazing data, tools, and analysis of NFTs as they’ve exploded, I’ve since launched the platform LuckyTrader.com.

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About Lucky Maverick

About Jonathan Bales

Note: If you notice Jake’s voice sounds like he has the flu in the audio version, don’t worry…he doesn’t have the flu! It’s just COVID.

I started fishing last year. Like any hobby I take up, I’ve become intensely serious about it to the point no one around me wants to be involved. I started tracking aspects of every catch in Excel; in just over a year, I’m up to 53 different species, not to brag. My goal is to catch as many species as possible.

If you ever see someone snagging lunker largemouth bass all day…that ain’t me. I already got that species. No need for more. I’m more of the type to be fishing for microspecies in a puddle using hooks that can blow away with a slight breeze.

You don’t know what it’s like to feel the strength of a fish until you’re lightly tugging a minnow out of a puddle using a piece of a worm the size of a grain of sand for bait. Just raw power.

Racking up species in fishing is all about leverage. The rod itself is a type of lever, letting you easily reel in even very powerful fish that are much stronger than you in water. I also often use multiple rods—usually one with the bait sitting at the bottom, one in the middle of the water column, and then actively using one with a spinner or topwater bait. You can use three rods at a time where I live, but theoretically, you could use quite a few more rods to increase the number of fish you catch without substantially more effort.

Well, the key to finding success—and specifically to making money—is the same as it is in racking up fish species smaller than your pinky: figure out what works—where the fish are and how to catch them—and apply leverage.

Leverage in Today’s World

Many of my thoughts on leverage have been inspired by Naval Ravikant. Check out his famous tweet thread on how to get rich (without getting lucky):

As Naval has pointed out, there are many different types of leverage, with the oldest form being labor: getting people to work for you. This, along with capital, are what people generally think of when it comes to being an entrepreneur or starting a business. And typically, that’s what business has meant: hire employees and raise money to grow.

Labor and capital are forms of permissioned leverage, meaning you can’t really just employ them on your own. You ultimately need someone’s permission to work with them, and you need permission to access others’ money.

The internet has created new forms of leverage, however, that do not require permission. What I’m doing right now—writing online—is a form of permissionless leverage. I don’t need anyone’s approval to post this, yet it supplies ultimate leverage on my time. This article can live forever, and whether it’s seen by 10 people or one million, there’s no additional work for me. And if I do a decent job, a whole lot of people will trust in me more and more, and that compounds over time in a non-linear way.

Software is another form of permissionless leverage. When I co-founded FantasyLabs, we didn’t need to ask anyone if it was okay that we did it. We built a product that can effectively run on its own, 24/7, and scale without any additional work. We can acquire more and more users at nearly no additional cost, whether its more energy or money; no matter if we have 100 users or 100,000 users, the costs in both time and capital are effectively the same. That’s leverage.

The internet has created a world in which there’s an abundance of money-making opportunities that allow individuals to earn like companies, but most people don’t yet realize it.

There’s a reason we built FantasyLabs as a data and tools platform rather than a service to give picks. One is sustainable and can grow without additional work; the other cannot.

There’s a reason I write almost no content that’s time-sensitive. This article doesn’t have an expiration date and can continue to “work” for me forever; a timely article would get more clicks in the short-term, but does effectively nothing to improve long-term leverage.

A useful way to figure out what type of leverage you’re applying on your work: ask yourself if the potential rewards are a direct result of the time you put in. If putting in more time guarantees a better result, this might not actually be a good thing; a salesperson working on commission might make more money by putting in more hours, but there’s no ability to earn 10x or 100x or 1,000x on their time. The salesperson—and most everyone else with an employer—is the lever for someone else to get rich.

You’ll have a difficult time becoming wealthy by getting paid for your time. You have to get paid for the value you can create for others through your unique knowledge, multiplied by the leverage you place on it. The returns from this sort of work—amplified by the internet—are compounding. This increases the importance of logical decision-making. When the results of your decisions are non-linear, it amplifies their impact.

If you consider yourself a sharp decision-maker and you have unique knowledge or skills, there’s never been a better time to get rich. The theoretical bounds of the value you can extract are nearly limitless.

1. Acquire specific knowledge or develop a unique skill. This is another form of permissionless leverage and it’s easy to unlock with the internet. You probably already have a lot of specific knowledge in areas of interest to you. The intersection of those areas is likely where you have the most unique knowledge.

2. Apply leverage to your distinct knowledge through media or code, i.e. leverage your knowledge to create online content or software. You can use labor and money, too, but they’re no longer required.

3. Focus on “evergreen” work; put time into things that have no theoretical limit for how much they can earn and require no additional work from you—things for which the cost of replication is zero or near-zero. And “earn” can mean money, but it can also mean trust or respect or some other output that can be monetized at a later date. I’m not currently making money from this newsletter, but it’s still providing leverage.

In the age of near-infinite leverage, you don’t get rich based on how hard you work. You get rich by having specific knowledge, creating something of value to others, and applying leverage to it.

Static vs. Dynamic Decision-Making

I recently came across this video from Nassim Nicholas Taleb called “How you will go bust on a favorable bet.”

Most of the video is pretty mathematical, but it’s ultimately his proof of this quote, which I really like.

Your grandmother does not analyze the notion of smoking as a single event of smoking a cigarette, but rather as an activity. Risk-taking is an activity, not a single event.

Smoking a single cigarette is not very harmful to your body. Let’s assume you determine the cost-benefit of smoking once to be in favor of lighting up; maybe the relaxation it gives you is mathematically worth the downside for that single cigarette. It still should be clear the decision to smoke is -EV (dynamically speaking) because it will increase the chances of you smoking again…and again…and again.

Almost no worthwhile decision is static. When there is great downside, you should make decisions as though you’d need to make the same choice 10,000 more times. You might play Russian roulette once for $1 billion, but if you keep taking such an offer, you’ll soon be dead.

That’s not to say you can’t ever take on big risk—the opposite, actually, as you can and should try to run it up when the consequences for financial “death” (going bust) are minimal. That is, if you have $100 to your name, it’s not terribly detrimental to go bust; if you have $1 million, then you probably should protect your downside.

Viewing decision-making as dynamic actually increases the merits of taking on huge risk early on—even -EV risks. I’m sure you’ve seen the graphs of what your net worth will be at 65 if you invest $X starting at age 25 instead of beginning at 35. Each additional dollar you acquire is theoretically slightly less valuable than the one before it, but if you’re overall a +EV decision-maker, you could argue the importance of quickly generating a small fortune is more meaningful than slight changes in EV such that the only fundamentally wrong decision you can make is not taking big risks.

In my article on why most decisions don’t matter, the first criteria I proposed for making a choice: “Is one option clearly the best long-term?” Decisions aren’t made in a vacuum, and the biggest mistake you can make is viewing them statically—analyzing choices as an event rather than an activity.

And the God of long-term decision-making is this man…

Sam Hinkie on Invest Like the Best

Being from Philly, I’m of course a huge fan of Sam Hinkie (and the ”Hinkie “Manifesto”). I highly recommend listening to his recent appearance on the Invest Like the Best podcast. Some of my favorite quotes:

Expertise is a predictive model about the future that works. I don’t care how you got there. It might be instincts. It might be actual data. Experience is how many times you’ve done this. That doesn’t mean people with experience can’t have expertise, but they’re wildly different things.

I look for people cognizant of their weaknesses. The ones I really like are the ones open about their weaknesses and keeping them their weaknesses because they think it’s an infinite game that you don’t understand yet.

I like people who are among the very best in the world and can’t believe it. They’re worried someone else out there is better. You’re underplaying your skills—not overplaying them—and you’re constantly looking for new edges because you presume there just must be someone out there who is better.

Amazing people are often drawn to be around other amazing people who have a lot of intellectual humility about what they don’t yet know and have a sense of wonder about what’s knowable.

Most of your ability to influence people is about the quality of the relationships you’ve built over time.

People are a power law, and the best ones can change everything.

I think in decades by nature. Where is this thing going? What aren’t people thinking about? What are the second- and third-order effects? And I want there to be leverage on that type of thinking. Leverage on trying to see around the bend.

As a general principle, you should trade money for time as much as you possibly can.

Write. Put your thoughts out there, particularly if you want to make them better. I’ve only recently realized the return of writing well.

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Goodhart’s Law

I was recently looking through some of the metrics for Lucky Maverick. I try not to get too caught up in site analytics because they’re typically a byproduct of certain actions rather than a forward-looking indicator. For some sites, I think the average time a user spends on a page is important because it conveys engagement—how much people care what you have to say—but once you chase the effect (trying to maximize time-on-site), it’s no longer a useful metric. That is, you shouldn’t specifically try to maximize the time a user spends on your site, as you’ll do things that will hinder the engagement; thus, the metric, once sought after, becomes self-refuting.

Well, this is Goodhart’s law:

When a measure becomes a target, it ceases to be a good measure.

 A famous example of this is a hospital that was threatened with penalties for long wait times. In response, they asked ambulances to keep patients inside for extended periods so as to not create a “wait” inside the hospital.

We see Goodhart’s law everywhere. Car salesmen sell vehicles at a loss near the end of the month to hit quotas; online media companies optimize for clicks (to their long-term detriment); NFL teams historically have tried to run the ball way too frequently because “teams win X% of the time when they run Y times.”

Goodhart’s law is effectively a variant of a logical error known as “affirming the consequent,” or:

If A then B
B
Therefore, A

This is logically inconsistent. Take this example.

If I eat healthy and exercise, I will lose weight.
I lost weight.
Therefore, I ate healthy and exercised.

There are a lot of unhealthy ways one could lose weight. In fact, I’d say “weight” is one of the prime examples of a metric that represents Goodhart’s law. Weight is correlated to a healthy lifestyle, but when you chase a lower weight as an end in and of itself, especially in the short-term, you’ll often end up doing the exact opposite types of things that actually lead to being healthy with a long-term sustainable weight.

I think this is important because I see this mistake made over and over again, in all areas of life—from gambling to business to health to investing.

Just because a number is a good indicator of a certain action doesn’t mean you should try to maximize it. In almost every instance, you shouldn’t.

ICYMI

Audio versions of Lucky Maverick are now on Spotify and iTunes.

There comes a time in every man’s life when he must stand up for what he believes in. With the world against him and no true believers on his side, he digs deep, knowing he must fight for what’s right, regardless of the lack of support, and stand firm in the face of mounting opposition. Victorious or not, he will come out the other side filled with a pride few will ever know—a pride experienced only by the rare breed of man with the courage to look evil directly in the face and, not because he has no fear, but in spite of his fear, gain a paradoxical and unparalleled strength to proclaim “I. WON’T. BACK. DOWN.” When the dust settles, he’s transformed into a warrior. A hero. A man of honor.

For me, that was a day filled with masturbating for money in Las Vegas.

This is my story.

This will be part of a “How to Win” series in which I break down how I went about figuring out the optimal way to win a bet, beat a game, or solve a problem. It’s an extension of my in-depth analysis in How to Win Games, which I’d suggest checking out if you haven’t. Part of my theory on winning games—as I discuss in the principles of Lucky Maverick—is that the same sorts of concepts tend to apply across all forms of games, and that if you can learn how to think about and win any game, you can learn to win every game. Most of life’s problems can be turned into a version of a game, so learning to win games, in my opinion, is a recipe for finding success in just about any area you want.

The Importance of Rules and the Art of the Negotiation

In 2018, I booked a bet with my buddy Adam Levitan on something called the 6-12-18-24 Challenge. If you’re unaware, the bet involves assigning each of those numbers to one of four tasks, then completing all of them within 24 hours. Your missions: eating donuts, drinking beers, running miles, and jacking off.

The plan was to complete the challenge in Vegas before the official start of the Gambling Olympics. I wanted to post our actual chat log when booking the bet to show how we went about deciding on the “rules.”

The rules—and hidden rules—are of incredible importance because winning any game boils down to working within the confines of that game to find edges that increase your win probability. All of the strategy and meta game are ultimately an effort to unearth EV by exploiting the rules better than your opponents. Knowing the rules—inside and out, truly—is so simple and yet so overlooked as an advantage by most.

*Note: Skip to the next section if you just want to read how I went about “solving” the 6-12-18-24 challenge. Or just skip right to closing this browser window if you have any sort of dignity.*

jonathan.bales [12:48 PM]
what odds are you guys giving me on 6-12-18-24? you said 10 to 1 levi? I think that’s fair :)

adam.levitan [12:49 PM]
i said nothing.. let’s nail down the official rules.. all your miles have to be under 10 minutes and outside?

jonathan.bales [12:49 PM]
I mean whatever you want
that’s clearly way harder and a potential problem though
10 min is actually hard to do for possibly 12 miles
I mean it’s almost a half marathon

adam.levitan [12:50 PM]
oh i assumed you were running 6

jonathan.bales [12:50 PM]
idk if I can JO 12 times after some practice
yeah I mean I am gonna have to but I’m running out of steam on these JOs

adam.levitan [12:53 PM]
if you’re running outside and averaging a 10-minute mile while running them consecutively i can give you 6-1… but I’m not going to give you a lot of action on it, can’t let you beat me for like 30k

jonathan.bales [12:53 PM]
consecutive? that’s way different
don’t think I can do that at all
I assumed I could take a break after each mile

peter.jennings [12:54 PM]
Im on bales side

adam.levitan [12:54 PM]
oh
well then i don’t see why you couldn’t do it
you’re in way better shape than the dude who came on the pod and did it
and you drink every day
doughnuts are easy
just gotta get the jerks done and you’ll have freedman to help you there

jonathan.bales [12:56 PM]
I don’t drink every day for the last time levi

adam.levitan [12:56 PM]
haha

jonathan.bales [12:56 PM]
if you think 18/24 beers/donuts is easy then idk
and either miles or JOs or both gonna be hard af too
I think I am equipped to do it more than avg person but I think I’m likely to fail
honestly

adam.levitan [12:57 PM]
i mean if you take 20 minutes off between each mile it’ll be easy

jonathan.bales [12:57 PM]
even if you remove that, there’s some decent chance I can’t physically do 12 JOs

adam.levitan [12:57 PM]
for sure

jonathan.bales [1:00 PM]
so you’d do 6 to 1 if I ran it straight, no stops at all?
like if I fail then I just start back at 0 miles?
trying to think of how much easier it is to stop and what that equates to in a line if 6 to 1 is fair for that

adam.levitan [1:00 PM]
you’d have to average a 10-minute mile for whole thing.. so if you do 6 miles you have 60 minutes total from start to finish

jonathan.bales [1:01 PM]
there’s almost 0% chance I can complete six miles right now
I’ve literally never run two miles

adam.levitan [1:01 PM]
yeah well if the running isn’t hard i don’t see how you fail really
unless your dick fails you

jonathan.bales [1:02 PM]
he’s good for six easy
he starts to get ornery at seven
idk how you think 18/24 beers/donuts is just a given
that’s so hard
and in conjunction with running and jacking off
will take 5 to 1 my $1k if I can stop once running

adam.levitan [1:06 PM]
if you do the total distance across total time you can stop as many times as you want

jonathan.bales [1:06 PM]
lol
need a break. can’t do six miles in 60 min
will do two segments of three in 30
it is fucking Vegas in summer man it is gonna be literally 120

adam.levitan [1:07 PM]
i can give you 3.5/1 on that, but i’m not happy about it and only doing it for the #content

jonathan.bales [1:08 PM]
like it might not even be safe

adam.levitan [1:08 PM]
don’t be a pussy
death is one of the outcomes, yes

jonathan.bales [1:08 PM]
i’d do 6 to 1 on one hour before 3.5 with a break
outside is just bananas
i won’t be able to breathe

adam.levitan [1:09 PM]
the only way i’ll win is if you fail at the running
so yes, i’d be rooting for “unable to breathe”

jonathan.bales [1:09 PM]
https://blogs.scientificamerican.com/guest-blog/too-hot-to-handle-the-dangers-of-running-in-the-heat/
i’ll die for content, it’s fine

adam.levitan [1:10 PM]
yeah i felt like this in 3rd set of frying pan match
you’re so hot you get the chills

jonathan.bales [1:10 PM]
that was fucking denver

adam.levitan [1:10 PM]
yep
it was like 90 but i know.. Vegas is asking for death
that’s how i want to win

jonathan.bales [1:11 PM]
I will do 6 to 1, six miles in 66 minutes

adam.levitan [1:12 PM]
outside?

jonathan.bales [1:12 PM]
yeah. and I honestly think this is gonna be a disaster because I can barely finish one mile in under 10…ran the other day

adam.levitan [1:13 PM]
do you have to run during the day?

jonathan.bales [1:14 PM]
what time range is acceptable. clearly I’m running at night if I can

adam.levitan [1:15 PM]
ugh i dunno man.. i don’t want to bet against you in physical activities
nighttime temps in july in vegas average 79 degrees
nice running weather

jonathan.bales [1:15 PM]
the last mile bet I had I ran a half mile
this isn’t lifting

adam.levitan [1:16 PM]
we won’t be able to film your death if you do it at night

jonathan.bales [1:16 PM]
I will do it when light out
idk how I am gonna set it up exactly…need to think about it and what is best in terms of when I start, when I am trying to run, etc
my lean was I’d drink and eat at night, sleep, drink maybe 1 or 2 in morning and run then
I can’t wait too long strategically or else I have to run after eating and drinking too much. there’s just no way

adam.levitan [1:18 PM]
are you allowed to get more action? Like if you can win 5 BTC instead of 2/3 BTC you’ll obv train harder

jonathan.bales [1:18 PM]
I am gonna try obv….I’d be fine reducing our odds if I get more though
like each 10k to win interval I go down a point or something…
I will do whatever you want on that b/c you are right I will actually try if I get a bunch of action…I just doubt I will

adam.levitan [1:20 PM]
OK i’ve wasted enough of this day.. let me think about it

jonathan.bales [1:20 PM]
comee onnnnn gimme something. have to get this booked

adam.levitan [1:21 PM]
freedman verification on jerks?

jonathan.bales [1:21 PM]
I mean obv

adam.levitan [1:21 PM]
no live women in room obv, even for fluffing

jonathan.bales [1:21 PM]
for that I will have a room that is inspected before and I will produce sample each time
yeah no women OR MEN

adam.levitan [1:21 PM]
no cam girls either… no human interaction

jonathan.bales [1:21 PM]
I can watch porn right

adam.levitan [1:21 PM]
right

jonathan.bales [1:22 PM]
donuts will be standard glazed

adam.levitan [1:22 PM]
frosting?

jonathan.bales [1:23 PM]
krispy kreme glazed I thought was standard

adam.levitan [1:23 PM]
beers minimum 5% ABV?

jonathan.bales [1:23 PM]
no way….standard miller lite bud light whatever
those are just under 5 arent they?

adam.levitan [1:24 PM]
coors light is like water, think it’s 4

jonathan.bales [1:24 PM]
the other two main ones are 4.2
normal cans of lite beer

adam.levitan [1:25 PM]
no funnels?

jonathan.bales [1:25 PM]
8 oz beers

adam.levitan [1:25 PM]
no shotgunning

jonathan.bales [1:25 PM]
no funnels, drink from can

adam.levitan [1:25 PM]
8oz? you mean 12oz

jonathan.bales [1:26 PM]
yeah I guess
whatever like a normal looking can is
yeah 12
looked it up
6 miles in 66 min, has to be during day, unlimited breaks, 12 oz lite beers, krispy kreme glazed donuts, produce semen 12 times
only other contingency I can think of is vomit

adam.levitan [1:29 PM]
OK i’ll give you 5-1 given the 66 minutes but you have to run between 9am and 6pm… if you sell more than 10k worth of additional potential winnings that goes to 2.5-1
yeah i think vomiting is tough because once you puke you can drink so much more beer

jonathan.bales [1:30 PM]
right. clearly purposely vomiting is out. I see a very high chance of puking while running though and that would stink if I was DQed on that
like what if it’s just a little tiny vomit

adam.levitan [1:30 PM]
haha
are you going to drink any beers at all before running?

jonathan.bales [1:31 PM]
since I am running in the morning presumably, I would like a contingency that I can vomit while running or up to 15 min after, but no other time during the competition. I’d also like to be able to purposely puke at the end once it is clear I finished and am not involuntarily vomiting

adam.levitan [1:32 PM]
hahahahaha

jonathan.bales [1:32 PM]
and idk on the beers but it would be like 1-2 and maybe one donut before at max
idk though…might just do nothing and run it right away

adam.levitan [1:32 PM]
you are going to take the full 24 hrs right? so there are 2 mornings, presumably

jonathan.bales [1:33 PM]
there will be just one if I start at night which I think I will

adam.levitan [1:33 PM]
yeah so you’re going to jerk, drink, eat.. go to sleep.. wake up and run and then finish
god this is so easy if you can do the run
we’re basically betting on the run, that’s it

jonathan.bales [1:34 PM]
can you jack off 12 times in a day? no. eat 18 donuts and drink 24 beers or vice versa? no

adam.levitan [1:34 PM]
i can do 6 a day
i can easily do donuts

jonathan.bales [1:34 PM]
I need to do 12 though

adam.levitan [1:34 PM]
i can’t drink the beer but you def can
nah 6 jerks before sleep, 6 jerks across next day
easy

jonathan.bales [1:34 PM]
six jerks before sleep come on

adam.levitan [1:35 PM]
one an hour for six hours?
then sleep for 6 hours

jonathan.bales [1:35 PM]
a good portion of jerks are gonna have to come after drinking
gonna be a real issue
6 to 1 and I cannot drop to 2.5 to 1 because that pretty much means I can’t even get other action
oh I see…I could get 9k more?
6 to 1 and 3 to 1 on that and it is booked

adam.levitan [1:37 PM]
not giving 6-1, it’s too easy
will give 5-1 for the content
but still think it’s a bad bet

jonathan.bales [1:38 PM]
5 to 1 and 68 min

adam.levitan [1:38 PM]
can’t do it.. failing the run is my only shot

jonathan.bales [1:38 PM]
and I want to clarify the vomiting proposal is fine?
5 to 1 then and that’s it
66 min

adam.levitan [1:40 PM]
so you’re saying you can vomit during the run? But you can’t vomit up a bunch of beer and doughnuts

jonathan.bales [1:40 PM]
yes that is correct…I don’t want to be DQed running in that heat and puking but the spirit isn’t to be able to puke up a bunch of beer and donuts
I do want to be able to puke once I finish, however
why don’t we do 2 beer and 2 donut max pre-running
although I almost certainly won’t be eating two donuts for sure

adam.levitan [1:42 PM]
ok that’s fine.. 2 beers and 2 donut max within 2 hrs of run
then you can puke.. but if you do complete the run, you can’t puke again rest of day

jonathan.bales [1:45 PM]
six miles in 66 minutes, unlimited breaks and able to puke up no more than two donuts and two beers from within two-hour window if I do happen to vomit during the run or within 15 minutes of it. otherwise no vomit until last task completed. 12 jackoffs that are produced in a semen-free room. 18/24 beers/donuts. 12 oz lite beers and standard glazed krispy kreme donuts. 5 to 1 on $1k and goes to 3 to 1 if I get more than $10k of additional to-win action.

adam.levitan [1:45 PM]
ugh fine.. it’s booked just for the lulz

jonathan.bales [1:46 PM]
booked

And that, my friends, is the art of the negotiation. If you want to read real advice on negotiating, I highly recommend Never Split the Difference by Chris Voss.

What’s interesting about this besides Levitan’s completely serious mentions of a “semen-free room” is that both he and I know the importance of finding edges, so haggling over seemingly minor details in the rules was quite critical for both of us. Each rule change in my favor might increase my win probability just a few percentage points, but unlocking those edges multiple times and over a continual basis is the difference between long-term winners and losers.

When negotiating anything, identify areas that are more important than the other party realizes (what you want to get) and those that are less vital than they understand (what you want to give up). When it comes to salary negotiations, for example, most people value guarantees, so you can typically trade in steady income for future upside. Perhaps you can work for $10,000 less, but add in a $30,000 bonus if you meet certain criteria, such as a specific sales threshold. This is no risk to the company, since you’d presumably be generating more than $30,000 in revenue for them in such a deal, but increases the EV of your contract, assuming you have greater than a 33% chance of reaching the bonus.

You can calculate the EV in this example to determine what the contract is “worth” to you. If you believe you actually have a 75% chance to reach the bonus, the EV would be (Base Salary - $10,000) + ($30,000 * 0.75) = Base Salary + $12,500. Trading in a sure thing for properly calculated upside (and downside) is one of the easiest ways to unlock EV, and in this case, if you’re willing to take on the risk, you’d make an additional $12,500 per year, on average.

Also, look for things that are more important to one side or the other. Comparing apples to apples isn’t really a great way to unlock EV without an information asymmetry, and continually operating in an effort to produce one-sided contracts is not only unethical, it’s also stupid long-term (and becoming more difficult by the day). I liked this recent tweet thread from Taylor Caby about the importance of negotiation integrity:

The best way to still “win” a negotiation is by finding the areas more important to one side or the other, then “trade” a higher quantity of things you deem of little importance for just one very important thing to you, making it appear as though you’re giving up more when the overall value is in your favor.

How I Planned for the Bet

As I discussed in How to Win Games, one highly effective tactic I’ve found to aid in deciding upon an approach to gameplay is to start at the end, as if you’re already won. From that post:

One way to get started on the right track is to work backwards. If you’re going to win a specific game, what sorts of things need to happen? What does the path to success look like? If you put a little thought into possible end-games, you can sometimes reverse-engineer a formidable plan-of-attack by working within the rules to eliminate potential scenarios that don’t lead to favorable outcomes for you.

This is one strategy employed by the chess prodigy Josh Waitzkin—the subject of the movie Searching for Bobby Fischer—that he discussed in his book The Art of Learning, which I highly recommend. Whereas most chess players approach the game sequentially, learning their opening moves and then progressing into the mid-game, Waitzkin learned how to maximize his odds of winning by starting with end-game scenarios, often with just three pieces left on the board. In doing this, he was able to work backwards from success to cultivate more apt early- and mid-games.

The biggest strides I made in DFS were when I stopped asking “How can I score as many points as possible?” and instead asked “How can I win with the fewest possible points?” and then reverse-engineered how to accomplish the latter by removing scenarios (and lineups) in which I might be likely to score a lot of points but, because of the construction of the lineup, not very likely to win.

As it relates to this bet, rather than trying to formulate a game plan from start to finish, which is how so many go about solving problems, I tried to think about the ways in which I might lose, then do what I could to eliminate those scenarios or reduce their likelihood of occurrence.

One way I could lose was of course to vomit during a period not designated for puking. I have a very strong stomach, so this was the least concerning issue for me. Nonetheless, I’ve also never drank so much beer and eaten so many donuts, let alone combined them, so I wanted to pace myself early so I could gauge my body’s reaction and adjust. I also chose to go with 24 beers and 18 donuts, rather than the inverse, because I figured I can quickly chug a bunch of beers at the 23-hour mark, if needed, whereas if I’m feeling sick, being forced to eat a lot of donuts could be disastrous.

I chose Miller Lite as my beer since it has the lowest alcohol content of any of the main lite beers, which I was hoping might aid in another area in which I could fail: masturbating to completion into a napkin 12 times and having it confirmed by a grown man in a hazmat suit.

You see this shit?

That’s a lot of pressure for anyone, let alone someone expected to get drunk. In addition to low-alcohol beer, I figured a graduated approach to supplementary material for the jack-offs might be optimal, working as long as possible with just my mind before moving to photos, normal videos, and then the hardcore stuff I will take to my grave.

Okay so we have 24 beers, 18 donuts, 12 jack-offs, and six miles, with an initial plan to just start furiously masturbating with a sort of tiered approach while pacing my food and beverage consumption.

Then we had the miles, outdoor in Vegas during the day in summer. There was really no way around this one; I had to train like crazy. I could barely finish a mile when I started, and by the end just a few weeks later, I was at something like a 7:20 pace for four miles. I never actually ran six straight miles while training; it’s very hard and boring! My plan was never to pace this out. I wanted to just not completely burn out, but get off to such a good start in the first 3-4 miles that I could really coast after that. That was really for mental reasons.

Another really big problem, though, was the heat. If you look up the difference in running times based on temperature, extreme heat is a disaster. One way I tried to compensate for this was training in as much clothing as possible.

I have these photos because I had another fitness prop bet with Levitan and Peter Jennings that involved working out X times per week, so we’d send each other sweaty photos of ourselves as proof which is completely normal adult behavior imo.

I researched various neighborhoods in Vegas and noticed it’s typically a few degrees colder and often has more cloud cover in certain areas by the mountains, so we drove 30 minutes to a track around there to complete the miles. And given that I had to run between 9am and 6pm, there was really no choice but to start them as early as possible…which I did, and it was still 105 degrees.

I could have chosen to begin the entire bet at 9am, but I figured it would make sense to break up the other tasks with some rest between. Thus, I thought it made sense to start in the evening, get through as many of the other three tasks as possible, wake up and have a beer/donut or two, run the miles, then come home to hang with the boys and just chill, drink some brews, eat some donuts, and masturbate together.

Wait what?

The Results

Like I said, I ended up winning the bet. Although I tried to pace myself, I began with an unsustainable rate of beers and donuts, forcing them down because “this seems easy” until the combination of alcohol, carbonation, and sugar made me violently ill with explosive diarrhea. Everyone has a plan until they get punched in the large intestine.

Things were looking bleak when my beer consumption began to affect my performance in other areas. When you’re drinking that many beers and eating that many donuts in such a short span, I’m telling you, it’s hard man. Actually, it’s the opposite of hard, which is the problem.

Another issue I didn’t envision was the mental challenge of masturbating feet away from a group of like 10 dudes. I was alone in my room, but it’s a little difficult to climax when you hear Levitan’s nasal-y laugh every 30 seconds. Masturbations 3 and 4 were some of the more challenging of my life, no doubt about it.

So I took a break to restore normal blood flow and reset my mind before roaring back with an astonishing string of masturbations—11 in the first night, as a matter of fact. I was on such a roll here I stayed up a lot later than I planned. Once my stomach settled, I was able to really hammer through the beers and donuts without even getting buzzed. I didn’t stick to my plan because things were going so well. Luckily, our semen collector stayed up late and was able to hang out (and verify some samples). I called him one time in the middle of the night to get out of bed and come look at my napkin, but otherwise he was right there by my side, figuratively speaking.

The next morning, I crushed the six-mile run.

Again, there wasn’t really any way to skirt around it; I had trained like crazy to be able to do this and once I did, it was game over.

We went back to the house and with maybe eight hours or to go, I was feeling quite sick but it was clear I was going to complete the challenge. I had just a few beers and donuts left, plus one celebratory J.O. I was planning for the end.

Levitan offered me a buyout as I was nearing the finish line—mainly because he wanted to go to a WNBA game and didn’t want to be forced to stick around to watch this mayhem—and I took it, with the condition I had to play him in racquetball for money the next day.

In terms of pure EV, the buyout wasn’t in my favor since I’d say I had maybe a 99.5% chance to complete the challenge (and he bought out for like 90% or something). But it was worth it just in terms of not needing to force-feed another Krispy Kreme down my throat while yanking it. The best part is I upset Levitan in racquetball, taking him for an additional $1k.

Final Points

So what’s the moral of all this? There’s no moral. The whole thing was a shitshow. I mean think about it, really.

But I’ll say this…

First, this bet was actually a fitness prop for me. I was trying to get in shape, and the reality is I trained like crazy and really improved my fitness. Even if the bet were slightly -EV for me in terms of money, it would still be very valuable overall to help me get in shape. Prop bets with friends are a wonderful motivator.

Second, if you want to win games, a good place to start is with the rules. Know the stated rules, inside and out. Know their implications. Think about your edges working within the confines of the game. Consider the ramifications of the rules and gameplay and how they lead to “hidden” rules you can focus energy on to maximize win probability.

Then, formulate a plan of attack by starting with success. Envision what it means for you to win, and how you get there. Eliminate as many scenarios as possible that don’t lead to that success. If you’re an underdog in a game, for example, focus on removing all low-variance outcomes in which your chances of winning are minimal. Don’t start from the beginning; start at the end, assume you won, and move backwards.

And lastly, this entire thing was actually just a long con to market PK Safety—the leader in hazmat suits, safety gloves, and other workwear.

PK Safety: Your worker safety specialists.

About Lucky Maverick

About Jonathan Bales

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I’ve long talked about the merits of reading books; I think it’s on par with sleeping well and exercising in terms of long-term benefits. No matter what else I do in a day, if I wake up rested, work out, and read, I feel like it was a successful day because my future will be brighter.

 In my whole life, I have known no wise people who didn’t read all the time—none, zero.

Like Charlie Munger, the smartest people I know and the ones who make the best decisions tend to read a lot.

Reading might seem tedious at first, but that’s not really the case if you either enjoy it—in which case it’s a sort of meditation—or you do it to learn. If you think about it, you can pick the brains of the smartest people in the world—both living and dead—and in a matter of hours, acquire all sorts of insights and wisdom that took them their entire lives to accrue. What better use of time could there possibly be?

Reading effectively is a skill—and one I think can be taught. The way I read books is maybe a bit different than most. My general strategy (for non-fiction):

• If the book isn’t interesting or incredibly useful, I stop reading. Most books pretty much suck.

• I skip sections if I feel like they’re not worthwhile.

• When I find a truly paradigm-shifting book, I re-read it often.

• I take notes—or at least underline the most important points as I read—so that if I want to refer to the book later, I can do it quickly.

• I don’t read books to rack up a total count; I read them to change my worldview. Thus, I read slowly.

• When I come across a concept I think could be useful, I stop reading and try to apply it to an area completely unrelated to the book (like antifragility in DFS, for example).

Basically, you have to develop the skill of being able to quickly sort through the crap to find the real gamechangers, then extract the maximum knowledge possible from those few books.

Those mind-altering books will be different for everyone, but since I get asked about my favorite books all the time, I figured it might make sense to compile a shortlist. There are many, many other books that I’ve found influential and worth the time to read, but only a few that have dramatically shifted my worldview.

Note: You might notice most of these books are sort of philosophical in nature—or actual philosophy. One reason is probably just because that’s what I tend to enjoy, but another is that I think the greatest books—at least to me—truly are philosophical in nature. That is, they make you question your most basic beliefs, at least in a specific area, and they work to help you establish a worldview that makes all future problems easier to analyze and solve.

The value of a truly great book extends well beyond the intended topic of that book.

In effect, the best books don’t supply you answers or teach you specific skills, but rather reframe old problems and help you alter the lens through which you see the world so you can improve future thinking and decision-making. With specific skills, my belief is you should probably just do the thing you want to learn. People ask me for my favorite books on game theory all the time, for example, and my answer is none: just play games.

With further ado, these are my favorite books, in no particular order.

All Nietzsche (favorites are Beyond Good and Evil and The Gay Science)

One must shed the bad taste of wanting to agree with many. "Good" is no longer good when one's neighbor mouths it. And how should there be a "common good"! The term contradicts itself: whatever can be common always has little value. In the end it must be as it is and always has been: great things remain for the great, abysses for the profound, nuances and shudders for the refined, and, in brief, all that is rare for the rare.

All Taleb (favorite is Antifragile)

A turkey is fed for 1,000 days by a butcher, and every day confirms to the turkey and the turkey’s economics department and the turkey’s risk management department that the butcher loves turkeys, and every day brings more confidence to the statement. But on day 1,001, there will be a surprise for the turkey.

Tao Te Ching by Laozi

If you understand others you are smart.
If you understand yourself you are illuminated.
If you overcome others you are powerful.
If you overcome yourself you have strength.
If you know how to be satisfied you are rich.
If you can act with vigor, you have a will.
If you don't lose your objectives you can be long-lasting.
If you die without loss, you are eternal.

The Four Agreements by Don Miguel Ruiz

We make the assumption that everyone sees life the way we do. We assume that others think the way we think, feel the way we feel, judge the way we judge, and abuse the way we abuse. This is the biggest assumption that humans make. And this is why we have a fear of being ourselves around others. Because we think everyone else will judge us, victimize us, abuse us, and blame us as we do ourselves. So even before others have a chance to reject us, we have already rejected ourselves. That is the way the human mind works.

Principles by Ray Dalio

Every time you confront something painful, you are at a potentially important juncture in your life—you have the opportunity to choose healthy and painful truth or unhealthy but comfortable delusion.

The 5 Love Languages by Gary Chapman

Real love - this kind of love is emotional in nature but not obsessional. It is a love that unites reason and emotion. It involves an act of the will and requires discipline, and it recognizes the need for personal growth.

Predictably Irrational by Dan Ariely

We usually think of ourselves as sitting the driver's seat, with ultimate control over the decisions we make and the direction our life takes; but, alas, this perception has more to do with our desires—with how we want to view ourselves—than with reality.

The 48 Laws of Power by Robert Greene

A heckler once interrupted Nikita Khrushchev in the middle of a speech in which he was denouncing the crimes of Stalin. “You were a colleague of Stalin’s,” the heckler yelled, “why didn’t you stop him then?” Khrushschev apparently could not see the heckler and barked out, “Who said that?” No hand went up. No one moved a muscle. After a few seconds of tense silence, Khrushchev finally said in a quiet voice, “Now you know why I didn’t stop him.” Instead of just arguing that anyone facing Stalin was afraid, knowing that the slightest sign of rebellion would mean certain death, he had made them feel what it was like to face Stalin—had made them feel the paranoia, the fear of speaking up, the terror of confronting the leader, in this case Khrushchev. The demonstration was visceral and no more argument was necessary.

The Art of Learning by Josh Waitzkin

In the end, mastery involves discovering the most resonant information and integrating it so deeply and fully it disappears and allows us to fly free.

The Almanack of Naval Rakivant by Eric Jorgenson

Wealth is a very positive-sum game. We create things together. We’re starting this endeavor to create this piece of art that explains what we’re doing. At the end of it, something brand new will be created. It’s a positive-sum game. Status, on the other hand, is a zero-sum game. It’s a very old game. We’ve been playing it since monkey tribes. It’s hierarchical. Who’s number one? Who’s number two? Who’s number three? And for number three to move to number two, number two has to move out of that slot.

How to Fail at Almost Everything and Still Win Big by Scott Adams

If you believe people use reason for the important decisions in life, you will go through life feeling confused and frustrated that others seem to have bad reasoning skills. The reality is that reason is just one of the drivers of our decisions, and often the smallest one.

Never Split the Difference by Chris Voss

Persuasion is not about how bright or smooth or forceful you are. It’s about the other party convincing themselves that the solution you want is their own idea. So don’t beat them with logic or brute force. Ask them questions that open paths to your goals. It’s not about you.

Again, there are so many other books that have taught me so much—those like More Than You Know, Atomic Habits, Personal Organization for Degenerates, Ego is the Enemy, Zero to One, Nudge, Loonshots, Benjamin Franklin: An American Life, books by physicist Michio Kaku, Quiet, Linchpin, The One Thing, The Success Equation, Ikigai, Total Recall, The Drunkard’s Walk, and more—but the list above represents the shortlist of paradigm-shifting, worldview-changing books for me.

What are the best books I haven’t listed here?

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About Lucky Maverick

About Jonathan Bales

Note: This first story is just for fun. Skip to the next section for anything useful whatsoever.

My Brief Time as Jake Delhomme’s Son

In 2009, my cousin Nick and I flew down to Dallas to see a Monday Night Football game between the Cowboys and Carolina Panthers. It was an awesome time and Nick and I, both of whom showed up already wasted, proceeded to double-fist beers throughout the entirety of the game. We stocked up in the third quarter before they stopped selling alcohol for the night, and by the time the game ended with a 21-7 Cowboys victory, we were absolutely annihilated. I mean not like in an unsafe way, but more in the way that you might like, I don’t knowwwwwww, throw a hot dog into the lower level of the stadium on a dare, but still sober enough to not put condiments all over it because hey I’m a thoughtful guy okay?

So the game was ending and we got up to leave but instead chose not to leave at all and just began exploring the stadium. We got into some areas we weren’t supposed to be in, but nothing too crazy, before finding this sort of hidden stairwell.

“Hey, let’s see what’s at the bottom,” I said with not even the slightest reservation about the idea.

So we walked down like 20 flights of stairs to the bottom and I opened this door, peeking out to see the Dallas Cowboys cheerleaders marching toward us down the hall.

Now we’re talking. I grabbed Nick and we walked into the tunnel. I don’t know what the penalties are for trespassing but at that point they probably would have needed to approach life in prison without the possibility of parole for me to turn around.

As the cheerleaders paraded toward us, I tried to think of something clever to say but instead just like kind of nodded. I don’t know, it’s kind of fuzzy but I remember trying to play it cool, so I’m pretty sure my head actually moved an imperceptibly small amount and instead I just looked like a total creep staring straight at these girls’ pom-poms (if you know what I mean) while double-fisting Miller Lite in a Tashard Choice jersey.

“Oooh, he’s cute!” one of the girls with poor judgement said, looking my way.

Holy shit. This is your time, man. A Cowboys cheerleader and you, a blogger. Don’t blow it. Say something she won’t forget. And, indeed, I said something she would not forget.

“What’s your name-ber?” I asked.

What the fuck? What’s your NAME-BER? A Cowboys cheerleader was basically screaming for me to talk to her and I asked for her NAME-BER. I assume my drunk ass just mixed ‘name’ and ‘number,’ but there’s also a chance I actually thought this through and, given the lack of time I had to work with, decided “name-ber” would be the most efficient way possible to get all the relevant info I needed.

Hey girl, in a hurry and gotta run to blog about the game, what’s your name-ber?

Anyway, the girls laughed. I like to think we were all laughing together, like old friends, but something tells me we weren’t. I think it was the Tashard Choice jersey. Knew I should have gone with Felix Jones.

So the chuckling ceased and there was a moment of silence (R.I.P. my pride) and then the most unexpected response possible happened: she gave me her name and number. Damnnnnnnnnn, son. That shit works. Name-ber. Don’t knock it till you try it I guess.

Let me pause to say this is already a great story. Kudos to me. If it ended there, I’d say it’s like a 7.5 or 8 out of 10.

But it didn’t end there.

So I got the digits and obviously I’m riding high. I mean all of the cheerleaders are beautiful but I’d say this one was easily in the top 25%, or actually she was probably the prettiest one on the squad in case you’re reading this, [name redacted].

Feeling invincible, I was strutting around the tunnels of the stadium like I was Jerry fucking Jones. Soon after I got the number, we saw a few Panthers players walking around, then a few more until I realized we were just outside of the visiting team’s locker room.

“Let’s go into the locker room to see Jake,” I said to my cousin, whose favorite NFL player was inexplicably mediocre Panthers quarterback Jake Delhomme (this isn’t a joke…we grew up in Philly and he loved watching Jake Delhomme). He nervously agreed.

I love to sneak into places—it’s one of my favorite pastimes—and if you know anything about being somewhere you aren’t supposed to be, you know you need to really sell that you’re either supposed to be there or that you didn’t know you couldn’t be there. I find the latter to be optimal in most situations, but for some reason (beer), in this particular situation, I went with the former.

We walked super confidently toward the locker room entrance and just before reaching the door got stopped by general security for the stadium.

“Where are you guys headed?”

You’d think I’d already have the answer to this sorted out, but given I wasn’t exactly running at peak efficiency, I was forced to think on my feet.

“We’re Jake’s sons.”

I told the stadium security that Jake Delhomme, at age 34 to my 24 when the game was played, was my DAD.

Think about this scene: I’m holding not one but two beers, wearing a fucking COWBOYS jersey, and claiming the opposing team’s quarterback—who was minutes removed from throwing two interceptions in a loss that night—became our father when he was 10.

Naturally, he let us in.

Obviously I never considered the possibility we’d actually get inside the visitor’s locker room to see our long lost dad, so I didn’t have much prepared. It didn’t matter since a member of the Panthers immediately approached us and said (very loudly and without much hospitality, I might add), “Who the fuck are you?”

I didn’t even need to say anything before the initial security guard, who was trailing just behind, spoke up. I figured the gig was up, but instead he yelled out:

“They’re Jake’s sons!”

LOL, they’re Jake’s sons. The guy stood up for us with just an all-time line, and he did it with confidence—like he had vetted us for three hours prior and was convinced these drunk assholes were the opposing quarterback’s children.

At this point, the things that should have happened began happening. “Get them the FUCK out of here!” A team to escort us out (no arrests!). A quick chug of one of my beers before they grabbed the other. Yada yada yada.

So that’s the time I got a Dallas Cowboys cheerleader’s number and subsequently thrown out of Cowboys Stadium simply for trying to visit my father, former Carolina Panthers quarterback Jake Delhomme.

Anyway, the point I’m trying to make here is that I never really told anyone this story and I just wanted to tell it. And the other point is that sometimes, you just have to take a risk.

And if you’re wondering, yes, I did meet up with the cheerleader that night. And yes, the date did end quickly after I became too competitive during the Skee-Ball portion of the evening.

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How to Find the Next Big Thing

Over the past decade, I’ve worked primarily in sports gambling and have mostly made money in unconventional ways: crypto, DFS, push-up bets, etc. Gamblers pride themselves on finding edges, one of which—maybe the biggest—is to uncover opportunities before others: to be first. When it comes to all forms of alternative investing, identifying which trends/industries will grow—and doing it before most others—is a pivotal part of success.

A few weeks ago, my buddies and I lost an auction for the most famous sports card ever:

There were a few reasons I liked this card. Some of those:

• As a vintage card, there’s guaranteed scarcity; it can’t be reproduced.

• In many ways, sports cards are new-age art, which I believe, along with another type of art I’ll discuss in a bit, will be collected more so than traditional fine art as younger generations get money.

• Of the few dozen known Honus Wagner cards, I think a large portion will never be up for sale (some are in museums, some owned by ultra-rich who don’t need an extra $1mm, etc.). The actual number of cards available is very low.

• High-end alternative assets could explode with the growth of fractional investing.

• It would just be cool af to own a Honus Wagner.

Anyway, as we were discussing the merits of owning the card, I found a couple aspects of the investment to be interesting.

First, I was probably never going to see the card. It was to be placed in a vault and, hopefully, never touched again until sold. I recently met up with one of my good friends and entrepreneur Jeremy Levine (he founded StarStreet, DRAFT, and now Underdog), and he has jumped head-first into sports card investing. He also mentioned he never actually sees any of the cards; he has them sent thousands of miles away where someone else handles them. In that way, what we’re looking for isn’t really a piece of cardboard, but something even less tangible: provable ownership of a scarce asset.

Second, as we discussed going in together to buy the card, I mentioned that I think the price of high-end assets like this could really soar in the coming years with the growth of fractional investing. Sites like Masterworks, Rally Rd., Otis, Collectable, and so on let people buy and sell shares of high-end alternative assets like art, cars, wine, etc. EmpireMaker—one of the top DFS players and one of four of us trying to win the Honus card—questioned “Who the hell would want to own a fraction of a card?” to which a friend of ours who was also in on the deal responded, “literally us, right now.”

In the gambling world, we are used to chopping things up all the time; we swap equity in big tournaments, go into investments like this together, etc. But the reality is that, until recently, this wasn’t really an option for most people.

Now it is.

A lot of smart people are seeing the bright future of alternative investing.

My background is in DFS/betting, but I’ve been known to dabble in trading cryptocurrencies. My company FantasyLabs made a push to get into esports after bringing on Mark Cuban as our lone investor; we ultimately decided there were better opportunities for us given we knew fucking nothing about video games but had lots of upside (and work to do) in continuing to build tools in DFS.

Recently, I bid on a piece of digital art that went for record-setting numbers. There’s a great explanation of the story behind this piece here.

I’m completely willing to admit this might be the biggest blunder of my life, but I think the future of art is digital. Not only should ownership of actual physical paintings be tokenized—fraud is a big problem!—but there are a variety of benefits of art that exists solely digitally as compared to physical art (the collector/artist relationship can shift and even become aligned, the art itself can change over time, you can quickly buy/sell without storing it, ownership/prices are transparent, and so on). I’ll get into these in another article because I have a bunch of thoughts.

The concept of digital art and similar areas are so new, which is what is attractive to me. Could I be the dumbest motherfucker on the planet? Perhaps. But I think the idea of people buying internet money a decade ago probably looked pretty dumb as well. To me, it’s a smart gamble because the potential payoffs are unbelievable. The fact that there’s a movement toward things similar to digital art—and digital art itself over the past 6-12 months—and my natural inclination is to dismiss it should be even more reason to be bullish, similar to the idea of Bitcoin years ago, as people initially writing it off is what allows for the big payoffs that accompany being first.

A lot of these new concepts will look ridiculous at first. As Chris Dixon has written, the next big thing will start out looking like a toy (h/t Ezra Galston, who linked to this post in his blog, which I recommend):

The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.”  This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.

Trading cards might very well become a stock market for athletes. What was once play—kids trading physical sports cards with friends—could transform into something completely different.

When you start to go down this rabbit hole, you inevitably end up asking “Why does this thing need to exist in the physical world at all to have value?”

As I examined the sorts of areas to which I’ve gravitated from an investment standpoint, I noticed a trend. Digital art, cryptocurrency, eSports, trading cards—they’re all a continuation of this inevitable trend of moving the physical world online.

And if you notice, they’re all widely rejected by older generations but overwhelmingly accepted by younger ones. I remember learning how much money kids spent on digital items in video games and thinking it was so stupid, but why? It’s so easy to write off what’s different or what we don’t naturally understand as silly, but it’s exactly those things we don’t naturally understand or agree with—yet are popular—that we should spend the most time figuring out.

And so, when it comes to finding the next big thing, I think you’re on the right track if you’re asking these questions:

1.      What are kids (high school/college-age) interested in?

2.      Which things that exist physically will move digital?

3.      How will the democratization of ownership change the investment landscape?

When you add all this shit together, you end up trying to pay six figures for a jpg of Vitalik Buterin.

But really, I think this trend of physical to digital and democratization of ownership will lead to a lot of really cool opportunities, specifically in fractional investing, alternative assets, and the combination of the two. Places like Dibbs.io—a new marketplace for sports card trading—will continue to pop up and redefine what it means to collect, own, and invest, breaking down barriers to entry as well as a lack of both liquidity and transparency. My guess is that either they or someone else will eventually do this with blockchain.

The future is digital. Look to youth and find ways they’re transforming age-old concepts like money (crypto) or athletics (eSports) in a digital world. The best combination of these ideas right now, in my opinion, is fractional investing of alternative assets.

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About Lucky Maverick

About Jonathan Bales

First of all, what does this image have to do with branding? Literally nothing. I don’t even know what it is. Okay, had to get that out of the way, let’s start the article…

My high school didn’t have a football team, so they let me go play football for the neighboring high school. It was kind of surreal—they were our rivals in other sports—but it was also pretty awesome.

At my high school, I was known as pretty shy. I’d say I was sort of in the cool groups—mostly because I played sports—but I certainly wasn’t one of the coolest kids. I didn’t really try to be popular, mostly just doing stuff I found interesting even if others didn’t. I also got really good grades, so I’d say my “brand” in my high school was like shy/nerdy/loner/not-good-with-girls.

But when I went to play football, something crazy happened: I became way more popular at the neighboring high school. I was good at football, so that helped, but I also think there was like this air of mystery surrounding this kid who barely spoke and just came to play running back—THE running back y’all—for the school. With literally zero change in my behavior, my brand at that school was probably more like cool/jock/athletic/still-not-good-with-girls-but-this-time-they-like-me-idk-why.

There’s a lot that goes into people’s perception of you (or your business). Mostly, I think both people and companies really try too hard and focus on the wrong things when they’re aiming to shape their brand. I’m no brand expert, but these guys are…

Invest Like the Best

My buddy and FantasyLabs co-founder Peter Jennings is always touting the Invest like the Best podcast from Patrick O’Shaugnessy, and he recently sent me an episode called The Power of Brand that I really enjoyed. From the show description:

My guests today are Jason Karp and Rohan Oza. Jason is the founder and CEO of HumanCo, a holding company focused on building businesses that help people live healthier lives. Jason formerly ran the hedge fund Tourbillon Capital and was an audience favorite when he was on the podcast several years ago. Rohan is the co-founder of CAVU Venture Partners, one of the fastest-growing venture funds in the CPG space. Before Cavu, Rohan focused on supercharging brands like Vitaminwater and Smartwater at Glaceau which was acquired by Coca Cola for over $4b dollars. You may also recognize his name as a recurring Shark on ABC's Shark Tank.

The people who seem to do the brand-building thing best are the ones who appear to not really care much about it. You can’t really be cool if everyone sees you trying to be cool. Further, it’s difficult to maintain that “cool” factor as you grow. I’m interested to see how Supreme—a company that’s been the best I’ve seen at building a “cool” brand at scale—maintains their image now that they’ve been acquired by Vanity Fair.

I’ve never really focused on “building a brand” on a personal level, but I think we did it pretty well at FantasyLabs. That was sort of unintentional, with the only concerted effort being to build stuff for super-hardcore users; we basically just made shit we wanted to use as DFS players and thought pro-level players might use.

I’ve always thought the idea of “building a brand” is kind of douchey, but whether you like it or not, you have a “brand”—a general perception about who you are, what you stand for, and so on. This might not matter to you, but if you’re trying to make money online, your brand likely matters quite a bit.

As I listened to this podcast, I realized I’ve kind of unintentionally done some of the things that convert well to building a respected brand—mostly centered around authenticity—and I thought it might be cool to run through some of Rohan and Jason’s main points from the show.

Using their advice as a springboard, here are the most important steps to building a desirable brand. Note that I’m using “brand” loosely here; it doesn’t apply solely to business or even to making money. If you’re going on a date, for example, your “product” is you and the same general principles still apply.

• Have a real product.

In the words of Rohan: “Sizzle is a bad word if there’s no steak. You have to have steak.”

Before you do any advertising, before you market at all, before you ask anyone for anything, you absolutely need to make sure you have something that’s worthy of people’s attention. In my experience, most companies’ failures stem from “putting lipstick on a pig.”

As this relates to marketing yourself…well, don’t do it unless you’re truly working on yourself and confident you have something special to offer. Branding is easy for something that truly rocks. And, in some ways, when you really have something that works, it’s cooler to not even really advertise it.

In the words of the Geto Boys:

Real gangsta ass ni**as don’t flex nuts
Cause real gangtsa ass ni**as know they got ‘em

Building a great brand—or at least one that’s cool—is kind of a “marketing without marketing.” Can you be cool, relevant, revered…without people knowing you’re even trying?

The easiest way to do that? Just be real. Focus on improving yourself, your product, the “steak,” and everything can fall into place after that. Without that steak, you can’t be a real gangsta.

When looking for companies in which to invest, Rohan looks for three things: a founder with a real story, a product with a real need, and a real ability to disrupt the market.

The key word in all this: real. That’s because another key element of building a brand is…

• Have a real story.

Rohan says “Authenticity is critical. It has to feel real.”

I’d go a step further and argue in order to feel real long-term, it has to be real.

Rohan looks for founders with a real story because customers eventually sniff out how real you are. It matters. You might be able to fool people temporarily, but it won’t last unless you’re genuine. Even after an acquisition, Jason argues that founder story needs to stay intact, even at scale.

People connect with authenticity and can uncover it a mile away.

• The founder must be fanatical about the product.

Related, the founder absolutely must be a power user of their product and a respected expert in their field. From Jason: “If the founder is (respected and) crazy about the product, the public can look and say ‘If it’s good enough for them, I know it’s good…With Apple, if it’s good enough for Steve Jobs...”

I never really consciously considered this, but it’s likely the single largest reason for our success at FantasyLabs. Peter and I were DFS players simply building tools we wanted to use. We were respected in DFS, and so when we built awesome stuff that we actually used, people took notice. Marketing is easy when your brand is built from a place of authenticity by people genuinely in love with what they’ve created. Most of our success was effectively, “Well if it’s good enough for CSURAM88 to use, I’m sure it’s good enough for me.”

Note that the first three bullet points for building a great brand are pre-marketing. They’re things that need to be accomplished before you tell a single soul about what you have going on. Jumping right to sizzle without cooking the steak is like learning all kinds of interesting pickup lines or making an interesting resume without being an interesting person. It’s actually worse than doing nothing because not only are you going to fail, but it will take a longer time for you to fail, and thus a longer time to adapt and improve. In my post on the secret to success, I discussed the importance of improving the speed of your trial-and-error cycle.

This idea of “pre-marketing” with substance is one reason I think it’s so pivotal to focus on your passions. Not only is it sustainable—an opportunity for you to live a happier life by simply enjoying what you do—but people will detect that passion, which will inevitably dictate your success.

• Find the 1-in-10—the “Fanatical Few”

Once you have something of substance, you can begin to grow. You can expand without really advertising or “brand building” or marketing at all—especially in an age of permissionless leverage—but you can certainly pour fuel on the fire once the pre-marketing is complete.

The place to start: the most hardcore users.

Rohan calls it finding the 1-in-10.

Jason calls it “the fanatical few.”

Taleb calls it fat tails.

Science calls it the Pareto principle.

Kevin Kelly calls it finding 1,000 true fans, and Andreessen Horowitz has said try 100.

If you want to grow big, first grow small. Focus on finding your superusers—the customers who really crave your product and will become influential in getting other people to use it, too. As Rohan says, “1-in-10 Americans influence the other nine. You have to find a way to get to that one.”

This is one reason Jason is so adamant about a fanatical founder. Not every customer is created the same; some are of far more importance to you—not just in dollars spent but primarily in influence over others—and the route to scale is through impressing those high-end users.

Great brands build for and market to the fanatical few.

• Focus on engagement over reach.

“Two people can have one million followers each, but one has far more influence than the other, even if the reach is the same,” says Rohan.

It’s not just reach that matters. It’s “how much do people care what you have to say?” Followers without engagement is like getting famous without the ancillary benefits, like getting rich. As Nelly said, “What good is all the fame if you ain’t fuckin’ the models?”

And to get rich, you need not only reach (followers/fans) and engagement (they care what you build/say), but you also need the right types of fans (i.e. those with disposable income). This could be a strong reason to be even more bullish on esports in the future, as the industry has world-class reach and engagement, and as the audience (overwhelmingly young) ages, they’ll have more money.

These reach/engagement effects are not linear. Ten-thousand followers who have 5x the engagement as 50,000 followers will be far, far more valuable. There are exponential returns to finding the most engaged fans, as demonstrated by Taylor Pearson in his article on finding luck.

Not only do the fanatical few pay exponentially more money for products they love, but they’re also the most effective means of advertising to the masses—the 9-in-10 who aren’t yet but could potentially become one of your true fans.

• Data won’t help with vision.

I don’t know where I heard the analogy, but I like the image of someone “perfectly following a map without knowing where they’re going.” It seems like so many people/companies have become obsessed with optimization over innovation—the equivalent of following directions, carefully planning everything to take the most efficient route possible…and then ending up in the wrong place.

Being data-driven can certainly aid in identifying and fixing inefficiencies, but I’d argue not as much in innovating. Almost all the time, you should be focused on innovating, not optimizing. Don’t just find the most efficient way to do what you do; think about completely new paths altogether.

Again, this is why a fanatical founder is so pivotal. In the same way you can’t successfully survey your customers to determine what to create (they’ll suggest small optimizations, not paradigm-shifting products), you can’t rely on data to tell you where to go. That must come from the heart of the leader.

As Jason said on the podcast, “Investment folks want to live in the quantifiable realm and not the qualitative, emotional realm. But I always come back to ‘Do they make epic shit?’ When you come across something epic, you know it, and it’s rare.”

Use data to inform but not completely dictate your vision. You can’t use data to back your way into making epic shit.

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How to Start a Movement

One last related item before I head out: I’ve been getting a lot of great content recommendations from readers—keep them coming!—and one was this very short TED talk (just a few minutes) on how to start a movement.

The key components of a movement:

·        A leader with the guts to stand out and be ridiculed

·        A first follower(s) with the guts to join in

·        The acceptance of the early followers as equals

·        Movement is public

Movements—which are really what brand-building is all about—are started by a leader with courage. Jeff Bezos has said entrepreneurs “need to be willing to be thought a fool for long periods of time.” If you’re worried about what other people think—or just delivering what you think they’ll want—you’re going to have a tough time starting a movement. Read: Never Become the Person Your Followers Want You to Be.

A leader needs followers. Movements start when a leader convinces initial followers to buy in, and following itself takes a lot of courage. The leader must accept these first followers as equals, and this must be done in some sort of public forum for others to see and join. At a certain point—as potential followers see more and more acceptance of the movement—there’s less social risk in joining.

I’d argue a great movement needs one more element, which is time. A movement needs time to reach a tipping point—a critical mass at which point there’s enough momentum such that the movement cannot be reversed. Movements grow exponentially; exponential functions look quite like linear ones early on, so the leader needs enough belief in what they’re doing to stick with it long enough to reach that tipping point.

My favorite quote from the talk: “If you really want to start a movement, have the courage to follow and get others to follow. And when you find a lone nut doing something great, have the guts to be the first one to stand up and join in.”

I don’t know if I’m going to start a movement with Lucky Maverick. But I do know I’m a lone nut having some fun.

About Lucky Maverick

About Jonathan Bales

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I’ve kicked off this newsletter with a bunch of longform content. I initially planned to experiment with various styles and formats, but the truth is that I’m suited to write longer articles. I believe in the power of focusing on fat tails. From Taylor Pearson, who I recommend checking out:

In his essay Do Things That Don’t Scale, Y Combinator’s Paul Graham notes that “[he] ha[s] never once seen a startup lured down a blind alley by trying too hard to make their initial users happy.”

This is 80/20 thinking. Because everyone is operating with a bell curve model in their heads, they are spending the same amount of time and energy taking care of each one of their users. But because not all users are created equal, if they were optimizing properly, they would spend 50% of their time on the 1% of users who are most excited about the product — and being an early adopter is a strong sign of being excited.

Even outside of strategic reasons for writing longform content, I simply enjoy it. You’ll always find me on the side of being too niche over too general.

There are some topics I’ve wanted to touch on that don’t really lend themselves to a 3,000-word article, though, and so I’ll occasionally publish some quick-hitter posts that bounce around a few different subjects or thoughts I’ve had.

Prop Bets for Motivation

I once bet a poker player he couldn’t learn Mandarin in one year. And guess what? With enough money on the line, he shocked everyone and became fluent in less than 12 months, parlaying the bet into a high-paying job in Shanghai.

Just kidding. He failed miserably. Becoming fluent in Mandarin is a bit ambitious, although he did learn to say “They are eating peaches,” which I think has some value. If he’s ever taking a stroll through Beijing and sees a group of locals eating fruit, he’s gonna really impress.

That bet aside, I’ve found the most effective way to trigger internal motivation is through betting. Money is a useful tool—or the threat of losing it, anyway—but your bets don’t need to be financial ones. I’m a big believer in the power of downside; humans are inherently more motivated by what they can lose than what they stand to gain. Making a goal public and having real consequences for not achieving it—or, better yet, competing against someone else trying to beat your ass—is a really useful means of self-improvement; with the right bet, even if you lose, you win.

If you want to get in better shape, book a fitness-oriented bet with a friend. I’ve done a bunch of these bets that have really improved my motivation to work out. You can bet on improvement in a specific exercise, a change in your body-fat percentage, or a penalty bet in which you lose $X for a specific action (say, drinking alcohol or eating certain types of foods). I booked a no-alcohol/no-sugar bet that would have cost me $1,000 for each infraction. Pretty easy to not drink at that price. If you don’t like paying $12 for a beer at a ballgame, you’ll really hate $1,012.

Hedging

Working in the gambling industry, I hear non-stop chatter about “hedging,” usually out of a big bet. Hedging is a tool used in basically all forms of investment, but I think there’s a lot of confusion and/or incorrect logic around the pros/cons of hedging.

First of all, buying out of a bet because it’s too big isn’t hedging; that’s just you being a pussy. If you make a bet—whether it’s in sports or with a stock or in crypto—and it gets to a point that it’s “too big” for you to stomach such that you want to buy out at a reduced -EV price, then you made too big of a bet to start. You’re guaranteed to lose money like this. If you can’t let it ride, don’t make the bet, because you’re losing all your EV by getting out.

There are a couple situations in which hedging makes sense, one of which is when you have an unexpected change in finances. When I first started working in DFS, I partnered with DraftKings on my books in exchange for equity. I probably could have gotten way more stock than I did—I’ve messed up like every deal I’ve ever done, although I’ve slowly improved from worst-negotiator-in-the-history-of-the-universe to just-regular-shitty level—but either way, it has ended up being a nice deal.

When DraftKings recently went public and the stock price soared, it turned into a terrific (potential) payday. For a long period of time, I couldn’t sell the stock, and even now I’m still just holding for capital gains reasons. The total value isn’t enough to really make me do much besides just sit on this stock for 12+ months, but what if it represented, say, 75% of my entire net worth? Then the math changes.

Let’s say given my shares and the current price that my stock was worth $150,000 with my net worth otherwise being just $50,000. Then, it would be smart to make some moves to hedge, even if I thought it offered a slightly negative expected value, just because my future net worth would be so volatile, almost completely dependent on the stock price. If I shorted DraftKings in such a way that I basically locked in $140,000 of the $150,000 value, that’d be a trade I’d be willing to make in this hypothetical.

You should buy insurance when your life would be materially altered by a specific downside scenario. In this example, hedging is simply buying insurance on your future net worth.

So one reason it’s smart to hedge: when a specific investment unexpectedly becomes too great a percentage of your net worth or the downside is too much for you to stomach. Slightly -EV decisions in the short-term to “buy insurance” on your future can be super +EV long-term. But you shouldn’t willingly be getting into situations in which you know you’d hedge out later (read: big sports parlays).

The second reason to hedge is the same reason you make any bet: it’s +EV. When a specific action is +EV and runs counter to something you’ve done in the past, I’d argue the threshold you have for action can be reduced to a point of basically neutral expected value.

Even neutral-EV bets that minimize your volatility can be +EV for your overall portfolio long-term. Situations change, you gain more information, and what you did in the past is irrelevant to the current EV of a decision. If you bet on a sports team at +110, for example, and then injury news comes out or the weather changes or whatever and the line moves and you think the other side is now neutral or very slightly positive expected value at even money, that’s a smart bet to make; you’re freerolling, betting X money on each side and either losing X and winning back X (breakeven) or losing X and winning back 1.1X (5% ROI).

As a real-world example, this spring I considered investing in a small company buying N-95 masks. I ended up not doing it, but the reasoning was basically this: I have a ton of exposure to the sports industry, which is very much tied to the future of COVID. In scenarios in which sports (and my future net worth) are negatively impacted by the virus, it’s likely that masks would be in high demand, in which case even an expected value of $0 for that investment would be +EV long-term because it would limit volatility at no cost. You could argue even a “bad” investment of this type could be beneficial, although part of that calculation is simply your appetite for risk.

In any event, the more correlated your investments, the more EV you need to justify taking on additional risk. When they aren’t correlated at all, you don’t need quite as much EV, and when they become inversely correlated, you can “hedge” by moving down to neutral-EV to even slight -EV in certain situations in which you possess a lot of downside.

To sum up my thoughts on hedging:

It’s smart if it’s used as true insurance. It’s smart if it’s neutral-to-plus EV when inversely correlated to other investments/bets you have. But most times, you’re just being a pussy and should let it ride.

Why Skin in the Game Matters

One of my favorite excerpts from Skin in the Game:

I went on television once to announce a newly published book and got stuck in the studio, drafted to become part of a roundtable with two journalists plus the anchor. The topic of the day was Microsoft, a company that was in existence at the time. Everyone, including the anchor, chipped in.

My turn came: ‘I own no Microsoft stock, I am short no Microsoft stock, hence I can’t talk about it.’ I repeated my dictum of Prologue 1: Don’t tell me what you think, tell me what you have in your portfolio.

Talk is cheap, as they say. If you want to know about stocks, you watch what a successful trader does rather than listen to what television analysts say. If you want to learn sports, you watch what a successful sports bettor does rather than, again, listen to what television analysts say. The only time to prioritize what someone on TV says is when the only alternative is a radio host.

The primary reason I think it’s important to learn from those with skin in the game isn’t because it’s honorable to take on risk (although it is) or because doing > saying (although it is) or because I’m biased toward placing downside on beliefs (although I am). The main reason is simply because looking to those with skin in the game is a useful heuristic to finding what works—a quick way to get closer toward the “truth”—as there’s a selection bias in terms of who you’re analyzing.

In real markets where people have skin in the game—and actual downside when they’re wrong—it’s not just the people operating that are meaningful. It’s all of the people no longer there—the ones who lost their money or were otherwise forced out—who truly matter. Whenever there’s a mechanism for poor ideas or -EV actions to die off—whenever an industry or field mimics natural selection—it means what’s left (say, elite pro poker players) is statistically more likely to be in line with reality than in areas in which there’s no such “survival of the fittest” trait (say, writing about poker strategy).

That’s not to say those who talk can offer nothing of value. Specifically, you can trust those with success who have skin in the game, or you can trust those appropriately using math/logic. Preferably both. Here’s how to find who you can trust.

You shouldn’t really trust what I say; hopefully you question everything and just use these posts as a springboard for thought. But if you do place emphasis in what I say, it should be because I can clearly articulate the logic behind what I’ve accomplished thus far—the areas I’ve found success when taking on risk. And more astutely, I hope you can learn from my many mistakes.

Question everything and everyone. But when it comes to looking for truth, a good starting point is the most successful people with downside because there’s a selection bias that increases the likelihood of them being correct for the same reason the odds of blindly choosing a delicious restaurant in New York City are higher than in Des Moines: the competition in NYC has forced out a higher percentage of the poor restaurants.

On Remote Work

COVID seems to have at least one beneficial impact to the economy over the long run, which is to speed up the timeline on certain aspects of our lives that were an inevitability.

One of them I’m not happy about is the surge in remote work, which I thought was one of the biggest possible edges available in business. My company FantasyLabs was completely remote and any company I ever create would be that way.

The primary benefits of remote business are:

• Lower costs (no office)

• Fewer meetings (less temptation to be busy over productive)

• Unrestricted hiring (hire the best, regardless of location)

These are all important, but the last one is the most impactful. The internet has opened the ways in which you can make money by many orders of magnitude—to a degree most people don’t yet grasp. Yes, it might be more difficult to monitor employees when they’re working remotely, but who cares? When someone is doing work they’re meant to be doing—when you find an A+ hire, which is probably hundreds of times easier when they don’t need to live in a specific location—you don’t need to worry about monitoring them and their output will naturally be so much greater because they’re doing what they should be doing.

It also should reinforce a concept I believe is incredibly important and fundamentally misunderstood; in the internet-age, people create value with their unique, irreplaceable knowledge, not with their time. You’ll never become wealthy or hire the right people if you think about output in relation to hours spent working. An amazing engineer can make a company millions of dollars with one beautiful, logical line of code. Remote work should help employers naturally focus more on output than time spent working—which is what they should have been doing anyway.

In this way, it kind of sucks (for those already operating remotely) that other businesses have removed to remote work simply out of necessity, stumbling upon the most efficient solution by accident. Not every business can function remotely, of course, but the ones that can and weren’t—a huge percentage of companies—just got extremely lucky. No need to worry, though; making money in business is still the easiest game in town, and there are so many incredible edges remaining.

Many of them are versions of my principles for Lucky Maverick.

About Lucky Maverick

About Jonathan Bales

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This is the audio version of my article The Secret to Success: Mimic Evolution.

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