Being extremely successful is risky. To be the first, you sacrifice being the last one. To be the first, you sacrifice being ridiculed. To be the first, you risk losing everything.
Many people want to be the best in whatever they do, but a lot of them are not willing to put in the work or are not willing to take the risk to be the best. Being at the top is risky and has a low probability. It’s risky because it’s like a mini claw machine. You can give it a lot of output (money), but you might never get the input (the toy). Crazy successes (i.e. Jeff Bezos, Ray Dalio) are exactly like this, you can give a lot of output (energy/effort/time), but you might never get the input (money/fame/followers/vision/dream).
I believe in working hard, putting in the effort, and dreaming big, but I’m referring to the crazy successes as in billionaires, visionaries, and shapers of society. These types of people, sometimes, have this level of success because they will risk everything hoping to win.
Let’s focus on entrepreneurship, which is one of those fields where it’s winner-take-all.
What if I told you I could predict who the next Jeff Bezos will be? Or Steve Jobs? Or Elon Musk? In many industries and ways of life, success can be attributed to randomness or luck. However, in the entrepreneurship world, their successes can be mostly attributed to a set of thinking ways and systems that they had in place way before we knew them like these “visionaries.” When I say their "crazy successes." I'm referring to the accomplishment of an aim or purpose.
For instance, it’s an easy prediction to make—that Jeff Bezos will do what he has always done. He will attempt to move faster, make bolder bets, and pursue both big inventions and small ones, all to achieve his grand vision for Amazon. You can mimic everything that Jeff Bezos has done and you might end up living in the streets. What’s the difference?
I’ve noticed that the same traits that lead to success, also lead to failure. If you think exactly like Jeff Bezos and imitate his habits and routines, that does not mean you will become as successful as him or build the next Amazon. We can take the most successful entrepreneurs of our time and study their habits and learn what they do to become what they are. This is exactly the problem with successful people's studies. You only study the ones who became successful and you don’t take into account the ones who failed and had the same habits, routines, mindsets, etc. This is known as survivorship bias.
This is also why most studies are done incorrectly because they fail to take into account the other part of the population, making the samples biased and not random. Let’s say the top ten basketball practice super hard, usually over 100 hours per week. Concluding that if you practice over 100 hours, you will become an outstanding basketball player is not right because we didn’t count the ones who worked +100 hours and did not make it. We simply don’t know if the ten players we picked had a personal trainer, a family member in the team, or if his dad was the coach.
Successful entrepreneurs are successful because of their mindset of taking risks and promising bets. If we don’t know anyone who failed miserably using this framework, we might think if we take big risks, we will succeed because well… that’s what these billionaires did. Sure, that’s what they did, but concluding that if you take big risky bets, you will succeed is wrong (Remember? Survivorship bias). There’s a probability, but it’s very low.
I found these two inspiring entrepreneurs to illustrate this point. Jeff Bezos (Amazon Founder) and Ray Dalio (Investor). We can compare them and we find many similar traits: they wake up early, they work hard, they’re positive, they take risks, they’re resilient, and they’re determined. These traits are great, and they might increase your probability of succeeding, as well as increasing your probability of failing.
In the early 1990s, Jeff Bezos had a high-paying job on Wall Street. He and his wife were comfortable and living a “good life.” However, Bezos saw the new opportunities with the internet and started an internet start-up in Seattle. He quit his fabulous job and risked his money, time, efforts to make his dream a reality. He, as we know, did pretty well.
The other entrepreneur runs the biggest hedge fund in the world, Ray Dalio. He might seem like a successful investor (which he is), but that wasn’t the case at all. In 1982, Dalio thought the global economy was going to massively fail, and he traded accordingly. Not only was he wrong, but the stock market began a bull run for the next 20 years. He was forced to lay off all of his employees and ask his family for money as he couldn’t even afford rent. Dalio is a great example of how taking big risks also leads to failure, and not exclusively to success. This failure pushed Dalio to keep getting better and understand why he had failed. This experience led him to become one of the most successful hedge fund managers in history.
What’s the bottom line then? If the same traits that lead to success, also lead to failure. What can I do?
Here is where it gets interesting. I will use a bell curve (a.k.a normal distribution).
Let me explain what you see.
In the 95% is where most people are, people who have an “average life.”
To get to 100%, we need about 5%. This 5% of people are approximately split in half. 2.1% in the lower end, and 2.1% in the upper end. (To avoid confusion, I will use 2.5%)
The “crazy successes” are in the upper 2.5%. This is where we find the most successful people on the planet. This is where we find the people who risked to be in the lower end to be at the top
In a Tim Ferris Show interview with author and personal finance advisor, Ramit Sethi. The host (Tim) asked Ramit what they both disagree on. Ramit says that following habits and routines from successful people is meaningless. He says that he doesn’t have any morning routine and likes to check his phone first thing in the morning. He uses the example of Michael Jordan and says that if he were to follow his morning routine and wear the same shoes, he would not become or do what Michael Jordan did.
I disagree with Ramit, he is right in a sense that blindly following other people’s routines and habits, hoping to become like them is insignificant and hollow. However, if you follow Jeff Bezos’ routines, habits, and mindset, you increase your probability of ending up in the upper 2.5%. Again, it doesn't mean you will end up there, in fact, it also increases your probability of ending up where Dalio once did, in the lower 2.5%.
When I say that people risk being the last one, to be #1 is because there’s no middle ground for these people. This framework is not for everyone; it is for those crazy and aspirational people who want to change the world.
One time, I was snapchatting with a “female friend.” I was telling her how she should be extreme and take risks to be the best (to end up in the upper 2.5%. I didn’t say that. That would’ve been weird). I even said, “Extreme people = extreme results.” She responded, “I’m not extreme.” This was a big turnoff, but most importantly it was the moment when I realized that not everyone is interested in being the best or being #1. I couldn’t get it.
People's aversion to risk is very different, and that determines their outcomes in life. Not everyone is willing to take laughable crazy risks, and this is what you need to understand for yourself.
Ask yourself these questions: What are my goals/dreams? And What’s my risk tolerance?
These two single questions will determine how you will live your life. If you’re interested in being at the top, in whatever you do, your risk tolerance needs to be quite high so that way (after you put in the work) you might increase your probability of ending up in the upper 2.5% (as Jeff Bezos), as well as ending up in the lower 2.5% (as Ray Dalio once did).
It’s all about risk tolerance and your willingness to get there.
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