Win at Life By Understanding Asymmetric Risk

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I introduced my teenage sons to poker a couple of years ago because it’s fun, I’m pretty good at it, and I hoped they’d enjoy it as much as I have. Lately they’ve been playing low-stakes online poker and it seems like every conversation at home is about making bets. Here’s what I’m teaching them.

Most things in life are predictable. Press the accelerator, the car goes faster. Show up at work, you get paid. Open TikTok, lose 90 minutes of your life. These are consistent, repeatable effects. Cope by being consistent yourself.

Then there are things that are totally random. Tomorrow’s weather. The mood of a toddler. Which line at the grocery store moves fastest. Cope by being adaptable.

And then there’s the final category: probabilistic outcomes. This is where poker lives. This is where life happens.

Sometimes we know the odds. Sometimes we don’t. But in most of these scenarios, the risk is symmetric — the payoff is proportional to the risk. You bet $1 on a coin flip; if you win, you get $2. That game, over time, offers no edge. It’s fair. Everyone has the same information. Picking individual stocks in public markets is symmetric risk.

Play symmetric games for fun, not fortune. Don’t get addicted. You can’t win.

But asymmetric games? That’s where it gets interesting. That’s where you can win.

In a good asymmetric game, the upside is vastly greater than the downside. Asking someone out. Investing in a business. Moving to a new city. If it works, your life changes. If it doesn’t, you move on to the next bet.

The trick to winning asymmetric games is information. Not just more of it, but having ways to get better, earlier, and cheaper access to information.

Take my purchase of the domain audiobooks.com. I didn’t know if it would boost sales, and I didn’t want to spend a million dollars blindly. So I tested it. I drove traffic to the domain while it was still under its old owner. I couldn’t see sales results, but I learned that Google charged me 50% less for audiobook-related ads than they did for my existing domain, SimplyAudiobooks.com. That would save me $500,000 a year in advertising.

That was enough. That was my edge.

Here’s another example: when our kids were little, my wife spent a lot of time at kids’ play places and considered opening one herself. I suggested, “Why don’t you try working at one first and see if you like it?”

She didn’t even want to try, and that was the end of that.

The best decisions often come from taking a small risk to inform a big one. Date before marriage. Travel somewhere before moving there. Try the side hustle before quitting your job.

As a teenager, I once asked a friend, “How do you know when to ask a girl out? They always seem to say yes to you.”

He said, “I make eye contact and smile. If they smile back, I talk to them.”

Sonofabitch. Why don’t they teach that in school instead of memorizing pi to six digits?

I still make the mistake of betting too much too fast. A year ago, I thought AI might help me pick stocks. I put $100,000 into a brokerage account, spread it across 10 AI-recommended stocks, and lost $17,000 in short order.

I could have learned the same lesson with a $10,000 test and only lost $1700. 

Any tool that’s publicly available can’t give you asymmetric information. If everyone has it, it’s not an edge.

The best experiments are private ones where only you know the result. Put up a fake sales page. Launch a test newsletter. Make a soft offer and see who bites. Track everything.

Years ago, I thought I could become a professional poker player. So I tracked every session I played. After a year, I found I was great at limit hold ’em and awful at no-limit. And no-limit is where the action is. It requires a level of aggression I just don’t have.

No poker career for me.

I’ve made over 100 investments in private companies, usually around $100,000 very early in a company’s development. I kept notes on each one. The pattern is clear: investments based on the founder’s charisma usually flopped. Investments based on how much I personally liked the product? Usually great.

People say “bet on the founder, not the product.” That sounds wise. But it’s mostly survivorship bias. The people saying that are the ones who happened to bet on great founders. They didn’t know that at the time.

If you want one powerful question to ask before investing in a startup, here’s the inside non-public information you want to know: Who else is investing? The reason this is important is that great investors have access to resources and information the average person, even the average rich person, just doesn’t have. 

When I moved from being an independent angel investor to running the 500 Startups Canada venture fund, I suddenly realized how much more access to information I had and why I was never going to make money as an angel. As a venture capitalist, I could have an entrepreneur pitch me on how much Google would love their business model and my next call would be to the head of business development at Google to get her opinion. Non VCs rarely have that kind of access. 

In poker, you get information by making small bets and seeing what your opponents do, narrowing down the possible hands they might be holding. Amateurs love to go all-in dramatically. Professionals know to make small bets, collect information, and then go all-in only when they know they have the best hand. 

The person with the best hand might win today. The person with the best information will win tomorrow, and every day after that. 

If you’re considering taking a big risk, consider this. What experiment could you run that will bring you critical information first?

To win at life, you have to take risks. But you don’t have to take them blind.

I love telling people about discoveries, people, or tools that enhance my life. Here are a few of my favourites. I receive compensation in cosmic karma points.

1. I meditate using Henry Shukman’s guided meditation app, The Way (link gives 30 free sessions.)

2. I journal using the Human Being Journal by Mahara Mindfulness.

3. My friend Alex Enchin runs a concierge service for medical help, Inscape, specializing in mental health retreats. If you or a loved one don’t know where to turn, he’s your guy to talk to (consultations are free).

4. I’m going to be holding a FREE online zoom live experience answering audience questions about risk-taking on May 22 at 8:30pm Eastern Time. Register here!

I write so I can connect with my readers. You can reach me by replying to this email, or by responding to the poll below.

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