Play Until You Win
Most of our failures stem from giving up early. We have to address that: Who continues to play eventually wins – under one crucial condition.
Alex Hormozi finishes his book $100 M Leads with the following parable: Imagine two friends playing dice against each other. One of them gets a die with 20, the other one with 200 sides – however, neither of them knows which one they got. Each die has one green side, the others are red. Every time they roll green, their die gains one additional green side. The two friends start rolling. Red, red, red … red, green, red, red, and so forth. Now, according to Hormozi, the two friends turn out to react quite differently to this game. One of them starts complaining pretty quickly. Soon he becomes absolutely convinced that he has had bad luck and is forced to use the bad die with 200 sides. The other one just keeps on rolling. Meanwhile the first one does throw a green side but is completely frustrated by the following red ones. He becomes convinced that this whole thing takes way too much effort and is unfair, anyways. The other one just continues to roll. The first one finally gives up, still complaining and leaves the die behind. As the other one stoically commences to roll, his die slowly yet gradually turns greener and greener, gaining pace while doing so and ends up rolling one green side after the other. Now, who has been the lucky one, receiving the die with only 20 sides? The thing is: It doesn't matter eventually.
“You don’t know how ‘good’ other players are when they start, you can only see how well they do now. But, if you understand the game, you also know it doesn't matter: A few begin early. Others begin much later. The rest sit on the sidelines complaining about how lucky the players are. I guess so, but they’re luckier because they play. And when they hit red, which they do, they didn’t quit. They rolled again.” (Alex Hormozi: $100 M Leads, p. 269)
It might not be the most subtle analogy, yet it immediately stuck with me: How much time I spend contemplating in which ways others are better positioned than I am. When I decided to switch careers from academic sociology towards business, I spent a lot of time thinking about my competitors on the job-market who might for instance have studied business economics or who at least secured multiple prestigious internships. How well these people must be off, being interested in the kinds of positions I now am, I thought. What if I had decided otherwise and had pursued at least a B.A. that was partially connected to economics a decade ago? If I had stopped at that point – becoming the player from the parable who stops playing altogether – I wouldn’t work as a Business Analyst for a major international bank now. Instead, while applying, I at some point realized that the only sensible thing to focus on was to concentrate on my own output: How well are my applications written? How well do they fit the jobs I try to get? How much work did I put in improving these applications and sending them out any given day? I understood that all the rest is just a distraction. And that, no matter the odds, if I just continued to push constantly, at some point something would give in. Eventually, I didn’t need to push as long as I had feared, but the important thing is that once you manage to achieve this inner shift, the odds at least become much less important. Just as in Hormozi’s parable, the only important aspect is that you do not stop. It might take a while, but if you manage to fight you will get what you want. Simple – certainly not easy. And eventually it doesn’t really even matter how long you took to green your die. In fact, nobody really cares. Every rejection hurts and seems to signal potential fail. This is especially the case if you are in a position to pivot, trying to switch careers, for instance. However, I still remember the realization I had in my last job interview that led to getting the position I currently work in: If I get this position, my CV will show a perfectly smooth transition from one career – being a Ph.D. student in sociology and working in academia – to the other. It will look effortless on paper – and hence, very probably what looks effortless on other people’s CVs hasn’t been as effortless, either! And what if it had taken me a whole year longer to get into my desired job? Would this be problematic a few years later, hopefully having had first successes in this new role? Quite the opposite, most people would appreciate the stamina and will to endure such a long period and not give up. We almost always admire stamina and the will to fight in others but tend to second-guess our own decisions to fight hard battles almost from the beginning on.
There are many obvious connections to make from Hormozi’s parable. Just think of the ‘inner scorecard’, echoing one of Buffett’s famous advices. Judge yourself according to your own standards and judge the outputs you generate. It is not in your hands to determine fully what comes out of your actions; just take care of them as well as you can, and the rest will eventually take care of itself. Did I push enough today? If so, I am content with my work – at some point, something will give in, no matter what. This reminds me of Charlie Munger’s dating-advice: To find a good spouse focus on becoming the person who deserves to have a good spouse. This, therefore, comes as another variant of the even more famous ‘Control the Controllable’. All this is true, valid, and valuable. However, I want to make another, maybe slightly less obvious connection. In Hormozi’s parable the only limiting factor is your own willpower as you can roll your die as often as you want. This may be true for many scenarios and more so than most people realize. However, I believe this part of the equation often has to be maintained or even created in the first place. Let’s make a brief detour into value investing to clarify this.
One of the absolute key ideas of value investing is Benjamin Graham’s notion of the ‘Margin of Safety’. Instead of following the classic dictum that risk and potential reward are necessary linked to each other – if you want to get a chance at better rewards you have to take more risks –, Graham proclaimed a different approach: If the value of a business is not by definition the same as the price people are willing to pay for it, there emerges the possibility of a gap between price and value. Hence, buying a security that is inherently worth much more than what you pay for it, “buying the dollar for 70 cents”, gives you both, low risk and potential for high rewards. In contemporary investing, this idea has gained a broader meaning and is closely connected to “conservative” approaches to investing. For instance, I understand Buffett’s – and most other value investor’s – disapproval of leverage as loosely stemming from this same idea. The usual argument would go somewhat like this: At least some amount of leverage is necessary to achieve the highest possible results, therefore, forgoing leverage may provide security but ultimately forces the investor to accept sub-par yields. Value-investors like Buffett, on the other hand, argue that much more important than each year’s rate of return is the ability to continue playing the game altogether. Do you see what I’m getting at? If you use leverage to make stellar returns for a few years just to get caught on the wrong foot at some point and are forced out of business, not only are your returns greatly diminished, you cannot continue to compound. No matter your tempo – slow always beats gridlock. In investing terms, therefore, you must defend the ability to roll your die as often as you’d like. This also applies to entrepreneurship: Whilst Richard Branson is well known for creating lots of different, sometimes exotic and seemingly risky ventures, such as an airline, he also always made sure to not “bet the house”, to always minimize the amount of risk to take.
“’Every single one of those [people] is obsessed with not losing money. I mean, a level of obsession that’s mindboggling.’ On Richard Branson: ‘His first question to every business is, ‘What’s the downside? And how do I protect against it?’’” (Ferris: Tools of Titans, p. 214)
Hence, the formula to great success seems to lie in stitching these two traits together: being obsessed with capping the downside on the one hand; not letting resistance, pushback, or even failure stop you, on the other. Both are necessary to make the other one possible: If you go “all-in” with whatever you are trying – risking everything – you thereby miss not only your second, but potentially all your following chances. Equally, if you play it safe enough but are unable to keep up the fight once the situation becomes tough, you also completely miss your chances to succeed. I guess what makes this setup relatively tricky is that the two preconditions seem to require traits from opposite ends of the spectrum: Somebody who fights bravely and doesn’t let obstacles or failure define his boundaries but at the same time prudently obsesses about his downside.
Let’s move this away from the heroic language and from investing or founding new businesses. In my quest to get a job I could at least afford to roll a lot of dies. First, in principle there is no cap to the number of applications one can send out any given day. Second, I started this whole process relatively early when my Ph.D. position was still going for longer than half a year. In more abstract terms this would count as preparation or ‘positioning’, as Shane Parrish calls it. Third, potentially I would have been able to prolong my application process by relying on a mixture of living as cheaply as possible, receiving some social security, or bridging the time with some kind of okay’ish paying gig (a friend of mine worked as a postman for some time before landing an absolute dream job). To me, this marks a success story. I obviously have a lot of unsuccessful stories in store, too. What they all have in common is that I behaved more or less like the first friend of the parable, who pretty quickly decides to give up the game. For instance, I once thought of a podcast I wanted to create, spent hours to think of the exact format, decided on a title, drew and designed a logo – to then give up after the first guest I invited declined. It is one of the strengths of Hormozi’s parable to somewhat transport the profanity of the whole thing. I tend to fall into a vocabulary that is marked by strong antagonisms, some kind of brutal force and potential violence, when talking about these obstacles. That happened in this blogpost and it also often happens when journaling. I guess descriptions of that kind do serve the goal to make clear how hard these endeavors can be. True. However, they might be misleading in making us wait for evil and brutal forces pushing us down when in fact it is most often our own laziness and fear of embarrassment or rejection that hold us back. The friend who stoped rolling his die might very well have thought: “What are the others thinking of me? They probably know that I have the 200-sided die and just don’t realize how much of a fool I’m making of myself.” They might, or they might not (more probable: they don’t care the slightest), but, speaking with Alex Hormozi: eventually it doesn’t matter. Again: Simple, not easy.
”I find it helpful to see the world as a slot machine that doesn’t ask you to put money in. All it asks is your time, focus, and energy to pull the handle over and over. A normal slot machine that requires money will bankrupt any player in the long run. But the machine that has rare yet certain payoffs, and asks for no money up front, is a guaranteed winner if you have what it takes to keep yanking until you get lucky. In that environment, you can fail 99 percent of the time, while knowing success is guaranteed. All you need to do is stay in the game long enough.” (Scott Adams: How to Fail at Almost Everything and Still Win Big, p. 160)
For me, reading this parable and thinking about it led to the decision to finally start this blog. The post you are reading right now is the direct result of me not sitting down but deciding to roll my die. Let’s see how many sides this die has and whether I will be determined enough to turn a substantial amount of them green.