Linear games get linear results.
In order to win a linear game, you need to move the needle. You must increase your input for your output to change.
Earning money is a linear game. You need to work to earn every additional dollar.
Making money, however, is different.
When you start investing money, you open yourself up to asymmetry.
Wealth-building operates more like a power law than a standard distribution. This is because financialization gives money the ability to self-propagate.
Regardless of your work ethic, the more money you have, the more money-making opportunities open up to you.
There are even laws preventing so-called ‘unsophisticated’ investors from investing in certain classes of deals, e.g. startup funding.
Wealth compounds not just through interest, but through optionality.
There are other things you can invest in at low cost, which greatly multiply the number of options open to you, and the amount of harvest you can reap.
Shane Parrish recently reminded me that trust is one of them.
Operating with high trust opens you up to asymmetry due to:
- the number of additional opportunities you would engage in, and
- your likelihood of obtaining a positive outcome from situations where trust plays a large role.
Play games that scale. Invest in things that compound.
Take intentional steps to expose yourself to asymmetric outcomes.