Category: Personal Development


What is “Too Good to be True?”

Filed Under: Courage, Personal Development by apingel — View Comments
March 24, 2011

Let it be noted that there are a lot of scams on the internet. I mean, there are a lot of scams everywhere, but the internet is a favorite medium due to its anonymity and relative novelty. So I guarantee you that you can, with little effort, find a website dedicated to separating people from their money without providing any value in return.

Almost as prevalent are sites dedicated to helping people spot and avoid those scams. Some are better than others, but almost every single one includes the line “Remember: if it sounds too good to be true, it probably is.”

What is “Too Good to be True”?

Am I the only person who doesn’t find that terribly helpful? I mean, yes, I agree that many con artists will try to lure you in with a deal that’s unsustainable. But it’s also true that a lot of weird $*!& goes on in the world. Who am I to say what’s realistic? I’m well-educated enough to know that (to a first approximation) I know essentially nothing at all. I’m also young enough to have seen dozens of rounds of

    It’s not Possible! ->
    Well, it’s possible but stupid ->
    Well, OK, sometimes it’s alright ->
    What are you talking about? Everybody does that.

So I just don’t feel like asking my gut to make a decision is the best heuristic. I mean, in most cases I have literally no data on the topic being discussed, and that’s what your gut uses to make its judgments. So I’d be just as well off flipping a coin.

Asking my social network is even worse: my friends’ guts are equally uninformed, and it only takes one loud idiot to make a bad group judgement.

The World is Changing

A lot of things are possible now that weren’t possible when I was born.

  • A store can make money — and drive competitors to bankruptcy — without any storefront at all.
  • An author can make more than $1,000,000 a year without any help from a publisher and without selling any paper books.
  • An advertising agency can get better results by not hiring any employees at all, and instead using only freelancers.
  • Jobs that used to require a commute and fixed hours are now done from your own house whenever you have time.

So there are a lot of opportunities out there that could only have been scams 30 years ago — it was simply technologically impossible to make them work — that are becoming commonplace now. “Too good to be true” has become not only a lot fuzzier, but a lot harder to judge.

How Does That Work?

So how about some new heuristics?

Ask When someone proposes an “opportunity” that you think might be a scam, ask them for more information. How does that work? Where do you get customers? Products? Funding? How do you get paid? What’s in it for me? What’s in it for you? What’s in it for them? Whether it’s a scam or not, you should never proceed until you truly understand what’s going on.

Research Of course, any con artist worth their salt can spin a line of BS that sounds convincing, so you should also research independently. Google is good for this, as is your local Business Bureau. Research the concept: are other people trying this? How long has this company been around? Does the technology work the way they said it does? Have other people tried this and liked it? Google “[Company name] scam” and see what comes up (do read whatever comes up — anyone can post a website saying that so-and-so is a scam, whether so-and-so is Bernie Madoff or the Red Cross. You have to judge for yourself whether either party consists of kooks, honest people, or some mixture of both).

Ask people in the industry Hollywood is forever creating tech-based plots that even fairly un-techie geeks like me can tell are flat-out impossible. Our guts don’t have enough data to make good judgement calls on most things, but there’s someone out there who can make a good judgement call on anything. So find someone who knows business to ask about this “investment opportunity”, or someone who knows tech to ask about this new “polarization regulator”.

Perform a Risk Analysis Still not sure? What do you have to lose? No, really, what do you have to lose? Knowing what you’re risking is a huge part of determining the best course of action. Plus, you get a nifty free download. :)

Let’s start making assessments on the basis of facts instead of fear.

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Examples: When predictable is risky

Filed Under: Courage, Personal Development by apingel — View Comments
March 22, 2011

In the last post I proposed that sometimes predictability is risky: when the “predictable outcome” is failure, you’re better off taking a chance on something that at least has a chance of success. We also discussed two examples: the playoff for MTG Player of the Year, and the last-second game-winning shot in a sports competition.

But there are lots of examples of risky stability

Lousy jobs
Hate your job, but stick with it because it’s “safer”?
Probability you’ll hate your job if you stick with this one: 100%
Probability you’ll hate your job if you look for another one, or make your own: 50%

Your job has much greater risk of frustration, depression, and misery.

New businesses
People like to make the same kinds of businesses as already exist, because they know that there’s a demand for it.

It’s a good idea to make sure there’s demand for your business. But doing so by competing in a crowded field is kinda crazy. Do you really want to be competing with Starbucks? With Wal-Mart?

The thing is, let’s be honest: you can’t compete with Starbucks. Almost guaranteed. If you go up against them, you will fail.

If you start a totally crazy business — like birthday parties for pets — there’s a chance you will fail. There’s also a chance you’ll find an untapped market that you can dominate easily since you have no competition.

Probability of succeeding with a coffee shop: 1%
Probability of succeeding with a birthday party for pets business: 50%.

New Products
When making a new product, most companies like to copy their competitors. Making an MP3 player? Look at what your competitors are making, and make a device that’s as close as possible to that.

Who didn’t follow that advice? Apple. I mean, look at the math. If you make a knock-off product, you’re guaranteed to sell a few units, but you’re guaranteed not to sell very many, since someone else already beat you to the market. And you’re going to spend millions on R&D and advertising. The only way to make money on that is if you sell lots of units, not just a few. Apple put the effort in to make an MP3 player that was completely different from their competitors’, and hit it out of the park. (Yes, there were MP3 players before iPods. They just didn’t catch on. Companies copied them anyway).

If the iPod had been a flop? Well, you’re investing millions anyway. Honestly, the difference between losing $1,000,000 and losing $900,000 isn’t that significant, and that’s what you’re risking with the knock-off product. Whereas the difference between making $100,000 and $10,000,000 is pretty darn significant.

Probability of making money on a knock-off product: .5%
Probability of making money on a brand-new, unique product: 50%

Are you in a situation where predictable is risky?

Still, there are a lot of situations in which predictable really does mean safe. How do you tell?

With this simple questionnaire! (Free Risk Analysis Download)

What’s the downside risk? If it all goes to heck in a handbasket, if Murphy steps in and your worst nightmares come true, what do you stand to lose? Money? Time? Reputation?

What’s the magnitude of the downside risk? Whatever you stand to lose, how much do you stand to lose? Usually this is your initial investment: if it will take you four hours a week to write a blog, then you stand to lose four hours a week. If it will take $1,000 to get in on this investment, you stand to lose $1000. If it will take you $100 to start this business, and you’ll be able to tell by the end of the month whether it will succeed, then you stand to lose $100, a month, and the respect of all your so-called friends who are lining up to say “I told you so”.

What’s the probability of failure?
In most cases, you’re making this up. I’m not asking for an exact number, just a gut feel. Very high? Fairly now? Fair-to-middling?

What’s the upside risk?
If this succeeds, what would you get? Money? Fame? Fast cars? Attractive members of your preferred sex volunteering to clean your house?

What’s the magnitude of the upside risk?
If this took off like you secretly hope for, if everything went right
and you were an overnight success, how much of that awesome stuff would you get? Hundreds of dollars? Hundreds of thousands of dollars? Your name known in every household in your town? Your country? The world? (I’ll leave the attractive housekeepers to your imagination).

What’s the probability of success?
Again, this is normally impossible to calculate, but make your best guess. Probable? Not bloody likely? Yeah-maybe-possible?

What’s the alternative?
Finally, what will happen if you don’t take this risk at all? What if you let sleeping dragons lie, ignore this opportunity, and continue with your life as it is right now?

Whatever units you used for your upside/downside risk (dollars, days, hot chicks/hunks), express the status quo in those units. How much money will you have if you continue with this job/ don’t start a business/ buy apple products instead of apple stock? How many fast cars do you have currently?

Put it all together

  • If the downside risk is significantly worse than the status quo, and the upside risk is pretty low, then this is a stupid risk. Stick with what you know.

  • If the downside risk and the upside risk are about the same distance from the status quo, then check the probabilities. And ask yourself: do I feel lucky?

  • If the upside risk is significantly better than the status quo and the downside risk is about the same as the status quo then this is a great opportunity. You are, as Julien Smith would say, being a *@^#*@ wuss. Get off your butt and take a chance.

Resources for Further Reading
Play it safe … and experiment

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When more volatile is less risky

Filed Under: Courage, Personal Development by apingel — View Comments
March 17, 2011

What is “safe”?

In the investment world, a safe investment is one that doesn’t move very much. It’s not very volatile. It’s predictable.

We like predictable. They’ve done studies that show how humans (and chimpanzees) like to pick the certain choice, even when the less-certain choice has a better chance of high benefit. We can get a little more excited about random chance when we have the chance to gain money (see: Las Vegas), but when it comes to potentially losing something, we shut right down. We hate chance. We hate uncertainty. We want to be safe. We want to know what will happen.

Overall, the safe = less volatile thing is a pretty good rule of thumb. As far as saving time and mental energy while yielding reasonably accurate results, it does a good job, most of the time.

But like any rule of thumb, it’s wrong sometimes. This post is about when it’s wrong.

What if the certain route is certain failure?

In the competition for MTG Player of the Year, Guillaume Matignon faced a bad situation: the cards he had were simply not as good as the cards his opponent had. They were good, and made a strong, consistent deck, but unfortunately they made a strong deck that was consistently slower than his opponent’s.

So he had a choice. He could play that strong, consistent deck. This is the “safe” option: it has a very predictable outcome. But that outcome is that he loses.

Or he could play a less consistent deck. One that — if it works — can work spectacularly and win him the game and — if it doesn’t work — will cause him to lose the game much more quickly than he otherwise would have. This option is much more volatile: he has no idea, going into the game, whether he will win hard or fail hard, but whatever he does, it will be fast-paced and intense.

What’s the less risky option?

Traditionally, we associate volatility with risk, so we would say that the first desk is less risky.

And yet, something has clearly gone wrong when you look at a situation and say “You should do the thing that’s guaranteed to fail — it’s less risky.” I mean, we try to avoid risk so as to improve our chances of success. When we box ourselves into a nice, safe, jail, we have to have taken a wrong turning somewhere.

Let’s look at a situation we’re more familiar with: there are 5 seconds left in the game, and your team is down by 1.

If you don’t take the shot, you have a very predictable outcome: you lose. If you DO take the shot, you have a less predictable outcome: you might make it, and win or tie the game. Or you might miss, and lose. Taking the shot is more “risky”, more volatile.

But everyone agrees that you take the shot. It’s your only chance of winning for heaven’s sake!

And that’s the thing. Sometimes volatility is your only chance of winning. And in those cases, although that option is volatile, it’s also less risky.

How will this help you win?

It all goes back to the fundamental decision-making question: what will help me win?

If reducing volatility will help you win, then it’s a good thing. And that’s very often the case.

But sometimes your only chance of success is to take the outside shot, to try drawing to an inside straight. If you fail, you are in exactly the same situation as if you didn’t try for the outside shot.

So you may as well try it.

Epilogue:

Guillaume Matignon played the more volatile deck. He got lucky draws and won the game, but lost the overall playoff in other games.

.

Resources for Further Reading
Dangerous? Or Gutsy?
Intelligent Risk Taking

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Resource: How to overcome your greatest disappointments

Filed Under: Personal Development by apingel — View Comments
March 16, 2011

Sorry to say, being an entrepreneur comes with its own ups and downs. Whether it’s realizing that being self-employed = no one to blame but yourself, or failing to get the venture capital you need for your business, or having an investment perform poorly, disappointment hits all of us.

There’s no point denying disappointment. But you don’t have to let it stop you cold.

Here’s some fantastic advice on overcoming disappointment and remaining optimistic.

Sometimes I come across something so good, I can’t add anything to it. In those cases, I simply post it with the code name “Resource:”. This is one of those days

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Why a Non-Catholic Observes Lent

Filed Under: Personal Development by apingel — View Comments
March 9, 2011

Is Lent for non-Catholics? I find it enormously helpful in my own personal and spiritual development

First off, sorry for the late post; the reason for it will become obvious below.

Today is Ash Wednesday, at least in the Roman church, and the start of Lent.

As some of you know, I am a Unitarian Universalist, a church that does not, to put it mildly, observe rites and rituals of holidays. So why do I care about Ash Wednesday?

Lent is ideal for changing habits

Each year, I give up something for Lent, although sometimes it’s easier to say what I’m doing than what I’m not doing. This year, for example, I’m “giving up” sloth; but my means of enforcing that is a Lenten resolution to work at least 40 hours/week until Easter.

We all have bad habits and vices we’d like to get rid of. And we’ve all struggled with how to eliminate them. But I’ve found Lent to be a very effective method, for several reasons:

Mardi Gras helps

Mardi Gras is not technically part of the Lenten observation, but it’s certainly part of tradition, and I’ve found it to be tremendously useful. The day before Ash Wednesday, I go all-out on whatever I’m giving up: yesterday I did nothing useful (hence no post); last year I ate 3000 calories of sugar and fat.

This kind of gorging has several benefits:

  • It makes you feel better about giving it up; you feel, somehow, like you’ve stored up enough to last you a while.
  • It makes you miserable. Drink all day on Mardi Gras, and you’ll start Lent with a hangover. Eat tons of sugar and fat, you’ll wake up feeling fat, sluggish, and weak (trust me.) Do nothing useful all day, you’ll go to bed feeling useless and angry with yourself. Overindulging your bad habit reminds you why you wanted to change the habit in the first place.
  • It makes it easy to give it up. After a day of doing nothing, the last thing I wanted to do today was sleep in. After a day of overeating, carrot sticks start looking good.

When you decide to change a habit, give yourself a “free day” to indulge in the bad habit as much as you’d like.

Lent lasts a long time…

40 days sounds short when you say it, but it sounds like forever when you put it in terms of giving up something you want. Google “habit change” and you’ll find bunches of people telling you (for no good reason except that they heard it somewhere), that it takes 21 days to change a habit. Steve Pavlina recommends 30-day trials to really lock in a routine. Sometimes it takes longer than that. When I fasted last year, I was still hungry after every meal, even by Good Friday. But by Easter, my body had adjusted and I no longer wanted to overeat.

Keeping a consistent habit for 40 days is almost always long enough to keep you from backsliding

…but it is temporary

It’s hard to give up something you really like, even when it’s bad for you. Looking at something and telling yourself “never again” is likely to result in a panicked rush towards your vice. If, when I’d started the diet last year, I’d said “You must keep this up forever!”, I’d have promptly responded “I can’t possibly keep this up forever, so I may as well quit now.”

But instead I said, “You only have to do this through Lent. On Easter, you can everything in sight.” The knowledge that it was temporary, that I only had to hold on through 40 days, made it possible for me to actually keep my resolution. And because I did keep it for 40 days, it no longer takes willpower to keep it forever.

Sometimes you don’t even want it to last forever. Lent is also good for jostling you out of old ruts. In past years I’ve given up “procrastination” and “beating up on myself”, only to realize that sometimes what looks like procrastination is actually prioritization, and that feeling bad about yourself when you screw up is a good way to prevent future screw-ups. Both of those things require balance. My previous approach veered too far in one direction; Lent allowed me to veer too far in the other direction; that allowed me, afterwards, to settle down in a more balanced attitude.

When you go to change a habit, specify a period after which you will re-evaluate the change.

Lent is specific

Most people in the US make New Year’s Resolutions, but they’re often bad resolutions. They’re things like “Be healthier” or “Be a happier person” or “Be organized”. Come January 2nd, most people in the US realize that they have no idea how to fulfill those, and the resolution goes out the window.

Lent is much simpler. Instead of “Be healthier”, you get “Stop eating Cheetos”. Instead of “Be a happier person” you get “Stop complaining”. Instead of “Be organized” you get “Write every single appointment in my calendar”.

They’re smaller steps. But they’re much more likely to succeed precisely because of that. And succeeding at these basic changes makes the bigger changes much more likely. There’s no wiggle room, to say that you’ve fulfilled it when you haven’t. There’s no doubt about what must be done. There’s just you and the decision.

When you go to change a habit, focus on one thing at a time.

Lent is sacred

This won’t matter to some of you; feel free to skip to the next heading if you’d like. But it matters to me, and it matters to some of you.

I have kept all of my Lenten resolutions. Even when I didn’t want to. Even when it was obvious that my choice was foolish and I’d be un-giving-up on Easter. Even when I felt guilty for keeping it (that was in the no-beating-myself-up year).

A lot of my habit changes don’t work. But the ones at Lent always do. Because my Lenten resolution is a promise to God. I can, and do, break promises to myself with impunity. I can get my fiance to let me out of promises I made to him. I can make excuses to my boss. But there’s no getting around a promise to God. You just have to keep it. So I do. So I grow.

When you go to change a habit, find a way to make it important to you.

Use this model to change your habits

You may not celebrate Christian holidays. You may not celebrate any religion at all.

You may not be reading this on Ash Wednesday.

But you can still make yourself a better person with these techniques. I invite you to do so, whatever the date or situation.

Are you observing Lent? What promise did you make?

Resources for Further Reading
Hollywood and New Skills
Breakthrough Goals
Resources: Making Big Changes
5 Steps to New Year’s Resolutions

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