Sometimes, the safe play is the lottery.

“I’d rather be working for a paycheck than waiting to win the lottery.”

—Bright Eyes, “First Day of My Life,” I’m Wide Awake, It’s Morning

There’s a difference between waiting to win the lottery and working to win the lottery.

Waiting doesn’t make sense: the lottery is a losing proposition. But working to win the lottery? If you can skew the odds in your favor, you can win.

Upon graduating from college, I reasoned: “I could get a job at a Big Tech Company that pays $60k/year, this year, or next year, or in ten years.” So I started my own business doing what I wanted to be doing.

I know of two strategies: working for a paycheck, and working to win the lottery. (By “lottery” I mean asymmetric upside, where one hit pays for many misses.) Most people, Partner included, are wired for the paycheck. I’m wired for the lottery. Both can win.

Most people think of the lottery as riskier. I disagree.

Here’s the move that separates my thinking from everyone else’s: the safer path is concentrated. You work for a company; that company goes under, you’re screwed. You find a similar company. But what happens when the whole industry goes under? The skills you’ve built might be useless worldwide.

The skills I’ve built? Not so much — because I’ve had the ability to choose what skills I build. The employee path is actually a concentrated bet on the need for similar skillsets. My portfolio is which skills to build. That, for me, is diversification.

The risk actually shows up at the intersection between the operator and the game. For me, this isn’t risky. I have savings discipline, deal flow, and a fitting temperament. For someone without those, it would be. We think of risk as the variance in an activity. On the meta-level, it’s more about being fit for the game and playing enough times to outlast the variance.

Two Paycheck Jobs

In my life, I have worked two standard, 9-5, knowledge-work paycheck jobs.

The first: I interned at a marketing agency in NYC the summer after my sophomore year of college. I automated all of my work, then all of the other interns’ work, then my direct superior’s work. When I asked my superior for more work, he said, “Sit tight and read.” So I played games on my computer, peaking at 120th in the world at a card game I liked.

The second was at a fintech. $175k cash per year. Predictable.

My first month working there, my monthly burn was 3x what it was the month before. I had been earning $100–150k with my own business.

It wasn’t the money. It was the perceived predictability.

The three most addictive things in the world are:

1. Methamphetamine
2. Nicotine
3. A steady paycheck

What can I say: I wanted to try the drug. I just got my fix and got out.

The Math

I keep my costs low. I don’t get much more value from the $50 Chinese restaurant over the $5 basement dumplings. Most of life’s joy comes from experiences and removing friction. I therefore spend money on travel and life infrastructure.

I lived in a van while building my first business.

The math: ten months of San Francisco rent = one van. After ten months of rent, you have nothing. After ten months of van, you have a van. (Also nice that I bought it for $12,500 and sold it 3 years later for $19,500. Taught me a lot about macroeconomic waves, too: the van market went crazy during COVID.)

While living in the van, I squirreled money into early-stage tech companies.

Natural aptitude matters. If none of my bets had paid off, I would have switched plans. But four $25k bets is only $100k. Which, if you’re making $150k per year and spending $30k, is only 1 year of work to find out whether you have a skill (in my case, the skill is betting on people).

Bet on People Who Will Win

I once asked Ann Miura-Ko (a Midas List member and board member of Lyft) whether there was more to investing than finding competent and trustworthy CEOs. I had a hunch that was the whole game. She agreed: yes. But she added that doing it well is not trivial.

Fun for her to confirm my approach.

So that’s been my approach. I haven’t bet on technology or the future. I’ve bet on individual people.

My company was a ghostwriting business. I spent a lot of time living in experts’ heads. Bylines included:

• Justin Kan (founder of Twitch)
• Sam Altman (then of Y-Combinator)
• Ellen Pao (CEO of Reddit)

During this investing, I also dabbled with crypto. I took the advice of friends, but those friends didn’t have control over the asset. They were speculators. With a private company, I’m betting on actual leadership. Leadership controls the outcome. They’re responsible for everything.

The lesson: bet on people who control the outcome. Or bet on no-one (the index). Don’t bet on people without control.

In a gambling sense: I’ve placed four bets on startups, where variance is high and likelihood is low:

• 1 failed
• 1 is planned to IPO this year
• 1 is going gangbusters
• 1 (the one that prompted this musing) just received a term sheet at 2.5x what I bought in

When Partner learned that my ~$15k investment was now worth ~$37.5k, she told me: “You’re like an odd sort of couch.” Apparently, most people find coins in the couch cushions, not tech company stock that they haven’t thought about in months.

It’s the same way I play poker: I find a spot where I have an edge, and I hammer it over and over and over again. Eventually, if I bet the same amount into ten different companies, and a successful company will more than 10x my money, I need to be right more than 1/10 times. (And, of course, not run out of money.)

Most people either don’t have the resolve or aren’t right more than 1/10 times.

Different Risk Profiles

Graduating university, Partner was saving 75% of her paycheck. She didn’t know many people didn’t save at all, and most financial experts only recommend around 15%. She thought what she was doing seemed logical.

We are FIRE sort of people, just with different risk profiles. Partner enjoys working for a paycheck. I work to win the lottery.

These mutually-balanced approaches are part of what makes us a good team. When we need to invent something out of nothing, I’m usually team captain. When a problem needs debugging, she’s in command.

After reading a draft of this article, Partner had this to say: 

“I think this last part might warrant slightly more space. You’re hedged in a way most people don’t get to be. 

It’s one thing to take big bets when you’re young and have no responsibilities. It’s that people tend to get addicted to the paycheck when they set their lives up in ways where they feel the need to have stability. They may miss out on being able to use those skills in big-bet ways as they don’t want to risk a loss. It’s also hard to have the mental space and discipline to self-hedge.

I’m your hedge so you can chase the upside.” 

One day, my ship will come in. And if not, we’re still happy.