Wanna bet?

What is risk?

We have all studied probabilities when we were young but for some reason, we forgot how they apply to our life.

We believe the best decisions are the ones where the probability of success is close to 100% and we can’t wait to rip the rewards. But those tend to rarely be the best decisions. The fact that we see “no risk” means that everybody is probably choosing the same path and the reward is not very attractive.

Instead, every decision in life is an asymmetrical bet.

A bet that has a 30% probability of success with a 5x return is a good bet even if you end up losing most of the time.

If losing more times than winning might still be the right thing to do, what makes a good decision?

A decision is not great if it leads to a great outcome. A great decision is the result of a great process that we can improve over time and that leads to better and better asymmetrical bets.

A poor outcome on the other hand does not reflect a poor decision. It’s not uncommon to make a great decision but end up with a bad outcome.

In short, winning or losing is not a result of the quality of our decisions and when we look at the outcomes to try and improve our decisions, we fall trap of many cognitive biases.

Why are we afraid of taking risks?

Most of us grew up chasing perfect outcomes with complete information.

The perfect test. The perfect diploma. The perfect CV. The perfect job.

We pretend we have all the information we need to make great decisions and we attribute uncertainty to luck.

Some of us are afraid of taking risks. This is called riskophobia.

We decide to trade freedom not for certainty but for the illusion of certainty because there are always risks, even if we can’t clearly see them at the moment.

It turns out life is like poker, not chess.

There is always information we don’t have. Things we don’t know.

Seeking certainly might have helped us in the past but it’s a punishment in disguise in an uncertain world.

From a very young age, we are taught that saying “I don’t know” or “I’m not sure” is a bad thing. It shows that we are not knowledgeable enough and it’s generally considered a sign of weakness.

In reality, embracing ignorance forces us to look for whatever we might be missing at that moment.

Wanna bet?

Asking ourselves if we are willing to bet money on a decision helps us consider our information as well as future outcome scenarios in a much more profound way, even if it’s just a thought experiment.

It’s one of the most powerful ways to avoid self-serving bias.

Self-serving bias is believing that our poor outcomes are because of bad luck while everyone else’s success is a result of lucky circumstances.

How is that person so rich? They must have done something shady.

Why did she get such an amazing job? Her dad must have pulled some strings.

Who are we betting against?

In the gambling world, players bet against the house and if one wins means that the other loses. These are zero-sum games.

In life, we are betting against ourselves.

Or to be more precise, it’s a bet against all the future versions of ourselves that we choose not to pursue. And none of those is zero-sum.

A career example from Sir Isaac Newton

Everybody knows Newton for his contributions to physics and history remembers him as one of the great physics of all time.

In reality, Newton spent decades studying alchemy and theology too because, at that time, they were all equally important but only one ended up changing the world.

Newton took 3 bets with calculated risks with the information he had. One worked and made the other losses irrelevant.

4 steps to improve your decisions

1. Your biases, not mine

People are much better at recognizing other people's biases, rather than their own (Cognitive sophistication does not attenuate the bias blind spot, 2012). This gap becomes even greater the smarter you are. This happens because when we evaluate someone else biases we can tap into our skills and experience while limiting the impact of biases on our reasoning.

Instead, when it’s about our own biases, those same skills might play out to our disadvantage.

The solution is rather simple: have a close group of smart friends who are ready to call you out on your mistakes.

Making your decisions accountable to other people you trust is also a great way to avoid making the same mistake over and over. Being smart does not mean having a 170 IQ Score but being reasonably well-informed and seeking accuracy over complaining.

This is of course much harder to achieve in practice. But worth the effort.

2. Define a kill criterion

A kill criterion (or limit loss) is a threshold at which you leave the game.

This is important because it’s been proven that when losing, we start taking even more risks to offset the losses and end up losing even more.

Instead, when you return after a break, your risk appetite resets.

The trick is to decide in advance what our kill criterion is so we can walk away without falling for the loss spiral trap. Otherwise, we probably won’t be able to make that decision on the spot.

Beyond the obvious investing analogy, this applies to everything in our lives. From relationships to careers.

• When do you leave a relationship that is not working?

• When do you leave a job that is not serving you anymore?

• When do I switch careers?

3. Remembering the future

There are two very powerful techniques you can use to make better decisions based on future scenarios.

One is backcasting from a successful future, where you picture a desired future and then identify the steps you need to get there. This is very useful when it comes to broader life goals as well as specific projects with milestones.

The other one is premortem, where you imagine a negative future, a situation where you completely failed to achieve your goals. This helps identify traps and pitfalls that won’t come naturally when dreaming about the ideal scenario.

Why do we need a premortem?

Having ambitious goals is important but it has been proven that only dreaming about them does not help turn them into action. Instead, visualizing a negative scenario is much more helpful in executing those goals.

If you’re looking for a practical way to implement the premortem concept, I highly recommend the Fear Setting Exercise by Tim Ferris (I do this at least twice a year).

4. Do a lot of reps

The only way to get better at taking risks is to do it over and over. Not necessarily with larger stakes, just more of them.

Just like training a muscle, you’ll get to use this skill in every part of your life: from accepting a job you are not fully qualified for to moving to another country because of a potential opportunity and much more.

If you want to go deeper into some of these concepts, I highly recommend “Thinking in Bets” by Anne Duke (cited many times throughout the article and the inspiration behind this piece). I hope it changes your perspective as much as it has changed mine.

This week's top scientific reads

1. A new drug to make dogs live longer (Springer Link)

2. Adult cells can turn into healers (Advanced Science)

3. A new Deep Brain Stimulation for traumatic brain injury (Nature Medicine)

4. The first self-copying RNA vaccine (Nature)

5. Large-scale clinical study for AI in breast cancer (Nature Medicine)

Read bite-sized highlights on these articles here.

Latest European funding rounds in health & bio

Ready to turn this news into your next career opportunity? Here is how

• Artbio raised $90M for their pipeline of clinical-stage therapies using alpha radioligand against multiple cancer indications 🇳🇴

• Virtuleap raised €2.5M for their Virtual Reality solution applied to the health and education sectors 🇵🇹

• Hoba Therapeutics closed a €23M Series A to develop novel therapeutics for patients with chronic neuropathic pain and hearing loss 🇩🇰

• German Bionic raised €15M for their smart power suits and wearable technologies exoskeletons for heavy-lifting workplace 🇩🇪

• Spore Bio raised €8M to build a micrological device that instantly detects pathogens in factories 🇫🇷

• Carthera raised €4.5M to further advance their ultrasound-based device to treat brain disorders 🇫🇷

• Freya Biosciences closed a $38M Series A for their pipeline of reproductive immunotherapies for women 🇩🇰

• Antabio raised €25M to develop treatments against drug-resistant bacterial infections 🇫🇷

• Samabriva raised €4M to develop biopharmaceuticals and chemicals using plant-based production methods 🇫🇷

• Aesyra raised $3M to develop oral medical devices to treat sleep apnea and other sleep conditions 🇨🇭

• Vandria raised a $20.6M Series A to advance their therapeutics aimed at rejuvenating cells to treat age-related and chronic conditions 🇨🇭

• GliaPharm raised $4.2M for their pipeline of compounds that focus on glial cell functions to treat and prevent neurological diseases 🇨🇭

If you enjoyed this issue, share it with a friend or two

More from us

1. 10 steps to join the startup world
   A workbook to help you find your ideal role in the startup ecosystem.
   From understanding the key players to finding hidden opportunities, this framework will guide you every step of the way.
   

2. How to build startup teams
   The ultimate guide on hiring, onboarding and retaining talent.
   Learn the proven playbooks that have helped 100+ founders build winning teams. And if you’re looking to join a startup, this is your chance to learn everything that happens behind the curtains.

3. Land your dream job with 1:1 private career coaching

   Get actionable and tailored advice from someone who has overcome similar obstacles and doubts in their career.
   You can book a 60-minute session by donating to any charity.