The Super Upside Factor E-Book

Daniel S. Kang

• Herausgeber: John Wiley & Sons
• Kategorie: Ratgeber
• Sprache: Englisch

Seitenzahl: 327

Veröffentlichungsjahr: 2025

Beschreibung

A practical playbook to maximize luck in life and career

Venture capitalists manage to raise and invest trillions of dollars despite being wrong most of time through asymmetric bets – where a few big wins outsize losses by factors of 1,000x.

In The Super Upside Factor, Daniel Kang draws on his experience as a venture capitalist at Softbank Vision Fund and a Y Combinator-backed founder to adapt asymmetric principles for personal and professional life. He offers a clear framework for maximizing luck and generating outsized returns—what he calls Super Upsides. Through vivid, real-life experiments, Kang demonstrates how he put these principles into practice—from securing a book deal writing just 15 minutes a day; to recovering from a spiralling plane as a pilot; to raising millions by betting on pivotal career shift. 

This book draws upon the author’s firsthand experience going from no money, network, or looks to a highly successful career in entrepreneurship and venture capitalism. In this book, readers will find discussion on: 

• Core concepts like the multiplier effect and black swans 
• Probabilities, biases, and luck, and how to make them work for you, not against you 
• Tools and first steps to create a “life portfolio” of uncapped upsides and unlimited opportunity 

Backed by decision science research and personal experimentations, the book strikes a balance between theory and practical advice, guiding readers to identify and optimize skewed life bets. Beyond the tactical elements, Kang explores the human side of applying these principles, including discussions on mental health, emotional struggles, and even tactically quitting.

The Super Upside Factor will inspire readers—even the most risk averse—to realize they are only a few Super Upsides away from extraordinary success and provide precise asymmetric principles needed to stack the odds in their favor.

Leseprobe

Asymmetric Principles that Will 10X Your Life

THE SUPER UPSIDE FACTOR

DANIEL SHIN UN KANG

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Library of Congress Cataloging-in-Publication Data

Names: Daniel Shin Un Kang, author.

Title: The super upside factor : applying asymmetric principles to 10x your life / Daniel Shin Un Kang.

Description: Hoboken, New Jersey : John Wiley & Sons, Inc., [2025] | Includes index.

Identifiers: LCCN 2024048506 (print) | LCCN 2024048507 (ebook) | ISBN 9781394254910 (hardback) | ISBN 9781394254934 (adobe pdf) | ISBN 9781394254927 (epub)

Subjects: LCSH: Success in business. | Success. | Risk.

Classification: LCC HF5386 .K1927 2025 (print) | LCC HF5386 (ebook) | DDC 650.1—dc23/eng/20241213

LC record available at https://lccn.loc.gov/2024048506

LC ebook record available at https://lccn.loc.gov/2024048507

Cover Design: WileyAuthor Photo: 시현하다 경미기록가

To my mom, dad,and sister—you have been my greatest gift.I love you, always.

PART IAsymmetric Principles

What if you're wrong?

It's a simple question, but the stakes couldn't be higher. In our most formative years, we're taught to strive for perfection. Praise follows each correct answer, while a big red F brands any mistake as a failure. The game we're taught assumes a known path, with success defined by a perfect score.

While the premise feels intuitive, it runs counter to how the most successful industries and careers rose to the top—by being wrong 90% of the time. Extraordinary outcomes are a game of outliers, driven by a handful of outsized events. We all know how a single accident can shatter your life, but the reverse is just as true. One pivotal encounter or timely decision can tilt your life to success. Picture your future balanced on a knife's edge, teetering between the ordinary and extraordinary, waiting for that one right move. What if your dreams were just a few moves away?

In Part I, we'll explore the counterintuitive strategies that power the world's biggest wins, even when most of their bets fail. By the end, you'll know how to apply these same principles to your own life, cutting through the noise to find the few moves that can tip your life toward something extraordinary. These are the Asymmetric Principles.

1The Few Right Things

Imagine a game, rigged in your favor. Every time you play, you can bet a single dollar with a binary outcome: win $1,000 or lose the dollar. Better yet, you can play the game as many times as you want. In this game, even if you're wrong 99% of the time, you'd still come out ahead. It feels almost too good to be legal.

This simple setup captures the essence of asymmetric payoffs, where the upside outsizes both the cost and the risk of the game. These asymmetric opportunities linger all around us, though often obscured by complexities. With a bit of precision, you'll see the hidden potential and hidden pitfalls disguised by averages. This game isn't just a clever thought experiment in a vacuum. This asymmetric principle is the foundation of trillion-dollar industries playing this rigged game every day: the world of venture capital and start-ups.

The Trillion Dollar Industry Paid to Be Wrong

Venture capital (VC) is probably one of the only industries in the world paid to be wrong. VC is a special type of financing that has more than $2 trillion under management globally,1 and deploys hundreds of billions annually.2 It proliferated in the mid-1900s3 to solve a circular problem of early-stage companies. Traditional forms of financing for companies often required proof of profitability and cash flow, but early-stage companies needed capital precisely because they didn't have predictable profitability and cash flow as they scaled. Hence the circularity.

Venture capitalists figured out that putting up capital for a special breed of companies—ones with potential to grow very big, very fast—can lead to phenomenally high returns. The few wins were so outrageously large that they would more than offset the losses, despite the high risk of early-stage companies without strong cash flows. To quantify just how big and how fast, I'm talking billions within a few years' time. Uber was started in 2009, hit a $3.5 billion valuation by 2013, and then crossed $50 billion in 2015.4 Instagram was started in 2010, and acquired 18 months later for a billion dollars.5 The recent AI boom has only accelerated the time to such valuations. In fact, if you observe the top 20 companies of the New York Stock Exchange, almost all of them have been funded by VCs. If the outcomes are so outsized when you're right, just how often can you be wrong and still make money in this industry? It turns out, quite a bit.

The 90% Failure Rate

An approximation circulated in the VC community around the success rates of their investments is the rule of thirds: make money on a third, break even on a third, and lose money on a third. But several empirical studies that examine the numbers from both academia and private research suggest that this adage may be wishful thinking.

The Financial Times shows the venture capital industry as a whole loses money more than 50% of the time.6 Other analyses of venture funds, including the one by Correlation Ventures, recently shared that venture capital funds lose money on more than half of their deals, crunching 35,000 venture investments in the United States between 2013 and 20227 (see Figure 1.1).

Figure 1.1 Venture Capital Returns, Percentage as Number of Deals

For asymmetric outcomes to work, the upside needs to seriously outsize all other losses, so even a 5× return on investment is a generous definition of “hits.” Even under such favorable definition, VCs fall short of their objectives 90% of the time, yet still make money. Asymmetric outcomes with outsized returns and minimal losses allow this dynamic to occur with a handful of wins.

Top-performing venture capital funds have just a few notable big wins that kicked off their legacy. Sequoia Capital is one of the oldest and most prestigious funds in the industry, managing about $85 billion.8 Sequoia Capital was started in the 1970s by Don Valentine with $3 million.9 Early investments in Apple and Atari put Sequoia on the map, before their other home runs in Google, Instagram, NVIDIA, and PayPal, among others. SoftBank Group, led by Masayoshi Son, hit a home run investing in Alibaba Group in 2000 for about $20 million, which grew into a $50 billion stake during Alibaba's IPO in 2014,10 considered one of the most successful investments in the tech history. It's also the win that became a precursor to the largest technology focused venture capital fund in the world: SoftBank Investment Advisers, known as The Vision Fund, where I had the pleasure of working. These pivotal wins aren't just glories of the past. I'll walk through a more recent example, and work out the math.

The 1,000× Return

Overlooking the glowing terracotta rooftops, tinged orange by the sun dipping below the ocean, I sipped my espresso and savored a world-class Pastéis de Belém, its sweetness cutting through bitterness of the sip. Amidst the vibrant energy on the rooftops of Lisbon, I shared a co-living space with 10 strangers who quickly became friends. Little did I know that within a few months, one would benefit from one of the hottest tech stories of 2021: Figma.

Figma is a start-up that helps people collaborate on User Interface and User Experience design (UI/UX). At the risk of oversimplifying, UI is designing what your buttons look like, and UX is designing what happens when you click through the buttons. It's a part of every app, website, and really any digital interface you use today. Figma started more than a decade ago and raised their first venture capital round of $3.8 million in 2012, valued at $10.9 million led by Index Ventures.11 All this means is that Figma traded a portion of their ownership or “equity” of the company in exchange for money today. In this case, Figma gave Index Ventures 35% ownership ($3.8 million over $10.9 million) in exchange for $3.8 million. Figma wasn't an obvious win.

For the first nine years, Figma didn't generate any cash, which might sound crazy. But then in 2021, the first year of making money, Figma generated $200 million in annual recurring revenue (ARR). In 2022, they doubled that number to $400 million,12 continuing to grow to more than $600 million in 2023. It turned out to be a great investment for Index Ventures, because a decade after the investment, Adobe offered to buy Figma for $20 billion, almost a 1,800× increase in value from the initial $10.9 million.

Twenty. Billion. Dollars. So, what happened to Index Ventures' $3.8 million? Well, simple math tells us that 36% of $20 billion is $7.2 billion. After adjusting for the annoying real-life details like dilution, it is estimated that the initial $3.8 million turned into about $2.6 billion13 or 684× return on money. To illustrate it anotherway, if you had put in $1,500, you'd have a million dollars. While the deal ultimately fell apart due to antitrust regulations in Europe, you can see directionally how it would've been an extraordinary return. With Figma alone, Index Ventures could theoretically have been wrong 600 times on $3.8 million investments before being right, and they still would've made money. Even at the entire fund level, Index could have been wrong 100 times and still have dream returns for top VC funds.

These skewed upsides may seem like once-in-a-blue-moon type of events, but Figma isn't a standalone example. Venture capitalists and start-up founders have figured out how to repeatedly identify and generate these huge outcomes. LinkedIn14 and GitHub15 were acquired by Microsoft for $26 billion and $7.5 billion, respectively. Other start-ups became standalone, doing their IPOs like Uber (2019), Airbnb (2020), DoorDash (2020), Robinhood (2021), and Coupang (2021) that have all become multibillion dollar companies. VCs found a way to consistently identify and realize outsized returns, and my view is that we can too.

Asymmetric Outcomes for Life

The primary thesis of the book is that we can apply these proven principles used by investors to personal lives and careers. If the thesis is correct, then the extraordinary trajectory in your life will come down to the few right things, and less about getting everything right. The good news is that a considerable number of hyper-successful people attribute their success to these principles of asymmetry.

Jeff Bezos, in Amazon's 2014 Letter to Shareholders, shared the following: “Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a 10% chance of a 100 times payoff, you should take that bet every time. But you're still going to be wrong nine times out of ten…. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs.”16

Bill Ackman, a billionaire and CEO of Pershing Square Capital Management, tweeted, “My best and favorite investments come from a deep understanding of the importance of asymmetry, that is, by understanding the potential risk and reward, and making sure that the reward overwhelming compensates for the risk. I have made some great asymmetric investments at Pershing Square, and also personally in start-ups. My first venture capital investment returned 1,650 times my initial investment.”17

Nassim Nicholas Taleb, a trader and author of The Black Swan, shares this sentiment in his book: “The best description of my lifelong business in the market is ‘skewed bets,’ that is, I try to benefit from rare events, events that do not tend to repeat themselves frequently, but, accordingly, present a large payoff when they occur.”18

Sam Altman, now the CEO of OpenAI, shared similar sentiments: “Optimize for being spectacularly right some of the time, and low stakes wrong a lot of the time.”19

So at least anecdotally, applying mechanisms of asymmetry to individual lives and careers seems to work. It's a few of the right things that really elevated their success, rather than a gradual linear growth of hitting all the right boxes.

Why You Should Read On

Unfortunately, inspirational aphorisms, while motivational and true, rarely offer practical guidance. It's akin to the investment advice “buy low, and sell high,” or in the start-up world, “find product market fit.” These are technically correct statements, but, they're like a compass pointing to true north, without specifics on how to get there.

What I've aimed to do in these pages is create a playbook—the map to the compass so to speak. These principles are built not only on proven frameworks and research but also on real-time experiments in my own life across a diverse set of contexts, from a pilot sponsored by the Department of National Defence of Canada, venture capitalist at SoftBank Vision Fund, board advisor of a multibillion-dollar company, start-up co-founder backed by Y-Combinator, and an author published with Wiley. The collection of principles is what I call Asymmetric Principles.

What to Expect

The rest of the book is composed of three parts. The remainder of Part I will walk through the mechanics of Asymmetric Principles, first in context of venture capital, followed by specific adaptations and qualifiers needed to apply to individuals. Taking these basic building blocks, what follows are precise details, illustrated with real-time examples in my own life, from 15 minutes of writing investment that gave an outsized return of publishing with Wiley, all the way to career swings that enabled me to raise millions from top investors in the world. Details and qualifiers of these chapters is what will differentiate Asymmetric Principles from reckless risk taking.

Part II shifts gears to a step-by-step guide to start applying Asymmetric Principles. Taking systems as the unit of analysis, I discuss differenttypes of systems required in stages of applying Asymmetric Principles, from the earliest stages of consistently identifying asymmetric opportunities; to maximizing luck of generating the initial traction; to scaling to the Super Upside with leverage; and finally to leaning in and out of different systems to work together with the rest of your life portfolio.

Finally, Part III discusses predictable problems that will arise as you start applying Asymmetric Principles in your life, including the exposure to higher stressors, and loss of agency that accompanies success. I follow that up with prescriptions to preemptively protect oneself, including a counterintuitive framework of quitting in the right way.

In the very next chapter, I'll dive into the basic building blocks of Asymmetric Principles. These fundamentals will serve as a foundation, expanding with precision in the chapters that follow.

Notes

1

.  Preqin.

Preqin Global Report 2023: Venture Capital

. London: Preqin Ltd., 2023.

https://www.preqin.com/insights/global-reports/2023-venture-capital

.

2

.  Gené Teare. “Global Funding 2023: How AI Drove a Surge in Investments.”

Crunchbase News,

August 15, 2023.

https://news.crunchbase.com/venture/global-funding-data-analysis-ai-eoy-2023/

.

3

.  Paul Gompers, and Josh Lerner.

The Venture Capital Cycle

(Cambridge, MA: MIT Press, 1999).

4

.  Timeline: How Uber's Valuation Went from $60M in 2011 to a Rumored $50B This Month.”

VentureBeat,

May 10, 2015.

https://venturebeat.com/entrepreneur/timeline-how-ubers-valuation-went-from-60m-in-2011-to-a-rumored-50b-this-month/

.

5

.  A. Eldridge. “Instagram.” Encyclopedia Britannica, August 13, 2024.

https://www.britannica.com/money/Instagram

.

6

.  Bryce Elder. “Venture Capital Funds Are Mostly Just Wasting Their Time and Your Money.”

Financial Times,

August 17, 2023.

https://www.ft.com/content/2099d3c1-65ba-4c20-a50c-f730fd258f42

.

7

.  David Coats. “Venture Capital: We're Still Not Normal.”

VC by the Numbers,

July 13, 2023.

https://correlationvc.com/insights/

.

8

.  Kate Clark. “Sequoia Capital to Open New York Office, First U.S. Outpost Outside Silicon Valley—the Information.” Information, July 27, 2022.

https://www.theinformation.com/articles/sequoia-capital-to-open-new-york-office-first-u-s-outpost-outside-silicon-valley

.

9

.  “Our History.” n.d. Sequoia Capital US/Europe.

https://www.sequoiacap.com/our-history/

.

10

. Eric Pfanner. “Softbank's Alibaba Alchemy: How to Turn $20 Million Into …”

Wall Street Journal.

September 19, 2014.

https://www.wsj.com/articles/BL-DGB-37805

.

11

. Josh Constine. “21 Years and $4 Million Later, I Finally Have a Hit.”

TechCrunch,

June 26, 2013.

https://techcrunch.com/2013/06/26/21-years-4-million-dollars/

.

12

. Adobe. “Adobe to Acquire Figma.”

Adobe Newsroom,

September 15, 2022.

https://news.adobe.com/news/news-details/2022/Adobe-to-Acquire-Figma/default.aspx

.

13

. Iain Martin. “Danny Rimer Makes Midas in Europe with Figma-Adobe Deal.”

Forbes,

December 8, 2022.

https://www.forbes.com/sites/iainmartin/2022/12/08/danny-rimer-midas-europe-index-figma-adobe/

.

14

. Microsoft. “Microsoft to Acquire LinkedIn.”

Microsoft News Center,

June 13, 2016.

https://news.microsoft.com/2016/06/13/microsoft-to-acquire-linkedin/

.

15

. Microsoft. “Microsoft Acquires GitHub.”

Microsoft News Center,

October 26, 2018.

https://news.microsoft.com/announcement/microsoft-acquires-github/

.

16

. Amazon.com, Inc. “2015 Letter to Shareholders.” April 2016.

https://ir.aboutamazon.com/annual-reports-proxies-and-shareholder-letters/default.aspx

.

17

. Bill Ackman (@BillAckman). “My best and favorite investments come from a deep understanding of the importance of asymmetry, that is, by understanding the potential risk and reward, and making sure that the reward overwhelming compensates for the risk. I have made some great asymmetric investments at Pershing Square, and also personally in start ups. My first venture capital investment returned 1,650 times my initial investment, and I am fortunate to have had a number of other great ones, but none quite so good as the first.” X (formerly Twitter), January 13, 2024.

https://x.com/BillAckman/status/1746381227798487424?lang=en

.

18

. Nassim Nicholas Taleb.

Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets

. 2nd ed. (New York: Random House, 2005), 103.

19

. Sam Altman (@sama). “The best work you ever do is what matters, not the time you worked on alchemy. Optimize for being spectacularly right some of the time, and low-stakes wrong a lot of the time.” X (formerly Twitter), January 6, 2020.

https://twitter.com/sama/status/1214274041176920064

.

2Defining Asymmetric Principles

My heart skipped a beat. The sharp scent of burned rubber stung my nose, accompanied by the growl of the noticeably weary engine. My driver was overtaking a car at 200 km an hour, in the beaten-up, gray Volkswagen I had matched with at the airport. I clenched on to the handle as if it'd do any good. Despite the winter chill in Berlin I felt only a moment ago, I was sweating in the middle of the Autobahn—not just from the near collision of my Uber driver, but because of my destination: headquarters of Auto1. Auto1 is a multibillion-dollar company that facilitates online trade of used cars. It's also where I held my first formal board position—though as an observer—in my career.

A few weeks earlier, I had entered the rather dimly lit board room, and grabbed a Schnittchen—an open sandwich that was too dry for my tastes—before sitting down for the hours of discussion ahead. Surrounded by industry veterans advising boards of Lufthansa and Volkswagen, my only chance of adding any value to the discussion was to do considerable work ahead of time. After the routine financial updates for the quarter, we moved quickly to the critical agenda point on the next stage of the business. The two co-founders, Christian and Hakan, navigated the discussion with charisma and data you'd come to expect from veteran founders, addressing the pointed questions from the board with clarity. The conclusion was one we had predicted before the meeting began: more capital to fuel the next stage of growth—even after the hundreds of millions SoftBank had already invested into the business.

A few days after the meeting, the C-suite asked me to fly out to Berlin to work directly with the team on fundraising, so I packed my bags. As my Uber driver swung onto Bergmannstraße, I unclenched my hand from the handle. With relief, I stepped out of the car, headed to the now familiar café to order a flat white. I took the first sip for a brief moment of calm before addressing the elephant in my mind: Should we be doubling down?

Venture investment requires judgment. There should be a clear thesis on why and how a company will generate outsized returns for investors. At SoftBank, the stakes were hundreds of millions of dollars to fund. Yet decisions had to be made with incomplete information, and consequences were hard to reverse. What made it exceptionally challenging was the complexity in the number of variables to consider. What if cost of used cars goes up, which could cut into gross margins? What if the interest rates increase, which would require more liquidity? What if inventory cycles slow, which could require a larger financing facility? What if the company can't raise in time? Even with a few “What ifs,” you can quickly see how there could be a near-infinite number of combinations of potential outcomes to consider. How does one cut through such complexity, never mind finding the perfect asymmetric opportunity for investments? And how does that translate to life decisions?

Identifying Asymmetric Opportunities

From the perspective of the present, every opportunity has a single realized past, and a range of possible future outcomes (Figure 2.1).

Figure 2.1 Range of Possible Outcomes

Each possible outcome has some probability of becoming the single realized path. And each realized path will impact you based on how you've positioned yourself. Let's call the range of possible outcomes variance; the associated probability frequency; and your position as impact. So if you're tossing a coin, variance is the range of possible outcomes, like heads, tails, and sides. Frequency is the probability, let's say it's roughly 49% chance of heads, 49% chance of tails, and 1% chance on side of the coin. And impact depends on how you've positioned yourself against the outcome, let's say a bet of $50 on heads.

Variance and frequency are objective measures, but impact is subjective based on your position. That is, the direction and magnitude of your impact is based on your position to the outcome. For example, if you toss a coin for fun, outcomes—heads, tails, or side—have no impact. In contrast, if you bet your net worth on heads for double or nothing, then outcomes will have a huge impact. Most investments are a more complex permutation of this base idea with a few more layers. Take, for example, stock market investing, and consider company performance relative to equity research analyst forecasts. Your first-order impact, barring exceptions like a financial crisis, will, roughly speaking, resemble the following based on your position:

You don't own any financial security: No real impact.

You own the stock: If the company falls short or exceeds by the same amount, the impact would be relatively symmetrical.

You bought a call option: Downside is usually limited to the premium, but the upside can be huge.

You sold a call option: Upside is usually limited to the premium, but the downside can be huge.

You short sold: Symmetrical impacts are amplified with leverage.

Investing in asymmetric opportunities works on the same basic principles, but has unique characteristics. First, the variance of outcomes is far wider. For asymmetric upsides, the upside outcomes disproportionately outsize the cost of investment and all possible outcomes, and vice versa for asymmetric downsides. The key is to find the upward asymmetry, so when you win, you win big, and when you lose, you don't lose much. Otherwise known as skewed bets, this is how investors benefit from asymmetric opportunities.

Cutting Through Complexity: Scenario Forecasts

The obvious problem is that multibillion-dollar decisions happen to be more complex than tossing a coin to assess if an opportunity is truly asymmetric. That's even more so with the considerable number of possible outcomes to consider from the endless “what ifs.” One method investors used to cut through the complexity is sampled approximation, which we called scenario forecasts. Put simply, it's sampling the most material scenarios, out of the infinite possible outcomes. Typically, we sample at least three—though often much more—broad scenarios: upside case, base case, and downside case. These scenarios consider how multiple variables interact with each other to paint a real picture of what would happen, including a series of events that'd lead to said scenario. The approach gives a far more accurate and useful output for assessing an opportunity than thinking through an endless number of what ifs with single variables. I'll walk through a few concrete examples, particularly useful for the downside.

For emerging markets, rather than examining macroeconomic variables like interest rates, inflation, and defaults independently, we'd consider a scenario of “economic downturn.” That's because it would be odd for heavy inflation to occur on its own without corresponding movement of interest rates, and default rates. Rather than running analyses of how a single variable would change the outcome and impact, we'd incorporate material variables including the devaluation of the foreign currency against the dollar (the investment currency), rising default rates, slowdown of sales, and interest rate movements.

We run scenario forecasts to paint an accurate picture to assess the downside, without underestimating or overestimating the downside. Variables interplaying during a downward spiral of an economic meltdown are far worse than what a single “what if” would estimate. At the same time, forecasting the series of events that'd take place avoids overestimating the downside from conflating mutually exclusive scenarios. For example, the devaluation of the local currency against the dollar would impact both the revenue base and cost base. I wouldn't assume sales to fall in terms of the US dollar while assuming the invoices from three months ago in local currency to somehow increase in terms of US dollars. In fact, if the company kept most of the investments in US dollars, as most are advised to do, that'd have greater buying power than before. The downside scenario isn't blindly stressing scenarios. It's replicating what such a scenario would represent, which cuts through the complexities to accurately evaluate the opportunity.

This is the sort of work I did as a venture capitalist, though in far more detail, when considering the investment decision. What happened to Auto1? We ended up doubling down and helped raise the 255 million euros, despite the capital scarcity that hit in 2020.

Worth the Work

The following year, I found myself enjoying a much more leisurely pace of life. Sitting in the meadows of Oxford, I relished the view of the river Cherwell, made even better with a sip of espresso after rowing practice at an ungodly early hour. A sense of satisfaction washed over me as I read the news on my phone: “Auto1 goes public,” and at a valuation of almost $10 billion.1 A single outsized return can be life changing, for both investors and for you.

While billion-dollar decisions sound grand, I'd argue that your personal life decisions hold far greater significance, in terms of subjective outcomes—you'd be the one living through it. Yet, when it comes to life decisions, the same level of rigor is often lacking. There is a tendency to be simplistic, from “lumping” outcomes into averages, reducing choices down to pros and cons lists, and using imprecise worst- and best-case scenarios. While that system of thinking suffices in most cases, where variance of outcomes is relatively narrow (as you'll see in Chapter 5), asymmetric opportunities definitionally require precision. Realizing these outsized returns requires a similar approach to how venture investors have consistently generated outsized returns. In the next section, I'll take this simple framework as a starting point before layering on details of applying such principles in personal life decisions over the rest of the book.

Asymmetry in Personal Lives

You and I are not venture funds. There are a host of differences from risk tolerance to, well, the fact these are real human beings, so certain adaptions are required for these principles to work for life decisions. By experimenting with these general principles in my own life, I arrived on adaptations and qualifiers needed for life decisions. Taking the scenario forecast as the first step, I've set precise definitional characteristics of asymmetric opportunities, which I've summarized as Asymmetric Principles in Table 2.1.

Table 2.1 Summary of Asymmetric Principles

Scenarios

Characteristics

Upside

Disproportionately outsizes both the investment and all other ranges of scenarios

Non-zero, visible path to realize the upside (Need-to-Believe)

Uncapped, without artificial barriers

Base case

Takes you where you want to go

Downside

Outcomes are tolerable

Outcomes are floored

Outcomes are predictable

Asymmetric Upside: Real, Uncapped, Opportunities

Asymmetric Upside or the Super Upside is a sampled outcome that has (1) a clear, non-zero probability path with (2) huge outcomes that outsize both your investment to take the shot and all other outcomes by several orders of magnitude. Let's start with the first qualifier.

When I share this definition, I see two flavors of pitfalls: On one hand, there is danger to see upsides as a license to defy laws of reality and common sense, calling impossible things upsides. That's daydreaming, not sampling an upside. On the other hand, there is fear from conflating the sheer size of the outcomes with the probability of the outcome that leads relegating the upside into the realm of impossibility, despite the fact there are possible paths to that upside that may materialize.

To avoid both errors, one framework I've borrowed from my time as an investor is called a Need-to-Believe analysis. Ask yourself the question “What are the set of assumptions I would need to believe for the upside to necessarily become true?” It's a common exercise for investors to write down a list of all assumptions that would need to be true for the upside to occur and then evaluate each assumption for its validity and probability. I'll take an example from the question I receive rather often: “Should I take this start-up job offer?”

Need-to-Believe Analysis I had the same question in my second year as a management consultant. A recently funded start-up reached out to chat about a role as a Director of Strategy. At the time, I was at Oliver Wyman, which was a top strategy consulting firm globally. What would a Need-to-Believe analysis look like for this sort of life decision? For simplicity, I'll walk through this scenario assuming the financial upside as the material variable, which would be determined by at least two things: the future value of the company (pie) and projected ownership stake (your piece of the pie).

Let's start with the pie. Optimists may be thinking of people who became millionaires in recent years with companies like Uber or more recently NVIDIA. The minor detail here is that Uber's IPO valuation was $75 billion,2 which at the time was the highest valuation in the IPO history of the New York Stock Exchange. And NVIDIA? Literally one of the most valuable companies in the world. The fact of the matter is that most companies will fail, and even those that succeed will probably not IPO at Uber's $75 billion valuation or grow to NVIDIA's $3 trillion valuation. For reference, David Friedberg, a founder of a billion-dollar company or “unicorn,” shared that the chances are 0.00006%.3