Rockets, The Earth, and risk

Mike Hughes just died 🙁

The point of view worshop begins in 13 days, on March 6: https://philipmorganconsulting.com/pmc-csw-point-of-view

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Longtime list members know I’ve been fascinated with Daredevil “Mad” Mike Hughes.

He was a Flat Earther, but I respected him in a very specific way.

Generally, I think Flat Earthers are intentional dumbasses. I say so in v3 of The Positioning Manual:

A polarizing POV is one that intentionally separates people into one of two camps: those that agree, and those that disagree. “The Earth is round, not flat” was a very not-polarizing POV for centuries until the Internet connected a critical mass of dumbasses, and now this POV (a fact, if I’m being careful with my language) is somewhat more polarizing now.

It required a communication media as frictionless as the Internet to create the critical mass of dumbasses known as Flat Earthers. How else could a group of people so bent on being dumb otherwise get together?

Being intentionally, obstinately dumb is costly, leaving little surplus time and energy for connecting with others for the purpose of being dumb in a group setting! Thanks, Facebook, for helping change that! 🙁

Mike Hughes built and flew inside of steam powered rockets in an effort to prove to himself that the earth is flat. He reckoned that if he could get up high enough, he’d observe a flat disc of earth rather than a curved one… I guess?

He (and other Flat Earthers, I suppose…) rejected photographic evidence — even self-collected ones that they think the Illuminati or whatever haven’t tampered with — because I suppose they dumbly believe the lens causes distant straight lines to be distorted into a curve? This does happen — it’s called barrel distortion or moustache distortion — but only with vastly cheaper or less sophisticated lenses. Lenses that do not have this problem have existed since 1866 for goodness sake!!

Cause let me tell you… sending up a weather balloon with a camera attached would have been way less risky for Mike than what he did instead.

Weather balloons would have been an ergodic risk.

There’s a sciencey word for the situation Mike created for himself: non-ergodic.

Nassim Taleb explains ergodicity in a way I’ve always found challenging to follow. Here’s a better-crafted explanation: https://taylorpearson.me/ergodicity/

And here’s the super-simple leaving-out-some-details-for-the-sake-of-simplicity explanation for a non-ergodic system: Actions with an uncertain outcome that can result in a game-over or disasterous scenario if repeated enough times by an individual are described as non-ergodic.

Assuming his work wasn’t merely a publicity stunt, I respect Daredevil “Mad” Mike Hughes for trying to discover things for himself. For using experiential learning.

I think he was a dumbass for a) being a Flat Earther in the first place and b) setting up his experimentation within a non-ergodic system where the probability of a game-over scenario was quite high.

RIP Mike, you fascinating weirdo: https://www.latimes.com/california/story/2020-02-22/daredevil-mad-mike-hughes-killed-in-stunt

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An email list member asked if he should make the leap to self-employment or hang out in his FTE job for a while longer and build runway. He provided some context, so I was able to suggest how to think about this decision. In my response, I shared my general POV on risk:

People like us should take as much risk as we can just short of flinching.

My correspondent asked:

Can you expand on “just short of flinching”?

Here’s what I said:

Maybe. 🙂

Business decisions are not bets. Bets are gambles that are relatively quickly resolved by a process we have no control over after we’ve placed our bet. The roulette ball lands wherever it is going to land; the sports team plays however it’s going to play and the bet is resolved.

For businesses like ours, a business decision can take months or years to resolve into an outcome. During that time — the implementation phase for the decision — we have tons of opportunities to change course, hesitate when we should move forward, be tame when we should be bold, etc. These are all forms of flinching. Two small business owners could embrace similar levels of risk and get different outcomes simply because one flinches in some way, the other doesn’t.

Bets don’t have feedforward loops. Risky business decisions do.

My suggested approach to risk is this:

  1. Avoid uncertain situations where the potential for harm is both a) likely and b) serious enough to take you out of the game long-term.
    1. This said, there are many potential hedges against this kind of risk: 3 months or more of burn in savings + living in a high opportunity area + being willing to re-enter the FTE world for a year or so to get back in the game, having a spouse/partner with a steady FTE gig you both could live on in a pinch, living modestly in a low cost of living area + investing in a hot skillset that is also remote-friendly, etc.
    2. With smart hedging, very few risks can actually take you permanently out of the self-employment game.
  2. While you’re avoiding those “likely-to-take-you-out-of-the-game” risks, embrace every other form of risk you possibly can, except those where your emotional discomfort with the risk will cause you to flinch during the implementation phase.
    1. Favor risks that are primarily social in nature (“I might embarrass myself”) but if they pay off they reward you with visibility or valuable forms of access to opportunity.
    2. Favor investing in your own expertise even if that reduces your ability to generate maximum revenue now because if you’re cultivating valuable, somewhat rare expertise, you can use that to drive significant future profitability, which I prefer to even a high-revenue/income scenario that looks like a treadmill rather than monetizing an asset.

Ergodicity is a difficult-to-remember word for a very useful concept. It separates risks into two buckets: ones that could take you out of the game eventually (an extreme example:: playing n rounds of Russian Roulette by yourself where n is the number of chambers in the revolver), and ones that can’t. Non-ergodic vs ergodic. Potentially ruinous vs not potentially ruinous.

Business owners like us face both kinds of risk, but my sense is that we systematically mistake risk that is not potentially ruinous for the other kind, and that causes us to play things too safe.

-P

Reminder: I’m running a workshop on point of view next month. It’ll make you smarter.

It’s online, limited to 20 people, meets weekly at 10am Mountain time March 6 – April 24, is introvert-friendly, gives you lots of support in exploring and formalizing your points of view, and costs $700. If this is of interest, you can sign up here: https://philipmorganconsulting.com/pmc-csw-point-of-view