All successful people are risk-taking optimists

Photo by Marc-Olivier Jodoin on Unsplash

All successful people are risk-taking optimists

Jan 17, 2024

Why do entrepreneurs take risks?

Company founders have a cognitive bias called the overconfidence effect. It is expressed in the fact that a person trusts his own judgments more than objective reality.

In most cases, people take risks because they do not understand that they are taking risks. Otherwise, they simply wouldn't do it. People are too optimistic and refuse to accept information that could keep them from making dangerous decisions.

Entrepreneurs in general are huge optimists. Overoptimists. Even when they specifically hire people who can give an objective assessment of their ideas, it all ends up with the entrepreneurs simply not listening to them. And if they had listened, they could have avoided serious mistakes.

Many of those who have achieved great success have done something crazy and irrational at some point in their lives. But one should not conclude that this is the reason for their success.

The paradox is that we want to learn from successful people, but they are all optimists who tend to take unnecessary risks. Statistically, this is not a good strategy. According to one study, if you come up with an innovative idea, on average it is more profitable to forget about it and go to work for hire than to try to build a business around your invention. At the same time, some ideas take off and bring huge profits - either these are good ideas, or simply because of luck. But it is these examples that we pay attention to and think that optimism and self-confidence are the keys to success. In most cases, it doesn't work that way.

On the other hand, if you don't buy a lottery ticket, you'll never win.

How to influence other people's decisions

The hardest part is getting people to make decisions that are good for them. This is the psychology of influence. There is a whole art to getting people to change without arguing with them, without forcing them to do anything, with a minimum set of incentives for motivation.

With the right approach, you will only need a few threats and get the desired result. All of the behavioral economics—not just the psychology of influence—is aimed at making it easier for people to change for the better.

You don’t need to push people where you want them to go, you need to remove obstacles to make it more convenient for them to move in that direction.

This idea in psychology is almost 100 years old, but it still seems to me the most ingenious: if you want to influence people, make it easy for them to do what you want them to do. This is much more effective than pressure.

Call-out culture and crowd psychology

It is very easy to provoke people's collective anger. This emotion in general is not difficult to provoke, but if it is also a common, shared feeling, people, for some reason, enjoy it. When there are many of you and you are simultaneously outraged by the same thing, it’s nice.

It's nice to be part of a group where other members share your emotions and feelings. Anger is a very powerful feeling. One tweet of 140 characters is enough to begin an irreversible process that in just a few weeks will grow from mild discontent to the complete destruction of the object of indignation. In the case of brands, this could be a boycott or refusal to cooperate on the part of partners.

If you find yourself the target of such collective anger, the optimal strategy depends on the situation. If everything has gone far enough, silence becomes dangerous: since you tolerate all this, it means that you are really to blame for everything that is said about you.

According to recent research, anger is a positive emotion and triggers the same impulses in the brain as joy. People like to be angry. It's better to be angry than to be afraid. Anger suggests that you intend to do something about it. And collective rage is like a drug.

How to play and not lose

The most important advice I can give is whenever there is a possibility of making a mistake, stop and think. Slow down.

Behavioral economics teaches that individual players should refrain from making financial decisions such as high-risk investments such as Bitcoin. The decisions of experts, and even more so the decisions made by investment funds, are more reliable. People who invest in an asset that they themselves do not deeply understand are taking a huge risk. Perhaps much more than they realize.

If you want to win, allocate a portion of the money that you are willing to lose.Like in a casino. This should be an amount that, if lost, will not lead to bitter regrets or dire consequences for your life. Treat high-risk investments like gambling.

When you have to make an important choice or decision, think about it not in isolation, but evaluate the situation in context. Compare it with other similar situations. Divide the problem into elements (in the case of a business - the presence of a market, a team, etc.) and evaluate each of them separately - to avoid the halo effect (a cognitive distortion in which the overall impression of an object affects the perception of its individual components. - Inc. ).

How AI will change the world

The most important thing that has happened in the world recently is the development of artificial intelligence. It will have a very significant impact on people's lives. Previously, there were studies that statistical prediction worked better than clinical prediction, but now it turns out that AI prediction is even more accurate. Artificial intelligence makes non-linear connections and finds more complex relationships if it has enough data at its disposal.

AI can not only predict the likelihood of a heart attack better than doctors, it can predict possible mistakes by doctors. If people can delegate some of their thinking to artificial intelligence, it will change our lives. It is very interesting how the interaction between humans and artificial intelligence will develop.

AI makes mistakes that a human wouldn't make, but a human makes mistakes that a computer wouldn't make.We only notice stupid mistakes that we wouldn't make.

People trust each other more than robots because they don't understand robots.But this is temporary. Now we arrive at the airport on a driverless train, and this does not bother us, it is a common occurrence. When they first appeared, people were afraid to ride in them - there was no driver! And this transformation is happening in all areas.

We trust artificial intelligence recommendations - Netflix or Amazon, - because they are pretty good, - are not ideal, but they are definitely better than what a person could give. It's only a matter of time before people trust AI completely.

If AI technologies develop as quickly as we expect (and this is a big question), then we will face large-scale social upheavals. Many people will be unemployed at the same time. At the same time, robots will replace not only those who do manual labor. Doctors, lawyers, professional investors are under threat. Already now, robots are successfully replacing dermatologists and radiologists - if we talk about medical professions. The transition to a new social order will be very painful.

Why you can’t punish for bad results

We have fairly limited control over the outcome of our actions, and we have to make decisions under conditions of uncertainty. You can do everything right, but due to pure bad luck, it will end in disaster. Therefore, it makes more sense to evaluate employees not by results - which depend on various circumstances - but by actions.

It is difficult for managers to abstract themselves from the result. We are all strong in hindsight: if the outcome is bad, we look back at the decisions that preceded it and think: “What stupid decisions!” This happens automatically. To change this in yourself and learn to evaluate other people’s work not by the result, but by the process, you need serious self-discipline.

It is important that employees are not afraid to take risks when necessary. In companies where employees are punished for poor performance, fear of risk becomes excessive.

A good strategy when you need to make a high-risk decision, assign this to a group rather than to one person.

By and large, everything I say is very simple things, common sense. I’m even embarrassed that in some sense I turned out to be the voice of common sense. On the other hand, sometimes people are more willing to believe experts than what their own mind tells them.

Anurag Deep

Logical by Mind, Creative by Heart