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NOTABLE! Moving the Needle on Probability

Discussion in 'General Entrepreneur Discussion' started by ExaltedLife, Jan 17, 2019.

  1. ExaltedLife
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    ExaltedLife Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Wow. My mind just got blown by a post from @MJ DeMarco. Some background: In the recently closed thread titled: "Quit now, get a job, and why bother. Everything is luck". The OP was complaining that his few half-assed attempts didn't get him anywhere and started to blame luck and basically descend into a quitting mentality. MJ closed the thread with a post about influencing probability that helped me to grasp the concept more clearly than I ever have before, and so I wanted to immediately start a thread about it because it is HUGELY important.

    Especially if, like me, you've been a wantrapraneur for a long period of time. Even though that thread is infected with nihilism and closed, I recommend looking it up just to read the last two posts which MJ made.

    I titled the thread "Moving the Needle on Probability" because what helped me to really grasp probability was the insight that you can manipulate probability. The question is, how? That question opens up a world of possibilities. Understanding this concept can help you A) Choose an idea you can feel good about committing to, B) Come up with a game plan of actionable steps, and C) Devise a way to measure your progress so that when you're in that desert of desertion, working without reward, you can take solace in the fact that you know you are improving your odds for success.

    DISCLAIMER: I'm making the following numbers up, and reality is a little more complex than I will represent it.

    So how do you manipulate probability? Well lets say, like me, you want to make $1,000,000 as a fiction author. Let's say 1 in every 5000 fiction writers makes that. So to start, I have a 0.0002% chance of success. Not very great. Okay. How do I improve my probability?

    Well let's say that of those 4999 authors who never make it, 300 of them have really shitty covers on their books. Okay, there is an Actionable Step to improve probability. So I pay to get a decent cover made. Now my odds are 1 in 4700, or 0.00021%. Boom! I just Moved the needle on probability! Pretty sweet, right? Not by much, but still. It moved.

    Okay, what else can be done? Let's say I discover that of the remaining 4699 authors who never make it, 1000 of them have only written 1 book. So, I write another book. Boom! Now my odds of success are 1 in 3700, or 0.00027%. The needle is moving people!

    Now I'm on a role. Now I get another idea: reaching out to individual readers to review my book on book forums. Turns out that of the 3699 remaining that never make it, 400 of them never do that. So I do that. Boom! My odds just became 1 in 3300. I just hit 0.0003%!

    I'm getting addicted to this! I discover that of those 3299 that never make it, 2500 of them never write more than 3 books. So over the next year I write 2 more books. 1 in 800! 0.00125%!

    25% of unsuccessful authors who do all those things never sell in multiple mediums! In addition to my ebooks, I publish in paperback, hardcover AND audiobooks! 1 in 600! 0.0017% !

    400 of those 599 never advertise! I buy some FB ads! 1 in 200! 0.5% ! NOW I'M COOKING!

    100 of those 199 never improve their copywriting skills! I do! 1 in 100! Now I have a 1% chance! WHAT ELSE CAN I DO???

    Now let's say that of those 99 remaining writers who never make $1,000,000 writing, 92 of them never take the time to study character and plot development, to listen to how their writing sounds to improve the flow, they never take the time to study how to build suspense, how a story can make somebody feel sadness, joy, anger, wonder, or otherwise emotionally impacted. They never take the time to study how to create the context in a story to build intensity in a conflict.

    Let's say I put the work in, and I do all of these things. Now my odds are 1 in 7, or 14%. Pretty damn good.

    This is an example of how engaging in certain processes can manipulate probability. It can work in any industry. What is the value array? Improve in any area, and you can move your own needle.


    Some more random examples:
    - Packaging sucks? Improve it!
    - Shitty lead time dropshipping? Order stock ahead of time.
    - Lack of success cold calling? Record your calls and listen to yourself. Are you talking too fast? Learn to slow down. Congratulations, you've just moved the needle.

    I never understood before why MJ put so many "To Do's" on the "My Fastlane Daily" worksheet. Now I do. There are so many ways to move the needle. If any of you are pursuing self publishing, here is the To Do list I just laid out:

    1. Get a better cover.
    2. Write another book.
    3. Reach out in book forums.
    4. Write more books.
    5. Publish an audio book.
    6. Publish in paperback and hardcopy
    7. Advertise
    8. Improve copywriting
    9. Study plot development
    10. Study emotional scenes

    Etcetera.

    Funny story, while writing this post I found this article by a writer who says the same thing: What Are the REAL Odds of Being a Successful Author? - Kristen Lamb

    Again, you can apply this principle to any business. Pretty cool right?
     
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  2. daru
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    daru Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Great post!

    So I was the one that brought Nassim Taleb into that thread. And that did not end well. But I do not agree that all is luck. What is so great with MJ's books is just what you wrote. By the TUNEF framework we can move probability! That is so inspiring. That is why I participate in this forum and still pursues entrepreneurship.

    So thank you for clearing it up @ExaltedLife.

    And a big THANK YOU to @MJ DeMarco for writing your books to show us howto move probability. Truly sorry if I was part of discrediting your work, that was not my intention if it seemed like it.
     
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  3. Suzanne Bazemore
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    Suzanne Bazemore Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I think another way to improve probablility is leverage.
    Leverage your own time by using one format or medium to promote another. (For example, building a website with interesting content that can promote your book or invention.)
    Leverage money by using other people's such as in real estate.
    Since time and money are my most limited assets right now, those are primarily the things I think about leveraging.
     
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  4. ExaltedLife
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    ExaltedLife Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Good insight. I'm sure this forum helps MJ sell a ton of books. I only discovered this forum because I read about it in MFL, and if I wasn't on here I wouldn't have found out about Unscripted.
     
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  5. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    I don't know if I'd say that leverage increases your probability. Leveraging money in real estate can lead to greater returns and enable you to afford more property, but does it really increase your chances of being successful? If I really think about it, say I had a 1 in 100 chance of making money on a property if I buy it. Do my chances of making money go up if I get a loan vs. paying cash?
     
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  6. ExaltedLife
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    ExaltedLife Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I think I see a way it could. Let's say you plan to make money via appreciation when you sell the property some years down the road. If it is a house in a shitty neighborhood that is miles away from any amenities, then probably the property value will be low, and the probability that it will rise significantly within the next ten years are say, 1%. And as far as cash is concerned, you can't afford more.

    So what if you leveraged other people's money to buy a whole bunch of surrounding properties, and you tore down a block of old houses and built a plaza that could hold a supermarket? I would think having those amenities near the original property would increase the probability that the valuation would increase.
     
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  7. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Admin Post
    Leverage (numerical, not margin or RE loans) only increases the expected value of the various outcomes and their associated probabilities.

    If you remember my Summit presentation, a $10,000,000 potential outcome, even at super-low probability, say .001 or .1%, dramatically impacts expected value positively. Kinda ties in with your recent real estate post about the "going rents" in the neighborhood. That has a tight expected value simply because your 2 bedroom condo will never rent for $15K/mo when everything else is renting for $1K.
     
  8. Suzanne Bazemore
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    Suzanne Bazemore Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Good point - I meant leverage for property investment enables people to invest who might not have all the cash to buy the property otherwise, but it definitely doesn't ensure success or cash flow.
     
  9. ZF Lee
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    ZF Lee Platinum Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Success also means different things for different people.

    The other day, I was at a technical investing seminar.

    The speaker was talking about having your own personal investing philosophy.

    I asked him what he meant.

    He asked me a question, 'Let's say you have bought X number of shares, and the price raise by 50%. Will you sell your shares or wait for a potential rise?'

    I thought for a bit, and said that I would sell as the market wasn't looking good generally. Even if the price continued to rise, I would at least avoid a loss, as long as my earnings included a full return on my capital.

    The speaker said,'Some folks might not see it that way. They have different price levels or benchmarks to sell or buy at. It depends on how risk tolerant you are.'

    And that was that about having a personal investing philosophy.

    That is the same way for real estate. In fact, I'd argue that people's idea of real estate success is much more vague than stocks and shares.

    One of the first book on property investing (local here in Malaysia) I ever bought had the tag line '100 Properties by 30 years old'. That got me hooked back then when I was ignorant. I thumbed through the pages, only to notice very brief mentions on actual cash flow . The numbers didn't look very attractive enough, and looked only enough to earn a nice chicken dinner than financial independence.

    And the author didn't even have 100 properties NOW...it was just his cumulative scorecard of past deals, good and bad included.

    But for readers who don't have anything in their pockets, 100 properties sure sound nice.

    This is akin to folks saying,'Oh, Mr So and So has a golden elephant. He must be rich!' But they never thought whether the elephant was alive, or even an actual animal in the first place.
     
  10. Kak
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    Kak Capitalist Swine Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    If you have the cash to buy THE hypothetical property... You have enough cash to finance 5 of them.

    Finance your real estate investments.
     
  11. MJ DeMarco
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    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    HOW TO MOVE THE NEEDLE ON PROBABILITY...

    1. Input more "tries" into the marketplace... coin drops into the gumball machine, flips of the coin, whatever you want to call it. If you have 2 flips to call a coin toss correct, probability moves from 50 to 75%.
    2. Focus on a CENTS system, or an "eventual" CENTS system (For instance, you start violating C with the aim of mitigating it later)
    3. Make sure your venture has a huge upside potential, even at super-low probability. This increases the expected value of your try, and future tries. This concept is embedded into the (S)cale commandment.
    4. Create some legacy value. Legacy value exists in time, separate from your time. This forum, my YT channel, are small examples of legacy value.
    5. Expand your network of good people, both personally and professionally.
    6. Never stop educating yourself in the disciplines that will move your needle.
    7. Envision your goal and have it aligned with a meaning or a purpose - this combats motivational fatigue and helps you fight through failures, bad times. Again, more "flips" at the coin.
    8. Recognize the importance of the feedback loop and how its absence causes early quitting
    9. Possess the right expectations, be OK with small wins to start. You don't win the World Series on the first try, you get a hit in a little league game.
    10. Make sure the appearance of failure is real failure. If you fail your messaging, fail your audience, or fail your reach, it could false-flag failure, when in fact, your product wasn't the problem.
    11. If people aren't recommending your product on some level, raving about it, etc, you have a product problem and a productocracy is unobtainable. Productocracies create expansive mathematics where 1+1 might equal 3.
     
  12. Amro
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    Amro Contributor Read Millionaire Fastlane

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    Hi,

    Nice post. I would add to it: learn marketing to the max, start splittesting your salespage and you'll be ahead of many of the bookwriters.

    All the best,
    Amro
     
  13. Rabby
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    Rabby Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I'll add an example of how people's actions affect the probability of outcomes.

    In risk management and insurance, you can look at a piece of property and base decisions on the probability of a loss.

    Part of that probability comes from things you don't have the knowledge to predict. Will there be a hail storm this year? Who knows.

    But a larger part is based on the actions and decisions of the property owner, and other people in the immediate area.

    If you insure a house, it matters whether people live there or not. Why? Because it is more likely to be targeted by vandals or squatters if it is vacant.

    It matters if someone drives their car to work every day, vs only driving on the weekends. Why? Because they're exposed to more potential collisions and human errors each week.

    It matters if a carpentry shop maintains proper dust collection, and cleans up varnish and oily rags immediately. Why? Because dust, varnish, and stray rags are hazards that increase the probability of an explosion or fire.

    If you accept that cause and effect are related, you should believe that you can move probability. I know the group in this forum "gets it."

    Incidentally, risk management is Taleb's field. One of his interests is in using better models to account for large risks that we don't have enough information about. That's the black swan - the thing you don't known now, but which can be causally linked to an outcome after the fact. That fragile models assume perfect information, while robust ones acknowledge there are things we won't know until later, is an extension of the same reasoning.

    Another of his interests is the classic problem of false associations between particular causes and effects. He never argues that "everything is random," or anything that would imply that "luck" is a thing. Rather, he argues that people look at data/graphs and think they're seeing cause and effect; but we are easily misled by false associations. This is the point of "fooled by randomness." Making false cause and effect associations leads to bad decisions (including: waiting for "luck" to strike).

    The same models that apply to risk also apply to opportunity. You're predicting outcomes based on causes you do understand, and the knowledge that there are causes you don't understand.

    That means you can do at least two things to "move the needle." You can refine your actions in the areas where you understand cause and effect, or input and output. And you can discover new, more accurate causal relationships.
     
  14. MJ DeMarco
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    Great example insofar as why insurance companies ask how many miles you drive, how many tickets, etc. Also why health insurance companies want to know if you smoke.

    These choices HACK probability.

    Our choices have the profound ability to HACK our probabilities where *luck* seemingly can make an appearance.
     
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  15. Rabby
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    Rabby Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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  16. ExaltedLife
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    ExaltedLife Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    I just stumbled across this video on YouTube while watching shark tank scenes! So cool! Thanks!
     
  17. ExaltedLife
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    ExaltedLife Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    The higher percentage points were an improvement
     
  18. Vadim26
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    Vadim26 Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Very motivating and you did an awesome job illustrating how probability of success works!

    Well, excuse me .. now, I'm gonna go and increase my probability of financial freedom by tiny bit by working on the prototype.
     
    Last edited: Jan 22, 2019
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  19. MJ DeMarco
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  20. Suzanne Bazemore
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    Suzanne Bazemore Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Thanks for bumping, @MJ DeMarco ! Somehow I missed the video, and it is a really good explanation. I took a couple of photos of the graphics, Starting Probability for Success and the one with things we have control over, as reminders of how to affect probability.
     

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