Optionality: How To Make Your Own Luck In Life - Richard Meadows | Modern Wisdom Podcast 269

My frame for optionality is, well, you can make your own luck. So look for those asymmetric opportunities and just snap them up. Just build a portfolio over years, and, um, you don't know ... You can never be sure if they will pay off, if you take one of these speculative plays, um, and, and probably they won't. Uh, you know, the, the ch- the chances are against you in any given one of them, but the idea is, you're building a portfolio. One of them is gonna pay off at some point in time, um, at which point, uh, you're gonna be okay. So you just keep stacking up opportunities wherever you see them and maximizing your chances of getting lucky. (airplane whooshing)

Richard Meadows, welcome to the show.

Thank you for having me.

Pleasure to have you on, man. So, optionality. What is optionality?

Uh, the simplest definition of optionality is the right, but not the obligation, to take action. So you can do something if you want, but you don't have to. And my argument is that optionality is a pretty good, uh, proxy for human flourishing in general, um, and just being able to maximize your capabilities as a human being, and, uh, y- have, have the, the maximum range of possibilities open to you.

So would that suggest that naturally, as humans, our level of well-being and flourishing is directly proportional to how many different options we can take in life?

Uh, I think it's, it's less of, it's less of a quantitative thing and more qualitative. So it's about, uh, the caliber of the options that are available to you. So I'd draw a distinction between having a, a lot of choices in the consumer capitalism, uh, frame, where you can go to the supermarket and choose between, uh, umpteen different varieties of, uh, pasta sauce or laundry detergent, but, like, having high-quality options, uh, is more important. So being able to, uh, you know, work in a career that you, that you find meaningful or satisfying or being able to have good relationships with the people around you, um, that's, that's really the key. And it's not so much about being, sort of floating on cloud nine and being euphoric a- w- all of the time, but also having the right to, to choose to do things that are really hard or that involve some degree of, uh, not necessarily suffering, but perhaps some degree of hardship or sacrifice, um, because it's sort of a, a, a broader definition of human flourishing that goes beyond the simple hedonistic pleasures.

How do you see optionality manifesting in the real world, then? That's a nice concept, but what, what does it actually look like-

Mm-hmm.

... when it enters our lives?

Yeah. So I've got a framework for cultivating optionality that basically looks like taking this lens and applying it to all the little decisions of daily life. Uh, so I'll give you a couple of concrete examples. Um, so what we're really looking for, uh, overall is any sort of decision or action you can take that has a, a small cost or a small downside, it doesn't require a lot of money or effort to take out the option, but it leads to an open-ended upside. So it could, uh, it could have basically unlimited possibility and it could be really transformative for your life. Um, so one simple example of that would be, uh, you know, like, uh, emailing someone you admire that takes you two minutes or, um, or, or whatever it might be to pen an email to someone. And amazingly with the, you know, with the, the power of the internet, you can get in touch with just about anyone that you can imagine. And then they might even write you back and it could be the beginning of a mentorship or you could have some kind of relationship or just, uh, find it to be a, a meaningful interaction. So the pos- uh, the, the downside cost there is, um, you know, very small, it's not that hard to do, and the possib- uh, the, the possible, uh, positive outcome is very large or open-ended. So in most cases, nothing will happen, maybe they don't email you back, and that's fine, because you've, you've lost essentially no- nothing. Um, but in the event that they do, uh, there's a, sort of a, the, the potential for transformative upsides. So my idea is to take this framework of optionality, which is a concept from the world of finance and, and just look at the deci- look at a lot of decisions, uh, through this framework and look for those asymmetries. So, uh, what's the downside, what's the upside, and, uh, what can I do that has a pretty small effort and might lead to a, a large payoff? And then just systematically collect as many of those options, uh, as you can and build a sort of portfolio. So even if most of them don't work out, uh, you're sort of constantly, uh, attuning yourself to serendipity and, and luck. You know, it's sort of a, a system for making your own luck. Um, so yeah, I could give more examples of, of those sort of asymmetries if, if you like. Um, there's also, uh, the negative optionality, which is something like being in debt. So if you take on a consumer debt, you have the obligation to do something, but not the right, so it's a, an, an inversion of the original formula. Um, and again, one of the most powerful things I would argue that anyone can do is to, uh, remove those sources of negative optionality in your life. So be extremely cautious of situations where, um, the upside, the possible return, the reward, the bounty is limited, so it's fixed, it's capped, but the potential downside is, uh, is, is bottomless or infinite. So th- this is the, sort of the Russian roulette archetype where you spin the barrel, maybe you win 100 bucks or sort of impress your mates at the bar, but in the event that you lose, you lose everything, uh, lights out. So that's the framework. Um, hunt for the asymmetric opportunities, uh, which are loaded in your favor, and steer well clear of the-... uh, the, the options and decisions which have a negative asymmetry, um, where there's a possibility that it will lead to some kind of total ruin.