Deconstructing the risk in my previous life decisions. How I view risk and opportunity cost differently than many people.
Ever since I started telling people I was going to quit my job to write full-time for a while, there’s been one response I’ve gotten far, far more often than any other: “You’re so brave.“
At which point I ask, “Why?”
“Well… because you might fail.”
“But what’s wrong with that?” I ask. “If I failed, I could just come back to tech, and it would be the same as what I’m doing now.”
“I don’t know.”
And that line of conversation pretty much ends there because I’m not sure how to respond. I’ve stopped asking “why?” when people say that, because it’s never really gone anywhere. But I’m still genuinely curious about why that’s such a common reaction for people to have. To think of such a move as brave. Especially because, when I think about it, it’s also been by far the most common reaction to all the major life decisions I’ve told people about in the past 6 years.
The truth is, when it comes to risk, I’m one of the most conservative people I know. I only decide to make a change when I see that there is virtually no downside. But as soon as I do see a very favorable opportunity–a decent possibility of large upside, with very little downside even in the worst case–I’m ready to make the change immediately. This is what’s known (in investing, and other fields) as an _asymmetric bet_, or _asymmetric risk/reward_. Maybe that tendency to go for such opportunities appears particularly decisive, fearless, or brave only because it’s relatively rare; people in similar situations, with similar opportunities, often seem to hesitate for a long time, or to never make the change.
I don’t gamble with my life. I count the cards. –Sekou Andrews
I would argue that there are situations, very common situations we all face at many points in our lives, in which it would be much more risky to stay put, to hesitate too long, keep doing what you’re doing, maintain the status quo. Cases where not making a change means losing out on a potentially life-changing opportunity, means ignoring doors open to you now that won’t be open again later, as well as leaving yourself exposed to hidden risks.
We always think of this false dichotomy where living true to yourself automatically means taking on more risk than not. I’m saying that in many cases, living true to yourself means taking on less risk than not. These are the easy ones and we should all be taking full advantage of these cases when they come along. They’re win-win, all upside, and they should be no-brainers. But it’s so common to assume that major changes or unconventional changes always mean more risk, without actually doing the analysis.
When we feel like the world is a dangerous place, then it seems like nothing could be safer than staying put. But for myself and many of my readers, there’s more to it than meets the eye. Diversifying your skill set and network (which means learning new things and working with new people) makes you antifragile (that is, able to adapt to and benefit from random events); failing to diversify leaves you in a very fragile position, exposed to any random event–anything from your company shutting down or you being laid off, to your home country becoming unstable. In the same vein, large companies that are slow to react to changes in an industry appear safe, but are also fragile.
As an exercise, I thought I’d go through my major life decisions of the past few years, the ones people most frequently labelled as “brave,” and deconstruct how I evaluated the risk of each one, and the potential upsides and downsides.
- Becoming a software engineer
The first of these decisions happened in a time when I was living at my parents’ house, tutoring SAT part-time. I really wanted to get a job that would allow me to move out of my parents’ house, so I decided to try to attend a web development bootcamp, as I had no programming experience, and to become a software engineer.
Let’s talk about the downside first.
A good question to always ask: if it doesn’t work out, can I come back to the current situation? In this case the answer was a resounding yes. Alas, SAT tutoring will always exist, and my parents are very hospitable people and enjoy having me around.
Another downside was time. Though with a bootcamp, it’s as short of a time investment as you can get: 3-6 months to get trained from scratch for a whole new career. Assuming I graduated, got a job as an engineer, and after a year or so decided I didn’t like it at all–that would still give me a lot of information and experience in a short amount of time. Plus, I didn’t have any other ideas.
Another downside was money. For a lot of bootcamps, just the tuition is a big risk (dropping $12-18k up front, at the time; something like $15-30k now, egad!). However, I was fortunate to find out about App Academy, which at the time only had a deferred-tuition model, where (other than a small deposit just to save your spot, which would be returned to you) you didn’t pay a cent until/unless you got a job as an engineer afterwards, and then you’d pay a percentage of your first year’s salary. Of course, I assumed I would never get accepted to App Academy, but as there was also basically no downside to applying, I applied, and to my shock and wonder, I got in!
So, there was almost no downside in terms of money. I say “almost” because there was some other money I would need to plan on losing: 3-6 months without my tutoring salary. As I made very little to begin with, I was fine with this. Another potential cost would be paying rent to live in SF during the bootcamp: but actually, I didn’t. At the time, App Academy let students crash on the floor of the office for free (not anymore, sorry!). Between that and the generosity of some friends who let me housesit when they went out of town, I didn’t have to pay rent during those months. So in that sense I de-risked the cost by sleeping on the linoleum floor of a giant office space for weeks at a time along with 20-30 dudes.
So, downsides were I’d have to give up a small amount of time, and a small amount of money, but I could definitely reverse the change and come back to the current situation. Now, the potential upside. It was all upside. I could get my first full-time job, doing something I knew I enjoyed and was good at, in a market where my skills would be in extremely high demand for a long time to come. I could go from making $20-25k a year (my best year tutoring), to over $100k (entry-level market rates in SF in 2013-2014). In less than one year. It was a no-brainer. I went for it, actually did collect all of that upside, and never looked back.
In retrospect, I lucked out: my timing couldn’t have been more perfect. It was the best time possible to go through a bootcamp and enter the job market. In 2013, developer bootcamps had been around for maybe a year or two. So I wasn’t so early that bootcamps didn’t exist, or so early that I was in the initial, most experimental cohorts; but I wasn’t so late that the bootcamp world became saturated as it is now, which means higher tuition, government regulation (no more crashing at the office), and the job market also being saturated with candidates fresh out of bootcamp, which makes it harder to stand out. I wasn’t aware of any of that at the time. A combination of luck, and the fact that I made a decision and acted without delay, got me to where I am now.
Let’s look at the next big decision.
- Quitting without another job lined up
When I was at my second job as an engineer, everything was chugging along as usual, and then one day everything changed without warning: we were told the company was going to be acquired, by a major corporation, at the end of the month. We’d each be given our offer to join the corporation, and we had one week to decide what to do. If you declined, then you’d simply be out of a job at the end of the month, with very little severance pay.
My offer included a small raise, as well as a massive retention bonus if I were to stay a full 2 years. The monetary benefits (401k/pension, health insurance, etc) would also be more generous in every way. It was like money on money.
I had a few options:
Accept and stay 2 years for the bonus. I wasn’t at all interested in working for the corporation. But that 2-year bonus was more money than I’d ever pictured getting as a lump sum. That gave me pause. It would be really agonizing to turn that down. But it might be at least as agonizing to stay for 2 years, when I was already getting all kinds of signals that I wouldn’t enjoy it and that I wouldn’t learn as much.
Accept, but start looking for a new job, and then quit after finding one. The company explicitly said that it would be ok if we wanted to do this. Rationally speaking, this is probably what I would recommend to someone else. It would mean turning down the big retention bonus, but it wouldn’t result in a break in income, and I could take as much time as needed to find a job I liked better, AND I would be able to actually experience working for the corporation and decide what I did or didn’t like about it, rather than relying on hypotheticals. This is what a bunch of my colleagues did.
Unfortunately, I’m not so rational. I was mad about how the whole thing came about, and I felt like my arm was being twisted into accepting, and I hate that feeling. I knew that if I got into a situation where I resented going to work every day, then it was going to mentally poison me a little more every single day and start turning me into a negative person. And messing up my mental well-being wasn’t a risk I was willing to take.
Plus, if I stayed, then there was also the risk that it might be easy and comfy, and I might stay longer than I meant to, and lose that urgency to find a new job. So I started to consider a third option:
Decline the offer and leave at the end of the month. This would mean losing my income suddenly, without knowing when I would have a new job. But there were some benefits: being able to interview full-time was a big one. And the lack of income giving me a sense of urgency and focus.
Oh, and if leaving didn’t work out, could I come back? Technically yes, I think the corporation would have been glad to have me back, and I don’t believe in burning bridges; though for reasons of simple pride, as well as the aforementioned mental well-being, I thought it best to consider it a closed door. 😄
In the end, I decided on the third option, to decline the offer and lose my job. These were the factors that influenced my decision:
- At that stage, just over a year into my engineering career, growth and learning were by far the most important factor for me. Any growth I experienced now would be a huge multiplier in the opportunities I would get later on, including opportunities to make more money. Putting that growth at risk at a crucial time, for 2 years, for a known sum of money, would be short-sighted: the money wasn’t going to compound at anywhere near the same rate as my value as an engineer.
- I had enough savings to go maybe 3-4 months without a job. Given the job market at the time, and my background, I felt reasonably confident that I could get a better job within that time.
- Rather than try to interview while also starting at what was basically a new company, on new projects, and still stewing in my emotions around the acquisiton, I could get a clean break and focus on what to do next.
- Finally, I had this thought: The true meaning of “rich” is being able to walk away from the money. And knowing that I could earn it all back in a better way. Being trapped for the money is a position of fear, and I didn’t want to be the kind of person who is controlled by fear. And that’s what ultimately decided it.
On the whole, I felt that the downside of staying put was much worse than the downside of moving on. I walked away, I got a new job within about 2 months, I even got contract work during that time so that I actually had no break in income, and after 2 years, I didn’t regret not getting that bonus.
That was one of the best decisions I’ve ever made. All else being equal, the knowledge that, when it came down to it, I walked away from the money because I valued something else more highly, and I could do it again–that’s going to stay with me for the rest of my life. Not everyone gets the opportunity to know that about themselves.
3. Moving to Europe
In 2018, I came to the Netherlands for the first time on a work trip, just to visit the other office of my company and get to know the people there.
Within days, I knew I liked everyday life here better than back in the SF Bay Area, in every possible way. The city (a small city in the north) is gorgeous; you pretty much can’t go anywhere without encountering canals, cathedrals, brick houses hundreds of years old, and lots and lots of green. The city is made for walking and biking. Commutes are mindblowingly short compared to any major city in the US: the vast majority of my colleagues walked or biked to work, and the absolute longest commute was probably around 20-30 minutes each way. Plus, I’ve just always felt at home in Europe.
All of these things contributed to an intense calm that came over me as soon as I arrived, which I had never felt before anywhere in the US, and which stayed with me for my whole visit. More than anything, it was that feeling that did it for me: I thought that if I could be somewhere where I had that feeling all the time, it would slowly turn me into the person I actually wanted to be. And that new person would be able to see new possibilities that I was completely blind to now.
It was remarkable that the idea to move here even occurred to me at all, as I had never lived abroad before or even considered living abroad, and in fact I hadn’t been planning to move out of the Bay Area… ever. I was born there, I’ve spent the vast majority of my life there, my parents live there, and I figured I’d just live there until I died. I guess I just needed the right thing to click, and then all my perceived walls around my old life fell away. I have some of my friends to thank for planting seeds in my mind that led to that click happening at just the right moment.
I floated to my employer the idea of me moving here. They actually had a greater need for my role in the Netherlands office than in SF, so it would be win-win, but the decision was totally up to me.
In retrospect, I think I’d already made up my mind within that first week, but I took another couple of weeks to try to come up with any objections.
Here were some of the thoughts going through my mind:
If things didn’t work out, could I come back to my current situation? Yep. I could move back, get my old job back, everything other than my exact apartment, basically, but it was okay, I’d already stayed there longer than I’d wanted to.
Almost every variable was known already. That’s what made it a lot less scary or risky than just deciding to move abroad without knowing what I would do. I’d stay with the same company, in the exact same role, I knew how it would go financially, I’d already met the whole team I would be working with, and they were used to helping expats move there, and the team would be my community. There weren’t any big unknowns.
I realized there was nothing more I could learn by spending more time thinking about it or doing research. Whatever remained that I didn’t know, I could only find out by packing up and going. So I went to my employer and said, “Let’s do it.”
Again, people said I was brave. Again, I didn’t understand why, because there was absolutely zero risk. And all the upside I mentioned above, including getting to live in Europe, a place Americans fantasize about getting to visit for two weeks every summer; and including literally becoming a different person. It was another no-brainer: I had run into the most amazing luck and all I had to do was say yes. Three months later, I was here.
Now I’ve lived in the Netherlands for just over a year (and loved every day of it) and I’m getting ready to leave again for my next adventure. But that first move paved the way for what I’m doing now, in ways I couldn’t have anticipated before I made that decision, except that I sort of did, when I had the vague feeling that making a change would open up more possibilities than staying put.
Looking back, the amount of joy I would have missed out on in this one year alone, had I decided to stay put, is staggering. And it kills me to think that so many other people have a thing like that–maybe it’s moving, maybe something totally different–but something amazing that they miss out on because of never actually evaluating the risk of making a change, and comparing that with the downside of staying put.
By the way, I really have to give a shoutout to my parents, for the way they reacted to each of these decisions, especially as I tend to decide without mentioning anything to them until after the fact.
When I came to them and said, “I want to do this program and become a software engineer in 3 months,” they were like, “Sounds like a good idea,” (which by the way was the first time I remember them ever saying that about any suggestion from me). And I was like, “Huh?? You’re not going to lecture me about it being obviously a scam?” But for some reason, they didn’t.
When I said, “My company got acquired and I didn’t want to go, so I went ahead and quit, and I’ll figure it out from here,” my dad said, “Oh… that’s not what I would have done, but OK. Good luck.”
When I said, “I liked it in the Netherlands so I’m going to move there, I don’t know for how long,” they said, “Good! You’re young, you should go out and experience more of the world.”
When I said, “I’m quitting my job and I’m going to take at least a year off, maybe more, and just roam around aimlessly,” they said, “Okay, do you need to ship some of your stuff back to our house?”
I’m really fortunate to have parents who would never in a million years try to talk me out of something because of their own desires or fears. And, it’s funny–neither would they ever say, “You’re so brave!” Rather, their stance is always, “By default I assume you’re making a reasonable decision based on what you know. Good luck!” If they don’t understand it then they ask questions. They treat even my more drastic decisions as perfectly normal and unremarkable, which now that I think about it, is the best reaction I could ask for.
I won’t go into detail about that latest decision here–leaving my job to travel and write–because it’s what I’m doing now, so you’ll hear a lot more about it in later posts. But a beloved mentor of mine had a similar reaction to my parents, upon hearing the news: “Oh, that’s wonderful. It makes perfect sense for you.” No comments on bravery, no questions that start with, “But aren’t you worried about…?”
And that’s exactly how it should be: in a perfect world, it would be not at all out of the ordinary for anyone to identify a new path in their lives that’s all upside and no downside, and when that opportunity comes along, to take that new path and never look back.