Are you making small bets?

Last year I went to a brilliant conference about LinkedIn called Uplift Live. I couldn’t go this year but I know quite a few people who did so I’m catching up on some of what happened while I wait for the recordings to be released.

One of the speakers, Phill Agnew, who I heard speak at Creator Day last year and hosts the brilliant Nudge podcast, apparently spoke about power laws vs normal distribution. What the heck does that mean?

Well, we’re used to things going in waves. You have the average or the peak in the middle, and outliers on either side. So for example, when new technology is released there is a curve which starts slowly with innovators, then builds with early adopters, then you have the early majority and the late majority, the curve peaks in the middle of those two groups, before descending and tailing off with ‘laggards’, those who are late to the party.

Power laws are similar to the 80:20 principle: 20% of the effort will make 80% of the difference. If you were to imagine this difference, the peak is at the start of the timeline, giving you what’s called a ‘fat tail’. So a bit like a waterslide, you see this peak at the start that falls and tails off.

The thing with this is, unless you’re psychic or very lucky, you don’t know what your magic 20% is going to be. All you can do is experiment.

I started investing recently. Not a lot, just dabbling. One of the best bits of advice I read was to only bet 1% of your pot. So let’s say you have £5000, that gives you a hundred £50 trades. It means if things go south, you haven’t lost very much. So far, I’ve lost £34 (I’ve invested less than £1000) and two of the 15 companies I bought shares in have gone up in price. It’s early days and I’m in no hurry, so I’m not worried. But if I’d put £1000 on one thing and the price had gone down I’d be a lot more nervous.

But the idea behind power laws is that I might pick 20 companies which take off, and that mitigates the loss on the other 80. We shall see.

What I liked when I heard about Phill’s talk is the idea that you are placing bets on your actions. You don’t know what is going to make the biggest difference in your life. Phill’s suggestion is you try 100 experiments. I didn’t hear the talk so I don’t know whether he gave examples but it could be that you would like to be more productive so you try:

• Going to bed at 9.30pm, and getting up at 6am
• Leaving jogging bottoms, a comfy top and trainers ready before bed
• Heading out for a walk when you get up
• Having a protein shake when you get back
• Journalling
• Reading 10 pages of a book
• Setting a timer and working for 2 hours

You don’t know if those seven actions will make any difference, or if you’ll like them. But you can test them for a few months and see what sticks.

Writing this blog daily is an experiment for me. I have no idea where it will lead. Following yesterday’s post about what I do when I’ve written an article, I’m experimenting with sharing more on social media and I’m going to try some things to see if I can get more newsletter subscribers. It’s not an either/or, some people will read my social posts, some people will prefer to get what I’ve written in their inbox. Some people will like a daily email (one of my jobs is to set up a form to ask) and some will prefer to just get The Sunday Edition, or emails about their preferred topic.

I don’t know if people still use RSS feeds but I’m going to try it. There are now share buttons at the end of all my blog posts.

What are you going to experiment with? Let me know in the comments.

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