Size your bets by investing your time and resources proportional to riskiness.
I shared this insight in my Maven “Lightning Lesson” this week on how to plan your 2025 like an executive (you can check out the recording from the link on my profile page).
Size your bets is a poker term. In poker, you can play your hand perfectly and still lose due to an unlucky card turning up. Poker players adjust their bets accordingly to account for that element of uncertainty and luck.
Business executives do the same thing. For projects in the idea phase, they invest only a small amount, just enough to gather more information and reduce the riskiness (this would be a seed stage investment in VC terms). Each subsequent investment can be larger because the chance of success is higher (Series A, B, C and onward in VC terms).
Executives at larger companies also rarely go all-in on one project. They develop a portfolio of offerings to diversify their risk, so that they are cultivating new opportunities while investing in their current profitable businesses. At Google, we used the heuristic of 60/30/10 – 60% of new investment went to the existing profitable business, 30% in the nascent businesses that were ready to scale, and 10% in exploring new blue-sky opportunities.
You can apply the same thinking to your own life. If all you do is work on your current job, you are going all-in on that company, which can be risky if something unlucky happens. Instead, I recommend constantly investing in new possibilities by:
— Networking with friends and colleagues to see what opportunities are available. Companies rarely provide extended safety any more, so be prepared by having strong relationships with others in the industry.
— Learning new skills or developing your current skills. What rare and valuable skills will differentiate you from others when applying for a job?
— Exploring new possibilities. If something looks interesting, do something about it. Even if you’re super busy, find 30 minutes each week to learn more about the possibility – have a conversation with somebody in the field, read a paper, maybe take a class. These are your seed-stage investments that need to be nurtured.
So what will you do differently in 2025 to diversify your work portfolio and size your bets differently? I’d love to hear from you in the comments!