Life is full of very unlikely-to-succeed operations, but ones with huge potential payoffs in the event of success. So merely because the chance of success is low does not have to mean that you turn down such opportunities.
But you should think about weak links — they are very important. In the above example, the weak link is the low-probability fourth event. Which brings me to the title of this newsletter. “A chain is only as strong as its weakest link” should, perhaps, be re-stated as “A chain cannot be stronger than its weakest link.”
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Its always a good idea to think about weak links in the idea before making an investment. How should you do that? One trick is to ask this question: “What three or four things can destroy this business?”
We discussed this idea when I introduced you to confirmation bias — the human mind seeks confirmation for decisions it wants to take and does not automatically look for information which could prove the decision wrong. So you have to kind of de-program yourself from what you’ve be programmed to do by evolution. So my suggestion is to always ask that question because it will then force you to find the weak links you are not programmed to be looking for.
But you should think about weak links — they are very important. In the above example, the weak link is the low-probability fourth event. Which brings me to the title of this newsletter. “A chain is only as strong as its weakest link” should, perhaps, be re-stated as “A chain cannot be stronger than its weakest link.”
…
Its always a good idea to think about weak links in the idea before making an investment. How should you do that? One trick is to ask this question: “What three or four things can destroy this business?”
We discussed this idea when I introduced you to confirmation bias — the human mind seeks confirmation for decisions it wants to take and does not automatically look for information which could prove the decision wrong. So you have to kind of de-program yourself from what you’ve be programmed to do by evolution. So my suggestion is to always ask that question because it will then force you to find the weak links you are not programmed to be looking for.
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