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Pare down and think in terms of EV


I read your post "The Million Dollar Question". It was very good. Thank you for sharing it. I can see myself in the friends you mentioned. I have these dreams of ways to increase my income. I have an internet side business that makes about $1500 a month. I know that there are many different ways I can scale it. In my mind I see the way, the things I need to do. But then I sit down to do those things and I freeze. I believe I am frozen by fear. I fear that if I do these things and they don't succeed, I have wasted my time. Or, I sit down and think of all the things I need to do to get to the endpoint and I think "that is a whole lot of work". So I don't do anything. I waste an hour reading HN and playing solitaire. It is really stupid.

Anyway, your post really made me think about it. I think I will write a plan of all the things I need to do to scale in one direction. Then I will break down the plan in small enough steps that can be accomplished in an hour or two. I'll write each step on a Post-It note. When I finish the step, I'll put it on the wall so I (and my wife) can see the progress. What do you think?

I think it's a good idea, and I empathize with where you're at. A few thoughts -

First, I think it can be helpful to start thinking in terms of expected value (EV) - I learned it from playing poker. If you play poker, you're often in a position where you make money on average by doing a good play, but you'll still lose a lot of the time. For instance, if you have an 80% chance of winning a hand and you get a big bet at you - of course you call. But 20% of the time you'll lose. Which sucks, but you've got to just shrug and not get upset because you did the right thing.

Calculating EV and Coefficient of Variation: An Example

On Lawrence He

Expected Value is the Profit or Loss from a decision times the probably of that happening.


Box A has a 25% chance of giving you 30 dollars, a 50% chance of giving you 20 dollars, and a 25% chance of giving you 10 dollars.  It costs 15 dollars to buy box A, what is your expected value?

30-15=15 ; 15 x .25= $3.75

20-15= 5 ; 5 x .5 = $2.50

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