Long Bets, Long Gains

Most people make money with a fairly understandable model. They perform some task for which they are sure that someone will pay them in some limited time. Doctors know that you will pay them once they give you advice and medicine. A shopkeeper knows that there are people around him who want toothpastes, so he would get lots of toothpastes and make them available to closeby people.

Most of these are fairly short term bets. We are not very good at making long term bets, because there are so many things that can change since now and then. There is a lot of risk involved. Plus most things in nature changes in an exponential rate, which makes it difficult to predict when something will happen.

We can take a simple example of Electric Cars. Say you want to start an electric car company. There are a lot things involved like gathering a team of designer, marketers, setting a manufacturing hub, etc. Currently getting an electric car doesn’t make sense for consumers, but you are betting that

• eventually the world would run out of petrol,
• governments would encourage people to renewable energy and
• battery technology would improve.

All of these things are highly difficult to predict, they could take anywhere between 5 to even 50 years, but they need to be predicted correctly in order to handle your company finances. You have to be willing to lose or not make money until those things happen.

Good thing is that if your long bets succeed, there are a lot of rewards to reap. Most highly successful things, people, business, nations, take a long time to succeed.

About a month ago, Spotify signed a deal to exclusively stream Joe Rogan’s podcasts. Spotify stocks jumps by $2B after that deal. One could safely say that Joe created a business worth $2B. I was surprised to find that it was started in 2009. Back then the word podcast probably didn’t exist. That’s a long time. This was probably his life’s most influential work.

The point is how big of an impact you want to create, how much money you want to make, it would take much long time.