Should you quit your job and start your own business? Should you go get that engineering degree or skip University and start your own YouTube channel? These are questions that I think crop up in our minds especially in modern times with the plethora of opportunities that we are inundated with. They all boil down to whether we must follow our heart and desire and try to make it big in something that we are passionate about but might not guarantee success or should we play it safe and stick to something which is predictable and stable but does not have the potential to make us rich or get the lifestyle that we desire. In the quest to answer this question, we looked at the difference between scalable and non-scalable professions or activities in the last article. To recap, scalable activities are those where the amount of your earnings is not linked to the number of hours of work you put in and have the ability to bring you huge rewards without additional work (ex: an author of a book can make millions by selling that book for years without having to work on that book any further). Non-Scalable activities are those where your earning potential is linked to the number of hours that you work (ex: a hairdresser who gets paid for each haircut or styling). We also touched upon the fact that non-scalable activities while not having the potential to make you rich, generally provide a stable and reliable source of income in contrast to scalable activities which though have the potential to bring you great riches do not provide you any kind of stability unless you are one of the minority who “make it” in that particular activity. This being the case, now how do we figure out whether we pursue the dream of making it big or we play it safe and stick to something that ensures that there is food on the table every day. Do we have to pick one or the other or is there some other way?
To handle this dilemma the author Nassim Taleb suggests what he terms as the “Barbell Strategy”.
A barbell which can be seen in the above picture is a long metal rod to which discs of the desired weight are attached at each end and is used for weightlifting in a gym. However, Taleb uses this device to explain how we can leverage the risk and opportunities that we are faced with in our decisions in life. Now let us consider the scenario where we are faced with the decision to either involve ourselves in a scalable activity with the potential for high rewards which at the same time comes with a lot of uncertainty and a small chance of success (ex: starting and growing your own YouTube channel) or to involve ourselves in a non-scalable activity that offers us stability but does not have the potential to bring us great rewards (ex: working as an engineer). When faced with such a scenario the barbell strategy comes into play. According to Taleb the best course of action in this scenario would be to find a way to expose ourselves to the possibility of the highest reward while putting a cap on the risk that we are exposed to.
This can be done by playing it very safe on one side while taking maximum risk on the other side of the barbell. In this way we give ourselves the chance of maximum gain or upside while limiting the downside. So in this scenario according to the barbell strategy, it would be wise to first get oneself a very secure job which does not require too much time or energy and which might have a low but stable pay such as a job at the government post office and then use the rest of the time to engage in the scalable activity or business such as building a YouTube channel. In this way, if the YouTube channel or the business that you wish to build or your goal of becoming a best-selling author does not come to fruition, there is a safe and reliable job that you can fall back on to ensure that your basic needs and comforts are met.
The additional advantage of this strategy is that, if you delve into a scalable activity with a low chance of having great success, and do not see rewards within a certain time frame, pressure builds as you do not have anything to fall back on and there is a chance that you would quit that activity soon in order to get yourself some stable source of income, whereas there might have been a chance that you would have found great success in the scalable activity that you quit, had you just persevered and continued for longer. However, if on the other hand, you already have a fall back option that provides you with some stability and a sense of security, it gives you the freedom to try harder and longer to find success in the scalable activity. However, the barbell strategy could be adopted in various ways in this situation, another alternative might consist of getting an education or learning a skill that would ensure that you can find employment easily and then delving into the scalable activity with the knowledge that you could always quit and use your fall back option or use your fall back option in addition to the scalable activity if the going gets tough. This strategy of playing it very safe on the one side while taking big risks on the other side can be applied to many things in life so that we can play to win while still ensuring that failure does not lead to a very bad situation or leave you in dire straits. This strategy is far more practical and takes into consideration the realities of life as opposed to the emotion driven motivational themes and advice of abandoning all caution and going for what you want that is propagated by gurus on YouTube. So any time you are faced with a tough decision, try to think of the barbell strategy and see if you could work out a plan that gives you the best possible chance of success while also ensuring that you have limited your downside.
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