JamesG Career Handbook: Risk (1)

The nature of careers is changing. In the past, when power belonged primarily to institutions, we were beholden to societal norms in order to “make it”. A traditional career path went something like this: graduate high school, then go to college, then get a safe job. Otherwise, you would graduate high school, then go into a job, and work your way up the “career ladder”. This is no longer the case.

It has become easier for other people to see our work — our ideas, code, writing, art, and so on — because sharing our content has become cheaper and more efficient. In the past, location was a constraint — you had to get a job for a local company, or move elsewhere to pursue better opportunities. But that is no longer the case — we can build our career from anywhere. This transition has made it easier for us to pave our own career paths. There are more potential decisions we can make now: we could start a company; write a book; start a blog or a podcast; move into a remote working job and more.

I will start by saying that the traditional “one-path” system — at least for many people — is dead. Indeed, some people may be pressured to follow that path, but it is no longer a necessity for success. We can pave our own way through the world, and pursue our interests and turn them into a real job if we work hard enough. I would argue that most career advice is useless, too. Nobody else is more qualified to make decisions on your own behalf than you, and most advice is conflicted in some way: the person wants you to do something their way; they want you to do something because they didn’t do it or; they are operating on incomplete information about you. This short series could be interpreted as a set of career advice, but I prefer to frame it as guidance based on my past experiences.

Career Planning 101

Do not plan your career. I hear a lot of advice about the importance of creating a “five-year” plan, or doing some other activity to help you think ahead. This is especially common advice when you are young, as career counselors and your parents all want to know what you want to do, otherwise they worry. Rightfully so, but career planning is not always the answer. Indeed, it is impossible for you to plan your career because you don’t know what will happen in the future. Those who started working 30 years ago would have no idea that most jobs would be dominated by new technologies — the internet hadn’t been invented. They didn’t know “full-stack web developer” was an actual career. They didn’t know that working with drones would be a thing. So how could they possibly make an informed decision about how they should spend their time?

Especially when you are young, it is important that you do not create complex plans. Many people try to find their passion at 18 and think that will set them up for life. But that limits your ability to pursue new opportunities. That great job you got offered in crypto? If it isn’t on your career plan, you may pass, even if taking the job is in your best interests. When you are young, you can always blame your career mistakes on your youth and find some way to rationalize your decisions.

The only thing I can guarantee about your career is that things will change. The people you work for will change; the industries you pursue will change; your interests will change. Therefore, planning ahead is a bad idea. If you plan your entire career, you miss out on all of the growth opportunities that change brings. If society is changing around you and you are still sticking with a career plan, where does that leave you? Well if you aren’t responding to the changing world then it leaves you behind. The truth is that career planning doesn’t account for one of the most important aspects of any career: serendipity. So many people have gotten to where they are today on account of serendipity — they met someone at the right time who offered them a job, or their friend mentioned a startup that they ended up getting a job for after reaching out to them. If you plan your career ahead, you will limit your options.

Your entire career is based on your looking for and pursuing opportunities. In your career, you will be presented with a series of opportunities. Some you will take, and some you will pass on. You will also go out looking for opportunities and hustle your way to where you want to be today. There is no one without the other. As you hustle, more opportunities will come your way. As more opportunities come your way, another set of opportunities will be generated. A large amount of opportunities, as aforementioned, are based on serendipity — of something happening at just the right time. These things happen on their own terms — you can’t control when serendipity will strike. But these are often the best opportunities you can receive, because they have presented themselves to you. They are attracted to you for some reason — maybe you have a great idea, or excellent skills, et cetera — and so pursuing them is often in your best interests.

A large amount of things that have happened in my career have been down to serendipity. Indeed, I would have never met the person who first took a chance on me if I hadn’t saw one Tweet from Patrick Collison. I would likely not be where I am today without seeing that Tweet. I bet if I asked someone successful “when did something lucky happen in your career?”, they would give me a list of answers. Serendipity is everywhere in our careers.

Other opportunities are those which you make for yourself. There are so many people that just sit around and wait for opportunities to come to them. But that is an inefficient use of your time, and serendipity can only be effective if you are willing to invest your time in pursuing an opportunity. When you are looking for career opportunities, you will need to put yourself out there to some extent, and showcase your work. This is why it is so important to build a portfolio from the get-go — it serves as a living testament to your skills and abilities. Having a strong portfolio gives you something to show to a potential employer that adequately demonstrates your skills and your potential. I should note that you don’t need permission to go out and look for opportunities. People often make excuses about why they are not chasing down opportunities — “I am still a student” or “I already have a job” are excuses which sound plausible, but unless you have no time or are completely happy, then pursuing more opportunities is a good idea.

Your career will be a set of these opportunities. Instead of having a linear path of jobs, many people have a portfolio. Indeed, sometimes people can go on for years in a single position. However in most cases, people’s careers go differently. Many people decide to take side gigs, or start a new project, or consult, or start a new company. All of this is part of someone’s career. This looks nothing like what old careers did — there is no accountancy degree then 50 years in the industry. I find many people refrain from talking about the opportunities they have pursued because it makes them look inconsistent or non-committal. I would argue though that this is the way that all careers will be in the future. Each job you take will give you something — experience, salary, etc — and you will move away to do something more fruitful in the future. And then you will move on again.

Ultimately, our career should not be about the titles we accumulate. If you are asking yourself “What title do I want when I am older?” when someone asks you about your career, you are asking the wrong question. Instead, you should be focused on the potential benefits of each opportunity. Our resume should reflect our pursuing all of the opportunities which we find interesting, and will become a list of our skills and capabilities rather than a list of titles. The people with somewhat erratic resumes are often those who have had the most fruitful and fulfilling careers. They have pursued every great opportunity that has come to them, and now have a portfolio to show for it. Interestingly, this type of resume signals that you are always looking to evolve. If you think of your career as a portfolio, you no longer get attached to the idea of long-term plans — you are always focused on how you can evolve each day. If you are no longer getting something out of a job, then you can start thinking about the next page in your portfolio.

Career Risks

I have written extensively about the topic of risk in the past. To clarify, by risk I do not mean gambling or anything along those lines. Rather, I am thinking about the practical types of risk we face in our careers. These can be split up into three primary buckets (at least for careers): opportunity risk, financial risk, and reputation risk. In order to have a successful career, you have to take risks. Indeed, every risk comes with a potential downside, but risks can be mitigated. People often forget that not taking risks in itself is risky. Imagine your life if you took very few career risks? What are the chances you are living your best life?

Let’s break these types of careers down. Here are the three types of risk that you will face:

- Opportunity Risk: This is the most common, yet underestimated type of risk. Most career decisions are zero-sum. If you commit to a new full-time job, you can’t take another full-time job on the side. Therefore, you need to be sure that the job to which you commit is the one that has the best upside. Which job offers you the best opportunities to learn, or whatever you want to have in a job? If you commit to the one that doesn’t offer a lot of opportunities to learn whereas the other one would have allowed you to learn more, then you have missed out. This is an opportunity risk. The best way to mitigate this type of risk is to educate yourself as much as possible, and make a decision based on all of the information you can collect.

- Financial Risk: This type of risk is the most common that is spoken about. When we make a decision in our career, there will likely be financial ramifications. If we commit to a startup, we may have to invest all of our personal savings. If we commit to a full-time job, we may earn a good and consistent salary. In order to make good career decisions, you should consider how your financials will be impacted by a certain risk. I will delve into risk profiles in a minute, but suffice to say that some people will not be able to handle large financial risks, which will make it more difficult to make bold career decisions.

- Reputation Risk: When you make a decision in your career, your reputation could take a hit. A great example of this would be pursuing a career in crypto. If you get a job in crypto, people may look at you differently — they may claim that crypto has no real potential, and it is so complex that it will never take off. You are taking a risk by pursuing that career. But if crypto were to become the next big thing, you would be in a unique position to accelerate your career. You could be labelled as an expert because you have been working on it for longer than other people; people will recognize you saw something in the industry they did not see. Indeed, when we commit to a certain path, people may think that we are dumb — “that is so risky, why are you doing that?” people will ask. If we take a risk in terms of our reputation and what we are working on does take off, people will call us a genius. It is all a matter of perspective.

Taking risks in careers is a necessary part of achieving outsized returns. If you take a risk, by definition there should be some upside to be gained in exchange for you taking that risk. Without taking any risks, you will not be able to embrace all of the opportunities that come to you. You may have a happy and consistent life, but it is unlikely that you will be able to have a major impact on the world — you are always interested in the safe path, rather than the path with the most upside to be gained. We are faced with risks in our career all of the time. Starting a company? It could fail and you will have to tell people why you decided to start a business. Or it could succeed and you could be seen as the next visionary. Moving to another job outside of your core field of expertise? You could learn a lot, or struggle then move back into your old career.

The best type of risk you can take in the context of careers are asymmetric risks. These are risks where you stand to lose everything that you have invested, but stand to gain 100 times what you have invested. Don’t play safe games unless you absolutely need to. A great example of an asymmetric risk would be to write a book. What do you stand to lose if your book is a complete failure? Only the time you have invested, and maybe some motivation. But what do you stand to gain? At the very least, you can now say “I wrote a book”. A better outcome would be that you have made a lot of money, or are now seen as an expert on the topic you wrote your book about. In this case, you could lose everything you have invested, but gain so much more. Starting a company is another great example. You could lose everything you have invested, or you could build a company worth millions of dollars if it takes off.

Many people are hesitant to take big career risks, especially if they are young and have no experience taking massive risks (thanks, school!). What can we do to mitigate our risks? The main thing you can do is make decisions that are easily reversible. If you commit to starting a company, it should be easy for you to go back into your old career if things didn’t work out. If you are able to easily reverse your decisions, you have some form of protection. This does not mean not committing to something — not committing to something is in itself risky. But rather that you should try to ensure none of your decisions are final. If you announce you are working on a bold new crypto project that ends up being seen as exploitative, there is no going back. If you work on a startup and have a clear path back to your old career if things don’t work out, you can easily go back if something doesn’t go your way.

You should also try as hard as possible to minimize your personal burn rate. If you spend very little each month, you can afford to take more career risks. Conversely, if you have a high amount of consistent costs that you need to cover each month, you can afford to take fewer risks. Ensure that you don’t spend more than you earn, and that you are saving up as much money as possible. Financial independence — or at least being less dependent on your salary — allows you to take more risks because you know you have the money you need to survive, even if things don’t work out. If you want to take good career risks, manage your burn rate, and never spend more than you earn.

Another thing you can do to mitigate your risk is to use Jeff Bezos’ regret minimization framework. This mental model states that when making a decision, you should think about how you will feel in ten years if you make that decision now. Will you regret starting a company in ten years? Conversely, will you regret not starting a company in ten years? Most people’s regrets come down to not doing something that they should have done. This is why it is so important to pursue as many good opportunities as you can — you will likely regret not doing so later.

It is important to consider the fact that everyone has different risk tolerances. As financial advisors say, young people can afford to invest in riskier stocks because they have more time to make their money back; older people can afford to take less risks because they don’t have as much time remaining. The best time that you can take risks in your career is when you are young, too. When you have just left school, you should try to do as much as possible to generate opportunities, and pursue the best opportunities that come to you. Do anything that will allow you to build you skills. Getting someone to take a risk on you before everyone else is always difficult, but the hardest part of careers is breaking in. You need to take risks to break into the career you want to pursue. Don’t delay taking risks when you are young; there is no better time to do so.

When you are older and have families to manage, then you are less able to take risks. When you were young, maybe you could pursue a career at a great startup. But when you have a family, you have to think about your income. You most likely will not be able to afford not earning a consistent income from a safer job. That being said, you shouldn’t stop taking risks entirely. In many cases, taking smaller risks when you have more commitments to manage is a good idea, assuming they are asymmetric. Indeed, these risks have capped downside and unlimited upside, which is exactly what you need as a parent or someone who has more family commitments to manage.

When we are thinking about risk tolerances, we should refer back to the idea of opportunity costs: what will you not be able to do if you do something else. This concept applies to everyone, irrespective of their risk tolerance, and so it is important that any decision we make accounts for what opportunities we may miss. For example, if we have a lot of commitments, working for Google may not be the best idea. Sure, the job will give you a good salary and some job security. But big companies are not the best place for you to learn as there is a lot of bureaucracy and red tape that you have to manage. Whereas if you joined a team with 20 or 30 employees, you would maybe earn a lower salary, but you would earn enough to manage your commitments, while being able to learn more because you are in a high-growth environment.

If you are young and ambitious, though, it is easier to justify bolder decisions. In the next post, I will explore the importance of building your own personal competitive advantage, and how you should approach skills development.

Blog, EssayJames GallagherComment