Barbell strategy

95% index funds, 5% angel - and a separate 'boring' bucket

Sam lays out his personal allocation: ~95% in index funds, 5% in angel investing, with steadier private-equity-style deals (like the ConvertKit secondary) going in a separate 'boring' pool rather than the risky angel bucket.

“the way that I'm doing my net worth is One percentage of the vast majority, let's say 95% is in, um, index funds. Boring. 5% is going to be in angel investing. And this, uh, this is considered private equity, I guess it's, but it's not angel investing to me.”

Steal thisBucket your net worth: ~95% boring index funds, ~5% angel, and keep steady cash-flowing deals separate from your risky bets.

The acquisition barbell: avoid the deadly middle

Lore frames exits as a barbell: a sub-$10M acquihire is easy (buy the talent) and a $100M+ strategic buy is easy (buy a real asset). The no-man's-land in between is the worst place — you've spent enough to be pricey but lack the proof to justify a big strategic purchase.

“it's the barbell strategy. They'll buy the Aqua Hire. You raise a million bucks and you bootstrapped it and you have like 3 good people and somebody will say like, oh, this is great. Like, here's $10 million.”

Steal thisEither stay cheap enough for an acquihire or go big enough to be a strategic must-buy; never get stranded in the middle.

Gilbert's barbell: a boring cash-flow business funds the crazy bets

Gilbert pairs a dull, cash-flowing mortgage business with wild venture bets, personally onboards every new hire on culture once a month, and lives by 'isms' like 'yes before no' and 'money follows, it does not lead.'

“he says, there's this great quote. He says, one of our things is that money follows. It does not lead. So we want people that are fired up and passionate about their mission and people that aren't so married to spreadsheets and thinking that kind of voodoo controls the future because it doesn't.”

Steal thisPair a boring cash-flowing business with a portfolio of big bets, and let mission lead money, not the reverse.

The barbell of cancelability: be ridiculous or buttoned-up, never middle

Immad's heuristic: people in the middle of the spectrum can be canceled, but if you're either completely ridiculous or completely buttoned-up you're cancel-proof. You have to pick an end of the barbell.

“There's like a barbell-ness to being cancelable. Like if you're in the middle, you can be canceled, but if you're completely ridiculous or completely like buttoned up, then you can't be canceled. So you gotta pick one.”

If you're number 2, elevate your risk profile to get a puncher's chance

Shaan uses the Houston Rockets' all-three-point strategy against the dominant Warriors to argue that a clear underdog shouldn't just try harder, they should deliberately increase volatility. If you'll lose by default, raise your risk to create a scenario where you might actually win.

“And I think this happens in business too, where if you're the clear number 2, not only do you have to try harder, you need to elevate your risk profile. And so how do you take greater chances given that by default you're going to lose? So if you're going to lose anyways, you have really nothing to lose besides— you have nothing to lose, and therefore you should elevate your risk and try to get into a more high volatility scenario where you may actually win.”

Steal thisWhen you're the clear underdog, deliberately raise your risk profile, a high-volatility bet is your only path to actually winning.

Incentive-caused bias: share buybacks line the CEO's own jeans

Wilkinson explains incentive-caused bias using buybacks: CEOs paid in stock options benefit when share price rises, and buybacks shrink the share count to lift price — so a 'return capital to shareholders' move can really be self-enrichment.

“a lot of CEOs are compensated based on share price because they get stock options. So their stock options become more valuable when the share price goes up. And what makes the share price go up but share buybacks? So when you buy back shares, there's fewer shares and each individual share is worth more. So it's actually a way for the CEO to put money in his or her own jeans.”

The pessimist's asymmetrical bet: stocking up early on COVID

Wilkinson, a self-described natural pessimist, saw early China news and judged a 1-in-5 to 1-in-10 chance of a global crisis. He treated prepping (a $5,000 grocery run, an isolated office house) as a cheap asymmetrical bet: small cost if wrong, big protection if right.

“And when I started seeing the news pop up out of China, I thought, you know, maybe there's a 1 in 5 chance, 1 in 10 chance this turns into something global and serious. But when I look at the cost of protecting myself so directly with my family, where, you know, I buy $5,000 of groceries or whatever, fortunately I could afford to do that. So me and my business partner rented a house to use as an office. We isolated really early. We stocked up on groceries and hand sanitizer and all that kind of stuff. I just looked at it as an asymmetrical bet where, you know, I spend a small amount of money to protect us. And if we're wrong, then we can laugh about it and look like idiots. But it's pretty low cost.”

Steal thisWhen the downside of being wrong is cheap and the upside of being right is huge, take the asymmetrical bet even at low odds.

Amazon FBA is an asymmetric bet: $5K downside, 7-figure upside

Paul Anderson frames Amazon FBA as attractive because the bet is asymmetric: a small amount of money you can afford to lose, against a chance at a 7-figure business. The downside is survivable even if it goes to zero.

“the thing I like about Amazon is it's pretty asymmetrical. Like, I started with $5,000 and it turns into a 7-figure business. So it feels like, hey, I'll make a small I'll bet that's going to really sting if this thing just goes to zero, but I can pick my life up and keep going even if I, you know, lose every dollar I put into it, right?”

Steal thisPick a first business where the worst case is losing money you can afford, not your livelihood.

College barbell: go top-20 brand-name or cheap state school, nothing between

Sam's rule for his future kids: either attend a top-20 brand-name university (Duke, Harvard) for the network, or a cheap state/community school for the experience - never pay ~$35-40K/year for a mid-tier private with no brand value.

“You have to either go to a Duke, a Harvard. You have to go to a top 20 university that has a brand name, or you have to go to community school or a cheap state school where you can get the experience and grow. Right. If you go to a Belmont University, that costs— I got a little bit of a scholarship and I also was lucky where I didn't have to take out debt. If you go to a school like I went to, that's like not even a top one. I don't even know if it's top 100. It's not good, right? It costs $35,000 or $40,000 a year.”

Steal thisPay only for a top-tier brand-name network or a cheap state-school experience - never the expensive mid-tier middle.

Bet on explosive upside, not managing downside, when you're young and broke

Simpson's rationale for going all-in on Bitcoin: when you're young with little to lose, asymmetric upside beats protecting a small downside. Losing half a small net worth is recoverable; being right about a generational bet is not.

“To me, I've always felt that it was more interesting to have explosive upside potential than managing downside risk. And so I was like, okay, I'm quite young. I don't have that much money to begin with. I think this is incredibly powerful and important, and most of the world has not yet caught on to this fact. And if it goes to zero, well, whatever, I've lost half of my net worth, but it wasn't that much to begin with, and I'll make it back over the course of my life slash career.”

Steal thisWhen young and low on capital, size bets for asymmetric upside instead of preserving a small downside.

Time in the market beats timing the market — bet on asymmetric upside

Svetski's investing philosophy after years of failed trading: dollar-cost average into assets with long-term, asymmetric upside (small downside, 100x potential) instead of trying to time entries. He says doing this alone would have left him 100-1,000x further ahead than active trading.

“So after all the years of trading and all the years of stuff that I've done, If I just dollar-cost averaged into things that had some asymmetric upside, I would be 100 or 1,000 times further ahead than I am now instead of trying to be a genius and try and fucking trade my way through.”

Steal thisStop trying to time the market; dollar-cost average into a few bets with capped downside and asymmetric upside.