We are living in an era where there are a lot of changes happening especially as it relates to technology. To take advantage of these opportunities we have to learn how to invest in asymmetrical projects. Asymmetrical projects are basically projects that bring exponential returns.
For every input, you put in whether that be time, money, or other resources you get 100X in returns. A good model of where you can find examples of asymmetrical returns is from tech companies.
Within the span of three years, a tech startup can scale up from 1 to 100 million users by utilizing network effects and other underlying models.
They invest in asymmetrical marketing campaigns. Some of them might seem spammy or a bit over the top but at the end of the day, they got the job done. Another great example of where you can find areas of asymmetrical examples is to look at new technologies.
Examples are cryptocurrencies, automation, etc. The returns of these technologies have been exponential, sometimes 10000X the rate of what you put in.
Asymmetrical projects are not just exclusive to tech companies or even technologies in general. I believe that the average layman can utilize asymmetric returns if he or she knows how to think this way.
It doesn’t have to be quantified from a financial perspective either. You can utilize this way of thinking to study, network, health, etc.
Linear Thinking
Before one can think about utilizing asymmetric returns, we have to rid ourselves of linear thinking. Thinking linearly is still necessary for everyday life, it’s our default mode of thinking.
For example, whenever we think about our sales goals or savings, we think about a steady line growing linearly on a graph. It’s pretty stable and average, nothing major is happening. Just a nice clean-cut line. We think that for 1 unit of increase in input we get an equal output.
If we add more employees into our company, we might see an average increase in productivity. This model of the world is still important but isn’t alone necessary if we want to grow beyond a certain threshold.
You will be outcompeted by persons who are thinking on a whole different wavelength. Your returns in a year would be an average month for them. For example, from a software programming perspective, you have really good software engineers who can do what an entire team does.
Asymmetrical Thinking
When you are thinking asymmetrically, you are thinking about how can you maximize the returns of your input. For one unit of input, how can you get 100X output? Let’s dive into awareness for a little bit here.
Everyone has a biological time daily when they are at their most productive. It only lasts for a couple of hours, but when it occurs you can get most of your daily productive tasks done.
During this period, you can utilize this time to do your most important work and leave the menial and repetitive work for hours outside that scope.
For some persons, this could be early mornings, late nights, and some other stretch of period throughout the day. It all depends on the individual. Persons that are productive utilize these 3-4 hours to win. Often times that’s all they need in order to have a good day.
On the other side of the fence, you have some persons who have to work long hours sometimes 3X longer than the productive ones to get the same returns.
Asymmetrical Thinking Drives Asymmetrical Ideas
Once you start to think asymmetrically or about exponential returns, it’s like a new world of doing things has opened up. You start thinking about scaling up different areas of your life 100X. It’s like having a car that taps out at 100 mph and wants to tune it up to 150mph.
Ideas will also come to you that might seem foreign before but normal now. What you think you can achieve in 10 years can now be achieved in 6 months. I remember I watched an interview with Peter Thiel who is the co-founder of PayPal and billionaire investor.
He talked about that very same concept of compressing time, he looks at what a company could achieve in x number of years and see if it’s possible they can achieve that in months. It’s a crazy idea but it goes right into the concept of Parkinson’s Law. Parkinson’s Law states that “work expands to fill the time available for completion”.
For example, if I set a milestone for a project to be achieved in 200 hours. I will work according to that completion period. It’s as if there is a meter in my brain that will program to work according to that time. Not knowing that probably I could achieve that in less time if I reduced the hours.
That’s how most of us think. We all have worked on projects that took us hours because we already had it in mind that it’s going to take hours to complete. Our bodies then automatically act like it’s going to take hours because our minds were already fixated on that.
That’s why in the startup world, we see companies gaining traction exponentially because the internal work culture thinks in an exponential way. It’s deeply competitive and they have competitors sprouting up thus they have to innovate quickly. Even if it means releasing an MVP version then quickly iterate to capture the userbase.
Asymmetrical Systems
Asymmetrical systems stem from asymmetrical thinking. When you think about asymmetrical systems it’s basically the systems that govern everything you do or everything that impacts you.
How can you improve it in such a way that your returns are not linear but exponential?
Could you learn a new language to tap into a new demographic?
Could you automate certain processes so you can scale to millions?
Once you start to think about asymmetrical systems you will see how unproductive certain areas of your life have been throughout the years and you are not even tapping into half your potential yet.
Asymmetrical Opportunities
In the 21st century, there are asymmetrical opportunities all around us especially if you are within the technology field. What took 100 employees to achieve in 2000 can now take close to zero depending on the market you are in. That’s why it’s important to invest in asymmetrical projects where you can leverage asymmetrical technologies.
This includes web services, automation, robotics, artificial intelligence, cloud technologies, etc. Look at Amazon, for example, their e-commerce business is basically eating the world. Over the years they have made use of robotics in their warehouses to improve efficiency. They also use artificial intelligence systems to improve their recommendation systems that can drive more sales.
The number of asymmetrical technologies underlying Amazon makes large brick-and-mortar stores look like a community mom-and-pop shop. Google is also at the forefront of utilizing asymmetrical technologies. To list all of them would be a daunting task as most are disclosed behind closed doors.
For a typical entrepreneur who wants to capitalize on asymmetrical opportunities, you have to ensure that you are in the right space first where it is necessary. For example, if you have a Shopify store, that could be easily scaled with targeted advertising.
Additionally, you could use virtual assistants to automate customer service and certain forms of marketing on the backend.
Asymmetrical Investing
From an investing perspective, asymmetrical investing is the holy grail. We all would want to put $100 in the slot machine and get $10,000 out. An investment like this is possible but it comes with a caveat.
You cannot make asymmetrical investments your main bread and butter unless you have the stomach of a whale to ride it out.
For example, let’s look at crypto, one of the main drivers behind cryptocurrencies in the hope that we are all going to be rich by investing $100 in an early altcoin. This is not necessarily the case at all, if you don’t have disposable income lying around, I don’t think you should invest in cryptocurrencies heavily because it’s just not the right vehicle.
In a bull market, everyone seems smart because the market is going up and a fool can put in $100 and get $1000 in return and thinks he is Warren Buffet. Not regarding the fact that most of these investment funds hedge their bets so that even if they lose on that bet, they were already investing in derivatives to offset the losses.
Naïve traders or investors will get caught flat-foot because they don’t have the capital to weather out the storms. You have to be realistic and pick the battles you can win with what you currently have.
It would be way easier to create an asymmetrical online business that can scale which can then give you disposable cash to invest in asymmetrical investments. Experimenting is very important when it comes to these types of projects.
Summary
In sum, it’s necessary to invest in asymmetrical projects especially given the plethora of tools available at our fingertips. At the beginning of an asymmetrical project or venture, the returns will seem small and the linear route might seem better.
Once momentum starts and the system turns into a well-oiled machine, it will be hard to stop. Hence why it’s easy to see how a tech company could be worth over 100 billion in less than a decade in this era.
