The River: A Community of Risk-Takers
This article explores the characteristics and habits of individuals who thrive in high-risk environments, often referred to as "The River." These individuals are frequently found in competitive domains such as Las Vegas, Wall Street, and Silicon Valley.
Defining the "Riverian" Personality
The "River" describes a community of like-minded, risk-taking individuals who demonstrate specific traits. They are often contrarian and comfortable with high variance, meaning they can experience both significant success and substantial failure. Unlike the stereotypical quantitative analyst who is cautious, the "Riverian" uses analytical skills to compete aggressively.
Identifying Common Habits of Successful Risk-Takers
Nate Silver, a statistician, poker player, and author of "On the Edge: The Art of Risking Everything," interviewed around 200 domain experts and practitioners across various fields. Through these conversations, he identified 13 common habits among successful risk-takers, which can be distilled into a few key areas.
Key Habits of Successful Risk-Takers
1. Conscientious Contrarianism
Many individuals in "The River" are contrarian by nature, especially in fields like Silicon Valley where investing in unproven ventures is common. However, it's crucial to be a conscientious contrarian. While deviating from the consensus is necessary at times, the wisdom of crowds is usually reliable. Success requires knowing when robust evidence supports a different direction, a skill that blends art and science.
-
Avoid relying on a single model, political faction, or philosophy, as people are prone to error.
-
Seek multiple pieces of evidence that align in the same direction for robust decision-making.
-
Averaging multiple models often yields better results than relying on just one.
2. Effective Estimation and Incomplete Information
Good risk-takers are adept at making estimations using incomplete information. In today's fast-paced world, a reasonably accurate estimate made quickly is often more valuable than a perfectly accurate estimate delivered slowly.
-
In competitive systems like markets or small businesses, being first or early to market is a significant advantage.
-
This requires identifying the most reliable early data points and taking calculated risks based on strong estimation skills.
3. Quantifying Decisions
Quantifying decisions is essential for making informed calculations. This practice becomes second nature for poker players. For instance, if facing a $200 bet with $200 already in the pot, a player must win approximately 33% of the time to justify calling the bet.
-
Even if it's a rough calculation, the output needs to be a number upon which a decision can be based.
-
Extensive practice is necessary to hone the ability to accurately assess probabilities and make informed choices.
4. The "Raise-or-Fold" Mentality
A valuable approach to life is adopting a "raise-or-fold" attitude. In poker, players have three options: raise, call, or fold. Inexperienced players often passively "call" too frequently, failing to take control. A strategic approach involves either aggressively "raising" to seize initiative or "folding" to avoid unnecessary losses.
-
This principle extends beyond poker, applying to various aspects of life.
-
Quitting an unhappy relationship, a dead-end job, or relocating allows you to preserve capital, decision-making power, and optionality for future opportunities.
Embracing Uncertainty
Ultimately, the world is inherently challenging and uncertain. The individuals, companies, and countries that thrive are those comfortable navigating uncertain environments. While many seek safety and predictability in a complex world, embracing uncertainty and calculated risk-taking can lead to greater success, especially for those privileged enough to recover from failures.
{# 
{# 
{# 
{# 
{#