Risk of Embarrassment has the highest returns

Let’s say you want to make money. That should be easy, it should apply to almost everyone.

Most people take a Financial risk.

This is where you look at the stock market, real estate, and typical investments. If you are more daring, you might go to a casino and put it all on black or get some lottery tickets. They say you can reliably make 5% gains a year with good financial investing.

Time Risk

This is where you spend time developing a skill. You take online courses in web programming. You study for actuarial exams. Side hustles fall into this category too, although you may take on a financial risk as well.

You could argue all time risk is really just a financial risk in disguise when you calculate the opportunity cost, but I never really believed in that argument. Your salary is your salary and it stays the same even if you go off and do something else for four hours. Passive income isn’t affected either, Bill Gates would still stop to pick up $100 if he found it on the street. You can make an okay case if you’re a contractor.

The returns are high, you can even become a millionaire given 10,000 hours if you believe Malcolm Gladwell.

Embarrassment Risk

This is the risk everyone avoids if they can.

This is where you max out all your credit cards propping up your air mattress rental website until it can become Airbnb. This is where you live out of your car while your friends get cushy FAANG jobs and you family wonders where they failed with you.

This is where you toil for years on the open mic circuit or put out a weekly youtube video where you dress in a suit and review fast food until you hit 1 million subscribers. Startup founders and comedians and Youtubers all take on this risk.

And you know what? They are rewarded heavily. The returns are much higher than the value they are providing. The number of people consistently putting out content and iterating on it is so ridiculously small compared to the number consuming right now.

Note how important it is that they take feedback and iterate. There are dozens of stories of people pumping out crap videos for months on end to no one.

People hate how much CEOs and Founders are compensated compared to everyone else. But those people aren’t being rewarded for taking on an enormous financial risk, although sometimes the founders did that as well. They are being rewarded because they were the ones who took on the risk of embarrassment. They opened themselves up to criticism.

I am not arguing that the large pay gap is right or that we shouldn’t work to change it. They are being rewarded for the Embarrassment Risk they took on.

With this in mind, millionaire wannabes should seek out high risk, high reward embarrassment opportunities. Write a blog with strange opinions. Dare to fail gloriously.

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