Tripwires Over TimeFrames: Using PreSet Rules for Preventing Loss & Pain
Timelines are great to align with goals. It helps with planning. But the world is changing so quickly these days, you need to build some flexibility into your life and plans.
I’ve long been a fan of Radigan Carter and he has a great insight that tripwires can sometimes be more important than time frames. It’s a great way to build flexibility. It also just makes sense right? As you get new data, your plan should change. Paul Samuelson, the economist said “When the facts change, I change my mind. What do you do, sir?”
This is why the poker champion Annie Duke created this idea of pre-set rule for preventing irrational behavior or tilt. This is when your brain goes into “Fight or Flight” mode, which happens when we hit challenges or things get really hairy. That is why it helps to have a rule of the situation, like figuring out the highest amount of money you are willing to lose. Once you hit that point, you have to walk away. It helps prevent you from losing even more money, especially when your brain is triggered negatively.
This is useful for determining the future of a city or even a country. Do you feel personal safety in this place? Do you see the price of food skyrocketing? Do you see empty shelves in the stores? Do you see street and property crime numbers increasing? Are you seeing well off individuals with means moving away? Do you see companies moving away? Sadly, I see all the above in San Francisco which shows that this is definitely NOT a city that is positioning itself well for future.
These rules can be useful for investing. Ie. If your investment doubles, sell enough to recoup the principal you put in, let the rest ride. Or even, don’t put in more money if you are taking losses unless you see certain metrics change. Sometimes the action is to do nothing. Especially in investing which is oriented toward the long term thinker. I love this quote shared by Pomp from Robert H. Schuller.
“Never cut a tree down in the wintertime. Never make a negative decision in the low time. Never make your most important decisions when you are in your worst moods. Wait. Be patient. The storm will pass. The spring will come.”
These rules can be useful for building your startup. For example, You cannot hire more people until you hit a key revenue milestone in the business. Or you can’t hire new sales people until certain products or packages are ready? I’ve seen way too many startup founders focusing on hitting hiring and spending plans without the corresponding revenue or user growth in the business. This is a big reason so many startups end up blowing up as their cost structure overruns the business.
These rules basically help you not over extend yourself. These are the basics of risk management. Life is all about risk management. Having triggers can be very helpful to know when to implement alternative plans. Obviously, you need to have a plan B and be prepared to act on this plan. But having a tripwire is critical for this to work.