July 17, 2018 | Filed under: business | personal development | shares003
I think the key to making money at something is to invest for the long term, be prepared to lose before you win, to put your money where your mouth is and take big risks…
…to an extent.
You probably know about survivorship bias, where you listen to nothing but the tales of success from people who took big risks. There are definitely many, many cases of people taking insane risks, those risks playing out and them making a huge, incredible success of it. In the world of video games, valve deciding to sink all the half life profits into HL2 AND also trying to create a digital distribution store when retail was still all-powerful was an insanely high risk venture. It worked, and the rest is history. Making a game which fits in no established genre such as the Sims or for that matter, ‘Democracy’ is also a big risk. Doing this entails being prepared to be wrong in a BIG way, and lose 100% of your investment.
This is something I am minded off today when reading a very long, depressing and complex email about a renewable energy investment I made that is being held up and rejected by government bureaucracy (with zero cause) which could, theoretically lose me a fair chunk of money. Real actual *OUCH* levels of money. It will be extremely vexing if this is the case. I tolerate that sort of risk, because when investments like that work, they work very well, and the returns are great.
I’m a high-risk investor who is happy to tick the ‘yes I know what I’m doing and may lose it all’ box on a regular basis. I have some money in lithium mines, some in palladium futures, lots in the electric car company ‘Tesla’ and a bunch of robotics and biotech stuff. Some of this has been a huge success. others… not so much. Overall… I think I’m doing well, but you never get to say that until you cash out. I’ve also invested in indie games, both as a publisher (Redshirt, Big Pharma, Political Animals, Shadowhand) and as a passive investor. Some of these made several times my money back, some have lost me money.
And right now…as I type this I have two CFDs (very short term bets) on Tesla, both of which I am DOWN on, and both of which cost me money each day just to keep the bet running. I have made 37 consecutive profitable trades doing this, but may be close to coming unstuck on these two. Only time will tell. You can probably understand why I thought I couldn’t lose: (The loss calls still make a profit, just at the lower range of my position)
The trick is… I’m never betting the farm. Do not bet the farm. Ever. I’m not even betting a small barn from the farm.
Don’t think I’m not tempted. I’ve seen stock market trades, AND video games, where I’ve thought ‘LOL, this is easy money. I should sell the house, car and liquidate everything else to really max out this sure thing’. Sometimes those trades shoot way up, and I hate myself for being such a coward. Sometimes they go up a bit. Very, very rarely, they crash like a meteorite. The end result of my level of caution is that I’m not a billionaire, but I’m not in the gutter either. This is a *good thing*.
Do not risk everything to make your dream indie game, or fund the writing of your first novel, or even your second or third or tenth. I’ve made a lot of games (at least 20), and even if I thought my next game was a sure-fire hit, I wouldn’t bet ANY money that I couldn’t afford to lose. Obviously this is much easier to say with no mortgage and some cash in the bank. Normally people cannot possibly make a game without spending their last dollar on it… or can they?
These days we have kickstarter, we have patreon, we have indie publishers. if you cannot persuade anyone to give you the minimum money you need to make an early access game through any of those three avenues, then that is a BAD sign and NOT a sign you should remortgage the house or sell a kidney. There is a myth that you have to ‘risk it all’ to become a hit, which is perpetuated by Hollywood movies, and TV shows where this trope of ‘risking it all’ and ‘succeeding just before they ran out of food’ becomes embedded in peoples idea of what it means to be ‘creative’. The romance of the ‘struggling artist eating out of bins who then becomes a billionaire’ is frankly bollocks.
Democracy 3 is a good example. Its a successful game that made me some decent money. Did I risk everything to ‘take a chance’ and make a hit? Nope. I risked fuck-all. I coded that in my spare time while I had a full time job (and a contract to ensure that was ok). I then made a sequel when I knew that the original was already popular. My wife and I both worked full time and we had no kids, so me then deciding to quit and make more games was zero risk, especially as I was already making more from my older games than I was getting in salary anyway. In all my times making video games from 1998s Asteroid Miner onwards, I’ve been unable to pay the mortgage for two months in total.
By all means take some risks. Risks are good. Risk is part of life. Don’t make any decision that could wreck your life and screw up your family.