Chris Lakin

Deviate from what’s typical to win a winner-takes-all game.

In a winner-takes-all game, picking a new, crazy, and deviant strategy is the better way to compete.


What do we do when we don’t know what to do? We copy others.

The people around us are most likely to be average in the skill we’re trying to learn, so we inevitably copy average-performing strategies, mental models, and habits.

And if being average is good enough—and for most skills it is—then this is completely logical. Listening to those around you is the simplest way to learn when you don’t know what you need to learn.

Oftentimes, however, being average has near-zero value because the rewards almost completely go to the few winners at the top; i.e.: it’s a “winner takes all” environment.

In these cases, the only outcome that matters is being at the top, and having a chance at being at the top. Being merely good doesn't matter; being merely great doesn't matter. In these cases, your skill needs to be among the best.

But you can’t do the same average things as everyone else and expect to be rewarded any more than the average player.

In these cases, I believe there’s a better strategy:

Ignore everyone— even the current ‘experts’.

Forget everything that you’ve been told is “true”.

And deviate from the norm.

Revert to first principles. Start with only the things that are by-the-laws-of-physics true and build from there. Question all assumptions, and consider all cases in which the current paradigm does not work well.

If you fail, nothing genuinely negative happens. At worst, a lot of people will call your ideas crazy. Even then, you get attention for being someone that’s questioning things.

Yes, most attempts of this strategy will fail. — But at least you had a real chance! — The only chance in “winning by averageness” is extreme luck.


The second advantage to this strategy is efficiency. You don’t have to be ridiculously ‘dedicated’.

In a competitive area, what comes first is good ideas.

What comes next is the saturation of those good ideas from players that copy them while practicing extreme ‘dedication’ and ‘determination’.

But breakthroughs don’t come from ‘more determination’; breakthroughs come from better ideas!

Competition is too often a game of effort, and corner-cutting. Who wants to play that game? Especially when there’s another way.

This strategy isn’t easy, though, it requires a lot of thought— but at least you don’t have to commit ridiculous amounts of effort.

If the field you’re competing in is somewhat mature, then the best players probably earned their position by investing far more effort into deliberate practice than anyone else (and luck also probably swung in their favor a few times). In which case, you can’t expect to beat them without pointing in at least as much effort as they did. Not unless you’re deviating.

But maybe your novel strategy is intrinsically 10x as good, and there’s no amount of effort that anyone under the typical philosophy could do and beat you.

Productivity only scales, at most, linearly with time. (More often logarithmically.) If you’re already working hard on something, you can’t multiply the time you spend on it. But you can adopt a strategy that’s many times better.


Personal experience

In high school I participated in a paper trade trading competition. Whichever portfolio that gained the most (relative to the S&P 500) after two months wins.

The typical strategy in my school was ‘pick companies that make things you like, and buy them’. Yes and the vast majority of everyone else in the competition, a few thousand teams, was also thinking that. How could you win, except for luck?

So instead I decided to short the market (with 3x leveraged ETFs).

If the market went up, the vast majority of other teams would gain, and I’d lose. But I’d also lose nothing in reality. This is exactly what happened the first year I played.

But if the market went down, then almost everyone else would lose, but I’d gain (at 3x leverage!) and the gap between me and almost everyone else would increase dramatically.

And that’s what happened the second year I played. After two weeks my portfolio was up 56%. After four weeks, 95.6%. After 8 weeks, 98.4%. (Peaked at +142%.)

Before the last day of the competition, the top 4 leaderboard of 2,000 looked this this:

Stock Market Game leaderboard 2020 April 24, second to last day.

And the competition ended like this:

Stock Market Game leaderboard 2020 April 24, second to last day.

While I didn’t win, I got really close! At least I had a chance! My portfolio was one of only 9 out of 2,000 that gained more than 60%. By adopting a different strategy, I was only competing against the few players that were also thinking like me.

The last day, however, was essentially down to luck. The team that won on the last day gained 87(!) percentage points overnight. He took a risky bet, because that was the only to win. (I had tried the same thing, but wasn’t as lucky.)

Either way, the only way to be first was to do something crazy.


Other examples:

Let me know what else comes to mind.

Summary:


This can also be incredibly fun.

 

Posted 2020 August 2, revised 2020 November 12.