I recently read an interesting article on how some individuals used the law of probabilities to beat the lottery. Essentially they found certain ways of playing where the probability of winning exceeded the cost to play. This was a big scandal a few years ago, but I wonder if there are a few things we can take away from the event for today’s college graduates.
Beating the Lottery
You can read the article here. Essentially these folks found a flaw in the design of a specific lottery game where on specific dates the odds of a second tier win were high enough to make the value of a ticket greater than it’s cost. To exploit this loophole they had to buy sufficient lottery tickets to reach a sample size that would likely mimic the population. As such they created whole companies and consortiums around buying these massive amounts of lottery tickets. And here I just assumed the house always wins the lottery.
Applicability of the Scheme to Your Future Career
I’m not going to tell you to go play the lottery. Frankly the odds of you finding such an exploit are low. Add to that this clearly was not an easy sit back and get rich scheme. They had to spend hundreds of hours a week buying tickets in order to make their process work. Most of us, even if we found such a loophole, probably do not have the spare time to pull off such a feet. No ,what I am going to highlight are the pieces of the story that might be applicable beyond lottery tickets.
Crowds filter out Opportunity
The first thing that stands out here as I read through the story was that making money was easier when the couple were the only game in town. I couldn’t help but notice the similarities between going on a unique path for lottery winnings and some other things people do for money.
Travel hacking for example is simply about being the non normal person whom bucks the trend of racking up immense interest payments to a card company. Instead they turn the tables by collecting more in bonuses and cash back then they otherwise put into it.
However, The more people using the lottery strategy the less profit was made. The same thing holds true for really any side hustle. The more competition the more profit is driven out via supply and demand. Similarly in the travel hacking world it is inevitable that as more people hack, bonuses will begin to shrink. It might even be that the giant bonus on the Chase Sapphire Reserve card from a few years back was the high water mark.
The Road Less Traveled Leads to Riches
The moral there is to try to be at or near the vanguard of new concepts. If you are starting a company its best to be one of the first in rather than late to the party. You’ll make more profits with less competition. In a more close to home example, if you start a personal finance blog, it’s probably best to do it before there are 1000s in the niche already ….. 😉
Differentiate Your Approach
If you must jump into a already heated area though, as most new college graduate will do, it’s best to try to differentiate your approach. In the case of the lottery situation the folks from MIT decided to start manipulating the timing of the days to freeze out their competition. I’m not going to condone what they did in any way, but if you look at the general concept it comes down to finding a unique angle. The more unique and less replicable that angle, the more profitable.
Warren Buffet is fond of saying he always buys companies that have a moat. In essence he is looking for that unique angle in a sea of competitors, and the harder it is to replicate the better. The same applies to your job, your career, or really anything else. No matter how innovative you are, eventually you will be in with many others with similar ideas or qualities. We are a world of billions of smart people. If they don’t think of it before you they will be sure to copy it. Odds are someone will even make a copy better than the original. So the key to life, the galaxy, and apparently 42, is to find as unique and unassailable an angle as you can. Then ride that wave to success.
My Approach to Differentiation
I have done much the same with my career. I started my career as a software engineer. By training at least I am a computer scientist. But what I quickly realized as my career progressed was software engineers were a dime a dozen. No offense to those that might be reading this, and of course some of this in difference to the dotcom crash, but software engineering is awash in people. It is highly unlikely my skills would have made me the best of the best.
My College Epiphany
So what did I do? Well I realized a niche existed. It all started in college. My Junior year I was on a project where my team asked me to present the teams findings and document the work. None of them wanted to do so. Later my senior year all computer science students were required to take a presentation class. It was noted in the class that for many in attendance it might be their first presentation. The room went audibly silent, except yours truly. I’d spent the last 4 years pursuing a minor in economics, where I presented multiple times each semester. It became apparent that speaking in public to non computer oriented folks was not something most in the profession wanted to do, let alone were good at. Conversely very few business people could talk to IT. So I developed that skill relentlessly throughout my career.
New College Graduates Should Find Their Niche
These days I tilt more towards business, but that skill still makes me unique. Few can play with a foot in each world and it takes years to develop the business acumen to do so. That’s not easy to copy and not a populous niche. I created my moat. Now I’m not telling you to go out and follow my moat, in fact I ask that you don’t as if it got crowded my opportunities would drop. That being said if I had to give one piece of formal advice to new college graduates early in their career, starting a business, or even playing the lottery(apparently) it would be to find a unique hard to copy niche. Then develop your trajectory and goals around that niche.
Let Your Niche Guide Your Career Choices, Each Role Builds Off the Next
Consider it an unwritten objective in the back of your mind at each step along the way. Mold or shape your moves around that objective as you go forward. Each new job, business, investment, or what have you should move you further into your moat away from the heard.
One Caveat, Don’t Build a Niche to Nowhere
Now, I will add one caveat, make sure it is a unique aspect that truly brings value. Don’t build yourself into a writer of psychology software in Fortran or you may find yourself with no customers. Go broad with how you apply your uniqueness to allow for adjustments to job market changes, but develop that uniqueness as it applies to your chosen field. That is the true key to success, not following your passion and in my opinion not solely following what you are successful with. Success can be made, passions can change. Developing a broad uniqueness can allow you to adapt to those changes.
Have you found your niche or moat? Anyone care to share theirs?