AN ACCURATE PICTURE OF THE ODDS HELPS YOU DECIDE HOW MUCH TO STAKE ON SUCCESS

Over the course of the 1980s, entrepreneur Norm Brodsky built a $30 million messenger company called Perfect Courier. To grow even faster, he decided to acquire a competitor, an ailing messenger company called Sky Courier. He infused Sky Courier with $5 million from Perfect Courier to help turn it around. But that wasn’t enough to save it. So he put another $2 million in. When that still wasn’t enough, he put in some of Perfect Courier’s credit as well. Brodsky knew he was effectively wagering one of his companies on his ability to fix the other, but he wasn’t worried. “It never crossed my mind that I might not be able to make Sky Courier successful,” he said.

Unfortunately, Brodsky was soon dealt two unlucky blows, one after the other. First came the stock market crash in October 1987. That ate up a lot of his business. Second was the rapid rise of the fax machine. Who needs a courier service to send important documents when you can simply pop them into a fax machine instead?

By the following autumn, Sky Courier had collapsed, taking Perfect Courier down with it. The most agonizing part, for Brodsky, was having to lay off thousands of employees. Ruefully, he realized: “I’d taken a lovely, secure, profitable business and destroyed it by exposing it to a level of risk it never should have faced.”

Venture capitalist Ben Horowitz argues, in The Hard Thing About Hard Things, that there’s no point in thinking about your odds of success when building a company. “When you are building a company, you must believe there is an answer and you cannot pay attention to your odds of finding it. You just have to find it,” he writes. “It matters not whether your chances are nine in ten or one in a thousand; your task is the same.”

But even if the immediate task is the same, that still leaves two critical questions: How much you should be willing to gamble on your ability to succeed at that task, and whether the goal is worth pursuing at all compared to other options. A 9 in 10 chance of success and a 1 in 1,000 chance call for different assessments of exposure. Neither probability alone tells you how much to stake: the payoff, potential loss, and consequences of losing also matter.

Estimates also help compare goals. The source gives a stage-acting illustration: out of roughly 49,000 Actors’ Equity members, about 17,000 obtained acting work in a year, with median annual acting earnings of $7,500 among those who worked. These undated figures illustrate why relevant base rates matter; they are not current career statistics or a complete estimate of an individual’s prospects.

The self-belief approach embodied in advice like Horowitz’s actively discourages this kind of realistic risk assessment. It treats the path in front of you as the only one that exists, making it impossible to ask, “Is this goal worth the risk?” or “Are there other goals with less risk and equal or greater reward?” Galef compares this framing with William James’s hypothetical of a climber facing a leap. Her objection is that real decisions may include alternatives excluded by the story, such as retreat or waiting for help when those are feasible. Before treating a goal as the only path, ask which alternatives actually exist.

That leaves a psychological challenge: If you have an accurate picture of the odds, how do you keep from getting discouraged? How do you motivate yourself to give it your all, while knowing there’s a significant chance your “all” won’t be enough in the end?