BLAINE’S WAGER

WHAT’S THE COST OF MAKING THE WRONG CHOICE?

If you’re a philosophical person, or a deeply religious person, you may have heard of a man named Blaise Pascal. Blaise Pascal was a French mathematician and physicist living in the 1600’s who became something of a hero in the world of probability science. He’s also well known for building some of the worlds first mechanical calculators, called Pascalines. When Pascal was 23 he became a follower of a Catholic religious movement and eventually became something of a philosopher of religion. Being an extremely intelligent mathematician, he eventually came up with what was believed at the time a simply probability exercise, eventually to be aptly named, Pascal’s Wager. In essence, Pascal’s Wager postulated that human beings bet with their lives that God either exists or does not. This podcast is not about religion, or philosophy, but I want to lay out Pascal’s wager for you to  lay the groundwork for other areas of our lives and businesses that it actually does apply. Pascal’s Wager, by the way, wasn’t necessarily new in the world of religion. Similar questions have been tossed out there throughout the centuries by many other religions.

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Now, before we go on, it’s important for me to state that, in the realm of logic, Pascal’s wager has been thoroughly debunked and exposed as a logical fallacy that simply falls apart when real logic is applied. However, Pascal was really the first to attempt to apply probability theory to a religious and philosophical question. If you’ve never heard of the wager, I’ll introduce it to you here in very simplistic terms. Pascal’s Wager basically says you have to start from a binary position that there either is or isnt a god. There aren’t any in betweens. Then you are asked the question, what if there is no god but you lived your life as if there was. What would the harm be in living the life of a believer, only to find out at the end that there is no god, what have you lost? Then you’re asked, what if there is no god and you live in a way that would possibly be looked down upon or punished in an afterlife by a deity, if one existed. Well, there would be nothing lost because no god exists in that probability coin toss. Then you’re asked, well what if a god DOES exist but you live as if one does not? Well, in Pascal’s belief, you have risked everything and lost and will have to pay the penalty of eternal damnation. The next coin toss of probability in Pascal’s little exercise asks, what if a god does exist and you live your life as if one does? Well, in his belief system, you win, there was very little cost during your life to live that way, and in the end you receive eternal blessings in his version of heaven. To sum up, Pascal argued that even if there was only a tiny probability that there was a god, it made sense to him to behave as if there was because the rewards, in his belief system, would be infinite and eternal, while the lack of belief carried with it the risk of eternal damnation. Pascal used probability science to try to make this argument by using plus ones and minus ones for each probability, like flipping a coin, and believed that his little test made complete sense and fell on the side of ‘why not just believe, because the potential benefits outweigh the potential eternal losses and pain.’

Again, this is not a podcast about religion, but I wanted to introduce you to Pascal and his wager because, for all of its flaws in the realm of logic as it pertains to religion and the fallacious reasoning with which it was applied, the wager can be, and has been, applied in other areas and quite successfully. One of those areas is the climate science debate. Again, small disclaimer, I don’t really care what you’re position is on the debate and I’m not bringing it up to spark a debate. I’m bringing it up simply to tell you how this wager, this little probability exercise that began in the mid-1600’s has been applied even more powerfully to scenarios where people tend to debate over small details of a topic and ultimately miss the bigger picture. Warren Buffet said in a letter to shareholders in 2015, when speaking on the topic of climate change, “…if there is only a 1% chance the planet is heading toward a truly major disaster and delay means passing a point of no return, inaction now is foolhardy.Call this Noah’s Law: If an ark may be essential for survival, begin building it today, no matter how cloudless the skies appear.” The point being that it doesn’t really matter whether you fall on the side of climate change being all a big hoax or you fall on the side of believing that climate change is a real thing and a threat, in this case, what is the harm in living as if it is true? Even if it is all a big hoax, what would be lost by recycling, or saving energy, or whatever else is being suggested to mitigate the change that might be occurring. If nothing is done, however, and it IS all true, what will be the ultimate cost?

So what’s your point Blaine? What does this all have to do with business, life, success, value, and all of the things we talk about on this show? Its quite simple my friends, it’s a wager that can be applied to a variety of areas of our lives and businesses one each you know how it works. You basically have to presuppose some kind of outcomes, both positive and negative, for everything that you’d like to use Blaine’s wager with and then decide what actions you want to take based on the probabilities. For example, most of you know my background in defensive tactics, martial arts, and the tactical world. Because of my upbringing, my work at the ghetto grocery for 10 years, my work with the military and law enforcement, and my martial arts and tactical background I am always on the lookout for what my kill me. I say it to my teenage boys all the time when teaching them how to drive, “be on the lookout for the myriad ways that you might die when you’re driving and don’t discount the odd or seemingly impossible.” It may not come from someone texting and driving, it may not come from somebody ignoring a stop sign, and it may not come from somebody running a red light, although those are all high probability scenarios to be on the lookout for. It may come from a piece of metal trash flying out of the back of pickup truck ahead of you. It may be a deer running out in the middle of the road. It may be a tree branch breaking and hitting your car or it could be having a tire blowout at 80 miles per hour. Driving is a dangerous activity for even the best of drivers and you have to be ever vigilant of the unknown. Blaine’s wager simply asks, what is lost by acting as if every time you go out for a drive, something may try to kill you? Maybe the pleasure of a relaxing country drive? Nope, because the activity does not preclude you from enjoying your drive, it merely suggests hyper vigilance and awareness. Your lack of awareness on that country drive wouldn’t make the drive more enjoyable, only more risky.

I’ve talked several times about how I am a concealed pistol carrier and have been for many years. I am very clear about the fact that you would never know it because it is, in fact, concealed well and I am very aware of my surroundings at all times. I don’t walk around In public hoping somebody will identify me as a concealed carrier, It’s actually the opposite. I walk in public with a gray man mindset, which is simply the tactical philosophy and practice of being relatively unnoticeable by the general public. Nothing really stands out about me or my behavior to those occupying the same relative space. If asked about me after I am gone, everybody would say, “nope, don’t know who you’re talking about, never saw him.” Why do this? Why carry a gun everywhere I go? Simple…Blaine’s wager: it may never happen and I hope it doesn’t, but what is the ultimate cost to me to be prepared to protect myself and my family in the off chance that something does go down? Almost nothing! Obviously, there is the hard cost of the guns and ammunition, the myriad holsters and the minor discomfort with wearing it in the position I carry in, which I almost never feel anymore. The cost to not being prepared and ready for a scenario, however, could literally be my life, the lives of my loved ones, or the lives of one of yours if they’re in the vicinity. Low cost, maybe even low probability of something happening, but an extremely high cost for not recognizing the potential threats and pushing the probability of a favorable outcome in my direction. That’s what all of these wagers are about. Whether its Pascal’s or Blaine’s wager, the point is to ask the questions about what are the potential outcomes in all potential scenarios, and then what is the ultimate cost for either discounting the outcomes or taking a chance on the outcomes and then preparing yourself. With the concealed carry examples, the wager is simple because we have actual statistics that we can rely on and, for me, I have actual experience with some of the worst potential outcomes possible and have seen what the ultimate cost is for not being prepared and being ignorant of the threats. Ignorance is bliss is the famous saying, however, ignorance does not guarantee a long fruitful life, nor a life free of hazards, roadblocks, and threats. It merely guarantees that you don’t know what you don’t know and suggests that your life may somehow be more peaceful by not knowing. However, what is blatantly left out of the saying is what happens to the bliss once the ignorance has been violently shattered.

How does this apply to your business? Simple, change is the only constant we can be sure of. Disruption is the name of the game in the 21st century. Like Pascal’s Wager or the climate change debate, it doesn’t matter if you believe it or not, there is guaranteed to be some outcome. Either you believe that there are and will continue to be changes to your industry, and you are doing something about it, or you discount the changes that are occurring and have decided that its business as usual. I am definitely one of those people that says there will always be a market for those who deliver the absolute best customer and client experience, regardless of the digital disruption going on in the world. As I’ve said before, you can still find travel agents in business despite the exodus of 90% of them thanks to online travel sites like expedia, trivago, and priceline. Look around, you can find them, and the ones who stuck around at the ones who had rock solid client experiences and relationships. Despite the presence and proliferation of the Amazon shopping experience, there are still retailers doing just fine due to the customer and client experiences and the relationships they cultivate. I talked about this in the recent Diamond Mining episode just released a few days ago. As appraisers, realtors, lenders, and all related industries being disrupted by technology and the speed at which business is being done now, we have a choice of whether or not we choose the, ‘eh, I don’t think it will effect me so I’m going to keep doing what I’ve always done’ side of the wager, or the ‘I can see something happening, even if I don’t fully know what, so I am going to start implementing some changes that recognize the potential possible outcomes on the horizon.’ After all, what is the downside of making changes even if the potential possible outcomes never come true? Depending, of course, on what those changes entail, the downsides of making changes to your business are very small with the upside being almost infinite. Rest assured my friends, ignorance of all potential outcomes may give you some bliss for the time being, but it does not guarantee you a spot at the table if, and when, major shifts occur. This is not a message of doom and gloom, by the way, quite the opposite. I’ve been talking about it for a long time on this show how I believe the changes we see in the appraisal, the real estate, and the mortgage side of the business are good things because they will allow those who create  outstanding client experiences to thrive in a very fast digital world while those who don’t wither on the vine and go quiet.

What’s the cost of change for you, my friend? What are the probabilities of massive change sweeping through yours, and 2 dozen other industries in the next 5 years or so? What are all of the potential outcomes of those probabilities? And what are you willing to bank your changes on? The chance that its not going to happen, or the chance that it will?

I’d like to thank you for investing your most valuable currency with me again this week my friends and I strongly encourage you to take some time to play the game a little bit. Flip the coin 50 or 100 times and write down the probability of it coming up heads and then tails. Then ask yourself what you’d be willing to bet on either happening on the next flip. What will the loss or the cost be for guessing wrong, and what will the benefit be for guessing right…in your life and your business. Flip away my friends, the probability that I will be back again next week with another show is 100%. In fact, be on the lookout for a diamond mining episode later this week. Until then my friends…I’m out.