Why Society Needs More ‘Elon Musks’ with Better Risk Management

During their recent episode, Taylor, Carlisle, and Luca Dellanna discussed Why Society Needs More ‘Elon Musks’ with Better Risk Management, here’s an excerpt from the episode:

Jake: I wondered if reading biographies might have some problematic nature to it, because biographies are all Alice’s. No one’s reading Bob’s biography. So, you’re looking for lessons and you’re reading about Alice, and maybe that’s [chuckles] not a reproducible strategy.

Tobias: Yeah.

Luca: Yeah, exactly. One question that I always get after the Alice and Bob example is, “Luca, but Elon Musk uses an Alice strategy?” And I’m like, “Yes.” And then they say– Without taking anything from his skills and hard work, because obviously he’s extremely skilled and extremely hard work. And then the people, they tell me, “Luca, but Elon Musk is good for society, and we need more people like Elon Musk.” Absolutely. Why are there so few people like Elon Musk? Because they are bad at managing risks. They were 10% better at managing risk, we would have more Elon Musks, not fewer. I think this is extremely important concept for people to grasp.

Jake: Yeah. What do you think about that, Luca, from a societal standpoint? Same thing with biology, where there’s an optimization, sometimes at the genetic level, individual level, but then there can also be group selection level. Do you think that same thing holds true for Alice and Bob strategies, where we need people out on the front edge, on the bleeding edge crashing to make progress, or is that not a good setup of the problem?

Luca: We need people taking risks. We do not need them crashing. [Tobias laughs] It’s like saying, “Luca, should I drive fast, or should I drive slow?” They are not on the opposite side. Of course, you should drive fast. But within driving faster, there is driving recklessly and driving fast but sustainably. We want people to drive fast and sustainably. We do not want to drive recklessly, because driving faster than fast becomes counterproductive.

This is, again, the thing. We need more Elon Musks. We need people that take the kind of risk that Elon Musk takes that are not reckless, and we need them to stop at the point of recklessness and do not do over the recklessness, so that their risky bets are more likely to succeed. So, yes, we want people like Elon Musk starting companies, taking risks, but we want them to do it with that modicum of risk management which enables the risky bets to succeed. That’s what we want them to.

Jake: Not committing securities fraud or things like that?

Luca: Yeah.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

Apple Podcasts