Entrepreneurship
Entrepreneurs do not benefit from knowing everything
volatility in business is not bad, if entrepreneurs master the concept of optionality. Philosopher and mathematician Thales was the first person in the history to practice optionality.
Thales put a down payment for a season’s produce of every olive press in his area. He had the option to not buy at a small cost. When the demand for the olive oil went up, he could release the sellers at the prices he set. Thus, he made profit from the volatility. Warren Buffet used optionality by buying stake in Sanborn Map Company at $45, while the company’s investment portfolio alone was worth $65. Warrant Buffet invested in Berkshire at $7, which assets were worth $11.
Taleb writes in Antifragile, “Antifragility equals more to gain than to lose equals more upside than downside equals asymmetry (unfavorable) equals likes volatility. And if you make more when you are right than you are hurt when you are wrong, then you will benefit, in the long run, from volatility (and the reverse). You are only harmed if you repeatedly pay too much for the option.”
Entrepreneurs should not worry about the ever changing market or the future. Instead, they should focus on how they can make asymmetry work for them by practicing optionality. Pandemic is causing volatility in the market, which also means entrepreneurs can grow their businesses by using asymmetric information.
More reading options: Optionality in emerging businesses/ startups Link