Low Variance, High Variance
In 2009, I was a 17-year-old middle-school dropout struggling with depression and playing a lot of World of Warcraft.
I lived in a 500-square-foot single-bedroom apartment with my younger brother and mom. In our dining room, we had two futon couches that converted into beds. I remember plopping down on my “couch bed” and hurting my back because it was so firm. We had fluorescent light pouring into the dining room from the kitchen at all times because we thought it would discourage roaches from crawling around. It didn’t. My brother and I had a desk on either side of the living room with our computers set up.
It was in this apartment that I learned how to get rich.
How to Get Rich
Everyone knows how to get rich these days - just go on the personal finance subreddit and take a look at the Prime Directive. It’s simple: Budget, reduce expenses, build an emergency fund, pay off debt, and then invest in index funds. Not easy, but simple. Do these steps, and you will become rich enough that by the time you are 62, you can retire comfortably (until you die 17 years later, on average).
When I was learning about finance while living in poverty, it felt like I was reading a novel - something I was curious about and interested in, but that would never be my reality. I was unemployed, unemployable, and I had a 7th-grade education. Why was I reading about personal finance? I think it was a shimmer of hope in a well of darkness at the time, and I enjoyed the distraction.
Stacking the Deck
After learning about personal finance a bit more, it became clear that if I went to college, I would have an easier time retiring, especially if I chose a major with a high earning potential. I asked my dad if he thought going to college was a good idea - I can only imagine the elation he must have felt when he said, “Yeah, son! I think that sounds like a great idea!” I thought he would say no because it was too expensive, and I would fail out. I was genuinely surprised when he excitedly said yes.
I enrolled in Houston Community College as a Computer Science major. An advisor explained to me that I would have to take three semesters of remedial math before I would be ready for college algebra, as I was currently at a 6th-grade math level. I later transferred to the University of Houston and graduated—it took me five and a half years in total.
Enter the Grind
I got my first job in retail shortly after I started college, and that’s when it hit. “This is what work is? I have to work my ass off for another 40 years and then maybe retire for 20? I won’t make it.”
Deeper into the rabbit hole I went. I discovered the Financial Independence / Retire Early (”FIRE”) movement, where folks are playing the game of trying to retire earlier than 60 by reducing expenses more aggressively and saving more aggressively, essentially doing the Prime Directive “but more.” Often trading quality of life in the present for freedom in the future.
I set two goals at this time, one nearer-term goal that set me up for the ultimate goal:
- $100,000 salary and $100,000 net worth by age 30
- Be able to retire by 50
These both felt extremely lofty at the time, near unattainable.
During my senior year of college I applied to hundreds of software engineering positions, fearing that I would be unable to land employment. I attended over 40 in-person interviews all across the city within a month, sometimes having several scheduled on the same day. I ended that month with eight job offers to choose from, ranging from $50,000 to $75,000 in salary as a junior software engineer. Only one of them offered equity in addition to salary, but I didn’t know what that was.
Taking a Shot
During college I also picked up a poker habit. I was a winning player at micro stakes online and played with friends on weekends. In poker, there is a concept called “bankroll management” that essentially ensures you do not bankrupt yourself by playing stakes that are too high for your bankroll. If $200 is all you have, bankroll management will tell you: don't play a $200 buy-in game. Instead, go find a 2$ buy-in game and play there until you have a larger bankroll, and then move up to bigger games over time.
But what about a $50 buy-in game if you have $200? That seems pretty risky, 25% of your bankroll up in flames if you lose.. but what if you win? You might come out of that game with 250$ and double the size of your bankroll in one session. If you lose, you’ll have $150 left, and you can go back to 2$ buy-in games until you grind your way back to $200.
This is called “Taking a shot” in poker. It is a risk-mitigated way to increase your bankroll faster in a shorter period of time by making selective high-variance bets. The downside is capped, and the upside is uncapped.
When I began researching what “equity” was in my job offer that extended it, I thought about it very similarly to taking a shot in poker. I’ll take a lower salary, but I get “a shot” at making an outsized return on the salary I’m sacrificing. A high variance bet.
Keeping my $100,000 net worth goal in mind, I decided the trade-off was worth it. At a $67,000 salary instead of $75,000, I was still likely to hit my goal as I had six years of time to save.
When I explained to people (classmates, parents, friends) my reasoning for accepting the lower salary offer there was not a single person I talked to who agreed with me. They all told me to take the $75K offer. Until I went to my weekly poker game, during which every single person at the table agreed with me, and one asked if I could get access to even more equity somehow.
This specific decision ended up costing me the $8000 difference in salary plus another ~$1000 I spent to exercise my options when I left this company. It failed several years after I left, and the stock was worthless. However, the framework I used to make the decision ended up paying off later.
Low Variance, High Variance
Coming from my background, it is very difficult and rare to escape poverty and land somewhere in the middle class. Taking it even further and building real wealth virtually never happens.
There's a reason for this, and it's related to how it feels to be in poverty. The feeling of poverty is similar to having your body lodged in an active hydraulic press. Money you lose increases the pressure. You feel your chest tighten. You feel a sharp pain in your head. You feel sick to your stomach. Money you gain gives you a fleeting sense of calm as the pressure decreases, a small release valve on an extremely stressed system. When this is the case, it will always make sense to take the guaranteed money now vs. the chance at more money in the future.
The lessons I learned from personal finance forums and playing poker were the perspective-shifting lens that enabled me to break out of that scarcity mindset. By running both high-variance and low-variance strategies in parallel, you can start to alleviate that pressure while still maintaining pathways to significant wealth. It's not about choosing between security and opportunity - it's about finding ways to pursue both simultaneously.
By continuing to increase my base salary and save diligently, I ensured I would meet my initial goals even if none of my equity bets paid off. This was my low-variance path, providing stability and steady progress toward financial security. Meanwhile, by consistently trading some salary for equity, I kept the door open for potentially life-changing returns.
It's important to note that this strategy doesn't guarantee success. The nature of high-variance bets means that sometimes, you might end up sacrificing salary without seeing any equity upside. This is part of the game. The key is to structure your life in a way that allows for the possibility of outsized returns, not the guarantee.
In my case, by keeping the high variance path open, I became a millionaire before age 30, which was ten times my original goal.
This balanced approach allowed me to take calculated risks without jeopardizing my financial security. It's a strategy that's particularly powerful for those coming from backgrounds of poverty or financial instability. By maintaining a strong foundation through traditional saving and investing, you create a safety net that makes it psychologically easier to pursue higher-risk, higher-reward opportunities.
This dual strategy laid the foundation for my next move: becoming a founder. With financial security established, I am able to take an even bigger, higher-variance risk. The safety net I built gave me the psychological freedom to pursue entrepreneurship. I'm applying the same principles on a larger scale—balancing the stability of my existing wealth with the high-variance bet of building a new company.
PS: I still feel the hydraulic press when it comes to money - the magnitude is just turned way down. I don't know if it will ever completely disappear, but the dual-strategy approach has given me the tools to manage it more effectively.
(thanks to anu, andrew, ashwin, angela, charley, jeesun, and dt for reading drafts of this!)