Not rich yet? Maybe you need to take bigger risks
So says Nate Silver in his new book On The Edge: The Art of Risking Everything
NATE Silver’s newly released book On the Edge: The Art of Risking Everything is a provocative exploration of risk-taking in today’s tech and financial markets. Best known for his work as a statistician and founder of data journalism website FiveThirtyEight, he applies his statistical expertise to his love of poker-playing and his observations of risk-takers in Silicon Valley and Wall Street.
Admittedly, he’s not the most elegant of writers – he uses words such as “degens” (degenerates), “nits” (nitwits) and “a**holes”. But if you can get past the sometimes overly casual writing style, the book offers interesting insights into the aggressive world of tech entrepreneurs and venture capitalists. It also explains why Elon Musk can still draw investors even after several SpaceX rocket explosions, and why Sam Bankman-Fried might still get a job when he gets out of prison.
A leading voice in data-driven journalism
Silver first found fame with his 2012 bestseller The Signal and the Noise, which demonstrated his ability to interpret data and forecast election results with striking accuracy. During the 2008 US presidential election, he predicted the results for 49 of the 50 states. He then predicted the outcomes of the 2012 and 2020 US presidential elections. Infamously, he tripped during the 2016 election when, like so many pundits, he predicted Hilary Clinton would win by a comfortable margin.
But he still remains a leading voice in data-driven journalism, particularly when it comes to politics and sports. In 2023, he left the website FiveThirtyEight to focus on his own writing, and the result is On The Edge, published in mid-August this year.
In this book, Silver looks at the art of taking risks. He conducts over 200 interviews with people who understand risk-taking very well, ranging from poker players to astronauts and hedge fund managers. Drawing parallels between these seemingly different fields, Silver concludes that most humans are generally too risk-averse for their own good, and that those who are able to counter this instinct can reap significant rewards.
He opens the book with three full chapters on poker playing. For someone like this journalist who’s never stepped inside a casino, these chapters were impossible to get excited about. But they’re necessary to get through in order to understand how Silver calculates risk. If anything, poker is the dominant lens through which he views much of life, and these gambling scenarios soon expand to include a broader range of high-risk professions.
Silver’s biggest contribution to popular discourse may be his theory of the “River” – a term he uses to describe the environment in which high-risk-takers operate and thrive. These individuals are highly risk-tolerant, using quantitative reasoning models such as game theory and probability theory to make decisions that sometimes yield very high rewards. He considers these calculated gambles and not blind risks, and seems particularly enamoured of Mark Zuckerberg’s quote: “The biggest risk is not taking any risk.”
“Venture capitalists,” he writes, “are looking for people with one big crazy idea that they’ll commit to for a decade or longer. An idea that might fail, but has a chance of being revolutionary.”
He is highly critical of the group of people in the “Village” – a term he uses for the congregation of academics, journalists, activists, political commentators, philosophers and the like who, according to him, often echo each other’s opinions without a strong basis in data or empirical evidence, and rely too much on intuition and tradition. In contrast, people in the “River” are more dynamic, competitive, risk-tolerant and adaptable, leading to world-shifting inventions such as new media and artificial intelligence.
‘Probabilists’
“Most people who reside in the River – me included – are probabilists,” he says. “We might find questions about the nature of the universe philosophically interesting. But they don’t really matter to our day-to-day work. The world may or may not be inherently random, but between chaos theory and our relative ignorance, many important phenomena are highly uncertain in practice. So we gather data, craft it into what we call reference classes, formulate hypotheses, and test them – all to figure out what events are relatively more predictable and relatively less so. This is the empirical way.”
Silver is so invested in the people of the “River” – or “Riverians” as he calls them and himself – he devotes a substantial portion of the book to Bankman-Fried, the disgraced founder of FTX cryptocurrency exchange, whom he spoke with five times for the book. To Silver, Bankman-Fried personifies some of the worst excesses of people of the “River”, in that they’re willing to carry out high-stakes financial manoeuvres at high moral costs. When not managed properly, the tendencies of “Riverians” can lead to catastrophic losses for many people.
On The Edge is a timely and provocative book. For some, it may suggest that our contemporary world is much too influenced by “Riverians”. As we witness “Riverians” gain dominance across many sectors from technology and finance to politics and culture, an even larger wedge is being driven between the “haves” and the “have-nots”, the technologically advanced and the formal knowledge holders.
On The Edge: The Art of Risking Everything by Nate Silver is available now at all good bookstores.
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