thomas

$1M now, or one penny now doubling every day for 30 days? 🧵

PhD in aviation ∩ climate science | Aviator, diver, ETH maxi, nexialist | Host of /diving /ethfinance /eth-staker /geopolitics /science /singapore /thomas

It’s not immediately intuitive, though, and many of us are stuck with a linear mode of thinking by which we overestimate the change in the short term and underestimate it in the long term. After all, inflection points happen slowly, and then all at once. 3/6

But even in organizations that pride themselves on thinking exponentially, walking the talk is hard.

In the above example, the second option remains inferior to the first for 27 of the 30 days. It’s only on day 28 that the penny option outperforms the $1M alternative; but from there, it just flies off. 4/6

Practically, it means that, should an executive check in on the investment project on any random day, there’s a 90% chance (27 out of 30) that the project will be deemed to underperform relative to well-established, safe expectations. 5/6

This can lead to projects being terminated prematurely despite being on the cusp of a breakout.

We don’t have many examples of those, precisely because we will never know what happened if they had been given just a bit more runway. 6/6 🎬

You’ve probably guessed that the latter is a more lucrative option, thanks to the power of exponents. $0.01 doubling every day yields $5.4M on day 30; five times more than the alternate option. 2/6

This becomes more interesting if the doublings occur with probability p<1. One could then ask the following: for what p would one prefer the pennies over the million?

Come on, for a developer 2^29 (we start from 1) is almost 32bit 😉
We all know how big it is.

I'd pick the latter if it goes for at least 52 days. we don't need the copper.

Anyone who chose $1M does not understand the power of passive income. 

100 $degen