Rule 5: Lean into the future

One of the interesting facts uncovered by psychology is that people suffer three times as much from losing something they had as they enjoy getting something they didn’t have before. There are all kinds of convincing explanations coming out of evolutionary biology why this would be the case, but in the modern world, it easily creates a mindset where many try to hold on to the past instead of embracing the future.

In many ways, deciding to rely on the proven ways of doing things is of course a perfectly defensible strategy. In the financial space, many seasoned investors can’t resist a smile when new entrants in the field claim that “this time it’s different” only to be proven wrong a few months or years later. Whether it’s the dot-com bubble or the subprime mortgage crisis, the basic, fundamental principles in the market don’t change or change only very slowly. History doesn’t repeat itself, but it does rhyme.

The problem in a digital world is that all the opportunities are created at the edges. It tends to be those who can see the potential of new technologies and use these to create value that benefit from the first-mover advantage. Of course, being the first mover is a risky strategy and there are many examples of the second or third mover winning the game, but entering late into an established market is a recipe for failure. I wrote about this earlier, in relation to virtual assets.