I now write on Medium here. You can find some of my old essays below.

Option Value

We generally don't think enough about how we should live as opposed to the minutiae of our lives. It's like how many CEOs of startups get caught up in operational details and let their companies slide down a poor strategic path. But post this isn't just about startups; it's something I see in almost everyone (including myself). Let me treat you to a story for a moment. I visited a friend today near Penn Station. I was heading from the 86th street area of Manhattan's Upper East Side. There are two ways to get to Penn Station from there:

a) Take the M86 bus to Central Park West, then the C train to Penn Station

b) Take the 6 train to 51st Street, then the E train to Penn Station.

On a Sunday morning, either one will take about 35 to 40 minutes. But coming back is a different story -- it'll typically take 25 to 30 minutes. The actual trains and buses go just as fast. So why the difference? Option value.

Individually, C and E trains are fairly rare. But when I'm heading back uptown and waiting at Penn Station, I can take whichever train comes first. I don't have to commit to a certain path until I have information about which train is coming first. I'll just take the first one to show up and only then am I committed to a certain path -- if a C train comes first, I'll head across Central Park on the M86. If an E train comes first, I'll take the 6 uptown.

When I'm heading downtown, I either go into the subway or wait for the bus. When I'm making that choice, I don't have the same information I do when I'm heading uptown; I don't know whether the train or bus will come first. I could very well go into the subway tunnel and wait 15 minutes before the next 6 train comes by.

Thus, the 10 minutes I save on average when heading uptown is the value of being able to retain that particular option.

So why am I rambling about the MTA? Because there are a lot of people who don't understand the value of an option -- when in reality, option value likely represents the single most precious asset we have. Especially while we're under, say, 40.

I don't know what our economy and culture is going to look like in 20 years any more than I know whether the C train is coming before the E train. I can gather hints -- for example, if a lot of Indians and Pakistanis are on the platform, it probably means that we're due for an E train, which goes through Jackson Heights, Queens -- a major south Asian center. But that's hardly a definitive analysis, and surely not one to base a career on.

Yet I see a bunch of people my age who can't wait to commit to a path. And I'm not talking about people who have a passion for a particular field. I mean people who just want to have a have a nice job, make a lot of money and meet a nice husband/wife. And I'm possibly as guilty of this as anyone, what with being in the gaming industry since before I got a college degree. But it's still something I think a lot about, especially when I see people my age self-deprecating their career paths as non-committal. "That's great!", I say. "Keep doing that as long as your budget and significant other allows!"

Let's say born in 1960 wanted to have a high-paying job with limited risk (a common goal, if not among startup founders). The decision for that person would've been fairly obvious -- become a doctor. At the time, finance was still the wild west, and doctors were at their peak profitability in the mid-80s. Yet had that person started practicing at, say, age 30 in 1990, they would have endured a lifetime of decreasing salaries, higher malpractice insurance and increased risk.

I think the same story can be told for a lot of people who have been sucked into finance over the last 15 years. Finance is hardly becoming a bad job. Neither, after all, is medicine. But it is definitely on the downward slope in terms of compensation, prestige and risk.

So what's the point? You've got to make a decision at some point, right? Well, yes. But it's probably worthwhile to spend the extra 5 or 10 years figuring out what you love to do rather than just jumping in to something because it is an "obvious" choice with good compensation. Of course, disregard this advice if you know what sectors will be hot when you reach your peak earning potential in 20 years -- if you do, you should take the multi-million dollar offers you're surely now getting from hedge funds. Maybe you'll end up trading options.