The Future – Luck or Design?

By Russell Kroeger, CFP®, EA

Jul 22
We all have dreams and aspirations for how our future plays out. In fact, our ability to contemplate the future is what differentiates humans from other species. This allows us to spend time creating tools, such as language or the wheel, for the benefit of our future selves and our offspring.
The question is, however, is the future based upon luck or design? Or more importantly…. What can we do to tip the scale in our favor regardless of whether luck or design is the key driver?

Overview – A Simple Framework

When teaching a class on Startups at Stanford, Peter Thiel’s lectures were turned into a book he developed with his student, Blake Masters (Zero to One: Notes on Startups, or How to Build the Future).

Thiel devoted an entire lecture to the concept of luck, and how it impacts what happens in life. Rather than spending time arguing over luck’s impact on the past or present, he focuses on the future and worldviews that can generalize an individual’s behavior.

Thiel argues that Futures can be viewed as Indeterminate or Determinate:

  • Indeterminate: Outcomes cannot be orchestrated or predicted because of complexity and chance.
  • Determinate: Deliberate action can influence (or predict) outcomes, and the future is creatable.

He then creates a Holon by layering Optimistic and Pessimistic attitudes over views of the future:

How does this framework apply to your life and the future you want to experience?

It’s important because it offers perspective for how we approach the future from a standpoint of outcomes that are and are not within our locus of control. We can also effectively think through how to create resilience and leverage our resources to help tip the scale in our favor.

As Thiel notes in his lecture:

A class on startups would be worthless if it simply relayed a bunch of stories about people who won lotteries. There is something very odd about a guide to playing slot machines. To the extent it’s all a matter of luck, there is no point in learning very much. But it’s not all a matter of luck. And the part of it that is can be channeled and mastered.

With that foundation, we gain awareness around our motivations (conscious or subconscious) to ensure our actions move us in the direction of our preferred future.

Craft a Future for Yourself and Those You Care About

Indeterminate Optimist

Consider the Indeterminate Optimistic quadrant from the Holon above, the worldview that our lives will become better but the path to get there is unknowable. There are actions and behaviors that can increase the probability of success, but there are too many things beyond our control to directly influence the outcomes with any significance.

Your investment portfolio lives here.

The optimistic aspect of this approach necessitates that an individual invests because they see the world as getting better – thus markets will likely go up over the long-term, allowing them to take advantage of progress that does not require their direct participation.

The indefinite part is the realization that nobody, can consistently call the market correctly. This means we are going to invest for the future but we do not know which company(ies) will help us get there most efficiently. So to mitigate the uncertainty and risk from derailing our preferred future, we diversify our investments: across geographical regions, within geographical regions, across companies of various sizes, etc.

The common wisdom is that assets will perform differently from year to year based on market conditions, geopolitical events, and development of new technologies. This means we’re better off getting a little bit of exposure to most types of assets because these are all events that no single individual can directly influence in their favor.

Indeterminate Pessimist

The Indeterminate Pessimistic worldview can be identified in individuals who believe the future will be worse than the present, but are unsure which specific risks will actualize and cause the decline. This likely means that the individual is hesitant to invest, but will  act in an attempt to protect what they have now and bring as much of it as possible into the future.

While we do not recommend subscribing completely to this Indeterminately Pessimistic worldview, there is something to be said for their prioritization of resilience.

Best practices would be to identify how to maintain resilience for future events that may be outside of your control. This includes things like the amount of cash available on the sideline for an emergency; the types and amounts of insurance carried in the event of injury, sickness or the loss of a job; and even legal documents that outline your wishes in case you can no longer make your own decisions.

Learning from Indeterminate Pessimists can help add guardrails to our trajectory when negative events happen that are outside of our control. The caveated here is striking a balance – not limiting the upside out of fear, while also coming to terms with the truth that most of what happens is outside of our direct control.

Determinate Pessimists

We will not spend much time outlining the Determinate Pessimists because Financial Planning, decision architecture, and those who wish to create the future have no place in this quadrant. Not only do these individuals feel that the world will be worse, they “know” that no matter what they do or how they act, nothing will make the future more worthwhile.

These individuals generally exhibit excessive spending (time, money, energy, etc.) in the present, because the future is more glim and thus there is no reason to delay any gratification in service of it. Unlike the Indeterminate Pessimists, there isn’t even a reason to save what they have now for the future – everything is worse and they are victims of circumstance, completely unable to influence the future or their happiness in it.

Determinate Optimists

Determinate Optimists on the other hand not only believe that the future will be better, but they believe in a path forward to make that preferred future a reality. This is where Thiel addresses the mindset of innovators who create something from nothing, thus literally inventing a future that others will enjoy and from which they will profit.

In contrast to Indeterminate Optimism, the type of investment here is usually investment in an individual’s human capital (skills, knowledge, experiences, etc.) or business. This can be seen in people who may take a slightly unorthodox approach to becoming their future self, because they believe so strongly in being able to impact how the future plays out.

We believe everyone would benefit from adopting certain traits of Determinate Optimists – investing in health, knowledge, skills, self-awareness, etc. Even if there is no anticipation of inventing a product/service or being an entrepreneur, it helps us become better versions of ourselves. This means that we will experience a better quality of life and provide a more positive experience for those with whom we interact.

Final Thoughts on the Future

By understanding these four worldviews, we can streamline how we approach the future through categorizing opportunities, actions, and possibilities into a particular quadrant. We can make an honest assessment of our ability to influence the outcome, and if we cannot, we understand how to protect the downside. It is important not to anchor our entire approach to the future into a single quadrant, but to understand how aspects of each can support our pursuit of a full life. Rather than buying into a particular worldview with our entire being, we can identify the current environment and move forward appropriately.

We can evaluate the playing field, position ourselves for progress toward our preferred future, hedge ourselves from potential risks, and move forward in confidence knowing that each step was taken to the best of our abilities. Our hope is that no matter how the future plays out, we can remain imperturbable based on our understanding of what is and is not within our control and the attitudes with which we perceive them.


About the Author

Explorer of life, ideas, possibilities, and limitations. Nothing of me is original, I am the combined effort of everyone I've ever known. #UtProsim