For whatever reason, it took me forever to understand the difference between probability and expected value. I searched the web high and low, and as far as I could tell, there wasn’t a good explanation to be found. I spent way too much time trying to wrap my head around the concepts, and I hope my explanation below will shortcut the process for you.

First, let’s start off with some quick definitions:

Probability measures how certain we are a particular event will happen in a specific instance.

Expected Value represents the average outcome of a series of random events with identical odds being repeated over a long period of time.

Take a coin flip. Every time a coin is flipped, the probability of it landing on either heads or tails is 50%. To determine the expected value, we have to apply some numbers to the outcomes.

In a scenario where every time the coin comes up heads, you win $2, and every time the coin comes up tails, you pay $1, your expected value is $0.50 per flip. That is, if you flipped the coin twice, one time it will come up tails and you’ll pay $1 and one time it will come up heads and you’ll get paid $2. So after two coin flips, you have made $1 ($2 – $1) or $0.50 per flip.

Of course, we all know if you only flip a coin twice, you could easily end up with heads twice or tails twice. Fortunately, we can use math to show us the probability of a particular outcome occurring. If we wanted to know the probability of flipping a coin twice and heads coming up at least once, we would apply this formula:

1 – (number of non-desired outcomes divided by total number of possible outcomes) ^n where n is the number of times a particular event is being repeated.
For the above example of a coin being flipped twice, it would be 1 – (1/2)^2 or 75%.

• 25% of the time, you lose twice, Tails/Tails
• 25% of the time, you win twice, Heads/Heads
• 50% of the time, you win once Tails/Heads or Heads/Tails

Now, you can quickly see that probability and expected value don’t directly correlate. In fact, it’s impossible to win $0.50 on any flip (you either win $2 or lose $1), and 25% of the time you won’t win anything at all. The trick to understanding expected value is to focus on the 25% of the time you win twice (Heads/Heads). Probability is just giving you the odds of heads appearing at all where expected value is predicting how many times you should expect heads to appear over a long period of time.

A Weather Example
Let’s look at another example with a few more outcomes. Take a 5 Day Weather forecast where there is a 20% chance of rain every day. The probability of it raining at all during those 5 days is 1 – (4/5)^5 or 67%. Every day, there is 1 outcome we want, rain (20%) and 4 outcomes we don’t want, no rain (80%). That’s where the 4/5 comes from. And 5 represents the number of days we are repeating this particular event.

So if we were gambling, why would we gamble like there is a 100% chance of rain during those 5 days even though we know that’s not the case? Shouldn’t we take into consideration the 33% of the time it won’t rain at all during the 5 day period?

No. You’re right in realizing there is only a 67% chance it will rain at least once during the 5 day period, but you can’t forget it could also rain multiple days during that same period as well. This would allow us to win money on multiple days. We could write the various possibilities out like the heads and tails chart above to see the numbers work out, but this post is already getting too long, so I’ll let you do the homework.

Using the rule of large numbers, over a long enough period of time, if we were able to get odds that paid better than 20% (something like bet $1 to win $5), we would definitely make money or in gambling terms have a positive expected value (EV+) for the weather scenario. This is the basic principle that keeps the lights on in Las Vegas, only it’s the house with with EV+ where you, the gambler, will have an EV-.

Probability of Ruin
Am I telling you to always take the risk if you have a positive expected value? No, there is one more principle to consider called risk of ruin. It takes into account the probability of winning, the probability of losing, and the portion of your finances at risk. This isn’t a hard and fast number, but more of a personal risk tolerance equation. While some people would be perfectly happy risking all of their assets for a 2/3 chance of being able make enough money to retire, others would focus much more on the 1/3 of the time you ruin your finances.

All of these concepts can be applied any time you are dealing with risking money based on probabilities. In this sense, gambling is the same as trading stocks or trying to determine if you should pursue a specific business opportunity.

Good luck, and I hope this helps someone.

Do not go where the path may lead; go instead where there is no path and leave a trail. – Ralph Waldo Emerson

It’s graduation season, and I had the great opportunity to be asked to write an advice letter to a soon to be graduate. Here is the letter in full, added here in hopes that some snippet might make a difference to someone:

It’s been nearly 15 years since I was in your shoes, or in your eyes, nearly a lifetime. No matter how many times someone told me, “time flies”, “life is short”, or some other sage fortune cookie wisdom, it went in one ear and out the other. I’m not so naïve to think you’re different than I was. So I’ll go a different route. If you only remember one thing from this letter, remember this: don’t live your life for anyone else. Don’t waste your limited time on earth following someone else’s dreams.

People like to talk about savings and retirement, especially to young people in your spot. That’s all well and good, but you’ll regret sacrificing your youth much more than not having your 401K where it needs to be.

Choose great work you love, and you won’t be tempted to surrender the best years of your life just to get away from it. Live in the moment, and don’t worry about finding yourself. Create yourself.

Everyone gets breaks, and you’re no different. You don’t know when they’ll come; all you can do is be prepared for them when they show up. And when your opportunities do show up, squeeze them until they scream, and even then, don’t let go until you’ve wrung everything you can out of them.

Most of your life’s book is yet to be written, and only two things limit your future: your imagination and your willingness to make bold moves. Trust in your gut and in God. Don’t take anything too seriously. Be flexible with your path, and always be learning.

Now is the time to take risks and make memories. Love who you are, and enjoy the ride,

Greg Starling

The secret of getting ahead is getting started. – Mark Twain

There are a lot of people out there giving advice on how you can start your business. I’m not smart enough to be giving advice though so I’ll just tell you how I went about starting a startup.

The short version is Fun Panda was founded because I couldn’t find a customizable bamboo case for my iPad. The longer version is:

The Idea
Coming up with an idea is easy; implementing an idea is difficult. In fact, frustrated with my inability to get any ideas to take off, I started a company called MilliSeed with a tag line of “A million ideas; a thousand beginnings.” Will Fun Panda be different? To be honest, I don’t know, but I have learned a lot from a half a dozen failed businesses over a dozen years.

A big difference this time is it’s not just an idea. This is a frustration turned business plan. I’ve sat around with groups of brilliant people throwing concepts up on the wall. In those cases, we were trying to find a niche or create a market. In this case, the market already exists. There are large market segments for customized iPad cases and environmentally responsible product. There just wasn’t an existing solution for customizable responsible iPad cases.

The Market
The reason most of my earlier businesses failed is people didn’t want what I was selling. Sure, there was money to be made, and others with similar businesses were able to succeed where I didn’t. Maybe the ideas were too soon (search engine optimization in the late 90s, green lawn care in the mid 2000s). Maybe they were too late (baseball card inventory management long after most people stopped collecting). There are plenty of excuses, but the bottom line is that if more people were buying what I was selling those businesses would have been successful.

This time around, I have a much firmer grasp of the market and the opportunity. My living room is littered with print outs of projections, trends, and market analysis.

The Team
I learned my lesson several years ago when I partnered with a couple of guys to create grassroots organization software for political movements. I didn’t know these guys particularly well, and two months later, one of them was 1,000 miles away, not answering his phone, and holding all the vital info to run the business.

This time around, I wanted to work with friends. I interview a lot of people in my “real” job, and I’ve learned being friends with someone, even for a short period of time, will tell you more about a person than you will ever learn in an interview.

My checklist for partnering:

• A Friend
• Smart
• Gets Stuff Done
• Could stand to hang around for hours on end

There is always the possibility of going it alone, but for me, I’ve done that. You have the weight of the world on your shoulders, and when things don’t go according to plan, there’s no one there to hold you accountable, pick you up, or not allow you to quit. This time around, going it alone wasn’t an option.

The Money
Everyone I told about the customizable bamboo cases loved the idea, and when they saw the samples, the responses were amplified. This made for an odd problem – too many people wanted to invest. I followed the partner checklist above and found a couple of people who could help off-set some of the start-up costs.

This will become a new rule of thumb for me for future business ideas. If people aren’t fighting each other to invest in your business, it’s probably not a very good idea.

The Future
While I’ve made a couple of personal loans to the business, I also know where my bread is buttered. I have a great job that I love very much. I’m not going to go into debt to grow Fun Panda, but I’m also not going to be taking money out of the company. For now, invest and reinvest in the company, work hard at night and on the weekends, and see if we can’t grow this thing into something great.

In the end, no one knows exactly why anything works. Groupon was an accident.  HP turned down the personal computer idea 5 times before Steve Wozniak partnered with Steve Jobs to found Apple. For now, it’s a really fun project with a lot of potential.

If you’re looking for an iPhone or iPad case, check us out.

If you want to make an easy job seem mighty hard, just keep putting off doing it. – Olin Miller

Here’s a quick heads up. That six month project you just started – it’s going to take you seven months. If you’re clever and scheduled it for seven months – it’s going to take you eight. After spending my entire adult life sitting through one hour meetings that should have lasted 15 minutes, I am more confident than ever in Parkinson’s law.

If you’re not familiar with Parkinson, his law basically states, ‘work expands to fill the time available for completion.’ My addendum would be, “Plus 10%” – people tend to over-estimate their skills and under-estimate complexity.

Short Timeframes
If an atom, which literally means indivisible in Latin, can be divided; you can figure out how to divide your project too. Breaking a small piece off your project and setting a due date in the near future is the best way to push forward. If you can procrastinate and get it done; the timeframe isn’t short enough. This will create enough pressure to maximize productivity without limiting your ability to engage resources or be creative.

Concrete Deliverables
You’re much more likely to lose two pounds this week than your are to lose some weight. What is some weight? It’s an undefined deliverable that can be rationalized away. “I ate a bigger than usual lunch.” “I just drank a lot of water.” Wrong. You’re fat. Go for a jog. Concrete deliverables are defined and measurable. They make sure you are solving the right problem and not getting caught up in distractions.

Continuously moving forward (short timeframes) and in the right direction (concrete deliverables) makes big projects small and over time will make small paychecks big.

You can’t always get what you want, but if you try sometimes, you might find, you get what you need. – The Rolling Stones

I’m not a huge fan of making technical posts; there are a lot of people a lot smarter than me when it comes to most of these topics. Every now and then though there is so much wrong information out there that I don’t mind dipping my toe in Nerd Lake.

Despite what you may have  heard or read, it is possible to move files from a Mac to an NTFS-formatted (PC) external hard drive. That being said, in Steve Jobs’ infinite wisdom, NTFS drives are not natively supported by Apple computers.

You’re going to have to follow these steps to make the your computer work like it should:

1. Disconnect the external hard drive from the Mac
2. Download and Install MacFuse (website)
3. Download and Install NTFS-3G for Mac (website)
4. Restart your computer
5. Plug in your external hard drive.
6. Start moving files

That’s about as straight forward as it gets. Usually with Macs, they just work like you think they should. This is one of those rare cases where they just don’t. Hope this post saves you the headache I had.

A salty yet sweet asparagus recipe that tastes more complicated than it is.

• 1 lb Asparagus
• 2 Tbsp Olive Oil
• 2 Cloves Garlic
• ½ tsp Kosher Salt
• ¼ tsp Black Pepper
• 1/3 Cup Panko Bread Crumbs
• 1/4 Cup Parmesan Cheese

1. Preheat oven to 425˚ F
2. Cut and throw away bottom 2 inches of Asparagus
3. Cut remaining Asparagus into 1-2” lengths
4. Mince Garlic
5. Place Asparagus in mixing bowl and toss with Olive Oil, Kosher Salt, Garlic, and Pepper
6. Spread Panko Bread Crumbs in a 13”x9” metal cake pan and place in oven for 2 minutes
7. Remove Bread Crumbs from oven and add to bowl with the Asparagus mixture
8. Toss the bowl to combine the ingredients
9. Add the entire combination to the cake pan and place in oven for 12-14 minutes
10. Remove from oven, toss in Parmesan Cheese, and serve

A full flavored mashed potato that has all the characteristics of a more traditional recipe but with enough flavor difference that your guests will be saying ‘I can’t put my finger on it, but something makes this the best mashed potatoes I’ve ever had.’

Truffle oil can be very expensive and you don’t always get what you pay for. After a lot of research and testing, La Tourangelle Infused White Truffle Oil is an inexpensive solution that has all the flavor of it’s more expensive counterparts.

You’ll have your guests thinking they’re eating at a fine dining restaurant with this sweet, earthy dish.

Bouquet Garni comes in many different forms, but Penzey’s just seems to do the trick better than any others I’ve come across.

The secret to juicy tender lean meats like pork tenderloin and chicken breasts is brining.

This recipe can be cut down by a third with the same results. Modifications that aren’t exactly divide by 3  include: 1 Gallon Water, 1 Cup Salt, and 1 Can Sprite.

Trust men and they will be true to you; treat them greatly, and they will show themselves great. – Ralph Waldo Emerson

Perhaps the most talented generation of employees, the Millennials, are entering the workforce. They are trying to figure out where your company fits in their lives. Not where they fit in your company. Engaging this generation in a way that understands that mindset while still maximizing their potential is one of the biggest competitive advantages in the market today.

Understand
Millennials grew up in a world where contributions were more important than credentials. When they upload a video to YouTube or post their latest blog no one is asking what film school they attended or where they received their journalism degree. Creating an environment of meritocracy resonates. If you truly listen, trust and loyalty follow – and from a group that grew up in a world of globalization, outsourcing, and corporate bankruptcies that’s significant.

Connect
This group has received more respect from their parent’s and teachers than any generation, and the quickest way to get them to shut down is to talk down to them. On the flip though, the best way to engage them is to really get to know them. Know their names, the projects they’re working on, and spend enough time with them on a regular basis to set them up for success. Set clear boundaries and a structure that the employee can have autonomy in. Avoid generic advice. Give something that is concrete and actionable. They need to understand we’re all on the same team, and we’re working toward a particular goal together.

Retain
There is nothing more exciting/nerve-wracking than the first day on a new job. New hires walk in on fire, and you’re either going to throw water or gasoline on the spark. Millennials want to hit the ground running. Sticking them in an office and paying them to fill out forms and wait on things is a fast way to turn a good hire bad. They will feel you are wasting their time. You also don’t want to be put in a sink or swim situation either. Day 1 should be about connecting them to your mission. Make them feel like they belong, and build the foundation for continuous learning. A good hire will respect what you bring to the table, and they want you to respect what they bring to the table. Give them work they’re fired up to do, and have someone take the time to train them.

Grow
Millennials are more than just the latest generation entering the workforce; they are the future of your company. Part of setting them up to succeed is teaching them:
• how to shine in presentations and meetings
• how to deal with big shots.
• the basics of customer service. One of our first growing employee assignments is to have them read a great book on customer service called, Customer Satisfaction is Worthless.
• show them how to set priorities and eliminate time wasters
• even how to use a checklist.

You’ll need to understand how to communicate with them, and show them how to take control of their destiny. Be that allowing them to develop their own learning plan or showing them how to rack up points in your company’s points banking system.

Millennials may be the most high maintenance workforce in history, but if managed correctly, they will also be the most high performance workforce in history. The juice is definitely worth the squeeze.