The house always wins.
If you’ve ever been to Las Vegas – or anywhere else with a casino — you’ve probably heard this mantra.
It’s a word of warning. A shot across the bow to anyone who thinks they can tip the scales in their favor when they gamble.
Sure, some lucky people here or there might hit the jackpot on the slot machines or win at the table games. And those big winners might score loads of money.
But ultimately, whoever owns the place comes out on top.
For the laws of probability prove that for every jackpot winner, there are plenty of others who put their money down and get nothing in return. And anyone who tries to take a shortcut to success — by counting cards in Blackjack, for example — is booted from the venue.
Yes, the moment we walk into a casino, the house has the drop on us. It has to so that the owners can cover those giant payouts — and make profits. If we fail to recognize this, we’re the suckers.
This is why I don’t gamble. It’s why you won’t see me feasting on $40 steaks, ambling up to the card tables, or hitting the slots.
I know which way the deck is tilted. And I ain’t playing.
There are plenty of jargony phrases in the business world.
Terms like EBITDA and revenue can delineate failure and success. Acronyms like IRR and EPS demonstrate how much money can be made on investments.
These words mean everything inside corporate boardrooms. But outside of the office, they’re little more than gibberish.
This is the way it should be. There are far more important things in life than discounted cash flows. Things like our health, our families, and our sense of belonging.
Even so, there is another concept that has use far beyond the business world. That concept is Arbitrage.
Arbitrage represents the advantage businesses try to seek. It’s the difference between what they pay for an item and the value they get out of it.
In order to make money and sustain success, businesses need to seize arbitrage wherever they can.
This is why casinos stack the deck against us. This is why companies devote entire departments to innovation. And this is why the titans of industry keep acquiring fledgling companies.
For years, I couldn’t stand this concept. I thought that working in the business world meant screwing over someone else. And I didn’t want to live that life.
I never saw the movie Wall Street as a kid. But I definitely would have taken issue with the character Gordon Gekko, who infamously proclaimed that Greed Is Good.
In fact, when I was asked to draw my fears at age 11, I didn’t sketch a Great White Shark or the Loch Ness Monster. I drew a man in a suit on a train platform, holding a briefcase and looking forlorn.
I had no idea how so many could willingly sacrifice their conscience for a taste of success. How could they sleep at night knowing that their gains were built on the misfortunes of others?
To me, arbitrage was nothing more than a mark of shame. But gradually, my thoughts on the matter have shifted.
Western Europe has many things going for it. Picturesque cities, renowned cuisine and timeless works of art — just to name a few.
But freedom of vocation is not on that list.
In many European countries, students must decide on their preferred profession as teenagers. Then they must pass entrance exams, which will let them pursue secondary education in that field. Beyond that, their professional future awaits.
There is little room for second-guessing or changing one’s mind. One adolescent decision carries the burden of destiny.
I’m thankful I wasn’t raised in such a system. Because truth be told, I had no idea what profession I would want to work in when I was 18 years old.
I entered college with aspirations of becoming a Hollywood screenwriter, only to find that I lacked passion for it. I shifted my focus to broadcast journalism, and I managed to work in the news media for three years. But then I pivoted again, ending up in the business world I’d once abhorred.
Such a winding path is quintessentially American. This is a nation where college dropouts can create trillion-dollar tech companies. It’s a culture where the words serial entrepreneur are celebrated, not reviled.
There is always an opportunity to try something new. To pick ourselves up by our bootstraps and try a new path.
But lost in such possibilities is any semblance of meritocracy. We can’t rely on the system to buoy us. We must seize whatever advantage we can.
We must embrace arbitrage.
Leveraging our advantage might mean doing something small, like focusing on our uniqueness during a job interview. Or it might mean something big, like dropping everything to seize an unprecedented opportunity.
These actions can help us. But by proxy, they can deny others.
And yet, we must accept this subtle cruelty. Because our selfishness ensures our survival.
There has to be another way.
Elon Musk is a polarizing figure.
The multibillionaire is brash, bold, and highly controversial. Plenty of people are repelled by his ego, his antics, and his wild commentary.
Yet, Musk has his admirers as well. For the companies he’s created — Tesla and SpaceX, among others — seek to solve problems that could benefit all of us. Efficient vehicles and ubiquitous space travel can broaden our horizons and redefine our future.
Musk is a torchbearer for a new type of arbitrage. One where an entire society benefits from the advantage.
And while few of us could be Elon Musk — and many wouldn’t even want to — we can follow his lead.
We can use our talents to improve more than our own situation. We can seek out the advantages that benefit our community. And we can leverage arbitrage to bring a positive change to the world.
The pursuit of this type of advantage can steady us. It can provide us the sustenance we need to thrive, without compromising our conscience.
It’s still a zero-sum game. But it’s got far more room in the winner’s circle.
So, let’s be smart about the advantages we seek. And let’s do our best to spread those benefits far and wide.