The Best Way To Be Okay With Risk: “Keep Flying The Plane.”

Jim McKelvey is the co-founder of Square, chairman of the St. Louis Fed, and founder of Invisibly. Ahead of our talk at SXSW next week, I invited him on Big Technology Podcast for a warm-up conversation. It’s not every day you get to speak with a billionaire influencing the U.S. economic policy, and I figured McKelvey could help me — and Big Technology listeners — get a look at where our crazy economy goes next.?

McKelvey has some special visibility into the future of our economy given his role at the Fed, where he has a voice on interest rate policy . I was naturally curious how he weights his decisions at the Fed with the natural desire to preserve one's wealth. The Fed has cooled markets considerably after signaling it would increase rates this year, for instance. And when McKelvey and I spoke Friday, the S&P 500 was down around 10% year to date. Square was even worse, down 42%. That must hurt.

McKelvey, somewhat predictably, said he doesn’t consider his portfolio when making decisions at the Fed, but my ears perked up when he started discussing his investment philosophy “I've got a few safe investments because my wife would divorce me,” he said. “But when it comes to stuff that I do, I like taking risks on things that don't exist. And if they exist, would change the world. But probably won't work.”

"I like taking risks on things that don't exist. And if they exist, would change the world. But probably won't work."

To operate this way, you need a healthy relationship with risk. You must be willing to fail, you must be comfortable losing money, and you must have a system for dealing with uncertainty. I try to take as many risks as possible — I have a saying,?“Capitalism rewards risk” — but the hardest part of risk-taking is getting comfortable with it. McKelvey must’ve figured something out.

“I don't meditate. I don't medicate,” McKelvey said. Instead, he relies on a lesson from pilot training: When everything goes wrong, you keep flying the plane. “No matter if the engine is on fire, if the wing is looking like it's going to come off, if you're in a thunderstorm, if there's hail, if there's ice on the wings… There's no reason to stop flying the plane, you have to keep doing it.”

Once you get up in the air, something amazing happens: It feels like you should be hitting the ground —?the physics don’t make emotional sense — but momentum and skill typically kick in. You then see that crashing is much less likely than you thought. Keep flying that plane, and good things happen.

“That's sort of how I look at risk,” McKelvey said. “I'm going to have a lot of failure. And I'm going to have a lot of times when things look bad. And if I can't handle that I shouldn't do it. But that's how we get new things.”

You can listen to the full episode here:

Apple:?https://apple.co/3vOrfnZ ?

Spotify:?https://spoti.fi/3C5YyDO