The switch from Permission and Optimization to Asymmetric Arbitrage and Category Creation

Whoa, that is a fancy title. I know.

It breaks every good writing recommendation, and yet it encompasses what I've been trying to explain to many people I meet these days. It is a non-obvious switch, especially for most ambitious people I meet. And I think it starts way back in human evolution and then the Industrial Revolution.

But before I go into why I think this happens, let me explain what I even mean. Let us start by defining the big-word terms here:

1. Permission: By permission, I simply mean our tendency to look for a script and wait for gatekeepers, someone higher in the hierarchy, or bosses to greenlight our ideas before we act.

2. Optimization: In math, optimization problems are about finding ways to make what already exists slightly faster, cheaper, or better.

3. Asymmetric Arbitrage: Now this is where it gets interesting. By asymmetric arbitrage, I mean finding overlooked gaps, resources, or opportunities and combining them into bets where the downside is capped but the potential upside has no obvious ceiling. Think of an entrepreneur using a new distribution channel before everyone else notices it, an investor finding something the market has systematically undervalued, or a researcher combining existing technologies in a way no one has tried before. The individual ingredients may already exist; the arbitrage is in seeing the gap between what they are currently worth and what they could become when combined differently.

4. Category Creation: This is often talked about in business strategy, but I mean it more generally: creating things that do not yet exist. Competition, in the conventional sense, becomes less relevant here. You begin creating the vocabulary and language of this new thing.

Now, let us combine them. I am saying that I had an unintentional switch from seeking permission from parents, teachers, and mentors to being self-led and taking ownership of new risks. Somewhere around the middle of my undergrad, gradually but certainly, I also switched from optimization to category creation. This way of thinking has completely revolutionized the trajectory of my career. It has switched me from thinking in linear trajectories to exponential ones, and exponential thinking is very non-obvious to the human brain.

I think our attachment to identities like student and employee makes this switch especially difficult. From school onward, many of us learn to progress through externally constructed levels: get the grade, get into the university, get the degree, get the internship, get the job, get promoted. There is nothing inherently wrong with any of these things, but they can train us to become exceptionally good at being selected. The stranger question is: what would you work on if nobody had already created the position, degree, credential, or pathway for you?

This is also where asymmetric arbitrage becomes more tangible to me. A degree, a workplace, a network, a skill, or an institution does not have to be an identity or final destination. It can be a resource. Instead of asking only, “How do I advance within this structure?”, you can ask, “What do I uniquely have access to here, and what could I combine it with that nobody else is seeing?” The same university can be a credentialing system to one person and an arbitrage opportunity of laboratories, professors, collaborators, funding, equipment, and ideas to another.

This year, that shift has become even more apparent to me. I have dedicated a lot of time to reflection, introspection, conversations, and observations. Most of us run on society inherited scripts. They are everywhere, including in the most hidden and unlikely places. One of the biggest enablers of this new type of thinking is stillness and deep focus, which, again, is the enemy of social media because it strips us of our own sovereign time and attention.

And now on to human evolution. Humans evolved in groups where belonging, conformity, and sensitivity to hierarchy often mattered for survival. It makes sense, then, that seeking permission and optimizing within existing structures can feel much more natural than stepping outside them. But optimizing within a system does not necessarily change the system itself. Industrialization and capitalism also made our societies much more accustomed to the standardization and boxing of products, services, and labour. Asymmetric thinking and category creation are therefore resisted by default.

Paradoxically, it is these risks, overlooked gaps, and new categories that are also core engines of capitalism. That's why the power law applies so much: a relatively small percentage of people, ideas, companies, or decisions can create a disproportionate percentage of the outcome. This switch increases your chances of operating on that side of the curve. I am not saying everyone should aspire to this, but if you do, it might be worth thinking deeply about making the switch. It comes with massive responsibilities, anxiety and, in my opinion, a lot of fun haha.

I think this idea is more powerful than even I can grasp right now. I hope my visceral understanding of it grows exponentially too :) This is an ongoing mental model for me that I hope to continue refining to be more nuanced and textured in the future. For now, I know this for sure: that becoming better at being chosen stopped being as interesting to me as choosing what should exist in the first place.

I know this was a very niche post that will likely not apply to most people for countless reasons, but if you are someone currently on the permission-and-optimization path and you feel like something might be missing, maybe consider:

The switch from permission and optimization to asymmetric arbitrage and category creation.

Thank you for reading. Consider subscribing to my email list so the posts come directly to you.