Antifragile by Nassim Nicholas Taleb: 15 Key Ideas (with Highlights & Notes)
In this blog post, I share the 15 key ideas — with direct quotes from the book — I picked from reading Antifragile, by Nassim Nicholas Taleb.
This book is full of great ideas to prepare oneself against uncertainty.
You’re fragile when uncertainty can harm you more than benefit you. But you’re antifragile when uncertainty can benefit you more than harm you. And you can learn how to become antifragile in practically all domains in life:
Emotional (see Idea 10—Seneca’s Antifragility),
Educational (Idea 13—The Survival of Ideas + Idea 14—The Lindy Effect),
Financial (Idea 9—Always Have Redundancies + Idea 11—The Barbell),
Lifestyle (Idea 3—Adopt a Mindset of Necessity + Idea 5—Touristification)
Honor & Integrity (Idea 15—Heroism)
Business (Idea 7—Pseudo-stabilization + Idea 12—The Green Lumber Fallacy)
Wind extinguishes a candle and energizes fire. Likewise with randomness, uncertainty, chaos: you want to use them, not hide from them. You want to be the fire and wish for the wind. This summarizes this author’s nonmeek attitude to randomness and uncertainty.
— Nassim Nicholas Taleb, Antifragile.
(Above… the mythological Hydra. When one head is cut off, two grow back. The Hydra is Taleb’s symbol of Antifragility — discussed in Idea 2).
💡 Idea 1 - Measure fragility, not risk
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… We can estimate, even measure, fragility and antifragility, while we cannot calculate risks and probabilities of shocks and rare events, no matter how sophisticated we get. Risk management as practiced is the study of an event taking place in the future, and only some economists and other lunatics can claim—against experience—to “measure” the future incidence of these rare events, with suckers listening to them—against experience and the track record of such claims. But fragility and antifragility are part of the current property of an object, a coffee table, a company, an industry, a country, a political system. We can detect fragility, see it, even in many cases measure it, or at least measure comparative fragility with a small error while comparisons of risk have been (so far) unreliable.
You cannot say with any reliability that a certain remote event or shock is more likely than another (unless you enjoy deceiving yourself), but you can state with a lot more confidence that an object or a structure is more fragile than another should a certain event happen. You can easily tell that your grandmother is more fragile to abrupt changes in temperature than you, that some military dictatorship is more fragile than Switzerland should political change happen, that a bank is more fragile than another should a crisis occur, or that a poorly built modern building is more fragile than the Cathedral of Chartres should an earthquake happen. And—centrally—you can even make the prediction of which one will last longer. Instead of a discussion of risk (which is both predictive and sissy) I advocate the notion of fragility, which is not predictive—and, unlike risk, has an interesting word that can describe its functional opposite, the nonsissy concept of antifragility.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
Taleb also mentions that there is a certain class of people that is attracted to the prediction of risks, and another class of people that focus instead on the estimation of fragility. The first class of people are academics and non-risk takers, while the second class are the doers—the people that take risks and have skin in the game.
🖍️ Highlight 2
… And in that strange profession of people who work with volatility, there were two types. First category, academics, report-writers, and commentators who study future events and write books and papers; and, second category, practitioners who, instead of studying future events, try to understand how things react to volatility (but practitioners are usually too busy practitioning to write books, articles, papers, speeches, equations, theories and get honored by Highly Constipated and Honorable Members of Academies). The difference between the two categories is central: as we saw, it is much easier to understand if something is harmed by volatility—hence fragile—than try to forecast harmful events, such as these oversized Black Swans. But only practitioners (or people who do things) tend to spontaneously get the point.
— Nassim Nicholas Taleb, Antifragile.
💡 Idea 2 - Please behead me
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In a Roman recycled version of a Greek myth, the Sicilian tyrant Dionysius II has the fawning courtier Damocles enjoy the luxury of a fancy banquet, but with a sword hanging over his head, tied to the ceiling with a single hair from a horse’s tail. A horse’s hair is the kind of thing that eventually breaks under pressure, followed by a scene of blood, high-pitched screams, and the equivalent of ancient ambulances. Damocles is fragile—it is only a matter of time before the sword strikes him down.
In another ancient legend, this time the Greek recycling of an ancient Semitic and Egyptian legend, we find Phoenix, the bird with splendid colors. Whenever it is destroyed, it is reborn from it own ashes. It always returns to its initial state. Phoenix happens to be the ancient symbol of Beirut, the city where I grew up. According to legend, Berytus (Beirut’s historical name) has been destroyed seven times in its close to five-thousand-year history, and has come back seven times. The story seems cogent, as I myself saw the eighth episode; central Beirut (the ancient part of the city) was completely destroyed for the eighth time during my late childhood, thanks to the brutal civil war. I also saw its eighth rebuilding. But Beirut was, in its latest version, rebuilt in even better shape than the previous incarnation—and with an interesting irony: the earthquake of A.D. 551 had buried the Roman law school, which was discovered, like a bonus from history, during the reconstruction (with archeologists and real estate developers trading public insults). That’s not Phoenix, but something else beyond the robust. Which brings us to the third mythological metaphor: Hydra. Hydra, in Greek mythology, is a serpent-like creature that dwells in the lake of Lerna, near Argos, and has numerous heads. Each time one is cut off, two grow back. So harm is what it likes. Hydra represents antifragility. The sword of Damocles represents the side effect of power and success: you cannot rise and rule without facing this continuous danger—someone out there will be actively working to topple you…
…
Black Swans will be out there to get you as you now have much more to lose, a cost of success (and growth), perhaps an unavoidable penalty of excessive success…
…
To counter success, you need a high offsetting dose of robustness, even high doses of antifragility. You want to be Phoenix, or possibly Hydra. Otherwise the sword of Damocles will get you.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
So we have the story of Damocles as representative of fragility, the Phoenix as the robust, and the Hydra as the antifragile.
And just to expand a bit more on the story of the Phoenix, I think there’s also another important meaning to this story. Which is that every day you start fresh and you don’t let dogma or the past dictate what you’re gonna do next. You constantly reinvent yourself. As Naval Ravikant put it: “The greatest superpower is the ability to change yourself.” This is also part of the philosophy of Jeff Bezos when he talks about Day One Thinking…
[Day One thinking] It’s really a very simple and I think age old idea about renewal and rebirth. Every day is day one. Every day you are deciding what you’re gonna do. And you are not trapped by what you were or who you were, or any self-consistency. Even Self-consistency can be a trap. And so day one thinking is kind of… We start fresh every day. And we get to make new decisions every day about invention, customers, about how we’re going to operate, even as deeply as what our principles are (it turns out we don’t change those very often, but we change them occasionally).
And when we work on programs at Amazon, we often make a list of tenets (they’re a little more tactical than principles, kind of the main ideas that we want this program to embody). And one of the things that we do is we put: “These are the tenets for this program”. And, in parentheses, we always put: “Unless you know a better way”. And that idea “Unless you know a better way” is so important… Because you never wanna get trapped by dogma. You never wanna get trapped by history. It doesn’t mean you discard history or ignore it— there’s so much value in what has worked in the past—but you can’t be blindly following what you’ve done. And that’s the heart of day one… is you’re always starting fresh.
— Jeff Bezos, The Lex Fridman Podcast. (Resurfaced using Readwise Reader).
Note I left to myself here: Be antifragile like the Hydra, and fluid like the Phoenix.
💡 Idea 3 - Adopt a Mindset of Necessity
🖍️ Highlight
… In spite of the visibility of the counterevidence, and the wisdom you can pick up free of charge from the ancients (or grandmothers), moderns try today to create inventions from situations of comfort, safety, and predictability instead of accepting the notion that “necessity really is the mother of invention.” Many, like the great Roman statesman Cato the Censor, looked at comfort, almost any form of comfort, as a road to waste. He did not like it when we had it too easy, as he worried about the weakening of the will.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
As Machiavelli states, necessity is what impels men to take action, and once the necessity is gone, only rot and decay are left.
…
Having no need to increase his store of power, Louis XV inevitably succumbed to inertia. Under him, Versailles, the symbol of the Sun King’s authority, became a pleasure palace of incomparable banality, a kind of Las Vegas of the Bourbon monarchy. It came to represent all that the oppressed peasantry of France hated about their king, and during the Revolution they looted it with glee. Louis XV had only one way out of the trap awaiting the son or successor of a man like the Sun King: to psychologically begin from nothing, to denigrate the past and his inheritance, and to move in a totally new direction, creating his own world.
— Robert Greene, The 48 Laws of Power. (Resurfaced using Readwise).
As a leader, necessity is, as Livy calls it, the last and greatest weapon because it is going to change every aspect of your culture. How motivated people are, how meritocratic your hierarchy is, how little petty politics people are willing to entertain. Necessity seems like the poison, it is the cure.
— Jonathan Bi, Lecture on Niccolo Machiavelli. (Resurfaced using Readwise Reader).
Michael Dell also has a great line: “If you don’t have a crisis, make one.”
💡 Idea 4 - Overcompensation
Taleb says that the reason for why necessity make us better is that there is a mechanism of overcompensation to an obstacle, where you do not just rise to the level of the obstacle but actually rise higher. So beyond compensating for an obstacle, we overcompensate, we become stronger than we were before we encounter the obstacle. And this process of overcompensation towards a stressor or an obstacle is of course antifragile—because you get better out of overcoming the stressor.
One simple illustration of this notion of overcompensation we can find it in weight-lifting: every-time you are able to lift more weight than your previous maximum, your body’s physical condition will change to accommodate for even heavier weights in the future (of course, up to a biological limit).
Love is another dimension where overcompensation kicks in…
🖍️ Highlight
If antifragility is what wakes up and overreacts and overcompensates to stressors and damage, then one of the most antifragile things you will find outside economic life is a certain brand of refractory love (or hate), one that seems to overreact and overcompensate for impediments such as distance, family incompatibilities, and every conscious attempt to kill it. Literature is rife with characters trapped in a form of antifragile passion, seemingly against their will. In Proust’s long novel La recherche, Swann, a socially sophisticated Jewish art dealer, falls for Odette, a demimondaine, a “kept” woman of sorts, a semi- or perhaps just a quarter-prostitute; she treats him badly. Her elusive behavior fuels his obsession, causing him to demean himself for the reward of a bit more time with her. He exhibits overt clinginess, follows her on her trysts with other men, hiding shamelessly in staircases, which of course causes her to treat him even more elusively. Supposedly, the story was a fictionalization of Proust’s own entanglement with his (male) driver.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
Romeo and Juliette also has this notion of overcompensation. Their love seem to be fueled by the fact that their families are eternal enemies.
“Absence diminishes minor passions and inflames great ones, as the wind douses a candle and fans a fire.” — La Rochefoucauld
“Love never dies of starvation, but often of indigestion.” — Ninon De L’Enclose (Resurfaced using Readwise).
💡 Idea 5 - Touristification
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What a tourist is in relation to an adventurer, or a flâneur, touristification is to life; it consists in converting activities, and not just travel, into the equivalent of a script like those followed by actors. We will see how touristification castrates systems and organisms that like uncertainty by sucking randomness out of them to the last drop—while providing them with the illusion of benefit. The guilty parties are the education system, planning the funding of teleological scientific research, the French baccalaureate, gym machines, etc. And the electronic calendar. But the worse touristification is the life we moderns have to lead in captivity, during our leisure hours: Friday night opera, scheduled parties, scheduled laughs. Again, golden jail. This “goal-driven” attitude hurts deeply inside my existential self.
Which brings us to the existential aspect of randomness. If you are not a washing machine or a cuckoo clock—in other words, if you are alive—something deep in your soul likes a certain measure of randomness and disorder. There is a titillating feeling associated with randomness.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
While I was reading this passage it immediately came to mind something I heard from the famous novelist Lee Child — which I think is an excellent analogy to this idea of “touristification”:
A lot of people assume that a book needs planning. They assume that you write out an outline or at least a hit list of plot points — some kind of a synopsis or outline or plan. And I’ve never ever done that. Because writing per se (making it with words) is not really the issue for me. [The issue] is the story that I want. And if I were to plan a story — and I’ve got friends who do huge outlines, you know, 300-page outlines — Even if I did a two-page outline with two lines per proposed chapter, then I’ve told myself the story, and I’m bored with it at that point. I want the next story. So I can’t afford to tell myself the story ahead of time. I have to just improvise it as I go along. So, it’s about starting somewhere which is defined by location and then see what happens. It really is that simple.
— Lee Child (interview w/ David Perell)
So Lee Child doesn’t plan his writing in advance, instead he picks a location and then the location sets the motion of the story…
Do you want it to be the West of Texas where it is baking hot and arid? Do you want it to be on the Atlantic coast of Maine in April, where it’s gray and cold and misty? So, that’s how I start with the sense of place, and then it’s just constructing it around that. In a way, the place and the temperature kind of dictates the story in a way.
— Lee Child (interview w/ David Perell)
This is also very similar to how Stephen King writes his novels. I confess I’ve never read any of his novels, but I read his first and only non-fiction book where he talks about his process of writing.
I distrust plot for two reasons: first, because our lives are largely plotless, even when you add in all our reasonable precautions and careful planning; and second, because I believe plotting and the spontaneity of real creation aren’t compatible. It’s best that I be as clear about this as I can – I want you to understand that my basic belief about the making of stories is that they pretty much make themselves. The job of the writer is to give them a place to grow (and to transcribe them, of course). If you can see things this way (or at least try to), we can work together comfortably. If, on the other hand, you decide I’m crazy, that’s fine. You won’t be the first.
…
Plot is, I think, the good writer’s last resort and the dullard’s first choice. The story which results from it is apt to feel artificial and labored.
— Stephen King, On Writing: A Memoir of the Craft.
So just like Lee Child and Stephen King dont follow a plot for writing their novels, maybe we should also free ourselves from the slavery of following some grand project or masterplan in our lives. Maybe we should make our lives more open to adventure and randomness, while less predictable and boring.
🖍️ Highlight 2
If I could predict what my day would exactly look like, I would feel a little bit dead.
…
There exist the kind of people for whom life is some kind of project. After talking to them, you stop feeling good for a few hours; life starts tasting like food cooked without salt. I, a thrill-seeking human, have a b***t detector that seems to match my boredom detector, as if we were equipped with a naturalistic filter, dullness-aversion. Ancestral life had no homework, no boss, no civil servants, no academic grades, no conversation with the dean, no consultant with an MBA, no table of procedure, no application form, no trip to New Jersey, no grammatical stickler, no conversation with someone boring you: all life was random stimuli and nothing, good or bad, ever felt like work. Dangerous, yes, but boring, never.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
You have a calibrated life when most of what you fear has the titillating prospect of adventure.
— Nassim Nicholas Taleb, The Bed of Procrustes.
💡 Idea 6 - Antifragile at the expense of others
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There is a different, stronger variety of antifragility linked to evolution that is beyond hormesis—actually very different from hormesis; it is even its opposite. It can be described as hormesis—getting stronger under harm—if we look from the outside, not from the inside.
This other variety of antifragility is evolutionary, and operates at the informational level—genes are information. Unlike with hormesis, the unit does not get stronger in response to stress; it dies. But it accomplishes a transfer of benefits; other units survive—and those that survive have attributes that improve the collective of units, leading to modifications commonly assigned the vague term “evolution” in textbooks and in the New York Times Tuesday science section.
So the antifragility of concern here is not so much that of the organisms, inherently weak, but rather that of their genetic code, which can survive them. The code doesn’t really care about the welfare of the unit itself—quite the contrary, since it destroys many things around it. Robert Trivers figured out the presence of competition between gene and organism in his idea of the “selfish gene.”
In fact, the most interesting aspect of evolution is that it only works because of its antifragility; it is in love with stressors, randomness, uncertainty, and disorder—while individual organisms are relatively fragile, the gene pool takes advantage of shocks to enhance its fitness.
So organisms need to die for nature to be antifragile—nature is opportunistic, ruthless, and selfish.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
Taleb also gives the example of the Economy, where entrepreneurs are fragile in the sense that most of them end up failing on their business, but the few that survive are able to make the economy thrive and evolve. This is diametrically different from the Soviet Union, where government-controlled companies were supposed to exist forever—and of course this removed antifragility from the system, and ultimately the system collapsed.
Another good example is aviation safety. Every time there is a crash, there is an investigation on it which draws new safety guidelines and procedures, which ultimately makes aviation safer. So in this sense, the aviation industry is antifragile thanks to the fragility of each of the tens of thousands of flights that go on every day. And every crash—while disastrous for that specific flight—is valuable information for the aviation industry as a whole…
🖍️ Highlight 2
Every plane crash brings us closer to safety, improves the system, and makes the next flight safer—those who perish contribute to the overall safety of others.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
We can generalize from this and say that for the antifragile, errors are not just errors, they are also potent information to improve.
And we can definitely apply this lesson to our own lives. That’s what learning from mistakes is about. Or actually, as Chamath Palihapitiya said, mistakes are learning—at least for the type of person who actually wants to make progress…
In terms of your mistakes… Society tells you: “don’t make them.” Because we will judge you and we will look down on you. And I think the really successful people realize that actually no... it’s the cycle time of mistakes that gets you to success. Because your error rate will diminish: The more mistakes that you make (you observe them, you figure out where it’s coming from... Is it a psychological thing? Is it a cognitive thing?) and then you fix it.
…
“Mistake” is maybe a bad proxy but it’s the best proxy I have for learning. But I’m using the language of what Society tells you. Society tells you that when you try something and it doesn’t work it’s a mistake. So I just use that word because it’s the word that resonates most with most people. [But] The real thing that it is… is learning!
— Chamath Palihapitiya The Lex Fridman Podcast (Resurfaced using Readwise Reader).
🖍️ Highlight 3
…My characterization of a loser is someone who, after making a mistake, doesn’t introspect, doesn’t exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on. These types often consider themselves the “victims” of some large plot, a bad boss, or bad weather.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
You can also learn from other people’s mistakes…
Learning from other people’s mistakes is the best way to learn.
— Jensen Huang, Conversation with Patrick Collison. (Resurfaced using Readwise Reader).
My prescription for misery is to learn everything you possibly can from your own experience, minimizing what you learn vicariously from the good and bad experiences of others, living and dead. This prescription is a sure-shot producer of misery and second-rate achievement.
— Charlie Munger, Poor Charlie’s Almanack. (Resurfaced using Readwise).
💡 Idea 7 - Pseudo-stabilization
🖍️ Highlight
In the markets, fixing prices, or, equivalently, eliminating speculators, the so-called “noise traders”—and the moderate volatility that they bring—provide an illusion of stability, with periods of calm punctuated with large jumps. Because players are unused to volatility, the slightest price variation will then be attributed to insider information, or to changes in the state of the system, and will cause panics. When a currency never varies, a slight, very slight move makes people believe that the world is ending. Injecting some confusion stabilizes the system.
Indeed, confusing people a little bit is beneficial—it is good for you and good for them. For an application of the point in daily life, imagine someone extremely punctual and predictable who comes home at exactly six o’clock every day for fifteen years. You can use his arrival to set your watch. The fellow will cause his family anxiety if he is barely a few minutes late. Someone with a slightly more volatile—hence unpredictable—schedule, with, say, a half-hour variation, won’t do so.
Variations also act as purges. Small forest fires periodically cleanse the system of the most flammable material, so this does not have the opportunity to accumulate. Systematically preventing forest fires from taking place “to be safe” makes the big one much worse. For similar reasons, stability is not good for the economy: firms become very weak during long periods of steady prosperity devoid of setbacks, and hidden vulnerabilities accumulate silently under the surface—so delaying crises is not a very good idea.— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
I stood up and told the company that five years from now we will have a new competitor. And that new competitor is going to be in every business that we are in, except they’re gonna be faster, more efficient, and more capable. And they’re gonna put us out of business.
And the only way that we’re gonna prevent that is we are going to become that company. It’s gut wrenching stuff to reinvent and reimagine your business, but if you don’t do it, you go out of business.
— Michael Dell, Source. (Resurfaced using Readwise Reader).
💡 Idea 8 - Naive Interventionism & Iatrogenics
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Probably the best example to illustrate this is when you get slightly sick, the doctor will tend to prescribe you some drug to make you feel better. But in reality, there’s no free lunch. These pills can have negative side effects which you’ll pay in a few decades. This is what’s also known as iatrogenics, which happens when the healer is the cause of harm. And this issue of iatrogenics in the medical field is very real, just think that until the discovery of penicillin the track record of medicine has been negative—they’ve caused more harm than good…
… Medical error still currently kills between three times (as accepted by doctors) and ten times as many people as car accidents in the United States. It is generally accepted that harm from doctors—not including risks from hospital germs—accounts for more deaths than any single cancer.
The methodology used by the medical establishment for decision making is still innocent of proper risk-management principles, but medicine is getting better. We have to worry about the incitation to overtreatment on the part of pharmaceutical companies, lobbies, and special interest groups and the production of harm that is not immediately salient and not accounted for as an “error.” Pharma plays the game of concealed and distributed iatrogenics, and it has been growing. It is easy to assess iatrogenics when the surgeon amputates the wrong leg or operates on the wrong kidney, or when the patient dies of a drug reaction. But when you medicate a child for an imagined or invented psychiatric disease, say, ADHD or depression, instead of letting him out of the cage, the long-term harm is largely unaccounted for.
Iatrogenics is compounded by the “agency problem” or “principal-agent problem,” which emerges when one party (the agent) has personal interests that are divorced from those of the one using his services (the principal). An agency problem, for instance, is present with the stockbroker and medical doctor, whose ultimate interest is their own checking account, not your financial and medical health, respectively, and who give you advice that is geared to benefit themselves. Or with politicians working on their career.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
During residency, one of my best friends was a cancer surgeon. During the meeting with my mom’s doctors [Casie’s mother had pancreatic cancer], words my friend spoke years before rang in my head: If you walk through the doors of this surgical oncology department, you are going to get an operation, whether you need it or not.
— Casey Means, Good Energy. (Resurfaced using Readwise).
🖍️ Highlight 2
There is an element of deceit associated with interventionism, accelerating in a professionalized society. It’s much easier to sell “Look what I did for you” than “Look what I avoided for you.” Of course a bonus system based on “performance” exacerbates the problem.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
As Charlie Munger says: “To a man with a hammer, every problem looks like a nail.” So depending on your profession, you are biased to perform according to your profession because that’s the only thing you can see; and of course on top of that you are incentivized to intervene because typically you get pay on what you do, not on what you avoid.
Taleb also talks about his experience discussing this idea of iatrogenics in other fields such as economics, political science, education, and other domains…
🖍️ Highlight 3
Not one of the consultants and academics in these fields with whom I tried discussing it knew what I was talking about—or thought that they could possibly be the source of any damage. In fact, when you approach the players with such skepticism, they tend to say that you are “against scientific progress.” But the concept can be found in some religious texts. The Koran mentions “those who are wrongful while thinking of themselves that they are righteous.” To sum up, anything in which there is naive interventionism, nay, even just intervention, will have iatrogenics.
…
Let me warn against misinterpreting the message here. The argument is not against the notion of intervention; in fact … I am equally worried about underintervention when it is truly necessary. I am just warning against naive intervention and lack of awareness and acceptance of harm done by it.
— Nassim Nicholas Taleb, Antifragile.
💡 Idea 9 - Always Have Redundancies
🖍️ Highlight
What makes life simple is that the robust and antifragile don’t have to have as accurate a comprehension of the world as the fragile—and they do not need forecasting. To see how redundancy is a nonpredictive, or rather a less predictive, mode of action, let us use the argument of Chapter 2: if you have extra cash in the bank (in addition to stockpiles of tradable goods such as cans of Spam and hummus and gold bars in the basement), you don’t need to know with precision which event will cause potential difficulties. It could be a war, a revolution, an earthquake, a recession, an epidemic, a terrorist attack, the secession of the state of New Jersey, anything—you do not need to predict much, unlike those who are in the opposite situation, namely, in debt. Those, because of their fragility, need to predict with more, a lot more, accuracy.
…
In spite of their bad press, some people in the nuclear industry seem to be among the rare ones to have gotten the point and taken it to its logical consequence. In the wake of the Fukushima disaster, instead of predicting failure and the probabilities of disaster, these intelligent nuclear firms are now aware that they should instead focus on exposure to failure—making the prediction or nonprediction of failure quite irrelevant. This approach leads to building small enough reactors and embedding them deep enough in the ground with enough layers of protection around them that a failure would not affect us much should it happen—costly, but still better than nothing. Another illustration, this time in economics, is the Swedish government’s focus on total fiscal responsibility after their budget troubles in 1991—it makes them much less dependent on economic forecasts. This allowed them to shrug off later crises.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
And so the essential trait of the successful man is not only perseverance but almost a perverse expectation of how difficult it is going to be. It is having redundancies on top of redundancies, so you can absorb the losses you eventually incur. One must not just steel one’s heart but also one’s spirit so that there is no such thing as an obstacle—just information.
— Ryan Holiday, Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue.
Though few companies last forever, all of them should be built to last a long time, says Munger. The approach to corporate control should be thought of as “financial engineering.” Just as bridges and airplanes are constructed with a series of back-up systems and redundancies to meet extreme stresses, so too should corporations be built to withstand the pressures from competition, recessions, oil shocks, or other calamities. Excess leverage, or debt, makes the corporation especially vulnerable to such storms.
— Janet Lowe, Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger.
💡 Idea 10 - Seneca’s Antifragility
🖍️ Highlight
Success brings an asymmetry: you now have a lot more to lose than to gain. You are hence fragile... When you become rich, the pain of losing your fortune exceeds the emotional gain of getting additional wealth, so you start living under continuous emotional threat. A rich person becomes trapped by belongings that take control of him, degrading his sleep at night, raising the serum concentration of his stress hormones, diminishing his sense of humor, perhaps even causing hair to grow on the tip of his nose and similar ailments. Seneca fathomed that possessions make us worry about downside, thus acting as a punishment as we depend on them. All downside, no upside. Even more: dependence on circumstances—rather, the emotions that arise from circumstances—induces a form of slavery.
Seneca’s practical method to counter such fragility was to go through mental exercises to write off possessions, so when losses occurred he would not feel the sting—a way to wrest one’s freedom from circumstances. It is similar to buying an insurance contract against losses. For instance, Seneca often started his journeys with almost the same belongings he would have if he were shipwrecked, which included a blanket to sleep on the ground, as inns were sparse at the time (though I need to qualify, to set things in the context of the day, that he had accompanying him “only one or two slaves”).
…
Seen this way, Stoicism is about the domestication, not necessarily the elimination, of emotions. It is not about turning humans into vegetables. My idea of the modern Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
Sudden Gains or Losses Sudden success or winnings can be very dangerous. Neurologically, chemicals are released in the brain that give a powerful jolt of arousal and energy, leading to the desire to repeat this experience. It can be the start of any kind of addiction and manic behavior. Also, when gains come quickly we tend to lose sight of the basic wisdom that true success, to really last, must come through hard work. We do not take into account the role that luck plays in such sudden gains. We try again and again to recapture that high from winning so much money or attention. We acquire feelings of grandiosity. We become especially resistant to anyone who tries to warn us—they don’t understand, we tell ourselves. Because this cannot be sustained, we experience an inevitable fall, which is all the more painful, leading to the depression part of the cycle. Although gamblers are the most prone to this, it equally applies to businesspeople during bubbles and to people who gain sudden attention from the public. Unexpected losses or a string of losses equally create irrational reactions. We imagine we are cursed with bad luck and that this will go on indefinitely. We become fearful and hesitant, which will often lead to more mistakes or failures. In sports, this can induce what is known as choking, as previous losses and misses weigh on the mind and tighten it up.
The solution here is simple: whenever you experience unusual gains or losses, that is precisely the time to step back and counterbalance them with some necessary pessimism or optimism. Be extra wary of sudden success and attention—they are not built on anything that lasts and they have an addictive pull. And the fall is always painful.
— Robert Greene, The Laws of Human Nature. (Resurfaced using Readwise).
Receive wealth or prosperity without arrogance; and be ready to let it go.
— Marcus Aurelius
💡 Idea 11 - The Barbell
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The barbell (a bar with weights on both ends that weight lifters use) is meant to illustrate the idea of a combination of extremes kept separate, with avoidance of the middle. In our context it is not necessarily symmetric: it is just composed of two extremes, with nothing in the center. One can also call it, more technically, a bimodal strategy, as it has two distinct modes rather than a single, central one.
I initially used the image of the barbell to describe a dual attitude of playing it safe in some areas (robust to negative Black Swans) and taking a lot of small risks in others (open to positive Black Swans), hence achieving antifragility. That is extreme risk aversion on one side and extreme risk loving on the other, rather than just the “medium” or the beastly “moderate” risk attitude that in fact is a sucker game (because medium risks can be subjected to huge measurement errors). But the barbell also results, because of its construction, in the reduction of downside risk—the elimination of the risk of ruin.— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
An example of the Barbell approach in the financial domain would be to put 90% of your funds in cash (assuming is protected from inflation), and the other 10% in maximally risky assets. So the most you can lose here is just 10%, while your upside can be way higher than 10%. You have more upside than downside, a favorable asymmetry against volatility, therefore you are antifragile. Also, your downside is capped and known, so you know you’ll survive no matter what happens. As Warren Buffet puts it: “In order to succeed you must first survive.”
Another example, this one in the entrepreneurial domain, would be to have a safe job during the day, and then some entrepreneurial project after your job is over. So you are not trying to put extra effort in your job to climb the corporate ladder or become employee of the year, instead you put that extra effort in your own entrepreneurial projects. Ideally, it should be a safe job that doesn’t expect you to keep working from home (or in the office) once the official schedule ends, so that you can fully focus on your projects once the day job finishes. This was the strategy followed by Mohnish Pabrai when he was starting his own business. In a recent episode on The Diary Of A CEO podcast, he tells that he didn’t quit his job and went “all in”. He kept his job and made sure he stayed “just above firing level” — so he could allocate all the extra time to his business (and weekends too). After two years, and on his second venture, he made it work (with real clients and real cashflow) and then quit his day job and went all-in in his business.
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With personal risks, you can easily barbell yourself by removing the chances of ruin in any area. I am personally completely paranoid about certain risks, then very aggressive with others. The rules are: no smoking, no sugar (particularly fructose), no motorcycles, no bicycles in town or more generally outside a traffic-free area such as the Sahara desert, no mixing with the Eastern European mafias, and no getting on a plane not flown by a professional pilot (unless there is a co-pilot). Outside of these I can take all manner of professional and personal risks, particularly those in which there is no risk of terminal injury.
…
The barbell is the domestication, not the elimination, of uncertainty.
— Nassim Nicholas Taleb, Antifragile.
💡 Idea 12 - The Green Lumber Fallacy
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(This one comes from a talk that Nassim gave at Google, because I found it more concise than his explanation on Antifragile…)
There is a story in both Antifragile and Skin in the Game, of a fellow who lost a million dollars trading green lumber.
He knew everything about green lumber. Everything! The economics, the mathematics, the statistics, collected data, everything…
And [yet] lost a million dollars.
And [he] wrote an account: What I Learned Losing a Million Dollars. And he reports that there’s a fellow, a pit trader — I don’t know if you’ve met pit traders, but they look like pit traders and they act like pit traders. And the fellow is making tons of money with green lumber and had been doing so consistently. Now, the narrator discovers that the fellow [who] made a lot of money on green lumber thought it was lumber painted green. He didn’t know it was freshly cut lumber.
So, is it that that person knew nothing about lumber?
No. He knew a lot of stuff, but not necessarily what you think from the outside is valuable.
So, when you have skin in the game, you tend to know a lot of stuff about business, about things, that you wouldn’t guess you need to know from the outside. And this is very hard to explain. This is why machine learning is successful, because machine learning has no ideas. It learns from the inside, not from the outside.
— Nassim Nicholas Taleb (talk at Google).
[📝 Note]
So what Taleb is talking about here is that there is an internal logic of things, which is only grasped by practitioners. It can’t be seen by academicians or outsiders because it cannot be grasped through theories and narratives.
Taleb also gives the example of the legendary Jim Simons, founder of the best performing hedge fund in the world Renaissance Technologies, who only hires physicists and mathematicians, and never reads economic reports or listen to economists or finance people. The reason being that economists give you good-sounding narratives but they will never understand or explain the things that actually matter in practice.
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My first conversation with an expert was with a fellow called B. Something-that-ends-with-a-vowel dressed in a handmade Brioni suit. I was told that he was the biggest Swiss franc trader in the world, a legend in his day—he had predicted the big dollar collapse in the 1980s and controlled huge positions. But a short conversation with him revealed that he could not place Switzerland on the map—foolish as I was, I thought he was Swiss Italian, yet he did not know there were Italian-speaking people in Switzerland. He had never been there. When I saw that he was not the exception, I started freaking out watching all these years of education evaporating in front of my eyes. That very same day I stopped reading economic reports. I felt nauseous for a while during this enterprise of “deintellectualization”—in fact I may not have recovered yet.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
“In theory there is no difference between theory and practice - in practice there is.”
— Yogi Berra
💡 Idea 13 - The Survival of Ideas
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Consider the role of heuristic (rule-of-thumb) knowledge embedded in traditions. Simply, just as evolution operates on individuals, so does it act on these tacit, unexplainable rules of thumb transmitted through generations—what Karl Popper has called evolutionary epistemology. But let me change Popper’s idea ever so slightly (actually quite a bit): my take is that this evolution is not a competition between ideas, but between humans and systems based on such ideas. An idea does not survive because it is better than the competition, but rather because the person who holds it has survived! Accordingly, wisdom you learn from your grandmother should be vastly superior (empirically, hence scientifically) to what you get from a class in business school (and, of course, considerably cheaper). My sadness is that we have been moving farther and farther away from grandmothers.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
Out of every hundred new ideas ninety-nine or more will probably be inferior to the traditional responses which they propose to replace. No one man, however brilliant or well-informed, can come in one lifetime to such fullness of understanding as to safely judge and dismiss the customs or institutions of his society, for these are the wisdom of generations after centuries of experiment in the laboratory of history. A youth boiling with hormones will wonder why he should not give full freedom to his sexual desires; and if he is unchecked by custom, morals, or laws, he may ruin his life before he matures sufficiently to understand that sex is a river of fire that must be banked and cooled by a hundred restraints if it is not to consume in chaos both the individual and the group. So the conservative who resists change is as valuable as the radical who proposes it—perhaps as much more valuable as roots are more vital than grafts. It is good that new ideas should be heard, for the sake of the few that can be used; but it is also good that new ideas should be compelled to go through the mill of objection, opposition, and contumely; this is the trial heat which innovations must survive before being allowed to enter the human race. It is good that the old should resist the young, and that the young should prod the old; out of this tension, as out of the strife of the sexes and the classes, comes a creative tensile strength, a stimulated development, a secret and basic unity and movement of the whole.
— Will Durant, The Lessons of History.
💡 Idea 14 - The Lindy Effect (or Aging in Reverse)
This is the idea that nonperishable things age in reverse compared to perishable or biological entities…
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For the perishable, every additional day in its life translates into a shorter additional life expectancy.
For the nonperishable, every additional day may imply a longer life expectancy.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
When a person ages one year, it means that his life expectancy also shrinks about a year. But if we consider a book or a technology, when it ages one year it means that its life expectancy is increased by about a year. So the non-perishable ages in reverse, every new day or year that survives makes it more likely to survive in the future. And just to be clear, when Taleb talks about a book he is not talking about a specific instance of the book. He is talking about the intangible idea of the book — such as all the possible copies that exist and will exist on that book. The longer this book keeps selling, the longer it will keep selling — again, aging in reverse (and this process of aging in reverse is also known as “The Lindy Effect.”)
So the best way to predict the future, if you were to engage in such activity, is to look at the past and see what’s still alive. You can be pretty sure that these things will still exist in the future. Chairs and shoes have been around for a very long time, so you can be certain of a future where these objects are still relevant.
And in the domain of ideas, the old (but still relevant) is actually the best place to learn about the human condition—because questions such as “how to be happy” or “how to cultivate a peaceful mind” have existed forever. Naval Ravikant has this great heuristic, it goes: “The older the problem, the older the solution.”
If you’re trying to learn how to drive a car or fly a plane, you should read something written in the modern age because this problem was created in the modern age and the solution is in the modern age.
If you’re talking about an old problem like how to keep your body healthy, how to stay calm and peaceful, what kinds of value systems are good, how you raise a family, and those kinds of things, the older solutions are probably better. Any book that survived for two thousand years has been filtered through many people. The general principles are more likely to be correct.
— Naval Ravikant, The Almanack of Naval Ravikant
This goes back to the survival of ideas.
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Books that are one year old are usually not worth reading (a very low probability of having the qualities for “surviving”), no matter the hype and how “earth-shattering” they may seem to be. So I follow the Lindy effect as a guide in selecting what to read: books that have been around for ten years will be around for ten more; books that have been around for two millennia should be around for quite a bit of time, and so forth.
— Nassim Nicholas Taleb, Antifragile.
💡 Idea 15 - Heroism
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Heroism is the exact inverse of the agency problem: someone elects to bear the disadvantage (risks his own life, or harm to himself, or, in milder forms, accepts to deprive himself of some benefits) for the sake of others.
And heroism is not just about riots and wars. An example of an inverse agency problem: as a child I was most impressed with the story of a nanny who died in order to save a child from being hit by a car. I find nothing more honorable than accepting death in someone else’s place.
In other words, what is called sacrifice. And the word “sacrifice” is related to sacred, the domain of the holy that is separate from that of the profane.
In traditional societies, a person is only as respectable and as worthy as the downside he (or, more, a lot more, than expected, she) is willing to face for the sake of others. The most courageous, or valorous, occupy the highest rank in their society: knights, generals, commanders. Even mafia dons accept that such rank in the hierarchy makes them the most exposed to be whacked by competitors and the most penalized by the authorities. The same applies to saints, those who abdicate, devote their lives to serve others—to help the weak, the deprived, and the dispossessed.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
I was actually listening to a conversation between Steven Pressfield and David Perell, and Steven said that the main trait that all heroes share in common is this capacity to self-sacrifice. To voluntarily take the downside for the sake of another person or the collective. Whereas the core trait that all villains share in common is that they are self-centered, self-absorbed, they only think about their own benefit.
So I think a great mental model in life is to think of your life as a movie, where you are the hero. And thanks to the consistency bias, you’ll start doing things that heroes do — which is, centrally, acts of selflessness and courage.
The measure of success in my life is: “How many useful things can I get done?” On a day-to-day basis, I wake up in the morning and ask, “How can I be useful today?” I want to maximize my utility.
Try to be useful. Do useful things for your fellow human beings and the world. It’s hard to be useful, to contribute more than you consume. Can you have a positive net contribution to society? Aim for that.
I have a lot of respect for someone who puts in an honest day’s work to do useful things. I admire anyone making a positive contribution to humanity. Whether that is in farming, technology, entertainment, or whatever else. To anyone useful to the rest of humanity: I admire you greatly.
A useful life is worth having lived.
— Elon Musk, The Book of Elon.
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A lesson I learned from this ancient culture is the notion of megalopsychon (a term expressed in Aristotle’s ethics), a sense of grandeur that was superseded by the Christian value of “humility.” There is no word for it in Romance languages; in Arabic it is called Shhm—best translated as nonsmall. If you take risks and face your fate with dignity, there is nothing you can do that makes you small; if you don’t take risks, there is nothing you can do that makes you grand, nothing. And when you take risks, insults by half-men (small men, those who don’t risk anything) are similar to barks by nonhuman animals: you can’t feel insulted by a dog.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
“A great man is hard on himself; a small man is hard on others.”
— Confucius
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In the old days, privilege came with obligations—except for the small class of intellectuals who served a patron or, in some cases, the state.
You want to be a feudal lord—you will be first to die. You want war? First in battle. Let us not forget something embedded in the U.S. Constitution: the president is commander in chief. Caesar, Alexander, and Hannibal were on the battlefield—the last, according to Livy, was first-in, last-out of combat zones. George Washington, too, went to battle, unlike Ronald Reagan and George W. Bush, who played video games while threatening the lives of others. Even Napoleon was personally exposed to risks; his showing up during a battle was the equivalent of adding twenty-five thousand troops. Churchill showed an impressive amount of physical courage. They were in it; they believed in it. Status implied you took physical risks.
Note that in traditional societies even those who fail—but have taken risks—have a higher status than those who are not exposed.
— Nassim Nicholas Taleb, Antifragile.
[📝 Note]
This reminded me a story that the famous actor Matthew McConaughey wrote on his book Greenlights. He was staying in a remote village in Mali, Africa, and he introduced himself as a writer and a boxer.
He says the villagers did not care about his writing career, but were very interested on the boxing part. The word spread about this white man boxer, and the wrestling champion of the village challenged Matthew to a match — which he accepted.
They fought for a few rounds until they were both exhausted. At that point the chief stopped the match and raised both their hands in victory.
Later, Matthew asked Issa — his villager friend — whether he had won or lost. To which Issa said:
“It is not about win or lose, it is about do you accept the challenge. When you did that, you already won.”
He had courage, the most important of all virtues, and its companion, fortitude. These strengths are inborn but they can also be cultivated, and Churchill worked on them all his life. In a sense his whole career was an exercise in how courage can be displayed, reinforced, guarded and doled out carefully, heightened and concentrated, conveyed to others. Those uncertain of their courage can look to Churchill for reassurance and inspiration.
— Paul Johnson, Churchill. (Resurfaced using Readwise).