All the notes were taken directly from the source mentioned.
– – –
People start businesses for all kinds of reasons. They do it to satisfy a dream or to solve a problem or to fill a void in the market. Some people want to improve on something that seems obsolete, and others want to reinvent an entire industry.
Good ideas are hard to find and hard to get right. But once you find one, they are also very hard to turn away from.
Graham wrote. “It’s to look for problems, preferably problems you have yourself… It sounds obvious to say you should only work on problems that exist. And yet by far the most common mistake startups make is to solve problems no one has.”
There is a name for a person who creates something purely out of passion: hobbyist. There is a name for a person who creates something out of passion that solves a problem only they have: tinkerer. There is a name for a person who creates something out of passion that also solves a problem they share with lots of other people: entrepreneur.
Why is it that so many of us are so bad at differentiating between things that terrify us and things that present a real hazard? We’re scared of flying, but we have no problem zipping down the highway in our cars at eighty-five miles per hour, even though you’re eighty-six times more likely to die in a car accident than a plane crash; the odds of which are nearly 1 in 10,000, which itself is three times less likely than choking on food.
His father’s response was unequivocal: “He looked at me and he said, ‘Jim, you have done some really stupid things in your life. This is the stupidest.'”
“It is the difference in life between things that are scary and things that are dangerous. There are plenty of things that are scary but aren’t dangerous. And there are things that are dangerous but not scary. And those are the things that get you…”
What did a teenage Michael Dell know about running a business? About hiring? About leading people? About finding and leasing office space? About corporate taxes? What do any of us know about that stuff before we confront it? Nothing. That is truly terrifying to any first-time entrepreneur. But it is also eminently knowable—if you choose to learn it.
They were taking the detour, taking the leap—away from the type of professional life they didn’t want, and toward something new and exciting and their own.
PayPal alumnus and LinkedIn founder Reid Hoffman captured the romance of entrepreneurial daring perhaps better than anyone when he said, “Starting a company is like throwing yourself off the cliff and assembling an airplane on the way down.”
Most of the successful entrepreneurs I’ve met left the comfort of their previous lives as safely and smartly as possible.
That makes the late Herb Kelleher’s achievement all the more impressive as co-founder of Southwest Airlines. For much of Southwest’s early existence, Herb, a practicing attorney, kept his private law practice open.
Knowing that he could always go back to something he was good at, where he had a lot of experience, didn’t make the leap into FUBU any less scary, but it did remove a lot of the danger.
For Sara Blakely, the billionaire founder of Spanx, selling fax machines was her fallback. For Mark Cuban, internet entrepreneur and Daymond John’s fellow shark, it was bartending. The founder of JetBlue Airways, David Neeleman, knew that if his idea for a low-cost airline that flew out of big markets didn’t take off, he could always go back to being a travel agent.
By doing things smartly and safely like this, you’ll give yourself more time and more room to operate, while simultaneously reducing the chances that failure can ruin your life.
All of them have done their homework—about their product, their business, their customers, their industry as a whole—and it has imbued them with a deep confidence in the viability of their ideas.
Their lack of subject matter expertise or institutional knowledge or industry experience was never a deterrent to them. It was actually a blessing. It was freedom.
Jen recalled, “which basically meant we went shopping every single day. We went to every department store. We went to every luggage store. We made these Google maps of different luggage stores around New York and compared all the experiences and all the prices. We kept very meticulous notes on what was out there.”
There is a famous line from Steve Jobs about this pitfall: “Some people say, ‘Give the customers what they want.’ But that’s not my approach… People don’t know what they want until you show it to them.”
All the market research Jen and Steph accumulated—all the comparison shopping they did on price, design, and purchase experience—it wasn’t so they could just collate it and regurgitate it back out into the marketplace to give people what they said they wanted. Rather, it was to build a foundation of knowledge on which they could leverage their creative instincts and their professional judgment, in order to truly innovate and deliver what dissatisfied luggage customers like them really needed.
There is nothing special about any of these industries that makes them uniquely suited for new entrants or for disruption.
Founders who did their homework to fill in the gaps in their understanding, so that the things they set out to build did not topple for lack of a sturdy foundation.
I find myself listening not so much to the story of a great idea born of singular brilliance, but to the triumph of a good idea in the hands of a perfect partnership.
You need a partner whose skill set complements yours. Someone who not only shares your vision but elevates it and holds you accountable to it; who does what you cannot; who thinks and sees things in a way you don’t; whose strengths compensate for your weaknesses, and vice versa.
It was a piece of advice echoed unequivocally by Paul Graham more than twenty years later, when he wrote, “Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong… The low points in a startup are so low that few could bear them alone.”
Bootstrapping is using what you have at your disposal to get yourself where you want to be.
I know that bootstrapping is more than simply using alternative sources of personal financing as a last resort. It’s also about keeping control of your business as long as you can. It’s about using other nonmonetary assets to solve problems that you would otherwise hire someone else to solve or throw money at—assets like your time, your effort, your network, and your own talent and ingenuity.
In 2015, Sam Altman, the president of Y Combinator, took to Twitter in defense of bootstrapping. “In our experience at YC,” he wrote, “the best companies do amazing things on small amounts of money.” He continued, “We especially love companies that can do a lot with little capital. It works much more often than those who do a little with a lot.”
Every business is a story.
The story, more than anything else, is what connects you and me and everyone out there to the thing you’re building. And every defining element of that thing you’re building, of that business, helps to tell its story. This goes from the name and the logo, to the function of the product or the style of the service, to the partners who founded it, all the way to the customers who patronize it. The purpose of that story changes with time and with whom it is being told to, but fundamentally its goal is to answer a hundred different variations on one simple question: Why? Why should I buy your product? Why should I join this company? Why should I be excited to work here? Why should I invest in this company?
Horowitz put the role of the company’s story even more succinctly: “The story must explain at a fundamental level why you exist.” It is a story you have to tell to your customers, to investors, to employees, and ultimately to yourself.
You need to give us a really compelling reason why we should choose yours.
Why do you do what you do? Or, Why should we care? I can’t know the answers to those questions until you, as the founder, want me to know them, because they exist first in your mind.
It’s equally important for understanding the story yourself, for staying anchored to why you do what you do and, to Ben Horowitz’s point, why your company exists.
The basic story that answers the big “why” questions is the one that creates loyal customers, finds the best investors, builds an employee culture that keeps them committed to the venture, and keeps you committed and grinding away when things get really hard and you want to give up (and you will).
“OPM doesn’t have to be other people’s money,” his mother told him as he searched for a solution. “It could be other people’s manufacturing, mind power, manpower, marketing.”
Soliciting money from friends and family is sort of like an unofficial step between bootstrapping and scaling up with professional fundraising.
Not only is it generally cheaper, but as Eric Ryan put it, it’s coming from “people who believe in you more than they necessarily believe in your idea,” which makes it easier to change your mind midstream and to iterate your way to the product or service that will eventually become the business, because the money is tied to a bet on you, not on a specific formulation of your idea.
Acknowledging privilege and recognizing advantage are essential to understanding the nature of success—both yours and others’.
While not everyone has the same privilege of circumstance, everyone has intangible advantages of one kind or another that they can leverage in pursuit of success.
To a person, all of these entrepreneurs will tell you that fundraising is brutally hard at every level. It taxes your time, your energy, your ego, and sometimes your relationships. You will have hundreds of conversations. You will have to tell your story hundreds of times and answer ten times as many questions, a lot of them the same, some of them incredibly frustrating, especially from people who you think are supposed to support you or whom you have always called a friend.
Crowdfunding sites are also great for people whose inner circles are a little thin without a lot of people to talk to, or alternatively are quite robust but without a lot of available cash to contribute.
Once you’ve convinced people in your personal network to part with their money in support of your idea, that’s when the pressure to succeed really begins. Understandably, some entrepreneurs don’t like that kind of pressure, which is part of what can make the facelessness of crowdfunding and the formality of professional money more appealing pathways. Others use the pressure as fuel. “I found it so motivating,” Eric Ryan told me, “because it’s one thing to lose our own money or fail, but when you’re taking money from people you really care about, you don’t want to let them down. It’s the best motivation to ensure that no matter how hard things get, you’re going to find a path forward.”
A lot happens between conception and first production for nearly every idea that gets turned into a business. Shape changes. Materials change. Offerings change. Names change. Process changes. Construction methods change. Look and feel and taste change.
It’s called iteration—the incremental evolution of a product or service.
As Tim made clear in our conversation, it’s important to spend enough time in this first phase to really get comfortable with your product and your story and really get to know the business you’re trying to build.
Every idea, no matter how great, has a shelf life. If you don’t get it off that shelf and out into the world in time, no amount of feedback you get during the second phase of the iterative process can overcome a lack of interest or mitigate first-mover advantage if someone beats you to the punch.
That’s really what entrepreneurs fear at this stage. The uncertainty of whether they will be able to cross that vast space between inspiration and execution, full of tests and traps, twists and turns.
Everyone will proceed through many of the same pivotal points, but your path will inevitably be unique to you, to your idea, and to the time and place through which it passes.
Or, as Peter Thiel put it in a 2014 lecture at the Stanford Center for Professional Development titled “Competition Is for Losers,” “Don’t always go through the tiny little door that everyone’s trying to rush through. Go around the corner and go through the vast gate that no one’s taking.”
Peter Thiel echoed this sentiment in his own way. “I have a single id√©e fixe that I am completely obsessed with on the business side,” he said in his characteristic, hitched speaking style, “which is that if you’re the founder-entrepreneur starting a company, you always want to aim for monopoly, and you always want to avoid competition.”
“Where you live matters,” Drew said in his address. “Whatever you’re doing, there’s usually only one place where the top people go. You should go there. Don’t settle for anything else… If the real action is happening somewhere else, move.”
The success of a new business depends on its ability to get attention—specifically, its ability to build buzz and to engineer word of mouth.
It’s the sense that you are everywhere, when in reality you’re just getting your name out in the handful of places where your core customers spend their time.
Walt Disney is often quoted as saying, “Whatever you do, do it well. Do it so well that when people see you do it, they will want to come back and see you do it again, and they will want to bring others and show them how well you do what you do.”
Some people will even tell you that quitting is the smartest thing to do, that it is what any right-thinking person would do. Of course, what those people are forgetting is that almost no one starts their own business if they’re in their right mind, so really what good is this advice anyway?
“The best way out is always through.” Frost wrote this line in his 1915 poem…
It’s called the “trough of sorrow”—a term coined by Paul Graham to describe the period young companies find themselves in as a result of a lack of product-market fit. This is when, as Marc Andreessen described it in his 2007 Guide to Startups series,* “the customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of ‘blah,’ the sales cycle takes too long, and lots of deals never close.”
Like Stonyfield, Airbnb’s problem wasn’t the founders’ idea (there was a market for this service); it was their execution.
All of them have done whatever it takes to stay alive, to make it another day, to get their product on shelves, to get customers in the door, to get vendors paid, to get investors to write checks.
Not every founder can build a unicorn. Nor should they need to. There’s nothing wrong, for example, with running a small business with a few employees that you bootstrap until you retire and either hand down or sell off. Not only is it not wrong, it’s actually the norm.
In fact, the most successful ones are usually the luckiest ones—lucky to have access to promising businesses early on, and lucky to have access to so much money that they can make a lot of bad bets and still find success in the end.
Venture capitalists know money, but they don’t always know your business better than you do, and sometimes they don’t know your industry better than you do either.
“You need to do the thing that you believe you are the best person in the world to do, where you have a unique proposition, given your story, to solve a problem.”
The first thing to understand is that raising venture capital is about making a promise.
How do you expect to scale this? Where is the growth going to come from? Who is the customer for this? Doesn’t something like this already exist? How will you get costs down? Where will you manufacture? Where will you be based? What’s your marketing strategy? Why does anyone need this? Why would anyone do this?
As an entrepreneur, you have to expect these questions. You have to know that you are going to face them.
This is a daily fight when you’re raising money. And if your goal is to scale your business, as I talked about at the beginning of this chapter, then you need to fight extra hard to reject each of these nagging, self-doubting thoughts.
“Sometimes one needs to go through these rites of passage to understand the importance of ownership of intellectual property, the importance of having a majority share in your own company,
When not to sue is just as important as knowing when to do so. And knowing why you’re suing is even more important than that.
It took that long because leaders within both companies were spending most of that time arguing over whose fault those accidents were, and therefore who was liable for the pain and suffering of the victims, rather than taking appropriate steps to end future
Evolution. Wealth. Love. Sleep. Thoughts. These are all subject to the gradual, then sudden, nature of change. So, too, is business.
You can’t keep doing what you’re doing if you want to grow or survive, but also identifying something else to do and/or some other place to do it.
Rarely, it seems, do companies pivot from failure to success. They don’t go from a bad idea to a good idea. Rather, they go from a good idea to a great one.
Recognize that the business you are leading is bigger and more important than the idea (your idea!) on which that business was originally built.
You can feel like a downright failure when you get to the right place for the wrong reasons, no matter how much money you have.
A company that is successful and resilient and that acts as a force for good in the world long after you’re gone has a larger purpose—a mission—at its center. One that you, as founder, are responsible for identifying and articulating from the very beginning, then guarding during times of plenty and leaning on during times of difficulty.
With everything swirling around you—whether it’s product development, funding, hiring, or marketing—it’s very easy to lose your sense of direction both individually as a founder and collectively as the business. Once you lose your sense of direction, the chances of keeping hold of any sense of mission become slim. After all, if you don’t know where you’re going, it’s hard to know why you’re going there.
Sure, they make a machine that makes cocktails. Simple enough. But why they make that machine is different from what they make.
“Every available moment, I was up writing content and trying to work out what is this thing that I want to do,” he said.
By defining exactly who they were, what they believed, and how they would operate, and then putting it down on paper and out into the world, Netflix not only screened out suboptimal job candidates before they even applied, but they also got “many people becoming candidates that might not have otherwise thought about Netflix.”
They’re called “monarch CEOs,” according to Professor Jeffrey Sonnenfeld, who studies CEOs at the Yale School of Management. “Their business is defined around them and their life is defined around the business,” he told the Washington Post.
“A lot of founders have difficulty making this transition,” said Professor Sydney Finkelstein of the Tuck School of Business at Dartmouth in the wake of Charney’s ouster from the board. “When you’re a smaller company, micromanagement is not necessarily a terrible thing. It’s when you cross the line and you have to grow, you’ve got to have management talent around you.”
Hastings would admit to venture capitalist John Doerr in an interview at a Kleiner Perkins Caufield & Byers CEO Workshop in 2015, “If the cultural roots are strong, then new leadership is developed in that model, and will often continue the culture.”
“When you build a company, it’s all about people,” Brian said. “Find the right people and treat them right.”
That shared sense of purpose and values, more so than money or profitability, is also what explains the longevity of Chez Panisse.
He recognized that for a business to last 100 years, which was one of his new goals, it can’t be about you, because “you don’t scale.” Only your idea, and your story, and your values do.
The possibility of succeeding in that kind of capital-intensive, winner-take-all environment has always been much lower than in finding a small niche related but adjacent to a massive boom and building a business there.
Why wouldn’t (or didn’t) the big players in the space identify this opportunity the way Chet did and then move to capture all that value at a scale Belkin wouldn’t be able to for a number of years? The answer, according to Chet, is one of the reasons that finding and owning a small niche is such a valuable strategy for an entrepreneur during a boom time.
IBM and other PC makers like them had too much work to do in their principal business to care about or even understand something they felt was too small of an opportunity. On the other hand, this niche was the “perfect size and just the right amount of work” for a company like Belkin International.
Herb most definitely did not want Southwest Airlines to meet the same fate. “So I used the line ‘Think small and act small and we’ll get bigger. Think big and act big and we’ll get smaller,'” he told me of that letter to his employees. He cautioned them not to think or act like the bigger airlines; not to be enamored of what it appeared they had; not to compete with them on their terms. Instead, if Southwest just stuck to what they did best, he believed, if they operated within their means and according to their founding principles, if they stayed in their lane, everything would work out, and major opportunities would present themselves.
In an ideal world, of course, founders don’t just have two choices. They often find a third way and work through their problems, for the sake of both the business and their relationship.
If you would gladly sacrifice and do whatever it takes to protect your family, why would you not do the same for your business?
When growth begins to accelerate, it’s even more critical to know who you are as a founder and who you are as a company. That understanding helps point you in the right direction when you have opportunities to pursue lots of different things. It’s a constant reminder of what business you’re actually in, which is something that is surprisingly easy to forget or lose sight of once your business starts to expand, evolve, and change shape.
Now, entrepreneurs don’t have to raise professional money if they don’t want to. They don’t have to accept it in the amounts or at the valuation that may be available to them. They don’t have to realize the potential idling within their ideas as quickly as others may want either. They can take it slow. They can defer compensation. They can wait to make a lot of money and let the company grow at a more natural pace.
Wasserman wrote. “This fundamental tension yields ‘rich’ versus ‘king’ trade-offs. The ‘rich’ options enable the company to become more valuable but [may] sideline the founder by taking away the CEO position and control over major decisions. The ‘king’ choices allow the founder to retain control of decision making by staying CEO and maintaining control over the board—but often only by building a less valuable company.”
Your natural instinct will be to focus the majority of your time on the things you’re good at—the business stuff, the product stuff. You’ll prioritize cultivating the things that add to the bottom line while mitigating those that subtract from it. As you should. That’s your job. But it is not your only job. You are also the mission maker, the values setter, the morale booster. You are responsible for creating an environment in which your employees can thrive, work can get done, customers’ needs can be met, and you can be proud of what your company has accomplished at the end of each day.
As I write this, I am looking at a small pennant I bought on Etsy that simply says BE KIND. I have it up on the wall in my studio to remind me of this message as an aspiration and a daily goal.
What they believe isn’t always the same, but it always feels profoundly personal. It’s not clinical or calculated. It’s compassionate. There is an empathy present in their decisions that often extends all the way out to the customer.
Kind founders don’t just make every customer feel valued; they make every employee feel valued as well. They do things that make their employees feel like part of a family. They make it a point to give their employees something to call their own, in recognition of this larger journey they are on together as a business, as a unit. That could mean giving them a piece of the company itself, offering opportunities that help them grow as people, or just doing something as simple as recognizing their basic human dignity by trusting them with the freedom to use their time the way they see fit.
From a strategic perspective, what is so underappreciated about treating your employees well and creating a kind work environment is that people pay attention. Employees feel it, obviously, as do their families, which makes talent retention appreciably easier. People looking for better job opportunities or something they can make a career out of see it, too, which is great for recruiting. And customers notice, which is excellent for brand loyalty and word of mouth.
They know what to do because he has empowered them to do their jobs however works best for them.
Whatever your choices as founder, a robust set of ethics should sit at their foundation. Beyond that, only two things are truly necessary when it comes to building a kind, long-lasting company. One, that the things you do advance your mission and match your values. And two, that you do them from the beginning, precisely because mission, values, and culture generally are so hard to change.
And yet, somehow I built a successful career in broadcasting. It’s a set of circumstances I can only make sense of when I recognize that although I worked hard, I also got very lucky. Lucky that people discovered my shows. Lucky that NPR gave me the opportunity to try something new. Lucky that I had two loving parents and a good education. Lucky that I grew up in the United States, where the mere thought of building something from nothing, of taking a chance at doing something you love, isn’t some absurd fantasy, but is baked into the nation’s founding promise. I am a big believer in luck.
What changes, I think, is the appreciation for just how many people out there are smarter or work harder or have more money or possess a more resilient personality, and are still less successful despite their best efforts.
Most businesses fail within a year or two. The cards are generally stacked against anyone thinking about starting a business. And yet, at the same time, if one or two bounces go your way, all of a sudden you can come out of the game as the big winner.
Luck, when it comes right down to it, is really just an opportunity waiting to be taken advantage of, and they took advantage of it.
Everyone is lucky in some number of ways for some amount of time in their life, and it’s what you do with your luck while you have it that determines whether you succeed or you fail or you even try.
Maybe you were lucky enough to be born with the kind of personality that makes you more resilient, more willing to accept rejection, more willing to do whatever it takes, without the massive ego that prevents so many from sticking with it during hard times.
Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty.
Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.
The Black Swan problem—the impossibility of calculating the risks of consequential rare events and predicting their occurrence.
This is the tragedy of modernity: as with neurotically overprotective parents, those trying to help are often hurting us the most.
The largest fragilizer of society, and greatest generator of crises, absence of “skin in the game.” Some become antifragile at the expense of others by getting the upside (or gains) from volatility, variations, and disorder and exposing others to the downside risks of losses or harm.
Life is more, a lot more, labyrinthine than shown in our memory—our minds are in the business of turning history into something smooth and linear, which makes us underestimate randomness.
The rarer the event, the less tractable, and the less we know about how frequent its occurrence—yet
In short, the fragilista (medical, economic, social planning) is one who makes you engage in policies and actions, all artificial, in which the benefits are small and visible, and the side effects potentially severe and invisible.
I have only written, in every line I have composed in my professional life, about things I have done, and the risks I have recommended that others take or avoid were risks I have been taking or avoiding myself.
It does not mean that one’s personal experiences constitute a sufficient sample to derive a conclusion about an idea; it is just that one’s personal experience gives the stamp of authenticity and sincerity of opinion.
Students pay to write essays on topics for which they have to derive knowledge from a library as a self-enhancement exercise; a professional who is compensated to write and is taken seriously by others should use a more potent filter. Only distilled ideas, ones that sit in us for a long time, are acceptable—and those that come from reality.
If you see fraud and do not say fraud, you are a fraud.
Compromising is condoning. The only modern dictum I follow is one by George Santayana: A man is morally free when… he judges the world, and judges other men, with uncompromising sincerity. This is not just an aim but an obligation.
The record shows that, for society, the richer we become, the harder it gets to live within our means.
Mental effort moves us into higher gear, activating more vigorous and more analytical brain machinery.
Risk management professionals look in the past for information on the so-called worst-case scenario and use it to estimate future risks—this method is called “stress testing.” They take the worst historical recession, the worst war, the worst historical move in interest rates, or the worst point in unemployment as an exact estimate for the worst future outcome. But they never notice the following inconsistency: this so-called worst-case event, when it happened, exceeded the worst case at the time. I have called this mental defect the Lucretius problem, after the Latin poetic philosopher who wrote that the fool believes that the tallest mountain in the world will be equal to the tallest one he has observed.
My favorite intellectual opponent (and personal friend) Aaron Brown:
Some thoughts are so antifragile that you feed them by trying to get rid of them, turning them into obsessions.
Criticism, for a book, is a truthful, unfaked badge of attention, signaling that it is not boring; and boring is the only very bad thing for a book.
With complex systems, interdependencies are severe. You need to think in terms of ecology: if you remove a specific animal you disrupt a food chain: its predators will starve and its prey will grow unchecked, causing complications and series of cascading side effects.
Loss of bone density and degradation of the health of the bones also causes aging, diabetes, and, for males, loss of fertility and sexual function.
It is the systematic removal of uncertainty and randomness from things, trying to make matters highly predictable in their smallest details. All that for the sake of comfort, convenience, and efficiency.
I myself, while writing these lines, try to avoid the tyranny of a precise and explicit plan, drawing from an opaque source inside me that gives me surprises. Writing is only worth it when it provides us with the tingling effect of adventure, which is why I enjoy the composition of books
All life was random stimuli and nothing, good or bad, ever felt like work.3 Dangerous, yes, but boring, never. Finally, an environment with variability (hence randomness) does not expose us to chronic stress injury, unlike human-designed systems. If you walk on uneven, not man-made terrain, no two steps will ever be identical—compare that to the randomness-free gym machine offering the exact opposite: forcing you into endless repetitions of the very same movement.
In a system, the sacrifices of some units—fragile units, that is, or people—are often necessary for the well-being of other units or the whole. The fragility of every startup is necessary for the economy to be antifragile, and that’s what makes, among other things, entrepreneurship work: the fragility of individual entrepreneurs and their necessarily high failure rate.
Restaurants are fragile; they compete with each other, but the collective of local restaurants is antifragile for that very reason.
And someone who has made plenty of errors—though never the same error more than once—is more reliable than someone who has never made any.
Nietzsche’s famous expression “what does not kill me makes me stronger”
For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner)—likewise, there is no such thing as a failed entrepreneur or failed scientific researcher,
My dream—the solution—is that we would have a National Entrepreneur Day, with the following message: Most of you will fail, disrespected, impoverished, but we are grateful for the risks you are taking and the sacrifices you are making for the sake of the economic growth of the planet and pulling others out of poverty. You are at the source of our antifragility. Our nation thanks you.
One has the illusion of stability, but is fragile; the other one the illusion of variability, but is robust and even antifragile.
We humans scorn what is not concrete. We are more easily swayed by a crying baby than by thousands of people dying elsewhere that do not make it to our living room through the TV set. The one case is a tragedy, the other a statistic. Our emotional energy is blind to probability.
A turkey is fed for a thousand days by a butcher; every day confirms to its staff of analysts that butchers love turkeys “with increased statistical confidence.” The butcher will keep feeding the turkey until a few days before Thanksgiving. Then comes that day when it is really not a very good idea to be a turkey. So with the butcher surprising it, the turkey will have a revision of belief—right when its confidence in the statement that the butcher loves turkeys is maximal and “it is very quiet” and soothingly predictable in the life of the turkey.
Mistaking absence of evidence (of harm) for evidence of absence, a mistake that we will see tends to prevail in intellectual circles and one that is grounded in the social sciences.
A donkey equally famished and thirsty caught at an equal distance between food and water would unavoidably die of hunger or thirst. But he can be saved thanks to a random nudge one way or the other. This metaphor is named Buridan’s Donkey, after the medieval philosopher Jean de Buridan,
What scientists call phenomenology is the observation of an empirical regularity without a visible theory for it.
When I wrote Fooled by Randomness, which argues—a relative of this message—that we have a tendency to underestimate the role of randomness in human affairs, summarized as “it is more random than you think,”
The best solution is to only look at very large changes in data or conditions, never at small ones.
The more data you get, the less you know what’s going on, and the more iatrogenics you will cause. People are still under the illusion that “science” means more data.
Our track record in figuring out significant rare events in politics and economics is not close to zero; it is zero.
There are ample empirical findings to the effect that providing someone with a random numerical forecast increases his risk taking, even if the person knows the projections are random.
Focus on exposure to failure—making
Stoics look down on luxury: about a fellow who led a lavish life, Seneca wrote: “He is in debt, whether he borrowed from another person or from fortune.”
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,
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.
My idea of the modern Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.
Wait at least a day before beating up a servant who committed a violation.
Seneca went beyond. He said that wealth is the slave of the wise man and master of the fool.
If I have “nothing to lose” then it is all gain and I am antifragile.
The first step toward antifragility consists in first decreasing downside, rather than increasing upside;
If a gambler has a risk of terminal blowup (losing back everything), the “potential returns” of his strategy are totally inconsequential.
A plane that has a high risk of crashing, the notion of “speed” is irrelevant, since we know it may not get to its destination,
You put 90¬†percent of your funds in boring cash (assuming you are protected from inflation) or something called a “numeraire repository of value,” and 10¬†percent in very risky, maximally risky, securities, you cannot possibly lose more than 10¬†percent, while you are exposed to massive upside.
Someone with 100¬†percent in so-called “medium” risk securities has a risk of total ruin from the miscomputation of risks.
Letting children play a little bit, not much more than a little bit, with fire and learn from injuries, for the sake of their own future safety.
This is what Seneca elected to do: he initially had a very active, adventurous life, followed by a philosophical withdrawal to write and meditate, rather than a “middle” combination of both. Many of the “doers” turned “thinkers” like Montaigne have done a serial barbell: pure action, then pure reflection.
Georges Simenon, one of the most prolific writers of the twentieth century, only wrote sixty days a year, with three hundred days spent “doing nothing.” He published more than two hundred novels.
I can take all manner of professional and personal risks, particularly those in which there is no risk of terminal injury.
The teleological fallacy the illusion that you know exactly where you are going, and that you knew exactly where you were going in the past, and that others have succeeded in the past by knowing where they were going.
The error of thinking you know exactly where you are going and assuming that you know today what your preferences will be tomorrow has an associated one. It is the illusion of thinking that others, too, know where they are going, and that they would tell you what they want if you just asked them.
Authors, artists, and even philosophers are much better off having a very small number of fanatics behind them than a large number of people who appreciate their work.
All you need is the wisdom to not do unintelligent things to hurt yourself
We cannot change humans as easily as we can build greed-proof systems,
Mistaking the merely associative for the causal, that is, if rich countries are educated, immediately inferring that education makes a country rich,
Entrepreneurs are selected to be just doers, not thinkers, and doers do, they don’t talk, and it would be unfair, wrong, and downright insulting to measure them in the talk department.
The same with artisans: the quality lies in their product, not their conversation—in fact they can easily have false beliefs
In one of the rare noncharlatanic books in finance, descriptively called What I Learned Losing a Million Dollars,
We are fooled into overestimating the role of good-sounding ideas.
Cooking seems to be the perfect business that depends on optionality.
As Dan Ariely once observed, we cannot reverse engineer the taste of food from looking at the nutritional label. And we can observe ancestral heuristics at work: generations of collective tinkering resulting in the evolution of recipes.
Evidence of absence is not absence of evidence.
Thanks for reading. Did you like the content you just read? You can help me spread these ideas by sharing this blog post through your social media channels or sending it as a direct message to your friends.