Stepan ParunashviliTwitterBooks

Antifragility

When Darwin introduced evolution with The Origin of Species, not only did it change how we saw life on earth, but it turned out to be much more general than we thought. We see it everywhere: from how innovation happens, how languages and cultures form, to how markets operate.

When you look at the world through the lens of evolution, what’s opaque becomes common sense and your vision of the world changes in kind.

The same, I think, can be said with Nassim Taleb’s Incerto. Yes, I have just compared him with Darwin.

Time will tell, but I think it’s merited. I’ve re-read Taleb’s work at least four times now, and each time I come out with new realizations. Similar to evolution, his ideas of Black Swans and Antifragility sprout up all around us. It can change everything from how you eat, how you work, how you build friendships, how you invest, how you innovate, and much more.

I wanted to share the most impactful idea that I got out of it with you. This is my own words, and it is nowhere near enough to capture his work’s complete implication. I hope it gives you an exciting lens and piques your curiosity enough to read Taleb’s books.

Predicting the Future

The place to start is with the question: how does the future happen?

We often think that it’s an unfolding of predictable events. It certainly seems that way when you read history. For example, we learn that World War I was an obvious consequence: countries were arming and had all these pacts, so of course, the war was a foregone conclusion.

But this is one of the most incredible illusions of all. With World War I, for example, we went from assassination in Austria-Hungary to an all-out war between superpowers in a matter of…one week.

No one predicted that. It would be analogous to China and America declaring hostilities next Friday.

This idea would have been hard to swallow before 2019, but I think enough has happened for us to reflect. No one predicted the exact consequences of COVID. No one expected that protesters would storm into the capitol building in January.

If breathtaking changes can happen in a matter of days, we need to revise our beliefs about how the future unfolds.

It’s not predictable. Instead, what Taleb calls “Black Swans” drive the future. These are events that are so unlikely that they’re unpredictable and so consequential that they change reality as we know it.

And that puts us in an uncomfortable situation — in a world dominated by events you can’t predict, how do you live your life?

The Triad

Here comes, I think, one of Taleb’s most meaningful insights. You can’t know the future, but you can know how well you could handle it.

Here’s what I mean. Take anything, and ask yourself: how would this react if something out of the ordinary happened?

For example, think about a piece of expensive china. Just about anything out of the ordinary would break it. At best, nothing terrible will happen. At worst, it will disintegrate. You could say that this piece of china is fragile towards the unexpected.

Now let’s look at a kettlebell. Up to a point, just about anything out of the ordinary would do little harm to the kettlebell. In most cases, nothing terrible will happen. It won’t suddenly become any better, but at least it won’t break. We could say that this kettlebell is robust towards the unexpected.

Now, consider this essay itself. If someone reads it and sees that it’s wrong, that person could let me know, and I would fix it. If they’re furious and make a fuss on the internet, it only gets more people reading it. And of course, if people love it, again more would read it. At worse, this essay will stay the same. In many cases, it will benefit. You could say that this essay is antifragile towards the unexpected 1.

Nassim calls this the “triad” — fragile, robust, antifragile — and you can start to identify just about all aspects of life within it.

Just exploring this triad can fill you with insights. For example, tinkering is antifragile. Banks are fragile. Gold is robust. Dollars are fragile. Individuals are fragile at the expense of the collective, which is antifragile. Why, and what does it mean? Expounding on the consequences would take a series of books… so you can appreciate the beauty and breadth of Nassim’s work.

For this essay, I’ll focus on just one slice of one thing. What can you do with this triad in your own life?

Barbell

Well, you can learn to love the future. If you can organize your life so that you remove your fragility and add antifragility, you can, as Nassim says, “be the fire and wish for the wind.”

Here’s how. Look over your life, and start to catalogue your exposure.

Is your work fragile, robust, or antifragile? Are your finances fragile, robust, or antifragile? Are your attachments fragile, robust, or antifragile?

Now, take all that is fragile, and try to move them towards robust.

Here’s an example. Say you have most of your net worth invested in stocks. Are your fragile, robust, or antifragile?

Well, imagine if your portfolio increases by 20%. You’ll be happy for sure. But, imagine if your portfolio decreases by 20%. Likely, you’ll be devastated. You have more to lose than to gain from the unexpected here. This means that you are fragile in your investments.

How can you move this towards robust? Two ways.

The first is philosophical. Just write off a large part of your investment mentally. Maybe 50% 2. Now, even if a 50% downturn happens, you only got what you expected. Arguably, you are robust towards the unexpected.

The second is practical. Move to more robust investments: stuff like gold, very cheap real estate in a small, resilient country, etc.

At this point, you may ask — you don’t just want robust. How can you win?

Well, now it’s time to add antifragility.

Can you set aside some amount for crazy risks? You can write this portion off completely, so at worst, what happens is what you expected: you lose it all. However, at best, you have upside.

The key is to choose the kind of activities that have a profound upside. If one win pays for a thousand losses, you are in a good place. How does this look?

Here’s a basket of ideas: start a company, invest in highly speculative ideas, make a youtube video, write a book, move to a city that excites you, learn to program, tinker, share. If you do that, suddenly, you can’t wait to see what the future holds.

Nassim calls this the “Barbell Strategy” — change your exposure to 90% robust, 10% antifragile.

Here’s one more example. Say you have a slight headache. There’s a new medication that could fix it. Should you take it?

Well, in the best case, your headache is gone. But since it’s slight, this is not such a big deal. At worst, who knows what can happen? Here, you are fragile towards this medication.

Now, imagine you are about to die, but a new, experimental medication can save you. At worst, you die, which is what you expect to happen. But, in the best case, you survive. Here, you are antifragile to this medication.

Wow. We've just used the triad as a compass for our life. Note the beauty here: at no point have we talked about specific risk modeling. It’s so simple that you don’t need any math. That’s pretty darn beautiful.

Fin

And with that, we learn one of the most interesting ideas: it’s not about predicting the future; it’s about not having to predict the future.

You know what books to check out for a much deeper, broader, and sometimes hilarious view.

Fair warning, though: the biggest complaint with Taleb is that he comes off as arrogant. I honestly think this is a misunderstanding in tone. Imagine whenever you read him that you’re talking with an animated elder, under a sunlit garden in Lebanon, with a good bottle of arak. You’ll see humor where there was arrogance.


Thanks to Alex Reichert, Joe Averbukh, Mark Shlick, Jacky Wang, Alexey Gurevich, for reviewing drafts of this essay


Thoughts? Reach out to me via twitter or email : )