He is not easy to read at all, but at the same time he is so engrossing. And true. Nassim Nicholas Taleb and his latest book, 'Skin the Game' - just unbelievable and badly needed in today's time.
It is about how the world needs skin in the game. People that can benefit from something, need to also be able to lose. No upside without potential downside as well. Commentators... who just comment but are not involved and have nothing to lose - what to they add? Nothing. And what is their merit? Questionable. Stay away from them.
I love a story that he tells, about being in a TV talk show where some other journalists were commenting about a specific stock. When asked about this stock, Taleb refused to comment, his reason being that he neither had that stock in his wallet, neither did he have it on a short position (eg would benefit from it dropping) - so he couldn't really comment. Other commentators were shocked, as the common held belief is that you can comment about something if you have no relationship with it, since you have no interests. He defends the opposite. If you have a vested interest, you know a lot more about it. Your opinion has strength, as you have something to gain or to lose, you have skin in the game. You have taken a stand on it already, where you may lose or gain something. You are invested. While others with no participation, then for them their opinion is really easy to give - whatever may happen as a result of their opinion will in reality not impact them at all.
Taleb points out how the financial system has lacked skin the game in the last few years. Banks stand to gain from their loans to successful ventures. But if these ventures fail, very often the banks get saved by public entities like the state. That is not healthy at all. They only stand to gain, no risk of losing. That is unhealthy and leads to poor behaviors from the banks, and they are comfortable, always comfortable. And a system that allows for this, that is a weak system that can collapse - as indeed it is happening to the financial system, that has lost all credibility.
He reminds us how this was not the case. Hammurabi's law - an eye for an eye. Let's take a house builder. The law in Hammurabi's time was that if a house collapsed and killed the son of the owner of the house, then the person who built should also lose his/her son. An eye for an eye. So the builder is invested, he has skin in the game. He makes sure he builds to the best of his knowledge. And he can also demand and expect quality from his suppliers, who are also exposed to the same law. It is a virtuous system. Currently, today, architects are by and large more worried about impressing other architects or winning prizes. Often resulting in houses that are simply not best suited for what they're supposed to do. He gives the example of new trains on a NY line. Most commuters traditionally have to stand in rush hour, holding their coffees, that they usually would place near the windows, which had some flat places that would serve for this purpose. New trains were brought in - absolutely stunning and appealingly designed, lots of organic round shapes. But designed by people who knew nothing about the commute, probably had never done it themselves - so designed something not fit for purpose. Eg no space to put your coffee cup... Done and not well done.
This applies to so much. I have been doing central roles professionally - eg not market roles with clear P&L accountability, but more coordination and direction setting roles. You can definitely have skin in the game, take visible ownership and hold yourself accountable when big things go wrong. But it is also very easy to escape this and keep chugging along with no risk, easily deflecting bad occasions to others - the people in the markets, other functions, external conditions. And actually a lot of people thrive like this, and I have come across a few, like my old boss in the company that I've left. You produce stuff that looks good, but that in reality has no application, no one will ever use. But it looks good, and some senior people, removed from the front line, think it is great and praise it. And thus the game goes on. Nothing good comes out of it, rather than frustration for the people who are actually trying to make a difference and make things happen.
There is so much more to be said about the book. It is a huge inspiration to me and makes me think about everything that I do. I want skin in the game. I am willing to suffer for it. But also recognize how easy it is often to shy away from things, there are always easy excuses, other people or situations to blame. Always. And good excuses that people will buy. But that is not living. And you will not grow. You grow by exposing yourself.
In Taleb's views, entrepreneurs have skin in the game. They invest themselves, often their family's life savings (and credit) into something that may work or fail. 'Corporates' don't. They are part of a huge corporation... usually their actions do not yeld immediate effects, and certainly not dramatic ones that can lead to the demise of the organization, which is huge. In my old job, so so often marketers would be promoted because they created a beautiful campaign... which 1 year after they had left, proved to have zero impact in the market. But it looked great and they were rewarded for it, and moved on quickly. The ones afterward were left to pick up the spoils. There, in these situations, the secret to thrive is timing... do you join an organization that is already on the up and you benefit from it, even though you played no role in it... Not what I personally want to do.
I want to contribute. I think I was brought up like that. My sisters also have this. They are doers, they want to make stuff happen. I am often afraid of taking risks but am at my best creating something. Creating, be it a strategy, a product, something. Creators by nature have skin in the game - they are putting something that they made out into the world, and this exposing themselves to criticism - or praise - from others. To elation or rejection. Skin in the game. If you are just commenting, you have not a lot to lose. But you are also not living... you are standing on the sidelines and speaking, to whomever is listening (usually other bystanders)... while the doers do, suffer and thrive, live and progress.
If this appeals to you - do check out Taleb's book.
It is about how the world needs skin in the game. People that can benefit from something, need to also be able to lose. No upside without potential downside as well. Commentators... who just comment but are not involved and have nothing to lose - what to they add? Nothing. And what is their merit? Questionable. Stay away from them.
I love a story that he tells, about being in a TV talk show where some other journalists were commenting about a specific stock. When asked about this stock, Taleb refused to comment, his reason being that he neither had that stock in his wallet, neither did he have it on a short position (eg would benefit from it dropping) - so he couldn't really comment. Other commentators were shocked, as the common held belief is that you can comment about something if you have no relationship with it, since you have no interests. He defends the opposite. If you have a vested interest, you know a lot more about it. Your opinion has strength, as you have something to gain or to lose, you have skin in the game. You have taken a stand on it already, where you may lose or gain something. You are invested. While others with no participation, then for them their opinion is really easy to give - whatever may happen as a result of their opinion will in reality not impact them at all.
Taleb points out how the financial system has lacked skin the game in the last few years. Banks stand to gain from their loans to successful ventures. But if these ventures fail, very often the banks get saved by public entities like the state. That is not healthy at all. They only stand to gain, no risk of losing. That is unhealthy and leads to poor behaviors from the banks, and they are comfortable, always comfortable. And a system that allows for this, that is a weak system that can collapse - as indeed it is happening to the financial system, that has lost all credibility.
He reminds us how this was not the case. Hammurabi's law - an eye for an eye. Let's take a house builder. The law in Hammurabi's time was that if a house collapsed and killed the son of the owner of the house, then the person who built should also lose his/her son. An eye for an eye. So the builder is invested, he has skin in the game. He makes sure he builds to the best of his knowledge. And he can also demand and expect quality from his suppliers, who are also exposed to the same law. It is a virtuous system. Currently, today, architects are by and large more worried about impressing other architects or winning prizes. Often resulting in houses that are simply not best suited for what they're supposed to do. He gives the example of new trains on a NY line. Most commuters traditionally have to stand in rush hour, holding their coffees, that they usually would place near the windows, which had some flat places that would serve for this purpose. New trains were brought in - absolutely stunning and appealingly designed, lots of organic round shapes. But designed by people who knew nothing about the commute, probably had never done it themselves - so designed something not fit for purpose. Eg no space to put your coffee cup... Done and not well done.
This applies to so much. I have been doing central roles professionally - eg not market roles with clear P&L accountability, but more coordination and direction setting roles. You can definitely have skin in the game, take visible ownership and hold yourself accountable when big things go wrong. But it is also very easy to escape this and keep chugging along with no risk, easily deflecting bad occasions to others - the people in the markets, other functions, external conditions. And actually a lot of people thrive like this, and I have come across a few, like my old boss in the company that I've left. You produce stuff that looks good, but that in reality has no application, no one will ever use. But it looks good, and some senior people, removed from the front line, think it is great and praise it. And thus the game goes on. Nothing good comes out of it, rather than frustration for the people who are actually trying to make a difference and make things happen.
There is so much more to be said about the book. It is a huge inspiration to me and makes me think about everything that I do. I want skin in the game. I am willing to suffer for it. But also recognize how easy it is often to shy away from things, there are always easy excuses, other people or situations to blame. Always. And good excuses that people will buy. But that is not living. And you will not grow. You grow by exposing yourself.
In Taleb's views, entrepreneurs have skin in the game. They invest themselves, often their family's life savings (and credit) into something that may work or fail. 'Corporates' don't. They are part of a huge corporation... usually their actions do not yeld immediate effects, and certainly not dramatic ones that can lead to the demise of the organization, which is huge. In my old job, so so often marketers would be promoted because they created a beautiful campaign... which 1 year after they had left, proved to have zero impact in the market. But it looked great and they were rewarded for it, and moved on quickly. The ones afterward were left to pick up the spoils. There, in these situations, the secret to thrive is timing... do you join an organization that is already on the up and you benefit from it, even though you played no role in it... Not what I personally want to do.
I want to contribute. I think I was brought up like that. My sisters also have this. They are doers, they want to make stuff happen. I am often afraid of taking risks but am at my best creating something. Creating, be it a strategy, a product, something. Creators by nature have skin in the game - they are putting something that they made out into the world, and this exposing themselves to criticism - or praise - from others. To elation or rejection. Skin in the game. If you are just commenting, you have not a lot to lose. But you are also not living... you are standing on the sidelines and speaking, to whomever is listening (usually other bystanders)... while the doers do, suffer and thrive, live and progress.
If this appeals to you - do check out Taleb's book.
