This is an extract from my book The 21 Laws of High Performance.
Once a while, bad things happen – a shock, completely unexpected, hits you hard and turns your life and career around.
You get fired, your company closes, or something as dramatic hits you. Someone in your close family gets unexpectedly sick. You get badly scammed or robbed. You entrusted all your money to Bernie Madoff and lost it all.
These are all unlikely, but they could happen. In fact, at one point, sooner or later, life is going to hit you strong – a big, unexpected blow will shatter all your most perfectly drawn plans.
There’s no ‘best way’ to avoid such shocks. In fact, there’s no way at all to avoid them. No matter how many routines, or how of a high performer you are, you are still going to be hit hard by unexpected events.
This essay will outline how to prepare for such shocks, so when they hit you (and again, they will), you’re in a strong position not only to overcome the shocks but to profit from them.
The Reason Why – Black Swans
These unexpected and high-impact shocks are what Nassim Nicholas Taleb called Black Swans.
Until Willem de Vlamingh discovered black swans in Australia in 1697 a Black Swan was a synonym of the highly improbable, if not impossible. Hence the famous expression “rara avis in terris nigroque simillima cygno” (“a rare bird in the lands and very much like a black swan.”). Until de Vlamingh, everyone in Europe was convinced black swans didn’t exist. In his writing, Taleb uses Black Swans as a metaphor of a perceived impossibility that is later be disproved.
Taleb defines Black Swans as following three attributes. First, they’re outliers – the events “lie outside the real of regular expectations, because nothing in the past can convincingly point to their possibility.” Second, their impact is extremely powerful. Third, despite they’re outliers, humans can retrospectively (though not prospectively) explain and ‘predict’ them.
Taleb catalogs, for example, the outbreak of World War I, the rise of the Internet and the terrorist attacks of 9/11 as Black Swans. But there’s more to it – Taleb argues that Black Swans have dominated society and history, and can explain almost everything in our world, from the success of ideas and religions to the dynamics of historical events.
You Can’t Predict (nor Escape) Black Swans
Black Swans are unknown-unknowns – you don’t know you don’t know them. The odds are you will be hit by a Black Swan sooner or later, and it will often come from the area you least expect it. Things you think are under control can be the source of a significant shock.
When that happens, the key is not to try to avoid the shock (you just can’t), but to put yourself in a situation that when the shock hits, you find yourself in a position to survive and even thrive from it.
You can’t remove uncertainty and randomness from your life. But you can be prepared so that when a Black Swan hits you you can not only withstand the shock but actually get stronger from it. That’s the main line from Taleb’s work – yes, bad thing happen, and the trick is to put yourself in a situation to survive and and even thrive when they do.
Antifragility – Turning Shocks Into Opportunities
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.” – Nassim Nicholas Taleb
Taleb encourages you not to attempt to predict Black Swan events. Instead, he suggests you to build robustness against negative ones and the ability to exploit positive ones. That’s the high performer’s reaction to Black Swan events and that’s antifragility in action.
There’s a long list of organisms, organizations and people that are antifragile. Taleb gives multiple examples:
– Your muscles, which grow and strengthen after training (which literally breaks them)
– The mythical Hydra, that grows two new heads every time you cut one off.
– Switzerland, which received huge influxes during the heights of the 2008 financial collapse
– Bacterial resistance
It’s easy to detect antifragility (and fragility) by using a simple test of asymmetry: anything that has more upside than downside from random events (or certain shocks) is antifragile. The reverse is fragile.
Common sense applies as well. Things can be antifragile only up to a certain point. Train your muscles and you’ll get stronger. Over-train and you’ll ruin them. Stress is good – but there’s a point when it will become just too much.
You can (and should) make yourself and your career antifragile. Here I’ll explain how to become an antifragile person by a) building a rock-solid psychology (“inner game”), and b) by doing specific activities that will strengthen you and give you antifragile traits (“outer game”).
How to Build an Antifragile Life
1) Inner Game
“There is only one way to happiness and that is to cease worrying about things which are beyond the power or our will.” – Epictetus
The ‘Inner Game’ is like your personal operating system. Think about it as the way you see and perceive the world from the inside. In this case, the most relevant philosophy is stoicism – an Ancient Greek-Roman school of thought and action that included, among others, Marcus Aurelius, one of the most famous Roman Emperors.
At the very root of stoic thinking there’s a simple, though not easy, way of living: take obstacles in your life and turn them into your advantage, control what you can and accept what you can’t.
Nassim Taleb hero-workships Seneca, another Stoic, and other world leaders have been strongly exposed to these ideas, including Shakespeare, Bill Clinton, and ex-Chinese Prime Minister Wen Jiabao, who said he read Marcus Aurelius’ Meditations over 100 times.
1.1) A Brief Introduction to Stoicism
“The impediment to action advances action. What stands in the way becomes the way.” – Marcus Aurelius
Stoicism can be traced to Ancient Greece. It was founded in Athens by Zeno of Citium in the early 3rd Century BC, and then famously practiced in the centuries after by the likes of Epictetus, Cato, Seneca and Marcus Aurelius.
The purpose of stoicism is practical application. This aspect is what makes it stand out from other schools of philosophy. It’s not an intellectual philosophy, but instead a toolbox to become a stronger and better person.
To stoics, virtue is happiness and judgment is based on behavior and not words. Stoics accept that they can’t control and can’t rely on external events – but they do can control themselves and their responses.
“Choose not to be harmed and you won’t feel harmed. Don’t feel harmed and you haven’t been.” -Marcus Aurelius
Stoicism is not a negative philosophy. It’s not about beating you up and pointing to yourself everything you’re doing wrong. It’s a technique to give you calm and perspective when others are overwhelmed by negative emotions.
Application of Stoicism to Attain Antifragility
“In life our first job is this, to divide and distinguish things into two categories: externals I cannot control, but the choices I make with regard to them I do control. Where will I find good and bad? In me, in my choices.” – Epictetus
The key in stoicism is that there’s no good or bad – there’s only perception. You can’t control events, but you can control your perception of these events. When a strong negative event impacts stoics, they let go of negative first impressions and instead take a step back, extrapolate past the first thoughts and mentally turn the situation around so it becomes an opportunity. This is the simple stream of thought:
- Non-Stoic – ‘X happened’ => ‘X happened and now I’m screwed’,
- Stoic, for the same event – ‘X happened’ => ‘X happened and now there’s this opportunity’
This is tough. You might think it’s impossible to turn a bankruptcy, a death of an important someone, your house burning down or anything as dramatic into an opportunity. But then you read, for example, the stories that Ryan Holiday wrote in his book The Obstacle is the Way, including Ulysses Grant’s, Rockefeller’s and others and you see that not only are these turnarounds possible, but are what make the difference between those who achieve great things in life and those who don’t.
Moreover, stoicism is applicable to the daily, mundane events as well – not only for big shocks. Again, this is something better explained by Marcus:
“When you wake up in the morning, tell yourself: The people I deal with today will be meddling, ungrateful, arrogant, dishonest, jealous and surly. They are like this because they can’t tell good from evil. But I have seen the beauty of good, and the ugliness of evil and have recognized that the wrongdoer has a nature related to my own–not of the same blood or birth, but the same mind, and possessing a share of the divine. And so none of them can hurt me.”
Again, Marcus was the Emperor of Rome. It’s easy to go by this without stopping to think how big Marcus was. Here we’ve a man who has unlimited wealth, adulation and power – a man who reigned from England, to Spain, to Italy, to Bulgaria in the Black Sea, modern day Turkey, Israel, Egypt and all of North Africa. Marcus was the most powerful person in the world, and he wrote these words for himself.
1.2) Exercise – Turning Obstacles Into Opportunities
As with any skill worth it, it takes deliberate practice to turn obstacles upside down. Make it a ritual to practice stoicism, and every time you have a problem, look for an angle to turn it upside down. Make the ‘bad’ become an opportunity and a source of good. Make every negative situation an opportunity to practice virtue.
Start small. For example, imagine when you’re in need of help at the office or school, you contact someone and he or she isn’t willing to cooperate. Stoics would look into this situation taking a step back – instead of getting sad or nervous, they would redirect their emotions towards new virtues – for example, patience or understanding (empathy).
Your mind is powerful, and it can flip almost anything around. If you compete for something, don’t win and you’re a runner up, instead of being sad and nervous by defeat, use the opportunity to practice virtue by showing fortitude.
More on Stoicism
This is a just a small summary, and by no means can make justice to the immensity and power of stoicism. I strongly encourage you to read the Meditations by Marcus Aurelius and Letters from a Stoic from Seneca, two of the most popular stoic writings.
A more modern angle is Ryan Holidays’ The Obstacle is the Way. As mentioned above, Ryan gives multiple examples from ancient and contemporary stoic philosophy in action.
2) Outer Game – Practical Ways of Turning Yourself Antifragile
As mentioned above, stoicism is a practical philosophy. It takes deliberate action to become antifragile. Here’s presented a way to start.
2.1) Practice Via Negativa
According to Taleb, “the first step towards antifragility consists in first decreasing downside.” This is done through via negativa – meaning that instead of focusing your time on adding things to your life, you should focus first on subtracting the things, habits, practices and people that fragilize you. Examples include: quitting smoking or heavy drinking, stopping to eat unhealthy food, getting out of debt and stop hanging out with negative-minded ‘friends’.
All these fragilize you because when a Black Swan hits you, in most cases they make the impact stronger. If you’ve debt and the interest rates hike 5 to 10%, as it happened in 2008 you’re going to be hit much harder than if you had a clean finances – something like that could potentially wipe you out.
– Practice Misfortune
“Cling tooth and nail to the following rule: not to give in to adversity, never to trust prosperity and always take full note of fortune’s habit of behaving just as she pleases, treating her as if she were actually going to do everything that is in her power.” – Seneca
Seneca, advisor to Emperor Nero, was by all means a very wealthy person. But he still set aside a certain number of days each month to practice poverty. He had little food, wore his worst clothes, got away from the comfort of his quarters and practiced being poor.
This is huge. Here’s a 1%-er of his day, outright practicing poverty. Seneca did this not to be emphatic with the poor, but to familiarize himself with his life’s worst-case scenario. Living (and not just thinking) about life in misfortune can make you ask the following question: “Is this what I used to dread?”
If you live your worst-case scenario, then you’ll be better prepared for when it happens. It’s like a vaccine – take a little bit of a virus, weakened, to get yourself stronger for when the real deal hits you. If you’ve practiced for when misfortune hits you, you will make this misfortune lose part of the ability to disrupt your life.
It doesn’t mean it will not be tough, but it will make you stronger in the face of adversity, and this will be a hell out of a difference when you’re against the ropes.
“It is in times of security that the spirit should be preparing itself for difficult times; while fortune is bestowing favors on it is then is the time for it to be strengthened against her rebuffs.” -Seneca
Practicing your worst case scenario has a double bonus. In many cases, the situation won’t be as bad as you first though – and living through it might give you the courage to go and chase your dreams.
2.2) Embrace Optionality
When chaos ensues and volatility increases, the man with the most options is the most antifragile.
In an interview with Fast Company, Taleb refers to fragile plans and forecasts as “highways with no exit”. Instead, he continues: “any strategy with optionality is like a highway with multiple exits, with optionality being the ability to take an option and branch from the projected trajectory.”
Keep your options open. This is done by, for example:
– Increasing your money in the bank, so you’ve breathing room during economic hardship
– Building and maintaining a strong network, so you’re in pole position for ‘unposted’ career opportunities
– Increasing your skill level, so you’ve multiple career paths in case one goes bust.
In another context, Taleb suggests, for example, that instead of risking all your money by leasing an office up front, you could draw a contract where you pay the landlord a percentage of your profits instead. Focus on convex payoff functions, where options are always part of the strategy.
Apply the Barbell Strategy in Your Own Career
To maximize options and position yourself in asymmetric scenarios, Taleb suggest you employ the ‘barbell strategy’. This strategy is described by Taleb as “a dual attitude of playing it safe in some areas and taking a lot of small risks in others, hence achieving antifragility.”
The concept is to both play it very safe from one side, thus reducing the potential downside of volatility, and exposing yourself to small, yet high-payoff risk scenarios where you can potentially make massive gains from the same volatility. The key is not to stand in the middle – in there, you don’t have the safety of the low-risk side of the barbell and you don’t have the upside of the high-risk side of the barbell.
This is how Taleb made the bulk of his wealth. We can assume his finance portfolio through the 2000s included ~90% in ultra-safe bonds and ~10% in options betting on an extreme market collapse. His portfolio probably barely made (if not lost) money through the buoying markets of 2002-2007, but his downside was capped – he didn’t lose that much, and when the market collapsed in 2008 and he had the options, his wealth multiplied dramatically while most of the rest of the world was going broke.
The key is to avoid the middle, and a further example for the average person includes to keep a boring, but safe day job (the ‘safe’ end of the barbell) and launching a side business at night (the ‘high risk’ end of the barbell). In the Fast Company interview, Taleb said: “never go for a medium profession. Writers should have a menial job or (if possible) a sinecure, and write on the side. Otherwise writing for a living under other people’s standards debases their literature. The same for artists. The best philosophers were not academics, but had another job, so their philosophy was not corrupted by careerism.”
The barbell concept and ‘ignoring the middle’ strongly linked with the 21 Laws of High Performance. It’s like staying out of the grey areas – work extremely hard in fully-focused periods of work, and then take fully-focused periods of rest, with no ‘in between’ periods where you’re half-work, half-distracted.
2.3) Position Yourself in Asymmetric Scenarios
The difference between fragility and antifragility is the asymmetry of the scenario. Most situations are either convex or concave:
Fragility is concave – you’ve more to lose than to gain, more downside than upside
Antifragility is convex – you’ve more to gain than to lose, there’s more upside than downside
The positive asymmetry is in the options. In this context, options are not just an investment – options give you the right (but not the obligation) to act on a certain scenario. In case the scenario is not favorable, your downside is limited to the price you paid for the option. If the scenario is favorable, your upside is very high or has directly no limit.
Taleb insists that you should seek out to create options that have a strong upside, but very low cost downside. For example, he mentions rent-controlled apartments. If you can secure a rent-controlled apartment, you’re protected against rent increases, but if rental rates go down elsewhere, you’re free to move. When you sign a contract, always insist on the option to cancel without a cost.
As another example, in his book he tells the story of the Greek philosopher Thales of Miletus, who bought the rights (but not the obligation) to use idle olive presses over a year for a very low fee. After an unusually good olive harvest, Thales made a fortune by renting out the presses to olive growers.
Spotting the Right Opportunities
“Be wary of the man who urges an action in which he himself incurs no risk.” – Seneca
If you’re going to take advice from someone, double-check that they’ve skin in the game. If the person sharing his or her advice and predictions has nothing to lose from being wrong, don’t listen to them. Instead, focus your attention on the people who accepted risk and responsibility for their words. In practice this means, for example:
– If someone suggests you to buy a stock or option and doesn’t buy him or herself, ignore
– If someone insists that you to quit your job and start a business, ignore unless he or she invests in your new business or opens his or her network for you
I personally practice every day each one of the 21 Laws of High Performance. If I didn’t, I would be one more charlatan – and the world is already full of them. Only take advice from those who walk the talk.
Practice Trumps Theory
“Don’t put theories into practice… create theories out of practice.” – Nassim Nicholas Taleb
I spend 10-20 hours every week reading books. I’m not the only one – so do most high performers. Taleb himself reads books 20+ hours every week, and, not to my surprise, so do people I admire as Tim Ferriss, Ryan Holiday, and others. While reading it’s not a pre-requisite, it’s a pattern among the most ambitious.
Most of them have an ‘anti-library’ as well. ‘Anti-library’ is Taleb’s concept of not the books you’ve read, which represent what you already know, but instead all the books you haven’t read. Having a big-pile of unread books is a humble reminder of what you don’t know. Knowing what you don’t know is just as important as knowing what you do know.
However, for all the books, always remember that doing what works in practice should always trump what’s supposed to work in theory. In Antifragile, among his (many times rightful) bashing of academics, Taleb talks of the ‘Green Lumber Fallacy’, which explains that most real world interactions are complex, messy, and don’t fit into flashy models. Instead of relying on academic generalizations, Taleb suggests you to use the trial-and-error, feedback and tinkering processes to iteratively improve on what’s working.
All things equal, always follow the advice of the practitioner with skin in the game vs. the out-of-touch academic. However, be mindful that each scenario can be different, and what worked for one person might not work for you.
2.4) Building Redundancies
“Redundancy is ambiguous because it seems like a waste if nothing unusual happens. Except that something unusual happens — usually.” – Nassim Nicholas Taleb
Antifragile things have built-in redundancies. Just look at nature – animals have two kidneys, two lungs, two testicles, and in all cases just one would be just fine. This could be labeled as inefficient, but when a major problem as disease or an accident strikes, it pays off to have one spare.
This is the contrary of the so-called ultra-efficient people and organizations, which can then be impacted hard when a Black Swan hits. The Black Swan will hit, more likely than not, and then the antifragile will trump the ultra-effective.
But… Doesn’t this go heads-on against The 21 Laws of High Performance? Not really. While the 21 Laws will make you more efficient and more effective, they leave ample room for the right type of redundancies. These include, for example:
– Extra pen and pencil during exams or important meetings
– Extra preparation for possible questions in an interview or pitch
– Emergency fund
– A side-job
– Harddrive backups
In the Art of Manliness, Brett McKay recalls the example of Theodore Roosevelt: “Theodore Roosevelt understood this. Because he couldn’t see very well without his glasses, he carried with him 12 (!) extra steel-rimmed pairs when he deployed to the Spanish-American War. He stashed these back-up glasses in various places on his person and in his equipment, so that no single accident would destroy them all. A few he put in his saddlebags, and several were sewn into his shirt, belt, pants, and even the lining of his hat.”
2.5) Intentionally Inject Volatility
According to Taleb, the more volatile a system is, the less Black Swan-prone it’s going to be. For a system (or a person, or an organization) to be antifragile, the key is not to completely remove risk (you can’t), but instead to intentionally inject moderate doses of volatility and/or stress. I repeat examples here:
– Vaccines. When you get a vaccine, you inject a weakened, ‘dead’ or ineffective virus into your system, but it’s a virus still. The small stress prepares you for when the big one comes.
– Fasting. Starving yourself, for example, has the upside of breaking the bad proteins in your body – a process called autophagy.
This has day to day applications. You only grow out of your comfort zone. If you stay in the cozy, quiet world you know, when the unknown hits you, you will be punished hard. If you every now and then do small experiments that push you out of your comfort zone you’ll be more likely to thrive in a changing scenario. While the 21 Laws can be the paramount of example of positive ways of getting out the comfort zone, there are much simpler examples:
– Take cold showers
– Run or lift weights beyond the level you’re used to
– Work 14-16 hours every day for a week
You need some short runs of volatility, adversity and stress to become a better person. Long-term, negative stress can have negative effects, but there’s no personal growth without some short bouts of stressful work. All ambitious people will, at one point or the other, need to work 16-hour days for a week – those who have lived that are the most likely to thrive.
Remove All Stress And You’ll be Fragile
‘Fragilistas’ are those who, in Taleb’s lingo, attempt to eliminate volatility in their lives. They’re the ones who try to remove tension, stress and variability in their day to day – again, a loser’s game, as to completely eliminate randomness is not possible. Randomness and variability are the rule, not the exception.
Take, for example, ‘helicopter’ parents. Trying to make life as easy and safe as possible for their kids, they put them at high risk for the inevitable time they’ll have to face adversity on their own. I can recall the Danish (or by extension, European) welfare state as another example – even out of a job for years, people still receive enough money for a decent life. Just as with helicopter parents, this is idealistic – nice in theory, but as states start to gradually dismantle their welfare nets, those who have never suffered the heat of reality will be left in disarray.
Traditions as Time-Tested Heuristics
“Now, what is fragile? The large, optimized, overreliant on technology, overreliant on the so-called scientific method instead of age-tested heuristics.” – Nassim Nicholas Taleb
For Taleb, traditions are time and battle-tested heuristics – the kind of knowledge that makes us walk confident through a volatile and random world. They’re ‘rules for life’ that have lasted the test of time, and all too often empirically based – again, practice trumps theory.
The thinking goes, if something was good to last for a thousand years (or, in modern times, 20 years!), then it must be really good. While not always the case, sticking with the old has benefits that outweigh the drawbacks. Here’s some ways in which Taleb attaches to these time-tested traditions:
– He drinks only liquids that have excited for more than one thousand years (wine, water, coffee, for example)
– He doesn’t eat fruit that was not present in the Ancient Mediterranean (like pineapple, papayas)
– He follows Greek Orthodox fasts for heath rather than religious reasons
– He only reads books that have been published over 20 years ago
The first principles didn’t change much in the past thousand years. We’re much more similar, in behavior and in everything else, to the Ancient Romans, for example, that you might ever think.
Black Swans are the rule, not the exception. Randomness and volatility will always be present in our lives, want it or not, and it’s smart to be prepared for them.
It’s not that you’ve to be a pessimist. You still have house, car and/or health insurance, right? Think of all these exercises an insurance for when bad things can happen. It may be that for decades you’ll never encounter a Black Swan. Lucky you! Odds are, however, that you and most others are very likely to be struck by multiple Black Swans at some point.
When that happens, if you’ve prepared, if you practiced for the moment, being a stoic, multiplying your (mostly asymmetric) options, building redundancies and injecting volatility in your life you’re the one who will thrive.