Embrace Turbulence. Make Your Life and Business Antifragile

The most fragile moment in my life happened when I learned the NBA was pausing their season for Covid.?

My daughter was 6 weeks old.? She wasn’t sleeping much, so I was sitting up late watching basketball Dallas Mavericks play the New Orleans Pelicans.? The camera zoomed into Mark Cuban’s face.? He was looking at his phone when his mouth went agape.? He showed his phone to the person next to him.? The announcers could only speculate about what he saw.

Around halftime, the announcers told the audience that the NBA was suspending their season.? The second half felt like a funeral march.? The crowd was silent.? The sound of the ball echoed in the stadium.? I remember after the game Lonzo Ball shot extra free throws.? It was like he was saying goodbye to the court.

I looked at my daughter and felt like the world was ending.? I don’t think I was the only one.

My life was extremely for several reasons – my daughter was incredibly vulnerable.? She had no immune system.? I had no idea what the impact would be on her.? There was no upside.? There were no options.? I was highly leveraged on the idea I needed to protect my daughter.

There are other scenarios that can make us fragile – we’re highly leveraged in one investment; we only have one income stream; we only have one skillset that can be easily replaced by technology.?

Antifragile is the opposite of fragility.? It’s an idea Nicholas Nassim Taleb’s book Antifragile.? It means being able to take advantage of disruption.

During Covid, there were a lot of people that took advantage of the situation to relocate.? There were businesses that quickly transitioned to working remote.? Some businesses were better positioned to scale their services in a world that had no in-person services.

Just like wilderness benefits from the death of the individual trees, a life that is antifragile can take benefit from turbulence.?

Here are 6 ideas that come from the book on how to embrace antifragility.

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1.???? Keep it small and simple

Taleb makes the point in his book many times that complex systems are very fragile.

Let’s put it like this – nobody likes connecting flights.? Why?? What happens if your first flight gets delayed? You miss the second one.

I know there are lots of ways I complicate my own life.

I make too many commitments.? I try to pursue too many business ideas.? I try to manage too relationships.?

Balancing all of it becomes a high wire act.

A small group of friends, a small set of commitments, and a singular business focus is less fragile.

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2.???? Emphasize Optionality and Multiple Revenue Streams

Ray Dalio says the Holy Grail of investing is having 15 uncorrelated revenue streams.

Think about it this way, a doctor or an attorney may make a lot of money.? But if they spend all that money, or if they don’t have a second revenue stream, they become very dependent on that first revenue stream.

Or similarly, every documentary about Bernie Madoff or a similar financial crook features a middle-class family that lost their life savings because they invested everything with a crook.

Living a life with one revenue stream is very fragile.? Having multiple revenue streams gives us options.? If one revenue stream is doing poorly, we can pivot to another.?

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3.???? Look for Asymmetric Bets

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An asymmetric bet is one that has the potential for large upside and minimal loss.

Venture Capitalists will bet small amounts of money on a large number of businesses.? The idea is that one of their investments will catch fire and make 100x on their initial investment.? 50 of those investments will fail.

I think this idea is particularly difficult to embrace because it requires embracing small failures.? Humans are very risk averse. We feel the pain of loss much worse than we feel the joy of gains.

In my life, creating content has been an example of looking for asymmetric bets.? I had learned that social media gave the possibility for reaching a much larger audience than is possible in individual sales calls.

Writing content requires being willing to make yourself vulnerable, and a lot of content will not work.?

Similarly, I invest in individual companies with this idea.? I put smaller amounts of money in a lot of companies with high potential for growth.? Some will bomb.? But it only takes one large success to make up for a lot of failures.

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4.???? Embrace small disruptions

Friends come and go.? TV shows end.? Authors retire. ?Customers come and go.? Sales opportunities pop out of nowhere and then they disappear.

If the change doesn’t disrupt your entire life, it’s a chance to improve.?

A friend leaving is an opportunity to make another one who will challenge you to do better.? A TV show ending is a chance to read more.? A customer departing is a chance to replace them with a larger customer.

Disruptions feel terrible in the moment. However, if we have embraced the idea of optionality, they won’t be ruinous.? In fact, they are an opportunity to search for upside.

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5.???? Don’t Try to Predict the Future.? Build a business on something timeless

In the age of internet, this idea was particularly challenging for me.? I’ve asked my wife a question like this:

“Do you think there’s ever been a generation that has experienced more change than ours?”?

We agree there hasn’t.? Internet, cell phones, and social media seem to have to totally changed how we interact with each other as people.? It leaves me feeling like I need to be chasing to catch up with every technological change.

Taleb makes this point – if you want to know what’s going to be around in 1,000 years, ask yourself what has already existed for 1,000 years.

It makes me feel better about insurance.? Insurance is an ancient business.? The way we transact insurance may change, but the need for insurance will never disappear.

Jeff Bezos created Amazon around the idea that people will always need retail operations.? There’s no way to wipe the idea from human existence.?

There are some ideas that are inherently fragile because we don’t know what they will look like.

Virtual reality, green technology, and AI all come to mind.?

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6.???? Avoid Leverage and Keep a lot of cash on hand

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Leverage is the fastest way to crash and burn.? I’m not aiming to jump into a Dave Ramsay vs. Robert Kiyosaki debate.? But I know one thing to be true:

Nobody went bankrupt holding a lot of cash.

People go bankrupt all the time because they carry too much debt and can’t support it.

Debt is like being overweight.? Sure, you can still go for a run, but it’s a lot harder.? Similarly, having a lot of cash on hand is like being slim and agile.? It’s easy to switch directions.

That said, I still love eating chicken wings.? Don’t take them from me.

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Conclusion

Antifragile is a paradigm shifting book.? It helps to identify fragile situations in life.

I can’t tell you how to live your life.? But I hope this gave some ideas on ways I’ve used this book to improve my own life.

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I'm Daryl Henry. I create content for Entrepreneurs that are trying to build something great... as a guy that is trying to build something great. Subscribe to my newsletter for more content like this.