#BLOCKCON - Day 2 (Oct 11) - Fireside Chat: Nassim Nicholas Taleb & Naval Ravikant

[Music] hi my name is kashish and next up is navall Ravi Khan [Music] hi I'm kismet and next up is Nassim Nicholas Taleb so this is the the German version of skin in the game but given that I don't read German I don't know what it means but they've used the word the English word skin in the game so let me talk about the concept but it's not as straightforward as you think so I'm gonna start with counterintuitive aspect of skin in the game before even defining it it's about how you acquire knowledge how how you do things so my origin my national origin is trader okay a lot of people have a national origin as mathematician or scientists or something like that and then they become traders I started as a trader means I stood with these people at some point and you know they spit on you and you so acquire all the germs particularly that they have children go to schools one so practically and in a couple of years it can practically cover every possible you know airborne disease that the planet can have in staying with these people and and it's not always crazy but what's crazy is even crazier than it seems here so you spend your time as a trader I was working with mathematical products I was also trading from a desk as well which is less romantic as this kind of wild jungle atmosphere so when you do mathematical training you quickly realize that theoreticians are full of baloney to be polite there's something wrong about theory and their view of the world clashes as you know was that if every trader we do things like people who ride a bicycle or say prostitute being lectured by nuns or and and you know about about you know about how to you know how to do their business it's kind of thing that academics for us were people really outside the practical world who've never done anything and they're models it's not that they're imprecise it's a different world okay so that's how the idea of skin the game came to me because eventually you retired from trading you lose hair I had here when I started I lost my hair you you want to do something else with your life 21 years of trading you know sort of miss it but you you want to grow up and become a real person so what do you do I kept looking for professions but I wasn't good at anything else and then I tried the retirement activities tennis do you play tennis no okay I can't concentrate you know playing tennis so you lose concentration and and technically when you play when you have partners is getting angry okay complete tennis complete chess for the same reason you have an idea to start meditating or playing chess and you forget you're playing chess so I realized I wasn't good at anything so I said okay I'm gonna give a little academia a try so I tried I started an academic career working on modeling and telling academics there's a full of baloney alright and be polite the Bologna replace was usual things that are clipped on radio okay so so this is the ideas this is my bio so in other words instead of going from theory to practice I went from practice to theory I saw something completely different so let me explain something that developed something called the ludecke fallacy the ludic fallacy is that the randomness and idea was probability the randomness that you encounter in real life absolutely nothing to do has nothing to do with the randomness you find in textbooks or in games and I use the word ludecke because ludecke means games and Latin now sure enough someone has that painting right for sale at Saatchi you know such or I think exhibited as a Sachi museum called the ludecke fallacy and I you know can't make head of tales of what it means all right but it's nice to have your concept someone paint painting something after a concert he's probably on drugs and painted something and then read the do like fallacy I decide to name it to name what he painted the logic fallacy whatever it is but I'm just showing it to you in case you can figure out because I couldn't figure out so now comes the expert problem still I haven't defined skin again have you noticed okay I may leave it to you but so see my bio started practice to theory realize that things in practice are much more complicated than theory and that of course in theory there's no difference between theory and practice and practice erase and then that that concept of ludecke fallacy because my specialty was randomness and probability and give it a name as we can see in the paintings so with this I'm gonna explain the expert problem there's two kind of professions and the black swan i define there's a profession in which the professionals are really professionals they don't know what the hell is going on yet nobody knows that they don't know or at least you know those who pay them don't know that they don't know what's going on and the professions where people know what's going on and how can we make the difference between these two and a black swan I said okay in domains like what I call Black Swan fraud like climate studies they have no clue but weather forecaster over next week has a lot of clue otherwise it can survive so came up with this idea of expert problem but I can illustrate it best with a story of a friend of mine who's also a trader and had the brilliant idea to go loses money in the restaurant business and when you retire he you know he and it was very nice because he lost his money prevented me from losing mine and that business now what did he learn in the restaurant business something quite central that can illustrate what's going on with our society all the other society summarized in one as well as will dick fallacy the in the restaurant business they have awards granted by newspapers and by and by of course other restaurateurs the best wood-paneled restaurant in the eastern United States the best sushi tuna sushi in Western Canada okay and then you have these all these awards so my friend noticed that there was a gala dinner at every the gala dinner every year you know say every year and and during that dinner the award you know the awards are given so guess what most restaurants that got the words were out of business by the time they had to get out there so what's the lesson there very simple lesson whenever you judge my peers you don't want to impress your peers and that's one thing I learned as a trader as a traitor there's a rule and I remember when I was very very young a trader I had a lot of hair and the badge said no no trader new member is called there's a old fellow you know or bored bald typically all traders grouchy and bored all right hey comment kid oh yeah he said stand up here okay he said if people like you over here you got to be doing something wrong okay kiddo now we can go now right so so that lesson I learned from when you judged by reality it's a complete different dynamics then when you're judged by your peers so businesses were you charged by peers our businesses like the restaurant business will rot okay and businesses were you charged by reality by your P&L by your accountant the only person you want to impress at the end of the day is your accountant now true you don't want to be hated by your peers but it's not they're not the ones whose approval you need to seek now academia it's a business where people are entirely judged by peers entirely this is what causes all the problems we have bureaucrats who judges bureaucrats other bureaucrats the boss this is it doesn't work there starts to have meetings you see and when a firm becomes very large you start you cannot associate the P&L attributed directly to a certain person that you start having meetings busy fly to Omaha come back you know do things you know talk to you on the phone for two hours as write long emails stuff like that that's the problem yeah we see this in the tech industry too there's a lot of tracking of inputs instead of tracking outputs exactly a great engineer can create a billion dollars worth of value look at Satoshi Nakamoto and a bad engineer can cost you value it has nothing to do with the amount of time they put in yet they're still managers who want the engineers in at 8:00 a.m. they want them working 4050 hour a week so this is complete nonsense exactly exactly exactly and training basically you're just charged by the P&L if you lose money no matter how nice you are it's not gonna work and if you make money no matter how nasty you are so here plumbers a plumber has got to be judged not by other plumbers you don't like you know the compensation isn't determined like so our government calls up other plumbers how much should we give them in bonus or it doesn't work that way okay it starts by you same with a dentist if you show up to the net this office with your teeth intact and leave the dentist's office half of a missing or visibly there's a problem okay you can catch some competence very quickly so there's a judgement either by metrics as in mathematics or physics or in hard science or engineering or by sum or because they have laws or by some the clients by reality just like restaurants so but you have businesses where people are judged entirely other people so the minute this is why you can figure out if journalism's are going to die because journalists try to impress other journalists that's their business they're not you know they're not trying working on the reader so you can have monoculture and become very vulnerable so this to explain the that that what I call the expert problem is that they don't get it the New Yorker doesn't get it because they are part of the expert problem there's that 1% of people that you're gonna call the iyi intellectual yet idiots and that class of people they have no accountability to reality they just account to one another and of course they're gonna have it's gonna degrade as a business and this is where what do experts do when they want when when you catch them with the pants down basically macro economists have never forecast anything a guy like Paul Krugman I hope I'm reported please make sure I'm recording Paul Krugman he he knows he it's like worse than random okay why do we keep why don't we replace and was miss Bri she's an astrologist and Lower East Side and and and was a much better track record why don't miss Bray I think they're equivalent with this crowd is someone like a Nouriel Roubini I don't want to comment on my friends with a crypto crowd right it's become popular to say like Bitcoin is rat poison or it's actually it's a ponzi and so on it and every time one of these experts has called it is being a failure it goes up you know 10x the next I see okay yeah I don't but if these guys had a P&L there we go if Paul Krugman has a P&L he'd be bust long before bid to win exactly he'll bust with the election because when you have a P&L you can't really your way of life there's no point in bullshitting financial assets because you can just go short it just put your money where your mouth is exactly people get into arguments about online whether bitcoins that I hit a certain price by a certain date you don't have to argue online you can go to let your ex so you can go to your favorite exchange and shorted or just take a position exact so much yeah I have an aphorism that you don't want to win an argue wanna win it's very different yeah so and here of course what do I so the experts do they compare themselves to pilots and we know that a pilot is an expert because a pilot has skin in the game bat pilots where are the bat pilots underwater on the water because they have skeletal Gabe okay it's even it's not just like like a restaurant that can fold there's a they're gone so there is a selection mechanism so it doesn't depend on judgment of other pilots at least you know now you know in the later phases of life so so that's the problem so you end up having feels like economics this is a mind pick an economist this is how they think you know they have that clarity of mind this is let's have a good day here after a cup of coffee to expresso that's how they think and it's just to tell you how their mind works okay and they don't realize what's going on face one I made the mistake of getting an economics degree alongside my computer science degree and I can tell you that in 20 years of venture investing in startups macro has been completely worthless if anything it's been distraction entertainment arguing about things that don't matter it's just another branch of politics yeah Micro has been very not judged even micro they're not judged by any contact with reality basically they don't have a P&L if you don't have a P&L you pretty much can because they can get what I call a circle or citation rings they can get into any kind of game grant one another no bells and and nobody would know the difference so now I'm gonna define skill in the game with a notion of symmetry okay so before I was introducing it's cutting the game from the back door my you know my own experience with it this is an Aluva in Paris and this is Hammurabi's code it's the earliest code we have found so far 3,800 years ago this was in a public place in Babylon most people can read so those people would read it for you then I think the reader come over tell me what it says and it says the following if the architect builds a house and the house collapses the architect shall be put to death okay now of course it's quite harsh it was Hammurabi remember it's not like talking about Jimmy Carter or someone that was much earlier okay so how was hammer Hammurabi's law what what does Hammurabi's law aim at it prevents you from hiding risk you cannot hide risk and then walk away from it the architect will always know more about where the risk is located then you so they can hide it in the basement and somewhere it can hide it in a foundation where they can cut corners and then walk away and go to another city and let the building collapse and say oh it's no longer my problem you bought it ok you can't you cannot walk away from the risk you've hidden that's the core of Hammurabi's law and let me show how I encountered it in my life as a trader was something I call the Bob Rubin trade that people still don't understand it's as follows Robert Rubin collected 120 million dollars in compensation at City Bank for over a decade and of course stuffing Citibank he was he was a vice chairman and Citibank was in a you know taking some classes of hidden risks in black industrial proportion and sure enough there was absolutely no edge to these trades if they just blow up infrequently and in 2008 Citibank was insolvent and who paid for Citibank who stopped it out max payers we did taxpayers maybe not you because sure uses I'm a taxpayer you're a taxpayer I'll show you you you you know how to defer taxes but the loopholes okay so with you have you have been include in that class of people your your dentist you're the bus driver the uber drivers they pay taxes you know that's because anything online and they say electronic you know all the worst part is after these kinds of collapses they say never again so then they put in place tax and policies that actually suppress entrepreneurship or actually the exactly create the upside black swans they put more regulation and then they call it some very unfortunate highly unexpected event often called Black Swan for which we apologize profusely but we are excused as nobody can predict these things we're actually all gathered here to cut as a direct consequence of the Bob Rubin trade because the Bob Rubens of the world lost enormous amounts of money it was a generational theft of trillions of dollars yes both through printing money and through taxes and his risk we all paid for it but in 2009 an unknown character named Satoshi Nakamoto released Bitcoin and in the Genesis block of Bitcoin he cited bank bailouts as the reason why while you can't trust the Fed why why he created Bitcoin I think it was inspired right alright at least a dedication to Bitcoin in the Genesis block is revenge for the Bob Rubin trade that's even more impressive about that story so and of course needless to say that this has happened many times in history in 93 there's something called the Resolution Trust Corporation mint 600 billion dollars at a time to bail out a category called savings and loans they all got rich one of them went to jail one single person went to jail the rest they all got rich and retired and of course nobody showed up was a checkbook like Bob Rubin didn't show up on that day was his checkbook he just resigned and say it's a black swan 1982 banks lost more money then than they ever made in history money center by banking so banks virtually have never made any money they've just been living off of the taxpayer but yet bankers are very rich they just know how to socialize law says it exactly as they know how to hide their losses so that's the skin in the game thou shalt not have the upside without bearing the downside yourself you need to own your own risk so that's the whole idea after Hammurabi of course we have had a little more let's say more what what should I call a more human you know softer rules okay like don't do to others no more of this killing architects or something it became the notion of symmetry society became based on notion of symmetry okay you don't want to punish someone too much you want to punish too little you don't want to have you know someone victimize others with impunity so there's a bunch of rules of which the better-known one is a golden rule do to others as you want them to do to you and I of course and skill in a game don't like the golden rule because the golden rule is positive role it's invite if I you know I can force you to eat Lebanese could be all right that's what I'd like to do so and it also can invite busybodies governmental people yeah who make you do things because they like it so that much more much more of us in a silver role don't do to others what you don't want it to do to you or the negative Golden Rule vastly more robust it's like all the people who are talking about censorship mechanisms of social media yeah I think the intellectually honest way is you build the censorship mechanism then you hand it over to your enemy to run it and if you're not willing to do that then you're what you're basically just saying is I want to be in charge but you're trying to do it in a in a in intellectually dishonest way you try to do it a face-saving way where people will give it to you but it's just to make it exercise of power again I see so and then but the the the Greeks and and and and the ancients we're aware of it basically that that the captain of the ship needs to be you get off last not like the you don't sneak out first like the captain of the Titanic and then you had rules only wishes that you eat your own cooking mercury was walking by one day and a bunch of fishermen had a lot of I think that the tortoises right so tortoises sorry yeah bunch of tortoises in Libya was or somewhere and and they were they don't like him so they invited them to eat the tortoises so mercury looked at them I said do you think I'm an idiot okay like was a New Jersey accent mercury he said okay you guys are gonna eat all these tortoises right first and then I'll eat the rest so he forced them to eat their own cooking so that has been present in pretty much in commercial law forever as a guiding principle ethical principle and you even see the entire sections of the Talmud are based on the symmetry in other words in transactions where there's a consideration in the contract and an ecosexual contract based on consideration that's what comes from whether someone is taking too much risk for others like for example in Rodian law that comes from Phoenician law for example if both saying if a boat is you know pirates say take the merchandise or something who loses the money how do you share it okay all parties who can benefit from the transaction are obligated to pay the cost so you have to have complete you know equity there and there are other concepts like how much information should you disclose to the buyer say how much should you disclose to the buyer when you have a transaction there's an ethical they are series of ethical rules yes if the buyer is someone from your community you're obligated to the - to divulge evolve everything but if he's a stranger how much is involved a lot of ethical rules that have I mean from that you can see in the Talmud you can see in Islamic law and you can see it of course in Roman ethics there's also phenomenon when you have like long caravan people crossing the desert or going through a difficult situation like the exodus from Pakistan to India during that separation if you were in the last few carts you were most likely to get picked off by brigands and robbers and if you'd lost something there then the rest of the caravan was supposed to make it up to you they're supposed to repay you because you were taking the most dangerous position in the back yeah so this risk sharing is actually this was a part of Islamic caravans as well because in a deserts the same story as robbers will attack those who are isolated in the back that way they won't kill you will take your merchandise and the other people are forced to compensate them or take turns on who's gonna be in the back right so so this is not new but there are a lot of nuances and as we will see in a conversation basically modern life has lost some of these considerations and we'll see how at no point in time in history I'm saying no point in time was few exceptions one exception was India another was I think like Egypt at some point and the ancient Egypt and one of them was modern-day France I mean modern day like hundred years ago France except for these situations at no time in history did you have leaders who took less physical risk than the common person no at no time the whole idea being a lord is you got to protect your trading status for obligation to protect so now that we've got to take more risk and Anna Falkland Wars or sorry it's called the Malvinas and some countries you know the Falkland Wars the they had to find someone from royal family to fly you know take the most dangerous mission and helicopter simply to you know confirm that role so and and and of course we lost that so you have you can have some schmuck and Washington war monger okay you can have war mongers we'll never take risks in generals now lead from the rear exactly and and warming up their civilian warmongers whereas in the past wartmongers had to be the embattled and and and and what does this symmetry do is that you want to cause people to die you got to be exposed to it it brings some kind of natural balance to society and let me explain how if you get on freeway okay you can easily kill 30 or 40 people okay I already have to do is go and reverse okay if you have a Tesla car that accelerates very well even better all right how come you don't see these freak accidents any more obvious kidding again it's gonna the game because the driver bad drivers are dead just like bad pilots okay there is so that is a regulator so it's the same thing with wars Hannibal was first in battle Napoleon first embattled Napoleon was actually they complained he was way way too overexposed in battle okay on his horse going around the battle field okay in the Polian roman emperors this is valerian a roman emperor who was captured by the persians why because he was had to be a frontline he wanted to be in the front line he's an emperor you gotta be you know you gotta have a little bit of dignity come on Julian my hero Julian the apostate and the Roman Emperor died with a spear lodged in his chest why he didn't have a shield so you know you had to take more risk that's your business he ended up being use the footstool but yeah footstool footstool by the by the Persian Emperor that's risk let's race hold encrypt everything risk this is a risk only one-third of amperes died in their bed and we're not even sure they died of natural causes okay so we never had that situation as a way you got a but people aren't fools you can you can tell that a person a warmonger in Washington working for a think-tank wants you to destroy Syria like the way we destroyed Iraq and Lybia in the name of democracy so we destroy because for them democracy is very important so they cannot learn from experiences you can never ever experiences so these people but we know they're full of crap we know Thomas Friedman is just a hacked full of crap ok it's just unfortunate that that people listen to them in Washington but the general population detects that because the general population can detect if a person it has cars or not takes more risk or not this is what's called a hovering signaling in the sense that when you're a risk-taker you take you have scars no and you produce these scars as an ornament the Xavier signaling is a concept that we discovered why do peacocks have these fancy tails these tails in fact are handicapped it's just to show their genetic superiority that they can function in spite of having these large burden Airy tails that bring predators because they're good that's wrong and they use this I took in Jaipur India this picture of the in front of me of the peacock so there's a call set of zahavy and signaling in other words called costly signaling it's not cheap signaling it's costly signaling you say there's a lot of virtues we're going to talk about virtues there are fake because anybody can signal these virtues but risk-taking is real you cannot fake risk-taking you cannot fake risk you can fake virtue not reorder what we call regulate virtue so this explained to me fundamentally why we spend so much time haggling I mean over in theology over the nature of the Christ I come for that part of the world where these discussions taking place the Greek Orthodox Church if you had I mean if you had to if you had a library you would have probably you'd fill in a stadium with documents about the discussions of you know and the arguments of whether the Christ was God or was not God but something like a God was a big difference and why did they always revert to the notion that the Christ could not be full God why because think about it if you're God you don't have skin in the game it's like an a Superman thing all right you have to have some vulnerability somewhere all right you have to suffer so you suffer because you have skin and again that's all concept and in Christology people don't think of that it effectively let's think about it if you go to a circus and see an acrobat with a parachute or instead of an acrobat with a parachute they show you a movie all right an acrobat and you want you want the person in front of you to take risks that's what you want that's what you paid for okay you want real risk because otherwise you're not signalling any virtue unless you take these risks and this is that was a story of Christ and this something that people don't get is that any virtue that doesn't entail some kind of sacrifice or cost is not virtual the gods in the old days did not let you you know just you know claim to be their subject receive your loves is also something without paying the price without without having something to lose for it and now in our society we have fake virtual what's fake virtual this is a hotel room they sell you save the planet dear guests save the planet what am I doing here saving the planet or saving their bottom line okay so they're using the planet as an excuse all right let's go what I call virtual signalling if virtual that'll cost you anything doesn't entail any risk-taking there's no risk in what they're doing and and you cannot have virtual that way so so here when young kids ask me what should I be doing okay and life start a business don't don't try to get a salary don't join an NGO because all they do is virtual signal maybe the initially the the founders really meanwhile but then you end up with people trying to game the system people I called rent rent seekers like the UN office in Lebanon for example they talk about deforestation so they can have the staff and they can have the funds so they can fly first-class and get a nice apartment but when you look at the numbers there's no deforestation you see so you have all these all this industry of NGOs so the first thing is tell a young person do not join an NGO if you want to do well start a business and fail your head because basically we need people we can't live off of Petrus everyone is seller you need to fail to take risks and just like a fallen soldier okay it remains more honorable than someone who has never been a soldier you say is there such a thing as a dishonorable fallen soldier no that soldier is very honorable why a dead entrepreneur fail and why should have failed entrepreneur be not something very honorable more honorable than some who've never been an entrepreneur come back with your shield or on it sorry come back exactly come back with a shield or on it so so this is the recommendation you know make is that start a business and then one thing I noticed some people won't like this but either I didn't think that Trump had any chance till I saw him standing was the 11 in the primary with 11 or 12 Republican opponents and at a time the there was a campaign to explain to us that Trump was an incompetent businessman because he lost a billion dollars of his own money the American public is no fool there's something real about losing a billion dollars if it's only relation with your own money so although it makes a professor at university would think oh it's horrible to lose a billion dollars like failing an exam life is not an exam losing a billion dollars makes you real and that helped them get elected at least help them in that stage of the election in the primary so in equality a lot of people talk about inequality first of all there's an error in the way we measure inequality we measure static inequality static inequality the u.s. we don't do very well compared to say Italy or France but dynamic inequality you realize that if you take 1982 the 1982 Forbes 500 richest people comparing to the 2012 you realize that only 10% of the families cross the list okay whereas in Italy if you do Florence 1620 and Florence 2015 you will notice that the same names now side on the list so you got a look at it dynamically basically in America I think 60% of Americans spent 10 years sorry 1 year and 10 percent and something like more than 12 percent of Americans spend at least one year and a 1% so we have the dynamics worse aesthetic that's not the thing there's something fundamental about inequality people are willing to accept inequality if the person who was richer is taking risks they say you know accept inequality if it's a ranked seeking CEO making fifty times or worker makes and people got upset about it but people are never upset about Steve Jobs being richer than then than others and actually the Swiss were trying to pass a law his Swiss could see the difference the public who said it was trying to pass a law I mean it didn't pass but you know it was not close but it was like 30 40 percent of people wanted to limit the salary of CEOs but not entrepreneurs there's a difference between answer preneur because entrepreneurs have skin in the game to limit because society doesn't like rich people who made their wealth without skin in the game you can detect it that's what's unpopular yeah people with a political agenda will conflate equality of opportunity with the quality of outcome equality of outcome is communism it's a terrible thing exact coercion but equality of opportunities what you strive for it not that you can ever really have it we all get dealt a different DNA hand and where we were born and how we grow up and what we learn and what our temperaments are but you could you can kind of at least narrow it down through education but you can measure you can also measure this inequality equality of opportunity with a negative metric most people look at the opportunity of people to rise well if you rise someone else can come down no right so you got to take someone else's spot so it's not quite a zero-sum game but still you know what dinosaurs just stick around so the best metric is how many large corporations fail yeah today in the United States the company's average life in the S&P 500 is 11 years today and dropping used to be 60 but the average price to earnings ratio is much higher than that but that's because extremists and their extremists are huge a fire exactly so there's nothing wrong provided Google has is exposed to go and bust one day they say same with the other firm some of the firm's in which you've invested okay the failure rate for small startups or for small cryptocurrencies as we all know it's very very high so so I'm gonna finish with the very start of the conversation was one more point that again it straighter story there there's something I call the green lumber fallacy is after the following the following metaphor there's a trader who as a fellow who wrote a book on how I lost a billion million dollars which at the time when he wrote is very respectable million dollars was a lot of money okay now you know they didn't have Obama the Obama years and Greenspan printing okay so how did he lose that million dollars he in traded green lumber and he knew everything about green lumber he knew the statistics physics chemistry everything the supply the demand the geography the consumption he knew everything about green lumber read every magazine every book he could find on lumber and let he lost all his money turned out there was an opit fellow an all trader who was very very wealthy and and always made money trading real Umbra's he trades nothing else and one day the narrator discovered that that fellow thought that green lumber was not freshly cut lumber that it was lumber that they took lumber and painted it green right and yet he made a fortune using green lumber so what does it tell us it tells us that from the outside like an academic approaching a problem what you need to know it's not that it's not what what what the fellow who made a lot of money his name is I think Siegel's like Jerry Siegel or something like that it was that what he knew was not like it's not like he didn't know anything he knew a lot of stuff that stuff can only detect from the inside you can never know from the outside what it is you see you have to play a game you have to play the game to know what you need to know okay from the inside not from the outside people people are always asking me to recommend a game theory textbook and the reality is I never read a game theory textbook when I was young I just played a lot of games okay there you go so you you from from being in that game you see things differently which is why education I think an anti fragile and hopefully we'll discuss that an anti fragile are rail against education and then finally my final slide and we're going to stop started conversation is about the following the following quiz which applies to any business where there is skin in the game say you go to a hospital and for your brain surgery you need to have a brain surgery you probably will enhance your your mathematical skills there's a special surgery all right you go you can do integrals after that surgery so we show up to the hospital and you had a choice between two doctors the first one looks like what Hollywood here would put in a movie you know measured clear English Harvard degree on the wall someone who really looked like a Hollywood doctor Hollywood version of a doctor a brain surgeon and the other person same ranked and in the hospital looks like they it looks like butcher thick fingers no diploma on the wall and speak with a thick New York accent okay like you can put them in a mafia movie from somewhere all right so and no diploma on the wall means he's embarrassed by his background which doctor should be rationally pick who would pick the butcher who would pick the slick Hollywood doctor okay there you go so the point is unconditionally you should pick the hell the Hollywood doctor right but here they're the same rank and University so think about it the person who looks at least like a doctor gotta have the most skills because he had to overcome the perception bias against a similar learning in early stage investing where you tend to avoid teams that look incredibly polished exactly good powerpoints they're well addressed they present well what you want is the person who's been busy in front of the computer flustered gets up in front of a whiteboard explains things a little too complicated but has the genuine substance it's actually but the form alone lets you avoid it so you get business plans that are too well written and they use too many buzzwords and you reject him just in that basis you know I would re I would take it one step further and argue against a business plan anybody was capable of writing a business plan you don't invest with them yeah so okay so now let's start the conversation yeah before we get into it I'm gonna give him a theme a proper introduction because I should have done that at the beginning but I don't know as me part of the presentation I normally have a rule but I don't travel for conferences and neither probably should you because they fall very much on this whole side of signaling right where you're kind of like looking busy for your boss rather than actually doing work now there can be huge benefits you can network with the right people when they're small you can meet the right people but you know cities sitting in an audience doesn't have that much value for you you could sit at home and watch it on YouTube so I normally don't travel for conferences but when I got the opportunity to speak with Massey my I had to come down from San Francisco to me he is one of the very very few living natural philosophers which is someone who practices science as real work in science but outside of a scientific institution outside of the credential system and I think his work is the kind of work that will last for a thousand years I don't say that but I think I think people will be reading you know their books that the seam is joking and I won't insult him by calling him dr. Talib's Alta but ya know I would know that you if I call you doctor tell that but the same has written books that I think people will be reading a thousand years from now his new book skin of the game is fantastic it's part five in his inter toes series which includes full by randomness Black Swan anti fragile the better for Krusty's it's it's written in a very timeless way the concepts are very simple there's not a lot of math to it although there is a huge math backing to the intuitive if you want to get into it and I would I would rather reread his work than anything on the bestseller lists and I have many of his books I've reread now the interesting thing is that I I do get pushed back when I say I'm talking to the sea because people say well he's so angry he's so he's so mean he's so rude because they can't they can't fight him on the math and they can't fight him on the principles so they go after just all so that I think I derive a huge amount of pleasure yes I'm Twitter fights yes and he does yeah and I write so and why do I derive pleasure from Spotify so think about it if you're born it wakes you up if and at the gym you see I'm into weightlifting and you have to take 15-minute breaks to in sets yeah and I think you you say that you do for fun but I think it's also it's it's having skin in the game in your principles right because as you say encouraged is the only virtue that cannot be faked I can fake any virtue on Twitter but the one that I can't fake as courage and that means going up under your name not under some troll account name and taking on somebody that you think has unfairly benefited from exploiting the system like the Bob Rubin trade for example or the Iowa iyi is the intellectual idiots that you call out and name or when you call out Monsanto yeah he's giving me too much credit right I just I don't do it because of these just likes to fight I do it because I get bored all right and sometimes waiting in line in or in traffic when you're stuck in traffic that's the best time for Twitter fight so released it's not as lofty a goal but it so happened that okay it you know can impress people that'll take on Saudi Arabia on Twitter and call them stuff so the barbarian really Barbaria on a regular basis yes but anyway so I'm very happy to be here with with Nasim I think the the books are absolutely worth reading if you haven't read all 5 of his books I wouldn't read anything else this year I would literally just absorb them and I don't say that lightly that's true for me like I'm going through scan the game he's gonna convince me to read my books the first one was finished 20 years ago so you understand well there is some redundancy in there as you would expect and I think the common theme that Nasim pointed out to me when we talked earlier running through the whole thing is this concept of symmetry and asymmetry skin in the game is about symmetry between your consequences of your actions and learning in feedback loops and asymmetry is about extreme outcome so you know Black Swan and and those kinds of principles so I think week and I'm going to explain to them of the symmetry saying I'm sorry I didn't put slides on symmetry hoping yeah if you already explained to them or yeah let's go ahead let's say why don't you explain symmetry and asymmetry in okay so you don't understand around in advance you can't predict what can happen but you can pretty much tell how the random event will hit you know you know whether you're gonna make from it lose from it make a lot lose a lot okay so you try to position yourself in a way to benefit more than you would lose from a random event okay or to lose less than your neighbor from a random event that's that's yeah you have a symmetry it's pretty much like an option when I call an option an option you make more on the upside than you would on the downside and if you in ghent or in general make more from a random event then lose from it then you're gonna do very well in the long run provided you make sure you're gonna survive let's see a symmetry that's present and contracts and options stuff like that that a symmetry becomes bad when you make the upside like what Ruben and transfer the downside to someone else and and the easiest thing to transfer to a person transfer to the taxpayer be anonymous taxpayer you see so that is an asymmetry okay a bad asymmetry but tinkering trial and error it is has a really positive asymmetry so simple you know example I give is if we want it what's your favorite dish it's pizza but I shouldn't be eating it Pizza what but it shouldn't be eating it okay so pizza okay so this let's say we decide to make the best pizza I would call it the Santa Monica fly-in pizza all right here so you you you you you rent a bus you go to the local university and bring every chemist run up every chemist and find okay and then and you take another bus and run up every overweight person you can find in LA who's well dressed this is my metric when you go to a restaurant is look at for overweight people who are well-dressed that's sort of like you know why my my thing so and then so we have two crowds now okay so if we ask a chemist let's a top down okay to invent that pizza yes it chemistry about 150 chemists all looking boring and poorly fed and visibly not well dressed and and then you ask the well-dressed people whatever and overweight you tell them listen let's make the best pizza so the way to do it is you take an existing recipe and you start adding ingredients to it know and you taste if it's good you Ratchet it up okay so you have the upside if it's good you discover something that really has good taste you go up or a up in other words you lock up your gain okay no if it's bad do you give it to a chemist very little too loose all right so that is trial and error a lot of trial and error and you can I show the nante fragile and that's the main argument that trial and error will always outperform design simply because of that property that were vastly more intelligent we have an IQ of a thousand when we do trial and error yeah this is basic these basic concepts by the way are cropping up all over in crypto currencies like Bitcoin that it is literally a lot of your principles realize like Bitcoin for example it's an asymmetric bet if you lose you just lose your money if you win if it becomes digital gold you can make 50 times or 100 times your monies that has that obviously depends on what price you buy it if you buy sure yeah hundred thousand maybe not if you buy it for here maybe but it's also fragile in the sense that every time it survives a hack or an attack or a failure of some part of the ecosystem the developers improve the code they improve the system see and they're surviving feature shocks so this idea of symmetry you say convexity because a convex function is very simply makes you make more when you go up then you lose when you go down okay and and and it links to fragility it's anti fragile because fragility has the exact opposite attribute you say if I jump from 10 meters I get I'm hard more than twice that if I jump from 5 meters and more than 10 times if I jumped 1 meter right and more than a hundred times so so if that's concave it means you don't like volatility and if you're convex during that range you like volatility you'd rather have also you'd rather have sharks you'd rather have turmoil so this is the idea of anti fragile which applies to both the physical system and anthropology it's like people who are shorting cryptocurrencies during the wrong side of that they're doing concave trades concave trade yeah because you have a lot more downside I mean think of Paul Krugman bearish at what 40 sorry he was bearish at 40 he was short yeah say imagine his P&L if you went short at 40 okay think about it first of all you would never hear us 100x you know he would disappear if he had a P&L so this is why you know I'm glad he didn't because we want to just have someone to make fun of all right so surprisingly he doesn't engagement other fights because simply he doesn't for some reason he attacks other people but not for some reason it's easier to attack people from behind the shield of the New York Times they don't by the way sighs I saw a copy of it the skin in the game was open as a best-seller to on a best-seller list without a single book review now the single book review in America in the United States zero okay just to tell you that we don't really need the New York Times becoming even in my industry what's funny is people give out awards like VC of the year or angel of the year and so on and they're all nonsense because the reward is and investing and making the money you know like who wants to who wants to win the award for a big corner of the year you just want to own the big coin okay so so there are a couple of things you guys talk about The Linde effect yeah linked to fragility like the test of time yeah Blizzard the Lindy but let me first say one property of the news that that was that was that's not you know never existed before in history before 1940 were or 1946 I think when when when families had a television set so you have a small family now watching television getting one-way information reason in the New York Times you don't go to the square you don't get okay before that period in time people did not get the news from one source they it was like Facebook or Twitter people traditionally were both conveyers and a recipient of the news so we're all involved in the news making you see so you go to the barber you get the news you go you transmit it you tell the Fisher you know fishermen they counter then tell your barber you bring back information to the barber that was so-so news were something that was organically spread in society and it was nobody could control it no as a source before the 1940s propaganda New York Times all that all that era of television and we broke out of it was Twitter and social media so and there's a concept called Lindy and the news the way you know it was organized during that period from 1946 to the election of 2016 was not Lindy can you explain to them what Lindy is and this means sort of stands the test of time which is like any book that's been around for thousands of years is likely to be around for thousands of more years the best predictor of the survivability of something is how long it is for something that all things things in the intellectual domain for the exact special domain so so was discovered Lindy is a restaurant in New York that has cheesecake it was a horrible cheesecake and and I spoke about it and discussed it in skin in the game and it had the great idea to go bust on the Tuesday the very the same day kind of again was published all right after 67 years so Lindy were the restaurant were actors used to meet and they discovered that plays that survived 200 days had to hold more days thousand days a thousand more days they discovers that rule so you can classify things and whether they're Lindy or not now Lindy tells you that technology okay it's gonna be all technology will outlive short technology at new technologies not because new technologies are bad but there will be more vulnerable new technologies to other newer technologies work for example is a piece of technology that's become invisible to us but it is technology you know having something it helps you eat things and the force gonna be around forever it's a tried-and-true model and the fact it's been around thousands of years means it'll be around for thousands of years there's something in blockchain the concept of transaction coupled with a commercial transaction coupled with a foreign financial transaction that's entirely Lindy yeah and that's the letter credit which itself was replicating something used in maritime commerce in other words the the banking they devised the system by which you can you trigger a currency the minute the you deliver the merchandise now you own you haunt you go there with a merchant or merchandise you come back with a currency so mixing the physical transaction with the financial one all in one it's the same transaction coupling them is an old very old thing yeah and in crypto like bitcoin is literally currency them it survived a long time survived the longest and it won't be digital gold until it's survived long enough but the longer it survives the longer it will survive the more faith people can put in it and the more money they can put into it exactly and and government-issued currencies has not never been Lindy people people don't realize and you can you can you can get a clear idea if you're in history okay the the you know the story of the the remember the story of the Christ and the temple why did he fight the money changers who why were their money changes in a temple because god of the temple did not like all these currencies he's in trust these currencies he wanted the shekel of Tyre and now current day and Phoenicia okay because they're the only reputable ones yeah so he forced cities to you know the four cities to compete on who's gonna have the most solid currency for the god to take it and then money changes would change into that shekel of Tyre so God's private currencies have always debated in government have always debase the currency yeah and and and and and and but yet citizens had the choice between currencies yeah when heresy have used and what would God want he would select the one that was at least debased oh you pointed out that one of the big things in history was separating the state from church and some religions have done that and some haven't yes where they still combine them but that was a major revolution you render unto Caesar what is Caesar's and the interesting thing with crypto is we're trying to separate money from the state and that transition if it successfully happens will probably be just as impactful and take seat layout it is interesting because if you start having competition between crypto currencies it would be the same competition as the one that prevailed in ancient times yeah tween issuers because you know the there was a stutter of an Asia Minor this each King produced his or her Queen her own currency and then you'd go buy the one that was the least prone to the basement right the one you can have faith in it was my opinion it's good to have the competition though because it makes them anti fragile exactly Shion and makes example exactly it's not till recently there is forced you know you can only conduct transactions and pay so dollar and this in the past people pick the currency that was the most reliable for transactions yeah another another point in a symmetry that you brought up which I thought was a very counterintuitive but at least for me and completely changed the way I think about many important things in the world is the minority rule I don't think that one's obvious at all it's one of the things that maybe it's obvious in hindsight once you fully understand it but I think the repercussions aren't obvious and the fact that even is a pretty stable outcome isn't very obvious so I'd love for you to just go to the minority rule okay I discovered a minority rule one day ironically I was trying to explain what the complex system was at a barbecue of the complex system Institute okay and and a complex system have one attribute that you at different scale things behave differently okay so in other words a collection of individuals don't behave like separate individuals they behave as separate animals a very separate animal which is something that a lot of people don't understand in government today is that if I understood the psychology of each person in this room I can't predict the collective how they will behave collectively okay but nurses know that people know that from children all right you know you could predict each child independently put them together it's unpredictable okay it's a different animal so that's a concept of complex systems trying to explain it okay so I was hit with the best example with a complex system because that barbecue there was okay there's you know we've had food all right and drinks and a delegation came from Jerusalem and they're all Orthodox people so fellow show that you know to say hello and and and I felt embarrassed I said oh I'm so sorry we don't have cultural drinks he looked at me he said all drinks are kosher here said what said yeah where'd you buy the drinks here in Boston okay mmm oh sure what I googled the proportion of kosher eaters and drinkers in America point less than 0.3% that some of the day all right religious holiday 0.3% yet close to a hundred percent of drinks in America are kosher why that's so simply because the Jews run the world in film you've been filmed it's because there's very simple concept if it's let's say I'm coca-cola where they don't have kosher coca-cola non kosher coca-cola all right you're gonna have different departments different things different trucks so you don't get mixed and then supermarkets will have a different you know I all this is Porsche I'll make em all kosher okay those who like me don't know the difference okay will drink coca-cola I don't drink coca-cola okay so it so happened that when we looked at the bottom of the lemonade bottle there was a sign saying it was kosher that only the kosher people know how to identify okay so that's the minority rule so if a margin came from space and sampled food preferences okay he would say that America's 100% kosher in drinks okay not points three percent so why there's an asymmetry the kosher person will never drink not kosher but the non kosher yes it can drink culture yeah that's the exact that's minority role for the minority to control the majority the minority has to be intransigent they have to be absolutely unwilling it has to be unwilling to do that so for example people didn't notice one thing about yeah the preferences marketing preferences they don't understand they look at marketing preference of individuals and they make cars accordingly most Americans at a time when where cars were you know still has stick shift preferred stick shift the majority seventy-five percent but most of them had a family member who the like stick shift right so your family at five and one family member at the time that people didn't have a lot of cars per household one household member tend right so what do you do this is gonna go yeah I think if someone in the house is a peanut allergy or gluten allergy exactly with their no peanuts so there's nothing wrong with accommodating the minority so long as you know it right now the interesting thing about the minority rule is that seems to me that it's a norm rather than the exception in society and about anything the reason we have non-smoking spaces sure I joked with a friend of mine one day I had a French visitor when I was a student and he came you know it met me I said meet me in front of this restaurant and booked a table he couldn't find a non-smoking table I told did you try the smoking one he said yeah said okay go by pack of cigarettes and we'd go to smoking section he believed he thought that you know you're forced to smoke in a smoking section so and we spoke to the smoking section to be there play the game so but really have these symmetries actually running our lives yeah the explanation of ethics so this is very this is very interesting for me because like on Twitter for example if you go on there you always find somebody who's outraged about something right there there there's someone in the extreme left or the extreme right in politics or in crypto land and it just really angry about something and for a while I thought they're just being super ineffective and that's what I was hoping I was hoping that the most outrageous angry people are actually very ineffective and they're just misguided they're kind of on the corner but the sad thing is the minority rule kind of shows that if these people are intransigent enough they actually run and control society they establish the laws for the rest of us and we kind of intuitively know this like from revolutions like revolutionaries to be small bands small groups that won't put up with the status quo that overthrow the entire system because most people in the center just kind of don't care they just kind of want to get along and they want to go along so this comes back to like if you're willing to tolerate intolerance then you're gonna live with the consequences if you look at for example elections there is a belief in politics and political science that it's the voter in the center the median voter who everybody competes for and decides how the election runs but that's not true when you have third parties with intransigent minorities so for example if the Bernie voters absolutely will not vote for the mainstream Democrat the Clinton or if the extreme you know right voters won't vote for the Jeb Bush then they'll actually stay home or they'll vote for third party then you actually have to appeal to them you have actually as a center as long as there's enough of them it doesn't have to be a large number it's just a few percentage points and they're enough to control the entire outcome so we live in a world that is actually structured around the Preferences of radicals who won't compromise it's not it's not built around around the will of the majority the will of the majority does apply in some cases but in many more cases it's the minority rule and there are all kinds of other imitations I mean ethics for example it had the illusions of society is getting more ethical because the majority is becoming more ethical its minority rule another mistake made by Monsanto is that when introducing GMOs they thought that all it took was convincing 51% of consumers to have GMOs okay they did not think it through properly because think about it all you need is 3 percent of people who are absolutely against eating GMOs all right and then you're gonna have a party here to celebrate the collapse of say Salieri Barbaria say okay we have a party all right what do you do is send a let's say Jim oh no Jim we make everything non-gmo you make everything organic and the difference in price when a difference this price is small everybody switches to the one that the minority wants so the choice of the minority one difference the price is large then it may have two varieties like for example for meat kosher meat and cultural stuff is much more cumbersome to have everything kosher right here it's more costly and it's complicated right so there's the evidence the Jews don't run the world but-but-but-but believe it or not 100 percent of the meat you get imported meat and you imported the lamb in the United States Oh about a hundred percent is halal because New Zealand exports ok the remaining exporter we're gonna do what is written shipped to Malaysia what if what if Malaysia doesn't want there's less than man we're gonna be halal it for you know send it to the United States so they made everything haha so it all their meat is all their exports aren't allowed so at Christmas I saw this Xmas halala was because I can detect I read Arabic yeah so it was probably you know they produce it and then we don't have to worry about merchandising about perishability and stuff like that to make it make everything how it's much simpler so the minority rule applies when the minority is not willing to compromise we're not so relatively distributed amongst the whole population like if they're off by themselves in a corner then maybe you can service them just as a minority on the exact if you have a geographic diversity ok then you don't have anarchy rules alright if you say the the people who eat halal live in the neighborhood kosher live in the neighborhood have their own ecosystem then then you'd have you won't have an RT rules as you open up the country then the minority rule would prevail about anything yeah and conditional on the majority not being ticked off by it that's right ok that's in Europe for example now pretty much schools have to have halal meat and you have reaction people didn't know I mean you should have done it this in a more quiet dishes way yeah but because parents to say no I refuse you know that my child is halal okay now we have a carto reaction just like the Christians and in a Roman world halal meat resembles all sacrificed meat in the near East actually you have to you know sacrifice the cow or the sheep in a certain way and Christians would would never eat sacrifice I'll meet you know in the old times pagans would have sacrificed meat and then a lot of people would die of hunger in front of a table full of meat just to show that they wouldn't they were Christian and it would not be sacrificial meat because for them it's polluted so you may have a counter counter minority rule coming to somewhere you say yeah I think for there are cases where the minorities themselves are a minority here obviously you know what it means it means small group of people who are intransigent themselves are very intolerant of maybe even the existence of the majority or the way the majority likes a question so it does create a counter reaction so it's not that all revolutionaries you know Nestle control the world all very often is get lynched or stamped out exactly so we have a sin balance here between majority rule and minority rule and Tocqueville wanted to protect the minority from the majority all right yeah and now we may have to do an inverse appeal as well to bring symmetry protect the majority from the minority yeah but it applies in crypto for example if imagine that you know something like I don't have had to make up a number like call it like ten or twenty percent of the good developers in Silicon Valley are now working on crypto related projects or at least a bling on it and if they all announce tomorrow that they are only gonna work for companies that pay them in crypto then pretty soon you would see every payroll system switch to also offering credit if you're a if your unconditional about getting or paying or see anything in crypto you're you install the minority rule so minority rule is a very powerful concept it's one of the ones in the scheme of the game I highly encourage you to go through it let's talk a little bit about black swans which an old concept you're very famous for it did you coined the term no Black Swan term was the earliest use of it was by a Roman poet who said that a good person is as rare as a Black Swan and it was used for something you know rare but not completely impossible yeah and now we see them everywhere now that you kind of popularized it I think it's very because we use as a logical problem that no matter how mean how many white swans you've seen you cannot rule out the Black Swan right but there's an asymmetry if you've seen one Black Swan then you can say that they are like small it's kind of like how science works to which I completely prove anything you can only disprove viable story disprove this exact right so anytime somebody says this is proven by science they're usually don't understand there are sense or they work for Monsanto yeah or the exponents are the ones they say it's proven by science science is not about proving science is about disproving and having something that has not been producing a result that has not yet been disproved or superseded by something else so it's the process not the result they're hold back but science is a minority rule by the way yeah yeah science when someone tells you 300 Nobel Prize winner says this okay that doesn't count because one counterexample can destroy the whole argument right consensus doesn't matter it works for minority but the system is there to protect that minority that is right against the majority except in economics of correct like wasn't Galileo who said but yet it moves when he was yeah yeah yeah it pushed evolving right very interesting related concept that you've tried to bring in the mainstream which I don't think has quite gotten mainstream yet is a Gerda City I don't think most people understand it I think it's one of your more complicated concepts I think I finally do understand it but I'd love to have you explain it and see if we can spread the game I'm gonna explain one thing one thing that if called path dependence if you wash your clothes first and then iron them say you wash your pants and then iron you get different results from if you ironed your pants first then wash them okay so the sequence matters no okay so it's trivial but you need to analyze think dynamically to get that point so skin in the game really is organized around two concepts thinks in statically that when you've um dynamically have completely different properties and you can only get that if you're either super smart mathematically which nobody is or have skin in the game because you realize that so if you go to a casino and you have a small probability blowing up no matter what your edge is you will blow up that's it so no matter what your because you cannot say okay I'm gonna blow up and then get rich you can't you got to get rich then blow up so the sequence matters so that is the past dependence we detect it this is the reason why we're paranoid and I noticed that there's a guy who got a Nobel sailor the pseudo Nobel and economic the shouldn't count she count as a negative right so and then all his work is based on showing how we are irrational statically okay he for example and one of his the example where we show irrational if you go to a casino and play with a house money in the sense that you bet small and that you win big if you win big then you risk big but if you lose you you you don't take risk so in other words your initial endowment you try to preserve it but you risk everything you make from a casino okay he found it irrational but if you look at it dynamically that's what every trader does you play with the house money if you don't follow such a strategy you're eventually going to one day because you can't say I can look at the average return because if your bust on day 28 there is no day 29 you see whereas if you take an average of people's returns if number 28 goes bust number 29 you know can operate freely let's see so that concept of path dependence was not incorporated into the psychology of decision-making and therefore they they found that we're irrational in many places where in reality were not because if you look at things in sequence you see so you gotta always look at things in sequence not look at things statically right so like a lot of behavioral psych studies and and economic studies will say that if I offered you a billion dollars to play a Russian Roulette right and six people play play Russian roulette well five out of the six make a billion dollars each so assuming that your value of your life is lower than a billion dollars you'll play Russian roulette once but would you one person play Russian roulette six times all right no so confusing those two the probability of a group going once each versus an individual taking all of the risks in sequence gives you completely different answers and there's this concept which I'm sure you've all heard of loss aversion where you know people are irrationally loss averse no they're not irrationally loss averse they're rationing loss averse because if you go bust you can never recover so like for example in your crypto asset accumulation and trading if you go super short and you sell everything and you lose everything you'll never get to get back in the game you have to stay in the game and it's kind of an obvious concept once it's explained and described but there are entire books written either it's a Kelly criteria and unfortunate formula that book and so on but yeah only traders and mathematicians will do information theory or computer science get the point like Kelly Shannon and Shannon entropy they get the point that you got to look at things dynamically but psychologists so naive and they keep getting nobles you know they're naive by saying we're irrational to be paranoid they don't understand that you you you you know dynamically if we were not paranoid wouldn't be here we will be here okay so you cannot analyze one event you got to see how that event is going to shorten your life expectancy so there's some classes of risk you should never be taking and effectively when you take Goldman Sachs with around 159 years you may hate them I hate them but you gotta admire how they stayed alive why they never take risk of ruin and that's the same thing as a lesson I had as a trader buy an all trader who came and told me listen take all the risk you can but make sure you're in tomorrow so make sure you survive so it tells you that you gotta gear your risk taking first or survival and that entails you take more risk as you're making more money with a casino money and thats called mental accounting is deemed irrational and being paranoid is deemed irrational because they only look at the single event not series of events and if something has been happening now with psychologists we're the middle of replication crisis and their papers don't replicate and those that replicate don't really have the same effect so which tells us that whatever they call science is vastly outperformed by your grandmother so if you go ask your grandmother particularly she's have Mediterranean wisdom I'm biased right so Mediterranean or some kind of Russian Russian Stickley but the babushkas are the very grandmothers all right so our grandparents or grandfathers as well they will whatever they will tell you will be Lindy will have survived the test of time and if psychologists agree with your grandparents okay means they're right if they bring something new that your grandparents don't know odds are it's going to be suspicious yeah any field where you need to add the word science to the end to make it seem but it probably is not exactly so I think so just if we were to summarize because time's up yeah they're slashing times up at a flash attempt but possession is nine-tenths of the law so until the audience leaves we're here so to wrap things up here I was saying an anti fragile and in in the scanner game is there two things that are wrong when in Alaska evilly is a scale a large country is not like small cities that you blow up Singapore is not like a small China and and likewise a group of people act differently that's complexity and the second one is with time if you under repeated behavior you have to have complete different strategies from the static ones and that was detected by practically every grandparent and people have skin in the game so that's sort of the Maslow chol message from skin in the game and the overall message is my message before you conclude is the idea of the insert' though is that there's a lot of uncertainty out there there's a lot of stuff we don't know but the good news is that there's only one and one way to go about it okay and and this is quite interesting to see that the more uncertainty there is take global warming there's a lot of uncertainty because there's a high probability that the IPCC they're full of a full of crap okay and there's a probability that they're you know that their opponents are full of crap all right but the more uncertainty there is an assistant the less you want to pollute because you don't know what's going on you don't know what's happened so so interestingly the more uncertainty there exists in the system okay the more you gotta follow follow a certain paranoid route try to position yourself to have more upside than downside and effectively your decisions become much easier so let's not waste time trying to argue about the niceties of the future because the more uncertainty there is the more we know how to act so that's sort of the idea of the incircle in general well I recommend everybody just devour all the machines books it'll improve your decision-making in life in crypto and I put pressure on me figuring out even like which doctor you should go to which restaurant you should eat at how you should conduct yourself honorably honorably and morally I think it's a it's an amazing work and I hope he keeps putting them out it's not the last one I hope I don't know if you if you keep talking like this I'll stop all right thank you everyone [Music] [Music] [Applause] [Music]

Channel: #BLOCKCON

Views: 274,004

Keywords: Naval, Nassim, BLOCKCON

Id: Da0aXfshlxM

Length: 84min 1sec (5041 seconds)

Published: Sun Oct 14 2018

Reddit Comments

[u/solovayy]

Naval looks here like a fanboy of Taleb, not much of an equal to discussion, which is a shame, because it we know he should be the one to have a deep debate with Taleb.

[u/openmind_17]

Love both of them, but Taleb is not the best public speaker, and this was more of an interview than a conversation unfortunately. Still thought provoking and interesting, though.