I'm extremely honored to be here uh thanks a lot for the invitation first time in Armenia but definitely I know it's not going to be the last thank you David I've known David for how long seven years eight years 10 maybe 10 okay time flies so first I'm going to explain why I'm honored to be in Armenia I was part of that paper that research study showing the following we have the illusion that Armenians came to Lebanon in 1917 actually there's also that's that's not true there's earlier migration and that earlier migration was uh with the mtis about a thousand years earlier there's also tigran a thousand years earlier but here we discovered that the first inhabitants of Mount Lebanon were Armenians Mount Le Le on the mountain not the coast so and they looks like speculation they may have brought wine with them which is a very good thing I guess for our evenings in Lebanon and then the Phoenicians start exporting wine around the Mediterranean so extremely honored to be back to probably where I have my part of my original genetics thanks so uh I'm going to talk about uh why I'm here because I'm both a businessman and a u uh researcher but I accept that I did I followed that road in inverse sequence so uh I started as a Trader doing mathematical trading early on I had a lot of hair and then of course you know what happens when you trade too much okay I mean you can see it on David all right and then I became a pit Trader for two years just out of curiosity so that's inverse sequence typically it's a reverse and then I started doing this kind of stuff and then I started doing research and writing papers and journals whether genetics or other things largely concerning U the Practical problems of uncertainty because sometimes as they say the devil is in the details the Practical problems are much more important and and as they say you know as Yogi Bara the baseball uh coach and and and and and and big star said in theory there's no difference between theory and practice and practice there is so the and then of course I'm known for the inserto the five volumes but I have uh at least these three volumes of a technical inserto collection of Scientific papers proving my point the first one is out the other ones uh are in Preparation they may never come out but but you can find them on the web this is downloadable for free on the web you could do whatever you want print it translate it into Armenian do whatever you want with it so long as if you translate into Armenian free just send me a copy or at least give me a link so the problem of people who come from Theory to practice that once you have an idea in your head you can't remove it anymore Charlie Monger just died age almost 100 and that was his point is that it's much harder to unlearn than to learn so and this is pretty much the mental Clarity of someone uh in Academia dealing with markets as you know can you repeat that Nim you said it's much harder to unlearn than learn than learn exactly so once you have a theory in your head you look for confirmation never this confirmation that's how human nature Works which is hard for and it makes it hard for people without what we call skin in the game the the the the limits of of daily uh life um it's very hard sometimes to pick up some some stuff so let me now put create a little bit of insecurity in the crowd okay with the following uh uh story let me find my lecture do you recognize this item no it's not a bagel and it's not the Armenian bread no it is a wheel how long have we had the wheel developed not far from here Mesopotamia 6,000 years ago no sorry how that's 6,000 years later we found this application I am extremely old old enough to remember having to carry all because I spent my childhood shuttling between air reports because of the Lebanese War carrying suitcases when it was so simple to put wheels on suitcases do you realize that we had to wait 6,000 years for a simple application now you may think that it's an anecdote these pyramids were built by the uh you know uh inhabitants of Mexico so not connected to our world and looks like they didn't have the wheel is it true they did not have the wheel they buil this I mean all they do did they built this was Labor unlike the pyramids that was built thanks to the wheel more labor and you give them corn maze and beat them up and make them build that was their technique is it true that the Miso American did not have the wheel yet they had the wheel they use it for toys children's toys but guess what they never made a connection so sometimes so we're not very good at understanding what technology we're going to be using next sometimes something so as Elementary as a wheel and you can't you can't see its application so you can imagine more complex stuff what it's going to be without as I explained in the Black Swan to understand and predict the future you need to understand what technologies we're going to use in the future here we have the Technologies and we can't even figure out what we're going to do with it so the future is very hard you as as as as you know but still that's not my point my point is that I've explained from inserto academics tell you what they know and they focus on what we can do in real life and businessman a good businessman uh especially as that applies to to businessmen we practice dealing with what we don't know so you focus on what you don't know and we we basically know the limits of our knowledge so we constantly have the boundaries of our knowledge for decision making it's very very different it's complete different approach we know what doesn't work and we know what may not work and we probe uncertainty and we want to survive we need to make decisions that will not harm us in the future we need to avoid fragilities so this talk the rest of the talk would be about the following fragility and I discovered that as an option Trader you were in the market so you understand what I'm talking about but not the general crowd yet I was able to uh you know sell the idea so to speak to Millions outside Finance the notion of once you understand fragility you understand how to deal with the opposite of fragility antifragility and basically there's a very interesting property I discovered when I stopped trading and and let me tell you why I stopped I went to research after I stop trading most people you know when they stop trading they go and they they they do some tourism they play golf they play tennis they play bridge I was completely incompetent at tennis because I daydream I don't like to do sightseeing like a tourist so I couldn't do anything else with my life so I was forced to go become a professor and then publish papers that's the reason and my main work became dealing with how systems handle disorder and the unknown but there this very simple property what I call the disorder Brothers it's not the moving company called disorder Brothers like a Warner Brothers or movie company it's that anything that likes one of these likes them all and anything that hates one of these hates them all if you hate disorder you hate time because time brings more disorder if you hate uh uh time you also hate chance you hate incomplete knowledge you hate all of these and if you like you know to some extent one of them you like all of them so this is going to be my talk linking fragility to how we deal with uncertainty with a simple notion David says don't be too complex by talking about convexity say nonlinearity and we're going to see it's very simple one particularly I I explained with pictures but basically when I so when I stopped trading I stopped trading and I couldn't play golf people would not like to play chess with me because again I daydream right so I the middle of thing you know I I I I forget I'm playing chess so I had to do research and the first thing I noticed is that this glass is fragile you know and is resemble something called short option in other words it doesn't like volatility and whatever is fragile doesn't like volatility so whatever is fragile does not like like Randomness doesn't like it doesn't like any of the disorder clusters and let's think about it this doesn't like time if I leave it here you may have an earthquake you may have something may have a shock it doesn't have but it has one principle attributes it has more downside than upside this is not going to improve if there's a shock if I hit it it's not going to improve move but it can degrade it's asymmetric and it's payoff so if I ask you then in case of Armenia we've had a lot of volatility over the last 30 years so could we say that we have become a bit more antifragile yeah we'll we'll talk about the necessity actually of volatility the necessity of shock for systems to work well because at no time in history before this generation in the states that we have people who did not have to face adversity in a moderate those all the time so we'll get to Armenia but let me explain why there is nonlinearity in everything fragile if I jump 10 met I'm hurt a lot more than if I jump 10 times 1 meter you agree it's more than 10 times the harm of one meter so we have acceleration everything that has harm accelerating is fragile and that's needed because let's say that it was equal harm you jump 10 1 meter is exactly uh uh half of 2 m okay if that was the case then what would happen you're just walking to the office in the morning you die that cumulative shock so you have to have nonlinearity and and and explained very easily if you smash a car against a wall 100 times at 1 kilometer per hour you're okay or a thousand times or a TENS of kilom per hour you're going to be okay okay one time at 100 kilm per hour against a wall or miles and you're you're I I hope you know really hope you you you believe in miracles because I don't think you're going to be okay so there has to be acceleration in anything that is fragile once we understand fragility then we can understand antifragility you have more downside than upside means acceleration of har harm so uh like for example blacks one events this you learn from the markets if the market goes down 10% you're harmed more than a 100 times than it went down 1% you're fragile that was a case of Fanny May and this is how you know I my friends and I benefited from the demise of these big Banks so and let me explain the mechanism of fragility in a banking system few minutes and then we get to entrepreneurship and all of that coming from very simple Point very very simple concept of more harm more downside accelerating harm or equivalently more upside and downside or the reverse this was uh soal had about 15 years ago a rogue Trader a French fellow uh he looks very French okay who uh hid something like 50 billion of trades in a drawer and they had to liquidate him so the bank went in and sold liquidated that error and they they the liquidating cost was 4 billion euros now I ask you as a Trader or as someone in the markets if they had a tense of the size would liquidation costs have been a TENS of what's the question the question is how much does it cost you to liquidate 5 billion EUR very very little it's almost nothing so if you're small and you face a random event it cost you much less proportionally than if you're large because something called the squeezes so this makes companies when they come large very fragile contrary to what we believe is that your elephant rat example exactly we're going to see that in a minute another example to show you what is fragile I'm I'm pounding examples one is not clear the other one will make it clear uh in in the antifragile I tell the story of a king who had a son who was very mischievous I don't know if you had a Mis son uh but you need the rule is for the king to punish that son and the punishment in that country was to crush the the culprit with a big Stone so the king really I if you know been king or had had a son who was mischievous and you have to apply the rules but it's very difficult situation you agree you have to punish to preserve the law but his son so the adviser came with a solution what do you think the solution was into several pieces smaller pieces so he said oh no problem there's a long weekend coming up Crush that in small stones and pedal that small Pebbles and go you know throw them at them over the long weekend and effectively that's not harm you have nonlinearity acceleration of harm as size gets bigger that makes things fragile we're going to tie everything together don't worry if you don't see the connection to entrepreneurship yet we're going to see it this explains why do you have any elephants in Armenia no maybe the weather but you know the mammoths could handle cold weather um an elephant we don't have a lot of elephants left in the world but we got a lot of mice you have mice in Armenia no a lot of mice New York City has more mice than citizens so they claim but but there's no sense you know to make mice Vote or something so we don't know the exact number but an elephant that the only difference between these two is the size they're both mammals and cartoons they look alike if an elephant fell by one meter bye-bye a mouse if you throw out the window like Russian style defenestration fourth floor it would laugh at you okay no problem so that tells you something about size and fragility we'll get to that so what happened here okay so let's say on the left for an equ equivalent move say the markets go down 10% you lose a million up 10% you lose you make 10 million you have acceleration of gains you're in a good position if on the other hand you have acceleration of harm you are fragile and that good position is of course going to be antifragile but before we get there let me show you how the world is getting more and more fragile if you have if demand drops if you have instead of having 50 and 50 you have one year five and the other year 95 is complete chaos and this is what happened postco in a Commodities Market with all these shortages instead of having 50 and 50 and the world is getting more and more of these and that's an illustration of fragility of the world and we can see that and the Black Swan I documented up till 1994 I think or 2000 but since then it repeats itself natural catastrophes tend to cost more and more the same as so because of the structure of the economic reality so we think we have efficiencies but often we don't have efficiencies because natural calamities are the same but the insurance cost are more and more why because if I destroy 10 houses it's much more expensive to replace in one house and in the current environment even worse so you have a lot more nonlinearities which is the structure of the world so again let's see how this disorder brother works if you like the disorder Brothers convex and concave is very theoretical this is less theoretical okay so on the left if you have that shape like this it means you gain more than you lose you are convex if you lose more than you gain for equivalent movement you are concave so antifragile is very similar I start with an option an option I was an option Trader and learned that from option where I have more upside than downside and if you have an option you like volatility if you have this type of payoff you like things and we can generalize to reality entrepreneurship everything and all of that links and all started looking at a coffee cup or actually a glass glass of water so let's talk about antifragile antifragile is what basically benefits from disorder but there's a Twist if you're antifragile it means that you're designed to have a little bit of disorder you don't get disorder guess what you're get in trouble not having disorder too much stability can be bad for you let's see how the mechanism antifragile basically your body is made for some amount of exercise if you don't exercise you know what happens to you you get weaker so this is why we have a gym you have a gym near you my house yeah in your house should yeah so so now we understand that your body benefits from some amount of stressors no again the disorder Brothers benefit from amount of stressors up to a point so for example if you lift uh uh 50 kilos you're going to be okay if yout 5,000 kilos or put 5,000 kilos on your shoulders you're going to have trouble okay so up to a point and then the other thing is it's the same mechanism if I lift 10 kilos I benefit a lot more than 10 Time 1 kilo you see this is how the the you see how that convex that nonlinearity works for your human body if I get if I lift 100 kilos it's a lot better than 10 times 10 kilos up to a point okay so another thing when I wrote antifragile nobody had heard of uh heart rate variability not even my myself what is the best predictor of human death the single best predictor of human death predictor of human death yes don't tell me cholesterol no no steady heart rate steady heart rate yes it means you're not varying with the environment the environment is not steady you have noise Randomness even within your system there's noise and it means you're not modulating to it so having an unsteady heart rate is actually good for you they call it heart rate variability not only that but since then the Apple watch measures your HRV they call it heart rate variability I'm sure many people have do do how many here have an Apple Watch or a Garmin watch okay so you're measuring heart rate variability all right and and what people don't generalize from this to Capital markets what's the best predictor of a bankruptcy of a hedge fund stable returns I don't know stable returns High sharp ratio equivalent stable returns we did that in 2008 the one that had the most stable returns went bust okay what's a best predictor of a bankruptcy of a company steady Revenue growth steady Revenue not growth steady revenues let me tell you it means you have a contract with someone and you're not adapted to the environment so but let's continue about nature so let's we have to distinguish now between natural systems that require volatility use it or lose it and you know when I wrote antifragile I was very upset with the treatment of the Black Swan by journalists so up to today I still have problems with a journalist but I you know I drink C mil tea and calm me down you know when I but but I still I was angry you know because they didn't read the book they they they read the table of content and then theorized about the book so when when I wrote the antifragile I made sure it was impossible to understand the contents of the chapter by just reading the title and my main chapter was was called on a main difference between a cat and a washing machine okay and what's the difference between a cat and a washing machine in other words what's the difference between an organism and a uh human-made item like a MH machine is that if I get angry and start banging on a washing machine you know with doing karate you know with my wrist what will happen is my wrist will get stronger but the washing machine is not going to get stronger if you beat it up okay so the main difference between you know things let's let's put this biological that they improve from stressors because you get information about the environment via stressor and you upregulate so as I mentioned earlier the biggest mistake is to think that you're lowering Risk by lowering variability and again I mean if you we you know I remember uh when when I was a kid they say oh no don't do too much exercise you know you get sick or or someone telling me when I had back problem they say oh you should rest the worst thing you could do is rest I have back problem or not go downstairs because you have knee problems the worst thing you could do is rest have back problem or not go downstairs because you have knee problems there's a right moderate amount to build up the muscle mass and and and and go from there so you're saying as people think lower variability means lower risk that's a mistake which means then higher variability doesn't mean higher risk exactly so so but uh you know you mentioned the example of the cab driver in London yeah no cap you said the taxi driver in beut and in London okay so let me give the example of a u for daily life and then you'll see from there in in antifragile I have uh two twin cypriot brothers uh you know um uh who were in London okay they made about the same income one of them worked for a large corporation and a Personnel department and had very steady uh income every 25 years you get a gold watch at a time maybe now it's you know not gold anymore but uh so you know the kind of very predictable person you go to the office you leave you take the 801 train to Trafalgar and and then you go from there that was one brother the other the other was a cab was a taxi driver in London they had about the same income but the taxi driver had more variable income and when I I you know ask people who has who's safer they say the one who works for a big Corporation not true the cab driver had more volatility of income he would use drop of income as information where to go you see so whereas so there's more noise but the noise was healthy noise income drops oh I got to go to he at 10: a.m. now maybe that's better so it forces you to always be calibrated to the environment whereas the other brother just had no signal from the environment and then let's say if you laid off at age 54 and 3/4 you lose your job and you work for a corporation can you ever recover in London is probably uh High you have a higher probability being hit by a uh purple truck driven by a redheaded teenager then you are finding a job whereas the taxi driver will always and then sure enough that was before Co you have covid a lot of taxi drivers became delivery people you know during Co and made tons of money so here we go we have so don't think variability is bad for you if it's healthy variability that brings information I wonder if variability could also be associated with survivorship the the there is an amount of survivorship by cleaned up from the data okay this is technical but so but uh so let me let's translate that two countries when I wrote the blacks onean uh I actually before I wrote the blacks Swan I was giving a conference in Washington and I don't know if you uh know me but but the minute I'm in Washington I don't have high blood pressure but my blood pressure goes up so I don't know there something that irritates me we had all these analysts and uh and I asked them I told them which country is more stable country a same government for a long time and actually a family for more than 90 years country B had at a time 50 governments since World War uh Second World War which country is more stable they all of them said country a and there was you know of course and and I said okay that now that they have uh country C same government um since the 70s stable so country a uh C okay country a was Saudi Arabia country B is Italy and still when you check it on Italy it's still around country C was Syria so they thought Syria was more stable than Italy because Syria had political basically a frozen political system whereas Italy had a lot of noise so that was so we have a neighboring country with similar characteristics so neighboring country all right so the uh uh now at your personal life there's something I don't know if uh you many of you you have been exposed to PTSD the Tello post-traumatic stress syndrome so like uh I experienced war in Lebanon a lot of Armenians have experienced war in Lebanon and I don't think it affected me if anything the opposite but okay I said maybe I'm immune to it until I found that there's something 10 times more prevalent than post-traumatic stress syndrome it's called post-traumatic growth but why don't you hear about it because nobody's going to make any money curing you of post-traumatic growth okay like and and after random event a lot of people up regulate they become stronger so when life gives you a lemon this is a joke this is a pun you make lemonade I don't know translator I really apologize but I'm sure it's untranslatable any language but a lemon means you know uh a car that that's basically uh Troublemaker all right and uh and and and and you make lemonade out of it it's just like a TR pun but but that's nice expression when you have wind coming you can either hide in a basement ask for government subsidies call the UN hey come help me you know and stuff like that and ask for diaspora for help or you can say oh let's make money out of it so you build wind bills so and effectively there's a phenomenon of overcompensation with city states and small countries that basically if you want to ever get rich have no resources so let me start with the Phoenicians okay the Phoenicians had absolutely nothing no resources except some wood so when you have wood you can build boats you know because supposedly I think I haven't verified but you can verify that wood floats no okay so you can build boats so with the boats at the time the the the it was uh copper was a hot thing and who had copper an island named after copper right you know a few 70 km from the co Coast Cyprus so they went to Cyprus with the boats to get copper and then start marketing copper but then again if you learn how to sale to go to Cyprus you're going to tell you know buy copper and you're going to tell them hey you have something else to sell and you may bring some stuff to sell them and then suddenly they became forget about copper they became a big network of of uh of uh Traders around the Mediterranean because they knew how to sail okay and and sure enough you know the story The The The Phoenician stuff all started because they had nothing they had they were forced they upregulated to the stressor so you notice the most successful country today is Singapore it's probably the most successful country in history they don't even have water they have to get it from Malaysia I mean it's not like they don't have oil of course they don't have oil all they got is water that's it I mean not water I mean they have the the I mean a sea around so the same thing with with Venice where they had to go and focus on trade so you upregulate when you have a stressor and and and and that's known and it actually the reverse happens something that it's called The Dutch disease is that if you want a country to not Prosper at all pray that they discover oil that's how they got to Trump I me look at I mean you have a neighbor who basically is now still in raw material half their half their economy is raw material Nim I want to ask you about the state uh city states like Singapore yes city states have one thing going for them principally before I answer is what size they're small they're not centralized they're manageable go ahead they're small do you think also they have a system I think the importance of a system because I can see like Armenia today is trying to build a system by by System I mean you know legal system political system economic system Financial system working together they what I mean what happen city states typically uh Prosper uh when uh you're in a trading situation where uh you're on a trade route like Aleppo is on a trade route Aleppo is a big Armenian Hub by the way on a trade route is fan on a trade route and uh and you have a economy in the old world between those who like land and you know you need to conquer to get land and those who like Commerce and and they know Commerce is not a zero some gain so I mean you just lost land the arach but the Phoenicians don't really care about having land they need just enough land around them the venetians really didn't go to conquer land in Italy a little bit just you know for entertainment no more it was not a necessity they they focused on Commerce and Commercial rule same with Amsterdam so the the idea of having you know there exceptions of course but with with English England and and you know they they went for Conquest but uh typically if you're if you're into Commerce and that's what you do you don't care about land because you know it's not Zero Sum gain and you would notice for example Jerusalem has Armenian and they've been there it's not they came in 1917 they've been there so whatever you have a hub of Commerce you find communities and people are very tolerant Venice has an Armenian uh quarter and they're very tolerant because you know what you have Armenians have business because you know what he's Armenian here he knows someone there's another Armenian in somewhere and he can connect me to them maybe I can sell them some whatever okay some silk so you have or buy some silk from them or buy some horses so people in cities I mean I grew up in Beirut and Beirut had 17 Different official ethn religious groups Beirut okay uh and they had two kind of Armenian Armenian Orthodox and Armenian Catholics two different ones so um but but it was welcoming because it's more Commerce if you know someone here they have a cousin somewhere who would bring you from creit some whatever or bring you some uh mtia from EOS so it was it was that that's how city states it's a complete different mentality now historically it's a model that survived the longer the longest provided you have the protection of an Empire but then again it's easy to get protection of an Empire because they were making money and when nabuko noer came of course you kill people and stuff but in the end you keep them intact because they bring you cash you see so the new ruler comes in and 10 it's like a mafia Dawn you get protection and you pay 10% sometimes 15% okay so that was why the system survived for so long of city states nation states are New Concept what you had the kingdoms property of a king and then that shrank and and usually territory Hungary people and then you had city states and that was a traditional model the nation as a concept is something very recent and it's 200 years old uh so let me let me continue here with the upregulation that comes from stressor a different kind of stressor is what happened after com collapse everything that was wrong became right and uh Evolution so evolution is benefits from uh random events simply because it likes volatility and let's look at it uh at two levels one let's say you have par enic pathogenic Evolution it means that you don't have uh nightclubs you see reproduction goes from parent to offspring without uh without the you know the entertainment no so basically conservative Society even worse right in other words there's no sex all right so there's no so the so how now how do you have diversity because of an error rate it's a system that likes errors you make an error you have one Offspring it's like you know the DNA makes an error because you're copying it's like having a fax machine that's little blurred so it's misread by the by the whatever reads it so you have a small error so that small error leads to Improvement why because let's say you make an error and the organism is not fit for that environment it's it disappear no big deal you have another child another error fitter so basically it's fueled by an error except with the following you need your error rate to be not high but not low if it's too low you don't have genetic Improvement and you won't survive because you won't adapt on your environment without genetic Improvement if your error rate is too high you don't conserve pre benefits so it has to be there's a sweet spot so you make some volatility not too much so that is if you have parenesis and the same thing with variability between parent and children when you have that bedroom activity night clubs and romance and stuff like that and then the child is a product of two parents you have very variability but if they're too different from the parents you have a problem if they're twoo close to the parents you have a problem so this is why there's a sweet spot so basically it's like saying variability has a sweet spot exactly it's exactly like uh for example variability in eating if you eat all the time okay you uh you will develop diabetes all right if you eat once a day it's a lot better but if you eat once a month you'll die you see there is a sweet spot of how what frequency you should be having uh now I come to the myth of the Soviet Harvard illusion I mean you know more about Soviet than me but this is what I called it I call it in my books all right Harvard because again at Harvard is the top down people who have never really worked in real life think that science leads to technology and Technology leads to business it's exact opposite business leads to technology and Technology leads to science how the mechanism of trial and error so let me call that the philosopher stone so uh before I do that let me uh uh let's do this following thought experiment okay we have we break half the room in in in two classes right we're trying to find the best Monte Monte is is an Armenian specialty no from from yavan or yes cuz we eat it from Beirut so I don't know Froman but it's Armenian yes it's Armenian all right so I want to make the best Monte so we have two approaches the first one is We Gather a bunch of people and make them randomly add small products to the Monte all right small products you mean like small small ingredients all right small amount of different things you add a little bit of tomato whatever you just keep adding all right you you and then you T you give it to someone who likes tasting food you look someone who appears to like food yes no is it better no better and then you keep going that way you will improve at very big upside because you get better Monte and a small downside because if it's not good it's small cost okay or at worst you give it to some tourist and they won't know okay so anyway so no downside the other group you send them to the university the one on the left and you start putting the equation the chemical equations of whatever is in Monti and you tell them let's improve on that how fast are they going to improve your Monte couple of minutes no not I mean the theoretically I mean theor theoretically but in practice no it's I mean cooking is pretty much a representation of how technology develops trial and error small time trial and error it works you are you know you ratch it up to the best one top down you can't it's very hard to figure out just from equation how something's going to taste so these are the two representation one I call through trial and error the other one through top down serialization and so basically I think that if you look at Fields when you the problem is everything's done by either Engineers the Industrial Revolution by Engineers who had more upside than downside Risk Takers with the following hitch these people don't write books who writes books academics and academics want everything to look like it derived you know by science so let's take the jet engine everybody think the jet engine was was developed by physicist no nobody figured out how it worked it was developed by Engineers who had no idea how it worked we still don't know how a Bicycle Works today we have no idea so it it's just like people thinker and it worked you know the the architecture if you look at Europe you have beautiful cathedrals gorgeous Cathedrals how were they built you clean and geometry you may say ukl came couple of thousand at least 1500 years earlier than these Cathedrals no nobody had a clue because before Arabic numerals nobody could do a division in Europe so but they built beautiful the Romans built beautiful structures I mean if you go to balbec they didn't have uh ukian geometry now how did that happen trial and error okay and they develop rules and they kept the rules this rule is better than that rule and it was not science it was a technology that later on may have led to science ukian geometry only entered architecture recently when it start building these up you know ugly uh Soviet style but then again even Europe had and us have Soviet style buildings was was Corners whereas everything before was richer and had higher dimensionality so architecture and actually there's this guy ban I kept looking at you know uh the of who could bust these myths and he showed you know how these people built pyram uh built Cathedrals and and houses and everything all these beautiful structures so uh I keep going down the list now medicine is going to be the most interesting one medicine it didn't come from biological understanding it came just by tricks and it still works that way medicine is not a theoretical discipline you select People based on their ability to pass exams you teach them couple of things for two years and then you turn forget everything now it's all experimental okay and we have no idea you don't have to see your eyes all you have to do is find this cohort lives two hours longer if you give him this chemical this and this one doesn't so this is pretty much how medicine works and if you look at history of medicine we have the illusion that chemotherapy was discovered for example by uh by very smart people doing equations no you know how chemotherapy was discovered it was actually classified they uh they discovered that uh nerve gas put those who had liquid cancer say leukemia or or other liquid cancers in remission but the problem is how did they discover it is because a Germans bomb in 1943 off of Bari Italy a American ship that had nerve gas or had whatever okay and that was banned by the Geneva Convention the Americans have been violating rules forever but but but somehow managed to hide it so it was classified but they discovered the doctors discovered that a lot of patients um were recovering from cancer so hence chemotherapy was was refined it was actually discovered also from ner gas in the first world war but that was the thing but it was classified so everybody in history books had the illusion that it came from scientist no it came from experimental Knowledge from bottom up experimental tinkering where you have low upside low upside so this is why Pharma Pharma for a long time had no idea about biological processes and and was developing products much faster the best example I give a Pharma basically have more upside than downside that practically I I think they have 100 we have 10 some, thousand drugs currently on the market of the 10 and some thousand only 150 are being used for what they were made for the remaining ones are used for the side effect take aspirin you've heard of aspirin you know you you take it now for as a blood center it was not design as a blood center it's previous iteration it was used as what as a fever reducer no actually it was used as painkiller it was not designed as a painkiller it was designed as a fever reducer okay now nobody takes it anymore as an anti partic people take it you know for uh so it had this it the side effect as as a side effect you know uh you give aspirin to a spouse and they say they don't say anymore honey I have a headache all right so Dr so you don't have so it has uh it's coming from side effect and the mother of all side effects is you've heard of a drug called Viagra I'm sure very few have heard of it but I won't describe all right so which basically so uh made a lot of divorce lawyers rich in America and it had a lot of side effects on you know on on real estate in New York where you had law firms buying more real estate okay so is a big Blockbuster drug but do you think it was designed that that that uh chemist and uh uh Executives got together and say you know what there's a big market for uh older non-athletic males who need um you know to improve their uh their uh increase their divorce odds all right no you know what it was it was a blood pressure medicine that failed but they noticed somehow that in the experiments you know when you give people uh in a control experiment the pills at the end they return what was unused when you stop the experiment guess what they were not returning the pills so the side effect of something so this is how we prob uncertainty so long as you have low downside no upside you do very well and lecturing Birds how to fly this is a Soviet approach is that very often we have had successes and then Academia tells you listen I told you so Academia helps a lot I'm an academic but a lot of it is marketing is propaganda they didn't help they just you know wrote the books so I I did something here is that I'd rather be antifragile than smart there's no payoff from being intelligent there huge payoff for being wise and from doing trial and error and I show here the graph of in in in yellow is if you are don't have much intelligence just enough intelligence to know that your Monty is a little better than what we had before okay you keep trying and error trial and error trial and error you do a lot better so it's like having a thousand IQ points whereas the other one's line is in blue is someone with an average intelligence and in red someone having a higher intelligence but the highest is the person who does trial and error now fostering a climate of trial and error is necessary if you want to grow for one reason what brought down China China was the most advanced Society probably ever up to its time very sophisticated but what happened is that they thought they believed in a Soviet Harvard illusion ahead of the Soviet Union creation by few 100 years and they created a class of the French call him mandaran but they're called scholars in English but they were because they designed the man in language and was an examination that last three weeks with people committing suicide that kind of stuff they created that class of Scholars to regulate it and sure enough they fell apart same with England England created the the model the industrial revolution of people who knew absolutely no science right of a steam engine which they rediscovered heuristically and it was already in a books but nobody read the books if you know it was had already been when I showed the stream engine here and and that uh slide Industrial Revolution uh well I it was I explain it in antifragile anyway we had we had the hero of Alexandria who discovered the steam engine and described how it worked but but it was Adventures so all these risk-taking adventurers who started the Industrial Revolution and all they had is a huge ability to do trial and error okay and it worked sorry we didn't stop yet and it worked beautifully and but now what happened is that they have 38,000 civil servants in London who theorize of what the UK uh science policy should be and sure enough what they did is completely destroy the capacity of the UK did you live in the UK yes if you live in the UK look at you see entrepreneurs in UK who are local very few entire thing is imported from from from other places they they they they killed I mean they did what China did so basically the minute you formalize a system the bureaucrats take over no longer the adventures we need both we need science we need technology we need a good feedback loop but everything starts with technology and Technology comes from business so the era is business technology science with this I guess we we're we're on top still no okay yeah so I guess I'm going to put the stop sign here so we can have a conversation and U and and thank you very much honored to be in Armenia and and let me let me summarize just in in two sentences what I did today so so to navigate I started by by showing you uh that how systems deal with uncertainty and believe me it ain't from top down It Is by being built to handle uncertainty by loving it by loving the random effects and and this and the antifragile is something that likes uh the unknown because it benefits you it can either benefit you or not harm you so in the long run it's going to benefit you and this is the and and finally one thing is I went to India to summarize all of this and uh you know gave gave my talk I said young Indians when they're smart they want to go end up and studying at Harvard and going and running a big conglomerate or they don't think of starting companies why because the fear of failure what characterized England at the time Industrial Revolution and America still today is no fear of failure America has the highest bankruptcy rate in the world as a country and within that country the sector that has highest bankruptcy rate is the healthiest one technology so just to understand how trial and era you could do it with companies everything thanks Nim I'll I'll just ask one question I have a lot of questions but I'm going to keep them for tomorrow um because we have basically all layers of Armenian Society here we have students we have government employees we have entrepreneurs we have academics we have even foreigners I can see who listening with translation so we're going to have a lot of questions for tomorrow of what you said there's only one question uh I guess I'm trying to pick one I'll pick the one on antifragility and I want to ask you this so ever since your book came out I've been thinking okay but what is antifragile what is the best example of antifragile for me and I thought the best example of anti fragility or antifragile for me is knowledge because the more you tear it apart the more you debate it the more you share it the more you question it the stronger it becomes the more you tear apart knowledge the faster it grows and that's something of course we'd like to see in Armenia so that people share that knowledge uh between universities and entrepreneurs and government do do you think knowledge is antifragile yeah definitely but there's this quality of knowledge that you can't put in textbooks and let me explain the richest country in Europe used to be Switzerland this probably still is but it has the lowest rate of college degrees it has a very low late compared to other countries why a lot of apprenticeship apprenticeship you apprenticeship so a lot of knowledge was distributed in the form of that I mean look medicine is still an apprenticeship by the way so is engineering so what you're saying is in Armenia we have the saying that people go get a diploma instead of knowledge so what you're saying is knowledge is more important than diploma in knowledge does not necessarily mean diploma knowledge that matters is what you're saying exactly and and in and in uh there are a bunch of studies that illustrate the following that we look at rich countries as countries that have a lot of diplomas thinking that the that studying make a country makes a country Rich it may work up to a level but if you take Korea and Argentina you see and and we have a lot of other experiments Korea got rich then got education Argentina had a lot of education and then got poor I mean relatively poor so typically I think that the thing is not 100% but but but typically wealth comes first and education later and then too much education can things up the problem is not education it's too much education so in India when I gave my my this idea I didn't know that it would stick to Indians and uh Modi came up with a slogan I'd rather build a thousand technical schools than one University because you know they got the point this is a so that that's part of the program to have more te schools non because what you study in books usually is different typically it's from theoreticians what you what you learn from doing is usually from a from a practitioner but you need a combination of course thanks Nasim I think that's it for today guys because we're running behind schedule n j the stage is yours um nice thank you I'm still honored to be in arenia
