Transcript for:
Authenticity in Art and Randomness

it was said that the artistic filmmaker lukino Visconti made sure that when actors pointed at a closed box men to contain Jewels there were real Jewels inside it could be an effective way to make actors live their part I think that Visconti's gesture may also come out of a plain sense of Aesthetics and a desire for authenticity somehow it may not feel right to fool the viewer and talking of authenticity which you've just quoted from talib's Black Swan if one goes to rational vc.com they will see the Three long-standing core values of the brand which are authenticity truth seeking long-termism one could just simply subscribe to get a summary of all the hard work we put into these videos into these podcasts after every episode you get a summarized email of the learnings from each episode exclusive content and early releases to podcasts and every episode we read a Lindy book and explore Lindy ideas and how one can apply them to business and life so that's rational vc.com and yeah Black Swan what do you make of this book it's complicated I think if you've watched our previous video on tb's first book in the inserto series which is called Fooled by Randomness click here if you're watching on YouTube to to view that episode and and please do listen on Spotify we think it's actually good if you listen to that episode first to get an understanding of where Talib starts his journey so that when you get into this book you're able to basically better understand exactly where he's coming from although I would say a lot of those same concepts are repeated in this book yes isn't it didn't you say to me uh or I read somewhere maybe when he was writing full by Randomness he stopped at some point halfway through or something came and wrote Black Swan and then went back to full by Randomness he says it in F by Randomness where he says uh the ability to think uh not in a linear fashion and we'll get in this is one of the key points that he brings out in in this book among other cognitive biases he talks about uh the ability to move uh sort of aside from the lateral perspective or the linear perspective and and basically go and do things where he feels like his int is being challenged so because he felt an intellectual curiosity to what a Black Swan was he actually left full by Randomness went into the Black Swan and you see a lot of overlapping ideas in the two books actually funnily enough uh you see a lot of overlapping ideas with this book as you do with Fooled by Randomness with uh the work of caraman and tersi particularly in their book um Thinking Fast and Slow wasn't in full by Randomness Talib was referring to caraman as Daniel caraman in this book it's literally like their mates and buddies and I like Danny conam and and it's funny because if you follow Talib on Twitter which you should because he holds himself to account and therefore calls out a lot of BC's publicly he's had a falling out I think with caraman as well I think so yeah um but anyway to answer your initial question what did I think of the book the book is complicated you should have an understanding of the Core Concepts of TB some maybe basic understanding of statistics and also the caraman and tersi work before diving into this book but equally as a standalone book it's literally a masterpiece it's a masterpiece because he brings to light Concepts that are of fundamental importance for people that work in Industries where risk is very important namely financial markets Y which is what his own background is what we're going to do in this episode I suppose is follow a little bit of a structure of what we think the core learnings the Lindy learnings are that we've taken away from this book and then towards the latter end for the autistic nerds that really want to get into the detail much like us we're going to go chapter by chapter and discuss specifically what he talks about in each of those chapters yeah for the autistic people the robots who need some structure uh they can wait for that later in the episode but initially structural follow it pretty much how you said that that's how the episode's going to go what I will say just as I said a preface just like like the prior episode with all the inserto episodes these books from the inserto series talib's books these are not books to be read they are books to be studied as some people may know if you don't now you will know but as of episode 50 get to know get to know if you don't know get to know as of episode 50 we pivoted the show we stopped interviewing kind of Silicon Valley big shots or whatever and we thought those episodes no one's going to go back to listen to interviews really many years from now but if you do a Lind episode ideally hundreds or thousands of years from now imagine that could be listened to which the ideas should stay that's awesome and so uh we pivoted and as of episode 50 which was the last episode uh we doing Lindy books every episode uh but the first five or six episodes will be the inserto series plus poor Charlie Almanac the books that have shaped our brand the founding of our brand is based on originally four years ago and the philosophies these are the five or six books which every 50 100 episodes or whatever we'll keep coming back to because they books to be reread Talib talks himself about rereading books and the importance of I mean even even nval says like rather than reading a thousand it's it's become a [ __ ] Flex of here's a photo of a thousand books I've read it's better to actually have an anti- library and then also reread profound books Lindy books which uh the ideas will Evergreen essentially so that's the preface these These are tough books to crack back one episode is not going to do any justice we'll keep coming back to them every year or couple of years with improved understanding as you go through more experiences in life with age experience maturity and rereading you gain New Perspectives and we hope that with every every uh redo of the episodes it gets better and better but here we are with our current understanding and we know that some of you like to understand where we are in life and share our learning so all of that out of the way let's get on with the episode one last thing this is not a if you give us almost any other book let's say p chares Almanac Robert shalini's influence whatever you give us any book on this bookshelf here it's pretty fairly easy to go through it's structured well but these books which actually goes to show Talib said himself something along the lines of he despises journalists the chapter names the chapter titles and the contents page will not really give away what this book is about journalists what they would historically do is they just look at the back of the book they look at the contents of the book and then that's it they'll they'll write some BS review without reading it and so tb's aim was he wanted to write these books in a way whereby journalist could not tell what that chapter or whatever is going to be about he couldn't summarize it which I love and also when books are so uh not complicated but deep not shallow not your prescriptive top sellers BS list it's not easy to go through like other books basically is what I'm getting at it's all it's kind of all over the place on your first read and talib's authenticity comes through because he's just writing as he wishes I think I've read this book four to five times uh every single time you take something differently away from the book um and it's actually good to step away from the book experience [ __ ] and then come back and read the book because your new experiences then inform some of the concepts yeah will give you real life examples that you've experienced around those specific Concepts to to your point around to your point around uh talb putting the book in that in that kind of manner I I think talib's personality is such that he is he he doesn't dislike conflict but he is able to deal well with conflict and therefore he likes creating an environment that is somewhat conflicting so that so that he's not like becoming aligned to the norm and you get this sense with this book and what I mean by that is like your example is he's written the book in a way which is like you can't just skim through it you got to study it but equally he has this ability in the book to just randomly call different people and things out and do it in a way in like a dry humor way in his first book in full by Randomness you you get this like you get this view that he's doing it a little bit against the grain I.E he's like trying to get this side of his personality out but he's not like fully going gung-ho with it with this you see the progression of his writing style in so far as it's just as complicated it's just as like splattered on a page kind of vibe but he's a little bit less worried about what readers are going to think of how he's written this because he's so confident in what it is that he's writing um so he's not aligning himself to the average reader he's trying to be very specific around the type of reader who reads this okay so in terms of structure of how we're going to do this I mentioned at the beginning that we'll do a deep dive into each chapter towards the end of the podcast what we're going to structure this as is a breakdown across three to four different areas right the first thing we probably need to talk about which is the title of the book is what is a Black Swan so let's Deep dive a little bit into terminology the second thing we'll talk about is why humans are susceptible to black swans which this is a bit which kind of you know where we talked about it aligning a bit to the cognitive biases and the the work that caraman and tersi have done the third bit would probably talk about is on the types of Worlds that exist so that's mediocris Stan versus extremist Stan the fourth thing we'll talk about is why midwit memes are [ __ ] the gaussian curve being an intellectual fraud basically why the bell curve doesn't work then the fifth thing we'll talk about is investing so how does this all apply to the world of investing which is really where value can be derived from from his work on that note let's start with terminology what what is a Black Swan in your view we have here Talib himself says I stop and summarize the triplets Rarity extreme impact and retrospective though not prospective predictability and he has an he has an asterisk here the footnotes the highly expected not happening is also a next one note that by symmetry the occurrence of a highly improbable event is the equivalent of the nonoccurrence of a highly probable one I mean there are some examples here but he talks about just imagine how little your understanding of the world on the eve of the events of 1914 would have helped you guess what was to happen next don't cheat by using the explanations drilled into your cranium by your dull high high school teacher so yeah I'll stop there because I don't want to just quot from the book but that's that's uh his definition yes so it's quite interesting so the first thing is he he brings up a number of examples over and over again around what a Black Swan is the eve of World War I being you know the cause of the eve of World War I being one of them and in fact in one of the footnotes in the book he talks about historian Neil Ferguson who Neil Ferguson is now blown up a professor at Stanford I suppose and and and and a bunch of other positions I think previously at Oxford but he calls him out because he was one of the only historians that came about to say specifically that the reasons you've been given as to why World War I occurred I don't know like the killing of the arch duuk France Ferdinand by gabo princip and all of that stuff is actually not like the genuine causes or like it wasn't economics anyway he talks about Neil fuson very early on I like that but to summarize what he said I think in a simple sentence black swans are unpredictable rare events that are outliers have an extreme impact and are explainable expost and what I mean by that latter part is that after the fact and we'll get into this when we talk about some of the cognitive biases humans have we like to explain the reasoning behind it when in fact we couldn't you couldn't predict it in the first place of how you're going to explain a post hindsight bias correct that's what we picked up on in uh in FBR the one example that I think I'm sorry before we which is basically this is a psychology work in many many aspects it is a psychological I mean the whole point of caraman and T's work was meant to push the boundaries of that specific space forward which is why I think he uses a lot of them their findings and other quick examples like I mentioned the eve of 1914 World War I but he talks about how about the market crash of 1987 which I think Tyler made huge amount of money in is that black Monday yeah yeah that's uh he made a lot of money in um he talks about how about uh you know the spread of the internet that that was unexpected so but there's one so if you type into Google or or these days in chat GPT uh explain to me an example of um a Black Swan typically the example that everybody uses is the one that he comes up with which is the turkey than let's let's go to that one tell us what the turkey at Thanksgiving it's pretty funny so this this this also talks to his ability like talib's ability to come up with these random like funny examples and he just uses so many bloody examples in this book that it fries your brain this is a before okay now you're getting excited this is an example of you and I both consumer [ __ ] ton of whether it's books online content blogs tweets just endless consumption of content material knowledge whatever you want to call it and I went on a podcast recently I was interviewed by olle Fox on the Brick by Brick podcast brilliant pod we'll tag it in the show notes and uh you can click here we tag if you want to hear me RAM on for two two plus hours and you're probably going to hear that on this episode as well at some point Ollie said which someone else on a prior prior another podcast that said to me they all say the same thing they're like wow Cyrus you're like an encyclopedia so and I'm like I'm just a pleb who just memorize a whole bunch of [ __ ] and my dream and my dream is to leave the world as a true aidite we we have a joke just just a we have a we have a running joke between our different friend circles where we're like whenever Cyrus wants to give you an answer to any question you post to him pulls it out from the encyclopedia he'll literally just say according to this person or according to that person according to nvar take a shot so yeah it's very hard to find what Cyrus thinks about a specific situation because he's like entering this encyclopedic knowledge of what other people think about this situation but the point I was trying to get at before we do a lot of sidetracks by they like any episode uh the point I was trying to get at is forgot the point Talib himself so I I said to the guys on these podcast I'm like I'm just a player of trying to figure it out my dream is to leave the world as a true aidite and when you read I mean Naval Shaw he's like this he's been reading since his mom told him to go to the library after school since he was a kid in New York but taleb having grown up in a house with a library you can see that all of the knowledge he's been accumulating his entire life since childhood into adulthood he basically just vomits so much there is no noise it's just signal in this book basically if you want to get nerdy autistic terms of like the signal noise think boy ratio whatever there's endless signal in this book and so when people say to me like you're like an encyclopedia I'm like no this is like an encyclopedia this guy is just [ __ ] quoting endlessly and all of the ideas sure some of them are from as he talks about not Theory but rather practice his own experiences in the real world in the trading flaw whatever but a lot of it is he Nam drops so many of History's Greatest thinkers and the reason and we say okay the rational VC pod hopefully will go on for until we're alive and every episode we explore a Lindy book we don't even know like okay we can pull out 30 40 or 50 Lindy books where do you go after that the reason Talib and manga have shaped our brand is because you just crack open poor Charlie Almanac or you just crack open any of talib's books they name drop so many of History's Greatest thinkers that it's a starting point of those are then the Lindy books we need to explore next in future episodes so exactly to your point he just brain dumps so many deep thought-provoking ideas from history from his learnings that it just goes to show how I mean to say he's well read is an understatement he is well read but it's not just like reading books and stuff it's like he brings experiences of his life to the four as well yes um but look getting back to the point around Turkey so if you are a turkey and you're raised in a farm every single experience you will have had to date whatever that date is before your thousandth day will be positive you have humans that are feeding you uh you're right there my Electro water only you would get S PLO water and then fill it with Elize anyway if you are a turkey turkey on a farm on a farm humans will be the best thing in the world for you because up until your thousandth day you're being fed you're being given female turkeys to mate with you're being put in a beautiful shelter and you're also being like um put in a safe space so the cats and foxes can't get you so you think these humans are incredible creatures up until the point that it hits the thousandth day and it's a week before Thanksgiving and they chop your head off to the turkey that event is a Black Swan because you are a sucker you did not have any information to suggest otherwise so and to the farmer it's not a Black Swan to the farmer it's not a Black Swan so therefore the farmer is not a sucker this is the whole point around asymmetric information that he kind of picks up throughout this book and we'll get into a bit more detail around that but the point is that a Black Swan to the turkey is its is its death yeah now if the turkey were to survive after having its head chopped off it may come up with as humans do expost reasoning as to why that happened oh the farmer was had problems with their marriage and therefore decided that they had to kill me or whatever the hell the reason they come up with see endlessly with people who say oh this founder in Silicon Valley who you know they've ipoed they've hit this you know Zer to 500 million AR whatever [ __ ] and they ipoed whatever it's because of these reasons wow and now they get on stage we should listen to them this is I mean so many of so much of what we discuss in F by Randomness is being repeated here yes but in a slightly different way of with with the ideas of now presented with black swans so as you say you look back and obviously hindsight bias is a point we've we've discussed to say you try to pinpoint specific reasons or explanations for why such events have taken place or why this person or this company has been successful which is the complete wrong way to look at it it's complete blindness brings us nicely onto the second point of you know our key learnings from this is what are the different human blindnesses that make us unable to predict or see black swans and I think the first thing obviously he picks up a lot of caraman and T's work Danny caraman and ters work in this book but the first thing he talks about so so let me just quickly run through some of the some of these names and then we can come and talk about them in more detail so the first is confirmation error the second is a roundtrip fallacy the third is a narrative fallacy the fourth is ludic fallacy he also touches on something called platonicity which is quite interesting it's about Plato um the Distortion of Silent evidence and tunneling and then the value of having an anti- Library which you've touched on so if if we go back to the first one which is confirmation error um do do you want to go on what what you think confirmation error is and what he talks about or do you want me to give a short overview or give a short cuz I was going to touch on a different point with respect to blindness okay um with confirmation error it's basically exactly what you talked about around hindsight byas just looking at it the other way around which is using the past to predict what the future would look like given that the future is unseen so using scenes to determine unseen it's a very human thing to do um and it's always looking for uh correlations instead of identifying causations so for example the common one I hear a lot uh is if you're a billionaire you've dropped out of college therefore if I drop out of college I'm likely to become a billionaire now that's not obviously that doesn't work there there's no logic to that but what you'll hear is like someone wanting to drop out of college and telling their parents well look Bill Gates and I don't know who else dropped out of college and look how well you know they're doing crypto uh don't get me start um but that's the confirmation area like humans are always looking for correlation instead of causation yes and just to rewind a little bit because we're touching on the blindness Point tal himself says the central idea of this book concerns our blindness with respect to Randomness particularly the large deviations why do we scientists or non-scientists hot shots or regular Joe's tend to see the pennies instead of the dollars why do we keep focusing on the minutia not the possible significant large events in spite of the obvious evidence of their huge influence and if you follow my argument why does reading the newspaper actually decrease your knowledge of the world which comes back so much to why we do what we do with Lindy books on podcasts and not kind of interviews or what's the latest tech this Tech that because if you have foundational understanding of Lindy ideas within all the major disciplines the big ideas as Peter calman and Monga say and how you can apply them that'll benefit you far more in business in life in VC and startups Tech whatever way more than what he talks about here whether it's newspapers or the latest trends or your Tech crunch or your Twitter which we fall pray to Twitter but you know uh Twitter different story has its pros and cons but generally speaking with with Publications and media uh and their downsides and as an extension to that he talks about black swans of course being unpredictable but later on in the book he also gets and a lot of this book is jumping around right so black swans Negative black swans and positive black swans and you obviously want to decrease as much as possible your exposure to negative black swans but increase your exposure to positive black swans so an example of a positive Black Swan is says himself here venture capital and you want to maximize your exposure to it uh which unfortunately now too many people have in the last few years Max tried to maximize their exposure to it but really how do I even say it smokes and mirrors it's it's BS we'll come to this later on when we talk about some of the prescriptions that exist within the financial space um around what you should do in terms of financial investing when it comes to black swes but this is a great point so all we spoke about when we gave the the the terminology the definition of what black one was was the negative angle we didn't talk about the positive angle which is like you want to increase your upside but maximizing your exposure to black swans also increases risk so he talks about insuring uring against the downside negative aspects um of a Black Swan or just general downside negative cumulative effects that would lead up to a so let's jump to that because you me as I said this book is we can't necessarily go in order his thoughts are not in order he's jumping around himself so you just mentioned gain exposure to a positive Black Swan but then you want to manage your risk with respect that exposure so one idea that comes to mind which he talks about in one of the later chapters we'll link right right here to this idea of yours is the barbell strategy which I wrote about in my OG Angel Investing essay which is how we like to typically approach things with our investing at rational. fund but how give us a quick overview of the barbell strategy and how it links to managing your risk but yet still gaining exposure to positive black swans without the risk of Destruction which tab says you should always avoid obviously the risk of being wiped out or destruction so uh just to touch on that last bit that you said the risk of being wiped out the reason he brings this up a lot is because he had a background in trading and the worst Traders were the ones that would make a [ __ ] ton of money appear super hot and be the coolest newest Traders figuring out a new way to make [ __ ] tons of money actually ended up like completely blowing up go and listen to our episode on full by Randomness we we really deep dive into that specific thing but what you want to do is not blow up I.E die or lose all your money or whatever um the barbell strategy in simple terms is that you put 85 to 90% of your Investments money making capability whatever it is right 90% goes into safe options and those can be things like T bills like treasury bills for example what your saying essentially there is I want to take as minimal risk but see a little bit of return because I know that in a worst casee scenario if your T bills go to [ __ ] in reality particularly if they're like us treasury bills the world is going to [ __ ] so you probably got bigger problems than losing a [ __ ] ton of money on the flip side you take 15 or 10% to 15% of your Investments and put those into speculative assets uh what you're doing there is you are heavily weighted towards very risk-free assets in the industry they call them risk-free of course they're not completely risk-free yep andif you know some small portion of your assets go into things that are very high risk so very high potential for complete ruin but small percentages of chance to absolutely go crazy and to the moon it's the notion of asymmetry right so bang on it's the exact notion of asymmetry the really good thing about this barbell strategy is that by taking an 8515 or a 90 10 approach your downside is capped your upside is still maximized but you're not going all in on your maximize now he talks about that's option one around the bar strategy we'll come to what option two is later on when we talk about the implications from the financial Market just put a pencil on that but we we just jump we were talking about psychology now we jump to investing we as I said we're going to go all over the place biology philosophy history whatever but as as you talk about um as you talk about here you mentioned the barbell in 8515 or 9010 one historically what what we believed in years ago when I wrote this Angel Investing essay which we'll Link in the show notes um it's it's one of the pieces of content that kind of put our put our content more so on the map or our brand um one of the things I speak about in there is how we believed at the time because we're young we were even younger then that 80% of the Investments go into S&P 500 because if that fails and it's like we have bigger worries America's failing which we I've definitely changed my mind on recently uh and then the other 20% which is like Angel Investing tickets now then my mind changed after I wrote that strong opinions loosely held my my mind train is like okay not the S&P 500 but rather the msci world index and people like Ray Delio get trolled but here content on the future of China and you start thinking about Emerging Markets you start looking at some of the [ __ ] show that's going on in America again we we want to discuss Lindy ideas we don't want to get into politics or modern or current affairs or whatever but we I then said okay msci World index and Angel Investing but then if msci World index is your 85% side of the barbell and Angel Investing is your other 15% side of the barbell I've been presented with ideas in this book prior to this book as well but even more so in this book that have challenged my thoughts around even the msci world index I'm I I for years I've said to you and to others I've said yeah you know if that goes to [ __ ] then we have much bigger worries but it's like exactly you'll never expect or no that the idea of that going to [ __ ] is a Black Swan in itself and so it's quite uh immature and I think after having read this idiotic for one to say 85% of the barbell going into msci World index which is like it's like the S&P but the world basket of stocks I think that's also stupid so then one thing so what should you do which is an idea I'm exploring now should it be all in treasury builds as TB says because this book was written 20 years ago that I also have my thoughts on that um so for the investing nuds it's something I'll probably write about more at some point or maybe later in this episode or another episode we'll dive into more but it's just to use a real world example of my own experiences and our our story of how we were so bullish on the S&P 500 and it has gone up a lot since then but that's the whole point because it's gone up it doesn't mean it'll always continue to go up and the unexpected the unpredictable the Black Swan event that that could happen uh it's not to be disregarded and just to say yeah you should put your money in S&P 500 or the msci world index that's that is Blindness I think I I I'd agree um so there's I want to bring up by the way I'm still on the prologue I haven't yeah it's it's actually matter how much there's two or three things for those of you watching if you're looking at the book I'm holding I'm only a few pages in all the ideas we've discussed so far there are two or three of those blindness um kind of points that I mentioned earlier that come up and I think are explained well by the examples you just gave so I mentioned there was a confirmation error which we spoke about as using the past to predict the Unseen future so this talks to your thing around like okay the S&P 500 has done really well for the last however many years 100 years or whatever uh doesn't mean that it's going to continue to do well even though it's just hit an all alltime high on it yep um the second third and fourth things all B jump into exactly what you just said second thing is a round it's called the round trip fallacy which is the need for corroboration or straw Manning our own arguments there's this concept of Steel Manning and straw Manning steel Manning is taking the other side and making as strong an argument as possible to understand where the loopholes in your argument are basically sense checking everything from the other side straw Manning is taking your argument and kep keep building on it right it's a strong man it's not it's not strong um so we have this need as humans to strong man everything um by using arguments with evidence that that fits our view um but not considering anything that is the alternative right we think that because history has told us that this is the way the S&P 500 has worked it will always work like that and here's a million examples of why that's the case um and this this need to always corroborate things so make everything that is similar appear the same right so this is the point around um you know if it's it's quite interesting there's like multiple examples used here but you could say that all terrorists are Muslim yeah therefore all Muslims are terrorists it's absolute [ __ ] but that is corroboration effect the round trip fallacy that makes it appear whole as a human that people fall into the second thing was the narrative fallacy which is you take that roundt trip fallacy but then you add a story to it this is where journalism is really really [ __ ] sometimes because in order to make something believable they have to put a really nice story middle end uh I don't know like a character that goes through an arc all of these things are super important because the human human mind tends to be drawn to stories and that's not how facts work that's in chapter six by the way we'll come back to that and then the final thing is the ludic fallacy which is because there is very little connection between what real life is in all of its beautiful Randomness and what we learn through sterilized um environments such as the classroom basically built on Plato's concept of models and what he terms as picity or platonicity which is this concept of when we learn things we learn them in the best possible manner of that thing existing we learn models and maps of things um so what we tend to do is fall into this trap of thinking life reacts in the same way so this is the 4x4 Matrix of how everything works life Must Fall within this and therefore you come up with a nice story and a narrative to fit that um you use the round trip fallacy to corroborate everything you're saying and you use the confirmation error which is to say because it's happened in the past it will happen in the future all of these things come together to make that story around why the S&P 500 is so powerful appear as though it's the best strategy moving forward when it's not so I'm just going to pause there but those are kind of like the high stuff he also talks about tunneling and Distortion of Silent evidence which we can get into which are also related but I'll pause there yeah so he talks about an extension of what you said on Plat icity and the nerd yeah which he says I mean he goes on and on here I'm trying to not read it all but it's so good and he says what many people commoditize and label as the unknown a quotes or improbable or uncertain is not the same thing to me it is not a concrete and precise category of knowledge a nerfi field but it's opposite it is the lack and limitations of knowledge it is the exact contrary of knowledge one should learn to avoid using terms made for knowledge to describe its opposite um and later he goes on to uh you know the pl platonic fult is the explosive boundary where the platonic mindset enters in contact with Messy reality where they gap between what you know and what you think you know becomes dangerously wide it is here that the Black Swan is produced this is exactly right so the gap between what um the models of our understanding of what a world looks like in the best of cases um you know the the thing that keeps coming to my mind is the the term or the phrase all things being equal which is what you literally learn if you do any economics or I don't know whatever um all other things equal what does X Y and Z mean that's literally the worst thing worst way to learn because you fall into this platonic fold which is you use you use these models with all things being equal and you use that model to apply it to messy real life and it doesn't work there's two things that emerge from that right there is this point around Distortion of Silent evidence and tunneling that emerge from exactly what you just talk about which is when the platonic fold essentially emerges y the Distortion of Silent evidence is you only see successes you don't see failures and this is exactly what he talks about in in full by Randomness as well I keep saying FBR so if I do say FBR basically referring to the previous book um so if you're like I don't know at Sea as a sailor and you know you are M you're in a storm and you're miraculously saved and you come back to Shore and you tell everyone the reason I was saved was because I prayed but what about all the sailors that died but still prayed right so this is the Distortion of Silent evidence you don't hear about those that have died and then there's tunneling which is one of the Core Concepts that emerges in terms of cognitive biases in this book which is as humans we shy away from what we don't know but we double down and focus only on what we do know y so this is exactly to the point of what you just read out um we can come to the Umberto EOS anti- library in a second we'll get there but tunneling is essentially this thing is like we tend to level our thoughts and our explanations for things in things that we understand and this is wrong because actually there's so much more that you don't understand versus what you do understand and so you're stuck between this thing of having to explain everything only with the limited knowledge that you do have um but yeah let's let's maybe move on to the anti- library because I think it it builds on all of these points that you've mentioned before one one last one before we do uh so the bottom line because we started this whole thing I don't know 10 20 minutes I don't know how long AG we're still on the early stages but I think we're half an hour in M we're like 30 minutes in and you started that this kind of section with let's discuss what is a Black Swan I think not only have we defined it but we've given several examples we've given an extension uh of of the ideas that relate to a Black Swan and TB also says in terms of like the bottom line before he really gets deeper into the book he says to summarize in this personal essay I stick my neck out and make a claim against many of our habits of thoughts that our world is dominated by the extreme the unknown and the Very improbable improbable according to our current knowledge and all the while spend and all the while we spend our time engaged in small talk focusing on the known and the repeated this implies the need to use extreme events as a starting point and not treat it as an exception to be pushed under the rug I also make the Bolder and more annoying claim that in spite of our progress and the growth in knowledge or perhaps because of such progress and growth the future will be increasingly less predictable while both human nature and social science a quote seem to conspire to hide the idea from us and that's how he pretty much sums up as like the bottom line of the book before he really gets deep into each and every single chapter which part one this book is in three parts part one is Umberto's Eco anti- library or how we seek validation so do you want to discuss Umberto's Eco anti library to kick this off because he talks about you know just to wrap up on this before I hand it over to you says the inded the more you know the larger the rows of unread books let us call this collection of unread books an anti- library and So What talb suggests is you know your library should include more unread books uh than than read books and it should be full of it should I don't know I guess he says in in a way maybe he's getting at the point that this should somewhat intimidate you um not in a sort of negative stress way but in a positive stress a way of look at how much I don't know which one of the core ideas of this book anyway is is the unknown uh and so you realize how much yep you know I've read a lot I've accumulated this knowledge but there is so much I still don't know and one should always have an anti- Library which is all of the books in your library that you have not yet read uh one should have you know good number of books on their bookshelves that not yet read that somewhat intimidate you or or look at you um so that's a summary of the anti- library but I I'll let you get deeper into Umberto eos's anti- library or how we seek validation it's interesting because this goes back to this point around uh both the ludic fallacy but also this point around tunneling which is we tend to become more aligned to what we already do know versus what we don't know and so what that creates is this uh very interesting Shield if you will against wanting to learn more information it's quite interesting because like when you hear like people I don't know people that go on podcast right smart guys going on podcast they talk about huh they talk about they talk about like using knowledge as like creating a foundation of knowledge and then adding like structures on top of that knowledge bang on it's exactly layering even musk talks about like Elon Musk talks about this um once you have a fundamental understanding of some of the Core Concepts of physics for example you can then build on those Concepts um this also connects to we'll link it here the episode I did on Charlie manga and Peter cowman's multi-disciplinary approach to thinking and connecting all the big ideas from the major disciplines uh sort of capturing 80% of the big ideas from the major disciplines and how they all help and Link with one another and as you said as well in terms of layering but but please continue it's interesting cuz like when you then add this point around layering and the point around tunneling which is you know we don't want to see anything apart from what we already know what becomes really important is the forcing of yourself in a sense of uh two things one of learning a [ __ ] ton more to always being humble enough to know that you need to learn more but also in terms of making yourself realize that you ain't [ __ ] so when you combine this drive and hunger to learn more with a humility of I ain't [ __ ] and I need to keep learning you create a environment where you're far less likely to fall into these fallacies and biases like the ludic and um uh tunneling fallacy biases so that to me is essentially what overall this anti- Library thesis is about but it's now kind of like grown into this thing of well a couple of ways to think about it this point around Gathering as much information and books and insights as possible so you're always like physically and mentally surrounded by what you don't know yeah uh and then also like this weird obsession with look how much I know versus other people yeah and then this kind of like masturbation of like I know I don't know [ __ ] and therefore I'm like stat signaling that I don't know [ __ ] and therefore I to do more so like you get into this weird like concoction sounds somewhat similar to midwit me which I know you have your thoughts on as we'll get on to later but it it literally is but then the interesting thing is the final thing I'll say on this anti- Library Tyler in this book talks about how he took some period of time out when he wanted to learn uh I think this was post College he takes some time out or something or he makes a little bit of money he takes some time out and he spends like anent entire period of time like a summer learning ship and just reading as much as he could and collecting books and reading loads of Lindy stuff um which made me think of something which was a couple years ago or a year ago or something a uh a podcaster named Lex fridman posted on Twitter saying here's my list of long Evergreen books that I intend to read and make podcasts about and guess who came and told him to [ __ ] off and told him this is stupid Mr Nim Nicholas talb himself so it gave me this thought of a lot of what talb describes in this book around building a physical and you know whatever anti- Library around yourself he is actually living that why because at first glance you'd think yeah but talb you did this like you tried to read all the books and and you even speak highly about it in this book y but you are intellectually honest enough m that after the fact you're able to say um you know it wasn't a it wasn't a waste of time at all actually he learned a lot from it but that process is like a signaling process which is throwing you into the Trap of tunneling and the ludic fallacy and all of these things um which are cognitive biases that all humans have and he's basically calling that out so he doesn't fall into that trap himself anyway long story short the anti- library in that concept I found it very interesting but I can see why people would think that he is going like against his own word when he's written something in a book and then changes his mind about it yes and to zoom out uh because we did go kind of zoom in on the anti library but to zoom out uh he says the writer because we we're talking here about Umberto eo's anti- library or how we seek validation which you touched on but the writer Umberto Eco belongs to that small class of Scholars who are encyclopedic insightful and null he is the the owner of a large personal Library containing 30,000 books and gold serious Golds and separates visitors into two categories those who react with Wow Senor Professor Doo what a library you have how many of these books have you read and the other a very small minority who get the point that a private library is not an ego boosting appendage but a research tool read books are far less valuable than unread ones the Library should contain as much of what you do not know as your financial means mortgage rates and the currently tight real estate market allow you to put there this is brilliant you will accumulate more knowledge and more books as you grow older and the growing number of unread books on the shelves will look at you menacingly so we uh a friend of the show uh vizzy Andre who will throw up on the screen here uh firstly you should give him a follow on Twitter uh there are not I I actually a while back messaged him and we exchanged some messages but the reason I had to message him and rarely do I message like a content creator or a online personality or someone to just be like wow like I mean most people W seriously like wow wow much wow much WoW meme but firstly throw up here his his V Andre's Twitter which you should definitely follow but the reason I I had to message him personally directly and out of the blue just like compliment his work and his tweets is because one I constantly find myself nodding and agreeing and it's just a lot of the things are thought-provoking or an extension of foundation of ideas I have that I may have not yet fully developed and he's giving an interesting perspective uh on them but he touched on this anti- Library actually I think the Tweet was today yesterday so we'll throw the Tweet up as well uh which he says you know he's literally quoted he says wow what a Library you have how many of these books have you read and you know he says even if you read all of the books from your library it doesn't mean much the beauty of reading is about rereading which I touched on earlier in the episode The Beauty of reading is about the notes actions you take and all of the reflections that get triggered thanks to the material in front of you yes so echoing that as well and and uh I thought we' just zoom out a little bit just to get the importance of I mean this this underpins a lot of how we approach these episodes as well and why I gave the preface of we're going to have to reread the inserto or po Char because of how uh you know phenomenal the ideas in these books are but that's that's Umberto EOS anti Library um I mean look we've touched on the the definition so that was the first part we touched on some of these blindness elements like the fallaces and um you know all the stuff around tunneling should we move on to mediocris and versus extremist then that's a big one um there is just one point because look this book and if you're watching I have endless sticky notes you're saying let's move on to that which I'd love to but then I'm excited by another sticky note I've just seen before we get there so where do I even begin I mean this whole thing most of this book I just like highlighting highlight I'm like so what's the point of highlighting like usually there's a point to highlighting but in this which goes back to the point of it's such high signal but in in one part he talks about uh he gives a lot of history around of course growing up in Lebanon oh yeah yeah and the Lebanese Paradise suddenly evaporated uh Etc and he talks about how the he experienced you know he saw in Lebanon a lot of brain drain and brain drain is hard to reverse and some of the old refinements may be lost forever and I wrote here just like Iran I wrote the same thing um the level of brain drink I don't think people quite what page is this on this is oh you have a you're going to laugh I'm on page [Laughter] seven I haven't even got into the book yet literally I I want you to say what you say and then I'm going to read out my sticky note cuz I bet I said it I I read that I said just like Iran um so yeah I I'll let you extend on that idea wait read the quote what was the quote the quote is brain drain is hard to reverse and some of the old refinements may be lost forever [ __ ] just like Iran I wrote It's a sub paragraph called Paradise evaporated Christ this is so okay so we might actually spend a good amount of time this I'm glad you brought this up this may be one of those episodes like when BAGI went on Lex Freedman it was 8 hours long the book the audio book of this is like8 hours itself so I guess the reason people listen to us is for authenticity and as nval says productizing oneself maybe you listen for us if you do thank you maybe you're you know you're one of the weirdos who finds US interesting if you do this this this may be a very long episode we just do you probably have problems like us but this is going to be a long episode let's just all right please continue so I think we're going to need like six pea breaks coffee whatever okay continue what I wrote is that specific sentence I even put an arrow to it the brain drain is hard to reverse than some of the old refinement may be lost forever I wrote my worry about Iran is exactly this the Imperial aligned culture may be lost forever as culturally the youth are so different while the smartest Talent are all leaving so you get this concoction of um refinement culture within the country dissolving which is what a lot of these Iranians with rast tinted glasses of the past of what the environment was at the second res res set up uh they they kind of like espouse this previous Iran to their offspring and you know all of this stuff and therefore you get this kind of Rose tinted view of the past and it goes back to if you if you actually flick back a few pages to the prologue where he talks about a new kind of ingratitude he writes and I'll tell you why I'm bringing this up is because it aligns exactly to all of this stuff but there are even more mistreated Heroes the very sad category of those who we do not know Were Heroes who saved Our Lives who helped us avoid disasters they left no traces and did not even know that they were making a contribution this is one of my favorite parts of the book he says it is quite saddening to think of those people who have been mistreated by history they were poet Modi uh like Edgar Alan or arthurine boo scorned by society and later woried and force-fed to school children atas this recognition came a little too late for the poet to get a serotonin kick out of it or to prop up his romantic life the point is instead of reading off it give us give us your understanding there's one more point which is important he says we remember the martyrs who died for a cause that we knew about never those no less effective in their contribution who but whose cause we were never aware of precisely because they were successful I wrote this this is why mullers in Iran the leaders in Iran currently have lorded and lent on the culture of lamentation and particularly the Iraq War martyrdom in Iran there's this massive culture of martydom being a good thing because it shows that we have Success Through a community of people that are willing to put down their lives but what about all those other people that weren't outwardly martyred and this comes back to the Iran point because we have this weird Obsession particularly Iranians but Lebanese people will understand this as well of having this blindness to what being an Iranian is and slowly losing what that Imperial historical cultural element of ir Iranian life was and then on page nine final thing he says this duration blindness in the middle-aged Exile is quite a widespread disease later when I decided to avoid the exile's obsession with his roots I studied Exile literature precisely to avoid the traps of consuming obsessive Nostalgia these Exiles seem to be have become prisoners of their memory of idic origin this is this exact same point about having a rose tinted view Iranians fleeing post Revolution and then they've passed this Rose tinted view to their children so I've written like Iranians should read this whole section because it's basically exactly what is wrong with Iranian culture today they won't read it and even if they do they'll just disregard it or forget about it people are stuck in their ways but this is the exact point around people being unaware of their biases people being unaware of what the Black Swan actually means and then adding these po hoc reasonings and attributions to [ __ ] that was a Black Swan and expecting people to understand that just to wrap up that entire section because I had that exact point highlighted as well which you were discussing the if you want to call them the unsung heroes or the or the unknown Heroes uh which is a a new kind of in gratitude so Talib here gives an example of assume that a legislator with courage influence intellect yada yada manages to enact a law that goes into Universal effect and employment on September 10th 2001 a day before 9/11 and this imposes the continuously locked bulletproof doors in every Co cockpit uh at High Cost of the struggling Airline straw just in case just in case terrorists decide to use planes to attack the World Trade Center in New York City I know this is lunacy but it is just a thought experiment uh he puts something in Brackets now so funny I am aware that there there may be no such thing as a legislator with intellect courage vision and perseverance the this is the point of the thought experiment but he says the legislation is not a popular measure among the airline personnel as it complicates their lives but it would certainly have prevented 9/11 and so no one goes on to thank this legislature because because of the if you want to call it the unknown unknown uh or the person who imposed locks on Co doors gets no he says he gets no statues in public squares not not so much as a quick mention of his contribution in his obituary Joe Smith who helped avoid disaster of 911 died of complications and liver disease so it makes you think of I mean I I've been having thoughts in recent months of like just always been overthinking so much of the complication of the world around us and and the unknowns the randomness just all the [ __ ] and then you read this and it's just another slap in the face like [ __ ] this is so good and this is exactly why you should not be putting [ __ ] retards on LinkedIn or Twitter on a pedestal with their threads or this is how I scaled my company you should follow my newsletter for tips on how you can also scale your company and it's there's no more to be say no more as they say SNM it's this right here is just absolutely brilliant I think what you've just spoken about is also by the way around that period he talks about the triplet of a of we have to touch on that now so so the triple of opacity is I'll be very quick with this no no this is a crucial section please but it does talk does touch on some of the fallacies that we spoke about earlier there's three obviously a triplet of opacity as he talks about his the human mind suffers from three ailments as it comes to contact with history those three things are an illusion of understanding so this point around how we think we know everything even though the world is way more complicated the second thing is retrospective Distortion so how we can assess matters only after the fact this is the attribute post so illusion of understanding retrospective Distortion retrospective Distortion the second one which both of these things come up in FB as well and the overvaluation of factual information and the handicap of authoritative and learned people particularly when they create categories when they platon ify this is this point around um you know you get factual information about the past or uh you're an authoritative person who knows a lot about a specific subject and then using these models of how we've learned stuff in University or school we you know apply those to the messy world and it doesn't actually work so those those are the three big buckets of the triplet of opacity um the reason why it's important is because all of the things that we just spoke about particularly with regard to like Lebanese or Iranian you know people who've left the motherland after a Black Swan event um all of these things are working in their brains as they tried to make sense of what has happened and how they've lost everything yet they are unaware of such things taking place in their brains one thing I just want to say is everything we've spoken about up to this point and the overarching view of this book if you wanted to completely boil it down to a few words is there are black swans which are unknown unknowns there are Grace swans which we'll get on to later which are known unknowns M and then there are just known knowns yes which are things you just obviously know when people apply known known to known unknowns it gets messy when people try to determine what an unknown unknown is that [ __ ] gets very crazy because they have no [ __ ] clue yeah should we is there anything else you want to pick up on this before we move on to mediocris extr you've touched on let's see um yeah I mean again I've got another one literally after what you just touched on the next p page uh I say here Iranians talking about what if regarding the Sha prisoners of their memory of idilic origin uh nobody knows what's going on and he he took exactly is what you've said uh it's it's on the section no the the apprenticeship of an empirical skeptic nobody knows what's going on and he says one he's endless stories of Cuban refugees with suitcases still half packed who came to Miami in the 19 60s for a matter of a few days after the installation of the Castro regime and of Iranian refugees in Paris and London who fled the Islamic Republic in 1978 thinking that their absence would be a brief vacation this reminds me of uh Eddie sahakian uh the owner of obviously you have Ed sahak Edward sahakian Eddie is a son apologies Edward sahak and you have here you know some some Fine Cigars so Edward sahakian story is brilliant I mean if if you're interested more you should just search on YouTube Edward sahakian Kirby Allison David of London story is phenomenal Edward sakan owned a few breweries he's an Iranian Armenian lived in tahran good days owned a few breweries in Iran and he like the fin things in life you know occasionally travel to Switzerland to buy cigars do whatever travel to London he was in London with his family exactly as TB says in this book in 1978 and the revolution happened and he EX Edward I believe is about 80 now but he explains back in those he said yeah you know we'll go back in a few weeks things will calm down and things didn't calm down the revolution took place with full effect things changed and then he had to stay in London um his breweries were burned down in Iran and uh rest his history he ended up meeting the Zeno davidof in Switzerland opening davidof of London which is arguably London's Prime it's the world's premier shop it's the world's Prem it literally is it's located in Mayfair London they serve everyone from politicians to I think even members or members or the extended members of the royal family and it just goes on and on and class class uh family gentleman but it's a that story I wanted to link to this because big fan of Edward sakin what he's done and also yeah he he never went back to Iran I guess what we'll do is we'll come back later on and go through some of the stickies and comments and thoughts that we have in relation to some of the more specific points I mean I have a sticky on almost every other page yeah so I don't think we're going to have enough time to get through all of it what we'll do is let let's let's next discuss mediocris versus extremist which is the next core concept but before we do that let's take a PE break and come back so we're back from our PE break and we're now going to be discussing one of the Core Concepts of the book that actually I think most people think about when they think about this book which is the two environments of mediocris and extremist Stan and if you're Persian like us it's mediocris and extremist the word ostan comes from the Persian word meaning Province yes um this is the little stuff that I Love About tlo's Books is that when he creates these I don't know if he actually created those words but I suppose he did um it's just like what this like Middle Eastern flare to it which is so also it's actually quite funny I know it's funny but in the book he um he makes such a conscious effort to be called 11 and not Middle Eastern or whatever or Lebanese okay mediocris Stan versus extremist Stan mediocris Stan he describes as being Sim an environment where single inputs don't change the average mhm so let's give an example uh let's talk about weight or height the reality is there's only a certain limit that human height is going to be like the tallest ever a person if you put it in a group of another 100 average heighted people or you take a random selection of 100 people and put the tallest person ever in that group the average is not going to be significantly impacted it'll probably Rise by like 1.5 to 2% all right so it's very easy to predict in mediocris because you know that there's limits there's upper and lower bounds this is where the idea of platinic which we talked about earlier applies as well because you're talking about best case scenarios ideas of perfection like these things are describing scenarios in mediocris Stan most of the time yes you've then got extremist which as the name would suggest is Extreme because it's a scenario it's an environment where the first 100 observations in that scenario tell you nothing about the next 1,000 or 100 whatever so it's where one single input can have a significant impact on the mean yes or the average so you want give an example we're talking about scalable or just just before you do it's so funny cuz I just caught a glimpse of his book and it says leverage leverage no good so take a shot seriously take a shot but okay extremist on is scalable and if you're an idea person you do not have to work hard only think intensely you do the same work whether you produce 100 units or a thousand and so this is where the idea of Leverage naval's idea of Leverage comes from and I think what talb I was discussing this with you before we started recording Because by the way we're still on mediocris and extremist Stan we're going to stay on this for a while it's a key part of the book but as a side note we I was asking you before we started recording I said you know we we talk about leverage chasing leverage optimizing or the naval talk firstly Naval I'm pretty sure he got the more you read this in Certo the more you realize a lot of a lot of naval's ideas and his how to get rich thread and podcast basically come from Talib he even says that himself there's there's that interview when he interviews Talib and he just Praises him to death at the beginning it's because he's literally stolen half of thisit exactly exactly and he said not stolen but you know he didn't yeah and Nal himself said a thousand years from now you'll be reading these which is literally what we say about these Lindy books anyway and nval Nal take a shot our friend Eric son friend of the show who's been on the show he's going to come on the show we discuss his other books as well um he's he's huge on Leverage he has a leverage we're leverage nerds put it that way and I said to you before this recording I said but isn't it interesting TB in this book teaches how literally chapter three starts with the best worst advice how when Talib was at Walton one of his classmate of someone a Walton student told me to get a profession that is scalable and TB says he disagrees with this and tal believes that you should actually get a a career in mediocris not in extremist Stan a career in mediocris Stan is for example I don't know something like being a dentist uh or uh you're going to I mean he doesn't recommend becoming a consultant he hates Consultants but he gives an example that a massage professional or even a consultant same as a dentist they operate in uh mediocris because in these professions no matter how highly paid uh you know you are your income is subject to gravity your Revenue depends on your continuous efforts more than the quality of your decisions whereas an extremist on uh which is you know scalable leverage type of career paths something such as uh literary Noel says books podcasts blogs programming robotics Etc it's more to do with your ideas and we've always chased leverage it's been a core I mean literally the the photo on the rational vc.com website is of Archimedes and the uh right so we've always chased leverage but then tala presents these ideas to challenge us which is essentially getting to the point of from my understanding one should have a mediocris Stan career a stable kind of like links up kind of with the barel strategy you have a mediocris Stan career where you have a uh kind of uh how do I say a a repeatable continuous uh source of stable income MH yet you supplement that with activity side projects in extremist done which kind of actually links up with also Friends of the show Daniel Vaso and and Louie of small beds.com community which which is the whole idea of what they do uh where do you want to go from here cuz that that was a side Note to no no it's relevant though because um it gives you examples of what work this this point around messy life and messy World versus platonicity and models of understanding um but a couple of things so the first thing is the name of the chapter is chapter in chap uh chapter 3 is brilant the Speculator and The Prostitute um and he writes one bit which I've tagged as being in great dry humor he says um this is exactly what you said some professions such as dentists Consultants or massage professionals cannot be scaled there is a cap on the number of patients or clients D if you are a prostitute you work by the hour and are generally paid by the hour furthermore your your presence is I assume necessary for the service you provide um so he's being like humorous but raising the fact that actually this point around leverage can be constru in two different ways depending on whether you're on mediocris Stan or extremist Stan the other thing the second thing I want to talk about is when you talk about extremist Stan the best example is wealth so he I think he talks about Bill Gates in the book which is if you take a random sample of a, 10,000 people but you drop and their you know average income is 100,000 or their average net worth is 100,000 each um the average will be 100,000 you drop a Bill Gates in there with an average with a net worth of 100 billion immediately the average Skyrocket and therefore that group tells you nothing that's like there's no real um induction you can make about that specific group on the basis of uh the information provided yeah so it's all about while it is all about scalability it's also about like the data that you have access to there's a specific term which is like sample size so if the sample size is large enough then the impact of an individual thing will not impact that sample size height weight whatever but if the sample size is actually not that large which if you think about it human the human race isn't that large in terms of wealth what you end up having is this like Drop in the Ocean having a massive dying effect on that ocean anyway the point I'm trying to raise is it's very hard to explain extremist on if you've been raised born in raised and learn everything you know about the world in mediocris yes I've actually so a a bunch of things you said there I'm going to come back to uh one of them is I literally just said if because I I wanted to ask you I literally have here beware beware the scalable right which Talib says if I myself had to give advice I would recommend someone pick a profession that is not scalable yes firstly I I I wonder this book was originally written 17 years ago roughly I wonder whether he's gone back on that even partially at least I don't think he has but let's say he hasn't gone back on it what do you make of this because what do you think because we we just I just asked you as I said you know we've discussed this leverage thing and Talib here is saying go after something mediocris Stan have your small bets on the side and I said to you you know but yeah we're leverage Chasers like our friend of the show Eric Jorgenson Eric jensson wrote The Almanac of rabic can which has sold more than a million copies and been I don't know more than 4 million free downloads whatever it's absurd like he's hit home run right he's hit the jackpot in the publishing media World he's now CEO of scry publishing but then I remembered actually the should throw up that actually mean actually actually Eric jensson himself was a product manager at a startup he had a stable job for 10 years he told us on the podcast he came on we interviewed him a couple of years ago he said how difficult that period was where he would work his 9 to 5 and weekends evenings he would for several years he was writing a Blog and then collating every piece of information speech essay whatever from noval to put together the alac of noal RAB and he said he had no free time quoting him you know he said relationship suffered everything suffered but in the end uh it worked now he probably did a whole bunch of other things that didn't work which is the whole idea of small bets he could have tried another 50 things and nothing worked but the point is he he is trying as talb says here be where the scalable because it could not with more likely to work than not uh but yeah Eric himself had something scalable and had small bets on the side until something worked so what is your view of this because I I do not think T has gone back on this um and Naval preaches a lot of Leverage and stuff which people just even myself guilty of this like Leverage for the win and yes leverage for the win but should one have a career in mediocris on and supplement it with a small bet yes and the reason is because it fits into this point around scalability why does it fit into this point around scalability because in extremist what you learn from data does not teach you anything further than what you have learned I.E you cannot make an induction on the basis of what you have learned in theory if you learn something in extremist time you're not able to build on it whereas in mediocre Stan you can also be comfortable with what you've learned from the data right you can be comfortable with what you've measured and therefore you can be comfortable with what you've learned as a result it's easier to build a career in some in in in that type of industry in that type of environment I should say MH because you will know that the effort you've put in and what you have learned will scale over time and you can build on it right we talked about this in full by Randomness bit because in that episode um and talked about like the value that comes from being a dentist versus something else I think this links to that which is to say you're able to feel like less of a fraud because you can actually point to what you've learned and how you've developed it over time I think that's the core concept of it there's an argument to be said if you're in a profession like podcasting itself preparing something like this each each episode is like I know 40 plus 50 plus hours everything to do with each episode where you're like if I'm able to put in more time so let's have this discussion because I've said this to you and I said if if we were like let's say I'll give case study examples which one would say fold by Randomness but if we were to give case studies like David senra of the founders podcast or Chris Williamson of the modern wisdom podcast these guys have both sold businesses in the past and ample cash Runway so they just have zero pressure of let's say financially and all they do is just record podcasts all day and eventually through as TB talks about in this book tinkering so one would initially say Fooled by Randomness but then I would somewhat challenge that with yes but if a whole bunch of things come together and still it's not guaranteed to work but a whole bunch of things come together like your innate desire uh your innate interest and feeling like play and not work and the endless tinkering as TB talks about in this book which is the whole world this is why America is America it's built on a culture of celebrating failures because after each failure you Tinker you reiterate and eventually with no Financial pressures endless Runway tinkering and a whole bunch of other things coming together it's not bound to work but it has a good chance of eventually working not for everyone and then I said to you but IM on there's official statistics out that you know stastics the fastic big maths quick maths big maths there's stastics out that no like only something like less than 1% of podcasts reach episode 20 like they haven't given up they've published 20 or more episodes uh of the sheer number of podcasts that start from episode one mhm uh and then I said to you well you know the because the sample it's not actually for by Randomness and I I was saying to you if we just keep publishing and tinkering eventually whether it's episode 300 or episode 3,000 eventually we'll we'll basically have this as our full-time thing uh will slowly grow it into its own proper Media company and everything to which you kind of argued along the line and this was a while ago maybe your views have changed after reading all of this but you you said something along the lines of yes but it is also F by a randomm to say that because you know something like only 1% of podcasts have published more than 20 episodes it means that we're also going to be success and I said well the sample size in itself is so small uh that we we we can't actually say we're fed by random but then you said that in itself is fed by random and we're just going back there's actually a Twitter thing where we're going back and forth replying I think there's like 10 to 20 uh replies we're just talking to each other on Twitter and then shout out to authenticity shout out to Seb Le of the fat tonus Community friend of the show he was liking a few of the tweets he was he probably had his popcorn he was loving it cuz he's a huge Talib inserto fan uh anyway what what am I getting with all this what am I getting all this which is because people listening to this are probably a lot of people are in the same boat right which is why Daniel Vaso small bets Community has blown up so much is because people have jobs Mo almost everyone hates their [ __ ] 9 to-5 jobs and they want their side project something that feels like play and you know not work looks like work to others yeah looks like work to others but feels like play to them yeah take short Nal take a short Nal they want that to be their full-time thing right and yes many okay sorry sorry continue continue yeah yeah so PE there's good number of people who want that to be their full-time thing but they know that this scalable thing in the extremist done uh which they their side project they want to become the full-time thing does not yet earn money and probably will not earn money because we're talking about literally you know we'll go back to please elaborate again your extremist on uh it's it has a low likelihood avoid the scalable as talb says beware and he Talib himself advises pick something that is not scalable like a dentist in mediocris or something like that so that's why we're discussing this because so many people they want to get out of their 9 to5 but Talib here is saying hey hey embil keep your 9 to5 keep your stable source of income but then have a crack at small bets on the side my argument to that is in theory sure that's a very rational take but in practice in the real world that's also difficult because I'm giving you the argument of David senra Chris Williamson these guys have endless Runway they just keep swinging some would say FBR and I would say no because of endless tinkering and if you have the Deep passion and it feels like play then eventually as Mark andreason says you you bend the world to your will eventually it's bound to work so what do you have to say to all of this what do you think what do you think um cuz this we discuss this all the time this is like for us it's a key topic and I know it is for probably good number of listeners they want to get out of their shitty 9 to5 they want to do what feels like play and but looks like work to others but it's an extremist on it's and talb says beware you so so success can still come from extremist done as you you you as we see and as you mention through the examples of some of these people that have blown up or or done well I should stop using the term blown up because he talks about that in a negative sense the problem is that this is genuinely Fooled by Randomness right so I guess that there are you know 7 60 to 80% of people who start a podcast for example let's keep it on the podcast category for example are actually very good podcasters or have the potential to be very good podcasters otherwise they probably wouldn't have started a podcast in the first place the interest element of starting a podcast took them down that road why is this important what you end up with is a sample of people that are actually more likely to be successful than not so your s so your sample size in your sample in and of itself is already full bar this this is what what I was getting at which is the sample itself right is the problem right so and and you're right in that the Market's early and it's a small enough size that you probably are not like choosing the right people the problem is that this fundamentally explains the extremist thing and focusing on a mediocris career because even if you are someone who is capable of doing well in podcasting and you're not blow and you're not doing well in podcasting because let's be honest most of the views and the listens go to spec to a few people sure that would mean that actually your chance of success is even lower if you're in general population of people um so my my view is like you need at some level to you need at some level to basically have income you know whatever I tweeted about this recently where I was like look the people that do that tend to do well either are like had a fellowship already had a [ __ ] ton of money or like you know somehow were getting supported um because it's very rare that you find people I think I think it was or exited a business like the guys I or exited a business you basically have Runway you have your Runway and burn worries covered but but the reason that's important is because the tweet that I made I'll throw it up on screen and put it in the show notes is the time that really impressive people spent on their modus operandi on their work and it was really big and their focus on non Focus stuff noncore stuff was really small which would identify this point around they had the ability to play an extremist Stan with by capping their potential downside which is this point of ruin yes yes yes so so basically I think we're arguing we're in violent agreement but we're arguing a little bit at Cross purposes because in reality you have to swing for the fences in order to make it big like you can't not be involved in the industry you have to be involved in the industry to do well and in addition you need to continue working in the industry to build the capabilities skill sets over time to be good at that thing exactly here on two three pages after where I was saying he says Beware of the scalable and pick something in mediocris he talks about scalability and globalization and uh you know the EU the Europe versus USA debate whenever you hear a snotty and frustrated European Middle brow presenting his stereotypes about Americans he will often describe them as uncultured unintellectual and poor in math because unlike his peers Americans are not into equation s and the constructions uh constructions middle brows called high culture like knowledge of goa's inspirational and Central trip to Italy or familiarity with the Del School of painting yada yada and then Talib goes on to say which I was saying literally a few minutes ago about this whole notion of tinkering uh iterating take a shot Nal play iterated games uh talb here says it so happens that America is currently far far more creative than these nations of Museum goers and equation solvers it is also far more tolerant of bottom up tinkering yes and undirected trial and error and globalization has allowed the United States to specialize in the creative aspect of things the production of Concepts and ideas that is a scalable part of the products and increasingly by exporting jobs yada yada and it goes on and on so that to the point of what you said and what I said about tinkering it's uh it's a key key part of having a scalable career yeah uh or having scalable Endeavor site projects small bets whatever you want to call it is the endless tinkering that's that's a necessity rational VC itself how many times have we tinkered on so many every episode every day we're tinkering different things not just on content like we're tinkering on so many other stuff outside of the content as well um but look to to the point is your question was if you want to escape your 9 to5 by doing by focusing on the thing that is your side hustle practical steps you need enough Capital you need enough money to be able to take the plunge that's the first thing how do you support yourself while you focus on that side hustle second thing is are you actually learning developing and refining and therefore tinkering uh on that side hustle over time and are you tracking how potentially you could be improving now I made a note somewhere else in this book which was the life of a content creat Creator is very well explained in this book why because he talks about it in the context of book like writers the correlation between effort and outcomes is particularly for Content creators not a great relationship because you can put in [ __ ] tons of effort for 10 years and see no outcome and then suddenly one day boom right this Chris Williamson graph that he uh that he keeps putting up around you know you do nothing you like nothing happens nothing happens something happens in something like he's had more listeners in the past month than he has in the entire 5 years combined or something like that exactly and and so what am I trying to get at I'm trying to get at this point of raise enough money make sure that you're learning and constantly tinkering all the time but understand that the relationship between your effort your input and the output you get is not linear and this is why humans struggle so much is like you can't we cannot conceptualize that a key part of this book nonlinearity which he goes into so many times yeah exactly that and this is why I take my hat off to someone like Eric jensson because he was working a 9 to5 or probably more than a 9 to5 is working in American Tech as a product manager but then he's constantly swinging and tinkering on evenings and weekends which means a sacrifice has to be made somewhere and goes back to my favorite quote of in life we must choose our regrets which is the regret that he chose at the time or for several years uh he's seen the results now but the results are not guaranteed as we're saying okay look I want to I want to move on to something that is well actually before I move on is there anything else you want to pick up on an extremist a couple of areas I have very quick highlighted in the utopian province of mediocris particular events don't contribute much individually only collectively I can State the supreme law of mediocris Stan as follows when your sample is large no single instance will signific ly change the aggregate or the total the largest observation will remain impressive but eventually insignificant to the sum Y and you know uh in terms of extremist done inequalities are such that one single observation can disproportionately impact the aggregate or the total uh and he goes on and on you know so he says so while weight height and calorie consumption are from a mediocre Stan wealth is not almost all social matters are from extremist another way to say is that social quantities are informational not physical you cannot touch them money in a bank account is something important but certainly not physical as such it can take any value without necessitating the expenditure of energy it is just a number so I thought I'd just wrap up that extremist mediocre St section with that's a nice way to wrap it up and yeah take away where do you want to go next with this so what becomes interesting is he builds on this idea of mediocris Stan versus extremist Stan throughout the rest of the book um he introduces it quite early I think it's chapter 3 or something and we'll throw up table one for those watching for those listening we'll try and see if there is table one online with a link we can throw in the show notes but for those watching on YouTube uh we'll throw up on the screen it's a table one we'll leave it on for a good few seconds uh a comparison of mediocris and extremist Stan uh in table one now what's interesting about extremist is that actually a lot of our societal structures our social structures our financial structures actually all sit in that space they sit in extremist St so that's why when we try to predict stuff or think about life we're thinking in a mediocre St style but actually we're living in extremist so the next bit which leads on from this very nicely which is one of the examples he talks about and this isn't Linear by the way we're not jumping to the next chapter or anything this is actually later very far later on in the book I think chapter 15 where he talks about the intellectual fraud that is the G gaussian or bell curve we're all familiar with the normal distribution curve where 80% of um data hovers around the the average and then only like 20% 2 10% hover around the edges he basically says that bell curves only ex only exist in mediocre Stan mhm why is this interesting because the way to think about anything in society like I said is that in reality the big events that happen the black ones that occur typically are always occurring in the variables that that they are variables that occur at the extremes of the bell curve so how do you explain if we're getting black swans over and over again how can they only be in the you know 10% or the 20% most extreme random events because if you do the math it's like if you would have looked at the crash of 1987 you know there's there's that scene from um what's that uh what's the what's the movie The Scene that we saw earlier when we were doing some research uh The Big Short yeah so the scene from The Big Short where the guy is like never has an investment Bank failed in in history I think this was in related to 2008 but anyway we'll see if we're going to throw it on as a for a few seconds here um if not but yeah you carry on I mean like you take Black Monday right so in Black Monday uh what's interesting is that you could have run an experiment to see how many times in history has something like Black Monday occurred it had never really occurred and therefore it would take like two billion years before that thing would occur well look it happened right so because it happened you can't apply the bell curve to this specific scenario why because this sits an extremist time what he then introduces is this concept of mandal bro and Randomness Y which reminded me of a phrase that you always used you can you can tell us who it's from but only the paranoid survive Andy Grove rest in peace Andy Grove rest in peace um previous CEO chairman of Intel Rose them to you know what we what we know as the goated Intel maybe not anymore these days but in their Prime I don't want to get too much into what mandal bro and Randomness is but what he describes here is how can you take black swans learn from them and turn them into Grace ones mhm right so things that are known unknowns now a lot of the time ahead of time you can remove the risk of being in a Black Swan environment by just taking small little steps for example putting insurance against your Investments putting stop losses on your Investments um making it such that in a scenario where something can happen that sits in particularly in inen in variables that sit in extremist you're able to stop yourself from going busted or blowing up in that scenario um so so just to just to close out the thought the reason why it aligns to only the paranoid survive is because if you have a paranoid view of any scenario that you're in you're more likely to stop you're more likely to preserve what you have in order to stop it being at risk of blowing up in any type of scenario without knowing what the the scenario could be a few ideas link up here kind of the terms of psychology of like loss of verion as well and I think TB talked about this in fold by Randomness but also here how if you let's say you have no money and you're given $10 million in a Lamborghini and then you lose $9 million and the Lamborghini and you're left with a million dollars you'll be psychologically more [ __ ] up uh with a million uh now than if you were to start with absolutely nothing and still have nothing and not be given the 10 million in the first place um and to your point if you can just remind me uh because I have a few ideas floating based on what you said uh what was the last thing you said just before the end if you only the paranoid survive so if you sure sure so points of hedge funds so you're talking about Tyler talks a lot about you know not getting wiped out or managing your downsides or the risk of you know basically getting [ __ ] and hedge funds you mentioned this before hedge funds all have stop losses so they manage the downside and this is why there are so many [ __ ] head funds majority of them as Buffett says struggle to beat the S&P 500 Index yet all these funds remain in existence one because of course they're charlatans and they get they live off management fees just like many Venture capitalists short SW a lot of shots fired but hedge funds the other reason they they remain in existence beyond the management fees is that well they're getting some returns and they have stop loss so they're protecting the risk of blowing up now of course they're hedge funds are known many known for blowing up because uh those are Cowboys maybe as TB is very high on testosterone and don't manage the risk as they should but a lot of hedge funds have stop losses in place which is why they continue to remain in existence even with Suba performance and why the the market is just flooded with everyone's a hedge fund manager now if they're not a VC they're a hedge fund manager he's just not nonn stop shots fired it's the truth fact so hold on so what's the point that you're trying to get to that was it it was just firing shots oh fine okay mandal bro and Randomness yeah how do you create a scenario where you are less likely to fall into the traps of extremist only the paranoid survive I'll leave it at that we need to cover that book but I think that is Andy Grove's books are Lindy books because they've been around for a few decades the teachings are anyway side not okay anything else you want to touch on while we're here that's it I think we can move on to before we move on I want to go I want to basically tell you why the midwit meme is [ __ ] all right tell us in this context before you continue let's throw up the midwit meme here let's briefly explain what it is I actually covered before it was like hip call as I mentioned in the Angel Investing essay I wrote a few years ago on rational vc.com Linked In the show notes the essay I threw up a midwit meme which is about how there's many examples h but let's say on the the left side of this normal distribution curve low IQ and then on the right side the high IQ they end up doing the same thing and then the guy in the middle who you could call the Normie he's going against the grain of both uh and just overthinking over analyzing or whatever the case may be so for example the the midwick guy may say all all of this [ __ ] of like uh optimize morning routine Andrew huberman cold plune 5 hours meditation Ginger shot and then the low IQ and the high IQ are just like just wake up gym get to work and then that's it so that's like one example but tell us please why you think despite its I think the midw is recently at its like peak of uh popularity especially with people like George Mack discussing it on threads and on podcasts so tell us why is this midwick meme that I've just explained or Define why is it [ __ ] specifically because he goes after the gaussian curve right so what he says is tell us which chapter this is for anyone that has read it or wants to read just so they can keep up a little bit so he talks about Carl Friedrich gaus who is basically The Economist I suppose who who wrote about the bell curve and this is why it's called the gaussian curve it's in chapter 15 it's called the bell curve the great intellectual fraud so that's in part three part three of the book chapter 14 until I believe 18 is the somewhat more technical part of the book uh so yeah Enlighten us I mean he he puts a little it's quite funny because he puts a little asteris literally on the title where he says the non-tech Brant the non-technical or intuitive reader can skip this chapter as it goes into some details about the bell curve also you can skip this skip this if you belong to the category of fortunate people who don't do not know about the belela um I don't want to like re there's quite a lot of stuff in this chapter but it immediately made me think of the midw meme why is that because in the midwit meme like you described the person in the middle right is um the overthinker the person who's trying to apply you know the the iyi the intellectual idiot as um as Talib likes to say but interestingly it's weird because what the meme infers is that less than like 10% of people are idiots who believe one thing and 10% of people are like Jedi Masters who believe the exact same thing as the idiots um but what extremist Stan tells us is that in a bell curve cannot exist in extremist so when you're discussing matters of Finance or you know whatever different things that you saw on the on the table that explains what examples of extremist are you can't technically apply the Gan curve so if you can't apply the Gan curve how are people applying the midwit meme to this specific to these specific examples what's interesting is that the yes but actually mean that you know people joke about and they think it's funny and whatever I know it's funny but when you put that lens on top of so it's the combination of a gaussian flex the person in the middle of the midwit meme and this notion that the bell curve doesn't apply or the Gan curve doesn't apply in extremist you put all those three things together makes you question why is it that people still believe in the midwit meme all the time so pachy McCormick for example one of the writers of not boring not bing.co I think y he recently tweeted saying everything in life can apply to to this midw me I told you it's at its peak of this Midway idea so why is that interesting is because that would tell you that actually the 10% that are Jedi Masters or the 10% that are idiots do not any longer exist because this has now breached what people think about as been it's too common an idea now to fall within the two ends of the spectrum anyway so you have this combination of everything we've spoken about so ideas in extremist are not being applicable to the bell curve you have this point around now it's being T Nory anyway to believe in the midw meme so you end up with this point of actually the ideas being discussed as being aligned to the midw me are not actually correct I'll caveat all of this with yes but none of them give a [ __ ] actually actually but none of them give a [ __ ] so the whole notion of the rational VC brand was initially well founded on Taliban mongus ideas philosophies but then we're applying them to the VC startup investing market and a lot of people would just be like like disregard it like so what like to the Moon uh raise 50 million to the moon no profit to the Moon everything to the Moon and so even now someone the other day I forgot his name some guy on Twitter well-known founder it seems like a fairly nice guy interacted with him a couple of times he posted a screenshot of the experience the resume or the CV of the founder of cognition Labs cognition Labs is a startup raised a lot of money developed a product recently with all the hype called Devon which is the first AI autonomous software engineer that can basically take freelance jobs from upw workk and do jobs so why am I mentioning this took a screenshot of the founder of of Devon the founder of cognition labs's resume and said wow this guy worked 5 years at some like b2c startup and then he found the cognition Labs it just means that if something doesn't to work for you try something else you swing long enough eventually something like will work and then I just rep with the book cover of foed by Randomness I do that a lot on Twitter to like startup tech people I either post Black Swan full by Randomness skin in the game yada y just as like stop talking [ __ ] Bro in the most in the politest way and also means go [ __ ] read the book as a because me myself every day I'm duped by these things duped and then a few seconds later I'm like oh like so oh for by R oh and then I'm I'm still Manning both sides of the argument in my own brain going back and forth like a maniac trying to come to terms with what is the [ __ ] truth here right these people don't give a [ __ ] about any of this none of this so I reply to all these soy lick and Valley Bros with these book covers to say like yeah but the idea you have maybe a little bit you're full by Randomness maybe a little bit like here black one and then they just disregard it like they don't give a [ __ ] so my point is what you're saying about the bell curve and gaan yes you're right but then they're just like and and then someone like David sax would be like yes but with his mon cair hat yes but uh you get to be right I get to be rich which is like how about how about you do right and Rich how about you try and approach things that way which is basically the Talib way talib's right and he's Rich so so a couple of things which actually Talib calls David sax as you said in the last episode techno watermelon techno watermelon but he did come out and recently apologized not apologize but tell sax that he was right about the Russia Ukraine situation where sax even was like stunned I think gave him Talib is so mature that he can give you credibility hold on he's not mature he's very immature in the way that he goes after people no that's authenticity skin in the game it's not mature though 100% he is very immature I just but I think he's so mature that he can give sax credit on one thing but then [ __ ] on him for many other things yeah but you don't need to [ __ ] in such a in such a if your VI hor way anyway so so just just to just to clarify this point so um Mr Talib himself a lot of the time on Twitter will say things like well this is actually a fat tale distribution and therefore this doesn't apply what he's talking about is more things in this specific scenario you talk about exist in ex extremist on and therefore are fat tailed events MH why is that important because it means that um because extreme events are more common than non-extreme or non- rare events actually the the [ __ ] curve doesn't apply so why the hell are you applying this curve in this scenario people don't have the intellectual honesty or the capability to really understand that this is exactly what's happening I would posit that the majority of people that make midwit memes are either midwit or idiots which by their own logic applies yeah and therefore it's [ __ ] and then I go back to the argument of and I agree with you but I go back to the argument they're going to be like they either disregard and shrug or or they're so blind that they don't even see your argument they're like what anyway uh yeah this founder he did this startup and then this startup and he raised a billion so woo let's go to the Moon okay all right anything else you want to add on this or should we just move on to now the investing part of all of the fifth point that I raised originally which was I mean there's so much do you want to go back to cuz we jumped around like chapter 15 do you want to go go to like chapter 6 narrative fallacy and chapter 7even living in the antichamber of Hope no because I think we've already covered those things because we floated so many ideas we've touched I think on the core no I think look so so so just to recap what we've done is we've gone um description of what a Black Swan is we've then talked about all the fallacies that they talk about in the book so that that includes the narrative fallacy and all of the stuff you're mentioning in chapter 6 then now we've just described what mediocre Stan versus extremist Stan are so when you combine the different environments that are medoc on and extremist on with all the fallacies that exist and why humans struggle with um why humans struggle with uh black swans you then get to a point of okay so so what the how do you actually create positive black swans like I understand this is all of the issues that humans have and I understand these are the different environments people can be in but how do I take advantage of Positive Black swes myself or how do I reduce my biases how do I remove my biases um which he talks about in the context of uh you know the barbell curve that we spoke about the bar strategy that we spoke about uh but also other Financial mechanisms um which I think is what made this book so popular with hedge fund managers in the first place uh but let let's let's discuss that once we've discussed that we can then go chapter by chapter and discuss all of the complex spe specificities in by chapter sure so okay so where do you want to go next tell me so I want to go to there's two options right so many good sticky notes here I'm I need another six coffees let's go for like 8 hours what I want to discuss is go back to the barbell strategy please oh wonderful okay as option one and then option two being this point around going all in um which is his second option of how to essentially take advantage of positive black ones which is where Venture Capital comes in let's go to the you want to go to the investing umbrella yes sir the key part okay this is an important point in many parts of this book book Talib ref first Aventure capital and mind you this is initially published 17 years ago 18 years ago so Venture C I mean why combinator had maybe just been founded uh a year or two in Venture Capital was not anywhere near what it is today especially with number of players but he seemed to show a lot of praise for VC in terms of being a positive Black Swan which I touched on earlier and one should gain exposure to it now it's very interest I know it's funny but I know it's very interesting that all the people who have entered this VC Market especially postco have not necessarily done it because of talib's wonderful teachings in this book about those people don't even know what a positive Black Swan [ __ ] is they've simply entered the market because mimetic desire has driven uh their actions and Shout Out Luke Burgess wanting previous guest on the sure you should read wanting Linked In the show notes which he talks about mimetic design mimetic Theory and uh you know exploring Rene Gerard's ideas and teachings VC now is is not VC because people have follow most people in VC have not even read Black Swan a lot of people in VC I think actually even dislike talb because just just as I do he shits on them in the in the sense that they are no skin in the game charlatans that live off management fees with sub Car returns no operating experience and all the usual [ __ ] that I've been talking about for years since we founded rational VC as a brand just pause there um the fact that You' spoken about this so much is evidenced by the fact that you can now recite exactly what you just said word for word over and over again like you've memorized what to say about how fraudulent these people are trucks anyway continue so yeah it's to say that okay let's let's get into this investing umbrella VC is a large part of it it's our brand we do that we have rational. fund on the side we we do syndicates we do special purpose Vehicles which is we do onetime raises in startups that we feel like investing in uh and you can go to right side this is not a plug but genuinely if you want to see more of how we apply talib's philosophies and mongus philosophies to investing which is we have skin in the game no charlatanism no management fees yada yada a bunch of other things go to rational. fund and you can read more about how we operate that but let's get into it because he talks about venture capital A Lot in this book but people in and but in recent years he's tweeted a lot about his disgust of VCS specifically so he praises the Venture capsule business model as a positive Black Swan but in recent years he's tweeted rightfully in my view uh [ __ ] on modern day VCS and all the new entrance and people in the market okay so that's a very good summary of I think where his head was at when he wrote this um but in in terms of like how do you learn from Black Swan Theory and everything he's spoken about to date and how do you apply a insurance policy if you will against black swans well we talked about only the only the paranoid survive but there are two options the first option is in a financial markets perspective you either take the barbell strategy which is um hyper conservative but also what he describes as being hyper aggressive 85% on safe stuff 15% on non-safe stuff uh um the second option which is where hedge funds become in particular um relevant is he talks about an insured portfolio so you go all in on very specific bets which is what Venture Capital does right you put a [ __ ] ton of money behind something or if you are a hedge fund manager you back a position with a significant portion of your funds but what you do is you add insurance insurance can be two things either one you can take out an insurance policy with a specific insurer around the bet you're making the problem is they don't that is such a specific thing to insure against that a lot of insurers won't support you on or you do something more practical which is you add a stop loss to that to that um strategy you say as soon as my losses go above 15% cancel like we take what we take that as a learning and a loss we don't try to keep writing it out because as a lot of popular sayings in the markets go the market Market can stay wrong longer than you can stay insolvent so why am I talking about all of this the reason we're bringing this up is because when you talk about VC it actually applies to both buckets of option one and option two in option one it applies in so far as you're only making VC becomes a smaller allocation of a total portfolio but in option two it's actually the large portion of the portfolio but you're taking insurance policies against downside there's no real way in which VCS are insured against losing LP money because the whole business model is around how do you throw as many darts as possible without the concern for downside the only downside potential that exists in that framework is that you are spreading your bets as wide as possible the problem with that is that is goes against option two the the whole point of option two is not to as Charlie manga talks about God Rest his soul not you know spreading yourself too thin and going after what you believe to be right yes and mind you this I have like four thoughts in my head trying to don't know which direction to go it explains the size of your head this really does you're talking about V Capital by Design is risky anyway and it's money that kind of essentially they're willing to lose exactly that because even the LPS who have funded those V's let's say a huge pension fund or whatever that pension fund will put they'll literally do a b strategy huge Pension funds with billions or endless endless amounts of funding essentially will allocate 85 90 God knows even family officers we even talk about smaller LPS even British family officers who are invested in our syndicates or Investments we have they'll put 85 90% of their portfolio in very safe secure low much lower risk very lowrisk Investments and then 10 or 15% of their funds is put to the sze that designed to be YOLO basically it's designed to be YOLO so those Pension funds will fund these VCS these VCS will be living off the management fees with no care in the world they're like the pension fund and the family offices they're willing to lose this money we'll live off the management fees we'll write a bunch of [ __ ] on Twitter and pretend we're cool and just go skiing and Napa Valley and pretend whatever and we'll throw a few dots [ __ ] it if nothing happens which kind of explains why so many funds recently have started to shut down and they struggle to raise fund two or fund three or whatever and if people go to again plug rational vc.com the F we'll link it below the first ever article I wrote Tech markets are irrational what to focus on I basically shat on this entire model of uh and we knew so we had soft commits to raise a fund a couple of years ago in the peak of the market after thinking about it we decided against becoming full-time VCS exactly because we knew eventually this is going to come crashing down and it has and people and we struggle to raise fund to and one of our values is long-termism there's a right way to do the things very long term and some very prominent GPS General Partners who are like solo GPS or very big Twitter thinkers and think boys or investors who I would I would have been like okay these guys will definitely raise a fun two fun three even they've struggled to raise a fun two and three and they've closed down uh like very big names in the VC space so it just goes to show exactly to your point and an extension of what you said that by design it is money that not only the VCS are willing to lose but it's because the LPS who are funded them have allocated that funding for it to be lost allocated allocated with a W because of my Southern Iranian dialect we extend some words for the w i i transfer it over to English Freshies are going to freshy you know I think that brings to a close some of the points that were raised I think if we read this book 60 times we do another 60 episode on this there's way to political cranker there's way too many good ideas in this book it's a very again High signal book and my my head's starting to hurt a little bit uh maybe we'll take a break shortly but let's go to the next section now you know how I feel so just to clarify so we just spent a couple of hours going through the the structure all right what we took from the book what does a Black Swan mean what are our different human blindnesses to black swans and why what does mediocris Stan versus extremist Stan mean and what are those different environments and why we can't treat them equally how that applies to the gaussian curve in particular and bell curve mathematics and midw memes and all of that good stuff what does that mean for investors now that we've closed that out we want to use the next part of the podcast to go through chapter by chapter talking about two things one the specific concept that Talib talks about per chapter and then discuss on top of that the second thing what are our takeaways and our experiences and the random thoughts that came into our heads and your big head around that specific chapter so I was just going to say I'm I'm flicking through coming across these sticky notes get better and better with in terms of like personal stories our stories experiences but I think that's a good direction let's do a quick because we said you know we said we've done what we've done so far in the episode for two hours let's let's give a few minutes of a quick recap and a quick summary of all the chapters we try not we'll try not to take more than 5 or 10 minutes as kind of a Midway points just to zoom out really a lot completely zoom out and then once we've done that for 5 or 10 minutes hopefully 5 or 10 minutes then we'll come back to exactly as you said then we'll go through all of our personal stories experiences and so many brilliant sticky notes I have here so let's do that so let's start with chapter one chapter one is the apprenticeship of an empirical skeptic yep uh in this chapter we start with this whole idea of we start with this whole idea of Talib talking about his experiences about Lebanon this is where we took a lot of the Iran stuff we spoke about um and understanding exactly what an imperial skeptic empirical skeptic is he then introduces this whole point about a trip triplet of opacity which is building on some of the Core Concepts from by Randomness and then I think that's basically it it talks about like what a distorted Outlook is and basically starts to introduce the concept of the black swarm we talk about rereading and the importance of these ideas so since we've zoomed out and we're going through each chapter very quickly you've pretty much done chapter one already but the last step is uh you know you talk about the triplet of opacity which defines the three missteps a human mind makes When approaching history uh let's quickly touch on those three quick bullets so this includes you want to you want to get yeah sure so those are the things we described earlier so those everything from not realizing that things are more complex than we understand um having a distorted Outlook when it comes to retrospection uh and then how we platon ify or add simple heuristics SL models to very complex things IE we we o we often oversimplify the reasons behind something oversimplification that's very dangerous um okay that's done let's go on to chapter 2 this is an interesting chapter cuz he kind of writes a little story here doesn't he yeah why why don't you so this chapter 2 is yia's Black Swan uh he talks about yvenia cnova in my Russian attempt uh who wanted to publish a book that she hadd written uh met several Publishers editors yada yada none would none wanted to publish it she went to some writing workshops um she she was you know they told her stick to the usual routine where writers just tried hard to create stories that were just an imitation of other successful stories and then eventually you know some Russian publisher felt that you know he had nothing to lose let's publish yia's book uh and uh the unexpected happened yev became uh literary sensation sold millions of copies of her books uh this unusual event changed a perception of Publishers and then suddenly they wanted to accept the fact that an idea when you know expos in its raw form you know let's go ahead with this yia's book is nothing but a Black Swan uh and readers of course who then go and search for yeva and Google going to be disappointed to to see that it's uh it's a fictional character that Talib he's made up he's made up but in such an awesome way to really drive home the point of a Black Swan and the fickleness because the whole oh first time I read this chapter to I was like these idiots and then right at the end of chapter he's like this is fictional and then the whole time I saying haha idiot is because you see that happening in the real world so often uh so I mean this is why people say we should read more fiction because really it's uh it's a good way of understanding the world you know so uh that that's chapter 2 I don't know if you want to say anything else on that chapter uh I remember reading that chapter and thinking this is made up you have gen is a madeup story The reason I thought that was because it fits so perfectly in what he was trying to describe that I thought he's and then yeah it was but and funnily enough I was on a plane so I couldn't even Google to sense check where the it was like halfway through the chapter the the part that made me laugh is towards the end I was like he said it's fiction I was like ha of course yeah of course it reminded me of of course hindsight wise right but it reminded it reminded me of in by Rand fo by Randomness he had another fictional story so I was like yeah I'm starting to get T that's how he writes you understand so understood instantly how he writes um okay chapter three Speculator and The Prostitute we've already touched on this one which is the funny prostitute spent a good amount of time on this yeah this is basically where he describes mediocris extremist the two domains of Randomness chapter 4 1,1 days or how not to be a sucker uh touched on this as well as I said we've jumped around so much that we've touched on most things in this chapter TB narrates the story of turkey uh that was fed for 1,000 days and then on the 1,000 first day uh you know the Black Swan event happened where uh the people the farmers fed the turkey on Thanksgiving uh fed them to on a on a dinner plate so this this is the whole confirmation era stuff right so this is the stuff of the past doesn't predict the future um you know we like narrative Pharisees all of that good stuff chapter 5 confirmation information by the way this is such a Iranian Uncle Middle Eastern thing confirmation conf yeah but he's doing it in like the Italian way right so it's Kish and all of that stuff um this is again so confirmation formation is the confirmation fallacy the roundtrip fallacy you know this whole thing that we spoke about Muslims being terrorists I terrorists being Muslims and Muslims being terrorists and then this whole thing around looking for corroboration of all of the so this is where he starts to bring in all of the caraman and tki stuff then watch chapter six The Narrative fallacy humans being generally us humans generally assign narratives of uh casualties to events that are random so uh he talks about we often believe in stories that rather than sticking to facts that are logical uh and naturally you know this kind of behavior is ingrained in us where we condense information in order to make it a unified story you know I think you you touched on this partially as well but how talb says that this results in a loss where we ignore data that doesn't support the narrative we have we do this by tricking ourselves into believing something that might not be true uh chapter 7 living in the antichamber of hope this is the basically the chapter where he talks about contradictions that lie in between chasing and activities that are dependent on back swans and other activities that are perform mainly to deliver proper results basically he's he's creating scenarios and and examples of where mediocre Stan versus extremist Stan can be leveraged um and then this whole point around like linearity and nonlinearity he starts to talk about here because we all tend to focus on linearity like humans only think in a linear perspective chapter8 is Gore casanova's unfailing luck the problem of secret evidence uh and so jackor for all the Italian listeners Jack on by the way you know you know that in recent months I've refused to learn German uh and I've said that if there is a language I I would spend time learning it would be Italian it it it sounds you live in Germany I know it's it just sounds beautiful I mean temporarily but it just sounds beautiful right so French French and it I mean you uh arus our friend who's speaks French you're probably Elementary French I mean I did the a level in it so I should remember it but anyway anyway French and Italian nice languages uh so chapter 8 Tyler begins with silent evidence a concept that is similar to the anti- liary we touched on where it emphasizes on the unknown over what's known basically the silent evidence comprises of instances that are not acknowledge yeah this is the whole Sailors who prayed versus didn't pray that we talked about earlier yeah in other words they don't become black swans uh so we we discuss this you know people who let's say they're they're the unknown Heroes you can say people who and you think about the sheer complexity in the world and why we shouldn't be putting people of specific people on pedestals which is the modern day culture of the world the uh really good example he talks about this in this chapter is gambling where he talks about people who always say oh I was so much luckier when I first started out which this of people thinking you know this notion of begin luck in gambling it's not the case you gambled for so long the reality is over time you're going to lose the house always win so like this is just a fallacy okay chapter n you want to yeah ludic fallacy so we we touched on this as well um humans overemphasize what seen and ignore anything that isn't quite so obvious um the fact that uh we this is quite interesting where he talks about worrying about stuff that's occurred um but usually ignoring something that could have happened but didn't if you knew all of the [ __ ] that could happen to you you'd worry probably a thousand times more so it's probably not even worth the worry and again he touches on this whole point around not being able to understand what a Black Swan is identifying black swans recognizing them and then how do you judge your own limits in that context um this is the whole thing around like how do you start to think think about the par only the paranoid survive and and and and holding yourself to account when it comes to black swans yes uh moving on chapter 10 the scandal of prediction so here he talks about epistemic arrogance which essentially means that we humans are arrogant about what we think we know so to site examples refers to a study where participants overestimated their abilities when asked to solve questions uh note that the accuracy of people comp eating in such studies is irrelevant but the overconfidence they displayed when answering those questions is important yeah this is the whole taxi drivers did the best yeah yeah yeah and and the problem lies in the fact that we think we know more than we actually do so yeah as you mentioned the taxi drivers and how taxi drivers probably know as much or if not more than your typical pseudo intellectual or or intellectual frauds as he likes to call and people in suits in Wall Street who sit around a boardroom table making up [ __ ] about predictions of markets or current affairs or how things will go and and how a taxi driver probably knows probably knows more than those those guys and this is why we have such a TR such trouble uh predicting the future is because number one we don't like you know the whole anti- Library stuff we do not hold ourselves to account for how limited knowledge we do have um and then also we compress possible outcomes all into single singular simplified oversimplified stuff uh that narrows your set of parameters chapter 11 how to look for bird poop uh and here he talks a lot about something we've discussed a lot on prior whether it's been tweets essays podcasts talks about serendipity where discoveries that were unintended turned out into huge breakthroughs uh so for example it talks about how America was discovered when the real intention was to find a new route to India um and so when you prepare yourself for something that's unintended you open the doors for Serendipity that allows you to identify and utilize black swans to your advantage so take a shot Naval I mean talb talks about this in the book and this is where naval's some of his famous tweets and ideas came from came from where he Naval says you know move to a big city because more Randomness uh more Serendipity uh go to a cocktail party meet more interesting people potential co-founder potential spouse potential whatever whatever um and just putting yourself in positions which we've done it in Prior episodes but we'll throw up nal's tweet where he said says move to a big city uh tweet more uh go to cocktail parties back then he was like buy Bitcoin uh just all all this [ __ ] well not all this [ __ ] I think the Bitcoin part is to be argued but of course 10% of one's barbell or 15% sure put your money in Bitcoin and ethereum uh because that's a portion of your barbell you're willing to lose but then the upside is who knows who knows what the future holds so uh in that regard absolutely so noval has extended Talib ideas in terms of serendipity and putting yourself positioning yourself in ways open to Serendipity the other thing he talks about here is he builds on this point around earlier in the previous chapter he talks about um us having problems predicting the future because of our fallacies but then in this chapter he says actually there's no even there's no point to even try to predict the future um because the the whole like potential multitude of outcomes that could occur are just not even calculable so what's the point about us trying to predict because we can't predict pla on many black ons will happen and therefore like it's not worth the hassle of trying to predict stuff yes chapter 12 uh epist democracy a dream did I say that right yeah um you want to troll you of your immigrant accent it's not as bad as yours chicks uh basically he talks about like his idea of Heaven to start with in this chapter which is this epistocracy um which is where everyone understands their level of AR um ignorance rather than their knowledge so it's like the complete opposite of where we're at now you're not trying to prove what you know you're proving you're trying to prove how much you do not know which is in in a sense a flex in and of itself um and then he talks about this stuff around currently and in the past any data you gather is probably not a good indicator of the future particularly in extremist Stan he talks about future blindness this concept where we're unable to think dynamically and it's quite interesting because future blindness can be dependent on on what we've previously been blind to we interpret the past by relying on a backward process where we try to rebuild the past depending on the outcome we see this is this whole whole post Haw attribution of reasoning to something he talks a lot about this in and Fooled by Randomness in the previous book anything else from this chapter no it's a good summary uh chapter and we're nearly wrapping up with this zooming out and of all the chapters uh chapter 13 appelles is that a correct pronunciation I think so appelles or aelis aelis the painter or what do you do if you cannot predict uh so in this chapter he basically T offers practical advice in order to cope with Randomness in life he encourages people to prepare for the possible results of unexpected events we'll get into some of these later instead of relying on a probability that the unexpected will occur so let's say if you're trying to predict something and fill with something that's trivial it won't really matter much but if if you predict something related to finance like the stock market you could end up in loads of trouble and so you one must rank beliefs according to the devastation they could cause and not rely on their plausibility I think that's everything in that CH I don't really remember that chapter to be honest it kind of like past me but anyway uh I think chapter I mean you could touch on it briefly but chapter 14 uh he he says from mediocris on to extremist on and back chapter 14 to 18 is part of what yeah chapter 14 to 18 is part three of the book and it's the part where he said he said it's the technical part you can skip it if you want uh I mean it's still phenomenal reading as he said some people will consider an appendix to the book whereas some would consider it a key part or the probably the most important part of the book nonetheless I think chapter 14 15 16 17 18 uh I don't know if you want to cover these yeah so let me I can rattle through these quickly so chapter 14 from mediocris Stan to extremist Stan and back he basically starts giving uh examples of the inequalities that arrive from those two from mediocris Stan and extremist Stan he talks about sports in particular when Sports people play in tournaments only one person wins it the winner wins the winner gets it all uh even though one player might just be marginally better than every other single player because it's in extremist AR and the variables relate to that he then talks about uh the Matthew effect uh the fact that if you're born with an advantage or you develop an advantage early on in life you're likely to Main Ain that advantage over time because it follows you throughout your life uh so you're able to like better gather resources and you know get more claim and get more accolades as a result of this fact that you got that early Pro initial Advantage the second part is on chapter 15 which is this bell curve the intellectual the bell curve that intellectual fraud which we've already touched covered already yeah and then chapter 16 are the is the Aesthetics of Randomness uh this is where the mandal BR Rand um concept of fractals is described which is where he talks about you know the difference between you know a mountain is made up of fractals of Many Stones he talks about like the fact that we study things in terms of geometry or shapes that are geometrical and whatever is neither here nor there because that never really happens in Mother Nature uh there's this really interesting fact about and I pass through this quickly but when Everest was first um recorded it was recorded as a completely round number something like I don't know I can't remember what the specific number was I say it was like 6,000 meters like on the dot but they had to change it and add two additional yards or meters or whatever to it so that people wouldn't be wouldn't think that it was made up so we have this like aversion to Natural round numbers and we should do because actually it that's not how Mother Nature works but this is the whole point around fractal Randomness being imprecise y yep you want me to quickly the AL the chapter 17 Lo there's only three chapters left right uh 17 18 19 yeah I mean 177 and 18 are still part of part three yeah chapter 19 actually it's I really like yeah I like chapter 19 uh it's a special chapter I think so anyway chapter 17 and 18 let's finish this part three the technical part Lo's Madmen chapter 17 Lo's Madmen or bell curve in the wrong places so talks about domain specificity and the way humans choose to forget black swans for instance the black curve was applied to economic matters after the stock market crash in 1987 the bell curve uh sorry the bell curve yeah uh but according to Talib this was inappropriate and uh people were unwilling to believe that the bell curve didn't help them uh he also says that the Nobel Prize related to economics is useless since the Prize winners have based their studies on the gaussian model which you touched on earlier as well yeah um and lastly chapter 18 the uncertainty of the phony here he continues to talk about domain specificity in this section specificity paic City I say like a freshy uh he also talks about phonies who copy model men for one domain and use it for another so basically this defeats the very purpose of the model and TB reiterates the tunneling concept you touched on earlier where people blindly accept Concepts even when they are uncertain about it philosophers should often question how people can speculate about theological matters while accepting other con other Concepts when they are clueless in that area they also need to question any accepted standards since they have an responsibility and are also professionally employed to do so anything you want to add on the chapter 18 or anything like that nope and chapter 19 is why don't you give a quick little summary I think chapter 19 so special that we can maybe once you've wrapped it up I can pull out a couple of sticky notes and then we go into the back to the notes and stories again if you want I like it so chapter 19 is called half and half or how to get even with the Black Swan in this chapter what he basically does is he summarizes all the principles that guide him in his life principles principles gu him in his life um he talks about skepticism and then he gives him like wisdom points he talks about how to take charge of your own life so good control everything you can control your time like he he he basically does what he does at the end of Fooled by Randomness which is he gives not prescriptions but he gives an overview of what you should think about in order to remove yourself from the biases and fallacies that he mentioned across the book I mean it's it's only four pages if that and I've written yes it's really short isn't it but it's very impactful so talks about I mean the chapter 19 is called half and half or how to get even with the Black Swan um and he says you know he opens this chapter with it is now time for a few last words so a few highlights he says I worry less about small failures more about large potentially terminal ones I worry far more about the promising in air quotes promising stock market particularly the safe air quotes particularly the safe Blue Chip stocks than I do about speculative Ventures the former presents invisible risks the latter offers no surprises since you know how volatile they are and can limit your downside by investing smaller amounts which ties so beautifully to even what I wrote in the micro Angel Investing essay linked below which is that 10 to 15% of the barbell which won YOLO into Angel Investments and one if if all goes to zero one is okay with that because you've you acknowledge that he literally says here uh it offers no surprises since you know how volatile they are but then the other 85% of the barbell if you are uh you know putting it in specific or whatever you're putting it in the stock market and safe blue stocks that nothing will ever happen to that's where you're really screwed because when you know that that has that presents invisible risks and unknown unknowns and opens you up to Black sanss potentially um which we discussed earlier um and so another great highlight in this chapter in the end this is a trivial decision-making rule I am very aggressive when I can gain exposure to positive black swans when a failure would be of small moment and very con conservative when I am under threat from a negative Black Swan that that that's a brilliant kind of tying up of all the positive and negatives I think we've discussed so far on the episode I don't know if you have anything to add or say not really I mean I would highly recommend people read this book after having done a little bit of digging in terms of the the car teski stuff the you know starting with full by Randomness but but if you do read this book cold maybe reading the Final Chapter even given that it's only a few pages first start with chapter 19 and see what he says it will give you a gist of basically his writing style and what he's getting at it it also shows you how he thinks because he talks about himself so much in this chapter and then it also gives you the answers to some of the questions you might start thinking about when you read the rest of the book yes um given I mean we're near the end of this chap it's such a short chapter but it really drives things home that we've been discussing so let me throw another couple of quotes which I don't normally like to do but half the time I am shallow the other half I want to avoid shallowness I am shallow when it comes to Aesthetics I avoid shallowness in the context of risks and returns uh and another quote he would say you know you can stand above the rat race in the pecking order not outside of it if you do so by choice quitting a high paying position if it is your your decision will seem a better payoff than the utility of money in of the money involved this may seem crazy but I've tried it and it works this is the first step towards the stoics throwing a four-letter word at fate you have far more control over your life if you decide on your Criterion by yourself and then the next uh party says mother nature has given us some defense mechanisms as in aso's Fable one of these is our ability to consider that The Grapes we cannot or did not reach are sour but an aggressively stoic prior disdain and rejection of the grapes is even more rewarding be aggressive be the one to resign if you have the guts I'm just going to finish with one quote on the last the literally the last I want it to I want I literally have the end the whole paragraph highlight I don't know it might be a bit to read don't read it's like it's like 14 15 lines but the the last bit of the last par is the best bit where he says oh I know what you're going to get to this is the best bit uh because you say this a lot I have a quot like this yeah imagine a speck of dust next to a planet a billion times the size of the Earth the speck of dust represents the odds in favor of your being born the huge Planet would be the odds against it so stop sweating the small stuff don't be like the ingrate who got a castle as a present and worried about the milw in the bathroom stop looking the gift horse in the mouth remember that you are a Black Swamp and this goes to my quote where I I mean I'm kind of known for saying this now but we are nothing but a fart in the wind in the cosmos of time uh so yeah I mean just before that paragraph to put that in further context it says you know what are the true odds uh that you know just being alive do you remember this meme of like Gary ve back in the day the exact same thing Gary ve back in the day only one million billion to answer being B the most non Lindy content creator uh he would say well first he's like [ __ ] your parents and go eat blueberries or something but uh he he he always used to say the odds of becoming a human being of like 4 trillion to one I mean I don't know where he gets these statist statistics from but stastics it's something it is something absurd and the fact that okay once you are a human then maybe you're in a day and age of as most of History has been suffering or even today in many parts of the world suffering but if you are listening to this podcast uh firstly you're alive secondly you're listening to this podcast thirdly because you're listening to this podcast most likely you're in the west or you just have the ability to seek such knowledge it shows you have a curious mind you understand English like [ __ ] what add all of those odds you've basically won the lottery of all lotteries like that that in itself is the Black Swan of all black swans I think so should one and this I mean this is a lot of talking to myself as well of one should be a daily reminders of one should be more grateful I mean it's become a bit of a m or cliche of do your morning journaling and gratitude journaling but okay you don't necessarily have to do that but taking a few minutes a day to maybe whether it's meditate by looking at a nice view on what you're grateful for it could be writing it down or whatever but and also just going for a lot of long walks which talb talks about in this book and all notion of floring which which he about but you know trying to trying to drive a nice message here which is really we are a fart in the wind the cosmos of time it's a reminder to myself who does usually sweat the big stuff and the small stuff sweats everything it's like stop sweating the small stuff um like even historically when we've been doing podcast I've enjoyed them but I was I was always sortly sweating tiny things like volume sound level of this sound sound that and today I've I've genuinely I mean maybe I'm getting old but uh genuinely enjoying the presence of enjoy the presence of doing this more um so yeah I mean are we wrapping up it sounds like it but I I don't want to wrap up I have endless we'll go through some stories shortly of all the sticky notes we have yeah we go we'll go through stories I don't think we're done yet we're going to do a bellagi 8 hours but um let's let's let's so this is a nice point to just take a break let's take a stop and take another PE break I'm going some Shadow you can have your 18th coffee of the day do your Shadow Boxing watch your Andrew tape videos to give you to give you energy and then we'll be right back this is turning into like a bag on Lex Freedman episode all right so we've pretty much covered everything the central ideas we've gone through chapter by chapter we then zoomed out gave a summary of each chapter high level uh we went through the ending of the book chapter 19 which is kind of like how One could uh not act how how one could proceed being one you're aware of these ideas how do you move forward in the context of Talib himself yes yes and then we said right everything's done now we're going to have some fun with it not that we've not been having fun but we've got a lot of sticky notes we're not going to go through all of them we'll be here for a few days in that case but every sticky note it either represents some story or some experience we've had um so yeah let's let's let's take it away the strategy for the discoverers and entrepreneurs is to rely Less on top down planning and focus on maximum tinkering and recognizing opportunities when they present themselves so I disagree with the followers of Marx and those of Adam Smith the reason free markets work is because they allow people to be lucky thanks to aggressive trial and error and not by giving Rewards or incentives for skill the reason I wanted to bring this one up is because we've kind of touched on this and we've spoken about it but really interestingly it's where we understand Discovery to come from and there's another quote that you can touch on which you posted I think online where he talked about where innovation actually do come from but anyway the the point I wanted to raise with this one is like everything that we've done in rational VC and everything that we've like tried to push forward with has been all about tinkering mhm um and we've not like we've been trying to increase our luck Space by doing more serendipitous stuff this goes back to all the stuff you're talking about Nal but I thought that was a good place to start because it kind of links from what we've been talking about already agreed uh the quote you're referring to okay this is the quote on the rational DC site from Talib both hu and Bale were her odites and spent their lives reading hu who lived in into his '90s had a servant follow him with a book to read alloud to him during meals and breaks and thus avoid lost time he was deemed the most R person in his day now this is the quote on our website which talb says let me insist that erudition is important to me it signals genuine intellectual curiosity it accompanies an open mind and the desire to probe the ideas of others above all an aidite can be dissatisfied with his own knowledge and such dissatisfaction is a wonderful Shield against platonos platonicity the simplifications of the 5-minute manager or the philistinism of the overs specialized scholar indeed scholarship without erudition can lead to disasters absolutely brilliant wonderful it's really well written as well yeah it's so good um I think on good reads it's like one of the quotes that has so many up votes or like thumbs up that's a good point yeah it is it is and uh on Kindle as well it has one of the most highlights yeah yeah uh well anyway it's the quote we have on our website because uh it kind of explains a lot of what we do with this podcast with the content we put out uh with such aims uh as mentioned in that quote so that was an awesome one uh I if you want to take us away with a another one another one this is sometimes called [ __ ] you money o this is brilliant this is sometimes called [ __ ] you money which in spite of its coarseness means that it allows you to act like a Victorian gentleman free from slavery it is a psychological buffer the capital is not so large as to make you spoiled rich but large enough to give you the freedom to choose a new occupation without excessive consideration of the financial rewards it Shields you from prostituting your mind mind and frees you from outside Authority any outside Authority this is exactly what we were talking about earlier around people that make it having you know a little bit of Freedom with their Runway yeah this is exactly that [ __ ] you money is not about money necessarily it's more so about the freedom your brain has from prostituting itself couple of things I'll add uh we'll throw up my tweet which is actually like a thankfully Twitter now lets you write a lot um and long post I have he can't be you know short can't be contained yeah be contained concise I was a caged animal and they you know it can't be contained in a cage basically I like to write long essays anyway I've got this mini essay on Twitter which will throw up on the screen where I talk about actually uh this notion of why do you as a grown man want to spend your entire life in the corporate world and be a corporate slave and I go into like I have a couple of mini essays on this we'll throw them out but like the meaning of life uh which sounds a bit trite but you know people talk about wanting to travel the world and backpacks and hostiles and find themselves for two years and I just say do these four or five things and it's the meaning of life which is you know one of them is procreation the other one is becoming the best version of yourself again TR but in every capacity physical intellectual spiritual yada yada I go on and on with a few points and I I I also mention doing what feel gaining independence which is a fu money and it doesn't necessarily mean let's not put a figure on it but it doesn't mean 10 20 30 40 million or whatever which some people kind of it's like the dream jackpot um but it's enough which gives you Independence it's literally the ability to say f you and so for everyone that may differ but in another mini essay which as I said will throw up I talk about the way it's actually the the the the Tweet where I mentioned Chris Williamson and uh David SRA and such creators is is that if one wants to do these kind of activities you should lower your burn uh in order to increase Runway among among other things and why all of this is important why is it important to know to not for prey to materialism or keeping up with the Joneses uh or status seeking games in the corporate world or all of this yada yada nonsense is because you then chasing the carrot on the stick you are trapped uh you're essentially a prisoner uh of BS Games rather than really focusing on what matters which is the Deep games which is gaining enough Independence or being able to do what you really want to do and aside from what you really want to do a life uh that is dedicated to not only audition uh but also procreation passing on your great qualities to those people and the meaning of life being other human beings surrounding yourself with great family friends Etc focusing on experiences and yada yada uh the importance of this and a lot of this come does come back to not all of it but a lot of it comes back to Fu money which stems from combination of low burn and increasing Runway uh and the importance of what you touched on and I'll just wrap all of that up with friend of the show Jack Reigns who writes at Young money.co Jack RS Make It Rain Jack Reigns Make It Rain uh awesome awesome blogger awesome writer he previously been a guest on the show and he actually had an article a few years couple of years ago on the topic of f few money which was published on Zero Hedge the finance blog uh he was tweeting about it and Talib really liked it and Talib tweeted or or retweeted this essay and I think that Zero Hedge article is an awesome summary Jack CRS wrote beautifully in that the the whole notion of Fu money and we'll link that in the show notes as well for you to read hit me with another quote I've got one here I mean we've mentioned them before let's let's mention them uh one more time relating to Daniel vasal and Lou with the small vets Community T of here he talks about uh you take the cemetery into account independent inventions right so the researcher Thomas astero has shown that Returns on Independent inventions ones you take uh if you take the cemetery into the account are far lower than those on Venture Capital some blindness to the odds or an obsession with their Positive Black Swan is necessary for entrepreneurs to function the venture capitalist is the one who gets the shekels so when you look at the empirical record you not only see that Venture capitalists do better than entrepreneurs but Publishers do better than writers dealers do better than artists and science does better than scientists uh yada yada and goes on and the reason this reminded me of Daniel Vaso and Louie because they you know quite especially Vaso he's quite skin in the game outspoken he kind of uh fires shots at the VC model and he says Be VC of your own ideas which is build a portfolio of small bets of your own don't be a dream in someone else's portfolio because here the VCS are the ones who are actually getting the shekel as TPS say so I thought that was an interesting one and one as a reminder to us and everyone else who's uh you know uh building things or doing stuff ah ah pause please how on Earth have we not even touched on Fat Tony please I mean you look like him and dressed like him shs just missing the watch all right where is what would you not say that our dear friend we've mentioned on prior Ali carpet is actually Fat Tony no no so explain what Fat Tony is please okay so fat Tony which such a prominent name figure whatever you want to call it that uh you know friend of the show Seb Le actually has fat Tony's Community which is is I think a few hundred or a couple of thousand members yeah it's in the thousands it's in the thousands podcast awesome blog community on Discord which you should check out also linked in the show notes and what is the big deal with Fat Tony why do we care so chapter nine the ludic fallacy or the uncertainty of the nerd talb here presents Fat Tony and he says and and if if you recall the Nero he mentions here is Nero from Ford by Randomness right so yes is it's fictional characters but I'd argue someone like n and by Randomness is actually Talib himself he anyway let's get it because Fat Tony characters do exist it's it's it may be somewhat fictional here but it's based on real figures in the world so he says Fat Tony is one of Nero's friends who irritates yvenia crn NOA beyond measure we should perhaps more thoughtfully style him horiz horizontally challenged t since he is not as objectively overweight as his nickname indicates it is just that his body shape makes whatever he wears seem ill-fitted he wears only tailored suits many of them cut for him in Rome but they look as if he bought them from a web catalog well firstly I'm offended because Sao only but anyway he has thick hands hairy fingers wears a gold wrist chain and reeks of licorice candies that he devours in industrial quantities as a substitute for an old smoking habit licorice for those English speakers among you he doesn't usually mind people calling him Fat Tony but he much prefers to be called just Tony Nero calls him more politely Brooklyn Tony because of his accent and his Brooklyn way of thinking though Tony is one of the prosperous Brooklyn people who moved to New Jersey 20 years ago he gives this description of Fat Tony there's more that comes around there's a lot more we haven't got into it yet we haven't yeah he he like fully fleshes out this character and then Fat Tony like a recurring theme within telean work and within the inserto series you said that do you think our friend Addy carpet is Fat Tony now if you've listen to this podcast watched this channel before we have mentioned one of our good friends Ali carpet now Ali carpet has never really worked for anyone he worked for himself he worked on the family business working in an industry and an environment where you really do need to it's a no BS environment you really do need to know your [ __ ] and that is the Antiques Market the reason you have to know your [ __ ] is cuz someone could flog you a piece of [ __ ] and you have to have the intellectual cap cap ability to one figure out his [ __ ] but two also call them out on their [ __ ] because it's a small world and you don't want people to fleece you and that be made public now the physical qualities described as to who Fat Tony are now Ali carpet isn't that short but a lot of the physical qualities are the same in so far as the one that really killed me was a thick hands hairy fingers wears a gold rist chain and also uh he devours you know licorice as a substitute for an old smoking habit carps as we like to call him endearingly still has a little bit of a smoking habit so we we're not smelling the licorice yet but physically speaking yes they're very similar why would they be similar on the the non-physical traits as well well so I went to UNI or university with carps short for carpet firstly there's a reason we call him Ali carpet uh two two reasons one because well the obvious his chest being a extremely hairy Uranian resembles a carpet where one cannot actually see the tone of his skin underneath the chest hair and number two because he actually is a prominent seller of Persian rugs and carpets so he's in that trade in the industry of Persian rugs and you know Middle East and antiques uh deals with auctions such as SES Christies whatever you want to call all the way down to your kind of bizar style negotiating in the back room of uh anyway uh for example the story of he was recently on holiday with his uh with his wife and he he he negotiates for a living like he does it for the thrill and so he went on some water activity in some Island and he was sticking his head out of water while he was in water he was negotiating with the Excursion guy or something so this is a guy who even in the moment of trying to enjoy his holiday for him enjoyment is I need to stick my head out of the water while I'm in the ocean and negotiate with a guy complete skin in the game uh never worked for anyone never has left uni still in business for himself and I guess the question is why would one go to UNI well it's you know classic Persian thing of you know you must get your degree for when when it's time to get married people will say what degree does your son have we want to show a bit of it's the old school model of credentialism but anyway so completely disregarded the degree never used it and um even though he completed and he's always been in business and he's the most I don't know you want to you want to say Wheeler Dealer but he as I said the thrill of negotiating and exactly as I said hairy fingers and gold wrist chains and uh all of that aside uh I would say the street smarts and the stoic values and virtues and courage and empathy and kindness and all he has all of those great values yet he is still a a phenomenal deal maker and no BS uh if you drop in a bizaar in Iran he'll he'll just do his thing he's like in his meditative State Tony is remarkably gifted at getting unlisted phone numbers first class seats on airlines for no additional money or your car in a garage that is officially full either through connections or his forceful charm I think that sums up Mr carps yep yep y there is a lot more we could go through but I think a good way to wrap up this episode we're usually against prescriptions top 10 list top five list whatever I mean Tyler himself has mentioned various parts of this book that he is too and there is a section called the 10 principles for a Black Swan robust Society uh and actually this passage you know footnote was published as an editorial in 2009 in the financial times uh he says some editor who no doubt had not read the Black Swan changed my Black Swan robust into Black Swan proof there is no such thing as Black Swan proof but robust is good enough anyway and he wrote These 10 principles mostly for economic life to cope with the fourth quadrant in the aftermath of the crisis uh and there are 10 points so if you want to go through these and then lastly Amor fatty how to become indestructible and we'll wrap there cool let's do it so the 10 points what is fragile should break early while it's still small you know nothing should ever become too big to fail number two is no socialization of losses and privatization of gains which really to me is screams skin in the game uh another we're going to get to uh not next episode but the one after number three people who are driving a school bus blindfolded and crashed should never be given a new bus uh he's talking about the economics establishment universities Regulators Central Bankers yada yada uh you know and how the economics establishment lost its legitimacy with the failure of the system in ' 08 uh it is irresponsible and foolish to put our trust in their ability to get us out of this mess uh find the smart people whose hands are clean and we shouldn't take advice from quote unquote risk experts so uh I recently last couple years been thinking a lot about it sounds quite bagy esque but the idea of sovereignty not putting your future or your future family's lives in the hands of such uh decision makers um so I think one should always on top of seeking you know lot of knowledge or whatever you want to call it uh is seek I guess as he says find the smart people whose hands are clean uh and a path to uh have some form of robustness if you want to call it uh for your life and your family's future life uh you want to go on from number four maybe yeah don't let someone make an incentive bonus manage a new a nuclear plant or your financial risks odds odds are that he would cut every corner or on safety to show profits from these savings while claiming to be conservative bonuses don't accommodate the hidden risks of blowups Screams McKenzie to me screams uh Financial Manager to me uh number five compensate complexity with Simplicity uh basically try to make everything as simple as possible but don't oversimplify uh so he talks about complexity from globalization and highly networked economic life needs to be countered by Simplicity in Financial products yeah number six is do not give children Dynamite sticks even if they come with a warning label complex Financial products need to be banned because nobody understands them and few are rational enough to know it and you know bankers and selling hedging products and all this nonsense number seven only Ponzi schemes should depend on confidence governments should never need to restore confidence Cas cing R rumors are a product of complex systems governments cannot stop the rumors simply we need to be in position to shrug off rumors be robust to them this is my favorite one number eight do not give an addict more drugs if he has withdrawal pains using leverage to cure the problems of too much Leverage is not Homeopathy it's denial the debt crisis is not temporary problem it is a structural one we need rehab this is even to this day to this day uh something that has been spoken about by Leading figures both in finance and the politics that is a massive issue that just the cost of um financing the debt is so high that it basically breaks the economy number nine citizens should not depend on financial assets as a repository of value and should not rely on fallible expert advice for their retirement uh economic life should be def financialized yeah uh and then finally make an omelet with the broken eggs um we need to rebuild the new Hull with new material we'll have to remake the system before it does so itself let us move voluntarily into a robust economy by helping what needs to be broken break on its own converting dead into Equity marginalizing the economics in business school establishments shutting down the Nobel in economics BR right there as you said shutting down the Nobel in economics Banning leverage buyouts Banning leverage buyouts which I used to do unfortunately when I wasting Bankers where they belong brilliant uh but basically he's just basically calling out all the [ __ ] and saying like start a fresh I think that's a lot harder said than done though yeah and those are the principles as he puts for a Black Swan robust society and I think the last SE the last postcript essay of this book is brilliant and must be covered before we wrap up and that is amatti how to become indestructible and he says and now read it it's time to part again and he gives a little story of as he's writing this he's in his village Amon uh in Lebanon the village of his ancestors and where he was born and raised as well uh gives a little story and you know kind of goes on to talk about the stoic philosophers and uh after everything we've learned in this book after everything we've read we've become aware of how does one handle these uh these things that that we've been you know reading about uh a few quotes Sena is the one who with some help from Cicero taught Montaine that to philosophize is to learn how to die senica is the one who taught n the amorfati love fate which prompted Nicha to just shrug and ignore adversity mistreatment by his critics and his disease to the point of being bored by them C's credibility as a moral philosopher to me came from the fact that unlike other philosophers he did not denigrate the value of wealth ownership and property because he was poor senica was said to be one of the wealthiest men of his day he just made himself ready to lose everything every day every day that's amazing because he put himself in a position of not caring but still living that life that most people want to live I would argue almost everyone would struggle with that today uh sounds quite think boy but Tim Ferris has an exercise where one day a month or two days a month something along the lines of he'll try and live on just $5 a day where he's sleeping on the floor and he's eating cans of tuna just as a reminder to is this the the worst it gets uh again I would say maybe problems of luxury or first world problems but how else are you going to try and put yourself in a position to appreciate the I think something we're fond of is uh doing difficult types of exercise whether it's strength training or powerlifting or uh getting in a myi ring Jiu-Jitsu ring whatever you want to call jiujitsu cage on the mats um and I mean cold plung has become a meme so I wouldn't necessarily say that but doing difficult things like for example running a marathon or uh building resilience through doing difficult things yes through uh forms of exercise through I mean I think the most difficult of them all is really the game of Entrepreneurship uh which forces a form of personal growth that is difficult to explain in any other way I mean it's all all forms of personal growth coming together uh in terms of like positive stressor um so yeah I would say that's another way just just before we wrap up so so the interesting thing is you can tell that this book has been written what was written at the same time as him writing uh Fooled by Randomness because the ending of both books are very similar in that he presents these uh ways of thinking about how to counteract being Fooled by Randomness or being a victim of a Black Swan through stoicism M you know he talks about having holding senica in his pocket everywhere he goes because he sees the value of stoicism now it'll be interesting in our later episodes to understand whether he still abides by this stoic you know this is what I'm curious because recently the last couple of years it's become kind of cool now to hate on stoicism I mean the the obvious one is uh Dr capil G to MD at the performance he's blocked me on Twitter that's a claim to fame if you're blocked by Lex Friedman and Kil Gupta that's a unique combo long story but anyway I I I still respect the work that he's produced and I said that as well uh you know using some form of critical thinking I'd like to hope uh he shut on storis which said it's a form of cope I don't think Nal did but a a few figures a few people who are thinkers writers whatever you want to call them have F ideas of how sism is BS and it's cope and people also argue that uh it's unhealthy for you to kind of not disregard your emotions but you know how stoics respond to such event it should be that uh you're bottling things up or it's cope and you should just let the emotion out like for example if it's grieving then it's healthy to grief for a few days and cry your cry your eyes out or whatever the event may be uh that sto ISM may be a form of cope I don't know what the answer is um I mean the stoics themselves had flaws uh was it s himself or one of the Stokes had multiple partners or would sleep with married women or something I don't know but anyway point is again it goes back to the unknowns he's a goat goat stoic it goes back to how much we don't know yes and I guess that's probably the best way to end this which is even there with the stok point we tried to steal man both sides and we're like I just don't [ __ ] know I just don't know this is the thing if you want to be someone who is Breaking Free from the traps of being Fooled by Randomness or limit your exposure to negative black swans by increasing your anti- library and learning more do go on to rational vc.com put your email in subscribe we'll send you a shortened version of this podcast an email format that will break down all the Core Concepts for you and make it relevant to today's day and age we'll do this with all the books 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