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rational vc .com
Learn from history's Greatest Minds — and find Timeless ideas you can apply to business and life.
Every podcast episode we explore a Lindy book. We strive to become polymaths like our investing and business icons, pulling the Big Ideas from a wide range of disciplines.
For the curious-minded seeking Worldly Wisdom.
Cyrus Yari
September 2024
Every podcast episode has been getting more listens, and our brand has grown rapidly. One episode now gets more listens than we used to get across all episodes in a year combined. Taleb co-signs have certainly helped us, but we’ve continued growing rapidly even after the recognition. It’s fair to say we’ve obtained “product-market-fit” since pivoting and appreciate all the messages and love we’re getting daily. Everything is up. The only constraint now is volume, getting out more episodes. This is not yet possible as we do Rational VC on the side, as an asymmetric bet, but stay tuned for some updates.
Our long-awaited 3-hour mammoth podcast on Nassim Taleb’s ‘Skin in the Game’ is now live! You can get it in your favourite podcast player.
So much effort and love went into this episode. 100+ hours of prep. We no longer refer to these as “podcasts”, rather “Timeless conversational audiobooks”.
As with all of Taleb’s books, they are to be studied, not read. We revisit them every few years. The Incerto Series is a masterpiece, hence why its philosophies and teachings have shaped our brand since inception many years ago (along with Poor Charlie’s Almanack).
Without further ado, let’s get into the mini essay that accompanies this megasode…
In our world of startups, I’ve heard all the stories. When things get tough, it’s not uncommon for the significant other (“SO”) to leave the struggling startup founder. Patience runs thin.
In rare cases, however, the SO funds their partner’s financial burn as the business is not yet income-generative, or stands by after facing bankruptcy, health scares, and in some extreme cases, cares for SO after he becomes disabled due to a diving accident (true story). I know of a couple where the lady funded her boyfriend (now husband) for several years with her corporate job while he kept swinging at different startups, facing failure after failure. It suffices to say that she deserves all of his success now, and he’d literally take 50 bullets for her.
One of many examples, not even the most extreme, is in this awesome video, outlining Marc Louvion’s journey, an indie-hacker who consistently failed for over six years, while his girlfriend (now wife) stuck by him through all the failures, and even married him at his lowest point as he explains in gripping detail in the video. The video’s top comments all praise how rare and amazing such a partner is, and how lucky Marc is to have her by his side.
Mind you, this applies to all relationships; friends help when you’re moving home, and you help them when it’s their turn. Employees with equity show more loyalty and operate with an owners mindset rather than job hopping to another company. The late Sam Zell once said: “For those who think you can’t get to the top unless you beat the crap out of everybody—you’re wrong. When you’re a repeat player, when your world is your business and your business is your world, it’s all about long-term relationships. In any negotiation I believe in leaving a little bit on the table. And in any relationship I believe in sharing the stakes (symmetry). I’ve been doing deals with many of the same people for decades because the goal is for us to all come out ahead.” Reminds me very much of Peter Kaufman (Charlie Munger’s business partner and mentee) on the topic of mirrored reciprocation (symmetry). You slowly begin to spot a pattern here among the long-term thinkers and doers; and no I’m not being fooled by randomness. Now, let’s return to marriage, the relationship we’re focussing on here.
Marriage is you putting your skin in the game for someone, you commit to the one person who has long ago shown their skin in the game. It is about the avoidance of asymmetry. In simple terms, if they’ve stuck by you in the most difficult of times and given you everything, then you stick by them in the most difficult of times and give them everything. If you’ve not yet found this person then you look for someone who has potential to show skin in the game for you (and does so) over time. Do they have a strong and tough mind to stick with you through thick and thin? Are they “ride or die”?
Why? Because their skin in the game is the highest form of commitment and the ultimate demonstration of the consequences they’re willing to face for you and the relationship. If they have suffered with you, supported you in different ways, and stuck by you in the most difficult moments, then the skin has literally been in the game. This means they have proven their dedication and have shown that they are fully invested in the shared future you both envision.
Having resolved the internal friction and fear I used to have around commitment, and later rereading Skin in the Game, it suffices to say that Professor Taleb’s book was also a very good slap in the face.
Simon Sarris went off on X on the topic of commitment and why birth rates are declining; I felt seen as this was an attack on my past self (hint: avoidance of symmetry, i.e. not willing to put in the sacrifice and commitment required to reap the rewards of having a partner, and eventually a family):
Taleb states in the book that Rationality is the avoidance of systemic ruin. Rationality is survival.
We can see from figure 6: taking personal risks to save the collective are “courage” and “prudence” since you are lowering risk for the collective.
Your family and friends come before you, and so does humanity. You form a family (procreation and commitment to a life partner) to give your offspring the stable environment they deserve (symmetry of love). You do all of this procreation, commitment, provision, and guidance for the sake of humanity and the ecosystem. Taleb: “I have a finite shelf life, humanity should have an infinite duration”.
Remember: Rationality is the avoidance of systemic ruin. Rationality is survival.
Rationality is not: investment banking, management consulting, modern venture capital, peer-reviewed academia, mainstream journalism, being a modern politician, or anything that benefits you while harming the ecosystem.
An example of rationality in your career:
and for your nation:
And while doing all of this, let’s not forget to incorporate other lessons from the Incerto Series and also embrace randomness throughout the process:
(random dude on reddit)
There’s a lot to cover. We’d be here all day. Go over to the podcast episode where we cover it all in detail.
I’ll leave you with some great quotes from the book:
“Finally, when young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro-level, my suggestion is:
1) Never engage in virtue signaling;
2) Never engage in rent-seeking;
3) You must start a business. Put yourself on the line, start a business.”
“Entrepreneurs are heroes in our society. They fail for the rest of us.”
“If you want to study classical values such as courage or learn about stoicism, don’t necessarily look for classicists. One is never a career academic without a reason. Read the texts themselves: Seneca, Caesar, or Marcus Aurelius, when possible. Or read commentators on the classics who were doers themselves, such as Montaigne—people who at some point had some skin in the game, then retired to write books. Avoid the intermediary, when possible. Or fuhgetaboud the texts, just engage in acts of courage.”
“Likewise, there prevails the illusion that businesses work by business plans and science by funding. This is strictly not true: a business plan is a useful narrative for those who want to convince a sucker. It works because firms in the entrepreneurship business make most of their money packaging companies and selling them; it is not easy to sell without some strong narrative. But for a real business, something that should survive on its own, rather than a fund-raising scheme, business plans and funding work backwards. At the time of writing, most big recent successes (Microsoft, Apple, Facebook, Google) started organically by people with skin and soul in the game and grew –if they had recourse to funding, it was to allow the managers to cash out rather than the prime source of creation. You don’t create a firm by creating a firm; nor do you do science by doing science.”
“Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.”
“The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding, or better at explaining than doing.”
“If you do not take risks for your opinion, you are nothing.”
“You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.”
“Life is sacrifice and risk taking, and nothing that doesn't entail some moderate amount of the former, under the constraint of satisfying the latter, is close to what we can call life. If you do not undertake a risk of real harm, reparable or even potentially irreparable, from an adventure, it is not an adventure.”
“What you learn from the intensity and the focus you had when under the influence of risk stays with you. You may lose the sharpness, but nobody can take away what you’ve learned.”
Check out our 3-hour megasode, where we cover everything from agency, ethics, the minority rule, employment, freedom & F-U-money, taking risks, intellectual yet idiots, the illusion of business plans, virtues and advice for young people, interventionistas, religion & belief, risk & rationality, and much, much more…
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