In business, size is a big problem, it makes you fragile, says Nicholas Taleb, author of Black Swan and Antifragile. He spoke last night in Bucharest during the Brand Minds event.

“I am not the author (only) of Black Swan, but a collection of books called Incerto. In the US, Incerto has 5 volumes. Volume six (will come out) if I live a few more years or maybe a year,” Taleb said at the start of the panel.

Short statements:

• People don’t like it when I tell them that (company-n.red) size is a big problem. Size makes you fragile when it comes to companies.

• Companies that have constant cash flow do not survive

• I spent 15 years in the West with very low or even zero interest rates. Now we have a generation of financiers, professionals, who have no idea about cash flow, because when the monetary policy interest rate is zero, you have no weight to invest

• The companies in California, all these startups, are very fragile because they were financed at low interest rates.

• Bitcoin is a tumor. This is a transparent Ponzi scheme. People refused to go to church and invented a religion with each generation. Instead of yoga, I’m doing cryptocurrency right now.

• Do you want to change the world? Guess what? Start a business! We need people who have skin in the game (referring to the book “When your skin is in the game”, where Taleb states that the infallible criterion by which we can judge someone’s authenticity, willingness to do good or integrity is the willingness of the person, which participates in the game and enters the skin in the group)

• We don’t need bureaucrats. We don’t need theorists. All these people can destroy a country, like Bush destroyed Iraq, like many NGOs destroyed Africa, and now they are retired with a villa and a pool.

• With all due respect to economists, they are not experts. People who work in political science are not experts. On the contrary, the installer is an expert. why Because he put his skin on the line.

• Advice for those in business: When looking at the market, you have to be sure that if anyone has to survive, it has to be you (see text and how)

• AI doesn’t know if it makes mistakes. AI will come in handy if you want to write a condolence letter or if you want to write an essay. ChatGPT is great for this

Why big companies are fragile

“After Black Swan came out, I was really upset that people were asking me if I could predict Black Swans. By definition, if one can predict, it is not a black swan, but a white one. In his view, what matters is whether or not you are fragile to random events (an idea we also find in the book Antifragile No),” Taleb said at Brand Minds 2023.

People don’t like it when he tells them size is a big issue, he says.

• “Size makes you fragile. If I take an elephant and release it from 1 meter…” (we know what’s going on, don’t we).

“What is the difference between an elephant and a mouse? As you get bigger, you grow in size, you become much more vulnerable to accidental hits. Maybe you’re more efficient when you’re big, maybe you live longer, but only if you don’t get hit. The pulse is lower. An elephant has 50-60 beats per minute, a mouse has 250. So being big is efficient, but that quality can be negated by random events,” he said.

I’ve done research that hasn’t been published but shows that companies that have constant cash flow don’t survive.

He gave an example from the book “Antifragile” with two Cypriot twin brothers. One of them worked for a corporation for 35 years, and the other was a taxi driver who didn’t have a stable income but generally made the same.

“When you ask people who’s safer, they’ll say the one who works for a corporation,” he said.

The example from the book shows that it is he who is fragile, because if he loses his job, it will be very difficult for him to find another one.

“He would sooner be shot than find another job,” the author believes.

In contrast, the taxi driver in the example will know how to navigate the market.

During a pandemic, for example, he could deliver various goods (medicines, for example, not) to those who needed them. This mainly explains the fact that it is always exposed to various stimuli and adapts to needs, becoming antifragile.

It’s the same with companies.

“This is the idea of ​​Antifragil. You need these stressors all the time,” he says, noting that Romania recently had a stressor, referring to communism.

He believes that the current generation is much stronger than the previous one.

Monetary policy over the past 15 years has created bubbles or tumors

“Let’s look at the forest. If you step in to put out every little fire, what happens? Flammable material will build up and then you will have a large fire that you cannot control. That’s why the US Federal Reserve (FED) intervened too much to try to address the fragility of the system,” he said.

According to him, I spent 15 years in the West, without interest (that is, very low interest, not even zero).

“Now we have a generation of financiers, professionals, who have no idea what cash flow means, because when monetary policy rates are zero, you have no weight to invest,” Taleb said.

• So you have bubbles. I don’t call them bubbles, but tumors. Bitcoin is a tumor. You still have real estate bubbles. It’s happening over a long period of time that people don’t understand.”

The companies in California, all these startups, are very fragile because they were financed at low interest rates.

“You have to have a constant stream of stressors,” Taleb said.

He also said about Bitcoin: “On paper, the idea is good. But when it was executed, it turned out to be worse than a Ponzi scheme. This is a transparent Ponzi scheme. People stopped going to church and invented religion with each generation, and instead of yoga they are now doing crypto-currency.”

What to do if you want to change the world

“Do you want to change the world? Guess what? Start a business. We need people who have skin in the game (referring to When Your Skin Is in the Game #. We need people who take risks,” he said.

• We don’t need bureaucrats. We don’t need theorists. All these people who can destroy a country, like Bush destroyed Iraq, how many NGOs destroyed Africa, and now they are retired with a villa and a pool.

“Start a business. This is what the world needs, or to attract them as an employee, as a partner in businesses that bring something to the economy,” he stated.

• “With all due respect to economists, they are not experts. Political scientists are not experts, but plumbers are. why Because he has skin in the game. If a plumber breaks your system or doesn’t fix it properly, people will hold him accountable.”

• If you are a dentist and you destroy someone’s teeth, that person will complain.

“These are people who are really putting their skin on the line,” he says.

Two perhaps unusual pieces of advice Taleb gives to entrepreneurs

He advises those with companies to avoid fragility.

1. “People misunderstand risk. They think it’s a separate matter. The first time, to do well, you have to survive. The first time you have to be sure that you have zero chance of being absorbed. You have to be strong enough,” Taleb explained.

In his opinion, when you look at the market, you have to be sure that if anyone has to survive, it has to be you.

“It’s like you can’t tell if there’s going to be a bear when you’re walking in the woods, but you’re walking with a fat, slow friend. It’s the same thing. You have to be sure that you will survive the crises,” he said.

• “You have to make sure you are less fragile than your slow fat friend. It’s a metaphor about companies.”

In summary, the first tip is not to be fragile.

2. “The second piece of advice is don’t overexert yourself. If you look at companies, you see the ego of the CEO, who usually doesn’t own the company but has ambitions to expand, then comes the Black Swan and that’s it. You’re a lot more fragile when you’re really big,” he said.

• “It’s good to resist expansion, but you have to be prepared that when others go bankrupt, you have a plan B to take their equipment and whatever else is lying around.”

ChatGPT needs people to monitor results

“Many people fear that AI will become a negative black swan. Let me tell you, there are many other things we should be concerned about besides AI,” he said.

According to him, AI does not know if it makes mistakes.

“Artificial intelligence will come in handy if you want to write a condolence letter or if you want to write an essay. ChatGPT is great for that,” said Taleb.

Because it allows for errors, you need more people to monitor the results, which means more workers.