This is a comprehensive summary of the book Skin in the Game: Hidden Asymmetries in Daily Life by Nassim Nicholas Taleb. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Written by book fanatic and online librarian Ivaylo Durmonski. Supporting Members get full access.
This medium-sized read is full of Taleb’s observations on what makes someone worthy of being called an expert. Why you shouldn’t listen to academics and why getting the fanciest gear is not always the best choice. Skin in the Game is a provocative – rant included – book, that will help you detect bullshit. Nassim Nicholas Taleb explains that if you want answers, the right answers, you shouldn’t talk to well-dressed limo driving specialists. Rather, have a chat with elderly people who walked the walk and talked the talk.
The Core Idea:
People are impressed by expensive equipment, complicated spreadsheets, fancy suits, overall, the aesthetics. But those who appear to have all the answers are usually frauds. While folks are drooling over the next “innovation,” what matters in life, as Nassim Nicholas Taleb writes is skin in the game – being a “doer,” living an honorable life, taking risks, lowering the risk for friends and family, and not transferring risk to other nothing suspecting individuals.
- Avoid taking advice from people who talk a lot. Most experts don’t boast about their achievements.
- If the packaging of a product is flawless, there is a high possibility that the actual product will be flawed.
- Taking risks should be an inseparable part of your daily life. Just make sure to consider all the downsides.
5 Key Lessons from Skin in the Game:
- Lesson #1: Skin In The Game Is Doing Things, Not Talking About Them
- Lesson #2: There Should be Symmetry Between Action and Consequences
- Lesson #3: Being Alive Means Taking Risks – Become A Wolf
- Lesson #4: Other People Suffer Too For Your Mistakes
- Lesson #5: Learn The Lessons and Ideas From Your Grandparents
Lesson #1: Skin In The Game Is Doing Things, Not Talking About Them
The first question that naturally comes to your mind before even reading the book is, what is skin in the game?
Nope, it’s not a sadistic game that involves your skin and rolling dice.
It’s something simpler yet, unsafe.
Having skin in the game doesn’t come from reading books or from talking about them, it comes from practice. From trials and error. From defeats. From bankruptcies. From not agreeing with others. From doing something that can be beneficial for society – which, unquestionably, is always hard and it involves a dose of risk.
So, the next time you’re scheduling a conference call with your “flashy” group of entrepreneurs, where you’re going to discuss “major” topics, stop for a moment and consider this: Are you living in accordance with what you’re saying or you’re simply trying to look smart in front of others?
Looking good on paper is easy. Especially today. You just need to pick the right set of quotes and publish them online. But that’s unlikely to get you somewhere near success. You will only appear successful.
If you want to gain experience, and real results, you need to put yourself out there. To take risks. To make mistakes and to learn from them. This is the right way, the only way, you get skin in the game and make a difference in your life and in the lives of others.
How much you truly “believe” in something can be manifested only through what you are willing to risk for it.” Nassim Nicholas Taleb
Lesson #2: There Should be Symmetry Between Action and Consequences
The world is now full of fancy suit-wearing experts who are trying to take our money without offering much in return. To correct things, we should observe what the ancient philosophers said about ethics and about risk-sharing.
Fortunately, Nassim Nicholas Taleb already did the hard work for us in the book. He compared the universal life laws and come up with the so-called formula to guide the relationship between people in a transaction-oriented world like ours.
Or in simple terms, how we should behave with others if we want everyone to thrive, not just ourselves.
According to the author, to have a blooming society, ditching the Golden Rule which states: “Treat others the way you would like them to treat you,” is a must. Instead, we should practice the more robust Silver Rule that says, “Do not treat others the way you would not like them to treat you.”
Why silver is better than gold?
Because we don’t know what’s good for others. But we surely know what’s bad for everyone – trying to cheat them, trying to rob them, being cruel, not telling the truth.
In practice, if you’re a banker, for example, this will mean to offer some sort of insurance for your suggestions. Only by doing so, you’ll ensure that your advice is not full of crap and actually helpful.
Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.” Nassim Nicholas Taleb
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