Antifragile by Taleb: How Things Gain from Disorder
The phrase below (you will discover in a few paragraphs how it relates to Antifragility) was part of a dialogue between the author of Freakonomics, Stephen Dubner, and the Lebanese writer and trader Nicholas Nassim Taleb:
If you look at ten or twenty or thirty of the richest countries around the world, among the richest people in those countries is someone from Lebanon.
We could say that this is also valid for other nationalities in some specific cases, like Chinese students in the Ivy League universities or Indians in C-Positions at Fortune 500 companies.
However, the comparison falls short when we consider how Lebanese are over-represented in multiple countries, in multiple positions of power — from business to academia and politics. Besides, while China and India are gigantic emerging economies, Lebanon is a tiny, turbulent country with fewer inhabitants than the Czech Republic.
Brazilians — as well as Argentinians, Mexicans, or people from a myriad of other places, are familiar with the multiple Lebanese surnames in the highest spheres of power. In nearly every place with a significant Lebanese diaspora, they outperform the rest in terms of business or financial achievements.
To put it into perspective: In the 60s, Brazil had a population of three hundred thousand Lebanese — first or second-generation — meaning 0.4% of the total population. But a study made by Bresser-Pereira, from this period showed they owned roughly 10% of all Brazilian industries.
They also influenced the political arena in Brazil. Despite being just 4% of the São Paulo inhabitants, over 1/3 of the mayors had Lebanese origins between 1982 and 2017.
The American continent and its immigrant-shaped nations make a curious case for the Lebanese diaspora. There, they outperformed various groups that arrived at the same time and with similar conditions. What made them so successful? Here is the answer.
Antifragile: Things That Gain from Disorder
Taleb presents an interesting answer about the success of his countrymen:
The idea is that in a natural setting, anything natural, anything organic, anything biological, up to a point, reacts a lot better to stressors than without… a little bit of adversity results in a little bit more performance in anything.
Adversities are natural in the Levant — the region where Lebanon is. It is a land threatened by invasions, catastrophes, and economical meltdowns. It forced residents to build up the apparatus to thrive under stress.
The Lebanese moved to Brazil during economic turmoils, and even a civil war, and faced recognizable problems. Troubles that were scary for most people, but just a normal day in their life. That is how they prospered in the new world chaos.
What Is Antifragility
According to Taleb, “Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.”
People (including me) make the mistake of confusing “to be antifragile” with “to be robust”. They are not the same case, as Taleb explains:
Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, good recipes (say, chicken soup or steak tartare with a drop of cognac), the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet.
Learning with the Lebanese about How to Become Antifragile
Nobody wishes for civil wars, invasions, economical collapses, or natural disasters.
Nobody wants these events unless he is a joker-style deranged psychopath.
But these constant tragedies in Lebanese history promoted adaptations that defined the path for the next generation’s success.
Here are some examples of characteristics that made the Lebanese antifragile.
- Lebanese emigrés are often trilingual, being educated in English, French, and Arabic. All these languages came through foreign occupying forces (Britain, France, and the Egyptian Mamluks).
- Civil wars and unstable politics often put the Lebanese in situations where they need to improvise to make an income. They cannot rely on public support, because it rarely exists. If you are familiar with the Impact vs likelihood matrix, think that what we know as rare catastrophes, in Lebanon may be regular disasters or even casual accidents.
- The uncertainties tuned their social skills. Years of sectarian strife made local allies necessary for citizens, families, and societies to exist.
- The mercantile nature of Lebanon (and their Phoenician ancestors) flourished for millennia. The trading activity inspired the residents to master skills as scarcity management, risk assessment, and negotiation. This explains the outstanding performance of Lebanese immigrants in finance and politics.
- A risk-taking posture and constant scarcity lead to greenfield projects. Lebanon is a country with chronic natural and social risks, so the inhabitants learned how to minimize their downside during a crisis. One example is the idea of a permanent liquid reserve. Something that, for example, the billionaire Slim Helu used in 1990, when the Mexican government privatized the telecom company Telmex for a reduced price after financial losses. Slim was one of the few investors with the resources to buy it. This company later became the multinational Claro.
How Concepts from Antifragile by Taleb Helped my Business
It is not an overstatement to say that I could go bankrupt — like half of my competitors — during the 2020/21 pandemic crisis.
Months before the crisis started, still in 2019, I decided to expand my first business — a touristic hostel in Warsaw. However, I needed resources to finance this expansion.
Loans are not expensive in Poland (differently than other things with shocking price tags). It was easy to find rates below 8% per year, so I considered taking a loan.
After some time, I thought again, and instead of asking for credit, I preferred to bring new shareholders. They had a considerable portion of the business, although I would still have the control.
A few times, colleagues and family members asked if instead of bringing in new partners, would not be better to take a loan since the rates were low. They even listed the benefits of taking credit instead of adding shareholders. Things like:
- I would not need to risk others’ capital.
- No need to explain to shareholders about company results or my decisions as a director.
- Smaller legal expenses.
But there was a benefit in bringing shareholders that offset all these pros of taking credit: It makes my business more antifragile, for 2 reasons:
1 — During a crisis (like the pandemic) that devastates my sector (hospitality), my business doesn’t need to pay dividends if there are no profits. But if the firm took a credit, we would need to pay or face execution.
2 — The non-mandatory nature of the payments for shareholders preserves the company’s cash flow during troubled times. It buys time to adapt to new economic conditions. This adaptation comes as new technologies and processes to increase efficiency and cut costs. For example, we broke a deal with a ride-sharing company that reduced the costs of transportation by over 40%.
Increasing our Antifragility, we not only survived the crisis — which is already something significant, since small touristic businesses are more fragile.
We are leaving it stronger than before.
Conclusion on Antifragility by Nassim Nicholas Taleb
The antifragile loves randomness and uncertainty, which also means — crucially — a love of errors, a certain class of errors. Antifragility has a singular property of allowing us to deal with the unknown, to do things without understanding them — and do them well. Let me be more aggressive: we are largely better at doing than we are at thinking, thanks to antifragility. I’d rather be dumb and antifragile than extremely smart and fragile, any time. Nassim Taleb
Antifragility is a characteristic of systems, companies, or societies which increase their capacity to thrive as a result of shocks, volatility, attacks, or failures.
By adapting to invasions, war, and turmoils, the Lebanese became antifragile. The Lebanese diaspora, with those inbuilt qualities from their native culture, prospered in multiple countries on the American continent where they found conditions similar to their homeland.
Nowadays, their success reflects on how they are disproportionally represented in business and political spheres of power.
Using the same concept of antifragility, I took a crucial business decision to bring new shareholders for my company before a crisis. While financing our expansion with bank credit would be easier, would also make my firm more fragile to economical shocks — something that came almost immediately with the global pandemic.
Meanwhile, bringing new shareholders was more complicated, but helped us to survive and thrive during and after the crisis.
Books Like Antifragile
Antifragile: Things That Gain From Disorder [was published in 2012 and relates to multiple ideas and concepts from previous works of Nicholas Nassim Taleb.
These works are Fooled by Randomness (2001), The Black Swan (2007–2010), and The Bed of Procrustes (2010–2016). It is the fourth book in the five-volume treatise on uncertainty called Incerto. He expanded many of the ideas from Antifragile are in the series’ fifth book, Skin in the Game: Hidden Asymmetries in Daily Life (2018).