Nicholas Nassim Taleb

Antifragile: Things That Gain from

Disorder
Some things seem to improve if they are placed in environments of
volatility and unpredictability. Antifragile analyzes why this is the
case. It suggests that this quality has been vital for the progress of
human civilization since ancient times.
Nassim Nicholas Taleb takes a critical look at modern society and its aim to smooth
out life by interfering in systems like the economy. Far from making society a better
place, this interfering nature is destroying the volatile environment essential for
antifragility to take place.

Who should read it?

 Anyone who wants to know why some systems improve over time
 Anyone who wants to know how to take advantage of uncertainty
 Anyone interested in why crises happen

Who's the author?

Nassim Nicholas Taleb is an academic and author of bestselling works such as The
Black Swanand Fooled by Randomness. He has devoted his life to studying the cause
and effects of uncertainty and probability. He is currently Distinguished Professor of
Risk Engineering at New York University’s Polytechnic Institute.

Unlike fragile items, which break when put

under stress, antifragile items actually benefit
from volatility and shock.

When you send an item made of glass by post, you would probably ensure that the
package is clearly labelled ‘Please Handle with Care’ because the glass is fragile; it
needs to be put in a tranquil environment because it shatters when harmed by
stresses and shocks.
Fragility is a relatively easy concept to understand; we are all aware that fragile items
need to be protected from volatile situations. Yet when we try to think of the opposite
of fragility, we struggle. What do you call something that benefits from volatility?

You may be thinking that robust is the answer. However, although a robust item
will be able to survive shocks better than a fragile one, it is not the opposite; it doesn’t
benefit from harm. What we are looking for is something that you would deliberately
mishandle, something that you’d package with the label ‘Please Handle Roughly.’
We struggle to define this concept partly because none of the world’s major languages
has a word for it. We must therefore use the word antifragile to describe the
antithesis of fragility – things that benefit from shock and therefore prefer volatility
to tranquillity.
A good example of antifragility is the story of the Hydra from Greek mythology. The
Hydra was a many-headed serpent which tormented the ancient world. Each time
one of these heads was cut off in battle, two would grow back in its place. So every
time the beast was harmed, it benefitted; the Hydra was therefore antifragile.

Unlike fragile items, which break when put under stress, antifragile
items actually benefit from volatility and shock.

The antifragility of a system depends on the

fragility of its constituent parts.

A good example of antifragility is the evolutionary process; it thrives in a volatile

environment. With each shock, evolution forces life forms to transform, mutate and
improve to become better suited to their environment.

Yet when you look closely at the evolutionary process, something very interesting
becomes clear. While the process itself is undoubtedly antifragile, each individual
organism itself is fragile. For evolution to occur, all that matters is that the successful
genetic code is passed on. The individuals themselves are unimportant and die in the
process. In fact, the system needs this to happen to free up living space for more
successful individuals to thrive.

The evolutionary process demonstrates a key trait of antifragility. In order for the
system as a whole to be antifragile, most of its constituent parts must be fragile. This
is because the success or failure of these parts acts as pieces of information,
informing the system of what works and what doesn’t.

Think of it as trial and error. The mistakes and successes of each individual part
provide the information as to what succeeds and what doesn’t. The price of failure in
evolution is extinction; therefore, every failure actually improves the overall quality of
all life that has evolved.
Another example of antifragility can be seen in the economy. Its constituent parts,
from one-person artisan workshops to huge corporations, are somewhat fragile but
the economy itself is antifragile. For the economy to grow, it needs some of these
parts to fail. The failure of a start-up in the coffee making business, for example, will
make that industry stronger overall, as other coffee manufacturers learn from their
mistakes.

The antifragility of a system depends on the fragility of its constituent

parts.

Shocks and stressors strengthen antifragile

systems by forcing them to build up extra
capacity.

We often experience antifragility without even knowing it. Exercising is a good

example of this. When we exercise we put our bodies through unusual stress. In doing
this, our bodies react to the shock and grow stronger. In this way our bodies are
antifragile.

The example of exercising also highlights how the concept of antifragility works.
When confronted by stressors, in this case weights or a treadmill, an antifragile
system will respond by overcompensating: it will improve its capacity to deal
with possible future shocks. This is a crucial element of antifragility; strength comes
from overcompensating against adversity.
Often the overcompensation will leave antifragile systems with elements of excess
strength. These are areas of redundant resources built up in response to stressors and
shocks. Common sense tells us that success depends on the most efficient use of
resources, so these layers of redundancy seem terribly inefficient.
Yet, overcompensation and the redundancy it brings are vital to antifragility. In our
bodies, for example, overcompensation and redundancy allow us to be prepared for
unknown problems ahead; what can seem to be a waste can suddenly become a
lifesaver in an emergency. A small amount of exercise drives our bodies to build up
extra capacity in preparation for a bigger shock in the future.

It may seem wasteful to take resources from other areas of the body to build up
muscles you might never use. But one day when you confront an unexpected stressor
- say having to carry a piano up five flights of stairs - you will be glad you built up the
extra muscle, even if it was useless until then.

Shocks and stressors strengthen antifragile systems by forcing them to

build up extra capacity.

Tranquil environments result in fragile systems

– antifragility stems from volatility.

Antifragility is typically found in natural, or biological, systems. Most man-made

items cannot be antifragile as they cannot self-improve based on failures or
unexpected stressors. At best, they can only be robust. A washing machine, for
example, will eventually wear down after repeated use; it may be able to stand a fair
amount of shocks, but it cannot benefit from them.

There are, however, a few artificial systems that are also antifragile. The economy is a
good example. Although it is a man-made system, it is incredibly antifragile. Such
systems are almost biological in nature, due to their complexity: they consist of a
series of interdependent layers and sub-units.

While complexity is crucial to all antifragile systems, artificial or natural, it is not

enough to sustain them. What these antifragile systems demand is volatility. As we
have seen, antifragile systems depend on the fragility of their sub-units – some of
which must die to strengthen the system as a whole. Shocks and stressors determine
which sub units are to survive and which are not. In a tranquil world, without shocks
and stressors, there would be no pressure on a system’s constituent parts. It would,
therefore, eventually lose its antifragility.

Once again, the economy provides us with a good example of how tranquility can be
disastrous. Many governments have attempted to tame the economy, using
regulations and subsidies to smooth out the economic cycle. This was done with the
belief that the economy could be managed and made more predictable and tranquil.
But in removing volatility from the system, they removed the vital stressors and
shocks. Without the information that these provide, resources became misallocated
and the economy became susceptible to huge, damaging shocks. Tranquility leads to
fragility.

Tranquil environments result in fragile systems – antifragility stems

from volatility.

To take advantage of antifragility you don’t need

to understand the opportunities you see, just
when to seize them.

When the author was working in highly volatile global currency markets, he was
surprised to find that often the most successful traders were also the most
uneducated. They didn’t understand complicated economic theory or the finances of
the countries whose currencies they were trading. They just knew when to buy and
when to sell.

In general, society places far too much value on theoretical, or academic, knowledge
and not nearly enough on practical knowledge. We assume that the former inevitably
leads to the latter, though, in fact, the two are completely separate. Knowing why
planes fly does not make you a qualified pilot.

You can take advantage of a volatile and therefore antifragile system without properly
understanding its principles when you have options: the opportunity, but not the
obligation, to do something. For example, stock options give you the chance to buy a
certain stock at a certain time for a fixed price X. If the price of the stock rises above
price X, you would exercise your option because you would effectively be getting a
discount, but if the price stays below X, you would not. The underlying stock market
is very volatile, but this way you need not understand the complex phenomena that
drive its fluctuations. To profit, you just need to know whether or not to use your
option when the time comes.
But options exist outside the stock market, too. For example, a friend asks you to
“come to a party, if you have the chance.” That’s an option. There’s no need to
forecast your plans or mood for that evening; you just need to decide whether or not
to go when the time comes.

To take advantage of antifragility you don’t need to understand the

opportunities you see, just when to seize them.

To become antifragile, manage your risks so you

can benefit from unpredictable events.

You cannot go through life without encountering periods of volatility and uncertainty;
unexpected events such as economic collapses or natural disasters can happen in the
blink of an eye.

In order to make yourself antifragile, you have to accept this and try to “domesticate”
the uncertainty, rather than avoid or eliminate it. The best way to achieve this is to
follow a barbell strategy: much as a barbell has weights on both ends but
nothing in the middle, you must prepare for extremes, both negative and positive,
and ignore the middle path.
The first thing you must do is concentrate on the negative element on your barbell:
minimize your exposure to potentially disastrous risks. For example, if you ensure
that 90% of your assets are secure against unexpected market collapses, you know
that you are safe against such shocks. This money might not be making a huge profit,
but at least it’s safe.

Once this has been achieved, you can concentrate on the other end of your barbell.
With the other 10% of your assets you can take small risks in highly volatile and
unpredictable areas that you can profit from. The upsides could be huge, but the
downside would only be 10%. This way you stand to make huge gains if things go
well, while having limited exposure to negative consequences.

Compare this to someone who puts 100% of their assets in an area of medium risk.
No matter how much money they potentially could make, in the case of a downturn
they stand to lose everything.

To become antifragile, manage your risks so you can benefit from

unpredictable events.
The larger the organisation or system is, the
harder it will be hit by unexpected crises.

Imagine you have to attend an important conference in Iceland. Naturally, you book
your flight well in advance to get it at the cheapest price. Unfortunately, a day before
the conference, the airline informs you that your flight is cancelled. You can’t miss the
conference, so you have no choice but to book a much pricier, last-minute flight.

This kind of nightmare is known as a squeeze: a situation where you have no choice
but to do something, regardless of the cost. Squeezes are the opposite of options.
The cost of a squeeze is determined by the size of the entity being squeezed; the larger
something is, the harder the squeeze. In the ticket example, if it was just you flying,
you might be able to secure another ticket at a somewhat higher cost, but imagine if
an entire university delegation was in that mess? There probably wouldn’t be enough
replacement economy seats available, so they would need to buy pricier first-class
tickets, or even charter a private jet. The size of the troop would make the squeeze
worse.

Similarly, globalisation has transformed the world economy into a single behemoth,
making it ever more vulnerable to large squeezes. Everyone, from banks to your local
supermarket, is globally interconnected, whether by trading stocks in Japan or
buying produce from Brazil. If a squeeze like a stock market crisis occurred, this
interconnected string of dominoes would cascade: banks would be squeezed to cut
funding to businesses, which would be squeezed to lay off employees, who would be
squeezed to perhaps lose their homes.

Any economic squeeze today would be global and universal, as would the suffering it
causes.

The larger the organisation or system is, the harder it will be hit by
unexpected crises.

Many modern professions are antifragile, but at

everybody else’s expense.
In the months preceding the 2008 financial crisis, a great many financial experts in
the world’s business schools and newspapers confidently informed us that there was
no need to worry about the economy. The “experts” were of course very wrong: the
global economy did collapse and many people lost their investments, homes and
pensions.

Now, you’d think that because of their failure to predict one of the biggest financial
collapses of all time, these experts would find themselves in hot water. In fact, a vast
majority of them kept their influential positions without even having to apologize for
their mistakes. This is because the field they work in is relatively narrow, and all the
experts were familiar with each other and interdependent, which meant they weren’t
too eager to criticize each other. Soon their mistakes were largely forgotten.

This exemplifies a deep problem at the heart of modern society. Many people’s
antifragility comes at other people’s expense; they reap the full benefits when they are
right, but suffer none of the consequences when they are wrong. The problem is that
they can, therefore, continue spouting their bad advice and the costs fall onto others,
as with the financial crisis. As it’s not their own money they’re playing with, they
lack skin in the game,meaning they have nothing to lose.
Similarly, bankers today also benefit from not having skin in the game. In medieval
Catalonia, it was common practice to behead failed bankers; this provided them with
adequate motivation to work for the common good. Compare this to modern bankers
who are constantly playing with other people’s money without risk to themselves.
When they do well, they collect huge bonuses, yet when they fail, it’s not their own
money, or head, that is lost. They have become antifragile at the expense of everybody
else.

Many modern professions are antifragile, but at everybody else’s

expense.

Our desire to eliminate volatility from life will

eventually make our society more fragile.

Many politicians and economists have viewed the economic cycle of boom and bust as
inefficient and unpredictable. In an attempt to make the process better, they
developed complex theories about when and how they should intervene in the cycle to
smooth it out.

This is a crucial problem with modern thinking: it tries to make society as smooth
and tranquil as possible. As human knowledge grows, we become more arrogant
about what we can and should control. We view volatility as something we can’t
predict, so we try to control it.

We call the policy where we try and meddle with systems to make them
smoother naïve interventionism. Unfortunately, we don’t know as much as we
think we do, so instead of making systems better, we make them worse. Without
knowing it, we rob systems - such as the economy - of the volatility vital for
antifragility.
Removing volatility, and therefore antifragility, from a system has one particularly
explosive effect: without volatility, problems are not as apparent, so they lie dormant,
growing more severe until they reach massive proportions. To highlight this
phenomenon, consider the example of a forest:

A forest will always be at risk of fire. Yet, the danger of a large, devastating fire is
often decreased by a series of smaller fires, which purge the forest of its most
flammable materials while leaving most of the trees intact. Volatility, like the small
fires, helps prevent the larger event. By preventing uncertainty in our systems, we are
building up the flammable material for a firestorm.

Our desire to eliminate volatility from life will eventually make our
society more fragile.

Modern teaching suffers from a “turkey

problem” – we misread the past to predict the
future.

Imagine you were a turkey on a brisk October day, happily clucking away. If you were
to predict the future from looking at the recent past, you would have little reason to
worry. Every day your owner has fed you well and made sure you are healthy; you
may, therefore, confidently predict that your owner loves turkeys and that the future
for you looks rosy. On Thanksgiving Day you would be in for a shock.
This reflects one of the main problems of modern times: making predictions about
the future based on a narrow view of the past. Universities, business schools and
newspapers are full of people telling us what will happen in the future. Companies
spend millions hiring strategists and risk managers, hoping to take advantage of the
predictions.

Yet these predictions are products of the “turkey problem,”predicting the future
based on a false narrative of the past. Those who follow the predictions could be in
danger of suffering the consequences when the predicted events don’t happen.
Another flaw in our thinking is that we assume the worst event we have witnessed
must be the worst that could ever happen. This leads to contingency plans and fail-
safes based on this worst-case scenario. It doesn’t occur to many people that a bigger
event could happen in the future; an event that they’d be wholly unaware of.

The Fukushima nuclear reactor, for example, was built to withstand the biggest
earthquake ever experienced. Its designers were obviously unaware that an even
bigger earthquake could strike in the future. When this happened in 2011, the reactor
was completely destroyed.

Modern teaching suffers from a “turkey problem” – we misread the past

to predict the future.

We undervalue the role of antifragility in

fuelling progress and advances in society.

We are taught in school that the Industrial Revolution was a product of scientific
progress: developments in theoretical knowledge drove technological advances
which, in turn, transformed manufacturing, business and society.

Yet, this narrative is wrong. The Industrial Revolution was, in fact, largely instigated
not by academics and professionals theorizing, but by hobbyists and amateurs
tinkering. The submarine, for example, wasn’t invented by a university or a naval
institution, but by a religious minister, Rev. George Garrett, who worked on it in his
spare time. Inventions like these were the result of hundreds of amateurs working
independently, constantly trying out new technologies and ideas, often failing but
 occasionally hitting success, from which society as a whole benefitted. They therefore
formed an antifragile system.

The false narrative of the Industrial Revolution is an example of how modern society
doesn’t understand the importance of antifragility. We can’t imagine our progress
was determined by chance in a complex system of trial and error. Therefore, when we
look back at history we try to create narratives that give more deterministic reasons to
our advances. We really want to think that inventors and engineers in the past knew
what they were doing and were not merely tinkering around in the dark, hoping to
land on something that works.

This has implications for modern society. Many modern professionals in the sciences
owe their high regard and funding to their claims that they’ll make ground-breaking
discoveries. Money is poured into these professions in the hope that they will produce
new theories, which, in turn, will facilitate new advances and discoveries. Yet,
theoretical knowledge cannot bring about the progress it claims; we need
randomness, and the antifragility it creates, to bring about real change.

We undervalue the role of antifragility in fuelling progress and advances

in society.

Final Summary

The main message in this book is:

Antifragility is a quality which has propelled human progress from the

earliest times. It allows systems to grow and improve in an unpredictable
and volatile world. However, modern society is in the process of trying to
dismantle the volatile environment that is vital for antifragility. In doing
so, we are making ourselves more fragile.
This book in blinks answered the following questions:

What is antifragility?
 Unlike fragile items, which break when put under stress, antifragile items actually
benefit from volatility and shock.
 The antifragility of a system depends on the fragility of its constituent parts.
 Shocks and stressors strengthen antifragile systems by forcing them to build up
extra capacity.
 Tranquil environments result in fragile systems – antifragility stems from
volatility.
How do you take advantage of antifragility?
 To take advantage of antifragility don’t try and understand the opportunities you
see, just know when to seize them.
 To become antifragile, manage your risks so you can benefit from unpredictable
events.
 The larger the organisation or system is, the harder it will be hit by unexpected
crises.
How does modern society damage antifragility?
 Many modern professions are antifragile, but at everybody else’s expense.
 Our desire to eliminate volatility from life will eventually make our society more
fragile.
 Modern teaching suffers from a “turkey problem” – we misread the past when
predicting the future.
 We undervalue the role of antifragility in fuelling progress and advances in
society.

Shareable content

3-5 great quotes from the book

 “What doesn’t kill you makes you stronger.”
 “You can’t predict in general, but you can predict that those who rely on
predictions are taking more risks, will have more trouble, perhaps even go bust.”
 “People we call ignorant might not be ignorant.”
 “Society is being fragilized by spineless politicians, draft dodgers afraid of polls,
and journalists building narratives.”

Actionable ideas from this book in blinks

Don’t try to predict the future, just make sure you’re prepared for it.
You can’t hope to accurately predict what will happen in the future. Shocks and
surprises, whether they are good or bad, will sneak up on you.
Instead of planning for what you think might happen, ensure you are prepared for
anything. First, minimize your risks; ensure that, even if the worst happens, your
assets are secure. It is only then, when you know you can survive anything, that you
can begin to take the (smaller) risks that allow you to succeed.

Don’t get squeezed. Instead, maximise your options.

Squeezes are bad; options are good. You should therefore try to avoid the former
while welcoming the latter.

You want to avoid getting into situations where you are forced to do something
whatever the cost. It is much better to secure a position where you have the option,
but not the requirement, to do something. So next time you’re negotiating your rent
for a new apartment, ask to have the option to stay as long as you want, rather than
the obligation to. Then you can stay as long as it’s cheap, but move when the rent gets
too expensive.

It’s often best not to listen to experts

Next time you hear some advice from a financial expert about where to put your
money, it might be best to just ignore it. After all, this expert could be wrong, and it’s
your money he’s playing with – there’s no risk for him. He can go on making
predictions whatever the result.

If you want to know what an expert really thinks will happen, find out where he puts
his own assets. Then you’ll know where his trust lies.