While the importance of resilience has been understood for a long time, Nicholas Nassim Taleb has built a movement around the idea of being antifragile. Part mathematics, part philosophy, and with a healthy heap of scorn for conventional wisdom, his Incerto series lays out a collection of principles, many counterintuitive to what entrepreneurs are widely taught, for how to design systems that improve rather than break down in the presence of disorder.
Design your company for resilience rather than speed.
There’s an old saying that the key to entrepreneurship is putting yourself in a position to be lucky. Given the failure rate of even venture-backed companies, what that really means is surviving long enough to get lucky. Research shows that successful exits take at least 8 years. As an entrepreneur, think about how the decisions you make will put you in a position to survive the eight years of uncertainty you likely need to succeed. For example, raise more money and spend less of it to make sure you have the runway to succeed.
Focus on skin in the game, rather than dilution.
Entrepreneurs often jealously-guard equity and resist dilution with every fiber of our being. Remember that human beings respond differently to challenges when they have true skin in the game. Think of your equity as a way to get the very best people (employees, investors and advisors) to truly and viscerally care about helping you overcome the challenges you will surely face. Use that equity judiciously but generously to make sure those around you have real skin in the game. For example, take the term sheet from the investors you think are most likely to help you succeed, rather than the one with the best valuation.
Keep things simple.
Can you explain your business to your mechanic or your grandmother? Does a layperson understand what you’re doing without the need for complex jargon? The best test for whether you truly understand the business you want to build is whether you have simplified it in your mind so that others can easily understand it. If you can’t explain the idea to your grandma then you probably have too complex an idea or you haven’t thought through it well enough to communicate it.
Ignore the small risks, obsess about the catastrophic ones.
When you’re running a business, you can expect stuff to go wrong every day. Every decision you make will have risk associated with it, and bad things are certain to happen. In fact, most of these bumps in the road are learning experiences that make your company stronger for going through them. The catastrophic risks to your business are small in number, events like running out of money or ruining your reputation in the marketplace. Don’t try to shield your company from all of the small risks, let them teach lessons. Focus instead on mitigating the catastrophic risks. For example, spend less time obsessing over product features and more time securing contingency financing.
You won’t often see Taleb’s Incerto listed amongst the usual books on entrepreneurship, which is a shame. In addition to celebrating the societal importance of entrepreneurship, the ideas inside the books are actually more valuable to entrepreneurs than so much of what is taught. By adopting his principles you can help your company improve while going through the ups and downs of the journey, and put your company in a position to stay alive long enough to get lucky and succeed.