Nassim Taleb's barbell strategy

[SpartanWarrior77]

Has anyone heard of Nassim Taleb's barbell strategy?



It's basically the idea that you go hyper conservative on one end and then maximal risk taking on the other thus avoiding the dreaded middle...

The same can be applied towards career choices.

The idea is that you choose a profession that is super secure like accountant, doctor, etc and then on your free time, you play around with more speculative ideas. This could take place in a more horizontal fashion (i.e you work on your biz idea after worl say from 5PM - 8PM) or more vertical (you do a couple of years of stable work and then take a year off with savings to work on a business idea).

The logic allows one to avoid total ruin as ultimately business success is statistically low especially at a high level...

I am 25 and I spent the past few years trying to just go for business ideas but I ultimately failed at every one of them (yes I learned a lot) but I am currently broke and living with my parents with almost no real skills to my name and it freaking SUCKS. Now I'm looking for an apprenticeship or something to at least get some money in my pocket and have a chance at a real career so that if my business ideas don't work, at least I won't be a total loser...

Just interested in other people's experiences regarding this wavelength...

 

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[S.Y.]

Big fan of Taleb here. His books Antifragile and Skin in the Game are full of gems.

Many here have recommended that approach. "Get a job and build your business after work" is a barbell strategy.

But we have to be careful on one thing. When Taleb says take risk, it is not any risk. He is encouraging people to go after things with positive assymetry (with more upside than downside). Those things that benefit from volatility.

And the concept of optionality is also important to understand. Do recommend anyone to read his books. He is unscripted and walk his talk.

Edit:
Just remembered a thread by MJ - From Flat-Broke To Financial Freedom: How To Get Started When You Have No Money - which is a form of barbell strategy

 

[thechosen1]

“Get a job and build your business after work" is a barbell strategy.

This sounds perfect. Seems to be a common sense strategy that would be very effective!

 

[Hai]

Has anyone heard of Nassim Taleb's barbell strategy?

View attachment 36116

It's basically the idea that you go hyper conservative on one end and then maximal risk taking on the other thus avoiding the dreaded middle...

The same can be applied towards career choices.

The idea is that you choose a profession that is super secure like accountant, doctor, etc and then on your free time, you play around with more speculative ideas. This could take place in a more horizontal fashion (i.e you work on your biz idea after worl say from 5PM - 8PM) or more vertical (you do a couple of years of stable work and then take a year off with savings to work on a business idea).

The logic allows one to avoid total ruin as ultimately business success is statistically low especially at a high level...

I am 25 and I spent the past few years trying to just go for business ideas but I ultimately failed at every one of them (yes I learned a lot) but I am currently broke and living with my parents with almost no real skills to my name and it freaking SUCKS. Now I'm looking for an apprenticeship or something to at least get some money in my pocket and have a chance at a real career so that if my business ideas don't work, at least I won't be a total loser...

Just interested in other people's experiences regarding this wavelength...

Same. It´s such a great feeling....after spending so many years failing to bootstrap a biz....it´s such a great thing to have a stable income and move out of the parent´s house.
It´s a great strategy. Having security on one hand and asymmetrical reward on the other hand.

Lately I invented the concept of "S class", which says that any given thing you do there is something that is most efficient at getting results. An analogy to competitive gaming, where certain characters are overpowered and likely to give you the highest returns for the effort you put in.

1. Engage in a S class dayjob that gives the highest income for time invested. High demand jobs!
2. Build an S class business. The time you put in should not be wasted in a business with mediocre scaling and need. Start right from the beginning with something that is very demanded and high leverage. This way you don´t waste resources. Very similar to CENTS framework.

 

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[MJ DeMarco]

just go for business ideas but I ultimately failed at every one of them

If you have no real skills from failing multiple businesses, then I'm guessing you probably did something wrong.

Each business failure should improve your skills.

Sounds like you didn't truly start a business, but just tried to do something "turnkey" --- writing an eBook is not starting a business, nor is sending out a few cold emails offering digital marketing. If some guru on YouTube is promoting some specific business venture, that's a business you should avoid.

 

[Diego Liu]

I haven't read Nassim Taleb's works and will surely check them out.

That said, I just finished How to Fail at Almost Everything and Still Win Big by Scott Adams. I highly recommend it. It really opened my eyes.

I used to think that hitting the jackpot is about failing at as many things as it takes until you finally find one that luckily takes off.

That flawed idea discouraged the hell out of me and made me afraid that whichever path I was on wasn't "the one." It also drained my confidence and patience as I had more failures accrued under my belt.

However, the book made me realize that the process of trying and failing is exactly what makes an entrepreneur successful.

In retrospect, I've actually experienced a mini-version of Scott Adam's laundry list of failures, and I certainly wouldn't have gotten the remote job I have today and been able to control my time and location had it not been for those failures:

• My failed blogging experience taught me the basics of Wordpress, web design, and non-fiction writing.
• My failed Instagram self-help porno-infographics experience taught me Adobe Illustrator, image & text formatting, whiteboard animation, and more non-fiction copywriting in the caption.
• (*Not really a failure, but whatever*) In the summer (2019) into my 3rd year of college, I volunteered to make a tutorial on fire dance (a performance in our dental camp) for the lowerclassmen. I just finished a beginner course on Adobe Premiere Pro on Skillshare and quickly put my rusty skills to use.
• (Again, not really a failure, but whatever*) 3 months later (October 2019), I again volunteered to co-write, co-edit, and co-direct the videos for our dental camp that year. I took my Premiere Pro up a notch and even learned script-writing and choreography directing along the way.
• In May this year, I started making animatic YouTube videos combining Adobe Illustrator and Premiere Pro.
• My animatic YouTube videos led me to my first gig from a fellow Fastlaner @Private Witt.
• My aggregate portfolio of Instagram infographics (with some enthusiastic comments and DM's), my own YouTube videos, and my first gig led me to the job I have today.

It doesn't really matter what route you take as long as you know that even if you fail, you'll come out ahead with new skills. That's how I make decisions right now, and let me tell you -- my bleak future suddenly looked so much brighter once I made that mindset shift.

Having experiences in different domains also allows you to see gaps and opportunities undiscovered by others or even you yourself before.

A perfect example of this is @MJ DeMarco himself -- He created limos.com and hit his Fastlane success after chauffeuring and learning web design. He didn't just sit at home, meditate, and have an epiphany, "Oh, I should go make a website that sells leads to limo companies! That's my Fastlane!"


Range is also a great book on how generalists utilize their skillset acquired in different fields and ultimately win. This strategy is simply a lot more fun and a lot easier than specializing in a winner-take-all field. Think Olympic athletes for example.


I'm about to go down the long haul of YouTube channel. Regardless of its growth rate, I know that this project can keep improving my craft at animations, storytelling, humor, connecting with the audience, etc.

However, I still constantly hear that bitch voice spitting irrational fear, "What if...?" Though I'm sure this voice will never go away, I guess Fooled by Randomness by Nassim Taleb (introduced to me in this video) can help me solve this problem. Thanks for introducing the Barbell Strategy!

 

[ProcessPro]

Has anyone heard of Nassim Taleb's barbell strategy?

View attachment 36116

It's basically the idea that you go hyper conservative on one end and then maximal risk taking on the other thus avoiding the dreaded middle...

The same can be applied towards career choices.

The idea is that you choose a profession that is super secure like accountant, doctor, etc and then on your free time, you play around with more speculative ideas. This could take place in a more horizontal fashion (i.e you work on your biz idea after worl say from 5PM - 8PM) or more vertical (you do a couple of years of stable work and then take a year off with savings to work on a business idea).

The logic allows one to avoid total ruin as ultimately business success is statistically low especially at a high level...

I am 25 and I spent the past few years trying to just go for business ideas but I ultimately failed at every one of them (yes I learned a lot) but I am currently broke and living with my parents with almost no real skills to my name and it freaking SUCKS. Now I'm looking for an apprenticeship or something to at least get some money in my pocket and have a chance at a real career so that if my business ideas don't work, at least I won't be a total loser...

Just interested in other people's experiences regarding this wavelength...

Do you have a job?

 

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[c4n]

This is basically my strategy...

I understand you can't be precise and it depends on persons' fiances, risk tolerance, needs, etc..., but do you have any general pointers or maybe even some more specific ones?

How you split your funds between low-risk cash-flowing assets and high-risk speculations (what portion goes to what)? For the high-risk part, how do you diversify? A few asset classes and many opportunities within? Distributed evenly, or heavy into some areas? I presume you have a minimum amount per investment to make it worthwhile?

 

[c4n]

Thanks for sharing! I know it's more complicated than it sounds and you put a lot of work into most of your "gambles", but nice to see some basic philosophies.

 

[GatsbyMag]

This is a popular strategy that most know about or can come up with, surprised Nassim felt the need to write an entire book about it. I'm sure there's extra detail that makes it worthwhile, might check it out later.

 

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[thechosen1]

This is a popular strategy that most know about or can come up with, surprised Nassim felt the need to write an entire book about it. I'm sure there's extra detail that makes it worthwhile, might check it out later.

I hate saying this because it's been repeated so often, but you've described most of the self-help industry.

"Wait, this is obvious, how is this a whole book...?"

"There are SEMINARS too??"

I'm only interested when there is real, in-depth information, something technical, and some actionable advice. Platitudes and "mindset" don't go very far.

MJ's books have a lot of detail, they are unambiguous, and that's why they have value.

For example, the money system portfolio: very detailed, unambiguous strategy. The 5 fastlane business types... CENTS. It's not a step-by-step how-to guide, but it's phenomenally better than "think success and you will BE successful," etc.

 

[biophase]

If you have no real skills from failing multiple businesses, then I'm guessing you probably did something wrong.

That's exactly what I was thinking.

 

[MJ DeMarco]

MJ's books have a lot of detail, they are unambiguous, and that's why they have value.

Thank you, basically this concept is similar to what I've been writing about for 10+ years.

Invest in your own business that can yield asymmetric returns (which tends to be higher-risk), reinvest those returns in low-risk, low yield investments that throw off reoccurring, passive income -- or what I call a money system.

Rinse and repeat.

Once you've done this once or twice, you can continue doing it, except you don't need to limit yourself to self-employment -- but can expand into higher risk ventures and other things that the average person might consider gambling.

 

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[ric2020]

Has anyone heard of Nassim Taleb's barbell strategy?

View attachment 36116

It's basically the idea that you go hyper conservative on one end and then maximal risk taking on the other thus avoiding the dreaded middle...

The same can be applied towards career choices.

The idea is that you choose a profession that is super secure like accountant, doctor, etc and then on your free time, you play around with more speculative ideas. This could take place in a more horizontal fashion (i.e you work on your biz idea after worl say from 5PM - 8PM) or more vertical (you do a couple of years of stable work and then take a year off with savings to work on a business idea).

The logic allows one to avoid total ruin as ultimately business success is statistically low especially at a high level...

I am 25 and I spent the past few years trying to just go for business ideas but I ultimately failed at every one of them (yes I learned a lot) but I am currently broke and living with my parents with almost no real skills to my name and it freaking SUCKS. Now I'm looking for an apprenticeship or something to at least get some money in my pocket and have a chance at a real career so that if my business ideas don't work, at least I won't be a total loser...

Just interested in other people's experiences regarding this wavelength...

from which book do you have this strategy?

 

[c4n]

from which book do you have this strategy?

https://www.amazon.com/dp/0812979680/?tag=tff-amazonparser-20

 

[gryfny]

This is basicly my investment strategy. One part in low risk index funds, and the other in high risk stuff like crypto. I didn't know this strategy, but it's very much in line with my way of thinking. I just got the book, thanks for sharing!

 

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[ZahScr]

Yes! Taleb's work is fantastic. His ideas and their previous iterations run deep and have a lot of interesting implications across so many fields. I spent most of 2020 reading his work, and am only just getting started on ideas that have influenced him.

I don't have much experience with it yet, but right now I'm trying to figure out how to apply the barbell strategy to my own time/money investments and work. I work full time in a "stable" job as a software engineer and am trying to do about 80/20 (rather than 90/10), where the other 20% is trying to start a fastlane business. I actually stumbled on The Millionaire Fastlane while looking for business building resources.

This is a super important distinction for the high risk side though:

But we have to be careful on one thing. When Taleb says take risk, it is not any risk. He is encouraging people to go after things with positive assymetry (with more upside than downside). Those things that benefit from volatility.

I think a properly vetted fastlane business would have the right risk/reward asymmetry. But in order for it to be considered "low risk", it would need to fail quite early with a super cheap MVP to make sure it doesn't suck up too much time or money before failure. That way you can move on to the next idea, and a succession of those small attempts would hopefully land you on something that you can run with. At that point it would start demanding a lot more time/energy and would probably need to be moved out of the high-risk/low-reward zone.

 

[ZahScr]

This is a popular strategy that most know about or can come up with, surprised Nassim felt the need to write an entire book about it. I'm sure there's extra detail that makes it worthwhile, might check it out later.

There isn't an entire book on the barbell strategy, maybe a chapter or two but I forget what book it's in... maybe Antifragile. I'd recommend reading him because the barbell strategy is really just a way to apply some of the ideas in his Incerto.