Startups and Antifragility

Nassim Taleb is the author of three highly influential books and quite a character. I’ve heard him be variously described as a former options trader, a psychologist, philosopher and flaneur, whatever the hell one of those is (I’m even writing this post in his style now). His thinking on antifragility has two important connotations for entrepreneurs and startups, at the macro and micro level.

Drawing strong similarities with nature throughout the book, Taleb explains antifragility thus:

“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. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better”.

The macro ecosystem

Taleb views individual startups as being inherently fragile because such a large number fail. However, within the startup ecosystem as a whole, he believes it necessary for the system to “sacrifice some units for the benefit of other units”. He says that “the fragility of every startup is necessary for the economy to be antifragile, and that’s what makes entrepreneurship work: the fragility of individual entrepreneurs and their necessarily high failure rates”.

He uses the example of restaurants in his book, which he says are fragile because they compete with one another, but a local collective of restaurants is antifragile. If restaurants were “individually robust, hence immortal, the overall business would be stagnant or weak”.

The micro startup

Taleb’s notion of antifragility merits thought at the individual level, both in terms of the personal anitfragility of the founding team (and the extent to which we as individuals are antifragile – another discussion) but also with regards to short-term business strategy. Consider the picture below, taken at a Taleb seminar I attended at The Bank of England.

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What immediately stood out for me is the obvious similarity to this approach with the principles of the lean startup, and in particular the idea of adopting a scientific approach to rapid-fire testing in pursuit of early growth. Do you agree with the similarity?

So what?

At the ecosystem level (international, national, regional and local level – think ‘Silicon Roundabout’) the notion of an antifragile system is a refreshing way to frame the positive benefits of healthy competition. Whilst we may be individually fragile (as people and as startups) together we are stronger.

At the level of the individual startup, you could argue that one way of addressing fragility is through superior business methodologies and associated strategy. It is again refreshing to know that the startup theories we are projecting are supported by additional robust thinking from the likes of Nassim Taleb. I’ll sleep better tonight knowing that circle has been squared and that I’m getting in to bed a little more antifragile than when I got out of it.

 You can buy Antifragile: Things that Gain from Disorder here 

 

My name is Richard Hughes-Jones. I am a Coach, Consultant & Lecturer who works with entrepreneurs. My clients are CEOs and leadership teams of startup and scale up businesses. I am an Associate Lecturer at the London College of Fashion and retained Consultant to the Centre for Fashion Enterprise.

I previously gained over a decade's experience as a Deloitte management consultant and HM Treasury civil servant. My full profile is on LinkedIn and you can also find me on Twitter. If you'd like to receive my book reviews you can sign up below.