My Personal Summary
This book is about hidden asymmetries in daily life.
- Having skin in the game means you’re exposed to the downside of your decisions.
- Skin in the game aligns the incentives of producers and consumers. The most famous example: in ancient times, if a home collapsed on someone then the builder would be put to death.
- Skin in the game can make boring tasks interesting. If you’re a pilot, checking that the engines are working correctly is not boring because you’ll be on the plane. If you’re in finance, probability and equations are not boring because understanding them can help you make money.
- One example of asymmetry is “minority rule” – when an intolerant minority of the population (<5%) won’t eat/drink certain food so it’s easier for restaurants, manufacturers, etc. to meet their needs since the flexible majority is not as picky in what they eat.
- “Don’t tell me what you think, just show me what’s in your portfolio.”
- Employment is a form of modern slavery. Employees are scared to act out because they risk losing employment, i.e. their only income source, so they dutifully clock in and out 9 hours per day each weekday and wear a uniform.
- Employees are like dogs – they lack freedom but are guaranteed a meal. Entrepreneurs are like wolves – they have complete freedom, but are also responsible for catching their own meals.
- “It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.”
- An IYI – intellectual yet idiot – is someone who sits in an ivory tower and theorizes about things without ever getting their hands dirty and exposing themselves to downside risk.
- “You can define a free person as someone whose fate is not dependent on peer assessment.”
- “Those who talk should do and only those who do should talk.”
- Pay attention to what people do, not what they say.