# 50 Learning by having skin in the game AND why second-order thinking is hard

Plus: questions to always ask a future employer

Hi friends 👏

Welcome to Issue #50 of Curiosity > Certainty. We made it, yayy! 🎉🎖🍾 Thank you to each of you for giving me your time 🙏 I hope to continue earning it.

I spent some time this week on Nassim Taleb’s Incerto series, specifically Skin in the Game. You will see the signature of that in the first piece in this issue. The rest of the issue picks apart second-order thinking and suggests some tough love to test your future employer with.

Hope you enjoy this issue!

The best way to become better: have skin in the game

What’s the surest way to get better at what you do? Have skin in the game. What does it mean? It means you learn the best when you stand to lose the most. 

Imagine you’re a solopreneur who has bagged a big firm as her first paying customer. You’re over the moon until your point of contact from the client side hands you their standard contract. It is as fat as a book. You like contracts as much as a fish likes milk. But you cannot afford to let this pass. So you get in touch with a friend’s friend who knows contract law and after several painful hours you now get the basics of corporate contracts enough to navigate the standard ones on your own. 

Now, say you work for a big company and you manage vendor relationships. You get a contract from a vendor. What are you gonna do? Send it over to the legal team, of course. 

In the first example, you are the principal. In the second, you’re the agent. There’s a misalignment in the interests of the principal and the agent. The principal has to learn to survive. The agent has only to manage the perception of who she represents. So you learn best by putting yourself in harm’s way. And the lessons you learn stay with you. This much is obvious. There’s also a surprise. Nassim Taleb in his book Skin in the Game talks about the thrill of learning under the influence of risk. He says having your own skin in the game actually makes what you do a lot more enjoyable. 

When you’re directly in the line of fire, you stand to lose everything. You also stand to win everything. The thrill of the potential upside urges you on, making searching through even the footnotes of a fat contract fun. I talk about decision-making on social media. I risk being publicly wrong under my own name. I accept the risk because if things go well, the credit rolls up to me. I walk on a knife’s edge. It is thrilling.

You don’t have to be a founder to experience this thrill. You can choose to adopt a founder’s mindset. You can make it your business to learn. No one will point a finger at you if you don’t show more accountability than what your job asks for. But remember that if you do, what you gain from the experience no one can take away from you. And who knows what big things you’ll be able to do tomorrow with what you learn by putting your skin in the game today?

A video version of this piece lives here.

Why second-order thinking is so much harder

First-order effects are easy to foresee. They take today and make it faster, better, safer (if it’s a positive change). Second-order effects are harder to forecast. They rarely stick to the same plane of growth or decay. They are often orthogonal to it, charting entirely new paths. This is important to understand, no matter who you are, because you’re making some big long-term bets on how the future turns out and you don’t want to be blindsided.

Take this example from John Collison, co-founder of Stripe, when he’s talking about the future of the Internet economy.

An analyst in the 50s or 60s forecasting the growth of computers in the future would’ve been very likely to imagine the future as one with faster computers that served pretty much the same use cases as at the time. She would have called banks processing transactions faster or airlines handling more routes.

And she would’ve been right. All of that happened. But almost as a footnote. If you told the same analyst that the world would be so awash with cheap computing power that it would use that to render incredibly life-life–wait for it!–video games, she would’ve asked you what you were smoking.

The biggest shifts in human life couldn’t simply have been predicted. They were all second-, third-, fourth-order effects. And if you thought this scale of change is specific to computers and to the Internet era, here’s some food for thought.

It has always been so.  

The elevator led to taller buildings, to cities, to offices, to urbanization. The toaster made breakfast quick and easy, ensured feet on the factory floor on time, improved productivity, industrialized economies.

And this is only speaking about broadly positive second-order effects. There are more than enough instances of well-intended first-order changes creating big second-order headaches–from over prescription of antibiotics leading to antibiotic resistance to smartphones chewing up the chewing gum market by killing boredom.

It is typical of second-order effects that they appear unintended. It is for the same reason that we should spend time mapping them out. We won’t get them all right but we could try and be less wrong. And that’s a huge advantage.

The (Conditional) Virtue-Vice Framework

The media’s now declaring the Great Indian Startup Party to be over. More than 7000 startup employees have lost their jobs in recent months. And the prediction is for worse. Whatever happens, this post can help them make a better decision when the time comes to pick their next employer. 

For a knowledge worker, it takes time to realize that there are few behaviors universally good. Context is important. You may think you’re doing the right thing but that doesn’t protect you from surprises. 

Some vices are acceptable; some virtues are not. It depends on the context. Org culture is that context. 

Reed Hastings defines org culture as a framework that decides what behaviors are rewarded and what are punished. (By punishment here, I don’t mean active punishment but punishment by being ignored for opportunities.) The behaviors that are rewarded or punished are tacit, and not always written in neat memos. 

In a startup, doing things that don’t scale is generally acceptable as long as you’re exploring corners and edges that no one else is. In a mature business, coloring within the lines is rewarded. In a top-down company, doing what you’re told to do earns you agency. More specifically, Stripe advocates communication transparency–all emails are public within the company–while hiring well is valued over hiring quickly at Amazon.  

Put simply, there are only a few behaviors that are rewarded (loyalty) or frowned upon (fraud) without exception. Those ones are easy to tell. 

What are trickier to spot are the ones in the other two diagonally opposite quadrants in the 2X2 below. Across this range, virtues and vices are subjective. They slide on a culture continuum. For example, if you’re a part of a setup where grooming talent is accepted, you may find yourself under scrutiny if you propose offloading and hiring readymade talent. Or if you believe in work-life integration, you may stick out at a place with a long-hours work culture.

All of which means employees could be rewarded for professionally compatible vices (aggression in EdTech companies in India) and could fall foul with incompatible virtues (radical candor in most companies?). 

Most discover culture after being hired. And then tie themselves in knots trying to fit in. Or struggle to communicate their world view to new colleagues. Either way’s too late. Here’s something to think about: Pay can be measured, rank can be measured, but culture not so much. And what cannot be measured tends to get devalued. That doesn’t mean it doesn’t matter. It just means we won’t see it until it hits us in the face.  

What’s the point of knowing this? Remember to ask better questions when picking a future employer. Here are some:

❓How many times last week did you manage to have dinner on time? or What is one hobby outside of work that you spent at least an hour on in the last couple of weeks?

❓Give me the contacts for the last two people in this role. How long were they here?

❓How many times in the last week was someone here late to a meeting that you were a part of? Were any of them the lowest-ranking attendee?

❓How many times in the last month have you received feedback from someone not your peer or superior?

❓How many times in the last quarter have you approved discretionary purchases of more than $50 by a team member?

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Thank you, dear reader, for adding Curiosity > Certainty to your inbox. I am glad for your time and attention. Next week the LinkedIn Creator Accelerator Program India starts. Wish me luck!