Skin in the Game: The Fundamental Question To Ask Yourself Before You Take Advice

The world seems to always give us advice. Friends tell us which Netflix shows to watch, families tell us what job to take, self-help books tell us how to spend our mornings. We get given so much advice that we have to somehow figure out which advice is worth taking.

The main question to ask yourself is: “Does the person advising me have skin in the game?” That is, what kind of losses are exposed to the advisor if this goes wrong? If your friend is telling you to buy bitcoin, you should find out how much money they would lose if bitcoin lost its value – if the answer is zero, you should run in the other direction.

This is precisely what happened on Wall Street, where fund managers got bonuses for wins but paid no penalty if they lost. In turn, they ended up taking high risks with other people’s money, knowing that they had no skin in the game and that taxpayers could rescue any bad decisions.

In contrast, Warren Buffett owns about 16% of the multi-billion dollar fund he manages, so if the fund loses, he loses in a big way.

Nassim Nicholas Taleb, the author of Skin in the Game, suggests we should take note of people who stick up for a truth that makes them unpopular, or people who act in a way that risks ostracism. He writes simply, “Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.”

Want to know another stance on advice-taking? Click here.

Jordan Peterson’s 12 Rules For Life Rule 11: Don’t Bother Children When They Are Skateboarding

As someone that grew up skateboarding, I know exactly what it felt like when my friends and I were interrupted while skateboarding. “Can’t you go somewhere else? Where do you live? Why aren’t you wearing a helmet?” The interrogation begins. No we can’t go somewhere else, the tarmac is smoothest here. We live just down the road. And no I don’t have a helmet. Even if I did have a helmet I wouldn’t wear one. Helmets are for vert skaters, not street skaters. Skateboarders that wear helmets always seem to be the ones that were driven to the skate park by their mother as they watched like hawks in case they fell.

Of course it was dangerous. Danger was the point. We wanted to triumph over danger. Each summer’s day we would traipse across our local town in search of higher things to jump off, and bigger stairs to try to jump down. We would conquer four-stairs and immediately search for a set of five. Those who overcame the fear of the five-stair would be eyeing up a six. We weren’t just blindly pursuing fear, we were pursuing competence. Fear was just a hurdle that we had to jump through to get to the other side.

Human beings are hard-wired for a level of risk. That’s why we seek out adrenaline, whether it be drag racing, bungee jumping or eating a packet of Doritos Roulette. Without risk, life is dull. We get careless. Inevitably, when something dangerous, unexpected and full of opportunity rears its head, we fail. When we take risk, we feel alive. Adrenaline pumps around our bloodstream, and our hearts beat that little bit faster. We’re living on the edge.

This chapter of Peterson’s book is one of my favorite to read. It goes on to outline some interesting differences between genders, and puts forward some fascinating topics to ponder over. I highly recommend it.

From a personal perspective, the biggest takeaway from this chapter is that there is a lack of competent, tough, strong men in the world today. More now than ever we see men shirking responsibility, and not taking the righteous (albeit more difficult) path. Men in today’s society are masters of expedience. We take the easy route almost every time. As a result we are seeing women who are searching for competent men to contend and grapple with, someone that will challenge them intellectually, emotionally and spiritually. But it’s a struggle, because these types of men – intelligent, confident, mature – are simply not as common among us anymore.

“And if you think tough men are dangerous, wait until you see what weak men are capable of.”

Jordan Peterson

So how does this relate to skateboarding? Let children build up the toughness and competence they need to be independent, as heartbreaking as it is for a mother to eventually see her child leave in the quest for lush new pastures.

Don’t bother children when they are skateboarding.