Skin in the game
So how could you become better at making decisions? Nassim Taleb argues that the best shortcuts for good advice is if someone has got "skin in the game". Skin in the game has got everything to do with accountability. When you have skin in the game, you can suffer from negative consequences. When you have skin in the game, you have your own money, reputation, time and future at stake if the choices you make or the advice you give don't pay off.
This is precisely the reason why it's utterly bonkers that corporate CEO's make so much money. They don't have skin in the game. They will benefit a lot when their actions turn out positive, but they won't suffer if things go wrong. BTW, this is in a nutshell the explanation of the 2008 financial crisis. If you don't suffer from bad decisions, you will make reckless and stupid decisions. Or decisions that will affect your bonus, and those aren't necessarily aligned with the longterm goals of the corporation.
My co-founder Astrid and I are entrepreneurs (and married). This means we have all our money, our reputation, and our ability to have a pension, invested in SUE. If we screw up our reputation, we will end in poverty. This results in a huge incentive to work very hard to have satisfied clients. When you have skin in the game, you can't afford failure.
Come to think of it. This is a useful shortcut for all kinds of decisions. If you need a banker, financial advisor, accountant, coach, or think of every professional service that you can rely on: go for the entrepreneurs. The big organizations might have the brand and the reputation, but often they will throw in their best people to get you as a client, and then they'll hook you up with the junior staffers.
If you like this topic: Subscribe to the podcast "Naval". Naval Ravikant is the co-founder of Angelist and the smartest geek on applying mental models to better decision making. The density of his thinking is mind-blowing.
Go out with a blast!